Document:

EXHIBIT 10.2

 

Execution
Copy

 

BORROWER
PLEDGE AGREEMENT

 

THIS
BORROWER PLEDGE AGREEMENT (this “Pledge
Agreement”), dated as of July 18, 2005, among AAI CORPORATION, a Maryland
corporation (the “Borrower”), the Subsidiaries of the Borrower signatory
hereto and each other subsidiary of the Borrower hereafter a party hereto (each
a “Subsidiary Pledgor” and collectively the “Subsidiaries Pledgors”;
Borrower, each Subsidiary Pledgor and each other Subsidiary hereafter becoming
a party hereto shall be collectively known as the “Pledgors”, and
individually as “Pledgor”), in favor of SUNTRUST BANK, a Georgia banking
corporation, as Administrative Agent (the “Administrative Agent”), on
its behalf and on behalf of the other banks and lending institutions (the “Lenders”)
from time to time party to the Revolving Credit Agreement, dated as of the date
hereof, by and among the Borrower, United Industrial Corporation the
Administrative Agent, the Lenders, and SunTrust Bank, as Issuing Bank and as
Swingline Lender (as amended, restated, supplemented, or otherwise modified
from time to time, the “Credit Agreement”).

 

W
I  T  N  E  S  S  E  T  H:

 

WHEREAS,
pursuant to the Credit Agreement, the Lenders have agreed to establish a
revolving credit facility to the Borrower;

 

WHEREAS,
it is a condition precedent to the obligations of the Administrative Agent, the
Issuing Bank, the Swingline Lender, and the Lenders under the Credit Agreement
that each Pledgor grant to Administrative Agent a security interest in all of
its Pledged Collateral (as defined below), and each Pledgor wishes to fulfill
said condition precedent;

 

WHEREAS,
the Pledgors are the record and beneficial owners of all of the issued and
outstanding shares of common stock listed on Part A of Schedule I
attached hereto (the “Pledged Shares”) and are the record and beneficial
owners of all membership interests listed on Part B of Schedule I
attached hereto (the “Pledged Membership Interests”), such Pledged
Shares and Pledged Membership Interests being all of the Capital Stock of the
Pledgors’ Domestic Subsidiaries and 65% of the voting Capital Stock and 100% of
the non-voting Capital Stock of the Pledgors’ Non-U.S. Subsidiaries;

 

WHEREAS, the
Pledgors are the record and beneficial owners of the promissory notes and
instruments described on Schedule II attached hereto (the “Pledged
Notes”); and

 

NOW,
THEREFORE, in order to induce Lenders to extend the Loans and
the Issuing Bank to issue Letters of Credit and to make the financial
accommodations as provided for in the Credit Agreement and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

 

 

1.  Defined Terms.  All
capitalized terms used but not otherwise defined herein have the meanings given
to them in the Credit Agreement.

 

2.  Pledge.  Each
Pledgor hereby pledges to the Administrative Agent, for its benefit and the
benefit of Lenders and each party to a Hedging Transaction incurred to limit
interest rate or fee fluctuation with respect to the Loans and Letters of
Credit if at the date of entering into such Hedging Transaction such
person was a Lender or an Affiliate of a Lender and such person executes and
delivers to the Administrative Agent a letter agreement in form and substance
acceptable to the Administrative Agent pursuant to which such person (i) appoints
the Administrative Agent as its agent under the applicable Loan Documents and (ii) agrees
to be bound by the provisions of Article IX and X of the Credit Agreement (each such person a “Specified Hedge Provider”,
the Administrative Agent, the Lenders and the Specified Hedge Providers,
collectively, referred to herein as the “Secured Parties” and each a “Secured
Party”) and grants to the Administrative Agent, for its benefit and the
benefit of the Secured Parties, a first priority security interest in all of
such Pledgor’s right, title and interest in, to and under the following
property, whether now owned by or owing to, or hereafter acquired by or arising
in favor of such Pledgor (collectively, the “Pledged Collateral”):

 

(a)                                  The
Pledged Shares and the certificates representing the Pledged Shares, and,
except as expressly provided for in Section 8 hereof, all
dividends, cash, instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the Pledged Shares;

 

(b)                                 Any
stock or other securities acquired by any Pledgor or such Pledgor’s designees
with respect to, incident to or in lieu of the Pledged Shares or with respect
to, incident to or in lieu of the Pledged Collateral (x) due to any dividend,
stock-split, stock dividend or distribution on dissolution, or partial or total
liquidation, or for any other reason, (y) in connection with a reduction of capital,
capital surplus or paid-in-surplus or (z) in connection with any spin-off,
split-off, reclassification, readjustment, merger, consolidation, sale of
assets, combination of shares or any other plan of distribution affecting of
the those companies listed on Schedule I;

 

(c)                                  Any
subscription or other rights or options issued in connection with the Pledged
Shares, and, if exercised by any Pledgor, all new shares or other securities so
acquired by such Pledgor, which shall promptly be assigned and delivered to the
Administrative Agent and held under the terms of this Pledge Agreement in the
same manner as the Pledged Shares originally pledged hereunder;

 

(d)                                 Any
and all proceeds, monies, income and benefits arising from or by virtue of, and
all dividends and distributions (cash or otherwise) payable or distributable
with respect to, all or any of the Pledged Shares or other securities and
rights and interests described in this Section 2, except as
expressly provided for in Section 8 hereof;

 

(e)                                  The
Pledged Membership Interests, if any, and any certificates at any time
representing the Pledged Membership Interests, [it being
understood that the Pledged

 

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Membership
Interests are, as of the date hereof, uncertificated,] and
all cash, securities, dividends, rights, and other property at any time and
from time to time received, receivable or otherwise distributed in respect of
or in exchange for any or all of the Pledged Membership Interests;

 

(f)                                    All
of such Pledgor’s right, title and interest as a member in each limited
liability company listed on Part B of Schedule I (the “LLCs”),
whether now owned or hereafter acquired, including all of such Pledgor’s right,
title and interest in, to and under the limited liability company agreements
described on Part B of Schedule I (as such agreements have heretofore
been and may hereafter be amended, restated, supplemented or otherwise modified
from time to time, collectively, the “LLC Agreements”) to which it is a
party (including, the right to vote with respect to and to manage and
administer the business of such LLCs) together with all other rights,
interests, claims and other property of such Pledgor in any manner arising out
of or relating to its membership interest in the LLCs, whatever their
respective kind or character, whether they are tangible or intangible property,
and wheresoever they may exist or be located, and further including, without
limitation, (1) all rights of such Pledgor to receive distributions of any
kind, in cash or otherwise, due or to become due under or pursuant to each such
LLC Agreement or otherwise in respect of such LLCs, (2) all rights of such
Pledgor to receive proceeds of any insurance, indemnity, warranty or guaranty
with respect to each such LLCs, (3) all claims of such Pledgor for damages
arising out of, or for the breach of, or for a default under, each such LLC
Agreement, (4) any certificated or uncertificated security evidencing any
of the foregoing issued by such LLCs to such Pledgor, (5) any interest of
such Pledgor in the entries on the books of any financial intermediary
pertaining to such Pledgor’s interest as a member in the LLCs and (6) to
the extent not included in the foregoing, all proceeds of any and all of the
foregoing; provided, however, that notwithstanding anything
herein to the contrary;

 

(i)                                     Each
Pledgor shall remain liable under the LLC Agreements to the extent set forth
therein to perform all of its duties and obligations thereunder to the same
extent as if this Pledge Agreement had not been executed;

 

(ii)                                  The
exercise by the Administrative Agent of any of its rights hereunder shall not
release any Pledgor from any of its duties or obligations under the LLC
Agreements (other than to the extent a Pledgor is precluded from performing
such duties solely as a result of the Administrative Agent’s having exercised
such rights or remedies);

 

(iii)                               The Administrative Agent
shall not have any obligation or liability under the LLC Agreements by reason
of this Pledge Agreement, nor shall the Administrative Agent be obligated to
perform any of the obligations or duties of the Pledgors thereunder, to make
any payment, to make any inquiry as to the nature or sufficiency of any payment
received by the Pledgors or the sufficiency of any performance by any party
under any such LLC Agreement, or to take any action to collect or enforce any
claim for payment assigned hereunder; and

 

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(iv)                              Without
limiting the generality of the foregoing, neither the grant of the security
interest in the Pledged Collateral in favor of the Administrative Agent as
provided herein nor the exercise by the Administrative Agent of any of its
rights hereunder nor any action by the Administrative Agent in connection with
a foreclosure on the Pledged Collateral shall be deemed to constitute the
Administrative Agent or any other Secured Party a member of any limited
liability company;

 

(g)                                 The
Pledged Notes and the instruments and other documents representing the Pledged
Notes, and all interest, cash, instruments and other property or proceeds from
time to time received, receivable or otherwise distributed in respect of or in
exchange for the Pledged Notes; and

 

(h)                                 All
additional promissory notes from time to time acquired by such Pledgor in any
manner and the instruments and other documents representing such promissory
notes and all interest, cash, instruments and other property, or proceeds from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such promissory notes.

