<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 11, 1996
REGISTRATION NO. 333-3229
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
RYERSON TULL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 5051 36-3431962
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
2621 WEST 15TH PLACE
CHICAGO, ILLINOIS 60608
(312) 762-2121
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
GEORGE A. RANNEY, JR.
VICE PRESIDENT AND GENERAL COUNSEL
30 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
(312) 346-0300
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
----------------
COPIES TO:
ROBERT E. CURLEY ROBERT H. CRAFT, JR.
MAYER, BROWN & PLATT SULLIVAN & CROMWELL
190 SOUTH LASALLE STREET 1701 PENNSYLVANIA AVENUE, N.W.
CHICAGO, ILLINOIS 60603 WASHINGTON, D.C. 20006
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) FEE
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Common Stock ($1.00
par value) including
preferred share purchase
rights...................... 6,000,000 shares $19.00 $114,000,000 $39,310.34(3)
</TABLE>
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(1) Includes 780,000 shares issuable upon exercise of options granted to the
Underwriters by the Company to cover over-allotments.
(2) Estimated solely for purposes of determining the registration fee.
(3) Previously paid.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
RYERSON TULL, INC.
CROSS REFERENCE SHEET
(PURSUANT TO ITEM 501(B) OF REGULATION S-K)
<TABLE>
<CAPTION>
FORM S-1 ITEM NUMBER AND
CAPTIONS HEADING OR LOCATION IN PROSPECTUS
------------------------ ---------------------------------
<C> <S> <C>
1. Forepart of the Registration
Statement and Outside Front Facing Page; Cross Reference Sheet; Outside
Cover Page of Prospectus..... Front Cover Page of Prospectus
2. Inside Front and Outside Back
Cover Pages of Prospectus.... Inside Front and Outside Back Cover Pages
of Prospectus
3. Summary Information and Risk Prospectus Summary; Risk Factors
Factors......................
4. Use of Proceeds............... Use of Proceeds
5. Determination of Offering Underwriting
Price........................
6. Dilution...................... Dilution
7. Selling Security Holders...... *
8. Plan of Distribution.......... Risk Factors; Underwriting
9. Description of Securities to Description of Capital Stock
be Registered................
10. Interest of Named Experts and Validity of Class A Common Stock
Counsel......................
11. Information with Respect to Prospectus Summary; Risk Factors; Use of
the Registrant............... Proceeds; Dividend Policy; Capitalization;
Dilution; Selected Financial Data;
Management's Discussion and Analysis of
Financial Condition and Results of
Operations; Business; Management;
Relationship with ISI; Principal
Stockholder; Ownership of ISI Stock;
Description of Capital Stock; Shares
Eligible for Future Sale; Index to
Financial Statements
12. Disclosure of Commission
Position on Indemnification
for Securities Act *
Liabilities..................
</TABLE>
- --------
* Not applicable.
<PAGE>
EXPLANATORY NOTE
This Registration Statement contains two separate prospectuses. The first
prospectus relates to a public offering of Ryerson Tull, Inc.'s Class A Common
Stock ("Class A Common Stock") in the United States (the "U.S. Offering"). The
second prospectus relates to a concurrent offering of Class A Common Stock
outside the United States (the "International Offering"). The prospectuses for
the U.S. Offering and the International Offering will be identical with the
exceptions of the front cover page, a "Certain U.S. Tax Consequences to Non-
U.S. Stockholders" section, an "Underwriting" section and a back cover page
for the International Offering. Such alternate pages appear in this
Registration Statement immediately following the complete prospectus for the
U.S. Offering.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JUNE 11, 1996
5,220,000 SHARES
RYERSON TULL, INC.
LOGO CLASS A COMMON STOCK
(PAR VALUE $1.00 PER SHARE)
----------
Of the 5,220,000 shares of Class A Common Stock offered, 4,176,000 shares are
being offered hereby in the United States and 1,044,000 shares are being
offered in a concurrent international offering outside the United States. The
initial public offering price and aggregate underwriting discount per share
will be identical for both Offerings. See "Underwriting."
All of the 4,176,000 shares of Class A Common Stock offered hereby are being
sold by Ryerson Tull, Inc. (the "Company"). Prior to the Offerings, there has
been no public market for the Class A Common Stock of the Company. It is
currently estimated that the initial public offering price per share will be
between $16.00 and $19.00. For factors to be considered in determining the
initial public offering price, see "Underwriting."
The Company is currently a wholly-owned subsidiary of Inland Steel
Industries, Inc. and, upon consummation of the Offerings, Inland Steel
Industries, Inc. will beneficially own 100% of the Company's outstanding
Class B Common Stock, which will represent approximately 86.7% of the economic
interest in the Company (85% if the Underwriters' over-allotment options are
exercised in full). See "Principal Stockholder."
Each share of Class A Common Stock entitles its holder to one vote, whereas
each share of Class B Common Stock entitles its holder to four votes. After
consummation of the Offerings, Inland Steel Industries, Inc. will beneficially
own shares having approximately 96.3% of the combined outstanding voting power
of all classes of voting stock of the Company (95.8% if the Underwriters' over-
allotment options are exercised in full). See "Description of Capital Stock--
Common Stock."
The Company intends to offer publicly $150,000,000 aggregate principal amount
of its Notes due 2001 and $100,000,000 aggregate principal amount of its Notes
due 2006. The consummation of the Offerings is not contingent on the
consummation of the Note Offering. See "Proposed Note Offering."
SEE "RISK FACTORS" BEGINNING ON PAGE 11 FOR CERTAIN CONSIDERATIONS RELEVANT
TO AN INVESTMENT IN THE CLASS A COMMON STOCK.
The Class A Common Stock has been approved for listing on the New York Stock
Exchange under the symbol "RT," subject to official notice of issuance.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIESAND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HASTHE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE DISCOUNT(1) COMPANY(2)
-------------- ------------ -----------
<S> <C> <C> <C>
Per Share............................... $ $ $
Total(3)................................ $ $ $
</TABLE>
- -----
(1) The Company and Inland Steel Industries, Inc. have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933.
(2) Before deducting estimated expenses of $900,000 payable by the Company.
(3) The Company has granted the U.S. Underwriters an option for 30 days to
purchase up to an additional 624,000 shares at the initial public offering
price per share, less the underwriting discount, solely to cover over-
allotments. Additionally, the Company has granted the International
Underwriters a similar option with respect to an additional 156,000 shares
as part of the concurrent international offering. If such options are
exercised in full, the total initial public offering price, underwriting
discount and proceeds to Company will be $ , $ and $ ,
respectively. See "Underwriting."
----------
The shares offered hereby are offered severally by the U.S. Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to
their right to reject any order in whole or in part. It is expected that
certificates for the shares will be ready for delivery in New York, New York,
on or about , 1996, against payment therefor in immediately available
funds.
GOLDMAN, SACHS & CO. CS FIRST BOSTON
----------
The date of this Prospectus is , 1996.
<PAGE>
[PICTURES]
Page 2 Map of United States showing Ryerson Tull, Inc.'s
top facilities.
Caption: Ryerson Tull also owns 50% of Ryerson de
Mexico, a general line metals service center and
processor operating out of 18 facilities in Mexico.
Page 2 Photograph of warehouse interior, trucks loaded
bottom with metals and forklift.
Caption: Just-In-Time Deliveries
Ryerson Tull has a nationwide network of 52
facilities that place the Company within several
hundred miles of most of its customers. Information
technology integrates this network and generally
enables delivery of stock items to customers from
the most economical location within 24 hours.
Page 2A Photograph of computer screens illustrating
top electronic data interface for ordering products and
services.
Caption: Electonic Data Interfaces
All of Ryerson Tull's products and services can be
ordered by customers through EDI. Customers can
also transmit orders through other direct ordering
systems and can electronically transmit intricate
design specifications.
Page 2A Photograph of engineer viewing computer screen
Bottom Left illustration for part design.
Caption: Engineering and Cost Reduction Services
Ryerson Tull helps customers reduce their costs by
providing technical advice on part design.
Page 2A Photograph of metal rods and bars.
center Caption: Material Management Services
Ryerson Tull provides services such as material
selection and specification that help customers
find, purchase, inventory and take delivery of a
wide variety of industrial materials.
Page 2B Photograph of coil slitter in operation.
Top Left Caption: Material Processing Services
More than one-half of the material sold by Ryerson
Tull is processed. The Company uses techniques such
as sawing, slitting, pickling, cutting to length,
flame cutting, laser cutting, plate burning,
fabricating and grinding to process materials to
meet customer specifications.
Page 2B Photograph of Company employee marking parts for a
Top Right customer's inventory.
Caption: Outsourcing by Manufacturers
Ryerson Tull provides inventory management and
first stage processing and assembling for many
customers, allowing them to reduce capital and
respond more quickly to competition.
Page 2B Photograph of metals sawing process.
Bottom left
Bottom right Photograph of laser cutting process.
IN THIS PROSPECTUS, REFERENCE TO "DOLLARS" AND "$" ARE UNITED STATES
DOLLARS.
----------------
IN CONNECTION WITH THE OFFERINGS, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS A
COMMON STOCK OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK
STOCK EXCHANGE OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
DURING THE OFFERINGS, CERTAIN PERSONS AFFILIATED WITH PERSONS PARTICIPATING
IN THE DISTRIBUTION MAY ENGAGE IN TRANSACTIONS FOR THEIR OWN ACCOUNTS OR FOR
THE ACCOUNTS OF OTHERS IN THE CLASS A COMMON STOCK PURSUANT TO EXEMPTIONS FROM
RULES 10B-6, 10B-7 AND 10B-8 UNDER THE SECURITIES EXCHANGE ACT OF 1934.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the more
detailed information appearing elsewhere in this Prospectus. Unless otherwise
indicated, all information contained in this Prospectus assumes that the over-
allotment options granted to the Underwriters are not exercised. In addition,
unless the context requires otherwise, (i) "Ryerson Tull" or "Company" refers
to Ryerson Tull, Inc. and its consolidated subsidiaries, (ii) "ISI" refers to
Inland Steel Industries, Inc. and its consolidated subsidiaries, (iii) "U.S.
Offering" refers to the offering of shares of the Company's Class A Common
Stock, par value $1.00 per share (the "Class A Common Stock"), in the United
States, "International Offering" refers to the offering of such shares outside
the United States and "Offerings" refers to the U.S. Offering and the
International Offering collectively and (iv) "Note Offering" refers to the
proposed offering of $150 million aggregate principal amount of the Company's
Notes due 2001 and $100 million aggregate principal amount of the Company's
Notes due 2006 (collectively, the "Notes"). The Class A Common Stock and the
Company's Class B Common Stock, par value $1.00 per share (the "Class B Common
Stock"), are sometimes collectively referred to in this Prospectus as the
"Common Stock."
On June 10, 1996, the Company effected a recapitalization (the
"Recapitalization") pursuant to which the two outstanding shares of the
Company's common stock, par value $1.00 per share, were exchanged for
34,000,000 shares of Class B Common Stock. Unless otherwise noted, information
relating to the Company's Common Stock set forth in this Prospectus assumes
that the Recapitalization was effected on December 31, 1995.
THE COMPANY
The Company, through its wholly-owned operating subsidiaries, Joseph T.
Ryerson & Son, Inc. ("Ryerson") and J. M. Tull Metals Company, Inc. ("Tull"),
is a general line metals service center and processor of metals. The Company
believes that it is the largest metals service center in the United States
based on sales revenue, with 1995 sales of $2.5 billion and a current U.S.
market share of approximately 9%, more than twice the U.S. market share of its
nearest competitor, based on the Company's analysis of Steel Service Center
Institute (the "SSCI") data. The Company distributes and processes metals and
other materials throughout the continental United States and is among the
largest purchasers of steel in the United States. With 52 interconnected
facilities that place it within several hundred miles of most of its customers,
the Company is able to be responsive to specific customer requests and is
generally able to make deliveries of stock items within 24 hours of receipt of
a customer's order. Utilizing this network of facilities and the Company's
regionalized management systems, the Company believes it can be responsive to
individual customers while providing a broad range of products and services.
The Company also owns a 50% interest in Ryerson de Mexico, S.A. de C.V.
("Ryerson de Mexico"), a general line metals service center and processor with
18 facilities in Mexico.
Ryerson Tull was incorporated under the laws of the state of Delaware in
March 1986 as Inland Steel Services Holding, Inc., and its name was changed
from Inland Materials Distribution Group, Inc. to Ryerson Tull, Inc. in May
1996. Ryerson, the predecessor of the Company, was founded in 1842. The
Company's principal executive offices are located at 2621 West 15th Place,
Chicago, Illinois 60608, telephone number (312) 762-2121.
INDUSTRY OVERVIEW
The Company believes that the U.S. metals service center industry (the
"Industry") occupies a growing niche between primary producers of carbon, alloy
and stainless steels, aluminum and other metals and purchasers of those
products, including manufacturers and intermediate processors. Metals service
centers, including the Company, provide services not typically available from
primary
3
<PAGE>
producers, such as more reliable deliveries, smaller order sizes, the
convenience of dealing with a smaller number of suppliers, just-in-time
inventory management and customer-specific, value-added processing. The Company
believes that the role of metals service centers is expanding as a result of a
number of factors, including the increased outsourcing of inventory management
functions and metals processing operations by manufacturers and the lower cost
and more reliable service available from service centers as compared to primary
producers.
The Industry is cyclical (with periods of strong demand and higher prices
followed by periods of weaker demand and lower prices), principally due to the
cyclical nature of the industries in which the largest consumers of metals
operate. Any significant slowdown in one or more of those industries could have
a material adverse effect on the demand for metals, resulting in lower prices
for metals and reduced profitability for metals service centers, including the
Company. Metals prices and metals service center profitability improve as
metal-consuming industries experience recoveries following economic downturns.
OPERATIONS
The Company is organized along regional and product lines into five business
units: Ryerson East, Ryerson West, Ryerson Central, Tull/AFCO and Ryerson Coil
Processing. This structure enables the Company to centralize certain
administrative support services while maintaining local organizations that are
responsive to the needs of specific customers and markets.
Each of the Company's facilities maintains a wide variety of inventory that
varies depending on the facility's size and customer demand, including carbon,
alloy and stainless steels, aluminum, red metals (such as brass and copper),
nickel and plastics. The Company purchases inventories from a number of
producers, primarily domestic. The Company purchases the majority of its
inventories in the open market at prevailing market prices, although
occasionally the Company enters into long-term, fixed-price supply contracts in
order to minimize its financial exposure to long-term, fixed-price sales
contracts. Purchases are typically made in large lots and held in distribution
centers until sold, usually in smaller quantities. These materials are
inventoried in a number of shapes, including coils, sheets, rounds, hexagons,
square and flat bars, plate, structurals and tubing. The Company uses
techniques such as sawing, slitting, blanking, pickling, cutting to length,
levelling, flame cutting, laser cutting, edge trimming, edge rolling,
fabricating and grinding to process materials to specified thickness, length,
width, shape and surface quality pursuant to specific customer orders. More
than one-half of the material sold by the Company is processed. The Company's
services include special stocking programs, just-in-time delivery, inventory
management (which includes the placement of Company employees at customer
sites), kits ready for assembly, programs that provide customers at their
places of business with Company-owned material which can be used as needed by
the customer, technical advice on part design and material specification, and
early stage material processing and fabrication. The Company typically ships
inventory between its facilities and products to customers by Company trucks
and by common carrier.
BUSINESS STRATEGY
The Company's strategy is to expand its market leadership position as a
nationwide general line metals service center and processor of metals by
providing its customers with high quality products and services at competitive
prices. The Company believes that increasing its market share will be an
effective means of increasing its profitability. One of the Company's goals is
to enhance its competitive position through the aggressive pursuit of organic
growth, strategic acquisitions, ongoing unit cost reductions and increased
asset productivity, although there can be no assurance that the Company will
achieve this goal. As part of its overall business strategy, the Company has
made substantial investments in management information systems that link its
operations and enhance interactions between the Company and its customers and
suppliers. Based on its size, which leads to cost efficiencies, the trend
towards consolidation in the number of suppliers used by customers, strategic
4
<PAGE>
plant locations, broad product and service offerings and management's
acquisition strategy, the Company believes that it is well positioned to take
advantage of the anticipated growth and consolidation in the Industry. See
"Business--Industry Overview."
ORGANIC GROWTH
One of the Company's goals is to expand its market leadership position within
the Industry through competitive pricing, broad product and service offerings
and the use of technology to improve customer service. The Company's large
size, buying power and competitive cost structure enable it to negotiate
favorable prices for raw materials and to take advantage of producer economies
of scale resulting in lower costs of material purchased, allowing it to offer
its products and services at competitive prices. In addition, the Company's
broad product and service offerings provide customers one-stop shopping,
positioning the Company to capitalize on what it believes to be a continuing
trend towards consolidation in the number of suppliers used by customers. To
this end, the Company has initiated a national accounts program targeting
customers that purchase metal from a number of suppliers throughout the
country. The Company believes it can better serve these customers by providing
competitive pricing and superior delivery and quality. The Company's goal is to
differentiate itself from its competitors by providing materials and services
on a more timely basis and with fewer rejections than its competitors through
increased emphasis on quality control. The Company has received International
Standards Organization 9002 ("ISO 9002") certification for five facilities and
will seek certification for additional facilities in the future. ISO 9002 is a
series of international standards for quality management and assurance. The
Company believes that certain major customers seek suppliers with such
certification and that such certification helps differentiate it from its
competitors.
STRATEGIC ACQUISITIONS
The Company believes that the fragmented nature of the Industry, combined
with the Company's strong national reputation, nationwide operations, market
leadership position and experience in integrating facility operations, make the
Company well situated to become a strategic buyer of service center assets. The
Company will seek selective acquisitions of businesses that complement, or
strategically extend, the Company's existing businesses. Acquired companies can
be either integrated into the Company's network or, depending on the
circumstances, operated as stand-alone facilities. In either case, the Company
believes that such acquisitions could enable it to realize further economies of
scale (particularly in operating cost, asset utilization and purchasing
leverage) and could better utilize the Company's existing facilities and
systems capability. Although the Company from time to time discusses potential
acquisitions with other service center operators, the Company currently has no
understandings, agreements or commitments to make any acquisitions.
UNIT COST REDUCTIONS AND INCREASED PRODUCTIVITY
Another of the Company's goals is to decrease unit costs through initiatives
which include increasing volume, thereby taking advantage of economies of
scale, and increasing asset and employee productivity. The Company has made and
will continue to make investments in computer-based and automated systems that
track profitability by customer, product and cost of process, allowing the
Company to determine where changes can be made to reduce cost and increase
profitability. The Company intends to increase its emphasis on the use of
electronic links known as electronic data interfaces or "EDIs" with its
suppliers and customers to reduce the paperwork and administrative costs
associated with customer orders, shipment tracking, billing and remittance
processing. The Company continues to re-engineer its various work processes
through benchmarking analyses across its 52 facilities. Re-engineering enables
the Company to increase output without increasing its labor force by increasing
the efficiency with which work processes are performed.
5
<PAGE>
COMPETITIVE STRENGTHS
The Company has a number of competitive strengths that it believes will
facilitate the implementation of the Company's strategy, including its market
leadership position and its management systems and practices.
MARKET LEADERSHIP POSITION
ECONOMIES OF SCALE. Because of the Company's large size, its costs of
operations can be spread across a large base of sales, resulting in lower fixed
costs per ton sold. However, in times of decreasing sales, the Company's fixed
costs must be spread across a smaller base of sales resulting in higher fixed
costs per ton sold. The Company believes that available capacity at many of its
plants will allow it to achieve further economies of scale to the extent it
increases sales in the future. Of the Company's 52 facilities, six are
currently operating one shift, 31 are operating two shifts and 15 are operating
three shifts. In addition, the size of the Company's material purchases enables
its suppliers to realize economies of scale and thereby provide the Company
with competitive prices.
SCOPE OF PRODUCTS AND SERVICES. The Company's broad product and service
offerings provide customers one-stop shopping for most of their metals needs.
In addition, the Company believes that its 52 facilities located throughout the
continental United States, generally within one day's delivery time of almost
all U.S. manufacturing centers, position it to target national customers that
currently buy metals from a variety of suppliers in different locations. The
Company's ability to transfer inventory among facilities enables it to have
available specialized items at regional locations throughout its network and to
provide such inventory on a timely basis more profitably than if it were
required to maintain inventory of all products at each location.
RELATIONSHIPS WITH SUPPLIERS. The Company is among the largest purchasers of
steel in the United States and is also a significant purchaser of aluminum in
the United States. The Company buys from and has developed relationships with
many U.S. steel producers as well as other metal producers. The Company's
relationships with numerous metal producers provide it access to high quality
metals, timely delivery and new product and service ideas from many suppliers.
In addition, because the Company purchases large volumes of metals, it can
negotiate competitive prices from its suppliers. In part because of its buying
power, the Company has been able to secure product from primary manufacturers
during times of tight supply.
MANAGEMENT SYSTEMS AND PRACTICES
The Company's management information systems have allowed management to
develop an internal benchmarking system and to track profitability by customer,
product and cost of process. This detailed information enables management to
make continuous improvements such as reallocating slow-moving inventory to
different locations to increase inventory turns, improving purchasing,
targeting customers or changing suppliers as needed. The Company's 52
facilities provide it with a large base for testing, comparing and implementing
new management practices.
RELATIONSHIP WITH ISI
The Company is currently a wholly-owned subsidiary of ISI, which also owns
Inland Steel Company ("ISC"), the sixth largest steel producer in the United
States based on the number of tons shipped. Following the consummation of the
Offerings, the Company will continue to be controlled by ISI, which will
beneficially own all of the outstanding Class B Common Stock, representing
approximately 96.3% of the aggregate voting power of all of the Company's
Common Stock. ISI will retain more than 50% of the voting control of the
Company until the number of shares of Class B
6
<PAGE>
Common Stock outstanding represents less than 50% of the total number of shares
of Class A Common Stock and Class B Common Stock outstanding, at which time the
outstanding Class B Common Stock will convert into an equal number of shares of
Class A Common Stock. The Company purchases steel from ISI and its affiliates.
The Company also purchases support functions from and has a tax sharing
arrangement with ISI. The Company intends to continue these relationships after
the Offerings. Ryerson is the guarantor of an obligation of the Inland Steel
Industries Thrift Plan ESOP Trust (the "ESOP Trust"), and the Company's
employees participate in the employee benefit plans of ISI other than the
Inland Steel Industries Pension Plan (the "ISI Pension Plan"). Effective April
30, 1996, that portion of the ISI Pension Plan covering the Company's current
and former employees was separated and became a new and separate plan sponsored
by the Company (the "Pension Plan"). See "Relationship with ISI."
RATIONALE FOR THE OFFERINGS AND NOTE OFFERING
The Company and ISI have decided to pursue the Offerings and the Note
Offering to assist them in realizing the following strategic and financial
objectives that the managements of the Company and ISI have established for
their respective businesses. The Company has historically been dependent on
cash flow from operations, limited borrowings from third party lenders and
contributions from ISI to fund its growth. The Company believes that
consummation of the Offerings and the Note Offering, which will establish
public trading markets for the Company's equity and debt securities, should
provide the Company with access to the public markets to raise additional
capital to fund its future growth. Consummation of the Offerings and the Note
Offering will permit ISI to retire debt, which will reduce ISI's interest
expense and eliminate certain burdensome restrictive covenants.
As a result of the transactions described below, ISI will receive all of the
proceeds of the Offerings and the Note Offering. Prior to the consummation of
the Offerings, the Company will declare a dividend payable in cash in an amount
equal to the estimated net proceeds of the Offerings (estimated to be $84.4
million at an assumed initial offering price of $17.50 per share (the mid-point
of the price range set forth on the cover page of this Prospectus)) and a
dividend consisting of a $293.8 million note payable to ISI (the "Note
Payable") maturing five years from its date of issuance and bearing interest at
a specified prime rate. The Note Payable may be prepaid without penalty at the
option of the Company. The estimated net proceeds from the Offerings will be
used to pay the cash dividend to ISI and will not be available to the Company.
All of the net proceeds from the Note Offering, if consummated, together with a
portion of the Company's available cash and/or borrowings under credit
facilities, will be used to discharge the Note Payable to ISI. On May 20, 1996,
the Company paid to ISI a dividend in the amount of $75 million in cash (the
"May 1996 Dividend" and, together with the dividends to be declared prior to
the consummation of the Offerings, the "Dividends"). Purchasers of Class A
Common Stock in the Offerings will not receive any portion of the Dividends. If
the Note Offering is not consummated, the Note Payable will remain an
obligation of the Company and must be repaid from cash generated from
operations and/or future financings, the source, nature and amount of which
cannot currently be determined.
ISI used $63.2 million of the proceeds from the May 1996 Dividend to repay
intercompany indebtedness owed by ISI to the Company arising out of a
corporate-wide cash management program. After the repayment of such
indebtedness, the Company ceased participation in such program and the
Company's cash will no longer be held in ISI's accounts. ISI has informed the
Company that ISI intends to use the remaining proceeds from the Dividends to
retire ISI and ISC indebtedness and for general corporate purposes. See "Use of
Proceeds" and "Proposed Note Offering."
In connection with the Offerings, certain of the options to purchase shares
of ISI common stock and restricted shares of ISI common stock held by the
Company's employees will be converted into options to purchase shares of Class
A Common Stock and shares of restricted Class A Common Stock
7
<PAGE>
having an aggregate value comparable to the value of their ISI options and
restricted stock. Employees, including employees of the Company who are also
employees of ISI, will also be eligible to receive future awards under the
Ryerson Tull 1996 Incentive Stock Plan. On June 10, 1996, the Company entered
into severance agreements with certain of its officers. In addition, the non-
employee Directors, including the non-employee Directors who are also Directors
of ISI, will receive fees from the Company for serving in their capacities as
Directors of the Company. See "Management--Directors' Compensation," "--
Employment and Change of Control Agreements" and "--Ryerson Tull 1996 Incentive
Stock Plan."
POTENTIAL DISTRIBUTION AND OTHER TRANSACTIONS
Upon consummation of the Offerings, ISI will beneficially own all of the
Class B Common Stock. ISI has advised the Company that, although it currently
intends to hold such stock, it may in the future distribute all or part of such
stock (in the form of Class A Common Stock) to ISI's stockholders (a "Spin-
off") or may sell such stock (in the form of Class A Common Stock) to third
parties in one or more transactions. See "Description of Capital Stock--Common
Stock--Conversion Rights." The completion of any such transaction would be
subject to a number of factors, including a determination by the Board of
Directors of ISI that the transaction would be in the best interests of its
stockholders and, in the case of a Spin-off, could be subject to the receipt of
a favorable ruling from the Internal Revenue Service (the "IRS") or an opinion
of counsel as to the tax-free nature of such transaction. Substantially all of
the shares of Class A Common Stock distributed in such a Spin-off or sale could
be eligible for immediate resale in the public market. Sales of a substantial
number of shares of Class A Common Stock or Class B Common Stock (which would
convert into shares of Class A Common Stock upon such sale) in the public
market could adversely affect the market price of the Class A Common Stock. See
"Shares Eligible for Future Sale--Potential Distribution and Other
Transactions."
RISK FACTORS
Prospective purchasers of the Class A Common Stock offered hereby should
consider carefully the information set forth under "Risk Factors," in addition
to the other information set forth in this Prospectus, before purchasing any of
the Class A Common Stock, such as the risk factors set forth under the
following headings: "Control by Principal Stockholder," "Highly Competitive
Industry," "Cyclical Nature of Business," "Dividends to ISI and Resulting
Indebtedness," "No Assurance that Note Offering will be Consummated," "Labor
Contracts; Risk of Work Stoppage," "Potential for Interruption in Sources of
Supply," "Volatile Price of Inventory," "Dependence On Computer-Based Systems,"
"Reliance On Acquisitions for Expansion," "Holding Company Structure; Reliance
On Dividends and Transfers from Subsidiaries; Restrictions On Dividends,"
"Benefits of the Offerings and Note Offering to the Principal Stockholder,"
"Pension and Other Postretirement Benefits; Underfunded Pension Plan," "Costs
of Environmental Compliance," "Certain Relationships with ISI," "Anti-Takeover
Provisions," "Dilution," "No Prior Market for Class A Common Stock" and "Shares
Eligible for Future Sale."
8
<PAGE>
THE OFFERINGS
<TABLE>
<CAPTION>
Class A Common Stock offered by the
Company:
<S> <C>
U.S. Offering..................... 4,176,000 shares of Class A Common Stock
International Offering............ 1,044,000 shares of Class A Common Stock
Total............................ 5,220,000 shares of Class A Common Stock
Common Stock to be outstanding
after the Offerings:
Class A Common Stock.............. 5,220,000 shares(1)
Class B Common Stock.............. 34,000,000 shares
Total............................ 39,220,000 shares
Use of Proceeds.................... The estimated net proceeds of the Offerings
will be paid to ISI in the form of a cash
dividend declared prior to the consummation
of the Offerings. All of the net proceeds
of the Note Offering, if consummated, to-
gether with a portion of the Company's
available cash and/or borrowings under
credit facilities, will be used to dis-
charge the Note Payable that will be de-
clared as a dividend to ISI prior to the
consummation of the Offerings. See "Use of
Proceeds."
Voting Rights...................... The Class A Common Stock and Class B Common
Stock vote together as a single class on
all matters, except as otherwise required
by law, with each share of Class A Common
Stock entitling its holder to one vote and
each share of Class B Common Stock enti-
tling its holder to four votes. All of the
outstanding Class B Common Stock is held by
ISI. See "Description of Capital Stock--
Common Stock--Voting Rights." Under certain
circumstances, Class B Common Stock auto-
matically converts to Class A Common Stock.
See "Description of Capital Stock--Common
Stock--Conversion Rights."
Proposed New York Stock Exchange
("NYSE") Symbol................... RT
</TABLE>
- --------
(1) Assumes that the Underwriters' over-allotment options are not exercised. If
the over-allotment options are exercised in full, 6,000,000 shares of the
Class A Common Stock will be outstanding upon completion of the Offerings.
Excludes an aggregate of 2,400,000 shares of Class A Common Stock that has
been reserved for issuance under the Incentive Stock Plan (as defined
herein) and the Directors' Compensation Plan (as defined herein), including
shares of Class A Common Stock to be issued in the form of restricted stock
and shares of Class A Common Stock reserved for issuance upon exercise of
options, in each case to be issued upon consummation of the Offerings as
described below. Effective upon consummation of the Offerings, the
outstanding shares of restricted ISI common stock and options to purchase
shares of ISI common stock held by the Company's employees will be
converted into shares of restricted Class A Common Stock and options to
purchase shares of Class A Common Stock, to the extent provided by the
Compensation Committee. The number of shares of Class A Common Stock that
will be issued as restricted stock or subject to options will also vary
depending on the relative value of a share of ISI common stock and a share
of Class A Common Stock on the applicable valuation date. Assuming that as
of the applicable valuation date the value of a share of ISI common stock
is $21.00 (the last reported sales price on the NYSE on June 5, 1996), that
the value of a share of Class A Common Stock is $17.50 (the mid-point of
the offering range set forth on the cover page of this Prospectus) and that
no shares of restricted ISI common stock or options to purchase ISI common
stock held by Company officers who are also ISI officers will be converted
into shares of restricted Class A Common Stock or options to purchase
shares of Class A Common Stock, 35,940 shares of Class A Common Stock would
be issued in the form of restricted stock and 799,513 shares of Class A
Common Stock would be reserved for issuance upon exercise of options
outstanding upon consummation of the Offerings. See "Management--Directors'
Compensation" and "--Ryerson Tull 1996 Incentive Stock Plan."
9
<PAGE>
PROPOSED NOTE OFFERING
The Company has filed a registration statement with the Securities and
Exchange Commission (the "Commission") relating to the Note Offering. All of
the net proceeds of the Note Offering, if consummated, together with a portion
of the Company's available cash and/or borrowings under credit facilities, will
be used to discharge the Note Payable to ISI that will be declared as a
dividend to ISI prior to the consummation of the Offerings. Because the Note
Offering is subject to a variety of market, economic and other factors, there
can be no assurance that the Note Offering will be consummated. It is expected
that the Note Offering would be consummated shortly after the consummation of
the Offerings. See "Proposed Note Offering" and "Use of Proceeds."
SUMMARY FINANCIAL DATA
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
-------------------------------------------------- ---------------------
1991 1992 1993 1994 1995 1995 1996
-------- -------- -------- -------- -------- -------- -----------
(IN MILLIONS, EXCEPT PER SHARE DATA, NUMBER OF EMPLOYEES AND
RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Net sales............... $1,655.9 $1,716.6 $1,893.3 $2,197.5 $2,450.1 $ 652.3 $625.3
Operating costs......... 1,639.7 1,689.5 1,836.9 2,099.4 2,301.4 610.2 588.7
-------- -------- -------- -------- -------- -------- ------
Operating profit........ 16.2 27.1 56.4 98.1 148.7 42.1 36.6
General corporate
expense, net of income
items.................. 10.6 8.4 7.4 6.9 0.7 0.4 (0.7)
Interest and other ex-
pense on debt(1)....... 17.1 12.8 10.9 2.9 2.6 0.7 0.6
-------- -------- -------- -------- -------- -------- ------
Income or (loss) before
income taxes........... (11.5) 5.9 38.1 88.3 145.4 41.0 36.7
Provision for income
taxes.................. 2.3Cr. 2.6 11.4 35.0 56.9 16.5 14.3
-------- -------- -------- -------- -------- -------- ------
Income or (loss) before
cumulative
effect of changes in
accounting
principles............. (9.2) 3.3 26.7 53.3 88.5 24.5 22.4
Cumulative effect of
changes in accounting
principles(2).......... -- (84.1) -- -- -- -- --
-------- -------- -------- -------- -------- -------- ------
Net income or
(loss)(1).............. $ (9.2) $ (80.8) $ 26.7 $ 53.3 $ 88.5 $ 24.5 $ 22.4
======== ======== ======== ======== ======== ======== ======
PRO FORMA DATA(1):
Earnings per share of
Common Stock........... $ 1.86 $ 0.53 $ 0.47
Weighted average number
of shares of Common
Stock outstanding...... 39.2 39.2 39.2
<CAPTION>
AS OF DECEMBER 31, AS OF MARCH 31,1996
-------------------------------------------------- ---------------------
AS
1991 1992 1993 1994 1995 ACTUAL ADJUSTED(3)
-------- -------- -------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET (END OF
PERIOD):
Operating working capi-
tal(4)................. $ 320.9 $ 296.9 $ 363.5 $ 366.7 $ 373.0 $ 423.3 $423.3
Total assets............ 748.1 765.4 842.3 891.3 972.6 1,010.9 935.9
Long-term debt.......... 31.0 25.7 28.2 23.6 18.9 18.4 312.2
Stockholder's equi-
ty(5).................. 430.7 350.0 526.7 580.0 668.5 690.9 322.1
<CAPTION>
THREE MONTHS
ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
-------------------------------------------------- ---------------------
1991 1992 1993 1994 1995 1995 1996
-------- -------- -------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Tons shipped............ 1.74 1.87 2.08 2.33 2.35 .63 .64
Number of employees at
period end............. 5,224 5,040 5,093 5,158 4,993 5,206 4,965
Capital Expenditures.... $ 9.8 $ 9.3 $ 19.3 $ 20.4 $ 19.3 $ 3.0 $ 3.0
Ratio of earnings to
fixed charges(6)....... 0.5x 1.3x 3.3x 11.8x 19.2x 21.5x 21.4x
EBITDA(7)............... $25.3 $38.8 $69.6 $112.4 $169.8 $47.1 $42.9
</TABLE>
10
<PAGE>
(1) The pro forma data gives effect to the Offerings at an assumed initial
public offering price of $17.50 per share (the mid-point of price range set
forth on the cover page of this Prospectus) and the dividend of the Note
Payable (at an assumed average interest rate of 8.80% for the year ended
December 31, 1995 and 8.50% for the three months ended March 31, 1996), as
if such transactions had occurred on January 1, 1995. The pro forma effect
of these transactions would increase historical interest and other expense
on debt for the year ended December 31, 1995 and for the three months ended
March 31, 1995 and 1996 by $25.9 million, $6.5 million and $6.2 million,
respectively.
Assuming the issuance of the $250 million of Notes in the Note Offering and
the borrowing of $50 million under credit facilities at a weighted average
interest rate of 8.75% and the application of the net proceeds therefrom to
discharge the Note Payable, as if each had occured on January 1, 1995, the
pro forma effect of these transactions would increase historical interest
and other expense on debt for the year ended December 31, 1995 and for the
three months ended March 31, 1995 and 1996 by $27.3 million, $6.8 million
and 6.8 million, respectively. Pro forma earnings per share giving effect
to these transactions for the year ended December 31, 1995 and for the
three months ended March 31, 1995 and 1996 would have been $1.83, $.52 and
$.47, respectively.
(2) The cumulative effect on prior years' results of operations of adopting,
effective January 1, 1992, Financial Accounting Standards Board ("FASB")
Statement No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions," was $72.3 million and of adopting FASB Statement No. 109,
"Accounting for Income Taxes," was $11.8 million.
(3) Adjusted to reflect the payment of $453.2 million to ISI in satisfaction of
the Dividends, and the receipt of $84.4 million of net proceeds from the
Offerings at an assumed initial public offering price of $17.50 per share
(the mid-point of price range set forth on the cover page of this
Prospectus) and the application of the estimated net proceeds therefrom.
Giving effect to the Note Offering and the application of the estimated
$243.8 million net proceeds therefrom, together with the borrowing of $50
million under credit facilities, to discharge the Note Payable, long-term
debt would be $268.4 million.
(4) Includes trade receivables and inventories less trade accounts payable and
accrued current liabilities.
(5) During the year ended December 31, 1993, ISI made a $150 million capital
contribution to the Company.
(6) Earnings for the calculation of the ratio of earnings to fixed charges
consist of income before income taxes. Earnings are increased by fixed
charges and previously capitalized interest amortized during the period.
Fixed charges consist of total interest charges (including capitalized
interest), amortization of debt expense and an appropriate share of rental
expense.
(7) Earnings before interest, taxes, depreciation and amortization ("EBITDA")
for any relevant period presented above represents operating profit less
general corporate expense, net of income items, plus depreciation and
amortization of goodwill and other intangibles. While EBITDA should not be
construed as a substitute for operating income or a better indicator of
liquidity than cash flow from operating activities, which are determined in
accordance with generally accepted accounting principles, it is included
herein to provide additional information with respect to the ability of the
Company to meet its future debt service, capital expenditure and working
capital requirements. EBITDA is not necessarily a measure of the Company's
ability to fund its cash needs. See the Company's Consolidated Financial
Statements and the related notes thereto appearing elsewhere in this
Prospectus.
11
<PAGE>
RISK FACTORS
Prospective purchasers should carefully consider the following factors,
together with other information in this Prospectus, in evaluating an
investment in the Class A Common Stock.
CONTROL BY PRINCIPAL STOCKHOLDER
Upon consummation of the Offerings, ISI will own in the aggregate 34,000,000
shares of Class B Common Stock, representing all of the outstanding shares of
Class B Common Stock. Each share of Class A Common Stock is entitled to one
vote, while each share of Class B Common Stock is entitled to four votes.
Consequently, ISI will control approximately 96.3% of the voting power of the
Company and will be able to elect the entire Board of Directors, thereby
controlling the management, policies and conduct of the business of the
Company, as well as matters submitted to a vote of the Company's stockholders
(other than matters that the Delaware General Corporation Law ("Delaware GCL")
entitles holders of Class A Common Stock to vote on separately as a class),
including decisions regarding the acquisition or disposition of the Company's
assets, future issuances of Common Stock or other securities of the Company
and the declaration and payment of dividends on the Common Stock. ISI will
retain more than 50% of the voting control of the Company until the number of
shares of Class B Common Stock outstanding represents less than 50% of the
total number of shares of Class A Common Stock and Class B Common Stock
outstanding, at which time the outstanding Class B Common Stock will convert
into an equal number of shares of Class A Common Stock. In addition, certain
Directors and officers of the Company are also Directors and officers of ISI.
See "--Anti-Takeover Provisions," "Relationship with ISI," "Principal
Stockholder," "Description of Capital Stock--Common Stock" and "--Corporate
Governance."
ISI has advised the Company that, although it currently intends to hold such
stock, it may in the future distribute all or part of such stock (in the form
of Class A Common Stock) to ISI's stockholders by means of a Spin-off or may
sell such stock (in the form of Class A Common Stock) to third parties in one
or more transactions. See "Description of Capital Stock--Common Stock--
Conversion Rights." The completion of such a transaction would be subject to a
number of factors, including a determination by the Board of Directors of ISI
that the transaction would be in the best interests of its stockholders and,
in the case of a Spin-off, could be subject to the receipt of a favorable
ruling from the IRS or an opinion of counsel as to the tax-free nature of such
transaction. Substantially all of the shares of Class A Common Stock
distributed in such a Spin-off or sale could be eligible for immediate resale
in the public market. See "Shares Eligible for Future Sale--Potential
Distribution and Other Transactions."
HIGHLY COMPETITIVE INDUSTRY
The Company is engaged in a highly fragmented and competitive Industry. In
general, competition is based on quality, service, price and geographic
proximity. The Company competes with many other metals service centers on a
regional and local basis, some of which may have greater financial resources
and flexibility than the Company. To the extent that some of the Company's
competitors purchase a higher percentage of metals than the Company from
foreign steelmakers, such competitors may benefit from favorable exchange
rates or other economic or regulatory factors that may result in a competitive
advantage. This competitive advantage may be offset somewhat by higher
transportation costs associated with importing metals into the United States.
See "Business--Competition."
CYCLICAL NATURE OF BUSINESS
The Company's principal operations are cyclical due to its dependence on
customers in cyclical industries. During 1995, the Company shipped
approximately 38% of its product (by sales revenue) to machinery
manufacturers, 25% to metal producers and fabricators, 10% to transportation
equipment
12
<PAGE>
producers and 9% to electrical machinery producers, all of which operate in
cyclical industries. Any significant slowdown in any of these industries could
have a material adverse effect on the Company's results of operations. See
"Business--Customer Base."
DIVIDENDS TO ISI AND RESULTING INDEBTEDNESS
Prior to the consummation of the Offerings, the Company will declare a
dividend payable in cash in an amount equal to the estimated net proceeds of
the Offerings (estimated to be $84.4 million at an assumed initial offering
price of $17.50 per share (the mid-point of the price range set forth on the
cover page of this Prospectus)), and a dividend consisting of the Note
Payable. The estimated net proceeds from the Offerings will be used to pay the
cash dividend to ISI and will not be available to the Company. The Company
anticipates that the Note Payable will be discharged from the net proceeds of
the Note Offering, if consummated, together with a portion of the Company's
available cash and/or borrowings under credit facilities. Purchasers of Class
A Common Stock in the Offerings will not receive any portion of these
dividends. If the Note Offering is not consummated, the Note Payable will
remain an obligation of the Company and must be repaid from cash generated
from operations and/or future financings, the source, nature and amount of
which cannot currently be determined.
The payment of the Dividends to ISI and the associated indebtedness incurred
by the Company will result in the Company having substantial indebtedness in
relation to its total invested capital. At March 31, 1996, on a pro forma
basis after giving effect to the Offerings, the Note Offering and the payment
of the Dividends to ISI, the Company would have a ratio of long-term debt to
stockholders' equity of approximately 0.8 to 1. As a result, the Company's
ability to respond to changes in financial, business and economic conditions
may be limited. In addition, the indenture governing the Notes is expected to
contain covenants that may limit the Company's financial flexibility or
otherwise affect the conduct of the Company's future business. Although the
Company believes that the covenants will not materially impact the Company's
financial flexibility or future business, there can be no assurance that the
covenants will not have such an effect.
The Company has received a definitive commitment letter from its lead
commercial bank to provide a four year, $250 million revolving credit facility
(the "New Credit Facility"), subject to certain customary conditions. The New
Credit Facility is expected to contain customary restrictive covenants,
including, among other things, leverage, minimum net worth and fixed charge
coverage requirements, and limitations on restricted payments (including
dividends), the addition of subsidiary debt (except for debt of acquired
companies and up to $50 million of purchase money debt), new agreements that
limit upstreaming of cash from subsidiaries, transactions with affiliates, the
existence of liens, and mergers and sales of assets. In addition, the amount
of credit available under the New Credit Facility will be eliminated in the
event of a change of control (as defined) of ISI or the Company. Although the
Company believes that the covenants will not materially impact the Company's
financial flexibility or future business, such covenants may restrict the
Company's ability to raise capital for operating needs, capital expenditures
and acquisitions, and may result in the Company incurring greater cost of
capital than it would otherwise incur.
Finally, the indenture (the "ISI Note Indenture") governing ISI's 12 3/4%
Notes due 2002 (the "ISI Notes") currently contains covenants that prohibit
the Company from issuing debt, including the Notes, and otherwise limit the
Company's financial flexibility, and that may affect the conduct of the
Company's future business. Although ISI is soliciting consents from the
holders of the ISI Notes to amend the ISI Note Indenture to eliminate certain
of these covenants, there can be no assurance that ISI will be successful in
obtaining sufficient consents to such an amendment. See "Dividend Policy" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Financing."
13
<PAGE>
NO ASSURANCE THAT NOTE OFFERING WILL BE CONSUMMATED
There can be no assurance that the Note Offering will be consummated. If the
Note Offering is not consummated, the Note Payable will remain outstanding and
must be repaid from cash generated from operations and from future financings,
the source, nature and amount of which cannot be determined. The Note Payable
will have a term of five years from its date of issuance, two years shorter
than the weighted average maturity of the Notes. As a result, the Company will
be required to repay the Note Payable sooner than it would have been required
to repay the Notes.
LABOR CONTRACTS; RISK OF WORK STOPPAGE
The Company has experienced only minor localized disruptions in operations
as a result of labor-related issues. A portion of the employees at ten of the
Company's 52 facilities are organized by the United Steelworkers of America
(the "United Steelworkers"), representing approximately 485 employees, and a
portion of the employees at ten facilities are organized by the International
Brotherhood of Teamsters, Chauffeurs, Warehousemen & Helpers (the
"Teamsters"), representing approximately 280 employees. The Company's labor
contracts expire on staggered dates. The next material labor contract to
expire is the contract with the United Steelworkers, relating to all United
Steelworkers-represented facilities and employees, which expires on July 31,
1996. During the next 12 months, labor contracts covering 652 employees at 15
facilities will expire. While management does not expect that work stoppages
will arise in connection with the renewal of labor agreements expiring in the
foreseeable future, no assurance can be given that work stoppages will not
occur. A widespread work stoppage could have a material adverse effect on the
Company's results of operations if it were to last for a significant period of
time. See "Business--Employees."
POTENTIAL FOR INTERRUPTION IN SOURCES OF SUPPLY
The Company purchases its principal inventory, such as carbon steel,
stainless steel, alloy steel, aluminum and a variety of other metals and
plastics, from a number of producers, primarily domestic. Any interruption or
reduction in the supply of any of these materials may make it difficult or
impossible to satisfy customers' just-in-time delivery requirements, which
could have a material adverse effect on the Company's results of operations.
VOLATILE PRICE OF INVENTORY
The domestic metals and plastics industries are cyclical due to significant
excess capacity in times of reduced demand in the United States, labor costs,
foreign and domestic competition and other factors which can result in
volatile pricing of such metals and plastics. Because the Company maintains
substantial inventories of steel, other metals and plastics in order to meet
the just-in-time delivery requirements of its customers, price decreases of
such raw materials usually require the Company to lower its selling prices,
resulting in lower profit margins or, in some cases, losses. In addition, the
Company occasionally enters into fixed-price supply contracts to purchase
materials. If the market price of raw materials were to decline below the
fixed price set in such contracts, the Company could be required to lower its
selling prices, resulting in lower margins or, in some cases, losses. Any
long-term price decreases of materials, in light of the Company's large
inventories and fixed-price supply contracts, may have a material adverse
effect on the Company's results of operations. Further, during periods of
rapid price decreases of such materials, the Company may be unable to lower
its prices quickly enough to remain price competitive, which could have a
material adverse effect on sales. Since mid-1995, the Company has gradually
reduced selling prices as a result of softness in Industry selling prices,
which has resulted in reduced gross margins. The Company's gross margin during
the three months ended March 31, 1996 was $232 per ton, compared to the
Company's gross margin per ton of $245 during 1995. There can be no assurance
that selling prices or gross margins will not decline further. See "Business--
Suppliers."
14
<PAGE>
DEPENDENCE ON COMPUTER-BASED SYSTEMS
The Company depends to a significant degree on its computer-based systems in
the operation of its business and has taken customary precautions to protect
such systems. The destruction or the failure of any of such computer-based
systems for any significant period of time would have a material adverse
effect on the Company's results of operations. See "Business--Management
Information Systems."
RELIANCE ON ACQUISITIONS FOR EXPANSION
The Company seeks to pursue growth through acquisitions as well as through
joint ventures and expansions of its existing facilities. However, the Company
has not made any acquisitions since 1990 and there can be no assurance that
the Company will be able to negotiate and complete acquisitions, enter into
joint ventures or effectively expand its facilities in the future. Moreover,
the cost of acquisitions, joint ventures and expansions could adversely affect
the Company's results of operations, liquidity and financial stability as a
result of the incurrence of additional debt, start-up costs and
underutilization of new facilities during the start-up phase. Acquisitions and
joint ventures may result in unanticipated difficulties in integrating
acquired businesses with the Company's existing business and may absorb a
disproportionate amount of management time. In addition, any issuances of
capital stock in connection with an acquisition or joint venture would dilute
the ownership of the Company's existing stockholders. Although the Company
from time to time discusses potential acquisitions with other service center
operators, the Company currently has no understandings, agreements or
commitments to make any acquisitions. In addition, while the Company has
achieved profitable operation of businesses acquired in the past, there can be
no assurance that any future acquisitions, if completed, would be profitable.
See "Business--Business Strategy--Strategic Acquisitions."
HOLDING COMPANY STRUCTURE; RELIANCE ON DIVIDENDS AND TRANSFERS FROM
SUBSIDIARIES; RESTRICTIONS ON DIVIDENDS
Ryerson Tull, Inc. is a holding company and has no direct business
operations. As such, Ryerson Tull, Inc. is dependent on dividends or other
intercompany transfers of funds from its subsidiaries to enable it to pay
dividends and to meet its obligations. Certain debt instruments of Ryerson
Tull, Inc.'s subsidiaries and the ESOP Guarantee (as defined herein) permit
the payment of dividends and advances to Ryerson Tull, Inc. only if such
subsidiaries are in compliance with financial covenants contained in those
instruments and such guarantee. As a result of these covenants, the
availability to the Company of cash from its subsidiaries in the form of
dividends, distributions and loans was limited to approximately $200 million
at March 31, 1996 ($125 million after giving effect to the May 1996 Dividend).
This amount is subject to change based on the financial performance of each
subsidiary. In addition, the indenture governing the Notes, as well as the New
Credit Facility, are expected to restrict Ryerson Tull, Inc.'s ability to pay
dividends and make other distributions on Ryerson Tull, Inc.'s capital stock.
As a result, Ryerson Tull, Inc.'s ability to pay dividends on the Common Stock
may be limited. See "Management's Discussion and Analysis of Financial
Conditions and Results of Operations--Liquidity and Financing" and "Proposed
Note Offering."
Following the consummation of the Offerings and the payment of the
Dividends, the Company does not anticipate paying any dividends for the
foreseeable future. See "Dividend Policy."
BENEFITS OF THE OFFERINGS AND NOTE OFFERING TO THE PRINCIPAL STOCKHOLDER
All of the estimated net proceeds of the Offerings will be paid to ISI in
the form of a dividend declared prior to the consummation of the Offerings and
will not be available to the Company. All of the net proceeds of the Note
Offering, if consummated, together with a portion of the Company's available
cash and/or borrowings under credit facilities, will be paid to ISI to
discharge the Note Payable. Purchasers of Class A Common Stock in the
Offerings will not receive any portion of these dividends. See "Use of
Proceeds" and "Capitalization."
15
<PAGE>
PENSION AND OTHER POSTRETIREMENT BENEFITS; UNDERFUNDED PENSION PLAN
Prior to April 30, 1996, certain employees of the Company were eligible to
participate in the ISI Pension Plan. Effective April 30, 1996, that portion of
the ISI Pension Plan covering the Company's current and former employees was
separated and became the Pension Plan, a new and separate plan sponsored by
the Company. If the Pension Plan had been in existence at the September 30,
1995 valuation date of the ISI Pension Plan, the projected benefit obligation
thereunder would have been $266 million and the share of the assets allocable
to the Pension Plan would have been $249 million, resulting in an underfunding
of $17 million for financial reporting purposes under Generally Accepted
Accounting Principles ("GAAP"). For purposes of calculating funding under the
Employee Retirement Income Security Act ("ERISA"), there will be no required
contribution in 1996 for the Pension Plan. However, regulations resulting from
recent federal legislation may accelerate future funding requirements. In
addition to pension benefits, the Company provides health care and life
insurance benefits to its eligible employees and retirees. The pension
benefits have been and will continue to be funded through a pension trust,
while health care and life insurance benefits are paid as incurred.
Under GAAP, the ISI Pension Plan, with $1.92 billion in assets, had unfunded
liabilities of $127 million at September 30, 1995. On an annualized basis,
individual yearly returns earned in the ISI Pension Plan have been volatile,
with the plan earning less than 1% in 1994, compared with over 20% in 1995.
The average annual return on the ISI Pension Plan over the last ten years has
been approximately 11%. ISI was required to record a $103 million additional
pension liability, offset by an intangible pension asset, on its year-end 1995
balance sheet. In May 1995, ISI contributed 3.9 million shares of its common
stock with an aggregate value of $100 million to the ISI Pension Plan. Most of
such shares continue to be held by the ISI Pension Plan and the Pension Plan
in amounts proportional to the assets in such plans. Under ERISA standards,
which take a longer term view than GAAP in determining the interest rate to
use in valuing liabilities, no contribution will be required in 1996 for the
ISI Pension Plan. See "--Certain Relationships with ISI."
Liabilities for health care and life insurance benefits are not funded. The
unfunded benefit liability reflected on the balance sheet of the Company as of
December 31, 1995 and March 31, 1996 was approximately $141.1 million and
$141.9 million (unaudited), respectively. The unfunded liability will continue
to grow as long as accrual-basis costs exceed cash benefit payments.
COSTS OF ENVIRONMENTAL COMPLIANCE
The Company's facilities and operations are subject to numerous federal,
state and local requirements relating to the protection of the environment,
including requirements governing air emissions, wastewater discharges,
hazardous materials handling and waste disposal. The Company has made and will
continue to make expenditures to comply with such provisions. Although the
Company believes that its facilities are presently in substantial compliance
with environmental laws and regulations, future events or regulatory
requirements could require the Company to make additional expenditures. While
the Company does not currently anticipate that costs of future compliance will
have a material adverse effect on the Company's results of operations or
financial condition, the amount and timing of future environmental
expenditures are subject to significant uncertainties and could vary
substantially from those presently anticipated and could have a material
adverse effect on the Company's financial condition. See "--Certain
Relationships with ISI" and "Business--Environmental, Health and Safety
Matters."
CERTAIN RELATIONSHIPS WITH ISI
Ryerson is the guarantor of the ESOP Trust's obligation to repay the
principal amount of indebtedness incurred by the ESOP Trust, amounting to
$110.8 million as of March 31, 1996, plus interest. In addition, for purposes
of the ISI Pension Plan, the Company is a member of a "control group of
companies," which includes ISI and ISC, as determined by regulations
promulgated by the Pension Benefit Guaranty Corporation. The Company is also
part of ISI's consolidated group for tax
16
<PAGE>
purposes. As a result of these and other relationships, under certain
circumstances the Company could be jointly and severally liable for certain of
ISI's and ISC's ESOP Trust, pension, environmental or tax liabilities.
ANTI-TAKEOVER PROVISIONS
ISI will be in a position to block any takeover as long as it retains voting
control of the Company. In addition, the Delaware GCL, the Certificate of
Incorporation (as defined herein) and the Company's amended and restated By-
Laws (the "By-Laws"), contain provisions that may have the effect of delaying,
preventing or making more difficult a takeover or change in control of the
Company, including, without limitation, a classified Board of Directors,
permitting stockholder action only by a meeting rather than by written consent
in lieu of a meeting, certain notice provisions and authorization of the
Company to issue preferred stock without the approval of the Company's
stockholders, the terms of which may be fixed by the Board of Directors. On
June 10, 1996 the Company adopted a stockholders' rights plan that may have
the effect of delaying, preventing or making more difficult a takeover or
change in control of the Company. Under certain conditions, Section 203 of the
Delaware GCL would impose a three-year moratorium on certain business
combinations between a Delaware corporation and an "interested stockholder"
(in general, a stockholder owning 15% or more of the Company's outstanding
voting stock, but excluding shares of voting stock held by ISI). See
"Description of Capital Stock--Preferred Stock," "--Anti-Takeover Effects of
Delaware Law and Certificate of Incorporation and By-Laws" and "--Rights
Plan."
DILUTION
Purchasers of Class A Common Stock in the Offerings will experience
immediate dilution of approximately $9.88 per share of Class A Common Stock
purchased. See "Dilution."
NO PRIOR MARKET FOR CLASS A COMMON STOCK
Prior to the Offerings, there has been no public market for the Class A
Common Stock. Although the Class A Common Stock has been approved for listing
on the NYSE subject to official notice of issuance, there can be no assurance
that an active trading market will develop or, if developed, that such market
will be sustained. The initial public offering price of the Class A Common
Stock will be determined by negotiation between the Company and Goldman, Sachs
& Co. and CS First Boston Corporation (as the representatives of the
Underwriters) and may not be indicative of the market price for shares of the
Class A Common Stock after the Offerings. There can be no assurance that a
purchaser of Class A Common Stock in the Offerings will be able to resell such
Class A Common Stock at or above the initial public offering price. See
"Underwriting" for factors to be considered in determining the initial public
offering price of the Class A Common Stock.
SHARES ELIGIBLE FOR FUTURE SALE
Sales of a substantial number of shares of Class A Common Stock or Class B
Common Stock (which would convert into shares of Class A Common Stock upon
such sale) in the public market following the Offerings could adversely affect
the market price for the Class A Common Stock. All of the shares of Class A
Common Stock sold in the Offerings will be freely saleable unless acquired by
affiliates of the Company. The Company and ISI have agreed not to offer, sell,
contract to sell or otherwise dispose of any additional shares of Class A
Common Stock or any shares of Class B Common Stock, any securities
substantially similar to the Class A Common Stock or Class B Common Stock or
any securities convertible into or exchangeable for Class A Common Stock or
Class B Common Stock or any such similar security (other than pursuant to
employee benefit plans existing, or on the conversion or exchange of
convertible or exchangeable securities outstanding, on the date of this
Prospectus), for a period of 180 days after the date of this Prospectus
without the prior written consent of the representatives of the Underwriters.
After expiration or waiver of such 180 day lock-up
17
<PAGE>
period, all of the shares of Class B Common Stock (or shares of Class A Common
Stock into which such shares of Class B Common Stock may be converted) held by
ISI will become eligible for sale, without registration, under Rule 144 ("Rule
144") under the Securities Act of 1933, as amended (the "Securities Act"),
subject to the volume and other restrictions of Rule 144. In addition, after
the expiration or waiver of such 180 day lock-up period, ISI will have the
right to demand registration under the Securities Act of shares of the Class A
Common Stock issuable upon conversion of its Class B Common Stock and shall
have the right to have such shares included in future registered public
offerings of Class A Common Stock by the Company. Finally, ISI has advised the
Company that, although it currently intends to hold its shares of Class B
Common Stock, it may in the future distribute all or part of such shares to
ISI's stockholders (in the form of Class A Common Stock) at some future date by
means of a Spin-off or may sell such stock to third parties (in the form of
Class A Common Stock) in one or more transactions. Substantially all of the
shares of Class A Common Stock distributed in a Spin-off or sale could be
eligible for immediate resale in the public market. See "Shares Eligible for
Future Sale."
An aggregate of 2,400,000 shares of Class A Common Stock has been reserved
for issuance under the Ryerson Tull 1996 Incentive Stock Plan (the "Incentive
Stock Plan") and the Ryerson Tull Directors' Compensation Plan (the "Directors'
Compensation Plan"), including shares of Class A Common Stock to be issued in
the form of restricted stock and shares of Class A Common Stock reserved for
issuance upon exercise of options, in each case to be issued upon consummation
of the Offerings as described below. Effective upon consummation of the
Offerings, the outstanding shares of restricted ISI common stock and options to
purchase shares of ISI common stock held by the Company's employees will be
converted into shares of restricted Class A Common Stock or options to purchase
shares of Class A Common Stock, provided that the Compensation Committee may
determine that any employee may receive restricted shares of Class A Common
Stock or options to purchase shares of Class A Common Stock with respect to
less than all of his or her shares of restricted ISI common stock or options to
purchase ISI common stock. The number of shares of Class A Common Stock that
will be issued as restricted stock or subject to options will also vary
depending on the relative value of a share of ISI common stock and a share of
Class A Common Stock on the applicable valuation date. Assuming that as of the
applicable valuation date the value of a share of ISI common stock is $21.00
(the last reported sales price on the NYSE on June 5, 1996), that the value of
a share of Class A Common Stock is $17.50 (the mid-point of the offering range
set forth on the cover page of this Prospectus) and that no shares of
restricted ISI common stock or options to purchase ISI common stock held by
Company officers who are also ISI officers will be converted into shares of
restricted Class A Common Stock or options to purchase shares of Class A Common
Stock, 35,940 shares of Class A Common Stock would be issued in the form of
restricted stock and 799,513 shares of Class A Common Stock would be reserved
for issuance upon exercise of options outstanding upon consummation of the
Offerings. See "Management--Directors' Compensation" and "--Ryerson Tull 1996
Incentive Stock Plan."
Within 90 days after the date of this Prospectus, the Company intends to
register under the Securities Act an aggregate of 2,400,000 shares of Class A
Common Stock issuable in the form of restricted stock or upon exercise of
options or stock appreciation rights, or the vesting of performance awards,
granted or to be granted under the Incentive Stock Plan and the Directors'
Compensation Plan. Some of the holders of these shares of restricted stock and
stock options are subject to lock-up restrictions that will expire 180 days
after the date of this Prospectus. Shares of Class A Common Stock held in the
form of restricted stock as to which the restrictions have lapsed and shares of
Class A Common Stock issued upon the exercise of stock options or stock
appreciation rights, or the vesting of performance awards, will be eligible for
immediate resale in the public market, subject, as to shares held by affiliates
of the Company, to the volume and certain other limitations of Rule 144, and
subject to the 180-day lock-up period described in the preceding sentence. See
"Shares Eligible for Future Sale."
18
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the shares of Class A
Common Stock offered hereby are estimated to be approximately $84.4 million
($97.1 million if the Underwriters' over-allotment options are exercised in
full) assuming an initial public offering price of $17.50 per share (the mid-
point of the price range set forth on the cover page of this Prospectus),
after deducting estimated underwriting discounts and commissions and expenses
of the Offerings payable by the Company. All of the estimated net proceeds of
the Offerings will be paid to ISI in the form of a cash dividend declared
prior to the consummation of the Offerings and will not be available to the
Company. All of the net proceeds of the Note Offering, if consummated,
together with a portion of the Company's available cash and/or borrowings
under credit facilities, will be used to discharge the Note Payable that will
be declared as a dividend to ISI prior to the consummation of the Offerings.
DIVIDEND POLICY
The Company did not pay a cash dividend on its capital stock during 1994,
1995 or the first three months of 1996. Other than the Dividends to ISI
declared prior to the consummation of the Offerings, the Company anticipates
that it will retain all of its earnings for use in the expansion and operation
of its business and does not anticipate paying any cash dividends in the
foreseeable future. Purchasers of shares of Class A Common Stock will not
receive any portion of the Dividends. The Certificate of Incorporation
provides that any subsequent cash dividend declared must be paid equally,
share for share, on the outstanding Class A Common Stock and Class B Common
Stock. Any determination as to the payment of dividends will depend upon
future results of operations, capital requirements, the financial condition of
the Company and such other factors as the Board of Directors may consider,
including any contractual restrictions on the Company's ability to pay
dividends. The Company's subsidiaries are parties to agreements that, among
other things, require the Company's subsidiaries to meet certain financial
tests and restrict the ability of the Company's subsidiaries to pay dividends
and make other distributions on their shares of capital stock. In addition,
the indenture governing the Notes, as well as the New Credit Facility, are
expected to contain, among other things, provisions restricting the Company's
ability to pay dividends. See "Risk Factors--Holding Company Structure;
Reliance on Dividends and Transfers From Subsidiaries; Restrictions on
Dividends," "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Financing" and Notes 3 and 4 to the
Company's Consolidated Financial Statements.
19
<PAGE>
CAPITALIZATION
The following table sets forth the actual capitalization of the Company as
of March 31, 1996 and the capitalization of the Company as of such date (i) as
adjusted to give effect to the Recapitalization and the declaration of the
Dividends, (ii) as further adjusted to give effect to the sale of the shares
of Class A Common Stock in the Offerings at an assumed initial offering price
of $17.50 per share (the mid-point of the price range set forth on the cover
of this Prospectus) and the application of the estimated net proceeds
therefrom to pay the cash dividend to ISI as set forth under "Use of Proceeds"
and (iii) as further adjusted to give effect to the sale of the Notes in the
Note Offering and the application of the estimated net proceeds therefrom,
together with borrowings under credit facilities of $50 million, to discharge
the Note Payable as set forth under "Use of Proceeds." This table should be
read in conjunction with the Company's Consolidated Financial Statements and
the related notes thereto included elsewhere in this Prospectus. See "Use of
Proceeds" and "Description of Capital Stock."
<TABLE>
<CAPTION>
MARCH 31, 1996
----------------------------------------------------------
AS ADJUSTED FOR
---------------------------------------------------
DIVIDENDS,
RECAPITALIZATION,
DIVIDENDS, OFFERINGS
DIVIDENDS AND RECAPITALIZATION AND NOTE
ACTUAL RECAPITALIZATION AND OFFERINGS OFFERING
------ ---------------- ---------------- -----------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
SHORT-TERM DEBT:
Short-term borrowings
under credit facility.. $ -- $ -- $ -- $ 50.0
Long-term debt due
within one year........ 4.7 4.7 4.7 4.7
------ ------ ------ ------
Total short-term debt.. $ 4.7 $ 4.7 $ 4.7 $ 54.7
====== ====== ====== ======
LONG-TERM DEBT:
Notes due 2001.......... $ -- $ -- $ -- $150.0
Notes due 2006.......... -- -- -- 100.0
Note Payable............ -- 293.8 293.8 --
Other................... 18.4 18.4 18.4 18.4
------ ------ ------ ------
Total long-term debt... 18.4 312.2 312.2 268.4
------ ------ ------ ------
STOCKHOLDERS' EQUITY:
Common Stock, $1.00 par
value, 3,000 shares
authorized, 1 share
issued actual; no
shares authorized as
adjusted............... -- -- -- --
Class A Common Stock,
$1.00 par value, no
shares authorized
actual; 100,000,000
shares authorized,
5,220,000 shares issued
and outstanding as
adjusted(1)............ -- -- 5.2 5.2
Class B Common Stock,
$1.00 par value, no
shares authorized
actual; 34,000,000
shares authorized,
34,000,000 shares
issued and outstanding
as adjusted............ -- 34.0 34.0 34.0
Preferred Stock, $1.00
par value, no shares
authorized actual;
16,000,000 shares
authorized, no shares
issued or outstanding
as adjusted............ -- -- -- --
Additional paid-in capi-
tal.................... 494.6 203.7 282.9 282.9
Earnings reinvested in
the business........... 196.3 -- -- --
------ ------ ------ ------
Total stockholders' eq-
uity................... 690.9 237.7 322.1 322.1
------ ------ ------ ------
Total capitalization.. $709.3 $549.9 $634.3 $590.5
====== ====== ====== ======
</TABLE>
- --------
(1) Excludes an aggregate of 2,400,000 shares that has been reserved for
issuance under the Incentive Stock Plan and the Directors' Compensation
Plan, including shares of Class A Common Stock to be issued in the form of
restricted stock and shares of Class A Common Stock reserved for issuance
upon exercise of options, in each case to be issued upon consummation of
the Offerings as described below. Effective upon consummation of the
Offerings, the outstanding shares of restricted ISI common stock and
options to purchase shares of ISI common stock held by the Company's
employees will be converted into shares of restricted Class A Common Stock
and options to purchase shares of Class A Common Stock, provided that the
Compensation Committee may determine that any employee may receive
restricted shares of Class A Common Stock or options to purchase shares of
Class A Common Stock with respect to less than all of his or her shares of
restricted ISI common stock or options to purchase ISI common stock. The
number of shares of Class A Common Stock that will be issued as restricted
stock or subject to options will also vary depending on the relative value
of a share of ISI common stock and a share of Class A Common Stock at the
20
<PAGE>
applicable valuation date. Assuming that as of the applicable valuation date
the value of a share of ISI common stock is $21.00 (the last reported sales
price on the NYSE on June 5, 1996), that the value of a share of Class A
Common Stock is $17.50 (the mid-point of the offering range set forth on the
cover page of this Prospectus) and that no shares of restricted ISI common
stock or options to purchase shares of ISI common stock held by Company
officers who are also ISI officers will be converted into shares of
restricted Class A Common Stock or options to purchase shares of Class A
Common Stock, 35,940 shares of Class A Common Stock would be issued in the
form of restricted stock and 799,513 shares of Class A Common Stock would be
reserved for issuance upon exercise of options outstanding upon consummation
of the Offerings. See "Management--Directors' Compensation" and "--Ryerson
Tull 1996 Incentive Stock Plan."
