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EXHIBIT 10.9
SECOND AMENDED AND RESTATED
PLEDGE AGREEMENT
This Second Amended and Restated Pledge Agreement (this "Pledge
Agreement") is entered into as of March 30, 2000, by and among Marketing
Specialists Corporation (the "Borrower") and the subsidiaries of the Borrower
signatory hereto (each individually a "Pledgor" and individually and
collectively, "Pledgors"), in favor of First Union National Bank, a national
banking association ("Pledgee"), as agent for the lenders (together with such
additional financial institutions as may become Lenders from time to time as
provided in the Credit Agreement described below "Lenders").
BACKGROUND
A. Borrower has entered into that certain Second Amended and Restated
Credit Agreement dated the date hereof (as may be amended from time to time, the
"Credit Agreement") among the Borrower, the Lenders and the Pledgee.
B. As a condition to Pledgee's and Lenders' willingness to enter into
the Credit Agreement, the Pledgors are willing to execute and deliver to
Pledgee, as agent for the Lenders, this Pledge Agreement.
C. The Borrower, certain of the Pledgors and the Pledgee are parties to
that certain Amended and Restated Pledge Agreement dated August 18, 1999 (the
"Existing Pledge Agreement").
D. The parties desire to amend the Existing Pledge Agreement and the
Pledgors signatory hereto desire to become party to the Pledge Agreement as set
forth herein.
E. This Pledge Agreement amends and restates in its entirety the
Existing Pledge Agreement; provided, however, that this Pledge Agreement shall
not constitute a novation and nothing herein shall be deemed to have terminated
or discharged any indebtedness or obligation under the Existing Pledge
Agreement, all of which shall remain outstanding under and be governed by this
Pledge Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
each Pledgor and the Pledgee hereby agree as follows:
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1. For the purposes of this Pledge Agreement:
(a) Capitalized terms used and not otherwise defined herein shall
have the meanings ascribed to such terms in the Credit Agreement.
(b) The term "Collateral" shall mean all shares of stock,
partnership interests, LLC interests, or other equity interests in any direct or
indirect Subsidiary of Borrower (the "Securities") now or hereafter owned by any
Pledgor, together with (i) all rights to distributions and other rights under
organizational documents, or under any other agreements, with respect thereto,
and all contract rights, general intangibles and investment property associated
with or representing such Pledgor's rights and interests with respect thereto,
and (ii) all additions to, substitutions or exchanges for, proceeds of and
distributions on, any of the foregoing, and all associated secondary rights and
secondary considerations of any kind (including, without limitation,
subscription rights and bonus shares). A list of the Securities as of the date
hereof is set forth on Schedule A attached hereto.
(c) The term "Obligations" shall mean any and all obligations and
Indebtedness of every kind and description of the Pledgors to the Lenders
pursuant to, under, or in connection with the Loan Documents, whether such debts
or obligations are primary or secondary, direct or indirect, absolute or
contingent, sole, joint or several, secured or unsecured, due or to become due,
contractual or tortious, arising by operation of law or otherwise, or now or
hereafter existing, whether incurred by any Pledgor as principal, surety,
endorser, guarantor, accommodation party or otherwise, including, without
limitation, principal, interest and fees, late fees and expenses (including,
attorneys' fees and costs and/or the allocated fees and costs of Pledgee's
in-house legal counsel to the extent required to be paid under the Loan
Documents), or that have been or may hereafter be contracted or incurred, and
any obligations of the Pledgors or any of them under interest rate protection
agreements, swaps, hedging contracts or similar arrangements with any Lender
(including, without limitation, any swap agreements as defined in 11 U.S.C.
Section 101). If a party ceases to be a Lender, any obligations under interest
rate protection agreements, swaps, hedging contracts or similar arrangements
(including, without limitation, any swap agreements as defined in 11 U.S.C.
Section 101) with such party prior to the date it ceased to be a Lender shall
continue to be Obligations secured by the pledge hereunder.
2. Pledgors hereby pledge, and xxxxx x xxxx as security with respect
to, the Collateral to Pledgee, as agent for the Lenders, as collateral security
for all of the Obligations.
