PLEDGE AND SECURITY AGREEMENT
This Pledge and Security Agreement is made as of the 25th day of
November, 1996 between BPI Packaging Technologies, Inc., a Delaware corporation
with a place of business at 000 Xxxxxxxx Xxxxxx, Xxxxx Xxxxxxx, Xxxxxxxxxxxxx
("Pledgor") and Foothill Capital Corporation, a California corporation with a
place of business at 00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx,
Xxxxxxxxxx ("Pledgee").
1. Pledge of Collateral. Pledgor hereby grants to Pledgee a continuing
security interest in and to, and assigns and pledges to the Pledgee the
following items and types of property, and all products, proceeds,
substitutions, additions, interest, dividends and other distributions
(including, without limitation, stock splits) in respect thereto, and all books,
records and papers relating to the foregoing (all of which is referred to
hereinafter as the "Collateral"): All of Pledgor's right, title and interest in
and to all securities, investments and property described in the attached
Schedule "A", together with all interest, cash dividends, rights to receive
dividends, stock dividends, distributions upon redemption or liquidation,
distributions as a result of split-ups, mergers, consolidations,
reorganizations, dissolutions, conversions, recapitalizations or rearrangements,
all stock rights, rights to subscribe, voting rights, rights to receive
securities and all other property or securities of any type whatsoever which the
Pledgor is or may become entitled to receive on account of the securities,
investments and property described in Schedule "A", together with all rights,
titles, interest, privileges and preferences appertaining or incidental thereto,
together with all cash and non-cash proceeds of any or all of the foregoing.
2. Obligations Secured. The security interest in the Collateral granted
hereby secures payments and performance of all debts, obligations, loans and
liabilities of Pledgor to Pledgee, whether now existing or hereafter arising
(the "Obligations") under that certain Loan and Security Agreement dated of even
date herewith among Pledgor, RC America, Inc. and Pledgee (the "Loan
Agreement"). This Pledge Agreement shall remain in full force and effect until
all of the Obligations, and any extensions or renewals thereof, together with
interest accruing thereon, shall be finally and irrevocably paid in full at
which time Pledgee shall convey the Collateral to Pledgor without recourse.
3. Perfection of Security Interest. All income from the Pledged
Accounts shall be reported to taxing authorities as income of the Pledgor.
4. Pledgee's Rights and Duties with Respect to the Collateral.
(a) Pledgee's only duty with respect to the Collateral shall be to
exercise reasonable care to secure the safe custody of such Collateral as may be
in the actual possession of Pledgee. Pledgee shall have the right, but not the
obligation to pay any taxes, liens, assessments, insurance premiums or other
charges pertaining to Collateral. Any expenses incurred by Pledgee under the
preceding sentence shall be paid to Pledgee by Pledgor upon demand, become part
of the Obligations secured by the Collateral and bear interest at the default
rate provided in the Loan
Agreement until paid. Pledgee shall be relieved of all responsibility for all
Collateral which may be in Pledgee's possession upon surrendering it to Pledgor.
(b) The Pledgor hereby designates the Pledgee as and for the
attorney-in-fact and proxy of the Pledgor to: endorse in favor of the Pledgee
any of the Collateral; cause the transfer of any of the Collateral into such
name or into an account as the Pledgee may, from time to time, determine; cause
the issuance of certificates for book entry and/or uncertificated securities;
renew, extend, or roll over any Collateral; and make demand and initiate actions
to enforce any of the Collateral, and receive and collect all money or money
damages payable on account of any of the Collateral; and protect, preserve or
assert any other rights of Pledgor or take any other action with respect to the
Collateral. The Pledgee may take such action with respect to the Collateral as
the Pledgee may reasonably determine to be necessary to protect and preserve its
interest in the Collateral. The rights, remedies, powers, privileges and
discretions included in this Section 4(b) may be exercised by the Pledgee at any
time after the occurrence of an Event of Default. The within designation, being
coupled with an interest, is irrevocable until the within Agreement is
terminated by a written instrument executed by a duly authorized officer of the
Pledgee. The power of attorney shall not be affected by subsequent disability or
incapacity of the Pledgor. The Pledgee shall not be liable for any act or
omission to act pursuant to this Section, except for Pledgee's own gross
negligence and for any act or omission of Pledgee which is in actual bad faith.