DILUTION
As of March 31, 1996, the Company had a net tangible book value of $214.4
million or $6.31 per share of Common Stock, after giving effect to the
Recapitalization and the declaration of the Dividends to ISI. Net tangible
book value per share is defined as the book value of the Company's tangible
assets, less all liabilities, divided by the number of shares of Common Stock
outstanding. After giving effect to the sale by the Company of the 5,220,000
shares of Class A Common Stock in the Offerings at an assumed initial public
offering price of $17.50 per share (the mid-point of the price range set forth
in the cover page of this Prospectus), after deduction of estimated
underwriting discounts and commissions and expenses of the Offerings payable
by the Company, and the application of the estimated net proceeds therefrom to
pay the cash dividend to ISI, the Company's pro forma net tangible book value
as of March 31, 1996 would have been $298.8 million or $7.62 per share of
Common Stock, representing an immediate increase in net tangible book value of
$1.31 per share to the existing stockholder and an immediate dilution to new
investors of $9.88 per share. The following table illustrates the dilution in
net tangible book value per share to new investors:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share................ $17.50
Net tangible book value per share at March 31, 1996.......... $6.31
Increase in net tangible book value per share attributable to
new investors............................................... 1.31
-----
Pro forma net tangible book value per share after the Offer-
ings.......................................................... 7.62
------
Dilution per share to new investors............................ $ 9.88(1)
======
</TABLE>
- --------
(1) Excludes an aggregate of 2,400,000 shares that has been reserved for
issuance under the Incentive Stock Plan and the Directors' Compensation
Plan, including shares of Class A Common Stock to be issued in the form of
restricted stock and shares of Class A Common Stock reserved for issuance
upon exercise of options, in each case to be issued upon consummation of
the Offerings as described below. Effective upon consummation of the
Offerings, the outstanding shares of restricted ISI common stock and
options to purchase shares of ISI common stock held by the Company's
employees will be converted into shares of restricted Class A Common Stock
and options to purchase shares of Class A Common Stock, provided that the
Compensation Committee may determine that any employee may receive
restricted shares of Class A Common Stock or options to purchase shares of
Class A Common Stock with respect to less than all of his or her shares of
restricted ISI common stock or options to purchase ISI common stock. The
number of shares of Class A Common Stock that will be issued as restricted
stock or subject to options will also vary depending on the relative value
of a share of ISI common stock and a share of Class A Common Stock at the
applicable valuation date. Assuming that as of the applicable valuation
date the value of a share of ISI common stock is $21.00 (the last reported
sales price on the NYSE on June 5, 1996), that the value of a share of
Class A Common Stock is $17.50 (the mid-point of the offering range set
forth on the cover page of this Prospectus) and that no shares of
restricted ISI common stock or options to purchase ISI common stock held
by Company officers who are also ISI officers will be converted into
shares of restricted Class A Common Stock or options to purchase shares of
Class A Common Stock, 35,940 shares of Class A Common Stock would be
issued in the form of restricted stock and 799,513 shares of Class A
Common Stock would be reserved for issuance upon exercise of options
outstanding upon consummation of the Offerings. For a more detailed
explanation of the formula see "Management--Directors' Compensation" and
"--Ryerson Tull 1996 Incentive Stock Plan." The issuance of such
restricted Class A Common Stock and the exercise of any of such options
for Class A Common Stock may result in further dilution to new investors.
21
<PAGE>
SELECTED FINANCIAL DATA
The following selected financial data presents the consolidated results of
operations for the five years ended December 31, 1995 and the three-month
periods ended March 31, 1995 and 1996, and should be read in conjunction with
the Company's Consolidated Financial Statements and the related notes thereto
appearing elsewhere in this Prospectus. The summary for each of the years in
the three-year period ended December 31, 1995 has been derived from the
Company's Consolidated Financial Statements and related notes thereto
appearing elsewhere in this Prospectus, which have been audited by Price
Waterhouse LLP, the Company's independent accountants. The summary for each of
the years in the two-year period ended December 31, 1992 has been derived from
separate audited Consolidated Financial Statements of the Company.
The summary for the three-month periods ended March 31, 1995 and 1996 has
been derived from the Company's unaudited consolidated financial statements
appearing elsewhere in this Prospectus. The information for interim periods is
unaudited, but, in the opinion of the Company, reflects all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of the results of operations and financial condition for such
periods. Results for interim periods should not be considered as indicative of
results for any other periods or for the year. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations."
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------------------- ----------------
1991 1992 1993 1994 1995 1995 1996
-------- -------- -------- -------- -------- ------ --------
(IN MILLIONS, EXCEPT PER SHARE DATA, NUMBER OF EMPLOYEES AND
RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Net sales............... $1,655.9 $1,716.6 $1,893.3 $2,197.5 $2,450.1 $652.3 $ 625.3
Operating costs......... 1,639.7 1,689.5 1,836.9 2,099.4 2,301.4 610.2 588.7
-------- -------- -------- -------- -------- ------ --------
Operating profit........ 16.2 27.1 56.4 98.1 148.7 42.1 36.6
General corporate
expense, net of income
items.................. 10.6 8.4 7.4 6.9 0.7 0.4 (0.7)
Interest expense and
other expense on debt.. 17.1 12.8 10.9 2.9 2.6 0.7 0.6
-------- -------- -------- -------- -------- ------ --------
Income or (loss) before
income taxes........... (11.5) 5.9 38.1 88.3 145.4 41.0 36.7
Provision for income
taxes.................. 2.3Cr. 2.6 11.4 35.0 56.9 16.5 14.3
-------- -------- -------- -------- -------- ------ --------
Income or (loss) before
cumulative effect of
changes in accounting
principles............. (9.2) 3.3 26.7 53.3 88.5 24.5 22.4
Cumulative effect of
changes in accounting
principles(1).......... -- (84.1) -- -- -- -- --
-------- -------- -------- -------- -------- ------ --------
Net income or (loss).... $ (9.2) $ (80.8) $ 26.7 $ 53.3 $ 88.5 $ 24.5 $ 22.4
======== ======== ======== ======== ======== ====== ========
PRO FORMA DATA(2):
Earnings per share of
Common Stock........... $ 1.86 $ 0.53 $ 0.47
Weighted average number
of shares of Common
stock outstanding...... 39.2 39.2 39.2
BALANCE SHEET (END OF
PERIOD):
Operating working capi-
tal(3)................. $ 320.9 $ 296.9 $ 363.5 $ 366.7 $ 373.0 $425.9 $ 423.3
Total assets............ 748.1 765.4 842.3 891.3 972.6 924.0 1,010.9
Long-term debt.......... 31.0 25.7 28.2 23.6 18.9 23.0 18.4
Stockholder's equi-
ty(4).................. 430.7 350.0 526.7 580.0 668.5 604.5 690.9
OPERATING DATA:
Tons shipped............ 1.74 1.87 2.08 2.33 2.35 .63 .64
Number of employees at
period end............. 5,224 5,040 5,093 5,158 4,993 5,206 4,965
Capital Expenditures.... $ 9.8 $ 9.3 $ 19.3 $ 20.4 $ 19.3 $ 3.0 $ 3.0
Ratio of earnings to
fixed charges(5)....... 0.5x 1.3x 3.3x 11.8x 19.2x 21.5x 21.4x
EBITDA(6)............... 25.3 38.8 69.6 112.4 169.8 47.1 42.9
</TABLE>
22
<PAGE>
(1) The cumulative effect on prior years' results of operations of adopting,
effective January 1, 1992, FASB Statement No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions" was $72.3 million and for
adopting FASB Statement No. 109, "Accounting for Income Taxes" was $11.8
million.
(2) The pro forma data gives effect to the Offerings at an assumed initial
public offering price of $17.50 per share (the mid-point of the price
range set forth on the cover page of this Prospectus) and the dividend of
the Note Payable (at an assumed interest rate of 8.80% for the year ended
December 31, 1995 and 8.50% for the three months ended March 31, 1996) as
if such transactions had occurred on January 1, 1995. The pro forma
earnings per share of the Common Stock giving effect to the Note Offering
and the borrowing of $50 million under credit facilities, at a weighted
average interest rate of 8.75% and the application of the net proceeds
therefrom to discharge the Note Payable, as if each had occurred on
January 1, 1995, would have been $1.83, $.52 and $.47 for the year ended
December 31, 1995 and for the three months ended March 31, 1995 and 1996,
respectively.
(3) Includes trade accounts receivable and inventories less trade accounts
payable and accrued current liabilities.
(4) During the year ended December 31, 1993, ISI made a $150 million capital
contribution to the Company.
(5) Earnings for the calculation of the ratio of earnings to fixed charges
consist of income before income taxes. Earnings are increased by fixed
charges and previously capitalized interest amortized during the period.
Fixed charges consist of total interest charges (including capitalized
interest), amortization of debt expense and an appropriate share of rental
expense.
(6) EBITDA for any relevant period presented above represents operating profit
less general corporate expense, net of income items, plus depreciation and
amortization of goodwill and other intangibles. While EBITDA should not be
construed as a substitute for operating income or a better indicator of
liquidity than cash flow from operating activities, which are determined
in accordance with generally accepted accounting principles, it is
included herein to provide additional information with respect to the
ability of the Company to meet its future debt service, capital
expenditure and working capital requirements. EBITDA is not necessarily a
measure of the Company's ability to fund its cash needs. See the Company's
Consolidated Financial Statements and the related notes thereto appearing
elsewhere in this Prospectus.
23
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company's net sales increased 48% to $2.5 billion in 1995 from $1.7
billion in 1991. During that same period, operating profit increased to 6.1%
of sales, totalling $148.7 million in 1995, from 1% of sales, totalling $16.2
million in 1991, and the number of tons shipped by the Company increased 36%
while the number of the Company's employees declined 4.4%. The Company
attributes the increase in its net sales, operating profit and tons shipped
and the decrease in the number of its employees to an improved economic
environment, an increased emphasis on cost control and productivity
improvements and marketing and sales programs targeted at sales of products
with higher profit margins.
Beginning in 1990, the Company instituted a number of initiatives intended
to reduce costs and improve asset utilization. The Company reorganized its
operations into five business units along product and geographic lines,
providing each business unit with the flexibility to meet customer needs while
making each business unit fully accountable for its results of operations. The
Company upgraded, and intends to continue upgrading, its computer-based
inventory and management information systems to measure and improve
productivity for each of its facilities and each of its processes. See "--
Capital Expenditures and Investments in Joint Venture." Since the fourth
quarter of 1994, the number of the Company's employees has decreased 4%
(mostly through attrition), while daily shipment levels have increased 6%.
During the same period, the Company successfully integrated the operations of
under-performing facilities in Jersey City and Boston into existing plants in
Philadelphia and Wallingford, Connecticut. The Company has also updated its
inventory measurement system and made significant changes in compensation,
recruiting and career management processes to better align employee goals with
the Company's objectives. The Company believes that these initiatives have
contributed significantly to the decline in the Company's operating costs (as
a percentage of sales) since 1991.
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated certain income
statement data of the Company expressed as a percentage of net sales.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------- --------------
1993 1994 1995 1995 1996
------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C>
Net sales....................... 100.0% 100.0% 100.0% 100.0% 100.0%
Operating costs................. 97.0 95.5 93.9 93.5 94.1
------- ------- ------- ------ ------
Operating profit................ 3.0 4.5 6.1 6.5 5.9
General corporate expense, net
of income items................ 0.4 0.3 0.0 0.1 (0.1)
Interest expense and other
expense on debt................ 0.6 0.2 0.2 0.1 0.1
------- ------- ------- ------ ------
Income before income taxes...... 2.0 4.0 5.9 6.3 5.9
Provision for income taxes...... 0.6 1.6 2.3 2.5 2.3
------- ------- ------- ------ ------
Net income...................... 1.4% 2.4% 3.6% 3.8% 3.6%
======= ======= ======= ====== ======
</TABLE>
The breakdown of the Company's sales revenue by product line has not varied
significantly over the last three years. See "Business--Products and
Services." The Company's gross profit as a percentage of net sales for its
product lines are all within a relatively small range and the Company's gross
profit as a percentage of net sales for its product lines have not varied
significantly over the last three years.
24
<PAGE>
THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31,
1995
NET SALES. Net sales decreased 4.1% to $625.3 million for the three months
ended March 31, 1996 ("First Quarter 1996") from $652.3 million for the three
months ended March 31, 1995 ("First Quarter 1995"). Tons shipped increased
1.8% in First Quarter 1996 from First Quarter 1995, while selling prices per
ton declined 5.9%. The demand for metals and the U.S. economy were not as
strong in First Quarter 1996 as in First Quarter 1995. According to the SSCI,
the number of tons of steel shipped in the U.S. market by the Industry
decreased 6.9% in First Quarter 1996 from the year earlier quarter. However,
the Company was able to increase its number of tons shipped by increasing its
market share in First Quarter 1996 from First Quarter 1995, based on the
Company's analysis of SSCI data. The relative weakness in demand in First
Quarter 1996 caused selling prices per ton to decline 5.9% to $979 in First
Quarter 1996 from $1,040 in First Quarter 1995. Although the Company cannot
predict Industry demand, SSCI anticipates that demand in 1996 will remain
sluggish, with modest improvement for the balance of the year. There can,
however, be no assurance as to the future level of demand.
OPERATING COSTS. Operating costs decreased 3.5% to $588.7 million in First
Quarter 1996 from $610.2 million in First Quarter 1995. The Company's
operating costs consist of material purchases and other operating costs.
Material purchases decreased 4.3% to $477.2 million in First Quarter 1996 from
$498.4 million in First Quarter 1995. Material purchases per ton decreased 6%
or $48 to $747 in First Quarter 1996 from $795 in First Quarter 1995 due to
falling prices as demand weakened.
Other operating costs decreased 0.3% to $111.5 million in First Quarter 1996
from $111.8 million in First Quarter 1995. These costs include such expenses
as plant and office employee-related costs (e.g., wages, salaries, benefits,
incentive pay), freight expenses, plant supplies and maintenance, systems
costs, depreciation and state and local taxes. Since tons shipped increased
1.8% in First Quarter 1996 from First Quarter 1995, the decline in operating
costs is attributable to a reduction in other operating costs per ton of $3 to
$175 in First Quarter 1996 from $178 in the year earlier quarter. The total
number of Company employees declined 4.6% to 4,965 at March 31, 1996 from
5,206 at March 31, 1995 as tons shipped increased over the same period.
OPERATING PROFIT. Operating profit decreased 13.1% to $36.6 million in First
Quarter 1996 from $42.1 million in First Quarter 1995 as lower demand resulted
in reduced selling prices and lower gross profit per ton, partly offset by
lower expenses. Since selling prices per ton declined $61 in First Quarter
1996 from First Quarter 1995 and material purchases per ton fell $48 over that
period, gross profit per ton decreased $13 to $232 in First Quarter 1996 from
$245 in First Quarter 1995.
GENERAL CORPORATE EXPENSE, NET OF INCOME ITEMS. General corporate expense,
which represents the charge from ISI for services rendered to the Company,
decreased slightly to $1.7 million in First Quarter 1996 from $1.8 million in
First Quarter 1995. Other revenue, principally interest income from
investments in short-term marketable securities and from intercompany loans to
ISI, increased to $2.4 million in First Quarter 1996 from $1.4 million in
First Quarter 1995, primarily due to increased cash flow generated in 1995.
INTEREST EXPENSE AND OTHER EXPENSE ON DEBT. Interest expense and other
expense on debt decreased slightly to $0.6 million in the First Quarter 1996
from $0.7 million in the First Quarter 1995 due to reduced debt levels.
INCOME BEFORE INCOME TAXES. Income before income taxes decreased to 5.9% of
net sales in the First Quarter 1996 from 6.3% in the First Quarter 1995 for
the reasons discussed above.
PROVISION FOR INCOME TAXES. Provision for income taxes decreased 13.3% to
$14.3 million in the First Quarter 1996 from $16.5 million in the First
Quarter 1995 due primarily to the decrease in taxable income and to a slight
reduction in the effective tax rate, which decreased to 39.0% in the First
Quarter 1996 from 40.2% in the First Quarter 1995.
25
<PAGE>
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
NET SALES. Net sales increased 11.5% to $2.5 billion in 1995 from $2.2
billion in 1994. Tons shipped rose 0.8% in 1995 from 1994, while selling
prices per ton increased 10.6% over the same period. Tons shipped increased
due to a slight improvement in demand, which according to the SSCI increased
by 1% in 1995 compared to 1994. Based on the Company's analysis of SSCI data,
the Company's market share remained relatively constant from 1994 to 1995. The
Company's selling prices per ton increased $100 to $1,044 in 1995 from $944 in
1994, primarily due to higher prices in the Industry.
OPERATING COSTS. Operating costs increased 9.6% to $2.3 billion in 1995 from
$2.1 billion in 1994. Material purchases increased 11.4% to $1.9 billion in
1995 from $1.7 billion in 1994. Material purchases per ton increased 10.4% or
$75 to $798 in 1995 from $723 in 1994, as a result of higher market prices.
Other operating costs increased 2.6% to $428 million in 1995 from $417
million in 1994 and increased 1.7% on a per ton basis to $182 in 1995 from
$179 in 1994. The increase in other operating costs is partly attributable to
the 0.8% increase in tons shipped in 1995 compared to 1994. The increase in
other operating costs on a per ton basis resulted from higher incentive pay
due to improved profits, recognition of costs associated with the Company's
closing of its facility located in New Jersey, higher spending for systems-
related activities and inflation. The Company's total number of employees
declined 3.2% to 4,993 at the end of 1995 from 5,158 at the end of 1994 as
tons shipped increased over the same period.
OPERATING PROFIT. Operating profit increased 51.6% to $148.7 million in 1995
from $98.1 million in 1994, primarily due to improved gross profit per ton and
a modest increase in the volume of tons shipped. Since selling prices per ton
increased by $100 in 1995 compared to 1994, and material purchases per ton
rose $75, gross profit per ton for the Company increased by $25 to $246 in
1995 from $221 in 1994.
GENERAL CORPORATE EXPENSE, NET OF INCOME ITEMS. General corporate expense
decreased slightly to $6.8 million in 1995 from $7.4 million in 1994 because
of continued cost reduction efforts at ISI. Other revenue, principally
interest income, increased to $6.1 million in 1995 from $0.5 million in 1994.
This improvement in interest income was primarily the result of increased
average balances on intercompany loans to ISI and short-term marketable
securities in 1995 compared to 1994.
INTEREST EXPENSE AND OTHER EXPENSE ON DEBT. Interest expense and other
expense on debt decreased 10.3% to $2.6 million in 1995 from $2.9 million in
1994, principally due to reduced debt levels.
INCOME BEFORE INCOME TAXES. Income before income taxes increased to 5.9% of
net sales in 1995 from 4.0% in 1994 for the reasons discussed above.
PROVISION FOR INCOME TAXES. Provision for income taxes increased 62.6% to
$56.9 million in 1995 from $35.0 million in 1994 due to the increase in
taxable income as the effective tax rate remained virtually unchanged at 39.1%
in 1995 compared to 39.6% in 1994.
YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993
NET SALES. Net sales increased 16.1% to $2.2 billion in 1994 from $1.9
billion in 1993. Tons shipped increased 12.0% in 1994 from 1993, while selling
prices per ton increased 3.6% over the same period. Based on the Company's
analysis of SSCI data, the increase in tons shipped was due both to greater
demand and a modest increase in the Company's market share. The Company's
selling prices per ton increased $33 to $944 in 1994 from $911 in 1993.
26
<PAGE>
OPERATING COSTS. Operating costs increased 14.3% to $2.1 billion in 1994
from $1.8 billion in 1993. Material purchases increased 17.2% to $1.7 billion
in 1994 from $1.4 billion in 1993. Material purchases per ton increased 4.6%
or $32 to $723 in 1994 from $691 in 1993.
Other operating costs increased 3.8% to $417 million in 1994 from $401
million in 1993. Since tons shipped rose 12.0% in 1994 compared to 1993, and
other operating costs increased only 3.8% over the same period, these costs on
a per ton basis declined $14 to $179 in 1994 from $193 in 1993. The Company's
total number of employees increased only 1.3% to 5,158 at the end of 1994 from
5,093 at the end of 1993, despite the significant increase in tons shipped in
1994 compared to 1993. This productivity improvement, along with other cost
reduction initiatives, contributed to the reduction in other operating costs
per ton.
OPERATING PROFIT. Operating profit increased by 73.9% to $98.1 million in
1994 from $56.4 million in 1993, primarily due to increased volume of tons
shipped and reduced other operating costs per ton. Since selling prices per
ton increased by $33 in 1994 compared to 1993, and material purchases per ton
rose $32, gross profit per ton for the Company increased by $1, to $221 in
1994 from $220 in 1993.
GENERAL CORPORATE EXPENSE, NET OF INCOME ITEMS. General corporate expense
was unchanged at $7.4 million. Other revenue, principally interest income, was
$0.5 million in 1994 compared to zero in 1993.
INTEREST EXPENSE AND OTHER EXPENSE ON DEBT. Interest expense and other
expense on debt decreased 73.4% to $2.9 million in 1994 from $10.9 million in
1993. Interest expense on intercompany loans from ISI was zero in 1994
compared to $7.7 million in 1993. This reduction resulted from the Company's
repayment late in 1993 of its loan balance due to ISI with funds received from
an ISI capital contribution.
INCOME BEFORE INCOME TAXES. Income before income taxes increased to 4.0% of
net sales in 1994 from 2.0% in 1993 for the reasons discussed above.
PROVISION FOR INCOME TAXES. Provision for income taxes increased to $35.0
million in 1994 from $11.4 million in 1993. This increase in 1994 income taxes
was primarily the result of improved pre-tax earnings. In addition, 1993
income taxes were reduced by credits of $3.2 million representing prior year
adjustments and a change in the statutory income tax rate. These credits
resulted in an effective tax rate of 29.9% in 1993 compared to 39.6% in 1994.
LIQUIDITY AND FINANCING
The Company has historically financed its operations and growth primarily
through net cash provided by operating activities, limited borrowings from
third parties and capital contributions from ISI. The Company believes that
the New Credit Facility, if entered into, should provide the Company with
access to an additional source of capital to fund its future growth. Net cash
provided from (used for) operating activities amounted to $(25.3) million,
$79.7 million and $84.4 million for the years ended December 31, 1993, 1994
and 1995, respectively, and $(24.3) million and $(20.3) million for the three
months ended March 31, 1995 and 1996, respectively. Cash flow from operating
activities in 1995 improved only $5 million over 1994 despite an increase of
$35 million of net income due to a $13 million pension contribution and
increased operating working capital levels in 1995. The $105 million
improvement in cash flow from operating activities in 1994 compared to 1993
resulted primarily from increased net income of $27 million and an increase in
operating working capital of $67 million in 1993 compared to only a $3 million
increase in 1994. The negative cash flow from operating activities of $(24.3)
million and $(20.3) million in the first quarter of 1995 and 1996,
respectively, reflects the seasonal build-up of operating working capital as
increases in receivables and inventories exceeded the income reported for
those quarters.
27
<PAGE>
During 1995, the total committed credit facilities of the Company's
subsidiaries increased to $225 million. Ryerson increased its $100 million
unsecured revolving credit facility (the "Ryerson Credit Facility") to $200
million and negotiated an extension of its term to March 31, 2000. The $25
million unsecured revolving credit facility (the "Tull Credit Facility")
expires on December 15, 1997. There was no borrowing under either of these
facilities during 1995 or the first three months of 1996. The Ryerson Credit
Facility and the Tull Credit Facility each require compliance with various
financial covenants including minimum net worth and leverage ratio tests. The
covenants also limit the amount of cash (or equivalents) that each of Ryerson
and Tull and its subsidiaries can transfer to the Company or ISI in the form
of dividends and advances. As of December 31, 1995 and March 31, 1996, Ryerson
and Tull were each in compliance with all of the covenants under its
respective credit facility. The interest rates on borrowing under the Ryerson
Credit Facility and the Tull Credit Facility are, at the Company's option,
based on Eurodollar, certificates of deposit, or the greater of federal funds
or prime rate. At year-end, the highest rate option for borrowing under either
of these credit agreements was the applicable prime rate.
As of March 31, 1996, Ryerson was also the guarantor of $110.8 million of
the Inland Steel Industries Thrift Plan ESOP notes (the "ESOP Guarantee"). The
ESOP notes are payable in installments through July 2004. The ESOP Guarantee
requires compliance with various financial covenants including minimum net
worth and leverage ratio tests and also limits Ryerson's ability to advance
funds or make dividend payments to the Company.
At March 31, 1996, approximately $200 million in the aggregate would have
been available for payment of dividends and advances to the Company under the
covenants contained in the Tull Credit Facility, the Ryerson Credit Facility,
the ESOP Guarantee and other debt agreements of the Company. This availability
was reduced on May 20, 1996 after a $75 million dividend was paid from Ryerson
to the Company. At March 31, 1996, after adjusting for this dividend,
approximately $125 million in the aggregate would have been available for
payment of dividends and advances to the Company under these agreements.
With respect to Ryerson's ability to advance funds or make dividend payments
to the Company, the most restrictive covenants on March 31, 1996 were
contained in the ESOP Guarantee. Under these covenants, Ryerson's ability to
dividend or advance funds to the Company at any time is limited to $30 million
(i) plus 80% of net income (decreased by 100% of net losses) earned by Ryerson
since December 31, 1989, (ii) minus the dollar amount of dividends paid and
capital stock repurchased and the balance of any advances outstanding and
(iii) plus capital contributions to Ryerson and the proceeds from the issuance
of any capital stock or certain other investments during such period. At March
31, 1996, approximately $145 million was available for making advances and
paying dividends to the Company under the ESOP Guarantee. At March 31, 1996,
after adjusting for the dividend referred to above, Ryerson's ability to
advance funds or make further dividend payments to the Company would have been
$70 million.
With respect to Tull's ability to advance funds or pay dividends to the
Company, the Tull Credit Facility and its senior notes contained the most
restrictive covenants on March 31, 1996. Under the Tull Credit Facility,
Tull's ability to pay dividends is limited by minimum tangible net worth and
net income requirements. The required minimum tangible net worth increases by
40% of net income each quarter, but is not reduced in the event of a net loss.
Under the terms of the senior notes, advances outstanding can be no more than
15% of tangible net worth. At March 31, 1996, approximately $55 million was
available for making advances and paying dividends to the Company under Tull's
debt agreements. Other covenants which could restrict dividends or advances to
the Company include tangible net worth and leverage tests at Ryerson and
cumulative earnings, leverage and working capital tests at Tull.
The Company has received a definitive commitment letter from its lead
commercial bank with respect to the New Credit Facility. Borrowings under the
New Credit Facility will rank pari passu with
28
<PAGE>
the Notes. The commitment is subject to certain conditions, including among
other things, that the Ryerson Credit Facility and the Tull Credit Facility be
terminated. Management estimates that the initial borrowing under the New
Credit Facility will be up to $50 million, with a remaining availability of
$200 million or more.
The New Credit Facility is expected to contain customary restrictive
covenants, including, among other things, leverage, minimum net worth and
fixed charge coverage requirements, and limitations on restricted payments
(including dividends), the addition of subsidiary debt (except for debt of
acquired companies and up to $50 million of purchase money debt), new
agreements that limit upstreaming of cash from subsidiaries, transactions with
affiliates, the existence of liens, and mergers and sales of assets. In
addition, the amount of credit available under the New Credit Facility will be
eliminated in the event of a change of control (as defined) of ISI or the
Company. Although the Company believes that the covenants will not materially
impact the Company's financial flexibility or future business, such covenants
may restrict the Company's ability to raise capital for operating needs,
capital expenditures and acquisitions and may result in the Company incurring
greater costs of capital than it would otherwise incur. The New Credit
Facility will expire in June 2000.
The Company expects that the Note Offering will be consummated shortly after
the consummation of the Offerings. However, the ISI Note Indenture currently
contains covenants that, among other things, prohibit or restrict (i) the
incurrence of debt and the issuance of preferred stock by the Company or any
of the other Restricted Subsidiaries (as defined) of ISI, (ii) the making of
Restricted Payments (as defined) by ISI or any of its subsidiaries, (iii) the
incurrence of limitations on the ability of the Company or any other
Restricted Subsidiary to pay dividends or distributions, make loans or
advances to ISI or any of its subsidiaries and transfer assets to ISI, (iv)
the incurrence of liens by ISI, the Company or any other Restricted
Subsidiary, (v) sale and leaseback transactions by ISI, the Company or any
other Restricted Subsidiary, (vi) investments by ISI, the Company or any other
Restricted Subsidiary in unrestricted subsidiaries, (vii) certain transactions
by ISI, the Company or any other Restricted Subsidiary with affiliates and
(viii) the consummation of certain mergers, asset sales and acquisitions of
the stock, assets or business of other persons of or by ISI, the Company or
any other Restricted Subsidiary. Although ISI is soliciting the consent of the
holders of ISI Notes to amend the ISI Note Indenture to eliminate these
covenants, there can be no assurance that ISI will be successful in obtaining
sufficient consents to such an amendment. If ISI does not obtain sufficient
consents to amend the ISI Note Indenture, the Company will not issue the Notes
or enter into the New Credit Facility, and the Company's financial flexibility
will continue to be limited by the restrictions imposed by the covenants in
the ISI Note Indenture. In addition, the ISI Note Indenture contains a
provision restricting the Company from engaging in certain sales of its assets
or capital stock unless the net proceeds of such sale are invested in assets
related to the business of the Company or are used to repay certain
indebtedness of ISI or the Company. ISI is not seeking to amend this provision
of the ISI Note Indenture, which would require the consent of all outstanding
holders of the ISI Notes.
The Company expects that the indenture governing the Notes will contain
covenants that may limit the Company's financial flexibility and that may
affect the Company's conduct of future business, although the Company believes
that the covenants will not materially impact its financial flexibility or
future business. Such covenants include limitations or prohibitions with
respect to (i) the incurrence of certain secured indebtedness, (ii) certain
sale and leaseback transactions, (iii) the payment of dividends, the
repurchase of capital stock and the prepayment of subordinated debt, (iv)
transactions with affiliates and (v) mergers, consolidations and certain sales
of assets.
The Company believes that available borrowings under its credit facilities
and anticipated cash flow from operations will provide sufficient liquidity to
meet its scheduled debt retirements, fund its capital program and meet any
operating cash requirements that may arise for at least the next 12 months.
29
<PAGE>
In 1993, ISI made a $150 million capital contribution to the Company.
Proceeds from this capital contribution, along with cash generated internally
over the three-year period ended December 31, 1995 (after subtracting
increased working capital requirements resulting from increased activity
levels and funding capital projects), were used to repay borrowings from ISI
and subsequently to lend funds to ISI. At December 31, 1992, the Company owed
$108 million to ISI. Between December 31, 1992 and March 31, 1996, the Company
advanced an aggregate of $162 million to ISI, leaving a balance owed to the
Company at March 31, 1996 of $54 million.
On May 20, 1996, Ryerson paid a dividend of $75 million in cash to the
Company. The Company used the proceeds of this dividend to pay the May 1996
Dividend to ISI on May 20, 1996. ISI used $63.2 million of the proceeds from
the May 1996 Dividend to repay intercompany indebtedness owed to the Company
arising out of a corporate-wide cash management program. Following the
repayment of such indebtedness, the Company ceased participation in such
program and the Company's cash will no longer be held in ISI's accounts. With
the May 20, 1996 dividend payments and repayment of intercompany indebtedness,
all outstanding indebtedness for borrowed money between ISI and the Company
(including the Company's subsidiaries) was discharged.
Prior to the consummation of the Offerings, the Company will declare a
dividend payable in cash in an amount equal to the estimated net proceeds of
the Offerings (estimated to be $84.4 million at an assumed initial offering
price of $17.50 per share (the mid-point of the price range set forth on the
cover page of this Prospectus)) and a dividend consisting of the Note Payable
to ISI. The Note Payable will mature five years from its date of issuance and
will bear interest at a specified prime rate. The Note Payable may be prepaid,
without penalty, at the option of the Company. An amount equal to the
estimated net proceeds of the Offerings will be used to pay the cash dividend
to ISI and will not be available to the Company. All of the net proceeds of
the Note Offering, if consummated, together with a portion of the Company's
available cash and/or borrowings under credit facilities, will be used to
discharge the Note Payable to ISI. If the Note Offering is not consummated,
the Company anticipates that the Note Payable will remain an obligation of the
Company and must be repaid from cash generated from operations and/or future
financings, the source, nature and amount of which cannot currently be
determined. The Note Payable will have a term of five years from its date of
issuance, two years shorter than the weighted average maturity of the Notes.
As a result, the Company will be required to repay the Note Payable sooner
than it would have been required to repay the Notes. The Company believes that
its financial position and results of operations will not be materially
adversely affected if the Note Offering is not consummated. See "Use of
Proceeds."
CAPITAL EXPENDITURES AND INVESTMENTS IN JOINT VENTURE
Capital expenditures for 1993, 1994 and 1995 were $19.3 million, $20.4
million and $19.3 million, respectively. Capital expenditures were primarily
used for buildings, machinery and equipment. In 1996, the Company anticipates
making capital expenditures of approximately $45 million to upgrade and expand
facilities and equipment, including approximately $3 million to upgrade its
computer-based inventory and management information systems. No assurances can
be given, however, that anticipated capital spending will occur. The Company
expects that its depreciation and amortization expense in future periods will
increase due to its anticipated capital investments.
In addition to the $45 million of planned capital expenditures in 1996 to
update and expand facilities, the Company expects to invest approximately $15
million in a previously announced joint venture with Geneva Steel. The Geneva
Steel joint venture, if completed, will own or lease and operate a coil plate
processing facility in the Chicago area. No assurance can be given that the
joint venture will be completed.
Most of the Company's assets are in working capital. At year-end 1995, the
Company had $409 million in inventory measured at current or approximate
replacement cost versus a book value of $263 million, $244 million in accounts
receivable and $107 million in accounts payable. The Company turned inventory
4.2 times during 1995 and averaged 40 days' sales outstanding in receivables
during 1995, both better than industry averages according to information
provided by the SSCI. For 1994 and 1993,
30
<PAGE>
inventory turnover was 4.1 times and 3.8 times, respectively, and the number
of days' sales outstanding averaged 39 days and 40 days, respectively. The
Company utilizes sophisticated inventory management and profitability systems
to monitor whether all working capital assets remain current and profitable
and to make changes when appropriate.
SUBSEQUENT EVENT
Effective June 1, 1996, ISI transferred to the Company its 50% interest in
Ryerson de Mexico, a joint venture with Altos Hornos de Mexico, S.A. de C.V.,
an integrated steel mill operating in Mexico. Ryerson de Mexico, which was
formed in 1994, is a general line metals service center and processor with 18
facilities in Mexico. As of April 30, 1996, ISI's investment in Ryerson de
Mexico totalled approximately $18 million. The impact of Ryerson de Mexico on
the Company's results of operations has not been material.
31
<PAGE>
BUSINESS
GENERAL
The Company, through its wholly-owned operating subsidiaries Ryerson and
Tull, is a general line metals service center and processor of metals. The
Company believes that it is the largest metals service center in the United
States based on sales revenue, with 1995 sales of $2.5 billion and a current
U.S. market share of approximately 9%, more than twice the U.S. market share
of its nearest competitor, based on the Company's analysis of SSCI data. The
Company distributes and processes metals and other material throughout the
continental United States, and is among the largest purchasers of steel in the
United States. With 52 interconnected facilities that place it within several
hundred miles of most of its customers, the Company is able to be responsive
to specific customer requests and is generally able to make deliveries of
stock items within 24 hours of receipt of a customer's order. Utilizing this
network of facilities and the Company's regionalized management systems, the
Company believes it can be responsive to individual customers while providing
a broad range of products and services. The Company also owns a 50% interest
in Ryerson de Mexico, a general line metals service center and processor with
18 facilities in Mexico.
Ryerson, the predecessor of the Company, was founded in 1842 by Joseph T.
Ryerson. Between 1986 and 1990, the Company implemented a strategy of growth
through acquisitions, expanding its geographic coverage by purchasing five
service center companies with 26 facilities for approximately $210 million,
plus assumed debt of $63 million. The Company acquired Tull, AFCO Metals, Inc.
and Southern Metals Corporation in 1986, 1988 and 1989, respectively,
establishing the Company's presence in the southeastern United States. The
Company's acquisition in 1989 of Processed Metals, Inc. (doing business under
the "Keelor Steel" and "Select Steel" names) expanded the Company's processing
capability in the midwestern United States, adding facilities in Minneapolis,
Minnesota and Marshalltown, Iowa. In 1990, the Company acquired the Metra
division of Schnitzer Steel, Inc., with facilities in Portland, Oregon,
Phoenix, Arizona and Salt Lake City, Utah, expanding the Company's presence in
the western United States.
The Company is divided into five operating business units along regional and
product lines with the following operations and locations:
<TABLE>
<CAPTION>
BUSINESS UNIT DESCRIPTION LOCATIONS
------------- ----------- ---------
<C> <S> <C>
Ryerson East Primarily general line service
centers Buffalo, NY
with substantial processing
capabilities Charlotte, NC
Chattanooga, TN
Cleveland, OH
Philadelphia, PA
Pittsburgh, PA
Wallingford, CT
Ryerson West Primarily general line service Denver, CO
centers with substantial processing Los Angeles, CA
capabilities Phoenix, AZ
Portland, OR
Salt Lake City, UT
San Francisco, CA
Seattle, WA
Spokane, WA
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
BUSINESS UNIT DESCRIPTION LOCATIONS
- ------------- ----------- ---------
<S> <C> <C>
Ryerson Central Primarily general line service
centers Chicago, IL
with substantial processing
capabilities Cincinnati, OH
Dallas, TX
Des Moines, IA
Detroit, MI
Houston, TX
Indianapolis, IN
Kansas City, MO
Milwaukee, WI
Minneapolis, MN
Omaha, NE
St. Louis, MO
Tulsa, OK
Tull/AFCO General line service centers Atlanta, GA
with some processing capabilities Baton Rouge, LA
Birmingham, AL
Charlotte, NC
Columbia, SC
Fort Smith, AR
Greensboro, NC
Greenville, SC
Jackson, MS
Jacksonville, FL
Little Rock, AR
Miami, FL
New Orleans, LA
Oklahoma City, OK
Richmond, VA
Shreveport, LA
Tampa, FL
West Memphis, AR
Wichita, KS
Ryerson Coil Processing Processors Chicago, IL (two facilities)
Marshalltown, IA
Minneapolis, MN (two facilities)
</TABLE>
The Company also owns a 50% interest in Ryerson de Mexico, a general line
metals service center and processor with 18 facilities located in Mexico. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Subsequent Event."
INDUSTRY OVERVIEW
Primary steel producers typically sell steel in the form of standard-sized
coils, sheets, plate, structurals, bars and tubes and generally sell in large
volumes with long lead times for production and delivery. Other primary metal
producers, such as producers of stainless steel and aluminum, also typically
sell their products in large volumes with long lead times for production and
delivery. However, many customers seek to purchase metals with customized
specifications, including value-added processing, in smaller volumes, on
shorter lead times and with more reliable delivery than primary metal
producers are able to provide. Metal service centers act as intermediaries
between primary metal producers and customers by purchasing metals in a
variety of shapes and sizes from primary metal producers in large volumes,
allowing metal service centers to take advantage of producer economies of
scale resulting in lower costs of material purchased, and engaging in a
variety of distribution and value-added processing operations to meet the
demands of specific customers. Because metal service centers purchase metals
from a number of primary producers, they can maintain a consistent supply of
various types of metal used by their customers. Most importantly, however,
metal service centers generally have lower fixed costs than primary metal
producers. By
33
<PAGE>
purchasing products from metal service centers, customers may be able to lower
their inventory levels, decrease the time between the placement of an order
and receipt of materials and reduce internal expenses, thereby lowering their
total cost of raw materials. The Company believes that the increased
prevalence of just-in-time inventory needs of manufacturers and intermediate
processors has made and will continue to make the value-added inventory,
processing and delivery functions performed by metal service centers more
important in the metals market.
The Industry is cyclical (with periods of strong demand and higher prices
followed by periods of weaker demand and lower prices), principally due to the
cyclical nature of the industries in which the largest consumers of metals
operate. Any significant slowdown in one or more of those industries could
have a material adverse effect on the demand for metals, resulting in lower
prices for metals and reduced profitability for metals service centers,
including the Company. Metals prices and metals service center profitability
improve as metal-consuming industries experience recoveries following economic
downturns.
The Industry is comprised of many companies, the majority of which have
operations limited as to product line and size of inventory and with customers
located in a specific geographic area. Based on SSCI data, the Company
believes that the Industry is comprised of between 750 and 1,000 service
centers, operating out of approximately 2,000 locations and servicing
approximately 300,000 customers. The Industry is highly fragmented, consisting
of a large number of small companies and a few relatively large companies.
Based on the Company's analysis of SSCI data, the Industry handled
approximately 27 million tons or approximately 25% of the metals distributed
in the United States in 1995.
The Industry is divided into three major groups: general line service
centers, specialized service centers and processing centers, each of which
targets different market segments. General line service centers handle a broad
line of metal products and tend to concentrate on distribution rather than
processing. General line service centers range in size from one location to a
nationwide network of locations. For general line service centers, individual
order size in terms of dollars and tons tends to be small relative to
processing centers, while the total number of orders is typically very high.
Specialized service centers focus their activities on a narrower range of
product and service offerings than general line companies. Such service
centers provide a narrower range of services to their customers and emphasize
product expertise and lower operating costs, while maintaining a moderate
level of investment in processing equipment. Processing centers typically
process large quantities of steel purchased from primary producers for resale
to large industrial customers, such as the automotive industry. Because orders
are typically large, operation of a processing center requires a significant
investment in processing equipment.
Because of the difficulty of differentiating commodity-like products, many
service centers attempt to differentiate themselves through the use of
sophisticated information systems and unique processing services, which
facilitate the provision of enhanced services at reduced cost. To varying
degrees at all service centers, but particularly at the larger, more
sophisticated companies, elaborate computer-based systems are used to automate
tasks such as order entry, material tracking, work-order scheduling and
processing, inventory management, billing and accounts payable and receivable
tracking. Some companies are creating and enhancing EDIs between themselves
and their suppliers and customers. The introduction and development of these
systems have increased the quality of products and services provided by
service centers.
Management believes that, in recent years, there has been a trend towards
increased outsourcing by manufacturers of certain operations and the
production of component parts, with manufacturers concentrating on producing
finished products. Many industrial companies have been unwilling or unable to
invest the significant amount of capital in the space, technology and
equipment necessary to store and process metals required for their operations.
By outsourcing certain operations, including inventory management, processing,
blanking and precision burning, many manufacturers are able to
34
<PAGE>
accommodate shorter production runs and changeover times. This increased
flexibility allows them to better respond to competitive pressures. Moreover,
many manufacturers find it beneficial, from a cost and quality standpoint, to
outsource many of the component parts that are utilized in the production of
their products. At the same time, manufacturers have been reducing the number
of suppliers that they rely on in order to reduce the administrative cost of
dealing with multiple suppliers and to take advantage of volume discounts.
Management believes that, in recent years, there has also been a trend in
the Industry towards consolidation, which the Company believes will continue
as long as the introduction of sophisticated operational and computer-based
systems continues to create economies of scale. Based on the Company's
analysis of SSCI data, the Industry has increased its share of metals
distributed in the United States from approximately 17% in 1980 to
approximately 25% in 1995. The Company believes that it is well positioned to
take advantage of acquisition opportunities that may arise from consolidation
in the Industry because of its capital resources, acquisition experience and
nationwide presence.
BUSINESS STRATEGY
The Company's strategy is to expand its market leadership position as a
nationwide general line metals service center and processor of metals by
providing its customers with high quality products and services at competitive
prices. The Company believes that increasing its market share will be an
effective means of increasing its profitability. One of the Company's goals is
to enhance its competitive position through the aggressive pursuit of organic
growth, strategic acquisitions, ongoing unit cost reductions and increased
asset productivity, although there can be no assurance that the Company will
achieve this goal. As part of its overall business strategy, the Company has
made substantial investments in management information systems that link its
operations and enhance interactions between the Company and its customers and
suppliers. Based on its size, which leads to cost efficiencies, the trend
towards consolidation in the number of suppliers used by customers, strategic
plant locations, broad product and service offerings and management's
acquisition strategy, the Company believes that it is well positioned to take
advantage of the anticipated growth and consolidation in the Industry. See "--
Industry Overview."
ORGANIC GROWTH
The Company believes that it can benefit from both the anticipated growth of
the Industry and the growth of its market share within the Industry.
The Company believes that the Industry occupies a growing niche between
primary producers of carbon, alloy and stainless steel, aluminum and other
metals and purchasers of those products, including manufacturers and
intermediate processors. Metals service centers, including the Company,
provide services not typically available from primary producers, such as more
reliable deliveries, smaller order sizes, the convenience of dealing with a
smaller number of suppliers, just-in-time inventory management and customer-
specific, value-added processing. The Company believes that the role of metals
service centers is expanding as a result of a number of factors, including the
increased outsourcing of inventory management functions and metals processing
operations by manufacturers and the lower cost and more reliable service
available from service centers as compared to primary producers.
One of the Company's goals is to expand its market leadership position
within the Industry through competitive pricing, broad product and service
offerings and the use of technology to improve customer service. The Company's
large size, buying power and competitive cost structure enable it to negotiate
favorable prices for raw materials and to take advantage of producer economies
of scale resulting in lower costs of materials purchased, allowing it to offer
its products and services at competitive prices. In addition, the Company's
broad product and service offerings provide customers one-stop shopping,
35
<PAGE>
positioning the Company to capitalize on what it believes to be a continuing
trend towards consolidation in the number of suppliers used by customers. To
this end, the Company has initiated a national accounts program targeting
customers that purchase metal from a number of suppliers throughout the
country. The Company believes it can better serve these customers by providing
competitive pricing and superior delivery and quality. One of the Company's
goals is to differentiate itself from its competitors by providing materials
and services on a more timely basis and with fewer rejections than its
competitors through increased emphasis on quality control. The Company has
received ISO 9002 certification for five facilities and will seek
certification for additional facilities in the future. ISO 9002 is a series of
international standards for quality management and assurance. The Company
believes that certain major customers seek suppliers with such certification
and that such certification helps differentiate it from its competitors.
STRATEGIC ACQUISITIONS
The Company believes that the fragmented nature of the Industry, combined
with the Company's strong national reputation, nationwide operations, market
leadership position and experience in integrating facility operations, make
the Company well situated to become a strategic buyer of service center
assets. The Company will seek selective acquisitions of businesses that
complement, or strategically extend, the Company's existing businesses.
Acquired companies can be either integrated into the Company's network or,
depending on the circumstances, operated as stand-alone facilities. In either
case, the Company believes that such acquisitions could enable it to realize
further economies of scale (particularly in operating cost, asset utilization
and purchasing leverage) and could better utilize the Company's existing
facilities and systems capability. Although the Company from time to time
discusses potential acquisitions with other service center operators, the
Company currently has no understandings, agreements or commitments to make any
acquisitions.
The Company believes that its ability to integrate acquired operations into
its existing facility operations will be critical to the ongoing success of
its acquisition strategy. Although the Company has not acquired any operations
since 1990, the Company believes that management's experience in successfully
integrating existing operations has provided it with experience relevant to
integrating acquired businesses. During 1994 and 1995, the Company closed two
low-profit facilities in Boston and Jersey City, integrating these operations
with plants in Wallingford, Connecticut and Philadelphia. These consolidations
resulted in a high level of customer retention, increased profitability, a
significantly lower cost and asset base and, the Company believes, a
comparable level of customer service. While the Company has achieved
profitable operations of businesses acquired in the past, there can be no
assurance that any future acquisitions, if completed, would be profitable.
UNIT COST REDUCTIONS AND INCREASED PRODUCTIVITY
Another of the Company's goals is to decrease unit costs through initiatives
which include increasing volume, thereby taking advantage of economies of
scale, and increasing asset and employee productivity. The Company has made
and will continue to make investments in computer-based and automated systems
that track profitability by customer, product and cost of process, allowing
the Company to determine where changes can be made to reduce cost and increase
profitability. The Company intends to increase its emphasis on the use of EDI
with its suppliers and customers to reduce the paperwork and administrative
costs associated with customer orders, shipment tracking, billing and
remittance processing. The Company continues to re-engineer its various work
processes through benchmarking analyses across its 52 facilities. Re-
engineering enables the Company to increase output without increasing its
labor force by increasing the efficiency with which work processes are
performed.
Finally, the Company has continued to improve its inventory management
systems and processes. Management believes improved forecasting and aggressive
supplier management should increase asset productivity. Also, to the extent
that sales grow, the Company believes that it can improve inventory management
and reduce total inventory per dollar of sales. The Company has installed
computer-based systems to enable it to more accurately measure and control the
appropriate inventory level.
36
<PAGE>
COMPETITIVE STRENGTHS
The Company has a number of competitive strengths that it believes will
facilitate the implementation of the Company's strategy, including its market
leadership position and its management systems and practices.
MARKET LEADERSHIP POSITION
With $2.5 billion of sales in 1995, the Company has a U.S. market share of
approximately 9%, more than twice the U.S. market share of the next largest
competitor, based on the Company's analysis of SSCI data. The Company sells
its products through 52 facilities located throughout the United States.
ECONOMIES OF SCALE. Because of the Company's large size, its costs of
operations can be spread across a large base of sales, resulting in lower
fixed costs per ton sold. However, in times of decreasing sales, the Company's
fixed costs must be spread across a smaller base of sales, resulting in higher
fixed costs per ton sold. The Company believes that available capacity at many
of its plants will allow it to achieve further economies of scale to the
extent it increases sales in the future. Of the Company's 52 facilities, six
are currently operating one shift, 31 are operating two shifts and 15 are
operating three shifts. In addition, the size of the Company's material
purchases enables its suppliers to realize economies of scale and thereby
provide the Company with competitive prices.
SCOPE OF PRODUCTS AND SERVICES. The Company's broad product and service
offerings provide customers one-stop shopping for most of their metals needs.
In addition, the Company believes that its 52 facilities located throughout
the continental United States, generally within one day's delivery time of
almost all U.S. manufacturing centers, position it to target national
customers that currently buy metals from a variety of suppliers in different
locations. The Company's ability to transfer inventory among facilities
enables it to have available specialized items at regional locations
throughout its network and to provide such inventory on a timely basis more
profitably than if it were required to maintain inventory of all products at
each location.
RELATIONSHIPS WITH SUPPLIERS. The Company is among the largest purchasers of
steel in the United States and is also a significant purchaser of aluminum in
the United States. The Company buys from and has developed relationships with
many U.S. steel producers as well as other metal producers. The Company's
relationships with numerous metal producers provide it access to high quality
metals, timely delivery and new product and service ideas from many suppliers.
In addition, because the Company purchases large volumes of metals, it can
negotiate competitive prices from its suppliers. In part because of its buying
power, the Company has been able to secure product from primary manufacturers
during times of tight supply.
DIVERSE CUSTOMER BASE. The Company's diverse customer base, consisting of
over 50,000 customers, reduces its exposure to the failure of a single
customer's business or a downturn in a particular industry. No customer
accounted for more than 2% of 1995 sales and the top ten customers accounted
for approximately 10% of 1995 sales. The Company sells to customers in most of
the metal-consuming industries, including machinery manufacturers, metal
producers and fabricators, transportation equipment producers and electric
machinery producers.
MANAGEMENT SYSTEMS AND PRACTICES
The Company's management information systems have allowed management to
develop an internal benchmarking system and to track profitability by
customer, product and cost of process. This detailed information enables
management to make adjustments such as reallocating slow-moving inventory to
different locations to increase inventory turns, improving purchasing,
targeting customers or changing suppliers as needed. The Company's 52
facilities provide it with a large base for testing, comparing and
implementing new management practices.
37
<PAGE>
The Company has spent $40 million to maintain and improve its management
information systems over the last three years. The Company operates data
processing systems that, among other functions, are used to purchase, monitor
and allocate inventory throughout its interconnected production facilities.
The Company believes that this monitoring has enabled it to effectively manage
inventory costs and achieve improved turnover rates. These systems also
include computerized order entry, sales analysis, inventory and work-in-
process status, invoicing and payment, and are designed to improve
productivity for both the Company and its customers. The Company also uses
EDI, which offers customers a paperless process for shipment tracking,
billing, remittance processing and other routine matters.
PRODUCTS AND SERVICES
The Company carries a full line of carbon steel, stainless steel and
aluminum, and a limited line of alloy steel, nickel, red metals and plastics.
These materials are inventoried in a number of shapes, including coils,
sheets, rounds, hexagons, square and flat bars, plate, structurals and tubing.
The following table sets forth the Company's shipments (by sales revenue)
for 1993, 1994 and 1995 for each of the Company's product lines.
<TABLE>
<CAPTION>
PERCENTAGE OF
SALES REVENUE
----------------
PRODUCT LINE 1993 1994 1995
- ------------ ---- ---- ----
<S> <C> <C> <C>
Stainless and aluminum........................................ 23% 23% 27%
Carbon flat rolled............................................ 28 28 24
Bars, tubing and structurals.................................. 23 23 22
Fabrication and carbon plate.................................. 19 19 20
Other......................................................... 7 7 7
--- --- ---
Total....................................................... 100% 100% 100%
=== === ===
</TABLE>
More than one-half of the material sold by the Company is processed. The
Company uses techniques such as sawing, slitting, blanking, pickling, cutting
to length, levelling, flame cutting, laser cutting, edge trimming, edge
rolling, fabricating and grinding to process materials to specified thickness,
length, width, shape and surface quality pursuant to specific customer orders.
Among the most common processing techniques used by the Company are pickling,
a chemical process using an acidic solution to remove surface oxide, commonly
called "scale," from steel which develops after the steel is hot rolled;
slitting, which is cutting coiled metals to specified widths along the length
of the coil; levelling, which is flattening metals and cutting them to exact
lengths; and edge rolling, a process which imparts round or smooth edges.
Although the Company often uses third party fabricators to outsource certain
limited processes that the Company is not able to perform internally,
outsourcing these processes does not affect a significant part of the
Company's operations or constitute a significant part of the Company's
operating costs and expenses.
The plate burning and fabrication processes are particularly important to
the Company. These processes require sophisticated and expensive processing
equipment. As a result, rather than making investments in such equipment,
manufacturers have increasingly outsourced these processes to material service
centers. The Company has flame and laser cutting capacity in 41 of its 52
facilities.
The Company performs a number of services that generate value for its
customers, including just-in-time delivery, production of kits containing
multiple products for ease of assembly by the customer, the provision of
Company-owned material to the customer and the placement of Company employees
at the customer's site for inventory management, production and technical
assistance. The Company also provides special stocking programs where products
that would not otherwise be stocked by the Company are held in inventory to
meet certain customer's needs. The foregoing services are designed to reduce
customers' costs by minimizing their investment in inventory and improving
their production efficiency.
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<PAGE>
In addition, the Company provides customers with technical advice on part
design and material specification and early stage material processing and
fabrication. Early stage material processing and fabrication by the Company
can benefit the customers that cannot economically perform such processes at
their own plants. Technical advice and early stage processing functions are
intended to reduce a customer's material cost and ultimately its finished
product cost.
All of the Company's products and services can be ordered through EDI, a
sophisticated electronic network that connects the Company's plants, as well
as certain of the Company's vendors and customers. Orders can also be
transmitted through direct ordering systems. Intricate design specifications
for particular jobs also can be electronically transmitted. Order entry
through scheduling, processing and shipping are monitored by the Company's
computer system and bar coding is available to aid in, and reduce the cost of,
tracking material at customer sites.
CUSTOMER BASE
The Company's customer base is diverse, numbering over 50,000. No customer
accounted for more than 2% of the Company's sales in 1995 and the top ten
customers accounted for approximately 10% of the Company's sales in 1995. The
Company's customer base includes most metal-consuming industries, most of
which are cyclical. The Company's shipments (by sales revenue) for 1993, 1994
and 1995 for each class of the Company's customers were as set forth in the
table below.
<TABLE>
<CAPTION>
PERCENTAGE OF
SALES REVENUE
----------------
CLASS OF CUSTOMER 1993 1994 1995
- ----------------- ---- ---- ----
<S> <C> <C> <C>
Machinery manufacturers....................................... 35% 36% 38%
Metal producers and fabricators............................... 25 25 25
Transportation equipment producers............................ 9 10 10
Electrical machinery producers................................ 10 9 9
Wholesale distributors........................................ 4 3 3
Construction-related purchasers............................... 5 4 3
Metal mills and foundries..................................... 3 3 3
Other......................................................... 9 10 9
--- --- ---
Total....................................................... 100% 100% 100%
=== === ===
</TABLE>
The Company believes it is particularly well suited to service regional or
national customers that value the Company's nationwide network of facilities,
broad product and service offerings, technical expertise and emphasis on
customer service. The Company believes that many of these customers value the
technical capability and single sourcing of most or all of their multiple
product needs that the Company is able to provide.
The Company's flat rolled processing business unit, Ryerson Coil Processing
("Ryerson Coil"), generally serves a customer base that differs from the
Company's general line service center business. A large portion of Ryerson
Coil's customers have long-term supply contracts with Ryerson Coil. These
contracts are typically at fixed prices and are generally from three months to
one year in duration, although Ryerson Coil has a small number of arrangements
with large customers that extend beyond one year. Ryerson Coil attempts to
limit its financial exposure on these fixed-price sales arrangements by
entering into fixed-price supply arrangements with one or more suppliers for
comparable periods of time. Ryerson Coil's customers often seek large
quantities of carbon sheet product that have undergone one or more of the
following processes: pickling, cutting to length, slitting, tension levelling,
texturing or blanking. Many of Ryerson Coil's approximately 625 customers are
in the transportation, appliance, office furniture or cabinetry businesses.
39
<PAGE>
SUPPLIERS
In 1995, the Company purchased in excess of 2.3 million tons of material
from many suppliers, including approximately 400,000 tons from ISC, a wholly-
owned subsidiary of ISI. The Company expects to continue purchasing
significant amounts of steel from ISC in the future, although there can be no
assurance that such purchases will continue. See "Relationship with ISI--
Supply Arrangements." Excluding ISC, the Company's top 25 suppliers accounted
for approximately 50% of 1995 purchases.
The Company purchases the majority of its inventories in the open market at
prevailing market prices. However, occasionally the Company enters into long-
term, fixed-price supply contracts to offset its long-term, fixed-price sales
contracts in order to minimize its financial exposure.
Because the Company uses many suppliers and because there is a substantial
overlap of product offerings from these suppliers, the Company believes it
will be able to meet its materials requirements for the foreseeable future.
The Company works with and monitors its suppliers in order to obtain
improvements in price, quality, service, delivery and performance. The Company
believes it has good relationships with most of its suppliers.
SALES AND MARKETING
Each of the Company's business units maintains its own sales and marketing
force. In addition to its office sales staff, the Company markets and sells
its products through the use of its field sales force that has extensive
product and customer knowledge and through a comprehensive catalog of the
Company's products. The Company's office and field sales staffs, which
together consist of 725 employees, include technical and metallurgical
personnel. In addition, the Company's technically-oriented marketing
department develops advertising materials and maintains product expertise for
each of the various types of materials sold and industries serviced by the
Company.
During 1995, the Company began a number of sales and marketing programs
which it believes will enhance its ability to grow. As part of this effort,
the Company appointed a national sales director to market its products and
services to customers with a national presence. These customers typically
place orders from each of their plants with local suppliers, resulting in
national customers having multiple suppliers for similar products. The Company
believes that it can better serve these customers by providing competitive
pricing and superior delivery and quality. The Company believes that no
competitor of the Company currently has as broad a national coverage as the
Company.
In addition, the Company recently began a sales territory market analysis to
improve sales force productivity. One of the primary goals of the analysis is
to determine what products can be sold to metal-consuming manufacturers and
processors with whom the Company currently does little or no business.
DISTRIBUTION
The Company has a nationwide distribution network and management information
systems that generally enable delivery of a customer's order from the most
economic plant location within 24 hours. The Company's management information
systems create an integrated network of plants and distribution facilities
that has contributed to a reduction in inventory levels and lower overall
product delivery costs while improving customer service. The Company typically
ships inventory between its facilities and products to customers by Company
trucks and by common carrier.
MANAGEMENT INFORMATION SYSTEMS
The Company operates data processing systems that, among other functions,
are used to purchase, monitor and allocate inventory throughout its production
facilities. The Company believes that this monitoring enables it to
effectively manage inventory costs and achieve improved turnover
40
<PAGE>
rates. These systems also include computerized order entry, sales analysis,
inventory status, work-in-process status, invoicing and payment. The systems
are designed to improve productivity for both the Company and its customers.
The Company also uses EDI, which has the advantage of offering customers with
EDI capability a paperless process for shipment tracking, customer billing,
remittance processing and other routine matters. In addition, an activity-
based costing system is available to help the Company measure profitability
and facilitate changes in process when needed.
PROPERTIES
The Company's headquarters are located in Chicago, Illinois. Of the
Company's 52 facilities, 45 are owned, five are leased and two are owned in
part and leased in part. Additionally, two of the five regional offices are
leased. Most leases have initial terms of more than one year and include
options to renew. While some of the Company's leases expire in the near term,
the Company does not believe that it will have difficulty either renewing such
leases or finding alternative sites. The Company's facilities are capable of
being utilized at higher capacities, if necessary. The Company believes that
its facilities are adequate for the purposes for which they are presently
used.
EMPLOYEES
As of March 31, 1996, the Company employed 4,965 persons. Of these
employees, 2,327 were salaried employees and 2,638 were hourly employees.
Approximately 40% of the hourly employees were members of various unions,
including the United Steelworkers and the Teamsters. The Company's
relationship with the various unions generally has been good, but occasional
work stoppages have occurred. Over the last five years, work stoppages have
occurred at two facilities (approximately 4% of the total), have involved an
average of 46 employees and have lasted an average of eight days. During the
next 12 months, labor contracts covering 652 employees at 15 facilities will
expire. The current agreement with the United Steelworkers will expire on July
31, 1996, and agreements with the Teamsters expire on various dates during the
period beginning June 30, 1996 and ending May 15, 1999. Excluding these
agreements with the United Steelworkers and the Teamsters, one contract
covering 27 employees is due to expire in 1996, and four contracts covering 83
employees are due to expire in 1997. While the Company's management does not
expect any unresolvable issues to arise in connection with the renewal of any
of these contracts, no assurances can be given that any of these contracts
will be extended prior to their expiration.
Prior to April 30, 1996, certain of the Company's employees were eligible to
participate in the ISI Pension Plan, a noncontributory defined benefit pension
plan. Effective April 30, 1996, that portion of the ISI Pension Plan covering
the Company's current and former employees was separated and became the
Pension Plan. See "Management--Pension Benefits" and "Relationship with ISI."
Almost all employees are covered by Company-provided life insurance and a
health benefits plan which provides broad health coverage for employees and
their families. Premiums for this health coverage are shared between the
Company and its employees. The Company believes that its salary and benefits
structure is competitive in the Industry.
COMPETITION
The Company is engaged in a highly fragmented and competitive Industry. In
general, competition is based on quality, service, price and geographic
proximity. Based on SSCI data, the Company believes that the Industry is
comprised of between 750 and 1,000 service centers, operating out of
approximately 2,000 locations. The Company competes with many other general
line service centers, specialized service centers and processing centers on a
regional and local basis, some of which may have greater financial resources
and flexibility than the Company. The Company also competes to a lesser extent
with primary steel producers. Primary steel producers typically sell to very
large
41
<PAGE>
customers that require regular shipments of large volumes of steel. Although
these large customers sometimes use metals service centers to supply a portion
of their metals needs, metals service center customers typically are consumers
of smaller volumes of metals than customers of primary steel producers. To the
extent that some of the Company's competitors purchase a higher percentage of
metals than the Company from foreign steelmakers, such competitors may benefit
from favorable exchange rates or other economic or regulatory factors that may
result in a competitive advantage. This competitive advantage may be offset
somewhat by higher transportation costs associated with importing metals into
the United States. Industry demand, in general, has weakened since mid-1995.
As a result, the Company has been reducing its prices since mid-1995 to remain
competitive.
The Company believes that it is well positioned in the Industry because of
its large number of locations, highly trained technical sales force,
sophisticated computer systems, modern equipment, broad-based inventory and
the economies of scale provided by its highly interconnected network of
facilities. In addition, the Company believes that it is strong in processing
materials, particularly in cutting materials to length, slitting, sawing,
plate burning and fabrication. Based on Industry data, the Company believes
that it is the largest general line metals service center in the United States
based on sales revenues.
The Company intends to differentiate itself from the competition based on
improved service and quality through investments in systems, equipment,
product and service offerings and by attaining a low-cost position compared to
many of its competitors. The Company believes that it has initiatives in place
that will produce results in these areas and that it is well positioned
operationally and financially to make advantageous capital investments and
acquisitions.
ENVIRONMENTAL, HEALTH AND SAFETY MATTERS
The Company's operations are subject to many federal, state and local
regulations relating to the protection of the environment and to workplace
health and safety. In particular, the Company's operations are subject to
extensive federal, state and local laws and regulations governing waste
disposal, air and water emissions, the handling of hazardous substances,
environmental protection, remediation, workplace exposure and other matters.
The Company's management believes that the Company is presently in substantial
compliance with all such laws and does not currently anticipate that the
Company will be required to expend any substantial amounts in the foreseeable
future in order to meet current environmental, workplace health or safety
requirements. However, additional costs and liabilities may be incurred to
comply with current and future requirements, which costs and liabilities could
have a material adverse effect on the Company's results of operations or
financial condition.
There are no known pending remedial actions or claims relating to
environmental matters that are expected to have a material effect on the
Company's financial position or results of operations. Some of the properties
owned or leased by the Company, however, are located in industrial areas or
have a history of heavy industrial use. These properties may potentially incur
environmental liabilities in the future that could have a material adverse
effect on the Company's financial condition or results of operations.
RYERSON DE MEXICO
The Company also owns a 50% interest in Ryerson de Mexico, a joint venture
with Altos Hornos de Mexico, S.A. de C.V., an integrated steel mill operating
in Mexico. Ryerson de Mexico, which was formed in 1994, is a general line
metals service center and processor with 18 facilities in Mexico. As of April
30, 1996, the Company's investment in Ryerson de Mexico totalled approximately
$18 million. The impact of Ryerson de Mexico on the Company's results of
operations has not been material.
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<PAGE>
PATENTS AND TRADEMARKS
The Company owns several U.S. patents and U.S. and foreign trademarks,
service marks and copyrights. Certain of the trademarks are registered with
the U.S. Patent and Trademark Office and, in certain circumstances, with the
trademark offices of various foreign countries. The Company's patents expire
over various periods of time beginning in 2011. The Company believes that the
expiration of its patents will not materially adversely affect its business.
The Company considers certain other information owned by it to be trade
secrets. The Company protects its trade secrets by, among other things,
entering into confidentiality agreements with employees regarding such matters
and implementing measures to restrict access to sensitive data and computer
software source code on a need-to-know basis. The Company believes that these
safeguards adequately protect its proprietary rights and the Company
vigorously defends these rights.
The Company's operating subsidiaries own or have obtained licenses for
various trademarks, service marks, trade names, copyrights, inventions, know-
how, trade secrets, confidential information and other intellectual property
that are necessary for the conduct of its businesses (collectively,
"Intellectual Property"). Neither the Company nor its operating subsidiaries
is aware of any claim (or of any facts that would reasonably be expected to
result in any such claim) or challenge by any third party that would
significantly limit the rights of the Company or its operating subsidiaries
with respect to any such Intellectual Property or to challenge the validity or
scope of any such Intellectual Property. The Company has no pending claim
against a third party with respect to the infringement by such third party to
any such Intellectual Property that, if determined adversely to the Company,
would individually or in the aggregate have a material adverse effect on the
Company's financial condition or results of operations. While the Company
considers all of its intellectual property rights as a whole to be important,
the Company does not consider any single right to be essential to its
operations as a whole.
LEGAL PROCEEDINGS
From time to time the Company is named as a defendant in legal actions
arising in the ordinary course of its business. The Company is not a party to
any pending legal proceedings other than routine litigation incidental to its
business. Management does not believe that the resolution of these claims will
have a material adverse effect on the Company's financial condition or results
of operations.
43
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The Company's Directors and executive officers and their ages as of June 10,
1996 are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Robert J. Darnall............... 58 Chairman and Director
President, Chief Executive Officer and
Neil S. Novich.................. 41 Director
Jay M. Gratz.................... 44 Vice President, Finance and Chief Financial
Officer
Stephen E. Makarewicz........... 49 President, Tull
Carl G. Lusted.................. 60 President, Ryerson Central
Gary J. Niederpruem............. 44 President, Ryerson East
Thomas S. Cygan................. 51 President, Ryerson West
Timothy L. LaPerre.............. 50 President, Ryerson Coil
William Korda................... 48 Vice President, Human Resources
Darell R. Zerbe................. 53 Vice President, Information Technology
Lily L. May..................... 46 Controller
Vicki L. Avril.................. 41 Treasurer
Charles B. Salowitz............. 47 Secretary
James A. Henderson.............. 61 Director
Donald S. Perkins............... 69 Director
Jean-Pierre Rosso............... 55 Director
</TABLE>
Robert J. Darnall has been Chairman of the Company and Chairman and Chief
Executive Officer of Ryerson since April 1995. He formerly was Chairman of the
Company from November 1990 to June 1994. He has been President, Chief
Executive Officer and a Director of ISI since April 1986 and became Chairman
of ISI in 1992. He is also Chairman, President and Chief Executive Officer of
ISC and has been a Director of ISC since 1983. He joined ISC in 1962, has
served as its Chairman since 1992, as its Chief Executive Officer from 1992 to
1995 and since April 1996 and as its President from 1984 to 1986, 1987 to 1992
and since April 1996. Mr. Darnall is also a Director of Cummins Engine
Company, Inc. and Household International, Inc. Although Mr. Darnall devotes a
substantial portion of his time to the Company, most of his time is devoted to
ISI and its other subsidiaries.
Neil S. Novich has been President, Chief Executive Officer and Chief
Operating Officer of the Company, President of Ryerson and Chairman of Tull
since June 1994. Mr. Novich was also appointed a Director of the Company in
June 1994. He served as Chairman of Ryerson from June 1994 to April 1995. He
was a Senior Vice President of ISI from January 1995 to May 1996 and served as
a Vice President of ISI from June 1994 to January 1995. Prior to joining ISI
in 1994, he led the Distribution and Logistics Practice at Bain & Company
("Bain"), an international management consulting firm, from 1987 and was
employed by Bain beginning in 1981.
Jay M. Gratz has been Vice President, Finance of the Company since September
1994 and Vice President, Finance and Chief Financial Officer of ISI since May
1996. He was Vice President, Finance of ISC from March 1993 to September 1994
and Vice President, Finance of the Inland Steel Flat Products Company division
of ISC from November 1991 to March 1993. Mr. Gratz also served as General
Manager of Financial Planning and Analysis of ISI from December 1989 to
November 1990 and Manager of Financial Planning and Analysis of ISI from July
1986 to December 1989. Mr. Gratz joined ISC in August 1975.
