Document:

Exhibit 4.11

 

 

DAYTON SUPERIOR CORPORATION

 

TREVECCA HOLDINGS, INC.

 

(“PLEDGORS”)

 

AND

 

THE BANK OF NEW YORK, 

 

AS COLLATERAL AGENT AND TRUSTEE

 

 

SECOND AMENDED AND
RESTATED 

PLEDGE AGREEMENT

 

 

 

CONTENTS

 

	
  Clause

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   Definitions

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.1

  	
  Definition
  of Terms Used Herein Generally

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.2

  	
  Rules
  of Interpretation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Pledge

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Grant of Security Interest

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.2

  	
  Description of
  Pledged Collateral

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.3

  	
  Delivery
  of Certificates, Instruments, Etc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.4

  	
  Registration

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.5

  	
  Authorization
  to File Financing Statements

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Representations
  and Warranties of Pledgor

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Pledgor’s
  Legal Status

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.2

  	
  Pledgor’s
  Legal Name

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.3

  	
  Pledgor’s
  Locations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.4

  	
  Authority;
  Binding Obligation; No Conflict

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.5

  	
  Title
  to Collateral

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.6

  	
  Pledged
  Collateral

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.7

  	
  Percentage
  Ownership

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.8

  	
  All of Pledgor’s Interests

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.9

  	
  Due
  Authorization, Etc., of Stock; Not Margin Stock

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.10

  	
  Required
  Consents

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.11

  	
  Nature of Security Interest

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.12

  	
  Partnership
  Interests

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.13

  	
  Limited Liability
  Company Interests

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Covenants
  of Pledgor

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Pledgor’s Legal Status

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.2

  	
  Pledgor’s Name

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.3

  	
  Pledgor’s
  Organizational Number

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.4

  	
  Locations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.5

  	
  Title to
  Collateral

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.6

  	
  Taxes

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.7

  	
  Further
  Assurances

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Voting
  Rights and Certain Payments Prior to Event of Default

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Voting Rights and Ordinary
  Payments Prior to an Event of Default

  	
   

  
					

 

i

 

	
   

  	
  5.2

  	
  Extraordinary
  Payments and Distributions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.3

  	
  Voting Rights and Ordinary Payments
  After an Event of Default

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  All
  Payments in Trust

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Expenses

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  Remedies

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Disposition
  Upon Default and Related Provisions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.2

  	
  Collateral Agent
  Appointed Attorney-in-Fact

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.3

  	
  Collateral Agent’s
  Duties of Reasonable Care

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.4

  	
  Indemnification

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.5

  	
  Prior Recourse

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.6

  	
  Collateral
  Agent May Perform

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  Suretyship
  Waivers by Pledgor; Obligations Absolute

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  Marshalling

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  Proceeds of Dispositions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  Reinstatement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  Miscellaneous

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.1

  	
  Notices

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.2

  	
  GOVERNING
  LAW; CONSENT TO JURISDICTION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.3

  	
  WAIVER OF JURY TRIAL, ETC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.4

  	
  Counterparts; Effectiveness

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.5

  	
  Headings

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.6

  	
  No Strict Construction

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.7

  	
  Severability

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.8

  	
  Survival of Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.9

  	
  Binding Effect; Several Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.10

  	
  No Waiver; Cumulative Remedies

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.11

  	
  Limitation
  by Law

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.12

  	
  Termination of this
  Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.13

  	
  Intercreditor
  Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.14

  	
  Advice of
  Counsel

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.15

  	
  Collateral
  Agency

  	
   

  

 

ii

 

SECOND
AMENDED AND RESTATED PLEDGE AGREEMENT

 

This SECOND AMENDED AND
RESTATED PLEDGE AGREEMENT (this “Pledge Agreement”), dated as of
January 30, 2004, amends and restates that certain Amended and
Restated Security Agreement, originally dated June 16, 2000 and amended
and restated on June 9, 2003 (the “Existing Pledge Agreement”) and
is by and among DAYTON SUPERIOR CORPORATION, a Ohio corporation, and TREVECCA
HOLDINGS, INC., a Delaware corporation (each referred to herein individually as
a “Pledgor” and collectively as “Pledgors”), THE BANK OF NEW YORK
(the “Collateral Agent”), as successor to Deutsche Bank Trust Company
Americas as Collateral Agent under the Existing Security Agreement and THE BANK
OF NEW YORK (the “Trustee”), as trustee for the beneficial holders (the “Noteholders”)
under that certain Indenture, dated as of June 9, 2003, by and among
Borrower, the Obligors parties thereto as Guarantors and The Bank Of New York,
governing the rights and duties of Borrower under 10 3⁄4% Senior Second Secured
Notes due 2008 in the initial aggregate principal amount of $165,000,000 (the “Indenture”).

 

WHEREAS:

 

A.                                   The
Existing Pledge Agreement provides for an assignment, pledge and grant of a
security interest in certain collateral in favor of Deutsche Bank Trust Company
Americas, as collateral agent for the benefit of the Noteholders (as that term
is defined therein), the Trustee and for the benefit of the Lender Creditors,
the Other Creditors and Additional First Lien Creditors (as each term is
defined therein) and Deutsche Bank Trust Company Americas, as administrative
agent;

 

B.                                     In
connection with the repayment of that
certain Credit Agreement (the “DB Credit Agreement”), dated as of
June 16, 2000, among Company, the Guarantors, the lenders party thereto in
their capacities as lenders and Deutsche Bank Trust Company Americas as
administrative agent, the Company and Guarantors have entered into that
certain Credit Agreement, dated as of the date hereof (including all annexes,
exhibits and schedules thereto, and as from time to time amended, restated,
supplemented or otherwise modified, the “Credit Agreement”) by and among
Company, Guarantors General Electric Capital Corporation, in its capacity as
Agent for itself and Lenders from time to time party to the Credit Agreement
(the “Agent”);

 

C.                                     Deutsche
Bank Trust Company Americas, as collateral agent under the Existing Security
Agreement, has resigned pursuant to a payoff letter of even date herewith and
is being replaced as collateral agent hereunder by the Collateral Agent;

 

D.                                    There
are no Other Obligations (as defined in the Existing Security Agreement) or
Additional First Lien Debt Obligations (as defined in the Existing Security
Agreement) outstanding on the date hereof and the Grantors desire that First
Lien Obligations (as defined in the Existing Security Agreement) no longer be
secured hereby;

 

E.                                      The
Company, Guarantors, Agent, Trustee and Collateral Agent have entered into that
certain Intercreditor Agreement (the “Intercreditor Agreement”), dated
as of the date hereof, to establish the priority of their security interests in
Company’s and Guarantor’s assets; and

 

F.                                      The
Trustee and Collateral Agent are, subject to the terms of the Intercreditor
Agreement, required to amend and restate the Existing Pledge Agreement to
provide for the subordination of their security interests to that of the Agent
under that certain Security Agreement (the “Senior Security Agreement”),
dated the date hereof, among Borrower, the other parties named therein as
Grantors and the Agent.

 

 

NOW, THEREFORE, in consideration of the
premises and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

 

1.                                       Definitions 

 

1.1                                 Definition of Terms Used Herein
Generally 

 

All terms used herein and
defined in the NYUCC shall have the same definitions herein as specified
therein; provided, however, that if a term is defined in
Article 9 of the NYUCC differently than in another Article of the
NYUCC, the term has the meaning specified in Article 9 of the NYUCC.

 

1.2                                 Rules of Interpretation 

 

Unless otherwise defined
herein, terms defined in the Indenture are used herein as therein defined, or
if not therein defined, as defined in Exhibit A to this Agreement, and the
rules of construction specified in Section 1.04 of the Indenture shall be
applicable to this Pledge Agreement. 
References to “Sections,” “Exhibits” and “Schedules” shall be to Sections,
Exhibits and Schedules, respectively, of this Pledge Agreement unless otherwise
specifically provided.  Any of the terms
defined in this Pledge Agreement may, unless the context otherwise requires, be
used in the singular or the plural depending on the reference.  All references to statutes and related
regulations shall include (unless otherwise specifically provided
herein) any amendments of same and any successor statutes and regulations.

 

2.                                       Pledge

 

2.1                                 Grant of Security Interest 

 

To secure the payment or
performance, as the case may be, in full of the Secured Obligations, whether at
stated maturity, by acceleration or otherwise, each Pledgor hereby pledges to
Collateral Agent (for the benefit of Trustee and the Noteholders), and grants
to Collateral Agent a Security Interest in, all right, title and interest of
such Pledgor in, to and under the collateral described in Section 2.2
(collectively, the “Pledged Collateral”).

