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[EXECUTION COPY]
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of March 30, 1998, by EVENFLO & SPALDING
HOLDINGS CORPORATION, a Delaware corporation ("Holdings"), SPALDING & EVENFLO
COMPANIES, INC., a Delaware corporation (the "Borrower"), the undersigned
Subsidiaries of the Borrower (each a "Subsidiary Pledgor" and collectively, the
"Subsidiary Pledgors") and each other Person which may from time to time
hereafter become a party hereto pursuant to Section 16 (each an "Additional
Pledgor" and collectively, the "Additional Pledgors", and, together with;
Holdings, the Borrower and the Subsidiary Pledgors, collectively, the
"Pledgors"), in favor of BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION
("BofA"), as administrative agent (in such capacity, the "Administrative
Agent") for the lenders (the "Lenders") from time to time parties to the
Liquidity Facility dated as of March 30, 1998 (as the same may be amended,
amended and restated, supplemented or otherwise modified from time to time, the
"Liquidity Facility"), among the Borrower, Holdings, as a guarantor, the
Lenders, Xxxxxxx Xxxxx Capital Corporation, as documentation agent (in such
capacity, the "Documentation Agent") for the Lenders, NationsBank N.A. South,
as syndication agent (in such capacity, the "Syndication Agent") and the
Administrative Agent, for the ratable benefit of the Secured Creditors (as
defined below).
W I T N E S S E T H:
WHEREAS, pursuant to the Liquidity Facility, the Lenders have
severally agreed to make Loans (such capitalized term, and other capitalized
terms used in these recitals, to have the meanings set forth, or defined by
reference, in Section 1) to the Borrower upon the terms of and subject to the
conditions set forth therein (such Lenders, together with the Administrative
Agent, the Documentation Agent and the Syndication Agent, being referred to
herein as the "Secured Creditors");
WHEREAS, Holdings, the Administrative Agent, the Documentation Agent,
the Syndication Agent and certain of the Lenders are parties to that certain
Credit Agreement, dated as of September 30, 1996 (as amended, amended and
restated, supplemented or otherwise modified from time to time, the "Holdings
Credit Agreement");
WHEREAS, (a) Holdings owns 100% of the capital stock of the Borrower,
(b) each Subsidiary Pledgor is a Subsidiary of the Borrower and (c) Holdings
and each Subsidiary Pledgor has, pursuant to the Guaranty, guaranteed to the
Administrative Agent, for the ratable benefit of the Secured Creditors and
their respective successors, endorsees, transferees and assigns, the prompt and
complete payment and performance by the Borrower when due (whether at the
stated maturity, by acceleration or otherwise) of the Obligations;
WHEREAS, the proceeds of the Loans will be used in part to enable the
Borrower to make valuable transfers to the Subsidiary Pledgors in connection
with the operation of their respective businesses;
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WHEREAS, Holdings, the Borrower and the Subsidiary Pledgors are
engaged in related businesses, and each Pledgor will derive substantial direct
and indirect benefit from the making of the Loans;
WHEREAS, it is a condition precedent to the obligation of the Lenders
to make their respective Loans to the Borrower under the Liquidity Facility
that each Pledgor shall have executed and delivered this Pledge Agreement to
the Administrative Agent for the ratable benefit of the Secured Creditors; and
WHEREAS, each Pledgor is the legal and beneficial owner of the shares
of stock (the "Pledged Shares") described on Schedule I hereto and attributed
to such Pledgor (as the same may be supplemented from time to time in
accordance with the requirements of the Liquidity Facility) and issued by the
corporations named therein, which Pledged Shares constitute the percentage of
all the issued and outstanding shares of capital stock of such corporations
identified on such Schedule I;
NOW, THEREFORE, in consideration of the premises and to induce the
Secured Creditors to enter into the Liquidity Facility with the Borrower, each
Pledgor hereby agrees with the Administrative Agent, for the ratable benefit of
the Secured Creditors, as follows:
1. Defined Terms. (a) Unless otherwise defined herein, terms defined
in the Liquidity Facility and used herein shall have the meanings given to them
in the Liquidity Facility.
(b) "Holdings Creditors" is defined in the definition of "Holdings
Pledge Agreement".
(c) "Holdings Pledge Agreement" means the Pledge Agreement, dated as
of September 30, 1996 (as the same may be amended, amended and restated,
supplemented or otherwise modified from time to time), entered into by Holdings
in favor of BofA, as administrative agent under, and for the ratable benefit
of, the administrative agent, the documentation agent, the syndication agent,
the swing line lender, the fronting lender and the other lenders (the foregoing
parties, collectively, the "Holdings Creditors"), in each case, parties to, the
Holdings Credit Agreement.
(d) "Obligations" means, collectively, the unpaid principal of and
interest on the Loans and all other obligations and liabilities of the Borrower
to the Administrative Agent or any Lender (including interest accruing at the
then-applicable rate provided in the Liquidity Facility after the maturity of
the Loans and interest accruing at the then-applicable rate provided in the
Liquidity Facility after, or which would have accrued but for, the filing or
commencement of, or which would have accrued but for the filing or commencement
of, any Insolvency Proceeding, relating to the Borrower, whether or not a claim
for post-filing or post-petition interest is allowed in such proceeding),
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter incurred, that may arise under, out of, or in connection
with, the Liquidity Facility, the other Loan Documents or any other document
made, delivered or given in connection therewith, whether on account of
principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including all reasonable fees and other charges of
counsel to the Administrative Agent or to the Lenders that are required to be
paid by Holdings, the Borrower or any Subsidiary Pledgor pursuant to the terms
of the Liquidity Facility or any other Loan Document) and all obligations of
each Obligor (other than the Borrower) now or hereafter existing under this
Pledge Agreement and each other Loan Document to which it is or may become a
party.