Stephen E. Makarewicz has been President, Chief Executive Officer and Chief
Operating Officer of Tull since October 1994. Mr. Makarewicz was Vice
President and General Manager of Ryerson Chicago from April 1992 to October
1994, Vice President and General Manager of Tull from June 1990 to April 1992
and District Manager for Tull's Charlotte facility from June 1988 to June
1990. Mr. Makarewicz originally joined Tull in September 1983.
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<PAGE>
Carl G. Lusted has been President of the Ryerson Central division of Ryerson
since August 1990. Mr. Lusted was Vice President and General Manager of Tull
from August 1984 to August 1990, Vice President, Merchandising of Tull from
January 1983 until August 1984, Vice President, Marketing of Tull from
September 1979 to January 1983 and Corporate Secretary of Tull from April 1979
to September 1979. Mr. Lusted originally joined Tull in January 1968.
Gary J. Niederpruem has been President of Ryerson East since January 1993.
He served as General Manager of Ryerson's Buffalo location from August 1985 to
January 1993 and General Order Manager of Ryerson's Minneapolis location from
November 1980 to August 1985. Mr. Niederpruem joined Ryerson in May 1973.
Thomas S. Cygan has been President of Ryerson West since November 1994. He
served as General Manager of Ryerson's Kansas City location from May 1981 to
November 1994. He also served as Inside Sales Manager for Ryerson-Detroit from
August 1976 to May 1981 and Inside Sales Manager for Ryerson's Machinery
Division from January 1973 to August 1976. Mr. Cygan joined Ryerson in
February 1966.
Timothy L. LaPerre has been President of Ryerson Coil since January 1993. He
served as Vice President and General Manager of Ryerson Coil from March 1990
to January 1993. He also served as Executive Vice President and General
Manager of Keelor Steel from March 1987 to March 1990. Mr. LaPerre originally
joined Keelor in April 1972.
William Korda has been Vice President of Human Resources of the Company
since October 1993. He served as the Company's Manager of Human Resources from
August 1992 to October 1993 and as Manager of Benefits and Salary
Administration for the Company from January 1991 to August 1992. He also
served as a Human Resources Manager for Ryerson from January 1986 to January
1991, Manager of Human Resources Development of ISC from April 1985 to January
1986 and Personnel Manager of ISC from September 1982 to April 1985. Mr. Korda
joined ISC in June 1969.
Darell R. Zerbe has been Vice President, Information Technology and Chief
Information Officer of the Company since February 1996. He served as Senior
Vice President, Management Information Systems, for Venture Stores, Inc. from
1988 to February 1996. Mr. Zerbe has also been employed by PepsiCo., Inc., Dr.
Pepper, Inc., Baxter International, Inc. and Procter & Gamble Co.
Lily L. May has been Controller of the Company since May 1996. She was Vice
President, Finance and Purchasing, and Controller of ISC from January 1995
through May 1996. Prior to that, she was Director of Purchases and Energy of
the Inland Steel Flat Products Company division of ISC from November 1993 to
January 1995. She also served as Director of Internal Auditing of ISI from
February 1992 to November 1993, Director of Corporate Accounting of ISI from
February 1991 to February 1992 and Manager of Pension Investments of ISI from
September 1990 to February 1991. Ms. May joined ISC in December 1973.
Vicki L. Avril has been Treasurer of the Company since February 1994. She
has also been Treasurer of Ryerson and Tull since February 1994 and of ISI and
ISC since January 1994 and Director-Corporate Planning of ISI since January
1995. In addition, she was Director of Pension Investments and Administration
of ISI from June 1991 to January 1995, Assistant Treasurer of ISI from May
1993 to January 1994 and Manager of Distribution Business Development-
Corporate Planning and Development from February 1990 to June 1991. Ms. Avril
joined ISC in September 1976. Although Ms. Avril devotes a substantial portion
of her time to the Company, most of her time is devoted to ISI and its other
subsidiaries.
Charles B. Salowitz has been Secretary of the Company since April 1996.
Since September 1995 he has been Secretary of ISI and ISC. He has also been
Associate General Counsel of ISI since
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<PAGE>
January 1995. He was an Assistant General Counsel of ISI from July 1989 and
Assistant Secretary from July 1989 to September 1995. Mr. Salowitz joined ISC
in September 1983. Although Mr. Salowitz devotes a substantial portion of his
time to the Company, most of his time is devoted to ISI and its other
subsidiaries.
James A. Henderson has been a Director of the Company since May 1996. Mr.
Henderson is Chairman and Chief Executive Officer of Cummins Engine Company,
Inc. ("Cummins Engine"), a manufacturer of diesel engines. He joined Cummins
Engine in 1964, was elected Executive Vice President in 1971, and was elected
Executive Vice President and Chief Operating Officer in 1975. In 1977, he was
elected President and Chief Operating Officer of Cummins Engine, was elected
President and Chief Executive Officer in 1994 and assumed his present position
in 1995. Mr. Henderson is also a Director of ISI, ISC, Cummins Engine,
Ameritech Corporation and Rohm and Haas Company.
Donald S. Perkins has been a Director of the Company since May 1996. Mr.
Perkins was Chairman of Jewel Companies, Inc. a diversified retailer, prior to
his retirement in 1980. Mr. Perkins is also a Director of ISI, ISC, Aon
Corporation, Lucent Technologies Inc., Cummins Engine, Illinova Corporation,
LaSalle Street Fund Incorporated, the Putnam Funds, Springs Industries, Inc.
and Time Warner Inc.
Jean-Pierre Rosso has been a Director of the Company since May 1996. Mr.
Rosso is Chairman, President and Chief Executive Officer of Case Corporation,
a worldwide designer, manufacturer and distributor of farm and construction
machinery, and was President and Chief Executive Officer of that company from
April 1994 to March 1996. Prior to joining Case Corporation, he was President
of the Home and Building Control Division of Honeywell Inc., a producer of
advanced technology products, from 1991 to 1994 and President of Honeywell
Europe from 1987 until 1991. He is also a Director of ISI, ISC, Case
Corporation, ADC Telecommunications Inc. and the Principal Financial Group.
The Certificate of Incorporation requires that after the date 60 days after
the consummation of the Offerings, when any shares of Class A Common Stock are
outstanding, at least one-third of the members of the Board of Directors be
Independent Directors, except under specific limited circumstances. The
Certificate of Incorporation also requires that the Board of Directors be
divided into three classes with the Independent Directors allocated as evenly
as possible among the classes. Within 60 days of the consummation of the
Offerings, the Company intends to increase the number of Directors to a total
of eight, including three Independent Directors, and to appoint the three
Independent Directors. Mr. Rosso serves in the class of Directors whose term
expires at the annual meeting of stockholders in 1997. Messrs. Henderson and
Novich serve in the class of Directors whose terms expire at the annual
meeting of stockholders in 1998. Messrs. Darnall and Perkins serve in the
class of Directors whose terms expire at the annual meeting of stockholders in
1999. Upon the expiration of the term of each class of Directors, the
Directors comprising such class will be elected for a three-year term at the
annual meeting of stockholders in the year in which such term expires. All
officers serve at the discretion of the Board of Directors. See "Description
of Capital Stock--Corporate Governance."
DIRECTORS' COMPENSATION
Prior to the consummation of the Offerings, the Directors were not
compensated for their services in such capacity. After consummation of the
Offerings, pursuant to the terms of the Directors' Compensation Plan, each
Director who is not an employee of the Company or any of its subsidiaries or
affiliates, will receive an annual retainer of $40,000, which will be paid 50%
in shares of Class A Common Stock and 50% in cash, provided that a Director
may elect to receive all or any portion of the
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<PAGE>
cash portion of such retainer in shares of Class A Common Stock. Such
Directors will also receive $1,000 for each special meeting of the Board of
Directors, and for each special committee meeting not held in conjunction with
a regular or special meeting of the Board of Directors, attended by them. No
fees will be paid for any meeting of the Executive Committee and membership on
the Compensation and Nominating Committees is regarded as membership on only
one committee for purposes of payment of fees for special meetings. Each
Director who serves as chairman of a standing committee of the Board of
Directors will receive an additional annual retainer of $4,000. Pursuant to
the terms of the Directors' Compensation Plan, each such Director may also
elect, prior to January 1 of each year, to defer payment of all or any portion
of the retainer and fees to which he or she would otherwise become entitled
during such year as a Director of the Company. If a Director becomes a
Director during a calendar year, the deferral election may be made within 30
days after he or she becomes a Director and will be effective for the
remainder of that year subsequent to the election. Deferred amounts will be
distributed in a lump sum or installments in cash or shares of Class A Common
Stock, all as elected by the Director at the time of the deferral. Interest on
cash deferrals will be credited at the prime rate in effect from time to time
at The First National Bank of Chicago (or its successor). Stock deferrals will
be credited with dividends paid on shares of Class A Common Stock from time to
time. A total of 100,000 shares of Class A Common Stock has been reserved for
issuance under the Directors' Compensation Plan, subject to adjustment for
certain corporate transactions affecting the number or type of outstanding
shares. The Directors' Compensation Plan has been approved by ISI as the sole
stockholder of the Company. The Company also pays the premiums on a business
accident insurance policy insuring each non-employee Director for amounts up
to $500,000.
EXECUTIVE COMPENSATION
The following table presents the compensation for 1995 paid to the chief
executive officer and the four other most highly compensated executive
officers of the Company (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------------------ -------------------------
SECURITIES
RESTRICTED UNDERLYING
NAME AND OTHER ANNUAL STOCK STOCK ALL OTHER
PRINCIPAL POSITION SALARY BONUS COMPENSATION AWARDS(1) OPTIONS (#)(4) COMPENSATION(2)
------------------ -------- -------- ------------ ---------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Darnall(3).... $192,778 $143,908 $ 0 $47,291 8,370 $ 9,430
Chairman and Director
Neil S. Novich.......... 387,113 400,400 0 84,750 14,000 18,788
President, Chief
Executive Officer and
Director
Jay M. Gratz............ 173,752 109,200 0 28,250 4,000 8,696
Vice President, Finance
and Chief Financial
Officer
Carl G. Lusted.......... 223,384 206,250 0 39,550 7,000 11,181
President,
Ryerson Central
Stephen E. Makarewicz... 167,504 125,500 13,333(5) 33,900 6,000 2,533
President, Tull
</TABLE>
- --------
(1) Awards consist of restricted ISI common stock and are valued at the
aggregate market value as of the date of grant, based on the closing
market price of ISI's common stock on such date. Dividends are paid on
such shares to the extent paid on the ISI common stock. The vesting
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<PAGE>
schedule for the restricted stock awards made in 1995 to the executives
identified in the table provides that all shares will vest at the end of a
three-year period beginning May 24, 1995. However, vesting may be
accelerated at the discretion of ISI's Compensation Committee in the event
of exceptional individual performance and/or significant progress by ISI or
the appropriate business unit in meeting its operating and financial
objectives. The number and value of the aggregate restricted stock holdings
at December 31, 1995, based on the closing market price of the ISI common
stock on December 29, 1995, were: Mr. Darnall, 6,696 shares/$168,237; Mr.
Novich, 10,800 shares/$271,350; Mr. Gratz, 5,000 shares/$125,625; Mr.
Lusted, 5,800 shares/$145,725; and Mr. Makarewicz, 4,700 shares/$118,088.
Effective upon consummation of the Offerings, the outstanding shares of
restricted ISI common stock held by the Company's employees will be
converted into shares of restricted Class A Common Stock, provided that the
Compensation Committee may determine that any employee may receive
restricted Class A Common Stock with respect to less than all of his or her
restricted ISI common stock. See "--Ryerson Tull 1996 Incentive Stock
Plan."
(2) Amounts represent the value of vested and unvested employer contributions
and allocations to the Inland Steel Industries Thrift Plan and the Inland
Steel Industries Non-Qualified Thrift Plan (the "Non-Qualified Thrift
Plan") (or, in the case of Mr. Makarewicz, the J. M. Tull Metals Company,
Inc. Employees' Profit Sharing Plan).
(3) Amounts shown for Mr. Darnall represent 27.9% of Mr. Darnall's total
compensation for 1995. Such percentage is based on the ratio of the
Company's operating assets to ISI's consolidated operating assets and was
used to determine the percentage of ISI's overhead expenses allocable to
the Company for 1995. All of Mr. Darnall's 1995 compensation was paid by
ISI.
(4) All options are for ISI common stock. Effective upon consummation of the
Offerings, most of the options for ISI common stock held by the Company's
officers and employees will be converted into options for Class A Common
Stock, provided that the Compensation Committee may determine that any
employee may receive options to purchase shares of Class A Common Stock
for less than all of his or her options to purchase ISI common stock. See
"--Ryerson Tull 1996 Incentive Stock Plan."
(5) Represents reimbursement of relocation expenses and related tax gross-up.
EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS
ISI entered into an agreement with Mr. Novich, dated April 8, 1994,
providing that he would serve as Vice President of ISI, Chief Operating
Officer of the Company and President of Ryerson. Pursuant to the agreement,
Mr. Novich received a base annualized salary for calendar year 1994 of
$330,000 and an award of $112,900 under the Inland Steel Industries, Inc.
Annual Incentive Plan (the "AIP"). In 1994, under the agreement, Mr. Novich
received a restricted stock award of 5,000 shares of ISI common stock and a
grant of options to purchase 20,000 shares of ISI common stock, each of which
vests over a three-year period. ISI also reimbursed Mr. Novich for moving
expenses from West Newton Hill, Massachusetts to the Chicago area, including
the amount by which the purchase price, plus the cost of capital improvements,
as defined by the IRS, of Mr. Novich's home in West Newton Hill exceeded the
sales price of such home and an amount sufficient to pay all taxes on the
reimbursement such that he would have no after tax cost or loss. This
reimbursement totaled $94,034. In addition, Mr. Novich was paid a bonus of
$100,000 upon signing the agreement.
ISI also entered into a severance agreement with Mr. Novich, dated April 8,
1994, providing that, in the event of termination of his employment for any
reason other than malfeasance or voluntary termination prior to the third
anniversary of his employment with the Company, the Company will pay the
present value of (i) his monthly base salary in effect at the time of such
termination times the number of months remaining in the 36-month period, plus
(ii) 1/12th of the average annual award paid to him under the AIP or a
successor plan times the number of months remaining in the 36-month period. In
addition, all of his restricted stock will become fully vested, all options
will become fully
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<PAGE>
exercisable and ISI will continue life insurance, disability insurance and
dental and health care coverage for Mr. Novich and his immediate family until
the third anniversary of his date of hire upon terms consistent with such
coverages for active employees until such date.
ISI entered into an agreement with Mr. Lusted, dated June 27, 1990,
providing that upon Mr. Lusted reaching age 62 or at any other mutually
agreeable time, ISI will reimburse Mr. Lusted for his reasonable moving
expenses from the Chicago area to the Atlanta area, or to any other mutually
agreeable location. In connection with such a relocation, ISI has agreed to
pay Mr. Lusted the amount, if any, by which the lesser of Mr. Lusted's
purchase price or the appraised value of his home in the Chicago area exceeds
the net sales price of such home.
On March 27, 1996, ISI entered into agreements (the "ISI Agreements") with
each of the Named Executive Officers, the present terms of which expire on
December 31, 1996, but are automatically extended for additional one-year
periods thereafter unless ISI gives prior notice that it does not wish to
extend such agreements for another year or unless a change in control (as
defined below) of ISI or certain other limited events occur. ISI has not given
notice of non-renewal. For purposes of the ISI Agreements, a change in control
will generally be deemed to have occurred if: (i) with certain limited
exceptions, any person becomes the beneficial owner of 40% or more of the
combined voting power of ISI's then outstanding securities; (ii) during any
two-year period, the majority of the membership of the ISI Board of Directors
changes without the approval of two-thirds of the Directors who either were
Directors at the beginning of the period or whose election was previously so
approved; (iii) the ISI stockholders approve a merger or consolidation of ISI
with another company in which ISI's voting securities, in combination with
voting securities held by any trustee or fiduciary under any ISI employee
benefit plan, do not continue to represent at least 60% of the combined voting
power of the voting securities of the surviving entity (excepting certain
recapitalizations of ISI); (iv) the ISI stockholders approve a plan of
complete liquidation of ISI or an agreement for the sale or disposition by ISI
of all or substantially all of its assets; or (v) there occurs with respect to
a Related Company (defined below) a sale or disposition of securities
representing 50% or more of the combined voting power of the Related Company's
securities, or a merger or consolidation of a Related Company with another
company in which a majority-owned direct or indirect subsidiary of ISI does
not own at least 50% of the combined voting power of the voting securities of
the surviving entity or a sale or disposition of all or substantially all of
the assets of a Related Company to a person other than a majority-owned direct
or indirect subsidiary of ISI. A "Related Company" is a covered employee's
employer (or any direct or indirect parent company of such employer, or
subsidiary of such employer that is a significant subsidiary (within the
meaning of Rule 405 of the Securities Act) of ISI). A change in control of ISI
shall not be deemed to have occurred with respect to any employee, however, if
the sale or other transaction includes or involves a sale to the public or a
distribution to the stockholders of ISI of more than 50% of the voting
securities of the employee's employer or a direct or indirect parent of his or
her employer and the employee's employer (or a direct or indirect parent of
the employee's employer) agrees to become a successor to ISI under the
employee's ISI Agreement.
The ISI Agreements provide that if a covered executive's employment is
terminated within two years after a change in control of ISI either (i) by ISI
other than for "cause" or other than as a consequence of death, disability or
retirement (all as defined in such agreements), or (ii) by such executive for
"good reason," generally relating to a diminution of responsibilities,
compensation or benefits or significant relocation of his or her principal
office, the executive will receive: (i) a lump-sum payment equal to two times
the sum of (a) the executive's current annual base salary plus (b) the
executive's average incentive bonus paid for the five years preceding
termination of employment; (ii) an amount in cash in lieu of any allocations,
unpaid awards or rights under ISI's annual or other incentive compensation
plans; (iii) an amount in cash equal to the value of outstanding stock options
granted under ISI's stock option plans at specified prices; (iv) an amount in
cash equal to the value of shares of common stock awarded or issuable as
performance and/or restricted shares under ISI's
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<PAGE>
incentive stock plans; (v) life, disability, accident and health insurance as
provided in ISI's insurance programs and financial advisory and outplacement
services for a period of 24 months after termination of employment; (vi) an
amount in cash in lieu of two years of additional accrued benefits under ISI's
pension plan and (vii) legal fees and expenses incurred as a result of such
termination. In addition to the foregoing, Mr. Novich's severance agreement
provides that payments thereunder the agreement will not limit or reduce any
benefits that he may be entitled to receive pursuant to his employment
agreement (discussed above) and that his benefits under the severance
agreement are reduced by benefits he receives under his employment agreement.
Each ISI Agreement contains an excise tax "gross-up" provision pursuant to
which the executive will be paid an additional amount upon the imposition of
any excise tax. While this provision will preserve the benefits receivable
under the agreement for the executive, ISI will not be entitled to a federal
income tax deduction for a portion of the severance payments provided
thereunder.
The ISI Agreements provide benefits in the event the employee is terminated
by ISI for reasons other than cause within 12 months after the occurrence of a
"potential change in control" of ISI if a change in control of ISI or certain
other limited events occur within 6 months after his or her termination. A
"potential change in control" shall be deemed to have occurred for purposes of
the agreements if (i) ISI enters into an agreement, the consummation of which
would result in the occurrence of a change in control of ISI, (ii) any person
(including ISI) publicly announces an intention to take or to consider taking
actions which, if consummated, would constitute a change in control, (iii)
with certain limited exceptions, any person who is or becomes the owner of
securities of ISI representing 9.5% or more of the combined voting power of
ISI's then outstanding securities increases such person's beneficial ownership
of such securities by 5% or more over the percentage so owned on the date of
the agreement, or (iv) the Board of Directors of ISI adopts a resolution that
a potential change in control of ISI has occurred for purposes of the ISI
Agreements. The Offerings will not, and the Company and ISI anticipate that a
Spin-off will not, constitute a change in control or potential change in
control for purposes of the ISI Agreements with respect to employees of the
Company. In the event of a Spin-off, employees of the Company will no longer
be entitled to benefits under the ISI Agreements.
On June 10, 1996, the Company entered into agreements (the "Company
Agreements") with each of the Named Executive Officers which provide benefits
substantially similar to those provided under the ISI Agreements in the event
that the executive's employment with the Company is terminated following a
change in control of the Company (defined to include events with respect to
the Company similar to those which constitute a change in control under the
ISI Agreements with respect to ISI). In addition, Mr. Novich's agreement
provides that payments under the agreement will not limit or reduce any
benefits that he may be entitled to receive pursuant to a severance agreement
dated April 8, 1994. To the extent that an executive becomes entitled to
benefits under a Company Agreement and an ISI Agreement upon a change of
control, benefits payable under the ISI Agreement will be reduced by the
amount of benefits payable under the Company Agreement. Other than as set
forth in the preceding sentence, in no event shall an executive be entitled to
benefits under both ISI Agreement and a Company Agreement on account of the
same events constituting a change in control. The Offerings will not, and the
Company and ISI anticipate that a Spin-off will not, constitute a change in
control for purposes of the Company Agreements.
PENSION BENEFITS
Prior to April 30, 1996, certain employees of the Company were eligible to
participate in the ISI Pension Plan. Effective April 30, 1996, that portion of
the ISI Pension Plan covering the Company's current and former employees was
separated and became the Pension Plan. Employees covered by the Pension Plan
will be credited with the number of years of service credited to them under
the ISI Pension Plan as of the separation date. The following table shows the
maximum annual pension benefits payable on a straight life annuity basis to
employees in various earnings classifications upon retirement at age 65. All
benefit amounts shown in such table are subject to offset based upon Social
Security earnings. Pension benefits are provided to eligible salaried
employees of Tull under a separate benefit schedule of the Pension Plan, as
discussed below.
50
<PAGE>
PENSION PLAN TABLE
<TABLE>
<CAPTION>
AVERAGE
ANNUAL
EARNINGS FOR
THE APPLICABLE ANNUAL PENSION BENEFITS FOR YEARS OF SERVICE SHOWN
YEAR-OF-SERVICE --------------------------------------------------------------
PERIOD 5 YEARS 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
--------------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 200,000...... $ 17,000 $ 34,000 $ 51,000 $ 68,000 $ 85,000 $102,000 $119,000
400,000...... 34,000 68,000 102,000 136,000 170,000 204,000 238,000
600,000...... 51,000 102,000 153,000 204,000 255,000 306,000 357,000
800,000...... 68,000 136,000 204,000 272,000 340,000 408,000 476,000
1,000,000...... 85,000 170,000 255,000 340,000 425,000 510,000 595,000
1,200,000...... 102,000 204,000 306,000 408,000 510,000 612,000 714,000
1,400,000...... 119,000 238,000 357,000 476,000 595,000 714,000 833,000
1,600,000...... 136,000 272,000 408,000 544,000 680,000 816,000 952,000
</TABLE>
As of April 1, 1996, the Named Executive Officers were credited with the
following years of service under the appropriate plan: Robert J. Darnall--33
years; Neil S. Novich--1 year; Jay M. Gratz--20 years; Carl G. Lusted--28
years; and Stephen E. Makarewicz--12 years.
Pensions are provided under the Pension Plan to eligible employees
(including employees who are Directors or officers) who, at retirement, have
met certain service or service and age requirements. In general for salaried
employees, benefits are based on years of service and individual earnings for
the highest consecutive 36-month period of earnings during the last ten 12-
month periods of service prior to retirement. For this purpose, earnings
generally consist of salary compensation plus bonus compensation as reported
in the Summary Compensation Table.
The Company has established the Ryerson Tull, Inc. Supplemental Retirement
Plan for Covered Employees (the "Supplemental Plan"), which provides
supplemental pension benefits to employees of the Company and its affiliates
who participate in the Pension Plan and whose benefits under that plan are
limited by the provisions of Sections 415 and 401(a)17 of the Internal Revenue
Code of 1986, as amended (the "Code"). Generally, the amount of the benefit
provided is equal to the difference between the benefit that would have been
payable under the Pension Plan had the applicable Code limitations not applied
and the benefit actually paid under the Pension Plan. The Supplemental Plan is
non-contributory and benefits payable under the Supplemental Plan are paid
from the general assets of the Company. Benefits under the Supplemental Plan
are generally paid at the same time in the same form as corresponding benefits
under the Pension Plan; provided however, the Supplemental Plan provides that,
for any officer or employee with at least five years of service, with annual
compensation in excess of $150,000 and who is age 55 or older, the Company may
elect to satisfy its obligations for benefits payable upon retirement at age
65 by (i) the purchase of an annuity contract either prior to or at the time
of retirement (and a tax gross-up payment to the officer or employee at the
time of purchase) or (ii) the payment of a lump sum amount at the time of
retirement. Prior to establishing the Supplemental Plan, certain employees of
the Company participated in the Inland Steel Industries Supplemental
Retirement Plan for Covered Employees and the Inland Steel Industries Special
Retirement Benefit Plan for Covered Employees (collectively, the "ISI
Supplemental Plans"). The ISI Supplemental Plans provided benefits similar to
the Supplemental Plan. The Company has assumed ISI's liabilities under the ISI
Supplemental Plans with respect to current and former employees of the
Company.
All accrued benefits under the Pension Plan vest, and all benefits accrued
under the Supplemental Plan will become fully and irrevocably vested and
distributable to participants as provided by the terms of such plans then in
effect, in the event of a change in control (as defined in those plans) of the
Company. Any surplus assets under the Pension Plan are to be used to provide
additional benefits in the event of a termination, merger or consolidation of
the Pension Plan, or a transfer of assets to another plan, within three years
of such a change in control, and limitations have been placed on
51
<PAGE>
amendments to the Pension Plan within such three-year period. The Offerings
will not, and the Company and ISI anticipate that a Spin-off will not,
constitute a change in control under the Pension Plan or the Supplemental
Plan.
Pension benefits are provided to eligible salaried employees of Tull under a
separate benefit schedule of the Pension Plan. The maximum annual pension
benefits payable under such schedule are approximately 3% higher than those
shown in the above table for comparable earnings and service. Stephen E.
Makarewicz is the only executive officer of the Company covered by the Tull
benefit schedule and he is credited with 10 years of service under the Tull
benefit schedule under the Pension Plan.
INLAND STEEL INDUSTRIES NONQUALIFIED THRIFT PLAN
The Company also participates in the Nonqualified Thrift Plan, which
provides supplemental benefits to employees of ISI and its affiliates who are
eligible to participate in the Inland Steel Industries Thrift Plan (the "ISI
Thrift Plan") and whose salary reduction contributions to the ISI Thrift Plan
are limited by the Code provision which generally restricts the amount of
compensation that can be taken into account under the ISI Thrift Plan. Under
the Nonqualified Thrift Plan, eligible employees can elect to defer, on a pre-
tax basis, between 1% and 10% of their salary. ISI will match 100% of the
deferral, up to 5% of the participant's salary. All amounts contributed
pursuant to the Nonqualified Thrift Plan are credited to a bookkeeping account
and are credited with hypothetical earnings at the rate of interest earned by
the assets in the Stable Value Fixed Income Fund (as defined) under the ISI
Thrift Plan. Upon termination of a participant's employment, all amounts
credited to his account under the Nonqualified Thrift Plan will be paid in a
lump sum from the general assets of ISI within 60 days after the first
anniversary of his termination of employment. If a participant terminates
employment prior to completing five years of service with ISI (other than on
account of certain limited events), he will not be entitled to any of the ISI
contributions relating to the two-year period prior to the termination of
employment. Special payment rules may apply if the participant terminates
employment on account of disability or retirement. Interim distributions may
be permitted on account of hardship. All benefits under the Nonqualified
Thrift Plan become fully vested upon a change in control (as defined) of ISI.
The Offerings will not, and the Company and ISI anticipate that a Spin-off
will not, constitute a change in control for purposes of the Nonqualified
Thrift Plan.
INDIVIDUAL OPTION GRANTS IN 1995
The following table presents information with respect to (i) individual
grants of options for ISI's common stock that were made during 1995 under the
ISI Incentive Plan to the Named Executive Officers and (ii) the grant date
present value of such options.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES IN PRICE(2) EXPIRATION PRESENT
NAME GRANTED(1) FISCAL YEAR ($/SHARE) DATE VALUE(3)
---- ---------- ------------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Robert J. Darnall....... 30,000 6.4% $28.50 May 23, 2005 $376,200
Neil S. Novich.......... 14,000 3.0 28.50 May 23, 2005 175,560
Jay M. Gratz............ 4,000 0.8 28.50 May 23, 2005 50,160
Carl G. Lusted.......... 7,000 1.5 28.50 May 23, 2005 87,780
Stephen E. Makarewicz... 6,000 1.3 28.50 May 23, 2005 75,240
</TABLE>
- --------
(1) All options are for ISI common stock and were granted on May 24, 1995.
They became exercisable with respect to 50% of the shares on May 24, 1996
and will be fully exercisable after May 24, 1997. Options granted in 1995
to each of these executives are transferable, with the advance written
consent of ISI's Compensation Committee of the Board of Directors, to (i)
a
52
<PAGE>
spouse or descendants, (ii) to a trust for the benefit of the optionee, his
spouse or descendants or (iii) as a charitable contribution. See "--
Employment and Change in Control Agreements" for provisions relating to
payout of options upon a change in control of ISI or the Company. Effective
upon consummation of the Offerings, the options for ISI common stock held
by the Company's officers and employees will be substituted with options
for Class A Common Stock in accordance with the methodology described in
Section 424 of the Code and regulations thereunder, provided that the
Compensation Committee may determine that any employee may receive
Substitute Options with respect to less than all of his or her options on
ISI common stock. See "--Ryerson Tull 1996 Incentive Stock Plan."
(2) The exercise price is equal to the average of the high and low price of
ISI's common stock on the NYSE Composite Transactions on the date of
grant. The exercise price may be paid by delivery of already-owned shares
and an optionee may elect to have ISI withhold shares of ISI common stock
(or accept already-owned shares) to satisfy tax withholding obligations
with respect to option exercises or payments.
(3) In accordance with Commission rules, the Black-Scholes option pricing
model was chosen to estimate the grant date present value of the options
granted during 1995. Use of this model should not be construed as an
endorsement of the model's accuracy at valuing options. The following
assumptions were made for purposes of calculating the present value of the
options as of the grant date: the option term is ten years, the volatility
of ISI's common stock is 35.215% (calculated using daily stock prices for
the one-year period prior to the grant date), the ten-year risk-free
interest rate is 6.63%, the annualized dividend rate is $0.20 per share
and a reduction of approximately 20.16% reflects the probability of (i)
forfeiture due to termination prior to vesting and (ii) a shortened option
term due to termination of employment prior to the option expiration date.
The value of the options granted in 1995 depends upon the actual
performance of ISI's common stock during the applicable period; the actual
value, if any, that an optionee will realize upon exercise of an option
will depend on the excess of the market value of ISI's common stock over
the exercise price on the date the option is exercised.
AGGREGATED OPTION EXERCISES IN 1995 AND YEAR-END OPTION/SAR VALUES
The following table presents the number of securities underlying the
option/SAR holdings of the Named Executive Officers at the end of 1995 and the
value of such holdings. No options for ISI common stock or SARs were exercised
by the Named Executive Officers during 1995.
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS/SARS AT
OPTIONS/SARS AT FISCAL FISCAL YEAR-END(1)
YEAR-END (EXERCISABLE/ (EXERCISABLE/
UNEXERCISABLE) UNEXERCISABLE)
---------------------- ------------------
<S> <C> <C>
Robert J. Darnall..................... 125,667/58,333 $101,250/$0
Neil S. Novich........................ 17,000/31,000 0/0
Jay M.Gratz........................... 15,467/8,333 0/0
Carl G. Lusted........................ 18,300/14,500 0/0
Stephen E. Makarewicz................. 13,750/7,750 0/0
</TABLE>
- --------
(1) All such options are for ISI common stock; value is based on the closing
price of ISI's common stock on the NYSE Composite Transactions on December
29, 1995.
RYERSON TULL 1996 INCENTIVE STOCK PLAN
The Company has adopted, and ISI has approved, the Incentive Stock Plan.
Long-term incentive compensation grants may be made by the Compensation
Committee under the Incentive Stock Plan. These grants and awards may consist
of stock options (both incentive and nonqualified), stock appreciation rights,
restricted stock awards and performance awards, or combinations thereof. Stock
53
<PAGE>
options and stock appreciation rights may be granted at not less than 100% of
the fair market value of the Class A Common Stock on the date of grant and are
generally exercisable for a period not exceeding ten years. Restricted stock
awards, consisting of shares of Class A Common Stock, are contingent on
continuing employment with the Company for specified periods, and performance
awards, payable in shares of Class A Common Stock or cash, are contingent on
the achievement over specified periods of such performance objectives as shall
be established by the Compensation Committee. Restricted stock awards may also
be contingent upon the achievement of performance measures. Grants and awards
made by the Compensation Committee under the Plan are intended to provide
executive officers not only with additional incentives for outstanding
individual performance but also with the opportunity to acquire an ownership
stake in the Company, thereby more closely aligning their interests with those
of the stockholders. Upon a change in control (as defined below) of the
Company, with certain exceptions: (i) the value of all outstanding stock
options, stock appreciation rights and restricted stock awards (whether or not
then fully exercisable or vested) will be cashed out at specified prices as of
the date of the change in control, except that (a) any stock options or stock
appreciation rights outstanding for less than six months will not be cashed
out until six months after the applicable date of grant and (b) the
Compensation Committee may provide for immediate vesting instead of cashing
out of restricted stock awards and (ii) all outstanding performance awards
will be cashed out in the amounts and manner determined by the Compensation
Committee.
For purposes of the Incentive Stock Plan, a change in control of the Company
shall generally be defined in the same manner as under the Company Agreements.
The Offerings will not, and the Company and ISI anticipate that a Spin-off
will not, constitute a change in control of the Company for purposes of the
Incentive Stock Plan.
Generally, a participant who is granted a stock option will not be subject
to federal income tax at the time of grant and the Company will not be
entitled to a tax deduction by reason of such grant. Upon exercise of a
nonqualified option, generally the difference between the option price and the
fair market value of the Class A Common Stock on the date of exercise will be
considered ordinary income to the participant and generally the Company will
be entitled to a corresponding tax deduction.
Upon exercise of an incentive stock option, no taxable income will be
recognized by the participant and the Company is not entitled to a tax
deduction by reason of such exercise. However, if Class A Common Stock
purchased pursuant to the exercise of an incentive stock option is sold within
two years from the date of grant or within one year after the transfer of such
Class A Common Stock to the participant, then the difference, with certain
adjustments, between the fair market value of the Class A Common Stock at the
date of exercise and the option price will be considered ordinary income to
the participant and generally the Company will be entitled to a corresponding
tax deduction. If the participant disposes of the Class A Common Stock after
such holding periods, any gain or loss upon such disposition will be treated
as a capital gain or loss and the Company will not be entitled to a deduction.
The maximum number of shares of Class A Common Stock reserved for issuance
under the Incentive Stock Plan is 2,300,000, subject to adjustment as provided
in the Incentive Stock Plan to reflect certain corporate transactions
affecting the number or type of outstanding shares.
NEW PLAN BENEFITS
It is currently estimated that approximately 100 Company employees will be
eligible to participate in the Incentive Stock Plan. No determinations have
been made concerning the issuance of awards under the Incentive Stock Plan,
other than the issuances of shares of restricted Class A Common Stock and
options to purchase shares of Class A Common Stock in exchange for certain
outstanding restricted shares of ISI common stock and options to purchase ISI
common stock, as described below.
54
<PAGE>
Effective upon consummation of the Offerings, shares of restricted stock
under the Incentive Stock Plan will be substituted for outstanding shares of
restricted stock that have been granted to employees of the Company under the
Inland 1995 Incentive Stock Plan and prior ISI plans (collectively, the "ISI
Incentive Plans"). Generally, the number of restricted shares of Class A
Common Stock to be substituted shall bear the same ratio to the number of
restricted shares of ISI common stock held by the employee as the average
value (defined below) of a share of ISI common stock bears to the average
value of a share of Class A Common Stock. Average value with respect to a
share of ISI common stock or Class A Common Stock means the average closing
price of such stock for the first ten trading days following the consummation
of the Offerings. Similarly, options granted under the Incentive Stock Plan
("Substitute Options") will be substituted for outstanding options granted to
employees of the Company under the ISI Incentive Plans, with the number of
shares of Common Stock that will be subject to the Substitute Options and the
exercise price thereof determined in accordance with Section 424 of the Code
and regulations thereunder. The Compensation Committee may determine, however,
that any employee may receive restricted shares of Class A Common Stock or
Substitute Options with respect to less than all of his or her outstanding
restricted stock or options under the ISI Incentive Plans.
The following table sets forth the number of shares of restricted Class A
Common Stock and the number of shares of Class A Common Stock subject to
options to be substituted for restricted shares of ISI common stock and
options to purchase ISI common stock (assuming that as of the applicable
valuation date the value of a share of ISI common stock is $21.00 (the last
reported sales price on the NYSE on June 5, 1996), that the value of a share
of Class A Common Stock is $17.50 (the mid-point of the offering range set
forth on the cover page of this Prospectus) and that no shares of ISI common
stock or options to purchase shares of ISI common stock held by Company
officers who are also ISI officers will be converted into shares of restricted
Class A Common Stock or options to purchase shares of Class A Common Stock for
(i) the Named Executive Officers, (ii) the Company's executive officers, as a
group, and (iii) all employees, including all current officers who are not
executive officers of the Company, as a group.
RYERSON TULL 1996 INCENTIVE STOCK PLAN
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SHARES OF SHARES
RESTRICTED SUBJECT
NAME AND POSITION STOCK(1) TO OPTIONS(1)
----------------- ---------- -------------
<S> <C> <C>
Robert J. Darnall...................................... 0 0
Chairman and Director
Neil S. Novich......................................... 12,690 108,000
President, Chief Executive Officer and Director
Jay M. Gratz........................................... 0 0
Vice President, Finance and Chief Financial
Carl G. Lusted......................................... 3,360 64,560
President, Ryerson Central
Stephen E. Makarewicz.................................. 2,640 47,400
President, Tull
Executive Group........................................ 29,040 384,330
Non-Executive Officer Employee Group................... 6,900 415,183
</TABLE>
- --------
(1) Assumes that no shares of restricted ISI common stock or options to
purchase shares of ISI common stock held by Company officers who are also
ISI officers will be converted into shares of restricted Class A Common
Stock or options to purchase shares of Class A Common Stock.
55
<PAGE>
RELATIONSHIP WITH ISI
DIVIDENDS
Prior to the consummation of the Offerings, the Company will declare a
dividend payable in cash to ISI in an amount equal to the estimated net
proceeds of the Offerings (estimated to be $84.4 million at an assumed initial
offering price of $17.50 per share (the mid-point of the price range set forth
on the cover page of this Prospectus)) and a dividend consisting of the Note
Payable. The net proceeds of the Offerings will be used to pay the dividend
and will not be available to the Company. All of the net proceeds of the Note
Offering, if consummated, together with a portion of the Company's available
cash and/or borrowings under credit facilities, will be used to discharge the
Note Payable. In the event that the Note Offering is not consummated, the Note
Payable will remain an obligation of the Company, and must be repaid with cash
generated from operations and/or from the proceeds of future financings, the
source, nature and amount of which cannot currently be determined. On May 20,
1996, the Company paid the May 1996 Dividend.
SHARED MANAGEMENT
Mr. Darnall, Chairman of the Board and a Director, Mr. Gratz, Vice
President, Finance and Chief Financial Officer and a Director, Ms. Avril,
Treasurer, and Mr. Salowitz, Secretary, are also executive officers of ISI.
The Company and ISI also have four common Directors. The Company expects that
such arrangements will continue for the foreseeable future following the
consummation of the Offerings. Until May 1996, Mr. Novich, President, Chief
Executive Officer and a Director, was also an executive officer of ISI. See
"Management--Executive Officers and Directors."
POTENTIAL DISTRIBUTION AND OTHER TRANSACTIONS
Immediately following the consummation of the Offerings, the Company will
continue to be controlled by ISI, which will beneficially own all of the
outstanding Class B Common Stock, representing approximately 96.3% of the
aggregate voting power of all of the Company's outstanding Common Stock (95.8%
if the over-allotment options granted to the Underwriters are exercised in
full). ISI has advised the Company that, although it currently intends to hold
such stock, it may in the future distribute all or a part of such stock (in
the form of Class A Common Stock) to ISI's stockholders by means of a Spin-off
or may sell such stock (in the form of Class A Common Stock) to third parties
in one or more transactions. See "Description of Capital Stock--Common Stock--
Conversion Rights." The completion of any such transaction would be subject to
a number of factors, including a determination by the Board of Directors of
ISI that such a transaction would be in the best interest of its stockholders,
and in the case of a Spin-off, could be subject to the receipt of a favorable
ruling from the IRS or an opinion of counsel as to the tax-free nature of such
transaction. Substantially all of the shares of Class A Common Stock
distributed in such Spin-off or sale could be eligible for immediate resale in
the public market. See "Shares Eligible for Future Sale--Potential
Distribution and Other Transactions."
SUPPLY ARRANGEMENTS
During 1995, the Company purchased approximately 400,000 tons of steel
having a value of $177 million from ISC, a wholly-owned subsidiary of ISI.
Purchases of steel from ISC amounted to $174 million in 1993 and $184 million
in 1994. The terms of these arrangements were negotiated between the Company
and ISC and are similar to other large supply arrangements the Company has
with other suppliers. The Company expects to continue purchasing significant
amounts of material from ISC, although there can be no assurances that such
purchases will continue. All future transactions, if any, will continue to be
on an arm's length basis. ISC also buys material from the Company, which
purchases amounted to approximately $11 million in each of 1993 and 1994 and
approximately $12 million in 1995, and may continue to buy material from the
Company in the future.
56
<PAGE>
SUPPORT SERVICES; INDEMNIFICATION AND CORPORATE SEPARATENESS
Concurrent with the consummation of the Offerings, the Company and ISI will
enter into a corporate separation agreement (the "Corporate Separation
Agreement") relating to, among other things, the provision of support services
by ISI to the Company, participation in a joint marketing program,
indemnification by and between the Company and ISI, and procedures intended to
maintain separation between the Company and ISI.
In the past, ISI has provided certain support services to the Company in the
following areas: finance (including tax administration, cash management,
pension and employee benefit plan administration, auditing and corporate
communications), legal (including public affairs and corporate secretary),
human resources and information technology, as well as senior management
services. Charges by ISI to the Company for these services amounted to $7.4
million in each of 1993 and 1994 and $6.8 million in 1995. The Corporate
Separation Agreement provides that ISI will continue to provide these services
to the Company for a period of five years, cancellable by either party upon 60
days written notice to the other party or immediately by mutual consent of the
parties. The Corporate Separation Agreement provides that, consistent with
past practice, specific distinguishable costs incurred by ISI in providing
services to the Company will be charged to the Company and that other support
costs will be allocated to the Company based on the percentage of ISI
consolidated operating assets attributable to the Company. The percentage of
ISI consolidated assets attributable to the Company is expected to fluctuate
from one period to another. During 1995, such percentage was 27.9%.
The Corporate Separation Agreement provides that the Company and ISI and its
subsidiaries will cooperate in joint marketing efforts currently referred to
as the "red diamond program." The red diamond program involves a team approach
to maximizing customer satisfaction by involving personnel from both the
Company and ISI with various areas of expertise to provide an integrated
solution to a customer's needs. The obligations of the Company and ISI to
cooperate in the joint marketing efforts will continue for a period of five
years, cancellable by either party upon 60 days written notice to the other
party or immediately by mutual consent of the parties.
The Corporate Separation Agreement also provides that the Company on the one
hand, and ISI and its other subsidiaries on the other, will indemnify each
other for losses, claims and damages that they may suffer or for which they
may become liable, including those relating to tax, environmental, ERISA and
pension liabilities, that arise out of the relationship of the parties prior
to the Offerings or as a result of ISI's control of the Company.
Provisions intended to maintain the existence of the Company and ISI as
separate corporate entities also are included in the Corporate Separation
Agreement. Such provisions provide that, among other things: other than the
Company's Chairman, no more than one-half of the Company's executive officers
will be officers or employees of ISI or any of its other subsidiaries; the
Company and ISI each will maintain its assets separate from those of the other
and the other's subsidiaries; the Company and ISI each will account for and
manage its liabilities separately from those of the other and the other's
subsidiaries; the Company will maintain offices separate from the offices of
ISI and ISI's other subsidiaries; and, other than the ESOP Guarantee, neither
the Company nor ISI will pledge its assets for the benefit of, or grant
guarantees or otherwise hold out its credit as being available to satisfy the
obligations of, the other or any of the other's subsidiaries. These provisions
automatically terminate at any time that the number of outstanding shares of
Class B Common Stock represents less than 50% of the total number of
outstanding shares of Class A Common Stock and Class B Common Stock.
TAX SHARING ARRANGEMENTS
Prior to the consummation of the Offerings, the Company and ISI will enter
into a tax-sharing agreement under which current and deferred federal income
tax provisions are determined for each company in the ISI group on a stand-
alone basis. Under the agreement, current tax liability for any member of the
ISI group, including the Company, is paid to ISI. If the Company is unable to
use all of
57
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its allocated tax attributes (net operating loss and tax credit carryforwards)
in a given year but other companies in the consolidated group are able to
utilize them, then ISI will pay the Company for the use of such tax
attributes. The agreement will also contain state tax sharing arrangements,
similar to the arrangements described above with respect to federal taxes for
those states in which the consolidated group is charged state taxes on a
unitary or combined basis.
CROSS-LICENSE AGREEMENT
Prior to the consummation of the Offerings, the Company and ISI will enter
into a cross-license agreement (the "Cross-License Agreement") pursuant to
which the Company will license on a royalty- free basis its "Ryerson" name and
know-how for use by ISI and its affiliates outside North America and pursuant
to which ISI will license on a royalty-free basis its "red diamond" trademark
for use by the Company. Pursuant to the Cross-License Agreement, the Company
and ISI are each required to reimburse the other for the reasonable costs
incurred by the other in providing its respective licensed property pursuant
to the Agreement. The Cross-License Agreement terminates automatically at any
time that the number of outstanding shares of Class B Common Stock represents
less than 50% of the total number of outstanding shares of Class A Common
Stock and Class B Common Stock. The Cross-License Agreement may also be
terminated by either party upon 60 days written notice to the other party or
immediately by mutual consent of Ryerson Tull and ISI. The Cross-License
Agreement provides that following termination of the agreement, the Company
and ISI each has a right to a license (which may be exclusive) of any part of
the other's property that is then the subject of the agreement for a
transition period of up to two years at a fair market value license fee and
upon such other terms as may be mutually agreed upon by the Company and ISI.
Upon a failure to mutually agree upon a license fee and other terms, provision
is made for determination by a qualified independent expert.
GUARANTOR ARRANGEMENT
Ryerson is the guarantor of the ESOP Trust's obligation to repay principal
amounting to $110.8 million as of March 31, 1996 plus accrued interest. The
notes are payable in installments through July 2004 and bear interest rates
ranging from 7.96% to 8.80%. Ryerson could be required to make payments
pursuant to the guarantee after a failure by ISI to provide funds to cover any
deficiency in the ESOP Trust. There have been no deficiencies in the ESOP
Trust.
PENSIONS
Prior to April 30, 1996, certain Company employees were eligible to
participate in the ISI Pension Plan. In 1995, ISI elected to change the
measurement date for pension plan assets and liabilities from December 31 to
September 30 in order to provide for more timely information and to achieve
administrative efficiencies in the collection of data. The change in the
measurement date had no effect on 1995 pension expense and had an immaterial
impact on the 1995 funded status. At September 30, 1995, the market value of
the ISI Pension Plan assets totaled $1.92 billion. The ISI Pension Plan's
accumulated benefit obligation as of such date was $1.96 billion and the
projected benefit obligation as of such date was $2.05 billion. For financial
reporting purposes, the funded status of the ISI Pension Plan has appeared
very volatile over the past several years. This volatility is due to
significant fluctuations in the interest rate on high-grade fixed-income
obligations that must be used for valuing pension liabilities. This rate
increased from 7.25% in 1993, a twenty year low, to 8.8% in 1994 and decreased
to 7.75% in 1995. ISI was required to record a $102.6 million additional
pension liability, offset by an intangible pension asset, on its year-end 1995
balance sheet. In 1995, ISI contributed 3.9 million shares of its common stock
with an estimated aggregate value of $100 million to the ISI Pension Plan.
This contribution, ISI's first since 1984, strengthened the plan's funded
status. In 1995, the Company paid $13.1 million to ISI for its share of this
contribution.
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Effective April 30, 1996, that portion of the ISI Pension Plan covering the
Company's current and former employees was separated and became the Pension
Plan. The Pension Plan assumed the liabilities of the ISI Pension Plan
attributed to current and former Company employees and a corresponding
percentage of the assets. If the Pension Plan had been in existence at the
September 30, 1995 valuation date of the ISI Pension Plan, the Company's
projected benefit obligation would have been $266 million and the Company's
share of the Pension Plan assets would have been $249 million, resulting in an
under-funding of $17 million for financial reporting purposes. However, under
ERISA funding guidelines, which take a longer term view in determining the
interest rate to use in valuing liabilities, no contribution will be required
for the ISI Pension Plan or the Pension Plan in 1996. The separation will not
have a material impact on the financial statements of the Company.
PRINCIPAL STOCKHOLDER
Prior to the consummation of the Offerings, ISI will own all of the
outstanding shares of the capital stock of the Company. Upon consummation of
the Offerings, ISI will own 100% of the Class B Common Stock and, accordingly,
will own Common Stock representing approximately 86.7% of the economic
interest in the Company (85% if the Underwriters' over-allotment options are
exercised in full) and representing approximately 96.3% of the combined voting
power of the Company's outstanding Common Stock (or 95.8% if the Underwriters
over-allotment options are exercised in full). The address of ISI is 30 West
Monroe Street, Chicago, Illinois 60603.
OWNERSHIP OF ISI STOCK
The following table presents, as of June 5, 1996, the ISI equity securities
beneficially owned (as that term is defined by the Commission) by all
Directors of the Company, the Named Executive Officers and the Directors and
executive officers as a group, in each case, except as indicated, with sole
voting and investment power. ISI common stock, in each case, includes ISI
preferred stock purchase rights distributed in 1987 to holders of ISI common
stock. The shares of ISI Series E ESOP Convertible Preferred Stock (the "ISI
Series E ESOP Preferred Stock") shown as beneficially owned by the executive
officers are held for their respective accounts in the ISI Thrift Plan and
could be converted upon retirement or other termination of employment into an
equal number of shares of ISI common stock (subject to adjustment in certain
events). Excluded from the number of shares of ISI Series E ESOP Preferred
Stock listed as beneficially owned are allocated shares of ISI Series E ESOP
Preferred Stock that the ESOP Trustee is required to vote or dispose of in the
manner and proportion in which allocated shares are directed to be voted or
disposed of.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
AMOUNT AND NATURE OF OF BENEFICIAL
BENEFICIAL OWNERSHIP OWNERSHIP OF ISI SERIES E
OF ISI COMMON STOCK(1) ESOP PREFERRED STOCK(2)
---------------------- -------------------------
<S> <C> <C>
Robert J. Darnall............ 230,106 1,796
Neil S. Novich............... 51,899 340
Jay M. Gratz................. 29,200 1,089
Carl G. Lusted............... 34,968 1,253
Stephen E. Makarewicz........ 22,699 435
James A. Henderson........... 1,985 0
Donald S. Perkins............ 3,485 0
Jean-Pierre Rosso............ 500 0
All Directors and Executive
Officers as a Group
(16 persons)................ 494,949 11,411
</TABLE>
- --------
(1) Excludes shares of ISI common stock into which ISI Series E ESOP Preferred
Stock may be converted. No Director or Named Executive Officer
individually owns 1% or more of the outstanding ISI common stock; all
Directors and executive officers as a group own 1% of the outstanding ISI
common stock. Includes shares held jointly with other persons, as
follows--Mr.
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Darnall-290 and all Directors and executive officers as a group-1,281;
shares which the following have the right to acquire under options
exercisable within 60 days of May 1, 1996--Mr. Darnall-169,000, Mr. Novich-
41,000, Mr. Gratz-21,800, Mr. Lusted-29,300, Mr. Makarewicz-18,500, and all
Directors and executive officers as a group--377,035; and shares of ISI
common stock held under restricted stock awards as follows--Mr. Darnall-
12,000, Mr. Novich-10,800, Mr. Gratz-4,400, Mr. Lusted-2,800, Mr.
Makarewicz-2,200, and all Directors and executive officers as a group-
44,600. Also includes 250 shares of ISI common stock held by the spouse of
an executive officer, for which beneficial ownership is disclaimed.
(2) Each Director and Named Executive Officer individually owns, and all
Directors and executive officers as a group collectively own, less than 1%
of the ISI Series E ESOP Preferred Stock.
PROPOSED NOTE OFFERING
The Company proposes to offer publicly $150 million aggregate principal
amount of its Notes due 2001 and $100 million aggregate principal amount of
its Notes due 2006, which will be unsecured obligations of the Company. The
net proceeds to the Company from the Note Offering (after deducting
underwriting discounts and expenses paid by the Company) are estimated to be
approximately $243.8 million. All of such proceeds of the Note Offering, if
consummated, together with the Company's available cash and borrowings under
credit facilities, will be used to discharge the Note Payable that will be
declared as a dividend to ISI prior to the Offerings. The indenture governing
the Notes is expected to include covenants that may affect the conduct of
future business and restrictions on dividends and other distributions on the
Company's capital stock. See "Dividend Policy" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Financing." Because the Note Offering is subject to a variety of market,
economic and other factors, there can be no assurance that the Note Offering
will be consummated. It is expected that the Note Offering will be consummated
shortly after the consummation of the Offerings.
DESCRIPTION OF CAPITAL STOCK
GENERAL
Under the Certificate of Incorporation, the authorized capital stock of the
Company consists of 100,000,000 shares of Class A Common Stock, 34,000,000
shares of Class B Common Stock and 16,000,000 shares of preferred stock, $1.00
par value (the "Preferred Stock"). Upon consummation of the Offerings, there
will be 5,220,000 shares of Class A Common Stock (6,000,000 shares if the
Underwriters' over-allotment options are exercised in full), 34,000,000 shares
of Class B Common Stock and no shares of Preferred Stock outstanding. The
Company has reserved for issuance 416,200 shares of Preferred Stock to be
issued as shares of Series A Participating Preferred Stock, par value $1.00
per share (the "Junior Participating Preferred Shares") pursuant to the Rights
Agreement (as defined herein). All outstanding shares will be fully paid and
non-assessable. Under the Certificate of Incorporation, the Company may not
issue any additional shares of Class B Common Stock other than in the form of
a distribution or stock split on the shares of Class B Common Stock, as more
fully described below.
COMMON STOCK
VOTING RIGHTS
The holders of Class A Common Stock have one vote per share and the holders
of the Class B Common Stock have four votes per share on all matters voted
upon by the stockholders of the Company. Except as otherwise required by law,
the holders of the Class A Common Stock and the Class B Common Stock vote
together as a single class with respect to all matters submitted for a vote
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of stockholders. Under the Delaware GCL, the holders of Class A Common Stock
are entitled to vote together as a single class and the holders of Class B
Common Stock are entitled to vote together as a single class on any proposal
to amend the Certificate of Incorporation to adversely alter or change the
powers, preferences or special rights of the Class A Common Stock or the Class
B Common Stock, respectively. Shares of Class A Common Stock and Class B
Common Stock do not have cumulative voting rights.
Until such time as a sufficient number of shares of Class B Common Stock are
converted to shares of Class A Common Stock or the Company issues a sufficient
number of shares of Class A Common Stock to dilute the voting power of ISI or
any subsequent holder or holders of the Class B Common Stock, ISI or such
holder or holders of Class B Common Stock will have the power to defeat any
attempt to acquire control of the Company even though such a change in control
may be favored by stockholders holding substantially more than a majority of
the Company's outstanding shares of Class A Common Stock. This may have the
effect of precluding holders of Class A Common Stock from receiving any
premium above market price for their shares which may be offered in connection
with any such attempt to acquire control. ISI, or any subsequent holder or
holders of Class B Common Stock, will also generally have the power to effect
certain fundamental corporate changes, such as a sale of substantially all of
the Company's assets, a merger of the Company or an amendment to the
Certificate of Incorporation that does not adversely alter or change the
powers, preferences or special rights of Class A Common Stock, without the
approval of holders of Class A Common Stock.
DIVIDEND RIGHTS
Each share of Class A Common Stock and Class B Common Stock is entitled to
dividends if, as and when dividends are declared by the Board of Directors.
Any dividend declared and payable in cash, capital stock of the Company or
other property must be paid equally on a share for share basis on Class A
Common Stock and Class B Common Stock, except as described below. Dividends
and distributions payable in shares of Class A Common Stock may be paid only
on shares of Class A Common Stock, and dividends and distributions payable in
shares of Class B Common Stock may be paid only on shares of Class B Common
Stock. If a dividend or distribution payable in shares of Class A Common Stock
is made on Class A Common Stock, a simultaneous and equivalent dividend or
distribution in shares of Class B Common Stock must be made on Class B Common
Stock. If a dividend or distribution payable in shares of Class B Common Stock
is made on Class B Common Stock, a simultaneous and equivalent dividend or
distribution in shares of Class A Common Stock must be made on Class A Common
Stock.
CONVERSION RIGHTS
The Class A Common Stock is not convertible. Each share of Class B Common
Stock is convertible into one share of Class A Common Stock at any time at the
option of the holder thereof. All of the outstanding shares of the Class B
Common Stock will automatically convert into shares of Class A Common Stock
immediately (i) upon the consolidation or merger of the Company into another
entity, (ii) upon the consolidation or merger of another entity into the
Company where the Company is the surviving entity and, in connection with such
merger, all or part of the Class A Common Stock and Class B Common Stock is
changed into or exchanged for stock or other securities of any other entity or
cash or any other property, (iii) upon the sale or transfer by the Company, in
one or more transactions, of assets or earning power aggregating 50% or more
of the assets or earning power of the Company to any person or persons or (iv)
at any time that the number of outstanding shares of Class B Common Stock
represents less than 50% of the total number of outstanding shares of Class A
Common Stock and Class B Common Stock.
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LIQUIDATION RIGHTS
The holders of the Class A Common Stock and the holders of the Class B
Common Stock are entitled to participate equally on a share for share basis in
all distributions to the holders of Common Stock in any liquidation,
distribution or winding up of the Company, subject to the rights of the
holders of any series of Preferred Stock.
PREEMPTIVE RIGHTS
Neither the holders of Class A Common Stock nor the holders of Class B
Common Stock have preemptive rights to purchase shares of any class of the
Company's capital stock.
REDEMPTION AND SINKING FUND PRIVILEGES
Neither the holders of the Class A Common Stock nor the holders of the Class
B Common Stock have any redemption or sinking fund privileges.
The rights, preference and privileges of holders of both classes of Common
Stock are subject to, and may be adversely affected by, the rights of the
holders of shares of any series of Preferred Stock which the Company may
designate and issue in the future.
TRANSFER RESTRICTION
Any shares of Class B Common Stock transferred by the holder of such Class B
Common Stock to any person other than a person owning 100% of such holder's
capital stock or a wholly-owned direct or indirect subsidiary of such holder
will automatically convert into shares of Class A Common Stock upon such
transfer.
REGISTRAR AND TRANSFER AGENT
Harris Trust and Savings Bank, Chicago, Illinois is the registrar and
transfer agent for the Common Stock.
PREFERRED STOCK
The Certificate of Incorporation authorizes the Board of Directors to create
and issue one or more series of Preferred Stock and determine the rights and
preferences of each series, to the extent permitted by the Certificate of
Incorporation and applicable law. Among other rights, the Board of Directors
may determine: (i) the number of shares constituting the series and the
distinguishing designation of the series; (ii) whether the shares shall have
voting rights in addition to the voting rights provided by law and, if so, the
terms and extent of such voting rights; (iii) whether the shares shall be
convertible into or exchangeable for other securities of the Company at the
option of the Company or at the option of the holder or holders thereof or
upon the happening of a specified event or events, and the terms and
conditions of the conversion or exchange, including provision for adjustment
of the conversion or exchange rate in circumstances determined by the Board of
Directors; (iv) whether the shares may be redeemed at the option of the
Company or at the option of the holder or holders thereof or upon the
happening of a specified event or events, and the terms and conditions of the
conversion or exchange, and, if so, the terms and conditions on which they may
be redeemed (including, without limitation, the dates upon or after which they
may be redeemed and the price or prices at which they may be redeemed, which
price or prices may be different in different circumstances or at different
redemption dates); (v) any requirement as to a sinking fund for shares; (vi)
the dividend rate, or the method of determining such rate, on the shares, if
any, any conditions upon which such dividends shall be paid, the date or dates
on which such dividends shall be payable, the manner of calculating any
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dividends, and the preference of any dividends; (vii) the rights of shares in
the event of voluntary or involuntary liquidation, dissolution or winding up
of the Company and the rights or priority of shares on the distribution of
assets on dissolution; and (viii) any other relative rights, preferences,
limitations and powers of that series. The holders of any series of Preferred
Stock will not have preemptive rights to purchase shares of any class of the
Company's capital stock.
The Junior Participating Preferred Shares which would be issuable upon
exercise of Rights (as defined herein) distributed pursuant to the Rights
Agreement (should the Rights become exercisable) would not be redeemable. Each
Junior Participating Preferred Share would entitle the holder thereof to
receive a preferential quarterly dividend equal to (i) the greater of $1.00 or
100 times the aggregate per share amount of all cash dividends declared on the
Class A Common Stock during such quarter (ii) plus 100 times the aggregate per
share amount (payable in kind) of all non-cash dividends and other
distributions (other than in shares of Class A Common Stock or a subdivision
of the outstanding shares of Class A Common Stock) declared on the Class A
Common Stock during such quarter, in each case adjusted to give effect to any
dividend on the Class A Common Stock payable in shares of Class A Common Stock
or any subdivision or combination of the Class A Common Stock (each, a
"Dilution Event"). Each one one-hundredth of a Junior Participating Preferred
Share would entitle the holder thereof to one vote (adjusted to give effect to
any Dilution Event) on all matters submitted to a vote of the stockholders of
the Company, voting together as a single class with the holders of the Class A
Common Stock and the holders of any other class of capital stock having
general voting rights. If at any time dividends payable on the Junior
Participating Preferred Shares are in arrears and unpaid in an amount equal to
or exceeding the amount of dividends payable thereon for six quarterly
dividend periods, the holders of Junior Participating Preferred Shares (voting
separately as a class with the holders of any other class of Preferred Stock
with dividends similarly in arrears) will have the exclusive right at a
special meeting of stockholders or at the Company's next annual meeting of
stockholders to elect two Directors, such Directors to be in addition to the
number of Directors constituting the Board of Directors immediately prior to
the accrual of such right. Such voting right will continue until all dividends
accumulated and payable on the Junior Participating Preferred Shares have been
paid in full, at which time such voting right will terminate, subject to re-
vesting in the event of a subsequent similar arrearage. Upon any termination
of such voting right, subject to the requirements of the Delaware GCL, the
term of office of all of the Directors elected by the holders of the Junior
Participating Preferred Shares will terminate. In the event of liquidation of
the Company, the holder of each Junior Participating Preferred Share would be
entitled to receive a preferential liquidation payment equal to $1.00 per
share (adjusted to give effect to any Dilution Event) plus an amount equal to
any accrued and unpaid dividends and distributions on such Junior
Participating Preferred Share, whether or not declared, to the date of such
payment, and to participate ratably in the distribution of any assets of the
Company remaining after the holders of the Class A Common Stock have received
a liquidation payment of $.01 per share of Class A Common Stock at a ratio of
100 to 1, adjusted to give effect to any Dilution Event. In the event of any
merger, consolidation or other transaction in which the outstanding shares of
Class A Common Stock of the Company are exchanged for or converted into other
stock, securities, cash or other property, each Junior Participating Preferred
Share would be similarly exchanged for or converted into 100 times the
aggregate amount of such stock, securities, cash or other property for or into
which each share of the Class A Common Stock is exchanged or converted,
adjusted to give effect to any Dilution Event.
CORPORATE GOVERNANCE
The Certificate of Incorporation contains several provisions intended to
maintain separation between the Company and ISI. The Certificate of
Incorporation requires that beginning 60 days from the date of consummation of
the Offerings, when any shares of Class A Common Stock are outstanding, at
least one-third of the Directors be Independent Directors, except as provided
in the following sentence. In the event that a vacancy occurs in a position
held by an Independent Director,
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the Company shall have six months to fill such vacancy with an Independent
Director. An Independent Director is defined in the Certificate of
Incorporation as a person who is not, and who has not within the previous 12
months been, an officer or employee of the Company or an officer, Director or
employee of ISI or any of ISI's other subsidiaries or affiliates, or an owner
of more than 5% of ISI's outstanding common stock or of any of ISI's
subsidiaries or affiliates. The Certificate of Incorporation also requires,
when any shares of Class A Common Stock are outstanding, the affirmative vote
of a majority of the Directors, including at least two-thirds of the
Independent Directors, to commence or consent to a voluntary bankruptcy
proceeding involving the Company. The Certificate of Incorporation requires,
when any shares of Class A Common Stock are outstanding, the affirmative vote
of a majority of the Directors, including at least two-thirds of the
Independent Directors, to merge or consolidate the Company with or into any
other entity unless the surviving entity is not affiliated with ISI or has a
charter with provisions comparable to those described in this paragraph.
Finally, the Certificate of Incorporation requires that, when any shares of
Class A Common Stock are outstanding, at the first regular meeting of the
Board immediately following the end of a calendar quarter, the Independent
Directors review transactions between ISI or ISI's other subsidiaries or
affiliates and the Company entered into during the immediately preceding
calendar quarter where the amount involved exceeds $25 million, other than
transactions pursuant to written agreements entered into prior to the
Offerings, to determine whether such transactions were on a basis at least as
favorable as that which could have been obtained from an unaffiliated third
party and to report such findings to the Board of Directors, which will take
such action as it deems advisable or appropriate. See "Relationships with
ISI." The foregoing provisions may be amended only with the approval of the
holders of 80% of the shares of Class A Common Stock then outstanding and will
terminate automatically when the number of outstanding shares of Class B
Common Stock represents less than 50% of the total number of outstanding
shares of Class A Common Stock and Class B Common Stock.
ANTI-TAKEOVER EFFECTS OF DELAWARE LAW AND CERTIFICATE OF INCORPORATION AND BY-
LAWS
The Certificate of Incorporation, the By-Laws and Section 203 of the
Delaware GCL contain certain provisions that may make more difficult the
acquisition of control of the Company by means of a tender offer, open market
purchase, a proxy fight or otherwise. These provisions are designed to
encourage persons seeking to acquire control of the Company to negotiate with
the Board of Directors. However, these provisions could have the effect of
discouraging a prospective acquiror from making a tender offer or otherwise
attempting to obtain control of the Company. To the extent that these
provisions discourage takeover attempts, they could deprive stockholders of
opportunities to realize takeover premiums for their shares or could depress
the market price of the shares of the Class A Common Stock.
DELAWARE GENERAL CORPORATION LAW AND BUSINESS COMBINATION PROVISION
Section 203 of the Delaware GCL prohibits certain "business combination"
transactions between certain publicly-held Delaware corporations, such as the
Company after the Offerings, and any "interested stockholder" for a period of
three years after the date on which the latter became an interested
stockholder, unless (i) prior to that date either the proposed business
combination or the proposed acquisition of stock resulting in its becoming an
interested stockholder is approved by the Board of Directors, (ii) in the same
transaction in which it becomes an interested stockholder, the interested
stockholder acquires at least 85% of those shares of the voting stock of the
corporation that are not held by the Directors, officers or certain employee
stock plans or (iii) the business combination with the interested stockholder
is approved by the Board of Directors and also approved at a stockholders'
meeting by the affirmative vote of the holders of at least two-thirds of the
outstanding shares of the corporation's voting stock other than shares held by
the interested stockholder. An "interested stockholder" is defined in Section
203 of the Delaware GCL, with certain exceptions, as any person that (i) is
the owner of 15% or more of the outstanding voting stock of a corporation or
(ii) is an affiliate or associate of the corporation and was the owner of 15%
or more of the outstanding voting stock of the corporation at any time within
the three-year period immediately prior to the date on which the determination
is to be made as to such person's status as an interested stockholder.
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AVAILABILITY OF SHARES OF CAPITAL STOCK FOR FUTURE ISSUANCE
The availability for issue of shares of Preferred Stock and authorized but
unissued Class A Common Stock by the Company without further action by
stockholders (except as may be required by NYSE or other applicable
regulations) could be viewed as enabling the Board of Directors to make more
difficult a change in control of the Company. The issuance of warrants or
rights to acquire shares of Preferred Stock or Class A Common Stock may
discourage or defeat unsolicited stock accumulation programs and acquisition
proposals, and the issuance of shares in a private placement or public
offering to dilute or deter stock ownership of persons seeking to obtain
control of the Company may have a similar effect. The Company has no present
plans to issue any shares of Preferred Stock or Class A Common Stock other
than as offered hereby or as contemplated under the Incentive Stock Plan and
Directors' Compensation Plan.
NO ACTIONS BY WRITTEN CONSENT; SPECIAL MEETINGS
The Certificate of Incorporation provides that stockholder action can be
taken only at an annual or special meeting of stockholders and cannot be taken
by written consent in lieu of a meeting (except to the extent that the Board
of Directors of the Company at any time may provide by resolution that the
holders of any series of Preferred Stock may take action by written consent
without a meeting). The Certificate of Incorporation provides that, except as
otherwise required by law, special meetings of the stockholders can only be
called by a majority of the entire Board of Directors, the Chairman of the
Board of Directors, the Vice Chairman of the Board of Directors or the
President. Only those matters set forth on the notice of the special meeting
may be considered or acted upon at such special meeting, except as otherwise
provided by law.