 

2.2                                 Description of Pledged Collateral 

 

(a)                                  The
Pledged Collateral is described as follows and on any separate schedules at any
time furnished by Pledgors to Collateral Agent (which schedules are hereby
deemed part of this Pledge Agreement):

 

(i)                                     all
right, title and interest of Pledgors as holders (whether now or in the
future) in (x) shares or other equity interests in any corporations,
limited liability companies or limited partnerships organized under the laws of
the United States (including, without limitation, those corporations and
limited liability companies described on Schedule 1 hereto), or any
warrants to purchase or depositary shares or other rights in respect of any
such interests, and (y) all shares of stock, certificates, instruments or
other documents evidencing or representing the same;

 

(ii)                                  all
right, title and interest of Pledgors as holders (whether now or in the
future) in (x) shares or other equity interests in any entity
directly owned by any Pledgor that is organized under the laws of a
jurisdiction outside the United States and 

 

4

 

described on Schedule 1
hereto which represent (x) 65% of the Voting Stock of such entity and (y) 100%
of the Non-Voting Stock of such entity, or any warrants to purchase or
depositary shares or other rights in respect of any such interests, and
(y) all shares of stock, certificates, instruments or other documents
evidencing or representing the same;

 

(iii)                               all
right, title and interest of each of the Pledgors in and to all present and
future payments, proceeds, dividends, distributions, instruments, compensation,
property, assets, interests and rights in connection with or related to the
collateral listed in clauses (i) and (ii) above, and all monies due
or to become due and payable to each of the Pledgors in connection with or
related to such collateral or otherwise paid, issued or distributed from time
to time in respect of or in exchange therefor, and any certificate, instrument
or other document evidencing or representing the same (including, without
limitation, all proceeds of dissolution or liquidation); and

 

(iv)                              all
proceeds of all of the foregoing, of every kind, and all proceeds of such
proceeds.

 

(b)                                 The
shares of stock, certificates, instruments or other documents evidencing or
representing the foregoing shall be collectively referred to herein as the “Pledged
Securities”.  Notwithstanding
anything herein to the contrary, in no event shall the security interest
granted hereunder attach to, and neither “Pledged Securities” nor “Pledged
Collateral” shall include (i) any of the outstanding capital stock of a
“controlled foreign corporation” (as defined in the Internal Revenue Code) in
excess of 65% of the voting power of all classes of capital stock of such
controlled foreign corporation entitled to vote or (ii) the Excluded
Collateral.

 

2.3                                 Delivery of Certificates, Instruments, Etc. 

 

(a)                                  Subject
to the terms of the Intercreditor Agreement, each Pledgor shall deliver to
Collateral Agent:

 

(i)                                     following
the Discharge of Senior Lender Claims, all original shares of stock,
certificates, instruments and other documents evidencing or representing the
Pledged Collateral owned by such Pledgor as of the date hereof concurrently
with the execution and delivery of this Pledge Agreement (and prior to a
Discharge of Senior Lender Claims all such property shall be delivered to the
Agent in accordance with the Intercreditor Agreement);

 

(ii)                                  following
the Discharge of Senior Lender Claims, the original shares of stock,
certificates, instruments or other documents evidencing or representing all
Pledged Collateral (other than Pledged Collateral that this Pledge Agreement
specifically permits Pledgors to retain) within ten (10) days after
such Pledgor’s receipt thereof (and prior to a Discharge of Senior Lender
Claims all such property shall be delivered to the Agent in accordance with the
Intercreditor Agreement);

 

(iii)                               for
each uncertificated security existing on the date hereof and included in the
Pledged Collateral, an agreement in form and substance reasonably satisfactory
to Collateral Agent (a “Control Letter”) of the issuer thereof in which
the issuer 

 

5

 

agrees, among other
things, that, following the Discharge of Senior Lender Claims, it will comply
with instructions originated by Collateral Agent with respect to the
uncertificated securities (unless a Control Letter is not required to perfect a
security interest or ensure priority of a security interest in such
uncertificated security in the jurisdiction governing perfection thereof); and

 

(iv)                              for
each uncertificated security created after the date hereof and included in the
Pledged Collateral, within 10 days following the issuance thereof, a Control
Letter (unless a Control Letter is not required to perfect a security interest
or ensure priority of a security interest in such uncertificated security in
the jurisdiction governing perfection thereof).

 

(b)                                 All
Pledged Securities that are certificated securities shall be in bearer form or,
if in registered form, following the Discharge of Senior Lender Claims, shall
be issued in the name of Collateral Agent or endorsed to Collateral Agent or in
blank.

 

2.4                                 Registration 

 

At any time and from time
to time following the Discharge of Senior Lender Claims, Collateral Agent may (with written notice to the Pledgors of such
Pledged Securities promptly following such transfer or registration) cause
all or any of the Pledged Securities to be transferred to or registered in its
name or the name of its nominee or nominees.

 

2.5                                 Authorization to File Financing
Statements 

 

Each Pledgor hereby irrevocably
authorizes Collateral Agent at any time and from time to time to file in any
jurisdiction in which the UCC has been adopted any initial financing statements
and amendments thereto that (a) describe the Pledged Collateral, and
(b) contain any other information required by part 5 of
Article 9 of the UCC for the sufficiency or filing office acceptance of
any initial financing statement or amendment, including (i) whether such
Pledgor is an organization, the type of organization and any organizational
identification number issued to such Pledgor. 
Each Pledgor agrees to furnish any such information to Collateral Agent
promptly upon reasonable request.  Each
Pledgor also ratifies its authorization for Collateral Agent to have filed in
any UCC jurisdiction any like initial financing statements or amendments
thereto if filed prior to the date hereof.

 

3.                                       Representations
and Warranties of Pledgor 

 

Each Pledgor hereby
represents and warrants to Trustee that:

 

3.1                                 Pledgor’s Legal Status 

 

(a) Such Pledgor is an
organization, as set forth in Schedule 1 hereto; (b) such organization is
of the type, and is organized in the jurisdiction, set forth in Schedule 1
hereto; and (c) Schedule 1 hereto sets forth such Pledgor’s organizational
identification number (if any).

 

3.2                                 Pledgor’s Legal Name 

 

Such Pledgor’s name as
set forth in its organizational documents is that set forth in Schedule 1
hereto and on the signature page hereof.

 

6

 

3.3                                 Pledgor’s Locations 

 

Schedule 1 hereto
sets forth such Pledgor’s place of business.

 

3.4                                 Authority; Binding Obligation; No
Conflict 

 

Such Pledgor has full
power and authority to execute, deliver and perform its obligations in
accordance with the terms of this Pledge Agreement and to grant to Collateral
Agent the Security Interests in the Pledged Collateral pursuant hereto, without
the consent or approval of any other person or entity other than any consent or
approval which has been obtained and is in full force and effect. The granting
to Collateral Agent of the Security Interest in the Pledged Collateral
hereunder, the execution by Pledgor of this Pledge Agreement and the
performance by such Pledgor of its obligations hereunder do not and will not
result in the existence or imposition of any Lien nor obligate such Pledgor to
create any Lien other than such Security Interests and the First Priority Lien
in favor of any person or entity over all or any of its assets.

 

3.5                                 Title to Collateral 

 

The Pledged Collateral is
owned by such Pledgor free and clear of any Lien, except for Permitted
Liens.  Such Pledgor has not filed or
consented to the filing of (a) any financing statement or analogous
document under the UCC or any other applicable laws covering any Pledged
Collateral or (b) any assignment in which such Pledgor assigns any Pledged
Collateral or any security agreement or similar instrument covering any Pledged
Collateral with any foreign governmental, municipal or other office, which
financing statement or analogous document, assignment, security agreement or
similar instrument is still in effect, except, in each case, for Permitted
Liens.

 

3.6                                 Pledged Collateral 

 

Set forth on
Schedule 1 hereto is a complete and accurate list and description of all
the Pledged Collateral of such Pledgor as of the date hereof.

 

3.7                                 Percentage Ownership 

 

The Pledged Securities of
each issuer specifically identified on Schedule 1 hereto constitute, and
until this Pledge Agreement terminates shall, except as permitted by the
Indenture, continue to constitute, the percentage of the outstanding equity of
each such issuer as indicated on Schedule 1 hereto.

 

3.8                                 All of Pledgor’s Interests 

 

As of the date hereof,
the Pledged Collateral set forth on Schedule 1 hereto constitutes all of
the equity interests of such Pledgor in any corporations (including, without
limitation, each of the corporate entities constituting a Subsidiary of such
Pledgor), limited liability companies, partnerships and other entities.

 

3.9                                 Due Authorization, Etc., of Stock; Not Margin Stock 

 

The Pledged Securities
listed on Schedule 1 hereto have been duly authorized and validly issued
and are fully paid and non-assessable and are not subject to any options to
purchase or similar rights of any person, and none of the Pledged Securities constitutes
Margin Stock, as such term is defined in
Regulation U of the Board of Governors of the Federal Reserve System.