3. Pledgors represent and warrant that:
(a) The chief place of business, chief executive offices and the
office(s) where their records are kept concerning accounts, contract rights and
other similar Collateral, are as set forth on Schedule B attached hereto, and as
set forth on Schedule B, each Pledgor either owns such premises free and clear
of any mortgage or other liens and
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encumbrances except as set forth on Schedule B or it leases such premises from
the record owner identified on Schedule B.
(b) Each Pledgor conducts business under and through its legal name
as set forth on the signature page hereto, and no other names except as set
forth on Schedule B attached hereto.
(c) Pledgors have good title to the Securities free and clear of all
liens and encumbrances except the security interest created hereby; and such
Securities constitute the percentage of the issued and outstanding shares of
each class of the capital stock or other equity interests of the subsidiaries of
Pledgors identified in Schedule A.
(d) The Securities are validly issued, fully paid and nonassessable
and are not subject to any charter, bylaw, statutory, contractual or other
restrictions governing their issuance, transfer, ownership or control except as
indicated on the stock certificates for the Securities.
(e) Pledgors have delivered to Pledgee all certificates or other
similar instruments or documents representing or evidencing the Securities,
together with corresponding assignment or transfer powers duly executed in blank
by Pledgors, and this Pledge Agreement and such powers have been duly and
validly executed and are binding and enforceable against Pledgor in accordance
with their terms except as such enforceability may be affected by bankruptcy
laws and other laws of general application relating to creditors' rights; and
the pledge of the Securities in accordance with the terms hereof creates a valid
and perfected first priority security interest in the Securities securing
payment of the Obligations.
(f) No authorization, approval, or other action by, and no notice to
or filing with any governmental authority or regulatory body is required for (i)
the pledge by Pledgors of the Securities pursuant to this Pledge Agreement, (ii)
the execution, delivery or performance of this Pledge Agreement by Pledgor or
(iii) the exercise by Pledgee of the (A) voting or other rights provided for in
this Pledge Agreement or (B) remedies in respect of the Collateral pursuant to
this Pledge Agreement (except as may be required in connection with such
disposition by laws affecting the offering and sale of securities generally or
the perfection of liens and security interests in proceeds).
4. Anything herein to the contrary notwithstanding, (a) each Pledgor
shall remain liable under any contracts and agreements included in the
Collateral to perform all of its duties and obligations thereunder to the same
extent as if this Pledge Agreement had not been executed, (b) the exercise by
Pledgee of any of its rights hereunder shall not release any Pledgor from any of
its duties or obligations under any contracts and agreements included in the
Collateral and (c) Pledgee shall not have any obligation or liability under any
contracts and agreements included in the Collateral by reason of this Pledge
Agreement, nor shall Pledgee be
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obligated to perform any of the obligations or duties of any Pledgor thereunder
or to take any action to collect or enforce any claim for payment assigned
hereunder.
5. Each Pledgor will promptly notify and provide Pledgee with a
complete description of the opening of any new places of business which would be
required to be disclosed pursuant to Paragraph 3(a) above (excluding sales
offices at which no books and records are maintained other than books and
records that are duplicates of books and records maintained at other locations
of which Pledgee has notice hereunder), the conduct of business under any names
or through any entities other than those set forth above, the relocation of any
of the Collateral, and the acquisition of any new Collateral. Each Pledgor will
furnish to Pledgee from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as Pledgee may reasonably request upon reasonable notice,
all in reasonable detail.
6. At any time and from time to time, upon the request of Pledgee, each
Pledgor will, at its own expense:
(a) defend the Collateral against the claims and demands of all
persons.
(b) deliver and pledge to Pledgee, endorsed or accompanied by
instruments of assignment or transfer satisfactory to Pledgee, any instruments
and documents covered hereby which Pledgee may specify.
(c) give, execute, deliver and file or record in the proper
governmental offices, any instrument, paper or document, including but not
limited to one or more financing statements under the Uniform Commercial Code,
satisfactory to Pledgee, or take any action, which Pledgee reasonably may deem
necessary or desirable in order to create, preserve, perfect, continue, modify,
terminate or otherwise affect any security interest granted pursuant hereto, or
to enable Pledgee to exercise or enforce any of its rights hereunder.
