EXHIBIT 10.4
PLEDGE AGREEMENT REGARDING CONTINGENT PAYMENT NOTE
This PLEDGE AGREEMENT REGARDING CONTINGENT PAYMENT NOTE (this
"Agreement"), dated as of June 20, 2006, is executed and delivered by and among
USG CORPORATION, a Delaware corporation (the "Company"), and the parties set
forth on the signature pages hereto listed as and acting in their capacities as
an Asbestos Personal Injury Trustee under and as defined in the Plan (as defined
below) (together, in each case, with its successors and assigns, if any, in such
capacity, individually and collectively being referred to herein as the
"Trustee") for the Trust (as defined below), with reference to the following:
WHEREAS, each of the entities listed on Schedule I hereto
(collectively, the "Makers" and each, a "Maker"), has executed and delivered
that certain Contingent Non-Negotiable Promissory Note, dated as of the date
hereof in the original principal amount of Three Billion, Fifty Million Dollars
($3,050,000,000) (the "Note") in favor of the United States Gypsum Asbestos
Personal Injury Settlement Trust (the "Trust"); and
WHEREAS, under the terms of the Joint Plan of Reorganization of the
Makers, filed with the United States Bankruptcy Court for the District of
Delaware on April 5, 2006 (as amended from time to time, the "Plan"), it is a
condition precedent to the emergence of the Makers from bankruptcy protection
that the Company agree to pledge to the Trust the Pledged Collateral (as defined
below), subject to the terms and conditions of this Agreement, to secure payment
of the Note;
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations, and warranties set forth herein and for other good and valuable
consideration, the parties hereto agree as follows:
Definitions And Construction.
Section 1. Definitions. All capitalized terms used herein (including,
without limitation, in the preamble and recitals hereof) without definition
shall have the meanings ascribed thereto in the Plan. The following terms, as
used in this Agreement, shall have the following meanings:
"Agreement" has the meaning set forth in the preamble to this
Agreement.
"Company" has the meaning set forth in the preamble to this Agreement.
"Equity Interests" means the common stock (other than treasury stock)
of the Company.
"Event of Default" means the occurrence and continuance of a payment
default pursuant to section 3(a)(i) of the Note beyond the expiration of the
cure period thereunder.
"Paid in Full" means the payment in full in cash of all Secured
Obligations (other than unasserted contingent and indemnification obligations).
"Pledge" has the meaning set forth in Section 2 below.
"Pledged Collateral" means the Pledged Interests and the Proceeds,
collectively.
"Pledged Interests" means the authorized but unissued Equity Interests
of the Company that would, upon issuance, constitute that amount of Equity
Interests that would entitle the Trust to 51% of the aggregate voting power of
all such outstanding Equity Interests of the Company on a fully diluted basis
(taking into account the Equity Interests of the Company issued and outstanding
immediately previous to such issuance, plus the Equity Interests to be issued
and pledged pursuant to Section 2 of this Agreement), as of the date that the
Trust demands the Pledge in accordance with the terms of the Plan, the Note and
this Agreement.
"Proceeds" means all proceeds (including proceeds of proceeds) of the
Pledged Interests including, without duplication, all: (a) rights, benefits,
distributions, premiums, profits, dividends, interest, cash, instruments,
documents of title, accounts, contract rights, inventory, equipment, general
intangibles, deposit accounts, chattel paper, and other property from time to
time thereafter received, receivable, or otherwise distributed in respect of or
in exchange for, or as a replacement of or a substitution for, any of the
Pledged Collateral, or proceeds thereof (including any cash, Equity Interests,
or other securities or instruments issued after any recapitalization,
readjustment, reclassification, merger or consolidation with respect to the
Company and any security entitlements, as defined in the UCC with respect
thereto) and (b) "proceeds," as such term is defined in the UCC.
"Secured Obligations" means all payment obligations set forth in
section 1(a) of the Note.
"UCC" means the Delaware Uniform Commercial Code, as in effect from
time to time; provided, however, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection, priority, or
remedies with respect to the Trustee's lien on any Pledged Collateral is
governed by the Uniform Commercial Code as enacted and in effect in a
jurisdiction other than the State of Delaware, the term "UCC" shall mean the
Uniform Commercial Code as enacted and in effect in such other jurisdiction
solely for purposes of the provisions thereof relating to such attachment,
perfection, priority, or remedies.
