PLEDGE AND SECURITY AGREEMENT
EXHIBIT 10.2
December 15, 2006
This PLEDGE AND SECURITY AGREEMENT (this “Agreement”) is entered into among by and among BANK
OF AMERICA, N.A., with offices at 000 Xxxxxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxx Xxxxxx 00000 (“BANA”),
and WOLVERINE TUBE, INC., a Delaware corporation with its principal place of business at 000
Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxx, Xxxxxxx 00000 (“Wolverine Tube”), and WOLVERINE JOINING
TECHNOLOGIES, LLC, a Delaware limited liability company with its principal place of business at 000
Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxx Xxxxxx 00000 (“Wolverine Joining”) (Wolverine Tube and Wolverine
Joining are hereinafter sometimes referred to individually as a “Company” and collectively, jointly
and severally as the “Companies”).
BACKGROUND
WHEREAS, reference is hereby made to that certain Amended and Restated Consignment Agreement
dated as of April 28, 2005 (as amended from time to time and in effect, the “Consignment
Agreement”) among the Companies and BANA, pursuant to which BANA extended a silver consignment
facility and a silver forward contract facility to the Companies, as previously amended by (i) that
certain First Amendment to Amended and Restated Consignment Agreement dated as of August 1, 2005;
(ii) that certain Second Amendment to Amended and Restated Consignment Agreement dated as of
February 22, 2006; and (iii) that certain letter agreement dated on or about November 9, 2006.
WHEREAS the Companies have requested that BANA agree to certain further amendments and
modifications of the Consignment Agreement, and BANA has agreed to do so, but only in accordance
with the terms and conditions of that certain Third Amendment to Amended and Restated Consignment
Agreement dated as of December 15, 2006 (the “Third Amendment”).
WHEREAS, in order to induce BANA to agree to enter into the Third Amendment, and in
consideration of the accommodations provided to the Companies by BANA thereunder and under the
Consignment Agreement, the Companies wish to secure their obligations and liabilities to BANA under
the Consignment Agreement and otherwise with the collateral granted pursuant to this Agreement;
NOW, THEREFORE, in consideration of the premises contained herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
Section 1 Definitions. Unless otherwise defined herein, capitalized terms
used herein shall have the respective meanings as set forth in the Consignment Agreement.
Section 2 Creation of Security Interest. To secure the prompt, punctual, and
faithful payment and performance of all and each of the Obligations of the Companies to BANA under,
related to, or arising in connection with the Consignment Agreement, any documents related thereto
or executed in connection therewith, and otherwise, whether now existing or hereafter arising, the
Companies each hereby grants BANA a continuing security interest in and to, a lien on, and right of
set-off with respect to, all right, title and interest of each Company in and to: (i) account no.
387148 maintained by Wolverine Tube with BANA and account no. 00000000 maintained by Wolverine Tube
with Banc of America Securities LLC (“BAS”) pursuant to that certain Customer Agreement dated on or
about December 15, 2006 (the “Customer Agreement”) among the Wolverine Tube, BANA and BAS
(hereinafter, each of the accounts referred to in this clause (i) shall be referred to collectively
as the “Account”); (ii) all investment property, securities and other financial assets of any kind
(including, without limitation, all “Financial Instruments” as defined in the Customer Agreement),
all certificates of deposit, all cash and all other funds now or hereafter held in, credited to, or
on deposit in the Account; (iii) all income now or hereafter earned therefrom and all investments
now or hereafter made thereof; and (iv) with respect to each item of property referred to in the
foregoing clauses (i) through (iii), all replacements, substitutions, additions,
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interest, and other distributions arising out of or in respect of any of the foregoing, all
instruments relating to or evidencing any of the foregoing, all general intangibles relating to any
of the foregoing, and all products and proceeds, both cash and non-cash, arising out of or in
respect of any of the foregoing whether now existing or arising at any time in the future (all of
which is referred to hereinafter as the “Collateral”).
Section 3 Representations, Covenants and Warranties.
3.1 The Companies hereby represent to BANA that:
(a) At all times, the Collateral shall have a minimum liquidated cash value of not less
than $9,500,000.00.
