1
Exhibit 10.9
PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT, dated as of June 24, 1999, delivered
by , an individual residing at the address set forth at the end of this
Agreement (the "Pledgor"), to RACI Holding, Inc., a Delaware corporation (the
"Pledgee").
W I T N E S S E T H
WHEREAS, the Pledgee has offered to the Pledgor Stock Purchase Rights
to purchase up to ________ shares of Class A Common Stock, par value $.01 per
share (the "Common Stock") or deferred shares of Common Stock and certain other
securities, as described in a Confidential Offering Memorandum dated May 14,
1999, as supplemented by the supplement to offering memorandum dated June 8,
1999 (as so supplemented, the "Offering Memorandum");
WHEREAS, the Pledgor has purchased shares (the "Pledged Shares") of
Common Stock pursuant to a Management Stock Subscription Agreement (the "Stock
Subscription Agreement"), dated as of the date hereof, among the Pledgor and the
Pledgee;
WHEREAS, prior to the date hereof, the Pledgor has been granted
options to purchase _____ shares of Common Stock (the "Pledged Options")
pursuant to one or more Management Stock option Agreements (each such agreement,
a "Stock Option Agreement");
WHEREAS, in connection with the purchase under the Stock Subscription
Agreement, the Pledgor has delivered to the Pledgee a promissory note, dated the
date hereof (the "Note"); and
WHEREAS, the Note requires that the Pledgor execute and deliver this
Pledge Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
agreements contained herein, the parties agree as follows:
1. Definitions.
a. "Event of Default" shall mean any one of the following events (whatever
the reason for such Event of Default and whether it shall be effected
voluntarily or
2
involuntarily, by operation of law or pursuant to judgment, decree or
order of any court or any order, rule or regulation of any governmental
body): (i) a default in the payment of any principal of or interest on the
Note whenever it becomes due and payable (whether at maturity or any date
fixed for prepayment or by declaration or otherwise); (ii) a default in
the performance or the breach of any covenant, representation or warranty
of the Pledgor contained in the Note, this Agreement, the Stock
Subscription Agreement or a Stock Option Agreement; (iii) the Pledgor's
(A) application for or consent to the appointment of a receiver, trustee,
custodian or liquidator of any of his property, (B) admission in writing
of his inability to pay his debts as they mature, (C) making of a general
assignment for the benefit of creditors, (D) adjudication as a bankrupt or
insolvent or being the subject of an order for relief under Chapter 13 of
the United States Bankruptcy Code or (E) filing a voluntary petition in
bankruptcy, or a petition or an answer seeking an arrangement with
creditors or to take advantage of any bankruptcy, insolvency, readjustment
of debt or liquidation law or statute, or an answer admitting the material
allegations of a petition filed against him in any proceeding under any
such law; or (iv) the entry of an order, judgment or decree, without the
application, approval or consent of the Pledgor, by any court of competent
jurisdiction, approving a petition appointing a receive, trustee,
custodian or liquidator of all or a substantial part of the assets of the
Pledgor, and such order, judgment or decree continuing unstayed and in
effect for a period of thirty days.
2. Security for Obligations. This Agreement is being delivered and is made
for the benefit of the Pledgee to secure the due and timely payment by the
Pledgor of the principal amount of and interest on the Note and all other
amounts payable by the Pledgor under the Note and this Agreement (the
"Secured Obligations").
