Exhibit 10.5
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Agreement"), dated as of
December , 1998, is entered into between QUANTUM NORTH AMERICA, INC., 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, Pledgor 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 Pledgor;
WHEREAS, to induce Secured Party to make the financial
accommodations provided to Pledgor pursuant to the Loan Agreement, Pledgor
desires to pledge, grant, transfer, and assign to Secured Party 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.
(a) 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.
"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.
"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
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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.
"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
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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 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 Pledgor to Secured Party of any kind or description arising
out of or outstanding under, advanced or issued pursuant to, or evidenced by the
Loan Agreement, the other Loan Documents, or this Agreement, irrespective of
whether for the payment of money, whether direct or indirect, absolute or
contingent, due or to become due, voluntary or involuntary, whether now existing
or hereafter arising, and including all interest (including interest that
accrues after the filing of a case under the Bankruptcy Code) and any and all
costs, fees (including attorneys fees), and expenses which Pledgor 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.
(b) CONSTRUCTION.
(i) Unless the context of
this Agreement clearly requires otherwise, references to the plural include the
singular and to the singular include the plural, the part includes the whole,
the term "including" is not limiting, and the term "or" has, except where
otherwise indicated, the inclusive meaning represented by the phrase "and/or."
The words "hereof," "herein," "hereby," "hereunder," and other similar terms in
this Agreement refer to this Agreement as a whole and not exclusively to any
particular provision of this Agreement. Article, section, subsection, exhibit,
and schedule references are to this Agreement unless otherwise specified. All of
the exhibits or schedules attached to this Agreement shall be deemed
incorporated herein by reference. Any reference to any of the following
documents includes any and all alterations, amendments, restatements,
extensions, 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.
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.
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(iii) In the event of any
direct conflict between the express terms and provisions of this Agreement and
of the Loan Agreement, the terms and provisions of the Loan Agreement shall
control.
2. PLEDGE.
(a) As security for the prompt payment and
performance of the Secured Obligations in full by Pledgor 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 wholly owned Subsidary 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 satisfactory 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
(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 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
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Collateral for Secured Party, all pursuant to 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 instruments as Secured Party may reasonably request for the
purpose of enabling Secured Party to receive the dividends and distributions
that it is entitled to receive and retain pursuant to the preceding sentence.
(c) Upon the occurrence and during the
continuance of an Event of Default in respect of which Secured Party has
accelerated the Obligations, all rights of Pledgor to exercise the voting and
other consensual rights that it would otherwise be entitled to exercise pursuant
to SECTION 4(A) shall cease, and all such rights shall thereupon become vested
in Secured Party, who shall thereupon have the sole right to exercise such
voting or other consensual rights. Pledgor shall execute and deliver (or cause
to be executed and
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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 party other than
Liens in favor of Secured Party;
(d) This Agreement, and the delivery to
Secured Party, or its designee, 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;
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(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 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:
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(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;
(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;
(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; and
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.
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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 without
notice (except as specified below) sell the Collateral or any part thereof in
one or more parcels at public or private sale, at any exchange, broker's board
or at any of Secured Party's offices or elsewhere, for cash, on credit or for
future delivery, at such time or times and at such price or prices and upon such
other terms as Secured Party may deem commercially reasonable, irrespective of
the impact of any such sales on the market price of the Collateral. To the
maximum extent permitted by applicable law, Secured Party may be the purchaser
of any or all of the Collateral at any such sale and shall be entitled, for the
purpose of bidding and making settlement or payment of the purchase price for
all or any portion of the Collateral sold at any such public sale, to use and
apply all or any part of the Secured Obligations as a credit on account of the
purchase price of any Collateral payable at such sale. Each purchaser at any
such sale shall hold the property sold absolutely free from any claim or right
on the part of Pledgor, and Pledgor hereby waives (to the extent permitted by
law) all rights of redemption, stay, or appraisal that it now has or may at any
time in the future have under any rule of law or statute now existing or
hereafter enacted. Pledgor agrees that, to the extent notice of sale shall be
required by law, at least ten (10) calendar days notice to Pledgor of the time
and place of any public sale or the time after which a private sale is to be
made shall constitute reasonable notification. Secured Party shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. Secured Party may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. To the maximum extent permitted by law, 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
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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:
(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
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reasonable judgment, may be necessary or appropriate for approval, or be
required by, any regulatory authority located in any city, county, state or
country where Pledgor or the Issuers engage in business, in order to transfer or
to more effectively transfer the Pledged Shares or otherwise enforce Secured
Party's rights hereunder; and
(v) do or cause to be done all
such other acts and things as may be necessary to make such sale of the
Collateral or any part thereof valid and binding and in compliance with
applicable law.
Pledgor acknowledges that there is no adequate remedy at law for failure by it
to comply with the provisions of this Section and that such failure would not be
adequately compensable in damages, and therefore agrees that its agreements
contained in this Section may be specifically enforced.
(e) 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
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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 JURISDICTION IN WHICH THE COLLATERAL IS LOCATED
IN CONNECTION WITH THE EXERCISE OF SECURED PARTY'S RIGHTS AND REMEDIES AS A
SECURED CREDITOR WITH RESPECT TO SUCH COLLATERAL. 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 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
12
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.
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
13
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.
[signature page to follow]
14
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.
FOOTHILL CAPITAL CORPORATION,
a California corporation
By
----------------------------------
Title:
------------------------------
QUANTUM NORTH AMERICA, INC.,
a Delaware corporation
By
----------------------------------
Title:
------------------------------
S-1
SCHEDULE A
TO
STOCK PLEDGE AGREEMENT
Pledgor: Quantum North America, Inc.
PLEDGED SHARES
Former Name, if Pledgor's
Number of Certificate any, in which Percentage Jurisdiction of
Issuer Shares Class Number(s) Certificate Issued Ownership Incorporation
------ ------ ----- --------- ----------------- --------- -------------
SCHEDULE B
TO
STOCK PLEDGE AGREEMENT
Pledgor: QUANTUM NORTH AMERICA, INC.,
a Delaware corporation
Address of Chief Executive Office:
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
SCHEDULE C
TO
STOCK PLEDGE AGREEMENT
Existing Future Rights and Proceeds