EXHIBIT 10.1
FORM OF
PLEDGE AND SECURITY AGREEMENT - BORROWER
This PLEDGE AND SECURITY AGREEMENT (this "Agreement"), dated as of
November __, 2004, is between [_________________], a [______________]
("Grantor"), and KEYBANK NATIONAL ASSOCIATION, a national banking association,
as Administrative Agent (as defined below)
PRELIMINARY STATEMENT. Grantor has entered into that certain Credit and
Security Agreement dated as of November 1, 2004 (as from time to time amended,
modified or supplemented, the "Credit Agreement"), among the Grantor, certain
other borrowers which are parties thereto (collectively the "Borrowers"),
certain lending institutions which are signatories thereto (the "Lenders"), and
KeyBank National Association, as administrative agent for the benefit of the
Lenders (the "Administrative Agent") and the letter of credit issuer (the "LC
Issuer"), pursuant to which, upon the satisfaction by the Borrowers of certain
terms and conditions contained therein, the Administrative Agent, the Lenders
and the LC Issuer (collectively the "Secured Parties") will make certain
advances and other financial accommodations available to the Borrowers,
including the Grantor. The Grantor owns the stock listed on Schedule I and
instruments listed on Schedule II and will benefit from the loans and financial
accommodations made available to the Borrowers under the Credit Agreement. It is
a condition precedent to the making of loans and other financial accommodations
to the obligations of the Secured Parties under the Credit Agreement that the
Grantor shall have executed and delivered this Agreement and hereby grant the
security interest contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
the Secured Parties to make loans and provide other financial accommodations to
the Borrowers under the Credit Agreement, Grantor hereby agrees with the
Administrative Agent as follows:
1. Grant of Security. Grantor hereby assigns and pledges and hereby grants
to the Administrative Agent for the benefit of the Secured Parties a security
interest in, all of the right, title and interest of Grantor in and to the
following, whether now owned or hereafter acquired (the "Collateral").
(A) Pledged Shares
(i) All shares (the "Pledged Shares") of stock described in Schedule
I and issued by any Subsidiary of Grantor (as defined in the Credit
Agreement) to the Grantor, the certificates representing the Pledged
Shares, and all dividends, cash, instruments and other property from time
to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the Pledged Shares;
(ii) All additional shares (the "Additional Pledged Shares") of
stock of such Subsidiary, from time to time acquired by Grantor in any
manner, and the certificates representing such Additional Pledged Shares,
and all dividends, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange
for any or all of such Additional Pledged Shares;
provided, that in no event shall the Borrowers be required to pledge in
the aggregate more than sixty five percent (65%) of the voting power of
all classes of the outstanding capital stock entitled to vote of any
Subsidiary that is not a Domestic Subsidiary; and
(B) Pledged Notes
(i) One hundred percent (100%) of right, title and interest of the
Grantor in Instruments (as defined in the Credit Agreement) evidencing all
Indebtedness (as defined in the Credit Agreement) owed to the Grantor
("Pledged Notes") described in Schedule II, and all interest, cash,
Instruments and other property from time to time received, receivable, or
otherwise distributed in respect of or in exchange for any and all of such
Indebtedness;
(ii) All additional right, title and interest of the Grantor in
Instruments evidencing Indebtedness owed to Grantor (the "Additional
Pledged Notes"), from time to time acquired by Grantor in any manner, and
all interest, cash, Instruments and other property from time to time
received, receivable, or otherwise distributed in respect of or in
exchange for any and all of such Indebtedness; and
(C) All proceeds of any and all of the foregoing Collateral described in
clauses (A) and (B) of this Section 1, and any and all payments (in any form
whatsoever) made or due and payable to Grantor from time to time in connection
with any requisition, confiscation, condemnation, seizure or forfeiture of all
or any part of the Collateral by any governmental body, authority, bureau or
agency (or any Person acting under color of governmental authority) and, to the
extent not otherwise included, all payments under any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing Collateral (the "Proceeds").
2. Security for Obligations. This Agreement and the Collateral hereunder
secures the payment of (i) all obligations of the Borrowers now or hereafter
existing under the Credit Agreement and the Loan Documents (as defined in the
Credit Agreement), whether for principal, interest, fees, expenses or otherwise,
and (ii) all obligations of Grantor now or hereafter existing under this
Agreement (all such obligations of the Borrower being referred to herein as the
"Obligations").
