Exhibit 10.8
PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT, dated as of October 30, 2006 (this
"Agreement"), between BNS Holding, Inc., a Delaware corporation ("Pledgor"), and
Steel Partners II, L.P., a Delaware limited partnership ("Secured Party").
WITNESSETH:
WHEREAS, Secured Party and Pledgor, have entered into a Loan
Agreement, dated as of the date hereof (the "Loan Agreement");
WHEREAS, it is a condition to Secured Party's obligations under the
Loan Agreement that this Agreement be duly executed and delivered; and
WHEREAS, Pledgor and Secured Party wish to enter into this Agreement
in order to secure the obligations of Pledgor under the Loan Documents (such
obligations, together with any obligations of Pledgor under this Agreement, the
"Obligations").
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. Capitalized terms used but not defined herein shall have
the meanings provided therefor in the Loan Agreement.
2. SECURITY INTEREST. Pledgor hereby pledges to Secured Party, as
security for the Obligations, and grants to Secured Party a first priority
continuing security interest in, lien on and right of set-off against the
following described property (collectively referred to as the "Collateral"):
(i) all right, title and interest in, to and under, all of the
property and assets currently owned or owing to, or hereafter acquired or
arising in favor of, Pledgor, wherever located, including, but not limited
to, all accounts, deposit accounts, chattel paper, instruments, documents,
securities, contract rights, receivables, equipment, goods, inventory,
investment property, goodwill, general intangibles, intellectual property,
patents, patent applications, trademarks, trademark applications, trade
names, copyrights, copyright applications, Internet domain names, service
marks, trade secrets, know-how, technology, software, hardware, commercial
tort claims, warranties and guarantees, as any of the foregoing terms may
be defined in the New York Uniform Commercial Code (the "UCC"), and
including any products, proceeds (including insurance proceeds) or income
derived therefrom, whether by disposition or otherwise; together with
(ii) the securities described in Schedule I hereto (such securities,
together with any additional securities constituting Collateral described
in subsection (iii) below, the "Pledged Securities"); and
(iii) the products, proceeds and accessions of any of the foregoing.
3. DELIVERY OF COLLATERAL. Pledgor agrees that all Pledged Securities
shall be evidenced by certificates and all such certificates shall be delivered
to Secured Party in New York c/x Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx & Xxxxxxx LLP,
Park Avenue Tower, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. Such
certificates shall be endorsed either to Secured Party or in blank by an
effective endorsement within the meaning of the UCC and shall be in suitable
form for transfer by delivery or accompanied by duly executed stock powers and
any other instruments of transfer reasonably requested by Secured Party. All
other property comprising part of the Collateral shall be accompanied by proper
instruments of assignment duly executed by Pledgor, and by any such other
instruments or documents as Secured Party may reasonably request. Certificates
evidencing the Pledged Securities shall be delivered in accordance with this
Section 3 upon the execution hereof.
4. REPRESENTATIONS AND AGREEMENTS OF PLEDGOR. Pledgor represents and
agrees that:
(a) Except for (i) the security interest granted hereby and (ii) any
restriction on transfer under the Federal or State securities laws (the
"Permitted Encumbrances"), Pledgor is, and as to Collateral acquired after the
date hereof Pledgor will be, the owner and holder of the Collateral free from
any adverse claim, security interest, encumbrance, lien, charge, or other right,
title or interest of any person. Pledgor agrees that at all times the Collateral
will be and remain free of all such adverse claims, security interests, or other
liens or encumbrances, other than any Permitted Encumbrance. Pledgor will defend
the Collateral against all claims and demands (other than any Permitted
Encumbrance) of all persons at any time claiming the same or any interest
therein.
(b) Upon execution of this Agreement and delivery to Secured Party of
certificates evidencing the Pledged Securities in accordance with Section 3,
Secured Party will have a valid and perfected first priority security interest
therein. Upon the filing of financing statements relating to the Collateral with
the Office of the Secretary of State of Delaware, Secured Party will have a
valid and perfected first priority security interest in all other Collateral (to
the extent a security interest therein may be perfected by the filing of a
financing statement).
(c) Pledgor has not heretofore signed any financing statement or
security agreement which covers any of the Collateral, and no such financing
statement or security agreement is now on file in any public office. Pledgor
will not enter into or execute any security agreement or any financing statement
covering the Collateral, other than those security agreements and financing
statements in favor of Secured Party hereunder, and Pledgor agrees that there
will not be on file in any public office any financing statement or statements
(or any documents or papers filed as such) covering the Collateral, other than
financing statements in favor of Secured Party hereunder, unless in any case the
prior written consent of Secured Party shall have been obtained.