 

7

 

3.10                           Required Consents 

 

Except as may be required
in connection with any disposition of any portion of the Pledged Securities by
laws affecting the offering and sale of securities generally and except as
permitted by and in accordance with the Indenture (which consents have been
obtained), no consent of any person (including, without limitation, partners,
members, shareholders or creditors of Pledgor or of any subsidiary of Pledgors
or of any issuer of Pledged Securities) and no license, permit, approval or
authorization of, exemption by, notice or report to, or registration, filing or
declaration with, any governmental instrumentality is required in connection
with (i) the execution, delivery, performance, validity or enforceability
of this Pledge Agreement by such Pledgor, (ii) the perfection or
maintenance of the Security Interest created hereby (including the first
priority nature of such Security Interest), or (iii) the exercise by
Collateral Agent of the rights provided for in this Pledge Agreement.

 

3.11                           Nature of Security Interest  

 

Upon the delivery of the
Pledged Securities or, in the case of uncertificated securities included as
Pledged Securities, a Control Letter signed by the issuer thereof, to
Collateral Agent, the pledge of the Pledged Collateral pursuant to this Pledge
Agreement will create a valid and perfected Security Interest in the Pledged
Collateral, securing the prompt and complete payment, performance and
observance of the Secured Obligations.

 

3.12                           Partnership Interests 

 

With respect to the
grants of security interests in general partner interests in limited partnerships
contained herein (if any), and limited partner interests in limited
partnerships contained herein (if any), each such partnership interest is a
security under Article 8 of the UCC as in effect in the jurisdiction of
organization of such limited partnership and neither such grant nor the
exercise by Collateral Agent of any right or remedy contained herein violates
any provision of the limited partnership agreement of such limited partnership
and each general partner and limited partner party thereto consents to such
grants and to the exercise, during the continuation of an Event of Default, of
all rights and remedies granted to Collateral Agent herein and the exercise by
Collateral Agent or any nominee thereof of all powers of the general partner granting
such general partnership interest, and of the limited partner granting such
limited partnership interest, and to the admission of Collateral Agent or its
nominee or transferee (at the election of Collateral Agent or such nominee or
transferee) upon foreclosure of any such general partner interest or limited
partner interest of such partnership. 
Pledgors shall not amend or permit to be amended the limited partnership
agreement of any issuer of Pledged Collateral that is a limited partnership
other than as permitted by the Indenture, and Pledgors shall not permit any
such limited partnership agreement to terminate and Pledgors shall perform,
observe and enforce all terms and provisions of each such limited partnership
agreement.

 

3.13                           Limited Liability Company Interests 

 

With respect to the
grants of security interests in any membership interest in any limited
liability company contained herein (if any), each such membership interest is a
security under Article 8 of the UCC as in effect in the jurisdiction of
organization of such limited liability company and neither such grant nor the
exercise by Collateral Agent of any right or remedy contained herein violates
any provision of the limited liability company or operating agreement of such
limited liability company and Pledgors or any sole member thereof consents to
such grants and to the exercise, during the continuation of an Event of
Default, of all rights and remedies granted to

 

8

 

Collateral Agent herein
and the exercise by Collateral Agent or any nominee thereof of all powers of
the sole member granting such security interest, and to the admission of
Collateral Agent or its nominee or transferee (at the election of Collateral
Agent or such nominee or transferee) as a member of such limited liability
company upon foreclosure of any such interest. 
No Pledgor shall amend or permit to be amended the limited liability
company or operating agreement of any issuer of Pledged Collateral that is a
limited liability company other than as permitted by the Indenture, and no
Pledgor shall permit any such limited liability or company agreement to
terminate and Pledgors shall, and shall cause its Subsidiaries to, perform,
observe and enforce all terms and provisions of each such limited liability or
company agreement.

 

4.                                       Covenants of Pledgor 

 

4.1                                 Pledgor’s Legal Status 

 

Without the prior written
consent of the Collateral Agent, except as permitted by the Indenture, no
Pledgor shall change its type of organization, jurisdiction of organization or
other legal structure. No Pledgor shall enter into, or consent to the entering
into of, any amendment of any limited partnership agreement or limited
liability operating agreement of any issuer of any Pledged Securities that
could reasonably be expected to have an adverse effect on the Security Interest
therein or the rights and remedies of Collateral Agent hereunder.  Each Pledgor, as a limited partner, general
partner, member, manager or managing member of any issuer of Pledged Securities
hereby consents to the execution and delivery of this Pledge Agreement, the
performance by the applicable Pledgor of its obligations hereunder and the
exercise by Collateral Agent of its rights and remedies hereunder.  Except for the Liens granted hereunder to
Collateral Agent and the First Priority Lien, no Pledgor shall suffer or permit
any issuer of Pledged Securities to enter into a Control Letter in favor of any
Person.

 

4.2                                 Pledgor’s Name 

 

Without providing at
least thirty (30) days’ prior written notice to Collateral Agent, Pledgor shall
not change its name.

 

4.3                                 Pledgor’s Organizational Number 

 

Without providing at
least thirty (30) days’ prior written notice to Collateral Agent, no Pledgor
shall change its organizational identification number, if it has one.  If any Pledgor does not have an
organizational identification number and later obtains one, such Pledgor shall
promptly notify Collateral Agent of such organizational identification number.

 

4.4                                 Locations 

 

Without providing at
least thirty (30) days’ prior written notice to Collateral Agent, no Pledgor
shall change its principal residence, its place of business or (if it has more
than one place of business) its chief executive office or its mailing
address.

 

4.5                                 Title to Collateral 

 

(a) Except for the
Security Interests herein granted and Permitted Liens, each Pledgor shall be
the owner of the Pledged Collateral pledged by it free from any Lien, and such
Pledgor, at its sole cost and expense, shall defend the same against all claims
and demands of all persons at any time claiming the same or any interests
therein adverse to Collateral Agent; and (b) no Pledgor shall 

 

9

 

sell or otherwise dispose
of, or pledge, mortgage or create, or suffer to exist a Lien on, the Pledged
Collateral in favor of any person other than Collateral Agent except for
Permitted Liens and the inclusion of “proceeds” of the Pledged Collateral under
the Security Interest granted herein shall not be deemed a consent by
Collateral Agent to any sale or other disposition of any Pledged Collateral.

 

4.6                                 Taxes 

 

Each Pledgor shall pay
promptly when due all taxes, assessments, governmental charges and levies upon
the Pledged Collateral or incurred in connection with the Pledged Collateral or
incurred in connection with this Pledge Agreement, provided that Pledgor may contest any such taxes in good faith so long as
it maintains adequate reserves therefor.

 

4.7                                 Percentage Ownership 

 

In the event the
percentage of the outstanding equity of any issuer owned by a Pledgor shall no
longer be that percentage specified on Schedule 1, such Pledgor shall
promptly deliver to Collateral Agent and Trustee a supplemental Schedule 1
setting forth the information required pursuant thereto.

 

4.8                                 Further Assurances 

 

Subject to the provisions
of the Intercreditor Agreement, each Pledgor will, from time to time, at its expense, promptly execute and
deliver all further instruments and documents and take all further action that
may be necessary, or that Collateral Agent may reasonably request, in order to
perfect and protect any Security Interest granted or purported to be granted
hereby or to enable Collateral Agent to exercise and enforce its rights and
remedies hereunder with respect to any Pledged Collateral.

 

5.                                       Voting Rights and Certain Payments Prior to Event of Default 

 

5.1                                 Voting Rights and Ordinary Payments Prior to
an Event of Default 

 

So long as no Event of
Default shall have occurred and be continuing, each Pledgor shall be entitled:

 

(a)                                  to
exercise, as it shall think fit, but in a manner consistent with the terms
hereof, the voting and consent power and other incidental rights of ownership
with respect to the Pledged Collateral of such Pledgor, and for that purpose
Collateral Agent shall (if any Pledged Securities shall be registered in the
name of Collateral Agent or its nominee) execute or cause to be executed from
time to time, at the expense of such Pledgor, such proxies or other instruments
in favor of such Pledgor or its nominee, in such form and for such purposes as
shall be reasonably required by such Pledgor and shall be specified in a
written request therefor, to enable it to exercise such voting power with
respect to the Pledged Securities; and

 

(b)                                 except
as otherwise provided in Sections 5.2 and 5.3 hereof, to receive and
retain for its own account any and all payments, proceeds, dividends,
distributions, monies, compensation, property, assets, instruments or rights to
the extent such are permitted pursuant to the terms of the Indenture, other
than (i) stock or liquidating dividends or (ii) extraordinary
dividends and dividends or other amounts payable under or in

 

10

 

connection with any
recapitalization, restructuring, or other non-ordinary course event (the
dividends and amounts in this clause (ii) being “Extraordinary
Payments”), paid, issued or distributed from time to time in respect of the
Pledged Collateral pledged by such Pledgor.