 

3.  Security For Secured Obligations.  This
Pledge Agreement and the Pledged Collateral secure the prompt payment, in full
when due, whether at stated maturity, by acceleration or otherwise, and performance
of (i) with respect to the Borrower, all Obligations of Borrower under the
Credit Agreement and the other Loan Documents (whether for principal, interest,
fees, expenses, indemnity or reimbursement payments, or otherwise, as provided
in the Credit Agreement or such other Loan Documents), (ii) with respect
to the Subsidiary Pledgors, all obligations of each such Subsidiary Pledgor
under the Subsidiary Guaranty Agreement and all other Loan Documents to which
such Pledgor is a party to (whether for principal, interest, fees, expenses,
indemnity or reimbursement payments, or otherwise, as provided in the Credit
Agreement or such other Loan Documents), (iii) all renewals, extensions,
refinancings and modifications thereof, and (iv) all interest, charges,
expenses, fees, attorneys’ fees and other sums required to be paid by any
Pledgor under the Credit Agreement, under this Pledge Agreement or under any of
the other Loan Documents (collectively, the “Secured Obligations”).

 

4.  Delivery Of Pledged Collateral.  All
certificates, promissory notes and instruments representing or evidencing the
Pledged Collateral shall be delivered to and held by or on behalf of the
Administrative Agent pursuant hereto. All Pledged Shares and Pledged Membership
Interests shall be accompanied by duly executed, undated instruments of
transfer or assignment endorsed in blank, all in form and substance
satisfactory to the Administrative Agent and, if the Administrative Agent so
requests, with signatures guaranteed by a member of a registered national
securities exchange or the National Association of Securities Dealers, Inc.
or by a commercial bank or trust company having an office or correspondent in
the United States.  All Pledged Notes
shall be endorsed by the applicable Pledgor.  Upon the occurrence and during the continuance
of an Event of Default, the Administrative Agent shall have the right, at any
time in its discretion and without notice to any Pledgor, to transfer to or to
register in the name of the Administrative Agent or any of its nominees any or
all of the Pledged Shares or Pledged Membership Interests.  In addition, the Administrative Agent shall
have the right at any time to

 

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exchange certificates or instruments representing or evidencing Pledged
Shares or Pledged Membership Interests for certificates or instruments of
smaller or larger denominations.

 

5.  Representations and Warranties.  Each
Pledgor represents and warrants to the Secured Parties as follows:

 

(a)                                  Each
Pledgor is, and at the time of delivery of the Pledged Shares and Pledged
Membership Interests to the Administrative Agent pursuant to Section 4
hereof will be, the sole holder of record and the sole beneficial owner of the
Pledged Collateral pledged by such Pledgor, free and clear of any Lien thereon
or affecting the title thereto except for Permitted Encumbrances.

 

(b)                                 All
of the Pledged Shares and Pledged Membership Interests have been duly
authorized, validly issued and are fully paid and non-assessable and all
documentary, stamp, or other taxes or fees owing in connection with the
issuance, transfer and/or pledge thereof hereunder have been paid and will be
hereafter paid by each Pledgor as same becomes due and payable.

 

(c)                                  No
dispute, counterclaim or defense exists with respect to all or any part of the
Pledged Collateral.

 

(d)                                 Each
Pledgor has the requisite corporate authority to pledge, assign, transfer,
deliver, deposit and set over its Pledged Collateral to the Administrative
Agent as provided herein.

 

(e)                                  There
are no restrictions, other than applicable laws and regulations affecting the
offering and sales of securities generally, upon the transfer, hypothecation or
pledge of any of the Pledged Collateral.

 

(f)                                    None
of the Pledged Shares or Pledged Membership Interests have been issued or
transferred in violation of the securities registration, securities disclosure
or similar laws of any jurisdiction to which such issuance or transfer may be
subject.

 

(g)                                 Part A
of Schedule I hereto lists the authorized shares of common stock,
the par value thereof and the number of issued and outstanding shares of common
stock of each issuer of Pledged Shares. 
As of the date hereof, (i) no subscription, warrant, option or
other rights to purchase or acquire any shares of any class of capital stock of
any issuer of Pledged Shares is authorized and outstanding, and (ii) there
is no commitment by any issuer of Pledged Shares to issue any such shares,
warrants, options or other such rights or securities.

 

(h)                                 Part B
of Schedule I hereto lists all of the issued and outstanding
membership interests of each issuer of Pledged Membership Interests.  As of the date hereof, (i) no
subscription, warrant, option or other rights to purchase or acquire any
membership interests of any issuer of Pledged Membership Interests is
authorized and outstanding, and (ii) there is no commitment by any issuer
of Pledged Membership Interests to issue any such warrants, options or other
such rights or securities.

 

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(i)                                     The
pledge by each Pledgor of its Pledged Collateral is not in contravention of any
law or of any agreement to which such Pledgor is party or by which such Pledgor
is otherwise bound, and no consent, approval, authorization or other order of,
or other action by, any Person or notice to or filing with, any Person is
required (x) for the pledge by such Pledgor of the Pledged Collateral pursuant
to this Pledge Agreement or for the execution, delivery or performance of this
Pledge Agreement by such Pledgor or (y) for the exercise by the Administrative
Agent of the voting or other rights provided for in this Pledge Agreement or
the remedies in respect of the Pledged Collateral pursuant to this Pledge
Agreement (except as may be required in connection with any disposition of any
portion of the Pledged Collateral by laws affecting the offering and sale of
securities generally).

 

(j)                                     The
pledge, assignment and delivery of the Pledged Collateral together with duly
executed, undated instruments of transfer or assignment endorsed in blank
pursuant to this Pledge Agreement will create a valid first priority Lien on
and a first priority perfected security interest in the Pledged Collateral and
the proceeds thereof, securing the payment of the Secured Obligations and no filing or other action is necessary to perfect or
protect such security interest, except that (i) the filing of a financing
statement, the taking of possession or some other action may be required under Section 9-315
of the Uniform Commercial Code as in effect in the State of New York (the “UCC”)
to perfect a security interest in certain proceeds of the Pledged Collateral
that do not constitute Pledged Shares or other securities or instruments and (ii) the
filing of a financing statement under Sections 9-312 and 9-314 of the UCC may
be required to perfect a security interest in any Pledged Collateral that
constitutes “investment property” (other than the Pledged Shares) with respect
to which the Administrative Agent does not have “control” (as such terms are
defined in the UCC).

 

(k)                                  All
of the representations and warranties contained in the Credit Agreement and the
other Loan Documents are true and correct in all material respects, are
incorporated herein by this reference and deemed to be made herein by each
Pledgor for purposes of this Pledge Agreement.

 

(l)                                     Each
of the Pledged Notes purported to be pledged hereunder is the legal, valid and
binding obligation of the obligor thereof, enforceable in accordance with its
terms; each of the Pledged Notes has been duly authorized, authenticated or
issued and delivered by the issuer thereof, and no such issuer is in default
thereunder.  Except as disclosed on Schedule II
hereto, none of the Pledged Notes are subordinated in right of payment to other
indebtedness (except for the Secured Obligations) or subject to the terms of an
indenture.

 

(m)                               This
Pledge Agreement has been duly authorized, executed and delivered by each
Pledgor and constitutes a legal, valid and binding obligation of such Pledgor
enforceable against such Pledgor in accordance with its terms.

 

The representations and
warranties set forth in this Section 5 shall survive the execution
and delivery of this Pledge Agreement.

 

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6.  Covenants.  Each
Pledgor covenants and agrees that from and after the date of this Pledge
Agreement and until the payment and performance in full of all of the Secured
Obligations of such Pledgor:

 

(a)                                  Such
Pledgor shall not sell, assign, transfer, pledge or otherwise encumber any of
its rights in or to its Pledged Collateral or any unpaid dividends or other
distributions or payments with respect thereto except pursuant to this Pledge
Agreement.

