EX-10.5 8 dex105.htm STOCK PLEDGE AGREEMENT STOCK PLEDGE AGREEMENT
Exhibit 10.5
THIS STOCK PLEDGE AGREEMENT (this “Agreement”), dated as of July 6, 2006, is made by CITISTEEL USA HOLDINGS, INC., a Delaware corporation (“Pledgor”), and THE BANK OF NEW YORK, a New York banking corporation (“BNY”), as Collateral Agent (in such capacity, “Collateral Agent”) for the benefit of the Secured Creditors (as defined below).
“Indenture Documents” means, collectively, the Indenture, the Notes, the Collateral Agreements and all other agreements, instruments and documents relating to the purchase of the Notes, including mortgages, deeds of trust, security agreements, subordination agreements, intercreditor agreements, pledges, powers of attorney, consents, collateral assignments, locked box and cash management agreements, letter agreements, contracts, notices, leases, financing statements and letters of credit and applications therefor and all other writings, which have been, are as of the date of this Agreement, or will in the future be signed by, or on behalf of, Pledgor and delivered to Collateral Agent, Trustee (as defined in the Indenture), or the Holders (as defined in the Indenture).
“Obligations” means all obligations for principal, premium, interest (including interest accruing after the commencement of any bankruptcy, insolvency, or similar proceeding, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the Notes (as defined in the Indenture which is defined below), the Indenture and other Indenture Documents.
“Pledged Shares” means (i) all shares of capital stock and other securities of the Subsidiary owned by Pledgor as described on Schedule I attached; (ii) all additional shares or other securities of Subsidiary owned by Pledgor required to be delivered by Pledgor pursuant to this Agreement; and (iii) all of the stock rights and interests in, under, to, and arising out of, all of the shares and other securities in the foregoing clauses (i) and (ii) in this definition.
“Secured Creditors” means, collectively, the Collateral Agent, the Trustee and the Holders.
“Subsidiary” means CitiSteel USA, Inc., a Delaware corporation.
1.3 Other Definitional Provisions; Construction. Unless otherwise specified,
(i) As used in this Agreement, accounting terms relating to Pledgor not defined in this Agreement have the respective meanings given to them in accordance with GAAP.
(ii) References to the UCC mean the Uniform Commercial Code as the same may from time to time be in effect in the State of New York or the Uniform Commercial Code (or similar code or statute) of another jurisdiction, to the extent it may be required to apply to any item or items of Pledged Collateral.
(iii) The definition of any document or instrument or agreement includes all schedules, attachments and exhibits thereto and all renewals, extensions, supplements, restatements and amendments thereof. All Exhibits and Schedules attached to this Agreement are incorporated into, made and form an integral part of, this Agreement for all purposes.
(iv) “Hereunder,” “herein,” “hereto,” “this Agreement” and words of similar import refer to this entire document; “including” is used by way of illustration and not by way of limitation, unless the context clearly indicates the contrary; the singular includes the plural and conversely; and any action required to be taken by Pledgor is to be taken promptly, unless the context clearly indicates the contrary.
(v) All of the uncapitalized terms contained in this Agreement which are now or hereafter defined under the UCC will, unless the context indicates otherwise, have the meanings provided for in the UCC.
(i) the Pledged Shares and the certificate(s) representing the Pledged Shares (whether or not the same constitutes “general intangibles”, “investment property”, or “securities” under the UCC and whether or not such interest is certificated or uncertificated) in Subsidiary and all securities (as that term is defined in the UCC), if any, issued by Subsidiary;
(ii) all dividends, distributions, 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 the Pledged Shares and all proceeds thereof;
-2-
(iii) all additional shares or other securities of Subsidiary from time to time acquired by Pledgor in any manner or to which Pledgor becomes entitled, and the certificates or other evidence representing such additional shares or other securities, 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 shares or other securities;
(iv) all of the rights, interests and privileges with respect to the Pledged Shares and the additional shares or other securities of Subsidiary acquired by Pledgor;
(v) all claims against third parties;
(vi) all cash and non-cash proceeds, interest, profits and other income of or on any of the foregoing described property;
(vii) all supporting obligations; and
(viii) all books and records relating to any of the foregoing described property;
provided, however, that “Pledged Collateral” shall not include Voting Stock of a Foreign Subsidiary of Pledgor, in excess of 65% of the total combined voting power of all Voting Stock of each such Foreign Subsidiary.