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(e) "Pledge Agreement" means this Pledge Agreement, as amended,
amended and restated, supplemented or otherwise modified from time to time.
(f) "Pledged Note Issuer" means each Person identified on Schedule
II hereto as the issuer of the Pledged Note identified opposite the name of
such Person.
(g) "Pledged Notes" means all promissory notes of any Pledged Note
Issuer in the form or substantially the form of Exhibit A hereto which are
delivered by each Pledgor to the Administrative Agent as Pledged Property
hereunder, as such promissory notes, in accordance with Section 8, are amended,
supplemented, restated or otherwise modified from time to time together with
any promissory note of any Pledged Note Issuer taken in extension or renewal
thereof or substitution therefor.
(h) "Pledged Property" means all Pledged Shares, all Pledged Notes,
and all other pledged shares of capital stock or promissory notes, all other
securities, all assignments of any amounts due or to become due with respect
thereto, all other instruments which are now being delivered by the Pledgor to
the Administrative Agent or may from time to time hereafter be delivered by the
Pledgor to the Administrative Agent for the purpose of pledge under this Pledge
Agreement or any other Loan Document, and all proceeds of any of the foregoing.
(i) "Shared Collateral" means the capital stock of the Borrower (and
proceeds thereof) pledged by Holdings (i) hereunder to the Administrative Agent
on behalf of the Secured Creditors and (ii) pursuant to the Holdings Pledge
Agreement.
(j) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Pledge Agreement shall refer to this Pledge Agreement
as a whole and not to any particular provision of this Pledge Agreement, and
Section references are to Sections of this Pledge Agreement unless otherwise
specified. The word "including" is not limiting and means "including without
limitation".
(k) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
2. Grant of Security. Each Pledgor hereby assigns, pledges and
transfers to the Administrative Agent for the ratable benefit of the Secured
Creditors, and hereby grants to the Administrative Agent for the ratable
benefit of the Secured Creditors, a security interest in, the following,
whether now owned or existing or hereafter acquired or existing (collectively,
the "Collateral"):
(a) all promissory notes of each Pledged Note Issuer identified in
Schedule II;
(b) all other Pledged Notes issued from time to time;
(c) the Pledged Shares and the certificates representing the Pledged
Shares, any other issued and outstanding shares of the "issuers" listed on
Schedule I, and any interest of such Pledgor in the entries on the books of any
financial intermediary pertaining to the Pledged Shares or any such other
shares, and all dividends, cash, warrants, rights, instruments and other
property or proceeds from time to time received,
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receivable or otherwise distributed in respect of or in exchange for any or all
of the Pledged Shares and any such other shares; and
(d) to the extent not covered by clause (a) above, all proceeds of
any or all of the foregoing Collateral. For purposes of this Pledge Agreement,
the term "proceeds" includes whatever is receivable or received when Collateral
or proceeds are sold, exchanged, collected or otherwise disposed of, whether
such disposition is voluntary or involuntary, and includes, without limitation,
proceeds of any indemnity or guaranty payable to such Pledgor or the
Administrative Agent from time to time with respect to any of the Collateral.
3. Security for Obligations. This Pledge Agreement secures the
payment of all Obligations. Without limiting the generality of the foregoing,
this Pledge Agreement secures the payment of all amounts that constitute part
of the Obligations and would be owed by the Obligors to the Administrative
Agent or the Secured Creditors under the Loan Documents but for the fact that
they are unenforceable or not allowable due to the existence of an Insolvency
Proceeding involving any such Obligor.
4. Delivery of the Collateral. All certificates or instruments, if
any, representing or evidencing the Collateral (other than the Shared
Collateral), including all Pledged Notes, shall be delivered to and held by or
on behalf of (and in the case of the Pledged Notes, endorsed to the order of)
the Administrative Agent pursuant hereto, as to Collateral existing on the date
hereof, on the date hereof and, as to Collateral coming into existence after
the date hereof, promptly following the creation thereof, and, in each case,
shall be in suitable form for transfer by delivery, or shall be accompanied by
duly executed undated instruments of transfer or assignment in blank, all in
form and substance reasonably satisfactory to the Administrative Agent. The
Administrative Agent shall have the right, at any time after the occurrence and
during the continuance of an Event of Default and without notice to any
Pledgor, to transfer to or to register in the name of the Administrative Agent
or any of its nominees any or all of the Pledged Shares.
5. Representations and Warranties. Each Pledgor hereby represents
and warrants to each Secured Creditor as follows:
(i) The Pledged Shares set forth on Schedule I hereto represent on
the date hereof the percentage of all the issued and outstanding capital stock
of the Borrower and of each direct Material Subsidiary of the Borrower as
identified on such Schedule I.
(ii) Each of the Pledgors is the legal and beneficial owner of the
Collateral, as indicated on Schedule I, pledged or assigned by such Pledgor
hereunder free and clear of any Lien, except for the Lien and security interest
(A) created by this Pledge Agreement, (B) as to the Shared Collateral only,
created by the Holdings Pledge Agreement, or (C) Liens permitted under Section
8.
