EXHIBIT 10.8
SUBSIDIARY PLEDGE AGREEMENT
This Subsidiary Pledge Agreement ("Agreement") dated this 15th day of
September, 1998, is made by Phoenix Color Corp., a Delaware corporation
("Pledgor") in favor of First Union National Bank, a national banking
association, as collateral agent (in such capacity "Collateral Agent") for (i)
First Union National Bank, as agent (in such capacity "Bank Agent"), for the
lenders ("Lenders") and issuer ("Issuer") parties to the Credit Agreement, dated
as of the date hereof (as amended, modified, restated or supplemented from time
to time, "Credit Agreement"), among the borrowers ("Borrowers"), Bank Agent,
Issuer, and Lenders and (ii) First Union Investors, Inc., ("Purchaser") as
purchaser of, and any other holder of the Bridge Notes or Exchange Notes as
defined in, and issued under, the Bridge Securities Purchase Agreement (as
amended, modified, restated or supplemented from time to time, "Purchase
Agreement"), among Phoenix, PCC, Realty and Purchaser.
BACKGROUND
A. Borrowers, Issuer, Lenders and Bank Agent have entered into the Credit
Agreement which, as set forth in the Background thereto (which Background is
incorporated by reference as if fully set forth herein), inter alia, confirms
and preserves the continued effect and operation of liens and security interests
granted under the Existing Loan Agreement (as defined in the Credit Agreement)
and certain documents related thereto.
B. Phoenix and Purchaser have entered into the Purchase Agreement pursuant
to which Phoenix may issue from time to time the Bridge Notes and Exchange Notes
(as defined in the Purchase Agreement) and PCC and Realty have guaranteed, in
accordance with the terms of the Purchase Agreement, the payment and performance
of Phoenix's obligations under the Purchase Agreement.
C. It is a condition precedent to the effectiveness of the Credit
Agreement that Pledgor pledge the Collateral as provided herein in order to
secure the Loan Obligations under, and as defined in, the Credit Agreement.
D. It is a condition precedent to the effectiveness of the Purchase
Agreement that Pledgor pledge the Collateral as herein provided in order to
secure the Bridge Note Obligations and Exchange Note Obligations, each as
defined in the Credit Agreement.
NOW, THEREFORE, the parties hereto, intending to be legally bound hereby,
agree as follows:
1.1 Definitions.
(a) Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the Credit
Agreement or by reference therein.
(b) The following terms shall have the following meanings:
Bridge Note Majority Holders - The holders of more than fifty
percent (50%) of the outstanding principal amount of the Bridge Notes.
Collateral - Collectively, all of the Pledged Stock and all of
the Pledged Membership Interests and, in each case, all additions, exchanges,
replacements and substitutions therefor and all dividends and distributions with
respect thereto and the proceeds thereof (whether cash, securities or other
property).
Default - Any Default under and as defined in the Credit
Agreement or any Default under and as defined in the Purchase Agreement.
Event of Default - Any Event of Default under and as defined
in the Credit Agreement or any Event of Default under and as defined in the
Purchase Agreement.
Exchange Note Holders - Any holders of the Exchange Notes.
Obligations - The collective reference to (i) the Loan
Obligations, (ii) the Bridge Note Obligations and (iii) the Exchange Note
Obligations, in each case whether on account of principal, interest, fees,
indemnities, costs, expenses or otherwise.
Pledged Membership Interests - The membership interests in
Realty listed opposite Pledgor's name on Schedule 1 hereto, together with all
membership certificates, options or rights issued or granted in connection
therewith.
Pledged Stock - The shares of Capital Stock in PCC listed
opposite Pledgor's name on Schedule 1 hereto, together with all stock
certificates, options or rights issued or granted in connection therewith.
Secured Parties - Collectively, Bank Agent, Lenders, Issuer,
Purchaser, Trustee, holders of the Bridge Notes and Exchange Note Holders, and
any successors or assigns thereto.
Trustee - the trustee under the Exchange Indenture.
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(c) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
2. (a) Pledgor, intending to be legally bound hereby, and for other good
and sufficient consideration, the receipt of which is hereby acknowledged, does
hereby assign, pledge, hypothecate, deliver and set over to Collateral Agent,
for the benefit of Secured Parties, the Collateral and Pledgor hereby grants to
Collateral Agent, for the benefit of Secured Parties, a continuing lien and
security interest in the Collateral as collateral security for the payment and
complete performance (whether at the stated maturity, by acceleration or
otherwise) of the Obligations.
