BORROWERS PLEDGE AGREEMENT
BORROWERS PLEDGE AGREEMENT, dated as of January 31, 1989, as amended and
restated through July 31, 1995, made by REX RADIO AND TELEVISION, INC., an Ohio
corporation ('Rex Radio'), KELLY & COHEN APPLIANCES, INC., an Ohio Corporation
('Kelly'), STEREO TOWN, INC., a Georgia corporation ('Stereo Town'), and REX
KANSAS, INC., a Kansas corporation ('Rex Kansas' and together with Rex Radio,
Kelly and Stereo Town, each a 'Pledgor' and, jointly and severally, the
'Pledgors'), and NATWEST BANK N.A. ('NatWest'), as agent (in such capacity,
referred to herein as 'Secured Party') for the several banks and other financial
institutions (the 'Lenders') from time to time parties to the Amended and
Restated Loan Agreement dated as of July 31, 1995 (as it may be further
amended, modified or supplemented from time to time, the 'Loan Agreement'; terms
used herein and not otherwise defined herein shall have the meanings assigned
thereto in the Loan Agreement).
WHEREAS, Rex Radio, Kelly, Stereo Town and NatWest USA Credit Corp. (in
such capacity, the 'Original Lender') entered into several Loan Agreements, each
dated as of January 31, 1989, and Rex Kansas and the Original Lender entered
into a Loan Agreement dated as of May 31, 1994 (collectively, the 'Original Loan
Agreements');
WHEREAS, in connection with the Original Loan Agreements, Rex Radio, Kelly
and Stereo Town entered into several Pledge Agreements with the Original Lender,
each dated as of January 31, 1989, and Rex Kansas and the Original Lender
entered into a Pledge Agreement dated as of May 31, 1994 (collectively, the
'Original Pledge Agreements');
WHEREAS, the parties to the Original Pledge Agreements wish to amend and
restate the Original Pledge Agreements as set forth below to, among other
things, combine the Original Pledge Agreements in one pledge agreement in the
form hereof.
NOW, THEREFORE, the parties hereto agree that the Original Pledge
Agreements shall hereby be combined and shall be amended and restated in their
entirety as follows:
1. Grant of Security Interest. As collateral security for the payment,
performance and observance of all Obligations, the each Pledgor pledges to the
Secured Party and grants the Secured Party a security interest in the following
property (collectively, the 'Pledged Securities'):
(a) the shares of stock and/or obligations and the certificates or other
instruments or documents evidencing same more particularly described in Schedule
A annexed hereto (the 'Initial Pledged Securities');
(b) any additional shares of stock and/or obligations of the issuers of the
Initial Pledged Securities which may at any time hereafter be acquired by any
Pledgor and the certificates or other instruments or documents evidencing same;
(c) any additional shares of stock and/or obligations and the certificates
or other instruments or documents evidencing same which may at any time
hereafter be delivered by any Pledgor to the Secured Party to be held pursuant
to this Agreement; and
(d) all dividends, distributions and moneys paid or distributed in respect
of or in exchange for, and all other proceeds of, any or all of the foregoing.
2. Delivery of Certificates and Instruments. The Pledgors shall deliver to
the Secured Party: (a) other than such certificates and instruments evidencing
Initial Pledged Securities previously delivered to the Secured Party pursuant to
the Original Pledge Agreements, the original certificates or other instruments
or documents evidencing any other shares or other obligations held by any
Pledgor, and (b) the original certificates or other instruments or documents
evidencing all other Pledged Securities (except for Pledged Securities which
this Agreement specifically permits the Pledgor to retain) within ten days after
the Pledgor's receipt thereof. All Pledged Securities which are certificated
securities shall be in bearer form or, if in registered form, shall be issued in
the name of the Secured Party or endorsed to the Secured Party or in blank.
3. Representations, Warranties and Covenants. Each Pledgor represents,
warrants and covenants that:
(a) the Initial Pledged Securities are, and all other Pledged Securities
hereafter delivered to the Secured Party will be, owned by such Pledgor free and
clear of all claims, mortgages, pledges, liens, encumbrances and security
interests of every nature whatsoever, except in favor of the Secured Party;
(b) such Pledgor will not sell, transfer, assign, pledge or grant a
security interest in the Pledged Securities to any person other than the Secured
Party;
(c) the Pledged Securities consisting of shares of stock constitute, and
during the term of the Loan Agreement will continue to constitute, 100% of the
outstanding shares of the issuer thereof;
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(d) the Pledged Securities are all of the shares and/or obligations of the
issuer thereof owned by such Pledgor;
(e) if the Pledged Securities include securities which are of the same
class as securities which have been registered pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended, then either (i) such Pledged
Securities are not 'restricted securities' within the meaning of Rule 144 issued
pursuant to the Securities Act of 1933, as amended, and such Pledgor is not an
'affiliate' of the issuer of such Pledged Securities within the meaning of such
Rule 144, or (ii) such Pledgor shall have executed and delivered to the Secured
Party, concurrently with the execution and delivery of this Agreement, a Rule
144 Supplementary Agreement in form and substance satisfactory to the Secured
Party;
4. Registration. At any time and from time to time the Secured Party may
cause all or any of the Pledged Securities to be transferred to or registered in
its name or the name of its nominee or nominees.