3. Pledge of Collateral. As security for the prompt payment and performance
of the Secured Obligations when due (whether at stated maturity, by
acceleration or otherwise), Pledgor hereby grants to the Pledgee a
security interest in all the following property, whether now owned or
hereafter acquired and whether now or in the future existing
(collectively, the "Collateral"): (i) the Pledged Shares; (ii) the Pledged
Options; (iii) all additional shares of Common Stock from time to time
acquired by Pledgor upon exercise of the Pledged Options; (iv) all
dividends, instruments, cash and other property or rights of any kind at
any time received, receivable or otherwise distributed or distributable
with respect to any of the foregoing; (v) all other Pledged Property (as
defined in Section 6) and (vi) all proceeds of any of the property
described in clauses (i) through (v) above; and the Pledgor hereby pledges
and deposits with the Pledgee the Pledged Shares, and assigns and
transfers to the Pledgee all of his or her right, title and interest in
and to the
2
3
Pledged Shares, to be held by the Pledgee in accordance with this
Agreement. The certificates representing the Pledged Shares, accompanied
by duly executed stock powers endorsed in blank by the Pledgor, have been
delivered by the Pledgor to the Pledgee. The Pledgor hereby assigns to the
Pledgee all of his or her right, title and interest in and to the Pledged
Options and under the Stock Option Agreements.
4. Agreement to Pledge Option Shares. The certificates representing all
shares of Common Stock purchased upon the exercise of the Pledged Options,
accompanied by duly executed stock powers endorsed in blank by the
Pledgor, shall be delivered by the Pledgor to the Pledgee promptly
following such exercise and receipt of such certificates and held in
pledge hereunder as Pledged Shares to secure the due and timely payment of
the principal amount of and interest on the Note.
5. Voting. The Pledgor shall be entitled to vote any and all of the Pledged
Shares and to give consents, waivers and ratifications in respect thereof
and to exercise all rights with respect to the Pledged Options and to give
consents, waivers and ratifications in respect thereof until the
occurrence of an Event of Default pursuant to Section 7 of the Note. From
and after the occurrence of an Event of Default, until the date that there
does not exist an Event of Default, the Pledgee shall vote the Pledged
Shares, give consents, waivers and ratifications in respect thereof, in
the same proportion as the votes of all other stockholders of the Pledgee
voting on any matter submitted to the stockholders, and shall have the
right to exercise all Pledged Options, and give consents, waivers and
ratifications in respect thereof.
6. Dividends and Distributions.
a. Non-Cash Dividends. (i) All non-cash dividends and distributions (less
any portion of such non-cash dividends that is applied to pay any tax due
thereon) paid with respect to the Pledged Shares and the Pledged Options
(the "Pledged Non-Cash Dividends"), (ii) all non-cash property (less any
portion of such non-cash property that is applied to pay any tax due
thereon) distributed with respect to the Collateral and (iii) all other
non-cash Collateral that may be pledged (together with the Pledged
Non-Cash Dividends, the "Pledged Property") shall be delivered to the
Pledgee and held in pledge hereunder to secure the due and timely payment
of the principal amount of and interest on the Note.
b. Cash Dividends, Etc. All cash dividends and distributions (less the
amount of such cash dividends and distributions necessary to pay any tax
due thereon) paid on the Collateral and other cash Collateral shall be
assigned to the Pledgee for the payment of the Loan Balance. Any assigned
cash dividends or
3
4
distributions shall be applied first to accrued interest on the Note and
then to the outstanding principal amount of the Note.
7. Repurchase Obligations of the Pledgee. If the Pledgee, Remington Arms
Company, Inc., a Delaware corporation ("Remington"), or The Xxxxxxx &
Dubilier Private Equity Fund IV Limited Partnership, a Connecticut limited
partnership ("C&D Fund IV") repurchases any or all of the Pledged Shares
or Pledged Options, the shares repurchased shall be released from this
pledge and the Pledgee may apply, or Remington or C&D Fund IV may pay to
the Pledgee to be applied, as the case may be, the proceeds of such
repurchase in accordance with the provisions of Section 9 hereof.