(d) keep, and stamp or otherwise xxxx, any of its documents and
instruments and its individual books and records relating to any of the
Collateral in such manner as Pledgee reasonably may require.
(e) pay, or reimburse Pledgee in the amount of, all reasonable
expenses (including reasonable fees and expenses of attorneys, experts and
agents) incurred in any way in connection with the exercise, defense or
assertion of any rights or interests of Pledgee hereunder, the enforcement of
any provisions hereof, or the management, preservation, use, operation,
maintenance, collection, possession, disposition or enforcement of any of the
Collateral (all such expenses to be Obligations hereunder).
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7. Each Pledgor agrees not to:
(i) sell or otherwise dispose of, or grant any option
(collectively, "Transfer") with respect to, any of the Collateral, provided
however, that nothing herein shall prohibit a merger of a wholly-owned
Subsidiary into any of the Companies as permitted pursuant to Paragraph 6.8(iii)
of the Credit Agreement; or
(ii) create or permit to exist any lien, security interest, or
other charge or encumbrance upon or with respect to any of the Collateral,
except the security interest under this Pledge Agreement. Each Pledgor agrees
that all additional shares of stock or other equity interests of any direct or
indirect Subsidiary of Borrower acquired by any Pledgor after the date hereof
shall automatically and without any further action of any Pledgor be pledged
hereunder and constitute a part of the Collateral hereunder, and in connection
therewith, each Pledgor agrees to immediately deliver to Pledgee any
certificates or other instruments or documents representing or evidencing the
Securities and a supplement to Schedule A attached hereto describing such
additional Collateral.
8. Prior to the full payment and performance of the Obligations,
Pledgee shall be entitled to receive, as additional Collateral, any and all
additional shares of stock or any other property of any kind distributable on or
by reason of the Securities pledged hereunder, whether in the form of or by way
of stock dividends, warrants, partial liquidation, conversion, prepayments or
redemptions (in whole or in part), liquidation, or otherwise, other than cash
dividends. If any of such property, other than such cash dividends, shall come
into the possession or control of any Pledgor, such Pledgor shall hold or
control and forthwith transfer and deliver the same to Pledgee subject to the
provisions hereof.
9. So long as no default has occurred under any of the Obligations or
Loan Documents and each Pledgor is in full compliance with the terms hereof:
(a) Pledgors shall be entitled to receive and retain any normal,
regularly declared cash dividends paid on the Securities pledged hereunder.
(b) Pledgors may exercise all voting rights, if any, pertaining to
the Securities for any purpose not inconsistent with the terms hereof or of the
Obligations or Loan Documents. In the event the Securities have been transferred
into the name of Pledgee or a nominee or nominees of Pledgee prior to default,
Pledgee or its nominee will execute and deliver upon request of Pledgors an
appropriate proxy in order to permit Pledgors to vote, if applicable, the same.
10. Each Pledgor shall take all actions (and execute and deliver from
time to time all instruments and documents) reasonably necessary or appropriate
or reasonably requested
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by Pledgee, to continue the validity, enforceability and perfected status of the
pledge of Securities hereunder.
11. Pledgee shall be under no obligation to take any actions and shall
have no liability (except for gross negligence or willful misconduct) with
respect to the preservation or protection of the pledged Securities or any
underlying interests represented thereby as against any prior or other parties.
In the event Pledgors request that Pledgee take or omit to take action(s) with
respect to the Collateral, Pledgee may refuse so to do with impunity if Pledgors
do not, upon request of Pledgee, post sufficient, creditworthy indemnities with
Pledgee which, in Pledgee's sole discretion, are sufficient to hold it harmless
from any possible liability of any kind in connection therewith.
12. Pledgors agree that Pledgee, at any time and without affecting its
rights in the pledged Securities and without notice to Pledgors, may grant any
extensions, releases or other modifications of any kind respecting the Loan
Documents, Obligations and any collateral security therefor and each Pledgor,
except as otherwise provided herein or in the Loan Documents, waives all notices
of any kind in connection with the Obligations, the Loan Documents and any
changes therein or defaults or enforcement proceedings thereunder, whether
against Pledgors or any other party. Each Pledgor hereby waives any rights it
has at equity or in law to require Pledgee to apply any rights of marshaling or
other equitable doctrines in the circumstances.