(iii) As of the date of this Pledge Agreement, the Pledged Shares
pledged by each Pledgor hereunder have been duly authorized and validly issued
and are fully paid and non-assessable.
(iv) As of the date of this Pledge Agreement, no Pledged Share is
uncertificated.
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(v) The execution and delivery by the Pledgors of this Pledge
Agreement and the pledge of the Collateral pledged by such Pledgors hereunder
pursuant hereto create a valid and perfected first priority security interest
and security entitlement in the Collateral (other than the Shared Collateral)
in favor of the Administrative Agent, on behalf of the Secured Creditors,
securing the payment of the Obligations. As to the Shared Collateral only, the
execution and delivery by Holdings of this Pledge Agreement and the pledge of
the Shared Collateral by Holdings hereunder create a valid and perfected first
priority, pari passu, security interest and security entitlement in the Shared
Collateral (equal in priority to the Lien created pursuant to the Holdings
Pledge Agreement and subject to no other Liens) in favor of the Administrative
Agent, on behalf of the Secured Creditors, securing the payment of the
Obligations.
(vi) In the case of each Pledged Note, all of such Pledged Notes
have been duly authorized, executed, endorsed, issued and delivered, and are
the legal, valid and binding obligation of the issuers thereof, and are not in
default.
(vii) Each Pledgor has full power, authority and legal right to
pledge all the Collateral pledged by such Pledgor pursuant to this Pledge
Agreement and such Pledgor will defend its and the Administrative Agent's title
or interest thereto or therein (and in the proceeds thereof) against any and
all Liens (other than (A) the Lien of this Pledge Agreement, (B) as to the
Shared Collateral only, the first priority, pari passu, Lien granted by
Holdings pursuant to the Holdings Pledge Agreement and (C) as to the Collateral
other than the Shared Collateral, the second priority Lien granted pursuant to
the Holdings Pledge Agreement), however arising, and all persons whomsoever.
(viii) Each of Holdings and the Borrower has furnished to the
Administrative Agent true and complete copies as of the date hereof of the
charter and/or other organizational documents of, and the bylaws of, in the
case of Holdings, the Borrower, and in the case of the Borrower, each
Subsidiary any of the shares of capital stock of which constitute Pledged
Shares, and neither Holdings nor the Borrower is a party as of the date hereof
to any shareholder agreement or other arrangement affecting the voting rights
of any capital stock of the Borrower or any such Subsidiary.
6. Further Assurances. Each Pledgor agrees that (a) at any time and
from time to time, at the expense of such Pledgor, it will promptly execute and
deliver all further instruments and documents, and take all further action that
may be necessary, or that the Administrative Agent may reasonably request, in
order to perfect and protect any pledge, assignment or security interest
granted or purported to be granted hereby or to enable the Administrative Agent
to exercise and enforce its rights and remedies hereunder with respect to any
Collateral and (b) at any time when any Pledged Shares shall become
uncertificated, the Pledgors and the Administrative Agent shall enter into good
faith negotiations to effectuate the provisions of Article 8 of the UCC such
that the Administrative Agent's first priority, in the case of the Collateral
other than the Shared Collateral, and first priority, pari passu, in the case
of the Shared Collateral only, security interests granted hereunder shall be
maintained. The Borrower agrees to notify the Administrative Agent in writing
on a monthly basis, such notice to be delivered concurrently with the reports
delivered by the Borrower to the Administrative Agent in accordance with
Section 7.1(c) of the Holdings Credit Agreement, as incorporated by reference
in the Liquidity Facility pursuant to Article VII thereof, of the amounts of
intercompany indebtedness owing to the Borrower and the identity of each
Subsidiary obligated to repay the same.
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7. Voting Rights; Dividends and Distributions; Etc. (a) So long as
no Event of Default shall have occurred and be continuing:
(i) The Pledgors shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Collateral (as applicable)
or any part thereof for any purpose not prohibited by the terms of this Pledge
Agreement or the other Loan Documents.
(ii) The Administrative Agent shall execute and deliver (or
cause to be executed and delivered) to any Pledgor (at such Pledgor's expense)
all such proxies and other instruments as such Pledgor may reasonably request
for the purpose of enabling such Pledgor to exercise the voting and other
rights that it is entitled to exercise pursuant to paragraph (i) above.
(b) Subject to paragraph (c) below, each Pledgor shall be entitled to
receive and retain and use, free and clear of the Lien of this Pledge
Agreement, any and all dividends, distributions and interest paid in respect of
the Collateral (as applicable); provided, however, that any and all dividends
and other distributions in equity securities included in the Collateral shall
be, and shall be forthwith delivered to the Administrative Agent to hold as,
Collateral and shall, if received by a Pledgor, be received in trust for the
benefit of the Administrative Agent, be segregated from the other property or
funds of such Pledgor and be forthwith delivered to the Administrative Agent as
Collateral in the same form as so received (with any necessary endorsement).
