EXHIBIT 10.31
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Pledge Agreement") is entered into as of
July 22, 2003 among UNITED STATES CAN COMPANY, a Delaware corporation (the
"Company"), U.S. CAN CORPORATION, a Delaware corporation (the "Parent
Guarantor"), and each of the Domestic Subsidiaries of the Company (individually
a "Subsidiary Guarantor" and collectively the "Subsidiary Guarantors"; together
with the Company and the Parent Guarantor, individually a "Pledgor" and
collectively the "Pledgors") and WELLS FARGO BANK MINNESOTA, NATIONAL
ASSOCIATION, in its capacity as trustee and collateral agent (in such capacity,
the "Collateral Agent") for the benefit of the Holders (described below).
RECITALS
WHEREAS, pursuant to that certain Indenture dated as of the date hereof
(as amended, modified, extended, renewed, restated or replaced from time to time
hereinafter, the "Indenture") among the Company, the Collateral Agent, and the
Parent Guarantor, the Company has issued on the date hereof $125,000,000 10 7/8%
Senior Secured Notes due 2010 (collectively, the "Notes");
WHEREAS, the Subsidiary Guarantors (including all future Subsidiaries
of the Company which become a party thereto by execution of a Guarantee
Supplement (as defined in the Indenture)) have guaranteed the obligations of the
Company under the Notes and the Indenture pursuant to the terms of that certain
Subsidiary Guarantee dated as of the date hereof (as amended, modified,
extended, renewed, restated or replaced from time to time hereinafter, the
"Subsidiary Guarantee") and the Parent Guarantor has guaranteed the obligations
of the Company under the Notes and the Indenture pursuant to the terms of that
certain Parent Guarantee dated as of the date hereof (as amended, modified,
extended, renewed, restated or replaced from time to time hereinafter, the
"Parent Guarantee"; collectively, the Indenture, the Notes, the Subsidiary
Guarantee and the Parent Guarantee, together with all documents and instruments
executed in connection therewith, are referred to herein as the "Note
Documents");
WHEREAS, the obligations of the Company, the Parent Guarantor and the
Subsidiary Guarantors under the Note Documents are to be secured pursuant to the
terms of this Pledge Agreement by liens on and security interests in the Pledged
Collateral;
WHEREAS, pursuant to a Lien Intercreditor Agreement dated as of the
date hereof (as amended, modified, extended, renewed, restated or replaced from
time to time hereinafter, the "Intercreditor Agreement") among Bank of America,
N.A., in its capacity as agent (in such capacity, the "Senior Agent") for the
financial institutions party to the Credit Agreement, the Collateral Agent, the
Company, the Parent Guarantor and the Subsidiary Guarantors, the liens on and
security interests in the Pledged Collateral granted by the Company, the Parent
Guarantor and the Subsidiary Guarantors pursuant hereto are junior to the liens
on and security interests in the Pledged Collateral granted by the Company, the
Parent Guarantor and the Subsidiary Guarantors to the Senior Agent; and
PLEDGE AGREEMENT
WHEREAS, it is a condition precedent to the effectiveness of the
Indenture and the obligations of the Holders to purchase the Notes that the
Obligors shall have executed and delivered this Pledge Agreement to the
Collateral Agent for the benefit of the Holders.
AGREEMENT
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. (a) Unless otherwise defined herein, capitalized
terms used herein shall have the meanings ascribed to such terms in the
Indenture, and the following terms which are defined in the Uniform Commercial
Code (the "UCC") in effect in the State of New York are used herein as so
defined: Control, Entitlement Order, Investment Company Security, Proceeds,
Products, Securities Account, Security Entitlement, Securities Intermediary and
Security. Except as otherwise expressly provided, all definitions shall be
equally applicable to the singular and plural forms of the terms defined.
(b) In addition, the following terms shall have the following
meanings:
"First-Tier Foreign Subsidiary": any direct Foreign Subsidiary of a
Pledgor.
"Governmental Authority": any nation or government, any
intergovernmental or supranational body, any state or other political
subdivision thereof and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of government, any securities exchange
and any self-regulatory organization (including the National Association of
Insurance Commissioners).
"Paid in Full": the indefeasible payment in full in of all obligations
of the Obligors under the Indenture and the Notes in accordance with Section
8.01(i) of the Indenture.
"Secured Obligations": the collective reference to all of the
obligations owing from the Company or any other Obligor to any Holder or the
Collateral Agent in connection with the Note Documents, howsoever evidenced,
created, incurred or acquired, whether primary, secondary, direct, contingent,
or joint and several, including, without limitation, all obligations and
liabilities incurred in connection with collecting and enforcing the foregoing.
"Security Agreement": that certain Security Agreement dated as of the
date hereof among the Pledgors and the Collateral Agent, as the same may be
amended, modified, extended, renewed, restated or replaced from time to time
hereinafter.