13. After the occurrence and during the continuance of an Event of
Default under the Credit Agreement:
(a) Pledgee may transfer or cause to be transferred any of the
pledged Securities into its own or a nominee's or nominees' name or names.
(b) Pledgee shall be entitled to receive and apply in payment of the
Obligations any cash dividends, interest or other payment on the pledged
Securities.
(c) Pledgee shall be entitled to exercise in Pledgee's discretion
all voting rights, if any, pertaining thereto and in connection therewith and at
the written request of Pledgee, Pledgors shall execute any appropriate dividend,
payment or brokerage orders or proxies.
(d) Pledgors shall take any action necessary or required or
reasonably requested by Pledgee, in order to allow Pledgee fully to enforce the
pledge of the Securities hereunder and realize thereon to the fullest possible
extent, including but not limited to the filing of any claims with any court,
liquidator or trustee, custodian, receiver or other like person or party.
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(e) Pledgee shall have all the rights and remedies granted or
available to it hereunder, under any statute or the common law, or under any of
the Loan Documents, including the right to sell the pledged Securities or any
portion thereof at one or more public or private sales upon ten (10) days'
written notice and to bid thereat or purchase any part or all thereof in its own
or a nominee's or nominees' names, free and clear of any equity of redemption;
and to apply the net proceeds of the sale, after deduction for any expenses of
sale, including the payment of all Pledgee's reasonable attorneys' fees in
connection with the Obligations and the sale, to the payment of the Obligations
in any manner or order which Pledgee in its sole discretion may elect, without
further notice to or consent of Pledgors and without regard to any equitable
principles of marshaling or other like equitable doctrines.
(f) Pledgee may increase, in its sole discretion, but shall not be
required to do so, the Obligations by making reasonable additional advances or
incurring reasonable expenses for the account of Pledgors deemed appropriate or
desirable by Pledgee in order to protect, enhance, preserve or otherwise further
the sale or disposition of the Collateral or any other property it holds as
security for the Obligations.
14. Each Pledgor recognizes that Pledgee may be unable to effect a sale
to the public of all or part of the Securities by reason of certain prohibitions
or restrictions in applicable securities laws and regulations (herein
collectively called the "Securities Laws"), or the provisions of other laws,
regulations or rulings, but may be compelled to resort to one or more sales to a
restricted group of purchasers who will be required to agree to acquire the
Securities for their own account, for investment and not with a view to the
further distribution or resale thereof without restriction. Each Pledgor agrees
that any sale(s) so made may be at prices and on other terms less favorable to
Pledgors than if the Securities were sold to the public, and that Pledgee has no
obligation to delay sale of the Securities for period(s) of time necessary to
permit the issuer thereof to register the Securities for sale to the public
under any of the Securities Laws. Each Pledgor agrees that negotiated sales
whether for cash or credit made under the foregoing circumstances shall not be
deemed for that reason not to have been made in a commercially reasonable
manner. Each Pledgor shall cooperate with Pledgee to satisfy any requirements
under the Securities Laws applicable to the sale or transfer of the Securities
by Pledgee, provided, however, that Pledgors shall have no obligation to file or
cause to be filed any registration statements.
In connection with any sale or disposition of the Collateral, Pledgee
is authorized to comply with any limitation or restriction as it may be advised
by its counsel is necessary or desirable in order to avoid any violation of
applicable law or to obtain any required approval of the purchasers) by any
governmental regulatory body or officer and it is agreed that such compliance
shall not result in such sale being considered not to have been made in a
commercially reasonable manner nor shall Pledgee be liable or accountable by
reason of the fact that the proceeds obtained at such sale(s) are less than
might otherwise have been obtained at public sale.
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Pledgee may elect to obtain the advice of any independent
nationally-known investment banking firm, which is a member firm of the New York
Stock Exchange, with respect to the method and manner of sale or other
disposition of any of the Collateral, the best price reasonably obtainable
therefor, the consideration of cash and/or credit terms, or any other details
concerning such sale or disposition. Pledgee, in its sole discretion, may elect
to sell on such credit terms which it deems reasonable.
