STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Agreement"), dated as of
December _, 1998, is entered into between NATIONAL MEDIA CORPORATION, a Delaware
corporation ("Pledgor"), and FOOTHILL CAPITAL CORPORATION, a California
corporation ("Secured Party"), with reference to the following:
WHEREAS, 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, Pledgor
desires 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 Pledgor is deemed
located pursuant to ss.9103(3)(d) of the Code.
"COLLATERAL" shall mean the Pledged Shares, the Future Rights,
and the Proceeds, collectively.
"EARTHLINK STOCK" shall have the meaning ascribed thereto in
the Security Agreement.
"FUTURE RIGHTS" shall mean: (a) all shares of stock (other
than Pledged Shares) of the Issuers, and all securities convertible or
exchangeable into, and all warrants, options, or other rights to purchase,
shares of stock of the Issuers; (b) to the extent of Pledgor's interest therein,
all shares of, all securities convertible or exchangeable into, and all
warrants,
options, or other rights to purchase shares of stock of any Person in which
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" shall have the meaning ascribed to
it in the Security Agreement.
"PLEDGED SHARES" shall mean all of the shares
identified as Pledged Shares on SCHEDULE A attached hereto (or any addendum
thereto).
"PLEDGOR" 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 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 ss.8313(2) of the
Code or otherwise); (b) "proceeds," as such term is used in ss.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 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
2
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, the other Loan Documents, or this Agreement, irrespective of whether
for the payment of money, whether direct or indirect, absolute or contingent,
due or to become due, voluntary or involuntary, whether now existing or
hereafter arising, and including all interest (including interest that accrues
after the filing of a case under the Bankruptcy Code) and any and all costs,
fees (including attorneys fees), and expenses which 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.
(ii) Neither this Agreement nor any
uncertainty or ambiguity herein shall be
construed or resolved against Secured
Party or Pledgor, whether under any rule
of construction or otherwise. On the
contrary, this Agreement has been
reviewed by both of the parties and
their respective counsel and shall be
construed and interpreted according to
the ordinary meaning of the words used
so as to fairly accomplish the purposes
and intentions of the parties hereto.
3
(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.
"SECURITY AGREEMENT" means that certain Security
Agreement, dated as of the date hereof, between Pledgor and Secured Party.
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 Pledgor pursuant hereto shall at any time have earnings and profits which,
because of such pledge, will result in taxable income to 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 Pledgor pursuant to IRC Section 952, and
(ii) deliver to 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
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 Pledgor shall
at any time be merged into any other wholly owned Subsidiary of Pledgor, or
shall be dissolved, then, in either case, upon delivery to Secured Party of
evidence, reasonably acceptable to Secured Party, of such merger or dissolution,
Secured Party shall deliver to 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 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 shall be
accompanied by duly executed instruments of transfer or assignment in blank, all
in form and substance satisfactory to Secured Party; PROVIDED, HOWEVER, that the
Earthlink Stock need not be delivered by Pledgor to Secured Party so long as the
Earthlink Stock is subject to a Permitted Lien and is in the possession of the
creditor having such Permitted Lien.
(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 Pledgor, to transfer to or to register on the
books of the Issuers (or of any other Person
4
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
Pledgor (a "Holder"), then 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
ss.ss.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 Pledgor
shall be so received or held in trust for Secured Party, shall be segregated
from other funds and property of 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 Pledgor,
if and to the extent they are not prohibited by the Loan Agreement, may be
retained by 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 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, 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 Pledgor to receive and retain cash dividends
or distributions that it would otherwise be entitled to exercise or 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. 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
5
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 Pledgor to exercise the voting and other consensual
rights 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. 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. Pledgor represents, warrants,
and covenants, in each case, to the best of its knowledge, information, and
belief, as follows:
(a) 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 Pledgor agrees that Secured Party 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;
(b) All information herein or hereafter supplied to
Secured Party by or on behalf of 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) Pledgor is and will be the sole legal and
beneficial owner of the Collateral (including the Pledged Shares and all other
Collateral acquired by 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 and Liens in favor of Secured Party;
(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 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 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;
6
(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) Pledgor agrees that from time to time, at the
expense of Pledgor, 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, Pledgor will: (i) at the request of Secured Party, ▇▇▇▇ 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 Pledgor's title to
or Secured Party's security interest in the Collateral.
(b) 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 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) Pledgor will promptly furnish to Secured Party,
upon the request of Secured Party: (i) a certificate executed by an authorized
officer of 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 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.
