PLEDGE AGREEMENT
Dated as of May 4, 2023
among
CASCADE RETAIL HOLDINGS INC., a Delaware corporation,
CASCADE RETAIL OPERATING COMPANY LLC, a Delaware limited liability company,
as Pledgors,
and
CRESCENT HARBOR BANK, NATIONAL ASSOCIATION, as Collateral Agent for the benefit of the Secured Parties
________________________________________
Executed and delivered pursuant to that certain Credit Agreement dated as of May 4, 2023 (the "Credit Agreement") among Cascade Retail Holdings Inc. and Cascade Retail Operating Company LLC, as Borrowers, the Guarantors party thereto, the Lenders party thereto, and Crescent Harbor Bank, National Association, as Administrative Agent and Collateral Agent
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This PLEDGE AGREEMENT (this "Agreement" or this "Pledge Agreement"), dated as of May 4, 2023, is entered into by and among CASCADE RETAIL HOLDINGS INC., a Delaware corporation ("CRH" or the "Holdings Pledgor"), CASCADE RETAIL OPERATING COMPANY LLC, a Delaware limited liability company ("CROC" or the "Operating Pledgor," and together with the Holdings Pledgor, the "Pledgors" and each individually a "Pledgor"), and CRESCENT HARBOR BANK, NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States, in its capacity as Collateral Agent for the benefit of the Secured Parties (in such capacity, together with its successors and assigns, the "Collateral Agent").
RECITALS
A. Cascade Retail Holdings Inc. and Cascade Retail Operating Company LLC, as Borrowers (collectively, the "Borrowers"), Cascade Digital Commerce Inc., Cascade Outlet Stores LLC, and Cascade Fulfillment Services Inc., as Guarantors, the Lenders party thereto (being Crescent Harbor Bank, National Association, with a commitment of $135,000,000; Northgate Capital Bank, with a commitment of $90,000,000; and Bridgevale Financial Corporation, with a commitment of $75,000,000), and Crescent Harbor Bank, National Association, as Administrative Agent and Collateral Agent, have entered into that certain Credit Agreement dated as of the date hereof (as amended, restated, supplemented, or otherwise modified from time to time, the "Credit Agreement"), pursuant to which the Lenders have agreed to provide a $300,000,000 Senior Secured Asset-Based Revolving Credit Facility (the "Facility") in favor of the Borrowers upon the terms and subject to the conditions set forth therein.
B. As a condition precedent to the making of the initial Revolving Loans and the effectiveness of the Credit Agreement, the Credit Agreement requires that the Pledgors execute and deliver this Pledge Agreement to the Collateral Agent, for the benefit of the Secured Parties, to secure the prompt and complete payment, performance, and observance of all Obligations (as defined herein) of the Borrowers and the Guarantors arising under the Credit Agreement and the other Loan Documents.
C. CRH is the sole member and the holder of one hundred percent (100%) of the limited liability company interests in CROC.
D. CROC is (i) the sole shareholder and the holder of one hundred percent (100%) of the issued and outstanding equity interests in Cascade Digital Commerce Inc., a Delaware corporation ("CDC"), (ii) the sole member and the holder of one hundred percent (100%) of the limited liability company interests in Cascade Outlet Stores LLC, a Washington limited liability company ("COS"), (iii) the sole shareholder and the holder of one hundred percent (100%) of the issued and outstanding equity interests in Cascade Fulfillment Services Inc., a Delaware corporation ("CFS"), and (iv) the holder of sixty-five percent (65%) of the voting equity interests in Cascade Retail Canada ULC, a British Columbia, Canada unlimited liability company ("CRC").
E. Each Pledgor will derive substantial direct and indirect benefit from the extensions of credit made from time to time under the Credit Agreement, and each Pledgor has determined that it is in its best interest to execute and deliver this Pledge Agreement to induce the Lenders to extend credit under the Credit Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I — DEFINITIONS
Section 1.1 — Defined Terms
Capitalized terms used but not otherwise defined herein shall have the respective meanings assigned to such terms in the Credit Agreement or the Security Agreement dated as of May 4, 2023 (the "Security Agreement"), by and among the Borrowers, the Guarantors, and the Collateral Agent. As used in this Pledge Agreement, the following terms shall have the following meanings:
"Collateral Agent" means Crescent Harbor Bank, National Association, in its capacity as Collateral Agent under the Credit Agreement, acting for the ratable benefit of the Secured Parties, together with its successors and assigns in such capacity.
"Credit Agreement" means that certain Credit Agreement dated as of May 4, 2023, among the Borrowers, the Guarantors party thereto, the Lenders party thereto, and the Administrative Agent and Collateral Agent, as the same may be amended, restated, amended and restated, supplemented, refinanced, replaced, or otherwise modified from time to time in accordance with the terms thereof.
"Domestic Pledged Entities" means, collectively, CROC, CDC, COS, and CFS, and each individually a "Domestic Pledged Entity."
"Foreign Pledged Entity" means Cascade Retail Canada ULC, a British Columbia, Canada unlimited liability company, and any other entity organized outside of the United States whose equity interests are now or hereafter pledged hereunder, subject to the Foreign Subsidiary Limitation.
"Foreign Subsidiary Limitation" means the limitation set forth in Section 2.1(b) of this Pledge Agreement restricting the pledge of equity interests in Foreign Pledged Entities to sixty-five percent (65%) of the total outstanding voting equity interests therein, as required to avoid adverse tax consequences under Section 1504 of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.