 

(b)                                 Such
Pledgor will not cause or permit any issuer of Pledged Shares or Pledged
Membership Interests to issue or grant any warrants, stock options of any
nature or other instruments convertible into membership interests or shares of
any class of capital stock or additional membership interests or shares of
capital stock or sell or transfer any membership interests or treasury stock.

 

(c)                                  Such
Pledgor will, at its own cost and expense, promptly execute, acknowledge and
deliver all such instruments and take all such action as the Administrative
Agent from time to time may reasonbly request in order to perfect and protect
the Lien granted or purported to be granted hereby or to enable the
Administrative Agent to exercise and enforce its rights and remedies hereunder
with respect to the Pledged Collateral.

 

(d)                                 Such
Pledgor has and will, at its own cost and expense, defend the title to its
Pledged Collateral and the Liens of the Administrative Agent thereon against
the claim of any Person and will maintain and preserve such Liens.

 

(e)                                  Such
Pledgor will pay all taxes, assessments and charges levied, assessed or imposed
upon its Pledged Collateral before the same become delinquent or become Liens
upon any of its Pledged Collateral except where the same may be contested in
good faith by appropriate proceedings and as to which adequate reserves have
been provided.

 

7.  Adjustments and Distributions Concerning
Pledged Collateral.  Should the Pledged Collateral, or any part
thereof, ever be converted in any manner by any Pledgor into another type of
property or any money or other proceeds ever be paid or delivered to any
Pledgor as a result of such Pledgor’s rights in the Pledged Collateral, then in
any such event (except as expressly provided in Section 8 hereof),
all such property, money and other proceeds shall promptly be and become part
of the Pledged Collateral, and each Pledgor covenants and agrees to forthwith
pay and deliver all money so received to the Administrative Agent, for the
benefit of the Secured Parties, as Pledged Collateral hereunder in accordance
with the provisions of the Credit Agreement; and, if the Administrative Agent
deems it necessary and so requests, to properly endorse, assign or transfer any
and all such other proceeds to the Administrative Agent and to deliver to the
Administrative Agent any and all such other proceeds which require perfection
by possession under the UCC.  With
respect to any of such property of a kind requiring an additional security
agreement, financing statement or other writing to perfect a security interest
therein in favor of the Administrative Agent, each Pledgor will forthwith
execute and deliver to the Administrative Agent, or cause to be executed and
delivered to the Administrative Agent, whatever the Administrative Agent shall
reasonably deem necessary or proper for such purposes.

 

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8.  Pledgors’ Rights; Termination Of Rights.

 

(a)                                  As
long as no Event of Default shall have occurred and be continuing:

 

(i)                                     Each
Pledgor shall have the right, from time to time, to vote and give consents with
respect to its Pledged Collateral or any part thereof for all purposes
permitted by the Credit Agreement or any other Loan Documents; provided,
that, without limitation of the foregoing, no vote shall be cast, and no
consent shall be given or action taken by any Pledgor without the prior written
consent of the Administrative Agent that would authorize or effect (except if
and to the extent expressly permitted by the Credit Agreement): (A) the
dissolution or liquidation, in whole or in part, of any issuer of the Pledged
Collateral, (B) the consolidation or merger of any issuer of the Pledged
Collateral with any other Person (other than any Pledgor), (C) the sale,
disposition or encumbrance of any portion of the assets of any issuer of the
Pledged Collateral or any business or division thereof, (D) any change in
the authorized number of shares or membership interests, the stated capital or
the authorized shares or member interest capital of any issuer of the Pledged
Collateral or the issuance of any additional shares of capital stock or
membership interests thereof, or (E) the alteration of the voting rights
with respect to the capital stock or membership interests of any issuer of the
Pledged Collateral;

 

(ii)                                  Each
Pledgor shall be entitled, from time to time, to collect and receive for its
own use all dividends, distributions and other amounts paid in respect of its
Pledged Collateral to the extent not in violation of the Credit Agreement other
than any and all:  (A) dividends
paid or payable other than in cash in respect of, and instruments and other
property received, receivable or otherwise distributed in respect of, or in
exchange for, any of its Pledged Collateral, (B) dividends and other
distributions paid or payable in cash in respect of any of its Pledged
Collateral in connection with a partial or total liquidation, dissolution or a
reduction in capital, capital surplus or paid in capital, and (C) cash
paid, payable or otherwise distributed in redemption of, or in exchange for,
any of its Pledged Collateral; provided, that until actually paid all
rights to such dividends shall remain subject to the Lien created by this
Pledge Agreement.

 

(b)                                 All
dividends (other than such cash dividends as are permitted to be paid to the
Pledgors in accordance with Section 8(a)(ii) above) and all
other distributions in respect of any of the Pledged Shares, Pledged Membership
Interests or Pledged Notes, whenever paid or made, shall be delivered to the
Administrative Agent to hold as Pledged Collateral and shall, if received by
any Pledgor, be received in trust for the benefit of the Administrative Agent,
be segregated from the other property or funds of such Pledgor, and be
forthwith delivered promptly to the Administrative Agent as Pledged Collateral
of such Pledgor in the same form as so received (with any necessary endorsement
or assignment).

 

(c)                                  Upon
the occurrence of an Event of Default and during the continuation thereof, all
of Pledgors’ rights to exercise voting and other consensual rights pursuant to Section 8(a)(i) hereof
and all of Pledgors’ rights to receive any cash dividends and distributions
pursuant

 

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to Section 8(a)(ii) hereof
shall cease and all such rights shall thereupon become vested in the Administrative
Agent, for the benefit of the Secured Parties, who shall have the sole and
exclusive right to exercise the voting and other consensual rights which the
Pledgors would otherwise be authorized to exercise pursuant to Section 8(a)(i) hereof
and to receive and retain the dividends and distributions which the Pledgors
would otherwise be authorized to receive and retain pursuant to Section 8(a)(ii) hereof.  Upon the occurrence of an Event of Default
and during the continuation thereof, each Pledgor shall pay over to the
Administrative Agent, for the benefit of the Secured Parties, any dividends
received by such Pledgor with respect to its Pledged Collateral and any and all
money and other property paid over to or received by the Administrative Agent shall
be retained by the Administrative Agent, for the benefit of the Secured
Parties, as Pledged Collateral hereunder and shall be applied in accordance
with the terms of the Credit Agreement.

 

9.  Default.  The
Pledgors shall be in default under this Pledge Agreement upon the happening of
any of the following events or conditions (hereinafter referred to as an “Event
of Default”):

 

(i)                                     The
occurrence of an Event of Default as defined in the Credit Agreement;

 

(ii)                                  The
filing of any financing statement with regard to the Pledged Collateral, other
than relating to or permitted by this Pledge Agreement, or the attachment of
any additional Lien or security interest to any portion of the Pledged
Collateral, for the benefit of any Person other than the Administrative Agent;
and

 

(iii)                               Failure
of any Pledgor to observe any of its respective covenants set forth in this
Pledge Agreement.

 

10.  Remedies Upon An Event Of Default.

 

(a)                                  Upon
the occurrence of an Event of Default and during the continuation thereof, the
Administrative Agent may exercise all rights of a secured party under the UCC
(whether or not the UCC applies to the affected collateral).  In addition, the Administrative Agent is
hereby authorized and empowered to transfer and register in its name or in the
name of its nominee the whole or any part of the Pledged Collateral, exercise
the voting rights with respect thereto, collect and receive all cash dividends
and other distributions made thereon, sell in one or more sales after five (5) days’
notice of the time and place of any public sale or of the time after which a
private sale is to take place (which notice each Pledgor agrees is commercially
reasonable), but without any previous notice or advertisement, the whole or any
part of the Pledged Collateral and otherwise act with respect to the Pledged
Collateral as though the Administrative Agent was the legal and record owner
thereof.  Each Pledgor hereby irrevocably
constitutes and appoints the Administrative Agent, for the benefit of the
Secured Parties, as the proxy and attorney-in-fact of such Pledgor with respect
to the Pledged Collateral, with full power of substitution to exercise any of
the rights provided in the preceding sentence; provided, that the
Administrative Agent shall not have any duty to exercise any such right or to
preserve the same and shall not be liable for any failure to do so or for any
delay in doing so.  Any sale shall be
made at a public or private sale at the Administrative Agent’s offices or
elsewhere to be named

 

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in the notice of
sale, either for cash or upon credit or for future delivery at such price as
the Administrative Agent may deem fair, and any Secured Party may be the
purchaser of the whole or any part of the Pledged Collateral so sold and hold
the same thereafter in its own right free from any claim of any Pledgor or any
right of redemption, which each Pledgor hereby waives to the extent permitted
by applicable law.  Each sale shall be
made to the highest bidder, but the Administrative Agent reserves the right to
reject any and all bids at such sale which, in its discretion, it shall deem
inadequate.  Demands of performance,
except as otherwise herein specifically provided for, notices of sale,
advertisements and the presence of property at sale are hereby waived and any
sale hereunder may be conducted by an auctioneer or any officer or agent of the
Administrative Agent.

