PLEDGE AGREEMENT
PLEDGE AGREEMENT dated as of May 21, 1997 (as amended, modified, or
supplemented from time to time, this Agreement), made by each of the undersigned
(each, together with its successors and assigns, a "Pledgor" and collectively,
the "Pledgors"), in favor of KEYBANK NATIONAL ASSOCIATION, a national banning
association, as Collateral Agent (herein, together with its successors and
assigns in such capacity, the "Pledgee" for the benefit of the Secured Creditors
(as defined below):
PRELIMINARY STATEMENTS:
(1) Except as otherwise defined therein, terms used herein and defined
in the Credit Agreement (as defined below) shall be used herein as therein
defined.
(2) This Agreement is made pursuant to the Credit Agreement, dated as
of the date hereof (herein, as amended or otherwise modified from time to time,
the "Credit Agreement"), among Safety Components International, Inc., a Delaware
corporation (herein, together with its successors and assigns, the "Company"),
the other Borrowers named therein, the financial institutions named as lenders
therein, and KeyBank National Association, as the Administrative Agent for the
Lenders (as defined in the Credit Agreement), providing, among other things, for
loans or advances or other extensions of credit to or for the benefit of the
Borrowers of up to $27,000,000, with such loans or advances being evidenced by
promissory notes (the "Notes", such term to include all Notes and other
securities issued in exchange therefor or in replacement thereof).
(3) The Company or any of its Subsidiaries may from time to time be
party to one or more Designated Hedge Agreements (as defined in the Credit
Agreement). Any institution that participates, and in each case their subsequent
assigns, as a counterparty to any Designated Hedge Agreement (collectively, the
"Hedge Creditors"; and the Hedge Creditors together with the Lenders,
collectively the "Secured Creditors"), shall benefit hereunder as herein
provided.
(4) Pursuant to the Subsidiary Guaranty, each Subsidiary Guarantor has
jointly and severally guaranteed to the Secured Creditors the payment when due
of the Guaranteed Obligations (as defined in the Subsidiary Guaranty).
(5) It is a condition precedent to the making of Loans and the issuance
of, and participation in, Letters of Credit under the Credit Agreement that each
Pledgor shall have executed and delivered to the Pledgee this Agreement.
(6) Each Pledgor desires to execute this Agreement to satisfy the
conditions described in the preceding paragraph.
1
NOW, THEREFORE, in consideration of the benefits accruing to each
Pledgor, the receipt and sufficiency of which are hereby acknowledged, each
Pledgor hereby makes the following representations and warranties to the Pledgee
and hereby covenants and agrees with the Pledgee as follows:
1. SECURITY FOR OBLIGATIONS.
This Agreement is made by each Pledgor to the Pledgee, for the benefit
of the Secured Creditors, to secure:
(i) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations
(including obligations which, but for the automatic stay under section
362(a) of the Bankruptcy Code, would become due) of such Pledgor to the
Lenders, whether now existing or hereafter incurred under, arising out
of, or in connection with the Credit Agreement and the other Credit
Documents to which such Pledgor is a party (including without
limitation (x) in the case of any Borrower, all such obligations and
indebtedness of such Borrower under the Credit Agreement and (y) in the
case of each other Pledgor, all such obligations and indebtedness under
the Subsidiary Guaranty to which such Pledgor is a party which relate
to any of the foregoing), and the due performance and compliance by
such Pledgor with all of the terms, conditions and agreements contained
in the Credit Agreement and such other Credit Documents (all such
obligations and liabilities under this clause (i), being herein
collectively called the "Credit Document Obligations");
(ii) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations
(including obligations which, but for the automatic stay under section
362(a) of the Bankruptcy Code, would become due) and liabilities of
each Pledgor or other Subsidiary of the Company now existing or
hereafter incurred under, arising out of or in connection with any
Designated Hedge Agreement with any of the Secured Creditors including,
in the case of Pledgors other than the Borrowers, all obligations of
such Pledgor under the Subsidiary Guaranty in respect of any Designated
Hedge Agreement, and the due performance and compliance by such Pledgor
with all of the terms, conditions and agreements contained therein (all
such obligations and liabilities described in this clause (ii) being
herein collectively called the "Hedge Obligations");
(iii) any and all sums advanced by the Pledgee in order to
preserve the Collateral (as hereinafter defined) or preserve its
security interest in the Collateral (to the extent provided for in the
Credit Documents); and
(iv) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations, or liabilities of such
Pledgor referred to in clauses (i), (ii) and (iii) above, after an
Event of Default (as such term is defined in the Security Agreement)
2
shall have occurred and be continuing, the reasonable expenses of
retaking, holding, preparing for sale or lease, selling or otherwise
disposing of or realizing on the Collateral, or of any exercise by the
Pledgee of its rights hereunder, together with reasonable attorneys'
fees and court costs.
All such obligations, liabilities, sums and expenses set forth in clauses (i)
through (iv) of this section 1 being herein collectively called the
"Obligations," it being acknowledged and agreed that the "Obligations" shall
include extensions of credit of the types described above, whether outstanding
on the date of this Agreement or extended from time to time after the date of
this Agreement.
2. CERTAIN DEFINITIONS; INITIAL REPRESENTATIONS, ETC.
2.1 Definitions. As used herein:
"Company" shall have the meaning provided in the Preliminary
Statements.
"Credit Agreement" shall have the meaning provided in the
Preliminary Statements.
"Credit Document Obligations" shall have the meaning provided
in clause (i) of section 1.