3. Representations and Warranties. Grantor represents and warrants as
follows:
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(A) The Pledged Shares have been duly authorized and validly issued and
are fully paid and nonassessable. The Pledged Shares (i) constitute one hundred
percent (100%) of the issued and outstanding shares of any Domestic Subsidiary
of Hawk Corporation owned by Grantor and (ii) when added to the other shares
pledged to the Administrative pursuant to the Loan Documents, constitute
sixty-five percent (65)% of the voting power of all classes of the capital stock
of any Subsidiary of Hawk Corporation that is not a Domestic Subsidiary, and, in
each case, there are no warrants, options or other rights to acquire any of the
capital stock of any such Subsidiary. Grantor is not the legal or beneficial
owner of any other shares of stock other than the Pledged Shares.
(B) Grantor is the legal and beneficial owner of the Collateral free and
clear of any lien, security interest, option, charge or encumbrance except for
the security interest created by this Agreement. No effective financing
statement or other instrument similar in effect covering all or any part of the
Collateral is on file in any recording office, except such as may have been
filed in favor of the Administrative Agent relating to this Agreement.
(C) The pledge and delivery of the Pledged Shares and the Pledged Notes
pursuant to this Agreement create a valid and perfected first priority security
interest in the Collateral, securing the payment of the Obligations.
(D) No authorization, approval or other action by, and no notice to or
filing with any governmental authority or regulatory body is required either (i)
for the grant by Grantor of the security interest granted hereby or for the
execution, delivery or performance of this Agreement by Grantor or (ii) for the
perfection of or the exercise by the Administrative Agent of its rights and
remedies hereunder or for the exercise by the Administrative Agent of the voting
or other rights provided for in this Agreement or the remedies in respect of the
Collateral pursuant to this Agreement (except any filing in connection with
judicial proceedings to enforce such rights and remedies and except as may be
required in connection with such disposition by laws affecting the offering and
sale of securities generally).
4. Further Assurances. Grantor hereby agrees that from time to time, at
the expense of Grantor, Grantor will promptly execute and deliver all further
instruments and documents, and take all further action that the Administrative
Agent may reasonably request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable the
Administrative Agent to exercise and enforce its right and remedies hereunder
with respect to any Collateral.
5. Voting Rights; Dividends; Etc. (A) So long as no Event of Default shall
have occurred and be continuing and no notice described in Section 5(B) shall
have been given to Grantor by the Administrative Agent:
(i) Grantor shall be entitled to (a) receive or retain dividends to the
extent permitted under the Credit Agreement, and (b) exercise any and all voting
and other consensual rights pertaining to the Collateral or any part thereof
owned by Grantor for any purpose not inconsistent with the terms of this
Agreement or the Credit Agreement; provided, however, that Grantor shall not
exercise or refrain from exercising any such right if such action or inaction
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could reasonably be expected to have a Material Adverse Effect (as defined in
the Credit Agreement) on the value of the Collateral or any part thereof; and
(ii) the Administrative Agent shall execute and deliver (or cause to be
executed and delivered) to Grantor all such proxies and other instruments as
Grantor may reasonably request for the purpose of enabling Grantor to exercise
the voting and other rights Grantor is entitled to exercise pursuant to
paragraph (i) above.
(B) Upon the occurrence of an Event of Default which is continuing (unless
waived by the Secured Parties in writing), and after notice to Grantor by the
Administrative Agent, all rights of Grantor to receive dividends or to exercise
the voting and other consensual rights that Grantor would otherwise be entitled
to exercise pursuant to Section 5(A)(i) shall cease, and all such rights shall
thereupon become vested in the Administrative Agent who shall thereupon have the
sole right to exercise such voting and other consensual rights.
6. Transfers and Other Liens; Additional Shares.
(A) Grantor shall not:
(i) Sell, assign (by operation of law or otherwise) or otherwise dispose
of any of the Collateral.
(ii) Create or suffer to exist any lien, security interest or other charge
or encumbrance upon or with respect to any of the Collateral to secure
Indebtedness of any person or entity, except for the security interest created
by this Agreement.
(B) Grantor will (i) cause its Subsidiaries not to issue any shares of
stock, securities, warrants, options or other acquisition rights in addition to
or in substitution for the Pledged Shares issued by such Subsidiary, except to
Grantor and (ii) pledge hereunder, immediately upon Grantor's acquisition
(directly or indirectly) thereof, any and all additional shares of stock or
other securities, warrants, options or other acquisition rights of its
Subsidiaries.
