STOCK PLEDGE AGREEMENT
STOCK PLEDGE AGREEMENT dated as of December 24, 1997, by and between
MEDLEY GROUP, INC., a Delaware corporation having principal offices at 0000
Xxxxx xx Xxxx Xxxxxxxxx, Xxxxx Xxxxxx, Xxxxxxx 00000 ("Pledgor"), and MEDLEY
CREDIT ACCEPTANCE CORP., a Delaware corporation having principal offices at
0000 Xxxxx xx Xxxx Xxxxxxxxx, Xxxxx Xxxxxx, Xxxxxxx 00000 ("Secured Party").
W I T N E S S T H:
WHEREAS, Pledgor, concurrently herewith, is benefitting from a
financial accommodation provided by Secured Party; principally, Secured Party's
posting, on behalf of Pledgor, a $1.7 million letter of credit (the "Letter of
Credit") to secure the payment stream with respect to certain equipment leases
concurrently being sold by Pledgor to an unaffiliated third party, all in
accordance with the terms and conditions set forth in that certain letter
agreement of even date herewith between Pledgor and Secured Party (the "Letter
Agreement"); and
WHEREAS, Secured Party requires, and Pledgor is willing, as a
condition to Secured Party's posting the Letter of Credit, to pledge to Secured
Party the Pledged Shares (as defined below) as security for the prompt
reimbursement by Pledgor of all amounts drawn under the Letter of Credit (the
"Secured Obligations") by executing and delivering this Agreement.
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound hereby, agree as follows:
1. DEFINITIONS
"Agreement" shall mean this Stock Pledge Agreement, including
all amendments, modifications and supplements and any exhibits and schedules to
any of the foregoing, and shall refer to this Agreement as the same may be in
effect at the time such reference becomes operative.
"Event of Default" shall mean: (a) the failure or neglect of
Pledgor to observe or perform any covenant, agreement or obligation under this
Agreement or the Letter Agreement; or (b) if any representation or warranty
made under this Agreement by Pledgor shall be breached or shall be untrue or
incorrect in any material respect as of the date when made or deemed made.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, institution, public benefit corporation, entity or government
(whether Federal, state, county, city, municipal or otherwise, including any
instrumentality, division, agency, body or department thereof).
"Pledged Collateral" shall have the meaning assigned to such
term in Section 2 hereof.
"Pledged Shares" shall mean, initially, 750,000 shares of
common stock, par value $.01 per share, of Secured Party currently owned by
Pledgor, and all dividends, cash, instruments and other property or securities
or proceeds from time to time received, receivable or otherwise distributed or
distributable in respect of or in exchange for any or all of such Pledged
Shares, whether issued by the issuer of the Pledged Shares or otherwise,
whether in connection with any tender offer, exchange offer, merger,
recapitalization, reorganization or otherwise.
"Termination Date" shall have the meaning assigned to such
term in Section 10 hereof.
"Uniform Commercial Code" shall mean the Uniform Commercial
Code of the jurisdiction with respect to which such term is used, as in effect
from time to time.
Except as otherwise specifically provided in this Agreement,
the singular of any term shall include the plural, and vice versa, the use of
any term shall be equally applicable to any gender, "or" shall not be
exclusive, and "including" shall not be limiting or exclusive, and any
reference to a "Section" shall refer to the relevant Section of this Agreement.
2. PLEDGE AND GRANT OF SECURITY INTEREST.
Pledgor hereby pledges to Secured Party, and grants to
Secured Party a continuing security interest in, all of Pledgor's right, title
and interest in and to (and in all of Pledgor's rights to acquire any and all
right, title and interest in and to) the Pledged Shares, whether now owned or
hereafter acquired in any manner, or whether from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such Pledged Shares (collectively, the "Pledged Collateral").
3. SECURITY FOR OBLIGATIONS.
This Agreement and the Pledged Collateral secures the prompt
payment and performance when due of each and every one of and all amounts that
constitute part of the Secured Obligations of Pledgor.
4. DELIVERY OF PLEDGED COLLATERAL.
Concurrently with the execution of this Agreement, all
certificates representing or evidencing the Pledged Shares shall be delivered
to the Secured Party accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to Secured Party.