 

5.2                                 Extraordinary Payments and Distributions 

 

(a)                                  Following
the Discharge of Senior Lender Claims, in case, upon the dissolution or
liquidation (in whole or in part) of any issuer of any Pledged Collateral
pledged by any Pledgor, any sum shall be paid or payable as a liquidating dividend
or otherwise upon or with respect to any of the Pledged Securities pledged by
Pledgor or, in the event any other Extraordinary Payment is paid or payable,
then and in any such event, except as permitted by the Indenture, such sum
shall be paid by Pledgor over to Collateral Agent promptly, and in any event
within ten (10) days after receipt thereof, to be held by Collateral Agent
as additional collateral hereunder.

 

(b)                                 Following
the Discharge of Senior Lender Claims, in case any dividend or distribution
payable in Stock shall be declared with respect to any of the Pledged
Collateral pledged by any Pledgor, or any shares of Stock or fractions thereof
shall be issued pursuant to any stock split involving any of the Pledged
Collateral pledged by such Pledgor, or any distribution of capital shall be
made on any of the Pledged Collateral pledged by such Pledgor, or any shares,
obligations or other property shall be distributed upon or with respect to the
Pledged Collateral pledged by such Pledgor, in each case pursuant to a
recapitalization or reclassification of the capital of the issuer thereof, or
pursuant to the dissolution, liquidation (in whole or in part), bankruptcy or
reorganization of such issuer, or to the merger or consolidation of such issuer
with or into another corporation, then except as permitted by the Indenture,
the shares, partnership interests, membership interests, obligations or other
property so distributed shall be delivered by such Pledgor to Collateral Agent
promptly, and in any event within ten (10) days after receipt thereof, to
be held by Collateral Agent as additional collateral hereunder subject to the
terms of this Pledge Agreement, and all of the same shall constitute Pledged
Collateral for all purposes hereof.

 

5.3                                 Voting Rights and Ordinary Payments After an Event of
Default 

 

Upon the occurrence and
during the continuance of any Event of Default, all rights of each Pledgor to
exercise or refrain from exercising the voting and consent rights and other
incidental rights of ownership that it would otherwise be entitled to exercise
pursuant to Section 5.1(a) hereof and to receive the payments,
proceeds, dividends, distributions, monies, compensation, property, assets,
instruments or rights that such Pledgor would otherwise be authorized to
receive and retain pursuant to Section 5.1(b) hereof shall
cease, and thereupon Collateral Agent, subject to the terms of the
Intercreditor Agreement, shall be entitled to exercise all voting power and
consent and other incidental rights of ownership with respect to the Pledged
Securities and to receive and retain, as additional collateral hereunder, any
and all payments, proceeds, dividends, distributions, monies, compensation,
property, assets, instruments or rights at any time declared or paid upon any
of the Pledged Collateral during such an Event of Default and otherwise to act
with respect to the Pledged Collateral as outright owner thereof.

 

11

 

6.                                       All Payments in Trust 

 

All payments, proceeds,
dividends, distributions, monies, compensation, property, assets, instruments
or rights that are received by any Pledgor contrary to the provisions of Section 5
hereof shall be, subject to the terms of the Intercreditor Agreement, received
and held in trust for the benefit of Collateral Agent, shall be segregated by
such Pledgor from other funds of such Pledgor and shall be forthwith paid over
to Collateral Agent as Pledged Collateral in the same form as so received (with
any necessary endorsement).

 

7.                                       Expenses 

 

Each Pledgor shall,
jointly and severally, pay all reasonable expenses incurred by Collateral Agent
in connection with the negotiation, execution, delivery, amendment, waiver,
renegotiation, enforcement or collection of this Pledge Agreement or the
exercise of remedies hereunder, including, without limitation, reasonable
attorney’s fees, advertising costs, fees and expenses of advisors and
investment bankers and other experts. 
If any Pledgor fails promptly to pay any portion of the above expenses when
due or to perform any other obligation of such Pledgor under this Pledge
Agreement, Collateral Agent may, subject to the terms of the Intercreditor
Agreement, pay or perform the same and charge such Pledgor for all costs and
expenses incurred therefor, and such Pledgor agrees to reimburse Collateral
Agent therefor on demand.  All sums so
paid or incurred by Collateral Agent or Trustee for any of the foregoing, any
and all other sums for which any Pledgor may become liable hereunder and all
such costs and expenses incurred by Collateral Agent in enforcing or protecting
the security interests created under this Pledge Agreement (the “Security
Interests”) or any of its rights or remedies under this Pledge
Agreement shall be payable by such Pledgor on demand, shall constitute Secured
Obligations and shall bear interest at the same rate of interest applicable to
the Notes at such time.

 

8.                                       Remedies 

 

8.1                                 Disposition Upon Default and Related
Provisions 

 

(a)                                  Upon
the occurrence and during the continuance of any Event of Default, Collateral
Agent or its nominee may, subject to the terms of the Intercreditor Agreement,
exercise in respect of the Pledged Collateral, in addition to other rights and
remedies provided for herein or otherwise available to it, all rights of
voting, consent, exercise, conversion and other incidental rights of ownership
with respect to the Pledged Collateral, including, without limitation, all
rights and powers of any Pledgor as limited or general partner of any
partnership and as sole member or managing member of any limited liability
company, in each case, that is an issuer of Pledged Securities pledged by such
Pledgor, and all of the rights and remedies of a secured party on default under
the NYUCC at that time (whether or not applicable to the affected Pledged
Collateral) and may also, without obligation to resort to other security,
at any time and from time to time sell, resell, assign and deliver, in its sole
discretion, all or any of the Pledged Collateral, in one or more parcels at the
same or different times, and all right, title and interest, claim and demand
therein and right of redemption thereof, on any securities exchange on which
any Pledged Collateral may be listed, or at public or private sale, for cash,
upon credit or for future delivery, and in connection therewith Collateral
Agent may grant options.

 

(b)                                 If
any of the Pledged Collateral is sold by Collateral Agent upon credit or for
future delivery, Collateral Agent shall not be liable for the failure of the
purchaser to purchase or pay for the same and, in the event of any such
failure, Collateral Agent may resell such Pledged Collateral.  In no event shall any Pledgor be credited
with any part of the 

 

12

 

proceeds of sale of any
Pledged Collateral until cash payment therefor has actually been received by
Collateral Agent.

 

(c)                                  Collateral
Agent may purchase any Pledged Collateral at any public sale and, if any
Pledged Collateral is of a type customarily sold in a recognized market or is
of the type that is the subject of widely distributed standard price
quotations, Collateral Agent may purchase such Pledged Collateral at private
sale, and in each case may make payment therefor by any means, including,
without limitation, by release or discharge of Secured Obligations in lieu of
cash payment.

 

(d)                                 Each
Pledgor recognizes that Collateral Agent may be unable to effect a public sale
of all or part of the Pledged Collateral consisting of securities by reason of
certain prohibitions contained in the Securities Act of 1933, as amended (the “Securities
Act”), 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 securities for their own account, for investment
and not with a view to the distribution or resale thereof.  Each Pledgor agrees that any such Pledged
Collateral sold at any such private sale may be sold at a price and upon other
terms less favorable to the seller than if sold at public sale.  Each Pledgor agrees that any such private
sale shall be a commercially reasonable manner in which to dispose of all or
any part of the Pledged Collateral. 
Collateral Agent shall have no obligation to delay the sale of any such
securities for the period of time necessary to permit the issuer of such
securities, even if such issuer would agree, to register such securities for
public sale under the Securities Act.

 

(e)                                  No
demand, advertisement or notice, all of which are hereby expressly waived,
shall be required in connection with any sale or other disposition of any part
of the Pledged Collateral that threatens to decline speedily in value or that is
of a type customarily sold on a recognized market; otherwise Collateral Agent
shall give the applicable Pledgor at least ten (10) days’ prior notice of the
time and place of any public sale and of the time after which any private sale
or other disposition is to be made, which notice each Pledgor agrees is
commercially reasonable.

 

(f)                                    Collateral
Agent shall not be obligated to make any sale of Pledged Collateral if it shall
determine not to do so, regardless of the fact that notice of sale may have
been given.  Collateral Agent may,
without notice or publication, adjourn any public or private sale or cause the
same to be adjourned from time to time by announcement at the time and place
fixed for sale, and such sale may, without further notice, be made at the time
and place to which the same was so adjourned.

 

(g)                                 The
remedies provided herein in favor of Collateral Agent shall not be deemed
exclusive, but shall be cumulative, and shall be in addition to all other
remedies in favor of Collateral Agent existing at law or in equity, subject in
all respects to the terms of the Intercreditor Agreement.