(c) Upon written notice to any Pledgor by the Administrative Agent
following the occurrence and during the continuance of an Event of Default:
(i) all rights of such Pledgor to exercise or refrain from
exercising the voting and other consensual rights that it would otherwise be
entitled to exercise pursuant to Section 7(a)(i) shall cease, and all such
rights shall thereupon become vested in the Administrative Agent, which shall
thereupon have the sole right to exercise or refrain from exercising such
voting and other consensual rights during the continuance of such Event of
Default;
(ii) all rights of such Pledgor to receive the dividends,
distributions, principal and interest payments that such Pledgor would
otherwise be authorized to receive and retain pursuant to Section 7(b) shall
cease, and all such rights shall thereupon become vested in the Administrative
Agent, which shall thereupon have the sole right to receive and hold as
Collateral such dividends and interest payments during the continuance of such
Event of Default;
(iii) all dividends, principal and interest payments that are
received by such Pledgor contrary to the provisions of Section 7(b) shall be
received in trust for the benefit of the Administrative Agent, shall be
segregated from other funds of such Pledgor and shall forthwith be paid over to
the Administrative Agent as Collateral in the same form as so received (with
any necessary endorsements); and
(iv) in order to permit the Administrative Agent to receive
all dividends and other distributions to which it may be entitled under Section
7(b), to exercise the voting and other consensual rights that it may be
entitled to exercise pursuant to Section 7(c)(i), and to receive all dividends,
distributions, principal and interest payments and other distributions that it
may be entitled to receive
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under Section 7(c)(ii), such Pledgor shall, if necessary, upon written notice
from the Administrative Agent, from time to time execute and deliver to the
Administrative Agent, appropriate proxies, dividend payment orders and other
instruments as the Administrative Agent may reasonably request.
8. Transfers and Other Liens; Additional Collateral; Documents; Etc.
No Pledgor shall:
(a) (i) except as permitted by the Liquidity Facility, sell or
otherwise dispose of, or grant any option or warrant with respect to, any of
the Collateral or (ii) create or suffer to exist any consensual Lien upon or
with respect to any of the Collateral, except for (A) the Lien of this Pledge
Agreement, (B) as to the Shared Collateral only, the first priority, pari
passu, Lien granted by Holdings pursuant to the Holdings Pledge Agreement and
(C) as to the Collateral other than the Shared Collateral, the second priority
Lien granted pursuant to the Holdings Pledge Agreement, provided that in the
event such Pledgor sells or otherwise transfers assets as permitted by the
Liquidity Facility in accordance with the terms of the Liquidity Facility and
such assets are or include Collateral, the Administrative Agent shall (at the
expense of such Pledgor) release such Collateral to such Pledgor free and clear
of the lien and security interest under this Pledge Agreement concurrently with
the consummation of such sale;
(b) (i) except as may be permitted by the Liquidity Facility, cause
any issuer of Pledged Shares pledged by such Pledgor to issue any stock or
other securities in substitution for the Pledged Shares issued by such issuer,
except to such Pledgor, (ii) fail to pledge hereunder, immediately upon the
issuance thereof, any and all additional shares of stock or other securities of
each such issuer of Pledged Shares and (iii) permit the issuance of any
additional shares of stock of such issuer unless permitted by the Liquidity
Facility and, if so permitted, any proceeds thereof required to be applied
under the Liquidity Facility are so applied in accordance therewith or, if any
such additional shares are issued to such Pledgor, such additional shares are
immediately pledged hereunder upon the issuance thereof;
(c) amend, supplement or otherwise modify, or permit the amendment,
supplementation or other modification of, the charter or other organizational
documents or the bylaws of any entity any of the capital stock of which
constitute Pledged Shares of such Pledgor in any respect that would be
materially adverse to the interests or position of the Administrative Agent or
the Secured Creditors hereunder or in connection herewith, nor shall it, nor
shall it permit any entity any of the capital stock of which constitutes
Pledged Shares to, enter into or agree to any shareholder or other agreement
that would be materially adverse to the interests or position of the
Administrative Agent or the Secured Creditors hereunder or in connection
herewith; and
(d) enter into any agreement amending any provision of any Pledged
Note or forgive the obligation of the maker thereof to repay any principal or
interest due and owing thereunder;
provided, however, that notwithstanding any provision to the contrary contained
herein or in any other Loan Document, the Borrower shall, at all times during
the period from the date hereof until the payment in full in cash of the
Obligations and the termination of all Commitments, have pledged to the
Administrative Agent for the ratable benefit of the Secured Creditors pursuant
to the terms of this Pledge Agreement all of the outstanding shares of the
capital stock of each Material Subsidiary of the Borrower, provided that, in
the event such Subsidiary is a Foreign Subsidiary, the Borrower shall not be
required to have so pledged to the Administrative Agent more than 65% of the
outstanding shares of the capital stock of such Subsidiary.
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9. Administrative Agent Appointed Attorney-in-Fact. Each Pledgor
hereby irrevocably appoints the Administrative Agent as such Pledgor's
attorney-in-fact, with full authority in the place and stead of such Pledgor
and in the name of such Pledgor or otherwise to take any action and to execute
any instrument, in each case after the occurrence and during the continuance of
an Event of Default, that the Administrative Agent may deem reasonably
necessary or advisable to accomplish the purposes of this Pledge Agreement,
including to receive, endorse and collect all instruments made payable to such
Pledgor representing any dividend, interest payment or other distribution in
respect of the Collateral or any part thereof and to give full discharge for
the same and otherwise to collect on any Collateral or enforce the rights of
the Administrative Agent with respect thereto. Each Pledgor hereby
acknowledges, consents and agrees that this power of attorney is irrevocable
and coupled with an interest.