Pledgor shall receive all certificates, cash, 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 the Pledged Shares in trust for
Secured Party and shall immediately upon receipt deliver to Secured Party such
certificates, cash, instruments and other property and proceeds, together with
any
- 2 -
necessary endorsement. All dividends and all other distributions in respect of
any of the Pledged Shares, whenever paid or made, shall be delivered to the
Secured Party to hold as Pledged Collateral and shall, if received by Pledgor,
be received in trust for the benefit of Secured Party, be segregated from the
other property or funds of Pledgor, and be forthwith delivered to the Secured
Party as Pledged Collateral in the same form as so received (with any necessary
endorsement). Secured Party shall have the right, at any time after the
occurrence of an Event of Default, in its discretion and without notice to
Pledgor, to transfer to or to register in the name of Secured Party or any of
its nominees any or all of the Pledged Shares. In addition, Secured Party shall
have the right at any time to exchange certificates or instruments representing
or evidencing the Pledged Shares for certificates or instruments of smaller or
larger denominations.
5. REPRESENTATIONS AND WARRANTIES.
Pledgor represents and warrants to Secured Party as follows:
5.1 Ownership. Pledgor is, and at the time of delivery of the
Pledged Shares to Secured Party pursuant to Section 4 hereof, the sole owner of
the Pledged Collateral, free and clear of any lien, claim, encumbrance, pledge
or restriction of any kind, nature or description whatsoever, except for the
lien created by this Agreement.
5.2 Authorization. Pledgor has the full corporate right,
power and authority to pledge, assign, transfer, deliver, deposit and set over
the Pledged Collateral to Secured Party as provided herein.
5.3 No Consent or Notice. No consent, approval, authorization
or other order of any Person and no consent, authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required to be made or obtained by Pledgor either (a) for
the grant by Pledgor of the security interest granted hereby, for the pledge by
Pledgor of the Pledged Collateral pursuant hereto or for the execution,
delivery or performance of this Agreement by Pledgor, (b) for the perfection or
maintenance of the pledge and security interest granted hereby (including the
first priority nature of such pledge and security interest) or (c) for the
exercise by Secured Party of his rights provided for in this Agreement or the
remedies in respect of the Pledged Collateral pursuant to this Agreement.
5.4 Valid Lien. The pledge of, grant of a security interest
in, and delivery of the Pledged Collateral by Pledgor pursuant to this
Agreement will create a valid first priority lien on, and a first priority
perfected security interest in, the Pledged Collateral and the proceeds thereof
of Pledgor, securing the payment in full of the Secured Obligations of Pledgor.
5.5 Binding Obligation. This Agreement has been duly executed
and delivered by Pledgor and constitutes the legal, valid and binding
obligation of Pledgor, enforceable in accordance with its terms.
- 3 -
5.6 Pledgor Address. The principal business address of
Pledgor is as set forth in the preamble to this Agreement.
The representations and warranties set forth in this Section
5 shall survive the execution and delivery of this Agreement.
6. COVENANTS.
Pledgor covenants and agrees that as of the date hereof and
until the Termination Date:
6.1 Transfer and Other Liens. Unless Secured Party gives its
prior written consent, Pledgor will not (a) sell, assign (by operation of law
or otherwise) or otherwise dispose of, or grant any option with respect to, any
of the Pledged Collateral, or (ii) create or suffer to exist any lien or grant
a security interest in or upon or with respect to, or encumber any of its
rights in or to, any of the Pledged Collateral, except for the pledge and
security interest created by this Agreement.
6.2 Further Assurances; Creation and Preservation of Lien.
Pledgor will, at its expense, promptly execute, acknowledge and deliver all
such instruments and take all such action as Secured Party, from time to time,
may reasonably request in order to ensure to Secured Party the benefits of the
liens in and to the Pledged Collateral intended to be created by this Agreement
and to protect any pledge or 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 the Pledged Collateral.
6.3 Title. Pledgor has and will defend the title to the
Pledged Collateral and the liens of Secured Party thereon against the claim of
any Person and will maintain and preserve such liens until such liens are
realized in accordance with the terms hereof or until the Termination Date
6.4 Legends. Each certificate evidencing the Pledged
Collateral states and shall state that it is subject to this Agreement.