CLASSIFIED BOARD OF DIRECTORS AND RELATED PROVISIONS
The By-Laws provide that the Board of Directors is divided into three
classes of Directors serving staggered three-year terms. As a result,
approximately one-third of the Company's Board of Directors will be elected
each year. See "Management--Executive Officers and Directors." The classified
board provision may prevent a party who acquires control of a majority of the
outstanding voting stock of the Company from obtaining control of the Board of
Directors until the second annual stockholders' meeting following the date the
acquiror obtains the controlling interest. The Certificate of Incorporation
requires that the Independent Directors be allocated as evenly as possible
among the classes of Directors.
The Certificate of Incorporation provides that the number of Directors will
not be less than three and that the Directors will have the exclusive power to
set the exact number of Directors from time to time by resolution adopted by
vote of a majority of the entire Board of Directors. The Certificate of
Incorporation further provides that Directors may be removed only for cause by
the affirmative vote of the holders of at least 80% of the votes that could be
cast by the holders of all shares of capital stock of the Company entitled to
vote for the election of Directors at a meeting duly called for such purpose.
This provision, in conjunction with the provisions of the Certificate of
Incorporation authorizing the Board of Directors to fill vacant directorships,
may prevent stockholders from removing incumbent Directors without cause and
filling the resulting vacancies with their own nominees.
The foregoing provisions of the By-Laws may be changed by the Board of
Directors or by the stockholders only upon the affirmative vote of the holders
of 80% of the votes that could be cast by the holders of all shares of capital
stock of the Company entitled to vote on such matters at a meeting duly called
for such purpose. The foregoing provisions of the Certificate of Incorporation
may be changed only by the affirmative vote of holders of at least 80% of the
votes that could be cast by the holders of all shares of capital stock of the
Company entitled to vote on such matters at a meeting duly called for such
purpose.
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STOCKHOLDER PROPOSALS
The By-Laws provide that, if a stockholder desires to submit a proposal at
an annual or special stockholders' meeting or to nominate persons for election
to the Board of Directors, the stockholder must submit notice to the Company
at least 90 days prior to the meeting or, if notice of the date of the annual
meeting is sent or given less than 105 days in advance of such meeting, not
less than 90 days prior to the day and month during that year which is the
same as the day and month of the prior year's annual meeting. Notices of
stockholder proposals must set forth the reasons for conducting such business,
the name and address of the person proposing such business, the class and
number of shares of capital stock of the Company beneficially owned by such
stockholder and any material interest of the stockholder in such business.
Director nomination notices must set forth: (i) as to each person whom the
stockholder proposes to nominate for election or re-election as a Director,
(a) the name, age, business address and residence address of the person, (b)
the principal occupation or employment of the person, (c) the class and number
of shares of capital stock of the Company beneficially owned by the person,
(d) such person's signed consent to serve as a Director if elected and (e) any
other information relating to the person that is required to be disclosed in
solicitations for proxies for election of Directors pursuant to Regulation 14A
under the Exchange Act; and (ii) as to the stockholder giving the notice,
(a) the name and record address of such stockholder and (b) the class and
number of shares of capital stock of the Company beneficially owned by such
stockholder. The presiding officer of the meeting may refuse to acknowledge a
proposal or nomination not made in compliance with the procedures contained in
the By-Laws.
The advance notice requirements regulating stockholder nominations and
proposals may have the effect of precluding a contest for the election of
Directors or the introduction of a stockholder proposal if the established
procedures are not followed.
The foregoing provisions of the By-Laws may be changed by the Board of
Directors or by the stockholders only upon the affirmative vote of the holders
of 80% of the votes that could be cast by the holders of all shares of capital
stock of the Company entitled to vote on such matters at a meeting duly called
for such purpose.
RIGHTS PLAN
On June 10, 1996, the Board of Directors declared a dividend distribution of
one right (a "Right") for each outstanding share of Class B Common Stock of
the Company to stockholders of record at the close of business on June 13,
1996 (the "Record Date") and authorized the issuance of one right for each
share of Common Stock that shall become outstanding between the Record Date
and the earlier of the Final Expiration Date (as defined herein) and the date
the Rights are redeemed. Except as described below, each Right, when
exercisable, entitles the registered holder thereof to purchase from the
Company one one-hundredth of a Junior Participating Preferred Share, at a
price of $95.00 per one one-hundredth of a share (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set forth
in the Rights Agreement (the "Rights Agreement") between the Company and
Harris Trust and Savings Bank, as Rights Agent. A copy of the Rights Agreement
has been filed with the Commission as an exhibit to the registration statement
of which this Prospectus is a part. This summary of certain provisions of the
Rights Agreement and the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement.
Initially, the Rights will be evidenced by Common Stock certificates
representing shares then outstanding, and no separate certificates evidencing
the Rights will be distributed. Until the later of (i) the Effective Date (as
defined herein) and (ii) the earlier to occur of (a) ten days following a
public announcement that a person or group of affiliated or associated
persons, with certain limited exceptions (an "Acquiring Person"), has
acquired, or obtained the right to acquire, beneficial ownership of capital
stock of the Company representing 10% or more of the voting power of the
66
<PAGE>
Company (the "Shares Acquisition Date") or (b) 15 business days (or such later
date as may be determined by action of the Board of Directors prior to the
time that any person becomes an Acquiring Person) following the commencement
of (or a public announcement of an intention to make) a tender or exchange
offer if, upon consummation thereof, such person or group would be the
beneficial owner of capital stock of the Company representing 10% or more of
the voting power of the Company (such earlier date being called the
"Distribution Date"), the Rights will be evidenced by the Common Stock
certificates and not by separate certificates. The "Effective Date" is the
close of business on the first date that ISI and its affiliates and
associates, in the aggregate, collectively beneficially own capital stock of
the Company then outstanding representing less than 50% of the voting power of
the Company.
The Rights Agreement provides that, until the Distribution Date, the Rights
will be transferred with, and only with, the Common Stock. Until the
Distribution Date (or earlier redemption, expiration or termination of the
Rights), the transfer of any Common Stock certificates will also constitute
the transfer of the Rights associated with the Common Stock represented by
such certificates. As soon as practicable following the Distribution Date,
separate certificates evidencing the Rights ("Right Certificates") will be
mailed to holders of record of the Common Stock as of the close of business on
the Distribution Date and, thereafter, such separate Right Certificates alone
will evidence the Rights.
The Rights are not exercisable until the Distribution Date, and will expire
upon the earliest of (i) the close of business on the tenth anniversary of the
date of the Rights Agreement (the "Final Expiration Date"), (ii) the
redemption of the Rights by the Company as described below or (iii) the
exchange of all Rights for Common Stock as described below.
A person will not become an Acquiring Person under the Rights Agreement if
such person is the Company or an affiliate of the Company or obtained 10% or
more of the voting power of the Company through (i) an issuance of Common
Stock by the Company directly to such person (for example, in a private
placement or an acquisition by the Company in which Common Stock is used as
consideration), (ii) a repurchase by the Company of Common Stock or (iii) a
sale by ISI of Class B Common Stock, provided in each case that such person
does not acquire any additional shares of Common Stock. The Rights Agreement
also provides that ISI and its affiliates and associates will in no event be
deemed to be an Acquiring Person prior to the first date that ISI and its
affiliates and associates, in the aggregate, collectively beneficially own
capital stock of the Company then outstanding representing less than 10% of
the voting power of the Company.
In the event that any person or group becomes an Acquiring Person, each
holder of a Right will thereafter have the right to receive, upon exercise at
the then current exercise price of the Right, Class A Common Stock (or, in
certain circumstances, cash, property or other securities of the Company)
having a value equal to two times the exercise price of the Right.
In the event that, at any time following a Shares Acquisition Date, the
Company is acquired by the Acquiring Person in a merger or other business
combination transaction or 50% or more of the Company's assets or earning
power are sold to the Acquiring Person, proper provision will be made so that
each holder of a Right will thereafter have the right to receive, upon
exercise at the then current exercise price of the Right, common stock of the
acquiring or surviving company having a value equal to two times the exercise
price of the Right.
Notwithstanding the foregoing, following the occurrence of any of the events
set forth in the preceding two paragraphs (the "Triggering Events"), any
Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person will immediately
become null and void.
67
<PAGE>
The Purchase Price payable, the number of Junior Preferred Shares, shares of
Common Stock or other securities or property issuable upon exercise of the
Rights and the number of Rights outstanding, are subject to adjustment from
time to time to prevent dilution, among other circumstances, in the event of a
stock dividend on, or a subdivision, split, combination, consolidation or
reclassification of, the Junior Preferred Shares or the Common Stock, or a
reverse split of the outstanding Junior Preferred Shares or shares of Common
Stock.
With certain exceptions, no adjustment to the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% to
the Purchase Price. Upon the exercise of a Right, the Company will not be
required to issue fractional Junior Preferred Shares or fractional shares of
Common Stock (other than fractions in multiples of one one-hundredth of a
Junior Preferred Share) and, in lieu thereof, an adjustment in cash may be
made based on the market price of the Junior Preferred Shares or Common Stock
on the last trading date prior to the date of exercise.
At any time after a person or group becomes an Acquiring Person and prior to
the acquisition by such person or group of capital stock of the Company
representing 50% or more of the voting power of the Company, the Board of
Directors may exchange the Rights (other than Rights owned by such person or
group, which have become void), in whole or in part, at an exchange ratio of
one share of Class A Common Stock per Right (subject to adjustment).
At any time after the date of the Rights Agreement until the earlier of the
time that a person becomes an Acquiring Person or the Final Expiration Date,
the Board of Directors may redeem the Rights in whole, but not in part, at a
price of $.01 per Right (the "Redemption Price"), which may (at the option of
the Company) be paid in cash, shares of Class A Common Stock or other
consideration deemed appropriate by the Board of Directors. Upon the
effectiveness of any action of the Board of Directors ordering redemption of
the Rights, the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no rights
as a stockholder of the Company, including, without limitation, the right to
vote or to receive dividends.
The provisions of the Rights Agreement may be amended by the Company, except
that any amendment adopted after the time that a person becomes an Acquiring
Person may not adversely affect the interests of holders of Rights.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
without conditioning the offer on the Rights being redeemed or a substantial
number of Rights being acquired by the Acquiring Person. Under certain
circumstances the Rights beneficially owned by such a person or group may
become void. The Rights should not interfere with any merger or other business
combination approved by the Board of Directors because, if the Rights would
become exercisable as a result of such merger or business combination, the
Board of Directors may, at its option, at any time prior to the time that any
Person becomes an Acquiring Person, redeem all (but not less than all) of the
then outstanding Rights at the Redemption Price.
68
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
GENERAL
Prior to the Offerings, there has been no public market for the Class A
Common Stock or the Class B Common Stock. The effect, if any, of public sales
of Class A Common Stock or the availability of Class A Common Stock for sale
at prevailing market prices cannot be predicted. Nevertheless, sales of
substantial amounts of Class A Common Stock or Class B Common Stock (which
would convert into shares of Class A Common Stock upon such sale) in the
public market could adversely affect the market price for the Class A Common
Stock.
The Company and ISI have agreed not to offer, sell, contract to sell or
otherwise dispose of any shares of Class A Common Stock or Class B Common
Stock, any securities substantially similar to the Class A Common Stock or
Class B Common Stock or any securities convertible into or exchangeable for
Class A Common Stock or Class B Common Stock or any such similar security
(other than pursuant to employee benefit plans existing, or on the conversion
or exchange of convertible or exchangeable securities outstanding, on the date
of this Prospectus), for a period of 180 days after the date of this
Prospectus without the prior written consent of the representatives of the
Underwriters. After expiration or waiver of such 180 day lock-up period, all
of the shares of Class B Common Stock (or shares of Class A Common Stock into
which such shares of Class B Common Stock may be converted) held by ISI will
become eligible for sale without registration under Rule 144, subject to the
restrictions of Rule 144 described below.
RULE 144
Upon consummation of the Offerings, the Company will have 5,220,000 shares
of Class A Common Stock issued and outstanding (6,000,000 shares if the
Underwriters' over-allotment options are exercised in full) and 34,000,000
shares of Class B Common Stock issued and outstanding. All of the shares of
the Class A Common Stock offered hereby may be resold without restriction or
further registration under the Securities Act unless acquired by an
"affiliate" of the Company as that term is defined in Rule 144. The 34,000,000
shares of Class B Common Stock outstanding will be "restricted securities"
within the meaning of Rule 144 and may not be sold in the absence of
registration under the Securities Act unless an exemption from registration is
available, including the exemption contained in Rule 144.
In general, under Rule 144 under the Securities Act, beginning 90 days after
the date of this Prospectus, a person (and persons whose shares must be
aggregated with those of such person) who has beneficially owned restricted
shares for at least two years, including an "affiliate" of the Company as that
term is defined in Rule 144, will be entitled to sell, within any three-month
period, a number of shares that does not exceed the greater of (i) the average
weekly trading volume of the class of stock being sold during the four
calendar weeks preceding the filing of a notice of sale with the Commission
or, if no such notice is required, the sale date or (ii) 1% of the then
outstanding shares of the class of stock being sold (approximately 52,200
shares, in the case of the Class A Common Stock, upon consummation of the
Offerings). Sales pursuant to Rule 144 are also subject to certain
requirements as to the manner of sale, notice and availability of current
public information about the Company. A person who is deemed not to have been
an affiliate of the Company at any time during the 90 days preceding a sale by
such person and who has beneficially owned shares for at least three years is
entitled to sell those shares under Rule 144 without regard to the volume
limitation, provisions concerning manner of sale or notice requirements of
Rule 144. Shares of Common Stock eligible for sale under Rule 144 may also be
sold pursuant to any exemption from registration which might be available
without compliance with the requirements of Rule 144. A proposed amendment to
Rule 144 would, if adopted, reduce the two and three year holding periods
referred to above to one and two years, respectively.
69
<PAGE>
REGISTRATION RIGHTS AGREEMENT
The Company and ISI are parties to a registration rights agreement (the
"Registration Rights Agreement") pursuant to which ISI may make two demands
for registration under the Securities Act of shares of Class A Common Stock
received by ISI upon conversion of shares of Class B Common Stock held by it
within any twelve-month period, subject to ISI's agreement not to sell any
shares of Common Stock prior to the expiration of 180 days from the date of
this Prospectus without the prior written consent of the representatives of
the Underwriters, and subject to certain other conditions. The Company may
postpone such registration if (i) the Company is, at such time, conducting an
underwritten public offering of Class A Common Stock (or securities
convertible into Class A Common Stock) and is advised in writing by the
managing underwriter or underwriters that such offering would in its or their
opinion be adversely affected by such registration, (ii) the Company
determines that such registration would interfere with any pending or imminent
financing, acquisition, corporate reorganization or other material transaction
involving the Company or any of its subsidiaries or (iii) such registration
would require the Company to make public disclosure of information which the
Company determines it is precluded from making, either due to circumstances
beyond its control or because it is unwilling for valid corporate purposes to
make such disclosure. In addition, ISI may request the Company to use its best
efforts to include shares of Class A Common Stock held by it in any
registration proposed by the Company of its Class A Common Stock under the
Securities Act, subject to certain conditions. However, the Company is not
required to include Class A Common Stock held by ISI therein if the managing
underwriter or underwriters of the offering advises the Company in writing
that it believes that such inclusion would in its or their opinion create a
substantial possibility of adversely affecting the price, timing or
distribution of the Class A Common Stock to be offered by the Company.
POTENTIAL DISTRIBUTION AND OTHER TRANSACTIONS
Upon consummation of the Offerings, ISI will beneficially own all of the
Class B Common Stock. ISI has advised the Company that, although it currently
intends to hold such stock, it may in the future distribute all or part of
such stock (in the form of Class A Common Stock) to ISI's stockholders by
means of a Spin-off or may sell such stock (in the form of Class A Common
Stock) to third parties in one or more transactions. The completion of any
such transaction would be subject to a number of factors, including a
determination by the Board of Directors of ISI that the transaction would be
in the best interests of its stockholders, and, in the case of a Spin-off,
could be subject to the receipt of a favorable ruling from the IRS or an
opinion of counsel as to the tax-free nature of such transaction. Shares of
Class A Common Stock distributed to ISI's stockholders in the Spin-off
generally would be freely transferrable, except for such shares received by
"affiliates" of the Company as that term is defined in Rule 144.
INCENTIVE STOCK PLAN AND DIRECTORS' COMPENSATION PLAN
An aggregate of 2,400,000 shares of Class A Common Stock has been reserved
for issuance under the Incentive Stock Plan and the Directors' Compensation
Plan, including shares of Class A Common Stock to be issued in the form of
restricted stock and shares of Class A Common Stock reserved for issuance upon
exercise of options, in each case to be issued upon consummation of the
Offerings as described below. Effective upon consummation of the Offerings,
the outstanding shares of restricted ISI common stock and options to purchase
shares of ISI common stock held by the Company's employees will be converted
into shares of restricted Class A Common Stock or options to purchase shares
of Class A Common Stock, provided that the Compensation Committee may
determine that any employee may receive restricted shares of Class A Common
Stock and options to purchase shares of Class A Common Stock with respect to
less than all of his or her shares of restricted ISI common stock or options
to purchase ISI common stock. The number of shares of Class A Common Stock
that will be issued as restricted stock or subject to options will also vary
depending
70
<PAGE>
on the relative value of a share of ISI common stock and a share of Class A
Common Stock on the applicable valuation date. Assuming that as of the
applicable valuation date the value of a share of ISI common stock is $21.00
(the last reported sales price on the NYSE on June 5, 1996), that the value of
a share of Class A Common Stock is $17.50 (the mid-point of the offering range
set forth on the cover page of this Prospectus) and that no shares of
restricted ISI common stock or options to purchase ISI common stock held by
Company officers who are also ISI officers will be converted into shares of
restricted Class A Common Stock or options to purchase shares of Class A
Common Stock, 35,940 shares of Class A Common Stock would be issued in the
form of restricted stock and 799,513 shares of Class A Common Stock would be
reserved for issuance upon exercise of options outstanding upon consummation
of the Offerings. See "Management--Directors' Compensation" and "--Ryerson
Tull 1996 Incentive Stock Plan."
Within 90 days after the date of this Prospectus, the Company intends to
register under the Securities Act an aggregate of 2,400,000 shares of Class A
Common Stock issuable in the form of restricted stock or upon exercise of
options or stock appreciation rights to be granted, or performance awards to
be made, under the Incentive Stock Plan and the Directors' Compensation Plan.
Some of the holders of these shares of restricted stock and options are
subject to lock-up restrictions that will expire 180 days after the date of
this Prospectus. Shares of Class A Common Stock held in the form of restricted
stock as to which the restrictions have lapsed and shares of Class A Common
Stock issued upon the exercise of such options or stock appreciation rights,
or the vesting of performance awards, will be eligible for immediate resale in
the public market, subject, as to shares held by affiliates of the Company, to
the volume and other limitations of Rule 144 and subject to restrictions
contained in lock-up agreements.
VALIDITY OF CLASS A COMMON STOCK
The validity of the shares of Class A Common Stock being offered hereby and
certain other legal matters will be passed upon for the Company by Mayer,
Brown & Platt, Chicago, Illinois. Certain legal matters will be passed upon
for the Underwriters by Sullivan & Cromwell, New York, New York. George A.
Ranney, Jr., Vice President and General Counsel of ISI, is a partner in the
law firm of Mayer, Brown & Platt. As of June 1, 1996, Mr. Ranney owned 7,300
shares of ISI's common stock and also held options to purchase 48,000 shares
of ISI's common stock, of which none are currently exercisable.
EXPERTS
The consolidated financial statements as of December 31, 1994 and 1995, and
for each of the three years in the period ended December 31, 1995 included in
this Prospectus and the financial statement schedules in the registration
statement have been so included in reliance on the report of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts
in auditing and accounting.
ADDITIONAL INFORMATION
The Company has filed with the Commission a registration statement on Form
S-1 (the "Registration Statement") under the Securities Act with respect to
the shares of Class A Common Stock offered hereby. For the purposes hereof,
the term "Registration Statement" means the original Registration Statement
and any and all amendments thereto. This Prospectus does not contain all of
the information set forth in the Registration Statement and the exhibits and
schedules thereto. For further information with respect to the Company and
such Class A Common Stock, reference is hereby
71
<PAGE>
made to the Registration Statement, exhibits and schedules, which may be
inspected and copied at the public reference facilities maintained by the
Commission at its principal office at Judiciary Plaza, 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549 and at certain regional offices of the
Commission located at Citicorp Center, 500 West Madison Street, Chicago,
Illinois 60661 and at Seven World Trade Center, New York, New York 10048.
Copies of the Registration Statement can be obtained at prescribed rates from
the Public Reference Section of the Commission at its principal office at
Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549.
72
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
OF RYERSON TULL, INC. AND SUBSIDIARY COMPANIES
(A WHOLLY-OWNED SUBSIDIARY OF INLAND STEEL INDUSTRIES, INC.)
<TABLE>
<CAPTION>
ITEM PAGE
---- ----
<S> <C>
Report of Independent Accountants......................................... F-2
Consolidated Statements of Operations and Reinvested Earnings for the
three years ended December 31, 1995 and (unaudited) for the three months
ended March 31, 1995 and 1996............................................ F-3
Consolidated Statement of Cash Flows for the three years ended December
31, 1995 and (unaudited) for the three months ended March 31, 1995 and
1996..................................................................... F-4
Consolidated Balance Sheet at December 31, 1994 and 1995 and (unaudited)
March 31, 1996........................................................... F-5
Statement of Accounting and Financial Policies............................ F-6
Notes to Consolidated Financial Statements................................ F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholder of Ryerson Tull, Inc.
In our opinion, the consolidated financial statements listed in the index
appearing on page F-1 present fairly, in all material respects, the financial
position of Ryerson Tull, Inc. (formerly Inland Materials Distribution Group,
Inc.) (a wholly-owned subsidiary of Inland Steel Industries, Inc.) and
Subsidiary Companies at December 31, 1995 and 1994, and the results of their
operations and their cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.
Price Waterhouse LLP
Chicago, Illinois
February 19, 1996
F-2
<PAGE>
RYERSON TULL, INC. AND SUBSIDIARY COMPANIES
(A WHOLLY-OWNED SUBSIDIARY OF INLAND STEEL INDUSTRIES, INC.)
CONSOLIDATED STATEMENTS OF OPERATIONS AND REINVESTED EARNINGS
DOLLARS IN MILLIONS
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
-------------------------- -------------
1993 1994 1995 1995 1996
-------- -------- -------- ------ ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS
Net sales............................ $1,893.3 $2,197.5 $2,450.1 $652.3 $625.3
-------- -------- -------- ------ ------
Operating costs and expenses:
Cost of goods sold (excluding
depreciation)..................... 1,663.8 1,927.7 2,118.1 563.5 541.6
Selling, general and administrative
expenses.......................... 144.4 142.1 153.2 39.1 39.5
Depreciation and amortization...... 20.6 21.2 21.8 5.4 5.6
State, local and miscellaneous
taxes............................. 8.1 8.4 8.3 2.2 2.0
-------- -------- -------- ------ ------
Total............................ 1,836.9 2,099.4 2,301.4 610.2 588.7
-------- -------- -------- ------ ------
Operating profit..................... 56.4 98.1 148.7 42.1 36.6
Other expense:
General corporate expense, net of
income items...................... 7.4 6.9 .7 .4 (.7)
Interest and other expense on
debt.............................. 10.9 2.9 2.6 .7 .6
-------- -------- -------- ------ ------
Income before income taxes........... 38.1 88.3 145.4 41.0 36.7
Provision for income taxes (Note 7).. 11.4 35.0 56.9 16.5 14.3
-------- -------- -------- ------ ------
Net income........................... $ 26.7 $ 53.3 $ 88.5 $ 24.5 $ 22.4
======== ======== ======== ====== ======
CONSOLIDATED STATEMENT OF REINVESTED EARNINGS
Balance at beginning of year......... $ 5.4 $ 32.1 $ 85.4 $ 85.4 $173.9
Net income for the year.............. 26.7 53.3 88.5 24.5 22.4
-------- -------- -------- ------ ------
Reinvested earnings at end of year... $ 32.1 $ 85.4 $ 173.9 $109.9 $196.3
======== ======== ======== ====== ======
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE>
RYERSON TULL, INC. AND SUBSIDIARY COMPANIES
(A WHOLLY-OWNED SUBSIDIARY OF INLAND STEEL INDUSTRIES, INC.)
CONSOLIDATED STATEMENT OF CASH FLOWS
DOLLARS IN MILLIONS
<TABLE>
<CAPTION>
INCREASE (DECREASE) IN CASH
--------------------------------------------
THREE MONTHS
ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
---------------------------- --------------
1993 1994 1995 1995 1996
-------- -------- -------- ------ ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income...................... $ 26.7 $ 53.3 $ 88.5 $ 24.5 $ 22.4
-------- -------- -------- ------ ------
Adjustments to reconcile net in-
come to net cash provided from
(used for) operating activi-
ties:
Depreciation and
amortization................. 20.6 21.2 21.8 5.4 5.6
Net gain on sales of assets... (.1) (.5) (.2) -- --
Deferred employee benefit
cost......................... 3.9 3.9 (14.4) (1.1) .9
Deferred income taxes......... (8.3) .7 .5 1.1 1.7
Change in:
Receivables.................. (22.8) (31.1) (16.7) (63.7) (30.8)
Inventories.................. (18.2) 5.7 10.4 (12.0) (34.5)
Other assets................. -- (1.6) (2.3) (.6) (.6)
Accounts payable............. (31.5) 22.6 (7.0) 13.0 21.4
Payables to related
companies................... 1.7 5.8 (.4) 13.8 .9
Accrued liabilities.......... 2.7 (.3) 4.2 (4.7) (7.3)
-------- -------- -------- ------ ------
Net adjustments............. (52.0) 26.4 (4.1) (48.8) (42.7)
-------- -------- -------- ------ ------
Net cash provided from (used
for) operating activities.. (25.3) 79.7 84.4 (24.3) (20.3)
-------- -------- -------- ------ ------
INVESTING ACTIVITIES
Capital expenditures............ (19.3) (20.4) (19.3) (3.0) (3.0)
Proceeds from sales of assets... .9 5.8 1.9 .3 1.2
-------- -------- -------- ------ ------
Net cash used for investing
activities................. (18.4) (14.6) (17.4) (2.7) (1.8)
-------- -------- -------- ------ ------
FINANCING ACTIVITIES
Long-term debt issued........... 7.5 -- -- -- --
Long-term debt retired.......... (5.3) (4.9) (4.7) (.6) (.5)
Capital contribution from Inland
Steel Industries............... 150.0 -- -- -- --
Change in notes to and from re-
lated companies................ (79.0) (87.2) (11.2) 41.9 14.4
-------- -------- -------- ------ ------
Net cash provided from (used
for) financing activities.. 73.2 (92.1) (15.9) 41.3 13.9
-------- -------- -------- ------ ------
Net increase (decrease) in cash
and cash equivalents........... 29.5 (27.0) 51.1 14.3 (8.2)
Cash and cash equivalents--be-
ginning of period............ -- 29.5 2.5 2.5 53.6
-------- -------- -------- ------ ------
Cash and cash equivalents--end
of period.................... $ 29.5 $ 2.5 $ 53.6 $ 16.8 $ 45.4
======== ======== ======== ====== ======
SUPPLEMENTAL DISCLOSURES
Cash paid during the period for:
Interest, net of amount capi-
talized...................... $ 11.3 $ 2.9 $ 3.0 $ .8 $ .6
Income taxes, net............. 22.6 30.5 56.4 9.4 12.5
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE>
RYERSON TULL, INC. AND SUBSIDIARY COMPANIES
(A WHOLLY-OWNED SUBSIDIARY OF INLAND STEEL INDUSTRIES, INC.)
CONSOLIDATED BALANCE SHEET
DOLLARS IN MILLIONS
<TABLE>
<CAPTION>
PRO FORMA
AT DECEMBER 31, AT MARCH 31,
--------------- AT MARCH 31, 1996
1994 1995 1996 (NOTE 10)
------- ------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........... $ 2.5 $ 53.6 $ 45.4 $ 24.8
Receivables less provision for
allowances, claims and doubtful
accounts of $6.3, $6.4 and $6.7
(unaudited) respectively........... 227.1 243.8 274.6 274.6
Inventories (Note 2)................ 273.2 262.8 297.3 297.3
Notes receivable from related
companies.......................... 57.6 68.8 54.4 --
Deferred income taxes (Note 7)...... 13.0 15.6 13.0 13.0
------- ------- -------- -------
Total current assets............. 573.4 644.6 684.7 609.7
------- ------- -------- -------
Property, plant and equipment, at
cost:
Buildings, machinery and equipment.. 433.9 448.2 448.8 448.8
Land and land improvements.......... 27.7 28.0 28.0 28.0
------- ------- -------- -------
461.6 476.2 476.8 476.8
Less accumulated depreciation....... 209.1 226.5 230.6 230.6
------- ------- -------- -------
252.5 249.7 246.2 246.2
------- ------- -------- -------
Prepaid pension costs (Note 6)....... 12.2 27.3 27.8 27.8
Excess of cost over net assets
acquired, net of accumulated
amortization........................ 25.0 23.6 23.3 23.3
Deferred income taxes (Note 7)....... 26.6 23.5 24.4 24.4
Other assets......................... 1.6 3.9 4.5 4.5
------- ------- -------- -------
Total assets..................... $891.3 $972.6 $1,010.9 $ 935.9
======= ======= ======== =======
LIABILITIES
Current liabilities:
Accounts payable.................... $ 99.8 $ 92.8 $ 114.2 $ 114.2
Dividend payable.................... -- -- -- 84.4
Payables to related companies....... 14.8 14.4 15.3 15.3
Accrued liabilities:
Salaries and wages................. 17.6 20.0 13.2 13.2
Taxes other than federal income
taxes............................. 7.4 8.9 8.9 8.9
Other.............................. 3.3 3.6 3.1 3.1
Long-term debt due within one year.. 4.7 4.7 4.7 4.7
------- ------- -------- -------
Total current liabilities........ 147.6 144.4 159.4 243.8
------- ------- -------- -------
Long-term debt (Note 4).............. 23.6 18.9 18.4 18.4
Note payable to related company...... -- -- -- 293.8
Deferred employee benefits and other
liabilities (Note 6)................ 140.1 140.8 142.2 142.2
------- ------- -------- -------
Total liabilities................ 311.3 304.1 320.0 698.2
------- ------- -------- -------
STOCKHOLDER'S EQUITY
Common stock, par value $1.00; 3,000
shares authorized; one share
issued.............................. -- -- -- --
Additional paid-in capital (Note 8).. 494.6 494.6 494.6 237.7
Earnings reinvested in the business.. 85.4 173.9 196.3 --
------- ------- -------- -------
Total stockholder's equity....... 580.0 668.5 690.9 237.7
------- ------- -------- -------
Total liabilities and
stockholder's equity............ $891.3 $972.6 $1,010.9 $ 935.9
======= ======= ======== =======
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE>
RYERSON TULL, INC. AND SUBSIDIARY COMPANIES
(A WHOLLY-OWNED SUBSIDIARY OF INLAND STEEL INDUSTRIES, INC.)
STATEMENT OF ACCOUNTING AND FINANCIAL POLICIES
The following briefly describes the Company's principal accounting and
financial policies.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
Joseph T. Ryerson & Son, Inc., and J. M. Tull Metals Company, Inc., which are
wholly-owned subsidiaries of the Company. The accounts of J. M. Tull Metals
Company, Inc. are consolidated with its wholly-owned subsidiary, AFCO Metals,
Inc.
INVENTORY VALUATION
Inventories are valued at cost which is not in excess of market. Cost is
determined principally by the last-in, first-out (LIFO) method.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is depreciated, for financial reporting
purposes, using the straight-line method over the estimated useful lives of
the assets. Expenditures for normal repair and maintenance are charged against
income in the period incurred.
EXCESS OF COST OVER NET ASSETS ACQUIRED
The excess of cost over fair value of net assets of businesses acquired
(goodwill) is amortized on the straight-line method over a 25-year period.
Accumulated amortization of goodwill totaled $8.8 million at December 31,
1994, $10.2 million at December 31, 1995 and (unaudited) $10.5 million at
March 31, 1996.
BENEFITS FOR RETIRED EMPLOYEES
Effective April 30, 1996, that portion of the Inland Steel Industries
Pension Plan (the "Industries Pension Plan") covering the Company's current
and former employees was separated and became the Ryerson Tull Pension Plan
(the "Ryerson Tull Pension Plan"). Pension benefits are provided by the
Company to substantially all employees under such trusteed noncontributory
plan. Life insurance and certain medical benefits are provided for
substantially all retired employees.
The estimated costs of pension, medical, and life insurance benefits are
determined annually by consulting actuaries. The cost of these benefits for
retirees is accrued during their term of employment (see Note 6). Pensions are
funded in accordance with ERISA requirements in a trust established under the
Industries Pension Plan and Ryerson Tull Pension Plan. Costs for retired
employee medical benefits are funded when claims are submitted.
CASH EQUIVALENTS
Cash equivalents are highly liquid, short-term investments with maturities
of three months or less.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the consolidated financial
statements and related notes to financial statements. Changes in such
estimates may affect amounts reported in future periods.
ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS
In 1995, the Company adopted Financial Accounting Standards Board ("FASB")
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of." Adoption of this Statement had no
material impact on the results of operations or financial position of the
Company.
F-6
<PAGE>
RYERSON TULL, INC. AND SUBSIDIARY COMPANIES
(A WHOLLY-OWNED SUBSIDIARY OF INLAND STEEL INDUSTRIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1/FINANCIAL STATEMENTS
Results of operations for any interim period are not necessarily indicative
of results for any other periods or for the year. The financial statements as
of March 31, 1996 and for the three-month periods ended March 31, 1995 and
1996 are unaudited, but in the opinion of management include all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of results for such periods.
NOTE 2/INVENTORIES
The Company's inventories consist principally of finished steel, nonferrous
metals and industrial plastic products for sale at service center locations.
The difference between LIFO values and approximate replacement costs for the
LIFO inventories was $132.6 million at December 31, 1994 and $146.4 million at
December 31, 1995 and (unaudited) $145.1 million at March 31, 1996.
During 1994 and 1995, various inventory quantities were reduced, resulting
in liquidations of LIFO inventory quantities carried at costs prevailing in
prior years that were different from current year costs. The effect on cost of
goods sold of LIFO liquidations in 1993, 1994 and 1995 was not material.
NOTE 3/BORROWING ARRANGEMENTS
At December 31, 1995 and March 31, 1996, the Company's subsidiaries had
available two unused credit facilities totalling $225 million. Each facility,
as well as the Inland Steel Industries Thrift Plan ESOP notes guarantee (the
"ESOP Guarantee") and certain other debt agreements, requires compliance with
various financial covenants including minimum net worth and leverage ratio
tests. The covenants also limit the amount of cash that the subsidiaries can
transfer to the Company in the form of dividends and other advances to $180
million at year-end 1995 and (unaudited) $200 million at March 31, 1996.
A $200 million unsecured credit agreement between Joseph T. Ryerson & Son,
Inc. and a group of banks provides a revolving credit facility to March 31,
2000.
J. M. Tull Metals Company, Inc. has a $25 million unsecured revolving credit
agreement with other banks, which extends to December 15, 1997 (the "Tull
Credit Facility").
With respect to Joseph T. Ryerson & Son, Inc.'s ability to advance funds or
make dividend payments to the Company, the most restrictive covenants on March
31, 1996 were contained in the ESOP Guarantee. Under these covenants, Joseph
T. Ryerson & Son, Inc.'s ability to dividend or advance funds to the Company
at any time is limited to $30 million (i) plus 80% of net income (decreased by
100% of net losses) earned by Joseph T. Ryerson & Son, Inc. since December 31,
1989, (ii) minus the dollar amount of dividends paid and capital stock
repurchased and the balance of any advances outstanding and (iii) plus capital
contributions to Joseph T. Ryerson & Son, Inc. and the proceeds from the
issuance of any capital stock or certain other investments during such period.
At December 31, 1995, approximately $128 million was available for making
advances and paying dividends to the Company under the ESOP Guarantee. At
March 31, 1996 such limitation was approximately $145 million (unaudited).
With respect to J.M. Tull Metals Company, Inc.'s ability to advance funds or
pay dividends to the Company, the Tull Credit Facility and its senior notes
contained the most restrictive covenants on March 31, 1996. Under the Tull
Credit Facility, J.M. Tull Metals Company, Inc.'s ability to pay dividends is
limited by minimum tangible net worth and net income requirements. The
required minimum tangible net worth increases by 40% of net income each
quarter, but is not reduced in the event of a net loss. Under the terms of the
senior notes, advances outstanding can be no more than 15% of tangible net
worth. At December 31, 1995, approximately $52 million was available for
making advances and paying dividends to the Company under J.M. Tull Metals
Company, Inc.'s debt agreements. At
F-7
<PAGE>
RYERSON TULL, INC. AND SUBSIDIARY COMPANIES
(A WHOLLY-OWNED SUBSIDIARY OF INLAND STEEL INDUSTRIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
March 31, 1996, such limitation was approximately $55 million (unaudited).
Other covenants which could restrict dividends or advances to the Company
include tangible net worth and leverage tests at Joseph T. Ryerson & Son, Inc.
and cumulative earnings, leverage and working capital tests at J.M. Tull
Metals Company, Inc.
NOTE 4/LONG-TERM DEBT
The Company's long-term debt is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------- MARCH 31,
1994 1995 1996
------ ------ -----------
(UNAUDITED)
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Joseph T. Ryerson & Son, Inc.
Industrial Revenue Bond, floating interest rate set
weekly based on 13-week Treasury bills, due
November 1, 2007.................................. $ 7.0 $ 7.0 $ 7.0
Other long-term debt, 10.25%, due through November
30, 1997.......................................... 1.8 1.6 1.6
J. M. Tull Metals Company, Inc.
Senior Notes, 9.43%, due through July 29, 1997..... 10.7 7.1 7.1
Term note ("Tull Term Note"), LIBOR plus 62.5 basis
points per annum, due through August 17, 1998..... 7.1 6.8 6.8
Industrial Revenue Bonds, interest rates ranging
from 6.5% to 65% of the prime rate, due through
January 1, 1997................................... 1.4 .9 .5
Other.............................................. .3 .2 .1
------ ------ -----
28.3 23.6 23.1
Less maturities due within one year................ 4.7 4.7 4.7
------ ------ -----
Long-term debt................................... $23.6 $18.9 $18.4
====== ====== =====
</TABLE>
At year-end 1995, maturities of long-term debt are: $4.7 million in 1996,
$5.6 million in 1997, $6.3 million in 1998, and $7.0 million in 2007.
Under the provisions of certain loan agreements, the Company's subsidiaries
are required to maintain specified amounts of working capital and net worth
and meet leverage tests, as outlined in the agreements, and are restricted as
to loans or dividends that may be paid to the Company.
Property with a net recorded carrying value of approximately $13.5 million
at December 31, 1995 is pledged as collateral on the industrial revenue bonds
and mortgage loans.
NOTE 5/DERIVATIVES AND FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value.
DERIVATIVES
The Company has only limited involvement with derivative financial
instruments and does not use them for speculative or trading purposes. The
Company has entered into an interest rate swap agreement to reduce the effects
of changes in interest rates on the Tull Term Note. At December 31, 1995, the
Company had outstanding an interest rate swap agreement with a bank having a
notional principal amount equal to the outstanding principal of the Tull Term
Note. This agreement effectively changes the Company's interest rate exposure
on the Tull Term Note from LIBOR plus 0.625% (a floating rate) to a fixed rate
of 5.925%. This interest rate swap matures on August 17, 1998. Gains and
losses associated with this hedging transaction will be reported as part of
the interest expense of
F-8
<PAGE>
RYERSON TULL, INC. AND SUBSIDIARY COMPANIES
(A WHOLLY-OWNED SUBSIDIARY OF INLAND STEEL INDUSTRIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
the Tull Term Note. The Company is exposed to potential credit loss in the
event of nonperformance by the bank; however, the Company does not anticipate
such nonperformance. This interest rate swap has not had a material impact on
the results of operations or financial position of the Company.
CASH AND CASH EQUIVALENTS
The carrying amount of cash equivalents approximates fair value because of
the short maturity of those instruments.
LONG-TERM DEBT
The estimated fair value of the Company's long-term debt (including current
portions thereof) using quoted market prices of Company debt securities
recently traded and market-based prices of similar securities for those
securities not recently traded was $27.4 million at December 31, 1994 and
$23.6 million at December 31, 1995, as compared with the carrying value of
$28.3 million and $23.6 million included in the balance sheet at year-end 1994
and 1995, respectively.
NOTE 6/RETIREMENT BENEFITS
In 1995, the measurement date for pensions and benefits other than pensions
was changed from December 31 to September 30 in order to provide for more
timely information and to achieve administrative efficiencies in the
collection of data. The change in the measurement date had no effect on 1995
expense and had an immaterial impact on the 1995 funded status of the pension
plan.
PENSIONS
The Industries Pension Plan covers certain employees, retirees and their
beneficiaries of Industries and its subsidiaries, including the Company. The
Industries Pension Plan is a noncontributory defined benefit plan that
provides benefits based on final pay and years of service for all salaried
employees and certain wage employees, and years of service and a fixed rate
(in most instances based on frozen pay level or on job class) for all other
wage employees, including employees under collective bargaining agreements.
Because the fair value of pension plan assets pertains to all participants in
the Industries Pension Plan, no separate determination of the fair value of
such assets is made solely with respect to the Company.
The actuarial present value of benefits for service rendered to date and the
fair value of plan assets available for benefits for the Industries
consolidated group were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1994 1995
------------ -------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Fair value of plan assets....................... $1,652 $1,919
Actuarial present value of benefits for service
rendered to date:
Accumulated Benefit Obligation based on
compensation to date......................... 1,641 1,956
Additional benefits based on estimated future
compensation levels.......................... 98 90
------ ------
Projected Benefit Obligation.................. 1,739 2,046
------ ------
Plan asset shortfall to Projected Benefit
Obligation..................................... $ (87) $ (127)
====== ======
</TABLE>
At September 30, 1995, Industries Pension Plan assets included 3.9 million
shares of Industries common stock with a fair value of $88 million. From May
1995, when the stock was contributed to the Industries Pension Plan, to
September 30, 1995, the pension fund received $.2 million of dividends on
these shares.
F-9
<PAGE>
RYERSON TULL, INC. AND SUBSIDIARY COMPANIES
(A WHOLLY-OWNED SUBSIDIARY OF INLAND STEEL INDUSTRIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
In 1995, Inland Steel Industries, Inc. ("Industries") recorded an additional
minimum pension liability of $102.6 million representing the excess of the
unfunded Accumulated Benefit Obligation over previously accrued pension costs.
A corresponding intangible asset was recorded as an offset to this additional
liability as prescribed. Neither was required in 1994.
The calculation of benefit obligations was based on a discount (settlement)
rate of 8.8% in 1994 and 7.75% in 1995; a rate of compensation increase of
5.0% in 1994 and 4.0% in 1995; and a rate of return on plan assets of 9.5% in
both 1994 and 1995.
The Company recorded a pension charge of $.1 million in 1993 and $1.8
million in 1994, and a credit of $2.3 million in 1995. In 1995, the Company
paid $13.1 million to Industries for its share of a contribution to the
Industries Plan trust.
The cost of other industry welfare and retirement funds, for bargaining unit
employees, was $2.9 million in 1993, $2.6 million in 1994 and $3.3 million in
1995.
Effective April 30, 1996, the Ryerson Tull portion of the Industries Pension
Plan was separated and became the Ryerson Tull Pension Plan. The Ryerson Tull
Pension Plan assumed the liabilities of the Industries Pension Plan attributed
to active and retired Ryerson Tull employees and a corresponding percentage of
the assets. If the Ryerson Tull Pension Plan had been in existence at the
September 30, 1995 valuation date of the Industries Pension Plan, the Ryerson
Tull's projected benefit obligation would have been $266 million (unaudited)
and Ryerson Tull's share of the Pension Plan assets would have been $249
million (unaudited), resulting in an under-funding of $17 million (unaudited)
for financial reporting purposes. There is no ERISA-required funding for
either the Industries Pension Plan or the Ryerson Tull Pension Plan in 1996,
nor will there be funding as a result of the separation. The separation will
not have a material impact on the financial statements of Ryerson Tull.
Benefits Other Than Pensions
Substantially all of the Company's employees are covered under
postretirement life insurance and medical benefit plans that involve
deductible and co-insurance requirements. The postretirement life insurance
benefit formula used in the determination of postretirement benefit cost is
primarily based on applicable annual earnings at retirement for salaried
employees and specific amounts for hourly employees. The Company does not
prefund any of these postretirement benefits.
The amount of net periodic postretirement benefit cost for 1993, 1994 and
1995 is composed of the following:
<TABLE>
<CAPTION>
1993 1994 1995
------- ------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Service cost..................................... $ 3.2 $ 2.7 $ 2.2
Interest cost.................................... 8.0 7.3 8.4
Net amortization and deferral.................... (1.9) (2.0) (3.4)
------- ------- -------
Total net periodic postretirement benefit
cost.......................................... $ 9.3 $ 8.0 $ 7.2
======= ======= =======
</TABLE>
F-10
<PAGE>
RYERSON TULL, INC. AND SUBSIDIARY COMPANIES
(A WHOLLY-OWNED SUBSIDIARY OF INLAND STEEL INDUSTRIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The following table sets forth components of the accumulated postretirement
benefit obligation:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1994 1995
------------ -------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Accumulated postretirement benefit obligation
attributable to:
Retirees...................................... $ 44.4 $ 59.5
Fully eligible plan participants.............. 15.9 17.6
Other active plan participants................ 24.9 28.2
------ ------
Accumulated postretirement benefit
obligation................................... 85.2 105.3
Unrecognized net gain........................... 33.7 16.7
Unrecognized prior service credit............... 20.3 18.9
------ ------
Accrued postretirement benefit obligation....... $139.2 140.9
======
Expense net of benefits provided, October
through December 1995.......................... .2
------
Accrued postretirement benefit obligation at
December 31, 1995.............................. $141.1
======
</TABLE>
Any net gain or loss in excess of 10% of the accumulated postretirement
benefit obligation is amortized over the remaining service period of active
plan participants.
The assumptions used to determine the plan's accumulated postretirement
obligation are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1994 1995
------------ -------------
<S> <C> <C>
Discount Rate..................................... 8.8% 7.75%
Rate of Compensation increase..................... 5.0% 4.0%
Medical cost trend rate........................... 6%-5% 4.5%
Year ultimate rate reached........................ 1996 1996
</TABLE>
A one percentage point increase in the assumed health care cost trend rates
for each future year increases annual periodic postretirement benefit cost and
the accumulated postretirement benefit obligation as of September 30, 1995 by
$2.7 million and $12.2 million, respectively.
NOTE 7/TAXES ON INCOME
The Company participates in a tax-sharing agreement under which current and
deferred federal income tax provisions are determined for each company in the
Industries group on a stand-alone basis. Any current liability is paid to
Industries. If the Company is unable to use all of its allocated tax
attributes (net operating loss and tax credit carryforwards) in a given year
but other companies in the consolidated group are able to utilize them, then
the Company will be paid by Industries for the use of its attributes. Net
operating loss ("NOL") and tax credit carryforwards are allocated to each
company in accordance with applicable tax regulations as if a company were to
leave the consolidated group. Companies with taxable losses record current
income tax credits not to exceed current income tax charges recorded by
profitable companies. If Industries uses NOL carryforwards, the Company will
use the appropriate portion of that year's carryforward previously allocated
to it, if any.
F-11
<PAGE>
RYERSON TULL, INC. AND SUBSIDIARY COMPANIES
(A WHOLLY-OWNED SUBSIDIARY OF INLAND STEEL INDUSTRIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
A state tax sharing arrangement, similar to the arrangement described above
with respect to federal taxes, also exists with Industries for those states in
which the consolidated group is charged state taxes on a unitary or combined
basis.
The elements of the provision for income taxes for the periods indicated
below are as follows:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
----------------------------- -------------
1993 1994 1995 1995 1996
-------- -------- -------- ------ ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Current income taxes:
Federal...................... $17.3 $30.4 $49.7 $12.7 $10.9
State and local.............. 2.6 3.9 6.7 2.7 1.7
-------- -------- -------- ------ ------
19.9 34.3 56.4 15.4 12.6
Deferred income taxes.......... 8.5Cr. .7 .5 1.1 1.7
-------- -------- -------- ------ ------
Total provision for income tax-
es............................ $11.4 $35.0 $56.9 $16.5 $14.3
======== ======== ======== ====== ======
</TABLE>
- --------
Cr. = Credit
In accordance with FASB Statement No. 109, the Company adjusted its deferred
tax assets and liabilities for the effect of the change in the corporate
federal income tax rate from 34 percent to 35 percent, effective January 1,
1993. A credit to income of $.6 million, which includes the effect of the rate
change on deferred tax asset and liability balances as of January 1, 1993 as
well as the effect on 1993 tax benefits recorded by the Company prior to the
enactment date of August 10, 1993, was recorded in the third quarter of 1993.
The components of the deferred income tax assets and liabilities arising
under FASB Statement No. 109 were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1994 1995
---------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Deferred tax assets (excluding postretirement
benefits other than pensions):
Net operating loss and tax credit
carryforwards.................................. $15.1 $ 16.2
Other deductible temporary differences.......... 29.0 27.9
---------- -----------
44.1 44.1
---------- -----------
Deferred tax liabilities:
Fixed asset basis difference.................... 39.7 37.2
Other taxable temporary differences............. 14.0 17.2
---------- -----------
53.7 54.4
---------- -----------
Net deferred tax liability (excluding
postretirement benefits other than pensions)..... (9.6) (10.3)
FASB Statement No. 106 impact (post retirement
benefits other than pensions).................... 49.2 49.4
---------- -----------
Net deferred tax asset............................ $39.6 $ 39.1
========== ===========
</TABLE>
F-12
<PAGE>
RYERSON TULL, INC. AND SUBSIDIARY COMPANIES
(A WHOLLY-OWNED SUBSIDIARY OF INLAND STEEL INDUSTRIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
For tax purposes, the Company had available, at December 31, 1995,
approximately $43 million of NOL carryforwards available for regular federal
income tax purposes, expiring as follows: $8 million in 2005, $21 million in
2006, $7 million in 2007, $6 million in 2008 and $1 million in 2009.
Additionally, in conjunction with the Alternative Minimum Tax ("AMT") rules,
the Company had available AMT credit carryforwards for tax purposes of
approximately $1.1 million, which may be used indefinitely to reduce regular
federal income taxes.
The Company believes that it is more likely than not that all of the NOL
carryforwards will be utilized prior to their expiration. This belief is based
upon the factors discussed below.
The NOL carryforwards and existing deductible temporary differences
(excluding those relating to FASB Statement No. 106) are offset by existing
taxable temporary differences reversing within the carryforward period.
Furthermore, any such recorded tax benefits which would not be so offset are
expected to be realized by continuing to achieve future profitable operations.
Subsequent to the adoption of FASB Statement No. 109, the Company adopted
FASB Statement No. 106 and recognized the entire transition obligation at
January 1, 1992 as a cumulative effect charge in 1992. At December 31, 1995,
the deferred tax asset related to the Company's FASB Statement No. 106
obligation was $49.4 million. To the extent that future annual charges under
FASB Statement No. 106 continue to exceed deductible amounts, this deferred
tax asset will continue to grow. Thereafter, even if the Company should have a
tax loss in any year in which the deductible amount would exceed the financial
statement expense, the tax law provides for a 15-year carryforward period of
that loss. Because of the extremely long period that is available to realize
these future tax benefits, a valuation allowance for this deferred tax asset
is not necessary.
Total income taxes reflected in the Consolidated Statement of Operations
differ from the amounts computed by applying the federal tax rate as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1993 1994 1995
-------- -------- --------
<S> <C> <C> <C>
Federal income tax provision computed at
statutory tax rate
of 35%...................................... $13.4 $30.9 $50.9
Additional taxes or credits from:
State and local income taxes, net of
federal income tax effect............... 1.7 2.5 4.5
Change in federal statutory rate......... .6Cr. -- --
All other, net........................... 3.1Cr. 1.6 1.5
-------- -------- --------
Total income tax provision............. $11.4 $35.0 $56.9
======== ======== ========
</TABLE>
- --------
Cr. = Credit
F-13
<PAGE>
RYERSON TULL, INC. AND SUBSIDIARY COMPANIES
(A WHOLLY-OWNED SUBSIDIARY OF INLAND STEEL INDUSTRIES, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 8/RELATED PARTY TRANSACTIONS
The Company sells products to and purchases products from related companies
at prevailing market prices. These transactions were as follows:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
-------------------------- -------------
1993 1994 1995 1995 1996
-------- -------- -------- ------ ------
(DOLLARS IN MILLIONS) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net product sales................... $ 10.7 $ 10.7 $ 15.7 $ 3.4 $ 5.2
Net product purchases............... $174.2 $184.1 $176.6 $44.5 $57.7
</TABLE>
Administrative expenses covering management, financial and legal services
provided to the Company were charged to the Company by Industries. Such
charges totaled $7.4 million in 1993 and 1994 and $6.8 million in 1995.
Cash management activities are performed by Industries and cash is
periodically transferred to Industries. Funds transferred to Industries are
supported by interest-bearing notes receivable. Interest, at prevailing prime
market rates, is charged on all intercompany loans within the Industries
consolidated group. There was $7.7 million of net intercompany interest
expense in 1993, no net intercompany interest expense in 1994 and $3.9 million
of net intercompany interest income in 1995.
In December 1993, Industries made a capital contribution of $150 million to
the Company. The capital contribution has been recorded as "additional paid-in
capital."
NOTE 9/COMMITMENTS AND CONTINGENCIES
The Company has noncancellable operating leases for which future minimum
rental commitments are estimated to total $38.3 million, including
approximately $8.6 million in 1996, $8.0 million in 1997, $7.0 million in
1998, $6.1 million in 1999, $4.8 million in 2000 and $3.8 million thereafter.
Rental expense under operating leases totaled $16.8 million in 1993 and
$15.9 million in 1994 and 1995.
Ryerson is the guarantor of $115.2 million at year-end 1995 and $110.8
million at March 31, 1996 (unaudited) of the Inland Steel Industries Thrift
Plan ESOP notes. The notes are payable in installments through July 2004.
There are various claims and pending actions against the Company. The amount
of liability, if any, for these claims and actions at December 31, 1995 is not
determinable but, in the opinion of management, such liability, if any, will
not have a materially adverse effect on the Company's financial position or
results of operations.
NOTE 10/PRO FORMA BALANCE SHEET (UNAUDITED)
On May 20, 1996, the Company paid to Industries a cash dividend in the
amount of $75 million. Industries used a portion of the proceeds from this
dividend to repay the amount owed to the Company under an intercompany note.
Prior to the consummation of the initial public offering of Class A Common
Stock in June 1996, the Company will declare a dividend payable in cash in an
amount equal to the estimated net proceeds of the common stock offering
(estimated to be $84.4 million) (based on an initial public offering price of
$17.50 per share, the mid-point of the estimated offering price range of
common stock) and a dividend consisting of a $293.8 million note payable to
Industries maturing five years from its date of issuance and bearing interest
at a specified prime rate. The pro forma balance sheet as of March 31, 1996
gives effect to the above transactions as if they had occurred on March 31,
1996.
F-14
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Company has agreed to sell to each of the U.S. Underwriters named below, and
each of such U.S. Underwriters, for whom Goldman, Sachs & Co. and CS First
Boston Corporation are acting as representatives, has severally agreed to
purchase from the Company, the respective number of shares of Class A Common
Stock set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
CLASS A
UNDERWRITER COMMON STOCK
----------- ------------
<S> <C>
Goldman, Sachs & Co.............................................
CS First Boston Corporation.....................................
---------
Total......................................................... 4,176,000
=========
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the U.S.
Underwriters are committed to take and pay for all of the shares offered
hereby, if any are taken.
The U.S. Underwriters propose to offer the shares of Class A Common Stock in
part directly to the public at the initial public offering price set forth on
the cover page of this Prospectus and in part to certain securities dealers at
such price less a concession of $ per share. The U.S. Underwriters may
allow, and such dealers may reallow, a concession not in excess of $ per
share to certain brokers and dealers. After the shares of Class A Common Stock
are released for sale to the public, the offering price and other selling
terms may from time to time be varied by the representatives.
The Company and ISI have entered into an underwriting agreement (the
"International Underwriting Agreement") with the underwriters of the
International Offering (the "International Underwriters") providing for the
concurrent offer and sale of 1,044,000 shares of Class A Common Stock in an
international offering outside the United States. The initial offering price
and aggregate underwriting discounts and commissions per share for the two
offerings are identical. The closing of the offering made hereby is a
condition to the closing of the International Offering, and vice versa. The
representatives of the International Underwriters are Goldman Sachs
International and CS First Boston Limited.
Pursuant to an Agreement between the U.S. and International Underwriting
Syndicates (the "Agreement Between") relating to the Offerings, each of the
U.S. Underwriters named herein has agreed that, as a part of the distribution
of the shares offered hereby and subject to certain exceptions, it will offer,
sell or deliver the shares of Class A Common Stock, directly or indirectly,
only in the United States of America (including the States and the District of
Columbia), its territories, its possessions and other areas subject to its
jurisdiction (the "United States") and to U.S. persons, which term shall mean,
for purposes of this paragraph: (a) any individual who is a resident of the
United States or (b) any corporation, partnership or other entity organized in
or under the laws of the United States or any political subdivision thereof
and whose office most directly involved with the purchase is located in the
United States. Each of the International Underwriters has agreed or will agree
pursuant to the
U-1
<PAGE>
Agreement Between that, as a part of the distribution of the shares offered as
part of the International Offering, and subject to certain exceptions, it will
(i) not, directly or indirectly, offer, sell or deliver shares of Class A
Common Stock (a) in the United States or to any U.S. persons or (b) to any
person who it believes intends to reoffer, resell or deliver the shares in the
United States or to any U.S. persons, and (ii) cause any dealer to whom it may
sell such shares at any concession to agree to observe a similar restriction.
Pursuant to the Agreement Between, sales may be made between the U.S.
Underwriters and the International Underwriters of such number of shares of
Class A Common Stock as may be mutually agreed. The price of any shares so
sold shall be the initial public offering price, less an amount not greater
than the selling concession.
The Company has granted the U.S. Underwriters an option exercisable for 30
days after the date of this Prospectus to purchase up to an aggregate of
624,000 additional shares of Class A Common Stock solely to cover over-
allotments, if any. If the U.S. Underwriters exercise their over-allotment
option, the U.S. Underwriters have severally agreed, subject to certain
conditions, to purchase approximately the same percentage thereof that the
number of shares to be purchased by each of them, as shown in the foregoing
table, bears to the 4,176,000 shares of Class A Common Stock offered hereby.
The Company has granted the International Underwriters a similar option to
purchase up to an aggregate of 156,000 additional shares of Class A Common
Stock.
The Company and ISI have agreed that, during the period beginning from the
date of this Prospectus and continuing to and including the date 180 days
after the date of this Prospectus, they will not offer, sell, contract to sell
or otherwise dispose of any shares of Class A Common Stock or Class B Common
Stock, any securities substantially similar to the Class A Common Stock or
Class B Common Stock or any securities convertible or exchangeable for Class A
Common Stock or Class B Common Stock or any such similar security (other than
pursuant to employee benefit plans existing, or on the conversion or exchange
of convertible or exchangeable securities outstanding, on the date of this
Prospectus) without the prior written consent of the representatives, except
for the shares of Class A Common Stock offered in connection with the
Offerings.
The representatives of the Underwriters have informed the Company that they
do not expect sales to accounts over which the Underwriters exercise
discretionary authority to exceed five percent of the total number of shares
of Class A Common Stock offered by them.
Prior to this Offering, there has been no public market for the Class A
Common Stock. The initial public offering price will be negotiated among the
Company and the representatives of the U.S. Underwriters and the International
Underwriters. Among the factors to be considered in determining the initial
public offering price of the Class A Common Stock, in addition to prevailing
market conditions, will be the Company's historical performance, estimates of
the business potential and earnings prospects of the Company, an assessment of
the Company's management and the consideration of the above factors in
relation to market valuation of companies in related businesses.
The Class A Common Stock has been approved for listing on the New York Stock
Exchange under the symbol "RT," subject to official notice of issuance. In
order to meet one of the requirements for listing the Class A Common Stock on
the New York Stock Exchange, the Underwriters have undertaken to sell lots of
100 or more shares to a minimum of 2,000 beneficial holders.
Certain of the U.S. Underwriters have provided from time to time, and expect
to provide in the future, investment banking services to the Company and ISI
and their subsidiaries, for which such U.S. Underwriters have received and
will receive customary fees and commissions. ISI has agreed to pay Goldman,
Sachs & Co. a fee for financial advisory services rendered to ISI.
The Company and ISI have agreed to indemnify the several Underwriters
against certain liabilities, including liabilities under the Securities Act.
U-2
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFOR-
MATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................................................... 3
Risk Factors............................................................. 12
Use of Proceeds.......................................................... 19
Dividend Policy.......................................................... 19
Capitalization........................................................... 20
Dilution................................................................. 21
Selected Financial Data.................................................. 22
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 24
Business................................................................. 32
Management............................................................... 44
Relationship with ISI.................................................... 56
Principal Stockholder.................................................... 59
Ownership of ISI Stock................................................... 59
Proposed Note Offering................................................... 60
Description of Capital Stock............................................. 60
Shares Eligible for Future Sale.......................................... 69
Validity of Class A Common Stock......................................... 71
Experts.................................................................. 71
Additional Information................................................... 71
Index to Consolidated Financial Statements............................... F-1
Underwriting............................................................. U-1
</TABLE>
THROUGH AND INCLUDING , 1996 (THE 25TH DAY AFTER THE DATE OF THIS PRO-
SPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE CLASS A COMMON STOCK,
WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER
A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOT-
MENTS OR SUBSCRIPTIONS.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
5,220,000 SHARES
RYERSON TULL, INC.
CLASS A COMMON STOCK
(PAR VALUE $1.00 PER SHARE)
------------
LOGO
------------
GOLDMAN, SACHS & CO.
CS FIRST BOSTON
REPRESENTATIVES OF THE UNDERWRITERS
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JUNE 11, 1996
5,220,000 SHARES
RYERSON TULL, INC.
LOGO
CLASS A COMMON STOCK
(PAR VALUE $1.00 PER SHARE)
----------
Of the 5,220,000 shares of Class A Common Stock offered, 1,044,000 shares are
being offered hereby in an international offering outside the United States and
4,176,000 shares are being offered in a concurrent United States offering. The
initial public offering price and aggregate underwriting discount per share
will be identical for both Offerings. See "Underwriting."
All of the 1,044,000 shares of Class A Common Stock offered hereby are being
sold by Ryerson Tull, Inc. ("the Company"). Prior to the Offerings, there has
been no public market for the Class A Common Stock of the Company. It is
currently estimated that the initial public offering price per share will be
between $16.00 and $19.00. For factors to be considered in determining the
initial public offering price, see "Underwriting."
The Company is currently a wholly-owned subsidiary of Inland Steel
Industries, Inc. and, upon consummation of the Offerings, Inland Steel
Industries, Inc. will beneficially own 100% of the Company's outstanding Class
B Common Stock, which will represent approximately 86.7% of the economic
interest in the Company (85% if the Underwriters' over-allotment options are
exercised in full). See "Principal Stockholder."
Each share of Class A Common Stock entitles its holder to one vote, whereas
each share of Class B Common Stock entitles its holder to four votes. After
consummation of the Offerings, Inland Steel Industries, Inc. will beneficially
own shares having approximately 96.3% of the combined outstanding voting power
of all classes of voting stock of the Company (95.8% if the Underwriters' over-
allotment options are exercised in full). See "Description of Capital Stock--
Common Stock."
The Company intends to offer publicly $150,000,000 aggregate principal amount
of its Notes due 2001 and $100,000,000 aggregate principal amount of its Notes
due 2006. The consummation of the Offerings is not contingent on the
consummation of the Note Offering. See "Proposed Note Offering."
SEE "RISK FACTORS" BEGINNING ON PAGE 11 FOR CERTAIN CONSIDERATIONS RELEVANT
TO AN INVESTMENT IN THE CLASS A COMMON STOCK.
The Class A Common Stock has been approved for listing on the New York Stock
Exchange under the symbol "RT," subject to official notice of issuance.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
----------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE DISCOUNT(1) COMPANY(2)
-------------- ------------ -----------
<S> <C> <C> <C>
Per Share............................... $ $ $
Total(3)................................ $ $ $
</TABLE>
- -----
(1) The Company and Inland Steel Industries, Inc. have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933.
(2) Before deducting estimated expenses of $900,000 payable by the Company.
(3) The Company has granted the International Underwriters an option for 30
days to purchase up to an additional 156,000 shares at the initial public
offering price per share, less the underwriting discount, solely to cover
over-allotments. Additionally, the Company has granted the U.S.
Underwriters a similar option with respect to an additional 624,000 shares
as part of the concurrent U.S. offering. If such options are exercised in
full, the total initial public offering price, underwriting discount and
proceeds to Company will be $ , $ and $ , respectively. See
"Underwriting."
----------
The shares offered hereby are offered severally by the International
Underwriters, as specified herein, subject to receipt and acceptance by them
and subject to their right to reject any order in whole or in part. It is
expected that certificates for the shares will be ready for delivery in New
York, New York on or about , 1996, against payment therefor in immediately
available funds.
GOLDMAN SACHS INTERNATIONAL CS FIRST BOSTON
----------
The date of this Prospectus is , 1996.
<PAGE>
on the relative value of a share of ISI common stock and a share of Class A
Common Stock on the applicable valuation date. Assuming that as of the
applicable valuation date the value of a share of ISI common stock is $21.00
(the last reported sales price on the NYSE on June 5, 1996), that the value of
a share of Class A Common Stock is $17.50 (the mid-point of the offering range
set forth on the cover page of this Prospectus) and that no shares of
restricted ISI common stock or options to purchase ISI common stock held by
Company officers who are also ISI officers will be converted into shares of
restricted Class A Common Stock or options to purchase shares of Class A
Common Stock, 39,149 shares of Class A Common Stock would be issued in the
form of restricted stock and 870,898 shares of Class A Common Stock would be
reserved for issuance upon exercise of options outstanding upon consummation
of the Offerings. See "Management--Directors' Compensation" and "--Ryerson
Tull 1996 Incentive Stock Plan."
Within 90 days after the date of this Prospectus, the Company intends to
register under the Securities Act an aggregate of 2,400,000 shares of Class A
Common Stock issuable in the form of restricted stock or upon exercise of
options or stock appreciation rights to be granted, or performance awards to
be made, under the Incentive Stock Plan and the Directors' Compensation Plan.
Some of the holders of these shares of restricted stock and options are
subject to lock-up restrictions that will expire 180 days after the date of
this Prospectus. Shares of Class A Common Stock held in the form of restricted
stock as to which the restrictions have lapsed and shares of Class A Common
Stock issued upon the exercise of such options or stock appreciation rights,
or the vesting of performance awards, will be eligible for immediate resale in
the public market, subject, as to shares held by affiliates of the Company, to
the volume and other limitations of Rule 144 and subject to restrictions
contained in lock-up agreements.
CERTAIN U.S. TAX CONSEQUENCES TO NON-U.S. STOCKHOLDERS
The following is a general discussion of certain U.S. federal tax
consequences of the ownership and disposition of a share of Class A Common
Stock by a beneficial owner of such shares that is not a U.S. person (a "non-
U.S. holder"). For purposes of this discussion, a "U.S. person" means a
citizen or resident of the United States, a corporation or partnership created
or organized in the United States or under the law of the United States or of
any State or political subdivision of the foregoing, or any estate or trust
whose income is includable in gross income for U.S. federal income tax
purposes regardless of its source. This discussion does not deal with all
aspects of U.S. federal income and estate taxation that may be relevant to
non-U.S. holders in light of their particular circumstances, and does not
address state, local or non-U.S. tax considerations. Furthermore, the
following discussion is based on provisions of the Code, the regulations
promulgated thereunder and administrative and judicial interpretations as of
the date hereof, all of which are subject to change, possibly with retroactive
effect. Treasury regulations were recently proposed that would, if adopted in
their present form, revise in certain respects the rules applicable to non-
U.S. holders of Class A Common Stock (the "Proposed Regulations"). The
Proposed Regulations are generally proposed to be effective with respect to
payments made after December 31, 1997. It is not certain whether, or in what
form, the Proposed Regulations will be adopted as final regulations. Each
prospective investor is urged to consult its own tax adviser with respect to
the U.S. federal, state and local consequences of owning and disposing of a
share of Class A Common Stock, as well as any tax consequences arising under
the laws of any other taxing jurisdiction.
U.S. INCOME AND ESTATE TAX CONSEQUENCES
It is not currently contemplated that the Company will pay dividends on the
Class A Common Stock in the foreseeable future. If the Company were to pay a
dividend in the future, such a dividend paid to a non-U.S. holder would be
subject to U.S. withholding tax at a 30% rate, or if applicable, a lower
treaty rate, unless the dividend is effectively connected with the conduct of
a trade or business
71
<PAGE>
in the United States by a non-U.S. holder (and, if certain tax treaties apply,
is attributable to a United States permanent establishment maintained by such
non-U.S. holder). A dividend that is effectively connected with the conduct of
a trade or business in the United States by the non-U.S. holder (and, if
certain tax treaties apply, is attributable to a United States permanent
establishment maintained by such non-U.S. Holder) will be exempt from the
withholding tax described above and subject instead (i) to the U.S. federal
income tax on net income that applies to U.S. persons and (ii) with respect to
corporate holders under certain circumstances, a 30% (or, if applicable, lower
treaty rate) branch profits tax that in general is imposed on its "effectively
connected earnings and profits" (within the meaning of the Code) for the
taxable year, as adjusted for certain items.
Under current Treasury Regulations, dividends paid to an address in a
foreign country are presumed to be paid to a resident of that country (unless
the payor has knowledge to the contrary) for purposes of the withholding
discussed above and, under the current interpretation of the Treasury
Regulations, for purposes of determining the applicability of a tax treaty
rate. Under the Proposed Regulations, however, a non-United States holder of
Class A Common Stock who wishes to claim the benefit of an applicable treaty
rate would be required to satisfy applicable certification and other
requirements. In the case of a foreign partnership, the certification
requirement would generally be applied to the partners of the partnership. In
addition, the Proposed Regulations would also require the partnership to
provide certain information, including a United States taxpayer identification
number, and would provide look-through rules for tiered partnerships. A non-
U.S. holder that is eligible for a reduced rate of U.S. withholding tax
pursuant to an income tax treaty may obtain a refund of any excess amounts
withheld by filing an appropriate claim for refund with the IRS.