10. The Administrative Agent's Duties. The powers conferred on the
Administrative Agent 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 money actually received by it hereunder, the Administrative
Agent shall have no duty as to any Collateral, as to ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Pledged Shares, whether or not the Administrative
Agent or any Secured Creditor has or is deemed to have knowledge of such
matters, or as to the taking of any necessary steps to preserve rights against
any parties or any other rights pertaining to any Collateral. The
Administrative Agent shall be deemed to have exercised reasonable care in the
custody and preservation of any Collateral in its possession if such Collateral
is accorded treatment substantially equal to that which the Administrative
Agent accords its own property or if the Administrative Agent decides to take
any action for such purpose that has been requested by any Pledgor (it being
understood and agreed that the failure of the Administrative Agent to comply
with any such request at any time shall not in itself be deemed a failure to
exercise reasonable care and that the Administrative Agent is not obligated to
comply with any such request unless otherwise required to do so hereunder or
under the Liquidity Facility).
11. Remedies. If any Event of Default shall have occurred and be
continuing:
(a) The Administrative Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured creditor
upon default under the Uniform Commercial Code in effect in the State of New
York at such time (the "UCC") and also may 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 the Administrative
Agent's offices or elsewhere, for cash, on credit or for future delivery, at
such price or prices and upon such other terms as are commercially reasonable
irrespective of the impact of any such sales on the market price of the
Collateral. Each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of any Pledgor, and each
Pledgor hereby waives (to the extent permitted by law) all rights of
redemption, stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
Each Pledgor agrees that, to the extent notice of sale shall be required by
law, at least ten (10) days' notice to such Pledgor of the time and place of
any public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Administrative Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. The Administrative Agent may adjourn any public or private sale
from time to time by announcement at the time and place fixed
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therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned. To the extent permitted by law, each
Pledgor hereby waives any claim against the Administrative Agent arising by
reason of the fact that 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 the Administrative Agent accepts the first offer received
and does not offer such Collateral to more than one offeree.
(b) Subject to Section 18 hereof, all cash proceeds received by the
Administrative Agent in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral shall be applied (after
payment of any amounts payable to the Administrative Agent pursuant to Sections
11.4 and 11.5 of the Liquidity Facility) by the Administrative Agent for the
ratable benefit of the Secured Creditors in the following order: first, against
Obligations consisting of unpaid and outstanding interest on the Loans, second,
ratably against Obligations consisting of unpaid and outstanding principal of
the Loans, and third, against any other remaining Obligations. Any surplus of
such cash or cash proceeds held by the Administrative Agent and remaining after
payment in full of all the Obligations (other than indemnities, costs and
expenses that survive termination of a Loan Document but as to which demand for
payment has not then been made) and the termination of all Commitments shall be
paid over to the applicable Pledgor or to any other Person notified in writing
to the Administrative Agent that may be lawfully entitled to receive such
surplus.
(c) The Administrative Agent may exercise any and all rights and
remedies of each Pledgor in respect of the Collateral.
(d) All payments received by any Pledgor after the occurrence and
during the continuance of an Event of Default in respect of the Collateral
shall be received in trust for the benefit of the Administrative Agent, shall
be segregated from other funds of such Pledgor and, upon written notice to such
Pledgor from the Administrative Agent, shall be forthwith paid over to the
Administrative Agent in the same form as so received (with any necessary
endorsement).
(e) Each Pledgor shall remain liable to the extent of any deficiency.
(f) Each Pledgor agrees that in any sale of any of the Collateral in
the exercise of remedies hereunder whenever an Event of Default shall have
occurred and be continuing, the Administrative Agent is hereby authorized to
comply with any limitation or restriction in connection with such sale as it
may be advised by counsel is reasonably necessary in order to avoid any
violation of applicable law (including compliance with such procedures as may
restrict the number of prospective bidders and purchasers, require that such
prospective bidders and purchasers have certain qualifications, and restrict
such prospective bidders and purchasers to persons who will represent and agree
that they are purchasing for their own account for investment and not with a
view to the distribution or resale of such Collateral), or in order to obtain
any required approval of the sale or of the purchaser by any governmental
regulatory authority or official, and such Pledgor further agrees that such
compliance shall not result in such sale being considered or deemed not to have
been made in a commercially reasonable manner, nor shall the Administrative
Agent be liable nor accountable to such Pledgor for any discount allowed by
reason of the fact that such Collateral is sold in compliance with any such
limitation or restriction.
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12. Amendments, etc. with Respect to the Obligations; Waiver of
Rights. Each Pledgor shall remain obligated hereunder notwithstanding that,
without any reservation of rights against such Pledgor and without notice to or
further assent by such Pledgor, any demand for payment of any of the
Obligations made by the Administrative Agent or any Secured Creditor may be
rescinded by such party and any of the Obligations continued, and the
Obligations, or the liability of any other party upon or for any part thereof,
or any collateral security or guarantee therefor or right of offset with
respect thereto, may, from time to time, in whole or in part, be renewed,
extended, amended, modified, accelerated, compromised, waived, surrendered or
released by the Administrative Agent or any Secured Creditor, and the Liquidity
Facility and the other Loan Documents and any other documents executed and
delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Administrative Agent (or the Majority
Lenders under the terms of the Liquidity Facility, as the case may be) may deem
advisable from time to time (in accordance with the Liquidity Facility), and
any collateral security, guarantee or right of offset at any time held by the
Administrative Agent or any Secured Creditor for the payment of the Obligations
may be sold, exchanged, waived, surrendered or released. Neither the
Administrative Agent nor any Secured Creditor shall have any obligation to
protect, secure, perfect or insure any Lien at any time held by it as security
for the Obligations or for this Pledge Agreement or any property subject
thereto. When making any demand hereunder against any Pledgor, the
Administrative Agent or any Secured Creditor may, but shall be under no
obligation to, make a similar demand on any other pledgor, or any other
provider of collateral or guarantor, and any failure by the Administrative
Agent or any Secured Creditor to make any such demand or to collect any
payments from such Pledgor or any other pledgor, provider of collateral or
guarantor, and any release of such Pledgor or any other pledgor, provider of
collateral or guarantor shall not relieve such Pledgor of its obligations or
liabilities hereunder, and shall not impair or affect the rights and remedies,
express or implied, or as a matter of law, of the Administrative Agent or any
Secured Creditor against such Pledgor. For the purposes hereof "demand" shall
include the commencement and continuance of any legal proceedings.