"Equity Interests" shall mean (i) all of the partnership
interests in a general or limited partnership at any time owned or held by any
Pledgor, and (ii) all of the membership interests in a limited liability company
at any time owned or held by any Pledgor.
"Foreign Corporation" shall mean a corporation that is not
organized under the laws of the United States or any State or territory thereof.
"Hedge Creditors" shall have the meaning provided in the
Preliminary Statements.
"Hedge Obligations" shall have the meaning provided in clause
(ii) of section 1.
"Notes" shall mean all promissory notes from time to time
issued to, or held by, any Pledgor.
"Noticed Event of Default" shall mean (i) an Event of Default
specified in section 10.1(g) of the Credit Agreement and (ii) any other Event of
Default under the Credit Agreement in respect of which the Pledgee has given the
Company notice that such Event of Default constitutes a Noticed Event of
Default.
"Obligations" shall have the meaning provided in section 1.
3
"Pledged Entity" shall mean the issuer of any Equity
Interests.
"Pledged Equity Interests" shall mean all Equity Interests at
any time pledged or required to be pledged under this Agreement.
"Pledged Votes" shall mean all Notes at any time pledged or
required to be pledged under this Agreement.
"Pledged Securities" shall mean all Pledged Stock and all
Pledged Notes.
"Pledged Stock" shall mean all Stock at any time pledged or
required to be pledged under this Agreement.
"Secured Creditors" shall have the meaning provided in the
Preliminary Statements.
"Secured Debt Agreement" shall have the meaning provided in
section 5.
"Securities" shall mean all of the Stock and Notes.
"Stock" shall mean (i) all of the issued and outstanding
shares of stock of any corporation (other than a Foreign Corporation) at any
time directly owned by any Pledgor; and (ii) all of the issued and outstanding
shares of capital stock of any Foreign Corporation at any time owned by any
Pledgor, provided that such Pledgor shall not be required to pledge hereunder
(and the term "Stock" shall not include) more than 65% of the total combined
voting power of all classes of capital stock of any Foreign Corporation entitled
to vote.
"Termination Date" shall have the meaning provided in section
18(a).
2.2 Representations and Warranties as to Collateral Initially
Pledged Hereunder. Each Pledgor represents and warrants that on the date hereof:
(a) each Subsidiary of such Pledgor and the direct ownership
thereof is listed on Annex A hereto;
(b) the Stock owned by it consists of the number and type of
shares of the stock of the corporations as described in Annex B hereto;
(c) such Pledgor is the holder of record with respect to any
such Subsidiary and sole beneficial owner of such Stock;
(d) such Stock constitutes that percentage of the issued and
outstanding capital stock of the issuing corporation as is set forth in Annex B
hereto;
4
(e) the Notes held by such Pledgor consist of the promissory
notes described in Annex C hereto;
(f) the Equity Interests held by such Pledgor constitutes that
percentage of the entire interest of each Pledged Entity as is set forth on
Annex D hereto; and
(g) on the date hereof, such Pledgor owns or possesses no
other Securities or Equity Interests.
3. PLEDGE OF SECURITIES, GRANT OF SECURITY INTERESTS, ETC.
3.1 Pledge. To secure the Obligations and for the purposes set forth in
section 1, each Pledgor hereby pledges and grants to the Pledgee a first
priority continuing security interest in, and as part of such grant and pledge,
hereby transfers and assigns to the Pledgee all of the following whether now
existing or hereafter acquired (collectively, the "Collateral"):
(a) such Pledgor's Equity Interest and all of such Pledgor's
right, title and interest in each Pledged Entity including, without limitation:
(i) all the capital thereof and its interest in all
profits, losses and other distributions to which such Pledgor shall at
any time be entitled in respect of such Equity Interest;
(ii) all other payments due or to become due to such
Pledgor in respect of such Equity Interest, whether under any
partnership agreement, limited liability company agreement or
otherwise, whether as contractual obligations, damages, insurance
proceeds or otherwise;
(iii) all of its claims, rights powers, privileges,
authority, options, security interests, liens and remedies, if any,
under any partnership agreement, limited liability company agreement or
at law or otherwise in respect of such Equity Interest;
(iv) all present and future claims if any, of the
Pledgor against any Pledged Entity for moneys loaned or advanced, for
services rendered or otherwise;
(v) all of such Pledgor's rights under any
partnership agreement, limited liability company agreement or at law to
exercise and enforce every right, power, remedy, authority, option and
privilege of such Pledgor relating to the Equity Interest including any
power to terminate, cancel or modify any partnership agreement or
limited liability company agreement, to execute any instruments and to
take any and all other action on behalf of and in the name of such
Pledgor in respect of the Equity Interest and any Pledged Entity, to
make determinations, to exercise any election (including, but not
limited to, election of remedies) or option or to give or receive any
notice, consent, amendment,
5
waiver or approval, together with full power and authority to demand,
receive, enforce, collect or receipt for any of the foregoing, to
enforce or execute any checks, or other instruments or orders, to file
any claims and to take any action in connection with any of the
foregoing;
(vi) all other property hereafter delivered in
substitution for or in addition to any of the foregoing, all
certificates and instruments representing or evidencing such other
property and all cash, securities, interest, distributions, dividends,
rights and other property at any time and from time to time received,
receivable or otherwise distributed in respect of or in exchange for
any or all thereof; and
(vii) to the extent not otherwise included, all
proceeds of any or all of the foregoing;
(b) all Securities owned by such Pledgor on the date hereof, if any,
and such Pledgor hereby pledges and deposits as security with the Pledgee and
delivers to the Pledgee certificates or instruments therefor duly endorsed in
blank in the case of Notes and accompanied by undated stock powers duly executed
in blank by such Pledgor in the case of Stock, or such other instruments of
transfer as are acceptable to the Pledgee; and
(c) all of such Pledgor's right, title and interest in and to such
Securities (and in and to all certificates or instruments evidencing such
Securities), which such Pledgor hereby assigns, transfers, hypothecates,
mortgages, charges and sets over to the Pledgee;
all of which Collateral is to be held and dealt with by the Pledgee upon the
terms and conditions set forth in this Agreement.