3. REPRESENTATIONS AND WARRANTIES. Pledgor hereby represents and warrants that:
(i) There is no stamp duty, tax, levy, impost, deduction, charge, withholding or similar duty, tax or fee imposed on or by virtue of the execution or delivery of this Agreement or any other document to be furnished hereunder or in connection herewith.
(ii) The Pledged Shares have been duly authorized and validly issued and are fully paid and non-assessable with no personal liability attaching to the ownership thereof (e.g., they do not oblige the owner thereof to make any further payments in respect thereof).
-3-
(iii) There are no restrictions upon the transfer of any of the Pledged Shares, and Pledgor has the unqualified and unilateral right to transfer the Pledged Shares without obtaining the consent of any Person (except as may be required by laws affecting the offering and sale of securities generally). The Pledged Shares are issued and registered in the name of Pledgor.
(iv) Pledgor is the sole, legal and beneficial owner of the entire right, title and interest in and to the Pledged Collateral free and clear of any Lien, charge, covenant or any other adverse claim, except for the security interest held by the Revolving Credit Claimholders (as defined in the Intercreditor Agreement) until the Discharge of Revolving Credit Obligations (as defined in the Intercreditor Agreement). Pledgor shall take all reasonable steps to defend the Pledged Collateral and each and every part thereof against all claims of all Persons at any time claiming any of the Pledged Collateral or claiming any interest therein adverse to the Secured Creditors other than any Permitted Liens;
(v) The pledge and delivery of the Pledged Shares pursuant to this Agreement create a valid and perfected first priority security interest (subject in priority, however, to the liens of the Revolving Credit Claimholders) in the Pledged Shares, securing the payment of the Obligations.
(vi) No authorization, approval or other action by, and no notice to or filing with any Governmental Authority is required either for the (a) pledge by Pledgor of the Pledged Collateral pursuant to this Agreement or for the execution, delivery or performance of this Agreement by Pledgor; or (b) exercise by Collateral Agent of the voting or other rights provided for in this Agreement or the remedies in respect of the Pledged Collateral pursuant to this Agreement (except as may be required by laws affecting the offering and sale of securities generally).
(vii) The Pledged Shares constitute 100% of the issued and outstanding capital stock of Subsidiary. There are no outstanding subscriptions, options, rights, warrants or other agreements or commitments pursuant to which Pledgor is or might be obligated to issue or transfer any additional ownership interests except as described on Schedule I.
-4-
5.1 Absence of an Event of Default. So long as no Event of Default shall have occurred and be continuing:
(i) Pledgor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Pledged Collateral or any part thereof for any purpose not inconsistent with the terms of this Agreement, the Indenture or the other Indenture Documents; provided, however, that Pledgor shall not exercise (or refrain from exercising) any such right if such action would have an material and adverse effect on the value of the Pledged Collateral or any part thereof.
(ii) Pledgor shall be entitled, in the manner and to the extent permitted by the Indenture, to receive and retain any and all dividends and interest paid in respect of the Pledged Collateral; provided, however, that:
(a) any and all dividends, distributions and interest paid or payable other than in cash in respect of, and instruments and other property received, receivable or otherwise distributed in respect of, or in exchange for, any Pledged Collateral; and
(b) upon the occurrence and during the continuance of an Event of Default, any and all cash paid, payable or otherwise distributed in respect of principal of, or in redemption of, or in exchange for, any Pledged Collateral
shall be delivered to Collateral Agent, or such nominee(s) of Collateral Agent as Collateral Agent shall direct, to hold as Pledged Collateral and shall, if received by Pledgor, be received in trust for the benefit of Collateral Agent, be segregated from the other property or funds of Pledgor, and be forthwith delivered to Collateral Agent, or such nominee(s) of Collateral Agent as Collateral Agent shall direct, as Pledged Collateral in the same form as so received (with any necessary indorsement(s)). Pledgor shall promptly execute such instruments, documents and agreements and do such acts as reasonably necessary, or as Collateral Agent may deem to be necessary or desirable to give effect to the provisions of this Section 5.1(ii).
-5-
6. TRANSFERS AND OTHER LIENS; ADDITIONAL SHARES.
6.1 Transfers/Liens by Pledgor. Pledgor will not (i) sell, transfer, or otherwise dispose of, or grant any option or warrants, or rights to purchase with respect to, or permit any Person to be registered as holder of, any of the Pledged Collateral except in accordance with the exercise of Collateral Agent’s rights hereunder; (ii) create or permit to exist any Lien, charge or other encumbrance upon or with respect to any of the Pledged Collateral, except for the Lien created under this Agreement and the liens of the Revolving Credit Claimholders pursuant to the Credit Agreement; or (iii) do, cause to be done or permit anything which may in any way have a material and adverse effect on the value of the Pledged Collateral.