Unless the context of this Agreement clearly requires otherwise,
references to the plural include the singular and to the singular include the
plural, the part includes the whole, the term "including" is not limiting, and
the term "or" has, except where otherwise indicated, the inclusive meaning
represented by the phrase "and/or." The words "hereof," "herein," "hereby,"
"hereunder," and other similar terms in this Agreement refer to this Agreement
as a whole and not exclusively to any particular provision of this Agreement.
Article, section, subsection, exhibit, and schedule references are to this
Agreement unless otherwise specified. All of the exhibits or schedules attached
to this Agreement shall be deemed incorporated herein by reference. Any
reference to this Agreement includes any and all permitted alterations,
2
amendments, restatements, extensions, modifications, renewals, or supplements
thereto or thereof, as applicable.
Neither this Agreement nor any uncertainty or ambiguity herein shall
be construed or resolved against the Trustee or the Company, whether under any
rule of construction or otherwise. On the contrary, this Agreement has been
reviewed by each of the parties signatory hereto and their respective counsel
and shall be construed and interpreted according to the ordinary meaning of the
words used so as to fairly accomplish the purposes and intentions of the parties
hereto.
Section 2. Agreement to Issue and Pledge. The Company hereby agrees,
upon (a) the occurrence and during the continuance of an Event of Default and
(b) the subsequent demand of the Trust in writing in accordance with the terms
of the Note and the Plan, to take all necessary action to issue the Pledged
Interests in the name of the Company, and, upon its issuance, to hypothecate,
pledge, grant, transfer, and collaterally assign to the Trustee, for the benefit
of the Trust, a security interest in all of the Company's then owned and
thereafter acquired right, title, and interest in and to the Pledged Collateral
(such hypothecation, pledge, grant, transfer, and collateral assignment is
herein referred to as the "Pledge").
Section 3. Security for Secured Obligations. Upon the occurrence of
the Pledge, such Pledged Collateral shall secure the prompt repayment of any and
all of the Secured Obligations in accordance with the provisions hereof and the
Note as described in the Plan (whether at the stated maturity, by acceleration
or otherwise).
Section 4. Delivery and Registration of Pledged Collateral. Upon the
effectiveness of the Pledge:
(a) all certificates or instruments representing or evidencing the
Pledged Collateral, if any, shall be promptly delivered by the Company to the
Trustee and shall be held by or on behalf of the Trustee pursuant hereto, and
shall be in suitable form for transfer by delivery, or shall be accompanied by
duly executed instruments of transfer or assignments in blank, all in form and
substance reasonably satisfactory to the Trustee;
(b) any and all Pledged Collateral (including dividends, interest, and
other cash distributions) at any time received or held by the Company in
contravention of terms of this Agreement, shall be so received or held in trust
for the Trustee, shall be segregated from other funds and property of the
Company and shall forthwith be delivered to the Trustee in the same form as so
received or held, with any necessary endorsements; and
(c) if at any time and from time to time any Pledged Collateral
consists of an uncertificated security or a security in book entry form, then
the Company, at its expense, shall promptly cause such Pledged Collateral to be
registered or entered, as the case may be, in the name of the Trustee, for the
benefit of the Trust, or otherwise cause the security interest held by the
Trustee for the benefit of the Trust, to be perfected in accordance with
applicable law.