 

(h)                                 To
the extent that applicable law imposes duties on Collateral Agent to exercise
remedies in a commercially reasonable manner, each Pledgor acknowledges and agrees
that it is commercially reasonable for Collateral Agent (i) to advertise
dispositions of Pledged Collateral through publications or media of general
circulation; (ii) to contact other persons, whether or not in the same
business as such Pledgor, for expressions of interest in acquiring all or any
portion of the Pledged Collateral; (iii) to hire one or more

 

13

 

professional auctioneers
to assist in the disposition of Pledged Collateral; (iv) to dispose of
Pledged Collateral by utilizing Internet sites that provide for the auction of
assets of the types included in the Pledged Collateral or that have the
reasonable capability of doing so, or that match buyers and sellers of assets;
(v) to disclaim disposition warranties, or (vi) to the extent deemed
appropriate by Collateral Agent, to obtain the services of brokers, investment
bankers, consultants and other professionals to assist Collateral Agent in the
disposition of any of the Pledged Collateral. 
Each Pledgor acknowledges that the purpose of this clause (h) is to
provide non-exhaustive indications of what actions or omissions by Collateral
Agent would be commercially reasonable in Collateral Agent’s exercise of
remedies against the Pledged Collateral and that other actions or omissions by
Collateral Agent shall not be deemed commercially unreasonable solely on
account of not being indicated in this clause (h).  Without limiting the foregoing, nothing
contained in this clause (h) shall be construed to grant any rights to any
Pledgor or to impose any duties on Collateral Agent that would not have been
granted or imposed by this Pledge Agreement or by applicable law in the absence
of this clause (h).

 

(i)                                     It
is expressly agreed by each Pledgor that, anything herein or in any other
Security Document to the contrary notwithstanding, each Pledgor shall remain
liable under each of its respective Contractual Obligations, including the
partnership agreement or operating agreement of any issuer of Pledged Securities,
to observe and perform all the conditions and obligations to be observed and
performed by it thereunder.  Neither
Collateral Agent nor any nominee thereof shall have any obligation or liability
under any Contractual Obligation by reason of or arising out of this Pledge
Agreement, the Indenture or any other Security Document or the granting herein
of a Lien thereon or the receipt by Collateral Agent or any nominee thereof of
any payment relating to any Contractual Obligation pursuant hereto, nor any
exercise by Collateral Agent or any nominee thereof of any rights of any
Pledgor.  Neither Collateral Agent nor
any nominee thereof shall be required or obligated in any manner to perform or
fulfill any of the obligations of any Pledgor under or pursuant to any Contractual
Obligation, or to make any payment, or to make any inquiry as to the nature or
the sufficiency of any payment received by it or the sufficiency of any
performance by any party under any Contractual Obligation, or to present or
file any claims, or to take any action to collect or enforce any performance or
the payment of any amounts which may have been assigned to it or to which it
may be entitled at any time or times.

 

8.2                                 Collateral Agent Appointed Attorney-in-Fact

 

(a)                                  To
effectuate the terms and provisions hereof, each Pledgor hereby appoints
Collateral Agent as such Pledgor’s attorney-in-fact for the purpose, from and
after the occurrence and during the continuance of an Event of Default, of
carrying out the provisions of this Pledge Agreement and taking any action and
executing any instrument that Collateral Agent from time to time in Collateral
Agent’s reasonable discretion may deem necessary or advisable to accomplish the
purposes of this Pledge Agreement. 
Without limiting the generality of the foregoing, Collateral Agent
shall, from and after the occurrence and during the continuance of an Event of
Default, have the right and power to, subject to the terms of the Intercreditor
Agreement:

 

(i)                                     receive,
endorse and collect all checks and other orders for the payment of money made
payable to such Pledgor representing any interest or dividend or other
distribution or amount payable in respect of the Pledged Collateral or any part
thereof and to give full discharge for the same;

 

14

 

(ii)                                  execute
endorsements, assignments or other instruments of conveyance or transfer with
respect to all or any of the Pledged Collateral;

 

(iii)                               exercise
all rights of such Pledgor as owner of the Pledged Collateral including,
without limitation, the right to sign any and all amendments, instruments,
certificates, proxies, and other writings necessary or advisable to exercise
all rights and privileges of (or on behalf of) the owner of the Pledged
Collateral, including, without limitation, all voting, consent and other
incidental rights of ownership rights with respect to the Pledged Securities;

 

(iv)                              ask,
demand, collect, sue for, recover, compound, receive and give acquittance and
receipts for moneys due and to become due under or in respect of any of the
Pledged Collateral;

 

(v)                                 file
any claims or take any action or institute any proceedings that Collateral
Agent may deem necessary or desirable for the collection of any of the Pledged
Collateral or otherwise to enforce the rights of Collateral Agent with respect
to any of the Pledged Collateral; and

 

(vi)                              generally
to sell, transfer, pledge, make any agreement with respect to or otherwise deal
with any of the Pledged Collateral as fully and completely as though Collateral
Agent were the absolute owner thereof for all purposes, and to do, at
Collateral Agent’s option and such Pledgor’s expense, at any time or from time
to time, all acts and things that Collateral Agent deems reasonably necessary
to protect, preserve or realize upon the Pledged Collateral.

 

(b)                                 Each
Pledgor hereby ratifies and approves all acts of Collateral Agent made or taken
pursuant to this Section 8.2 (provided, that no Pledgor by virtue
of such ratification, releases any claim that Pledgor may otherwise have
against Collateral Agent for any such acts made or taken by Collateral Agent
through gross negligence or willful misconduct).  Neither Collateral Agent nor any person designated by Collateral
Agent shall be liable for any acts or omissions or for any error of judgment or
mistake of fact or law, except such as may result from Collateral Agent’s gross
negligence or willful misconduct.  This
power, being coupled with an interest, is irrevocable so long as this Pledge
Agreement shall remain in force.

 

8.3                                 Collateral Agent’s Duties of Reasonable
Care 

 

(a)                                  Collateral
Agent shall have the duty to exercise reasonable care in the custody and
preservation of any Pledged Collateral in its possession, which duty shall be
fully satisfied if such Pledged Collateral is accorded treatment substantially
equal to that which Collateral Agent accords its own property and, with respect
to any calls, conversions, exchanges, redemptions, offers, tenders or similar
matters relating to any such Pledged Collateral (herein called “events”),

 

(i)                                     Collateral
Agent exercises reasonable care to ascertain the occurrence and to give
reasonable notice to Pledgors of any events applicable to any Pledged
Securities that are registered and held in the name of Collateral Agent or its
nominee,

 

(ii)                                  Collateral
Agent gives the applicable Pledgor reasonable notice of the occurrence of any
events of which Collateral Agent has received actual knowledge, which 

 

15

 

events are applicable to
any securities that are in bearer form or are not registered and held in the
name of Collateral Agent or its nominee (each Pledgor agreeing to give
Collateral Agent reasonable notice of the occurrence of any events of which
such Pledgor has knowledge, which events are applicable to any securities in
the possession of Collateral Agent), and

 

(iii)                               Collateral
Agent endeavors to take such action with respect to any of the events as any
Pledgor may reasonably and specifically request in writing in sufficient time for
such action to be evaluated and taken or, if Collateral Agent reasonably
believes that the action requested would adversely affect the value of the
Pledged Collateral as collateral or the collection of the Secured Obligations,
or would otherwise prejudice the interests of Collateral Agent, Collateral
Agent gives reasonable notice to Pledgor that any such requested action will
not be taken and, if Collateral Agent makes such determination or if such
Pledgor fails to make such timely request, Collateral Agent takes such other
action as it deems advisable in the circumstances.

 

(iv)                              Except
as hereinabove specifically set forth, Collateral Agent shall have no further
obligation to ascertain the occurrence of, or to notify any Pledgor with
respect to, any events and shall not be deemed to assume any such further
obligation as a result of the establishment by Collateral Agent of any internal
procedures with respect to any securities in its possession, nor shall
Collateral Agent be deemed to assume any other responsibility for, or
obligation or duty with respect to, any Pledged Collateral or its use of any
nature or kind, or any matter or proceedings arising out of or relating
thereto, including, without limitation, any obligation or duty to take any
action to collect, preserve or protect its or Pledgor’s rights in the Pledged
Collateral or against any prior parties thereto, but the same shall be at each
Pledgor’s sole risk and responsibility at all times.

 

(v)                                 Upon
the occurrence and during the continuance of an Event of Default, each Pledgor
waives any restriction or obligation imposed on Collateral Agent under
Sections 9-207(c)(1) and 9-207(c)(2) of the NYUCC.