5. Pledgor's Covenants, Warranties and Indemnify. Pledgor represents,
warrants and covenants
(a) that Pledgor is the lawful owner of all right, title and interest
in the Collateral and will not encumber or suffer the encumbrance of the
Collateral except in favor of Pledgee,
(b) that the Collateral is and will be fully paid and non-assessable,
(c) that Pledgor will not:
i. cause or permit any of the Collateral presently
evidenced by a written certificate to be converted
to uncertificated securities;
ii. exercise any right with respect to the Collateral
which would adversely affect the Pledgee's rights
in the Collateral;
iii. file any affidavit of lost stock certificates or
bonds; or
iv. vote the Collateral in favor of or consent to any
resolution which might impose any restrictions on
the sale, transfer or disposition of the
Collateral.
2
(d) that the Collateral represents 100% of the issued and outstanding
capital stock of each of RC America, Inc., Market Media, Inc., BPI Packaging,
Inc. and BPI Packaging Limited (collectively, the "Subsidiaries"), and that
Pledgor shall not permit any of the Subsidiaries to authorize or issue any
further capital stock or securities or rights convertible into capital stock at
any time that there remain any Obligations of Pledgor to Pledgee without written
consent of Pledgee, and
(e) that the Collateral is and will remain free and clear of all liens,
encumbrances and security interests other than the security interest granted by
Pledgor hereunder, and
(f) that Pledgor has the sole right and lawful authority to pledge the
Collateral and otherwise to comply with the provisions hereof. In the event that
any adverse claim is asserted in respect of the Collateral or any portion
thereof, except such as may result from an act of Pledgee not authorized
hereunder, Pledgor promises and agrees to indemnify Pledgee and hold Pledgee
harmless from and against any losses, liabilities, damages, expenses, costs and
reasonable counsel fees incurred by Pledgee in exercising any right, power or
remedy of Pledgee hereunder or defending, protecting or enforcing the security
interest created hereunder. Any such loss, liability or expense so incurred
shall be paid by Pledgor upon demand, become part of the Obligations secured by
the Collateral and bear interest, at the default rate of interest set forth in
the Loan Agreement and related documents, until paid.
6. Pledgor's Default. Pledgor shall be in default hereunder upon the
occurrence of any of the following events ("Events of Default"):
Pledgor's failure to pay or perform any of the Obligations described in
this Agreement or under the Loan Agreement when such payment or performance is
due.
7. Rights Appertaining to Collateral.
(a) Prior to Event of Default: Prior to an Event of Default, the
Pledgor shall be entitled to vote the Collateral and give consents, waivers and
ratifications in respect thereof subject to the requirements of Section 5 above,
and to the extent allowed by the Loan Agreement, any cash interest, dividends or
distributions received from the Collateral.
(b) Pledgee's Rights Upon Default. Upon the occurrence of any Event of
Default, the rights of the Pledgor pursuant to Subsection (a) hereof shall
automatically and immediately cease and Pledgee, if Pledgee so elects at its
sole option, in addition to exercising rights granted under Section 4(b):
i. may vote all or any part of the Collateral and give all
consents, waivers and ratifications in respect thereof, sell or convey the
Collateral, cause the Collateral to be transferred into its own name, into its
own account or the name or account of its nominee and otherwise act with respect
thereto as the absolute owner thereof (the Pledgor hereby irrevocably
constituting and appointing Pledgee Pledgor's proxy and attorney-in-fact, with
full power of substitution, to do so, which
3
appointment is coupled with an interest) and exercise all rights with respect to
the Collateral as though Pledgee were the absolute owner thereof, whether or not
such rights were retained by Pledgor as against Pledgee before the Event of
Default; and
ii. may exercise all other rights available to a secured party
under the Uniform Commercial Code and other applicable law, including without
limitation the right to apply Pledgor's rights to the Collateral against the
Obligations regardless of the adequacy or existence of other collateral
therefor.