"Obligations" has the meaning assigned to such term in the Credit Agreement and, for the avoidance of doubt, includes all revolving loans, swingline loans, letter of credit reimbursement obligations, interest, fees, premiums, penalties, expenses, indemnification obligations, and all other amounts now or hereafter payable by the Borrowers or any Guarantor under the Credit Agreement and the other Loan Documents, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising.
"Pledge Collateral" has the meaning assigned to such term in Section 2.1(c) of this Pledge Agreement.
"Pledged Entity" means each of CROC, CDC, COS, CFS, and CRC, and any other entity whose equity interests are now or hereafter pledged hereunder by any Pledgor pursuant to this Pledge Agreement, and "Pledged Entities" means all of the foregoing, collectively.
"Pledged Interests" means all equity interests in the Pledged Entities now owned or hereafter acquired by either Pledgor, including all shares of capital stock, membership interests, partnership interests, limited liability company interests, and any other ownership or equity interests in the Pledged Entities, subject in all cases to the Foreign Subsidiary Limitation with respect to any Foreign Pledged Entity.
"Pledgors" means CRH and CROC, collectively, and each individually a "Pledgor."
"Secured Parties" means, collectively, the Collateral Agent, the Administrative Agent, each Lender, and each other holder of Obligations under the Credit Agreement and the other Loan Documents.
"UCC" means the Uniform Commercial Code as in effect from time to time in the State of New York; provided that, if, by reason of mandatory provisions of applicable law, the validity, attachment, perfection, priority, or the effect of perfection or non-perfection of the security interest in any Pledge Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term "UCC" shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such validity, attachment, perfection, priority, or effect of perfection or non-perfection.
Section 1.2 — Other Interpretive Provisions
The rules of construction set forth in this Section 1.2 shall apply to this Pledge Agreement unless the context otherwise requires:
(a) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine, and neuter forms. The words "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation." The word "will" shall be construed to have the same meaning and effect as the word "shall."
(b) Unless the context otherwise requires, (i) any definition of or reference to any agreement, instrument, or other document herein shall be construed as referring to such agreement, instrument, or other document as from time to time amended, restated, supplemented, or otherwise modified (subject to any restrictions on such amendments, restatements, supplements, or modifications set forth herein or in the Credit Agreement), (ii) any reference herein to any person shall be construed to include such person's successors and assigns, (iii) the words "herein," "hereof," and "hereunder," and words of similar import, shall be construed to refer to this Pledge Agreement in its entirety and not to any particular provision hereof, and (iv) all references herein to Articles, Sections, Schedules, and Exhibits shall be construed to refer to Articles and Sections of, and Schedules and Exhibits to, this Pledge Agreement.
(c) References to any statute or regulation shall be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing, or interpreting such statute or regulation.
Section 1.3 — Credit Agreement Controls
In the event of any conflict or inconsistency between the terms and provisions of this Pledge Agreement and the terms and provisions of the Credit Agreement, the terms and provisions of the Credit Agreement shall govern and control to the extent of such conflict or inconsistency.
ARTICLE II — PLEDGE AND GRANT OF SECURITY INTEREST
Section 2.1 — Pledge and Grant
(a) Holdings Pledgor Pledge. As security for the payment, performance, and observance of all Obligations, CRH hereby pledges, assigns, hypothecates, and grants to the Collateral Agent, for the ratable benefit of the Secured Parties, a first-priority continuing security interest in and lien on all of CRH's right, title, and interest in, to, and under the following, in each case whether now owned or hereafter acquired, and whether now existing or hereafter arising (collectively, the "Holdings Pledge Collateral"):
(i) one hundred percent (100%) of the limited liability company interests in Cascade Retail Operating Company LLC, a Delaware limited liability company (EIN: 83-2951047), including all membership interests, economic interests, voting interests, and governance rights associated therewith;
(ii) all distributions, dividends, profits, cash, instruments, and other property from time to time received, receivable, or otherwise distributed in respect of, in exchange for, or on account of any or all of such interests described in clause (i) above;
(iii) all other rights, privileges, authorities, and preferences pertaining to such interests, including the right to make determinations, give consents, exercise voting rights, and take any other action with respect to such interests; and
(iv) all Proceeds (as defined in the UCC) of any and all of the foregoing, in whatever form, including cash, deposit accounts, negotiable instruments, securities, and other property.
