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Exhibit 4.7
SECURITY AND PLEDGE AGREEMENT
THIS SECURITY AND PLEDGE AGREEMENT, dated as of March __, 1998, is made by
SHOP AT HOME, INC., a Tennessee corporation ("SAH"), BROADCAST, CABLE AND
SATELLITE TECHNOLOGIES, INC., a Texas corporation ("BCST"), SAH ACQUISITION
CORPORATION II, a Tennessee corporation ("Acquisition") (each of SAH, BCST and
Acquisition, a "Pledgor" and together, the "Pledgors"), in favor of PNC BANK,
NATIONAL ASSOCIATION, a national banking association, as trustee (the "Trustee")
for the holders (the "Holders") of the Notes (as defined herein).
R E C I T A L S
Pledgors, the Trustee and the other subsidiaries of SAH party thereto, have
entered into an indenture dated as of March __, 1998 (as amended, amended and
restated, supplemented or otherwise modified from time to time, the
"Indenture"), pursuant to which the Pledgors are issuing on the date hereof
$75,000,000 in aggregate principal amount at maturity of its ___% Secured Notes
due 2005 (the "Notes"). Capitalized terms used herein and not otherwise defined
herein shall have the meanings given to such terms in the Indenture.
SAH and BCST are the legal and beneficial owner of the outstanding shares
of Capital Stock set forth on Schedule I hereto and issued by the corporations
named therein (the "Pledged Stock").
It is a condition precedent to the purchase of the Notes by the Holders
shall have granted the assignment and security interest and made the pledge and
assignment contemplated by this Agreement.
Unless otherwise defined in this Agreement or in the Credit Agreement,
terms defined in Article 9 of the Uniform Commercial Code in effect in the
State of New York (the "Code") are used in this Agreement as such terms are
defined there.
NOW THEREFORE, in consideration of the premises, and in order to induce the
Holders to purchase the Notes, the Pledgors hereby agree with the Trustee for
its benefit and the ratable benefit of the Holders as follows:
SECTION 1. Pledge and Security Interest.
(a) Each Pledgor hereby assigns and pledges to the Trustee for its benefit
and for the ratable benefit of the Holders, and hereby grants to the Trustee for
its benefit and for the ratable benefit of the Holders, a continuing security
interest in all of its right, title and interest in the following collateral
owned by such Pledgor (collectively, the "Pledgor Collateral"):
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(i) the Pledged Stock and the certificates representing the Pledged
Stock, all proceeds of the Pledged Stock, and all of the following (to the
extent that they may not otherwise constitute proceeds): all income and
profits from the Pledged Stock, all dividends, cash, options, warrants,
rights, subscriptions, instruments and other property from time to time
after the date hereof received, receivable or otherwise distributed in
respect of or in exchange or substitution for any or all of the Pledged
Stock; and
(ii) all additional shares of Capital Stock of, and all securities
convertible into, and all warrants, options or other rights to purchase,
Capital Stock of, the Issuer from time to time after the date hereof
acquired by such Pledgor in any manner, and the certificates representing
any such additional shares and all income and profits thereon, and all
proceeds, dividends, cash, options, warrants, rights, subscriptions,
instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange or
substitution for any or all of such shares; and
(a) Acquisition hereby assigns and pledges to the Trustee for its benefit
and for the ratable benefit of the Holders, and hereby grants to the Trustee
for its benefit and for the ratable benefit of the Holders, a continuing
security interest in all of its right, title and interest in the following
collateral owned by Acquisition (the "Acquisition Collateral" and, together
with the Pledgor Collateral, the "Collateral"):
(i) all of Acquisition's right, title and interest, whether now owned
or hereafter acquired, in and to all equipment in all of its forms,
wherever located, now or hereafter existing [(including, but not limited
to, )], all fixtures and all parts thereof and all accessories
thereto (any and all such equipment, fixtures, parts and accessions being
the "Acquisition Equipment");
(ii) all of Acquisition's right, title and interest, whether now
owned or hereafter acquired, in and to all accounts, chattel paper,
instruments, deposit accounts, investment property, general intangibles
and other obligations of any kind, now or hereafter existing (excluding
any interest in any license, permit or authorization that may
not be assigned without the consent of the Federal Communications
Commission), whether or not arising out of or in connection with the sale
or lease of goods or the rendering of services, and all rights now or
hereafter existing in and to all security agreements, leases and other
contracts securing or otherwise relating to any such accounts, chattel
paper, instruments, deposit accounts, investment property, general
intangibles or obligations (any and all such accounts, chattel paper,
instruments, deposit accounts, investment property, general intangibles
and obligations being the "Acquisition Receivables", and any and all such
leases, security agreements and other contracts being the "Acquisition
Related Contracts" and, collectively with the Acquisition Equipment, the
"Acquisition Personal Property");
(iii) all other tangible or intangible property of Acquisition,
including, without limitation, all proceeds, products and accessions of and
to any of the property of the Acquisition described in clauses (i) or (ii)
above in this Section 2(b), and, to the extent related to any property
described in said clauses or such proceeds, products and accessions, (i)
all books, correspondence, credit files, records, invoices and other
papers, including without limitation all tapes, cards, computer runs and
other papers and documents in the possession or under the control of
Acquisition or any computer bureau or service company from time to time
acting for Acquisition, (ii) all payments under insurance (whether or not
the Lender is the loss payee thereof), or any indemnity, warranty or
guaranty by reason of loss of or change to or otherwise with respect to
any of the foregoing Acquisition Collateral, and (iii) cash.