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(d) Pledgor has full legal capacity and lawful authority to enter
into this Agreement and to grant to Secured Party the first priority security
interest in the Collateral as herein provided and all corporate or other action
on the part of Pledgor requisite for the due execution, delivery, and
performance of this Agreement has been duly and effectively taken.
(e) The execution, delivery and performance hereof are not in
contravention of any agreement or undertaking to which Pledgor is a party or by
which Pledgor, or its property, is bound and will not result in the imposition
of any security interest or lien on any other property of Pledgor.
5. RIGHTS OF SECURED PARTY AND PLEDGOR RELATED TO COLLATERAL.
(a) Secured Party may from time to time following the occurrence of
an Event of Default with respect to Pledgor:
(i) transfer any of the Collateral into the name of Secured Party or
its nominee;
(ii) notify parties obligated on any of the Collateral to make
payment to Secured Party of any amounts due or to become due thereunder;
(iii) enforce collection of any of the Collateral by suit or
otherwise; surrender, release or exchange all or any part thereof, or
compromise or extend or renew for any period (whether or not longer than
the original period) any obligation of any nature of any party with respect
thereto; and exercise all other rights of Pledgor in any of the Collateral
(including, without limitation, the right to vote or exercise other
consensual interests in the Collateral); and/or
(iv) take possession or control of any proceeds of the Collateral.
(b) Until the occurrence of an "Event of Default with respect to
Pledgor" (as defined in Section 7 below), Pledgor shall have the right to
receive all income from or interest on the Collateral, other than any such
income or interest which would be prohibited by the Loan Agreement, (such income
or interest distributed by way of a dividend or otherwise shall be promptly
delivered to Secured Party to be held as additional Collateral hereunder (such
delivery to be in the manner contemplated by Section 3 above)). Upon the
occurrence of an Event of Default with respect to Pledgor, Pledgor will not
demand or receive any income from or interest on the Collateral, and if Pledgor
receives any such income or interest without any demand by it, the same shall be
held by Pledgor in trust for Secured Party in the same medium in which received,
shall not be commingled with any assets of Pledgor and shall be delivered to
Secured Party in the form received, properly endorsed to permit collection, not
later than the second Business Day following the day of its receipt.
(c) So long as no Event of Default with respect to Pledgor shall have
occurred, 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 or purpose of this Agreement or the Loan
Agreement (and Secured Party shall exercise any voting and other consensual
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rights it may have pertaining to the Collateral in accordance with any
instructions of Pledgor in that regard).
(d) In the event Secured Party shall pay any taxes, assessments,
interests, costs, penalties or expenses incident to or in connection with the
collection of the Collateral or protection or enforcement of the Collateral or
any security therefor, Pledgor, upon demand of Secured Party, shall pay to
Secured Party the full amount thereof with interest thereon from the date
expended by Secured Party until repaid at a rate per annum (based on a 360-day
year for the actual number of days involved) equal to 15%.
(e) Pledgor shall not sell, assign, alienate, exchange, convey,
transfer, hypothecate or otherwise dispose of or encumber the Pledged
Securities, or cause Xxxxxxx I Holding Corp., a Delaware corporation, to
dissolve or liquidate, without the prior written consent of Secured Party.
6. FURTHER ASSURANCES; SECURED PARTY AS AGENT. Pledgor agrees to take
such actions and to execute such stock or bond powers and such other or
different writings as Secured Party may reasonably request (and irrevocably
authorizes Secured Party to execute such writings as Pledgor's agent and
attorney-in-fact) to create, preserve, perfect or validate Secured Party's
security interest in the Collateral, or to enable Secured Party to exercise or
enforce its rights under this Agreement with respect to the Collateral,
including (without limitation) the right to receive, indorse 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 except
for those distributions which the Pledgor is entitled to retain pursuant to
Section 5(b).
7. EVENTS OF DEFAULT. The occurrence of any Event of Default with respect
to Pledgor pursuant to any of the Loan Documents or a breach by Pledgor of the
Obligations, shall constitute an "Event of Default with respect to Pledgor"
hereunder.