(b) The Collateral is held and owned by the Companies, free and clear of all liens,
encumbrances, attachments, security interests, pledges, and charges, is fully paid for and
nonassessable, and is not subject to any restrictions to its free transferability and sale
to the public.
(c) The Companies have the full right, power and authority to pledge the Collateral and
to grant the security interest in and lien on the Collateral as herein provided.
(d) The execution, delivery and performance of this Agreement by the Companies does not
and shall not result in the violation of any mortgage, indenture, contract, instrument,
agreement, judgment, decree, order, statute, rule or regulation to which either Company is
subject, or by which it or any of its property is bound.
(e) This Agreement constitutes the legal, valid and binding obligation of the Companies
in accordance with the terms hereof and has been duly authorized, executed and delivered.
3.2 The Companies hereby covenant and agree that each Company shall:
(a) Execute all such instruments, documents, and papers, and will do all such acts as
BANA may reasonably request from time to time to carry into effect the provisions and intent
of this Agreement, and will do all such other acts as BANA may reasonably request with
respect to the perfection and protection of the security interest granted herein and the
assignment effected hereby.
(b) Keep the Collateral free and clear of all liens, encumbrances, attachments,
security interests, pledges, and charges.
(c) Deliver to BANA, if and when received by the Companies, any item representing,
evidencing, or constituting any of the Collateral or proceeds of the Collateral, including,
without limitation, any interest, cash dividends, or other distributions made on account of
or in respect to any of the Collateral.
Section 4 Restrictions on Collateral. The Companies agree that all of the
Collateral shall be held as security for all of the Obligations. The Companies shall not be
permitted to make any withdrawals from the Account or to receive any portion of the Collateral
unless and until all Obligations have been indefeasibly satisfied in full. The Companies agree
that until the Companies are entitled to a return of the Collateral, or so much thereof as remains,
it shall not, without the express prior written consent of BANA, transfer the Collateral or any
interest therein or enter into any agreement for the transfer of such Collateral, or permit or
suffer any other liens, whether or not junior to the lien created hereby, to be created or to exist
with respect to the Collateral.
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Section 5 Application of Collateral; Remedies.
5.1 Without limiting the rights and remedies of BANA under this Agreement, the Consignment
Agreement, the Customer Agreement or otherwise, in the event that any of the Obligations shall
become due (whether upon maturity, acceleration or otherwise), the Companies hereby covenant and
agree that BANA may, in its discretion, without first obtaining the further consent or instruction
of either Company and without prior notice to either Company, dispose, set-off against and/or
liquidate any of the Collateral in order to obtain collected funds and may apply all or any portion
thereof in reduction or satisfaction, as the case may be, of the Obligations in such order and
manner as BANA may determine to be appropriate, and the Companies shall remain liable for any
deficiency remaining following such application. To the extent necessary or advisable (as
determined by BANA in its sole discretion), BANA may also instruct BAS to take any of the foregoing
actions in accordance with the terms of the Customer Agreement without the Companies’ further
consent or instruction.
5.2 In addition to all rights and remedies set forth in Section 5.1 above, and without
intending to limit same in any manner, in enforcing the security interest in the Collateral, BANA
shall have all of the rights and remedies of a secured party under the Uniform Commercial Code.
Section 6 BANA’s Right to File Financing Statements. Each Company hereby
irrevocably authorizes BANA to file such financing statements as BANA deems necessary to further
confirm and perfect its security interest in the Collateral.
Section 7 Event of Default. The Companies hereby covenant and agree that (i)
the Companies’ failure to comply with any obligation, representation, warranty or covenant
contained herein shall constitute an Event of Default under the Consignment Agreement and (ii) the
occurrence of any Event of Default under the Consignment Agreement shall constitute a default
hereunder. The Companies hereby covenant and agree that the existence of an Event of Default shall
not be a condition to BANA’s exercise of any of its rights and remedies set forth in Section 5.1
above.
Section 8 Designation As Attorney-In-Fact.