SECTION 2. Security for Obligations. (a) This Agreement secures the payment
and performance when due (whether for principal, interest, fees, expenses or
otherwise at stated maturity, by acceleration or otherwise) of the obligations
of the Pledgors under the Indenture or under this Agreement (the "Secured
Obligations").
(b) The Pledgors and the Holders, by their acceptance of this Agreement,
hereby confirm that it is the intention of all such parties that the pledge
contemplated by this Agreement not constitute a fraudulent transfer or
conveyance for purposes of Bankruptcy Law (as defined below), the Uniform
Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar
federal or state law to the extent applicable to this Agreement. To effectuate
the foregoing intention, the Holders and the Pledgors hereby irrevocably agree
that the obligations of the Pledgors under this Agreement shall be limited to
the maximum amount as will, after giving effect to such maximum amount and all
other contingent and fixed liabilities of the Pledgors that are relevant under
such laws, result in the obligations of the Pledgors under this Agreement not
constituting a fraudulent transfer or conveyance. For purposes hereof,
"Bankruptcy Law" means Title 11, U.S. Code, or any similar Federal or state law
for the relief of debtors.
(c) Without limiting the generality of the foregoing, this Agreement
secures the payment of all amounts that constitute part of the
Secured Obligation and would be owed by Pledgors to the Holders under the
Indenture and the Notes but for the fact that they are unenforceable or not
allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving one or more of Pledgors.
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SECTION 3. Delivery of Collateral. All certificates or instruments
representing or evidencing any and all of the Collateral shall be delivered to
and held by or on behalf of the Trustee pursuant hereto and shall be in suitable
form for transfer by delivery, or shall be accompanied by duly executed stock
powers and instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Trustee. The Trustee shall have the right, at any
time in its discretion and without notice to Pledgors, to transfer to or to
register in the name of the Trustee or any of its nominees any or all of the
Collateral, subject only to the revocable rights specified in Section 7(a) of
this Agreement. In addition, the Trustee shall have the right at any time to
exchange certificates or instruments representing or evidencing Collateral for
any of the certificates or instruments of smaller or larger denominations.
SECTION 4. Representations and Warranties. (a) Each Pledgor represents and
warrants with respect to itself as follows:
(i) The execution, delivery and performance by Pledgor of this
Agreement are within Pledgor's corporate powers, have been duly authorized
by all necessary corporate action, and do not contravene, or constitute a
default under, any provision of applicable law or regulation or of the
certificate of incorporation or by-laws of Pledgor or of any agreement,
judgment, injunction, order, decree or other instrument, binding upon
Pledgor or result in the creation or imposition of any Lien on any assets
of Pledgor, except for the security interests granted under this Agreement.
(ii) This Agreement and the pledge of the Pledged Stock create a valid
and perfected first priority security interest in the Collateral securing
the payment of the Secured Obligations, the security interest in the
Collateral comprised of the Capital Stock of BCST, MFP, Inc. and Urban
Broadcasting Systems, Inc. shall be a second priority security interest,
junior to the security interest securing the Senior Credit Facility (as
defined in the Indenture) (the "Junior Lien"). All filings and other
actions necessary or desirable to perfect and protect the foregoing
security interest have been duly taken.
(iii) Pledgor is, and at the time of delivery of any Collateral to the
Trustee pursuant to Section 3 of this Agreement will be, the legal and
beneficial owner of the Collateral, free and clear of any Lien or claims of
any Person except for the lien and security interest created by this
Agreement and, in the case of the Collateral subject to the Junior Lien,
except for the lien and security interest of the Senior Credit Facility. No
effective financing statement or other instrument similar in effect
covering all or any part of the Collateral is on file in any recording
office, except such as may have been filed in favor of the Trustee relating
to this Agreement.
(iv) The Pledged Stock has been duly authorized and validly issued and
is fully paid and non-assessable.
(vi) The Pledged Stock, consisting of Capital Stock of the Issuer,
identified in Schedule I annexed hereto, constitutes the percentage of the
issued and outstanding shares of stock of the Issuer as set forth on such
schedule.
(e) This Agreement has been duly executed and delivered by Pledgor and
constitutes a legal, valid and binding obligation of Pledgor, enforceable
against
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Pledgor in accordance with its terms, except as such enforceability may be
limited by the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally or general principles of equity.