(b) Operating Pledgor Pledge. As security for the payment, performance, and observance of all Obligations, CROC hereby pledges, assigns, hypothecates, and grants to the Collateral Agent, for the ratable benefit of the Secured Parties, a first-priority continuing security interest in and lien on all of CROC's right, title, and interest in, to, and under the following, in each case whether now owned or hereafter acquired, and whether now existing or hereafter arising (collectively, the "Operating Pledge Collateral"):
(i) one hundred percent (100%) of the issued and outstanding shares of capital stock of Cascade Digital Commerce Inc., a Delaware corporation (EIN: 84-3720158), being one thousand (1,000) shares of Common Stock, par value $0.01 per share, represented by Certificate No. 1;
(ii) one hundred percent (100%) of the limited liability company interests in Cascade Outlet Stores LLC, a Washington limited liability company (EIN: 91-2034671), including all membership interests, economic interests, voting interests, and governance rights associated therewith;
(iii) one hundred percent (100%) of the issued and outstanding shares of capital stock of Cascade Fulfillment Services Inc., a Delaware corporation (EIN: 84-5291836), being one thousand (1,000) shares of Common Stock, par value $0.01 per share, represented by Certificate No. 1;
(iv) sixty-five percent (65%) of the voting equity interests in Cascade Retail Canada ULC, a British Columbia, Canada unlimited liability company, being six hundred fifty (650) of the one thousand (1,000) outstanding voting common shares, represented by Certificate No. 1 (the "Foreign Subsidiary Limitation"); provided that no more than sixty-five percent (65%) of the total outstanding voting equity interests in any Foreign Pledged Entity shall be required to be pledged hereunder, as required to avoid the adverse tax consequences that would arise under Section 1504 of the Internal Revenue Code of 1986, as amended, if a greater percentage were pledged;
(v) all distributions, dividends, profits, cash, instruments, and other property from time to time received, receivable, or otherwise distributed in respect of, in exchange for, or on account of any or all of such interests described in clauses (i) through (iv) above;
(vi) all other rights, privileges, authorities, and preferences pertaining to such interests, including the right to make determinations, give consents, exercise voting rights, and take any other action with respect to such interests; and
(vii) all Proceeds (as defined in the UCC) of any and all of the foregoing, in whatever form, including cash, deposit accounts, negotiable instruments, securities, and other property.
(c) Collectively, all of the foregoing described in Sections 2.1(a) and 2.1(b) shall be referred to herein as the "Pledge Collateral."
Section 2.2 — Security for Obligations
The Pledge Collateral secures the prompt and complete payment when due (whether at stated maturity, by acceleration, or otherwise), performance, and observance of all Obligations, whether now existing or hereafter arising, direct or indirect, absolute or contingent, under the Credit Agreement and the other Loan Documents, including, without limitation, the $300,000,000 aggregate revolving commitments, all principal of and interest on the Revolving Loans and Swingline Loans, all letter of credit reimbursement obligations, the unused line fee of 37.5 basis points per annum, all letter of credit fees, all agent fees (including the annual administrative agent fee of $150,000), all other fees, costs, and expenses payable under the Credit Agreement and the other Loan Documents, and all indemnification obligations, in each case as such Obligations may be amended, restated, supplemented, or otherwise modified from time to time in accordance with the terms of the Credit Agreement.
Section 2.3 — Delivery of Pledge Collateral
(a) Certificated Securities. To the extent any Pledged Interests are or become certificated securities (as defined in Article 8 of the UCC), the applicable Pledgor shall deliver, or cause to be delivered, to the Collateral Agent all original certificates representing such Pledged Interests, in each case accompanied by undated stock powers or transfer powers (substantially in the form of Exhibit B hereto) duly executed in blank by the applicable Pledgor. Without limiting the generality of the foregoing, the following certificates shall be delivered to the Collateral Agent:
(i) Certificate No. 1 representing one thousand (1,000) shares of Common Stock of Cascade Digital Commerce Inc., together with an executed stock power in blank;
(ii) Certificate No. 1 representing one thousand (1,000) shares of Common Stock of Cascade Fulfillment Services Inc., together with an executed stock power in blank; and
(iii) Certificate No. 1 representing six hundred fifty (650) common shares of Cascade Retail Canada ULC (constituting sixty-five percent (65%) of the voting equity interests therein), together with an executed transfer power in blank, to the extent such interests are evidenced by certificates.
(b) Uncertificated Interests. To the extent any Pledged Interests are not evidenced by certificates (including, without limitation, the membership interests in CROC and the membership interests in COS), each applicable Pledgor shall:
(i) cause the issuer of such uncertificated interests to register the security interest of the Collateral Agent on its books and records, and to note such security interest on any register or ledger maintained by or on behalf of such issuer; and
(ii) deliver to the Collateral Agent a duly executed acknowledgment from the applicable Pledged Entity (in form and substance reasonably satisfactory to the Collateral Agent) confirming such registration and acknowledging the Collateral Agent's security interest in such uncertificated interests; or, alternatively, execute and deliver, or cause to be executed and delivered, such control agreements or other instruments as may be necessary or advisable, in the Collateral Agent's reasonable judgment, to perfect the Collateral Agent's security interest in such uncertificated interests under Article 8 or Article 9 of the UCC, as applicable.
(c) Timing. All deliveries and other actions required under this Section 2.3 shall be made and completed on or prior to May 19, 2023 (the "Closing Date"), which is the date on which the conditions precedent to the initial extension of credit under the Credit Agreement are required to be satisfied.
Section 2.4 — Continuing Security Interest; Termination
The pledge and security interest granted hereunder constitute a continuing security interest and shall remain in full force and effect until the Termination Date. As used herein, the "Termination Date" means the date on which all of the following conditions have been satisfied: (i) all Obligations have been irrevocably paid in full in cash (other than contingent indemnification and expense reimbursement obligations for which no claim has been asserted), (ii) all Commitments under the Credit Agreement have been terminated, and (iii) all Letters of Credit have expired or been terminated, or have been cash collateralized or backstopped in accordance with the terms of the Credit Agreement.