2. Pledge and Grant of Security Interest. To secure the prompt
payment and performance in full when due, whether by lapse of time or otherwise,
of the Pledgor Obligations (as defined in Section 3 hereof), each Pledgor hereby
pledges and assigns to the Collateral Agent, for the benefit of the Holders, and
grants to the Collateral Agent, for the benefit of the Holders, a continuing
security interest in any and all right, title and interest of such Pledgor in
PLEDGE AGREEMENT
and to the following, whether now owned or existing or owned, acquired, or
arising hereafter (collectively, the "Pledged Collateral"):
(a) Pledged Capital Stock. 100% (or, if less, the full
amount owned by such Pledgor) of the issued and outstanding Capital
Stock of each Domestic Subsidiary and, subject to Section 3 hereof,
each First-Tier Foreign Subsidiary set forth on Schedule 2(a) attached
hereto, together with the certificates (or other agreements or
instruments), if any, representing such Capital Stock and all options
and other rights, contractual or otherwise, with respect thereto
(collectively, together with the Capital Stock described in Sections
2(b) and 2(c) below, the "Pledged Capital Stock"), including, but not
limited to, the following (provided that any Capital Stock which would
require the presentation of separate audited financial statements for
such Subsidiary pursuant to rules and regulations promulgated by the
Securities and Exchange Commission shall be excluded from the
definition of "Pledged Collateral" hereunder until such time as such
rules and regulations are repealed, superseded or no longer of any
force or effect at which time the applicable Pledgor shall pledge such
Capital Stock pursuant to the terms hereof):
(A) all shares, securities, membership interests
or other equity interests representing a dividend on any of
the Pledged Capital Stock, or representing a distribution or
return of capital upon or in respect of the Pledged Capital
Stock, or resulting from a stock split, revision,
reclassification or other exchange therefor, and any
subscriptions, warrants, rights or options issued to the
holder of, or otherwise in respect of, the Pledged Capital
Stock; and
(B) without affecting the obligations of the
Pledgors under any provision prohibiting such action hereunder
or under the Indenture, in the event of any consolidation or
merger involving the issuer of any Pledged Capital Stock and
in which such issuer is not the surviving entity, the Capital
Stock of the successor entity formed by or resulting from such
consolidation or merger.
(b) Additional Shares. 100% (or, if less, the full amount
owned by such Pledgor) of the issued and outstanding Capital Stock of
any Person which hereafter becomes a Domestic Subsidiary or a
First-Tier Foreign Subsidiary, together with the certificates (or other
agreements or instruments), if any, representing such Capital Stock.
(c) Proceeds. All Proceeds and Products of the foregoing,
however and whenever acquired and in whatever form.
Without limiting the generality of the foregoing, it is hereby
specifically understood and agreed that a Pledgor may from time to time
hereafter deliver additional Capital Stock to the Collateral Agent as collateral
security for the Pledgor Obligations. Upon delivery to the Collateral Agent,
such additional Capital Stock shall be deemed to be part of the Pledged
Collateral of such Pledgor and shall be subject to the terms of this Pledge
Agreement whether or not Schedule 2(a) is amended to refer to such additional
Capital Stock.
PLEDGE AGREEMENT
3. Security for Pledgor Obligations. The security
interest created hereby in the Pledged Collateral of each Pledgor
constitutes continuing collateral security for all of the Secured
Obligations owing from the Company or any other Pledgor to any Holder
or the Collateral Agent, howsoever evidenced, created, incurred or
acquired, whether primary, secondary, direct, contingent, or joint and
several, including, without limitation, all obligations and liabilities
incurred in connection with collecting and enforcing the foregoing
(collectively, the "Pledgor Obligations"); provided, however, in no
event shall more than 65% of the Capital Stock of any First Tier
Foreign Subsidiary of any Pledgor secure the Secured Obligations.
4. Delivery of the Pledged Collateral; Perfection of Security
Interest. Each Pledgor hereby agrees that:
(a) Delivery of Certificates. Each Pledgor shall deliver
to the Collateral Agent or its agent or bailee (i) simultaneously with
or prior to the execution and delivery of this Pledge Agreement, all
certificates representing the Pledged Capital Stock of such Pledgor and
(ii) promptly upon the receipt thereof by or on behalf of a Pledgor,
all other certificates and instruments constituting Pledged Collateral
of a Pledgor. Prior to delivery to the Collateral Agent, all such
certificates and instruments constituting Pledged Collateral of a
Pledgor shall be held in trust by such Pledgor for the benefit of the
Collateral Agent pursuant hereto. All such certificates shall be
delivered in suitable form for transfer by delivery or shall be
accompanied by duly executed instruments of transfer or assignment in
blank, substantially in the form provided in Exhibit 4(a) attached
hereto.
(b) Additional Securities. If such Pledgor shall receive
by virtue of its being, becoming or having been the owner of any
Pledged Collateral, any (i) certificate, including without limitation,
any certificate representing a dividend or distribution in connection
with any increase or reduction of capital, reclassification, merger,
consolidation, sale of assets, combination of shares or membership or
equity interests, stock splits, spin-off or split-off, promissory notes
or other instrument; (ii) option or right, whether as an addition to,
substitution for, or an exchange for, any Pledged Collateral or
otherwise; (iii) dividends payable in securities; or (iv) distributions
of securities or other equity interests in connection with a partial or
total liquidation, dissolution or reduction of capital, capital surplus
or paid-in surplus, then, subject to the percentage limitations set
forth in Section 2(a) above, such Pledgor shall receive such
certificate, instrument, option, right or distribution in trust for the
benefit of the Collateral Agent, shall segregate it from such Pledgor's
other property and shall deliver it forthwith to the Collateral Agent
in the exact form received together with any necessary endorsement
and/or appropriate stock power duly executed in blank, substantially in
the form provided in Exhibit 4(a), to be held by the Collateral Agent
as Pledged Collateral and as further collateral security for the
Pledgor Obligations.
(c) Financing Statements. Each Pledgor shall execute and
deliver to the Collateral Agent such UCC or other applicable financing
statements as may be reasonably requested by the Collateral Agent in
order to perfect the security interest created hereby in the Pledged
Collateral of such Pledgor.