(vii) No litigation, investigation or proceeding of or before any
arbitrator or governmental authority is pending or, to the knowledge of
Pledgor, threatened by or against Pledgor with respect to this Agreement or
the Pledge of Collateral by Pledgor contemplated hereby, except in each
case for such litigations, investigations or proceedings that, singly or in
the aggregate, are not reasonably likely to result in a material adverse
effect on (i) the business, operations, properties, assets, liabilities,
net worth, condition (financial or otherwise) or prospects of Pledgor and
its consolidated subsidiaries, taken as a whole or (ii) the ability of
Pledgor to perform any of its obligations under this Agreement;
(viii) No consent of any other Person and no consent, authorization,
approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body or other Person is required
either for the pledge by Pledgor of the Collateral pursuant to this
Agreement or for the execution, delivery or performance of this Agreement
by Pledgor, (ii) the perfection or maintenance of the pledge created hereby
(including the first priority nature of such pledge except in the case of
the Junior Lien) or (iii) except as provided in Section 26, for the
exercise by the Trustee of the voting or other rights provided for in this
Agreement or the remedies in respect of the Collateral pursuant to this
Agreement (except the declaration of effectiveness by the Securities and
Exchange Commission of any registration statement filed pursuant to Section
12).
(ix) Pledgor does not directly own any shares of Capital Stock other
than the shares of Capital Stock set forth on Schedule I annexed hereto.
(x) Except with respect to this Agreement, the Pledged Stock is not
subject to any stockholder agreement, voting trust agreement or other
agreement that affects the voting or other rights of a holder of Pledged
Stock, including the ability to transfer any of the Pledged Stock.
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(xii) The principal place of business and chief executive office of
Pledgor and the office where Pledgor keeps its records concerning the
Collateral are located at
Pledgor Location
------- --------
(xiii) As of the date hereof, all information set forth herein
relating to the Collateral is accurate and complete in all respects.
(b) Acquisition represents and warrants as follows:
(i) All of the Acquisition Equipment is located at the places
specified in Section 4(a)(xi) herein beneath such Pledgor's name.
(ii) Acquisition has exclusive possession and control of the
Acquisition Equipment.
SECTION 5. Further Assurances. (a) Each Pledgor agrees that at any time and
from time to time, at the expense of such Pledgor, such Pledgor will promptly
execute and deliver or use its best efforts to cause to be executed and
delivered all further instruments and documents, and take all further action,
that may be necessary or desirable, or that the Trustee may request, in order to
perfect and protect the priority of the Trustee's security interest in the
Collateral, any pledge, assignment or security interest granted or purported to
be granted hereby or to enable the Trustee to exercise and enforce its rights
and remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, each Pledgor will execute and file such financing
or continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as the Trustee may request, in
order to perfect and preserve the pledge, assignment and security interest
granted or purported to be granted hereby.
(b) Each Pledgor hereby authorizes the Trustee to file one or more
financing or continuation statements, and amendments thereto, relating to all or
any part of the Collateral without the signature of such Pledgor where permitted
by law. A photocopy 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 furnish to the Trustee from time to time statements
and schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Trustee may reasonably request,
all in reasonable detail.
SECTION 6. As to Equipment. (a) Acquisition shall keep the Acquisition
Equipment at the places therefor specified in Section 4(a)(xi) or, upon 30
days' prior written notice to the Trustee, at such other places in a
jurisdiction where all action required by Section 5 shall have been taken with
respect to the Acquisition Equipment.
(b) Acquisition shall cause the Acquisition Equipment to be maintained and
preserved in accordance with its existing practices and shall forthwith, or in
the case of any loss or damage to any of the Acquisition Equipment as quickly as
practicable after the occurrence thereof, make or cause to be made all repairs,
replacements and other improvements in connection therewith that are necessary
or desirable to such end. Acquisition shall promptly furnish to the Trustee a
statement respecting any loss or damage to any of the Acquisition Equipment.
SECTION 7. Voting Rights; Dividends; Etc.. (a) So long as no Default or
Event of Default shall have occurred and be continuing:
(i) Each Pledgor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Pledged Stock owned by it or any
part thereof for any purpose not inconsistent with the terms of this
Agreement, the Indenture or the Notes; provided, however, that such Pledgor
shall not exercise or shall refrain from exercising any such right if such
action would be inconsistent with or violate any provisions of this
Agreement or the Indenture.
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(ii) Each Pledgor shall be entitled to receive and retain any and all
dividends paid in respect of the Collateral; provided, however, that any
and all
(A) dividends paid or payable other than in cash in respect of,
and instruments and other property received, receivable or otherwise
distributed in respect of, or in exchange for, any Collateral,
(B) dividends and other distributions paid or payable in cash in
respect of any Collateral in connection with a partial or total
liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in-surplus, and
(C) cash paid, payable or otherwise distributed in respect of
principal of, or in redemption of, or in exchange for, any Collateral
shall be, and shall be forthwith delivered to the Trustee to hold as,
Collateral and shall, if received by a Pledgor, be received in trust for
the benefit of the Trustee, be segregated from the other property or funds
of such Pledgor and be forthwith delivered to the Trustee as Collateral in
the same form as so received (with any necessary endorsement).
(iii) In order to permit a Pledgor to exercise the voting and other
rights which it is entitled to exercise pursuant to Section 6(a)(i) above
and to receive the dividends, distributions or principal payments which it
is authorized to receive and retain pursuant to Section 7(a)(ii) above, the
Trustee shall, if necessary, upon written request of Pledgor, from time to
time execute and deliver (or cause to be executed and delivered) to Pledgor
all such proxies, dividend payment orders and other instruments as Pledgor
may reasonably request.