8. RIGHTS AND REMEDIES OF SECURED PARTY UPON DEFAULT. (A) If an Event of
Default with respect to Pledgor shall have occurred:
(i) Secured Party shall have and may exercise with reference to the
Collateral and the Obligations any or all of the rights and remedies of a
secured party under the UCC, and as otherwise granted herein or under any
other applicable law or any other agreement now or hereafter in effect
executed by Pledgor, including, without limitation, the right and power to
sell, at public or private sale or sales, or otherwise dispose of, or
otherwise utilize the Collateral and any part or parts thereof in any
manner authorized or permitted under the UCC after default by a debtor, and
to apply the proceeds in accordance with Section 10 hereof. Without
limiting the foregoing, Secured Party shall have the right to take
possession of all or any part of the Collateral and of all books, records,
papers and documents of Pledgor or in Pledgor's possession or control
relating to the Collateral which are not already in Secured Party's
possession. To the extent permitted by law, Pledgor expressly waives any
notice of sale or other disposition of the Collateral and all other rights
or remedies of Pledgor or formalities prescribed by law relative to sale or
disposition of the Collateral or exercise of any other right or remedy of
Secured Party existing after default hereunder; and to the extent any such
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notice is required and cannot be waived, Pledgor agrees that if such notice
is given in the manner provided in Section 14 hereof at least five (5) days
before the time of the sale or disposition, such notice shall be deemed
reasonable and shall fully satisfy any requirement for giving of said
notice. 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.
(ii) Upon notice by Secured Party to Pledgor, Secured Party or its
nominee or nominees shall have the sole and exclusive right to exercise all
voting and consensual powers pertaining to the Collateral or any part
thereof and may exercise such powers in such manner as Secured Party may
elect. To extent that the terms and conditions of that certain Stockholders
Agreement dated as of October 30, 2006 by and among Xxxxxxx Holding, its
Stockholders and Xxxxxxx Industries, Inc. (the "Stockholders Agreement")
provide that any rights that would otherwise be exercisable by the Secured
Party under this Agreement may only be exercised by the Pledgor, Pledgor
agrees to exercise such rights in accordance with the written directions of
Secured Party given in accordance with this Section 8(a)(ii).
(iii) All rights to marshalling of assets of Pledgor, including any
such right with respect to the Collateral, are hereby waived by Pledgor.
(iv) All recitals in any instrument of assignment or any other
instrument executed by Secured Party incident to sale, lease, transfer,
assignment or other disposition, lease or utilization of the Collateral or
any part thereof under this Section 8(a) shall be full proof of the matters
stated therein and no other proof shall be requisite to establish full
legal propriety of the sale or other action taken by Secured Party or of
any fact, condition or thing incident thereto and all prerequisites of such
sale or other action or of any fact, condition or thing incident thereto
shall be presumed conclusively to have been performed or to have occurred.
(b) Secured Party shall never be under any obligation to collect,
attempt to collect, protect or enforce the Collateral, which Pledgor agrees and
undertakes to do at Pledgor's expense, but Secured Party may do so in its
discretion at any time after the occurrence of an Event of Default with respect
to Pledgor. All expenses (including, without limitation, attorneys' fees and
expenses) incurred or paid by Secured Party in connection with or incident to
any such collection or attempt to collect the Collateral or actions to protect
or enforce the Collateral shall be borne by the Pledgor or reimbursed by the
Pledgor to Secured Party upon demand.
(c) The Secured Party will act in good faith and in a commercially
reasonable manner in the exercise of any of its rights and remedies hereunder.
9. SPECIAL PROVISIONS. Pledgor hereby acknowledges that the sale by
Secured Party of any Pledged Securities resulting from an exercise by Secured
Party of its rights hereunder must be made in compliance with the Securities Act
of 1933 (the "Securities Act"), as well as any applicable Blue Sky or other
state securities laws that may impose limitations as to the manner in which
Secured Party or any other person may dispose of securities. Pledgor
acknowledges that any sale or disposition contemplated pursuant hereto may be at
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prices and on terms less favorable to Secured Party than those obtainable
through a public sale without any applicable restrictions, and, notwithstanding
such circumstances, Pledgor agrees that any such sale or other disposition shall
be deemed to have been made in a commercially reasonable manner. Secured Party
shall have no obligation to engage in public sales and no obligation to delay
the sale of any Collateral for any period of time; and Pledgor waives any claims
against Secured Party arising by reason of the fact that the price that might
have been obtainable in a public sale was greater than the price obtained in any
such sale or disposition pursuant hereto, even if Secured Party accepts the
first offer received and does not offer the Collateral to more than one offeree.
10. APPLICATION OF PROCEEDS. In the event Secured Party sells or otherwise
disposes of the Collateral in the course of exercising the remedies provided for
in this Agreement, any amounts held, realized or received by Secured Party
pursuant to the provisions hereof, including the proceeds of the sale of any of
the Collateral or any part thereof, shall be applied by Secured Party first
toward the payment of any costs and expenses incurred by Secured Party in
enforcing this Agreement, in realizing on or protecting any Collateral and in
enforcing or collecting any Obligations or any guaranty thereof, including,
without limitation, the actual attorneys' fees and expenses incurred by Secured
Party, all of which costs and expenses Pledgor agrees to pay, and then to such
other Obligations in such order as Secured Party may elect. Any amounts and any
Collateral remaining after such application and after payment to Secured Party
of satisfaction of all of the Obligations in full shall be paid or delivered to
Pledgor, its successor or assigns, or as a court of competent jurisdiction may
direct.