8. Remedies in Case of Event of Default. Upon the occurrence and continuance
of an Event of Default, the Pledgee (a) may transfer into its name, or
into the name of its nominee or nominees, all or any portion of the
Collateral and (b) may sell, assign and deliver the whole or, from time to
time, any part of the Collateral, at any private sale or at public
auction, and may buy in the same or participate in the purchase thereof,
in any manner consistent with the requirements of Article 9 of the Uniform
Commercial Code as in effect from time to time in the State of New York
(or any successor statute thereto). The Pledgee shall apply the proceeds
of any sale or buying in, together with any other monies at the time held
by it hereunder, as provided in Section 9 hereof. Neither the failure nor
delay on the part of the Pledgee to exercise any right, remedy, power or
privilege provided for herein or by statute or at law or in equity shall
operate as a waiver thereof, nor shall any single or partial exercise of
such right, remedy, power or privilege preclude any other or further
exercise thereto or the exercise of any such other right, remedy, power or
privilege. Each right, power and remedy of the Pledgee provided for in
this Agreement, the Stock Subscription Agreement, a Stock Option Agreement
or the Note or now or hereafter existing at law or in equity or by statute
shall be cumulative and concurrent and shall be in addition to every other
such right, power or remedy. The exercise or beginning of the exercise by
the Pledgee of any one or more of the Stock Subscription Agreement, Stock
Option Agreement or the Note or in any such other instrument or agreement
or now or hereafter existing at law or in equity or by statute or
otherwise shall not preclude the simultaneous or later exercise by the
Pledgee of all such other rights, powers or remedies and no failure or
delay on the part of the Pledgee to exercise any such right, power or
remedy shall operate as a waiver thereof.
9. Use of Proceeds. The proceeds of any sale, payment on, settlement of
collection, or other use or disposition of the Collateral shall be applied
by the Pledgee as follows:
4
5
a. Expenses and Advances. In the event of any foreclosure on the
Collateral pursuant to Section 7 hereof, first to the payment of all
reasonable expenses, out-of-pocket costs and advances made or incurred by
the Pledgee in connection with such foreclosure;
b. Other Indebtedness. After payment of any expenses and advances as
described above, or if no such expenses or advances are payable hereunder,
first to the payment of accrued interest on the Note and then to the
unpaid principal amount thereof; and
c. Surplus. If any surplus remains after satisfaction of the Note, to the
Pledgor or his or her successors and assigns.
10. Pledgor's Obligations Not Affected. The obligations of the Pledgor under
this Agreement shall remain in full force and effect without regard to,
and shall not be impaired or affected by: (a) any amendment or
modifications of or addition or supplement to the Note, the Stock
Subscription Agreement or any Stock Option Agreement, or any instrument
referred to in any or all of them; (b) any exercise or non-exercise by the
Pledgee of any right, remedy, power or privilege under or in respect of
this Agreement; (c) any waiver, consent, extension or other action or
inaction in respect of this Agreement; (d) any bankruptcy, insolvency,
reorganization or the like, of the Pledgor or the Pledgee or any other
corporation, association, partnership or person; or (e) any other
circumstances, whether or not the Pledgor shall have notice or knowledge
or any of the foregoing.
11. Bailment Agreement. Pledgor and Remington are parties to a Master Bailment
Agreement, dated as of June 24, 1999 (the "Bailment Agreement"), pursuant
to which Pledgor has agreed to deliver his shares of Common Stock to
Remington, as bailee, for safekeeping on the terms and conditions set
forth in the Bailment Agreement. It is understood and agreed that the
Bailment Agreement shall be suspended by this Agreement for so long as
this Agreement is in full force and effect. Pledgor and Pledgee
acknowledge and agree that, immediately upon the termination of this
Agreement pursuant to Section 12 hereof, the Bailment Agreement shall be
binding upon the parties thereto in accordance with its terms and all
Pledged Shares shall be delivered to Remington to be held pursuant to the
terms of the Bailment Agreement.
12. Termination. Upon payment in full of the Secured Obligations, this
Agreement shall terminate and (i) the Pledgor shall be bound by the terms
and conditions of the Bailment Agreement with respect to the Pledged
Shares and (ii) except for such Pledged Shares as are delivered to
Remington to be held pursuant to the Bailment Agreement, Pledgee shall
deliver to the Pledgor the property or evidences of
5
6
ownership with respect to the Pledged Property. Notwithstanding the
foregoing, the Pledgee shall not be obligated to redeliver any such
certificates, property or evidence to the extent that such certificates,
property or evidence have been pledged by the Pledgor to the Pledgee as
security for the obligations of the Pledgor under any promissory note
other than the Note.