(b) Upon the occurrence and during the continuance of a Default or an Event
of Default (but subject to Section 28 below);
(i) Upon written notice from the Trustee to a Pledgor, all rights of
such Pledgor to exercise or refrain from exercising the voting and other
consensual rights which it would otherwise be entitled to exercise pursuant
to Section 7(a)(i) above shall cease, and all such rights shall thereupon
become vested in the Trustee which shall thereupon have the sole right to
exercise such voting and other consensual rights.
(ii) All rights of a Pledgor to receive the dividends and
distributions which it would otherwise be authorized to receive and retain
pursuant to Section 7(a)(ii) above shall cease and all such rights shall
thereupon become vested in the Trustee
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who shall thereupon have the sole right to receive and hold as Collateral
such dividends and distributions.
(iii) All dividends, distributions and interest payments that are
received by a Pledgor contrary to the provisions of this Section 7 above
shall be received in trust for the benefit of the Trustee and the Holders,
shall be segregated from other property or funds of Pledgor and shall be
forthwith delivered to the Trustee as Collateral in the same form as so
received (with any necessary endorsement).
(c) In order to permit the Trustee to receive all dividends and other
distributions to which it may be entitled under Section 7(a)(ii) or 7(b)(ii)
above, or to exercise the voting and other consensual rights which it may be
entitled to exercise pursuant to Section 7(b)(i) above, each Pledgor shall, if
necessary, upon written notice from the Trustee, from time to time execute and
deliver (or cause to be executed and delivered) to the Trustee appropriate
proxies, dividend payment orders and other instruments as the Trustee may
reasonably request.
SECTION 8. Covenants. Each Pledgor covenants and agrees with the Trustee
and the Holders from and after the date of this Agreement until the Obligations
have been paid in full:
(a) Except as permitted by the Indenture, Pledgor will not (i) sell,
assign (by operation of law or otherwise) or otherwise dispose of, or grant
any option or warrant with respect to, any of the Collateral, (ii) create
or permit to exist any Lien upon or with respect to any of the Collateral,
except for the pledge and security interest under this Agreement or, in the
case of the Collateral subject to the Junior Lien, except for the lien and
security interest of the Senior Credit Facility, or (iii) transfer or
otherwise dispose of any Pledged Stock or take any corporate action to
authorize the transfer or disposition of any property or assets (other than
transfers or dispositions in the ordinary course of business) of the Issuer
to a Subsidiary, unless such Subsidiary is a Wholly Owned Restricted
Subsidiary and Pledgor promptly (and in any event within five Business Days
after such transfer or disposition) delivers to the Trustee a duly executed
pledge amendment, in substantially the form of Exhibit A hereto (a "Pledge
Amendment"), with respect to the Capital Stock of such Subsidiary owned by
Pledgor or a Subsidiary of Pledgor. Each such Subsidiary shall, upon
execution of such Pledge Amendment, be an "Issuer" hereunder. If a
Subsidiary of a Pledgor owns any such pledged Capital Stock, such
Subsidiary shall be a "Pledgor" hereunder.
(b) Pledgor agrees that it will not enter into any agreement or
understanding that purports to or may restrict or inhibit the Trustee's
rights or
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remedies hereunder, including, without limitation, the Trustee's right to
sell or otherwise dispose of the Collateral.
(c) Pledgor shall keep its principal place of business and chief
executive office and the office where it keeps its records concerning the
Collateral at the location specified in Section 4(a)(xi) above or, upon 30
days' prior written notice to the Trustee, at such other location in a
jurisdiction where all actions required by Section 5 above shall have been
taken with respect to the Collateral. Pledgor will hold and preserve such
records and will permit representatives of the Trustee at any time during
normal business hours to inspect and make copies or abstracts from such
records and chattel paper.
(d) Pledgor agrees that immediately upon becoming the beneficial owner
of any additional shares of Capital Stock, it will pledge and deliver to
the Trustee for its benefit and the ratable benefit of the Holders, a
continuing security interest in such shares of equal priority to that
previously granted to the Trustee (as well as duly executed instruments of
transfer or assignments in blank, all in form and substance satisfactory to
the Trustee). Pledgor further agrees that it will promptly (and in any
event within five Business Days after such acquisition) deliver to the
Trustee, duly executed by Pledgor, a Pledge Amendment with respect to the
additional Collateral that is to be pledged pursuant to this Agreement.
(e) Pledgor will at all times be the sole beneficial owner of the
Collateral.
Pledgor hereby authorizes the Trustee to attach each Pledge Amendment to
this Agreement and agrees that any Capital Stock listed on the Pledge Amendment
delivered to the Trustee shall for all purposes hereunder be considered "Pledged
Stock" and "Collateral".