7. Appointment as Attorney-in-Fact.
(A) The Administrative Agent shall hereby have the right and the Grantor
hereby irrevocably makes, constitutes, and appoints the Administrative Agent
(and all officers, employees, or agents designated by the Administrative Agent)
as its true and lawful attorney-in-fact and agent, with full power of
substitution, to, from time to time but only to the extent following the
occurrence of an Event of Default which has not been waived in writing by the
Secured Parties for the purpose of carrying out the terms of this Agreement or
any Loan Document to the extent permitted by applicable law, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Agreement, any
Loan Document and, without limiting the generality of the foregoing, hereby
gives the Administrative Agent, subject to the other terms of this Agreement,
the power and right, on behalf of Grantor, without notice to or assent by
Grantor to do the following:
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(i) to pay or discharge taxes, liens, security interests or other
encumbrances levied or placed on or threatened against the Collateral which are
not permitted by the terms hereof;
(ii) to receive payment of and receipt for any and all moneys, claims and
other amounts due or to become due at any time in respect of or arising out of
any Collateral; and
(iii) to (a) commence and prosecute any suits, actions or proceedings at
law or in equity in any court of competent jurisdiction and to collect the
Collateral or any Proceeds thereof and to enforce any other right in respect of
any Collateral; (b) defend any suit, action or proceeding brought against
Grantor with respect to any Collateral; (c) settle, compromise or adjust any
suit, action or proceeding described above and, in connection therewith, to give
such discharges or releases as the Administrative Agent may deem appropriate;
and (d) except to the extent prohibited by law, generally sell, transfer,
pledge, make any agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though the Administrative Agent were the
absolute owner thereof for all purposes, and to do, at the Administrative
Agent's option and Grantor's expense, at any time, or from time to time, all
acts and things which the Administrative Agent reasonably deems necessary to
protect, preserve or realize upon the Collateral and Administrative Agent's
security interest therein, in order to effect the intent of this Agreement, all
as fully and effectively as Grantor might do.
Grantor hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof and in accordance herewith. This power of attorney
is a power coupled with an interest and shall be irrevocable.
(B) Grantor also authorizes the Administrative Agent, at any time and from
time to time, to execute, in connection with any sale provided for in Section 10
of this Agreement, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral.
8. Administrative Agent May Perform. If Grantor fails to perform any
agreement contained herein, the Administrative Agent may itself perform, or
cause performance of, such agreement, and the expenses of the Administrative
Agent incurred in connection therewith shall be payable by Grantor under Section
11(A).
9. Duties of Administrative Agent. The powers conferred on the
Administrative Agent hereunder are solely to protect such parties' interest in
the Collateral and shall not impose any duty upon it to exercise any such
powers. Except for the safe custody of any Collateral in its possession, the
Administrative Agent shall not have any duty as to any Collateral or as to the
taking of any necessary steps to preserve rights against prior parties or any
other rights pertaining to any Collateral. The Administrative Agent shall be
deemed to have exercised reasonable care in the custody and preservation of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which the Administrative Agent accords its own
property, it being understood that the Administrative Agent shall not have any
responsibility or liability for (i) ascertaining or taking action with respect
to calls, conversions, exchanges, maturities, tenders
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or other matters relative to any Collateral, whether or not the Administrative
Agent has or is deemed to have knowledge of such matters, (ii) taking any
necessary steps to preserve rights against any parties with respect to any
Collateral, or (iii) the collection of any proceeds of any Collateral.
10. Remedies. If any Event of Default shall have occurred and be
continuing:
(A) the Administrative Agent may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party on default under the
Uniform Commercial Code (the "Code") (whether or not the Code applies to the
affected Collateral) and also may, after giving any notice required under
Section 5(B), (i) exercise any and all rights and remedies of Grantor in respect
of the Collateral, (ii) manage and control the Collateral and do any acts which
it deems necessary or desirable to preserve the value or marketability of the
Collateral, or any part thereof or interest therein, all without prior notice to
Grantor, except as specifically provided in Section 10(A)(iii) below with
respect to a formal public or private sale and, after deducting the expenses of
preserving the Collateral, including, without limitation, just and reasonable
compensation for its services and for all attorneys, counsel, agents, clerks,
servants and other employees by it engaged and employed, shall apply the moneys
arising as aforesaid pursuant to the provisions of the Credit Agreement (nothing
contained herein shall be construed to impose upon the Administrative Agent any
obligation to preserve or protect the Collateral) following the occurrence of an
Event of Default, and (iii) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or private sale,
at any of the Administrative Agent's offices or elsewhere, for cash, on credit
or for future delivery, and upon such other terms as the Administrative Agent
may deem commercially reasonable. Grantor agrees that, to the extent notice of
sale shall be required by law, at least fifteen (15) Business Days' notice to
Grantor of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. The
Administrative Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Administrative Agent may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.