13. Miscellaneous.
a. Miscellaneous. Pledgor hereby authorizes the Pledgee to date this
Agreement as of the date of the making of the Note and to complete any
blank space herein according to the terms upon which the loan under the
Note was granted.
b. Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (a)
delivered personally, (b) mailed, certified or registered mail with
postage prepaid, (c) sent by next-day or overnight mail or delivery or (d)
sent by telecopy or telegram, as follows:
(i) if to the Pledgee, to:
RACI Holding, Inc.
000 Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Chief Financial Officer
(ii) if to the Pledgor, to him or her at the address set forth at the
end of this Agreement.
c. Binding Effect; Benefits. This Agreement shall be binding upon and
inure to the benefit of the parties to this Agreement and their respective
successors and assigns. Nothing in this Agreement, express or implied, is
intended or shall be construed to give any person other than the parties
hereto, or their respective successors and assigns, any legal or equitable
right, remedy or claim under or in respect of any agreement or any
provision contained herein.
d. Waiver. Either party hereto may by written notice to the other (i)
extend the time for the performance of any of the obligations or other
actions of the other under this Agreement; (ii) waive compliance with any
of the conditions or covenants of the other contained in this Agreement;
and (iii) waive or modify performance of any of the obligations of the
other under this Agreement. Except
6
7
as provided in the preceding sentence, no action taken pursuant to this
Agreement, including, without limitation, any investigation by or on
behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties,
covenants or agreements contained herein. The waiver by any party hereto
of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any preceding or succeeding breach and no failure
by either party to exercise any right or privilege hereunder shall be
deemed a waiver of such party's rights or privileges hereunder or shall be
deemed a waiver of such party's rights to exercise the same any time or
times hereunder.
e. Amendment. This Agreement may be amended, modified or supplemented only
by a written instrument executed by the Pledgor and the Pledgee.
f. Assignability. This Agreement or any right or remedy hereunder may be
transferred or wholly assigned by the Pledgee to (I) any direct or
indirect subsidiary of the Pledgee or (ii) any creditor of the Pledgee or
any of its subsidiaries. Except as aforesaid, neither this Agreement nor
any right, remedy, obligation or liability arising hereunder or by reason
hereof shall be assignable by either the Pledgee or the Pledgor without
the prior written consent of the other party.
g. Withholding of Taxes. The Pledgee shall have the right to require the
Pledgor to pay the amount of any taxes that are required to be withheld
with respect to the non-cash dividends paid on the Pledged Shares or the
Pledged Options or with respect to any other property delivered to the
Pledgor, or to sell such shares or other property if the proceeds of such
sale will be sufficient to satisfy such withholding requirement, and shall
have the right to withhold the amount of any taxes that are required to be
withheld from any cash dividends or any repurchase proceeds.
h. Further Assurances. Pledgor agrees to execute and deliver such further
documents, certificates, assignments, security agreements and financing
statements and to take such further actions as Pledgee may reasonably
request to confirm or perfect the pledge and security interest intended to
be granted by Pledgor to Pledgee hereby.
i. GOVERNING LAW. THE PROVISIONS OF THIS NOTE SHALL BE CONSTRUED AND
INTERPRETED AND ALL RIGHTS AND OBLIGATIONS HEREUNDER DETERMINED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
7
8
PRINCIPLES OF CONFLICT OF LAWS TO THE EXTENT SUCH PRINCIPLES WOULD REQUIRE
OR PERMIT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
j. Sections and Other Headings. The section and other headings contained
in this Agreement are for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.
k. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one and the same instrument.
8
9
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
RACI HOLDING, INC.
By:
--------------------------------
Name:
Title:
THE PLEDGOR
-----------------------------------
Address of Pledgor:
Social Security Number:
-----------------------------------
9