7. COVENANTS OF PLEDGOR. Pledgor shall:
(a) Perform each and every covenant in the Loan
Documents applicable to 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;
7
(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 Pledgor; and
(d) Upon receipt by 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 Pledgor.
8. SECURED PARTY AS PLEDGOR'S ATTORNEY-IN-FACT.
(a) Pledgor hereby irrevocably appoints Secured Party
as Pledgor's attorney-in-fact, with full authority in the place and stead of
Pledgor and in the name of 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 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 Pledgor's attorney-in-fact in SUBSECTION (A), Pledgor hereby irrevocably
appoints Secured Party as 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 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:
(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, in
accordance with the Security Agreement and as otherwise specified below, sell
the Collateral or any part thereof in one or more parcels at public or private
sale, at any exchange, broker's board or at any of Secured Party's offices or
elsewhere, for cash, on credit or for future delivery, at such time or times and
at such price or prices and upon such other terms as Secured Party may deem
commercially reasonable, irrespective of the impact of any such sales on the
market price of the Collateral. To the maximum extent permitted by applicable
law, Secured Party may be the purchaser of any or all of the Collateral at any
such sale and shall be entitled,
8
for the purpose of bidding and making settlement or payment of the purchase
price for all or any portion of the Collateral sold at any such public sale, to
use and apply all or any part of the Secured Obligations as a credit on account
of the purchase price of any Collateral payable at such sale. Each purchaser at
any such sale shall hold the property sold absolutely free from any claim or
right on the part of Pledgor, and Pledgor hereby waives (to the extent permitted
by law) all rights of redemption, stay, or appraisal that it now has or may at
any time in the future have under any rule of law or statute now existing or
hereafter enacted. 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, 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.
(b) 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.
(c) 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. 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. Pledgor has no objection to sale in
such a manner and agrees that Secured Party shall have no obligation to obtain
the maximum possible price for the Collateral. Without limiting the generality
of the foregoing, 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.
(d) If Secured Party shall determine to exercise its
right to sell all or any portion of the Collateral pursuant to this Section,
Pledgor agrees that, upon request of Secured Party, Pledgor will, at its own
expense:
9
(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;
(iii) cause the Issuers to make available to
their respective security holders, as
soon as practicable, an earnings
statement which will satisfy the
provisions of Section 11(a) of the
Securities Act;
(iv) execute and deliver, or cause the
officers and directors of the Issuers to
execute and deliver, to any person,
entity or governmental authority as
Secured Party may choose, any and all
documents and writings which, in Secured
Party's reasonable judgment, may be
necessary or appropriate for approval,
or be required by, any regulatory
authority located in any city, county,
state or country where Pledgor or the
Issuers engage in business, in order to
transfer or to more effectively transfer
the Pledged Shares or otherwise enforce
Secured Party's rights hereunder; and
(v) do or cause to be done all such other
acts and things as may be necessary to
make such sale of the Collateral or any
part thereof valid and binding and in
compliance with applicable law.
Pledgor acknowledges that there is no adequate remedy at law for failure by it
to comply with the provisions of this Section and that such failure would not be
adequately compensable in damages, and therefore agrees that its agreements
contained in this Section may be specifically enforced.
10
(e) 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 with respect to the
Collateral or any responsibility for taking any necessary steps to preserve
rights against any Persons with respect to any Collateral.
12. CHOICE OF LAW AND VENUE. THE VALIDITY OF THIS AGREEMENT, ITS
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT, AND THE RIGHTS OF THE PARTIES
HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CALIFORNIA. THE PARTIES AGREE THAT ALL ACTIONS OR
PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA OR, AT THE SOLE OPTION OF SECURED PARTY, IN ANY
OTHER COURT IN WHICH SECURED PARTY SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS
AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY. EACH
OF PLEDGOR AND SECURED PARTY WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE
LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR
TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH
THIS SECTION 12.
13. AMENDMENTS; ETC. No amendment or waiver of any provision of
this Agreement nor consent to any departure by 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
11
Obligations preclude any other or further exercise thereof or the exercise of
any other right. The remedies provided for in this Agreement or otherwise with
respect to any of the Secured Obligations are cumulative and not exclusive of
any remedies provided by law.
14. NOTICES. Unless otherwise specifically provided herein, any
notice or other communication herein required or permitted to be given shall be
in writing and shall be delivered in the manner set forth in the Loan Agreement.