Section 5. Representations and Warranties. The Company represents and
warrants as follows:
3
(a) the Company is duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its organization and has full
corporate power and authority to execute and deliver this Agreement;
(b) the execution and delivery by the Company of this Agreement has
been duly authorized by all necessary corporate action on its part; and
(c) this Agreement constitutes a legal, valid and binding obligation
of the Company, enforceable against it in accordance with the terms hereof,
except as such enforceability may be limited by: (i) bankruptcy, insolvency,
reorganization, fraudulent transfer or conveyance and other laws of general
applicability relating to or affecting creditors' rights and (ii) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
Section 6. Further Assurances. From and after the Pledge,
(a) the Company agrees that from time to time, at its own expense, it
will promptly execute and deliver all further instruments and documents, and
take all further action that may be necessary, or that the Trustee may
reasonably request, in order to protect the security interest granted hereby or
to enable the Trustee to exercise and enforce its rights and remedies hereunder
with respect to any Pledged Collateral. Without limiting the generality of the
foregoing, the Company will: (i) at the request of the Trustee, mark
conspicuously each of its records pertaining to the Pledged Collateral with a
legend, in form and substance reasonably satisfactory to the Trustee, indicating
that such Pledged Collateral is subject to the security interest granted hereby;
(ii) authorize, execute, or file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be necessary,
or as the Trustee may reasonably request, in order to preserve the security
interests granted hereby; and (iii) appear in and defend any action or
proceeding that may affect the Trustee's interest in the Pledged Collateral; and
(b) the Company authorizes the Trustee, on behalf of the Trust, to
file one or more financing or continuation statements, and amendments thereto,
relative to all or any part of the Pledged Collateral without the signature of
the Company where permitted by law. A carbon, photographic, or other
reproduction of this Agreement or any financing statement covering the Pledged
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.
Section 7. Covenants of the Company. Until the Secured Obligations are
Paid in Full, the Company shall:
(a) take such actions as are necessary to ensure that it maintains at
all times Equity Interests that are authorized but unissued in an amount
adequate to fulfill its obligations hereunder, and that no conditions precedent
to the issuance of such Pledged Collateral shall exist, except as set forth
herein;
(b) at all times keep at least one complete set of its records
concerning the Pledged Collateral;
4
(c) from and after the Pledge, at its expense, promptly execute,
acknowledge and deliver all such instruments and take all such actions as the
Trustee from time to time may request in order to ensure to the Trustee the
benefits of the liens in and to the Pledged Collateral created by this
Agreement, including the filing of any necessary financing statements, which may
be filed by the Trustee, and will cooperate with the Trustee at the Company's
expense, in obtaining all necessary approvals and making all necessary filings
under federal, state, local or foreign law in connection with such liens or any
sale or transfer of the Pledged Collateral;
(d) from and after the Pledge, defend the liens of the Trustee in the
Pledged Collateral against the claim of any Entity and will maintain and
preserve such liens, except with respect to actions affirmatively taken by the
Trustee with respect to its liens or any failure of the Trustee to continue any
lien prior to the lapse thereof.
Section 8. Legending of Certificates; No Registration Rights. Each of
the Trustee and the Company agrees that, from and after the Pledge,
(a) any certificate or other writing evidencing the Pledged Collateral
that is issued by the Company in the name of the Trustee or otherwise in favor
of the Trust or the Trustee pursuant to Section 9 hereof shall bear the
following legend:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED OR APPLICABLE STATE SECURITIES LAWS. NO INTEREST IN THIS CERTIFICATE MAY
BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS
(A) THE COMPANY RECEIVES AN OPINION OF LEGAL COUNSEL FOR THE HOLDER OF THIS
CERTIFICATE SATISFACTORY TO THE COMPANY STATING THAT SUCH TRANSACTION IS EXEMPT
FROM REGISTRATION OR (B) THE COMPANY OTHERWISE SATISFIES ITSELF THAT SUCH
TRANSACTION IS EXEMPT FROM REGISTRATION; and
(b) the Trustee agrees and acknowledges that none of the Trust, the
Trustee or any other holder of any of the Note or any certificate or other
writing evidencing the Pledged Collateral, or any rights relating thereto, shall
have any rights to require the Company to register the Note or such certificate
or other writing, or any rights related thereto, with respect to the Pledged
Collateral, under the Securities Act of 1933, as amended, or pursuant to any
applicable state securities laws.