(b) Pledgor has delivered, or is contemporaneously with the
execution hereof, delivering to Collateral Agent all certificates representing
or evidencing the Collateral, accompanied by duly executed instruments of
transfer or assignments in blank, to be held by Collateral Agent in accordance
with the terms hereof.
3. Pledgor hereby represents and warrants that:
(a) Except as pledged herein, Pledgor has not sold, assigned,
transferred, pledged or granted any option or security interest in or otherwise
hypothecated the Collateral in any manner whatsoever and the Collateral is
pledged herewith free and clear of any and all liens, security interests,
encumbrances, claims, pledges, restrictions, legends, and options.
(b) Pledgor has the full power and authority to execute, deliver,
and perform under this Agreement and to pledge the Collateral hereunder.
(c) This Agreement constitutes the valid and binding obligation of
Pledgor, enforceable in accordance with its terms, and the pledge of the
Collateral referred to herein is not in violation of and shall not create any
default under any agreement, undertaking or obligation of Pledgor.
(d) The Collateral has been duly and validly authorized and issued
by the issuer thereof and such Collateral is fully paid for and non-assessable.
(e) Pledgor is pledging hereunder one hundred percent (100%) of
Pledgor's interest and ownership in the Collateral.
4. Collateral Agent may (but without any obligation to do so), after an
acceleration of the Loan Obligations, Bridge Note Obligations or Exchange Note
Obligations following the occurrence of an Event of Default, exercise from time
to time with respect to the Collateral any and/or all rights and remedies
available to it hereunder, under the UCC, or otherwise available to it, at law
or in equity, including without limitation the right to dispose of the
Collateral at public or private sale(s) or other proceedings, and Pledgor agrees
that Collateral Agent, Bank Agent,
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Lenders, Issuer, Purchaser, Trustee and any holder of the Bridge Notes or any
Exchange Note Holders shall have the right upon any such public sale or sales
and, to the extent permitted by law, upon any private sale or sales purchase the
whole or any part of the Collateral so sold free of any equity or right of
redemption which Pledgor waives.
5. (a) In addition to all other rights granted to Collateral Agent herein
or otherwise available at law or in equity, Collateral Agent shall have the
following rights, each of which may be exercised (but without any obligation to
do so) at any time after an acceleration of the Loan Obligations, Bridge Note
Obligations or Exchange Note Obligations following the occurrence of an Event of
Default, without further consent of Pledgor: (i) to transfer the whole or any
part of the Collateral into the name of itself or its nominee; (ii) to vote the
Collateral; (iii) to notify any Persons obligated on any of the Collateral to
make payment to Collateral Agent (for application in accordance with the terms
of the Collateral Agency Agreement) of any amounts due or to become due thereon;
and (iv) to release, surrender or exchange any of the Collateral at any time, or
to compromise any dispute with respect to the same. Collateral Agent may proceed
against the Collateral, or any other collateral securing the Obligations, in any
order, and against Pledgor and any other obligors (including, without
limitation, Borrowers), jointly and/or severally, in any order, to satisfy the
Obligations. Pledgor waives and releases any right to require Collateral Agent
to first collect any of the Obligations secured hereby from any other collateral
of Pledgor or any other party (including, without limitation, Borrowers)
securing the Obligations under any theory of marshaling of assets, or otherwise.
All rights and remedies of Collateral Agent are cumulative, not alternative.
(b) Pledgor hereby irrevocably appoints each of the officers of
Collateral Agent or its representative as its attorney-in-fact, subject to the
terms hereof, to arrange, at Collateral Agent's option to, (i) after an
acceleration of the Loan Obligations, the Bridge Note Obligations or Exchange
Note Obligations following the occurrence of an Event of Default, effectuate the
transfer of the Collateral on the books of the issuer thereof to the name of
Collateral Agent or to the name of Collateral Agent's nominee, designee or
assignee, (ii) endorse and collect checks payable to Pledgor representing
Distributions or other payments on the Collateral that are not permitted under
the Credit Agreement, and (iii) carry out the terms and provisions hereof.
6. The proceeds of any Collateral received by Collateral Agent (or any
other Secured Party) at any time, whether from the sale of Collateral or
otherwise, shall be applied in accordance with the Collateral Agency Agreement.