Upon the occurrence of the Termination Date, the Collateral Agent shall, at the request and sole expense of the Pledgors, promptly execute and deliver to the Pledgors (or to such other persons as the Pledgors may reasonably designate) such instruments of release, termination, and discharge, including UCC-3 termination statements, as may be reasonably requested by the Pledgors to evidence the release of the security interest and lien granted hereunder, and shall return to the applicable Pledgor all certificates, stock powers, transfer powers, and other instruments held by the Collateral Agent pursuant to this Pledge Agreement.
ARTICLE III — REPRESENTATIONS AND WARRANTIES
Each Pledgor hereby represents and warrants to the Collateral Agent, for the benefit of the Secured Parties, as of the date hereof and as of the Closing Date, as follows:
Section 3.1 — Ownership and Title
Each Pledgor is the sole legal and beneficial owner of the Pledged Interests set forth opposite such Pledgor's name on Schedule I hereto, free and clear of all Liens (as defined in the Credit Agreement) other than (x) the Lien in favor of the Collateral Agent created by this Pledge Agreement and (y) Permitted Liens (as defined in the Credit Agreement). Without limiting the generality of the foregoing:
(a) CRH is the sole legal and beneficial owner of one hundred percent (100%) of the limited liability company interests in CROC; and
(b) CROC is the sole legal and beneficial owner of (i) one hundred percent (100%) of the issued and outstanding shares of capital stock of CDC, (ii) one hundred percent (100%) of the limited liability company interests in COS, (iii) one hundred percent (100%) of the issued and outstanding shares of capital stock of CFS, and (iv) sixty-five percent (65%) of the voting equity interests in CRC.
Each Pledgor has full right, power, and authority to pledge and grant a security interest in the Pledged Interests as provided herein.
Section 3.2 — Due Authorization; No Conflicts
Each Pledgor has full corporate or limited liability company power and authority, as applicable, to execute, deliver, and perform its obligations under this Pledge Agreement and to grant the security interest and pledge contemplated hereby. The execution, delivery, and performance of this Pledge Agreement by each Pledgor and the granting of the security interest and pledge contemplated hereby have been duly authorized by all requisite corporate or limited liability company action on the part of each Pledgor, including (i) with respect to CRH, resolutions duly adopted by the Board of Directors of CRH on February 27, 2023, and (ii) with respect to CROC, resolutions duly adopted by CRH, as the sole member of CROC, in accordance with CROC's limited liability company agreement.
The execution, delivery, and performance of this Pledge Agreement by each Pledgor and the consummation of the transactions contemplated hereby do not and will not (a) violate any provision of the certificate of incorporation, bylaws, limited liability company agreement, or other organizational document of such Pledgor, (b) violate any applicable law, rule, regulation, judgment, order, writ, injunction, or decree of any governmental authority applicable to such Pledgor, (c) result in a breach of or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under any material agreement, contract, indenture, or instrument to which such Pledgor is a party or by which any of its property or assets may be bound, including the Credit Agreement, or (d) result in or require the creation or imposition of any Lien upon any of the property or assets of such Pledgor other than the Lien created by this Pledge Agreement and Permitted Liens.
Section 3.3 — Validity and Enforceability
This Pledge Agreement has been duly executed and delivered by each Pledgor and constitutes the legal, valid, and binding obligation of each Pledgor, enforceable against each Pledgor in accordance with its terms, subject to (a) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and other similar laws affecting creditors' rights generally, and (b) general principles of equity, regardless of whether considered in a proceeding in equity or at law (including concepts of materiality, reasonableness, good faith, and fair dealing).
Section 3.4 — No Required Consents
No consent, approval, authorization, order, registration, qualification, or filing of or with any governmental authority or any other person (including the shareholders, members, or other equity holders of any Pledged Entity) is required for the execution, delivery, and performance by each Pledgor of this Pledge Agreement or for the grant of the security interest contemplated hereby, or for the exercise by the Collateral Agent of its rights and remedies hereunder, except for:
(i) the filing of UCC-1 financing statements with the Secretary of State of the State of Delaware (with respect to CRH and CROC as debtors) and with the Secretary of State of the State of Washington (with respect to COS as debtor); and
(ii) such consents, approvals, or authorizations as may be required under the organizational documents of the Pledged Entities, all of which have been duly obtained on or prior to the date hereof and are in full force and effect.
Section 3.5 — Pledged Interests Description
The Pledged Interests are accurately and completely described on Schedule I hereto. The Pledged Interests listed on Schedule I constitute (a) with respect to each Domestic Pledged Entity, one hundred percent (100%) of the issued and outstanding equity interests of such Domestic Pledged Entity, and (b) with respect to the Foreign Pledged Entity (CRC), sixty-five percent (65%) of the issued and outstanding voting equity interests of CRC. No Pledgor has granted any option, warrant, right of first refusal, right of first offer, or other right to purchase, subscribe for, or otherwise acquire any equity interests in any Pledged Entity, other than as described herein and as otherwise permitted under the Credit Agreement.
Section 3.6 — Validly Issued Interests
All Pledged Interests have been duly authorized and validly issued in accordance with the organizational documents of the applicable Pledged Entity and all applicable laws. With respect to the corporate Pledged Entities (CDC and CFS), the shares of capital stock constituting the Pledged Interests are fully paid and nonassessable. With respect to the limited liability company Pledged Entities (CROC and COS), the membership interests constituting the Pledged Interests have been fully paid up and no additional capital contributions or other payments are required to be made with respect thereto (other than as may be required under the applicable limited liability company agreement, as in effect on the date hereof). With respect to CRC, the common shares constituting the Pledged Interests have been duly authorized, validly issued, fully paid, and are not subject to any preemptive or similar rights.