PLEDGE AGREEMENT
(d) Provisions Relating to Securities Entitlements and
Securities Accounts. With respect to any Pledged Collateral consisting
of a Securities Entitlement or held in a Securities Account, (a) the
applicable Pledgor and the applicable Securities Intermediary shall
enter into an agreement with the Collateral Agent granting Control to
the Collateral Agent over such Pledged Collateral, such agreement to be
in form and substance satisfactory to the Collateral Agent and (b) the
Collateral Agent shall be entitled, upon the occurrence and during the
continuance of a Default or an Event of Default, to notify the
applicable Securities Intermediary that it should follow the
Entitlement Orders of the Collateral Agent and no longer follow the
Entitlement Orders of the applicable Pledgor. Upon receipt by a Pledgor
of notice from a Securities Intermediary of its intent to terminate the
Securities Account of such Pledgor held by such Securities
Intermediary, prior to the termination of such Securities Account the
Pledged Collateral in such Securities Account shall be (i) transferred
to a new Securities Account which is subject to a control agreement as
provided above or (ii) transferred to an account held by the Collateral
Agent (in which it will be held until a new Securities Account is
established).
5. Representations and Warranties. Each Pledgor hereby represents
and warrants to the Collateral Agent, for the benefit of the Holders, that so
long as any of the Pledgor Obligations remain outstanding (other than any such
obligations which by the terms thereof are stated to survive termination of the
Note Documents) or any Note Document is in effect, and until all of Notes shall
have been Paid in Full and the Indenture shall have been terminated (except as
provided in Section 8.01(iii) of the Indenture):
(a) Authorization of Pledged Capital Stock. The Pledged
Capital Stock is duly authorized and validly issued, is fully paid and,
with respect any Pledged Capital Stock consisting of stock of a
corporation, nonassessable and is not subject to the preemptive rights
of any Person. All other shares of Capital Stock constituting Pledged
Collateral will be duly authorized and validly issued, fully paid and,
with respect any Pledged Capital Stock consisting of stock of a
corporation, nonassessable and not subject to the preemptive rights of
any Person.
(b) Title. Each Pledgor has good and indefeasible title
to the Pledged Collateral of such Pledgor and will at all times be the
legal and beneficial owner of such Pledged Collateral free and clear of
any Lien or "adverse claim" (within the meaning of Section 8-102 of the
UCC), other than Permitted Liens.
(c) Exercising of Rights. Neither the grant by the
Obligors to the Collateral Agent of the rights and remedies hereunder
nor the exercise by the Collateral Agent of its rights and remedies
hereunder in a lawful manner will violate any law or governmental
regulation or any material contractual restriction binding on or
affecting a Pledgor or any of its property; provided, however, that no
representation or warranty is made as to any authorization, approval or
action by, or notice of filing with, any Governmental Authority
applicable to the Collateral Agent or any Holder.
PLEDGE AGREEMENT
(d) Pledgor's Authority. No authorization, approval or
action by, and no notice or filing with any Governmental Authority, the
issuer of any Pledged Capital Stock or any third party is required
either (i) for the pledge made by a Pledgor or for the granting of the
security interest by a Pledgor pursuant to this Pledge Agreement or
(ii) for the exercise by the Collateral Agent on behalf of the Holders
of its rights and remedies hereunder (except as may be required by laws
affecting the offering and sale of securities).
(e) Security Interest/Priority. This Pledge Agreement
creates a valid security interest in favor of the Collateral Agent, for
the benefit of the Holders, in the Pledged Collateral. Pursuant to the
terms of the Intercreditor Agreement, the taking of possession by the
Senior Agent of the certificates, if any, representing the Pledged
Capital Stock and all other certificates and instruments constituting
Pledged Collateral will perfect and establish the second priority of
the Collateral Agent's security interest in the Pledged Capital Stock
and such certificates and instruments and, upon the filing of UCC
financing statements in the appropriate filing office in the location
of each Pledgor's chief executive office, the Collateral Agent shall
have a second priority perfected security interest, subject to
Permitted Liens, in all uncertificated Pledged Capital Stock consisting
of partnership or limited liability company interests that do not
constitute a Security pursuant to Section 8-103(c) of the UCC. With
respect to any Pledged Collateral consisting of a Securities
Entitlement or held in a Securities Account, upon execution and
delivery by the applicable Pledgor, the applicable Securities
Intermediary and the Collateral Agent of an agreement granting Control
to the Collateral Agent over such Pledged Collateral, the Collateral
Agent shall have a second priority perfected security interest in such
Pledged Collateral. Except as set forth in this Section, no action is
necessary to perfect or otherwise protect such security interest.
(f) No Other Capital Stock. No Pledgor owns any Capital
Stock of any Domestic Subsidiary or First-Tier Foreign Subsidiary other
than as set forth on Schedule 2(a) attached hereto.
(g) Partnership and Limited Liability Company Interests.
Except as previously disclosed to the Collateral Agent pursuant to
Section 6(f), none of the Pledged Capital Stock consisting of
partnership or limited liability company interests (i) is dealt in or
traded on a securities exchange or in a securities market, (ii) by its
terms expressly provides that it is a Security governed by Article 8 of
the UCC, (iii) is an Investment Company Security, (iv) is held in a
Securities Account or (v) constitutes a "Security" or a "Financial
Asset" as such terms are defined in Article 8 of the UCC.
PLEDGE AGREEMENT
6. Covenants. Each Pledgor hereby covenants, that so long as any
of the Pledgor Obligations remain outstanding (other than any such obligations
which by the terms thereof are stated to survive termination of the Note
Documents) or any Note Document is in effect, and until all of Notes shall have
been Paid in Full and the Indenture shall have been terminated (except as
provided in Section 8.01(iii) of the Indenture), such Pledgor shall:
(a) Books and Records. At any time after the Credit
Agreement is no longer in effect, mark its books and records (and shall
cause the issuer of the Pledged Capital Stock of such Pledgor to mark
its books and records) to reflect the security interest granted to the
Collateral Agent, for the benefit of the Holders, pursuant to this
Pledge Agreement.