Without limiting the generality of the foregoing, upon
the occurrence of any Event of Default, and at any time thereafter, the Pledgee
shall have all of the rights and remedies which a secured party is entitled to
exercise upon default under the Uniform Commercial Code as adopted in
Massachusetts, in addition to which the Pledgee may sell or otherwise dispose of
the Collateral (in one or more sales) and/or enforce and collect the Collateral
(including, without limitation, the liquidation of debt instruments or
securities and the exercise of conversion rights with respect to convertible
securities, whether or not such instruments or securities have matured and
whether or not any penalties or other charges are imposed on account of such
action), for application towards (but not necessarily in complete satisfaction
of) the Obligations. The Pledgor shall remain liable to the Pledgee for any
deficiency remaining following such application. Any such sale may be made
either at public or private sale at Pledgee's place of business or elsewhere, or
at any brokers' board or securities exchange, either or cash or upon receipt or
for future delivery, at such price as Pledgee may deem fair (to the extent
permitted by law), and Pledgee may be the purchaser of any or all Collateral so
sold and may hold the same thereafter in its own right free from any claim of
Pledgor or right of redemption. No such purchase or holding by Pledgee shall be
deemed a retention by Pledgee in satisfaction of the Obligations. Unless the
Collateral, threatens to decline speedily in value, or is of a type customarily
sold on a recognized market (in which event the Pledgee shall give the Pledgor
such notice as may be practicable under the circumstances), the Pledgee shall
give the Pledgor at least the greater of the minimum notice required by law or
seven (7) days prior written notice of the date, time, and place of any public
sale thereof or of the time after which any private sale or any other intended
disposition is to be made. The Pledgor acknowledges that any exercise by the
Pledgee of the Pledgee's right upon default may be subject to compliance by the
Pledgee with any statute, regulation, ordinance, directive, or order of any
federal, state, municipal, or other governmental authority ("Securities
Regulations"), and Pledgee may impose, without limitation, any of the foregoing
restricting the sale of securities in order to comply with applicable Securities
Regulations. The Pledgee, in its reasonable discretion at any such sale, in
order to comply with applicable Securities Regulations, may restrict the
prospective bidders or purchasers as to their number, nature of business and
investment intention, and impose, without limitation, a requirement that the
persons making such purchases represent and agree, to the satisfaction of the
Pledgee, that they are purchasing the Collateral for their own account, for
investment, and not with a view to the distribution or resale thereof.
4
8. Application of Sale Proceeds. In the event of a sale of Collateral,
the proceeds shall first be applied to the payment of the expenses of the sale,
including brokers' commissions, counsel fees, any taxes or other charges imposed
by law upon the Collateral or the transfer thereof and all other charges paid or
incurred by Pledgee pertaining to the sale; and, second, to satisfy outstanding
Obligations, in the order in which Pledgee elects in its sole discretion, any
statute, custom, or usage to the contrary notwithstanding; and, third, the
surplus (if any) shall be paid to Pledgor.
9. Return of Collateral. If any Collateral is held by the Pledgee, the
Pledgee shall return to the Pledgor certificates evidencing the Collateral and
any blank stock powers delivered to the Pledgee pursuant to this Agreement
hereof (together with any other securities and transfer documents delivered to
the Pledgee under the terms hereof and, where appropriate, satisfactions,
releases, discharges and notices of termination of this Agreement, duly executed
and acknowledged and in proper form for filing or recording) upon the final and
irrevocable payment and performance of all of the Obligations.
10. Further Documents and Assurances.
(a) The Pledgor shall, from time to time and at his own
expense, promptly execute, acknowledge, witness, deliver, file and record (or
procure the execution, acknowledgment, witnessing, delivery, filing and
recordation of) such documents or instruments (and shall take or cause to be
taken such other action) as Pledgee may reasonably request for the perfection of
the security interests created hereby and for the continuation and protection
thereof. The Pledgor shall promptly furnish to Pledgee evidence satisfactory to
Pledgee of such filing and recordation. In addition, the Pledgor shall execute
all such instruments, documents, and papers, and will do all such acts as the
Pledgee may request from time to time to carry into effect the provisions and
intent of this Agreement, including, without limitation, the execution of stop
transfer orders, stock powers, notifications to obligors on the Collateral, the
providing of notification in connection with book entry securities or general
intangibles, and the providing of instructions to the issuers of uncertificated
securities, and will do all such other acts as the Pledgee may request with
respect to the perfection and protection of the security interest granted herein
and the assignment effected hereby. Without limiting the generality of the
foregoing, Pledgor shall, contemporaneously herewith, deliver to Pledgee such
duly executed financing statements and consents as may be necessary in the
judgment of Pledgee to perfect Pledgee's security interests in any Collateral
and shall execute, acknowledge,witness, deliver, file and record such Uniform
Commercial Code financing and continuation statements, notices and additional
security agreements, make such notations on their records and take such other
actions as Pledgee may reasonably request for the purpose of so perfecting,
maintaining and protecting its security interests hereunder.
11. Notices. All notices, demands and other communications by one party
hereunder to the other shall be in writing and shall be deemed effective when
sent by certified or registered mail, return receipt
5
requested, postage prepaid, or by recognized overnight delivery service and
addressed to the other party as set forth below:
If to the Pledgor: BPI Packaging Technologies, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
With a copy to: Xxxxxx Xxxxxxxxx, Esq.
Xxxxxx and Xxxxxx, P.C.
000 Xxxxx Xxxx
Xxxxx, XX 00000
If to the Pledgee: Foothill Capital Corporation
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xx. Xxx Xxxxxxxxx
With a copy to: Xxxx X. Xxxxxxx, Esquire
Stroock & Stroock & Xxxxx
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
or to such other address of which notice is given in the same manner.