Section 3.7 — Perfection
(a) Upon the delivery to the Collateral Agent of the certificates representing the certificated Pledged Interests (together with undated stock powers or transfer powers duly executed in blank) in accordance with Section 2.3(a), the Collateral Agent will have a first-priority perfected security interest in such certificated Pledged Interests, subject only to Permitted Liens.
(b) Upon the filing of UCC-1 financing statements with the Secretary of State of the State of Delaware (with respect to CRH (Filing No. 2023-1947291) and CROC (Filing No. 2023-1947283) as debtors) and with the Secretary of State of the State of Washington (with respect to COS (Filing No. 2023-204-8176) as debtor), and/or upon the registration of the Collateral Agent's security interest on the books and records of the applicable Pledged Entity in accordance with Section 2.3(b), the Collateral Agent will have a first-priority perfected security interest in the uncertificated Pledged Interests, subject only to Permitted Liens.
(c) No further action is necessary to create, preserve, protect, or perfect the security interest in and lien on the Pledge Collateral granted hereunder, or to entitle the Collateral Agent to exercise its rights and remedies hereunder with respect thereto, other than the actions described in Sections 2.3(a) and 2.3(b) hereof.
Section 3.8 — No Other Pledge
None of the Pledged Interests is subject to any prior pledge, hypothecation, assignment, charge, or security interest in favor of any person other than (a) the security interest created by this Pledge Agreement in favor of the Collateral Agent and (b) Permitted Liens (as defined in the Credit Agreement). The existing UCC financing statements filed by Harborview Lending Group, LLC against the Pledgors and the Pledged Entities are being terminated concurrently with the closing under the Credit Agreement on May 19, 2023, and UCC-3 termination statements with respect to all such filings are being filed on or before such date.
Section 3.9 — Organizational Information
The information set forth on Schedule I hereto with respect to each Pledgor and each Pledged Entity (including the entity type, jurisdiction of organization, principal office address, and employer identification number of each such entity) is true, correct, and complete in all respects as of the date hereof. Without limiting the foregoing:
(a) CRH is a corporation organized and existing under the laws of the State of Delaware, with its principal office at 2200 Elliott Avenue, Suite 1400, Seattle, Washington 98121, and its employer identification number is 91-1847263.
(b) CROC is a limited liability company organized and existing under the laws of the State of Delaware, with its principal office at 2200 Elliott Avenue, Suite 1400, Seattle, Washington 98121, and its employer identification number is 83-2951047.
(c) CDC is a corporation organized and existing under the laws of the State of Delaware, with its principal office at 500 Fremont Street, Suite 200, Portland, Oregon 97209, and its employer identification number is 84-3720158.
(d) COS is a limited liability company organized and existing under the laws of the State of Washington, with its principal office at 2200 Elliott Avenue, Suite 1400, Seattle, Washington 98121, and its employer identification number is 91-2034671.
(e) CFS is a corporation organized and existing under the laws of the State of Delaware, with distribution centers located at 18700 72nd Avenue South, Kent, Washington 98032; 4500 Logistics Parkway, Reno, Nevada 89506; and 7200 Alum Creek Drive, Columbus, Ohio 43217; and its employer identification number is 84-5291836.
(f) CRC is an unlimited liability company organized and existing under the laws of the Province of British Columbia, Canada. CRC is a Foreign Pledged Entity, and the pledge with respect to CRC is limited to sixty-five percent (65%) of the voting equity interests therein in accordance with the Foreign Subsidiary Limitation.
ARTICLE IV — COVENANTS
Each Pledgor covenants and agrees with the Collateral Agent, for the benefit of the Secured Parties, as follows:
Section 4.1 — Maintenance of Pledge; No Disposition
No Pledgor shall sell, assign, transfer, exchange, convey, or otherwise dispose of, or grant any option, warrant, right of first refusal, or other right with respect to, any of the Pledge Collateral or any interest therein, except as expressly permitted under the Credit Agreement (including dispositions permitted under the disposition basket of $10,000,000 per fiscal year set forth in the Credit Agreement). Any purported sale, assignment, transfer, exchange, conveyance, or other disposition made in violation of this Section 4.1 shall be void and of no force or effect.
Section 4.2 — No Additional Liens
No Pledgor shall create, incur, assume, or suffer or permit to exist any Lien on any of the Pledge Collateral or any interest therein, except for (a) the security interest granted in favor of the Collateral Agent pursuant to this Pledge Agreement and (b) Permitted Liens as defined in the Credit Agreement. Each Pledgor shall defend the Pledge Collateral and the Collateral Agent's security interest therein against the claims and demands of all persons whomsoever.