5. Voting Rights and Certain Payments Prior to Default. So long as there
shall exist no Default or Event of Default under the Loan Agreement, each
Pledgor shall be entitled:
(a) To exercise, as it shall think fit, but in a manner in the judgment of
the Secured Party not inconsistent with the terms hereof or of the Loan
Agreement, the voting power with respect to the Pledged Securities, and for that
purpose the Secured Party shall (if the Pledged Securities shall be registered
in the name of the Secured Party or its nominee) execute or cause to be executed
from time to time, at the expense of the Pledgors, such proxies or other
instruments in favor of such Pledgor or its nominee, in such form and for such
purposes as shall be reasonably required by such Pledgor and shall be specified
in a written request therefor of its President or a Vice-President, to enable it
to exercise such voting power with respect to the Pledged Securities; and
(b) to receive and retain for its own account any and all dividends (other
than stock or liquidating dividends) and interest at any time and from time to
time declared or paid upon any of the Pledged Securities.
6. Extraordinary Payments and Distributions. In case, upon the dissolution
or liquidation (in whole or in part) of the issuer of any of the Pledged
Securities, any sum shall be paid as a liquidating dividend or otherwise upon or
with respect to any of the Pledged Securities, and in case any sum shall be paid
on account of the principal of any of the Pledged Securities which shall be an
obligation, such sum shall be paid over to the Secured Party promptly, and in
any event within ten days after
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receipt thereof, to be held by the Secured Party as additional collateral
hereunder. In case any stock dividend shall be declared on any of the Pledged
Securities, or any shares of stock or fractions thereof shall be issued pursuant
to any stock split involving any of the Pledged Securities, or any distribution
of capital shall be made on any of the Pledged Securities, or any shares,
obligations or other property shall be distributed upon or with respect to the
Pledged Securities pursuant to a recapitalization or reclassification of the
capital of the issuer thereof, or pursuant to the dissolution, liquidation (in
whole or in part), bankruptcy or reorganization of such issuer, or to the merger
or consolidation of such issuer with or into another corporation, the shares,
obligations or other property so distributed shall be delivered to the Secured
Party promptly, and in any event within ten days after receipt thereof, to be
held by the Secured Party as additional collateral hereunder, and all of the
same (other than cash) shall constitute Pledged Securities for all purposes
hereof.
7. Voting Rights and Certain Payments After Default. So long as there shall
exist a Default or Event of Default under the Loan Agreement, the Secured Party
shall be entitled to exercise all voting power with respect to the Pledged
Securities and to receive and retain, as additional collateral hereunder, any
and all dividends and interest at any time and from time to time declared or
paid upon any of the Pledged Securities.
8. Application of Cash Collateral. Any cash received and retained by the
Secured Party as additional collateral hereunder pursuant to the foregoing
provisions may at any time and from time to time be applied (in whole or in
part) by the Secured Party, at its option, to the payment of interest on and/or
principal of the Obligations (in such order of maturity as the Secured Party
shall in its sole discretion determine).
9. Remedies Upon Default.
(a) If a Default or Event of Default shall occur under the Loan Agreement,
the Secured Party, without obligation to resort to other security, shall have
the right at any time and from time to time to sell, resell, assign and deliver,
in its discretion, all or any of the Pledged Securities, in one or more parcels
at the same or different times, and all right, title and interest, claim and
demand therein and right of redemption thereof, on any securities exchange on
which the Pledged Securities or any of them may be listed, or at public or
private sale, for cash, upon credit or for future delivery, and in connection
therewith the Secured Party may grant options, each Pledgor hereby waiving and
releasing any and all equity or right of redemption. If any of the Pledged
Securities are sold by the Secured Party upon credit or for future delivery, the
Secured Party shall not be liable for the failure of the purchaser to
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purchase or pay for the same and, in the event of any such failure, the Secured
Party may resell such Pledged Securities. In no event shall the Pledgors be
credited with any part of the proceeds of sale of any Pledged Securities until
cash payment thereof has actually been received by the Secured Party.