7. Pledgor recognizes that Collateral Agent may be unable to effect, or
may effect only after such delay which would adversely affect the value that
might be realized from the Collateral, a public sale of all or part of the
Collateral by reason of certain prohibitions contained in the Securities Act of
1933, as amended, and may be compelled to resort to one or more private sales to
a restricted group of purchasers who will be obliged to agree, among other
things, to acquire such securities for their own account, for investment and not
with a view to the
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distribution or resale thereof. Pledgor agrees that any such private sale may be
at prices and on terms less favorable to Collateral Agent or the seller than if
sold at public sales, and therefore recognizes and confirms that such private
sales shall not be deemed to have been made in a commercially unreasonable
manner solely because they were made privately. Pledgor agrees that Collateral
Agent has no obligation to delay the sale of any such securities for the period
of time necessary to permit the issuer of such securities to register such
securities for public sale under the Securities Act of 1933, as amended.
8. In the event that any stock dividend, reclassification, readjustment or
other change is made or declared in the capital structure of, or Pledgor
acquires or in any other manner receives additional shares of Capital Stock or
membership interests in, any issuer, or any option included within the
Collateral is exercised, or both, all new, substituted and additional shares, or
other securities, issued by reason of any such change or exercise shall be
deemed Collateral hereunder and shall be delivered to and held by Collateral
Agent under the terms hereof in the same manner as the Collateral originally
pledged hereunder. No cash Distribution may be paid to or retained by Pledgor
unless expressly permitted under the Credit Agreement.
9. So long as no Event of Default has occurred and is continuing and,
until Collateral Agent notifies Pledgor in writing of the exercise of its rights
hereunder, Pledgor shall retain the sole right to vote the Collateral and
exercise all rights of ownership with respect to all governance questions for
all purposes; provided Pledgor shall not vote the Collateral in a manner which
would, in Collateral Agent's reasonable judgment, impair the Collateral or which
would be inconsistent with or result in a violation of any provision of the
Credit Agreement or Purchase Agreement.
10. (a) Collateral Agent's sole duty to Pledgor with respect to the
custody, safekeeping and physical preservation of the Collateral in its
possession, under Section 9207 of the UCC or otherwise, shall be to deal with it
in the same manner as Collateral Agent deals with similar property for its own
account. Neither Collateral Agent nor any other Secured Party nor any of their
respective officers, directors, employees or agents shall be liable for failure
to demand, collect or realize upon any of the Collateral or for any delay in
doing so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of Pledgor or any other Person or to take any other
action whatsoever with regard to the Collateral or any part thereof. The powers
conferred on Collateral Agent and the other Secured Parties hereunder are solely
to protect such parties' interests in the Collateral and shall not impose any
duty upon any of such parties to exercise any such powers. Such parties shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to Pledgor for any act or failure to
act hereunder, except for their own gross negligence or willful misconduct.
(b) Collateral Agent shall release the Liens on the Collateral
granted hereunder only upon receipt of notice from Bank Agent, Bridge Note
Majority Holders and
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Trustee, which notices, taken together, confirm the satisfaction in full of all
of the Obligations and termination of the Revolving Credit.
11. To the extent Collateral Agent is required by law to give Pledgor
prior notice of any public or private sale, or other disposition of the
Collateral, each Pledgor agrees that ten (10) days' prior written notice to
Pledgor shall be a commercially reasonable and sufficient notice of such sale or
other intended disposition. Pledgor further recognizes and agrees that if the
Collateral, or a portion thereof, threatens to decline speedily in value or is
of a type customarily sold on a recognized market, Pledgor shall not be entitled
to any prior notice of sale or other intended disposition.
12. In addition to any other indemnity obligations in favor of Collateral
Agent, Pledgor shall indemnify, defend and hold harmless Collateral Agent from
and against any and all claims, losses and liabilities resulting from a) any
breach by Pledgor of Pledgor's representations and covenants under this
Agreement and b) any stamp, excise, sales or other tax which may be payable with
respect to any of the Collateral or in connection with any of the transactions
contemplated by this Agreement.
13. Pledgor hereby waives notice of (a) acceptance of this Agreement, (b)
the existence and incurrence from time to time of any Obligations, (c) the
existence of any Event of Default, the making of demand, or the taking of any
action by Collateral Agent under any Security Document or by Bank Agent or any
holder of the Bridge Notes or Exchange Note Holders under the Loan Documents or
Bridge Note Documents, respectively, and (d) demand and default hereunder.