Section 4.3 — Further Assurances
Each Pledgor shall, at its own cost and expense, promptly execute and deliver, or cause to be executed and delivered, such further instruments, documents, and agreements, and take such further actions, as the Collateral Agent may from time to time reasonably request to carry out the intent and purposes of this Pledge Agreement, to create, preserve, protect, and perfect the security interest and lien granted hereby, and to enable the Collateral Agent to exercise and enforce its rights and remedies hereunder with respect to the Pledge Collateral. Without limiting the generality of the foregoing, each Pledgor shall:
(i) execute and deliver such additional UCC-1 financing statements, UCC-3 amendments, continuation statements, and other filings and recordings as the Collateral Agent may reasonably request from time to time;
(ii) deliver to the Collateral Agent any additional stock powers, transfer powers, or other instruments of transfer, duly executed in blank, with respect to any Pledged Interests;
(iii) obtain and deliver to the Collateral Agent acknowledgments from the applicable Pledged Entities regarding the Collateral Agent's security interest in the Pledged Interests, in form and substance reasonably satisfactory to the Collateral Agent; and
(iv) cause each applicable Pledged Entity to note the Collateral Agent's security interest on its books and records, including any membership register, stock ledger, or similar record.
Section 4.4 — Preservation of Pledged Entities
Each Pledgor shall take all actions reasonably necessary to maintain the good standing and valid existence of each Pledged Entity in its jurisdiction of organization, including the timely filing of all annual reports and the payment of all franchise taxes and fees required by applicable law; provided, however, that this Section 4.4 shall not restrict any merger, consolidation, liquidation, dissolution, or disposition otherwise expressly permitted under the Credit Agreement.
Section 4.5 — Notification of Changes
Each Pledgor shall provide the Collateral Agent with not less than thirty (30) days' prior written notice of any of the following:
(i) any change in such Pledgor's legal name or any trade name or fictitious business name under which such Pledgor conducts business;
(ii) any change in such Pledgor's jurisdiction of organization;
(iii) any change in such Pledgor's organizational identification number or employer identification number;
(iv) any change in the type, class, or nature of the equity interests of any Pledged Entity, including any reclassification, conversion, exchange, or other change in the character of such equity interests; and
(v) any issuance by any Pledged Entity of additional equity interests (whether by original issuance, conversion, exchange, stock split, stock dividend, or otherwise).
Each Pledgor shall take all actions necessary or reasonably requested by the Collateral Agent to maintain the validity, perfection, and priority of the security interest and lien granted hereunder following any such change or issuance.
Section 4.6 — After-Acquired Equity Interests
If any Pledgor shall at any time acquire (whether by purchase, dividend, stock split, conversion, exchange, contribution, or otherwise) any additional equity interests in any Pledged Entity (or in any newly formed or acquired domestic subsidiary that is required to be a Pledged Entity under the terms of the Credit Agreement), such Pledgor shall promptly (and in any event within ten (10) Business Days of such acquisition):
(i) pledge such additional equity interests to the Collateral Agent for the ratable benefit of the Secured Parties by executing and delivering to the Collateral Agent a supplement or amendment to this Pledge Agreement or a joinder agreement substantially in the form of Exhibit A hereto, as the Collateral Agent may require;
(ii) deliver to the Collateral Agent any certificates representing such additional equity interests, together with undated stock powers or transfer powers duly executed in blank (in the case of certificated interests), or take such other steps as may be required under Section 2.3(b) hereof (in the case of uncertificated interests); and
(iii) take all other actions required by this Article IV to grant, preserve, protect, and perfect a first-priority security interest in such additional equity interests in favor of the Collateral Agent for the ratable benefit of the Secured Parties.
Notwithstanding the foregoing, the pledge of equity interests in any Foreign Pledged Entity shall be subject to the Foreign Subsidiary Limitation, and no Pledgor shall be required to pledge more than sixty-five percent (65%) of the total outstanding voting equity interests in any Foreign Pledged Entity.
Section 4.7 — Voting Rights; Dividends
(a) Prior to an Event of Default. Unless and until an Event of Default shall have occurred and be continuing, each Pledgor shall be entitled to:
(i) exercise any and all voting and consensual rights pertaining to the Pledge Collateral for any purpose not inconsistent with the terms or purposes of this Pledge Agreement, the Credit Agreement, or the other Loan Documents; and
(ii) receive and retain all cash dividends, distributions, and other payments made on or with respect to the Pledge Collateral;
provided, however, that the right to receive dividends, distributions, and other payments under clause (ii) above shall be subject to compliance with the restricted payment conditions set forth in the Credit Agreement, including the requirements that (A) no Default or Event of Default shall have occurred and be continuing or would result from such payment, (B) after giving pro forma effect to such payment, Availability shall be not less than $45,000,000, and (C) if, after giving pro forma effect to such payment, Availability would be less than twenty percent (20%) of the lesser of (x) the aggregate Commitments and (y) the Borrowing Base, the pro forma Fixed Charge Coverage Ratio shall be not less than 1.15 to 1.00.
(b) After an Event of Default. Upon the occurrence and during the continuance of an Event of Default under the Credit Agreement:
(i) the Collateral Agent shall have the right, at its sole election, to exercise (or to direct the exercise of) all voting and consensual rights pertaining to the Pledge Collateral, and each Pledgor hereby grants to the Collateral Agent an irrevocable proxy to exercise such voting and consensual rights during the continuance of any Event of Default;
(ii) all dividends, distributions, and other payments on or with respect to the Pledge Collateral shall be paid directly to the Collateral Agent and shall be held by the Collateral Agent as additional Pledge Collateral and applied in accordance with the terms of this Pledge Agreement and the Credit Agreement; and
(iii) each Pledgor shall, upon the request of the Collateral Agent, promptly execute and deliver to the Collateral Agent such proxies, powers of attorney, dividend orders, and other instruments as the Collateral Agent may reasonably request to enable the Collateral Agent to exercise the rights described in this Section 4.7(b).