13. Continuing Security Interest, Assignments Under the Liquidity
Facility. This Pledge Agreement shall create a continuing security interest in
the Collateral and shall (a) unless the Pledgors and the Administrative Agent
otherwise agree, remain in full force and effect until the payment in full in
cash of the Obligations (other than indemnities, costs and expenses that
survive termination of a Loan Document but as to which demand for payment has
not then been made) and the termination of all Commitments, notwithstanding
that from time to time prior thereto the Pledgors may be free from any
Obligations, (b) be binding upon each Pledgor, its successors and assigns and
(c) inure, together with the rights and remedies of the Administrative Agent
hereunder, to the benefit of the Administrative Agent, the Secured Creditors
and their respective successors, transferees and assigns.
Without limiting the foregoing clause (c), any Secured Creditor may assign or
otherwise transfer (in whole or in part) any Note, Loan or other Obligation
held by it to any other Person, and such other Person shall thereupon become
vested with all the rights and benefits in respect thereof granted to such
Secured Creditor under any Loan Document (including this Pledge Agreement) or
otherwise, subject, however, to any contrary provisions in such assignment or
transfer, and to the provisions of Section 11.8 and Article X of the Liquidity
Facility.
14. Reinstatement. This Pledge Agreement shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Obligations is rescinded or must
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otherwise be restored or returned by the Administrative Agent or any Secured
Creditor upon the filing or commencement of any Insolvency Proceeding in
respect of any Pledgor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, such
Pledgor or any substantial part of its property, or otherwise, all as though
such payments had not been made.
15. Notices. All notices, requests and demands to or upon the
Secured Creditors or the Pledgors under this Pledge Agreement shall be given or
made in accordance with Section 11.2 of the Liquidity Facility and addressed as
follows:
(a) if to any Pledgor other than the Borrower, in care of the
Borrower in accordance with Section 11.2 of the Liquidity Facility
(b) if to the Borrower, in accordance with Section
11.2 of the Liquidity Facility; and
(c) if to any Secured Creditor, in accordance with Section
11.2 of the Liquidity Facility.
16. Additional Pledgors. Upon the execution and delivery by any
other Person of an instrument in the form of Annex 1 hereto, such Person shall
become a "Pledgor" hereunder with the same force and effect as if originally
named as a Pledgor herein. The execution and delivery of any such instrument
shall not require the consent of any other Pledgor hereunder. The rights and
obligations of each Pledgor hereunder shall remain in full force and effect
notwithstanding the addition of any new Pledgor as a party to this Pledge
Agreement.
17. Foreign Pledgor Supplements. This Pledge Agreement may be
supplemented from time to time by Foreign Subsidiary Pledge Supplements as to
pledges of capital stock of Foreign Subsidiaries which supplements shall make
express reference to this Pledge Agreement.
18. Intercreditor Arrangements. For perfection purposes only, the
Administrative Agent shall be deemed to be holding the Collateral (other than
the Shared Collateral) hereunder on behalf of the Secured Creditors on a first
priority basis and on behalf of the Holdings Creditors on a second priority
basis. In furtherance of the foregoing, the Administrative Agent shall be
deemed to have all the benefits of appointment, authorization, exculpation and
indemnity provided to the administrative agent under the Holdings Credit
Agreement mutatis mutandis.
19. Counterparts. This Pledge Agreement may be executed by the
Pledgors and the Administrative Agent on any number of separate counterparts,
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument. A set of the counterparts of this Pledge Agreement
signed by the Pledgors and the Administrative Agent shall be lodged with the
Administrative Agent, Holdings and the Borrower.
20. Severability. Any provision of this Pledge Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
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12
21. Integration; Loan Document. This Pledge Agreement represents the
entire agreement of the Pledgors and the Administrative Agent with respect to
the subject matter hereof and there are no agreements relative to the subject
matter hereof not reflected herein or, to the extent expressly referred to
herein, in the other Loan Documents. This Pledge Agreement is a Loan Document
executed pursuant to the Liquidity Facility and shall (unless otherwise
expressly indicated herein) be construed, administered and applied in
accordance with the terms and provisions of the Liquidity Facility.
22. Amendments in Writing; No Waiver; Cumulative Remedies. (a) None
of the terms or provisions of this Pledge Agreement may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
each Pledgor and the Administrative Agent in accordance with Section 11.1 of
the Liquidity Facility.
(b) Neither the Administrative Agent nor any Secured Creditor shall by
any act (except by a written instrument pursuant to Section 22(a)), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. No failure to exercise, nor
any delay in exercising, on the part of the Administrative Agent or any Secured
Creditor, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Administrative Agent
or any Secured Creditor of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy that the Administrative
Agent or such Secured Creditor would otherwise have on any future occasion.