3.2 Subsequently Acquired Securities and Equity Interests. If a Pledgor shall
acquire (by purchase, stock dividend or otherwise) any additional Securities
and/or Equity Interests at any time or from time to time after the date hereof
which are represented by certificates or instruments, such Pledgor will
forthwith pledge and deposit such Securities and/or Equity Interests as security
with the Pledgee and deliver to the Pledgee certificates or instruments thereof,
duly endorsed in blank in the case of Notes and accompanied by undated stock
powers duly executed in blank in the case of Stock, by such Pledgor or such
other instruments of transfer as are acceptable to the Pledgee, and will
promptly thereafter deliver to the Pledgee a certificate executed by a principal
executive officer of such Pledgor describing such Securities and/or Equity
Interests and certifying that the same have been duly pledged with the Pledgee
hereunder. No Pledgor shall be required at any time to pledge hereunder any
Stock which is more than 65% of the total combined voting power of all classes
of capital stock of any Foreign Corporation entitled to vote.
3.3 Uncertificated Securities and/or Equity Interests. Notwithstanding anything
to the contrary contained in sections 3.1 and 3.2, if any Securities and/or
Equity Interests (whether or
6
not now owned or hereafter acquired) are uncertificated securities, a Pledgor
shall promptly notify the Pledgee thereof, and shall promptly take all actions
required to perfect the security interest of the Pledgee under applicable law
(including, any event, under sections 8-313 and 8-321 of the Uniform Commercial
Code if applicable). Each Pledgor further agrees to take such actions as the
Pledgee deems reasonably necessary or desirable to effect the foregoing and to
permit the Pledgee to exercise any of its rights and remedies hereunder, and
agrees to provide an opinion of counsel reasonably satisfactory to the Pledgee
with respect to any such pledge of uncertificated securities and/or Equity
Interests promptly upon the request of the Pledgee.
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC.
The Pledgee shall have the right to appoint one or more sub-agents for
the purpose of retaining physical possession of the Pledged Securities, which
may be held (in the discretion of the Pledgee) in the name of the relevant
Pledgor, endorsed or assigned in blank or in favor of the Pledgee or any nominee
or nominees of the Pledgee or a sub-agent appointed by the Pledgee.
5. VOTING, ETC. WHILE NO EVENT OF DEFAULT.
Unless and until a Noticed Event of Default shall have occurred and be
continuing, each Pledgor shall be entitled to exercise all voting rights
attaching to any and all Collateral owned by it, and to give consents, waivers
or ratifications in respect thereof, provided that no vote shall be cast or any
consent, waiver or ratification given or any action taken which would violate,
result in breach of any covenant contained in or be inconsistent with, any of
the terms of this Agreement, any other Credit Document or any Designated Hedge
Agreement (collectively, the "Secured Debt Agreements"), or which would have the
effect of impairing the position or interests of the Pledgee or any Secured
Creditor therein. All such rights of such Pledgor to vote and to give consents
waivers and ratifications shall cease in ease a Noticed Event of Default shall
occur and be continuing and section 7 hereof shall become applicable.
6. DIVIDENDS AND OTHER DISTRIBUTIONS.
Unless and until a Noticed Event of Default shall have occurred and be
continuing, all cash dividends or other amounts payable in respect of the
Collateral shall be paid to the relevant Pledgor, provided that all dividends,
distributions or other amounts payable in respect of the Collateral which are
reasonably determined by the Pledgee to represent in whole or in part an
extraordinary, liquidating or other distribution in return of capital not
permitted by the Credit Agreement shall be paid to the extent so determined to
represent an extraordinary, liquidating or other distribution in return of
capital, to the Pledgee and retained by it as part of the Collateral (unless
such cash dividends and/or distributions are applied to repay the Obligations
pursuant to section 9 of this Agreement). The Pledgee shall also be entitled to
receive directly, and to retain as part of the Collateral:
7
(i) all other or additional stock, other securities,
partnership interests, membership interests or property (other than
cash) paid or distributed by way of dividend or otherwise in respect of
the Collateral;
(ii) all other or additional stock, other securities,
partnership interests, membership interests or property (including
cash) paid or distributed in respect of the Collateral by way of
stocksplit, spin-off, split-up, reclassification, combination of shares
or similar rearrangement; and
(iii) all other or additional stock, other securities,
partnership interests, membership interests or property (including
cash) which may be paid in respect of the Collateral by reason of any
consolidation, merger, exchange of stock, conveyance of assets,
liquidation or similar corporate, partnership or limited liability
company reorganization.
All dividends, distributions or other payments which are received by any Pledgor
contrary to the provisions of this section 6 or section 7 shall be received in
trust for the benefit of the Pledgee, shall be segregated from other property or
funds of such Pledgor and shall be forthwith paid over to the Pledgee as
Collateral in the same form as so received (with any necessary endorsement).