8.1 Each Company hereby designates BANA as and for the attorney-in-fact of such Company to:
endorse in favor of BANA, as pledgee, any of the Collateral; cause the transfer of any of the
Collateral in and to such name as BANA, may from time to time, determine; and take such other
actions with respect to the Collateral as BANA may reasonably determine to be appropriate. BANA
may take such action with respect to the Collateral as BANA reasonably may determine to be
necessary to protect and preserve its interest in the Collateral. BANA shall also have and may
exercise at any time all rights, remedies, powers, privileges, and discretions of the Companies
with respect to and under the Collateral.
8.2 This designation, being coupled with an interest, is irrevocable until this Agreement is
terminated by a written instrument executed by a duly authorized officer of BANA, which BANA shall
provide to the Companies from and after the indefeasible satisfaction of the Companies’ Obligations
and the termination of the Consignment Agreement, and upon the Companies written request and at the
Companies sole expense. BANA shall not be liable for any act or omission to act pursuant to this
Agreement except for any act or omission to act as to which there is a final determination is made
in a judicial proceeding (in which BANA has had an opportunity to be heard), which determination
includes a specific finding that BANA had acted in a grossly negligent manner or in actual bad
faith.
Section 9 Rights and Remedies. The rights, remedies, powers, privileges, and
discretions of BANA hereunder (herein, the “Rights and Remedies”) shall be cumulative and not
exclusive of any rights or remedies which it would otherwise have. No delay or omission by BANA in
exercising or enforcing any of BANA’s Rights and Remedies shall operate as, or constitute, a waiver
thereof. No waiver by BANA of any Event of Default or of any default under any other agreement
shall operate as a waiver of any other default hereunder or under any other agreement. No single
or partial exercise of any of BANA’s Rights or Remedies, and no express or implied agreement or
transaction of whatever nature
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entered into between BANA and any person, at any time, shall preclude the other or further
exercise of BANA’s Rights and Remedies. No waiver by BANA of any of BANA’s Rights and Remedies on
any one occasion shall be deemed a waiver on any subsequent occasion, nor shall it be deemed a
continuing waiver. BANA’s Rights and Remedies may be exercised at such time or times and in such
order of preference as BANA may determine. BANA’s Rights and Remedies may be exercised without
resort or regard to any other source of satisfaction of the Obligations.
Section 10 Obligations Not Affected. The obligations of the Companies
hereunder shall remain in full force and effect without regard to, and shall not be impaired by,
(i) any exercise or nonexercise, or any waiver, by BANA of any right, remedy, power or privilege
under or in respect of any of the Obligations or any security therefor (including this Agreement);
(ii) any amendment to, modification of, or termination of, the Consignment Agreement, or any of the
Obligations; (iii) any amendment to or modification of any instrument (other than this Agreement)
securing any of the Obligations; or (iv) the taking of additional security for, or any other
assurances of payment of, any of the Obligations or the release or discharge or termination of any
security or other assurances of payment or performance for any of the Obligations; in each case
whether or not either Company shall have notice or knowledge of any of the foregoing.
Section 11 BANA’s Exoneration. Except as expressly provided under applicable
law with respect to a secured creditor’s duty to preserve collateral in the secured creditor’s
possession, under no circumstances shall BANA be deemed to assume any responsibility for or
obligation or duty with respect to any part or all of the Collateral or any nature or kind or any
matter or proceedings arising out of or relating thereto. BANA shall not be required to take any
action of any kind to collect, preserve or protect its or the Companies’ rights in any of the
Collateral or against other parties thereto. BANA’s prior recourse to any part or all of the
Collateral shall not constitute a condition of any demand, suit or proceeding for payment or
collection of any of the Obligations.
Section 12 No Waiver, etc. Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated except by a written instrument expressly referring to
this Agreement and to the provisions so modified or limited, and executed by the party to be
charged. No act, failure or delay by BANA shall constitute a waiver of its rights and remedies
hereunder or otherwise. No single or partial waiver by BANA of any default or right or remedy that
it may have shall operate as a waiver of any other default, right or remedy or of the same default,
right or remedy on a future occasion. Each Company hereby waives acceptance and notice of
acceptance of this Agreement and presentment, notice of dishonor and protest of all instruments,
included in or evidencing any of the Obligations or any of the Collateral, and any and all other
notices and demands whatsoever.