(b) Defense of Title. Warrant and defend title to and
ownership of the Pledged Collateral of such Pledgor at its own expense
against the claims and demands of all other parties claiming an
interest therein, keep the Pledged Collateral free from all Liens,
except for Permitted Liens, and not sell, exchange, transfer, assign,
lease or otherwise dispose of Pledged Collateral of such Pledgor or any
interest therein, except as permitted under the Indenture and the other
Note Documents.
(c) Further Assurances. Promptly execute and deliver at
its expense all further instruments and documents and take all further
action that may be necessary and desirable or that the Collateral Agent
may reasonably request in order to (i) perfect and protect the security
interest created hereby in the Pledged Collateral of such Pledgor
(including, without limitation, the execution and filing of UCC
financing statements and any and all action necessary to satisfy the
Collateral Agent that the Collateral Agent has obtained a second
priority perfected security interest in all Pledged Capital Stock); and
(ii) enable the Collateral Agent to exercise and enforce its rights and
remedies hereunder in respect of the Pledged Collateral of such
Pledgor, including, without limitation and if requested by the
Collateral Agent after the occurrence and during the continuance of an
Event of Default, delivering to the Collateral Agent irrevocable
proxies in respect of the Pledged Collateral of such Pledgor.
(d) Amendments. Not make or consent to any amendment or
other modification or waiver with respect to any of the Pledged
Collateral of such Pledgor or enter into any agreement or allow to
exist any restriction with respect to any of the Pledged Collateral of
such Pledgor other than pursuant hereto or as may be permitted under
the Indenture.
(e) Compliance with Securities Laws. File all reports and
other information now or hereafter required to be filed by such Pledgor
with the United States Securities and Exchange Commission and any other
state, federal or foreign agency in connection with the ownership of
the Pledged Collateral of such Pledgor.
(f) Issuance or Acquisition of Capital Stock. Not,
without providing 30 days prior written notice to the Collateral Agent
and without executing and delivering, or causing to be executed and
delivered, to the Collateral Agent such agreements,
PLEDGE AGREEMENT
documents and instruments as the Collateral Agent may require, issue or
acquire any Capital Stock consisting of an interest in a partnership or
a limited liability company that (i) is dealt in or traded on a
securities exchange or in a securities market, (ii) by its terms
expressly provides that it is a Security governed by Article 8 of the
UCC, (iii) is an Investment Company Security, (iv) is held in a
Securities Account or (v) constitutes a "Security" or a "Financial
Asset" as such terms are defined in Article 8 of the UCC.
7. Performance of Obligations and Advances by Collateral Agent.
On failure of any Pledgor to perform any of the covenants and agreements
contained herein, the Collateral Agent may, at its sole option, perform or cause
to be performed the same and in so doing may expend such sums as the Collateral
Agent may reasonably deem advisable in the performance thereof, including,
without limitation, the payment of any taxes, a payment to obtain a release of a
Lien or potential Lien, expenditures made in defending against any adverse claim
and all other expenditures which the Collateral Agent may make for the
protection of the security hereof or which may be compelled to make by operation
of law. All such sums and amounts so expended shall be repayable by the Pledgors
on a joint and several basis promptly upon timely notice thereof and demand
therefor, shall constitute additional Pledgor Obligations and shall bear
interest from the date said amounts are expended at 11 7/8 % per annum. No such
performance of any covenant or agreement by the Collateral Agent on behalf of
any Pledgor, and no such advance or expenditure therefor, shall relieve the
Pledgors of any default under the terms of this Pledge Agreement or the other
Note Documents. The Collateral Agent may make any payment hereby authorized in
accordance with any bill, statement or estimate procured from the appropriate
public office or holder of the claim to be discharged without inquiry into the
accuracy of such bill, statement or estimate or into the validity of any tax
assessment, sale, forfeiture, tax lien, title or claim except to the extent such
payment is being contested in good faith by a Pledgor in appropriate proceedings
and against which adequate reserves are being maintained in accordance with
GAAP.
8. Events of Default. The occurrence of an event which under the
Indenture would constitute an Event of Default shall be an event of default
hereunder (an "Event of Default").
9. Remedies.
(a) General Remedies. Upon the occurrence of an Event of
Default and during the continuation thereof, the Collateral Agent, on
behalf of the Holders, shall have, in respect of the Pledged Collateral
of any Pledgor, in addition to the rights and remedies provided herein,
in the Note Documents and any Holder or by law, the rights and remedies
of a secured party under the UCC or any other applicable law.
(b) Sale of Pledged Collateral. Upon the occurrence of an
Event of Default and during the continuation thereof, without limiting
the generality of this Section and without notice, the Collateral Agent
may, in its sole discretion, sell or otherwise dispose of or realize
upon the Pledged Collateral, or any part thereof, in one or more
parcels, at public or private sale, at any exchange or broker's board
or elsewhere, at such price or prices and on such other terms as the
Collateral Agent may deem commercially reasonable, for cash, credit or
for future delivery or otherwise in accordance with applicable law. To
the extent permitted by law, any Holder may in such event bid for the
PLEDGE AGREEMENT
purchase of such securities. Each Pledgor agrees that, to the extent
notice of sale shall be required by law and has not been waived by such
Pledgor, any requirement of reasonable notice shall be met if notice,
specifying the place of any public sale or the time after which any
private sale is to be made, is personally served on or mailed postage
prepaid to such Pledgor in accordance with the notice provisions of
Section 12.02 of the Indenture at least 10 days before the time of such
sale. The Collateral Agent shall not be obligated to make any sale of
Pledged Collateral of such Pledgor regardless of notice of sale having
been given. The Collateral Agent may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor,
and such sale may, without further notice, be made at the time and
place to which it was so adjourned.