 

8.4                                 Indemnification 

 

Each Pledgor hereby
indemnifies and holds harmless Collateral Agent, Trustee, each Noteholder and
their respective officers, shareholders, directors, employees and agents (each,
an “Indemnified Party”) from any claims, causes of action and
demands at any time arising out of or with respect to this Pledge Agreement,
the Secured Obligations, the Pledged Collateral and its use and/or any actions
taken or omitted to be taken by such Indemnified Party with respect thereto
(except such claims, causes of action and demands arising from the bad faith,
gross negligence or willful misconduct of such Indemnified Party) and each
Pledgor hereby agrees, jointly and severally, to hold each Indemnified Party
harmless from and with respect to any and all such claims, causes of action and
demands (except such claims, causes of action and demands arising from the
gross negligence or willful misconduct of such Indemnified Party).

 

8.5                                 Prior Recourse 

 

Collateral Agent’s prior
recourse to any Pledged Collateral shall not constitute a condition of any
demand, suit or proceeding for payment or collection of the Secured
Obligations.

 

16

 

8.6                                 Collateral Agent May Perform 

 

If any Pledgor fails to
perform any agreement contained herein, subject to the terms of the
Intercreditor Agreement, Collateral Agent may perform or cause performance of
such agreement, and the expenses of Collateral Agent incurred in connection
therewith shall be treated as provided in Section 7 hereof.  Collateral Agent shall use reasonable efforts to notify Pledgor of any such performance
by Collateral Agent, provided that
failure to do so shall not affect Collateral Agent’s rights hereunder, including rights of
reimbursement relating to such performance.

 

9.                                       Suretyship Waivers
by Pledgor; Obligations Absolute 

 

(a)                                  Each
Pledgor waives demand, notice, protest, notice of acceptance of this Pledge
Agreement, notice of loans made, credit extended, collateral received or
delivered or other action taken in reliance hereon and all other demands and
notices of any description thereof, all in such manner and at such time or
times as Collateral Agent may deem advisable. 
Collateral Agent shall have no duty as to the collection or protection
of the Pledged Collateral or any income thereon, nor as to the preservation of
rights against prior parties, nor as to the preservation of any rights
pertaining thereto beyond the safe custody thereof as set forth in Section 8.3.

 

(b)                                 All
rights of Collateral Agent hereunder, the Security Interests and all
obligations of each Pledgor hereunder shall be absolute and unconditional
irrespective of (a) any lack of validity or enforceability of the
Indenture, any Security Document, any agreement with respect to any of the
Secured Obligations or any other agreement or instrument relating to any of the
foregoing, (b) 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
amendment or waiver of or any consent to any departure from the Indenture, any
Security Document, or any other agreement or instrument, (c) any exchange,
release or non-perfection of any Lien on other collateral, or any release or
amendment or waiver of or consent under or departure from or any acceptance of
partial payment thereon and or settlement, compromise or adjustment of any Secured
Obligation or of any guarantee, securing or guaranteeing all or any of the
Secured Obligations, or (d) any other circumstance that might otherwise
constitute a defense available to, or a discharge of, such Pledgor in respect
of the Secured Obligations or this Pledge Agreement other than the defense of payment.

 

10.                                 Marshalling 

 

Collateral Agent shall
not be required to marshal any present or future collateral security (including
but not limited to this Pledge Agreement and the Pledged Collateral) for,
or other assurances of payment of, the Secured Obligations or any of them or to
resort to such collateral security or other assurances of payment in any
particular order, and all of its rights hereunder and in respect of such
collateral security and other assurances of payment shall be cumulative and in
addition to all other rights, however existing or arising.  To the extent that it lawfully may, each
Pledgor hereby agrees that it shall not invoke any law relating to the
marshalling of collateral which might cause delay in or impede the enforcement
of Collateral Agent’s rights under this Pledge Agreement or under any other
instrument creating or evidencing any of the Secured Obligations or under which
any of the Secured Obligations is outstanding or by which any of the Secured
Obligations is secured or payment thereof is otherwise assured, and, to the
extent that it lawfully may, each Pledgor hereby irrevocably waives the
benefits of all such laws.

 

17

 

11.                                 Proceeds of
Dispositions 

 

Subject to the terms of
the Intercreditor Agreement, after deducting all expenses payable to Collateral
Agent and Trustee, including, without limitation, pursuant to Section 7,
the residue of any proceeds of collection or sale of the Secured Obligations or
Collateral shall, to the extent actually received in cash, be applied to the
payment of the remaining Secured Obligations, proper allowance and provision
being made for any Secured Obligations not then due or held as additional Collateral.  Upon the final payment and satisfaction in
full of all of the Secured Obligations and the termination of all commitments
under the Indenture and after making any payments required by
Sections 9-608(a)(1)(C) or 9-615(a)(3) of the NYUCC, any excess
of any Pledged Collateral of any Pledgor shall be returned to such Pledgor, and
in any event each Pledgor shall remain liable for any deficiency in the payment
of the Secured Obligations.  Upon the final payment and satisfaction in full
of the Secured Obligations and a release of all claims against Collateral
Agent, Trustee and Noteholders, and so long
as no suits, actions, proceedings, or claims are pending or threatened against
any Indemnified Party asserting any damages, losses or liabilities that are indemnified
liabilities hereunder, Collateral Agent shall deliver to Pledgors termination statements and other documents
necessary or appropriate to evidence the termination of the Liens securing
payment of the Secured Obligations.

 

12.                                 Reinstatement 

 

This Pledge Agreement
shall remain in full force and effect and continue to be effective should any
petition be filed by or against any Pledgor for liquidation or reorganization,
should any Pledgor become insolvent or make an assignment for the benefit of
any creditor or creditors or should a receiver or trustee be appointed for all
or any significant part of Pledgor’s assets, and shall continue to be effective
or be reinstated, as the case may be, if at any time payment and performance of
the Secured Obligations, or any part thereof, is, pursuant to applicable law,
rescinded or reduced in amount, or must otherwise be restored or returned by
any obligee of the Secured Obligations, whether as a “voidable preference,”
“fraudulent conveyance,” or otherwise, all as though such payment or
performance had not been made.  In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Secured Obligations shall be reinstated and deemed reduced only
by such amount paid and not so rescinded, reduced, restored or returned.

 

13.                                 Miscellaneous 

 

13.1                           Notices 

 

Any notice or other
communication required shall be in writing addressed to the respective party as
set forth below and may be personally served, telecopied, sent by overnight
courier service or U.S. mail and shall be deemed to have been given:  (a) if delivered in person, when delivered;
(b) if delivered by fax, on the date of transmission if transmitted on a
Business Day before 4:00 p.m. New York time;  (c) if delivered by
overnight courier, one (1) Business Day after delivery to the courier properly
addressed; or (d) if delivered by U.S. mail, four (4) Business Days after
deposit with postage prepaid and properly addressed.

 

Notices shall be
addressed as follows:

 

(a)                                  If
to Pledgor:

 

18

 

	
   

  	
  DAYTON SUPERIOR CORPORATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  777 Washington Village
  Drive, Suite 130

  	
   

  
	
   

  	
  Dayton, Ohio 45459

  	
   

  
	
   

  	
  Attention:

  	
  Edward Puisis

  	
   

  
	
   

  	
  Facsimile:

  	
  (937) 428-9115

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  With a copy to:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LATHAM & WATKINS LLP

  	
   

  
	
   

  	
  885 Third Avenue, Suite 1000

  	
   

  
	
   

  	
  New York, New York 
  10022

  	
   

  
	
   

  	
  Attn:  Kirk
  Davenport, Esq.

  	
   

  
	
   

  	
  Fax:  (212)
  751-4864

  	
   

  
	
   

  	
   

  	
   

  
	
  (b)

  	
  If
  to Trustee or Collateral Agent:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE BANK OF NEW YORK

  	
   

  
	
   

  	
  101 Barclay Street – 8W

  	
   

  
	
   

  	
  New York, New York 10286

  	
   

  
	
   

  	
  Attention: Corporate Trust Administration

  	
   

  
	
   

  	
  Facsimile: (212) 815-5707

  	
   

  

 

13.2                           GOVERNING LAW; CONSENT TO JURISDICTION 

 

(a)                                  THIS
PLEDGE AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES WHICH SHALL BE
DEEMED NOT TO INCLUDE SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS
LAW.

