PARENT PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (as amended, supplemented, restated or otherwise modified from time to time, this "Pledge Agreement"), dated as of November 21, 2000, made by KEY COMPONENTS, INC., a Delaware corporation, and KEYHOLD, INC., a Delaware corporation (each, a "Pledgor", and collectively, the "Pledgors"), in favor of FIRST UNION NATIONAL BANK, as agent (together with any successor(s) thereto in such capacity, the "Administrative Agent") for each of the Lender Parties (such capitalized terms and all other capitalized terms not otherwise defined herein shall have the meanings provided for in Article I).
W I T N E S S E T H:
WHEREAS, pursuant to the Credit and Guaranty Agreement, dated as of September 29, 2000 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "Credit Agreement"), among Key Components, LLC (the "Borrower"), certain of its Subsidiaries and the Pledgors, as Guarantors, the various financial institutions and other Persons as are or may become parties thereto, as lenders (the "Lenders"), the Administrative Agent, Societe Generale, as Syndication Agent for the Lenders, and First Union Securities, Inc. and SG Cowen Securities Corporation, as Co-Arrangers, the Lenders have extended Commitments to make Credit Extensions to the Borrower;
WHEREAS, as a condition precedent to the making of the initial Credit Extension under the Credit Agreement and to the execution and delivery of any Rate Protection Agreement, each Pledgor is required to execute and deliver this Pledge Agreement;
WHEREAS, each Pledgor is an equity holder of the Borrower;
WHEREAS, each Pledgor has duly authorized the execution, delivery and performance of this Pledge Agreement; and
WHEREAS, it is in the best interests of each Pledgor to execute this Pledge Agreement inasmuch as each Pledgor will derive substantial direct and indirect benefits from the Credit Extensions made from time to time to the Borrower by the Lenders pursuant to the Credit Agreement and pursuant to Rate Protection Agreements;
NOW, THEREFORE, for good and valuable consideration the receipt of which is hereby acknowledged, and in order to induce the Lenders to make Credit Extensions (including the initial Credit Extension) to the Borrower pursuant to the Credit Agreement, and to enter into Rate Protection Agreements with the Borrower, each Pledgor agrees with the Administrative Agent, for the benefit of each Lender Party, as follows:
SECTION I.1. Certain Terms. The following terms (whether or not underscored) when used in this Pledge Agreement, including its preamble and recitals, shall have the following meanings (such definitions to be equally applicable to the singular and plural forms thereof):
"Administrative Agent" is defined in the preamble.
"Collateral" is defined in Section 2.1.
"Control Agreement" means an agreement in form and substance satisfactory to the Administrative Agent which provides for the Administrative Agent to have "control" (as defined in Section 8-106 of the UCC, as such term relates to Investment property (other than certificated securities or commodities contracts), or as used in Section 9-115(e) of the UCC, as such term relates to commodity contracts).
"Credit Agreement" is defined in the first recital.
"Distributions" means all stock dividends, liquidating dividends, shares of stock resulting from (or in connection with the exercise of) stock splits, reclassifications, warrants, options, non-cash dividends, mergers and consolidations, and all other distributions (whether similar or dissimilar to the foregoing) on or with respect to any Pledged Interests or other shares of capital stock constituting Collateral, but shall not include Dividends.
"Dividends" means cash dividends and cash distributions with respect to any Pledged Interests or other Pledged Property made in the ordinary course of business or otherwise permitted under the Credit Agreement.
"Investment property" is defined in Section 9-115 of the UCC.
"Lender" and "Lenders" are defined in the first recital.
"Lender Party" means, as the context may require, any Lender and/or the Administrative Agent and/or each party to a Rate Protection Agreement (other than the Borrower) and each of their respective successors and permitted transferees and assigns.
"Pledge Agreement" is defined in the preamble.
"Pledged Interest Issuers" means each Person identified in Attachment 1 hereto as the issuer of the Pledged Interests identified opposite the name of such Person and each Person whose ownership, equity or other similar interests, including shares of capital stock, limited liability company interests and general and limited partnership interests, are required to be pledged hereunder and under the Credit Agreement from time to time.
"Pledged Interests" means all ownership, equity or other similar interests, including shares of capital stock, limited liability company interests and general and limited partnership interests, of any Pledged Interest Issuer which are required to be delivered by any Pledgor to the Administrative Agent as Pledged Property hereunder.
"Pledged Property" means all Pledged Interests, all intercompany notes in which any of the Pledgors has an interest (including the right to receive payment of principal and accrued interest on such notes and all other rights of a payee under such notes), and all other instruments and securities, in each case which are now being delivered or required to be delivered by any Pledgor to the Administrative Agent or may from time to time hereafter be delivered or be required to be delivered by any Pledgor to the Administrative Agent for the purpose of pledge under this Pledge Agreement or any other Loan Document, and all proceeds of any of the foregoing.