(c) Private Sale. Upon the occurrence of an Event of
Default and during the continuation thereof, the Pledgors recognize
that the Collateral Agent may deem it impracticable to effect a public
sale of all or any part of the Pledged Collateral and that the
Collateral Agent may, therefore, determine to make one or more private
sales of any such Pledged Collateral to a restricted group of
purchasers who will be obligated to agree, among other things, to
acquire such Pledged Collateral for their own account, for investment
and not with a view to the distribution or resale thereof. Each Pledgor
acknowledges that any such private sale may be at prices and on terms
less favorable to the seller than the prices and other terms which
might have been obtained at a public sale and, notwithstanding the
foregoing, agrees that such private sale shall not be deemed to have
been made in a commercially unreasonable manner solely by reason of
such prices or terms and that the Collateral Agent shall have no
obligation to delay sale of any such Pledged Collateral for the period
of time necessary to permit the issuer of such Pledged Collateral to
register such Pledged Collateral for public sale under the Securities
Act of 1933. Each Pledgor further acknowledges and agrees that any
offer to sell such Pledged Collateral which has been (i) publicly
advertised on a bona fide basis in a newspaper or other publication of
general circulation in the financial community of New York, New York
(to the extent that such offer may be advertised without prior
registration under the Securities Act of 1933), or (ii) made privately
in the manner described above shall be deemed to involve a "public
sale" under the UCC, notwithstanding that such sale may not constitute
a "public offering" under the Securities Act of 1933, and the
Collateral Agent may, in such event, bid for the purchase of such
Pledged Collateral.
(d) Retention of Pledged Collateral. In addition to the
rights and remedies hereunder, upon the occurrence and during the
continuance of an Event of Default, the Collateral Agent may, after
providing the notices required by Section 9-621 of the UCC or otherwise
complying with the requirements of applicable law of the relevant
jurisdiction, retain all or any portion of the Pledged Collateral in
satisfaction of the Pledgor Obligations. Unless and until the
Collateral Agent shall have provided such notices, however, the
Collateral Agent shall not be deemed to have retained any Pledged
Collateral in satisfaction of any Pledgor Obligations for any reason.
(e) Deficiency. In the event that the proceeds of any
sale, collection or realization are insufficient to pay all amounts to
which the Collateral Agent or the Holders are legally entitled, the
Pledgors shall be jointly and severally liable for the
PLEDGE AGREEMENT
deficiency, together with interest thereon at 11 7/8 % per annum and
together with the costs of collection and the reasonable fees of any
attorneys employed by the Collateral Agent to collect such deficiency.
Any surplus remaining after the full payment and satisfaction of the
Pledgor Obligations shall be returned to the Pledgors or to whomsoever
a court of competent jurisdiction shall determine to be entitled
thereto.
10. Rights of the Collateral Agent.
(a) Power of Attorney. In addition to other powers of
attorney contained herein, to the fullest extent permitted by
applicable law, each Pledgor hereby designates and appoints the
Collateral Agent, on behalf of the Holders, and each of its designees
or agents as attorney-in-fact of such Pledgor, irrevocably and with
power of substitution, with authority to take any or all of the
following actions upon the occurrence and during the continuance of an
Event of Default:
(i) to demand, collect, settle, compromise,
adjust and give discharges and releases concerning the Pledged
Collateral of such Pledgor, all as the Collateral Agent may
reasonably determine;
(ii) to commence and prosecute any actions at any
court for the purposes of collecting any of the Pledged
Collateral of such Pledgor and enforcing any other right in
respect thereof;
(iii) to defend, settle, adjust or compromise any
action, suit or proceeding brought and, in connection
therewith, give such discharge or release as the Collateral
Agent may deem reasonably appropriate;
(iv) to pay or discharge taxes, liens, security
interests, or other encumbrances levied or placed on or
threatened against the Pledged Collateral of such Pledgor;
(v) to direct any parties liable for any payment
under any of the Pledged Collateral to make payment of any and
all monies due and to become due thereunder directly to the
Collateral Agent or as the Collateral Agent shall direct;
(vi) to receive payment of and receipt for any
and all monies, claims, and other amounts due and to become
due at any time in respect of or arising out of any Pledged
Collateral of such Pledgor;
(vii) to sign and endorse any drafts, assignments,
proxies, stock powers, verifications, notices and other
documents relating to the Pledged Collateral of such Pledgor;
(viii) to execute and deliver all assignments,
conveyances, statements, financing statements, renewal
financing statements, pledge agreements, affidavits, notices
and other agreements, instruments and documents that the
Collateral
PLEDGE AGREEMENT
Agent may determine necessary in order to perfect and maintain
the security interests and liens granted in this Pledge
Agreement and in order to fully consummate all of the
transactions contemplated herein;
(ix) to exchange any of the Pledged Collateral of
such Pledgor or other property upon any merger, consolidation,
reorganization, recapitalization or other readjustment of the
issuer thereof and, in connection therewith, deposit any of
the Pledged Collateral of such Pledgor with any committee,
depository, transfer agent, registrar or other designated
agency upon such terms as the Collateral Agent may determine;
(x) to vote for a shareholder, partner or member
resolution, or to sign an instrument in writing, sanctioning
the transfer of any or all of the Pledged Capital Stock of
such Pledgor into the name of the Collateral Agent or one or
more of the Holders or into the name of any transferee to whom
the Pledged Capital Stock of such Pledgor or any part thereof
may be sold pursuant to Section 9 hereof; and
(xi) to do and perform all such other acts and
things as the Collateral Agent may reasonably deem to be
necessary, proper or convenient in connection with the Pledged
Collateral of such Pledgor.