Under current law, a non-U.S. holder generally will not be subject to U.S.
federal income tax on any gain recognized on a sale or other disposition of a
share of Class A Common Stock unless (i) the Company is or has been during the
five-year period ending on the date of disposition a "United States real
property holding corporation" for U.S. federal income tax purposes (which the
Company does not believe that it has been or is currently and does not
anticipate becoming), (ii) the gain is effectively connected with the conduct
of a trade or business within the United States of the non-U.S. holder and, if
certain tax treaties apply, is attributable to a United States permanent
establishment maintained by the non-U.S. holder, (iii) the gain is not
described in clause (ii) above, the non-U.S. holder is an individual who holds
the share as a capital asset, is present in the United States for 183 days or
more in the taxable year of the disposition and either (a) such individual has
a "tax home" (as defined for U.S. federal income tax purposes) in the United
States or (b) the gain is attributable to an office or other fixed place of
business maintained in the United States by such individual, or (iv) the non-
U.S. holder is subject to tax pursuant to the Code provisions applicable to
certain U.S. expatriates. In the case of a non-U.S. holder that is described
under clause (ii) above, its gain will be subject to the U.S. federal income
tax on net income that applies to U.S. persons and, in addition, if such non-
U.S. holder is a foreign corporation, it may be subject to the branch profits
tax as described in the second preceding paragraph. An individual non-U.S.
holder that is described under clause (iii) above will be subject to a flat
30% tax on the gain derived from the sale, which may be offset by U.S. capital
losses (notwithstanding the fact that he or she is not considered a resident
of the United States). Thus, individual non-U.S. holders who have spent 183
days or more in the United States in the taxable year in which they
contemplate a sale of the Class A Common Stock are urged to consult their tax
advisers as to the tax consequences of such sale.
Class A Common Stock owned or treated as owned by an individual who is not a
citizen or resident (as specially defined for United States federal estate tax
purposes) of the United States at the date of death, or Class A Common Stock
subject to certain lifetime transfers made by such an individual, will be
included in such individual's estate for United States federal estate tax
purposes and may be subject to United States federal estate tax, unless an
applicable estate tax treaty provides otherwise.
72
<PAGE>
BACK-UP WITHHOLDING AND INFORMATION REPORTING
DIVIDENDS
Except as provided below, the Company must report annually to the IRS and to
each non-U.S. holder the amount of dividends paid to and the tax withheld with
respect to such holder. These information reporting requirements apply
regardless of whether withholding was reduced or eliminated by an applicable
tax treaty. Copies of these information returns may also be available under
the provisions of a specific treaty or agreement with the tax authorities in
the country in which the non-U.S. holder resides. In general, backup
withholding at a rate of 31% and additional information reporting will apply
to dividends paid on shares of Class A Common Stock to holders that are not
"exempt recipients" and that fail to provide in the manner required certain
identifying information (such as the holder's name, address and taxpayer
identification number). Generally, individuals are not exempt recipients,
whereas corporations and certain other entities generally are exempt
recipients. However, dividends that are subject to U.S. withholding tax at the
30% statutory rate or at a reduced tax treaty rate are exempt from backup
withholding of U.S. federal income tax and such additional information
reporting.
BROKER SALES
If a non-U.S. holder sells shares of Class A Common Stock through a U.S.
office of a U.S. or foreign broker, the broker is required to file an
information return and is required to withhold 31% of the sale proceeds unless
the non-U.S. holder is an exempt recipient or has provided the broker with the
information and statements, under penalties of perjury, necessary to establish
an exemption from backup withholding. If payment of the proceeds of the sale
of a share by a non-U.S. holder is made to or through the foreign office of a
broker, that broker will not be required to backup withhold or, except as
provided in the next sentence, to file information returns. In the case of
proceeds from a sale of a share by a non-U.S. holder paid to or through the
foreign office of a U.S. broker or a foreign office of a foreign broker that
is (i) a controlled foreign corporation for U.S. tax purposes or (ii) a person
50% or more of whose gross income for the three-year period ending with the
close of the taxable year preceding the year of payment (or for the part of
that period that the broker has been in existence) is effectively connected
with the conduct of a trade or business within the United States (a "Foreign
U.S. Connected Broker"), information reporting is required unless the broker
has documentary evidence in its files that the payee is not a U.S. person and
certain other conditions are met, or the payee otherwise establishes an
exemption. In addition, the Treasury Department has indicated that it is
studying the possible application of backup withholding in the case of such
foreign offices of U.S. and Foreign U.S. Connected Brokers.
REFUNDS
Any amounts withheld under the backup withholding rules from a payment to a
non-U.S. holder may be refunded or credited against the non-U.S. holder's U.S.
federal income tax liability, provided that the required information is
furnished to the IRS.
VALIDITY OF CLASS A COMMON STOCK
The validity of the shares of Class A Common Stock being offered hereby and
certain other legal matters will be passed upon for the Company by Mayer,
Brown & Platt, Chicago, Illinois. Certain legal matters will be passed upon
for the Underwriters by Sullivan & Cromwell, New York, New York. George A.
Ranney, Jr., Vice President and General Counsel of ISI, is a partner in the
law firm of Mayer, Brown & Platt. As of June 1, 1996, Mr. Ranney owned 7,300
shares of ISI's common stock and also held options to purchase 48,000 shares
of ISI's common stock, of which none are currently exercisable.
73
<PAGE>
EXPERTS
The consolidated financial statements as of December 31, 1994 and 1995, and
for each of the three years in the period ended December 31, 1995 included in
this Prospectus and the financial statement schedules in the registration
statement have been so included in reliance on the report of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts
in auditing and accounting.
ADDITIONAL INFORMATION
The Company has filed with the Commission a registration statement on Form
S-1 (the "Registration Statement") under the Securities Act with respect to
the shares of Class A Common Stock offered hereby. For the purposes hereof,
the term "Registration Statement" means the original Registration Statement
and any and all amendments thereto. This Prospectus does not contain all of
the information set forth in the Registration Statement and the exhibits and
schedules thereto. For further information with respect to the Company and
such Class A Common Stock, reference is hereby made to the Registration
Statement, exhibits and schedules, which may be inspected and copied at the
public reference facilities maintained by the Commission at its principal
office at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549 and at certain regional offices of the
Commission located at Citicorp Center, 500 West Madison Street, Chicago,
Illinois 60661 and at Seven World Trade Center, New York, New York 10048.
Copies of the Registration Statement can be obtained at prescribed rates from
the Public Reference Section of the Commission at its principal office at
Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549.
74
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Company has agreed to sell to each of the International Underwriters named
below, and each of such International Underwriters, for whom Goldman Sachs
International and CS First Boston Limited are acting as representatives, has
severally agreed to purchase from the Company, the respective number of shares
of Class A Common Stock set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
CLASS A
UNDERWRITER COMMON STOCK
----------- ------------
<S> <C>
Goldman Sachs International ....................................
CS First Boston Limited.........................................
---------
Total....................................................... 1,044,000
=========
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
International Underwriters are committed to take and pay for all of the shares
offered hereby, if any are taken.
The International Underwriters propose to offer the shares of Class A Common
Stock in part directly to the public at the initial public offering price set
forth on the cover page of this Prospectus and in part to certain securities
dealers at such price less a concession of $ per share. The International
Underwriters may allow, and such dealers may reallow, a concession not in
excess of $ per share to certain brokers and dealers. After the shares of
Class A Common Stock are released for sale to the public, the offering price
and other selling terms may from time to time be varied by the
representatives.
The Company has entered into an underwriting agreement (the "U.S.
Underwriting Agreement") with the underwriters of the U.S. Offering (the "U.S.
Underwriters") providing for the concurrent offer and sale of 4,176,000 shares
of Class A Common Stock in a U.S. offering in the United States. The offering
price and aggregate underwriting discounts and commissions per share for the
two offerings are identical. The closing of the offering made hereby is a
condition to the closing of the U.S. Offering, and vice versa. The
representatives of the U.S. Underwriters are Goldman, Sachs & Co. and CS First
Boston Corporation.
U-1
<PAGE>
Pursuant to an Agreement between the U.S. and International Underwriting
Syndicates (the "Agreement Between") relating to the Offerings, each of the
U.S. Underwriters has agreed that, as a part of the distribution of the shares
offered hereby and subject to certain exceptions, it will offer, sell or
deliver the shares of Class A Common Stock, directly or indirectly, only in
the United States of America (including the States and the District of
Columbia), its territories, its possessions and other areas subject to its
jurisdiction (the "United States") and to U.S. persons, which term shall mean,
for purposes of this paragraph: (a) any individual who is a resident of the
United States or (b) any corporation, partnership or other entity organized in
or under the laws of the United States or any political subdivision thereof
and whose office most directly involved with the purchase is located in the
United States. Each of the International Underwriters named herein has agreed
pursuant to the Agreement Between that, as a part of the distribution of the
shares offered as a part of the International Offering, and subject to certain
exceptions, it will (i) not, directly or indirectly, offer, sell or deliver
shares of Class A Common Stock (a) in the United States or to any U.S. persons
or (b) to any person who it believes intends to reoffer, resell or deliver the
shares in the United States or to any U.S. persons, and (ii) cause any dealer
to whom it may sell such shares at any concession to agree to observe a
similar restriction.
Pursuant to the Agreement Between, sales may be made between the U.S.
Underwriters and the International Underwriters of such number of shares of
Class A Common Stock as may be mutually agreed. The price of any shares so
sold shall be the initial public offering price, less an amount not greater
than the selling concession.
The Company has granted the International Underwriters an option exercisable
for 30 days after the date of this Prospectus to purchase up to an aggregate
of 156,000 additional shares of Class A Common Stock solely to cover over-
allotments, if any. If the International Underwriters exercise their over-
allotment option, the International Underwriters have severally agreed,
subject to certain conditions, to purchase approximately the same percentage
thereof that the number of shares to be purchased by each of them, as shown in
the foregoing table, bears to the 1,044,000 shares of Class A Common Stock
offered. The Company has granted the U.S. Underwriters a similar option to
purchase up to an aggregate of 624,000 additional shares of Class A Common
Stock.
The Company and ISI have agreed that, during the period beginning from the
date of this Prospectus and continuing to and including the date 180 days
after the date of this Prospectus, they will not offer, sell, contract to sell
or otherwise dispose of any shares of Class A Common Stock or Class B Common
Stock, any securities substantially similar to the Class A Common Stock or
Class B Common Stock or any securities convertible or exchangeable for Class A
Common Stock or Class B Common Stock or any such similar security (other than
pursuant to employee benefit plans existing, or on the conversion or exchange
of convertible or exchangeable securities outstanding, on the date of this
Prospectus) without the prior written consent of the representatives, except
for the shares of Class A Common Stock offered in connection with the
Offerings.
Each International Underwriter has also agreed that (a) it has not offered
or sold and prior to the date six months after the date of issue of the shares
of Class A Common Stock will not offer or sell any shares of Class A Common
Stock to persons in the United Kingdom except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995, (b) it has complied, and will comply,
with all applicable provisions of the Financial Services Act 1986 of Great
Britain with respect to anything done by it in relation to the shares of Class
A Common Stock in, from or otherwise involving the United Kingdom and (c) it
has only issued or passed on and will only issue or pass on in the United
Kingdom any
U-2
<PAGE>
document received by it in connection with the issuance of the shares of Class
A Common Stock to a person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order
1995 of Great Britain or is a person to whom the document may otherwise
lawfully be issued or passed on.
Buyers of shares of Class A Common Stock offered hereby may be required to
pay stamp taxes and other charges in accordance with the laws and practice of
the country of purchase in addition to the initial public offering price.
The representatives of the Underwriters have informed the Company that they
do not expect sales to accounts over which the Underwriters exercise
discretionary authority to exceed five percent of the total number of shares
of Class A Common Stock offered by them.
Prior to this Offering, there has been no public market for the Class A
Common Stock. The initial public offering price will be negotiated among the
Company and the representatives of the U.S. Underwriters and the International
Underwriters. Among the factors to be considered in determining the initial
public offering price of the Class A Common Stock, in addition to prevailing
market conditions, will be the Company's historical performance, estimates of
the business potential and earnings prospects of the Company, an assessment of
the Company's management and the consideration of the above factors in
relation to market valuation of companies in related businesses.
The Class A Common Stock has been approved for listing on the New York Stock
Exchange under the symbol "RT," subject to official notice of issuance. In
order to meet one of the requirements for listing the Class A Common Stock on
the New York Stock Exchange, the Underwriters have undertaken to sell lots of
100 or more shares to a minimum of 2,000 beneficial holders.
Certain of the International Underwriters have provided from time to time,
and expect to provide in the future, investment banking services to the
Company and ISI and their subsidiaries, for which such International
Underwriters have received and will receive customary fees and commissions.
ISI has agreed to pay Goldman, Sachs & Co. a fee for financial advisory
services rendered to ISI.
The Company and ISI have agreed to indemnify the several Underwriters
against certain liabilities, including liabilities under the Securities Act.
U-3
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFOR-
MATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................................................... 3
Risk Factors............................................................. 12
Use of Proceeds.......................................................... 19
Dividend Policy.......................................................... 19
Capitalization........................................................... 20
Dilution................................................................. 21
Selected Financial Data.................................................. 22
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 24
Business................................................................. 32
Management............................................................... 44
Relationship with ISI.................................................... 56
Principal Stockholder.................................................... 59
Ownership of ISI Stock................................................... 59
Proposed Note Offering................................................... 60
Description of Capital Stock............................................. 60
Shares Eligible for Future Sale.......................................... 69
Certain U.S. Tax Consequences to Non-U.S. Stockholders................... 71
Validity of Class A Common Stock......................................... 73
Experts.................................................................. 73
Additional Information................................................... 74
Index to Consolidated Financial Statements............................... F-1
Underwriting............................................................. U-1
</TABLE>
THROUGH AND INCLUDING , 1996 (THE 25TH DAY AFTER THE DATE OF THIS PRO-
SPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE CLASS A COMMON STOCK,
WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER
A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOT-
MENTS OR SUBSCRIPTIONS.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
5,220,000 SHARES
RYERSON TULL, INC.
CLASS A COMMON STOCK
(PAR VALUE $1.00 PER SHARE)
-----------
LOGO
-----------
GOLDMAN SACHS INTERNATIONAL
CS FIRST BOSTON
REPRESENTATIVES OF THE UNDERWRITERS
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION(S)
The following are the estimated expenses in connection with the distribution
of the securities being registered:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee................ $ 39,310
NASD Filing Fee.................................................... 11,900
Printing and Engraving Expenses.................................... 300,000
Accounting Fees and Expenses....................................... 75,000
Attorneys' Fees and Expenses....................................... 250,000
Transfer Agent's and Registrar's Fees.............................. 15,000
Blue Sky Fees and Expenses (including attorneys' fees)............. 25,000
NYSE Listing Fees.................................................. 88,100
Miscellaneous...................................................... 95,690
--------
Total............................................................ $900,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
(a) The Delaware GCL (Section 145) (i) gives Delaware corporations broad
power to indemnify their present and former directors, officers, employees and
agents and those of affiliated corporations against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or her in connection with the defense of any
lawsuit or proceeding to which they are made parties by reason of being or
having been such directors, officers, employees or agents if such person acted
in good faith and in a manner he or she reasonably believed to be in and not
opposed to the best interests of the corporation; (ii) gives corporations
power to indemnify any person who was or is a party or is threatened to be
made a party to a lawsuit or proceeding by or in the right of the corporation
by reason of the fact that such person is or was a director, officer, employee
or agent of the corporation or an affiliated corporation against expenses
(including attorneys' fees) actually and reasonably incurred by such person in
the defense or settlement of such action if such person acted in good faith
and in a manner he or she reasonably believed to be in and not opposed to the
best interests of the corporation and except that no indemnification may be
made in respect of any action as to which such person shall have been adjudged
to be liable to the corporation unless only to the extent that a court
determines upon application that such person is fairly and reasonably entitled
to indemnity for such expenses which such court deems proper; (iii) gives a
director, officer, employee or agent who successfully defends an action the
right to be so indemnified for expenses (including attorneys fees) actually
and reasonably incurred by such director, officer, employee or agent; and (iv)
authorizes the Registrant to buy directors' and officers' liability insurance.
Such indemnification is not exclusive of any other rights to which those
indemnified may be entitled under any by-laws, agreement, vote of stockholders
or disinterested directors or otherwise.
(b) Pursuant to Article XI of the Registrant's Certificate of
Incorporation, Article VI of the By-Laws of the Registrant provides for
indemnification of directors, officers, employees and agents to the fullest
extent not prohibited by law.
(c) Reference is made to Section 8 of the U.S. Underwriting Agreement and
the International Underwriting Agreement (the forms of which are included as
Exhibits 1.1 and 1.2 to this Registration Statement) for provisions regarding
the indemnification under certain circumstances of the Registrant, its
directors and certain of its officers by the Underwriters.
(d) In accordance with Section 102(b)(7) of the Delaware GCL, the
Registrant's Certificate of Incorporation provides that directors shall not be
liable for monetary damages for breaches of their fiduciary duty as directors
except to the extent such exemption from liability or limitation thereof is
not permitted under the Delaware GCL as the same exists or may be amended.
II-1
<PAGE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
None.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) EXHIBITS:
A list of the exhibits included as part of this Registration Statement is
set forth in the Exhibit Index which immediately precedes such exhibits and is
incorporated herein by reference.
(b) FINANCIAL STATEMENT SCHEDULES:
SCHEDULE I--CONDENSED FINANCIAL INFORMATION
Statements of Operations for the Years Ended December 31, 1993, 1994
and 1995
Statements of Cash Flows for the Years Ended December 31, 1993, 1994
and 1995
Balance Sheets at December 31, 1994 and 1995
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide to the underwriters
at the closing specified in the Underwriting Agreements certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions referred to in Item 14, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For purposes of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-2
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS AMENDED REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF
CHICAGO, STATE OF ILLINOIS, ON JUNE 11, 1996.
Ryerson Tull, Inc.
By /s/ Robert J. Darnall
---------------------------------
ROBERT J. DARNALL CHAIRMAN AND
DIRECTOR
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
AMENDED REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON JUNE 11, 1996.
NAME TITLE
* Chairman and Director
- -------------------------------------
ROBERT J. DARNALL
* President, Chief Executive Officer and
- ------------------------------------- Director
NEIL S. NOVICH
*
- ------------------------------------- Vice President, Finance, and Chief
JAY M. GRATZ Financial Officer (Principal
Financial Officer)
* Controller (Principal Accounting
- ------------------------------------- Officer)
LILY L. MAY
* Director
- -------------------------------------
JAMES A. HENDERSON
* Director
- -------------------------------------
DONALD S. PERKINS
* Director
- -------------------------------------
JEAN-PIERRE ROSSO
*By /s/ Charles B. Salowitz
----------------------------------
ATTORNEY-IN-FACT
II-3
<PAGE>
RYERSON TULL, INC.
SCHEDULE I--CONDENSED FINANCIAL INFORMATION
(PARENT COMPANY ONLY)
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
1993 1994 1995
----- ----- -----
<S> <C> <C> <C>
Equity in income of subsidiaries.................... $32.1 $53.3 $86.5
Intercompany interest expense....................... 8.3 .1 .1
----- ----- -----
Income before income taxes.......................... 23.8 53.2 86.4
Provision for income taxes.......................... 2.9Cr. .1Cr. 2.1Cr.
----- ----- -----
Net income.......................................... $26.7 $53.3 $88.5
===== ===== =====
</TABLE>
- --------
Cr. = Credit
<PAGE>
RYERSON TULL, INC.
SCHEDULE I--CONDENSED FINANCIAL INFORMATION
(PARENT COMPANY ONLY)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
1993 1994 1995
------ ----- -----
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income.............................................. $ 26.7 $53.3 $88.5
Adjustments to reconcile net income to net cash provided
from (used for) operating activities:
Equity in undistributed earnings of subsidiaries...... (32.1) (53.3) (86.5)
Deferred income taxes................................. (2.0) 2.0 (.1)
------ ----- -----
Net adjustments..................................... (34.1) (51.3) (86.6)
------ ----- -----
Net cash provided from (used for) operating
activities......................................... (7.4) 2.0 1.9
------ ----- -----
FINANCING ACTIVITIES:
Change in notes to and from related companies........... (142.6) (2.0) (1.9)
Capital contribution from Inland Steel Industries,
Inc.................................................... 150.0 -- --
------ ----- -----
Net cash provided from (used for) financing
activities........................................... 7.4 (2.0) (1.9)
------ ----- -----
Net increase in cash and cash equivalents............... -- -- --
Cash and cash equivalents--Beginning of year............ -- -- --
------ ----- -----
Cash and cash equivalents--End of year.................. $ -- $ -- $ --
====== ===== =====
</TABLE>
<PAGE>
RYERSON TULL, INC.
SCHEDULE I--CONDENSED FINANCIAL INFORMATION
(PARENT COMPANY ONLY)
BALANCE SHEETS
AT DECEMBER 31, 1994 AND 1995
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
1994 1995
------ ------
<S> <C> <C>
ASSETS
Current Assets:
Cash.......................................................... $ -- $ --
Notes receivable from related companies....................... -- 1.9
------ ------
Total current assets........................................ -- 1.9
Investment in subsidiary companies.............................. 571.0 657.5
Deferred income taxes........................................... 9.0 9.1
------ ------
Total assets................................................ $580.0 $668.5
====== ======
STOCKHOLDER'S EQUITY
Common Stock, $1.00 par; 3,000 shares authorized; 1 share is-
sued........................................................... $ -- $ --
Additional paid-in capital...................................... 494.6 494.6
Earnings reinvested in business................................. 85.4 173.9
------ ------
Total stockholder's equity.................................. $580.0 $668.5
====== ======
</TABLE>
<PAGE>
RYERSON TULL, INC.
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
PROVISION FOR ALLOWANCES
CLAIMS AND DOUBTFUL ACCOUNTS
-------------------------------------
BALANCE AT ADDITIONS DEDUCTIONS BALANCE OF
BEGINNING CHARGED TO FROM END OF
YEARS ENDED DECEMBER 31, OF YEAR INCOME RESERVES(A) YEAR
- ------------------------ ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
1993.......................... $5.4 $2.0 $1.9 $5.5
1994.......................... $5.5 $1.4 $ .6 $6.3
1995.......................... $6.3 $1.2 $1.1 $6.4
</TABLE>
- --------
(A) Bad debts written off during year.
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
NUMBER EXHIBIT PAGE
------ ------- ------------
<C> <S> <C>
1.1 Form of U.S. Underwriting Agreement..................... *
1.2 Form of International Underwriting Agreement............ *
3.1 Restated Certificate of Incorporation of the
Registrant.............................................
3.2 By-Laws of the Registrant...............................
4.1 Form of Rights Agreement between the Registrant and
Harris Trust and Savings Bank, as Rights Agent, dated
as of , 1996.................................
4.2 Form of Indenture relating to the Notes.................
4.3 Form of Class A Common Stock Certificate................
4.4 Indenture, dated as of December 15, 1992, between Inland
Steel Industries, Inc. and Harris Trust and Savings
Bank (Filed as Exhibit 4-G to Inland Steel Industries,
Inc. Annual Report on Form 10-K for the fiscal year
ended December 31, 1992, and incorporated by reference
herein.)
4.5 Form of Note payable from the Company to Inland Steel
Industries, Inc........................................
Note: No long-term debt instruments issued by the Company
exceed 10% of the consolidated total assets of the
Company and its subsidiaries. In accordance with
paragraph 4(iii) of Item 601 of Regulation S-K, the
Company will furnish to the Commission upon request
copies of long-term debt instruments and related
agreements
5 Opinion of Mayer, Brown & Platt.........................
10.1 Form of Registration Rights Agreement between the
Registrant and Inland Steel Industries, Inc............
10.2 Employment Agreement dated as of April 8, 1994 between
Inland Steel Industries, Inc. and Neil S. Novich (Filed
as Exhibit 10.N.(8) to Inland Steel Industries, Inc.'s
Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 and incorporated by reference
herein.)
10.3 Severance Agreement dated as of April 8, 1994 between
Inland Steel Industries, Inc. and Neil S. Novich (Filed
as Exhibit 10.N.(9) to Inland Steel Industries, Inc.'s
Annual Report on Form 10-K for the fiscal year ended
December 31, 1994, and incorporated herein by reference
herein.)
10.4 Employment Agreement between Inland Steel Industries,
Inc. and Carl G. Lusted, dated June 27, 1990...........
10.5 Form of Change in Control Agreements dated as of March
27, 1996, between Inland Steel Industries, Inc. and the
parties listed on the Schedule thereto.................
10.6 Change in Control Agreement dated as of March 27, 1996
between Inland Steel Industries, Inc. and Neil S.
Novich.................................................
10.7 Form of Change in Control Agreements dated as of June
10, 1996 between the Registrant and the parties listed
on the Schedule thereto................................
10.8 Change in Control Agreement dated as of June 10, 1996
between the Registrant and Neil S. Novich..............
10.9 Ryerson Tull Directors' Compensation Plan...............
10.10 Ryerson Tull, Inc. Supplemental Retirement Plan for
Covered Employees......................................
10.11 Ryerson Tull 1996 Incentive Stock Plan..................
10.12 Form of Corporate Separation Agreement between the
Registrant and Inland Steel Industries, Inc............
10.13 Form of Cross-License Agreement between the Registrant
and Inland Steel Industries, Inc.......................
10.14 Form of Tax Sharing Agreement between the Registrant and
Inland Steel Industries, Inc...........................
10.15 ESOP Guarantee Agreement between Joseph T. Ryerson and
Son, Inc. and the Purchasers named therein, dated
August 15, 1990 .......................................
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
NUMBER EXHIBIT PAGE
------ ------- ------------
<C> <S> <C>
10.16 Copy of Inland Steel Industries, Inc. Non-Qualified
Thrift Plan, as amended. (Filed as Exhibit 10.D to the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995, and incorporated by reference
herein.)
10.17 Inland Steel Industries, Inc. Supplemental Retirement
Plan for Covered Employees, as amended (Filed as
Exhibit 10.I to Inland Steel Industries, Inc.'s Annual
Report on Form 10-K for the fiscal year ended December
31, 1993, and incorporated by reference herein.)
10.18 Inland Steel Industries, Inc. Special Retirement Plan
for Covered Employees (Filed as Exhibit 10.J to Inland
Steel Industries, Inc.'s Annual Report on Form 10-K for
the fiscal year ended December 31, 1993, and
incorporated by reference herein.)
10.19 Inland 1995 Incentive Stock Plan (Filed as Exhibit A to
Inland Steel Industries, Inc.'s definitive Proxy
Statement dated April 17, 1995 and was furnished to
stockholders in connection with the annual meeting held
May 24, 1995, and incorporated by reference herein.)
10.20 Inland Steel Industries, Inc. Annual Incentive Plan
(Filed as Exhibit 10.A to Inland Steel Industries,
Inc.'s Quarterly Report on Form 10-Q for the quarter
ended September 30, 1995, and incorporated by reference
herein.)
10.21 Inland Steel Industries, Inc. Special Achievement Award
Plan (Filed as Exhibit 10.I to Inland Steel Industries,
Inc.'s Annual Report on Form 10-K for the fiscal year
ended December 31, 1987, and incorporated by reference
herein.)
10.22 Inland 1984 Incentive Stock Plan (Filed as Exhibit 10.A
to Inland Steel Industries, Inc.'s Quarterly Report on
Form 10-Q for the quarter ended June 30, 1995, and
incorporated by reference herein.)
10.23 Inland 1988 Incentive Stock Plan (Filed as Exhibit 10.B
to Inland Steel Industries, Inc.'s Quarterly Report on
Form 10-Q for the quarter ended June 30, 1995, and
incorporated by reference herein.)
10.24 Inland 1992 Incentive Stock Plan, as amended (Filed as
Exhibit 10.C to Inland Steel Industries, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995, and incorporated by reference herein.)
10.25 Inland Steel Industries, Inc. Deferred Compensation Plan
for Certain Employees (Filed as Exhibit 10.J to Inland
Steel Industries, Inc.'s Annual Report on Form 10-K for
the fiscal year ended December 31, 1994, and
incorporated by reference herein.)
12 Statement re: Computation of Ratio of Earnings to Fixed
Charges................................................ *
21 Subsidiaries of the Registrant.......................... *
23.1 Consent of Price Waterhouse LLP.........................
23.2 Consent of Mayer, Brown & Platt is contained in their
Opinion filed as Exhibit 5 to this Registration
Statement
24 Powers of Attorney......................................
27 Financial Data Schedule................................. *
</TABLE>
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*Previously filed
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
-------------------------------------
OF
--
RYERSON TULL, INC.
------------------
The undersigned, a corporation organized and existing under and by virtue
of the General Corporation Law of the State of Delaware, as amended (the
"Corporation"), DOES HEREBY CERTIFY as follows:
1. The present name of the Corporation is Ryerson Tull, Inc. The name
under which the Corporation was originally incorporated was Inland Steel
Services Holding, Inc. The Certificate of Incorporation of the Corporation was
originally filed in the Office of the Secretary of State of the State of
Delaware on March 19, 1986.
2. On June 10, 1996, in the manner prescribed by Sections 242 and 245 of
the General Corporation Law of the State of Delaware, as amended, this Restated
Certificate of Incorporation (the "Restated Certificate of Incorporation"),
which amends and restates the Certificate of Incorporation of the Corporation,
was proposed by a resolution unanimously adopted by the Board of Directors and
was adopted by the sole stockholder of the Corporation.
3. The text of the Certificate of Incorporation of the Corporation as
amended and restated herein shall, at the effective time of this Restated
Certificate of Incorporation, read as follows:
ARTICLE I. NAME.
The name of the Corporation (hereinafter the "Corporation") is:
RYERSON TULL, INC.
ARTICLE II. REGISTERED OFFICE AND AGENT.
The address of the registered office of the Corporation in the State of
Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle.
The name of the registered agent of the Corporation at that address is The
Corporation Trust Company.
<PAGE>
ARTICLE III. NATURE OF BUSINESS; PURPOSE.
The nature of the business or purpose to be conducted or promoted by the
Corporation is to engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of the State of Delaware, as
amended (the "General Corporation Law of Delaware").
ARTICLE IV. CAPITAL STOCK.
Section 1. Authorized Capital Stock. The total number of shares of all
classes of stock which the Corporation shall have authority to issue is
150,000,000, of which 100,000,000 shares are Class A Common Stock, $1.00 par
value per share (the "Class A Common Stock"), 34,000,000 shares are Class B
Common Stock, $1.00 par value per share (the "Class B Common Stock"), and
16,000,000 shares are Preferred Stock, $1.00 par value per share (the "Preferred
Stock"). The shares of stock of the Corporation may be issued from time to time
for such consideration as may be fixed from time to time by the Board of
Directors.
Section 2. Common Stock. The holders of shares of Class A Common Stock
and Class B Common Stock shall have the following respective rights:
(a) Voting.
(i) The holders of shares of Class A Common Stock shall be entitled
to one vote per share and the holders of shares of Class B Common Stock shall be
entitled to four votes per share on all matters to be voted upon by stockholders
of the Corporation.
(ii) Except as provided by law or by this Restated Certificate of
Incorporation, neither the holders of shares of Class A Common Stock nor the
holders of shares of Class B Common Stock shall be entitled to vote as a
separate class on any matter to be voted upon by stockholders of the
Corporation.
(iii) Neither the holders of shares of Class A Common Stock nor the
holders of shares of Class B Common Stock shall have cumulative voting rights.
(b) Dividends and Distributions.
(i) The holders of Class A Common Stock and the holders of Class B
Common Stock shall be entitled to dividends if, as and when declared by the
Board of Directors.
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(ii) The amount of any dividend or distribution of cash, stock of the
Corporation or other property of the Corporation to be paid per share of Class A
Common Stock shall equal the amount of such dividend or distribution to be paid
per share of Class B Common Stock, and the amount of any such dividend or
distribution to be paid per share of Class B Common Stock shall equal the amount
of such dividend or distribution to be paid per share of Class A Common Stock,
except as otherwise provided in this Section 2(b) of Article IV. No dividend,
distribution, subdivision, combination or reclassification of the Class A Common
Stock shall occur unless a like dividend, distribution, subdivision, combination
or reclassification is made with respect to the Class B Common Stock, and no
dividend, distribution, subdivision, combination or reclassification of the
Class B Common Stock shall occur unless a like dividend, distribution,
subdivision, combination or reclassification is made with respect to the Class A
Common Stock. The limitation on dividends, distributions, subdivisions,
combinations and reclassification set forth in this Section 2(b) of Article IV
shall apply at any time during which shares of both Class A Common Stock and
Class B Common Stock are outstanding.
(iii) The Corporation may not pay a dividend or make a distribution
of Class A Common Stock or any security exercisable for or convertible into
Class A Common Stock ("Class A Common Stock Equivalents") on or to shares of any
class of the Corporation's capital stock other than Class A Common Stock. If
the Corporation shall pay a dividend or make a distribution of Class A Common
Stock or Class A Common Stock Equivalents, the Corporation shall simultaneously
pay a dividend or make a distribution of Class B Common Stock or securities
exercisable for or convertible into Class B Common Stock ("Class B Common Stock
Equivalents") on or to shares of Class B Common Stock, and the number of shares
of Class B Common Stock issued or covered by Class B Common Stock Equivalents
issued on each share of Class B Common Stock pursuant to such dividend or
distribution shall equal the number of shares of Class A Common Stock issued or
covered by Class A Common Stock Equivalents issued on each share of Class A
Common Stock pursuant to such dividend or distribution.
(iv) The Corporation may not pay a dividend or make a distribution of
Class B Common Stock or Class B Common Stock Equivalents on or to shares of any
class of the Corporation's capital stock other than Class B Common Stock. If
the Corporation shall pay a dividend or make a distribution of Class B Common
Stock or Class B Common Stock Equivalents, the Corporation shall simultaneously
pay a dividend or make a distribution of Class A Common Stock or corresponding
Class A Common Stock Equivalents on or to shares of Class A Common Stock, and
the number of shares of Class A Common Stock issued or
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covered by Class A Common Stock Equivalents issued on each share of Class A
Common Stock pursuant to the dividend or distribution shall equal the number of
shares of Class B Common Stock issued or covered by Class B Common Stock
Equivalents issued on each share of Class B Common Stock pursuant to the
dividend or distribution.
(c) Liquidation. On dissolution and liquidation of the Corporation,
whether voluntary or involuntary, after paying or setting aside for the holders
of all shares of Preferred Stock then outstanding the full preferential amounts
to which they are entitled pursuant to the terms thereof, the holders of shares
of Class A Common Stock and Class B Common Stock shall be entitled to receive,
pro rata, any remaining assets of the Corporation. The Board of Directors may
distribute in kind to the holders of the shares of Class A Common Stock and
Class B Common Stock such remaining assets of the Corporation or may sell,
transfer or otherwise dispose of all or any part of such remaining assets to any
other corporation, trust or entity and receive payment therefor in cash, stock
or obligations of such other corporation, trust or entity or any combination
thereof, and may sell all or any part of the consideration so received, and may
distribute the consideration received or any balance or proceeds thereof to
holders of the shares of Class A Common Stock and Class B Common Stock in
accordance with Section 2(b) of this Article IV. The voluntary sale,
conveyance, lease, exchange or transfer of all or substantially all the property
or assets of the Corporation (unless in connection therewith the dissolution or
liquidation of the Corporation is specifically approved), or the merger or
consolidation of the Corporation into or with any other corporation, or the
merger of any other corporation into the Corporation, or any purchase or
redemption of shares of stock of the Corporation of any class, shall not be
deemed to be a dissolution or liquidation of the Corporation for the purpose of
this Section 2(c) of Article IV.
(d) Conversion.
(i) A holder of shares of Class B Common Stock shall have the right
at any time to convert, at the option of, and without payment to the Corporation
by, the stockholder, any share or shares of Class B Common Stock into an equal
number of shares of Class A Common Stock. The holder shall exercise this right
by the surrender of the certificate representing each share of Class B Common
Stock to be converted to Class A Common Stock to the Corporation at its
principal office or to such agent as the Board of Directors may designate.
Written notice of the holder's election to convert the shares of Class B Common
Stock and, if requested by the Corporation, an instrument of transfer
satisfactory to the Corporation duly executed by the holder or the holder's duly
authorized attorney shall accompany the
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<PAGE>
surrendered certificate. As promptly as practicable after the holder's
surrender of the certificate for conversion as provided above, the Corporation
shall deliver or cause to be delivered to the holder of the shares of Class B
Common Stock represented by the surrendered certificate a certificate or
certificates representing the number of shares of Class A Common Stock issuable
upon such conversion issued in the name of the holder, or such other name or
names as the holder may direct, and, if a surrendered certificate includes
shares of Class B Common Stock not being converted, a certificate or
certificates representing the number of shares of Class B Common Stock not being
converted. Such conversion shall be deemed to have been made immediately prior
to the close of business on the date of the surrender of the certificate or
certificates representing shares of Class B Common Stock unless the transfer
books of the Corporation are closed on such date in which case such conversion
shall be deemed to have been made immediately prior to the close of business on
the first day thereafter on which the transfer books are open. At that time,
all rights of such holder arising from ownership of the converted shares of
Class B Common Stock shall cease, and the person or persons in whose name or
names the certificate or certificates of Class A Common Stock are to be issued
shall be treated for all purposes as having become the record holder or holders
of such shares of Class A Common Stock.
(ii) Each share of Class B Common Stock shall immediately and
automatically convert into one share of Class A Common Stock, without payment to
the Corporation, upon the direct or indirect occurrence of any of the following:
(w) the Corporation shall consolidate with, or merge with and into, any other
corporation, partnership, association, joint venture, joint-stock company,
trust, or unincorporated organization (each a "Person"); (x) any Person shall
consolidate with the Corporation, or merge with and into the Corporation and the
Corporation shall be the continuing or surviving corporation of such merger and,
in connection with such merger, all or part of the Class A Common Stock and
Class B Common Stock shall be changed into or exchanged for stock or other
securities of any other Person (or the Corporation) or cash or any other
property; (y) the Corporation shall sell or otherwise transfer, in one or more
related transactions, assets or earning power aggregating 50 percent or more of
the assets or earning power of the Corporation to any individual or individuals
or any Person or Persons; or (z) the number of shares of Class B Common Stock
outstanding shall represent less than 50 percent of the sum of the number of
outstanding shares of Class B Common Stock and Class A Common Stock.
(iii) Any share of Class B Common Stock shall immediately and
automatically convert into one share of Class A Common Stock upon transfer of
such share by the holder thereof to
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<PAGE>
any individual or Person other than an individual or Person owning 100% of such
holder's capital stock or a wholly-owned direct or indirect subsidiary of such
holder.
(iv) The Corporation shall at all times reserve and keep available,
solely for the purpose of issuance upon conversion of outstanding shares of
Class B Common Stock, such number of authorized but unissued shares of Class A
Common Stock as will be sufficient to permit the conversion of all outstanding
shares of Class B Common Stock.
(v) The holders of shares of Class A Common Stock shall not have any
conversion rights whatsoever with respect to such shares of Class A Common
Stock.
(e) Redemption. Neither the Class A Common Stock nor the Class B
Common Stock shall be subject to redemption by the Corporation.
(f) Restrictions on Issuance of Class B Common Stock. The
Corporation may not issue any shares of Class B Common Stock after the date of
the initial issuance of the shares of Class B Common Stock other than in the
form of a dividend or distribution pursuant to a stock dividend or division or
split-up of the shares of Class B Common Stock, and then only in respect of the
issued shares of Class B Common Stock in accordance with Section 2(b) of this
Article IV or as otherwise provided in this Restated Certificate of
Incorporation, or upon exercise or conversion of a Class B Common Stock
Equivalent.
Section 3. Preferred Stock. The Board of Directors is authorized, subject
to the limitations prescribed by the General Corporation Law of Delaware and by
the provisions of this Article IV, to adopt, from time to time, a resolution or
resolutions providing for the issuance of shares of Preferred Stock in one or
more series, to establish the number of shares in each such series, and to
determine the designations and the powers, preferences and relative,
participating, optional and other special rights and the qualifications,
limitations and restrictions of the shares of each series. The authority of the
Board of Directors with respect to each such series includes determination of
the following, which may vary as between the different series of Preferred
Stock:
(a) The number of shares in the series and the distinguishing
designation of that series;
(b) Whether shares of that series shall have full, special,
conditional, limited or no voting rights, except to the extent otherwise
provided by the General Corporation Law of Delaware;
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(c) Whether shares of that series shall be convertible into or
exchangeable for other securities of the Corporation at the option of the
Corporation or at the option of the holder or holders thereof or upon the
happening of a specified event or events, and the terms and conditions of the
conversion or exchange, including provision for adjustment of the conversion or
exchange rate in circumstances determined by the Board of Directors;
(d) Whether or not shares of that series shall be redeemable at the
option of the Corporation or at the option of the holder or holders thereof or
upon the happening of a specified event or events, and the terms and conditions
of redemption, including the date or dates upon or after which such shares shall
be redeemable and the amount per share payable in case of redemption, which
amount may vary under different conditions or at different redemption dates;
(e) Any requirement as to a sinking fund for the shares of that
series;
(f) The dividend rate (or method of determining such rate), if any, on
shares of that series, any conditions upon which such dividends shall be paid,
the date or dates upon which such dividends shall be payable, the manner of
calculating any dividends, the extent, if any, to which dividends thereon shall
be cumulative, and the relative rights of preference, if any, of payment of any
dividends;
(g) The right or rights of shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation and the rights of priority of that series relative to the Class A
Common Stock, the Class B Common Stock and any other series of Preferred Stock
on the distribution of assets on dissolution; and
(h) Any other relative rights, preferences and limitations of that
series that are permitted by law and not inconsistent with the provisions of
this Article IV or any resolution adopted by the Board of Directors pursuant
hereto.
A. DESIGNATION, PREFERENCES AND RIGHTS OF SERIES A JUNIOR PARTICIPATING
PREFERRED STOCK
Unless otherwise indicated, any reference in this Article IV, Section 3A to
"Section", "Subsection", "paragraph", "subparagraph" or "clause" shall refer to
a Section, Subsection, paragraph, subparagraph or clause of this Article IV,
Section 3A.
Section 1. Designation and Amount. There shall be a series of Preferred
Stock of the Corporation which shall be designated
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<PAGE>
as "Series A Junior Participating Preferred Stock," par value $1.00 per share
(hereinafter called "Series A Preferred Stock"), and the number of shares
constituting such series shall be 1,340,000. Such number of shares may be
increased or decreased by resolution of the Board of Directors and by the filing
of a certificate pursuant to the provisions of the General Corporation Law of
the State of Delaware stating that such increase or reduction has been so
authorized; provided, however, that no decrease shall reduce the number of
shares of Series A Preferred Stock to a number less than that of the shares then
outstanding plus the number of shares of Series A Preferred Stock issuable upon
exercise of outstanding rights, options or warrants or upon conversion of
outstanding securities issued by the Corporation.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of any shares
of any series of Preferred Stock ranking prior and superior to the shares of
Series A Preferred Stock with respect to dividends, the holders of shares of
Series A Preferred Stock shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash to holders of record on the last business
day of March, June, September and December in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an amount per share (rounded
to the nearest cent) equal to the greater of (a) $1.00 or (b) subject to the
provision for adjustment hereinafter set forth, 100 times the aggregate per
share amount of all cash dividends, and 100 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions other than a
dividend payable in shares of Class A Common Stock (hereinafter defined) or a
subdivision of the outstanding shares of Class A Common Stock (by
reclassification or otherwise), declared on the Class A Common Stock, par value
$1.00 per share, of the Corporation (the "Class A Common Stock") since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Preferred Stock. In the event the Corporation
shall at any time following June 13, 1996 (i) declare any dividend on Class A
Common Stock payable in shares of Class A Common Stock, (ii) subdivide the
outstanding Class A Common Stock or (iii) combine the outstanding Class A Common
Stock into a smaller number of shares, then in each such case the amount to
which holders of shares of Series A Preferred Stock were entitled immediately
prior to such event under clause (b) of the preceding sentence shall be adjusted
by multiplying each such amount by a fraction the numerator of which is the
number of
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shares of Class A Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Class A Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the Series
A Preferred Stock as provided in paragraph (A) above at the time it declares a
dividend or distribution on the Class A Common Stock (other than a dividend
payable in shares of Class A Common Stock).
(C) No dividend or distribution (other than a dividend payable in shares of
Class A Common Stock) shall be paid or payable to the holders of shares of Class
A Common Stock unless, prior thereto, all accrued but unpaid dividends to the
date of such dividend or distribution shall have been paid to the holders of
shares of Series A Preferred Stock.
(D) Dividends shall begin to accrue and be cumulative on outstanding shares
of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series A Preferred Stock, unless
the date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue from the date of issue of such shares, or unless the date of
issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series A Preferred Stock entitled
to receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series A Preferred Stock in
an amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 30 days prior to the date fixed
for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each one
one-hundredth of a share of Series A Preferred Stock shall entitle the holder
thereof to one vote on all matters submitted to a vote of the stockholders of
the Corporation. In the event the Corporation shall at any time following June
13, 1996 (i) declare any dividend on Class A Common Stock payable in
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shares of Class A Common Stock, (ii) subdivide the outstanding Class A Common
Stock or (iii) combine the outstanding Class A Common Stock into a smaller
number of shares, then in each such case the number of votes per share to which
holders of shares of Series A Preferred Stock were entitled immediately prior to
such event shall be adjusted by multiplying such number by a fraction the
numerator of which is the number of shares of Class A Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Class A Common Stock that were outstanding immediately prior to such
event.
(B) Except as otherwise provided herein or by law, the holders of shares of
Series A Preferred Stock and the holders of shares of Class A Common Stock and
any other capital stock of the Corporation having general voting rights shall
vote together as one class on all matters submitted to a vote of stockholders of
the Corporation.
(C) (i) Whenever, at any time or times, dividends payable on any share or
shares of Series A Preferred Stock shall be in arrears in an amount equal
to at least six full quarterly dividends (whether or not declared and
whether or not consecutive), the holders of record of the outstanding
Series A Preferred Stock together with the holders of any other Preferred
Stock, on which the dividends payable on any share or shares of such
Preferred Stock shall be in arrears in an amount equal to at least six full
quarterly dividends (whether or not declared and whether or not
consecutive), shall have the exclusive right, voting separately as a single
class, to elect two directors of the Corporation at a special meeting of
stockholders of the Corporation or at the Corporation's next annual meeting
of stockholders, and at each subsequent annual meeting of stockholders, as
provided below. At elections for such directors, the holders of shares of
Series A Preferred Stock shall be entitled to cast one vote for each one
one-hundredth of a share of Series A Preferred Stock held.
(ii) Upon the vesting of such right of the holders of the Preferred
Stock, the maximum authorized number of members of the Board of Directors
shall automatically be increased by two and the two vacancies so created
shall be filled by vote of the holders of the outstanding Preferred Stock
as hereinafter set forth. A special meeting of the stockholders of the
Corporation then entitled to vote shall be called by the Chairman or the
President or the Secretary of the Corporation, if requested in writing by
the holders of record of not less than 10% of the Preferred Stock then
outstanding. At such special meeting, or, if no such special meeting shall
have been called, then at the next annual meeting of stockholders of the
Corporation, the
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holders of the shares of the Preferred Stock shall elect, voting as above
provided, two directors of the Corporation to fill the aforesaid vacancies
created by the automatic increase in the number of members of the Board of
Directors. At any and all such meetings for such election, the holders of
a majority of the outstanding shares of the Preferred Stock shall be
necessary to constitute a quorum for such election, whether present in
person or by proxy, and such two directors shall be elected by the vote of
at least a plurality of shares held by such stockholders present or
represented at the meeting. Any director elected by holders of shares of
the Preferred Stock pursuant to this Section may be removed at any annual
or special meeting, by vote of a majority of the stockholders voting as a
class who elected such director, with or without cause. In case any
vacancy shall occur among the directors elected by the holders of the
Preferred Stock pursuant to this Section, such vacancy may be filled by the
remaining director so elected, or his successor then in office, and the
director so elected to fill such vacancy shall serve until the next meeting
of stockholders for the election of directors. After the holders of the
Preferred Stock shall have exercised their right to elect Directors in any
default period and during the continuance of such period, the number of
Directors shall not be further increased or decreased except by vote of the
holders of Preferred Stock as herein provided or pursuant to the rights of
any equity securities ranking senior to or pari passu with the Series A
Preferred Stock.
(iii) The right of the holders of the Preferred Stock, voting
separately as a class, to elect two members of the Board of Directors of
the Corporation as aforesaid shall continue until, and only until, such
time as all arrears in dividends (whether or not declared) on the Preferred
Stock shall have been paid or declared and set apart for payment, at which
time such right shall terminate, except as herein or by law expressly
provided, subject to revesting in the event of each and every subsequent
default of the character above-mentioned. Upon any termination of the
right of the holders of the shares of the Preferred Stock as a class to
vote for directors as herein provided, the term of office of all directors
then in office elected by the holders of Preferred Stock pursuant to this
Section shall terminate immediately. Whenever the term of office of the
directors elected by the holders of the Preferred Stock pursuant to this
Section shall terminate and the special voting powers vested in the holders
of the Preferred Stock pursuant to this Section shall have expired, the
maximum number of members of the Board of Directors of the Corporation
shall be such number as may be provided for in the By-laws of the
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Corporation, irrespective of any increase made pursuant to the provisions
of this Section.
(D) Except as set forth herein, holders of Series A Preferred Stock shall
have no special voting rights and their consent shall not be required (except to
the extent they are entitled to vote with holders of Class A Common Stock as set
forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
1. Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(a) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock;
(b) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on the Series A Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then
entitled;
(c) redeem or purchase or otherwise acquire for consideration shares
of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such parity stock in exchange for shares of any stock
of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred Stock; or
(d) purchase or otherwise acquire for consideration any shares of
Series A Preferred Stock, except in accordance with a purchase offer made
in writing or by publication (as determined by the Board of Directors) to
all holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative
rights and preferences of the respective
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series and classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
2. The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up.
1. Upon any voluntary liquidation, dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock unless, prior thereto, the holders
of shares of Series A Preferred Stock shall have received $1.00 per share, plus
an amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment (the "Series A Liquidation
Preference"). Following the payment of the full amount of the Series A
Liquidation Preference, no additional distributions shall be made to the holders
of shares of Series A Preferred Stock unless, prior thereto, the holders of
shares of Class A Common Stock shall have received an amount per share (the
"Common Adjustment") equal to the quotient obtained by dividing (i) the Series A
Liquidation Preference by (ii) 100 (as appropriately adjusted as set forth in
subparagraph C below to reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Class A Common Stock) (such number in
clause (ii), the "Adjustment Number"). Following the payment of the full amount
of the Series A Liquidation Preference and the Common Adjustment in respect of
all outstanding shares of Series A Preferred Stock and Class A Common Stock,
respectively, holders of Series A Preferred Stock and holders of shares of Class
A Common Stock shall receive their ratable and proportionate share of the
remaining assets to be distributed in the ratio, on a per share basis, of the
Adjustment Number to 1 with respect to such Preferred Stock and Class A Common
Stock, on a per share basis, respectively.
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2. In the event, however, that there are not sufficient assets available
to permit payment in full of the Series A Liquidation Preference and the
liquidation preferences of all other series of Preferred Stock, if any, which
rank on a parity with the Series A Preferred Stock, then such remaining assets
shall be distributed ratably to the holders of such parity shares in proportion
to their respective liquidation preferences.
3. In the event the Corporation shall at any time following June 13, 1996
(i) declare any dividend on Class A Common Stock payable in shares of Class A
Common Stock, (ii) subdivide the outstanding Class A Common Stock or (iii)
combine the outstanding Class A Common Stock into a smaller number of shares,
then in each such case the Adjustment Number in effect immediately prior to such
event shall be adjusted by multiplying such Adjustment Number by a fraction the
numerator of which is the number of shares of Class A Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Class A Common Stock that were outstanding immediately prior to such
event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Class A Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case the shares
of Series A Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Class A Common Stock is changed or
exchanged. In the event the Corporation shall at any time (i) declare any
dividend on Class A Common Stock payable in shares of Class A Common Stock, (ii)
subdivide the outstanding Class A Common Stock or (iii) combine the outstanding
Class A Common Stock into a smaller number of shares, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Preferred Stock shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of shares of
Class A Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Class A Common Stock that were
outstanding immediately prior to such event.
Section 8. Redemption. The shares of a Series A Preferred Stock shall not
be redeemable by the Corporation. The preceding sentence shall not limit the
ability of the Corporation to purchase or otherwise deal in such shares of stock
to the extent permitted by law.
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Section 9. Ranking. The Series A Preferred Stock shall rank junior to all
other series of the Corporation's preferred stock (whether with or without par
value) as to the payment of dividends and the distribution of assets, unless the
terms of any such series shall provide otherwise.
Section 10. Amendment. The Certificate of Incorporation of the Corporation
shall not be amended in any manner which would materially alter or change the
powers, preferences or special rights of the Series A Preferred Stock so as to
affect them adversely without the affirmative vote of the holders of a majority
or more of the outstanding shares of Series A Preferred Stock, voting separately
as a class.
Section 11. Fractional Shares. Series A Preferred Stock may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
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Section 4. Preemptive Rights. No holder of shares of Class A Common
Stock, Class B Common Stock or Preferred Stock of the Corporation shall, by
reason of such holding, have any preemptive right to purchase or to subscribe to
purchase any additional shares of stock of the Corporation or securities
convertible into or carrying a right to subscribe for or acquire capital stock
of the Corporation.
ARTICLE V. DIRECTORS.
Section 1. Number of Directors; Quorum. The number of Directors of the
Corporation shall be fixed from time to time by the vote of a majority of the
entire Board of Directors, but such number shall in no case be less than three.
Any such determination made by the Board of Directors shall continue in effect
unless and until changed by the Board of Directors, but no such change shall
affect the term of any Director then in office. A majority of the entire Board
of Directors shall constitute a quorum for the transaction of business.
Section 2. Classification of Directors. The Directors shall be divided
into three classes, designated Class I, Class II and Class III. Each class
shall consist, as nearly as may be possible, of one-third of the total number of
Directors constituting the entire Board of Directors. At each annual meeting of
stockholders, successors to the class of Directors whose term expires at that
annual meeting shall be elected for a three-year term. If the authorized number
of Directors is changed, any increase or decrease shall be apportioned among the
classes so as to maintain the number of Directors in each class
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as nearly equal as possible. Any Director of any class elected to fill a
vacancy resulting from an increase in such class or otherwise shall hold office
for a term that shall coincide with the remaining term of the class into which
such Director is elected, but in no case will a decrease in the number of
Directors shorten the term of any incumbent Director.
Section 3. Term of Office; Vacancy; Election; Removal from Office. A
Director shall hold office until the annual meeting for the year in which his or
her term expires and until his or her successor shall be elected and shall
qualify, subject, however, to prior death, resignation or removal from office.
Any vacancy on the Board of Directors or newly created directorship resulting
from an increase in the number of Directors shall be filled only by a majority
of the Directors then in office (even if less than a quorum). Elections of
Directors need not be by written ballot unless the By-laws of the Corporation
shall so provide. Any Director may be removed only for cause by the affirmative
vote of the holders of not less than 80% of the voting power represented by all
the shares of stock of the Corporation outstanding and entitled to vote for the
election of Directors, given at a duly called annual or special meeting of
stockholders.
ARTICLE VI. INDEPENDENT DIRECTORS.
Section 1. Independent Directors. Except as provided in the last sentence
of this Section 1 of Article VI, beginning 60 days after the date of first
issuance of any shares of Class A Common Stock, at all times thereafter when any
shares of Class A Common Stock are outstanding, at least one-third of the
Directors of the Corporation shall be comprised of individuals who are not, and
who have not within the previous twelve months been: (x) officers or employees
of the Corporation; (y) officers, directors or employees of Inland Steel
Industries, Inc. or any other subsidiaries or affiliates of Inland Steel
Industries, Inc.; or (z) owners of more than five percent of the outstanding
common stock of Inland Steel Industries, Inc. or of any of the other
subsidiaries or affiliates of Inland Steel Industries, Inc. Each Director
meeting the requirements of the foregoing sentence is referred to herein as an
"Independent Director." At all times when the Corporation's Board of Directors
is divided into two or more classes of Directors, the Independent Directors
shall be allocated among the classes of Directors so that the each class shall
include, as nearly as may be possible, an equal number of Independent Directors.
In the event that a vacancy occurs in a position held by an Independent
Director, the Corporation shall have six months to fill such vacancy with
another Independent Director or otherwise comply with the requirements of this
Section 1 of Article VI.
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Section 2. Vote for Bankruptcy Proceedings. When any shares of Class A
Common Stock are outstanding, the Corporation shall not, without the affirmative
vote of a majority of the Board of Directors, including the affirmative vote of
at least two-thirds of the Independent Directors: (t) make an assignment for
the benefit of creditors; (u) file a petition in bankruptcy; (v) petition or
apply to any tribunal for the appointment of a custodian, receiver or any
trustee for it or for a substantial part of its property; (w) commence any
proceeding under any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute or other similar
law of any jurisdiction, whether now or hereafter in effect or any other
proceeding to be adjudicated a bankrupt or insolvent; (x) consent to, or
acquiesce in, the filing of any such petition, application, proceeding or
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of the Corporation
or any substantial part of its property; (y) admit in writing its inability to
pay its debts generally as they become due, unless, in the reasonable opinion of
its counsel, it is required to do so by applicable law; or (z) authorize any of
the foregoing to be done or taken on behalf of the Corporation; provided
however, that if there shall not be an Independent Director or Independent
Directors then in office and acting, a vote upon any matter set forth in this
Section 2 of Article VI shall not be taken unless and until the requisite number
of Independent Directors shall have been elected.
Section 3. Vote for Merger or Consolidation. When any shares of Class A
Common Stock are outstanding, the Corporation shall not, without the affirmative
vote of a majority of the Board of Directors, including the affirmative vote of
at least two-thirds of the Independent Directors, merge with and into, or
consolidate with, any other Person, unless the surviving entity is not
affiliated with Inland Steel Industries, Inc. or has charter provisions
comparable to this Article VI and Article XII, to the extent that the provisions
of Article XII apply to this Article VI; provided however, that if there shall
not be an Independent Director or Independent Directors then in office and
acting, a vote upon any matter set forth in this Section 3 of Article VI shall
not be taken unless and until the requisite number of Independent Directors
shall have been elected.
Section 4. Review of Certain Transactions. When any shares of Class A
Common Stock are outstanding, at the first regular meeting of the Board of
Directors following the end of a calendar quarter, the Independent Directors
shall review any transaction entered into by and between the Corporation (or any
subsidiary) and Inland Steel Industries, Inc. (or any of its affiliates, other
than the Corporation or a subsidiary of the Corporation) during the immediately
preceding calendar quarter where the
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amount involved exceeds $25 million, other than transactions arising out of
written agreements entered into prior to the issuance of any shares of Class A
Common Stock, to determine whether such transactions were on a basis at least as
favorable as that which could have been obtained from an unaffiliated third
party. The Independent Directors shall report the findings of any such review
to the Board of Directors at the next meeting of the Board of Directors which
shall take such action as it deems appropriate.
Section 5. Termination of this Article. The provisions of this Article VI
shall terminate automatically when the number of shares of Class B Common Stock
outstanding shall represent less than 50 percent of the sum of the number of
outstanding shares of Class B Common Stock and Class A Common Stock.
ARTICLE VII STOCKHOLDER ACTION AND MEETINGS.
Section 1. Stockholder Action. Any action required or permitted to be
taken by the stockholders of the Corporation, whether voting as a single class
or otherwise, must be taken at a duly called annual or special meeting of such
holders and may not be taken by a consent in writing by any such holders, except
that the Board of Directors at any time may by resolution provide that the
holders of Preferred Stock, or any series thereof, may take any action required
or permitted to be taken by such holders by consent in writing without a
meeting.
Section 2. Meetings of Stockholders; Books and Records. Meetings of
stockholders may be held within or without the State of Delaware, as the By-laws
of the Corporation may provide. The books of the Corporation may be kept
(subject to any provision contained in the General Corporation Law of Delaware)
outside the State of Delaware at such place or places as may be designated from
time to time by the Board of Directors or in the By-laws of the Corporation.
Section 3. Special Stockholder Meetings. Except as otherwise required by
law, special meetings of the stockholders of the Corporation may be called only
by: (w) the Board of Directors pursuant to a resolution approved by the
affirmative vote of a majority of the Directors then in office; (x) the Chairman
of the Board; (y) the Vice Chairman of the Board if one is elected; or (z) the
President. Only those matters set forth in the notice of the special meeting
may be considered or acted upon at such special meeting, except as otherwise
provided by law.
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ARTICLE VIII. BY-LAWS.
Both the Board of Directors and the stockholders shall have the power to
adopt, amend or repeal the By-laws of the Corporation. Any repeal or amendment
of the By-laws by the stockholders shall require the affirmative vote of the
holders of not less than 80% of the voting power represented by all the shares
of stock of the Corporation outstanding and entitled to be cast on the matter.
ARTICLE IX. SALE OF ASSETS.
The Board of Directors is authorized to sell, assign, transfer, convey and
otherwise dispose of a part of the property, assets and effects of the
Corporation, less than the whole or substantially the whole thereof, on such
terms and conditions as the Board of Directors shall deem advisable, without the
assent of the stockholders; and also to sell, assign, transfer, convey and
otherwise dispose of the whole, or substantially the whole, of the property,
assets, effects, franchises and goodwill of the Corporation on such terms and
conditions as the Board of Directors shall deem advisable but only with the
assent of the holders of not less than two-thirds of the voting power
represented by all the shares of stock of the Corporation outstanding and
entitled to be cast on the matter, but in any event not less than the amount
required by law.
ARTICLE X. DIRECTOR LIABILITY.
No Director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for any breach of fiduciary
duty as a Director, except (i) for any breach of a Director's duty of loyalty to
the Corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the General Corporation Law of Delaware, or (iv) for
any transaction from which a Director derived an improper personal benefit. If
the General Corporation Law of Delaware is amended to authorize corporate action
further eliminating or limiting the personal liability of Directors, then by
virtue of this Article X the liability of a Director of the Corporation shall be
eliminated or limited to the fullest extent permitted by the General Corporation
Law of Delaware, as so amended. No amendment to or repeal of the General
Corporation Law of Delaware or this Article X that further limits the acts or
omissions for which elimination of liability is permitted shall affect the
liability of a Director for any act or omission which occurs prior to the
effective date of such amendment or repeal.
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ARTICLE XI. INDEMNIFICATION.
The Corporation may indemnify, in accordance with and to the full extent
now or hereafter permitted by law, any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(including, without limitation, an action by or in the right of the
Corporation), by reason of such person acting as a director, officer, employee
or agent of, or acting in any other capacity for, on behalf of, or at the
request of, the Corporation, against any liability or expense actually and
reasonably incurred by such person in respect thereof.
ARTICLE XII. AMENDMENT.
The Corporation reserves the right to repeal, alter, change, amend or
restate this Restated Certificate of Incorporation in the manner prescribed
herein or now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation. No repeal,
alteration, change or amendment of this Restated Certificate of Incorporation
(other than in connection with the issuance of Preferred Stock in accordance
with Article IV of this Restated Certificate of Incorporation) shall be made
unless the same is first approved by the Board of Directors of the Corporation
pursuant to a resolution adopted by the Directors then in office in accordance
with the By-laws and applicable law and thereafter approved by the stockholders
in accordance with the By-laws, this Restated Certificate of Incorporation and
applicable law; provided that, the provisions set forth in Article V, Sections
2, 3 and 4 of Article VI, Article VII, Article VIII and this Article
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XII may not be repealed, altered, changed or amended in any respect, nor may any
provision be adopted which is inconsistent with such Sections or Articles,
unless such action is approved by the affirmative vote of the holders of not
less than 80% of the voting power represented by all the shares of stock of the
Corporation outstanding and entitled to be cast on the matter.
ARTICLE XIII. RESTATEMENT.
The Restated Certificate of Incorporation of the Corporation, as so amended
and restated herein, shall constitute a restatement of, and shall supersede, the
Certificate of Incorporation of the Corporation as previously filed with the
Secretary of State of the State of Delaware.
ARTICLE XIV. EXISTENCE.
The Corporation is to have perpetual existence.
IN WITNESS WHEREOF, the Corporation has caused this Restated Certificate of
Incorporation to be signed as of the 10th day of June, 1996, by its Chairman and
attested by its Secretary.
/s/ Robert J. Darnall
(Corporate Seal) ------------------------------
Robert J. Darnall
Chairman
ATTEST:
/s/ Charles B. Salowitz
- ------------------------------
Charles B. Salowitz
Secretary
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BY-LAWS
OF
RYERSON TULL, INC.
(AS AMENDED TO AND INCLUDING JUNE 10, 1996)
ARTICLE I
OFFICES
Section 1. The registered office of the Corporation shall be in the City
of Wilmington, County of New Castle, State of Delaware. The Corporation may
also have offices at such other places both within and without the State of
Delaware as the Board of Directors may from time to time determine or the
business of the Corporation may require.
ARTICLE II
STOCKHOLDERS
Section 1. Time and Place of Meetings. All meetings of the stockholders
for the election of Directors or for any other purpose shall be held at such
time and place, within or without the State of Delaware, as shall be designated
by the Board of Directors.
Section 2. Annual Meetings; Nomination of Directors. An annual meeting of
stockholders shall be held for the purpose of electing Directors and for the
transaction of only such other business as is properly brought before the
meeting in accordance with these By-laws. The date of the annual meeting shall
be such date as may be determined by the Board of Directors.
To be properly brought before the meeting, business must be either (a)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board, (b) otherwise properly brought before the meeting by
or at the direction of the Board or (c) otherwise properly brought before the
meeting by a stockholder. In addition to any other applicable requirements, for
business to be properly brought before an annual meeting by a stockholder, the
stockholder must have given timely notice thereof in writing to the Corporate
Secretary of the Corporation. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Corporation not less than ninety days prior to the meeting; provided, however,
that if less than one hundred five days' notice or prior public disclosure of
the date of a meeting is given or made to stockholders, such stockholder's
notice shall also be deemed to be timely as to such meeting if so delivered or
received not less than ninety days prior to the day and month during that year
which is the same as the day and month of the prior year's annual meeting.
<PAGE>
A stockholder's notice to the Corporate Secretary shall set forth as to each
matter the stockholder proposes to bring before the annual meeting (i) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (ii) the name
and record address of the stockholder proposing such business, (iii) the class
and number of shares of the Corporation which are beneficially owned by the
stockholder and (iv) any material interest of the stockholder in such business.
Notwithstanding anything in the By-laws to the contrary, no business shall
be conducted at the annual meeting except in accordance with the procedures set
forth in this Article II, Section 2, provided, however, that nothing in this
Article II, Section 2 shall be deemed to preclude discussion by any stockholder
of any business properly brought before the annual meeting.
The Chairman of an annual meeting shall, if the facts warrant, in his or
her sole discretion, determine and declare to the meeting that business was not
properly brought before the meeting in accordance with the provisions of this
Article II, Section 2, and if he or she should so determine, he or she shall so
declare to the meeting and any such business not properly brought before the
meeting shall not be transacted.
Only persons who are nominated in accordance with the following procedures
shall be eligible for election as Directors. Nominations of persons for
election to the Board of the Corporation at the annual meeting may be made at a
meeting of stockholders by or at the direction of the Board of Directors by any
nominating committee or person appointed by the Board or by any stockholder of
the Corporation entitled to vote for the election of Directors at the meeting
who complies with the notice procedures set forth in this Article II, Section 2.
Such nominations, other than those made by or at the direction of the Board,
shall be made pursuant to timely notice in writing to the Corporate Secretary of
the Corporation. To be timely, a stockholder's notice shall be delivered to or
mailed and received at the principal executive offices of the Corporation not
less than ninety days prior to the meeting; provided, however, that in the event
that less than one hundred five days' notice or prior public disclosure of the
date of the meeting is given or made to stockholders, notice by the stockholder
to be timely must be so received not later than the close of business on the
fifteenth day following the day on which such notice of the date of the meeting
was mailed or such public disclosure was made, whichever first occurs. Such
stockholder's notice to the Corporate Secretary shall set forth: (a) as to each
person whom the stockholder proposes to nominate for election or re-election as
a Director, (i) the name, age, business address and residence address of the
person, (ii) the principal occupation or employment of the person, (iii) the
class and number of shares of
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capital stock of the Corporation which are beneficially owned by the person,
(iv) such person's signed consent to serve as a Director of the Corporation if
elected and (v) any other information relating to the person that is required to
be disclosed in solicitations for proxies for election of Directors pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended; and (b) as
to the stockholder giving the notice, (i) the name and record address of such
stockholder and (ii) the class and number of shares of capital stock of the
Corporation which are beneficially owned by such stockholder. The Corporation
may require any proposed nominee to furnish such other information as may
reasonably be required by the Corporation to determine the eligibility of such
proposed nominee to serve as Director of the Corporation. No person shall be
eligible for election as a Director of the Corporation unless nominated in
accordance with the procedures set forth herein.
The Chairman of the meeting shall, if the facts warrant, in his or her sole
discretion, determine and declare to the meeting that a nomination was not made
in accordance with the foregoing procedure, and if he or she should so
determine, he or she shall so declare to the meeting and the defective
nomination shall be disregarded.
Section 3. Special Meetings. Except as otherwise required by law, special
meetings of the stockholders of the Corporation may be called only by (i) the
Board of Directors pursuant to a resolution approved by the affirmative vote of
a majority of the Directors then in office, (ii) the Chairman of the Board,
(iii) the Vice Chairman of the Board if one is elected or (iv) the President.
Only those matters set forth in the notice of the special meeting may be
considered or acted upon at such special meeting, except as otherwise provided
by law.
Section 4. Notice of Meetings. Written notice of each meeting of the
stockholders stating the place, date and time of the meeting shall, unless
otherwise required by law, be given not less than ten nor more than sixty days
before the date of the meeting to each stockholder entitled to vote at such
meeting. The notice of any special meeting of stockholders shall state the
purpose or purposes for which the meeting is called. If mailed, such notice
shall be deemed to be delivered to a stockholder when deposited in the United
States mail in a sealed envelope addressed to the stockholder at his or her
address as it appears on the records of the Corporation with postage thereon
paid.