7. PLEDGOR'S RIGHTS.
Until the occurrence of an Event of Default under this
Agreement or the Letter Agreement, Pledgor shall be entitled, pursuant to this
Agreement, to exercise all voting and other rights pertaining to the Pledged
Shares. After the occurrence of any such Event of Default, Secured Party or its
nominee shall have the sole right to vote any and all of the Pledged Shares and
give consents, waivers and ratifications in respect thereof, and Pledgor shall
deliver to Secured Party or its nominee such proxies and other documents as
Secured Party may request to further effectuate the foregoing.
- 4 -
8. DEFAULTS AND REMEDIES.
8.1 Defaults and Remedies. Upon the occurrence of an Event of
Default and during the continuance of such Event of Default, upon at least ten
days notice but without any other notice or demand, Secured Party (through an
agent) is hereby authorized and empowered to transfer and register in his name
or in the name of his nominee the whole or any part of the Pledged Collateral,
to exercise the voting rights with respect thereto, and to collect and receive
all dividends and other distributions made thereon; and, to sell in one or more
sales after at least ten days notice of the time and place of any public sale
or of the time after which a private sale is to take place (which notice
Pledgor agrees is commercially reasonable), but without any previous notice or
advertisement, the whole or any part of the Pledged Collateral and otherwise to
act with respect to the Pledged Collateral as though Secured Party were the
outright owner thereof, Pledgor hereby irrevocably constituting and appointing
Secured Party as the proxy and attorney-in-fact of Pledgor, with full power of
substitution to do so; provided, however, Secured Party shall not have any duty
to exercise any such right or to preserve the same and shall not be liable for
any failure to do so or for any delay in doing so. Secured Party shall exercise
reasonable care in preserving the certificates representing the Pledged
Collateral, but Secured Party shall have no obligation to preserve the value of
the Pledged Collateral. Subject to the limitations previously set forth in this
Section 8.1, any sale of the Pledged Collateral shall be made at a public or
private sale at the place named in the notice of sale, either for cash or upon
credit or for future delivery at such price as Secured Party may deem fair, and
Secured Party or Pledgor may be the purchaser of the whole or any part of the
Pledged Collateral so sold, and hold the same thereafter in his or its own
right free from any claim of Pledgor or any right of redemption. Each sale
shall be made to the highest bidder, but Secured Party reserves the right to
reject any and all bids at such sale which, in his discretion, he shall deem
inadequate. Demands of performance, notices of sale, advertisements and the
presence of property at sale are hereby waived, and any sale hereunder may be
conducted by an auctioneer or any officer or agent of Secured Party.
8.2 Sale of Collateral. If, at the original time or times
appointed for the sale of the whole or any part of the Pledged Collateral, the
highest bid shall be inadequate to discharge in full all the Secured
Obligations if there be but one sale, or if the Pledged Collateral be offered
for sale in lots, if at any of such sales the highest bid for the lot offered
for sale would indicate to Secured Party, in his discretion, the unlikelihood
of the proceeds of the sales of the whole of the Pledged Collateral being
sufficient to discharge all of the Secured Obligations, Secured Party may, on
one or more occasions and in his discretion, postpone any of said sales by
public announcement at the time of sale or the time of previous postponement of
sale, and no other notice of such postponement or postponements of sale need be
given, any other notice being hereby waived.
8.3 Proceeds. In the event of any sales hereunder, Secured
Party shall, after deducting all costs and expenses of every kind (including
reasonable attorneys' fees and disbursements) for care, safekeeping,
collection, sale, delivery or otherwise, apply the residue of the proceeds of
the sales to the payment or reduction, either in whole or in part, of the
Secured
- 5 -
Obligations in accordance with Section 9 and the agreements and instruments
governing and evidencing such Secured Obligations, returning the surplus, if
any, to Pledgor.
8.4 Pledgor Waivers. Pledgor agrees that following the
occurrence and during the continuance of an Event of Default, it will not at
any time plead, claim or take the benefit of any appraisal, valuation, stay,
extension, moratorium or redemption law now or hereafter in force in order to
prevent or delay the enforcement of this Agreement, or the absolute sale of the
whole or any part of the Pledged Collateral or the possession thereof by any
purchaser at any sale hereunder, and Pledgor waives the benefit of all such
laws to the extent it lawfully may do so.