(B) Grantor recognizes and acknowledges that the Administrative Agent may
be unable to effect a public sale of all or a part of the Collateral by reason
of certain prohibitions contained in the Securities Act of 1933, as amended, as
now or hereafter in effect, or in applicable Blue Sky or other state securities
laws, as now or hereafter in effect, but may be compelled to resort to one or
more private sales to a restricted group of purchasers who will be obliged to
agree, among other things, to acquire such Collateral for their own account, for
investment and not with a view to the distribution or resale thereof. Grantor
agrees that private sales so made may be at prices and other terms less
favorable to the seller than if such Collateral were sold at public sales, and
that the Administrative Agent has no obligation to delay sale of any such
Collateral for the period of time necessary to permit the Grantor, even if the
Grantor would agree, to register such collateral for public sale under such
applicable securities laws. Grantor agrees that private sales made under the
foregoing circumstances shall not be deemed to have been made in a commercially
unreasonable manner by that fact alone.
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(C) All payments received by Grantor under or in connection with any
Collateral shall be received in trust for the benefit of the Administrative
Agent, shall be segregated from other funds of Grantor and shall be forthwith
paid over to the Administrative Agent in the same form as so received (with any
necessary endorsement).
(D) All payments made under or in connection with any Collateral and all
cash proceeds received by the Administrative Agent in respect of any sale of,
collection from, or other realization upon all or any part of the Collateral
shall be applied (after payment of any amounts payable to the Administrative
Agent pursuant to Section 11) by the Administrative Agent against the
Obligations pursuant to the Credit Agreement. Any surplus of such cash or cash
proceeds held by the Administrative Agent and remaining after payment in full of
all the Obligations shall be paid over to Grantor or to whomsoever may be
lawfully entitled to receive such surplus.
11. Indemnity and Expenses.
(A) Grantor agrees to indemnify the Administrative Agent from and against
any and all claims, losses and liabilities growing out of or resulting from this
Agreement (including, without limitation, enforcement of this Agreement), except
claims, losses or liabilities resulting from Administrative Agent's gross
negligence or willful misconduct.
(B) Grantor will upon demand pay to the Administrative Agent the amount of
any and all reasonable expenses, including attorney fees and fees of any experts
and agents, which the Administrative Agent may incur in connection with (i) the
sale of, collection from, or other realization upon, any of the Collateral, as
provided for herein, (ii) the exercise or enforcement of any of the rights of
the Administrative Agent hereunder or (iii) the failure by Grantor to perform or
observe any of the provisions hereof.
12. Security Interest Absolute. All rights of the Administrative Agent and
security interests hereunder, and all obligations of Grantor hereunder, shall be
absolute and unconditional, irrespective of:
(A) any lack of validity or enforceability of the Credit Agreement, any
Loan Documents or any other agreement or instrument evidencing all or any part
of the Obligations;
(B) any change in the time, manner or place of payment of, or in any other
term of, all or any of the Obligations or any other amendment or waiver of or
any consent to any departure from the Credit Agreement or any other Loan
Document;
(C) the absence of any attempt to collect the Obligations from any
guarantor or other action to enforce the same;
(D) the waiver or consent by the Administrative Agent with respect to any
provision of any instrument evidencing the Obligations, or any part thereof, or
any other agreement now or hereafter executed by Grantor and delivered to the
Administrative Agent;
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(E) failure by the Administrative Agent to take any steps to perfect and
maintain its security interest in, or preserve its rights to, any security or
collateral for the Obligations;
(F) the Administrative Agent's election in any proceeding instituted under
Chapter 11 of Title 11 of the United States Code (11 U.S.C. Section 101 et seq.)
(the "Bankruptcy Code"), of the application of Section 1111(b)(2) of the
Bankruptcy Code;
(G) any borrowing or grant of a security interest under Section 364 of the
Bankruptcy Code;
(H) any exchange, release or non-perfection of any other collateral; or
(I) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, Grantor.
13. Waiver. Except as otherwise expressly required by the terms hereof,
Grantor hereby waives diligence, presentment, demand of payment, filing of
claims with a court in the event of receivership or bankruptcy of Grantor,
protest or notice with respect to the Obligations and all demands whatsoever,
and covenants that this Agreement will not be discharged, except by complete
performance of the Obligations contained herein. Upon any Event of Default as
provided in the Credit Agreement, the Loan Documents, or any other instrument or
document evidencing all or any part of the Obligations, the Administrative Agent
may, at its sole election, proceed directly and at once, without notice, against
Grantor to recover, solely from the Collateral and to the extent provided under
Section 11, the full amount or any portion of the Obligations by exercising its
rights provided in Section 10 hereof, without first proceeding against any other
Person or against any security or collateral for the Obligations. The
Administrative Agent shall have the exclusive right to determine the application
of payments and credits, if any, from Grantor or from any other Person on
account of the Obligations or of any other liability of the Borrowers to the
Secured Parties.