"Pledgor" and "Pledgors" are defined in the preamble.
"Secured Obligations" is defined in Section 2.2.
"Stock Collateral" is defined in clause (a) of Section 2.1.
"UCC" means the Uniform Commercial Code as in effect in the State of New York.
SECTION I.2. Credit Agreement Definitions. Unless otherwise defined herein or the context otherwise requires, terms used in this Pledge Agreement, including its preamble and recitals, have the meanings provided in the Credit Agreement.
SECTION I.3. UCC Definitions. Unless otherwise defined herein or the context otherwise requires, terms for which meanings are provided in the UCC are used in this Pledge Agreement, including its preamble and recitals, with such meanings.
SECTION II.1. Grant of Security Interest. Each Pledgor hereby pledges, hypothecates, assigns, charges, mortgages, delivers, and transfers to the Administrative Agent, for its benefit and the ratable benefit of each of the Lender Parties, and hereby grants to the Administrative Agent, for its benefit and the ratable benefit of the Lender Parties, a continuing security interest in, all of such Pledgor's right, title and interest in, to and under the following property, whether now or hereafter existing or acquired by such Pledgor (the "Collateral"):
(a) all Investment property in which such Pledgor has an
interest, including all Pledged Interests of each Pledged Interest
Issuer identified in Attachment 1 hereto, issued from time to time (the
(b) all other Pledged Property, whether now or hereafter
delivered to the Administrative Agent in connection with this
(c) all right, title and interest of such Pledgor, whether now
existing or hereafter arising or acquired, in, to and under any
partnership, joint venture, limited liability company operating and/or
similar agreement which governs the rights and obligations of the
holders of ownership, equity or similar interests in a Pledged Interest
(d) all Dividends, Distributions, interest, and other payments
and rights with respect to any Pledged Property; and
(e) all proceeds of and from any of the foregoing.
SECTION II.2. Security for Obligations. This Pledge Agreement secures the payment in full of all amounts payable by the Borrower, each Pledgor and each other Obligor under or in connection with the Credit Agreement, the Notes, each Rate Protection Agreement and each other Loan Document (including this Pledge Agreement), whether for principal, interest (including interest accruing during, or which would have accrued but for, the pendency of any bankruptcy or similar proceeding), costs, fees, expenses, indemnities or otherwise and whether now or hereafter existing (all of such obligations being the "Secured Obligations").
SECTION II.3. Delivery and Transfer of Pledged Property. All certificates or instruments representing or evidencing any Collateral, including all Pledged Interests, shall be delivered to and held by or on behalf of the Administrative Agent pursuant hereto, shall be in suitable form for delivery, and shall be accompanied by all necessary undated instruments of transfer or assignment, duly executed in blank or, if any securities pledged pursuant to this Agreement are uncertificated securities, confirmation and evidence satisfactory to the Administrative Agent that the security interests in such uncertificated securities have been transferred to and perfected by the Administrative Agent for the benefit of the Lenders in accordance with the UCC.
SECTION II.4. Dividends on Pledged Interests. In the event that any Dividend is to be paid to any Pledgor on any Pledged Interests, such Dividend may be paid directly to such Pledgor. If any Default of the nature set forth in Section 8.1.9 of the Credit Agreement or Event of Default has occurred and is continuing, then any such Dividend shall be paid directly to the Administrative Agent other than as permitted by clause (a)(i)(A) of Section 7.2.6 of the Credit Agreement.
SECTION II.5. Continuing Security Interest; Transfer of Note. This Pledge Agreement shall create a continuing security interest in the Collateral and shall
(a) remain in full force and effect until payment in full in
cash of all Secured Obligations and the expiration or termination of
(b) be binding upon each Pledgor and its successors,
transferees and assigns, provided that none of the Pledgors shall
assign any of its rights or obligations under this Agreement without
the consent of all the Lenders, and
(c) inure, together with the rights and remedies of the
Administrative Agent hereunder, to the benefit of the Administrative
Agent and each other Lender Party.