15. The powers conferred on Pledgee hereunder are solely to protect its
interest in the Collateral and shall not impose any duty upon it to exercise any
such powers. Except for the safe custody of any Collateral in its possession and
the accounting for monies actually received by it hereunder, Pledgee shall have
no duty as to any Collateral or as to the taking of any necessary steps to
preserve any right of or against other parties pertaining to any Collateral.
Pledgors agree jointly and severally to indemnify Pledgee and each Secured Party
from and against any and all claims, losses and liabilities growing out of or
resulting from this Pledge Agreement (including, without limitation, enforcement
of this Pledge Agreement) or Pledgee's or any Lender's interest in the
Collateral, except claims, losses or liabilities resulting from such party's
gross negligence or wilful misconduct.
16. The parties agree that this Pledge Agreement shall be governed as
to its validity, interpretation and effect by the internal laws of the
Commonwealth of Pennsylvania without regard to the conflict of laws rules
thereof; and any terms used herein which are defined in the Uniform Commercial
Code as enacted in Pennsylvania shall have the meanings therein set forth.
17. This Pledge Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, personal
representatives, successors and assigns.
18. If Pledgee shall waive any rights or remedies arising hereunder or
under any applicable law, such waiver shall not be deemed to be a waiver upon
the later occurrence or recurrence of any of said events. No delay by Pledgee in
the exercise of any right or remedy shall under any circumstances constitute or
be deemed to be a waiver, express or implied, of the same and no course of
dealing between the parties hereto shall constitute a waiver of Pledgee's rights
or remedies.
19. Each Pledgor hereby irrevocably appoints Pledgee, effective upon
the occurrence and during the continuation of an Event of Default under the
Credit Agreement, as its attorney-in-fact to execute, deliver and record, if
appropriate, from time to time any instruments or documents in connection with
the Collateral, in such Pledgor's or Pledgee's names.
20. EACH OF THE PARTIES HERETO HEREBY KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON OR ARISING
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OUT OF, UNDER OR IN CONNECTION WITH THIS PLEDGE AGREEMENT OR THE CREDIT
AGREEMENT OR OTHER LOAN DOCUMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF PLEDGEE OR LENDERS. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR PLEDGEE'S ENTERING INTO THIS PLEDGE
AGREEMENT ON BEHALF OF THE LENDERS.
21. EACH PLEDGOR ACKNOWLEDGES THAT IT HAS HAD THE ASSISTANCE OF COUNSEL
IN THE REVIEW AND EXECUTION OF THIS PLEDGE AGREEMENT AND, SPECIFICALLY, SECTION
20 HEREOF, AND FURTHER ACKNOWLEDGES THAT THE MEANING AND EFFECT OF THE FOREGOING
WAIVER OF JURY TRIAL HAVE BEEN FULLY EXPLAINED TO SUCH PLEDGOR BY SUCH COUNSEL.
22. This Pledge Agreement represents the entire understanding of the
parties with respect to the subject matter and no modification or change herein
shall be effective unless contained in a writing signed by the parties hereto.
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IN WITNESS WHEREOF, the undersigned have executed this Second Amended
and Restated Pledge Agreement under seal as of the day and year first above
written.
Attest: MARKETING SPECIALISTS CORPORATION
By: By:
--------------------------------- ----------------------------------
Name: Name:
Title: Title:
Attest: MARKETING SPECIALISTS SALES
COMPANY
By: By:
--------------------------------- ----------------------------------
Name: Name:
Title: Title:
Attest: BROMAR, INC.
By: By:
--------------------------------- ----------------------------------
Name: Name:
Title: Title:
Attest: XXXX XXXXX ASSOCIATES, INC.
By: By:
--------------------------------- ----------------------------------
Name: Name:
Title: Title:
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Schedule A
Pledged Securities
Description Percent of
Company of Securities Certificate No. No. of Shares Outstanding Equity
------- ------------- --------------- ------------- ------------------
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Schedule B
Disclosure
B-1