7. REMEDIES IN CASE OF AN EVENT OF DEFAULT.
In case a Noticed Event of Default shall have occurred and be
continuing, the Pledgee shall be entitled to exercise all of the rights, powers
and remedies (whether vested in it by this Agreement or any other Secured Debt
Agreement or by law) for the protection and enforcement of its rights in respect
of the Collateral, including, without limitation all the rights and remedies of
a secured party upon default under the Uniform Commercial Code of the State of
New York, and the Pledgee shall be entitled, without limitation to exercise any
or all of the following rights which each Pledgor hereby agrees to be
commercially reasonable:
(i) to receive all amounts payable in respect of the
Collateral otherwise payable under section 6 to a Pledgor;
(ii) to transfer all or any part of the Collateral into the
Pledgee's name or the name of its nominee or nominees;
(iii) to accelerate by Pledged Note which may be accelerated
in accordance with its terms, and take any other lawful action to
collect upon any Pledged Note (including, without limitation, to make
any demand for payment thereon);
(iv) to vote all or any part of the Collateral (whether or not
transferred into the name of the Pledgee) and give as consents, waivers
and ratifications in respect of the Collateral and otherwise act with
respect thereto as though it were the outright owner
8
thereof (each Pledgor hereby irrevocably constituting and appointing
the Pledgee the proxy and attorney-in-fact of such Pledgor, with full
power of substitution to do so); and
(v) at any time or from time to time to sell, assign and
deliver, or grant options to purchase, all or any part of the
Collateral, or any interest therein, at any public or private sale,
without demand of performance, advertisement or notice of intention to
sell or of the time or place of sale or adjournment thereof or to
redeem or otherwise (all of which are hereby waived by each Pledgor),
for cash, on credit or for other property, for immediate or future
delivery without any assumption of credit risk, and for such price or
prices and on such terms as the Pledgee in its absolute discretion may
determine, provided that at least 10 days' notice of the time and place
of any such sale shall be given to the relevant Pledgor; each purchaser
at any such sale shall hold the property so sold absolutely free from
any claim or right on the part of any Pledgor, and each Pledgor hereby
waives and releases to the fullest extent permitted by law any right or
equity of redemption with respect to the Collateral whether before or
after sale hereunder, all rights, if any, of marshaling the Collateral
and any other security for the Obligations or otherwise, and all
rights, if any, of stay and/or appraisal which it now has or may at any
time in the future have under rule of law or statute now existing or
hereafter enacted; at any such sale, unless prohibited by applicable
law, the Pledgee on behalf of all Secured Creditors (or certain of
them) may bid for and purchase (by bidding in Obligations or otherwise)
all or any part of the Collateral so sold free from any such right or
equity of redemption; and neither the Pledgee nor any Secured Creditor
shall be liable for failure to collect or realize Upon any or all of
the Collateral or for any delay in so doing nor shall it be under any
obligation to take any action whatsoever with regard thereto.
8. REMEDIES CUMULATIVE; PLEDGEE TO ACT FOR SECURED CREDITORS.
8.1 Remedies Cumulative, etc. Each right, power and remedy of the
Pledgee provided for in this Agreement or any other Secured Debt Agreement now
or hereafter existing at law or in equity or by statute shall be cumulative and
concurrent and shall be in addition to every other such right, power or remedy.
The exercise or beginning of the exercise by the Pledgee of any one or more of
the rights, powers or remedies provided for in this Agreement or any other
Secured Debt Agreement or now or hereafter existing at law or in equity or by
statute or otherwise shall not preclude the simultaneous or later exercise by
the Pledgee or any Secured Creditor of all such other rights, powers or
remedies, and no failure or delay on the part of the Pledgee or any Secured
Creditor to exercise any such right, power or remedy shall operate as a waiver
thereof. Unless otherwise required by the Credit Documents, no notice to or
demand upon any Pledgor in any case shall entitle it to any other or further
notice or demand in similar other circumstances or constitute a waiver of any of
the rights of the Pledgee or any other Secured Creditor to any other further
action in any circumstances without demand or notice.
9
8.2 Pledgee to Act on Behalf of Secured Creditors. The Secured
Creditors agree by their acceptance of the benefits hereof that this Agreement
may be enforced on their behalf only by the action of the Pledgee, acting upon
the instructions of the Required Lenders (or, after all Credit Document
Obligations have been paid in full, instructions of the holders of at least the
majority of the outstanding Hedge Obligations) ant that no other Secured
Creditor shall have any right individually to seek to enforce or to enforce this
Agreement or to realize upon the security to be granted hereby, it being
understood and agreed that such rights and remedies may be exercised by the
Pledgee, for the benefit of the Secured Creditors, upon the terms of this
Agreement.
9. APPLICATION OF PROCEEDS.
(a) All moneys collected by the Pledgee Upon any sale or other
disposition of the Collateral pursuant to the terms of this Agreement, together
with all other moneys received by the Pledgee hereunder, shall be applied as
follows:
(i) first, to the payment of all Obligations owing to the
Pledgee or any of the Secured Creditors of the type described in
clauses (ii) and (iii) of section 1 of this Agreement;
(ii) second, to the extent monies remain after the application
pursuant to the preceding clause (i), an amount equal to the
outstanding Obligations shall be paid to the Secured Creditors as
provided in section 9(c), with each Secured Creditor receiving an
amount equal to its outstanding Obligations or, if the proceeds are
insufficient to pay in full all such Obligations, its Pro Rata Share
(as defined below) of the amount remaining to be distributed; and
(iii) third, to the extent monies remain after the application
pursuant to the preceding clauses (i) and (ii) or following the
termination of this Agreement pursuant to section 18(a) hereof, to the
relevant Pledgor or to whomever may be lawfully entitled to receive
such surplus.