Without limiting the foregoing clause (c), any Lender may, to the extent permitted under the Credit Agreement, assign or otherwise transfer (in whole or in part) any Note or Credit Extension held by it, to any other Person or entity, and such other Person or entity shall thereupon become vested with all the rights and benefits in respect thereof granted to such Lender under any Loan Document (including this Pledge Agreement) or otherwise, subject, however, to any contrary provisions in such assignment or transfer, and to the provisions of Section 11.11 and Article X of the Credit Agreement. Upon the payment in full in cash of all Secured Obligations and the expiration or termination of all Commitments, the security interest granted herein shall terminate and all rights to the Collateral shall revert to the Pledgors. Upon any such termination or release, the Administrative Agent will, at the Pledgors' joint and several expense, deliver to such Pledgor, without any representations, warranties or recourse of any kind whatsoever, (i) in the case of such termination, all certificates and instruments representing or evidencing all Pledged Interests, together with all other Collateral held by the Administrative Agent hereunder, and (ii) in the case of any such release, all Collateral held by the Administrative Agent for which the security interest granted hereunder is so released, and in each case, execute and deliver to such Pledgor such documents as such Pledgor shall reasonably request to evidence such termination or release.
SECTION II.6. Security Interest Absolute. All rights of the Administrative Agent and the security interests granted to the Administrative Agent hereunder, and all obligations of each Pledgor hereunder, shall, to the fullest extent permitted by applicable law, be absolute and unconditional, irrespective of
(a) any lack of validity or enforceability of the Credit
Agreement, any Note, any Rate Protection Agreement or any other Loan
(b) the failure of any Lender Party or any holder of any Note
(i) to assert any claim or demand or to enforce any
right or remedy against the Borrower, any Pledgor or any other
Obligor or any other Person under the provisions of the Credit
Agreement, any Note, any Rate Protection Agreement, any other
Loan Document or otherwise, or
(ii) to exercise any right or remedy against any
other guarantor of, or collateral securing, any Secured
Obligation of the Borrower, any Pledgor or any other Obligor,
(c) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Secured Obligations or any
other extension, compromise or renewal of any Obligation of the
Borrower, any Pledgor or any other Obligor,
(d) any reduction, limitation, impairment or termination of
any Secured Obligation of the Borrower, any Pledgor or any other
Obligor for any reason (other than the repayment in full of all Secured
Obligations), including any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to (and the Pledgor
hereby waives any right to or claim of) any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality, nongenuineness, irregularity, compromise,
unenforceability of, or any other event or occurrence affecting, any
Secured Obligation of the Borrower, any Pledgor or any other Obligor or
(e) any amendment to, rescission, waiver, or other
modification of, or any consent to departure from, any of the terms of
the Credit Agreement, any Note, any Rate Protection Agreement or any
other Loan Document,
(f) any addition, exchange, release, surrender or
non-perfection of any collateral (including the Collateral), or any
amendment to or waiver or release of or addition to or consent to
departure from any guaranty, for any of the Secured Obligations, or
(g) any other circumstances which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the
Borrower, any Pledgor, any other Obligor, any surety or any guarantor.
SECTION II.7. Postponement of Subrogation, etc. None of the Pledgors will exercise any rights which it may acquire by way of rights of subrogation under this Pledge Agreement or otherwise, until the prior payment, in full and in cash, of all Secured Obligations. Any amount paid to any Pledgor on account of any such subrogation rights prior to the payment in full of all Secured
Obligations shall be held in trust for the benefit of the Lender Parties and each holder of a Note and shall immediately be paid to the Administrative Agent and credited and applied against the Secured Obligations, whether matured or unmatured, in accordance with the terms of the Credit Agreement; provided, however, that if
(a) any Pledgor has made payment to the Lender Parties and
each holder of a Note of all or any part of the Secured Obligations,
(b) all Secured Obligations have been paid in full and all
Commitments have been permanently terminated,
each Lender Party and each holder of a Note agrees that, at such Pledgor's request, the Administrative Agent, on behalf of the Lender Parties and the holders of the Notes, will execute and deliver to such Pledgor appropriate documents (without recourse and without representation or warranty) necessary to evidence the transfer by subrogation to such Pledgor of an interest in the Secured Obligations resulting from such payment by such Pledgor. In furtherance of the foregoing, for so long as any Secured Obligations or Commitments remain outstanding, each Pledgor shall refrain from taking any action or commencing any proceeding against the Borrower or the other Guarantors (or their respective successors or assigns, whether in connection with a bankruptcy proceeding or otherwise) to recover any amounts in respect of proceeds of any Collateral received by any Lender Party or any holder of a Note.
SECTION II.8. Pledgor Remains Liable. Anything herein to the contrary notwithstanding
(a) each Pledgor will remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein,
and will perform all of its duties and obligations under such contracts
and agreements to the same extent as if this Pledge Agreement had not
(b) the exercise by the Administrative Agent of any of its
rights hereunder will not release any Pledgor from any of its duties or
obligations under any such contracts or agreements included in the
(c) neither the Administrative Agent nor any other Lender
Party will have any obligation or liability under any contracts or
agreements included in the Collateral by reason of this Pledge
Agreement, nor will the Administrative Agent or any other Lender Party
be obligated to perform any of the obligations or dutie