Section 4.8 — Organizational Documents
No Pledgor shall, without the prior written consent of the Collateral Agent (which consent shall not be unreasonably withheld, conditioned, or delayed), amend, modify, supplement, restate, or waive any provision of the certificate of incorporation, bylaws, limited liability company agreement, operating agreement, or other organizational document of any Pledged Entity, in each case in any manner that could reasonably be expected to materially and adversely affect the rights, interests, or remedies of the Collateral Agent or any other Secured Party under this Pledge Agreement, the Credit Agreement, or any other Loan Document.
ARTICLE V — REMEDIES
Section 5.1 — Remedies Upon Event of Default
Upon the occurrence and during the continuance of an Event of Default (as defined in the Credit Agreement), the Collateral Agent may, at its option, without demand of performance or other demand, advertisement, or notice of any kind (except any notice required by law that cannot be waived) to or upon any Pledgor or any other person (all and each of which demands, advertisements, and notices are hereby expressly waived to the extent permitted by applicable law), exercise any or all of the following rights and remedies in any combination:
(a) Foreclose upon, sell, assign, or otherwise dispose of all or any portion of the Pledge Collateral at one or more public or private sales, in one or more parcels, at such time or times, at such place or places, for such price or prices, and upon such terms and conditions as the Collateral Agent may deem commercially reasonable, for cash, on credit, or for future delivery, and at any such sale the Collateral Agent or any Secured Party may be the purchaser of any or all of the Pledge Collateral so sold, free and clear of any right of redemption or equity of redemption, which rights of redemption and equity of redemption are hereby waived and released to the fullest extent permitted by applicable law;
(b) Exercise all voting, consensual, and other rights and powers of ownership with respect to the Pledge Collateral, including the right to vote, consent to, and direct all matters relating to the management, governance, and affairs of the Pledged Entities, and to execute and deliver all documents and instruments and take all other actions necessary or desirable to effectuate the exercise of such rights;
(c) Collect and receive all dividends, distributions, interest, income, and other payments on or with respect to the Pledge Collateral, and apply the same to the Obligations in such order and manner as the Administrative Agent shall determine in accordance with the Credit Agreement;
(d) Transfer or cause to be transferred on the books and records of the applicable Pledged Entity any or all of the Pledge Collateral to the name of the Collateral Agent, any nominee of the Collateral Agent, or any purchaser at any foreclosure sale, and cause such Pledged Entity to register such transfer; and
(e) Exercise any and all other rights and remedies available to it under the UCC as in effect in the applicable jurisdiction, under any other applicable law, or in equity, including all rights and remedies of a secured party under Article 9 of the UCC.
Section 5.2 — Sale of Pledge Collateral
Each Pledgor acknowledges and agrees that the Pledge Collateral, or any portion thereof, may be subject to one or more restrictions on transfer or resale imposed by applicable securities laws (including the Securities Act of 1933, as amended (the "Securities Act"), and applicable state securities or "blue sky" laws) and that, accordingly, the Collateral Agent may be unable to effect a public sale of any or all of the Pledge Collateral, and the Collateral Agent may be compelled to resort to one or more private sales thereof to a restricted group of purchasers. Each Pledgor agrees that any such private sale may be at prices and on terms less favorable to the seller than the prices and terms that might have been obtained at a public sale, and each Pledgor agrees that any such private sale conducted in a commercially reasonable manner shall not, by reason of having been made privately, be deemed to be not commercially reasonable. The Collateral Agent shall be under no obligation to delay a sale of any of the Pledge Collateral for the period of time necessary to permit any Pledged Entity to register such Pledge Collateral for public sale under the Securities Act, any applicable state securities laws, or any comparable foreign laws, even if such Pledged Entity would agree to do so.
Each Pledgor agrees that ten (10) days' prior written notice by the Collateral Agent to such Pledgor of the time and place of any public sale or of the time after which a private sale or other intended disposition is to be made shall constitute commercially reasonable notice of such matters. No notification need be given to a Pledgor if such Pledgor has signed after default a statement renouncing or modifying any right to notification of sale or other intended disposition.
Section 5.3 — Application of Proceeds
The cash proceeds actually received by the Collateral Agent from any sale of, collection from, or other realization upon all or any part of the Pledge Collateral shall be applied in the following order of priority:
First, to the payment of all costs, expenses, and fees incurred by the Collateral Agent in connection with the exercise of its rights and remedies hereunder, including reasonable and documented attorneys' fees and disbursements, court costs, appraisal fees, and other out-of-pocket expenses;
Second, to the payment and satisfaction of all Obligations in such order of application as the Administrative Agent shall determine in accordance with the terms of the Credit Agreement; and
Third, after all Obligations have been irrevocably paid in full in cash, all Commitments have been terminated, and all Letters of Credit have expired, been terminated, or been cash collateralized, any remaining surplus shall be paid to the applicable Pledgor or Pledgors or to whomsoever may be lawfully entitled thereto or as a court of competent jurisdiction may direct.