(c) The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
23. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS PLEDGE AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS PLEDGE AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE,
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION
23.
24. Jurisdiction; Consent to Service of Process. (a) Each Pledgor
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any New York State court or federal court of
the United States of America sitting in New York City, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to
this Pledge Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in
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such federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Pledge Agreement shall affect any right that any Pledgor or any
Secured Creditor may otherwise have to bring any action or proceeding relating
to this Pledge Agreement or the other Loan Documents against any Pledgor or any
Secured Creditor or its properties in the courts of any jurisdiction.
(b) Each Pledgor and each Secured Creditor hereby irrevocably
and unconditionally waives, to the fullest extent it may legally and
effectively do so, any objection that it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Pledge Agreement or the other Loan Documents in any New York State or
federal court. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(c) Each party to this Pledge Agreement irrevocably consents
to service of process in the manner provided for notices in Section 15.
Nothing in this Pledge Agreement will affect the right of any party to this
Pledge Agreement to serve process in any other manner permitted by law.
25. Section Headings. The Section headings used in this Pledge
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation
hereof.
26. Successors and Assigns. This Pledge Agreement shall be binding
upon the successors and assigns of each Pledgor and shall inure to the benefit
of the Administrative Agent and the Secured Creditors and their successors and
assigns, except no Pledgor may assign, transfer or delegate any of its rights
or obligations under this Pledge Agreement without the prior written consent of
the Administrative Agent.
27. Protection of Collateral. The Administrative Agent may from time
to time take any action which the Administrative Agent reasonably deems
necessary for the maintenance, preservation or protection of any of the
Collateral or of its security interest therein, and at any time after and
during the continuance of an Event of Default, the Administrative Agent may
from time to time, at its option and at the expense of the applicable Pledgor,
perform any act which such Pledgor agrees hereunder to perform and which such
Pledgor shall fail to perform.
28. GOVERNING LAW. THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each of the undersigned has caused this Pledge
Agreement to be duly executed and delivered by its duly authorized officer as
of the day and year first above written.
EVENFLO & SPALDING HOLDINGS
CORPORATION
SPALDING & EVENFLO COMPANIES, INC.
EVENFLO COMPANY, INC.
ETONIC WORLDWIDE CORPORATION
LISCO, INC.
S&E FINANCE CO., INC.
SPALDING SPORTS CENTERS, INC.
ETONIC LISCO, INC.
LISCO FURNITURE, INC.
LISCO FEEDING, INC.
LISCO SPORTS, INC.
By: ______________________________
Name:
Title:
S&E FINANCE CO., INC.
By: ______________________________
Name:
Title:
BANK OF AMERICA NATIONAL TRUST &
SAVINGS ASSOCIATION,
as Administrative Agent
By: ______________________________
Name:
Title:
15
ACKNOWLEDGED AND AGREED:
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION,
as Administrative Agent under the
Holdings Credit Agreement, on behalf of
the lenders thereunder
By: ______________________________
Name:
Title:
16
SCHEDULE I
TO THE PLEDGE AGREEMENT
PLEDGED SHARES
Percentage
Stock of
Class of Certificate Number of Outstanding
Pledgor Issuer Stock/Par Value No(s) Shares Shares
------ ------ --------------- ----- ------ ------
Evenflo & Spalding Holdings Spalding & Evenflo Companies, Common C 2 190,000 100%
Corporation Inc. Stock/$1.00
Spalding & Evenflo
Companies, Inc.
[SUBSIDIARIES]
17
SCHEDULE II
TO THE PLEDGE AGREEMENT
PLEDGED NOTES
Pledged Note Issuer Description
------------------- -----------
18
ANNEX 1 TO
PLEDGE AGREEMENT
SUPPLEMENT NO. dated as of , to
the Pledge Agreement dated as of March 30, 1998 (the "Pledge
Agreement"), among EVENFLO & SPALDING HOLDINGS CORPORATION, a
Delaware corporation ("Holdings"), SPALDING & EVENFLO
COMPANIES, INC., a Delaware corporation (the "Borrower"), each
of the Subsidiaries (such term and each other capitalized term
used but not defined herein having the meaning given it in the
Pledge Agreement) and BANK OF AMERICA NATIONAL TRUST & SAVINGS
ASSOCIATION, as administrative agent (in such capacity, the
"Administrative Agent") for the Secured Creditors.
A. Reference is made to the Liquidity Facility, dated as of
March 30, 1998 (as amended, amended and restated or otherwise modified from
time to time, the "Liquidity Facility"), among the Borrower, the Lenders, the
Administrative Agent, the Documentation Agent and the Syndication Agent.
B. The Pledgors have entered into the Pledge Agreement in
order to induce the Lenders to make Loans pursuant to, and upon the terms and
subject to the conditions specified in, the Liquidity Facility. Pursuant to
the Liquidity Facility, each Material Subsidiary that was not in existence or
not a Material Subsidiary on the date thereof is required to enter into the
Pledge Agreement as a Pledgor upon becoming a Material Subsidiary. Section 16
of the Pledge Agreement provides that additional Persons may become Pledgors
under the Pledge Agreement by execution and delivery of an instrument in the
form of this Supplement. The undersigned (the "New Pledgor") is a Material
Subsidiary of the Borrower and is executing this Supplement in accordance with
the requirements of the Liquidity Facility to become a Pledgor under the Pledge
Agreement in order to induce the Lenders to make additional Loans and as
consideration for Loans previously made.