Section 9. Remedies upon Default. From and after the Pledge, upon the
occurrence and during the continuance of an Event of Default:
(a) At any time upon ten (10) Business Days prior written notice to
the Company, the Trustee (personally or through an agent) may, to the maximum
extent permitted by applicable law, (i) transfer and register in its name or in
the name of its nominee the whole or any part of the Pledged Collateral, (ii)
exchange certificates or instruments representing or evidencing Pledged
Collateral for certificates or instruments of smaller or larger denominations,
(iii) exercise the voting and all other rights as an equity holder with respect
to the Pledged Collateral, including without limitation all rights under
applicable law, (iv) collect and receive all
5
cash dividends and distributions made with respect to the Pledged Collateral
(including any sums paid or distributions made upon or in respect of the Equity
Interests (A) upon the liquidation or dissolution of the Company, and (B) on or
in respect of the Equity Interests or any property distributed upon or with
respect to the Equity Interests pursuant to the recapitalization or
reclassification of the capital of the Company or pursuant to the reorganization
thereof) and make application thereof to the Secured Obligations and (v)
otherwise act with respect to the Pledged Collateral as though the Trustee was
the outright owner thereof, including, without limitation, take any action,
exercise any right or receive any benefit under applicable law.
(b) The Trustee, on behalf of the Trust, may exercise in respect of
the Pledged Collateral, in addition to other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a secured
party under the UCC and all other applicable laws upon the occurrence and
continuance of an Event of Default hereunder (irrespective of whether the UCC
applies to the affected items of Pledged Collateral), and the Trustee, on behalf
of the Trust, may also, subject to the terms of Section 8, to the extent
permitted by law, sell the Pledged Collateral or any part thereof in one or more
parcels at private sale, for cash, on credit or for future delivery, at such
time or times and at such price or prices and upon such other terms as the
Trustee may deem commercially reasonable. To the maximum extent permitted by
applicable law, the Trustee may be the purchaser of any or all of the Pledged
Collateral at any such sale and shall be entitled, to use and apply all or any
part of the Secured Obligations as a credit on account of the purchase price of
any Pledged Collateral payable at such sale. Each purchaser at any such sale
shall hold the property sold free, subject to Section 8 above, from any claim or
right on the part of the Company. The Company agrees that, to the extent notice
of sale shall be required by law, at least ten (10) calendar days written notice
to the Company of the time and place of any public sale or the time after which
a private sale is to be made shall constitute reasonable notification. The
Trustee shall not be obligated to make any sale of Pledged Collateral regardless
of notice of sale having been given. The Trustee may adjourn any 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.
Section 10. Duties of the Trustee. The powers conferred on the Trustee
hereunder are solely to protect its interests in the Pledged Collateral and
shall not impose on it any duty to exercise such powers. Except as provided in
Section 9-207 of the UCC, and under Section 8 above, the Trustee shall have no
duty with respect to the Pledged Collateral or any responsibility for taking any
necessary steps to preserve rights against any Entities with respect to any
Pledged Collateral.
Section 11. Choice of Law and Venue. THE VALIDITY OF THIS AGREEMENT,
ITS CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT, AND THE RIGHTS OF THE PARTIES
HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF DELAWARE. THE PARTIES AGREE THAT ALL ACTIONS OR
PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF NEW
CASTLE, STATE OF DELAWARE. THE COMPANY AND THE TRUSTEE WAIVE, TO THE EXTENT
PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE
OF FORUM NON COVENIENS
6
OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH
THIS SECTION 11.
Section 12. Amendments; Etc. No amendment or waiver of any provision
of this Agreement nor consent to any departure by the Company herefrom shall in
any event be effective unless the same shall be in writing and signed by the
Trustee and the Company, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given. No
failure on the part of the Trustee to exercise, and no delay in exercising any
right under this Agreement, the Note, or otherwise with respect to any of the
Secured Obligations, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right under this Agreement, the Note, or otherwise with
respect to any of the Secured Obligations preclude any other or further exercise
thereof or the exercise of any other right. The remedies provided for in this
Agreement or otherwise with respect to any of the Secured Obligations are
cumulative and not exclusive of any remedies provided by law.
Section 13. Successors; Assigns. This Agreement shall be binding upon
the Company, the Trustee and their respective successors and assigns, and shall
inure to the benefit of the Company, the Trust and the Trustee and the
successors and assigns of the Trust and the Trustee. No other Entity shall be a
direct or indirect legal beneficiary of, or have any direct or indirect cause of
action or claim in connection with, this Agreement or the Note. The Company may
not assign or transfer any of its rights or Secured Obligations under this
Agreement without the prior written consent of the Trustee and the Trustee may
not assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of the Company.