Section 5. Quorum. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum for the transaction of business at any meeting
of the stockholders, except as otherwise provided by law, by the Corporation's
Restated
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Certificate of Incorporation, as the same now exists or may hereafter be amended
(the "Certificate of Incorporation"), or by these By-laws. If a quorum is not
present or represented, the holders of the stock present in person or
represented by proxy at the meeting and entitled to vote thereat shall have
power, by the affirmative vote of the holders of a majority of such stock, to
adjourn the meeting to another time and/or place, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
such adjourned meeting, at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the original
meeting. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 6. Voting. At all meetings of the stockholders, each holder of
record on the record date for the meeting shall be entitled to vote as set forth
in the Certificate of Incorporation (including any Certificates of Designations)
or as otherwise required by law, in person or by proxy, the shares of voting
stock owned of record by such stockholder on the record date. When a quorum is
present or represented at any meeting, the vote of the holders of a majority of
the stock voted on such matter in person or by proxy shall decide any question
brought before such meeting, unless the question is one upon which, by express
provision of law or of the Certificate of Incorporation, a different vote is
required, in which case such express provision shall govern and control the
decision of such question, and except that Directors shall be elected by a
plurality of the votes of the stock present in person or represented by proxy
and entitled to vote on the election of Directors. If the Certificate of
Incorporation provides for more or less than one vote for any share of stock, on
any matter, every reference in the Certificate of Incorporation or these By-laws
to a majority or other proportion of stock shall refer to such majority or other
proportion of the votes of such stock.
ARTICLE III
DIRECTORS
Section 1. General Powers. The business and affairs of the Corporation
shall be managed and controlled by or under the direction of a Board of
Directors, which may exercise all such powers of the Corporation and do all such
lawful acts and things as are not by law or by the Certificate of Incorporation
or by these By-laws directed or required to be exercised or done by the
stockholders.
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Section 2. Number of Directors. The number of Directors of the
Corporation shall be fixed from time to time by the vote of a majority of the
entire Board of Directors, but such number shall in no case be less than three.
Any such determination made by the Board of Directors shall continue in effect
unless and until changed by the Board of Directors, but no such change shall
affect the term of any Director then in office.
Section 3. Classification of Directors. The Directors shall be divided
into three classes, designated Class I, Class II and Class III. Each class
shall consist, as nearly as may be possible, of one-third of the total number of
Directors constituting the entire Board of Directors. At each annual meeting of
stockholders, successors to the class of Directors whose term expires at that
annual meeting shall be elected for a three-year term. If the authorized number
of Directors is changed, any increase or decrease shall be apportioned among the
classes so as to maintain the number of Directors in each class as nearly equal
as possible. Any Director of any class elected to fill a vacancy resulting from
an increase in such class or otherwise shall hold office for a term that shall
coincide with the remaining term of the class into which such Director is
elected, but in no case will a decrease in the number of Directors shorten the
term of any incumbent Director.
Section 4. Qualification; Term of Office; Election; Removal from Office.
Directors need not be residents of Delaware or stockholders of the Corporation.
A Director shall hold office until the annual meeting for the year in which his
or her term expires and until his or her successor shall be elected and shall
qualify, subject, however, to earlier death, resignation or removal from office.
Elections of Directors need not be by written ballot. Any Director may be
removed only for cause by the affirmative vote of the holders of not less than
80% of the voting power represented by all the shares of stock of the
Corporation outstanding and entitled to vote for the election of Directors,
given at a duly called annual or special meeting of stockholders.
Section 5. Vacancies. All vacancies and newly created directorships
resulting from any increase in the number of Directors shall be filled only by a
majority of the Directors then in office (even if less than a quorum), and each
Director so chosen shall hold office until his or her successor is elected and
qualified or until his or her earlier resignation or removal. If there are no
Directors in office, then an election of Directors may be held in the manner
provided by law. Any Director elected to fill a vacancy resulting from an
increase in the number of Directors or otherwise shall hold office for a term
that shall coincide with the remaining term of the class into which such
Director is elected.
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Section 6. Place of Meetings. The Board of Directors may hold meetings,
whether regular or special, within or without the State of Delaware.
Section 7. Regular Meetings. The Board of Directors shall hold a regular
meeting, to be known as the annual meeting, immediately following each annual
meeting of the stockholders. Other regular meetings of the Board of Directors
shall be held at such time and place as shall from time to time be determined by
the Board. No notice of regular meetings need be given.
Section 8. Special Meetings. Special meetings of the Board may be called
by the Chairman of the Board, the Vice Chairman of the Board, a majority of the
Directors or the President and Chief Executive Officer. Special meetings shall
be called by the Corporate Secretary on the written request of a majority of the
Board of Directors. Notice of special meetings shall be given at least one day
before any such meeting. Such notice may be given by telephone, by facsimile or
other electronic means, by messenger or by mail and, if given by messenger or
mail shall be deemed delivered when presented to the messenger or deposited in
the United States mail in a sealed envelope addressed to the Director with
postage thereon paid.
Section 9. Quorum. At all meetings of the Board of Directors a majority
of the total number of Directors shall constitute a quorum for the transaction
of business and the act of a majority of the Directors present at any meeting at
which there is a quorum shall be the act of the Board of Directors, except as
may be otherwise specifically provided by law, the Certificate of Incorporation
or these By-laws. If a quorum shall not be present at any meeting of the Board
of Directors, the Directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
Section 10. Organization. Except as provided in Article III, Section 5
of these By-laws, the Directors shall designate from among their number a
Chairman of the Board, who shall preside at all meetings of the stockholders and
of the Board of Directors of the Corporation and who, if he or she is an
employee of the Corporation, shall exercise all of the powers and duties
conferred on the Chairman of the Board by the provisions of these By-laws. If a
Chairman of the Board is not elected or, if elected, is not present, the Vice
Chairman of the Board, if any, or if the Vice Chairman of the Board is not
present, the President and Chief Executive Officer or, in the absence of the
President and Chief Executive Officer, a Director chosen by a majority of the
Directors present, shall act as chairman at meetings of the Board of Directors.
If the person selected by the Directors as the Chairman of the Board is not, or
ceases to be, an employee of the
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Corporation, then, notwithstanding any other provision of these By-laws to the
contrary, he or she shall exercise only such powers and duties conferred on the
Chairman of the Board by these By-laws as the Directors shall determine by
resolution duly adopted and any other powers and duties, including those of
chief executive officer of the Corporation, shall be exercised by the President
and Chief Executive Officer of the Corporation.
Immediately upon the Chairman of the Board's death, physical or mental
incapacity, or other inability to act (other than due to absence for a brief and
identifiable period), the Chairman of the committee responsible for recommending
candidates to fill vacancies on the Board of Directors of the Corporation (the
"Nominating Committee Chairman") shall assume the position of Chairman of the
Board and responsibility for performing all functions, authorities and duties
thereof, and shall serve in such capacity until his or her successor is duly
elected and qualified pursuant to Article III, Section 4 and any other
applicable provision of these By-laws or until his or her earlier death,
resignation or removal. The Nominating Committee Chairman shall have sole
discretion to determine, at any time and from time to time, whether the Chairman
of the Board is physically or mentally incapacitated, otherwise unable to act,
or absent for other than a brief and identifiable period and shall, immediately
upon making such a determination or learning of the death of the Chairman of the
Board, notify each member of the Board of Directors and each officer of the
Corporation of the relevant facts and circumstances.
Section 11. Committees. The Board of Directors, by resolution adopted by
a majority of the whole Board, may designate one or more committees, each such
committee to consist of one or more Directors. Except as expressly limited by
the General Corporation Law of the State of Delaware or the Certificate of
Incorporation, any such committee shall have and may exercise such powers as the
Board of Directors may determine and specify in the resolution designating such
committee. The Board of Directors, by resolution adopted by a majority of the
whole Board, also may designate one or more additional Directors as alternate
members of any such committee to replace any absent or disqualified member at
any meeting of the committee, and at any time may change the membership of any
committee or amend or rescind the resolution designating the committee. In the
absence or disqualification of a member or alternate member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not such member or members constitute a quorum, may
unanimously appoint another Director to act at the meeting in the place of any
such absent or disqualified member, provided that the Director so appointed
meets any qualifications stated in the resolution designating the committee.
Each committee shall keep a record of proceedings and report the same to the
Board of Directors to such extent and in such form as the Board of Directors may
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require. Unless otherwise provided in the resolution designating a committee, a
majority of all of the members of any such committee may select its Chairman,
fix its rules or procedures, fix the time and place of its meetings and specify
what notice of meetings, if any, shall be given.
Section 12. Action without Meeting. Unless otherwise restricted by the
Certificate of Incorporation or these By-laws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all members of the Board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the Board or committee.
Section 13. Attendance by Telephone. Members of the Board of Directors,
or of any committee, may participate in a meeting of the Board of Directors, or
of such committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.
Section 14. Compensation. The Board of Directors shall have the authority
to fix the compensation of Directors, which may include reimbursement of their
expenses, if any, of attendance of each meeting of the Board of Directors or of
a committee.
ARTICLE IV
OFFICERS
Section 1. Enumeration. The officers of the Corporation shall be chosen
by the Board of Directors and shall be a President and Chief Executive Officer,
a Corporate Secretary, a Treasurer and a Controller. The Board of Directors may
also elect a Chairman of the Board, a Vice Chairman, one or more Assistants to
the Chairman, one or more Vice Presidents, a General Counsel, one or more
Assistant Corporate Secretaries and Assistant Treasurers and such other officers
and agents as it shall deem appropriate. Any number of offices may be held by
the same person.
Section 2. Term of Office. The officers of the Corporation shall be
elected at the annual meeting of the Board of Directors and shall hold office
until their successors are elected and qualified, or until their earlier death,
resignation or removal from office. Any officer elected or appointed by the
Board of Directors may be removed at any time by the Board of Directors. Any
vacancy occurring in any office of the Corporation required by this Article IV
shall be filled by the Board of Directors, and any vacancy in any other office
may be filled by the Board of Directors.
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Section 3. Chairman of the Board. Subject to the provisions of Article
III, Section 10 of these By-laws, the Chairman of the Board, when elected, shall
preside at all meetings of the stockholders and of the Board of Directors and
shall have such other functions, authority and duties as may be prescribed by
the Board of Directors.
Section 4. Vice Chairman of the Board. The Vice Chairman of the Board
shall, in the case of absence of the Chairman of the Board for any brief and
identifiable period, have and exercise the powers and duties of the Chairman of
the Board. He or she shall have such other duties and powers as may be assigned
to him by the Board of Directors or the Chairman of the Board.
Section 5. President and Chief Executive Officer. The President and Chief
Executive Officer shall be the chief executive officer of the Corporation and,
as such, shall have general supervision, direction and control of the business
and affairs of the Corporation, subject to the control of the Board of
Directors, and such other duties as customarily appertain to the office of the
chief executive of a business corporation or as may be prescribed by the Board
of Directors or the Chairman of the Board.
Section 6. Executive and Senior Vice Presidents. Each Executive Vice
President shall have such duties and powers as may be assigned to him or her by
the Board of Directors, the Chairman of the Board, the Vice Chairman of the
Board or the President and Chief Executive Officer. An Executive Vice
President, designated by the Board of Directors, shall (in the event of absence,
death or other inability to act of the President and Chief Executive Officer)
have and exercise the powers and duties of the President and Chief Executive
Officer.
Each Senior Vice President shall have such duties and powers as may be
assigned to him or her by the Board of Directors, the Chairman of the Board, the
Vice Chairman of the Board or the President and Chief Executive Officer.
Section 7. Vice Presidents. Each Vice President shall perform such duties
and have such other powers as may from time to time be prescribed by the Board
of Directors, the Chairman of the Board, the Vice Chairman of the Board or the
President and Chief Executive Officer.
Section 8. Corporate Secretary. The Corporate Secretary shall keep a
record of all proceedings of the stockholders of the Corporation and of the
Board of Directors, and shall perform like duties for any committee when
required. The Corporate Secretary shall give, or cause to be given, notice, if
any, of all meetings of the stockholders and shall perform such other duties as
may be prescribed by the Board of Directors, the Chairman of the Board,
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the Vice Chairman of the Board or the President and Chief Executive Officer.
The Corporate Secretary shall have custody of the corporate seal of the
Corporation and the Corporate Secretary, or in the absence of the Corporate
Secretary any Assistant Corporate Secretary, shall have authority to affix the
same to any instrument requiring it, and when so affixed it may be attested by
the signature of the Corporate Secretary or an Assistant Corporate Secretary.
The Board of Directors may give general authority to any other officer to affix
the seal of the Corporation and to attest such affixing of the seal.
Section 9. Assistant Corporate Secretary. The Assistant Corporate
Secretary, or if there be more than one, the Assistant Secretaries in the order
determined by the Board of Directors (or if there be no such determination, then
in the order of their election), shall, in the absence of the Corporate
Secretary or in the event of the Corporate Secretary's inability or failure to
act, perform the duties and exercise the powers of the Corporate Secretary and
shall perform such other duties as may from time to time be prescribed by the
Board of Directors, the Chairman of the Board, the Vice Chairman of the Board,
the President and Chief Executive Officer or the Corporate Secretary.
Section 10. Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, keeping proper records of such disbursements,
and shall render to the Chairman of the Board, Vice Chairman of the Board, the
Chairman of any committee, the President and Chief Executive Officer, the
officer designated by the Board of Directors as Chief Financial Officer, if any,
and the Board of Directors and any committee at their regular meetings or when
the Board of Directors so requires, an account of all transactions as Treasurer
and of the financial condition of the Corporation. The Treasurer shall perform
such other duties as may from time to time be prescribed by the Board of
Directors, the Chairman of the Board, the Vice Chairman of the Board, the
President and Chief Executive Officer or the Chief Financial Officer.
Section 11. Assistant Treasurer. The Assistant Treasurer, or if there
shall be more than one, the Assistant Treasurers in the order determined by the
Board of Directors (or if there be no such determination, then in the order of
their election), shall, in the absence of the Treasurer or in the event of the
Treasurer's inability, failure or refusal to act, perform the duties and
exercise the powers of the Treasurer and shall perform such other duties and
have such other powers as may from time to time be
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prescribed by the Board of Directors, the Chairman of the Board, the Vice
Chairman of the Board, the President and Chief Executive Officer or the
Treasurer.
Section 12. Assistant to the Chairman. The Assistant to the Chairman of
the Board shall have and exercise such powers and duties as may be assigned to
him or her by the Chairman of the Board.
Section 13. General Counsel. The General Counsel, if there be one, shall
be responsible for the legal affairs of the Corporation and shall have such
other duties as from time to time may be assigned to him or her by the Chairman
of the Board, the Vice Chairman of the Board, the President and Chief Executive
Officer or the Board of Directors.
Section 14. Controller. The Controller shall be the chief accounting
officer of the Corporation. He or she shall, when proper, approve all bills for
purchases, payrolls, and similar instruments providing for disbursement of money
by the Corporation, for payment by the Treasurer. He or she shall be in charge
of and maintain books of account and accounting records of the Corporation. He
or she shall perform such other acts as are usually performed by a Controller of
a corporation. He or she shall render to the Chairman of the Board, the Vice
Chairman of the Board, the Chairman of any committee, the President and Chief
Executive Officer, the Chief Financial Officer, the Board of Directors and any
committee, such reports as any thereof may require.
Section 15. Other Officers. Any officer who is elected or appointed from
time to time by the Board of Directors and whose duties are not specified in
these By-laws shall perform such duties and have such powers as may be
prescribed from time to time by the Board of Directors, the Chairman of the
Board, the Vice Chairman of the Board or the President and Chief Executive
Officer.
Section 16. Surety Bonds. The Board of Directors may by resolution,
require any officers of the Corporation to give bonds for the faithful discharge
of their duties in such sums and with such sureties as the Board of Directors
shall determine, the expense of which shall be paid by the Corporation.
ARTICLE V
CERTIFICATES OF STOCK
Section 1. Form. The shares of the Corporation shall be represented by
certificates; provided, however, that the Board of Directors may provide by
resolution or resolutions that some or all of any or all classes or series of
the Corporation's stock shall be
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uncertificated shares. Certificates of stock in the Corporation, if any, shall
be signed by or in the name of the Corporation by the Chairman of the Board, the
President and Chief Executive Officer or a Vice President and by the Treasurer,
an Assistant Treasurer, the Corporate Secretary or an Assistant Corporate
Secretary of the Corporation. The signatures of the Chairman of the Board, the
President and Chief Executive Officer or a Vice President and the Treasurer, an
Assistant Treasurer, the Corporate Secretary or an Assistant Corporate Secretary
may be facsimiles. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, the certificate may be issued by the Corporation with the
same effect as if such officer, transfer agent or registrar were such officer,
transfer agent or registrar at the date of its issue.
Section 2. Transfer. Upon surrender to the Corporation or the transfer
agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction on its books.
Section 3. Replacement. In case of the loss, destruction or theft of a
certificate for any stock of the Corporation, a new certificate of stock or
uncertificated shares in place of any certificate therefor issued by the
Corporation may be issued upon satisfactory proof of such loss, destruction or
theft and upon such terms as the Board of Directors may prescribe. The Board of
Directors may in its discretion require the owner of the lost, destroyed or
stolen certificate, or his or her legal representative, to give the Corporation
a bond, in such sum and in such form and with such surety or sureties as it may
direct, to indemnify the Corporation against any claim that may be made against
it with respect to a certificate alleged to have been lost, destroyed or stolen.
ARTICLE VI
INDEMNIFICATION
Section 1. Each person who was or is made a party or is threatened to be
made a party to or is involved in or called as a witness in any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, and any appeal therefrom (hereinafter,
collectively a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is, was or had agreed to become a
Director, officer, employee or agent of the
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Corporation or is or was serving at the request of the Corporation as a
Director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, shall be indemnified and held harmless by the
Corporation to the fullest extent permitted under the General Corporation Law of
the State of Delaware (the "DGCL"), as the same now exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights than
the DGCL permitted the Corporation to provide prior to such amendment), against
all expenses (including attorneys' fees), liabilities and losses, judgments,
fines, excise taxes or penalties pursuant to the Employee Retirement Income
Security Act of 1974, as amended, and amounts paid or to be paid in settlement,
reasonably incurred or suffered by such person in connection therewith; provided
that, except as explicitly provided herein, prior to a Change in Control, as
defined herein, a person seeking indemnity in connection with a proceeding (or
part thereof) initiated by such person against the Corporation or any Director,
officer, employee or agent of the Corporation shall not be entitled thereto
unless the Corporation has joined in or consented to such proceeding (or part
thereof). For purposes of this Article, a "Change in Control of the
Corporation" shall be deemed to have occurred if, after June 10, 1996, (i) any
"Person" (as is used in Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934, as amended) becomes (except in a transaction approved in advance by the
Board of Directors of the Corporation) the beneficial owner (as defined in Rule
13d-3 under such Act), directly or indirectly, of securities of the Corporation
representing 20% or more of the combined voting power of the Corporation's then
outstanding securities or (ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors of the Corporation cease for any reason to constitute at least a
majority thereof unless the election of each Director who was not a Director at
the beginning of the period was approved by a vote of at least two-thirds of the
Directors then still in office who were Directors at the beginning of the
period.
Any indemnification under this Section 1 (unless ordered by a court) shall
be paid by the Corporation unless within 60 days of such request for
indemnification a determination is made (i) by the Board of Directors by a
majority vote of a quorum consisting of Directors who were not parties to such
proceeding, (ii) if such quorum is not obtainable, or even if obtainable a
quorum of disinterested Directors so directs, by independent legal counsel (who
may be the regular counsel of the Corporation) in a written opinion or (iii) by
the stockholders, that indemnification of such person is not proper under the
circumstances because such person has not met the necessary standard of conduct
under Delaware law; provided, however, that following a Change in Control of the
Corporation, with respect to all matters thereafter arising out of
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acts, omissions or events prior to the Change in Control of the Corporation
concerning the rights of any person seeking indemnification under this Section
1, such determination shall be made by special independent counsel selected by
such person and approved by the Corporation (which approval shall not be
unreasonably withheld), which counsel has not otherwise performedservices (other
than in connection with similar matters) within the five years preceding its
engagement to render such opinion for such person or for the Corporation or any
affiliates (as such term is defined in Rule 405 under the Securities Act of
1933, as amended) of the Corporation (whether or not they were affiliates when
services were so performed) ("Independent Counsel"). Unless such person has
theretofore selected Independent Counsel pursuant to this Section 1 and such
Independent Counsel has been approved by the Corporation, legal counsel approved
by a resolution or resolutions of the Board of Directors prior to a Change in
Control of the Corporation shall be deemed to have been approved by the
Corporation as required. Such Independent Counsel shall determine as promptly
as practicable whether and to what extent such person would be permitted to be
indemnified under applicable law and shall render its written opinion to the
Corporation and such person to such effect. The Corporation agrees to pay the
reasonable fees of the Independent Counsel referred to above and to fully
indemnify such Independent Counsel against any and all expenses, claims,
liabilities and damages arising out of or relating to this Article or its
engagement pursuant hereto.
Section 2. Expenses. Expenses, including attorneys' fees, incurred by a
person referred to in Section 1 of this Article in defending or otherwise being
involved in a proceeding shall be paid by the Corporation in advance of the
final disposition of such proceeding, including any appeal therefrom, upon
receipt of an undertaking (the "Undertaking") by or on behalf of such person to
repay such amount if it shall ultimately be determined that he or she is not
entitled to be indemnified by the Corporation.
Section 3. Right of Claimant to Bring Suit. If a claim under Section 1
hereof is not paid in full by the Corporation within 60 days after a written
claim has been received by the Corporation or if expenses pursuant to Section 2
hereof have not been advanced within 10 days after a written request for such
advancement accompanied by the Undertaking has been received by the Corporation,
the claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim or the advancement of expenses. (If the
claimant is successful, in whole or in part, in such suit or any other suit to
enforce a right for expenses or indemnification against the Corporation or any
other party under any other agreement, such claimant shall also be entitled to
be paid the reasonable expense of prosecuting such claim.) It shall be a
defense to any such action (other than an action brought to enforce a claim for
expenses incurred in
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defending any proceeding in advance of its final disposition where the required
Undertaking has been tendered to the Corporation) that the claimant has not met
the standards of conduct which make it permissible under the DGCL for the
Corporation to indemnify the claimant for the amount claimed. After a Change in
Control, the burden of proving such defense shall be on the Corporation, and any
determination by the Corporation (including its Board of Directors, independent
legal counsel or its stockholders) that the claimant had not met the applicable
standard of conduct required under the DGCL shall not be a defense to the action
nor create a presumption that claimant had not met such applicable standard of
conduct.
Section 4. Non-Exclusivity of Rights. The rights conferred on any person
by this Article shall not be exclusive of any other right which such person may
have or hereafter acquire under any statute, provision of the Certificate of
Incorporation, By-laws, agreement, vote of stockholders or disinterested
Directors or otherwise. The Board of Directors shall have the authority, by
resolution, to provide for such other indemnification of Directors, officers,
employees or agents as it shall deem appropriate.
Section 5. Insurance. The Corporation may purchase and maintain insurance
to protect itself and any Director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any expenses, liabilities or losses, whether or not the
Corporation would have the power to indemnify such person against such expenses,
liabilities or losses under the DGCL.
Section 6. Enforceability. The provisions of this Article shall be
applicable to all proceedings commenced after its adoption, whether such arise
out of events, acts, omissions or circumstances which occurred or existed prior
or subsequent to such adoption, and shall continue as to a person who has ceased
to be a Director, officer or employee and shall inure to the benefit of the
heirs, executors and administrators of such person. This Article shall be
deemed to grant each person who, at any time that this Article is in effect,
serves or agrees to serve in any capacity which entitles him or her to
indemnification hereunder rights against the Corporation to enforce the
provisions of this Article, and any repeal or other modification of this Article
or any repeal or modification of the DGCL or any other applicable law shall not
limit any rights of indemnification then existing or arising out of events,
acts, omissions, or circumstances occurring or existing prior to such repeal or
modification, including, without limitation, the right to indemnification for
proceedings commenced after such repeal or modification to enforce this Article
with regard to acts, omissions, events or circumstances occurring or existing
prior to such repeal or modification.
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Section 7. Severability. If this Article or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each Director, officer and employee of
the Corporation as to costs, charges and expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement with respect to any proceeding,
whether civil, criminal, administrative or investigative, including an action by
or in the right of the Corporation, to the full extent permitted by any
applicable portion of this Article that shall not have been invalidated and to
the full extent permitted by applicable law.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Fiscal Year. The fiscal year of the Corporation shall be the
calendar year.
Section 2. Corporate Seal. The corporate seal shall be in such form as
may be approved from time to time by the Board of Directors. The seal may be
used by causing it or a facsimile thereof to be impressed or affixed or in any
other manner reproduced.
Section 3. Waiver of Notice. Whenever any notice is required to be given
under law or the provisions of the Certificate of Incorporation or these By-
laws, a waiver thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be deemed
equivalent to notice.
ARTICLE VIII
AMENDMENTS
Both the Board of Directors and the stockholders shall have the power to
alter, amend or repeal these By-laws. Any repeal or change of these By-laws by
the stockholders shall require the affirmative vote of the holders of not less
than 80% of the votes entitled to be cast on the matter.
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================================================================================
RIGHTS AGREEMENT
between
RYERSON TULL, INC.
and
HARRIS TRUST AND SAVINGS BANK
Rights Agent
Dated as of ___________ __, 1996
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
Section 1. Certain Definitions...................... 1
Section 2. Appointment of Rights Agent.............. 8
Section 3. Issue of Right Certificates.............. 8
Section 4. Form of Right Certificates............... 12
Section 5. Countersignature and Registration........ 13
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates;
Mutilated, Destroyed, Lost or
Stolen Right Certificates............... 15
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights............... 16
Section 8. Cancellation and Destruction of
Right Certificates...................... 21
Section 9. Availability of Preferred Shares......... 22
Section 10. Preferred Shares Record Date............. 23
Section 11. Adjustment of Purchase Price, Number of
Shares or Number of Rights.............. 24
Section 12. Certificate of Adjusted Purchase Price
or Number of Shares..................... 40
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power.............. 40
Section 14. Fractional Rights and Fractional Shares.. 45
Section 15. Rights of Action......................... 48
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<PAGE>
PAGE
----
<TABLE>
<S> <C> <C>
Section 16. Agreement of Right Holders............... 49
Section 17. Right Certificate Holder Not Deemed a
Stockholder............................. 50
Section 18. Concerning the Rights Agent.............. 51
Section 19. Merger or Consolidation or Change of
Name of Rights Agent..................... 52
Section 20. Duties of Rights Agent................... 53
Section 21. Change of Rights Agent................... 58
Section 22. Issuance of New Right Certificates....... 60
Section 23. Redemption............................... 60
Section 24. Exchange................................. 63
Section 25. Notice of Certain Events................. 65
Section 26. Notices.................................. 67
Section 27. Supplements and Amendments............... 68
Section 28. Successors............................... 69
Section 29. Benefits of this Agreement............... 69
Section 30. Severability............................. 69
Section 31. Governing Law............................ 70
Section 32. Counterparts............................. 70
Section 33. Descriptive Headings..................... 70
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</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Section 34. Determinations and Actions by the
Board of Directors...................... 70
Signatures ......................................... 72
</TABLE>
Exhibit A - Form of Certificate of Designation, Preferences and
Rights
Exhibit B - Form of Right Certificate
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<PAGE>
RIGHTS AGREEMENT
----------------
Rights Agreement, dated as of ______________ __, 1996, between Ryerson
Tull, Inc., a Delaware corporation (the "Company"), and Harris Trust and Savings
Bank, a national banking association (the "Rights Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Board of Directors of the Company has authorized and declared
a dividend of one preferred share purchase right (a "Right") for each Common
Share (as hereinafter defined) of the Company outstanding as of the close of
business on ____________, 1996 (the "Record Date"), each Right representing the
right to purchase one one-hundredth of a Preferred Share (as hereinafter
defined), upon the terms and subject to the conditions herein set forth, and has
further authorized and directed the issuance of one Right with respect to each
Common Share that shall become outstanding between the Record Date and the
Expiration Date (as such terms are hereinafter defined).
<PAGE>
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
"Acquiring Person" shall mean any Person (as such term is hereinafter
defined) who or which, together with all Affiliates and Associates (as such
terms are hereinafter defined) of such Person, shall be the Beneficial Owner (as
such term is hereinafter defined) of capital stock of the Company then
outstanding representing 10% or more of the voting power of the Company, but
shall not include the Company, any Subsidiary (as such term is hereinafter
defined) of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any person or entity holding capital stock of the
Company for or pursuant to the terms of any such plan. Notwithstanding the
foregoing, no Person shall become an "Acquiring Person" as the result of (a) an
acquisition of capital stock by the Company which, by reducing the number of
shares outstanding, increases the proportionate voting power of shares
beneficially owned by such Person to 10% or more of the voting power of the
Company,
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(b) a sale by an ISI Party of shares of Class B common stock, par value $.01 per
share, of the Company which, by reducing the aggregate number of votes of Common
Shares outstanding, increases the proportionate voting power of shares
beneficially owned by such Person to 10% or more of the voting power of the
Company, or (c) the acquisition by such Person of newly-issued capital stock
directly from the Company (it being understood that a purchase from an
underwriter or other intermediary is not directly from the Company); provided,
however, that if a Person shall become the Beneficial Owner of capital stock of
the Company representing 10% or more of the voting power of the Company by
reason of share purchases by the Company, the sale of shares by an ISI Party or
the receipt of newly-issued capital stock directly from the Company and shall,
after such share purchases or direct issuance by the Company or sale by ISI
Parties, become the Beneficial Owner of any additional voting stock of the
Company, then such Person shall be deemed to be an "Acquiring Person;" provided
further, however, that any transferee from such Person who becomes the
Beneficial Owner of capital stock of the Company representing 10% or more of the
voting power of the Company then outstanding shall nevertheless be deemed to be
an "Acquiring Person." Notwithstanding the foregoing, if the Board of
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Directors of the Company determines in good faith that a Person who would
otherwise be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph, has become such inadvertently, and such Person
divests as promptly as practicable (and in any event within ten Business Days
after notification by the Company) a sufficient number of shares of capital
stock of the Company so that such Person would no longer be an Acquiring Person,
as defined pursuant to the foregoing provisions of this paragraph, then such
Person shall not be deemed to be an "Acquiring Person" for any purposes of this
Agreement.
Notwithstanding anything in this Agreement to the contrary, for purposes of
this Agreement, none of the ISI Parties shall be deemed to be an Acquiring
Person, and the Shares Acquisition Date shall not be deemed to have occurred as
a result of ownership of shares of capital stock by any ISI Party, on or prior
to the ISI Disposition Date.
"Affiliate" and "Associate" shall have the respective meanings ascribed to
such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange
Act, as in effect on the date of this Agreement.
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A Person shall be deemed the "Beneficial Owner" of and shall be deemed
to have "beneficial ownership" of or "beneficially own" any securities:
(a) which such Person or any of such Person's Affiliates or Associates
beneficially owns, directly or indirectly;
(b) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has (A) the right to acquire (whether
such right is exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding, whether written or
oral (other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities), or upon the exercise of conversion rights, exchange rights,
rights (other than these Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the Beneficial Owner
of, or to beneficially own, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange; (B) the sole or shared
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<PAGE>
right to vote or dispose (including any such right pursuant to any
agreement, arrangement or understanding, whether written or oral);
provided, however, that a Person shall not be deemed the Beneficial Owner
of, or to beneficially own, any security if the agreement, arrangement or
understanding to vote such security (1) arises solely from a revocable
proxy or consent given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the Exchange Act and (2)
is not also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or (C) "beneficial ownership" (as
determined pursuant to Rule 13d-3 (or any successor rule) of the General
Rules and Regulations under the Exchange Act); or
(c) which are beneficially owned, directly or indirectly, by any other
Person (or any Affiliate or Associate thereof) with which such Person or
any of such Person's Affiliates or Associates has any agreement,
arrangement or understanding, whether written or oral (other than customary
agreements with and between underwriters and selling group members with
respect to a bona fide public
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<PAGE>
offering of securities) for the purpose of acquiring, holding, voting
(except to the extent contemplated by the proviso to clause (B) of
subparagraph (b) of this definition) or disposing of any securities of
the Company.
Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such Person
would be deemed to own beneficially hereunder.
"Business Day" shall mean any day other than a Saturday, a Sunday, or
a day on which banking institutions in Illinois are authorized or obligated by
law or executive order to close.
"Class A Common Shares" when used with reference to the Company shall mean
the shares of Class A common stock, par value $.01 per share, of the Company, as
such shares may be constituted or designated, or as such par value may be
changed, from time to time during the term of this Agreement.
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"Close of business" on any given date shall mean 5:00 P.M., Chicago
time, on such date; provided, however, that if such date is not a Business Day
it shall mean 5:00 P.M., Chicago time, on the next succeeding Business Day.
"Common Shares" when used with reference to the Company shall mean the
shares of both Class A and Class B common stock, par value $.01 per share as
such shares may be constituted or designated, or as such par value may be
changed, from time to time during the term of this Agreement, of the Company.
"Common Shares" when used with reference to any Person other than the
Company when used with reference to any Person other than the Company shall mean
the capital stock (or equity interest) with the greatest voting power of such
other Person or the equity securities or other equity interest having power to
control or direct the management of such other Person.
"Distribution Date" shall have the meaning set forth in Section 3
hereof.
"Effective Date" shall mean the close of business on the first date
the ISI Parties, in the aggregate, collectively beneficially own capital stock
of the Company then outstanding representing less than 50% of the voting power
of the Company.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
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"Expiration Date" shall have the meaning set forth in Section 7
hereof.
"ISI Disposition Date" shall mean the close of business on the first
date the ISI Parties, in the aggregate, collectively beneficially own capital
stock of the Company then outstanding representing less than 10% of the voting
power of the Company.
"ISI Parties" shall collectively mean all of Inland Steel Industries,
Inc., a Delaware corporation, and its Affiliates and Associates.
"Person" shall mean any individual, firm, corporation or other entity,
and shall include any successor (by merger or otherwise) of such entity.
"Preferred Shares" shall mean shares of Series A Junior Participating
Preferred Stock, par value $.01 per share, of the Company having the rights and
preferences set forth in the Form of Certificate of Designations, Preferences
and Rights attached to this Agreement as Exhibit A.
"Principal Party" shall have the meaning set forth in Section 13
hereof.
"Purchase Price" shall have the meaning set forth in Section 4 hereof.
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"Redemption Date" shall have the meaning set forth in Section 7
hereof.
"Right Certificate" shall have the meaning set forth in Section 3
hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Shares Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) promulgated under the
Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has
become such.
"Subsidiary" shall mean, with reference to any Person, any corporation
or other entity of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.
"Trading Days" shall have the meaning set forth in Section 11 hereof.
"Triggering Event" shall mean any event described in Section 11(a)(ii)
or Section 13(a) hereof.
Any determination or interpretation required in connection with any of the
definitions contained in this Section 1 shall be made by the Board of Directors
of the Company in their good faith
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judgment, which determination shall be final and binding on the Rights Agent.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the Common Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such co-Rights Agents as it may deem necessary or
desirable.
Section 3. Issue of Right Certificates.
(a) Until the later of (i) the Effective Date and (ii) the earlier of (A)
the close of business on the tenth day after the Shares Acquisition Date or (B)
the close of business on the fifteenth Business Day (or such later date as may
be determined by action of the Board of Directors prior to such time as any
Person becomes an Acquiring Person) after the date of the commencement by any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company or any entity
holding capital stock of the Company for or pursuant to the terms of any such
plan) of, or of the first public announcement of the intention of any Person
(other than the Company,
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any Subsidiary of the Company, any employee benefit plan of the Company or of
any Subsidiary of the Company or any entity holding capital stock of the Company
for or pursuant to the terms of any such plan) to commence, a tender or exchange
offer the consummation of which would result in any Person becoming the
Beneficial Owner of capital stock of the Company then outstanding representing
10% or more of the voting power of the Company (including any such date which is
after the date of this Agreement and prior to the issuance of the Rights; such
date being herein referred to as the "Distribution Date"), (x) the Rights will
be evidenced (subject to the provisions of Section 3(b) hereof) by the
certificates for Common Shares registered in the names of the holders thereof
(which certificates shall also be deemed to be certificates for Rights) and not
by separate certificates, and (y) the Rights will be transferable only in
connection with the transfer of the underlying Common Shares (including a
transfer to the Company). As soon as practicable after the Distribution Date,
the Company will prepare and execute, the Rights Agent will countersign, and the
Company will send or cause to be sent (and the Rights Agent will, if requested,
send) by first-class, insured, postage-prepaid mail, to each record holder of
Common Shares as of the close of business on the Distribution Date, at the
address of such holder shown on the
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records of the Company, a Right Certificate, in substantially the form of
Exhibit B hereto (a "Right Certificate"), evidencing one Right for each Common
Share so held. As of the Distribution Date, the Rights will be evidenced solely
by such Right Certificates.
(b) With respect to certificates for Common Shares outstanding as of the
Record Date, until the Distribution Date, the Rights will be evidenced by such
certificates registered in the names of the holders thereof and registered
holders of Common Shares shall also be the registered holders of the associated
Rights. Until the Distribution Date (or the Expiration Date), the transfer of
any certificate for Common Shares outstanding on the Record Date, shall also
constitute the transfer of the Rights associated with the Common Shares
represented thereby.
(c) Rights shall be issued in respect of all Common Shares which are
issued (whether originally issued or delivered from the Company's treasury)
after the Record Date but prior to the earlier of the Distribution Date or the
Expiration Date. Certificates representing such Common Shares shall also be
deemed to be certificates for Rights. Certificates representing both Common
Shares and Rights in accordance with this Section 3 which are executed and
delivered (whether the Common Shares represented thereby are originally issued,
delivered from the Company's
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treasury or are presented for transfer) by the Company (including, without
limitation, certificates representing reacquired Common Shares referred to in
the last sentence of this paragraph (c)) after the Record Date but prior to the
earlier of the Distribution Date or the Expiration Date shall have impressed on,
printed on, written on or otherwise affixed to them a legend substantially
equivalent to the following:
This certificate also evidences and entitles the holder hereof to certain
rights as set forth in the Rights Agreement between Ryerson Tull, Inc. (the
"Company") and Harris Trust and Savings Bank, dated as of ____________,
1996 (the "Rights Agreement"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the principal offices
of the Company. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates and will
no longer be evidenced by this certificate. The Company will mail to the
holder of this certificate a copy of the Rights Agreement, as in effect on
the date of mailing, without charge promptly after receipt of a written
request therefor. Under certain circumstances set forth in the Rights
Agreement, Rights issued to, or held by, any Person who is, was or becomes
an Acquiring Person or an Affiliate or Associate thereof (as such terms are
defined in the Rights Agreement), whether currently held by or on behalf of
such Person or by any subsequent holder, shall become null and void.
Until the Distribution Date, the Rights associated with the Common Shares shall
be evidenced by the certificates representing the associated Common Shares
alone, and the transfer of any such certificate shall also constitute the
transfer of the Rights
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associated with the Common Shares represented thereby. In the event that the
Company purchases or acquires any Common Shares after the Record Date but prior
to the Distribution Date, any Rights associated with such Common Shares shall be
deemed cancelled and retired so that the Company shall not be entitled to
exercise any Rights associated with the Common Shares which are no longer
outstanding.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to purchase
Preferred Shares and of assignment to be printed on the reverse thereof) shall
each be substantially in the form set forth in Exhibit B hereto and may have
such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to usage. Subject to the
provisions of Section 11 and Section 22 hereof, the Right Certificates shall
entitle the holders thereof to purchase such number of one one-hundredths of a
Preferred Share as shall be set
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forth therein at the price per one one-hundredth of a Preferred Share set
forth therein (the "Purchase Price"), but the amount and type of securities
purchasable upon the exercise of each Right and the Purchase Price thereof shall
be subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or Section 22
hereof that represents Rights beneficially owned by: (i) an Acquiring Person or
any Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or such Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes an Acquiring Person, or (iii) a transferee of an
Acquiring Person (or such Associate or Affiliate) who becomes a transferee prior
to or concurrently with the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for consideration) from
the Acquiring Person to holders of equity interests in such Acquiring Person or
to any Person with whom the Acquiring Person has any continuing agreement,
arrangement or understanding, whether written or oral, regarding the transferred
Rights or (B) a transfer which is part of a plan, arrangement or understanding,
whether written or oral, which has as a primary purpose or effect avoidance of
Section 7(e) hereof, and any Right
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Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer,
exchange, replacement or adjustment of any other Right Certificate referred to
in this sentence, shall contain (to the extent feasible and otherwise reasonably
identifiable as such) the following legend:
The Rights represented by this Right Certificate are or were beneficially
owned by a Person who was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such terms are defined in the Rights
Agreement). Accordingly, this Right Certificate and the Rights represented
hereby shall become void in the circumstances specified in Section 7(e) of
such Agreement.
The provisions of Section 7(e) shall apply whether or not any Right Certificate
actually contains the foregoing legend.
Section 5. Countersignature and Registration. The Right Certificates
shall be executed on behalf of the Company by its Chairman of the Board, its
Chief Executive Officer, any Vice Chairman, its President, any of its Vice
Presidents, or its Treasurer, either manually or by facsimile signature, shall
have affixed thereto the Company's seal or a facsimile thereof, and shall be
attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Right Certificates shall be manually
countersigned by the Rights Agent and shall not be valid for any purpose unless
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countersigned. In case any officer of the Company who shall have signed any of
the Right Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the person who signed such Right Certificates had not ceased to be such officer
of the Company; and any Right Certificate may be signed on behalf of the Company
by any person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause to be
kept, at its office designated for such purpose, books for registration and
transfer of the Right Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Right Certificates, the
number of Rights evidenced on its face by each of the Right Certificates and the
date of each of the Right Certificates.
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Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Sections 4(b), 7(e), 14 and 24 hereof, at
any time after the close of business on the Distribution Date, and at or prior
to the close of business on the Expiration Date, any Right Certificate or Right
Certificates may be transferred, split up, combined or exchanged for another
Right Certificate or Right Certificates, entitling the registered holder to
purchase a like number of Preferred Shares (or, following a Triggering Event,
Common Shares, other securities or property, as the case may be) as the Right
Certificate or Right Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Right Certificate or Right Certificates shall make such request in
writing delivered to the Rights Agent, and shall surrender the Right Certificate
or Right Certificates to be transferred, split up, combined or exchanged at the
office of the Rights Agent designated for such purpose. Neither the Rights
Agent nor the Company shall be obligated to take any action whatsoever with
respect to the transfer of any such surrendered Right Certificate until the
registered holder shall have
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completed and signed the certificate contained in the form of assignment on the
reverse side of such Right Certificate accompanied by such documents as the
Rights Agent may deem appropriate and the Company shall have been provided with
such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request. Thereupon the Rights Agent shall, subject to Sections 4 and
7 hereof, countersign and deliver to the person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested. The
Company may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split up,
combination or exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if
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mutilated, the Company will make and deliver a new Right Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
holder in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) Subject to Section 7(e) hereof, the registered holder of any Right
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the Distribution Date
upon surrender of the Right Certificate, with the form of election to purchase
on the reverse side thereof duly executed, to the Rights Agent at the office of
the Rights Agent designated for such purpose, together with payment of the
Purchase Price with respect to each surrendered Right for the total number of
Preferred Shares (or other securities or property, as the case may be) as to
which the Rights are exercised, at or prior to the earliest of (i) the close of
business on June 13, 2006 (the "Expiration Date"), (ii) the time at which the
Rights are redeemed as provided in Section 23 hereof (the "Redemption Date"), or
(iii) the time at which such Rights are exchanged as provided in Section 24
hereof.
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(b) The Purchase Price for each one one-hundredth of a Preferred Share
pursuant to the exercise of a Right shall initially be $95.00, shall be subject
to adjustment from time to time as provided in Sections 11 and 13 hereof and
shall be payable in lawful money of the United States of America in accordance
with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable Rights,
with the form of election to purchase and the certificate on the reverse side of
the Right Certificate duly executed, accompanied by such documents as the Rights
Agent may deem appropriate, payment of the Purchase Price for the shares
(or other securities or property, as the case may be) to be purchased and an
amount equal to any applicable transfer tax required to be paid by the holder of
such Right Certificate in accordance with Section 9 hereof by certified check,
cashier's check or money order payable to the order of the Company, the Rights
Agent shall thereupon promptly (i) (A) requisition from any transfer agent of
the Preferred Shares (or make available, if the Rights Agent is the transfer
agent of the Preferred Shares) certificates for the number of Preferred Shares
to be purchased and the Company hereby irrevocably authorizes its transfer agent
to comply with all such requests, or (B) if the Company shall
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have elected to deposit the Preferred Shares issuable upon exercise of the
Rights with a depositary agent, requisition from the depositary agent depositary
receipts representing such number of one one-hundredths of a Preferred Share as
are to be purchased (in which case certificates for the Preferred Shares
represented by such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company will direct the depositary agent to comply
with such request, (ii) when appropriate, requisition from the Company the
amount of cash to be paid in lieu of issuance of fractional shares in accordance
with Section 14 hereof, (iii) after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Right Certificate, registered in such name or names as may be
designated by such holder and (iv) when appropriate, after receipt, deliver such
cash to or upon the order of the registered holder of such Right Certificate. In
the event that the Company is obligated to issue other securities (including
Common Shares) of the Company, pay cash and/or distribute other property
pursuant to Section 11(a) hereof, the Company will make all arrangements
necessary so that such other securities, cash and/or property are available for
distribution by the Rights Agent, if and when appropriate.
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(d) In case the registered holder of any Right Certificate shall exercise
less than all the Rights evidenced thereby, a new Right Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent and delivered to the registered holder of such Right Certificate or
to his duly authorized assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the occurrence of a Triggering Event, any Rights beneficially owned by (i)
an Acquiring Person or an Associate or Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes an Acquiring Person, or
(iii) a transferee of an Acquiring Person (or such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person becoming
an Acquiring Person and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom the
Acquiring Person has any continuing agreement, arrangement or understanding,
whether written or oral, regarding the transferred Rights or (B) a transfer
which the
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Board of Directors otherwise concludes in good faith is part of a plan,
arrangement or understanding (whether written or oral) which has as a primary
purpose or effect the avoidance of this Section 7(e), shall become null and void
without any further action, and any holder of such Rights shall thereupon have
no rights whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise, from and after the occurrence of a Triggering
Event. The Company shall use all reasonable efforts to insure that the
provisions of this Section 7(e) hereof are complied with, but shall have no
liability to any holder of Rights for the inability to make any determinations
with respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless the certificate contained in the form of
election to purchase set forth on the reverse side of the Right Certificate
surrendered for such exercise shall have been completed and signed by the
registered holder thereof and the Company shall have been provided with such
additional evidence of
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the identity of the Beneficial Owner (or former Beneficial Owner)
or Affiliates or Associates thereof as the Company shall reasonably request.
(g) The Company covenants and agrees that it will cause to be reserved and
kept available out of its authorized and unissued Preferred Shares (and,
following the occurrence of a Triggering Event, Common Shares and/or other
securities) or any Preferred Shares (and, following the occurrence of a
Triggering Event, Common Shares and/or other securities) held in its treasury,
the number of Preferred Shares (and, following the occurrence of a Triggering
Event, Common Shares and/or other securities) that will be sufficient to permit
the exercise in full of all outstanding Rights.
(h) Notwithstanding any statement to the contrary contained in this
Agreement or in any Right Certificate, if the Distribution Date or the Shares
Acquisition Date shall occur prior to the Record Date, the provisions of this
Agreement, including (without limitation) Sections 3 and 11(a)(ii), shall be
applicable to the Rights upon their issuance to the same extent such provisions
would have been applicable if the Record Date were the date of this Agreement.
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Section 8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, a nd no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all cancelled Right Certificates to the Company, or shall, at the written
request of the Company, cause such cancelled Right Certificates to be destroyed,
and in such case cause a certificate of destruction to be delivered to the
Company.
Section 9. Availability Of Preferred Shares. The Company covenants and
agrees that it will take all such action as may be necessary to ensure that all
Preferred Shares (and, following the occurrence of a Triggering Event, Common
Shares and/or other securities) delivered upon exercise of Rights shall, at the
time
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of delivery of the certificates for such Preferred Shares (and, following
the occurrence of a Triggering Event, Common Shares and/or other securities),
subject to payment of the Purchase Price, be duly and validly authorized and
issued and fully paid and nonassessable shares.
The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Right Certificates or of
any Preferred Shares (or Common Shares and/or other securities, as the case may
be) upon the exercise of Rights. The Company shall not, however, be required to
pay any transfer tax which may be payable in respect of any transfer or delivery
of Right Certificates to a person other than, or the issuance or delivery of
certificates or depositary receipts for the Preferred Shares (or Common Shares
and/or other securities, as the case may be) in a name other than that of, the
registered holder of the Right Certificate evidencing Rights surrendered for
exercise or to issue or to deliver any certificates or depositary receipts for
Preferred Shares (or Common Shares and/or other securities, as the case may be)
upon the exercise of any Rights until any such tax shall have been paid (any
such tax being payable by the holder of such Right
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Certificate at the time of surrender) or until it has been established to the
Company's reasonable satisfaction that no such tax is due.
Section 10. Preferred Shares Record Date. Each person in whose name any
certificate for Preferred Shares (or Common Shares and/or other securities, as
the case may be) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the shares or securities
represented thereby on, and such certificate shall be dated, the date upon which
the Right Certificate evidencing such Rights was duly surrendered and payment of
the Purchase Price (and any applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a date upon which the
Preferred Shares (or Common Shares and/or other securities, as the case may be)
transfer books of the Company are closed, such person shall be deemed to have
become the record holder of such shares or securities on, and such certificate
shall be dated, the next succeeding Business Day on which the Preferred Shares
(or Common Shares and/or other securities, as the case may be) transfer books of
the Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Right Certificate shall not be entitled to any rights of a holder of
Preferred
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Shares (or Common Shares and/or other securities, as the case may be) for which
the Rights shall be exercisable, including, without limitation, the right to
vote, to receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights. The Purchase Price, the number of Preferred Shares covered by each Right
and the number of Rights outstanding are subject to adjustment from time to time
as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C)
combine the outstanding Preferred Shares into a smaller number of Preferred
Shares or (D) issue any shares of its capital stock in a reclassification
of the Preferred Shares (including any such reclassification in connection
with a consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this Section 11(a)
and Section 7(e) hereof, the
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Purchase Price in effect at the time of the record date for such dividend
or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of capital stock
issuable on such date, shall be proportionately adjusted so that the holder
of any Right exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock which, if such Right
had been exercised immediately prior to such date and at a time when the
Preferred Shares transfer books of the Company were open, he would have
owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided, however,
that in no event shall the consideration to be paid upon the exercise of
one Right be less than the aggregate par value of the shares of capital
stock of the Company issuable upon exercise of one Right. If an event
occurs which would require an adjustment under both Section 11(a)(i) and
Section 11(a)(ii), the adjustment provided for in this Section 11(a)(i)
shall be in addition to, and shall be made prior to, any adjustment
required pursuant to Section 11(a)(ii).
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(ii) Subject to Section 24 of this Agreement, in the event any Person
becomes an Acquiring Person, each holder of a Right, except as provided
below and in Section 7(e) hereof, shall thereafter have a right to receive,
upon exercise thereof at a price equal to the then current Purchase Price
multiplied by the number of one one-hundredths of a Preferred Share for
which a Right is then exercisable, in accordance with the terms of this
Agreement and in lieu of Preferred Shares, such number of Class A Common
Shares of the Company as shall equal the result obtained by (x) multiplying
the then current Purchase Price by the number of one one-hundredths of a
Preferred Share for which a Right is then exercisable and dividing that
product by (y) 50% of the then current per share market price of the
Company's Class A Common Shares (determined pursuant to Section 11(d)
hereof) on the date of the occurrence of such event. In the event that any
Person shall become an Acquiring Person and the Rights shall then be
outstanding, the Company shall not take any action which would eliminate or
diminish the benefits intended to be afforded by the Rights.
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(iii) In lieu of issuing Class A Common Shares of the Company in
accordance with Section 11(a)(ii) hereof, the Company may, in the sole
discretion of the Board of Directors, elect to (and, in the event that the
Board of Directors has not exercised the exchange right contained in
Section 24 hereof and there are not sufficient issued but not outstanding
and authorized but unissued Class A Common Shares to permit the exercise in
full of the Rights in accordance with the foregoing subparagraph (ii), the
Company shall) take all such action as may be necessary to authorize, issue
or pay, upon the exercise of the Rights, cash (including by way of a
reduction of the Purchase Price), property, other securities or any
combination thereof having an aggregate value equal to the value of the
Class A Common Shares of the Company which otherwise would have been
issuable pursuant to Section 11(a)(ii), which aggregate value shall be
determined by a majority of the Board of Directors. For purposes of the
preceding sentence, the value of the Class A Common Shares shall be
determined pursuant to Section 11(d) hereof and the value of any equity
securities which a majority of the Board of Directors determines to be a
"common stock equivalent" (including the
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Preferred Shares, in such ratio as the Board of Directors shall determine)
shall be deemed to have the same value as the Class A Common Shares. Any
such election by the Board of Directors must be made and publicly announced
within 60 days following the date on which the event described in Section
11(a)(ii) shall have occurred. Following the occurrence of the event
described in Section 11(a)(ii), a majority of the Board of Directors then
in office may suspend the exercisability of the Rights for a period of up
to 60 days following the date on which the event described in Section
11(a)(ii) shall have occurred to the extent that such directors have not
determined whether to exercise the Company's right of election under this
Section 11(a)(iii). In the event of any such suspension, the Company shall
issue a public announcement stating that the exercisability of the Rights
has been temporarily suspended.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Shares entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares ("equivalent
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preferred shares")) or securities convertible into Preferred Shares or
equivalent preferred shares at a price per Preferred Share or equivalent
preferred share (or having a conversion price per share, if a security
convertible into Preferred Shares or equivalent preferred shares) less than the
then current per share market price of the Preferred Shares (as defined in
Section 11(d)) on such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of Preferred Shares outstanding on such record date plus the
number of Preferred Shares which the aggregate offering price of the total
number of Preferred Shares and/or equivalent preferred shares so to be offered
(and/or the aggregate initial conversion price of the convertible securities so
to be offered) would purchase at such current market price and the denominator
of which shall be the number of Preferred Shares outstanding on such record date
plus the number of additional Preferred Shares and/or equivalent preferred
shares to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); provided, however, that
in no event shall the consideration to be paid upon the exercise of one
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Right be less than the aggregate par value of the shares of capital stock of the
Company issuable upon exercise of one Right. In case such subscription price may
be paid in a consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be as determined in good faith by
the Board of Directors of the Company, whose determination shall be described in
a statement filed with the Rights Agent and shall be binding on the Rights
Agent. Preferred Shares owned by or held for the account of the Company shall
not be deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is fixed; and
in the event that such rights, options or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription rights or warrants
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(excluding those referred to in Section 11(b) hereof), the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the then current per share market
price of the Preferred Shares on such record date, less the fair market value
(as determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent) of
the portion of the assets or evidences of indebtedness so to be distributed or
of such subscription rights or warrants applicable to one Preferred Share and
the denominator of which shall be such current per share market price of the
Preferred Shares; provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company to be issued upon exercise of one
Right. Such adjustments shall be made successively whenever such a record date
is fixed; and in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
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(d) (i) For the purpose of any computation hereunder, other than
under Section 11(a)(iii) hereof, the "current per share market price" of
any security (a "Security" for the purpose of this Section 11(d)(i)) on any
date shall be deemed to be the average of the daily closing prices per
share of such Security for the 30 consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date, and for the purpose of
any computation under Section 11(a)(iii) hereof, the "current per share
market price" of a Security on any date shall be deemed to be the average
of the daily closing prices per share of such Security for thirty (30)
consecutive Trading Days immediately following such date; provided,
however, that in the event that the current per share market price of the
Security is determined during a period following the announcement by the
issuer of such Security of (A) a dividend or distribution on such Security
payable in shares of such Security or securities convertible into such
shares (other than the Rights), or (B) any subdivision, combination or
reclassification of such Security and prior to the expiration of 30 Trading
Days after the ex-dividend date for such dividend or distribution, or the
record date for such
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subdivision, combination or reclassification, then, and in each such case,
the "current per share market price" shall be appropriately adjusted to
reflect the current market price per share equivalent (ex-dividend) of such
Security. The closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average
of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Security is not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which the Security is listed or
admitted to trading or, if the Security is not listed or admitted to
trading on any national securities exchange, the last quoted price or, if
not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or such
other system then in use, or, if on any
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such date the Security is not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Security selected by the
Board of Directors of the Company. If on any such date no market maker is
making a market in the Security, the fair value of such Security on such
date (as determined in good faith by the Board of Directors of the Company)
shall be used. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the Security is listed or
admitted to trading is open for the transaction of business or, if the
Security is not listed or admitted to trading on any national securities
exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the "current per
share market price" of the Preferred Shares shall be determined in
accordance with the method set forth in Section 11(d)(i). If the Preferred
Shares are not publicly traded, the "current per share market price" of the
Preferred Shares shall be conclusively deemed to be the current per share
market price of the Class A Common Shares of the Company as determined
pursuant to Section 11(d)(i) (appropriately adjusted to reflect any stock
split, stock
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dividend or similar transaction occurring after the date hereof),
multiplied by one hundred. If neither the Class A Common Shares of the
Company nor the Preferred Shares are publicly held or so listed or traded,
"current per share market price" shall mean the fair value per share as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights
Agent.
(e) Anything herein to the contrary notwithstanding, no adjustment in the
Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price; provided, however,
that any adjustments which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest one one-millionth of a Preferred Share or one ten-
thousandth of any other share or security, as the case may be. Notwithstanding
the first sentence of this Section 11(e), any adjustment required by this
Section 11 shall be made no later than the earlier of (i) three years from the
date of the transaction which requires such adjustment or
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(ii) the date of the expiration of the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section 11(a) or
Section 13(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than
Preferred Shares, thereafter the number of such other shares so receivable upon
exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Shares contained in this Section 11, and the provisions
of Sections 7, 9, 10, 13 and 14 with respect to the Preferred Shares shall apply
on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and
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(c), each Right outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the adjusted Purchase Price,
that number of one one-hundredths of a Preferred Share (calculated to the
nearest one one-millionth of a Preferred Share) obtained by (i) multiplying (x)
the number of one one-hundredths of a share covered by a Right immediately prior
to this adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of one one-hundredths of a Preferred Share purchasable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
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Purchase Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may be the date
on which the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later than the date of
the public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Right Certificates on such record date Right Certificates evidencing, subject
to Section 14 hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders shall be entitled
after such adjustment. Right Certificates so to be distributed shall be issued,
executed and countersigned in
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the manner provided for herein and shall be registered in the names of the
holders of record of Right Certificates on the record date specified in the
public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of one one-hundredths of a Preferred Share issuable upon the exercise of
the Rights, the Right Certificates theretofore and thereafter issued may
continue to express the Purchase Price and the number of one one-hundredths of a
Preferred Share which were expressed in the initial Right Certificates issued
hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below one one-hundredth of the then par value, if any, of the
Preferred Shares issuable upon exercise of the Rights, the Company shall take
any corporate action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid and
nonassessable Preferred Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuing to the holder of any Right exercised after such record date of the
Preferred
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Shares and other capital stock or securities of the Company, if any, issuable
upon such exercise over and above the Preferred Shares and other capital stock
or securities of the Company, if any, issuable upon such exercise on the basis
of the Purchase Price in effect prior to such adjustment; provided, however,
that the Company shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional shares upon
the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any consolidation or subdivision of the Preferred Shares, issuance
wholly for cash of any Preferred Shares at less than the current market price,
issuance wholly for cash of Preferred Shares or securities which by their terms
are convertible into or exchangeable for Preferred Shares, dividends on
Preferred Shares payable in Preferred Shares or issuance of rights, options or
warrants referred to hereinabove in Section
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11(b), hereafter made by the Company to holders of its Preferred Shares shall
not be taxable to such stockholders.
(n) In the event that at any time after the date of this Agreement and
prior to the Distribution Date, the Company shall (i) declare or pay any
dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares, then in any such case (i) the
number of one one-hundredths of a Preferred Share purchasable after such event
upon proper exercise of each Right shall be determined by multiplying the number
of one one-hundredths of a Preferred Share so purchasable immediately prior to
such event by a fraction, the numerator of which is the number of Common Shares
outstanding immediately before such event and the denominator of which is the
number of Common Shares outstanding immediately after such event, and (ii) each
Common Share outstanding immediately after such event shall have issued with
respect to it that number of Rights which each Common Share outstanding
immediately prior to such event had issued with respect to it. The adjustments
provided for in this Section 11(n) shall be made successively whenever such a
dividend
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is declared or paid or such a subdivision, combination or consolidation is
effected.
(o) So long as the shares issuable upon the exercise of the Rights may be
listed on any national securities exchange, the Company shall use its best
efforts to cause, from and after such time as the Rights become exercisable, all
shares reserved for such issuance to be listed on such exchange upon official
notice of issuance upon such exercise.
(p) The Company shall use its best efforts to (i) file, as soon as
practicable following the first occurrence of a Triggering Event, a registration
statement under the Securities Act with respect to the securities purchasable
upon exercise of the Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Securities Act) until the date of
the expiration of the Rights. The Company will also take such action as may be
appropriate under the blue sky laws of the various states. The Company may
temporarily suspend, for a period of time not to exceed 90 days, the
exercisability of the Rights in order to prepare and file such registration
statement or in order
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to comply with such blue sky laws. Upon any such suspension, the Company shall
issue a public announcement stating that the exercisability of the Rights has
been temporarily suspended.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent and with each transfer agent for the Common Shares or the
Preferred Shares a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Right Certificate in accordance with Section 25 hereof. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment therein contained and may assume that no adjustment has been made
unless and until it shall have received such certificate. No failure to comply,
or defect in compliance with, this Section 12 shall affect the validity of any
adjustment.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a) If after the Shares Acquisition Date, directly or indirectly, (x) the
Company shall consolidate with, or merge with and into, the Acquiring Person (or
any Affiliate or Associate of
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the Acquiring Person), (y) the Acquiring Person (or any Affiliate or Associate
of the Acquiring Person) shall consolidate with the Company, or merge with and
into the Company and the Company shall be the continuing or surviving
corporation of such merger and, in connection with such merger, all or part of
the Common Shares shall be changed into or exchanged for stock or other
securities of any other Person (or the Company) or cash or any other property,
or (z) the Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one or more transactions,
assets or earning power aggregating 50% or more of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to the Acquiring Person
(and its Affiliates and Associates), then, and in each such case, proper
provision shall be made so that (i) each holder of a Right (except as otherwise
provided herein) shall thereafter have the right to receive, upon the exercise
thereof at a price equal to the then current Purchase Price multiplied by the
number of one one-hundredths of a Preferred Share for which a Right is then
exercisable, in accordance with the terms of this Agreement and in lieu of
Preferred Shares, such number of validly authorized and issued, fully paid, non-
assessable and freely tradeable Common Shares of the Principal Party (as
hereinafter
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defined), free and clear of all liens, rights of call or first refusal,
encumbrances or other adverse claims, as shall equal the result obtained by (A)
multiplying the then current Purchase Price by the number of one one-hundredths
of a Preferred Share for which a Right is then exercisable (or, if such Right is
not then exercisable for a number of one one-hundredths of a Preferred Share,
the number of such fractional shares for which it was exercisable immediately
prior to an event described under Section 11(a)(ii) hereof) and dividing that
product by (B) 50% of the then current per share market price of the Common
Shares of such Principal Party (determined pursuant to Section 11(d) hereof) on
the date of consummation of such consolidation, merger, sale or transfer; (ii)
such Principal Party shall thereafter be liable for, and shall assume, by virtue
of such consolidation, merger, sale or transfer, or otherwise, all the
obligations and duties of the Company pursuant to this Agreement; (iii) the term
"Company" shall thereafter be deemed to refer to such Principal Party and (iv)
such Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of its Common Shares in accordance with
Section 9 hereof) in connection with such consummation as may be necessary to
assure that the provisions hereof shall thereafter
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be applicable, as nearly as reasonably may be, in relation to its
Common Shares thereafter deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean:
(i) In the case of any transaction described in (x) or (y) of the
first sentence of Section 13(a), the Person that is the issuer of any
securities into which Common Shares of the Company are converted in such
merger or consolidation, and if no securities are so issued, the Person
that is the surviving entity of such merger or consolidation (including the
Company if applicable); and
(ii) in the case of any transaction described in (z) of the first
sentence in Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to
such transaction or transactions;
provided, however, that in any such case described in clauses (b)(i) and
(b)(ii): (1) if the Common Shares of such Person are not at such time and have
not been continuously over the preceding 12-month period registered under
Section 12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Shares of which is and has been so
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registered, "Principal Party" shall refer to such other Person; (2) in case such
Person is a Subsidiary, directly or indirectly, or more than one Person, the
Common Shares of two or more of which are and have been so registered,
"Principal Party" shall refer to whichever of such Persons is the issuer of the
Common Shares having the greatest aggregate market value; and (3) in case such
Person is owned, directly or indirectly, by a joint venture formed by two or
more Persons that are not owned, directly or indirectly, by the same Person, the
rules set forth in (1) and (2) above shall apply to each of the chains of
ownership having an interest in such joint venture as if such party were a
"Subsidiary" of both or all of such joint venturers and the Principal Parties in
each such chain shall bear the obligations set forth in this Section 13 in the
same ratio as their direct or indirect interests in such Person bear to the
total of such interests.
(c) The Company shall not consummate any such consolidation, merger, sale
or transfer unless the Principal Party shall have sufficient Common Shares
authorized to permit the full exercise of the Rights and prior thereto the
Company and such Principal Party shall have executed and delivered to the Rights
Agent a supplemental agreement providing for the terms set
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forth in paragraphs (a) and (b) of this Section 13 and further providing that,
as soon as practicable after the date of any consolidation, merger or sale of
assets mentioned in paragraph (a) of this Section 13, the Principal Party will:
(i) prepare and file a registration statement under the Securities
Act, with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, and will use its best
efforts to cause such registration statement to (A) become effective as
soon as practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the Securities Act)
until the Expiration Date;
(ii) deliver to holders of the Rights historical financial statements
for the Principal Party and each of its Affiliates which comply in all
respects with the requirements for registration on Form 10 under the
Exchange Act; and
(iii) take such actions as may be necessary or appropriate under the
blue sky laws of the various states.
The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that one of the
transactions described in this
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Section 13(a) shall occur at any time after the occurrence of a transaction
described in Section 11(a)(ii) hereof, the Rights which have not theretofore
been exercised shall thereafter become exercisable in the manner described in
Section 13(a).
Section 14. Fractional Rights and Fractional Shares. (a) The Company
shall not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there may be paid to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a whole
Right. For the purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Rights
are not listed or admitted to trading on the New York
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Stock Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the Rights are listed or admitted to trading or, if the Rights
are not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board of
Directors of the Company. If on any such date no such market maker is making a
market in the Rights, the fair value of the Rights on such date as determined in
good faith by the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one one-hundredth
of a Preferred Share) upon exercise of the Rights or to distribute certificates
which evidence fractional Preferred Shares (other than fractions which are
integral multiples of one one-hundredth of a Preferred
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Share). Fractions of Preferred Shares in integral multiples of one one-hundredth
of a Preferred Share may, at the election of the Company, be evidenced by
depositary receipts, pursuant to an appropriate agreement between the Company
and a depositary selected by it; provided, that such agreement shall provide
that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
the Preferred Shares represented by such depositary receipts. In lieu of
fractional Preferred Shares that are not integral multiples of one one-hundredth
of a Preferred Share, the Company may pay to the registered holders of Right
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current market value of one one-
hundredth of a Preferred Share. For the purposes of this Section 14(b), the
current market value of one one-hundredth of a Preferred Share shall be one one-
hundredth of the closing price of a Preferred Share (as determined pursuant to
the second sentence of Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of such exercise.
(c) Following the occurrence of a Triggering Event, the Company shall not
be required to issue fractions of Class A
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Common Shares upon exercise of the Rights or to distribute certificates which
evidence fractional Class A Common Shares. In lieu of fractional Class A Common
Shares, the Company may pay to the registered holders of Right Certificates at
the time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of the current market value of one Class A Common Share. For
purposes of this Section 14(c), the current market value of one Class A Common
Share shall be the closing price of one Class A Common Share (as determined
pursuant to the second sentence of Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of the Right expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares),
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without the consent of the Rights Agent or of the holder of any other Right
Certificate (or, prior to the Distribution Date, of the Common Shares), may, in
his own behalf and for his own benefit, enforce, and may institute and maintain
any suit, action or proceeding against the Company to enforce, or otherwise act
in respect of, his right to exercise the Rights evidenced by such Right
Certificate in the manner provided in such Right Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of the obligations of
any Person subject to, this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only
in connection with the transfer of the Common Shares;
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(b) after the Distribution Date, the Right Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the office of
the Rights Agent designated for such purposes, duly endorsed or accompanied by a
proper instrument of transfer and with appropriate forms and certificates fully
executed;
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated Common Shares
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or any other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of
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competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority prohibiting or otherwise restraining
performance of such obligation.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No holder,
as such, of any Right Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the Preferred Shares or any other
securities of the Company which may at any time be issuable on the exercise of
the Rights represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
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Section 18. Concerning the Rights Agent. The Company agrees to pay to the
Rights Agent reasonable compensation for all services rendered by it hereunder
and, from time to time, on demand of the Rights Agent, its reasonable expenses
and counsel fees and other disbursements (including any taxes other than income
taxes) incurred in the administration and execution of this Agreement and the
exercise and performance of its duties hereunder. The Company also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any loss,
liability, or expense, incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted by the
Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability arising, directly or indirectly, therefrom.
The Rights Agent shall be protected and shall incur no liability for, or in
respect of any action taken, suffered or omitted by it in connection with, its
administration of this Agreement in reliance upon any Right Certificate or
certificate for the Preferred Shares or Common Shares or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction,
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consent, certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper person or persons, or otherwise upon the advice of
counsel as set forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
Any corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the stock transfer or
corporate trust business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto; provided, that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Right Certificates shall have been
countersigned but not delivered; any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such
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Right Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.