11. CARE OF COLLATERAL. Secured Party shall be deemed to have exercised
reasonable care in the custody and preservation of the Collateral in its
possession if the Collateral is accorded treatment substantially equal to that
which Secured Party accords its own property, it being understood that Secured
Party shall not have any responsibility for (i) ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Collateral, whether or not Secured Party has or is
deemed to have knowledge of such matters, or (ii) taking any necessary steps to
preserve rights against any parties with respect to any Collateral. Prior to an
Event of Default, Secured Party agrees to follow Pledgor's reasonable
instructions in connection with any action with respect to the Collateral,
provided that such action is not prohibited hereby and such action would not
impair the value or liquidity of the Collateral (or the relationship between the
Collateral and the Obligations).
12. TERMINATION. This Agreement and the security interest created
hereunder shall terminate upon such date on which all the Obligations have been
paid in full. Upon termination hereof, Secured Party shall execute and deliver
to Pledgor all documents which Pledgor shall reasonably request to evidence
termination of such security interest and shall return physical possession of
any Collateral then held by Secured Party to Pledgor; provided, however, that
all indemnities of Pledgor contained in this Agreement shall survive, and remain
in full force and effect regardless of the termination of the security interest
or this Agreement. Notwithstanding the foregoing, this Agreement and the
security interest granted hereunder shall be reinstated if at any time any
payment or delivery pursuant to an Obligation, in whole or in part, is rescinded
or must otherwise be returned by Secured Party under the application of the
Bankruptcy Code or any other Debtor Law, all as though such payment or delivery
had not been made.
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13. ADDITIONAL INFORMATION. Pledgor agrees to furnish Secured Party from
time to time with such additional information and copies of such documents
relating to this Agreement and the Collateral, as Secured Party may reasonably
request.
14. NOTICES. Any communication, notice or demand to be given hereunder
shall be given in accordance with the Loan Agreement.
15. INDEMNITY AND EXPENSES. Pledgor agrees to indemnify Secured Party from
and against any and all claims, losses and liabilities growing out of or
resulting from this Agreement (including, without limitation, enforcement of any
rights under this Agreement, and any claims or demands of any persons at any
time claiming the Collateral or any interest therein), except claims, losses or
liabilities resulting from Secured Party's gross negligence or willful
misconduct. Pledgor agrees to pay on demand all out-of-pocket expenses
(including the reasonable fees and expenses of Secured Party's legal counsel,
experts and agents) in any way relating to the enforcement or protection of the
rights of Secured Party hereunder.
16. NO WAIVER; CUMULATIVE RIGHTS. No failure on the part of Secured Party
to exercise, and no delay in exercising, any right, remedy or power hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise by
Secured Party of any right, remedy or power hereunder preclude any other or
future exercise of any other right, remedy or power. Each and every right,
remedy and power hereby granted to Secured Party or allowed it by law or other
agreement shall be cumulative and not exclusive of any other, and may be
exercised by Secured Party from time to time.
17. APPLICABLE LAW. This Agreement and the rights and obligations of the
parties hereunder shall be governed by, and construed in accordance with, the
laws of the State of New York applicable to contracts made and to be performed
entirely within such state.
18. ASSIGNMENT; BINDING EFFECT; BENEFIT. The rights and obligations of the
parties under this Agreement are not assignable without the prior written
consent of the other parties, except that Secured Party may assign all or any of
its rights and benefits hereunder, and may delegate all or any of its
obligations or liabilities (whether by assignment, merger, liquidation or
otherwise), and upon any such assignment, Secured Party's rights, benefits,
obligations and liabilities shall automatically cease. Subject to the
immediately preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns. Nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties and their respective successors and
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
19. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as
of the date first above written.
BNS HOLDING, INC.
By: /s/ Xxxxxxx Xxxxxx
------------------------------
Name: Xxxxxxx Xxxxxx
Title: President & CEO
STEEL PARTNERS II, L.P.
By: Steel Partners, L.L.C.
General Partner
By: /s/ Xxxxxx X. Xxxxxxxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxxxxxxx
Title: Managing Member
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SCHEDULE I
PLEDGED SECURITIES
26,400 shares of Xxxxxxx I Holding Corp., a Delaware corporation, $0.01 par
value per share, represented by certificate number 2 in the name of BNS Holding,
Inc.
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