(b) For purposes of this Agreement, "Pro Rata Share" shall mean, when
calculating a Secured Creditor's portion of any distribution or amount, the
amount (expressed as a percentage) equal to a fraction, the numerator of which
is the then outstanding amount of the relevant Obligations owed such Secured
Creditor and the denominator of which is the then outstanding amount of all
Obligations.
(c) All payments required to be made to the (i) Lenders hereunder shall
be made to the Administrative Agent for the account of the respective Lenders
and (ii) Hedge Creditors hereunder shall be made to the paying agent under the
applicable Designated Hedge Agreement or, in the case of Designated Hedge
Agreements without a paying agent, directly to the applicable Hedge Creditor.
10
(d) For purposes of applying payments received in accordance with this
section 9, the Pledgee shall be entitled to rely upon (i) the Administrative
Agent for a determination (which the Administrative Agent agrees to provide upon
request to the Pledgee) of the outstanding Credit Document Obligations (as
defined in the Subsidiary Guaranty) and (ii) Upon any Hedge Creditor for a
determination (which each Hedge Creditor agrees to provide upon request to the
Pledgee) of the outstanding Hedge Obligations (as defined in the Subsidiary
Guaranty) owed to such Hedge Creditor. Unless it has actual knowledge (including
by way of written notice from a Secured Creditor) to the contrary, the
Administrative Agent under the Credit Agreement, in furnishing information
pursuant to the preceding sentence, and the Pledgee, in acting hereunder, shall
be entitled to assume that (x) no Credit Document Obligation other than
principal, interest and regularly accruing fees are owing to any Lender any (y)
no Designated Hedge Agreements or Hedge Obligations with respect thereto are in
existence.
(e) It is understood and agreed that each Pledgor shall remain liable
to the extent of any deficiency between (x) the amount of the proceeds of the
Collateral applied pursuant to clause (i) of section 9(a) and (y) the aggregate
outstanding amount of the Obligations.
10. PURCHASERS OF COLLATERAL.
Upon any sale of the Collateral by the Pledgee hereunder (whether by
virtue of the power of sale herein granted, pursuant to judicial process or
otherwise), the receipt of the Pledgee or the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the Collateral so sold,
and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Pledgee or such
officer or be answerable in any way for the misapplication or nonapplication
thereof.
11. INDEMNITY.
Each Pledgor jointly and severally agrees (i) to indemnify and hold
harmless the Pledgee and the Secured Creditors from and against any and all
claims, demands, losses, judgments and liabilities (including liabilities for
penalties) of whatsoever kind or nature, and (ii) to reimburse the Pledgee and
the Secured Creditors for all reasonable costs and expenses, including
reasonable attorneys' fees, growing out of, or resulting from this Agreement or
the exercise by the Pledgee of any right or remedy granted to it hereunder or
under any other Secured Debt Agreement except, with respect to clauses (i) and
(ii) above, for those arising from the Pledgee's gross negligence or willful
misconduct. In no event shall the Pledgee be liable, in the absence of gross
negligence or willful misconduct on its part, for any matter or thing in
connection with this Agreement other than to account for moneys or other
property actually received by it in accordance with the terms hereof or thereof.
If and to the extent that the obligations of each Pledgor under this Section 11
are unenforceable for any reason, each Pledgor hereby agrees to make the maximum
contribution to the payment and satisfaction of such obligations which is
permissible under applicable law.
11
12. FURTHER ASSURANCES.
Each Pledgor agrees that it will join with the Pledgee in executing
and, at the Pledgor's own expense, file and refile under the Uniform Commercial
Code such financing statements, continuation statements and other documents in
such offices as the Pledgee may deem reasonably necessary or appropriate and
wherever required or permitted by law in order to perfect and preserve the
Pledgee's security interest in the Collateral hereunder and hereby authorizes
the Pledgee to file financing statements and amendments thereto relative to all
or any part of the Collateral without the signature of such Pledgor where
permitted by law, and agrees to do such further acts and things and to execute
and deliver to the Pledgee such additional conveyances, assignments, agreements
and instruments as the Pledgee may reasonably require or deem advisable to carry
into effect the purposes of this Agreement or to further assure and confirm unto
the Pledgee its rights, powers and remedies hereunder or thereunder.
13. THE PLEDGEE AS AGENT.
The Pledgee will hold in accordance with this Agreement all items of
the Collateral at any time received under this Agreement. It is expressly
understood and agreed that the obligations of the Pledgee as holder of the
Collateral and interests therein and with respect to the disposition thereof,
and otherwise under this Agreement, are only those expressly set forth in this
Agreement. The Pledgee shall act hereunder on the terms and conditions set forth
herein and in section 11 of the Credit Agreement.
14. TRANSFER BY THE PLEDGORS.
No Pledgor will sell or otherwise dispose of, grant any option with
respect to, or mortgage, pledge or otherwise encumber any of the Collateral or
any interest therein (except in accordance with the terms of this Agreement and
the Credit Documents).
15. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
PLEDGORS.