14. Amendments; Etc. No amendment or waiver of any provision of this
Agreement nor consent to any departure by Grantor herefrom, shall in any event
be effective unless the same shall be in writing and signed by the
Administrative Agent, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
15. Notices. Any notice or notification required, permitted or
contemplated hereunder shall be in writing, shall be addressed to the party to
be notified at the address set forth below or at such other address as each
party may designate for itself from time to time by notice hereunder, and shall
be deemed to have been validly served, given or delivered (i) five (5) days
following deposit in the United States mails, with proper postage prepaid, or
(ii) the next business day after such notice was delivered to a regularly
scheduled overnight delivery carrier with delivery fees either prepaid or an
arrangement, satisfactory with such carrier, made for the payment of such fees,
or (iii) upon receipt of notice given by telecopy, mailgram, telegram, telex or
personal delivery:
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To Administrative Agent: KeyBank National Association
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxx Xxxxxx
Telecopy No: (000) 000-0000
To Grantor: [____________________]
c/o Hawk Corporation
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxx 00000-0000
Attention: Vice President - Chief Financial
Officer
Telecopy: (000) 000-0000
With a copy to: Xxxxxxx Xxxxxxx & Xxxxxx P.L.L.
Xxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx
0000 Xxxx 0xx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
16. Continuing Security Interest; Transfer of Notes. This Agreement shall
create a continuing security interest in the Collateral and shall (A) remain in
full force and effect until payment in full of all of the Obligations, (B) be
binding upon Grantor, Grantor's successors and assigns and (C) inure, together
with the rights and remedies of the Administrative Agent hereunder, to the
Administrative Agent and its respective successors, transferees and assigns.
Without limiting the generality of the foregoing clause (C), subject to and to
the extent provided in Section 11 of the Credit Agreement, the Administrative
Agent may assign or otherwise transfer any instrument held by it to any other
person or entity, and such other person or entity shall thereupon become vested
with all the benefits in respect thereof granted to such assigning party,
whether herein or otherwise. Upon the payment in full of all Obligations and the
termination of all Obligations under the Credit Agreement, the security interest
granted hereby shall terminate and all rights to the Collateral shall revert to
Grantor. Upon any such termination, the Administrative Agent will, at Grantor's
expense, promptly return to Grantor all certificates representing any of the
Collateral and execute and deliver to Grantor such documents as Grantor shall
reasonably request to evidence such termination.
17. Governing Law; Terms. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio, except to the extent
that the validity or perfection of the security interest hereunder, or remedies
hereunder, in respect of any particular Collateral are governed by the laws of a
jurisdiction other than the State of Ohio. Unless otherwise defined herein or in
the Credit Agreement, terms used in Article 9 of the Uniform Commercial Code in
the State of Ohio are used herein as therein defined.
[Signature Follows on Next Page]
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IN WITNESS WHEREOF, Grantor has caused this Agreement to be duly executed
and delivered by their officers thereunto duly authorized as to the date first
above written.
[___________________]
___________________________________________
By: _______________________________________
Its: ______________________________________
Accepted in Cleveland, Ohio,
as of the ___ day of November, 2004.
KEYBANK NATIONAL ASSOCIATION,
as Administrative Agent
__________________________________________
By: ______________________________________
Its: _____________________________________
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STATE OF __________________ )
)ss:
COUNTY OF__________________ )
The foregoing instrument was acknowledged before me this ____ day of
___________, 2004, by ______________________, who appeared before me and
affirmed that [s]he is the ________________________ of [_________________], a
[_________________], on behalf of such company.
_______________________________________
Notary Public
[SEAL] My commission expires: ___________________
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SCHEDULE I
Pledge and Security Agreement
[GRANTOR]
Pledged Shares Owned and Pledged by Grantor
Number of Class of Stock Certificate
Stock Issuer Shares Stock No(s.) Par Value
------------ ------ ----- ------ ---------
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SCHEDULE II
Pledge and Security Agreement
[GRANTOR]
Pledged Instruments Owned and Pledged by Grantor
Note Issuer Date Maturity Amount
---- ------ ---- -------- ------
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