Section 5.4 — Remedies Cumulative
All rights and remedies of the Collateral Agent under this Pledge Agreement, the Credit Agreement, and the other Loan Documents are cumulative, may be exercised simultaneously or in any order, and are not exclusive of any other rights or remedies provided by law, in equity, or by any other agreement. The exercise of one right or remedy shall not be deemed a waiver of or preclude the exercise of any other right or remedy. No failure by the Collateral Agent to exercise, and no delay in exercising, any right, remedy, or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, remedy, or power preclude any other or further exercise thereof or the exercise of any other right, remedy, or power.
Section 5.5 — Waiver of Defenses
Each Pledgor waives, to the fullest extent permitted by applicable law:
(a) any defense based upon or arising by reason of the adequacy or inadequacy of the Pledge Collateral;
(b) any defense based upon the manner or method of any sale, collection, or other realization upon all or any part of the Pledge Collateral, or any defense arising by reason of the lack of a commercially reasonable disposition or manner of disposition of the Pledge Collateral;
(c) any defense based upon the application or nonapplication of the proceeds of any sale, collection, or realization;
(d) any right of marshaling of assets or any similar right;
(e) any defense based upon the failure of the Collateral Agent to give notice to any Pledgor other than as expressly required by this Pledge Agreement or applicable law that cannot be waived;
(f) any defense based upon any claim that such Pledgor's obligations exceed or are more burdensome than those of any Borrower; and
(g) any defense, setoff, claim, counterclaim, or recoupment that could be asserted against any Secured Party.
ARTICLE VI — THE COLLATERAL AGENT
Section 6.1 — Appointment and Authority
Each Pledgor acknowledges and agrees that Crescent Harbor Bank, National Association, has been appointed as Collateral Agent under the Credit Agreement to act for the ratable benefit of the Secured Parties. The Collateral Agent's rights, powers, duties, and obligations under this Pledge Agreement are subject to, and shall be exercised and performed in accordance with, the provisions of Article IX of the Credit Agreement (including all protections, immunities, exculpations, and indemnifications set forth therein), which provisions are incorporated herein by reference, mutatis mutandis, as if fully set forth herein.
Section 6.2 — Collateral Agent's Duties
The Collateral Agent shall have no duties or responsibilities with respect to the Pledge Collateral or this Pledge Agreement other than those expressly set forth herein and in the Credit Agreement. Without limiting the generality of the foregoing:
(a) The Collateral Agent shall not be obligated to take any action hereunder that, in the Collateral Agent's reasonable judgment, would expose the Collateral Agent to personal liability or that would be contrary to this Pledge Agreement, the Credit Agreement, or applicable law.
(b) The Collateral Agent shall not be liable for any action taken or omitted to be taken by it under or in connection with this Pledge Agreement, except for its own gross negligence, willful misconduct, or bad faith, as determined by a final non-appealable judgment of a court of competent jurisdiction.
(c) The Collateral Agent may rely upon, and shall be fully protected in relying upon, any notice, request, certificate, statement, instrument, document, or other communication (including any electronic communication) reasonably believed by it to be genuine and to have been signed, sent, or made by the proper person or persons, and the Collateral Agent shall have no duty to make any inquiry or investigation regarding the accuracy, completeness, or genuineness of any such communication.
(d) The Collateral Agent may employ agents and attorneys-in-fact and shall not be responsible for the negligence or misconduct of any such agents or attorneys-in-fact selected by it with reasonable care.
Section 6.3 — Successor Collateral Agent
Any successor Administrative Agent appointed under the Credit Agreement in accordance with the terms thereof shall automatically become the successor Collateral Agent under this Pledge Agreement, and shall thereupon succeed to and become vested with all of the rights, powers, privileges, and duties of the Collateral Agent hereunder, and the predecessor Collateral Agent shall be discharged from its duties and obligations hereunder. Upon the acceptance of appointment by any successor Collateral Agent, each Pledgor shall execute and deliver such instruments and documents as such successor may reasonably request in order to confirm and evidence its status as Collateral Agent hereunder.
ARTICLE VII — MISCELLANEOUS
Section 7.1 — Notices
All notices, requests, demands, consents, and other communications required or permitted to be given under this Pledge Agreement shall be in writing and shall be given, delivered, and deemed received in accordance with the notice provisions set forth in the Credit Agreement. For purposes of this Pledge Agreement, notices shall be addressed as follows:
If to CRH or CROC:
Cascade Retail Holdings Inc. Cascade Retail Operating Company LLC 2200 Elliott Avenue, Suite 1400 Seattle, Washington 98121
Attention: Derek Tanaka, General Counsel & Corporate Secretary
with a copy to: Priya Anand, Treasurer
With a copy to Borrower's Counsel:
Calderwood & Harkness LLP 599 Lexington Avenue, 42nd Floor New York, New York 10022
Attention: Claudia Merritt
If to the Collateral Agent:
Crescent Harbor Bank, National Association 780 Park Avenue, 30th Floor New York, New York 10021
Attention: Julianne Strickland, Vice President, Portfolio Management
With a copy to Lenders' Counsel:
Whitfield, Greer & Holloway LLP 51 West 52nd Street, 35th Floor New York, New York 10019
Attention: Bernard Ashford
Any party hereto may change its address for notice purposes by giving written notice of such change to the other parties in accordance with this Section 7.1.
Section 7.2 — Amendments and Waivers