In case at any time the name of the Rights Agent shall be changed and at
such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
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(a) The Rights Agent may consult with legal counsel satisfactory to it
(who may be legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent and
the Rights Agent shall incur no liability or responsibility to the Company
or to any holder of any Right Certificate in respect of any action taken or
omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering or omitting
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
Chief Executive Officer, any Vice Chairman, the President, any Vice President,
the Treasurer or the Secretary of the Company and delivered to the Rights Agent;
and such certificate shall be full authorization to the Rights Agent for any
action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
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(c) The Rights Agent shall be liable hereunder to the Company only for,
and shall indemnify and hold harmless the Company from and against, any and all
losses, liabilities, costs, damages and expenses (including attorneys' fees)
arising out of or in connection with, the Rights Agent's negligence, bad faith
or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; nor shall it
be responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 7(e) hereof) or any adjustment in the
terms
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of the Rights (including the manner, method or amount thereof) provided
for in Section 3, 11, 13, 23 or 24, or the ascertaining of the existence of
facts that would require any such change or adjustment (except with respect to
the exercise of Rights evidenced by Right Certificates after receipt of a
certificate furnished pursuant to Section 12 describing a change or adjustment);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Preferred Shares or Class
A Common Shares to be issued pursuant to this Agreement or any Right Certificate
or as to whether any Preferred Shares or Class A Common Shares will, when
issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief
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Executive Officer, any Vice Chairman, the President, any Vice President, the
Secretary or the Treasurer of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it shall not be liable
for any action taken or suffered by it in good faith in accordance with
instructions of any such officer or for any delay in acting while waiting for
those instructions. Any application by the Rights Agent for written instructions
from the Company may, at the option of the Rights Agent, set forth in writing
any action proposed to be taken or omitted by the Rights Agent under this Rights
Agreement and the date on and/or after which such action shall be taken or such
omission shall be effective. The Rights Agent shall not be liable for any action
taken by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which date shall not be less than five Business Days after the date
such application is given, unless any such officer shall have consented in
writing to an earlier date) unless, prior to taking any such action (or the
effective date in the case of an omission), the Rights Agent shall have received
written instructions in response to such application specifying the action to be
taken or omitted.
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(h) The Rights Agent and any stockholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or its Subsidiaries or become pecuniarily interested in any
transaction in which the Company or its Subsidiaries may be interested, or
contract with or lend money to the Company or its Subsidiaries or otherwise act
as fully and freely as though it were not Rights Agent under this Agreement.
Nothing herein shall preclude the Rights Agent from acting in any other capacity
for the Company or its Subsidiaries or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(j) If, with respect to any Rights Certificate surrendered to the Rights
Agent for exercise, transfer, split-up, combination or exchange, the certificate
attached to the form of assignment or form of election to purchase, as the case
may be, has either
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not been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise, transfer, split-up, combination or exchange without first
consulting with the Company.
(k) The Rights Agent shall not be under any duty or responsibility to
insure compliance with any applicable federal or state securities laws in
connection with the issuance, transfer or exchange of Right Certificates.
(l) The Rights Agent shall be under no obligation to institute any action,
suit or legal proceeding or to take any other action likely to involve expense
unless the Company or one or more holders of Right Certificates shall furnish
the Rights Agent with security and indemnity to its satisfaction for any costs
and expenses which may be incurred.
(m) The Rights Agent shall not be liable for failure to perform any duties
except as specifically set forth herein and no implied covenants or obligations
shall be read into this Agreement against the Rights Agent whose duties and
obligations are ministerial and shall be determined solely by the express
provisions hereof.
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Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares or Preferred Shares by registered or certified mail, and to
the holders of the Right Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30 days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Shares or Preferred Shares by
registered or certified mail, and to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the registered holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights
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Agent. Any successor Rights Agent, whether appointed by the Company or by such a
court, shall be a corporation or bank organized and doing business under the
laws of the United States or of any other state of the United States, which is
authorized under such laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $100 million. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Shares or Preferred Shares, and mail a notice thereof in writing to
the registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or
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validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates.
----------------------------------
Notwithstanding any of the provisions of this Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price and the number or kind or
class of shares or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement.
Section 23. Redemption.
----------
(a) The Board of Directors of the Company may, at its option, at any time
prior to such time as any Person becomes an Acquiring Person, redeem all but not
less than all the then outstanding Rights at a redemption price of $.01 per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"). The redemption of the
Rights by the Board of Directors may be made effective at such time on such
basis and with such conditions as the Board of Directors in its sole discretion
may
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establish. If redemption of the Rights is to be effective as of a future
date, the Rights shall continue to be exercisable, subject to Section 7 hereof,
until the effective date of the redemption, provided that nothing contained
herein shall preclude the Board of Directors from subsequently causing the
Rights to be redeemed at a date earlier than the previously scheduled effective
date of the redemption. The Company may, at its option, pay the Redemption
Price in cash, Class A Common Shares (based on the current per share market
price of the Class A Common Shares at the time of redemption) or any other form
of consideration deemed appropriate by the Board of Directors.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights (or at the effective time of such
redemption established by the Board of Directors of the Company pursuant to
paragraph (a) of this Section 23), and without any further action and without
any notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price.
The Company shall promptly give public notice of any such redemption; provided,
however, that the failure to give, or any defect in, any such notice shall not
affect the validity of such redemption. Promptly after such
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action of the Board of Directors ordering the redemption of the Rights or, if
later, the effectiveness of the redemption of the Rights pursuant to the last
sentence of paragraph (a), the Company shall mail a notice of redemption to all
the holders of the then outstanding Rights at their last addresses as they
appear upon the registry books of the Rights Agent or, prior to the Distribution
Date, on the registry books of the transfer agent for the Common Shares. Any
notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of redemption
will state the method by which the payment of the Redemption Price will be made;
provided, however, that such notice of redemption may be sent simultaneously
with payment of the redemption price. The Company may, at its option, discharge
all of its obligations with respect to the Rights by (i) issuing a press release
announcing the manner of redemption of the Rights, (ii) depositing with a bank
or trust company having a capital and surplus of at least $100,000,000, funds
necessary for such redemption, in trust, to be applied to the redemption of the
Rights so called for redemption and (iii) arranging for the mailing of the
Redemption Price to the registered holders of the Rights; then, and upon such
action, all outstanding Rights
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Certificates shall be null and void without further action by the Company.
Neither the Company nor any of its Affiliates or Associates may redeem, acquire
or purchase for value any Rights at any time in any manner other than that
specifically set forth in this Section 23, in Section 24 hereof, or in
connection with the purchase of Common Shares prior to the Distribution Date.
Section 24. Exchange. (a) The Board of Directors of the Company may, at
its option, at any time after a Triggering Event, exchange all or part of the
then outstanding and exercisable Rights (which shall not include Rights that
have become void pursuant to the provisions of Section 7(e) hereof) for Class A
Common Shares at an exchange ratio of one Class A Common Share per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the
foregoing, the Board of Directors shall not be empowered to effect such exchange
at any time after any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or any such Subsidiary, or any
entity holding capital stock for or pursuant to the terms of any such plan),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of
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capital stock of the Company representing 50% or more of the voting power of the
Company.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to paragraph (a) of this Section 24
and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of Class A Common Shares equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company promptly shall mail a notice
of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any
notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange
will state the method by which the exchange of the Common Shares for Rights will
be effected and, in the event of any partial exchange, the number of Rights
which will be exchanged. Any partial exchange shall be effected pro rata based
on the number of Rights (other than
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Rights which have become void pursuant to the provisions of Section 7(e) hereof)
held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Preferred Shares (or equivalent preferred shares, as such
term is defined in Section 11(b) hereof) for Class A Common Shares exchangeable
for Rights, at the initial rate of one one-hundredth of a Preferred Share (or
equivalent preferred share) for each Class A Common Share, as appropriately
adjusted to reflect adjustments in the voting rights of the Preferred Shares
pursuant to the terms thereof, so that the fraction of a Preferred Share
delivered in lieu of each Class A Common Share shall have the same voting rights
as one Class A Common Share.
(d) In the event that there shall not be sufficient Class A Common Shares
or Preferred Shares issued but not outstanding or authorized but unissued to
permit any exchange of Rights as contemplated in accordance with this Section
24, the Company shall take all such action as may be necessary to authorize
additional Class A Common Shares or Preferred Shares for issuance upon exchange
of the Rights.
(e) The Company shall not be required to issue fractions of Class A Common
Shares or to distribute certificates which
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evidence fractional Class A Common Shares. In lieu of such fractional Class A
Common Shares, the Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional Class A Common Shares would
otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole Class A Common Share. For the purposes of this
paragraph (e), the current market value of a whole Class A Common Share shall be
the closing price of a Class A Common Share (as determined pursuant to the
second sentence of Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of exchange pursuant to this Section 24.
Section 25. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose at any time after the Distribution
Date (i) to pay any dividend payable in stock of any class to the holders of its
Preferred Shares or to make any other distribution to the holders of its
Preferred Shares (other than a regular quarterly cash dividend), (ii) to offer
to the holders of its Preferred Shares rights or warrants to subscribe for or to
purchase any additional Preferred Shares or shares of stock of any class or any
other securities, rights or options, (iii) to effect any reclassification of its
Preferred Shares (other than a reclassification involving only the subdivision
of outstanding
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Preferred Shares), (iv) to effect any consolidation or merger into or with, or
to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or more transactions,
of 50% or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to, any other Person, (v) to effect the
liquidation, dissolution or winding up of the Company, or (vi) to declare or pay
any dividend on the Common Shares payable in Common Shares or to effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares),
then, in each such case, the Company shall give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, or distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Shares and/or Preferred Shares, if any such
date is to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least 10 days prior to the record date
for determining holders of
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the Preferred Shares for purposes of such action, and in the case of any such
other action, at least 10 days prior to the date of the taking of such proposed
action or the date of participation therein by the holders of the Common Shares
and/or Preferred Shares, whichever shall be the earlier.
(b) In case any of the events set forth in Section 11(a)(ii) hereof shall
occur, then the Company shall as soon as practicable thereafter give to each
holder of a Right Certificate, in accordance with Section 26 hereof, a notice of
the occurrence of such event, which notice shall describe such event and the
consequences of such event to holders of Rights under Section 11(a)(ii) hereof.
Section 26. NOTICES. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Ryerson Tull, Inc.
2621 West 15th Place
Chicago, Illinois 60608
Attention: Corporate Secretary
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Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
Harris Trust and Savings Bank
311 West Monroe Street
Chicago, Illinois 60606
Attention: Charles Zade
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company. Notices or demands sent by mail shall be deemed given or
made three Business Days after the date they are sent.
Section 27. SUPPLEMENTS AND AMENDMENTS. The Company may from time to time
supplement or amend this Agreement without the approval of any holders of Right
Certificates in order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provisions herein, or to make any other provisions with respect
-82-
<PAGE>
to the Rights which the Company may deem necessary or desirable, any such
supplement or amendment to be evidenced by a writing signed by the Company and
the Rights Agent; provided, however, that from and after such time as any Person
becomes an Acquiring Person, this Agreement shall not be amended in any manner
which would adversely affect the interests of the holders of Rights.
Section 28. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any person or corporation other than the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Shares) any legal or equitable right, remedy
or claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, the Common Shares).
Section 30. SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or
-83-
<PAGE>
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
Section 31. GOVERNING LAW. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
Section 32. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
Section 33. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
-84-
<PAGE>
Section 34. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS. The
Board of Directors of the Company shall have the exclusive power and authority
to administer this Agreement and to exercise all rights and powers specifically
granted to the Board or the Company or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to (i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights or to
amend the Agreement). All such actions, interpretations and determinations
(including, for purpose of clause (ii) below, all omissions with respect to the
foregoing) which are done or made by the Board in good faith, shall (i) be
final, conclusive and binding on the Company, the Rights Agent, the holders of
the Right Certificates and all other parties, and (ii) not subject the Board of
Directors to any liability to the holders of the Right Certificates.
-85-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
Attest: RYERSON TULL, INC.
By: By:
--------------------------------- --------------------------------
Title: Secretary Title: President
and Chief Executive
Officer
Attest: HARRIS TRUST AND SAVINGS BANK
By: By:
--------------------------------- --------------------------------
Title: Title:
--------------------------- --------------------------
-86-
<PAGE>
Exhibit A
---------
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
RYERSON TULL, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
We, [NAME][TITLE], and Charles B. Salowitz, Secretary of Ryerson Tull,
Inc., a corporation organized and existing under the General Corporation Law of
the State of Delaware (the "Corporation"), in accordance with the provisions of
Section 103 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by the
Restated Certificate of Incorporation of the Corporation, the Board of Directors
on June __, 1996 adopted the following resolution creating a series of 1,340,000
shares of preferred stock designated as Series A Junior Participating Preferred
Stock:
RESOLVED, that pursuant to the authority granted to the Board of Directors
by the Restated Certificate of Incorporation, of the Corporation, the Board of
Directors hereby creates a series of preferred stock, par value $1.00 per share,
of the Corporation (the class of preferred stock being herein referred to as
"Preferred Stock," which term shall include any additional shares of preferred
stock of the same or different series heretofore or hereafter authorized to be
issued by the Corporation), consisting of 1,340,000 shares, and hereby fixes the
designation and the voting powers, preferences and relative, participating,
optional or other special rights, and the qualifications, limitations or
restrictions thereof, as follows:
Section 1. DESIGNATION AND AMOUNT. There shall be a series of Preferred
Stock of the Corporation which shall be designated as "Series A Junior
Participating Preferred Stock," par value $1.00 per share (hereinafter called
"Series A Preferred Stock"),
<PAGE>
and the number of shares constituting such series shall be 1,340,000. Such
number of shares may be increased or decreased by resolution of the Board of
Directors and by the filing of a certificate pursuant to the provisions of the
General Corporation Law of the State of Delaware stating that such increase or
reduction has been so authorized; provided, however, that no decrease shall
reduce the number of shares of Series A Preferred Stock to a number less than
that of the shares then outstanding plus the number of shares of Series A
Preferred Stock issuable upon exercise of outstanding rights, options or
warrants or upon conversion of outstanding securities issued by the Corporation.
Section 2. Dividends and Distributions.
---------------------------
(A) Subject to the prior and superior rights of the holders of any shares
of any series of Preferred Stock ranking prior and superior to the shares of
Series A Preferred Stock with respect to dividends, the holders of shares of
Series A Preferred Stock shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash to holders of record on the last business
day of March, June, September and December in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an amount per share (rounded
to the nearest cent) equal to the greater of (a) $1.00 or (b) subject to the
provision for adjustment hereinafter set forth, 100 times the aggregate per
share amount of all cash dividends, and 100 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions other than a
dividend payable in shares of Class A Common Stock (hereinafter defined) or a
subdivision of the outstanding shares of Class A Common Stock (by
reclassification or otherwise), declared on the Class A Common Stock, par value
$1.00 per share, of the Corporation (the "Class A Common Stock") since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Preferred Stock. In the event the Corporation
shall at any time following June 13, 1996 (i) declare any dividend on Class A
Common Stock payable in shares of Class A Common Stock, (ii) subdivide the
outstanding Class A Common Stock or (iii) combine the outstanding Class A Common
<PAGE>
Stock into a smaller number of shares, then in each such case the amount to
which holders of shares of Series A Preferred Stock were entitled immediately
prior to such event under clause (b) of the preceding sentence shall be adjusted
by multiplying each such amount by a fraction the numerator of which is the
number of shares of Class A Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Class A Common
Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the Series
A Preferred Stock as provided in paragraph (A) above at the time it declares a
dividend or distribution on the Class A Common Stock (other than a dividend
payable in shares of Class A Common Stock).
(C) No dividend or distribution (other than a dividend payable in shares
of Class A Common Stock) shall be paid or payable to the holders of shares of
Class A Common Stock unless, prior thereto, all accrued but unpaid dividends to
the date of such dividend or distribution shall have been paid to the holders of
shares of Series A Preferred Stock.
(D) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series A Preferred Stock, unless
the date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue from the date of issue of such shares, or unless the date of
issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series A Preferred Stock entitled
to receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series A Preferred Stock in
an amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive payment of a dividend or distribution
<PAGE>
declared thereon, which record date shall be no more than 30 days prior to the
date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
one one-hundredth of a share of Series A Preferred Stock shall entitle the
holder thereof to one vote on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall at any time
following June 13, 1996 (i) declare any dividend on Class A Common Stock payable
in shares of Class A Common Stock, (ii) subdivide the outstanding Class A Common
Stock or (iii) combine the outstanding Class A Common Stock into a smaller
number of shares, then in each such case the number of votes per share to which
holders of shares of Series A Preferred Stock were entitled immediately prior to
such event shall be adjusted by multiplying such number by a fraction the
numerator of which is the number of shares of Class A Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Class A Common Stock that were outstanding immediately prior to such
event.
(B) Except as otherwise provided herein or by law, the holders of shares
of Series A Preferred Stock and the holders of shares of Class A Common Stock
and any other capital stock of the Corporation having general voting rights
shall vote together as one class on all matters submitted to a vote of
stockholders of the Corporation.
(C) (i) Whenever, at any time or times, dividends payable on any share or
shares of Series A Preferred Stock shall be in arrears in an amount equal
to at least six full quarterly dividends (whether or not declared and
whether or not consecutive), the holders of record of the outstanding
Series A Preferred Stock together with the holders of any other Preferred
Stock, on which the dividends payable on any share or shares of such
Preferred Stock shall be in arrears in an amount equal to at least six full
quarterly dividends (whether or not declared and whether or not
consecutive), shall have the exclusive right, voting separately as a single
class, to elect two directors of the Corporation at a special meeting of
stockholders of the Corporation or at the Corporation's next annual meeting
of stockholders, and at
<PAGE>
each subsequent annual meeting of stockholders, as provided below. At
elections for such directors, the holders of shares of Series A Preferred
Stock shall be entitled to cast one vote for each one one-hundredth of a
share of Series A Preferred Stock held.
(ii) Upon the vesting of such right of the holders of the Preferred
Stock, the maximum authorized number of members of the Board of Directors
shall automatically be increased by two and the two vacancies so created
shall be filled by vote of the holders of the outstanding Preferred Stock
as hereinafter set forth. A special meeting of the stockholders of the
Corporation then entitled to vote shall be called by the Chairman or the
President or the Secretary of the Corporation, if requested in writing by
the holders of record of not less than 10% of the Preferred Stock then
outstanding. At such special meeting, or, if no such special meeting shall
have been called, then at the next annual meeting of stockholders of the
Corporation, the holders of the shares of the Preferred Stock shall elect,
voting as above provided, two directors of the Corporation to fill the
aforesaid vacancies created by the automatic increase in the number of
members of the Board of Directors. At any and all such meetings for such
election, the holders of a majority of the outstanding shares of the
Preferred Stock shall be necessary to constitute a quorum for such
election, whether present in person or by proxy, and such two directors
shall be elected by the vote of at least a plurality of shares held by such
stockholders present or represented at the meeting. Any director elected
by holders of shares of the Preferred Stock pursuant to this Section
may be removed at any annual or special meeting, by vote of a majority of
the stockholders voting as a class who elected such director, with or
without cause. In case any vacancy shall occur among the directors elected
by the holders of the Preferred Stock pursuant to this Section, such
vacancy may be filled by the remaining director so elected, or his
successor then in office, and the director so elected to fill such vacancy
shall serve until the next meeting of stockholders for the election of
directors. After the holders of the Preferred Stock shall have exercised
their right to elect Directors in any default period and during the
continuance of such period, the number of Directors shall not be further
increased or decreased except by vote
<PAGE>
of the holders of Preferred Stock as herein provided or pursuant to the
rights of any equity securities ranking senior to or pari passu with the
Series A Preferred Stock.
(iii) The right of the holders of the Preferred Stock, voting
separately as a class, to elect two members of the Board of Directors of
the Corporation as aforesaid shall continue until, and only until, such
time as all arrears in dividends (whether or not declared) on the Preferred
Stock shall have been paid or declared and set apart for payment, at which
time such right shall terminate, except as herein or by law expressly
provided, subject to revesting in the event of each and every subsequent
default of the character above-mentioned. Upon any termination of the
right of the holders of the shares of the Preferred Stock as a class to
vote for directors as herein provided, the term of office of all directors
then in office elected by the holders of Preferred Stock pursuant to this
Section shall terminate immediately. Whenever the term of office of the
directors elected by the holders of the Preferred Stock pursuant to this
Section shall terminate and the special voting powers vested in the holders
of the Preferred Stock pursuant to this Section shall have expired, the
maximum number of members of the Board of Directors of the Corporation
shall be such number as may be provided for in the By-laws of the
Corporation, irrespective of any increase made pursuant to the provisions
of this Section.
(D) Except as set forth herein, holders of Series A Preferred Stock shall
have no special voting rights and their consent shall not be required (except to
the extent they are entitled to vote with holders of Class A Common Stock as set
forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
--------------------
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
<PAGE>
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on the Series A Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such parity stock in exchange for shares of any stock
of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series A Preferred Stock, except in accordance with a purchase offer made
in writing or by publication (as determined by the Board of Directors) to
all holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative
rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among
the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section,
purchase or otherwise acquire such shares at such time and in such manner.
<PAGE>
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up.
--------------------------------------
(A) Upon any voluntary liquidation, dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock unless, prior thereto, the holders
of shares of Series A Preferred Stock shall have received $1.00 per share, plus
an amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment (the "Series A Liquidation
Preference"). Following the payment of the full amount of the Series A
Liquidation Preference, no additional distributions shall be made to the holders
of shares of Series A Preferred Stock unless, prior thereto, the holders of
shares of Class A Common Stock shall have received an amount per share (the
"Common Adjustment") equal to the quotient obtained by dividing (i) the Series A
Liquidation Preference by (ii) 100 (as appropriately adjusted as set forth in
subparagraph C below to reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Class A Common Stock) (such number in
clause (ii), the "Adjustment Number"). Following the payment of the full amount
of the Series A Liquidation Preference and the Common Adjustment in respect of
all outstanding shares of Series A Preferred Stock and Class A Common Stock,
respectively, holders of Series A Preferred Stock and holders of shares of Class
A Common Stock shall receive their ratable and proportionate share of the
remaining assets to be distributed in the ratio, on a per share basis, of the
Adjustment Number to 1 with respect to such Preferred Stock and Class A Common
Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets available
to permit payment in full of the Series A Liquidation Preference and the
liquidation preferences of all
<PAGE>
other series of Preferred Stock, if any, which rank on a parity with the Series
A Preferred Stock, then such remaining assets shall be distributed ratably to
the holders of such parity shares in proportion to their respective liquidation
preferences.
(C) In the event the Corporation shall at any time following June 13, 1996
(i) declare any dividend on Class A Common Stock payable in shares of Class A
Common Stock, (ii) subdivide the outstanding Class A Common Stock or (iii)
combine the outstanding Class A Common Stock into a smaller number of shares,
then in each such case the Adjustment Number in effect immediately prior to such
event shall be adjusted by multiplying such Adjustment Number by a fraction the
numerator of which is the number of shares of Class A Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Class A Common Stock that were outstanding immediately prior to such
event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Class A Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case the shares
of Series A Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Class A Common Stock is changed or
exchanged. In the event the Corporation shall at any time (i) declare any
dividend on Class A Common Stock payable in shares of Class A Common Stock, (ii)
subdivide the outstanding Class A Common Stock or (iii) combine the outstanding
Class A Common Stock into a smaller number of shares, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Preferred Stock shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of shares of
Class A Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Class A Common Stock that were
outstanding immediately prior to such event.
Section 8. Redemption. The shares of a Series A Preferred Stock shall not
be redeemable by the Corporation. The preceding
<PAGE>
sentence shall not limit the ability of the Corporation to purchase or otherwise
deal in such shares of stock to the extent permitted by law.
Section 9. Ranking. The Series A Preferred Stock shall rank junior to
all other series of the Corporation's preferred stock (whether with or without
par value) as to the payment of dividends and the distribution of assets, unless
the terms of any such series shall provide otherwise.
Section 10. Amendment. The Certificate of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of a
majority or more of the outstanding shares of Series A Preferred Stock, voting
separately as a class.
Section 11. Fractional Shares. Series A Preferred Stock may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
FURTHER RESOLVED, that the Restated Certificate of Incorporation is amended
so that the designation and number of shares of the class and series acted upon
in the forgoing resolution, and the relative rights, preferences and limitations
of such class and series, are as stated in the resolution.
<PAGE>
IN WITNESS WHEREOF, Ryerson Tull, Inc. has caused its corporate seal to be
hereunto affixed and this Certificate to be signed by [NAME][TITLE], and the
same to be attested by Charles B. Salowitz, its Corporate Secretary, this __th
day of _______, 1996.
RYERSON TULL, INC.
By:___________________________
[NAME]
[TITLE]
(SEAL)
Attest:
By:______________________________________
Charles B. Salowitz
Corporate Secretary
<PAGE>
Exhibit B
---------
[Form of Right Certificate]
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER JUNE 13, 2006, OR EARLIER IF THE RIGHTS EXPIRE UNDER
CERTAIN CIRCUMSTANCES OR ARE REDEEMED BY THE COMPANY. THE RIGHTS ARE
SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $1.00 PER RIGHT ON
THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES,
RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED
IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE OR
WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON
OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHT CERTIFICATE AND
THE RIGHTS REPRESENTED HEREBY MAY BECOME VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]*
Right Certificate
Ryerson Tull, Inc.
This certifies that __________________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of _____________________, 1996 (the "Rights
Agreement"), between Ryerson Tull, Inc., a Delaware corporation (the "Company"),
and Harris Trust and Savings Bank (the "Rights Agent"), to purchase from the
Company at any time after the Distribution Date (as such term is defined in the
Rights Agreement) and prior to 5:00 p.m., Chicago Time, on June 13, 2006, or
notice of redemption or exchange at the office of the
- -----------
* The portion of the legend in brackets shall be inserted only if applicable
and shall replace the preceding sentence.
<PAGE>
Rights Agent (or its successors as Rights Agent) designated for such purpose,
one one-hundredth of a fully paid non-assessable share of Series A Junior
Participating Preferred Stock, par value $1.00 per share (the "Preferred
Shares") of the Company at a purchase price of $95.00 per one one-hundredth of a
share (the "Purchase Price") upon presentation and surrender of this Right
Certificate with the appropriate Form of Election to Purchase and related
Certificate duly executed. The number of Rights evidenced by this Right
Certificate (and the number of shares which may be purchased upon exercise
thereof) set forth above, and the Purchase Price per share set forth above, are
the number and Purchase Price as of June 13, 1996, based on the Preferred Shares
as constituted at such date. Capitalized terms not defined in this Right
Certificate that are defined in the Rights Agreement shall have the meanings
ascribed to them in the Rights Agreement.
Upon the occurrence of a Triggering Event, if the Rights evidenced by this
Right Certificate are beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
in the Rights Agreement), (ii) under certain circumstances specified in the
Rights Agreement, a transferee of any such Acquiring Person, Associate or
Affiliate, or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of a person who, after such transfer, became an
Acquiring Person, or an Affiliate or Associate of an Acquiring Person, such
Rights shall become null and void and no holder hereof shall have any right with
respect to such Rights from and after the occurrence of any such Triggering
Event.
As provided in the Rights Agreement, the Purchase Price and the number and
kind of Preferred Shares or other securities, which may be purchased upon the
exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the
<PAGE>
Right Certificates, which limitations of rights include the temporary suspension
of the exercisability of such Rights under certain circumstances specified in
such Rights Agreement. Copies of the Rights Agreement are on file at the above-
mentioned office of the Rights Agent and are also available upon written request
to the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal corporate trust office of the Rights Agent, may be
exchanged for another Right Certificate or other Right Certificates of like
tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of Preferred Shares as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have entitled such holder to
purchase. If this Right Certificate shall be exercised in part, the holder shall
be entitled to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Company at its option at a redemption
price of $1.00 per Right (subject to adjustment pursuant to the Rights
Agreement) at any time prior to the earlier of the close of business on (i) the
Shares Acquisition Date and (ii) the Expiration Date.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share, which may at the election
of the Company be evidenced by depository receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Preferred Shares or
of any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof; or to give or
withhold consent to any corporate action; or to receive notice of meetings or
other actions affecting stockholders (except as provided in
<PAGE>
the Rights Agreement); or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by this Right Certificate shall
have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
<PAGE>
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Dated as of _________ __, 19__
ATTEST: (SEAL) RYERSON TULL, INC.
By:
____________________________ ____________________________
Name: Name:
Title: Title:
Countersigned:
________________________
By: ___________________________
Authorized Signature
<PAGE>
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such holder desires to transfer
the Right Certificate.)
FOR VALUE RECEIVED _____________________________________________
hereby sells, assigns and transfers unto _______________________
_______________________________________________________________________________
(Please print name and address of transferee)
_______________________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ______________________ Attorney,
to transfer the within Right Certificate on the books of the within-named
Company, with full power of substitution.
Date: __________________, 19___
_________________________
Signature
Signature Guaranteed:
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Right Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person
or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined pursuant to the Rights Agreement)
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights
<PAGE>
evidenced by this Right Certificate from any Person who is, was or
subsequently became an Acquiring Person or an Affiliate or Associate of an
Acquiring Person.
Dated: _____________, 19___ ______________________
Signature
<PAGE>
NOTICE
------
The signature to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
<PAGE>
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise Rights represented by the
Right Certificate.)
To: Ryerson Tull, Inc.
The undersigned hereby irrevocably elects to exercise ______ Rights
represented by this Right Certificate to purchase the Preferred Shares issuable
upon the exercise of the Rights (or such other securities of the Company or of
any other person which may be issuable upon the exercise of the Rights) and
requests that certificates for such shares be issued in the name of:
Please insert social security
or other identifying number:____________________________________
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance of such Rights shall
be registered in the name of and delivered to:
Please insert social security
or other identifying number:____________________________________
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
_______________________________________________________________________________
Dated: __________________, 19___ _____________________________
Signature
Signature Guaranteed:
<PAGE>
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Right Certificate from any
Person who is, was or became an Acquiring Person or an Affiliate or Associate of
an Acquiring Person.
Dated: ____________, 19___ ______________________________
Signature
NOTICE
------
The signature to the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
<PAGE>
===========================================
RYERSON TULL, INC.
TO
THE BANK OF NEW YORK
Trustee
_________
INDENTURE
Dated as of ____________, 1996
Debt Securities
===========================================
<PAGE>
Ryerson Tull, Inc.
Certain Sections of this Indenture relating to
Sections 3.10 through 3.18, inclusive, of the
Trust Indenture Act of 1939, as amended:
<TABLE>
<CAPTION>
Provision of Trust
Indenture Act of 1939,
as amended Indenture Section
<S> <C>
(S) 310(a)(1) ................................... 6.9
(a)(2) ................................... 6.9
(a)(3) ................................... Not Applicable
(a)(4) ................................... Not Applicable
(b) ................................... 6.8, 6.10
(c) ................................... Not Applicable
(S) 311(a) ................................... 6.13
(b) ................................... 6.13
(c) ................................... Not Applicable
(S) 312(a) ................................... 7.1, 7.2(a)
(b) ................................... 7.2(b)
(c) ................................... 7.2(c)
(S) 313(a) ................................... 7.3(a)
(b) ................................... 7.3(a)
(c) ................................... 7.3(a)
(d) ................................... 7.3(b)
(S) 314(a) ................................... 7.4
(a)(4) ................................... 1.1, 10.4
(b) ................................... Not Applicable
(c)(1) ................................... 1.2
(c)(2) ................................... 1.2
(c)(3) ................................... Not Applicable
(d) ................................... Not Applicable
(e) ................................... 1.2
(S) 315(a) ................................... 6.1
(b) ................................... 6.2
(c) ................................... 6.1
(d) ................................... 6.1
(e) ................................... 5.14
(S) 316(a) ................................... 1.1
(a)(1)(A) ................................... 5.2, 5.12
(a)(1)(B) ................................... 5.13
(a)(2) ................................... Not Applicable
(b) ................................... 5.8
(c) ................................... 1.4(c)
(S) 317(a)(1) ................................... 5.3
(a)(2) ................................... 5.4
(b) ................................... 10.3
(S) 318(a) ................................... 1.7
- ---------------------------
</TABLE>
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
RECITALS OF THE COMPANY.................................................... 1
ARTICLE I
Definitions and Other Provisions
of General Application
Section 1.1 Definitions.............................................. 1
Act........................................................... 2
Affiliate..................................................... 2
Asset Disposition............................................. 2
Attributable Debt............................................. 2
Authenticating Agent.......................................... 3
Board of Directors............................................ 3
Board Resolution.............................................. 3
Book-Entry Security........................................... 3
Business Day.................................................. 3
Capital Lease Obligations..................................... 3
Capital Stock................................................. 3
Commission.................................................... 3
Company....................................................... 4
Company Request" or "Company Order............................ 4
Consolidated Net Income....................................... 4
Consolidated Net Tangible Assets.............................. 4
Consolidated Net Worth........................................ 4
Corporate Trust Office........................................ 4
corporation................................................... 4
Debt.......................................................... 4
Defaulted Interest............................................ 5
Depository.................................................... 5
Disqualified Stock............................................ 5
Event of Default.............................................. 5
- ------------------------
NOTE: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
ii
<PAGE>
Funded Debt................................................. 5
Guarantee................................................... 5
Holder...................................................... 6
Incur....................................................... 6
Indenture................................................... 6
interest.................................................... 6
Interest Payment Date....................................... 7
Investment Grade............................................ 7
Lien........................................................ 7
Maturity.................................................... 7
Moody's..................................................... 7
Officers' Certificate....................................... 7
Opinion of Counsel.......................................... 7
Original Issue Discount Security............................ 7
Outstanding................................................. 7
Paying Agent................................................ 8
Permitted Liens............................................. 8
Person...................................................... 9
Place of Payment............................................ 9
Predecessor Security........................................ 9
Principal Property.......................................... 9
Redemption Date............................................. 9
Redemption Price............................................ 9
Regular Record Date......................................... 9
Restricted Subsidiary....................................... 10
S&P......................................................... 10
Sale and Leaseback Transaction.............................. 10
Securities.................................................. 10
Security Register" and "Security Registrar.................. 10
Special Record Date......................................... 10
Stated Maturity............................................. 10
Subsidiary.................................................. 10
Trust Indenture Act......................................... 10
Trustee..................................................... 11
U.S. Government Obligation.................................. 11
Vice President.............................................. 11
Voting Stock................................................ 11
- ------------------------
NOTE: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
iii
<PAGE>
Wholly-Owned Restricted Subsidiary............................ 11
Section 1.2 Compliance Certificates and Opinions.................... 11
Section 1.3 Form of Documents Delivered to Trustee.................. 12
Section 1.4 Acts of Holders; Record Dates........................... 13
Section 1.5 Notices, Etc. to Trustee and Company.................... 14
Section 1.6 Notice to Holders; Waiver............................... 14
Section 1.7 Conflict with Trust Indenture Act....................... 15
Section 1.8 Effect of Headings and Table of Contents................ 15
Section 1.9 Successors and Assigns.................................. 15
Section 1.10 Separability Clause..................................... 15
Section 1.11 Benefits of Indenture................................... 15
Section 1.12 Governing Law........................................... 15
Section 1.13 Legal Holidays.......................................... 15
ARTICLE II
Security Forms
Section 2.1 Forms Generally......................................... 16
Section 2.2 Form of Trustee's Certificate of Authentication......... 16
ARTICLE III
The Securities
Section 3.1 Amount Unlimited; Issuable in Series.................... 17
Section 3.2 Denominations........................................... 19
Section 3.3 Execution, Authentication, Delivery and Dating.......... 19
Section 3.4 Temporary Securities.................................... 21
Section 3.5 Registration, Registration of Transfer and Exchange..... 22
Section 3.6 Mutilated, Destroyed, Lost and Stolen Securities........ 23
Section 3.7 Payment of Interest; Interest Rights Preserved.......... 24
Section 3.8 Persons Deemed Owners................................... 25
Section 3.9 Cancellation............................................ 25
Section 3.10 Computation of Interest................................. 26
Section 3.11 CUSIP Numbers........................................... 26
- ------------------------
NOTE: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
iv
<PAGE>
ARTICLE IV
Satisfaction and Discharge
Section 4.1 Satisfaction and Discharge of Indenture................ 26
Section 4.2 Application of Trust Money............................. 27
ARTICLE V
Remedies
Section 5.1 Events of Default...................................... 28
Section 5.2 Acceleration of Maturity; Rescission and Annulment..... 30
Section 5.3 Collection of Indebtedness and Suits for Enforcement
by Trustee........................................... 31
Section 5.4 Trustee May File Proofs of Claim....................... 31
Section 5.5 Trustee May Enforce Claims Without Possession of
Securities........................................... 32
Section 5.6 Application of Money Collected......................... 32
Section 5.7 Limitation on Suits.................................... 33
Section 5.8 Unconditional Right of Holders to Receive Principal,
Premium and Interest................................. 33
Section 5.9 Restoration of Rights and Remedies..................... 33
Section 5.10 Rights and Remedies Cumulative......................... 34
Section 5.11 Delay or Omission Not Waiver........................... 34
Section 5.12 Control by Holders..................................... 34
Section 5.13 Waiver of Past Defaults................................ 34
Section 5.14 Undertaking for Costs.................................. 35
Section 5.15 Waiver of Stay or Extension Laws....................... 35
ARTICLE VI
The Trustee
Section 6.1 Certain Duties and Responsibilities.................... 36
Section 6.2 Notice of Defaults..................................... 36
Section 6.3 Certain Rights of Trustee.............................. 36
Section 6.4 Not Responsible for Recitals or Issuance of Securities. 37
- ------------------------
NOTE: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
v
<PAGE>
Section 6.5 May Hold Securities.................................... 38
Section 6.6 Money Held in Trust.................................... 38
Section 6.7 Compensation and Reimbursement......................... 38
Section 6.8 Disqualification; Conflicting Interests................ 39
Section 6.9 Corporate Trustee Required; Eligibility................ 39
Section 6.10 Resignation and Removal; Appointment of Successor...... 39
Section 6.11 Acceptance of Appointment by Successor................. 41
Section 6.12 Merger, Conversion, Consolidation or Succession
to Business.......................................... 42
Section 6.13 Preferential Collection of Claims Against Company...... 42
Section 6.14 Appointment of Authenticating Agent.................... 43
Section 6.15 Trustee's Application for Instructions from the
Company.............................................. 45
ARTICLE VII
Holders' Lists and Reports
by Trustee and Company
Section 7.1 Company to Furnish Trustee Names and Addresses
of Holders........................................... 45
Section 7.2 Preservation of Information; Communications to
Holders.............................................. 45
Section 7.3 Reports by Trustee..................................... 46
Section 7.4 Reports by Company..................................... 46
ARTICLE VIII
Consolidation, Merger, Conveyance,
Transfer or Lease
Section 8.1 Company May Consolidate, Etc. Only on Certain Terms.... 47
Section 8.2 Successor Substituted.................................. 48
ARTICLE IX
Supplemental Indentures
Section 9.1 Supplemental Indentures Without Consent of Holders..... 48
Section 9.2 Supplemental Indentures with Consent of Holders........ 49
Section 9.3 Execution of Supplemental Indentures................... 51
- ------------------------
NOTE: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
vi
<PAGE>
Section 9.4 Effect of Supplemental Indentures...................... 51
Section 9.5 Conformity with Trust Indenture Act.................... 51
Section 9.6 Reference in Securities to Supplemental Indentures..... 51
ARTICLE X
Covenants
Section 10.1 Payment of Principal, Premium and Interest............. 52
Section 10.2 Maintenance of Office or Agency........................ 52
Section 10.3 Money for Securities Payments to Be Held in Trust...... 52
Section 10.4 Statement by Officers as to Default.................... 53
Section 10.5 Existence.............................................. 54
Section 10.6 Restrictions on Secured Debt........................... 54
Section 10.7 Limitation on Sales and Leasebacks..................... 55
Section 10.8 Limitations on Restricted Payments..................... 56
Section 10.9 Limitations on Transactions with Affiliates............ 57
Section 10.10 Waiver of Certain Covenants............................ 58
Section 10.11 Provision of Financial Information..................... 58
Section 10.12 Calculation of Original Issue Discount................. 58
Section 10.13 Appointments to Fill Vacancies in Trustee's Office..... 58
ARTICLE XI
Redemption of Securities
Section 11.1 Applicability of Article............................... 59
Section 11.2 Election to Redeem; Notice to Trustee.................. 59
Section 11.3 Selection by Trustee of Securities to Be Redeemed...... 59
Section 11.4 Notice of Redemption................................... 60
Section 11.5 Deposit of Redemption Price............................ 61
Section 11.6 Securities Payable on Redemption Date.................. 61
Section 11.7 Securities Redeemed in Part............................ 61
- ------------------------
NOTE: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
vii
<PAGE>
ARTICLE XII
Sinking Funds
Section 12.1 Applicability of Article............................... 62
Section 12.2 Satisfaction of Sinking Fund Payments with Securities.. 62
Section 12.3 Redemption of Securities for Sinking Fund.............. 62
ARTICLE XIII
Defeasance and Covenant Defeasance
Section 13.1 Applicability of Article; Company's Option
to Effect Defeasance or Covenant Defeasance.......... 63
Section 13.2 Defeasance and Discharge............................... 63
Section 13.3 Covenant Defeasance.................................... 64
Section 13.4 Conditions to Defeasance or Covenant Defeasance........ 64
Section 13.5 Deposited Money and U.S. Government Obligations
to be Held in Trust; Other Miscellaneous Provision... 66
Section 13.6 Reinstatement.......................................... 66
- ------------------------
NOTE: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
viii
<PAGE>
INDENTURE, dated as of _____________, 1996 between Ryerson Tull, Inc.,
a corporation duly organized and existing under the laws of the State of
Delaware (herein called the "Company"), having its principal office at 2621 West
15th Place, Chicago, Illinois 60608, and The Bank of New York, a New York
banking corporation, as Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
"Securities"), to be issued in one or more series as in this Indenture provided.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities or of series thereof, as
follows:
ARTICLE I
Definitions and Other Provisions
of General Application
Section 1.1 Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) Unless otherwise specified herein, all accounting terms used in
this Indenture are to be interpreted, all accounting determinations under
this Indenture are to be made, and all financial statements required
hereunder are to be prepared (except for
1
<PAGE>
changes concurred in by the Company's independent public accountants) in
accordance with generally accepted accounting principles applied on a basis
consistent with the audited consolidated financial statements of the
Company as of December 31, 1995; provided that, if the Company or any
Restricted Subsidiary has adopted since such date or adopts at any time
after the date of this Indenture a change in accounting principles from
those used in preparing such consolidated financial statements that affects
in any material respect the computation of or compliance with any of the
covenants contained in this Indenture, then, unless this Indenture shall
have been amended to modify the covenants in this Indenture to take account
of such change in accounting principles, the Company shall continue to
compute all financial restrictions and ratios contained in such covenants
based on accounting principles in effect prior to the adoption of such
change; and
(4) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"Act," when used with respect to any Holder, has the meaning specified
in Section 1.4.
"Affiliate" of any specified Person means any other Person, directly
or indirectly, controlling or controlled by or under direct or indirect common
control with any specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Asset Disposition" by the Company or any of its Restricted
Subsidiaries means any sale, lease, conveyance, transfer or other disposition
(including, without limitation, by way of a merger, consolidation, spin-off,
sale of Capital Stock or otherwise) of (i) the shares of Capital Stock of a
Restricted Subsidiary of the Company (other than directors' qualifying shares),
(ii) substantially all of the assets representing a division or line of the
business of the Company or any of its Restricted Subsidiaries or (iii) other
assets of the Company or any of its Restricted Subsidiaries outside of the
ordinary course of business (each referred to for the purposes of this
definition as a "disposition"), in each case by the Company or any of its
Restricted Subsidiaries (other than a disposition by such a Restricted
Subsidiary to the Company or by the Company to a Restricted Subsidiary or by a
Restricted Subsidiary to another Restricted Subsidiary).
"Attributable Debt" means, with respect to a lease in a Sale and
Leaseback Transaction, the total net amount of rent required to be paid during
the remaining primary term of such lease, discounted at a rate per annum equal
to the interest rate implicit in such lease, calculated in accordance with
generally accepted accounting practices. The net amount of rent
2
<PAGE>
required to be paid under any such lease for any such period shall be the
aggregate amount of rent payable by the lessee with respect to such period after
excluding amounts required to be paid on account of maintenance, repairs,
insurance, taxes, assessments, utility, operating and labor costs and similar
charges.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 6.14 to act on behalf of the Trustee to authenticate
Securities of one or more series.
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Book-Entry Security" means a Security issued to the Depository or its
nominee, and registered in the name of such Depository or nominee.
"Business Day," when used with respect to any Place of Payment, means
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in that Place of Payment are authorized or obligated by law
or executive order to close.
"Capital Lease Obligations" of any Person means the obligations to pay
rent or other amounts under a lease of (or other Debt arrangements conveying the
right to use) real or personal property of such Person that are required to be
classified and accounted for as a capital lease or a liability on the face of a
balance sheet of such Person in accordance with generally accepted accounting
principles, and the amount of such obligations shall be the capitalized amount
thereof in accordance with generally accepted accounting principles and the
stated maturity thereof shall be the date of the last payment of rent or any
other amount due under such lease prior to the first date upon which such lease
may be terminated by the lessee without payment of a penalty.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock or
other equity participation, including partnership interests, whether general or
limited, of such Person.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934, as
amended, or, if at any time after the execution of this instrument such
Commission is not existing and performing the duties now assigned to it under
the Trust Indenture Act, then the body performing such duties at such time.
3
<PAGE>
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its President or
a Vice President, and by its Treasurer, an Assistant Treasurer, its Controller,
its Secretary or an Assistant Secretary, and delivered to the Trustee.
"Consolidated Net Income" of the Company means for any period the
consolidated net income (or loss) of the Company and its Restricted Subsidiaries
for such period determined on a consolidated basis in accordance with generally
accepted accounting principles, provided that there shall be excluded therefrom
(i) the net income (or loss) of any Person acquired by the Company or a
Restricted Subsidiary in a pooling-of-interests transaction for any period prior
to the date of such transaction, (ii) the net income (but not net loss) of any
Restricted Subsidiary which is subject to restrictions which prevent the payment
of dividends or the making of distributions to the Company to the extent of such
restrictions, (iii) the net income (or loss) of any Person that is not a
Restricted Subsidiary except to the extent of the amount of dividends or other
distributions actually paid to the Company by such Person during such period,
(iv) gains or losses on Asset Dispositions by the Company or its Restricted
Subsidiaries and (v) all extraordinary gains and extraordinary losses.
"Consolidated Net Tangible Assets" means the aggregate amount of
assets of the Company and its Restricted Subsidiaries after deducting (i) all
current liabilities other than commercial paper, short-term bank debt and
current maturities of long-term debt and (ii) all goodwill and other
intangibles.
"Consolidated Net Worth" means the consolidated stockholders' equity
of the Company and its Restricted Subsidiaries, less amounts attributable to
Disqualified Stock.
"Corporate Trust Office" means the principal office of the Trustee in
New York, at which at any particular time its corporate trust business shall be
administered, which currently is located at 101 Barclay Street, 21 West, New
York, New York 10286.
"corporation" means a corporation, association, company, joint-stock
company or business trust.
"Debt" means (without duplication), with respect to any Person,
whether recourse is to all or a portion of the assets of such Person and whether
or not contingent, (i) every obligation of such Person for money borrowed, (ii)
every obligation of such Person evidenced by bonds, debentures, notes or other
similar instruments, including obligations Incurred in connection with the
acquisition of property, assets or businesses, (iii) every reimbursement
obligation of such Person with respect to letters of credit, bankers'
acceptances or similar
4
<PAGE>
facilities issued for the account of such Person, (iv) every obligation of such
Person issued or assumed as the deferred purchase price of property or services
(but excluding trade accounts payable or accrued liabilities arising in the
ordinary course of business that are not overdue by more than 90 days or that
are being contested in good faith), (v) every Capital Lease Obligation of such
Person, (vi) the maximum fixed redemption or repurchase price of Disqualified
Stock of such Person, (vii) every obligation of such Person under interest rate
swap or similar agreements, or foreign currency or commodity hedge, exchange or
similar agreements of such Person, (viii) the Attributable Debt with respect to
any Sale and Leaseback Transaction to which such Person is a party and (ix)
every obligation of the type referred to in clauses (i) through (viii) of
another Person and all dividends of another Person the payment of which, in
either case, such Person has Guaranteed or is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise.
"Defaulted Interest" has the meaning specified in Section 3.7.
"Depository" means, with respect to the Securities of any series
issuable or issued in whole or in part in the form of one or more Book-Entry
Securities, the Person designated as Depository for such series by the Company
pursuant to Section 3.1, initially The Depository Trust Company, its nominees
and their respective successors, which Person shall be a clearing agency
registered under the Securities Exchange Act of 1934, as amended.
"Disqualified Stock" means, with respect to Securities of any series,
any Capital Stock that, by its terms (or by the terms of any security into which
it is convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable in cash, pursuant to a sinking fund
obligation or otherwise, or is redeemable in cash at the option of the holder
thereof, in whole or in part, on or prior to the date on which the Securities of
such series mature; provided, however, that Disqualified Stock shall not include
any Capital Stock held by or issued in connection with an employee benefit plan
or program in which employees or directors of the Company or any Subsidiary of
the Company participate.
"Event of Default" has the meaning specified in Section 5.1.
"Funded Debt" means (i) all Debt having a maturity of more than 12
months from the date as of which the determination is made or having a maturity
of 12 months or less but by its terms being renewable or extendible beyond 12
months from such date at the option of any obligor thereon and (ii) Capital
Lease Obligations payable more than 12 months from such date (such Capital Lease
Obligations to be included as Funded Debt at the amount so capitalized at the
date of such computation and to be included for the purposes of the definition
of Consolidated Net Tangible Assets both as an asset and as Funded Debt at the
amount so capitalized).
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person guaranteeing any Debt of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, and including,
without limitation, any obligation of such Person, directly or indirectly (i) to
purchase or pay (or advance or supply funds for the purchase or
5
<PAGE>
payment of) such Debt or to purchase (or to advance or supply funds for the
purchase of) any interest in or security for the payment of such Debt, (ii) to
purchase property, securities or services for the purpose of assuring the holder
of such Debt of the payment of such Debt or (iii) to maintain working capital,
equity capital or other financial statement condition or liquidity of the
primary obligor so as to enable the primary obligor to pay such Debt (and
"Guaranteed" and "Guaranteeing" shall have meanings correlative to the
foregoing); provided, however, that a Guarantee by any Person shall not include
endorsements by such Person for collection or deposit, in either case, in the
ordinary course of business; and provided, further, that the term "Guarantee"
shall not include contracts made in the ordinary course of business of the
Company and its Restricted Subsidiaries for the purchase of utilities, services
and raw materials that require payment to be made to the provider of utilities,
services or raw materials regardless of whether delivery is ever made of such
utilities, services or raw materials so long as the quantities of utilities,
services or raw materials purchased under each such contract do not exceed the
Company's or its contracting Restricted Subsidiary's reasonably anticipated
consumption thereof on the date of the contract. The amount of a Guarantee shall
be equal to the amount of the obligation covered thereby.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Incur" means, with respect to any Debt or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise), assume,
Guarantee or otherwise become liable in respect of such Debt or other obligation
or the recording, as required pursuant to generally accepted accounting
principles or otherwise, of any such Debt or other obligation on the balance
sheet of any such Person (and "Incurrence," "Incurred," "Incurrable" and
"Incurring" shall have meanings correlative to the foregoing); provided,
however, that a change in generally accepted accounting principles that results
in an obligation of such Person that exists at such time becoming Debt shall not
be deemed an Incurrence of such Debt, and "Incur" means with respect to any
Lien, to create, incur or assume such Lien on any asset or property (and
"Incurrence," "Incurred," "Incurrable" and "Incurring" shall have meanings
correlative to the foregoing).
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument, and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively. The term "Indenture" shall also include the terms of particular
series of Securities established as contemplated by Section 3.1.
"interest," when used with respect to an Original Issue Discount
Security which by its terms bears interest only after Maturity, means interest
payable after Maturity.
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"Interest Payment Date," when used with respect to any Security, means
the Stated Maturity of an installment of interest on such Security.
"Investment Grade" means Baa3 or better in the case of a rating from
Moody's and BBB- or better in the case of a rating from S&P.
"Lien" means, with respect to any property or assets, any mortgage or
deed of trust, pledge, hypothecation, assignment, deposit arrangement, security
interest, lien, charge, easement (other than any easement not materially
impairing usefulness or marketability), encumbrance, preference, priority or
other security agreement, or any equivalent of any of the foregoing under the
laws of any applicable jurisdiction, on or with respect to such property or
assets (including, without limitation, any conditional sale or other title
retention agreement having substantially the same economic effect as any of the
foregoing); provided, however, that Lien shall not include a Permitted Lien.
"Maturity," when used with respect to any Security, means the date on
which the principal of such Security or an installment of principal becomes due
and payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Moody's" mean Moody's Investors Service, Inc. or any successor
thereto.
"Officers' Certificate" means a certificate signed on behalf of the
Company by its Chairman of the Board, its President or a Vice President, and by
its Treasurer, an Assistant Treasurer, its Controller, its Secretary or an
Assistant Secretary, and delivered to the Trustee. One of the officers signing
an Officers' Certificate given pursuant to Section 10.4 shall be the principal
executive, financial or accounting officer of the Company.
"Opinion of Counsel" means a written opinion of counsel, who may be an
employee of the Company, and who shall be reasonably acceptable to the Trustee.
"Original Issue Discount Security" means any Security which provides
for an amount less than the principal amount thereof to be due and payable upon
a declaration of acceleration of the Maturity thereof pursuant to Section 5.2.
"Outstanding," when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Securities for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Trustee or any Paying Agent
(other than the
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Company) in trust or set aside and segregated in trust by the Company (if
the Company shall act as its own Paying Agent) for the Holders of such
Securities; provided, however, that, if such Securities are to be redeemed,
notice of such redemption has been duly given pursuant to this Indenture or
provision therefor satisfactory to the Trustee has been made;
(iii) Securities as to which defeasance has been effected pursuant to
Section 13.2; and
(iv) Securities which have been paid pursuant to Section 3.6 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given, made or taken any
request, demand, authorization, direction, notice, consent, waiver or other
action hereunder as of any date, (i) the principal amount of an Original Issue
Discount Security that shall be deemed to be Outstanding shall be the amount of
the principal thereof that would be due and payable as of the date of such
determination upon acceleration of the Maturity thereof pursuant to Section 5.2,
(ii) if, as of such date, the principal amount payable at the Stated Maturity of
a Security is not determinable, the principal amount of such Security which
shall be deemed to be Outstanding shall be the amount as specified or determined
as contemplated by Section 3.1, (iii) the principal amount of a Security
denominated in one or more foreign currencies or currency units shall be the
U.S. dollar equivalent, determined in the manner provided as contemplated by
Section 3.1 on the date of original issuance of such Security, of the principal
amount (or, in the case of a Security described in clause (i) or (ii) above, the
U.S. dollar equivalent on the date of original issuance of such Security of the
amount determined as provided in (i) or (ii) above) of such Security and (iv)
Securities owned by the Company or any other obligor upon the Securities or any
Affiliate of the Company or of such other obligor shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent, waiver or other action, only Securities which the
Trustee actually knows to be so owned shall be so disregarded. Securities so
owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to such Securities and that the pledgee is not the
Company or any other obligor upon the Securities or any Affiliate of the Company
or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or any premium or interest on any Securities on behalf of the
Company.
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"Permitted Liens" means (i) deposits, liens or pledges of personal
property to enable the Company or a Restricted Subsidiary to exercise any
privilege or license, or to secure payments of worker's compensation,
unemployment insurance or social security obligations, or to secure the
performance of contracts or leases to which the Company or a Restricted
Subsidiary is a party, or to secure public or statutory obligations of the
Company or a Restricted Subsidiary, or other similar deposits, liens, or pledges
of personal property made in the ordinary course of business, (ii) mechanics',
workmen's, repairmen's or carriers' liens, or other similar liens arising in the
ordinary course of business, or deposits, liens or pledges of personal property
to obtain the release of any such liens, (iii) liens for taxes, assessments and
other governmental charges not delinquent or the payment of which is being
contested by the Company or a Restricted Subsidiary in good faith and (iv)
bankers' liens and rights of setoff arising in the ordinary course of business
of the Company or any Restricted Subsidiary under common law or by statute.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Place of Payment," when used with respect to the Securities of any
series, means the place or places where the principal of and any premium and
interest on the Securities of that series are payable as specified as
contemplated by Section 3.1.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.6 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Principal Property" means any facility owned by the Company or any
Subsidiary the gross book value of which (including related land, improvements,
machinery and equipment so owned, without deduction of any depreciation
reserves) on the date as of which the determination is being made exceeds 2% of
Consolidated Net Tangible Assets.
"Redemption Date," when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price," when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Regular Record Date" for the interest payable on any Interest Payment
Date on the Securities of any series means the date specified for that purpose
as contemplated by Section 3.1.
"Restricted Payment" has the meaning specified in Section 10.8.
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"Restricted Subsidiary" means any Subsidiary of the Company which owns
a Principal Property and any other Subsidiary designated as a Restricted
Subsidiary by the Board of Directors.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw Hill Companies, Inc., or any successor thereto.
"Sale and Leaseback Transaction" means an arrangement with any lender
or investor or to which any lender or investor is a party providing for the
leasing by such Person of any property or asset of such Person that has been or
is being sold or transferred by such Person more than 180 days after the
acquisition thereof or the completion of construction or commencement of
operation thereof to such lender or investor or to any person to whom funds have
been or are to be advanced by such lender or investor on the security of such
property or asset. The stated maturity of such arrangement shall be the date of
the last payment of rent or any other amount due under such arrangement prior to
the first date on which such arrangement may be terminated by the lessee without
payment of a penalty.
"Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities authenticated and delivered
under this Indenture.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 3.5.
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 3.7.
"Stated Maturity," when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.
"Subsidiary" of any Person means (i) a corporation more than 50% of
the outstanding Voting Stock of which is owned, directly or indirectly, by such
Person or by one or more other Subsidiaries of such Person or by such Person and
one or more Subsidiaries thereof or (ii) any other Person (other than a
corporation) in which such Person, or one or more other Subsidiaries of such
Person or such Person and one or more other Subsidiaries thereof, directly or
indirectly, has at least a majority ownership and power to direct the policies,
management and affairs thereof.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; provided, however,
that if the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.
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"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder, and
if at any time there is more than one such Person, "Trustee" as used with
respect to the Securities of any series shall mean the Trustee with respect to
Securities of that series.
"U.S. Government Obligation" means (x) any security that is (i) a
direct obligation of the United States of America for the payment of which the
full faith and credit of the United States of America is pledged or (ii) an
obligation of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation of the United
States of America, that, in either case (i) or (ii), is not callable or
redeemable at the option of the issuer thereof, and (y) any depositary receipt
issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as
custodian with respect to any U.S. Government Obligation that is specified in
clause (x) above and held by such bank for the account of the holder of such
depositary receipt, or for the account of the holder of such depositary receipt,
or with respect to any specific payment of principal of or interest on any U.S.
Government Obligation that is so specified and held, provided that (except as
required by law) such custodian is not authorized to make any deduction from the
amount payable to the holder of such depositary receipt from any amount received
by the custodian in respect of the U.S. Government Obligation or the specific
payment of principal or interest evidenced by such depositary receipt.
"Vice President," when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president."
"Voting Stock" means Capital Stock which ordinarily has voting power
for the election of directors (or persons performing similar functions), whether
at all times or only so long as no senior class of securities has such voting
power by reason of any contingency.
"Wholly-Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock of which (other
than directors' qualifying shares) shall at the time be owned by such Person or
by one or more Wholly-Owned Restricted Subsidiaries of such Person or by such
Person and one or more Wholly-Owned Restricted Subsidiaries of such Person.
Section 1.2 Compliance Certificates and Opinions.
------------------------------------
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee such certificates and opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of
an Officers' Certificate, if to be given by an officer of the
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Company, or an Opinion of Counsel, if to be given by counsel, and shall comply
with the requirements of the Trust Indenture Act and any other requirements set
forth in this Indenture. In the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture relating to such particular application or request, however,
no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.3 Form of Documents Delivered to Trustee.
--------------------------------------
In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one
such Person, or that they be so certified or covered by only one document,
but one such Person may certify or give an opinion with respect to some
matters and one or more other such Persons as to other matters, and any
such Person may certify or give an opinion as to such matters in one or
several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such officer knows, or
in the exercise of reasonable care should know, that the certificate or
opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such certificate or
Opinion of Counsel may be based, insofar as it relates to factual matters,
upon a certificate or opinion of, or representations by, an officer or
officers of the Company stating that the information with respect to such
factual matters is in the possession of the Company, unless such counsel
knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.
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Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be
consolidated and form one instrument.
Section 1.4 Acts of Holders; Record Dates.
-----------------------------
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by this Indenture to
be given or taken by Holders may be embodied in and evidenced by one or
more instruments of substantially similar tenor signed by such Holders in
person or by agent duly appointed in writing; and, except as herein
otherwise expressly provided, such action shall become effective when such
instrument or instruments are delivered to the Trustee and, where it is
hereby expressly required, to the Company. Such instrument or instruments
(and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such instrument
or instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 6.1) conclusive in favor of the Trustee
and the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Where such execution is by a signer acting in a
capacity other than his individual capacity, such certificate or affidavit
shall also constitute sufficient proof of his authority. The fact and date
of the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other manner which the
Trustee deems sufficient.
(c) The Company may, in the circumstances permitted by the Trust
Indenture Act, fix any day as the record date for the purpose of
determining the Holders of Securities of any series entitled to give, make
or take any request, demand, authorization, direction, notice, consent,
waiver or other action, or to vote on any action, authorized or permitted
to be given or taken by Holders of Securities of such series. If not set
by the Company prior to the first solicitation of a Holder of Securities of
such series made by any Person in respect of any such action, or, in the
case of any such vote, prior to such vote, the record date for any such
action or vote shall be the 30th day (or, if later, the date of the most
recent list of Holders required to be provided pursuant to Section 7.1)
prior to such first solicitation or vote, as the case may be. With regard
to any record date for action to be taken by the Holders of one or more
series of Securities, only the Holders of Securities of such series on such
date (or their duly designated proxies) shall be entitled to give or take,
or vote on, the relevant action.
(d) The ownership of Securities shall be proved by the Security
Register.
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(e) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security issued
upon the registration of transfer thereof or in exchange therefor or in
lieu thereof in respect of anything done, omitted or suffered to be done by
the Trustee or the Company in reliance thereon, whether or not notation of
such action is made upon such Security.
Section 1.5 Notices, Etc. to Trustee and Company.
------------------------------------
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office, Attention: Corporate
Trust Administration, or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first-class postage prepaid, to the Company
addressed to it at the address of its principal office specified in the
first paragraph of this instrument, Attention: Corporate Secretary or at
any other address previously furnished in writing to the Trustee by the
Company.
Section 1.6 Notice to Holders; Waiver.
-------------------------
Where this Indenture provides for notice to Holders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each
Holder affected by such event, at his address as it appears in the Security
Register, not later than the latest date (if any), and not earlier than the
earliest date (if any), prescribed for the giving of such notice. In any
case where notice to Holders is given by mail, neither the failure to mail
such notice, nor any defect in any notice so mailed, to any particular
Holder shall affect the sufficiency of such notice with respect to other
Holders. Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such
notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed
with the Trustee, but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made as shall be satisfactory to
the Trustee shall constitute a sufficient notification for every purpose
hereunder.
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Section 1.7 Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be
a part of and govern this Indenture, the latter provision shall control.
If any provision of this Indenture modifies or excludes any provision of
the Trust Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so modified or to
be excluded, as the case may be.
Section 1.8 Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
Section 1.9 Successors and Assigns.
All covenants and agreements in this Indenture by the Company
shall bind its successors and assigns, whether so expressed or not.
Section 1.10 Separability Clause.
In case any provision in this Indenture or in the Securities shall
be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
Section 1.11 Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder and the Holders, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
Section 1.12 Governing Law.
This Indenture and the Securities shall be governed by and
construed in accordance with the laws of the State of New York without
giving effect to the conflict of laws provisions thereof.
Section 1.13 Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or
Stated Maturity of any Security shall not be a Business Day at any Place of
Payment, then (notwithstanding any other provision of this Indenture or of
the Securities (other than a provision of the Securities of any series
which specifically states that such provision shall apply in lieu of this
Section)) payment of interest or principal (and premium, if any) need not
be made at such Place of
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Payment on such date, but may be made on the next succeeding Business Day
at such Place of Payment with the same force and effect as if made on the
Interest Payment Date or Redemption Date, or at the Stated Maturity;
provided, however, that no interest shall accrue for the period from and
after such Interest Payment Date, Redemption Date or Stated Maturity, as
the case may be.
ARTICLE II
Security Forms
Section 2.1 Forms Generally.
The Securities of each series shall be substantially in the form
as shall be established by or pursuant to a Board Resolution or in one or
more indentures supplemental hereto, in each case with such appropriate
insertions, omissions, substitutions and other variations as are required
or permitted by this Indenture, and may have such letters, numbers or other
marks of identification and such legends or endorsements placed thereon as
may be required to comply with the rules of any securities exchange or
Depository therefor or as may, consistently herewith, be determined by the
officers executing such Securities, as evidenced by their execution of the
Securities. If the form of Securities of any series is established by
action taken pursuant to a Board Resolution, a copy of an appropriate
record of such action shall be certified by the Secretary or an Assistant
Secretary of the Company and delivered to the Trustee at or prior to the
delivery of the Company Order contemplated by Section 3.3 for the
authentication and delivery of such Securities.
The definitive Securities shall be printed, lithographed or
engraved on steel engraved borders or may be produced in any other manner,
all as determined by the officers executing such Securities, as evidenced
by their execution of such Securities.
Section 2.2 Form of Trustee's Certificate of Authentication.
The Trustee's certificates of authentication shall be in
substantially the following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
The Bank of New York,
As Trustee
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By:________________________________
Authorized Signatory
ARTICLE III
The Securities
Section 3.1 Amount Unlimited; Issuable in Series.
------------------------------------
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution and, subject to Section 3.3,
set forth, or determined in the manner provided, in an Officers' Certificate, or
established in one or more indentures supplemental hereto, prior to the issuance
of Securities of any series;
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from Securities of any other
series);
(2) any limit upon the aggregate principal amount of the Securities
of the series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Securities of the
series pursuant to Section 3.4, 3.5, 3.6, 9.6 or 11.7 and except for any
Securities which, pursuant to Section 3.3, are deemed never to have been
authenticated and delivered hereunder);
(3) the Person to whom any interest on a Security of the series shall
be payable, if other than the Person in whose name that Security (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest;
(4) the date or dates on which the principal of the Securities of the
series is payable;
(5) the rate or rates at which the Securities of the series shall
bear interest, if any, or the method of calculating such rate or rates of
interest, the date or dates from which such interest shall accrue, the
Interest Payment Dates on which any such interest shall be payable and the
Regular Record Date for any interest payable on any Interest Payment Date;
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(6) the place or places where the principal of and any premium and
interest on Securities of the series shall be payable;
(7) the period or periods within which, the price or prices at which
and the terms and conditions upon which Securities of the series may be
redeemed, in whole or in part, at the option of the Company and, if other
than by a Board Resolution, the manner in which any election by the Company
to redeem the Securities shall be evidenced;
(8) the obligation, if any, of the Company to redeem, purchase or
repay Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a Holder thereof and the period or periods
within which, the price or prices at which and the terms and conditions
upon which Securities of the series shall be redeemed, purchased or repaid,
in whole or in part, pursuant to such obligation;
(9) if other than denominations of $1,000 or any integral multiple
thereof, the denominations in which Securities of the series shall be
issuable;
(10) the currency, currencies or currency units in which payment of
the principal of and any premium and interest on any Securities of the
series shall be payable if other than the currency of the United States of
America and the manner of determining the equivalent thereof in the
currency of the United States of America for purposes of the definition of
"Outstanding" in Section 1.1;
(11) if the amount of payments of principal of or any premium or
interest on any Securities of the series may be determined with reference
to an index or formula, the manner in which such amounts shall be
determined;
(12) if the principal of or any premium or interest on any Securities
of the series is to be payable, at the election of the Company or a Holder
thereof, in one or more currencies or currency units other than that or
those in which the Securities are stated to be payable, the currency,
currencies or currency units in which payment of the principal of and any
premium and interest on Securities of such series as to which such election
is made shall be payable, and the periods within which and the terms and
conditions upon which such election is to be made;
(13) the application, if any, of Section 13.2 or 13.3 or both to the
Securities of any series and, if other than by a Board Resolution, the
manner in which any election by the Company to defease such Securities
shall be evidenced;
(14) if the principal amount payable at the Stated Maturity of any
Securities of the series will not be determinable as of any one or more
dates prior to the Stated Maturity, the amount which shall be deemed to be
the principal amount of such Securities as of any such date for any purpose
thereunder or hereunder, including the
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principal amount thereof which shall be due an payable upon any Maturity
other than the Stated Maturity or which shall be deemed to be Outstanding
as of any date prior to the Stated Maturity (or, in any such case, the
manner in which such amount deemed to be the principal amount shall be
determined);
(15) whether the Securities of the series shall be issued in whole or
in part in the form of one or more Book-Entry Securities and, in such case,
the Depository with respect to such Book-Entry Security or Securities and
the circumstances under which any Book-Entry Security may be registered for
transfer or exchange, or authenticated and delivered, in the name of a
Person other than such Depository or its nominee, if other than as set
forth in Section 3.5;
(16) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section
5.2;
(17) any deletions from, modifications of or additions to the Events
of Default set forth in Section 5.1 or covenants of the Company set forth
in Article X pertaining to the Securities of the series and any change in
the right of the Trustee or the requisite Holders of such Securities to
declare the principal amount thereof due and payable pursuant to Section
5.2; and
(18) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture, except as permitted by
Section 9.1(5)).
All Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or pursuant
to the Board Resolution referred to above and (subject to Section 3.3) set
forth, or determined in the manner provided, in the Officers' Certificate
referred to above or in any such indenture supplemental hereto.