 

(b)                                 EACH
PLEDGOR HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED WITHIN NEW YORK COUNTY, STATE OF NEW YORK AND IRREVOCABLY AGREES THAT,
SUBJECT TO COLLATERAL AGENT’S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT
OF OR RELATING TO THIS PLEDGE AGREEMENT OR THE OTHER SECURITY DOCUMENTS  SHALL
BE LITIGATED IN SUCH COURTS.  EACH
PLEDGOR EXPRESSLY SUBMITS AND CONSENTS TO THE JURISDICTION OF THE AFORESAID
COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS.  EACH PLEDGOR HEREBY WAIVES PERSONAL SERVICE
OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS  MAY BE
MADE UPON PLEDGOR BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED,
ADDRESSED TO SUCH PLEDGOR, AT THE ADDRESS SET FORTH IN THIS PLEDGE AGREEMENT
AND SERVICE  SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS
BEEN POSTED.  IN ANY LITIGATION, TRIAL, ARBITRATION OR OTHER DISPUTE 

 

19

 

RESOLUTION
PROCEEDING RELATING TO THIS PLEDGE AGREEMENT OR ANY OF THE OTHER SECURITY
DOCUMENTS, ALL DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS OF PLEDGORS OR ANY OF
ITS AFFILIATES SHALL BE DEEMED TO BE EMPLOYEES OR MANAGING AGENTS OF PLEDGOR
FOR PURPOSES OF ALL APPLICABLE LAW OR COURT RULES REGARDING THE PRODUCTION OF
WITNESSES BY NOTICE FOR TESTIMONY (WHETHER IN A DEPOSITION, AT TRIAL OR
OTHERWISE).  PLEDGOR AGREES THAT
COLLATERAL AGENT’S OR TRUSTEE’S COUNSEL IN ANY SUCH DISPUTE RESOLUTION
PROCEEDING MAY EXAMINE ANY OF THESE INDIVIDUALS AS IF UNDER
CROSS-EXAMINATION AND THAT ANY DISCOVERY DEPOSITION OF ANY OF THEM MAY BE
USED IN THAT PROCEEDING AS IF IT WERE AN EVIDENCE DEPOSITION.  PLEDGORS IN ANY EVENT WILL USE ALL
COMMERCIALLY REASONABLE EFFORTS TO PRODUCE IN ANY SUCH DISPUTE RESOLUTION
PROCEEDING, AT THE TIME AND IN THE MANNER REQUESTED BY COLLATERAL AGENT, ALL
PERSONS, DOCUMENTS (WHETHER IN TANGIBLE, ELECTRONIC OR OTHER FORM) OR OTHER
THINGS UNDER THEIR CONTROL AND RELATING TO THE DISPUTE.

 

13.3                           WAIVER OF JURY TRIAL, ETC. 

 

EACH PLEDGOR HEREBY
WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS PLEDGE AGREEMENT AND THE OTHER SECURITY DOCUMENTS.  EACH PLEDGOR ACKNOWLEDGES THAT THIS WAIVER
IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT COLLATERAL
AGENT AND TRUSTEE HAVE EACH RELIED ON THE WAIVER IN ENTERING INTO THIS PLEDGE
AGREEMENT AND THE OTHER SECURITY DOCUMENTS AND WILL CONTINUE TO RELY ON THE
WAIVER IN THEIR RELATED FUTURE DEALINGS. 
EACH PLEDGOR WARRANTS AND REPRESENTS THAT SUCH PLEDGOR HAS HAD THE
OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT SUCH
PLEDGOR KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.

 

13.4                           Counterparts; Effectiveness 

 

This Pledge Agreement and
any amendments, waivers, consents or supplements may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all of
which counterparts together shall constitute but one in the same
instrument.  This Pledge Agreement shall
become effective upon the execution of a counterpart hereof by each of the
parties hereto.

 

13.5                           Headings 

 

Section and
subsection headings are included herein for convenience of reference only
and shall not constitute a part of this Pledge Agreement for any other purposes
or be given substantive effect.

 

13.6                           No Strict Construction 

 

The parties hereto have
participated jointly in the negotiation and drafting of this Pledge
Agreement.  In the event an ambiguity or
question of intent or interpretation arises, this Pledge Agreement shall be
construed as if drafted jointly by the parties hereto and no presumption or 

 

20

 

burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Pledge Agreement.

 

13.7                           Severability 

 

The invalidity,
illegality, or unenforceability in any jurisdiction of any provision under the
Pledge Agreement shall not affect or impair the remaining provisions in the
Pledge Agreement.

 

13.8                           Survival of Agreement 

 

All covenants, agreements,
representations and warranties made by Pledgor herein and in the certificates
or other instruments prepared or delivered in connection with or pursuant to
this Pledge Agreement shall be considered to have been relied upon by
Collateral Agent and shall survive the Indenture and the advance of all
extensions of credit contemplated thereby, regardless of any investigation made
by Collateral Agent, and shall continue in full force and effect until this
Pledge Agreement shall terminate (or thereafter to the extent provided herein).

 

13.9                           Binding Effect; Several Agreement 

 

This Pledge Agreement and
all obligations of each Pledgor hereunder shall be binding upon the successors
and permitted assigns of such Pledgor (including any debtor-in-possession on
behalf of such Pledgor) and shall, together with the rights and remedies of
Collateral Agent, for the benefit of Trustee and Noteholders, hereunder, inure
to the benefit of Trustee and Noteholders, all future holders of any instrument
evidencing any of the Secured Obligations and their respective successors and
permitted assigns except that Pledgors may not assign any of its rights or
obligations hereunder without the written consent of the Collateral Agent and
the Trustee (acting in accordance with the Indenture) which assignment without
such consent shall be void.  No sales of
participations, other sales, assignments, transfers or other dispositions of
any agreement governing or instrument evidencing the Secured Obligations or any
portion thereof or interest therein shall in any manner impair the Lien granted
to Collateral Agent, for the benefit of Trustee and Noteholders, hereunder.

 

13.10                     No Waiver;
Cumulative Remedies  

 

Collateral Agent shall
not, by any act, delay, omission or otherwise, be deemed to have waived any of
its rights or remedies hereunder, and no waiver shall be valid unless in
writing, signed by Collateral Agent and then only to the extent therein set
forth.  A waiver by Collateral Agent of
any right or remedy hereunder on any one occasion shall not be construed as a
bar to any right or remedy that Collateral Agent would otherwise have had on
any future occasion.  No failure to
exercise nor any delay in exercising on the part of Collateral Agent, any right,
power or privilege hereunder, shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
any other or future exercise thereof or the exercise of any other right, power
or privilege.  The rights and remedies
hereunder provided are cumulative and may be exercised singly or concurrently,
and are not exclusive of any rights and remedies provided by law.  None of the terms or provisions of this
Pledge Agreement may be waived, altered, modified or amended except by an
instrument in writing, duly executed by each Pledgor, the Collateral Agent and
the Trustee (acting in accordance with the Indenture).

 

21

 

13.11                     Limitation
by Law 

 

All rights, remedies and
powers provided in this Pledge Agreement may be exercised only to the extent
that the exercise thereof does not violate any applicable provision of law, and
all the provisions of this Pledge Agreement are intended to be subject to all
applicable mandatory provisions of law that may be controlling and to be
limited to the extent necessary so that they shall not render this Pledge
Agreement invalid, unenforceable, in whole or in part, or not entitled to be
recorded, registered or filed under the provisions of any applicable law.

 

13.12                     Termination
of this Agreement 

 

Subject to Section 12
hereof, this Pledge Agreement shall terminate upon payment and satisfaction in
full of the Secured Obligations. Following the termination of this agreement,
Collateral Agent shall, upon reasonable request, and at the sole cost and
expense of Pledgors, execute such termination statements and other releases (in
form and substance reasonably satisfactory to Collateral Agent) with respect to
security granted hereunder, and Collateral Agent shall at such time transfer
any original shares of stock, certificates, instruments and other documents
evidencing or representing the Pledged Collateral delivered to the hereunder to
the Pledgors, without recourse and without representation of warranty.

 

13.13                     Intercreditor
Agreement 

 

Notwithstanding anything
herein to the contrary, the lien and security interest granted to the
Collateral Agent pursuant to this Agreement and the exercise of any right or
remedy by the Collateral Agent hereunder, in each case in respect of any
collateral constituting Noteholder Collateral (as defined in the Intercreditor
Agreement) are subject to the provisions of the Intercreditor Agreement.  In the event of any conflict between the
terms of the Intercreditor Agreement and this Pledge Agreement, the terms of
the Intercreditor Agreement shall govern. 
No failure to specify or preface any clause herein with the words
“subject to the terms of the Intercreditor Agreement” or words of like import
shall be deemed to imply that any such clause or any right or remedy of the
Collateral Agent hereunder is not subject in all respects to the terms and
provisions of the Intercreditor Agreement.

 

13.14                     Advice of
Counsel 

 

Each of the parties
represents to each other party hereto that it has discussed this Pledge
Agreement and, specifically, the provisions of Section 13.2 and Section 13.3,
with its counsel.