Accordingly, the Administrative Agent and the New Pledgor
agree as follows:
SECTION 1. In accordance with Section 16 of the Pledge
Agreement, the New Pledgor by its signature below becomes a Pledgor under the
Pledge Agreement with the same force and effect as if originally named therein
as a Pledgor and the New Pledgor hereby agrees to all the terms and provisions
of the Pledge Agreement applicable to it as a Pledgor thereunder. Each
reference to a "Pledgor" in the Pledge Agreement shall be deemed to include the
New Pledgor. The Pledge Agreement is hereby incorporated herein by reference.
SECTION 2. The New Pledgor represents and warrants to the
Secured Creditors that this Supplement has been duly authorized, executed and
delivered by it and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms, subject to the effects of
applicable bankruptcy, insolvency or similar laws effecting creditors' rights
generally and equitable principles of general applicability.
SECTION 3. This Supplement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute but one
19
instrument. This Supplement shall become effective when the Administrative
Agent shall have received counterparts of this Supplement that, when taken
together, bear the signatures of the New Pledgor and the Administrative Agent.
SECTION 4. Except as expressly supplemented hereby, the
Pledge Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provisions
contained in this Supplement should be held invalid, illegal or unenforceable
in any respect, neither party hereto shall be required to comply with such
provision for so long as such provision is held to be invalid, illegal or
unenforceable, but the validity, legality and enforceability of the remaining
provisions contained herein and in the Pledge Agreement shall not in any way be
affected or impaired. The parties hereto shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.
SECTION 7. All communications and notices hereunder shall be
in writing and given as provided in the Pledge Agreement. All communications
and notices hereunder to the New Pledgor shall be given to it at the address
set forth under its signature, with a copy to the Borrower.
IN WITNESS WHEREOF, the New Pledgor and the Administrative Agent have
duly executed this Supplement to the Pledge Agreement as of the day and year
first above written.
[NAME OF NEW PLEDGOR]
By: ______________________________
Name:
Title:
Address: _________________________
_________________________
Fax No.: _________________________
Attention:_________________________
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BANK OF AMERICA NATIONAL SAVINGS &
TRUST ASSOCIATION, as
Administrative Agent
By: ______________________________
Name:
Title:
Address: _________________________
_________________________
Fax No.: _________________________
Attention:_________________________
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21
EXHIBIT A
TO PLEDGE AGREEMENT
PROMISSORY NOTE
_________________, 19__
FOR VALUE RECEIVED, the undersigned, ______________, a
_______________ corporation (the "Maker"), promises to pay to the order of
SPALDING & EVENFLO COMPANIES, INC., a Delaware corporation (the "Payee"), on
DEMAND, advances made from time to time pursuant to intercompany loans made by
the Payee to the Maker.
The unpaid principal amount of this promissory note (this "Note")
from time to time outstanding shall bear interest at a rate of interest
determined by the Payee from time to time, which the Maker represents to be a
lawful and commercially reasonable rate, payable quarterly, and all payments of
principal of and interest on this Note shall be payable in lawful currency of
the United States of America. All such payments shall be made by the Maker to
an account established by the Payee and notified to the Maker and shall be
recorded on the grid attached hereto by the holder hereof (including the
Administrative Agent as pledgee). Upon notice from the Administrative Agent
(hereinafter defined) that a Default (as defined in the Liquidity Facility,
hereinafter defined) of the nature referred to in Section 9.1(f) or (g) of the
Liquidity Facility or an Event of Default (as defined in the Liquidity
Facility) has occurred and is continuing under the Liquidity Facility, the
Maker shall make such payments, in same day funds, to such other account as the
Administrative Agent shall direct in such notice.
This Note is one of the notes referred to in, and evidences
Indebtedness incurred pursuant to Article VIII of the Liquidity Facility (which
Article incorporates by reference, inter alia, clause (c) of Section 8.4 of the
Holdings Credit Agreement, as incorporated by reference in the Liquidity
Facility pursuant to Article VIII thereof. Upon the occurrence and continuance
of an Event of Default under the Liquidity Facility, and notice thereof by the
Administrative Agent to the Maker, the Administrative Agent shall have all
rights of the Payee to collect and accelerate, and enforce all rights with
respect to, the Indebtedness evidenced by this Note. Unless otherwise defined
herein or the context otherwise requires, terms used herein have the meanings
provided in the Liquidity Facility.
Reference is made to the Liquidity Facility for a description of the
Pledge Agreement pursuant to which this Note has been pledged to the
Administrative Agent as security for the Obligations outstanding from time to
time under the Liquidity Facility and each other Loan Document.
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In addition to, but not in limitation of, the foregoing, the Maker
further agrees to pay all expenses, including reasonable attorneys' fees and
legal expenses, incurred by the holder (including the Administrative Agent as
pledgee) of this Note endeavoring to collect any amounts payable hereunder which
are not paid when due, whether by acceleration or otherwise.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
THE MAKER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY
RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON
THIS NOTE. THE MAKER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE PAYEE TO ACCEPT THIS NOTE.
[Name of Maker]
By_____________________________
Title:_______________________
Pay to the order of ________________
SPALDING & EVENFLO COMPANIES, INC.
By: __________________________
Title:
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GRID
Intercompany Loans made by Spalding & Evenflo Companies, Inc. to
________________ and payments of principal of such Loans.
Amount of Amount of Outstanding
Intercompany Principal Principal Notation Made
Date Loan Payment Balance By
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