SECTION 9. Trustee Appointed Attorney-in-Fact. In addition to all of the
powers granted to the Trustee pursuant to Article 6 of the Indenture but subject
to Section 28 below, each Pledgor hereby irrevocably appoints the Trustee such
Pledgor's attorney-in-fact, with full authority in the place and stead of
Pledgor and in the name of Pledgor or otherwise, from time to time in the
Trustee's discretion to take any action and to execute any instrument which the
Trustee may reasonably deem necessary or advisable to accomplish the purposes of
this Agreement, including, without limitation:
(a) to ask for, demand, collect, ▇▇▇ for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under or
in respect of any of the Collateral,
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(b) to receive, endorse and collect any drafts or other instruments
and documents, in connection with clause (a) above, and
(c) to file any claims or take any action or institute any proceedings
that the Trustee may deem necessary or desirable for the collection of any
of the Collateral or otherwise to enforce the rights of the Trustee with
respect to any of the Collateral.
SECTION 10. Trustee May Perform. If a Pledgor fails to perform any
agreement contained herein, the Trustee, subject to Section 28 below, may itself
perform, or cause performance of, such agreement, and the expenses of the
Trustee, including the fees and expenses of its counsel, incurred in connection
therewith shall be payable by Pledgor under Section 13 hereof.
SECTION 11. The Trustee's Duties. The powers conferred on the Trustee
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the safe
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Trustee shall have no duty as to any
Collateral, as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, lenders or other matters relative to any
Security Collateral, whether or not the Trustee or any Holder has or is deemed
to have knowledge of such matters, or as to the taking of any necessary steps
to preserve rights against any parties or any other rights pertaining to any
Collateral. The Trustee shall be deemed to have exercised reasonable care in
the custody and preservation of any Collateral in its possession if such
Collateral is accorded treatment substantially equal to that which the Trustee
accords trust property.
SECTION 12. Subsequent Changes Affecting Collateral. Each Pledgor
represents to the Trustee and the Holders that Pledgor has made its own
arrangements for keeping informed of changes or potential changes affecting the
Collateral (including, but not limited to, rights to convert, rights to
subscribe, payment of dividends, reorganization or other exchanges, tender
offers and voting rights), and Pledgor agrees that the Trustee and the Holders
shall have no responsibility or liability for informing Pledgor of any such
changes or potential changes or for taking any action or omitting to take any
action with respect thereto. Each Pledgor covenants that it will not vote or
take any other action to sell or otherwise dispose of, or grant any option, or
create or permit to exist any Lien upon or, with respect to any of the
Collateral except with respect to Collateral released from this Agreement
pursuant to Section 23 of this Agreement or sales of Collateral in accordance
with this Agreement and the Indenture. Each Pledgor will defend the right, title
and interest of the Trustee and the Holders in and to the Collateral against the
claims and demands of all Persons.
SECTION 13. Remedies Upon Default. If any Event of Default shall have
occurred and be continuing (but subject to Section 28 below):
(a) (i) The Trustee and the Holders 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
upon default under the Code, and the Trustee may also in its sole
discretion, (i) require Acquisition to, and Acquisition hereby agrees that
it will, at its expense and upon request of the Trustee forthwith, assemble
all or part of the Collateral as directed by the Trustee and make it
available to the Trustee at a place to be designated by the Trustee that
is reasonably convenient to both parties, and (ii) 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 of the Trustee's offices or
elsewhere, for cash, on credit or for future delivery, and at such price or
prices and upon such other terms and otherwise in such manner as the
Trustee may deem commercially reasonable, irrespective of the impact of any
such sales on the
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market price of the Collateral. Each purchaser at any such sale shall hold
the property sold absolutely free from any claim, encumbrance or right on
the part of a Pledgor, and, with respect to any such Collateral sold upon
default, Pledgor hereby waives (to the extent permitted by law) all rights
of redemption, stay and or appraisal which it now has or may at any time in
the future have under any rule of law or statute now existing or hereafter
enacted. Each Pledgor agrees that, to the extent notice of sale shall be
required by law, at least ten days' notice to Pledgor of the time and place
of any public sale or the time after which any private sale is to be made
shall constitute reasonable notification. The Trustee shall not be
obligated to make any sale of Collateral regardless of notice of sale
having been given. The Trustee 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. Each Pledgor hereby waives any claims against the Trustee
arising by reason of the fact that the price at which any Collateral may
have been sold at such a private sale was less than the price which might
have been obtained at a public sale, even if the Trustee accepts the first
offer received and does not offer such Collateral to more than one offeree.
(ii) Each Pledgor recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended (the "Securities Act"),
and applicable state securities laws, the Trustee may be compelled, with
respect to any sale of all or any part of the Collateral, to limit
purchasers to those who will agree, among other things, to acquire the
Collateral for their own account, for investment and not with a view to the
distribution or resale thereof. Each Pledgor acknowledges that any such
private sales may be at prices and on terms less favorable to the Trustee
than those obtainable through a public sale without such restrictions
(including, without limitation, a public offering made pursuant to a
registration statement under the Securities Act), and, notwithstanding such
circumstances, agrees that any private sale shall be deemed to have been
made in a commercially reasonable manner and that the Trustee shall have no
obligation to engage in public sales and no obligation to delay the sale of
any Collateral for the period of time necessary to permit the Issuer to
register it for a form of public sale requiring registration under the
Securities Act or under applicable state securities laws, even if Pledgor
would agree to do so.