(a) Each Pledgor represents, warrants and covenants that:
(i) it is the legal, beneficial and record owner of, and has
good and marketable title to, all Securities pledged by it hereunder,
subject to no pledge, lien, mortgage, hypothecation, security interest,
charge, option or other encumbrance whatsoever, except the liens and
security interests created by this Agreement;
(ii) it has full power, authority and legal right to pledge
all the Securities pledged by it pursuant to this Agreement;
12
(iii) all the shares of the Stock have been duly and validly
issued and are fully paid and nonassessable;
(iv) each of fee Notes, when executed by the obligor thereof
and pledged hereunder, will be the legal valid and binding obligation
of the obligor thereof, enforceable in accordance with its terms;
(v) it will defend the Pledgee's right, title and interest in
and to the Equity Interests and in and to the Collateral pledged by it
pursuant hereto or in which it has granted a security interest pursuant
hereto against the claims and demands of all other persons whomsoever,
and such Pledgor covenants and agrees that it will have like title to
and right to pledge any other property at any time hereafter pledged to
the Pledgee as Collateral hereunder and will likewise defend the right
thereto and security interest therein of the Pledgee;
(vi) it is the legal and beneficial owner of and has good
title to its Equity Interests and has good title to all of the other
Collateral pledged by it pursuant hereto or in which it has granted a
security interest pursuant hereto, free and clear of all claims,
pledges, liens, encumbrances and security interests of every nature
whatsoever, except such as are created pursuant to this Agreement, and
has the unqualified right to pledge and grant a security interest in
the same as herein provided without the consent of any other person,
firm, association or entity which has not been obtained;
(vii) it the full power, authority and legal right to pledge
the Equity Interests pledged by it pursuant to this Agreement and such
Equity Interest has been validly acquired and is fully paid for and is
duly and validly pledged hereunder;
(viii) it is not in default in the payment of any portion of
any mandatory capital contribution, if any, required to be made under
any partnership agreement or limited liability company agreement to
which such Pledgor is a party, and such Pledgor is not in violation of
any other material provisions of any partnership agreement or limited
liability company agreement to which such Pledgor is a party, or
otherwise in default or violation thereunder, no Equity Interest is
subject to any defense, offset or counterclaim, nor have any of the
foregoing been asserted or alleged against such Pledgor by any person
with respect thereto and as of the Initial Borrowing Date, there are no
certificates, instruments, documents or other writings (other than the
partnership agreements, limited liability company agreements, and
certificates, if any, delivered to the Collateral Agent) which evidence
any Equity Interest of such Pledgor;
(ix) the pledge and assignment of the Equity Interests
pursuant to this Agreement, together with the relevant filings consents
or recordings (which filings and recordings have been made or
obtained), creates a valid, perfected and continuing first security
interest in such Equity Interests and the proceeds thereof, subject to
no prior lien
13
or encumbrance or to any agreement purporting to grant to any third
party a lien or encumbrance on the property or assets of such Pledgor
which would include the Collateral;
(x) there are no currently effective financing statements
under the UCC covering any property which is now or hereafter may be
included in the Collateral and such Pledgor will, without the prior
written consent of the Pledgee, execute and, until the Termination Date
(as hereinafter defined), there will not ever be on file in any public
office any enforceable financing statement or statements covering any
or all of the Collateral, except financing statements filed or to be
filed in favor of the Pledgee as secured party,
(xi) it shall give the Pledgee prompt notice of any written
claim relating to the Collateral and shall deliver to the Pledgee a
copy of each other demand, notice or document received by it which may
adversely affect the Pledgee's interest in the Collateral promptly
upon, but in any event within 10 days after, such Pledgor's receipt
thereof;
(xii) it shall not withdraw as a partner or member of any
Pledged Entity, or file or pursue or take any action which may,
directly or indirectly, cause a dissolution or liquidation of or with
respect to any Pledged Entity or seek a partition of any property of,
any Pledged Entity, except as permitted by the Credit Agreement; and
(xiii) a notice in the form set forth in Annex E attached
hereto and by this reference made a part hereof (such notice the
"Notice of Pledge"), appropriately completed, notifying each Pledged
Entity of the existence of this Agreement and a certified copy of this
Agreement have been delivered by such Pledgor to the relevant Pledged
Entity, and such Pledgor has received and delivered to the Pledgee an
acknowledgment in the form set forth in Annex E attached hereto (such
acknowledgment, the "Pledged Entity Acknowledgment") duly executed by
the relevant Pledged Entity.
(b) Each Pledgor covenants and agrees that it will defend the Pledgee's
right, title and security interest in and to the Collateral (including the
proceeds thereof) against the claims and demands of all persons whomsoever.
(c) Each Pledgor covenants and agrees that it will take no action which
would violate or be inconsistent with any of the terms of any Secured Debt
Agreement or which would have the effect of impairing the position or interests
of the Pledgee or any Secured Creditor under any Secured Debt Agreement except
as permitted by the Credit Agreement.
16. PLEDGORS' OBLIGATIONS ABSOLUTE, ETC.
The obligations of each Pledgor under this Agreement shall be absolute
and unconditional and shall remain in full force and effect without regard to,
and shall not be released, suspended, discharged, terminated or otherwise
affected by, any circumstance or occurrence whatsoever,
14
including, without limitation:
(i) any renewal, extension, amendment or modification of, or
addition or supplement to or deletion from other Credit Documents or
any other Secured Debt Agreement, or any other instrument or agreement
referred to therein, or any assignment or transfer of any thereof;
(ii) any waiver, consent, extension, indulgence or other
action or inaction under or in respect of any such agreement or
instrument or this Agreement except as expressly provided in such
renewal, extension, amendment, modification, addition, supplement,
assignment or transfer;
(iii) any furnishing of any additional security to the Pledgee
or its assignee or any acceptance thereof or any release of any
security by the Pledgee or its assignee;
(iv) any limitation on any person's liability or obligations
under any such instrument or agreement or any invalidity or
unenforceability, in whole or in part, of any such instrument or
agreement or any term thereof; or
(v) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other link proceeding relating
to a Pledgor or any Subsidiary of a Pledgor, or any action taken with
respect to this Agreement by any trustee or receiver, or by any court,
in any such proceeding, whether or not a Pledgor shall have notice or
knowledge of any of the foregoing.