8.5 Non-Interference. Pledgor agrees that it will not
interfere with any right, power or remedy of Secured Party provided for in this
Agreement or now or hereafter existing at law or in equity or by statute or
otherwise, or the exercise or beginning of the exercise by Secured Party of any
one or more of such rights, powers or remedies. No failure or delay on the part
of Secured Party to exercise any such right, power or remedy, and no notice or
demand which may be given to or made upon Pledgor by Secured Party with respect
thereto, shall operate as a waiver thereof, or limit or impair Secured Party's
right to take any action or to exercise any right, power or remedy hereunder,
without notice or demand, or prejudice his rights against Pledgor in any
respect.
8.6 Unencumbered Shares. Secured Party agrees,
notwithstanding any provision to the contrary set forth herein, that in
connection with any sale, transfer or other disposition by him of the Pledged
Collateral in accordance with this Section 8, Secured Party shall first remove
its lien against such Pledged Collateral so that the transferee of such Pledged
Collateral will acquire, in accordance with this Section 8, such Pledged
Collateral free and clear of all liens, encumbrances and other restrictions or
title defects.
9. APPLICATION OF PROCEEDS.
Any cash held by Secured Party as Pledged Collateral and all
cash proceeds received by Secured Party in respect of any sale of, liquidation
of or other realization upon all or any part of the Pledged Collateral shall be
applied by Secured Party as follows:
(a) First, to the payment of the costs and expenses of such
sale, including reasonable fees and expenses of Secured Party's agents and
counsel, and all expenses, liabilities and advances made or incurred by Secured
Party in connection therewith;
(b) Next, to the payment of the Secured Obligations; and
(c) Finally, to the payment to Pledgor, or his heirs,
successors or assigns of Pledgor, or to whomsoever may be lawfully entitled to
receive the same or as a court of competent jurisdiction may direct, of any
surplus then remaining from such proceeds.
- 6 -
10. TERMINATION.
Following the complete payment and satisfaction of all
Secured Obligations of Pledgor to Secured Party under this Agreement or the
cancellation, without having been drawn under, of the Letter of Credit (the
"Termination Date"), this Agreement shall terminate and Pledgor shall be
entitled to the return of all Pledged Collateral and all instruments of
assignment executed in connection therewith, and all of Pledgor's liabilities
hereunder shall at such time terminate.
11. INDEMNIFICATION
Pledgor agrees to indemnify and hold Secured Party harmless
from and against any and all taxes, liabilities, claims and damages, including
reasonable attorneys' fees and disbursements, and other expenses incurred or
arising by reason of the taking or the failure to take action by Secured Party,
in good faith, in respect of any transaction effected under this Agreement or
in connection with the lien provided for herein, including any taxes payable in
connection with the delivery of any of the Pledged Collateral as provided
herein. The liabilities of Pledgor under this Section shall survive the
termination of this Agreement.
12. LIEN ABSOLUTE.
(a) All rights of Secured Party hereunder, and all
obligations of Pledgor hereunder, shall be absolute and unconditional and shall
remain in full force and effect without regard to, and shall not be impaired or
affected by, or deemed to be satisfied by, nor shall Pledgor or any Pledged
Collateral be exonerated, discharged or released by, any of the following
events: Secured Party's exercise or enforcement of or failure or delay in
exercising or enforcing any legal proceedings to collect the Secured
Obligations or any power, right or remedy with respect to the Secured
Obligations, the Pledged Collateral or any other collateral held by Secured
Party, including any action or inaction of Secured Party to perfect, protect or
enforce any security interest in the Pledged Collateral or any other
collateral, any impairment or suspension of the Pledged Collateral or any other
collateral, Secured Party's compromise, exchange, release, settlement,
amendment or waiver with or of any other Person, or the Pledged Collateral or
any other collateral, or any change in the time, manner or place of payment of,
or in any other term of, all or any part of the Secured Obligations, or any
other amendment, impairment, renunciation, cancellation, surrender, suspension
or waiver of the Note or any other agreement or instrument governing or
evidencing any of the Secured Obligations;
(b) Any insolvency, bankruptcy, reorganization, arrangement,
adjustment, composition or assignment for the benefit of creditors of Secured
Party or Pledgor, appointment of a receiver or trustee for all or any part of