-6-
to exercise any such powers. Collateral Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Pledged Collateral in its possession if the Pledged Collateral is accorded treatment substantially equal to that which Collateral Agent accords its own property, it being understood that Collateral Agent shall not have responsibility for (i) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Pledged Collateral, whether Collateral Agent has or is deemed to have knowledge of such matters, or (ii) taking any necessary steps to preserve rights against any parties with respect to any Pledged Collateral. In acting under or by virtue of this Agreement, Collateral Agent shall be entitled to all the rights, privileges and protections provided to it in the Indenture, which are incorporated by reference herein mutatis mutandis. Collateral Agent hereby disclaims any representation or warranty to the other Secured Creditors or any other holders of the Obligations concerning the perfection of the liens and security interests granted hereunder or in the value or sufficiency of any of the Pledged Collateral. Collateral Agent shall not be responsible for filing any financing or continuation statements or recording any documents or instruments in any public office.
10. REMEDIES UPON AN EVENT OF DEFAULT.
10.1 Transfers by Collateral Agent. If any Event of Default shall have occurred and be continuing:
(i) Subject to the notice required to be given to Pledgor as specified below, Collateral Agent, at its option and without any obligation to do so, may transfer to or register in its name, or the name of any nominee(s) all or any part of the Pledged Collateral, and Collateral Agent may exercise in respect of the Pledged Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies under applicable law and of a secured party on default under the UCC; and, subject to the notice required to be given to Pledgor as specified below, Collateral Agent may also, without notice except as specified below, sell (through agents or otherwise) the Pledged Collateral or any part thereof in one or more parcels at public or private sale, at any exchange, broker’s board or any of Collateral Agent’s offices or elsewhere, for cash, on credit or for future delivery, and upon such other commercially reasonable terms as Collateral Agent may determine in its good faith judgment. Collateral Agent shall be authorized at any such sale (if it deems it advisable to do so in its good faith judgment) to restrict the prospective bidders or purchasers to Persons who will represent and agree that they are purchasing the Pledged Shares for their own account in compliance with Regulation D of the Securities Act or under applicable law or under any other applicable exemption available under applicable law. Pledgor agrees that at least ten (10) Business Days notice to Pledgor 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. Collateral Agent shall not be obligated to make any sale of the Pledged Collateral regardless of notice of sale having been given. Collateral 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; and
(ii) All cash proceeds received by Collateral Agent in respect of any sale of, collection from, or other realization upon all or any part of the Pledged Collateral may, in the
-7-
discretion of Collateral Agent exercised in good faith, be held by Collateral Agent as Collateral for, or upon the occurrence and continuance of an Event of Default in whole or in part by Collateral Agent against, all or any parts of the Obligations in such order as provided by the Indenture. Any surplus of such cash or cash proceeds held by Collateral Agent and remaining after payment in full of all of the Obligations shall be paid over to Pledgor or to whomsoever may be lawfully entitled to receive such surplus.
-8-
11. INDEMNIFICATION; EXPENSES.
14.1 Severability. If any term of this Agreement is found invalid under New York law or other laws of mandatory application by a court of competent jurisdiction, the invalid term will be considered excluded from this Agreement and will not invalidate the remaining terms of this Agreement.
-9-
14.2 GOVERNING LAW. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
14.3 WAIVER OF JURISDICTION. AS A SPECIFICALLY BARGAINED INDUCEMENT FOR SECURED CREDITORS TO PURCHASE NOTES FROM PLEDGOR, PLEDGOR AND COLLATERAL AGENT AGREE THAT ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS AGREEMENT, ITS VALIDITY OR PERFORMANCE, AND WITHOUT LIMITATION ON THE ABILITY OF SECURED CREDITORS, AND THEIR SUCCESSORS AND ASSIGNS, TO EXERCISE ALL RIGHTS AS TO THE PLEDGED COLLATERAL AND INITIATE AND PROSECUTE IN ANY APPLICABLE JURISDICTION ACTIONS RELATED TO REPAYMENT OF THE OBLIGATIONS, SHALL BE INITIATED AND PROSECUTED AS TO ALL PARTIES AND THEIR SUCCESSORS AND ASSIGNS AT NEW YORK, NEW YORK. SECURED CREDITORS AND PLEDGOR EACH CONSENTS TO AND SUBMITS TO THE NONEXCLUSIVE JURISDICTION OVER ITS PERSON BY ANY COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF HAVING JURISDICTION OVER THE SUBJECT MATTER, AND CONSENTS THAT ALL SERVICE OF PROCESS BE MADE BY CERTIFIED MAIL DIRECTED TO ISSUER AND SECURED CREDITORS AT THEIR RESPECTIVE ADDRESSES SET FORTH IN THE INDENTURE OR AS OTHERWISE PROVIDED UNDER THE LAWS OF THE STATE OF NEW YORK. PLEDGOR WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER, AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT.