 

(b)                                 If,
at the original time or times appointed for the sale of the whole or any part
of the Pledged Collateral, the highest bid, if there be but one sale, shall be
inadequate to discharge in full all the Secured Obligations, or if the Pledged
Collateral be offered for sale in lots, if at any of such sales, the highest
bid for the lot offered for sale would indicate to the Administrative Agent, in
its discretion, the unlikelihood of the proceeds of the sales of the whole of
the Pledged Collateral being sufficient to discharge all the Secured
Obligations, the Administrative Agent may, on one or more occasions and in its
discretion, postpone any of said sales by public announcement at the time of
sale or the time of previous postponement of sale, and no other notice of such
postponement or postponements of sale need be given, any other notice being
hereby waived; provided, that any sale or sales made after such
postponement shall be after five (5) days’ notice from the Administrative
Agent to any such Pledgor.

 

(c)                                  If,
at any time that the Administrative Agent shall determine to exercise its
rights to sell the whole or any part of the Pledged Collateral hereunder, such
Pledged Collateral or the part thereof to be sold shall not, for any reason
whatsoever, be effectively registered under the Securities Act of 1933, as
amended (the “Act”), the Administrative Agent may, in its discretion
(subject only to applicable requirements of law), sell such Pledged Collateral
or part thereof by private sale in such manner and under such circumstances as
the Administrative Agent may deem necessary or advisable, but subject to the
other requirements of this Section 9, and shall not be required to
effect such registration or to cause the same to be effected.  Without limiting the generality of the
foregoing, in any such event the Administrative Agent in its discretion (i) may,
in accordance with applicable securities laws, proceed to make such private
sale notwithstanding that a registration statement for the purpose of
registering such Pledged Collateral or part thereof could be or shall have been
filed under said Act (or similar statute), (ii) may approach and negotiate
with a single possible purchaser to effect such sale, (iii) may restrict
such sale to a purchaser who will represent and agree that such purchaser is
purchasing for its own account, for investment and not with a view to the
distribution or sale of such Pledged Collateral or part thereof, and (iv) may
place all or any part of the Pledged Collateral with an investment banking firm
for private placement, which firm shall be entitled to purchase all or any part
of the Pledged Collateral for its own account. 
If any of the Pledged Collateral shall not be freely distributable to
the public without registration under the Act (or similar statute), then the
Administrative Agent shall not be required to effect such registration or cause
the same to be effected but, in its discretion (subject to applicable
requirements of law), may require that any sale hereunder (including a sale at
auction) be conducted subject to restrictions (i) as to the financial
sophistication and ability of any Person permitted to bid or purchase at any
such sale,

 

10

 

(ii) as to
the content of legends to be placed upon any certificates representing the
Pledged Collateral sold in such sale, including restrictions on future transfer
thereof, (iii) as to the representations required to be made by each
Person bidding or purchasing at such sale relating to that Person’s access to
financial information about any Pledgor or any of its subsidiaries so sold and
such Person’s intentions as to the holding of the Pledged Collateral so sold
for investment, for its own account, and not with a view to the distribution
thereof, and (iv) as to such other matters as the Administrative Agent
may, in its discretion, deem necessary or appropriate in order that such sale
(notwithstanding any failure so to register) may be effected in compliance with
the UCC and other laws affecting the enforcement of creditors’ rights and the
Act and all applicable state securities laws.

 

(d)                                 Each
Pledgor acknowledges that, notwithstanding the legal availability of a private
sale or a sale subject to the restrictions described above in paragraph (c),
the Administrative Agent may, in its discretion, elect to register any or all
the Pledged Collateral under the Act (or any applicable state securities
law).  Each Pledgor, however, recognizes
that the Administrative Agent may be unable to effect a public sale of any or
all the Pledged Collateral and may be compelled to resort to one or more
private sales thereof.  Each Pledgor also
acknowledges that any such private sale may result in prices and other terms
less favorable to the seller than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner.  The Administrative Agent shall be under no
obligation to delay a sale of any of the Pledged Collateral for the period of
time necessary to permit the registrant to register such securities for public
sale under the Act, or under applicable state securities laws, even if each
Pledgor would agree to do so.

 

(e)                                  Any
cash held by the Administrative Agent as Pledged Collateral and all cash
proceeds received by the Administrative Agent in respect of any sale of,
collection from, or other realization upon all or any part of the Pledged
Collateral may, in the discretion of the Administrative Agent, be held by the
Administrative Agent as collateral for, and/or then or at any time thereafter
be applied (after payment of any amounts payable to the Administrative Agent
pursuant to Section 12 hereof) in whole or in part by the
Administrative Agent for the benefit of the Secured Parties in their individual
and various agency capacities and any other holder of any Secured Obligations
against, all or any part of the Secured Obligations in accordance with the
terms hereof.  Any surplus of such cash
or cash proceeds held by the Administrative Agent and remaining after payment
in full of all the Secured Obligations shall be paid over to the Pledgors or to
whomsoever may be lawfully entitled to receive such surplus.

 

(f)                                    Each
Pledgor agrees that following the occurrence and during the continuation of an
Event of Default it will not at any time plead, claim or take the benefit of
any appraisal, valuation, stay, extension, moratorium or redemption law now or
hereafter in force in order to prevent or delay the enforcement of this Pledge
Agreement, or the absolute sale of the whole or any part of the Pledged
Collateral or the possession thereof by any purchaser at any sale hereunder,
and each Pledgor waives the benefit of all such laws to the extent it lawfully
may do so.  Each Pledgor agrees that it
will not interfere with any right, power and remedy of the Administrative Agent
provided for in this Pledge Agreement or now or hereafter existing at law or in
equity or by statute or otherwise, or the exercise or beginning of the exercise
by the

 

11

 

Administrative
Agent of any one or more of such rights, powers, or remedies.  No failure or delay on the part of the
Administrative Agent to exercise any such right, power or remedy and no notice
or demand which may be given to or made upon any Pledgor by the Administrative
Agent with respect to any such remedies shall operate as a waiver thereof, or
limit or impair the Administrative Agent’s right to take any action or to
exercise any power or remedy hereunder, without notice or demand, or prejudice
its rights as against any Pledgor in any respect.  Except for gross negligence or willful
misconduct, each Pledgor waives all claims, damages and demands against the
Administrative Agent arising out of the repossession, retention or sale of the
Pledged Collateral.

 

11.  Power Of Attorney.  Each
Pledgor appoints the Administrative Agent, or any other Person whom the
Administrative Agent may designate, as each Pledgor’s true and lawful
attorney-in-fact, with, upon the occurrence of an Event of Default, power to
endorse each Pledgor’s name on any checks, notes, acceptances, money orders,
drafts or other form of payment or security representing a portion of the
Pledged Collateral that may come into the Administrative Agent’s possession and
to do all things necessary to carry out the terms of this Pledge
Agreement.  Each Pledgor ratifies and
approves all such acts of such attorney-in-fact.  Except gross negligence or willful
misconduct, neither the Administrative Agent nor any other Person designated by
the Administrative Agent as attorney-in-fact hereunder will be liable for any
acts or omissions, nor for any errors of judgment or mistakes of fact or
law.  This power, coupled with an
interest, is irrevocable until the payment if full of all Secured Obligations
of each Pledgor.

 

12.  Administrative Agent’s Right To Take
Action.  In the event that any Pledgor fails or
refuses promptly to perform any of its obligations set forth herein, including,
without limitation, its obligation pursuant to Section 6(e) hereof
to pay taxes, assessments and other charges levied, assessed or imposed on the
Pledged Collateral, or otherwise fails or refuses to pay any amount necessary
for the preservation and protection of the Pledged Collateral, the
Administrative Agent shall have the right, without obligation, by notice to the
Pledgors, to do all things it deems necessary or advisable to discharge the
same (including, without limitation, to pay any such taxes, assessments,
charges or other sums, together with interest and penalties thereon) and any
sums paid by the Administrative Agent, or the cost thereof, including, without
limitation, reasonable attorneys’ fees, shall be reimbursed by the Pledgors, to
the Administrative Agent on demand and, until so reimbursed, shall bear
interest at the highest rate chargeable under Section 2.12(c) of the
Credit Agreement.