Secured Party's or Pledgor's assets or liquidation, winding up or dissolution
of the Pledgor;
- 7 -
(c) Any invalidity, voidability, unenforceability or
irregularity, or future change to or amendment of, in whole or in part, the
Secured Obligations, the Letter Agreement, this Agreement or any other
agreements, documents or instruments evidencing any Secured Obligations;
(d) Any merger, acquisition, consolidation or change in
structure of Pledgor, or any sale, lease, transfer or other disposition of any
or all of the assets of Pledgor;
(e) Any assignment, endorsement or other transfer, in whole
or in part, of Secured Party's interest in the Secured Obligations, the Pledged
Collateral or any other collateral;
(f) Any claim, defense, counterclaim or set-off, other than
that of prior performance, that Pledgor may have or assert, including, but not
limited to, any defense of incapacity, disability or lack of corporate or other
authority to execute any documents relating to the Secured Obligations, the
Pledged Collateral or any other collateral;
(g) Secured Party's vote, claim, distribution, election,
acceptance, action or inaction in any bankruptcy or reorganization case related
to the Pledged Collateral or the Secured Obligations; or
(h) Any cancellation, renunciation or surrender of any pledge
or any other debt instrument evidencing the Secured Obligations.
13. REINSTATEMENT.
This Agreement shall remain in full force and effect and
continue to be effective if at any time payment and performance of the Secured
Obligations of Pledgor, or any part thereof, is, pursuant to applicable law,
avoided, rescinded or reduced in amount, or must otherwise be restored or
returned by any obligee of the Secured Obligations, whether as a "voidable
preference," "fraudulent conveyance" or otherwise, all as though such payment
or performance had not been made. In the event that any payment, or any part
thereof, is avoided, rescinded. reduced. restored or returned. the Secured
Obligations, as the case may be, shall be reinstated and deemed reduced only by
such amount paid and not so avoided, rescinded, reduced, restored or returned.
14. MISCELLANEOUS.
14.1 Use of Agents. Secured Party may execute any of his
duties hereunder by or through agents and shall be entitled to advice of
counsel concerning all matters pertaining to his duties hereunder.
14.2 Reimbursement. Pledgor agrees to reimburse Secured Party
promptly for all expenses, including reasonable counsel fees, reasonably
incurred by Secured Party in connection with the administration and enforcement
of this Agreement.
- 8 -
14.3 Limitations on Liability. Secured Party shall not be
liable for any action lawfully taken or omitted to be taken by Secured Party
hereunder or in connection herewith, except for his own gross negligence or
willful misconduct.
14.4 Binding Agreement. This Agreement shall be binding upon
Pledgor and its administrators, legal representatives and permitted successors
and assigns, and shall inure to the benefit of, and be enforceable by, Secured
Party and his heirs, legal representatives. successors and assigns.
14.5 Entire Agreement; Amendments. This Agreement, together
with the Letter Agreement: (a) constitutes the entire agreement between the
parties with respect to the subject matter hereof; and (b) may not be amended
or modified except by a writing signed by Pledgor and Secured Party.
14.6 Severability. If any provision of this Agreement shall
be held invalid or unenforceable, such invalidity or unenforceability shall
attach only to such provision and shall not in any manner affect or render
invalid or unenforceable any other severable provision of this Agreement, and
this Agreement shall be carried out as if any such invalid or unenforceable
provision were not contained herein.
14.7 Notices All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to be duly
given if personally delivered with receipt acknowledged, if mailed by
registered or certified mail, first class, postage prepaid, if delivered by a
nationally recognized overnight courier service to the parties at their
respective addresses set forth in the preamble hereof.
14.8 Section Titles. The Section titles contained in this
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.
14.9 Governing Law. This Agreement is being executed and
delivered by the parties hereto in the State of Florida and shall be construed
in accordance with, and governed by, the internal laws of the State of Florida,
without giving effect to the conflicts of laws principles thereto.
14.10 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which when taken together shall constitute one and the same agreement.
- 9 -
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first written above.
MEDLEY GROUP, INC.
By:___________________________
MEDLEY CREDIT ACCEPTANCE CORP.
By:_____________________________
- 10 -