Section 14. Notices. All notices and other communications provided for
hereunder shall be given in the form and manner and delivered to Trustee or to
the Company, as applicable, at its address specified in the Note, or, as to any
party, at such other address as shall be designated by such party in a written
notice to the other party.
Section 15. Continuing Security Interest. Upon the effectiveness of
the Pledge, this Agreement shall create a security interest in the Pledged
Collateral and shall remain in full force and effect until the Secured
Obligations are Paid in Full. At such time the Secured Obligations are Paid in
Full, the security interests granted upon the effectiveness of the Pledge shall
automatically terminate and all rights to the Pledged Collateral shall revert to
the Company. Upon any such termination, the Trustee will, at the Company's
expense, execute and deliver to the Company such documents as the Company shall
reasonably request to evidence such termination and promptly deliver any Pledged
Collateral in its possession to the Company. Such documents shall be prepared by
the Company and shall be in form and substance reasonably satisfactory to the
Trustee.
Section 16. Security Interest Absolute. To the maximum extent
permitted by law, all rights of the Trustee, all security interests hereunder,
and all obligations of the Company hereunder, shall, upon the effectiveness of
the Pledge, in accordance with the terms hereof, be absolute and unconditional
irrespective of:
(a) any change in the time, manner or place of payment of, or in any
other term of, all or any part of the Secured Obligations, or any other
amendment or waiver of
7
or any consent to any departure from the Note, the Plan or any other
agreement or instrument governing or evidencing any Secured Obligations;
(b) any exchange, release, or non-perfection of any other collateral,
or any release or amendment or waiver of or consent to departure from any
guaranty for all or any of the Secured Obligations;
(c) the insolvency of any Maker; or
(d) any other circumstances that might otherwise constitute a defense
available to, or a discharge of, the Company, other than payment in full of
the Secured Obligations.
Section 17. Acknowledgements.
(a) The Company and the Trustee hereby acknowledge that they have been
advised by counsel in the negotiation, execution and delivery of this Agreement.
(b) The Company hereby acknowledges that:
(i) neither the Trustee nor the Trust has any fiduciary
relationship with or duty to the Company arising out of or in
connection with this Agreement or the Note, and the relationship
between the Company, on the one hand, and the Trustee and the Trust,
on the other hand, in connection herewith or therewith is solely that
of debtor and creditor; and
(ii) no joint venture is created hereby or otherwise exists by
virtue of the transactions contemplated hereby among the Company and
the Trust or the Trustee on behalf of the Trust.
Section 18. Headings. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement or be given any substantive effect.
Section 19. Severability. In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
Section 20. Counterparts; Telefacsimile Execution. This Agreement may
be executed in one or more counterparts, each of which shall be deemed an
original and all of which together shall constitute one and the same Agreement.
Delivery of an executed counterpart of this Agreement by telefacsimile shall be
equally as effective as delivery of an original executed counterpart of this
Agreement. Any party delivering an executed counterpart of this Agreement by
telefacsimile also shall deliver an original executed counterpart of this
Agreement but the failure to deliver an original executed counterpart shall not
affect the validity, enforceability, or binding effect hereof.
8
Section 21. Waiver of Jury Trial. THE COMPANY AND THE TRUSTEE HEREBY
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. THE COMPANY AND THE
TRUSTEE REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
[Remainder of page intentionally left blank]
9
IN WITNESS WHEREOF, the Company and the Trustee have caused this
Agreement to be duly executed and delivered as of the date first written above.
USG CORPORATION,
a Delaware corporation
By: /s/ Richard H. Fleming
------------------------------------
Name: Richard H. Fleming
Title: Executive Vice President & Chief
Financial Officer
[Signature Page to Contingent Note Pledge Agreement]
/s/ Philip A. Pahigian
----------------------------------------
Philip A. Pahigian
Trustee
/s/ Lewis R. Sifford
----------------------------------------
Lewis R. Sifford
Trustee
/s/ Thomas M. Tully
----------------------------------------
Thomas M. Tully
Trustee
[Signature Page to Contingent Note Pledge Agreement]