 

13.  Expenses.  The
Pledgors shall, jointly and severally, pay (i) all reasonable costs,
expenses, taxes and fees incurred by the Administrative Agent in connection
with the negotiation, preparation, execution and delivery of this Pledge
Agreement and all certificates, opinions and other documents relating to these
transactions, including, without limitation, the reasonable disbursements and
professional fees of King & Spalding LLP, counsel to the
Administrative Agent, in all cases whether or not the transaction contemplated
hereby shall be consummated; (ii) all costs, expenses, taxes and fees
incurred by the Administrative Agent in connection with the perfection,
registration, maintenance, administration, custody and preservation of the
Pledged Collateral, including, without limitation, with respect to any and all
stamp, intangible or other taxes that may be payable or determined in the
future to be payable in

 

12

 

connection with this Pledge Agreement and all other documents executed or
delivered in connection herewith, and relating to releases and consents; and (iii) all
costs, expenses, taxes and fees incurred by any of the Secured Parties in
connection with or after the occurrence of any Event of Default, including,
without limitation, in connection with (a) the negotiation, preparation,
execution and delivery of any waiver, amendment or consent by the Secured
Parties, (b) the negotiation of any restructuring or workout transaction,
and the preparation, execution and delivery of any documents prepared in
connection therewith, and (c) enforcement or foreclosure with respect to
this Pledge Agreement, in all such cases such costs, expenses, taxes and fees
shall include, without limitation, the reasonable disbursements and reasonable
professional fees actually incurred of counsel to any Secured Party.  To the extent that any such fees and expenses
are subject to value added taxes, such taxes will be paid by the Pledgors.  To the extent reimbursement is sought
pursuant to this Section 13 or any other document executed pursuant
hereto, the Secured Parties shall submit to the Pledgors a statement of
expenses to be paid by the Pledgors. 
Such expenses shall be due and payable within thirty (30) days of the
date of the original statement to the extent that such Secured Party is
entitled to such reimbursement.

 

14.  Indemnity.  The
Pledgors, jointly and severally, will indemnify and hold harmless each of the
Secured Parties and each of their respective employees, representatives,
officers and directors from and against any and all claims, liabilities,
investigations, losses, damages, actions, and demands by any party against the
Secured Parties or any of them resulting from any breach or alleged breach by
any Pledgor of any representation or warranty made hereunder, or otherwise
arising out of this Pledge Agreement, unless, with respect to any of the above,
any of the Secured Parties are finally judicially determined to have acted or failed
to act with gross negligence or willful misconduct.  This Section 14 shall survive
termination of this Pledge Agreement.

 

15.  Limitation On the Administrative Agent’s
Duty In Respect Of Pledged Collateral.  The
Administrative Agent shall use reasonable care with respect to the Pledged
Collateral in its possession or under its control. The powers conferred on the
Administrative Agent hereunder are solely to protect its interest in the
Pledged Collateral and shall not impose any duty upon it to exercise any such
powers. Except for the safe custody of any Pledged Collateral in its possession
and the accounting for moneys actually received by it hereunder, the
Administrative Agent shall have no duty as to any Pledged Collateral or any
income thereon, as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Pledged Collateral, whether or not the Administrative Agent, or any other
Secured Party has or is deemed to have knowledge of such matters, or as to the
taking of any necessary steps to preserve rights against any parties or any
other rights pertaining to any Pledged Collateral.  The Administrative Agent shall be deemed to
have exercised reasonable care in the custody and preservation of any Pledged
Collateral in its possession if such Pledged Collateral is accorded treatment
substantially equal to that which the Administrative Agent accords its own
property.

 

16.  Security Interest Absolute.  All
rights of the Administrative Agent and security interests hereunder, and all
obligations of each Pledgor hereunder, shall be absolute and unconditional
irrespective of:

 

13

 

(a)                                  any
lack of validity or enforceability of the Loan Documents;

 

(b)                                 any
change in the time, manner or place of payment of, or in any other term of, all
or any of the obligations, or any other amendment or waiver of or any consent
to any departure from the Loan Documents including, without limitation, any
increase in the Secured Obligations resulting from the extension of additional
credit to any Pledgor or any of its Subsidiaries or otherwise;

 

(c)                                  any
taking, exchange, release or non-perfection of any other collateral, or any
taking, release or amendment or waiver of or consent to departure from any
guaranty, for all or any of the Secured Obligations;

 

(d)                                 any
manner of application of collateral, or proceeds thereof, to all or any of the
Secured Obligations, or any manner of sale or other disposition of any
collateral for all or any part of the Secured Obligations or any other assets
of any Pledgor or any of its Subsidiaries;

 

(e)                                  any
change, restructuring or termination of the corporate structure or existence of
any Pledgor or any of its Subsidiaries; or

 

(f)                                    any
other circumstance which might otherwise constitute a defense available to, or
a discharge of, any Pledgor or a third party pledgor.

 

17.  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 any 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,” “fraudulent
transfer” 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.

 

18.  Successors And Assigns.  This Pledge
Agreement and all obligations of each Pledgor hereunder shall be binding upon
the successors and assigns of such Pledgor (including any debtor-in-possession
on behalf of such Pledgor) and shall, together with the rights and remedies of
the Administrative Agent, for the benefit of the Secured Parties, hereunder,
inure to the benefit of the Administrative Agent, the other Secured Parties,
all future holders of any instrument evidencing any of the Secured Obligations
and their respective successors and assigns. 
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
affect the Lien granted to the Administrative Agent, for the benefit of the
Secured Parties, hereunder.  No Pledgor
may assign, sell, hypothecate or otherwise transfer any interest in or
obligation under this Pledge Agreement.

 

14

 

19.  Waivers; Amendment.

 

(a)                                  No
failure or delay by any Secured Party of any kind in exercising any power,
right or remedy hereunder and no course of dealing between any Pledgor on the
one hand and the administrative Agent or the holder of any Note on the other
hand shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or remedy hereunder or under any other Loan
Document, or any abandonment or discontinuance of steps to enforce such a
power, right or remedy, preclude any other or further exercise thereof or the
exercise of any other power, right or remedy. 
The rights and of the Secured Parties hereunder and of the Lenders under
the other Loan Documents are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. 
No waiver of any provision of this Pledge Agreement or consent to any
departure by any Pledgor therefrom shall in any event be effective unless the
same shall be permitted by subsection (b) below, and then such waiver
and consent shall be effective only in the specific instance and for the
purpose for which given.  No notice or
demand on any Pledgor in any case shall entitle such Pledgor to any other or
further notice in similar or other circumstances.

 

(b)                                 Neither this Pledge Agreement nor any provision
hereof may be waived, amended or modified except pursuant to a written
agreement entered into between the Pledgors with respect to which such waiver,
amendment or modification relates and the Administrative Agent, with the prior
written consent of the Required Lenders (except as otherwise provided in the
Credit Agreement).

 

20.  Severability.  Any
provision of this Pledge Agreement held to be illegal, invalid or unenforceable
in any jurisdiction, shall, as to such jurisdiction, be ineffective to the
extent of such illegality, invalidity or unenforceability without affecting the
legality, validity or enforceability of the remaining provisions hereof or
thereof; and the illegality, invalidity or unenforceability of a particular
provision in a particular jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

 

21.  Notices.  All
notices, requests and other communications to the Pledgors or Administrative
Agent hereunder shall be delivered in the manner required by the Credit
Agreement and shall be sufficiently given to Administrative Agent or any
Pledgor if addressed or delivered to them at, in the case of the Administrative
Agent and Borrower, its addresses and telecopier numbers specified in the
Credit Agreement and in the case of any other Pledgor, at their respective
addresses and telecopier numbers provided in the Subsidiary Guaranty
Agreement.  All such notices and
communications shall be deemed to have been duly given at the times set forth
in the Credit Agreement.

 

22.  Counterparts; Integration.  This
Pledge Agreement may be executed by one or more of the parties to this Pledge
Agreement on any number of separate counterparts (including by telecopy), and
all of said counterparts taken together shall be deemed to constitute one and
the same instrument. This Pledge Agreement constitutes the entire agreement
among the parties hereto regarding the subject matters hereof and supersedes
all prior agreements and understandings, oral or written, regarding such
subject matter.

 

15

 

23.  Governing Law; Jurisdiction; Consent to
Service of Process.

 

(a)                                  This
Pledge Agreement shall be construed in accordance with and be governed by the
law of the State of New York.