11. Heirs, Successors, Etc. This Pledge Agreement and all of its terms
and provisions shall benefit and bind the heirs, successors, assigns,
transferees, executors and administrators of each of the parties hereto.
12. Miscellaneous
(a) The rights, remedies, powers, privileges, and discretions
of the Pledgee hereunder (hereinafter, the "Pledgee's Rights and Remedies")
shall be cumulative and not exclusive of any rights, remedies, powers,
privileges or discretions which Pledgee otherwise may have under the Agreement
or otherwise. No delay or omissions by the Pledgee in exercising or enforcing
any of the Pledgee's Rights and Remedies shall operate as, or constitute, a
waiver thereof. No waiver by the Pledgee of any Event of Default or of any
default under any other agreement shall operate as a waiver of any other default
hereunder or under any other agreement. No exercise of any of the Pledgee's
Rights and Remedies and no other agreement or transaction of whatever nature
entered into between the Pledgee and the Pledgor at any time shall preclude any
other exercise of the Pledgee's Rights and Remedies. No waiver by the Pledgee of
any of the Pledgee's Rights and Remedies on any one occasion shall be deemed a
waiver on any subsequent occasion, nor shall it be deemed a continuing waiver.
All of the Pledgee's Rights and Remedies and all of the Pledgee's rights,
remedies, powers, privileges, and discretions under any other agreement or
transaction are cumulative and not alternative or exclusive and may be exercised
by the Pledgee at such time or times and in such order of preference as the
Pledgee in its sole discretion may determine.
6
(b) This Agreement is intended to take effect as a sealed
instrument, and it and all transactions thereunder or pursuant thereto shall be
governed as to interpretation, validity, effect, rights, duties and remedies of
the parties thereunder and in all other respects by the internal laws of the
Commonwealth of Massachusetts.
(c) This Agreement and all documents which have been or may be
hereinafter furnished by Pledgor to the Pledgee may be reproduced by the Pledgee
by any photographic, photostatic, microfilm, xerographic, or similar process,
and any such reproduction shall be admissible in evidence as the original itself
in any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made in the regular course of
business).
(d) Jurisdiction and Venue. Borrower irrevocably submits to
the non-exclusive jurisdiction of any federal or state court sitting in Suffolk
County of Massachusetts, or the County of Los Angeles, California, or at Bank's
discretion any other court in which the Bank shall initiate legal or equitable
proceedings and which has jurisdiction over the parties and any suit, action or
proceeding arising out of or relating to this Agreement. Borrower irrevocably
waives, to the fullest extent it may effectively do so under applicable law, any
objection it may have or hereafter have to the laying of the venue of any such
suit, action or proceeding brought in any such court and any claim that the same
has been brought in an inconvenient forum.
(e) JURY WAIVER. THE BORROWER AND BANK EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY, AND AFTER AN OPPORTUNITY TO CONSULT WITH LEGAL
COUNSEL, WAIVE ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
IN CONNECTION WITH THIS AGREEMENT, THE OBLIGATIONS, IN ALL MATTERS CONTEMPLATED
HEREBY AND DOCUMENTS EXECUTED IN CONNECTION HEREWITH. THE BORROWER CERTIFIES
THAT NEITHER THE BANK NOR ANY OF ITS REPRESENTATIVES, AGENTS OR COUNSEL HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BANK WOULD NOT IN THE EVENT OF ANY
SUCH PROCEEDING, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO TRIAL BY JURY.
EXECUTED under seal as of the date first above written.
Witness: BPI PACKAGING TECHNOLOGIES, INC.
By: /s/ Xxxxxx Xxxxxxxxx
------------------ -----------------------
7
ACCEPTED:
FOOTHILL CAPITAL CORPORATION
By:_______________________________
COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss November 25, 1996
Then personally appeared the above-named, Xxxxxx X. Xxxxxxxxx, the CEO
of BPI Packaging Technologies, Inc., and acknowledged the foregoing instrument
to be his/her free act and deed on behalf of BPI Packaging Technologies, Inc.,
before me,
---------------------------------------
, Notary Public
My Commission Expires: November 2, 2002
8
Pledge and Security Agreement Among
Foothill Capital Corporation and BPI Packaging Technologies, Inc.
Schedule "A"
------------
1. 1 share of the common stock of Market Media, Inc., representing all of
the issued and outstanding capital stock of Market Media, Inc.
2. 6 shares of the common stock of BPI Packaging (UK) Limited,
representing all of the issued and outstanding capital stock of BPI
Packaging (UK) Limited.
3. 50,500 shares of the common stock of RC America, Inc., representing all
of the issued and outstanding capital stock of RC America, Inc.