15. CONTINUING SECURITY 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 Pledgor and its
successors and assigns; and (iii) inure to the benefit of Secured Party and its
successors, transferees, and assigns. Upon the indefeasible payment in full of
the Secured Obligations, including the cash collateralization, expiration, or
cancellation of all Secured Obligations, if any, consisting of letters of
credit, and the full and final termination of any commitment to extend any
financial accommodations under the Loan Agreement, the security interests
granted herein shall automatically terminate and all rights to the Collateral
shall revert to Pledgor. Upon any such termination, Secured Party will, at
Pledgor's expense, execute and deliver to Pledgor such documents as Pledgor
shall reasonably request to evidence such termination. Such documents shall be
prepared by 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 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, Pledgor.
To the maximum extent permitted by law, Pledgor hereby waives any right to
require Secured Party to: (A) proceed against or exhaust any security held from
Pledgor; or (B) pursue any other remedy in Secured Party's power whatsoever.
12
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
20. WAIVER OF MARSHALING. Each of 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. Pledgor and Secured
Party waive any right to require the marshaling of any of the Collateral.
21. WAIVER OF JURY TRIAL.
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. PLEDGOR AND SECURED PARTY REPRESENT THAT EACH
HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
22. WAIVERS.
(a) To the maximum extent permitted by law, 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 Pledgor's right to make inquiry of Secured
Party to ascertain the amount of the Obligations at any reasonable time; (iv)
notice of
13
any adverse change in the financial condition of Borrower or of any other fact
that might increase 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 Pledgor under this Agreement) and demands
to which Pledgor might otherwise be entitled.
(b) To the fullest extent permitted by applicable
law, 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. 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, Pledgor
hereby waives: (i) any rights to assert against Secured Party any defense (legal
or equitable), set-off, counterclaim, or claim which 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 ▇▇.▇▇. 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 Pledgor's liability
hereunder or the enforcement thereof.
(d) To the maximum extent permitted by law, Pledgor
hereby waives any right of subrogation Pledgor has or may have as against
Borrower with respect to the Secured Obligations. In addition, 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. Pledgor also hereby waives any right to
proceed or to seek recourse against or with respect to any property or asset of
Borrower. Pledgor hereby agrees that, in light of the waivers contained in this
Section, 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 Pledgor hereunder.
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,
14
reimbursement, contribution, or indemnity of Pledgor against Borrower or
guarantors or sureties, and (b) absent the waiver given by Pledgor herein, such
an election might estop Secured Party from enforcing this Agreement against
Pledgor. Understanding the foregoing, and understanding that Pledgor is hereby
relinquishing a defense to the enforceability of this Agreement, 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. Pledgor understands that the effect of the foregoing
waiver may be that Pledgor may have liability hereunder for amounts with respect
to which Pledgor may be left without rights of subrogation, reimbursement,
contribution, or indemnity against Borrower or guarantors or sureties. 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 Pledgor's liability under this Agreement.
23. WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR
OTHER PROVISION SET FORTH IN THIS AGREEMENT, PLEDGOR HEREBY WAIVES, TO THE
MAXIMUM EXTENT SUCH WAIVER IS PERMITTED BY LAW, ANY AND ALL DEFENSES ARISING
DIRECTLY OR INDIRECTLY UNDER ANY ONE OR MORE OF CALIFORNIA CIVIL CODE ▇▇.▇▇.
2808, 2809, 2810, 2815, 2819, 2820, 2821, 2838, 2839, 2845, 2848, 2849, AND
2850, TO THE EXTENT APPLICABLE, CALIFORNIA CODE OF CIVIL PROCEDURE ▇▇.▇▇. 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, 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 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 Pledgor, other than Borrower, 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]
15
IN WITNESS WHEREOF, Pledgor 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.
NATIONAL MEDIA CORPORATION, a
Delaware corporation
By
Title:
FOOTHILL CAPITAL CORPORATION,
a California corporation
By
----------------------------------------
Title:
--------------------------------------
S-1
SCHEDULE A
TO
STOCK PLEDGE AGREEMENT
Pledgor: NATIONAL MEDIA CORPORATION
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: NATIONAL MEDIA CORPORATION, a Delaware corporation
Address of Chief Executive Office:
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
SCHEDULE C
TO
STOCK PLEDGE AGREEMENT
Existing Future Rights and Proceeds: [None.]