17. REGISTRATION, ETC.
(a) If a Noticed Event of Default shall have occurred and be
continuing and the relevant Pledgor shall have received from the
Pledgee a written request or requests that such Pledgor cause any
registration, qualification or compliance under any Federal or state
securities law or laws to be effected with respect to all or any part
of the Stock of its Subsidiaries, such Pledgor as soon as practicable
and at its expense will use its best efforts to cause such registration
to be effected (and be kept effective) and will use its best efforts to
cause such qualification and compliance to be effected (and be kept
effective) as may be so requested and as would permit or facilitate the
sale and distribution of such Stock, including, without limitation,
registration under the Securities Act of 1933, as then in effect (or
any similar statute then in effect), appropriate qualifications under
applicable blue sky or other state securities laws and appropriate
compliance with any other governmental requirements, provided that the
Pledgee shall furnish to such Pledgor such information regarding the
Pledgee as such Pledgor may request in writing and as shall be required
in connection with any such registration, qualification or compliance.
The relevant Pledgor will cause the Pledgee to be kept reasonably
advised in writing as to the progress of each such registration,
qualification or compliance and as to the completion
15
thereof, will furnish to the Pledgee such number of prospectuses,
offering circulars and other documents incident thereto as the Pledgee
from time to time may reasonably request, and will indemnify the
Pledgee and all others participating in the distribution of such Stock
against all claims, losses, damages or liabilities caused by any untrue
statement (or alleged untrue statement) of a material fact contained
therein (or in any related registration statement, notification or the
like) or by any omission (or alleged omission) to state therein (or in
any related registration statement, notification or the like) a
material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same may have
been caused by an untrue statement or omission based upon information
furnished in writing to such Pledgor by the Pledgee expressly for use
therein.
(b) If at any time when the Pledgee shall determine to exercise its
right to sell all or any part of the Pledged Stock; pursuant to section
7, such Pledged Stock or the part thereof to be sold shall not, for any
reason whatsoever, be effectively registered under the Securities Act
of 1933, as then in effect, the Pledgee may, in its sole and absolute
discretion, sell such Pledged Stock or part thereof by private sale in
such manner and under such Circumstances as Pledgee may deem necessary
or advisable in order that such sale may legally be effected without
such registration, provided that at least 10 days' notice of the time
and place of any such sale shall be given to the relevant Pledgor.
Without limiting the generality of the foregoing, in any such event the
Pledgee, in its sole and absolute discretion, (i) may proceed to make
such private sale notwithstanding that a registration statement for the
purpose of registering such Pledged Stock or part thereof shall have
been filed under such Securities Act, (ii) may approach and negotiate
with a single possible purchaser to effect such sale and (iii) may
restrict such sale to a purchaser who will represent and agree that
such purchaser is purchasing for its own account, for investment, and
not with a view to the distribution or sale of such Pledged Stock or
part thereof. In the event of any such sale, the Pledgee shall incur no
responsibility or liability to any Pledgor for selling all or any part
of the Pledged Stock at a price which the Pledgee may in good xxxxx
xxxx reasonable under the circumstances, notwithstanding the
possibility that a substantially higher price might be realized if the
sale were deferred until the registration as aforesaid.
18. TERMINATION; RELEASE.
(a) After the Termination Date (as defined below), this Agreement shall
terminate (provided that indemnities set forth herein including, without
limitation, in section 11 hereof shall survive any such termination) and the
Pledgee, at the request and expense of the relevant Pledgor, will execute and
deliver to the relevant Pledgor a proper instrument or instruments acknowledging
the satisfaction and termination of this Agreement as provided above, and will
duly assign, transfer and deliver to the relevant Pledgor (without recourse and
without any representation or warranty) such of the Collateral as may be in the
possession of the Pledgee and as has not theretofore been sold or otherwise
applied or released pursuant to this Agreement, together with
16
moneys at the time held by the Pledgee hereunder. As used in this Agreement,
"Termination Date" shall mean the date upon which the Total Commitment and all
Designated Hedge Agreements have been terminated, no Letter of Credit nor Note
under the Credit Agreement is outstanding and all other Obligations have been
paid in full.
(b) In the event that any part of the Collateral is sold in connection
with a sale permitted by section 9.2 of the Credit Agreement or is otherwise
released at the direction of the Required Lenders (or all the Lenders if
required by section 13.12 of the Credit Agreement), and the proceeds of such
sale or sales or from such release are to be applied in accordance with the
terms of the Credit Agreement to the extent required to be so applied, the
Pledgee, at the request and expense of such Pledgor will release such Collateral
from this Agreement, and will duly assign, transfer and deliver to such Pledgor
(without recourse and without any representation or warranty) such of the
Collateral as is then being (or has been) so sold or released and as may be in
possession of the Pledgee and has not theretofore been released pursuant to this
Agreement.