This power of attorney is a power coupled with an interest and shall be
irrevocable (i) for so long as any of the Pledgor Obligations remain
outstanding (other than any such obligations which by the terms thereof
are stated to survive termination of the Note Documents) or any Note
Document is in effect and (ii) until all of Notes shall have been Paid
in Full and the Indenture shall have been terminated (except as
provided in Section 8.01(iii) of the Indenture). The Collateral Agent
shall be under no duty to exercise or withhold the exercise of any of
the rights, powers, privileges and options expressly or implicitly
granted to the Collateral Agent in this Pledge Agreement and shall not
be liable for any failure to do so or any delay in doing so. The
Collateral Agent shall not be liable for any act or omission or for any
error of judgment or any mistake of fact or law in its individual
capacity or its capacity as attorney-in-fact except acts or omissions
resulting from its gross negligence or willful misconduct. This power
of attorney is conferred on the Collateral Agent solely to protect,
preserve and realize upon its security interest in the Pledged
Collateral.
(b) Assignment by the Collateral Agent. Subject to the
terms of the Indenture, the Collateral Agent may from time to time
assign the Pledgor Obligations or any portion thereof and/or the
Pledged Collateral or any portion thereof, and the assignee shall be
entitled to all of the rights and remedies of the Collateral Agent
under this Pledge Agreement in relation thereto.
(c) The Collateral Agent's Duty of Care. Other than the
exercise of reasonable care to ensure the safe custody of the Pledged
Collateral while being held by the Collateral Agent hereunder, the
Collateral Agent shall have no duty or liability to
PLEDGE AGREEMENT
preserve rights pertaining thereto, it being understood and agreed that
each of the Pledgors shall be responsible for preservation of all
rights in the Pledged Collateral of such Pledgor, and the Collateral
Agent shall be relieved of all responsibility for such Pledged
Collateral upon surrendering it or tendering the surrender of it to
such Pledgor. The Collateral Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Pledged
Collateral in its possession if such Pledged Collateral is accorded
treatment substantially equal to that which the Collateral Agent
accords its own property, which shall be no less than the treatment
employed by a reasonable and prudent agent in the industry, it being
understood that the Collateral Agent shall not have responsibility for
(i) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relating to any Pledged
Collateral, whether or not the Collateral Agent has or is deemed to
have knowledge of such matters; or (ii) taking any necessary steps to
preserve rights against any parties with respect to any Pledged
Collateral.
(d) Voting Rights in Respect of the Pledged Collateral.
(i) So long as no Event of Default shall have
occurred and be continuing, to the extent permitted by law,
each Pledgor may exercise any and all voting and other
consensual rights pertaining to the Pledged Collateral of such
Pledgor or any part thereof for any purpose not inconsistent
with the terms of this Pledge Agreement or the Indenture; and
(ii) Upon the occurrence and during the
continuance of an Event of Default, all rights of a Pledgor to
exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to subsection (i)
of this Section shall cease and all such rights shall
thereupon become vested in the Collateral Agent which shall
then have the sole right to exercise such voting and other
consensual rights.
(e) Dividend and Distribution Rights in Respect of the
Pledged Collateral.
(i) So long as no Event of Default shall have
occurred and be continuing and subject to Section 4(b) hereof,
each Pledgor may receive and retain any and all dividends
(other than stock dividends and other dividends constituting
Pledged Collateral which are addressed hereinabove),
distributions or interest paid in respect of the Pledged
Collateral to the extent not prohibited under the Indenture.
(ii) Upon the occurrence and during the
continuance of an Event of Default:
(A) all rights of a Pledgor to receive
the dividends, distributions and interest payments
which it would otherwise be authorized to receive and
retain pursuant to subsection (i) of this Section
shall cease and all such rights shall thereupon be
vested in the Collateral Agent which shall then
PLEDGE AGREEMENT
have the sole right to receive and hold as Pledged
Collateral such dividends, distributions and interest
payments; and
(B) all dividends, distributions and
interest payments which are received by a Pledgor
contrary to the provisions of subsection (A) of this
Section shall be received in trust for the benefit of
the Collateral Agent, shall be segregated from other
property or funds of such Pledgor, and shall be
forthwith paid over to the Collateral Agent as
Pledged Collateral in the exact form received, to be
held by the Collateral Agent as Pledged Collateral
and as further collateral security for the Pledgor
Obligations.
(f) Release of Pledged Collateral. The Collateral Agent
may release any of the Pledged Collateral from this Pledge Agreement or
may substitute any of the Pledged Collateral for other Pledged
Collateral in connection with a transaction permitted by the Indenture
without altering, varying or diminishing in any way the force, effect,
lien, pledge or security interest of this Pledge Agreement as to any
Pledged Collateral not expressly released or substituted, and this
Pledge Agreement shall continue as a second priority lien on all
Pledged Collateral not expressly released or substituted.
(g) Provisions Concerning the Collateral Agent. The
provisions of Section 10 of the Security Agreement shall apply to the
Collateral Agent as if fully set forth herein.