(b) If the Trustee determines to exercise its right to sell any or all
of the Collateral, upon written request, each Pledgor shall and shall use
its best efforts to furnish to the Trustee all such information as the
Trustee may request in order to determine the number of shares and other
instruments included in the Collateral which may be sold by the Trustee as
exempt transactions under the Securities Act and the rules of Securities
and Exchange Commission thereunder, as the same are from time to time in
effect.
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(c) The Trustee may exercise any and all rights and remedies of a
Pledgor in respect of the Collateral, including, without limitation, any
and all of the rights of a Pledgor to demand or otherwise require payment
of any amount under, or performance of any provision of, the Indenture.
(d) All payments received by a Pledgor in respect of the Collateral
shall be received in trust for the benefit of the Trustee, shall be
segregated from other funds of such Pledgor and shall be forthwith paid
over to the Trustee in the same form as so received (with any necessary
endorsement).
SECTION 14. Registration Rights. If the Trustee shall determine to exercise
its rights to sell all or any of the Pledged Stock pursuant to Section 13 above,
each Pledgor agrees that, upon request of the Trustee, Pledgor will, at its own
expense, take all corporate action which it is able to take to cause the Issuer
to:
(a) execute and deliver, and cause its directors and officers to
execute and deliver, all such instruments and documents, and do or cause to
be done all such other acts and things, as may be necessary or, in the
opinion of the Trustee, advisable to register such Pledged Stock under the
provisions of the Securities Act, 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 prospectus that, in
the opinion of the Trustee, 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;
(b) use its best efforts to qualify the Pledged Stock under the state
securities or "Blue Sky" laws and to obtain all necessary governmental
approvals for the sale of the Collateral, as requested by the Trustee;
(c) make available to its security holders, as soon as practicable, an
earnings statement that will satisfy the provisions of Section 11(a) of the
Securities Act; and
(d) 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.
The Trustee is authorized, in connection with any sale of the Collateral
pursuant to Section 13 of this Agreement, to deliver or otherwise disclose to
any prospective purchaser of the Collateral (i) any registration statement or
prospectus, and all supplements and amendments thereto, prepared pursuant to
clause (a) above and (ii) any other information
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(which has not been provided by Pledgor on a confidential basis) in its
possession relating to the Collateral.
SECTION 15. Application of Proceeds. After and during the continuance of an
Event of Default, any cash held by the Trustee as Collateral and all cash
proceeds received by the Trustee (all such cash being "Proceeds") in respect of
any sale of, collection from, or other realization upon all or any part of the
Collateral pursuant to the exercise by the Trustee of its remedies as a secured
creditor as provided in Section 13 of this Agreement shall be applied promptly
from time to time by the Trustee as follows:
First, to the payment of the costs and expenses of such sale,
collection or other realization, including reasonable compensation to the
Trustee and its agents and counsel, and all expenses, liabilities and
advances made or incurred by the Trustee and its agents and counsel in
connection therewith;
Second, to the payment of the Secured Obligation in accordance with
Section 506 of the Indenture;
Third, to the payment of any other Obligations; and
Fourth, after payment in full of all Obligations, to a Pledgor, or its
successors or assigns, 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.
SECTION 16. Indemnity and Expenses. (a) The Pledgors agree to indemnify
the Trustee from and against any and all claims, losses and liabilities growing
out of or resulting from this Agreement (including, without limitation,
enforcement of this Agreement, except claims, losses, or liabilities resulting
from the Trustee's negligence or wilful misconduct as determined by a final
judgment of a court of competent jurisdiction.
(b) Each Pledgor will upon demand pay to the Trustee the amount of any and
all reasonable expenses, including the reasonable fees, expenses and
disbursements of its counsel and of any experts and agents, which the Trustee
may incur in connection with (i) the administration of this Agreement, (ii) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of the Trustee or the Holders hereunder or (iv) the failure by
a Pledgor to perform or observe any of the provisions hereof.
SECTION 17. Security Interest Absolute. The obligations of each Pledgor
under this Agreement are independent of the Secured Obligations, and a separate
action or actions may be brought and prosecuted against each Pledgor to enforce
this Agreement, irrespective of whether any action is brought against any other
Pledgor or whether any other Pledgor is joined in any such action or actions.
All rights of the Trustee and the Holders and security interests hereunder, and
all obligations of a Pledgor hereunder, shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of the Indenture or any
other agreement or instrument relating thereto;
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(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 the Indenture;
(c) any taking, exchange, surrender, release or non-perfection of any
Liens on any other collateral, or any taking, release or amendment or
waiver of or consent to departure from any guarantee, for all or any of the
Secured Obligations; or
(d) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, a Pledgor in respect of the Obligations or
of this Agreement.
SECTION 19. Amendments, Waivers and Consents. No amendment or waiver of
any provision of this Agreement, and no consent to any departure by any Pledgor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Trustee, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given. Any
amendment or waiver of any provision of this Agreement and any consent to any
departure by a Pledgor from any provision of this Agreement shall be effective
only if made or given in compliance with all of the terms and provisions of the
Indenture and neither the Trustee nor any Holder shall be deemed, by any act,
delay, indulgence, omission or otherwise, to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. Failure of the Trustee or any
Holder to exercise, or delay in exercising, any right, power or privilege
hereunder shall not operate as a waiver thereof. No single or partial exercise
of any right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. A
waiver by the Trustee or any Holder of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy that the Trustee
or such Holder would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or concurrently
and are not exclusive of any rights or remedies provided by law.