 

(b)                                 Each
party to this Pledge Agreement hereby irrevocably and unconditionally submits,
for itself and its property, to the non-exclusive jurisdiction of the United
States courts located within the Southern
district in the State of New York, and of any state court of the State of New
York located in New York county and any appellate court from any thereof, in
any action or proceeding arising out of or relating to this Pledge Agreement or
any other Loan Document or the transactions contemplated hereby or thereby, or
for recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York state
court or, to the extent permitted by applicable law, such Federal court. Each
of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.  Nothing in this Pledge Agreement shall affect
any right that the Administrative Agent, the Issuing Bank or any Lender may
otherwise have to bring any action or proceeding relating to this Pledge
Agreement against any Pledgor or its properties in the courts of any
jurisdiction.

 

(c)                                  Each
party to this Pledge Agreement irrevocably and unconditionally waives any
objection which it may now or hereafter have to the laying of venue of any
such suit, action or proceeding described in paragraph (b) of this Section and
brought in any court referred to in paragraph (b) of this Section.  Each party hereto irrevocably waives, to the
fullest extent permitted by applicable law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

 

(d)                                 Each
party to this Pledge Agreement irrevocably consents to the service of process
in the manner provided for notices in Section 10.1 of the Credit
Agreement.  Nothing in this Pledge
Agreement will affect the right of the Administrative Agent or any Lender to
serve process in any other manner permitted by law.

 

24.  WAIVER OF JURY TRIAL.  EACH
PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF THIS PLEDGE AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (i) CERTIFIES THAT
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND (ii) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
PLEDGE AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

16

 

25.  Benefit of Secured Parties.  All Liens
granted or contemplated hereby shall be for the benefit of the Secured Parties,
and all proceeds or payments realized from Pledged Collateral in accordance
herewith shall be applied to the Secured Obligations in accordance with Section 8.2
of the Credit Agreement.

 

26.  Termination of this Pledge Agreement.  No
termination or cancellation (regardless of cause or procedure) of the Credit
Agreement shall in any way affect or impair the powers, obligations, duties,
rights and liabilities of the parties hereto in any way with respect to (i) any
transaction or event occurring prior to such termination or cancellation, (ii) the
Pledged Collateral, or (iii) any Pledgor’s undertakings, agreements,
covenants, warranties and representations contained in this Pledge Agreement
and all such undertakings, agreements, covenants, warranties and
representations shall survive such termination or cancellation until the
payment and performance, in full, of all Secured Obligations of the Pledgors
and the termination of all commitments to lend or issue letters of credit under
the Credit Agreement.  Subject to Section 17  hereof, this Pledge Agreement and
the security interests granted hereunder shall terminate when all of the
Secured Obligations (other than those Secured Obligations relating to the
Hedging Obligations) have been paid in full in cash and the Lenders have no
further commitment to lend under the Credit Agreement, the LC Exposure has been
reduced to zero and the Issuing Bank has no further obligation to issue Letters
of Credit under the Credit Agreement.  Upon such termination, Administrative Agent
shall return all Pledged Collateral in its possession to the respective
Pledgors and will, at the sole cost and expense of the Pledgors, execute such
documents, without recourse or warranty, as Pledgors deem reasonably necessary
to release any interests held by Administrative Agent or the Secured Parties in
the Pledged Collateral.

 

27.  Additional Pledged Collateral.  In the
event that the any Pledgor is required, under the terms of any Loan Document or
otherwise, to pledge and hypothecate any Collateral after the Closing Date,
such Pledgor shall pledge and hypothecate such Collateral, and be bound with
respect to such Collateral by all of the terms and conditions hereof, by
delivery to the Administrative Agent of an executed counterpart of a Supplement
to Subsidiary Pledge Agreement in the form of Exhibit A attached
hereto.

 

28.  Additional Pledgors.  Pursuant
to Section 5.10 of the Credit Agreement, each Subsidiary that that is
required to become a Subsidiary Loan Party after the date of the Credit
Agreement is required to enter into this Agreement as a Pledgor upon becoming
such a Subsidiary Loan Party.  Upon
execution and delivery after the date hereof by the Administrative Agent and
such Subsidiary of an instrument in the form of Exhibit B, such
Subsidiary shall become a Pledgor hereunder with the same force and effect as
if originally named as a Pledgor herein. 
The execution and delivery of any instrument adding an additional
Pledgor as a party to this Pledge Agreement shall not require the consent of
any other Pledgor hereunder.  The rights
and obligations of each Pledgor hereunder shall remain in full force and effect
notwithstanding the addition of any new Pledgor as a party to this Pledge
Agreement.

 

[Signature Pages Follow]

 

17

 

IN WITNESS WHEREOF, each
Pledgor has caused this Pledge Agreement to be executed and delivered by its
duly authorized officer as of the date first set forth above.

 

 

	
   

  	
  AAI SERVICES
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  AAI/ACL TECHNOLOGIES,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  AAI CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
   

  
	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

[SIGNATURE
PAGE TO PLEDGE AGREEMENT]

 

 

	
  Acknowledged and Agreed
  to:

  
	
   

  
	
  SUNTRUST BANK,

  
	
  as Administrative Agent

  
	
   

  
	
   

  
	
  By:

  	
  /s/

  	
   

  
	
  Name:

  
	
  Title:EXHIBIT 10.3

 

Execution Copy

 

PARENT GUARANTY AGREEMENT

 

THIS PARENT GUARANTY AGREEMENT (the “Agreement”),
dated as of July 18, 2005, by and among UNITED INDUSTRIAL CORPORATION, a
Delaware corporation (the “Guarantor”) and SUNTRUST BANK, a Georgia
banking corporation, as administrative agent (the “Administrative Agent”)
for the benefit of itself and the several banks and other financial
institutions (the “Lenders”) from time to time party to the Revolving
Credit Agreement, dated as of the date hereof, by and among the AAI
Corporation, a Maryland corporation (the “Borrower”), Guarantor, the
several banks and other financial institutions from time to time party
thereto(the “Lenders”), the Administrative Agent, and SunTrust Bank, as
Issuing Bank and as Swingline Lender (as amended, restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”;
capitalized terms used herein and not otherwise defined herein shall the
meanings assigned to such terms in the Credit Agreement).

 

W I T N E S S E T H:

 

WHEREAS, pursuant to the Credit Agreement, the
Lenders have agreed to establish a revolving credit facility in favor of the
Borrower;

 

WHEREAS, the Guarantor is the parent of the
Borrower and will derive substantial benefit from the making of Loans by the
Lenders and the issuance of Letters of Credit by the Issuing Bank; and

 

WHEREAS, it is a condition precedent to the
obligations of the Administrative Agent, the Issuing Bank, the Swingline
Lender, and the Lenders under the Credit Agreement that the Guarantor execute
and deliver to the Administrative Agent a Parent Guaranty Agreement in the form
hereof, and the Guarantor wishes to fulfill said condition precedent;

 

NOW, THEREFORE, in order to induce Lenders to
extend the Loans and the Issuing Bank to issue Letters of Credit and to make
the financial accommodations as provided for in the Credit Agreement and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

 

Section 1.  Guarantee.  The Guarantor unconditionally guarantees, as
a primary obligor and not merely as a surety, (i) the due and punctual
payment of all Obligations including, without limitation, (A) the
principal of and premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other
similar proceeding, regardless of whether allowed or allowable in such
proceeding) on the Loans, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or otherwise, (B) each
payment required to be made by the Borrower under the Credit Agreement in
respect of any Letter of Credit, when and as due, including payments in respect
of reimbursement or disbursements, interest thereon and obligations to provide
cash collateral, and (C) all other monetary obligations, including fees,
costs, expenses and indemnities, whether primary, secondary, direct,
contingent, fixed or otherwise (including monetary obligations incurred during

 

 

the pendency
of any bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such proceeding), of the Loan
Parties to the Administrative Agent and the Lenders under the Credit Agreement
and the other Loan Documents, (ii) the due and punctual performance of all
covenants, agreements, obligations and liabilities of the Loan Parties under or
pursuant to the Credit Agreement and the other Loan Documents; and (iii) the
due and punctual payment and performance of all obligations of the Borrower,
monetary or otherwise, arising under any Hedging Transaction incurred to limit
interest rate or fee fluctuation with respect to the Loans and Letters of
Credit entered into with a counterparty that was a Lender or an Affiliate of a
Lender at the time such Hedging Transaction was entered into (each such person
a “Specified Hedge Provider”; the Administrative Agent, the Lenders and
the Specified Hedge Providers, collectively, the “Secured Parties” and
each individually a “Secured Party”) (all the monetary and other
obligations referred to in the preceding clauses (i) through (iii) being
collectively called the “Guaranteed Obligations”).  The Guarantor further agrees that the
Guaranteed Obligations may be extended or renewed, in whole or in part, without
notice to or further assent from such Guarantor, and that such Guarantor will
remain bound upon its guarantee notwithstanding any extension or renewal of any
Guaranteed Obligations.