11. Application of Proceeds. Upon the occurrence and during the
continuance of an Event of Default, any payments in respect of the Pledgor
Obligations and any proceeds of any Pledged Collateral, when received by the
Collateral Agent or any of the Holders in cash or its equivalent, subject to the
Intercreditor Agreement, will be applied in reduction of the Pledgor Obligations
in the order set forth in Section 6.10 of the Indenture, and each Pledgor
irrevocably waives the right to direct the application of such payments and
proceeds.
12. Costs of Counsel. At all times hereafter, whether or not an
Event of Default exists, the Pledgors agree to promptly pay upon demand any and
all reasonable costs and expenses of the Collateral Agent or the Holders, (a) as
required under Section 7.07 of the Indenture and (b) as necessary to protect the
Collateral or to exercise any rights or remedies under this Pledge Agreement or
with respect to any Collateral. All of the foregoing costs and expenses shall
constitute Pledgor Obligations hereunder.
13. Continuing Agreement.
(a) This Pledge Agreement shall be a continuing agreement
in every respect and shall remain in full force and effect so long as
any of the Pledgor Obligations remain outstanding (other than any such
obligations which by the terms thereof are stated to survive
termination of the Note Documents) or any Note Document is in effect,
and until all of Notes shall have been Paid in Full and the Indenture
shall have been terminated (except as provided in Section 8.01(iii) of
the Indenture). Upon such payment and termination, the Collateral
Agent, on behalf of the Holders, shall, upon the request and at the
expense of the Pledgors, forthwith release all of their Liens and
security interests hereunder and shall
PLEDGE AGREEMENT
execute and deliver all UCC termination statements and/or other
documents reasonably requested by the Pledgors evidencing such
termination. Notwithstanding the foregoing, all releases and
indemnities provided hereunder shall survive termination of this Pledge
Agreement.
(b) This Pledge Agreement shall continue to be effective
or be automatically reinstated, as the case may be, if at any time
payment, in whole or in part, of any of the Pledgor Obligations is
rescinded or must otherwise be restored or returned by the Collateral
Agent or any Holder as a preference, fraudulent conveyance or otherwise
under any bankruptcy, insolvency or similar law, all as though such
payment had not been made; provided that in the event payment of all or
any part of the Pledgor Obligations is rescinded or must be restored or
returned, all reasonable costs and expenses (including without
limitation any reasonable legal fees and disbursements) incurred by the
Collateral Agent or any Holder in defending and enforcing such
reinstatement shall be deemed to be included as a part of the Pledgor
Obligations.
14. Amendments; Waivers; Modifications. This Pledge Agreement and
the provisions hereof may not be amended, waived, modified, changed, discharged
or terminated except as set forth in Section 2.2 of the Intercreditor Agreement
and Article 9 of the Indenture.
15. Successors in Interest. This Pledge Agreement shall create a
continuing security interest in the Collateral and shall be binding upon each
Pledgor, its successors and assigns and shall inure, together with the rights
and remedies of the Collateral Agent and the Holders hereunder, to the benefit
of the Collateral Agent and the Holders and their successors and permitted
assigns; provided, however, that none of the Pledgors may assign its rights or
delegate its duties hereunder except as permitted by the Indenture. To the
fullest extent permitted by law, each Pledgor hereby releases the Collateral
Agent and each Holder, and its successors and assigns, from any liability for
any act or omission relating to this Pledge Agreement or the Collateral, except
for any liability arising from the gross negligence or willful misconduct of the
Collateral Agent, or such Holder, or its officers, employees or agents.
16. Notices. All notices required or permitted to be given under
this Pledge Agreement shall be in conformance with Section 12.02 of the
Indenture.
17. Counterparts; Telecopy. This Pledge Agreement may be executed
in any number of counterparts, each of which where so executed and delivered
shall be an original, but all of which shall constitute one and the same
instrument. It shall not be necessary in making proof of this Pledge Agreement
to produce or account for more than one such counterpart. Delivery of an
executed counterpart by facsimile shall be as effective as an original executed
counterpart and shall be deemed a representation that an original executed
counterpart will be delivered.
18. Headings. The headings of the sections and subsections hereof
are provided for convenience only and shall not in any way affect the meaning,
construction or interpretation of any provision of this Pledge Agreement.
PLEDGE AGREEMENT
19. Governing Law; Submission to Jurisdiction; Venue.
(a) THIS PLEDGE AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Any
legal action or proceeding with respect to this Pledge Agreement may be
brought in the courts of the State of New York, or of the United States
for the Southern District of New York, and, by execution and delivery
of this Pledge Agreement, each Pledgor hereby irrevocably accepts for
itself and in respect of its property, generally and unconditionally,
the jurisdiction of such courts. Each Pledgor further irrevocably
consents to the service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to it at the
address for notices pursuant to Section 12.02 of the Indenture, such
service to become effective 30 days after such mailing. Nothing herein
shall affect the right of the Collateral Agent to serve process in any
other manner permitted by law or to commence legal proceedings or to
otherwise proceed against any Pledgor in any other jurisdiction.
(b) Each Pledgor hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with
this Pledge Agreement brought in the courts referred to in subsection
(a) hereof and hereby further irrevocably waives and agrees not to
plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum.
20. Waiver of Jury Trial; Waiver of Consequential Damages. EACH OF
THE PARTIES TO THIS PLEDGE AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS PLEDGE AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY. Each Pledgor agrees not to assert any claim
against the Agents, any Holder, any of their Affiliates, or any of their
respective directors, officers, employees, attorneys or agents, on any theory of
liability, for special, indirect, consequential or punitive damages arising out
of or otherwise relating to any of the transactions contemplated herein.