SECTION 20. Addresses for Notices. All notices and other communications
provided for hereunder shall be in the form and manner, and delivered to each of
the parties hereto at their respective addresses, as set forth or provided for
in Section 106 of the Indenture.
SECTION 18. Concerning the Trustee.
(a) Pursuant to Section 512 of the Indenture, the Holders shall have the
right, by one or more instruments in writing executed and delivered to the
Trustee, to direct the time, method and place of conducting any proceeding for
any right or remedy available to the Trustee, or of exercising any trust or
power conferred on the Trustee, or for the appointment of a receiver, or to
direct the taking or the refraining from taking of any action authorized by this
Agreement; provided that (i) such direction shall not conflict with the
provisions of any law or of this Agreement or the Indenture, (ii) the Trustee
shall
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be adequately secured and indemnified as provided in the Indenture and (iii)
such direction does not involve the Trustee in personal liability and is not
unjustly prejudicial to the Holders not consenting. Nothing in this Section
20(a) shall impair the right of the Trustee in its discretion to take any action
or omit to take any action which it deems proper and which is not inconsistent
with such direction. The Trustee shall have no duty to take or refrain from
taking any action unless explicitly required herein.
(b) The Trustee shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral in its possession if the Collateral
is accorded treatment substantially equivalent to that which the Trustee, in its
individual capacity, accords its own similar property in similar situations, it
being understood that neither the Trustee nor any Holder shall have
responsibility for (a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not the Trustee has or is deemed to have knowledge of
such matters, or (b) taking any necessary steps (other than steps taken in
accordance with the standard of care set forth above to maintain possession of
the Pledged Stock) to preserve rights against any Person with respect to any
Collateral.
(c) The Trustee shall not be responsible in any manner whatsoever for the
correctness of any recitals, statements, representations or warranties herein,
all of which are made solely by Pledgors. The Trustee makes no representations
as to the value or condition of the Collateral or any part thereof, or as to the
title of a Pledgor thereto or as to the security afforded by this Agreement, or
as to the validity, execution (except the Trustee's own execution),
enforceability, legality or sufficiency of this Agreement, and the Trustee shall
incur no liability or responsibility in respect of any such matters.
(d) Notwithstanding any other provision of this Agreement, the Trustee
shall not, in its individual capacity, be personally liable for any action taken
or omitted to be taken by it in accordance with this Agreement except for its
own gross negligence or willful misconduct.
(e) The Trustee shall have the same rights with respect to any obligation
secured hereunder held by it as any other secured party and may exercise such
rights as though it were not the Trustee hereunder, and may accept deposits
from, lend money to, and generally engage in any kind of banking or trust
business with a Pledgor as if it were not the Trustee.
(f) For purposes of this Agreement, in the performance of the duties and
obligations hereunder the Trustee shall be entitled to the benefits of the terms
and provisions of Article Six of the Indenture.
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SECTION 21. Termination. Subject to Section 22 of this Agreement, when all
the Secured Obligations have been indefeasibly paid in full in accordance with
the terms of the Indenture, this Agreement shall terminate, and the Trustee
shall, upon the written request and at the expense of Pledgors, forthwith
assign, transfer and deliver, against receipt and without recourse to the
Trustee, such of the Collateral as shall not have been sold or otherwise applied
pursuant to the terms hereof to or on the order of Pledgors.
SECTION 22. Continuing Security Interest; Transfer of Notes. This Agreement
shall create a continuing security interest in the Collateral and shall, unless
otherwise provided in the Indenture or this Agreement, (a) remain in full force
and effect until indefeasible payment in full is made of all Obligations in
accordance with the terms of the Indenture, (b) be binding upon Pledgors, its
successors and assigns, and (c) inure, together with the rights and remedies of
the Trustee hereunder, to the benefit of the Trustee, the Holders and each of
their respective successors, transferees and assigns.
SECTION 23. Separability Clause. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 24. Reinstatement. This Agreement shall continue to be effective or
be reinstated if at any time any amount received by the Trustee or any Holder in
respect of the Obligations is rescinded or must otherwise be restored or
returned by the Trustee or any Holder upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of a Pledgor or upon the appointment
of any receiver, intervenor, conservator, trustee or similar official for a
Pledgor or any substantial part of its assets, or otherwise, all as though such
payments had not been made.
SECTION 25. Governing Law; Terms. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, except to the
extent that the validity or perfection of the security interest hereunder, or
remedies hereunder, in respect of any particular Collateral are governed by the
laws of a jurisdiction other than the State of New York. Unless otherwise
defined herein or in the Indenture, terms defined in Articles 8 and 9 of the
Uniform Commercial Code as in effect in the State of New York are used herein as
therein defined.
SECTION 26. Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures thereto and hereto were
upon the same instrument.
