Exhibit 10.16
SECOND AMENDED AND RESTATED
PLEDGE AGREEMENT
This Second Amended and Restated Pledge Agreement (this
"Pledge Agreement") is entered into as of March __, 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
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.
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.
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").
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.
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:
For the purposes of this Pledge Agreement:
Capitalized terms used and not otherwise defined
herein shall have the meanings ascribed to such terms in the Credit Agreement.
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.
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.
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.
Pledgors represent and warrant that:
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 encumbrances
except as set forth on Schedule B or it leases such premises from the record
owner identified on Schedule 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.
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.
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.
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.
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).
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 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.
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.
At any time and from time to time, upon the request of
Pledgee, each Pledgor will, at its own expense:
defend the Collateral against the claims and demands
of all persons.
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.
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.
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.
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).
Each Pledgor agrees not to:
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
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.
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.
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:
Pledgors shall be entitled to receive and retain
any normal, regularly declared cash dividends paid on the Securities pledged
hereunder.
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.
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 by Pledgee, to continue the validity,
enforceability and perfected status of the pledge of Securities hereunder.
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.
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.
After the occurrence and during the continuance of an Event
of Default under the Credit Agreement:
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.
Pledgee shall be entitled to receive and apply in
payment of the Obligations any cash dividends, interest or other payment on
the pledged Securities.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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 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.
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.
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.
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:
1
Schedule A
PLEDGED SECURITIES
COMPANY DESCRIPTION PERCENT OF
------- OF SECURITIES CERTIFICATE NO. NO. OF SHARES OUTSTANDING EQUITY
------------- --------------- ------------- ------------------
1
Schedule B
DISCLOSURE