-10-
demand, notice of default and all other notices to which Pledgor might otherwise be entitled. Pledgor shall also assert no claim against Collateral Agent on any theory of liability for consequential, special, indirect or punitive damages except to the extent such claim arises from the gross negligence or willful misconduct of Collateral Agent.
-11-
15. TERM. This Agreement will terminate on the Termination Date.
(a) The Liens granted hereunder in favor of Collateral Agent for the benefit of the Secured Creditors in respect of the Pledged Collateral and the exercise of any right related thereto thereby shall be subject, in each case, to the terms of the Intercreditor Agreement.
(b) In the event of any direct conflict between the express terms and provisions of this Agreement and of the Intercreditor Agreement, the terms and provisions of the Intercreditor Agreement shall control until the Discharge of the Revolving Credit Obligations (as defined in the Intercreditor Agreement) shall have occurred.
(c) Notwithstanding anything to the contrary herein, any provision hereof that requires Issuer to (i) deliver any Pledged Collateral to Collateral Agent or (ii) provide that Collateral Agent have control over any Pledged Collateral may be satisfied by (A) the delivery of such Pledged Collateral by Issuer to the Administrative Agent for the benefit of the Lenders and the L/C Issuer (as defined in the Credit Agreement) and Collateral Agent for the benefit of the Secured Creditors pursuant to Section 5.4 of the Intercreditor Agreement and (B) providing that the Administrative Agent be provided with control with respect to such Pledged Collateral of
-12-
Issuer for the benefit of the Lenders and the L/C Issuer and Collateral Agent for the benefit of Secured Creditors pursuant to Section 5.4 of the Intercreditor Agreement.
[Remainder of this page left intentionally blank]
-13-
| CITISTEEL USA HOLDINGS, INC. | ||
| By: | /s/ Xxxx Xxxxxxx | |
| Name: | Xxxx Xxxxxxx | |
| Title: | Chief Executive Officer |
Accepted at New York, New York
on July 6, 2006:
| THE BANK OF NEW YORK, as Collateral Agent | ||
| By: | /s/ Xxxxx Xxxxxxxxx-Xxxxxx | |
| Name: | Xxxxx Xxxxxxxxx-Xxxxxx | |
| Title: | Vice President |
SIGNATURE PAGE
(CITISTEEL USA HOLDINGS, INC.
-13-
CONSENT OF CITISTEEL USA, INC.
CitiSteel USA, Inc. (“CitiSteel”) hereby: (i) consents to the execution, delivery, and performance of this Agreement by Pledgor and (ii) agrees that if Collateral Agent exercises any right or remedy with respect to any of the Pledged Collateral, including, without limitation, any sale or other disposition of the Pledged Shares following the occurrence and continuance of an Event of Default, CitiSteel consents, without any further act or instrument, to such exercise of such right or remedy by Collateral Agent and will take any other and further action Collateral Agent determines in its discretion exercised in good faith to be necessary or desirable to effect any sale or other disposition of the Pledged Shares effected by Collateral Agent.
| CITISTEEL USA, INC. | ||
| By: | /s/ Xxxx Xxxxxxx | |
| Xxxx Xxxxxxx, Executive Chairman |
CONSENT OF CITISTEEL USA, INC. TO
CITISTEEL USA HOLDINGS, INC.
SCHEDULE I
| Stockholders | Class of Stock Number of Shares | Cert. # | ||
| Citisteel USA Holdings, Inc. | 1000 Common Shares | 1 |
Outstanding subscriptions, options, rights, warrants or other agreements or commitments pursuant to which Pledgor might be obligated to issue or transfer any additional shares of its capital stock:
None.