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SECTION 27. GOVERNMENTAL APPROVALS, ETC. THE TRUSTEE ACKNOWLEDGES THAT IN
CONNECTION WITH ANY EXERCISE BY THE TRUSTEE OF ITS RIGHTS HEREUNDER IT MAY BE
NECESSARY TO OBTAIN THE PRIOR CONSENT OR APPROVAL OF CERTAIN GOVERNMENTAL
AUTHORITIES, INCLUDING, WITHOUT LIMITATION, THE FEDERAL COMMUNICATIONS
COMMISSION ("FCC"). NOTHING IN THIS AGREEMENT SHALL INTERFERE WITH EACH
PLEDGORS' OR EACH LICENSEE'S OBLIGATION TO CONTROL AND OPERATE ITS BUSINESS AS
REQUIRED BY THE FEDERAL COMMUNICATIONS ACT OF 1934, AS AMENDED, AND THE RULES
AND REGULATIONS PROMULGATED THEREUNDER. THE TRUSTEE SHALL NOT TAKE ANY ACTION
PURSUANT TO THIS AGREEMENT THAT WOULD CONSTITUTE OR RESULT IN AN ASSIGNMENT OR
TRANSFER OF CONTROL OF ANY FCC LICENSE, PERMIT OR AUTHORIZATION WITHOUT
OBTAINING THE PRIOR CONSENT OF THE FCC THERETO.
PRIOR TO THE EXERCISE BY THE TRUSTEE OF ANY POWER, RIGHT, PRIVILEGE OR REMEDY
PURSUANT TO THIS AGREEMENT WHICH REQUIRES ANY CONSENT, APPROVAL, REGISTRATION,
QUALIFICATION OR AUTHORIZATION OF ANY GOVERNMENTAL AUTHORITY OR INSTRUMENTALITY,
EACH PLEDGOR WILL EXECUTE AND DELIVER, OR WILL CAUSE THE EXECUTION AND DELIVERY
OF, ALL APPLICATIONS, CERTIFICATES, INSTRUMENTS AND OTHER DOCUMENTS AND PAPERS
THAT THE TRUSTEE MAY BE REQUIRED TO OBTAIN FOR SUCH FCC OR OTHER GOVERNMENTAL,
CONSENT, APPROVAL, REGISTRATION, QUALIFICATION OR AUTHORIZATION AND WILL USE
THEIR BEST EFFORTS TO ASSIST THE TRUSTEE TO OBTAIN SUCH CONSENT, APPROVAL,
REGISTRATION, QUALIFICATION OR AUTHORIZATION.
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IN WITNESS WHEREOF, Pledgors and the Trustee have each caused this
Agreement to be duly executed and delivered by its officer thereunto duly
authorized as of the date first above written.
PLEDGORS:
SHOP AT HOME, INC.
By: _______________________________
Title:
BROADCAST, CABLE AND SATELLITE
TECHNOLOGIES, INC.
By: _______________________________
Title:
SAH ACQUISITION CORPORATION II
By: _______________________________
Title:
Notice Address of Pledgors:
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ______________________
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TRUSTEE:
PNC BANK, NATIONAL ASSOCIATION
as Trustee
By: ______________________________
Title:
Notice Address of Trustee:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department
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SCHEDULE I
PLEDGED STOCK
PLEDGED STOCK OWNED AND PLEDGED BY SHOP AT HOME, INC.
Percentage of
Capital Stock of
Jurisdiction of Subsidiary Owned
Name of Subsidiary of SAH Incorporation Share Certificate Numbers by SAH
-------------------------- --------------- ------------------------- -----------------
SAH Acquisition Corporation Tennessee #1 -- 1000 shares 100%
II
Broadcast, Cable and Satellite Texas #3 -- 1000 shares 100%
Technologies, Inc.
MFP, Inc. Tennessee #1,2 -- 1000 shares 100%
PLEDGED STOCK OWNED AND PLEDGED BY BROADCAST, SATELLITE & CABLE
TECHNOLOGIES, INC.
Percentage of
Capital Stock of
Jurisdiction of Subsidiary Owned
Name of Subsidiary of BCST Incorporation Share Certificate Numbers by BCST
-------------------------- --------------- ------------------------- -----------------
Urban Broadcasting Systems, Texas #3 -- 490 shares 100%
Inc. #4 -- 510 shares
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EXHIBIT A
Pledge Amendment
This Pledge Amendment, dated ________________, 19__, is delivered pursuant
to Section 7 of the Pledge Agreement referred to below. The undersigned hereby
pledges to the Trustee for its benefit and the ratable benefit of the Holders,
and grants to the Trustee for its benefit and the ratable benefit of the
Holders, a continuing security interest in all of its right, title and interest
in the Capital Stock listed below.
The undersigned hereby agrees that this Pledge Amendment may be attached to
the Security and Pledge Agreement dated as of March ___, 1998 (the "Pledge
Agreement"), between the undersigned and PNC Bank, National Association, a
national banking association, Trustee, capitalized terms used herein and not
otherwise defined herein shall have the meanings given to such terms in the
Pledge Agreement; and the Collateral listed on this Pledge Amendment shall be
deemed to be part of the Collateral, and shall become part of the Collateral and
shall secure all Obligations.
-------------------------------------
By:
----------------------------------
Name:
Title:
Pledged Shares
--------------
Number of Share
Pledged Certificate Percentage of
Issuer Shares Numbers Outstanding
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