(b) No demand, advertisement or notice, all of which are hereby expressly
waived, shall be required in connection with any sale or other disposition of
any part of the Pledged Securities which threatens to decline speedily in value
or which is of a type customarily sold on a recognized market; otherwise the
Secured Party shall give the Pledgors at least ten days' prior notice of the
time and place of any public sale and of the time after which any private sale
or other disposition is to be made, which notice the Pledgors agree is
reasonable, all other demands, advertisements and notices being hereby waived.
The Secured Party shall not be obligated to make any sale of Pledged Securities
if it shall determine not to do so, regardless of the fact that notice of sale
may have been given. The Secured Party may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same was so
adjourned. Upon each private sale of Pledged Securities of a type customarily
sold in a recognized market and upon each public sale, the Secured Party or any
holder of the Obligations may purchase all or any of the Pledged Securities
being sold, free from any equity or right of redemption, which is hereby waived
and released, and may make payment therefor by release or discharge of
Obligations in lieu of cash payment. In the case of all sales of Pledged
Securities, public or private, the Secured Party may deduct from the proceeds of
sale all costs and expenses of every kind for sale or delivery, including
brokers' and attorneys' fees, and the Secured Party shall apply any balance of
the proceeds of sale to the payment of the Obligations. The Pledgors shall
remain liable for any deficiency. If any proceeds of sale remain after payment
in full of such costs and expenses and all of the Obligations, they shall be
paid to the Pledgors, subject to any duty of the Secured Party imposed by law to
the holder of any subordinate security interest in the Pledged Securities known
to the Secured Party.
(c) The Pledgors recognize that the Secured Party may be unable to effect a
public sale of all or a part of the Pledged Securities by reason of certain
prohibitions contained in the Securities Act of 1933, as amended, as now or
hereafter in effect, or in applicable Blue Sky or other state securities laws,
as now or hereafter in effect, but may be compelled to resort to one or more
private sales to a restricted group of purchasers who will be obliged to agree,
among other things, to acquire such Pledged Securities for their own account,
for investment and not with a view to the distribution or resale thereof. The
Pledgors
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agree that private sales so made may be at prices and other terms less
favorable to the seller than if such Pledged Securities were sold at public
sales, and that the Secured Party has no obligation to delay sale of any such
Pledged Securities for the period of time necessary to permit the issuer of such
Pledged Securities, even if such issuer would agree, to register such Pledged
Securities for public sale under such applicable securities laws. The Pledgors
agree that private sales made under the foregoing circumstances shall be deemed
to have been made in a commercially reasonable manner.
(d) The remedies provided herein in favor of the Secured Party shall not be
deemed exclusive, but shall be cumulative, and shall be in addition to all other
remedies in favor of the Secured Party existing at law or in equity.
10. Care of Pledged Securities. The Secured Party shall have no duty as to
the collection or protection of the Pledged Securities or any income thereon or
as to the preservation of any rights pertaining thereto, beyond the safe custody
of any thereof actually in its possession. With respect to any maturities,
calls, conversions, exchanges, redemptions, offers, tenders or similar matters
relating to any of the Pledged Securities (herein called 'events'), the Secured
Party's duty shall be fully satisfied if (i) the Secured Party exercises
reasonable care to ascertain the occurrence and to give reasonable notice to the
Pledgors of any events applicable to any Pledged Securities which are registered
and held in the name of the Secured Party or its nominee, (ii) the Secured Party
gives the Pledgors reasonable notice of the occurrence of any events, of which
the Secured Party has received actual knowledge, as to any securities which are
in bearer form or are not registered and held in the name of the Secured Party
or its nominee (the Pledgors agreeing to give the Secured Party reasonable
notice of the occurrence of any events applicable to any securities in the
possession of the Secured Party of which the Pledgors have received knowledge),
and (iii) in the exercise of its sole discretion (a) the Secured Party endeavors
to take such action with respect to any of the events as the Pledgors may
reasonably and specifically request in writing in sufficient time for such
action to be evaluated and taken or (b) if the Secured Party determines that the
action requested might adversely affect the value of the Pledged Securities as
collateral, the collection of the Obligations, or otherwise prejudice the
interests of the Secured Party, the Secured Party gives reasonable notice to the
Pledgors that any such requested action will not be taken and if the Secured
Party makes such determination or if the Pledgors fails to make such timely
request, the Secured Party takes such other action as it deems advisable in the
circumstances. Except as hereinabove specifically set forth, the Secured Party
shall have no further obligation to ascertain the occurrence of, or to notify
the Pledgors with respect to, any events and shall not be
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deemed to assume any such further obligation as a result of the establishment by
the Secured Party of any internal procedures with respect to any securities in
its possession. Except for any claims, causes of action or demands arising out
of the Secured Party's failure to perform its agreements set forth in this
Section, each Pledgor releases the Secured Party from any claims, causes of
action and demands at any time arising out of or with respect to this Agreement,
the Pledged Securities and/or any actions taken or omitted to be taken by the
Secured Party with respect thereto, and each Pledgor hereby agrees to hold the
Secured Party harmless from and with respect to any and all such claims, causes
of action and demands.