14. Pledgor hereby consents and agrees that Collateral Agent, Bank Agent
and Bridge Note Agent (as the case may be) may at any time or from time to time
in its sole discretion (a) extend or change the time of payment and/or the
manner, place or terms of payment of any and all Obligations, (b) supplement,
amend, restate, supersede, or replace the Credit Agreement or Purchase Agreement
or any other Loan Documents, (c) renew, extend, modify, increase or decrease
loans and extensions of credit under the Credit Agreement or Purchase Agreement,
(d) modify the terms and conditions under which loans and extensions of credit
may be made under the Credit Agreement or notes or securities purchased under
the Purchase Agreement, (e) settle, compromise or grant releases for any
Obligations and/or any Person or Persons liable for payment of any Obligations,
(f) exchange, release, surrender, sell, subordinate or compromise any collateral
of any party now or hereafter securing any of the Obligations and (g) apply any
and all payments received from any source by Collateral Agent at any time
against the Obligations in the order and manner prescribed in the Collateral
Agency Agreement, all of the foregoing in such manner and upon such terms as
Bank Agent, or any holder of the Bridge Notes or Exchange Note Holders or
Collateral Agent may determine and without notice to or further consent from
Pledgor and without impairing or modifying the terms and conditions of this
Agreement which shall remain in full force and effect.
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15. This Agreement shall remain in full force and effect and shall not be
limited, impaired or otherwise affected in any way by reason of (a) any delay in
making demand on Borrowers, Pledgor or any other obligor for or delay in
enforcing or failure to enforce, performance or payment of Borrowers', Pledgor's
or any other obligor's obligations, or (b) any failure, neglect or omission on
Collateral Agent's part to perfect any lien upon, protect, exercise rights
against, or realize on, any property of Borrowers, any Pledgor or any other
party securing the Obligations.
16. Pledgor covenants and agrees that Pledgor shall not, without the prior
written consent of Collateral Agent, sell, assign, transfer, encumber or grant
any lien, security interest or option on or with respect to any of the
Collateral or enter into any agreement restricting the ability of Pledgor or
Collateral Agent to sell, assign or transfer any of the Collateral.
17. Pledgor hereby authorizes and instructs each issuer of the Collateral
to comply with any instruction received by it from Collateral Agent in writing
that (a) states that an Event of Default has occurred and (b) is otherwise in
accordance with the terms of this Agreement, without any other or further
instructions from Pledgor, and Pledgor agrees that each such issuer shall be
fully protected in so complying.
18. Pledgor acknowledges that the rights and responsibilities of
Collateral Agent under this Agreement with respect to any action taken by
Collateral Agent or the exercise or non-exercise by Collateral Agent of any
option, voting right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Agreement shall, as between Bank
Agent and Lenders, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them; and
as among holders of the Bridge Notes, be governed by the Purchase Agreement and
such other agreements with respect thereto as may exist from time to time among
them; and as among Exchange Note Holders, be governed by the Exchange Indenture
and such other agreements with respect thereto as may exist from time to time
among them; but, as between Collateral Agent and Pledgor, Collateral Agent shall
be conclusively presumed to be acting as agent for Secured Parties with full and
valid authority so to act or refrain from acting, and neither Pledgor nor any
issuer of Collateral shall be under any obligation, or entitlement, to make any
inquiry respecting such authority. All references herein to any rights or
remedies of Collateral Agent, or to any obligations owing to Collateral Agent
hereunder, shall be deemed to refer to such rights and remedies as Collateral
Agent may exercise on behalf of itself and Secured Parties for the benefit of
Secured Parties.
19. This Agreement, shall be governed by and construed in accordance with
the substantive laws of the Commonwealth of Pennsylvania without regard to its
otherwise applicable principles of conflict of law. The provisions of this
Agreement and all other agreements and documents referred to herein are to be
deemed severable, and the invalidity or unenforceability of any provision shall
not affect or impair the remaining provisions which shall continue in full force
and effect.
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20. No omission or delay by Collateral Agent in exercising any right or
power under this Agreement or any related agreements and documents will impair
such right or power or be construed to be a waiver of any default, or Event of
Default or an acquiescence therein, and any single or partial exercise of any
such right or power will not preclude other or further exercise thereof or the
exercise of any other right, and as to Pledgor no waiver will be valid unless in
writing and signed by Collateral Agent and then only to the extent specified.
21. Any notices or consents required or permitted by this Agreement shall
be in writing and shall be deemed given to Pledgor at the respective address and
in the manner set forth in Section 9.8 of the Credit Agreement and, as to
Collateral Agent, if effected in the manner set forth in the Collateral Agency
Agreement.
22. The headings of any paragraph or Section of this Agreement are for
convenience only and shall not be used to interpret any provision of this
Agreement.
23. This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties. Pledgor may not transfer, assign
or delegate any of its duties or obligations hereunder.
24. Two or more duplicate originals of this Agreement may be signed by the
parties, each of which shall be an original but all of which together shall
constitute one and the same instrument. This Agreement may be executed in
counterpart, all of which counterparts taken together shall constitute one fully
completed fully executed document.