21. Severability. If any provision of this Pledge Agreement is
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.
22. Entirety. This Pledge Agreement together with the other Note
Documents represent the entire agreement of the parties hereto and thereto, and
supersede all prior agreements and understandings, oral or written, if any,
including any commitment letters or correspondence relating to the Note
Documents or the transactions contemplated herein and therein.
PLEDGE AGREEMENT
23. Survival. All representations and warranties of the Pledgors
hereunder shall survive the execution and delivery of this Pledge Agreement and
the other Note Documents and the issuance of the Notes.
24. Other Security. To the extent that any of the Pledgor
Obligations are now or hereafter secured by property other than the Pledged
Collateral (including, without limitation, real and other personal property
owned by a Pledgor), or by a guarantee, endorsement or property of any other
Person, then the Collateral Agent, on behalf of the Holders, shall have the
right to proceed against such other property, guarantee or endorsement upon the
occurrence of any Event of Default, and the Collateral Agent and the Holders
have the right, in their sole discretion, to determine which rights, security,
liens, security interests or remedies the Collateral Agent, on behalf of the
Holders, shall at any time pursue, relinquish, subordinate, modify or take with
respect thereto, without in any way modifying or affecting any of them or any of
the Collateral Agent's and the Holders' rights or the Pledgor Obligations under
this Pledge Agreement, under any other of the Note Documents.
25. Priority of Liens. The relative priority of the security
interests with respect to certain of the Pledged Collateral is governed by the
terms of the Intercreditor Agreement. This Pledge Agreement and the Liens
granted herein will be junior in priority to the First Priority Liens (as
defined in the Intercreditor Agreement) in the manner and to the extent set
forth in the Intercreditor Agreement. This Pledge Agreement shall automatically
be amended and the Collateral covered hereunder (or portion thereof)
automatically released upon the terms and conditions set forth in Section 2.2 of
the Intercreditor Agreement. To the extent of any inconsistency between the
terms of the Intercreditor Agreement and this Pledge Agreement, the terms of the
Intercreditor Agreement shall govern.
26. Delivery to Senior Agent. Notwithstanding any other provision
of this Pledge Agreement, during the term of the Credit Agreement, in the event
any requirement hereunder of an Obligor to deliver or cause to be delivered any
agreement, instrument, Pledged Collateral or other document to the Collateral
Agent is also a requirement of such Obligor under the terms of the Credit
Agreement, such requirement hereunder shall be deemed to be satisfied upon the
delivery of such agreement, instrument, Pledged Collateral or other document to
the Senior Agent pursuant to the terms of the Credit Agreement.
PLEDGE AGREEMENT
Each of the parties hereto has caused a counterpart of this Pledge
Agreement to be duly executed and delivered as of the date first above written.
PLEDGORS:
UNITED STATES CAN COMPANY,
a Delaware corporation
By: /s/ Sandra K. Vollman
Name: Sandra K. Vollman
Title: Sr. VP and CFO
U.S. CAN CORPORATION,
a Delaware corporation
By: /s/ Sandra K. Vollman
Name: Sandra K. Vollman
Title: Sr. VP and CFO
USC MAY VERPACKUNGEN HOLDING, INC.,
a Delaware corporation
By: /s/ Sandra K. Vollman
Name: Sandra K. Vollman
Title: Sr. VP and CFO
PLEDGE AGREEMENT
Accepted and agreed to as of the date first above written.
WELLS FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Collateral Agent
By: /s/ Jane Y. Schweiger
Name: Jane Y. Schweiger
Title: Vice President
PLEDGE AGREEMENT
Schedule 2(a)
to
Pledge Agreement
dated as of July 22, 2003 in favor of
Wells Fargo Bank Minnesota, National Association,
as Collateral Agent
PLEDGED CAPITAL STOCK
PLEDGOR: U.S. CAN CORPORATION
Name of Number of Certificate Percentage Percentage
Domestic Subsidiary Shares Number Ownership Pledged
------------------- ------ ------ --------- -------
United States Can Company 1000 7 100% 100%
PLEDGOR: UNITED STATES CAN COMPANY
Name of Number of Certificate Percentage Percentage
Domestic Subsidiary Shares Number Ownership Pledged
------------------- ------ ------ --------- -------
USC May Verpackungen 100 1 100% 100%
Holding Inc.
Name of Number of Certificate Percentage Percentage
Foreign Subsidiary Shares Number Ownership Pledged
- ------------------ ------ ------ --------- -------
U.S.C. Europe N.V. 3900 2 100% 100% (subject to
2100 3 limitations in
1 4 Section 3)
1 5
PLEDGOR: USC MAY VERPACKUNGEN HOLDING INC.
Name of Number of Certificate Percentage Percentage
Foreign Subsidiary Shares Number Ownership Pledged
------------------ ------ ------ --------- -------
May Verpackungen GmbH & N/A N/A 100% 100% (subject to
Co., KG limitations in
Section 3)
Exhibit 4(a)
to
Pledge Agreement
dated as of July 22, 2003 in favor of
Wells Fargo Bank Minnesota, National Association,
as Collateral Agent
Irrevocable Stock Power
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to
the following shares of capital stock of _____________________, a ____________
corporation:
No. of Shares Certificate No.
and irrevocably appoints __________________________________ its agent and
attorney-in-fact to transfer all or any part of such capital stock and to take
all necessary and appropriate action to effect any such transfer. The agent and
attorney-in-fact may substitute and appoint one or more persons to act for him.
______________,
a ______________ corporation
By:_________________________________
Name:_______________________________
Title: _____________________________