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EXHIBIT 10.42
PLEDGE AGREEMENT dated as of March 27, 1997 among Xxxxxxx Xxxxx,
Xxxxxxx Xxxxxx Xxxxx, and Media Equities International, LLC (each a "Pledgor
and collectively, the "Pledgors"), and Dove Entertainment, Inc., as Pledgee
(the "Pledgee").
W I T N E S S E T H:
WHEREAS, the Pledgors have heretofore entered into a Stock Purchase
Agreement (the "Agreement") among the Pledgors and Pledgee pursuant to which
the Pledgors have agreed to purchase shares of Preferred Stock of Pledgee;
WHEREAS, capitalized terms used herein without definition shall have
the respective meanings set forth therefor in the Agreement;
WHEREAS, the Pledgee desires to secure the payment of the purchase
price for the Second Preferred Shares under the Agreement;
WHEREAS, each of Xxxxxxx Xxxxx and Xxxxxxx Xxxxxx (collectively as a
single Pledgor), and Media Equities International, LLC as a separate Pledgor,
is responsible to provide certain cash consideration to acquire the Second
Preferred Shares at the Second Closing Date (for purposes hereof, their several
"Obligations");
NOW, THEREFORE, it is agreed:
1. Each Pledgor agrees to deposit and pledge with the Pledgee a
certificate evidencing the number of shares of the Preferred Stock, par value
$.01 per share, of Dove Entertainment, Inc. set forth opposite such Pledgor's
name on Schedule I hereto (the "Pledged Securities") as collateral security for
the payment to the Pledgee by Pledgor of their several Obligations in
accordance with the terms of the Agreement.
2. Each Pledgor hereby delivers the Pledged Securities
accompanied by instruments of assignment duly executed in blank by such Pledgor
in proper form for transfer, and the Pledgee acknowledges the receipt thereof.
3. Unless an Event of Default (as hereinafter defined) shall have
occurred and be continuing, the Pledgors shall be entitled to exercise all
rights of ownership with respect to the Pledged Securities; provided, however,
that the Pledgors shall not be entitled in any way to sell, assign, transfer,
convey, hypothecate or otherwise dispose of, grant any option with respect to,
or mortgage, pledge or encumber the Pledged Securities without Pledgee's prior
consent.
4. Unless an Event of Default shall have occurred and be
continuing, all dividends payable with respect to the Pledged Securities shall
be paid to the respective Pledgor; provided, however, stock dividends,
securities issued as a result of any split, reclassification or exchange of any
Pledged Securities and any dividends on dissolution or liquidation or as a
distribution in connection with the reclassification or reduction of capital,
in each case which shall be made in respect of the Pledged Securities
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(collectively, "Distributions"), shall be paid to the Pledgee to be held as
additional security hereunder. In case an Event of Default shall have occurred
and be continuing all such dividends and Distributions shall be paid to the
Pledgee to be held as additional security hereunder.
5. "Event of Default" with respect to any Pledgor as used herein
shall mean a default by such Pledgor in payment of the purchase price for the
Second Preferred Shares which continues for 30 days after the date when the
same shall become due and payable under the Agreement.
6. In the event any Pledgor defaults in the payment of the
Purchase Price for the Second Preferred Shares when the same shall become due
and payable under the Agreement, Pledgee will use its reasonable best efforts
to sell equity securities of the Company in mitigation of the Obligations, and
Pledgor shall be responsible only for the shortfall on a common share
equivalent basis (e.g. if the Company sells an equivalent amount of shares at
$1.50 per share, the damages for such shares would be limited to $0.50 per
share). Pledgee shall have no liability to either Pledgor with respect to the
terms of the sale of securities in mitigation of the Obligations provided
Pledgee acts in good faith and such transactions are approved by the Board of
Directors of Pledgee.
7. If an Event of Default with respect to any Pledgor shall have
occurred and be continuing, the Pledgee may sell the Pledged Securities or the
common stock equivalent (in which event for purposes of the Agreement the
Pledged Securities shall be deemed converted and the shares of common stock
issuable upon conversion sold) of such Pledgor, or any part thereof, at public
or private sale or at any broker's board or on any securities exchange, for
cash, upon credit or for future delivery as the Pledgee shall deem appropriate
subject to the terms hereof or as otherwise provided in the California Uniform
Commercial Code. The Pledgee shall be authorized at any such sale (if it deems
it advisable to do so) to restrict to the full extent permitted by law the
prospective bidders or purchasers to persons who will represent and agree that
they are purchasing the Pledged Securities for their own account for investment
and not with a view to the distribution or sale thereof, and upon consummation
of any such sale the Pledgee shall have the right to assign, transfer, and
deliver to the purchaser or purchasers thereof the Pledged Securities so sold.
Proceeds shall be applied first to costs, second to reasonable attorneys' fees
and disbursements payable by the Company and then to satisfy the balance of
Pledgor's Obligations not mitigated under Section 5 hereof.
8. Upon payment in full of the purchase price for the Second
Preferred Shares with respect to any Pledgor, this Agreement shall terminate
with respect to such Pledgor and the related Pledged Securities and any
additional collateral shall be delivered to such Pledgor. In case an Event of
Default shall have occurred and be continuing, Pledgee may exercise all
remedies at law to enforce the Agreement and to realize upon the collateral
securities provided hereunder.
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9. The Pledgee undertakes, except while an Event of Default shall
have occurred and shall be continuing, to exercise such duties and only such
duties as are specifically set forth in this Agreement, and, while an Event of
Default shall have occurred and shall be continuing, to exercise such of the
rights, powers and remedies as are vested in it by this Agreement and by law.
The Pledgee shall be under no liability with respect to any action taken in
accordance with this Agreement, except for its own gross negligence or wilful
misconduct. The Pledgee shall not be obligated to take any action which in its
reasonable judgment would involve it in expense or liability unless it has been
furnished with reasonable indemnity.
10. All notices and other communications hereunder shall be
delivered in accordance with the notice provisions of the Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Pledge
Agreement as of the date and the year first above written.
Media Equities International, LLC
as Pledgor
By /s/ XXX XXXXXXXXXX
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Its:
Xxxxxxx Xxxxx and Xxxxxxx Xxxxxx Xxxxx
as Pledgors
/s/ XXXXXXX XXXXX
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/s/ XXXXXXX XXXXXX
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Dove Entertainment, Inc.,
as Pledgee
By /s/ XXXXXX XXXXXXX
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Its:
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Schedule I
Pledged Shares
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PLEDGOR OBLIGATIONS PLEDGED SHARES
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Xxxxxxx Xxxxx and Xxxxxxx $825,000 500 shares of Series C
Xxxxxx Preferred Stock
MEI $1,000,000 500 shares of Series B
Preferred Stock
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