(c) At any time that a Pledgor desires that Collateral be released as
provided in the foregoing section 18(a) or (b), it shall deliver to the Pledgee
a certificate signed by an executive officer stating that the release of the
respective Collateral is permitted pursuant to section 18(a) or (b). The Pledgee
shall have no liability whatsoever to any Secured Creditor as the result of any
release of Collateral by it as permitted by this section 18.
19. NOTICES, ETC.
All notices and other communications hereunder shall be in writing and
shall be delivered or mailed by first class mail postage prepaid, addressed:
(i) if to any Pledgor, at its address specified in or pursuant
to the Subsidiary Guaranty,
(ii) if to the Pledgee, at:
KeyBank of New York,
as Collateral Agent
0 Xxxxxxx Xxxxx
Xxxxx Xxxxxx, Xxx Xxxx 00000
Attn.: Xxxxxxx Xxxxxxxx
Senior Market Manager
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000;
17
with copies to:
Xxxxx, Day, Xxxxxx & Xxxxx
North Point
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attn.: Xxxx X. Xxxxx, Esq.
Te1. No.: (000) 000-0000
Fax No.: (000) 000-0000
(iii) if to any Lender (other than the Pledgee), at such
address as such Lender shall have specified in the Credit Agreement;
(iv) if to any Hedge Creditor, at such address as such Hedge
Creditor shall have specified in writing to the Pledgors and the
Pledgee;
or at such address as shall have been furnished in writing by any person
described above to the party required to given notice hereunder.
20. WAIVER; AMENDMENT.
None of the terms and conditions of this Agreement may be changed,
waived, modified or varied in any manner whatsoever unless in writing duly
signed by each Pledgor and the Pledgee (with the consent of the Required Lenders
or, to the extent required by section 13.12 of the Credit Agreement all of the
Lenders); provided, however, that no such change, waiver, modification or
variance shall be made to section 9 hereof or this section 20 without the
consent of each Secured Creditor adversely affected thereby, provided further,
that any change, waiver, modification or variance affecting the rights and
benefits of a single Class of Secured Creditors (and not all Secured Creditors
in a like or similar manner) shall require the written consent of the Requisite
Creditors of such Class of Secured Creditors. For the purpose of this Agreement,
the term "Class" shall mean each class of Secured Creditors, i.e., whether (x)
the lenders as holders of the Credit Document Obligations or (y) the Hedge
Creditors as holders of the Hedge Obligations. For the purpose of this
Agreement, the term "Requisite Creditors" of any Class shall mean each of (x)
with respect to each of the Credit Document Obligations, the Required Lenders
and (y) with respect to the Hedge Obligations, the holders of 51% of all
obligations outstanding from time to time under the Designated Hedge Agreements.
21. PLEDGEE NOT BOUND.
(a) Nothing herein shall be construed to make the Pledgee liable as a
general partner or limited partner of any Pledged Entity or a shareholder of any
corporation, and the Pledgee by
18
virtue of this Agreement or otherwise (except as referred to in the following
sentence) shall not have any of the duties, obligations or liabilities of a
general partner or limited partner of any Pledged Entity or a stockholder of any
corporation. The parties hereto expressly agree that, unless the Pledgee shall
become the absolute owner of a Equity Interest or Stock pursuant hereto, this
Agreement shall not be construed as creating a partnership or joint venture
among the Pledgee and/or a Pledgor.
(b) Except as provided in the last sentence of section 21(a), the
Pledgee, by accepting this Agreement, did not intent to become a general
partner, limited partner or member of any Pledged Entity or a shareholder of any
corporation or otherwise be deemed to be a co-venturer with respect to any
Pledgor or any Pledged Entity or a shareholder of any corporation either before
or after an Event of Default shall have occurred. The Pledgee shall have only
those powers set forth herein and shall assume none of the duties, obligations
or liabilities of a general partner or limited partner of any Pledged Entity or
of a Pledgor.
(c) The Pledgee shall not be obligated to perform or discharge any
obligation of a Pledgor as a result of the collateral assignment hereby
effected.
(d) The acceptance by the Pledgee of this Agreement, with all the
rights, powers, privileges and authority so created, shall not at any time or in
any event obligate the Pledgee to appear in or defend any action or proceeding
relating to the Collateral to which it is not a party, or to take any action
hereunder or thereunder, or to expend any money or incur any expenses or perform
or discharge any obligation duty or liability under the Collateral.
22. MISCELLANEOUS.
This Agreement shall create a continuing security interest in the
Collateral and shall (i) remain in full force and effect, subject to release
and/or termination as set forth in section 18, (ii) be binding upon each
Pledgor, its successors and assigns; provided, however, that no Pledgor shall
assign any of its rights or obligations hereunder without the prior written
consent of the Pledgee (with the prior written consent of the Required Lenders
or to the extent required by section 13.12 of the Credit Agreement, all of the
Lenders), and (iii) inure, together with the rights and remedies of the Pledgee
hereunder, to the benefit of the Pledgee, the Secured Creditors and their
respective successors, transferees and assigns. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
The headings of the several sections and subsections in this Agreement are for
purposes of reference only and shall not limit or define the meaning hereof.
This Agreement may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one instrument.
In the event that any provision of this Agreement shall prove to be invalid or
unenforceable, such provision shall be deemed to be severable from the other
provisions of this Agreement which shall remain binding on all parties hereto.
19
23. WAIVER OF JURY TRIAL.
Each Pledgor and the Pledgee each hereby irrevocably waives all right
to a trial by jury in any action, proceeding or counterclaim arising out of or
relating to this Agreement or the transactions contemplated hereby.
20