 

Section 2.  Obligations
Not Waived. 
To the fullest extent permitted by applicable law, the Guarantor waives
presentment or protest to, demand of or payment from the other Loan Parties of
any of the Guaranteed Obligations, and also waives notice of acceptance of its
guarantee and notice of protest for nonpayment. 
To the fullest extent permitted by applicable law, the obligations of
the Guarantor hereunder shall not be affected by (i) the failure of the
Administrative Agent or any Lender to assert any claim or demand or to enforce
or exercise any right or remedy against the Borrower or any other Guarantor
under the provisions of the Credit Agreement, any other Loan Document or
otherwise, (ii) the failure of any Secured Party to assert any claim or
demand or to enforce or exercise any right or remedy against the Borrower or
any other Guarantor under the provisions of any instruments, agreements or
documents executed in connection with any Hedging Transaction incurred to limit
interest rate or fee fluctuation with respect to the Loans and Letters of
Credit entered into with a Specified Hedge Provider (each such document, a “Hedging
Document”) (iii) any rescission, waiver, amendment or modification of,
or any release from any of the terms or provisions of, this Agreement, any
other Loan Document, any Hedging Document, any guarantee or any other
agreement, including with respect to any other Guarantor under this Agreement,
or (iv) the failure to perfect any security interest in, or the release
of, any of the security held by or on behalf of the Administrative Agent or any
Secured Party.

 

Section 3.  Guarantee of
Payment. 
The Guarantor further agrees that its guarantee constitutes a guarantee
of payment when due and not of collection, and waives any right to require that
any resort be had by the Administrative Agent or any Secured Party to any of
the security held for payment of the Guaranteed Obligations or to any balance
of any deposit account or credit on the books of the Administrative Agent or
any Secured Party in favor of the Borrower or any other Person.

 

Section 4.  No Discharge
or Diminishment of Guarantee.  The obligations of the Guarantor hereunder
shall not be subject to any reduction, limitation, impairment or termination
for any reason (other than the indefeasible payment in full in cash of the
Guaranteed Obligations), including any claim of waiver, release, surrender,
alteration or compromise of any

 

2

 

of the
Guaranteed Obligations, and shall not be subject to any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality or unenforceability of the Guaranteed Obligations or otherwise.  Without limiting the generality of the
foregoing, the obligations of the Guarantor hereunder shall not be discharged
or impaired or otherwise affected by the failure of the Administrative Agent or
any Secured Party to assert any claim or demand or to enforce any remedy under
the Credit Agreement, any other Loan Document, any Hedging Document or any
other agreement, by any waiver or modification of any provision of any thereof,
by any default, failure or delay, willful or otherwise, in the performance of
the Guaranteed Obligations, or by any other act or omission that may or might
in any manner or to the extent vary the risk of any Guarantor or that would
otherwise operate as a discharge of the Guarantor as a matter of law or equity
(other than the indefeasible payment in full in cash of all the Obligations).

 

Section 5.  Defenses of
Borrower Waived. 
To the fullest extent permitted by applicable law, the Guarantor waives
any defense based on or arising out of any defense of any Loan Party or the
unenforceability of the Guaranteed Obligations or any part thereof from any
cause, or the cessation from any cause of the liability of any Loan Party,
other than the final and indefeasible payment in full in cash of the Guaranteed
Obligations.  The Administrative Agent
and the Secured Parties may, at their election, foreclose on any security held
by one or more of them by one or more judicial or nonjudicial sales, accept an
assignment of any such security in lieu of foreclosure, compromise or adjust
any part of the Guaranteed Obligations, make any other accommodation with any
other Loan Party or any other guarantor, without affecting or impairing in any
way the liability of any Guarantor hereunder except to the extent the
Guaranteed Obligations have been fully, finally and indefeasibly paid in
cash.  Pursuant to applicable law, the
Guarantor waives any defense arising out of any such election even though such
election operates, pursuant to applicable law, to impair or to extinguish any
right of reimbursement or subrogation or other right or remedy of such
Guarantor against the Borrower or any other Guarantor or guarantor, as the case
may be, or any security.

 

Section 6.  Agreement to
Pay; Subordination.  In furtherance of the foregoing and not in
limitation of any other right that the Administrative Agent or any Secured
Party has at law or in equity against any Guarantor by virtue hereof, upon the
failure of the Borrower or any other Loan Party to pay any Obligation when and
as the same shall become due, whether at maturity, by acceleration, after
notice of prepayment or otherwise, the Guarantor hereby promises to and will
forthwith pay, or cause to be paid, to the Administrative Agent for the benefit
of the Secured Parties in cash the amount of such unpaid Obligation.  Upon payment by any Guarantor of any sums to
the Administrative Agent, all rights of such Guarantor against any Loan Party
arising as a result thereof by way of right of subrogation, contribution,
reimbursement, indemnity or otherwise shall in all respects be subordinate and
junior in right of payment to the prior indefeasible payment in full in cash of
all the Guaranteed Obligations.  In
addition, any indebtedness of any Loan Party now or hereafter held by any
Guarantor is hereby subordinated in right of payment to the prior payment in
full in cash of the Guaranteed Obligations. 
If any amount shall erroneously be paid to any Guarantor on account of (i) such
subrogation, contribution, reimbursement, indemnity or similar right or (ii) any
such indebtedness of any Loan Party, such amount shall be held in trust for the
benefit of the Administrative Agent and the Secured Parties and shall forthwith
be paid to the Administrative Agent to be credited against the

 

3

 

payment of the
Guaranteed Obligations, whether matured or unmatured, in accordance with the
terms of the Loan Documents.

 

Section 7.  Information.  The Guarantor assumes all responsibility for
being and keeping itself informed of other Loan Parties’ financial condition
and assets, and of all other circumstances bearing upon the risk of nonpayment
of the Guaranteed Obligations and the nature, scope and extent of the risks
that such Guarantor assumes and incurs hereunder, and agrees that none of the
Administrative Agent or the Secured Parties will have any duty to advise the
Guarantor of information known to it or any of them regarding such
circumstances or risks.

 

Section 8.  Indemnity and
Subrogation. 
In addition to all such rights of indemnity and subrogation as the
Guarantor may have under applicable law (but subject to Section 6),
the Borrower agrees that (a) in the event a payment shall be made by any
Guarantor under this Agreement, the Borrower shall indemnify such Guarantor for
the full amount of such payment and such Guarantor shall be subrogated to the
rights of the person to whom such payment shall have been made to the extent of
such payment and (b) in the event any assets of any Guarantor shall be
sold to satisfy a claim of any Secured Party under this Agreement, the Borrower
shall indemnify such Guarantor in an amount equal to the greater of the book
value or the fair market value of the assets so sold.

 

Section 9.  Contribution
and Subrogation. 
The Guarantor (a “Contributing Guarantor”) agrees (subject to Section 6)
that, in the event a payment shall be made by any other Guarantor under this
Agreement or assets of any other Guarantor shall be sold to satisfy a claim of
any Secured Party and such other Guarantor (the “Claiming Guarantor”)
shall not have been fully indemnified by the Borrower as provided in Section 8,
the Contributing Guarantor shall indemnify the Claiming Guarantor in an amount
equal to the amount of such payment or the greater of the book value or the
fair market value of such assets, as the case may be, in each case multiplied
by a fraction of which the numerator shall be the net worth of the Contributing
Guarantor on the date hereof and the denominator shall be the aggregate net
worth of the Guarantor on the date hereof. 
Any Contributing Guarantor making any payment to a Claiming Guarantor
pursuant to this Section 9 shall be subrogated to the rights of
such Claiming Guarantor under Section 8 to the extent of such
payment.

 

Section 10.  Subordination.  Notwithstanding any provision of this
Agreement to the contrary, all rights of the Guarantor under Section 8
and Section 9 and all other rights of indemnity, contribution or
subrogation under applicable law or otherwise shall be fully subordinated to
the indefeasible payment in full in cash of the Guaranteed Obligations.  No failure on the part of the Borrower or any
Guarantor to make the payments required under applicable law or otherwise shall
in any respect limit the obligations and liabilities of any Guarantor with
respect to its obligations hereunder, and the Guarantor shall remain liable for
the full amount of the obligations of such Guarantor hereunder.