 

13.15                     Collateral
Agency

 

The Trustee hereby
designates and appoints the Collateral Agent to act as the Collateral Agent
under the Security Documents, and authorizes the Collateral Agent to take such
actions on its behalf under the provisions of the Security Documents and to
exercise such powers and perform such duties as are expressly delegated to the
Collateral Agent by the terms of this Agreement, together with such other
powers as are reasonably incidental thereto. 
The rights, duties and obligations of the Collateral Agent with respect
to the Trustee and the Noteholders shall be identical to the rights, duties and
obligations of the Trustee with respect to the Noteholders as specified in
Article 7 of the Indenture (including but not limited to Section 7.07
of the Indenture), mutatis mutandis.  Notwithstanding any provision to the
contrary in any Security Document, the 

 

22

 

Collateral Agent shall
not have any duties or responsibilities, except those expressly set forth in
the Security Documents, and no implied covenants, functions or
responsibilities, fiduciary or otherwise, shall be read into any of the Security
Documents or otherwise exist against the Collateral Agent.  Notwithstanding any provision to the
contrary in any Security Document, the Collateral Agent shall not be required
to exercise any discretionary rights or remedies under any of the Security Documents
or give any consent under any of the Security Documents or enter into any
agreement amending, modifying, supplementing or waiving any provision of any
Security Document unless it shall have been directed to do so by the Trustee
(with the consent of the Noteholders, to the extent required under the
Indenture).

 

23

 

IN WITNESS WHEREOF, intending to be legally
bound, each Pledgor has caused this Pledge Agreement to be duly executed as of
the date first above written.

 

	
   

  	
  DAYTON
  SUPERIOR CORPORATION

  
	
   

  	
  as Pledgor

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Edward J. Puisis 

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Edward J. Puisis

  
	
   

  	
   

  	
  Title:

  	
  Vice President and Chief Financial 

  Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TREVECCA
  HOLDINGS, INC.

  
	
   

  	
  as Pledgor

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Edward J. Puisis 

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Edward J. Puisis

  
	
   

  	
   

  	
  Title:

  	
  Vice President and Chief Financial
 Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  THE
  BANK OF NEW YORK,

  
	
   

  	
  as Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Cynthia Chaney 

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Cynthia Chaney

  
	
   

  	
   

  	
  Title:

  	
  Authorized Signatory

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  THE
  BANK OF NEW YORK,

  
	
   

  	
  as Collateral Agent

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Cynthia Chaney 

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Cynthia Chaney

  
	
   

  	
   

  	
  Title:

  	
  Authorized Signatory

  
							

 

SIGNATURE PAGE TO DAYTON PLEDGE
AGREEMENT

 

 

EXHIBIT A

 

DEFINITIONS

 

“Contractual
Obligations” shall mean as applied to any Person, any indenture, mortgage,
deed of trust, contract, undertaking, agreement or other instrument to which
that Person is a party or by which it or any of its properties is bound or to
which it or any of its properties is subject.

 

“Control Letter”
shall have the meaning assigned to such term in Section 2.3(a)(iii).

 

“Discharge of Senior
Lender Claims” shall have the meaning assigned to such term in the
Intercreditor Agreement.

 

“event” shall have
the meaning assigned to such term in Section 8.3(a).

 

“Excluded Collateral”
shall have the meaning assigned to such term in the Indenture.

 

“Extraordinary
Payments” shall have the meaning assigned to such term in Section 5.1(b).

 

“Indemnified Party”
shall have the meaning assigned to such term in Section 8.4.

 

“Pledged Collateral”
shall have the meaning assigned to such term in Section 2.1.

 

“Pledged Securities”
shall have the meaning assigned to such term in Section 2.2(b).

 

“Non-Voting Stock”
shall mean any Stock that is not Voting Stock (as that term is defined in the
Indenture).

 

“NYUCC” shall mean
the Uniform Commercial Code as in effect in the State of New York from time to
time.  

 

“Secured Obligations”
shall mean the Second Priority Lien Obligations and all liabilities,
obligations, covenants, duties, and indebtedness owing by Pledgor to Collateral
Agent under this Pledge Agreement.  The
term includes, without limitation, interest accruing during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding.

 

“Securities Act”
shall have the meaning assigned to such term in Section 8.1(d).

 

“Security Interests”
shall have the meaning assigned to such term in Section 7.

 

“Stock” means all
shares, options, warrants, general or limited partnership interests, membership
interests or other equivalents (regardless of how designated) of or in a
corporation, partnership, limited liability company or equivalent entity
whether voting or nonvoting, including common stock, preferred stock or any other
“equity security” (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934).

 

“UCC” shall mean
the Uniform Commercial Code as in effect in any jurisdiction (except as
otherwise contemplated in Section 3.3).  References to particular sections of Article 9 of the UCC 

 

 

shall be, unless
otherwise indicated, references to Revised Article 9 of the UCC adopted
and effective in certain jurisdictions on or after July 1, 2001.Exhibit 10.5  

AMERICAN FEDERAL SAVINGS BANK  

 MEMO  

	TO:	Bob Kemp	 
	

FROM:	

Phil Bowman	

 
	

RE:	

Employment	

 
	

DATE:	

12/23/98	

 
	

The
following memo outlines the terms of your employment with the bank. If after you have read the memo you have any questions or concerns please to contact me. If these terms are acceptable please
sign where indicated and return it to me. This offer shall expire on December 4, 1998. The terms are as follows: 

	1.
	Employment
Date: Shall Be as of November 30, 1998.

	2.
	Salary:
You shall be compensated at the rate of $120,000 per annum, plus amount equal to thirty percent (30%) of the profits of the mortgage banking division or subsidiary. Profits of
the company shall include the following as Gross Income: All fees, earned from origination and sale of residential mortgages by your entity. This shall specifically exclude any income derived from the
interest rate spread difference, if any, between the coupon rate of the loan and the interest rate charged by the bank as the funding cost; any income derived from individual construction loans
originated and sold to the bank; except for previously agreed origination fees. Expenses shall include all costs associated with originating residential mortgages including, but not limited to, rent,
utilities, insurance benefits, payroll, payroll taxes, auto expenses, postage, office supplies, telephone expense, overhead fees for accounting, payroll administration, equipment rental and
depreciation. It is agreed that the bank shall charge rental of $1,500 per month for the premises in which the company currently occupies and will charge a corporate overhead fee of $2,500 per month,
and an amount which amortizes the cost of equipment, phones, and furnishings over a three year period.

	4.
	Benefits:
You shall be entitled to vacation of three weeks, health insurance, life insurance if available, 401 K plan, and personal leave in accordance with existing terms and
conditions as cited in the employee manual. It should be noted that the insurance program offered by the bank has a ninety day waiting period before it is effective. The bank is agreeable to provide
an amount equal to the cost of the bank's insurance for your classification to be used to pay for insurance you select during the waiting period.

	5.
	Bonus:
You shall not be entitled to participate in the company bonus plan. You are entitled to the profit sharing described in paragraph 2 above. It is agreed that the profit
spits will be paid on a quarterly basis. In computing the quarterly profits of the entity it is agreed that for the first quarter of this year your salary and Mr. Cobles salary shall be
deferred until the fourth quarter. In the event that the profits do not cover the total cost of the year the bank will withhold that amount from any future payment.

	6.
	Auto
Allowance: You shall be paid during you employment an auto allowance of $500 per month.

	7.
	Stock
Option: You shall be granted a stock option of 5,000 shares which will be subject to the 1998 Stock Option plan. The price shall be determined by the quoted stock price on the
date your employment commences.

	8.
	Signing
Bonus: You shall receive a signing bonus in the amount of $10,000 which shall be payable over the first two months. In the event you should leave the bank's employment within
Twelve 

Months
(12) from the commencement date the bonus shall be pro rated and repaid from any funds owed to you by the bank. 

	9.
	Title:
You shall have the title of Sr. Vice President/Mortgage Operations.

	10.
	Job
Description: You shall be responsible for origination, underwriting, settlement, and sale to third parties of residential loans commonly referred to Freddie/FNMA, extended loans
and non-conforming (subprime) loans and any such other residential permanent loan programs that shall be added at a later time.

	11.
	Probationary
Period: The bank provides for a mandatory 90 day probationary period for all employees. Please see employee manual regarding the probationary period.

	12.
	In
the event you resign from the company you will agree that no employee of the bank shall be employed by you or any entity with whom you are employed for a period of one year and you
will not seek to solicit any mortgage companies from whom the bank or its entity is doing business for a period of six months.

	13.
	After
six months the bank will agree to entertain a formal contract which would provide for the following: 1) provide severance of six months in the event the bank discharges
you for reasons other than "cause" (as described in the attached addendum) and 2) to provide that in the event of a change of control in which
AFSB's management does not survive and you are not hired severance equal to number of months you have employed by the bank or one year whichever is less; or if you are retained but choose to leave
severance in an amount equal to the number of months you have been employed or six months whichever is less. In the event that you choose to leave but do not take any severance then in that event; the
restriction cited in paragraph 12 regarding solicitation of mortgage companies shall be null and void. The terms and conditions of the proposed contract shall be subject to approval in
accordance the Office of Thrift Supervision. 

If
this is satisfactory please initial where indicated and return the copy to me. 

Agreed
& Accepted this    day of December, 1998. 

	/s/  ROBERT N. KEMP, JR.      
 Robert N. Kemp, Jr.

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