Section 13 Notice, etc. All notices, requests and other communications
hereunder shall be made in accordance with the terms of the Consignment Agreement.
Section 14 Miscellaneous.
14.1 This Agreement incorporates all discussions and negotiations between the parties
concerning the matters included therein. No such discussions and negotiations, nor any custom,
usage, or course of dealings shall limit, modify, or otherwise affect the provisions thereof. No
failure by BANA to give notice to the Companies of any person’s having failed to observe and comply
with any warranty or covenant included herein shall constitute a waiver of such warranty or
covenant or the amendment of the subject provision. This Agreement shall not serve to limit or
restrict any of the rights and remedies of BANA and/or BAS pursuant to the Consignment Agreement,
the Customer Agreement or otherwise.
14.2 The security interest in the Collateral granted by the Companies hereunder is in addition
to, and is supplemental of, all other security interests and liens heretofore or hereafter granted
by either Company to BANA.
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14.3 The headings of each section of this Agreement are for convenience only and shall not
define or limit the provisions thereof.
14.4 This Agreement and all rights and obligations hereunder shall be binding upon each
Company and its successors and permitted assigns, and shall inure to the benefit of BANA and its
successors and assigns.
14.5 If any term of this Agreement shall be held to be invalid, illegal or unenforceable, the
validity of all other terms hereof shall in no way be affected thereby, and this Agreement shall be
construed and be enforceable as if such invalid, illegal or unenforceable term had not been
included herein. The Companies acknowledge receipt of a copy of this Agreement.
14.6 This Agreement and all documents which relate hereto, which have been or may be
hereinafter furnished BANA may be reproduced by BANA by any photographic, photostatic, microfilm,
micro-card, miniature photographic, xerographic, or similar process, and BANA may destroy any
document so reproduced. Any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding (whether or not the original is in existence
and whether or not such reproduction was made in the regular course of business). Any facsimile
which bears proof of transmission shall be binding on the party which or on whose behalf such
transmission was initiated and likewise shall be so admissible in evidence as if the original of
such facsimile had been delivered to the party which or on whose behalf such transmission was
received.
14.7 Each Company shall indemnify, defend, and hold BANA and any agent, employee, officer, or
representative of BANA, harmless of and from any claim (other than any claim as to which a final
determination is made in a judicial proceeding (in which BANA has had an opportunity to be heard),
which determination includes a specific finding that BANA had acted in a grossly negligent manner
or in actual bad faith) brought or threatened against BANA or any such person so indemnified by any
person (as well as from attorneys’ reasonable fees and reasonable expenses in connection therewith)
on account of BANA’s relationship with either Company, or any other person obligated on account of
the Obligations, the Consignment Agreement, or otherwise (each of which may be defended,
compromised, settled, or pursued by BANA with counsel of BANA’s own selection, but at the expense
of the Companies). This indemnification shall survive payment of the Obligations, and/or any
termination, release, or discharge executed by BANA in favor of the Companies.
14.8 It is intended that the within Agreement take effect as a sealed instrument.
[signature page follows]
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IN WITNESS WHEREOF, intending to be legally bound, the Companies and BANA have caused this
Pledge and Security Agreement to be executed under seal as of the date first above written.
| WITNESS: | WOLVERINE TUBE, INC. | |||
| /s/ Xxxxxxxx Xxxxxxxx
|
By: Title: | /s/ Xxxxx X. Xxxxxx
|
||
| WOLVERINE JOINING TECHNOLOGIES, LLC | ||||
| /s/ Xxxxxxxx Xxxxxxxx
|
By: Title: | /s/ Xxxxx X. Xxxxxx
|
||
| BANK OF AMERICA, N.A. | ||||
| /s/ Xxxxxx Xxxxx
|
By: Title: | /s/ Xxxx X. XxXxxxxx
|
||
Signature Page to Pledge and Security Agreement