 

Section 11.  Representations
and Warranties. 
The Guarantor represents and warrants as to itself that all
representations and warranties relating to it (as a parent of the Borrower)
contained in the Credit Agreement are true and correct.

 

4

 

Section 12.  Termination.  The guarantees made hereunder (i) shall
terminate when all the Guaranteed Obligations (other than those Guaranteed
Obligations relating to the Hedging Obligations) have been paid in full in cash
and the Lenders have no further commitment to lend under the Credit Agreement,
the LC Exposure has been reduced to zero and the Issuing Bank has no further
obligation to issue Letters of Credit under the Credit Agreement and (ii) shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any Obligation is rescinded or must otherwise
be restored by any Lender or any Guarantor upon the bankruptcy or
reorganization of the Borrower, any Guarantor or otherwise.  In connection with the foregoing, the
Administrative Agent shall execute and deliver to such Guarantor or Guarantor’s
designee, at such Guarantor’s expense, any documents or instruments, without
representation or recourse, which such Guarantor shall reasonably request from
time to time to evidence such termination and release.

 

Section 13.  Binding
Effect; Several Agreement; Assignments.  Whenever in this Agreement any of the parties
hereto is referred to, such reference shall be deemed to include the successors
and assigns of such party; and all covenants, promises and agreements by or on
behalf of the Guarantor that are contained in this Agreement shall bind and
inure to the benefit of each party hereto and their respective successors and
assigns.  This Agreement shall become
effective as to any Guarantor when a counterpart hereof executed on behalf of
such Guarantor shall have been delivered to the Administrative Agent, and a
counterpart hereof shall have been executed on behalf of the Administrative
Agent, and thereafter shall be binding upon such Guarantor and the
Administrative Agent and their respective successors and assigns, and shall
inure to the benefit of such Guarantor, the Administrative Agent and the
Secured Parties, and their respective successors and assigns, except that no
Guarantor shall have the right to assign its rights or obligations hereunder or
any interest herein (and any such attempted assignment shall be void).  If all of the capital stock of a Guarantor is
sold, transferred or otherwise disposed of pursuant to a transaction permitted
by the Credit Agreement, such Guarantor shall be released from its obligations
under this Agreement without further action. 
This Agreement shall be construed as a separate agreement with respect
to the Guarantor and may be amended, modified, supplemented, waived or released
with respect to any Guarantor without the approval of any other Guarantor and
without affecting the obligations of any other Guarantor hereunder.

 

Section 14.  Waivers;
Amendment.

 

(a)                                  No
failure or delay of the Administrative Agent of any kind in exercising any
power, right or remedy hereunder and no course of dealing between any Guarantor
on the one hand the and Administrative Agent or any holder of any Note on the
other hand shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or remedy hereunder, under any other Loan
Document or under any Hedging Document, or any abandonment or discontinuance of
steps to enforce such a power, right or remedy, preclude any other or further
exercise thereof or the exercise of any other power, right or remedy.  The rights of the Administrative Agent
hereunder and of the Secured Parties under the other Loan Documents and the
Hedging Documents, as applicable, are cumulative and are not exclusive of any
rights or remedies that they would otherwise have.  No waiver of any provision of this Agreement
or consent to any departure by any Guarantor therefrom shall in any event be
effective unless the same shall be permitted by subsection (b) below,
and then such waiver and consent shall be effective only in the specific
instance and for the purpose for which given. 
No

 

5

 

notice or
demand on any Guarantor in any case shall entitle such Guarantor to any other
or further notice in similar or other circumstances.

 

(b)                                 Neither
this Agreement nor any provision hereof may be waived, amended or modified
except pursuant to a written agreement entered into between the Guarantor with
respect to which such waiver, amendment or modification relates and the
Administrative Agent, with the prior written consent of the Required Lenders
(except as otherwise provided in the Credit Agreement).

 

Section 15.  Notices.  All communications and notices hereunder
shall be in writing and given as provided in Section 10.1 of the Credit
Agreement.  All communications and
notices hereunder to the Guarantor shall be given to it at its address set
forth on Schedule I attached hereto.

 

Section 16.  Severability.  Any provision of this Agreement held to be
illegal, invalid or unenforceable in any jurisdiction, shall, as to such
jurisdiction, be ineffective to the extent of such illegality, invalidity or
unenforceability without affecting the legality, validity or enforceability of
the remaining provisions hereof or thereof; and the illegality, invalidity or
unenforceability of a particular provision in a particular jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.

 

Section 17.  Counterparts;
Integration. 
This Agreement may be executed in counterparts, each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract (subject to Section 13), and shall become effective
as provided in Section 13. 
Delivery of an executed signature page to this Agreement by
facsimile transmission shall be as effective as delivery of a manually executed
counterpart of this Agreement.  This
Agreement constitutes the entire agreement among the parties hereto regarding
the subject matters hereof and supersedes all prior agreements and
understandings, oral or written, regarding such subject matter.

 

Section 18.  Rules of
Interpretation. 
The rules of interpretation specified in Section 1.4 of the
Credit Agreement shall be applicable to this Agreement.

 

Section 19.  Governing
Law; Jurisdiction; Consent to Service of Process.

 

(a)                                  This
Agreement shall be construed in accordance with and be governed by the law of the
State of New York.

 

(b)                                 Each
party to this Agreement hereby irrevocably and unconditionally submits, for
itself and its property, to the non-exclusive jurisdiction of the United States
courts located within the Southern District in the State of New York, and of
any state court of the State of New York located in New York county and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, any other Loan Document or any Hedging Document or
the transactions contemplated hereby or thereby, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York state court or, to the
extent permitted by applicable law, such Federal court.  Each of the parties hereto agrees that a
final judgment in any such action or

 

6

 

proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.  Nothing in this Agreement shall affect any
right that the Administrative Agent, the Issuing Bank or any Secured Party may
otherwise have to bring any action or proceeding relating to this Agreement
against any Guarantor or its properties in the courts of any jurisdiction.

 

(c)                                  Each
party to this Agreement irrevocably and unconditionally waives any objection
which it may now or hereafter have to the laying of venue of any such
suit, action or proceeding described in paragraph (b) of this Section and
brought in any court referred to in paragraph (b) of this
Section.  Each party hereto irrevocably
waives, to the fullest extent permitted by applicable law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.

 

(d)                                 Each
party to this Agreement irrevocably consents to the service of process in the
manner provided for notices in Section 10.1 of the Credit Agreement.  Nothing in this Agreement will affect the
right of the Administrative Agent or any Secured Party to serve process in any
other manner permitted by law.

 

Section 20.  Waiver of
Jury Trial. 
EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT OR ANY HEDGING DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (i) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER, AND (ii) ACKNOWLEDGES THAT IT AND THE
OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS AND THE HEDGING DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

Section 21.  Right of
Setoff.  If
an Event of Default shall have occurred and be continuing, each Secured Party
is hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
Indebtedness at any time owing by such Secured Party to or for the credit or
the account of any Guarantor against any or all the obligations of such
Guarantor now or hereafter existing under this Agreement, the other Loan
Documents and the Hedging Documents held by such Secured Party, irrespective of
whether or not such Person shall have made any demand under this Agreement, any
other Loan Document or any Hedging Document and although such obligations may
be unmatured.  The rights of each Secured
Party under this Section 21 are in addition to other rights and
remedies (including other rights of setoff) that such Secured Party may have.

 

[Signatures Follow]

 

7

 

IN WITNESS WHEREOF, the parties hereto have
duly executed this Agreement as of the day and year first above written.

 

	
   

  	
  UNITED
  INDUSTRIAL CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James H. Perry

  	
   

  
	
   

  	
   

  	
  Name:

  	
  James H. Perry

  
	
   

  	
   

  	
  Title:

  	
  Vice President
  and Chief

  Financial Officer

  
					

 

[SIGNATURE PAGE TO PARENT
GUARANTY AGREEMENT]

 

 

	
  SUNTRUST BANK,
  as

  
	
  Administrative
  Agent

  
	
   

  
	
   

  
	
  By:

  	
  /s/

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
				

 

 

SCHEDULE I TO THE

PARENT GUARANTY AGREEMENT

 

 

United
Industrial Corporation

124
Industry Lane

Hunt
Valley, MD  21030

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