25. No modification hereof or any agreement referred to herein shall be
binding or enforceable unless in writing and signed by Pledgor, Collateral
Agent, Bank Agent, Majority Bridge Note Holders and, if appointed, Trustee.
26. Without limiting the effect of Section 27, Pledgor and Collateral
Agent hereby irrevocably consent to the jurisdiction of the Courts of Common
Pleas of the Commonwealth of Pennsylvania or the United States District Court
for the Eastern District of Pennsylvania in any and all actions and proceedings
arising under this Agreement, or any other undertaking between the parties
hereto and irrevocably agree to service of process by certified mail, return
receipt requested to the address of the appropriate party set forth herein.
27. (a) Upon demand of any party hereto, whether made before or after
institution of any judicial proceeding, any dispute, claim or controversy
arising out of, connected with or relating to this Agreement or any other
undertaking between the parties hereto ("Disputes") between or among parties to
this Agreement, shall be resolved by binding arbitration as provided herein.
Institution of a judicial proceeding by a party does not waive the right of that
party to demand arbitration hereunder. Disputes may include, without limitation,
tort claims, counterclaims, disputes as to whether a matter is subject to
arbitration, claims brought as class actions, claims arising from this
Agreement, any document executed in the future or claims
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arising out of or connected with the transactions contemplated by this
Agreement. Arbitration shall be conducted under and governed by the Commercial
Financial Disputes Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association (the "AAA") and Title 9 of the U.S. Code. All
arbitration hearings shall be conducted in Philadelphia, Pennsylvania. The
expedited procedures set forth in Rule 51 et seq. of the Arbitration Rules shall
be applicable to claims of less than $1,000,000.00. All applicable statutes of
limitation shall apply to any Dispute. A judgment upon the award may be entered
in any court having jurisdiction as provided in this Agreement. The panel from
which all arbitrators are selected shall be comprised of licensed attorneys. The
single arbitrator selected for expedited procedure shall be a retired judge from
the highest court of general jurisdiction, state or federal, of the state where
the hearing will be conducted or if such person is not available to serve, the
single arbitrator may be a licensed attorney.
(b) Notwithstanding the preceding binding arbitration provisions,
Pledgor and Collateral Agent, agree to preserve, without diminution, certain
remedies that any party hereto may employ or exercise freely, independently or
in connection with an arbitration proceeding or after an arbitration action is
brought. Pledgor and Collateral Agent, shall have the right to proceed in any
court of proper jurisdiction or by self-help to exercise or prosecute the
following remedies, as applicable: (i) all rights to foreclose against any
property or other security by exercising a power of sale granted under this
Agreement or under applicable law or by judicial foreclosure and sale, including
a proceeding to confirm the sale; (ii) all rights of self-help including but not
limited to set-off and peaceful possession of personal property; and (iii)
obtaining provisional or ancillary remedies including injunctive relief,
sequestration, garnishment, attachment, appointment of receiver and filing an
involuntary bankruptcy proceeding. Preservation of these remedies does not limit
the power of an arbitrator to grant similar remedies that may be requested by a
party in a Dispute. Pledgor and Collateral Agent agree that they shall not have
a remedy of punitive or exemplary damages against the other in any Dispute and
hereby waive any right or claim to punitive or exemplary damages they have now
or which may arise in the future in connection with any Dispute whether the
Dispute is resolved by arbitration or judicially.
28. TO THE EXTENT THAT ANY DISPUTE IS NOT SUBMITTED TO ARBITRATION UNDER
SECTION 27, PLEDGOR AND COLLATERAL AGENT, HEREBY WAIVE ANY AND ALL RIGHTS IT MAY
HAVE TO A JURY TRIAL IN CONNECTION WITH ANY LITIGATION, PROCEEDING OR
COUNTERCLAIM ARISING WITH RESPECT TO RIGHTS AND OBLIGATIONS OF THE PARTIES
HERETO OR UNDER THE LOAN DOCUMENTS OR BRIDGE NOTE DOCUMENTS OR WITH RESPECT TO
ANY CLAIMS ARISING OUT OF ANY DISCUSSIONS, NEGOTIATIONS OR COMMUNICATIONS
INVOLVING OR RELATED TO ANY PROPOSED RENEWAL, EXTENSION, AMENDMENT,
MODIFICATION, RESTRUCTURE, FORBEARANCE,
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WORKOUT, OR ENFORCEMENT OF THE TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS
OR BRIDGE NOTE DOCUMENTS.
PHOENIX COLOR CORP.
By: /s/ Xxxxxx Xxxxxxxxx
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Title: Executive Vice President
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