11. Power of Attorney. Each Pledgor hereby appoints the Secured Party as
the Pledgor's attorney-in-fact for the purpose of carrying out the provisions of
this Agreement and taking any action and executing any instrument which the
Secured Party may deem necessary or advisable to accomplish the purposes hereof.
Without limiting the generality of the foregoing, the Secured Party shall have
the right and power to (a) receive, endorse and collect all checks and other
orders for the payment of money made payable to any Pledgor representing any
interest or dividend or other distribution payable in respect of the Pledged
Securities or any part thereof and to give full discharge for the same, and (b)
to execute endorsements, assignments or other instruments of conveyance or
transfer with respect to all or any of the Pledged Securities.
12. No Waiver. No delay on the part of the Secured Party or of any holder
of the Obligations in exercising any of its options, powers or rights, or
partial or single exercise thereof, shall constitute a waiver thereof.
13. Return of Pledged Securities. Upon payment in full of all Obligations
and the termination of the Total Commitment, the Pledgors shall be entitled to
the return of all of the Pledged Securities and all other cash held as
additional collateral hereunder which have not been used or applied toward the
payment of the Obligations. The assignment by the Secured Party to the Pledgors
of such Pledged Securities and other property shall be without representation or
warranty of any nature whatsoever and wholly without recourse.
14. Amendments and Waivers. No amendment or waiver of any provision of this
Agreement shall in any event be effective unless the same shall be in writing
and signed by the Secured Party and the Pledgor.
15. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
SECURED PARTY AND THE PLEDGOR HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAW OF THE
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STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES
THEREOF).
16. Submission to Jurisdiction.
(a) Any legal action or proceeding with respect to this Agreement may be
brought in the courts of the State of New York or of the United States of
America for the Southern District of New York, and, by execution and delivery of
this Agreement, the Pledgor hereby accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Each Pledgor hereby irrevocably waives, in connection with any such
action or proceeding, (i) trial by jury, (ii) any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
forum non conveniens, which it may now or hereafter have to the bringing of any
such action or proceeding in such respective jurisdictions and (iii) the right
to interpose any setoff, counterclaim or cross-claim.
(b) Each Pledgor irrevocably consents to the service of process of any of
the aforementioned courts in any such action or proceeding by the mailing of
copies thereof by certified mail, postage prepaid, to such Pledgor at its
address determined pursuant to Section 13.01 of the Loan Agreement.
(c) Nothing herein shall affect the right of the Secured Party to serve
process in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against any Pledgor in any other jurisdiction.
17. Benefit of Agreement. This Agreement shall be binding upon and inure to
the benefit of the Pledgors and the Secured Party and their respective
successors and assigns, and all subsequent holders of the Obligations.
18. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original and all of which
shall together constitute one and the same agreement.
19. Captions. The captions of the sections of this Agreement have been
inserted for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
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IN WITNESS WHEREOF, the Pledgors and the Secured Party have caused this
Agreement to be duly executed by their respective officers duly authorized as of
the day and year first above written.
REX RADIO AND TELEVISION. INC.
By:______________________________
Name: Douglas Bruggeman
Title: Vice President, Finance
KELLY & COHEN APPLIANCES, INC.
By:______________________________
Name: Douglas Bruggeman
Title: Vice President, Finance
STEREO TOWN, INC.
By:______________________________
Name: Douglas Bruggeman
Title: Vice President, Finance
REX KANSAS, INC.
By:______________________________
Name: Douglas Bruggeman
Title: Vice President, Finance
NATWEST BANK N.A., Agent, as
Secured Party
By:______________________________
Name: Thomas Maiale
Title: Vice President
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Schedule A to Pledge Agreement
Description of Stock:
Class of Certificate Number of
Stock Issuer Stock Number Shares
------------ -------- ----------- ---------
Description of Obligations:
Original
Description of Maturity Principal
Obligation Issuer Obligation Date Amount
----------------- -------------- -------- ---------
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