If any of the terms of the series are established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of such action
shall be certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
Section 3.2 Denominations.
The Securities of each series shall be issuable in registered form
without coupons in such denominations as shall be specified as contemplated by
Section 3.1. In the absence of any such provisions with respect to the
Securities of any series, the Securities of such series shall be issuable in
denominations of $1,000 and any integral multiple thereof.
Section 3.3 Execution, Authentication, Delivery and Dating.
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The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its President or one of its Vice Presidents, under its
corporate seal reproduced thereon attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the Securities
may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities, and the Trustee in accordance
with the Company Order shall authenticate and make available for delivery such
Securities. If the form or terms of the Securities of the series have been
established in or pursuant to one or more Board Resolutions as permitted by
Sections 2.1 and 3.1, in authenticating such Securities, and accepting the
additional responsibilities under this Indenture in relation to such Securities,
the Trustee shall be entitled to receive, and (subject to Section 6.1) shall be
fully protected in relying upon, an Opinion of Counsel stating:
(a) if the form of such Securities has been established by or pursuant to
Board Resolution as permitted by Section 2.1, that such form has been
established in conformity with the provisions of this Indenture;
(b) if the terms of such Securities have been established by or pursuant
to Board Resolution as permitted by Section 3.1, that such terms have been
established in conformity with the provisions of this Indenture;
(c) that such Securities, when authenticated and delivered by the Trustee
and issued by the Company in the manner and subject to any conditions specified
in such Opinion of Counsel, will constitute valid and legally binding
obligations of the Company enforceable in accordance with their terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles; and
(d) that all laws and requirements in respect of the execution and
delivery by the Company of such Securities have been complied with.
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
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Notwithstanding the provisions of Section 3.1 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 3.1 or the Company Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the time
of authentication of each Security of such series if such documents are
delivered at or prior to the authentication upon original issuance of the first
Security of such series to be issued.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and made available for delivery hereunder.
Notwithstanding the foregoing, if any Security shall have been authenticated and
made available for delivery hereunder but never issued and sold by the Company,
and the Company shall deliver such Security to the Trustee for cancellation as
provided in Section 3.9, for all purposes of this Indenture such Security shall
be deemed never to have been authenticated and made available for delivery
hereunder and shall never be entitled to the benefits of this Indenture.
Section 3.4 Temporary Securities.
--------------------
Pending the preparation of definitive Securities of any series, the
Company may execute, and upon Company Order the Trustee shall authenticate and
made available for delivery, temporary Securities which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any authorized
denomination, substantially of the tenor of the definitive Securities in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Securities may
determine, as evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Company will
cause definitive Securities of that series to be prepared without unreasonable
delay. After the preparation of definitive Securities of such series, the
temporary Securities of such series shall be exchangeable for definitive
Securities of such series upon surrender of the temporary Securities of such
series at the office or agency of the Company in a Place of Payment for that
series, without charge to the Holder. Upon surrender for cancellation of any
one or more temporary Securities of any series the Company shall execute and the
Trustee shall authenticate and make available for delivery in exchange therefor
one or more definitive Securities of the same series, of any authorized
denominations and of a like aggregate principal amount and tenor. Until so
exchanged the temporary Securities of any series shall in all respects be
entitled to the same benefits under this Indenture as definitive Securities of
such series and tenor.
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Section 3.5 Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency of the Company in a Place of Payment being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is
hereby appointed "Security Registrar" for the purpose of registering Securities
and transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security of any
series at the office or agency in a Place of Payment for that series as
designated pursuant to Section 10.2, the Company shall execute, and the Trustee
shall authenticate and make available for delivery, in the name of the
designated transferee or transferees, one or more new Securities of the same
series, of any authorized denominations and of a like aggregate principal amount
and tenor.
At the option of the Holder, Securities of any series may be exchanged
for other Securities of the same series, of any authorized denominations and of
a like aggregate principal amount and tenor, upon surrender of the Securities to
be exchanged at such office or agency. Whenever any Securities are so
surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and make available for delivery, the Securities which the Holder
making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 3.4, 9.6 or 11.7 not involving any transfer.
The Company shall not be required (i) to issue, register the transfer
of or exchange Securities of any series during a period beginning at the opening
of business 15 days before the day of the mailing of a notice of redemption of
Securities of that series selected for
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redemption under Section 11.3 and ending at the close of business on the day of
such mailing or (ii) to register the transfer of or exchange any Security so
selected for redemption in whole or in part, except the unredeemed portion of
any Security being redeemed in part.
Notwithstanding the foregoing, any Book-Entry Security shall be
exchangeable in whole or in part pursuant to this Section 3.5 for Securities
registered in the name of Persons other than the Depository for such Security or
its nominee only if (i) such Depository notifies the Company that it is
unwilling or unable to continue as Depository for such Book-Entry Security or if
at any time such Depository cease s to be a clearing agency registered under the
Securities Exchange Act of 1934, as amended, (ii) the Company executes and
delivers to the Trustee a Company Order that such Book-Entry Security shall be
so exchangeable, (iii) there shall have occurred and be continuing an Event of
Default with respect to the Securities or (iv) there shall exist such
circumstances, if any, in addition to or in lieu of the foregoing as have been
specified for this purpose as contemplated by Section 3.1. Any Book-Entry
Security that is exchangeable pursuant to the preceding sentence shall be
exchangeable for Securities registered in such names as such Depository shall
direct.
Notwithstanding any other provision in this Indenture, a Book-Entry
Security may not be transferred except as a whole by the Depository with respect
to such Book-Entry Security to a nominee of such Depository or by a nominee of
such Depository to such Depository or another nominee of such Depository.
Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Book-entry Security or any
portion thereof, whether pursuant to this Section, Section 3.4, 3.6, 9.6 or 11.7
or otherwise, shall be authenticated and delivered in the form of, and shall be,
a Book-entry Security, unless such Security is registered in the name of a
Person other than the Depositary for such Book-entry Security or a nominee
thereof.
Section 3.6 Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and make available for delivery
in exchange therefor a new Security of the same series and of like tenor and
principal amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Security
and (ii) such security or indemnity as may be required by them to save each of
them and any agent of either of them harmless, then, in the absence of notice to
the Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and make
available for delivery, in lieu of any such destroyed, lost or stolen Security,
a new Security of the same series and of like tenor and principal amount and
bearing a number not contemporaneously outstanding.
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In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company
may require the payment by the Holder of such mutilated, destroyed, lost or
stolen Security of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this Section in
lieu of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
Section 3.7 Payment of Interest; Interest Rights Preserved.
Except as otherwise provided as contemplated by Section 3.1 with
respect to any series of Securities, interest on any Security which is payable,
and is punctually paid or duly provided for, on any Interest Payment Date shall
be paid to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest.
Any interest on any Security of any series which is payable, but is
not punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities of such series (or their
respective Predecessor Securities) are registered at the close of business
on a Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid
on each Security of such series and the date of the proposed payment, and
at the same time the Company shall irrevocably deposit with the Trustee an
amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory
to the Trustee for such deposit prior to the date of the proposed payment,
such money when deposited to be held in trust for the
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benefit of the Persons entitled to such Defaulted Interest as in this
Clause provided. Thereupon the Trustee shall fix a Special Record Date for
the payment of such Defaulted Interest which shall be not more than 15 days
and not less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor to be given to each Holder of Securities
of such series in the manner set forth in Section 1.6, not less than 10
days prior to such Special Record Date. Notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor having been so
mailed, such Defaulted Interest shall be paid to the Persons in whose names
the Securities of such series (or their respective Predecessor Securities)
are registered at the close of business on such Special Record Date and
shall no longer be payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest on the
Securities of any series in any other lawful manner not inconsistent with
the requirements of any securities exchange on which such Securities may be
listed, and upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed payment pursuant
to this Clause, such manner of payment shall be deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
Section 3.8 Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal of and any premium
and (subject to Section 3.7) any interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
Section 3.9 Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly cancelled by it. The Company may at any time deliver to
the Trustee for cancellation any Securities previously
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authenticated and delivered hereunder which the Company may have acquired in any
manner whatsoever, and may deliver to the Trustee (or to any other Person for
delivery to the Trustee) for cancellation any Securities previously
authenticated hereunder which the Company has not issued and sold, and all
Securities so delivered shall be promptly cancelled by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for any Securities
cancelled as provided in this Section, except as expressly permitted by this
Indenture. All cancelled Securities held by the Trustee shall be destroyed and
a certificate of destruction delivered by the Trustee to the Company, unless the
Company otherwise directs the Trustee by a Company Order.
Section 3.10 Computation of Interest.
Except as otherwise specified as contemplated by Section 3.1 for
Securities of any series, interest on the Securities of each series shall be
computed on the basis of a 360-day year of twelve 30-day months.
Section 3.11 CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided, however, that any such
notice may state that no representation is made as to the correctness of such
numbers either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers.
ARTICLE IV
Satisfaction and Discharge
Section 4.1 Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further
effect (except as to any surviving rights of registration of transfer or
exchange of Securities herein expressly provided for), and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered (other
than (i) Securities which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 3.6 and (ii) Securities
for whose payment money has theretofore been
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deposited in trust or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such trust, as provided
in Section 10.3) have been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within
one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company,
and the Company, in the case of (i), (ii) or (iii) above, has deposited or
caused to be deposited with the Trustee as trust funds in trust for the
purpose an amount sufficient to pay and discharge the entire indebtedness
on such Securities not theretofore delivered to the Trustee for
cancellation, for principal and any premium and interest to the date of
such deposit (in the case of Securities which have become due and payable)
or to the Stated Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.7, the obligations of
the Trustee to any Authenticating Agent under Section 6.14 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 4.2 and the last
paragraph of Section 10.3 shall survive.
Section 4.2 Application of Trust Money.
Subject to provisions of the last paragraph of Section 10.3, all money
deposited with the Trustee pursuant to Section 4.1 shall be held in trust and
applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and any premium and
interest for whose payment such money has been deposited with the Trustee.
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ARTICLE V
Remedies
Section 5.1 Events of Default.
"Event of Default," wherever used herein with respect to Securities of
any series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest upon any Security of that
series when it becomes due and payable, and continuance of such default for
a period of 30 days; or
(2) default in the payment of the principal of (or premium, if any,
on) any Security of that series at its Maturity; or
(3) failure to perform or comply with the provisions set forth under
Section 8.1; or
(4) default in the deposit of any sinking fund or other payment
required pursuant to the terms of a Security of that series as established
pursuant to Section 3.1(8), when and as due by the terms of a Security of
that series; or
(5) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere in
this Section specifically dealt with or which has expressly been included
in this Indenture solely for the benefit of series of Securities other than
that series, provided that for purposes of this clause (5) any covenant or
agreement on the part of the Company contained in this Indenture which is
not limited to a series of Securities shall be in respect of all series of
Securities), and continuance of such default or breach for a period of 60
days after there has been given, by registered or certified mail, to the
Company by the Trustee or to the Company and the Trustee by the Holder or
Holders of at least 10% in principal amount of the Outstanding Securities
of that series a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder; or
(6) a default or defaults under any bonds, debentures, notes or other
evidences of, or obligations constituting, Debt of the Company or any
Restricted Subsidiary (other than Securities of that series) or under any
mortgages, indentures, instruments (including
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this Indenture) or agreements under which there may be issued or existing
or by which there may be secured or evidenced any Debt of the Company or
any Restricted Subsidiary, in any such case with a principal or similar
amount then outstanding, individually or in the aggregate, in excess of
$25,000,000, whether such Debt exists as of the date of this Indenture or
is thereafter created, which default or defaults constitute a failure to
pay any portion of the principal or similar amount of such Debt when due
and payable or which would enable the holder thereof to cause such Debt to
become due and payable prior to the date on which it would otherwise have
become due and payable; or
(7) the rendering of a final judgment or judgments (not subject to
appeal) against the Company or any of its Restricted Subsidiaries
individually or in the aggregate, in excess of $25,000,000, which remains
unstayed, undischarged or unbonded for a period of 60 days thereafter; or
(8) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company or any Restricted
Subsidiary in an involuntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other similar
law or (B) a decree or order adjudging the Company or any Restricted
Subsidiary a bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or composition of
or in respect of the Company or any Restricted Subsidiary under any
applicable Federal or State law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official of
the Company or any Restricted Subsidiary or of any substantial part of its
property, or ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any such other decree
or order unstayed and in effect for a period of 60 consecutive days; or
(9) the commencement by the Company or any Restricted Subsidiary of a
voluntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent, or the
consent by it to the entry of a decree or order for relief in respect of
the Company or any Restricted Subsidiary in an involuntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against it, or the filing by it
of a petition or answer or consent seeking reorganization or relief under
any applicable Federal or State law, or the consent by it to the filing of
such petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or any Restricted Subsidiary or of any substantial
part of its property, or the making by it of an assignment for the benefit
of creditors, or the admission by it in writing of its inability to pay its
debts generally as they become due,
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or the taking of corporate action by the Company or any Restricted
Subsidiary in furtherance of any such action; or
(10) any event which constitutes an "Event of Default" under the
terms governing Securities of that series established as provided in
Section 3.1.
Section 5.2 Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified
in Section 5.1(8) or (9)) with respect to Securities of any series at the
time Outstanding occurs and is continuing, either the Trustee or the Holder
or Holders of at least 25% in aggregate principal amount of the Outstanding
Securities of that series may declare the principal amount (or, if any of
the Securities of that series are Original Issue Discount Securities, such
portion of the principal amount of such Securities as may be specified in
the terms thereof) of all of the Outstanding Securities of that series to
be due and payable immediately, by a notice in writing to the Company (and
to the Trustee if given by Holders), and upon any such declaration such
principal amount (or specified amount) shall become immediately due and
payable. If an Event of Default specified in Section 5.1(8) or (9) with
respect to Securities of any series of any time outstanding occurs and is
continuing, the principal amount (or, if any of the Securities of that
series are Original Issue Discount Securities, such portion of the
principal amount of such Securities as may be specified in the terms
thereof) of all of the Outstanding Securities of that series shall become
immediately due and payable without any declaration or other act on the
part of the Trustee or any Holders of that series.
At any time after such a declaration of acceleration with respect
to Securities of any series has been made and before a judgment or decree
for payment of the money due has been obtained by the Trustee as
hereinafter in this Article provided, the Holders of a majority in
principal amount of the Outstanding Securities of that series, by written
notice to the Company and the Trustee, may rescind and annul such
declaration and its consequences if
(1) the Company has paid or irrevocably deposited with the Trustee a
sum sufficient to pay
(A) all overdue interest on all Securities of that series,
(B) the principal of (and premium, if any, on) any Securities of
that series which have become due otherwise than by such declaration
of acceleration and any interest thereon at the rate or rates
prescribed therefor in such Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate or rates prescribed
therefor in such Securities, and
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(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
and
(2) all Events of Default with respect to Securities of that series,
other than the non-payment of the principal of Securities of that series
which have become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 5.13.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Section 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any Security
when such interest becomes due and payable and such default continues for a
period of 30 days, or
(2) default is made in the payment of the principal of (or premium,
if any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal and any premium and interest and, to the extent that
payment of such interest shall be legally enforceable, interest on any overdue
principal and premium and on any overdue interest, at the rate or rates
prescribed therefor in such Securities, and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
If an Event of Default with respect to Securities of any series occurs
and is continuing, the Trustee may in its discretion proceed to protect and
enforce its rights and the rights of the Holders of Securities of such series by
such appropriate judicial proceedings as the Trustee shall deem most effectual
to protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy.
Section 5.4 Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company (or any
other obligor upon the Securities), its property or its creditors, the Trustee
shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the
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Trust Indenture Act in order to have claims of the Holders and the Trustee
allowed in any such proceeding. In particular, the Trustee shall be authorized
to collect and receive any moneys or other property payable or deliverable on
any such claims and to distribute the same; and any custodian, receiver,
assignee, trustee, liquidator, sequestrator or other similar official in any
such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 6.7.
No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
Section 5.5 Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
Section 5.6 Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal or any premium
or interest, upon presentation of the Securities and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
6.7; and
SECOND: To the payment of the amounts then due and unpaid for
principal of and any premium and interest on the Securities in respect of
which or for the benefit of which such money has been collected, ratably,
without preference or priority of any kind, according to the amounts due
and payable on such Securities for principal and any premium and interest,
respectively.
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Section 5.7 Limitation on Suits.
No Holder of any Security of any series shall have any right to
institute any proceeding, judicial or otherwise, with respect to this Indenture,
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless:
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Securities of that
series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request to
the Trustee to institute proceedings in respect of such Event of Default in
its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority
in principal amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.
Section 5.8 Unconditional Right of Holders to Receive Principal, Premium and
Interest.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of and any premium and (subject to Section 3.7)
any interest on such Security on the Stated Maturity or Maturities expressed in
such Security (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
Section 5.9 Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any
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reason, or has been determined adversely to the Trustee or to such Holder, then
and in every such case, subject to any determination in such proceeding, the
Company, the Trustee and the Holders shall be restored severally and
respectively to their former positions hereunder and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
Section 5.10 Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last paragraph
of Section 3.6, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
Section 5.11 Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Securities
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
Section 5.12 Control by Holders.
The Holders of a majority in principal amount of the Outstanding
Securities of any series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the
Securities of such series, provided that:
(1) such direction shall not be in conflict with any rule of law or
with this Indenture, and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
Section 5.13 Waiver of Past Defaults.
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The Holders of not less than a majority in principal amount of
the Outstanding Securities of any series may on behalf of the Holders of
all the Securities of such series waive any past default hereunder with
respect to such series and its consequences, except a default
(1) in the payment of the principal of or any premium or interest on
any Security of such series, or
(2) in respect of a covenant or provision hereof which under Article
IX cannot be modified or amended without the consent of the Holder of each
Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
Section 5.14 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; provided that neither this Section nor the Trust Indenture Act
shall be deemed to authorize any court to require such an undertaking or to make
such an assessment in any suit instituted by the Company or the Trustee.
Section 5.15 Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
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ARTICLE VI
The Trustee
Section 6.1 Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as provided by
the Trust Indenture Act. Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it. Whether or not therein
expressly so provided, every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section.
Section 6.2 Notice of Defaults.
If a default occurs hereunder with respect to Securities of any
series, the Trustee shall give the Holders of Securities of such series notice
of such default as and to the extent provided by the Trust Indenture Act;
provided, however, that in the case of any default of the character specified in
Section 5.1(5) with respect to Securities of such series, no such notice to
Holders shall be given until at least 30 days after the occurrence thereof. For
the purpose of this Section, the term "default" means any event which is, or
after notice or lapse of time or both would become, an Event of Default with
respect to Securities of such series.
Section 6.3 Certain Rights of Trustee.
Subject to the provisions of Section 6.1:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action
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hereunder, the Trustee (unless other evidence be herein specifically prescribed)
may, in the absence of bad faith on its part, rely upon an Officers'
Certificate;
(d) the Trustee may consult with counsel of its selection and the
written advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder; and
(h) the Trustee shall not be liable for any action taken, suffered,
or omitted to be taken by it in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Indenture.
Section 6.4 Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee or any Authenticating Agent assumes no
responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Indenture or of the Securities. The
Trustee or any Authenticating Agent shall not be accountable for the use or
application by the Company of Securities or the proceeds thereof.
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Section 6.5 May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
6.8 and 6.13, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Security
Registrar or such other agent.
Section 6.6 Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed in writing with the Company.
Section 6.7 Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Trustee from time to time such compensation as
shall be agreed to in writing between the Company and the Trustee for all
services rendered by it hereunder (which compensation shall not be limited
by any provision of law in regard to the compensation of a trustee of an
express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify the Trustee for, and to hold it harmless against,
any and all loss, damage, liability or expense, including taxes (other than
taxes based on the income of the Trustee), incurred without negligence or
bad faith on its part, arising out of or in connection with the acceptance
or administration of the trust or trusts hereunder, including the costs and
expenses of defending itself against any claim or liability in connection
with the exercise or performance of any of its powers or duties hereunder.
The Trustee shall have a lien prior to the Securities as to all
property and funds held by it hereunder for any amount owing it or any
predecessor Trustee pursuant to this Section 6.7, except with respect to funds
held in trust for the benefit of the Holders of particular Securities.
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When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 5.1(8) or Section 5.1(9), the
expenses (including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable Federal or State bankruptcy, insolvency or
other similar law.
The provisions of this Section shall survive the termination of this
Indenture.
Section 6.8 Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act, and this Indenture. To the extent
permitted by such Act, the Trustee shall not be deemed to have a conflicting
interest by virtue of being a trustee under this Indenture with respect to
Securities of more than one series.
Section 6.9 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
Person that is eligible pursuant to the Trust Indenture Act to act as such and
has a combined capital and surplus of at least $50,000,000 and its Corporate
Trust Office in the Borough of Manhattan, The City of New York or in The City of
Chicago, Illinois. If such Person publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section and to the extent
permitted by the Trust Indenture Act, the combined capital and surplus of such
Person shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect hereinafter specified
in this Article.
Section 6.10 Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 6.11.
(b) The Trustee may resign at any time with respect to the Securities
of one or more series by giving written notice thereof to the Company. If the
instrument of acceptance by a successor Trustee required by Section 6.11 shall
not have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities of such series.
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(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal amount
of the Outstanding Securities of such series, delivered to the Trustee and to
the Company. If the instrument of acceptance by a successor Trustee required by
Section 6.11 shall not have been delivered to the Trustee within 30 days after
such Act of such Holders, the removed Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee with respect
to the Securities of such series.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 6.8 after written
request therefor by the Company or by any Holder who has been a bona fide
Holder of a Security for at least six months, unless the Trustee's duty to
resign is stayed in accordance with the provisions of Section 310(b) of the
Trust Indenture Act, or
(2) the Trustee shall cease to be eligible under Section 6.9 and
shall fail to resign after written request therefor by the Company or by
any such Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee with respect to all Securities, or (ii) subject to Section 5.14, any
Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee with respect to all
Securities and the appointment of a successor Trustee or Trustees. If the
instrument of acceptance by a successor Trustee required by Section 6.11 shall
not have been delivered to the Trustee within 30 days after such removal of the
Trustee described in clauses (i) and (ii) of the immediately preceding sentence,
the removed Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, with
respect to the Securities of one or more series, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee or Trustees with respect
to the Securities of that or those series (it being understood that any such
successor Trustee may be appointed with respect to the Securities of one or more
or all of such series and that at any time there shall be only one Trustee with
respect to the Securities of any particular series) and shall comply with the
applicable requirements of Section 6.11. If, within one year after such
resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee with respect to the Securities of any series shall be
appointed by
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Act of the Holders of a majority in principal amount of the Outstanding
Securities of such series delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment in accordance with the applicable requirements of Section 6.11,
become the successor Trustee with respect to the Securities of such series and
to that extent supersede the successor Trustee appointed by the Company. If no
successor Trustee with respect to the Securities of any series shall have been
so appointed by the Company or the Holders and accepted appointment in the
manner required by Section 6.11, any Holder who has been a bona fide Holder of a
Security of such series for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Trustee with respect to the Securities of such
series.
(f) The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of any series
to all Holders of Securities of such series in the manner provided in Section
1.6. Each notice shall include the name of the successor Trustee with respect to
the Securities of such series and the address of its Corporate Trust Office.
Section 6.11 Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
retiring Trustee and each successor Trustee with respect to the Securities of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (1) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series to which the appointment of such successor Trustee relates, (2)
if the retiring Trustee is not retiring with respect to all Securities, shall
contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the retiring Trustee and
(3) shall add to or change any of the provisions of this Indenture as
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shall be necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein or
in such supplemental indenture shall constitute such Trustees co-trustees of the
same trust and that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee; and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates; but, on request of the Company or any successor Trustee, such
retiring Trustee shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder with
respect to the Securities of that or those series to which the appointment of
such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts referred
to in paragraphs (a) and (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under this Article.
Section 6.12 Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
Section 6.13 Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
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Section 6.14 Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with respect
to one or more series of Securities which shall be authorized to act on behalf
of the Trustee to authenticate Securities of such series issued upon original
issue and upon exchange, registration of transfer or partial redemption thereof
or pursuant to Section 3.6, and Securities so authenticated shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
an Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice
of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give notice of such
appointment in the manner provided in Section 1.6 to all Holders of Securities
of the series with respect to which such Authenticating Agent will serve. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
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hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section.
If an appointment with respect to one or more series is made pursuant
to this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
The Bank of New York,
As Trustee
By:___________________________
As Authenticating Agent
By:___________________________
Authorized Signatory
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Section 6.15 Trustee's Application for Instructions from the Company.
Any application by the Trustee for written instructions from the
Company may, at the option of the Trustee, set forth in writing any action
proposed to be taken or omitted by the Trustee under this Indenture and the date
on and/or after which such action shall be taken or such omission shall be
effective. The Trustee shall not be liable for any action taken by, or omission
of, the Trustee in accordance with a proposal included in such application on or
after the date specified in such application (which date shall not be less than
three Business Days after the date any officer of the Company actually receives
such application, unless any such officer shall have consented in writing to any
earlier date) unless prior to taking any such action (or the effective date in
the case of an omission), the Trustee shall have received written instructions
in response to such application specifying the action to be taken or omitted.
ARTICLE VII
Holders' Lists and Reports
by Trustee and Company
Section 7.1 Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not later than 15 days after the Regular Record
Date for interest for each series of Securities, a list, in such form as the
Trustee may reasonably require, of the names and addresses of the Holders of
Securities of such series as of such Record Date, or if there is no Regular
Record Date for interest for such series of Securities, semi-annually, upon such
dates as are set forth in the Board Resolution or supplemental indenture
authorizing such series; and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
Section 7.2 Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.1 and the names and
addresses of Holders received by the Trustee in its
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capacity as Security Registrar. The Trustee may destroy any list furnished to
it as provided in Section 7.1 upon receipt of a new list so furnished.
(b) The rights of the Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and privileges of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.
Section 7.3 Reports by Trustee.
(a) The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant thereto.
If required by Section 313(a) of the Trust Indenture Act, the Trustee shall,
within 60 days after each February 1 following the date of this Indenture
deliver to Holders a brief report, dated as of such February 1, which complies
with the provisions of such Section 313(a).
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which any Securities are listed, with the Commission and with the Company. The
Company will promptly notify the Trustee when any Securities are listed on any
stock exchange.
Section 7.4 Reports by Company.
(a) The Company covenants and agrees to file with the Commission and
provide the Trustee and Holders of Securities such information, documents and
other reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe) as may be
required pursuant to the Trust Indenture Act at the times and in the manner
provided pursuant to such Act; provided that any such information, documents or
reports required to be filed with the Commission pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended, shall be filed with the
Trustee within 15 days after the same is so required to be filed with the
Commission.
(b) The Company covenants and agrees to file with the Trustee and the
Commission, in accordance with the rules and regulations prescribed from time to
time by the Commission, such additional information, documents and reports, if
any, with respect to compliance by the Company with the conditions and covenants
provided for in this Indenture as may be required from time to time by such
rules and regulations.
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(c) The Company covenants and agrees to transmit by mail to all
Holders, as the names and addresses of such Holders appear upon the register of
the Company, within 30 days after the filing thereof with the Trustee, such
summaries of information, documents and reports required to be filed by the
Company, if any, pursuant to subsections (a) and (b) of this Section 7.4 as may
be required by rules and regulations prescribed from time to time by the
Commission.
Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
ARTICLE VIII
Consolidation, Merger, Conveyance,
Transfer or Lease
Section 8.1 Company May Consolidate, Etc. Only on Certain Terms.
The Company shall not, in a single transaction or a series of related
transactions, consolidate with or merge with or into any other Person or sell,
assign, convey, transfer or lease or otherwise dispose of all or substantially
all of its properties and assets to any Person or group of Affiliated Persons,
or permit any of its Restricted Subsidiaries to enter into any such transaction
or transactions, and the Company shall not permit any Person to consolidate with
or merge into the Company or convey, transfer or lease its properties and assets
substantially as an entirety to the Company, unless:
(1) in a transaction in which the Company does not survive or in
which the Company sells, assigns, conveys, transfers, leases or otherwise
disposes of all or substantially all of its assets, the successor entity to
the Company shall be organized and validly existing under the laws of the
United States of America, any State thereof or the District of Columbia and
shall expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee in form satisfactory to the Trustee, the due and
punctual payment of the principal of and any premium and interest on all
the Securities and the performance or observance of every obligation of
this Indenture on the part of the Company to be performed or observed;
(2) immediately before and after giving effect to such transaction
and treating any Debt that becomes an obligation of the Company or a
Restricted Subsidiary as a result of such transaction as having been
incurred by the Company or such Restricted Subsidiary at the time of such
transaction, no Event of Default or event that with the
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passing of time or the giving of notice, or both, would constitute an Event
of Default shall have occurred and be continuing;
(3) if, as a result of any such transaction, properties or assets of
the Company or any Restricted Subsidiary would become subject to a Lien
prohibited by Section 10.6, the Company or such successor entity to the
Company, as the case may be, shall take such steps as shall be necessary
effectively to secure the Securities as required by such Section 10.6; and
(4) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is required
in connection with such transaction, such supplemental indenture comply
with this Article and that all conditions precedent herein provided for
relating to such transaction have been complied with.
Section 8.2 Successor Substituted.
Upon any consolidation of the Company with, or merger of the
Company into, any other Person or any sale, assignment, conveyance,
transfer or lease of substantially all the properties and assets of the
Company in accordance with Section 8.1, the successor Person formed by such
consolidation or into which the Company is merged or to which such sale,
assignment, conveyance, transfer or lease is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company
under this Indenture with the same effect as if such successor Person had
been named as the Company herein; and thereafter, except in the case of a
lease, the predecessor Person shall be relieved of all obligations and
covenants under this Indenture and the Securities.
ARTICLE IX
Supplemental Indentures
Section 9.1 Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized
by a Board Resolution, and the Trustee, at any time and from time to time,
may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company herein
and in the Securities; or
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(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to be
for the benefit of less than all series of Securities, stating that such
covenants are expressly being included solely for the benefit of such
series) or to surrender any right or power herein conferred upon the
Company; or
(3) to add any additional Events of Default for the benefit of the
Holders of all or any series of Securities (and if such additional Events
of Default are to be for the benefit of less than all series of Securities,
stating that such additional Events of Default are expressly being included
solely for the benefit of such series); or
(4) to add to or change any of the provisions of this Indenture to
such extent as shall be necessary to permit or facilitate the issuance of
Securities in bearer form, registrable or not registrable as to principal,
and with or without interest coupons, or to permit or facilitate the
issuance of Securities in uncertificated form; or
(5) to add to, change or eliminate any of the provisions of this
Indenture in respect of one or more series of Securities, provided, that
any such addition, change or elimination (i) shall neither (A) apply to any
Security of any series created prior to the execution of such supplemental
indenture and entitled to the benefit of such provision nor (B) modify the
rights of the Holder of any such Security with respect to such provision or
(ii) shall become effective only when there is no such Security
Outstanding; or
(6) to secure the Securities pursuant to the requirements of Section
10.6 or otherwise; or
(7) to establish the form or terms of Securities of any series as
permitted by Sections 2.1 and 3.1; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or
more series and to add to or change any of the provisions of this Indenture
as shall be necessary to provide for or facilitate the administration of
the trusts hereunder by more than one Trustee, pursuant to the requirements
of Section 6.11(b); or
(9) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising
under this Indenture, provided that such action pursuant to this clause (9)
shall not adversely affect the interests of the Holders of Securities of
any series.
Section 9.2 Supplemental Indentures with Consent of Holders.
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With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities of each series affected by
such supplemental indenture, by Act of said Holders delivered to the
Company and the Trustee, the Company, when authorized by a Board
Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders of Securities of such
series under this Indenture; provided, however, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding
Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Security, or
(2) reduce the principal amount thereof or the rate of interest
thereon or the rate of accretion of any Original Issue Discount Security or
any premium payable upon the redemption thereof, or reduce the amount of
the principal of an Original Issue Discount Security that would be due and
payable upon a declaration of acceleration of the Maturity thereof pursuant
to Section 5.2, or
(3) change any Place of Payment where, or the coin or currency in
which, any Security or any premium or interest thereon is payable, or
(4) impair the right to institute suit for the enforcement of any
such payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date), or
(5) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is required
for any waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided for in this
Indenture, or
(6) modify any of the provisions of this Section, Section 5.8,
Section 5.13 or Section 10.11, except to increase any such percentage or to
provide that certain other provisions of this Indenture cannot be modified
or waived without the consent of the Holder of each Outstanding Security
affected thereby; provided, however, that this clause shall not be deemed
to require the consent of any Holder with respect to changes in the
references to "the Trustee" and concomitant changes in this Section and
Section 10.11, or the deletion of this proviso, in accordance with the
requirements of Sections 6.11(b) and 9.1(8), or
(7) modify any provision of this Indenture relating to the
modification and amendment of this Indenture or the waiver of past defaults
or covenants, except as otherwise specified in this Indenture, in a manner
adverse to the Holders thereof.
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A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
Section 9.3 Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 6.1) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
Section 9.4 Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
Section 9.5 Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
Section 9.6 Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company shall
so determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Company, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities of such series.
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ARTICLE X
Covenants
Section 10.1 Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of and any premium
and interest on the Securities of that series in accordance with the terms of
the Securities and this Indenture.
Section 10.2 Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series may be presented
or surrendered for payment, where Securities of that series may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Company in respect of the Securities of that series and this Indenture
may be served. The Company will give prompt written notice to the Trustee of
the location, and any change in the location, of such office or agency. If at
any time the Company shall fail to maintain any such required office or agency
or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
The Company may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be presented
or surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an office
or agency in each Place of Payment for Securities of any series for such
purposes. The Company will give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.
Section 10.3 Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with
respect to any series of Securities, it will, on or before each due date of the
principal of or any premium or interest on any of the Securities of that series,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay the principal and any premium and interest so becoming due
until such sums shall be paid to such Persons or otherwise disposed of as herein
provided and will promptly notify the Trustee of its action or failure so to
act.
Whenever the Company shall have one or more Paying Agents for any
series of Securities, it will, prior to each due date of the principal of or any
premium or interest on any Securities of that series, deposit with a Paying
Agent a sum sufficient to pay such amount, such
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sum to be held as provided by the Trust Indenture Act, and (unless such Paying
Agent is the Trustee) the Company will promptly notify the Trustee of its action
or failure so to act.
The Company will cause each Paying Agent for any series of Securities
other than the Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section, that such Paying Agent will (i) comply with the provisions of
the Trust Indenture Act applicable to it as a Paying Agent and (ii) during the
continuance of any default by the Company (or any other obligor upon the
Securities of that series) in the making of any payment in respect of the
Securities of that series, and upon the written request of the Trustee,
forthwith pay to the Trustee all sums held in trust by such Paying Agent for
payment in respect of the Securities of that series.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of or any premium or
interest on any Security of any series and remaining unclaimed for two years
after such principal, premium or interest has become due and payable shall be
paid to the Company on Company Request, or (if then held by the Company) shall
be discharged from such trust; and the Holder of such Security shall thereafter,
as an unsecured general creditor, look only to the Company for payment thereof,
and all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in New York, New York,
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will be repaid to the
Company.
Section 10.4 Statement by Officers as to Default.
The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture (without regard to any period of
grace or requirement of notice provided hereunder) and, if the Company shall
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be in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.
Section 10.5 Existence.
Subject to Article VIII, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises; provided, however, that the
Company shall not be required to preserve any such right or franchise if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the Holders.
Section 10.6 Restrictions on Secured Debt.
The Company will not, nor will it permit any Restricted Subsidiary to,
Incur any Debt secured by a Lien on any (i) Principal Property or any part
thereof, (ii) Capital Stock of a Restricted Subsidiary now owned or hereafter
acquired by the Company or by any Restricted Subsidiary or (iii) Debt of a
Restricted Subsidiary owed to the Company or to any Restricted Subsidiary,
without in any such case under clause (i), (ii) or (iii) effectively providing
concurrently with such Incurrence that the Outstanding Securities of any series
to which this Section 10.6 applies (pursuant to Section 3.1) (together with, if
the Company shall so determine, any other Debt of the Company or such Restricted
Subsidiary then existing or thereafter created which is not subordinated to the
Securities) are secured equally and ratably with (or, at the Company's option,
prior to) such secured Debt and any other Debt required to be so secured, unless
the aggregate amount of all such secured Debt outstanding at such time, plus all
Attributable Debt of the Company and its Restricted Subsidiaries with respect to
Sale and Leaseback Transactions involving Principal Properties outstanding at
such time (with the exception of such transactions that are excluded as
described pursuant to clauses (1) to (4) of Section 10.7), would not exceed 10%
of Consolidated Net Tangible Assets; provided, however, that this Section 10.6
shall not apply to, and there shall be excluded from Debt in any computation
under this Section 10.6:
(1) Debt secured by a Lien in favor of the Company or a Restricted
Subsidiary;
(2) Debt secured by a Lien in favor of governmental bodies to secure
progress or advance payments or payments pursuant to contracts or statute;
(3) Debt secured by a Lien on property, Capital Stock or Debt
existing at the time of acquisition thereof (including acquisition through
merger, consolidation or otherwise) and not Incurred in anticipation
thereof;
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(4) Debt Incurred or Guaranteed to finance the acquisition of property,
Capital Stock or Debt, or to finance construction on, or improvement or
expansion of, property, which Debt is Incurred within 180 days of such
acquisition or completion of construction, improvement or expansion, and is
secured solely by a Lien on the property, Capital Stock or Debt acquired,
constructed, improved or expanded;
(5) Debt consisting of industrial revenue or pollution control bonds
or similar financing secured solely by a Lien on the property the subject
thereof;
(6) secured Debt outstanding on the date of the Indenture; or
(7) any extension, renewal, refunding or replacement of any Debt
referred to in clauses (3), (4) and (6) of this Section 10.6.
Section 10.7 Limitation on Sales and Leasebacks.
Neither the Company nor any Restricted Subsidiary shall enter
into any Sale and Leaseback Transaction involving any Principal Property or
any part thereof unless the aggregate amount of all Attributable Debt of
the Company and its Restricted Subsidiaries with respect to such
transactions outstanding at such time, plus all secured Debt outstanding at
such time to which the restriction described in Section 10.6 applies, would
not exceed 10% of Consolidated Net Tangible Assets; provided, however, that
this Section 10.7 shall not apply to, and there shall be excluded from in
any computation under Section 10.6 or this Section 10.7 of Attributable
Debt with respect to, any Sale and Leaseback Transaction if:
(1) the lease is for a period of not in excess of three years,
including renewal rights;
(2) the lease secures or relates to industrial revenue or pollution
control bonds or similar financing;
(3) the transaction is between the Company and a Restricted
Subsidiary or between Restricted Subsidiaries; or
(4) the Company or such Restricted Subsidiary, within 270 days after
the sale is completed, applies an amount equal to the greater of (i) the
net proceeds of the sale of the Principal Property or part thereof leased
pursuant to such arrangement or (ii) the fair market value of the Principal
Property or part thereof leased at the time of entering into such
arrangement (as determined by the President and Chief Executive Officer or
the Treasurer) either to (a) the retirement (or open market purchase) of
Securities, other Funded Debt of the Company ranking on a parity with or
senior to Securities or Funded Debt of a Restricted Subsidiary or (b) the
purchase by the Company or any Restricted Subsidiary of other property,
plant or equipment related to the business of the Company
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or any Restricted Subsidiary having a value at least equal to the value of
the Principal Property or part thereof leased.
Section 10.8 Limitations on Restricted Payments.
The Company will not, nor will it permit any Restricted
Subsidiary to, directly or indirectly (i) declare or pay any dividend or
make any distribution on account of the Company's Capital Stock (other than
dividends or distributions payable in Capital Stock (other than
Disqualified Stock) of the Company or dividends or distributions payable to
the Company or any Wholly-Owned Restricted Subsidiary of the Company), (ii)
purchase, redeem or otherwise acquire or retire for value any Capital Stock
of the Company other than any such Capital Stock owned by the Company or
any Wholly-Owned Restricted Subsidiary of the Company or (iii) redeem,
defease (including, but not limited to, legal or covenant defeasance),
repurchase, retire or otherwise acquire or retire for value prior to any
scheduled maturity, repayment or sinking fund payment, Debt of the Company
(other than the Securities of that series) that is subordinate in right of
payment to Securities (all such payments and other actions set forth in
clauses (i), (ii) and (iii) above being collectively referred to as
"Restricted Payments"), unless, at the time of such Restricted Payment:
(a) no Event of Default or event that with the passing of time or the
giving of notice, or both, would constitute an Event of Default shall have
occurred and be continuing or would occur as a consequence thereof; and
(b) upon giving effect to such Restricted Payment on a pro forma
basis (the value of any such payment, if other than cash, being determined
by the Board of Directors and evidenced by a resolution set forth in an
Officers' Certificate delivered to the Trustee) the Consolidated Net Worth
of the Company would exceed:
(I) if the long-term unsecured Debt of the Company is not rated
Investment Grade by each of Moody's and S&P, the sum of (x)
$250,000,000 and (y) an amount equal to the greater of zero and 50% of
cumulative Consolidated Net Income of the Company since June 30, 1996;
or
(II) if the long-term unsecured Debt of the Company is rated
Investment Grade by each of Moody's and S&P, the amount determined
pursuant to Section 10.8(b)(I) as of the last day of the most recent
fiscal quarter prior to the date on which such debt became so rated by
each of Moody's and S&P.
The foregoing restrictions in this Section 10.8 will not prohibit (i)
the payment of any dividend within 60 days after the date of declaration
thereof, if at said date of declaration such payment would have complied with
the provisions of this Indenture, (ii) the redemption, repurchase, retirement or
other acquisition of any Capital Stock of the Company in exchange for, or out of
the proceeds of, the substantially concurrent sale (other than to a Restricted
Subsidiary of the Company) of
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other Capital Stock of the Company (other than any Disqualified Stock), (iii)
the repurchase, redemption or other acquisition or retirement for value of any
Capital Stock of the Company held by any member of the Company's (or any of its
Restricted Subsidiaries') management or any director of the Company pursuant to
any management equity subscription agreement, stock option agreement or other
employee benefit plan or program, (iv) payments not exceeding $15,000,000 in the
aggregate in any twelve month period with respect to dividends on any series of
preferred stock of the Company (other than Disqualified Stock) issued after the
date of this Indenture, (v) any redemption by the Company of any series of
preferred stock of the Company or Debt of the Company which is convertible into
common stock of the Company if at the time of such redemption the Company has an
underwriting commitment on customary terms from a nationally recognized broker-
dealer to purchase all shares of such series of preferred stock or convertible
Debt (or shares of common stock into which such preferred stock or convertible
Debt is convertible) which are not converted as of the redemption date and (vi)
any Restricted Payment made in connection with any merger, consolidation or sale
permitted under Article VIII, provided that in the case of any transaction under
clause (iii) or (iv) above, no Event of Default or event that with the passing
of time or the giving of notice, or both, would constitute an Event of Default
shall have occurred and be continuing immediately after such transaction.
Section 10.9 Limitations on Transactions with Affiliates.
The Company will not, nor will it permit any Restricted Subsidiary to,
sell, lease, transfer or otherwise dispose of any of its properties or assets
to, or purchase any property or assets from, or enter into or make any contract,
agreement, understanding, loan, advance or guarantee with or for the benefit of,
any Affiliate unless (i) such transaction or series of transactions is on terms
that are no less favorable to the Company or such Restricted Subsidiary, as the
case may be, than would be available in a comparable transaction with an
unrelated third party and (ii) the Company delivers to the Trustee, except with
respect to the purchase or sale of products from or to Inland Steel Industries,
Inc. or any of its Affiliates, (a) with respect to a transaction or series of
transactions involving aggregate payments in excess of 1% of Consolidated Net
Tangible Assets, a Board Resolution set forth in an Officers' Certificate
certifying that such transaction complies with clause (i) above and has been
approved by a majority of the independent members of the Board of Directors, and
(b) with respect to a transaction or series of transactions involving aggregate
payments equal to or greater than 4% of Consolidated Net Tangible Assets, the
Company receives a written opinion from a nationally recognized expert that such
transaction or series of transactions is fair to the Company from a financial
point of view, provided that (i) employment agreements, (ii) transactions
between or among the Company and its Restricted Subsidiaries or between or among
its Restricted Subsidiaries, (iii) transactions permitted by Section 10.8 and
(iv) arrangements with Affiliates in effect as of the date of this Indenture,
including any renewal, restructuring, amendment, refinancing or modification of
any such arrangement which does not materially adversely affect the interests of
the Holders of Securities in the reasonable judgment of the Company, in each
case, will not be subject to this Section 10.9.
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Section 10.10 Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any
term, provision or condition set forth in Sections 10.6 to 10.9, inclusive, with
respect to the Securities of any series if before the time for such compliance
the Holders of at least a majority in principal amount of the Outstanding
Securities of such series shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such term,
provision or condition, but no such waiver shall extend to or affect such term,
provision or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and the duties of
the Trustee in respect of any such term, provision or condition shall remain in
full force and effect.
Section 10.11 Provision of Financial Information.
Whether or not the Company is required to be subject to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, as amended, or any successor
provision thereto, the Company shall file with the Commission the annual
reports, quarterly reports and other documents which the Company would have been
required to file with the Commission pursuant to such Section 13(a) or 15(d) or
any successor provision thereto if the Company were so required, such documents
to be filed with the Commission on or prior to the respective dates (the
"Required Filing Dates") by which the Company would have been required so to
file such documents if the Company were so required. The Company shall also in
any event (a)(1) promptly upon written request transmit by mail to all Holders
of Outstanding Securities, as their names and addresses appear in the Security
Register, and to any prospective holder, without cost to such holders, and (ii)
within 15 days of each Required Filing Date, file with the Trustee copies of the
annual reports, quarterly reports and other documents which the Company would
have been required to file with the Commission pursuant to Section 13(a) or
15(d) of the Exchange Act or any successor provisions thereto if the Company
were required to be subject to such Sections and (b) if filing such documents by
the Company with the Commission is not permitted under the Exchange Act, (i)
promptly upon written request supply copies of such documents to any Holder and
prospective holder and (ii) file copies of such documents with the Trustee.
Section 10.12 Calculation of Original Issue Discount.
The Company shall file with the Trustee promptly at the end of each
calendar year a written notice specifying the amount of original issue discount
(including daily rates and accrual periods) accrued on Outstanding Securities as
of the end of such year.
Section 10.13 Appointments to Fill Vacancies in Trustee's Office.
The Company, whenever necessary to avoid or fill a vacancy in the
office of the Trustee, will appoint, in the manner provided in Section 6.10, a
Trustee, so that there shall at all times be a Trustee hereunder.
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ARTICLE XI
Redemption of Securities
Section 11.1 Applicability of Article.
Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 3.1 for Securities of any series)
in accordance with this Article.
Section 11.2 Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be
evidenced by a Board Resolution or in another manner specified as contemplated
by Section 3.1 for such Securities. In case of any redemption at the election
of the Company, the Company shall, at least 60 days prior to the Redemption Date
fixed by the Company (unless a shorter notice shall be satisfactory to the
Trustee), notify the Trustee of such Redemption Date, of the principal amount of
Securities of such series to be redeemed and, if applicable, of the tenor of the
Securities to be redeemed. In the case of any redemption of Securities prior to
the expiration of any restriction on such redemption provided in the terms of
such Securities or elsewhere in this Indenture, the Company shall furnish the
Trustee with an Officers' Certificate evidencing compliance with such
restriction.
Section 11.3 Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities of any series are to be redeemed
(unless all of the Securities of such series and of a specified tenor are to be
redeemed), the particular Securities to be redeemed shall be selected not more
than 60 days prior to the Redemption Date by the Trustee, from the Outstanding
Securities of such series not previously called for redemption, by such method
as the Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions (equal to the minimum authorized
denomination for Securities of that series or any integral multiple thereof) of
the principal amount of Securities of such series of a denomination larger than
the minimum authorized denomination for Securities of that series. If less than
all of the Securities of such series and of a specified tenor are to be
redeemed, the particular Securities to be redeemed shall be selected not more
than 60 days prior to the Redemption Date by the Trustee, from the Outstanding
Securities of such series and specified tenor not previously called for
redemption in accordance with the preceding sentence.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Securities selected
for partial redemption, the principal amount thereof to be redeemed.
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The provisions of the two preceding paragraphs shall not apply with
respect to any redemption affecting only a single Security, whether such
Security is to be redeemed in whole or in part. In the case of any such
redemption in part, the unredeemed portion of the principal amount of the
Security shall be in an authorized denomination (which shall not be less than
the minimum authorized denomination) for such Security.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
Section 11.4 Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at his address appearing in
the Security Register.
All notices of redemption shall identify the Securities to be redeemed
(including, subject to Section 3.11, the CUSIP number) and shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities of any series are to
be redeemed, the identification (and, in the case of partial redemption of
any Securities, the principal amounts) of the particular Securities to be
redeemed and, if less than all the Outstanding Securities of any series
consisting of a single Security are to be redeemed, the principal amount of
the particular Security to be redeemed,
(4) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed and, if applicable, that
interest thereon will cease to accrue on and after said date,
(5) the place or places where such Securities are to be surrendered
for payment of the Redemption Price, and
(6) that the redemption is for a sinking fund, if such is the case.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
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Section 11.5 Deposit of Redemption Price.
Prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 10.3) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on, all the Securities
which are to be redeemed on that date.
Section 11.6 Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date; provided, however, that, unless otherwise specified as
contemplated by Section 3.1, installments of interest whose Stated Maturity is
on or prior to the Redemption Date shall be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and the
provisions of Section 3.7.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and any premium shall, until
paid, bear interest from the Redemption Date at the rate prescribed therefor in
the Security.
Section 11.7 Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered
at a Place of Payment therefor (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and make available for delivery to the Holder of such
Security without service charge, a new Security or Securities of the same series
and of like tenor, of any authorized denomination as requested by such Holder,
in aggregate principal amount equal to and in exchange for the unredeemed
portion of the principal of the Security so surrendered. If a Book-Entry
Security is so surrendered, such new Security so issued shall be a new Book-
Entry Security.
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ARTICLE XII
Sinking Funds
Section 12.1 Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund
for the retirement of Securities of a series except as otherwise specified as
contemplated by Section 3.1 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is herein referred to as a "mandatory sinking
fund payment," and any payment in excess of such minimum amount provided for by
the terms of Securities of any series is herein referred to as an "optional
sinking fund payment." If provided for by the terms of Securities of any series,
the cash amount of any sinking fund payment may be subject to reduction as
provided in Section 12.2. Each sinking fund payment shall be applied to the
redemption of Securities of any series as provided for by the terms of
Securities of such series.
Section 12.2 Satisfaction of Sinking Fund Payments with Securities.
The Company (1) may deliver Outstanding Securities of a series (other
than any previously called for redemption) and (2) may apply as a credit
Securities of a series which have been redeemed either at the election of the
Company pursuant to the terms of such Securities or through the application of
permitted optional sinking fund payments pursuant to the terms of such
Securities, in each case in satisfaction of all or any part of any sinking fund
payment with respect to the Securities of such series required to be made
pursuant to the terms of such Securities as provided for by the terms of such
series; provided that such Securities have not been previously so credited.
Such Securities shall be received and credited for such purpose by the Trustee
at the Redemption Price specified in such Securities for redemption through
operation of the sinking fund and the amount of such sinking fund payment shall
be reduced accordingly.
Section 12.3 Redemption of Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash and the portion thereof, if any,
which is to be satisfied by delivering and crediting Securities of that series
pursuant to Section 12.2 and will also deliver to the Trustee any Securities to
be so delivered. Not less than 45 days before each such sinking fund payment
date the Trustee shall select the Securities to be redeemed upon such sinking
fund payment date in the manner specified in Section 11.3 and cause notice of
the redemption thereof to be given in the name of and at the
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expense of the Company in the manner provided in Section 11.4. Such notice
having been duly given, the redemption of such Securities shall be made upon the
terms and in the manner stated in Sections 11.6 and 11.7.
ARTICLE XIII
Defeasance and Covenant Defeasance
Section 13.1 Applicability of Article; Company's Option to Effect Defeasance
or Covenant Defeasance.
If pursuant to Section 3.1 provision is made for either or both of (a)
defeasance of the Securities of a series under Section 13.2 or (b) covenant
defeasance of the Securities of a series under Section 13.3, then the provisions
of such Section or Sections, as the case may be, together with the other
provisions of this Article XIII, shall be applicable to the Securities of such
series, and the Company may at its option by Board Resolution or in another
manner specified as contemplated by Section 3.1 for such Securities, at any
time, with respect to the Securities of such series, elect to have either
Section 13.2 (if applicable) or Section 13.3 (if applicable) be applied to the
Outstanding Securities of such series upon compliance with the conditions set
forth below in this Article XIII.
Section 13.2 Defeasance and Discharge.
Upon the Company's exercise of the above option (if any) applicable to
this Section, the Company shall be deemed to have been discharged from its
obligations with respect to the Outstanding Securities of such series as
provided in this Section on and after the date the conditions precedent set
forth below are satisfied (hereinafter, "defeasance"). For this purpose, such
defeasance means that the Company shall be deemed to have paid and discharged
the entire indebtedness represented by the Outstanding Securities of such series
and to have satisfied all its other obligations under such Securities and this
Indenture insofar as such Securities are concerned (and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging the
same), except for the following which shall survive until otherwise terminated
or discharged thereunder: (A) the rights of Holders of Outstanding Securities
of such series to receive, solely from the trust fund described in Section 13.4
as more fully set forth in such Section, payments of the principal of (and
premium and interest, if any, on) such Securities when such payments are due,
(B) the Company's obligations with respect to such Securities under Sections
3.4, 3.5, 3.6, 10.2 and 10.3 and such obligations as shall be ancillary thereto,
(C) the rights, powers, trusts, duties, immunities and other provisions in
respect of the Trustee hereunder and (D) this Article XIII. Subject to
compliance with this Article XIII, the Company may exercise its option under
this Section 13.2 notwithstanding the prior exercise of its option under Section
13.3 with respect to the Securities of such series.
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Section 13.3 Covenant Defeasance.
Upon the Company's exercise of the above option applicable to this
Section, the Company shall be released from its obligations under Sections 8.1,
10.6, 10.7, 10.8 and 10.9 (and any covenant applicable to such Securities that
are determined pursuant to Section 3.1 to be subject to this provision) and the
occurrence of an event specified in Section 5.1(3) and (5) (with respect to any
of Sections 8.1, 10.6, 10.7, 10.8 or 10.9) (and any other Event of Default
applicable to such Securities that are determined pursuant to Section 3.1 to be
subject to this provision) shall not be deemed to be an Event of Default with
respect to the Outstanding Securities of such series on and after the date the
conditions set forth below are satisfied (hereinafter, "covenant defeasance").
For this purpose, such covenant defeasance means that, with respect to the
Outstanding Securities of such series, the Company may omit to comply with and
shall have no liability in respect of any term, condition or limitation set
forth in any such Section or clause whether directly or indirectly by reason of
any reference elsewhere herein to any such Section or clause or by reason of any
reference in any such Section or clause to any other provision herein or in any
other document, but the remainder of this Indenture and such Securities shall be
unaffected thereby.
Section 13.4 Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions precedent to application of
Section 13.2 or Section 13.3 to the Outstanding Securities of such series, as
the case may be:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 6.9 who shall agree to comply with the provisions of this
Article XIII applicable to it) as trust funds in trust for the purpose of
making the following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of such Securities, (A)
money in an amount, or (B) U.S. Government Obligations which through the
scheduled payment of principal and interest in respect thereof in
accordance with their terms will provide, not later than one day before the
due date of any payment, money in an amount, or (C) a combination thereof,
sufficient, without reinvestment, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge, and which shall be
applied by the Trustee (or other qualifying trustee) to pay and discharge,
the principal of (and premium and interest, if any on) the Outstanding
Securities of such series on the Stated Maturity of such principal, or
premium and interest, if any. Before such a deposit the Company may make
arrangements satisfactory to the Trustee for the redemption of Securities
at a future date or dates in accordance with Article XI, which shall be
given effect in applying the foregoing.
(2) No Event of Default or event which with notice or lapse of time
or both would become an Event of Default with respect to the Securities of
such series shall have
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occurred and be continuing (A) on the date of such deposit or (B) insofar
as subsections 5.1(8) and 5.1(9) are concerned, at any time during the
period ending on the 90th day after the date of such deposit (it being
understood that the condition in this condition shall not be deemed
satisfied until the expiration of such period).
(3) Such defeasance or covenant defeasance shall not (A) cause the
Trustee for the Securities of such series to have a conflicting interest
for purposes of the Trust Indenture Act with respect to any securities of
the Company or (B) result in the trust arising from such deposit to
constitute, unless it is qualified as, a regulated investment company under
the Investment Company Act of 1940, as amended.
(4) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, this Indenture or
any other agreement or instrument to which the Company is a party or by
which it is bound.
(5) In the case of an election under Section 13.2 with respect to any
series of Securities, the Company shall have delivered to the Trustee an
Opinion of Counsel stating that (x) the Company has received from, or there
has been published by, the Internal Revenue Service a ruling, or (y) since
the date of this Indenture there has been a change in the applicable
Federal income tax law, in either case to the effect that, and based
thereon such opinion shall confirm that, the Holders of the Outstanding
Securities of such series will not recognize income, gain or loss for
Federal income tax purposes as a result of such deposit, defeasance and
discharge to be effected with respect to such Securities and will be
subject to Federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such deposit, defeasance
and discharge were not to occur.
(6) In the case of an election under Section 13.3 with respect to any
series of Securities, the Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that the Holders of the Outstanding
Securities of such series will not recognize income, gain or loss for
Federal income tax purposes as a result of such deposit and covenant
defeasance to be effected with respect to such Securities and will be
subject to Federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such deposit and covenant
defeasance were not to occur.
(7) Such defeasance or covenant defeasance shall be effected in
compliance with any additional terms, conditions or limitations which may
be imposed on the Company in connection therewith pursuant to Section 3.1.
(8) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the defeasance under Section 13.2
or the covenant defeasance under Section 13.3 (as the case may be) have
been complied with.
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Section 13.5 Deposited Money and U.S. Government Obligations to be Held in
Trust; Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 10.3, all
money and U.S. Government Obligations (including the proceeds thereof) deposited
with the Trustee (or other qualifying trustee -- collectively, for purposes of
this Section 13.5, the "Trustee") pursuant to Section 13.4 in respect of the
Outstanding Securities of such series shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Securities and this
Indenture, to the payment, either directly or through any Paying Agent (but not
including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Securities, of all sums due and to become due
thereon in respect of principal (and premium, if any) and interest, but such
money need not be segregated from other funds except to the extent required by
law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the money or U.S. Government
Obligations deposited pursuant to Section 13.4 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of Outstanding Securities.
Anything herein to the contrary notwithstanding, the Trustee shall
deliver or pay to the Company from time to time upon Company Request any money
or U.S. Government Obligations held by it as provided in Section 13.4 which, in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, are in
excess of the amount thereof which would then be required to be deposited to
effect an equivalent defeasance or covenant defeasance, as the case may be, with
respect to such Securities.
Section 13.6 Reinstatement.
If the Trustee or the Paying Agent is unable to apply any money in
accordance with this Article XIII with respect to any Securities by reason of
any order or judgment or any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, then the Company's
obligations under this Indenture and the Securities of such series shall be
revived and reinstated as though no deposit had occurred pursuant to this
Article XIII until such time as the Trustee or Paying Agent is permitted to
apply all such money held in trust pursuant to Section 13.5 with respect to such
Securities in accordance with this Article XIII; provided, however, that if the
Company makes any payment of principal of (and premium, if any) or interest on
any such Security following the reinstatement of its obligations, the Company
shall be subrogated to the rights of the Holders of such Securities to receive
such payment from the money held by the Trustee or the Paying Agent.
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This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
---------------------
67
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
RYERSON TULL, INC.
By___________________________
Name:
Title:
Attest:
____________________________
THE BANK OF NEW YORK, as Trustee
By___________________________
Attest:
____________________________
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<PAGE>
STATE OF _________ )
) ss.:
COUNTY OF ________ )
On the ___ day of _________, ____, before me personally came
___________________, to me known, who, being by me duly sworn, did depose and
say that he is the _________________________________________________ of Ryerson
Tull, Inc., one of the corporations described in and which executed the
foregoing instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
authority of the Board of Directors of said corporation, and that he signed his
name thereto by like authority.
____________________________________
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ____ day of __________, ____, before me personally came
_________________, to me known, who, being by me duly sworn, did depose and say
that he is ________________ of The Bank of New York one of the corporations
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
____________________________________
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Certificate for Certificate for
Not More Than Not More Than
100,000 Shares 100,000 Shares
NUMBER
CM RT SHARES
[LOGO]
- ---------------------- -------------------- ---------------------
CLASS A COMMON STOCK CLASS A COMMON STOCK
PAR VALUE $1.00 PAR VALUE $1.00
Incorporated under the Laws of the State of Delaware
RYERSON TULL, INC.
THIS CERTIFICATE IS TRANSFERABLE IN THE CITY OF NEW YORK OR IN CHICAGO
CUSIP 783755 101
see Reverse for Certain Definitions
THIS CERTIFIES THAT [Name]
IS THE OWNER OF [Amount]
FULLY-PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF
Ryerson Tull, Inc. transferable in person or by duly authorized attorney in the
books of the Company upon surrender of this Certificate properly endorsed. This
Certificate is not valid unless countersigned by the Transfer Agent and
registered by the Registrar. In witness whereof the Company has caused this
certificate to be signed by its duly authorized officers, and its corporate seal
to be hereunto affixed.
[SEAL]
Dated
CORPORATE SECRETARY CHAIRMAN
<PAGE>
RYERSON TULL, INC.
THE COMPANY WILL FURNISH TO ANY STOCKHOLDER UPON REQUEST AND WITHOUT CHARGE
A FULL STATEMENT OF THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES
THEREOF AUTHORIZED TO BE ISSUED, AND THE QUALIFICATIONS, LIMITATIONS OR
RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS, INCLUDING A STATEMENT OF THE
AUTHORITY OF THE BOARD OF DIRECTORS TO DESIGNATE AND FIX THE RELATIVE RIGHTS,
PREFERENCES AND LIMITATIONS OF SERIES TO BE CREATED BY THE BOARD. SUCH REQUEST
MAY BE MADE TO THE CORPORATE SECRETARY AT THE PRINCIPAL OFFICE OF THE COMPANY IN
CHICAGO, ILLINOIS.
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in the Rights Agreement between Ryerson Tull, Inc. (the
"Company") and Harris Trust and Savings Bank (the "Rights Agent") dated as of
June 10, 1996 (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of this is on file at the principal
offices of the Company. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates and will no
longer be evidenced by this certificate. The Company will mail to the holder of
this certificate a copy of the Rights Agreement, as in effect on the date of
mailing, without charge promptly after receipt of a written request therefor.
Under certain circumstances set forth in the Rights Agreement, Rights issued to,
or held by, any Person who is, was or becomes an Acquiring Person or an Adverse
Person or any Affiliate or Associate thereof (as such terms are defined in the
Rights Agreement), whether currently held by or on behalf of such Person or by
any subsequent holder, may become null and void.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF TRANSFER MIN ACT _____________ Custodian _____________
(Cust) (Minor)
TEN ENT - as tenants by the entireties Under Uniform Transfer to Minors Act
JT TEN - as joint tenants with right
of survivorship and not as
tenants in common _____________________________________
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
For value received __________ hereby sell, assign and transfer unto
Please insert social security or
other identifying number of assignee
- ----------------------------
- --------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares
- -------------------------------------------------------------------------
of the capital stock represented by the written Certificate and do hereby
irrevocably constitute and appoint
----------------------------------------------
Attorney to transfer the said stock on the books of the within-named Company
with full power of substitution in the premises.
Dated:
------------------ ---------------------------------------------
<PAGE>
RYERSON TULL, INC.
------------------
PROMISSORY NOTE
$293,800,000 June __, 1996
The undersigned, Ryerson Tull, Inc., a Delaware corporation (the
"Company"), for value received, promises to pay to the order of Inland Steel
Industries, Inc., a Delaware corporation ("ISI"), at its office in Chicago,
Illinois on June __, 2001, the principal sum of Two Hundred Ninety Three Million
Eight Hundred Thousand Dollars ($293,800,000), together with interest from the
date hereof to maturity at the Prime Rate from time to time in effect on the
principal amount remaining from time to time unpaid. Interest shall be payable
semi-annually on the first day of each June and December, commencing December 1,
1996, and at maturity. This Note shall bear interest at the rate per annum
equal to 1% in excess of the Prime Rate from time to time in effect (but in no
event less than 1% in excess of the Prime Rate in effect at maturity) from
maturity until paid, which interest after maturity shall be payable on demand.
The "Prime Rate," for purposes of this Note, shall be a rate per annum then most
recently publicly announced by Morgan Guaranty Trust Company of New York in New
York City as its Prime Rate. Interest shall be computed on the basis of a year
consisting of 365, or when appropriate 366, days.
This Note may be prepaid, in whole or in part, at any time; provided,
however, that partial prepayments shall be in a minimum amount of $5,000,000 or
any larger multiple of $1,000,000 and shall include accrued interest thereon to
the date of such prepayment.
If (i) there is a default in the payment when due of any principal or
interest on this Note, and such default shall continue for 10 days after notice
from ISI to the Company, or (ii) the Company becomes insolvent or admits in
writing its inability to pay its debts as they mature or applies for, consents
to or acquiesces in the appointment of a trustee or receiver for it or any of
its property, or any bankruptcy, reorganization, debt arrangement or other
proceeding under any bankruptcy or insolvency law shall be instituted by or
against the Company, and if instituted against it shall be consented to or
acquiesced in by it or shall not be dismissed within a period of sixty (60)
days, then and in either such event ISI may, at its option and without demand or
notice of any kind, declare this Note to be due and payable, whereupon the
unpaid principal of and accrued interest on this Note shall become immediately
due and payable and ISI may exercise all rights and remedies available to it
under applicable law. The Company agrees to pay all fees and expenses
(including attorneys' fees and expenses) incurred by ISI in connection with any
such default and any enforcement proceedings resulting therefrom.
This Note evidences a portion of the proceeds of a dividend declared by the
Company on June __, 1996 and payable to ISI on the date hereof.
This Note shall be governed by the laws of the State of Illinois.
RYERSON TULL, INC.
By: ________________________________
Its: _______________________________
Address: 2621 West 15th Place
Chicago, Illinois 60608
<PAGE>
June 10, 1996
Ryerson Tull, Inc.
2621 West 15th Place
Chicago, Illinois 60608
Re: Class A Common Stock, $1.00 par value per share
-----------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Ryerson Tull, Inc., a Delaware corporation (the
"Company"), in connection with the corporate proceedings (the "Corporate
Proceedings") taken and to be taken relating to the public offering of up to
6,000,000 shares of the Company's Class A Common Stock, $1.00 par value per
share, including preferred share purchase rights (the "Class A Common Stock").
We have also participated in the preparation and filing with the Securities and
Exchange Commission under the Securities Act of 1933 of a registration statement
on Form S-1 (the "Registration Statement") relating to such shares of Class A
Common Stock. In this connection, we have examined such corporate and other
records, instruments, certificates and documents as we considered necessary to
enable us to express this opinion.
Based on the foregoing, it is our opinion that, upon completion of the
Corporate Proceedings, the Class A Common Stock will have been duly authorized
for issuance and, when the Class A Common Stock is delivered in accordance with
the Underwriting Agreements in substantially the forms filed as Exhibits 1.1 and
1.2 to the Registration Statement and the Corporate Proceedings, it will be
validly issued, fully paid and non-assessable by the Company.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to us under the caption "Validity of Class A
Common Stock."
Very truly yours,
MAYER, BROWN & PLATT
<PAGE>
REGISTRATION RIGHTS AGREEMENT
-----------------------------
Ryerson Tull, Inc., a Delaware corporation ("the Company"), and Inland
Steel Industries, Inc., a Delaware corporation ("ISI"), in consideration of the
mutual covenants and agreements set forth herein, and other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the parties hereto agree as follows:
Section 1. Registration Rights.
--------- -------------------
(a) ISI shall have the right to make two requests (each of which must be
in writing) in any twelve month period to register, under the Securities Act of
1933, as amended prior hereto or subsequently (the "Securities Act"), the shares
of the Class A Common Stock of the Company received by ISI upon any conversion
of Class B Common Stock of the Company and any such shares distributed thereon
(the "Subject Stock"), and the Company shall use its best efforts to cause such
shares to be registered under the Securities Act as soon as reasonably
practicable upon receiving such a request, subject to the terms of this
Agreement. Notwithstanding the foregoing, the Company shall not be required to
comply with any such request unless such request (as contrasted with the number
of shares of Subject Stock actually sold in the offering) requests registration
of the lesser (the "Minimum Registrable Amount") of (i) 1,000,000 shares of
Subject Stock (which number shall be adjusted proportionately in the event of
any reverse stock split, stock split or other distribution by the Company of its
Class A Common Stock to all holders of Class A Common Stock), (ii) Subject Stock
having a market value of at least $25 million (based on the average closing
price of the Company's Class A Common Stock during the 20 trading days preceding
the date of the request) or (iii) any shares of Subject Stock representing ISI's
remaining ownership of such stock, if less than (i) or (ii). A pledgee of
Subject Stock
<PAGE>
may, with the consent of ISI, request registration of Subject Stock under this
Section 1(a); provided, however, that such registration (i) shall count as a
request for registration by ISI for purposes of the first sentence of this
Section 1(a) and (ii) be subject in all respects to the provisions of this
Agreement except for those set forth in the prior sentence providing for a
Minimum Registrable Amount. Upon receiving such a request, the Company shall
prepare and file, on Form S-3 if permitted or otherwise on such appropriate
form, a registration statement under the Securities Act to effect such
registration.
Notwithstanding the foregoing, the Company (i) shall not be obligated to
file more than one registration statement during any four-month period, (ii)
shall not be obligated to cause any special audit to be undertaken in connection
with any such registration and (iii) shall be entitled to postpone the filing or
the effectiveness of any registration statement otherwise required to be
prepared and filed by the Company, or to suspend its other obligations under
this Agreement, including its obligations to maintain the effectiveness of such
registration statement, if (A) the Company is, at such time, conducting or
determines to conduct an underwritten public offering of Class A Common Stock
(or securities convertible into Class A Common Stock) and is advised in writing
by its managing underwriter or underwriters that the price, timing or
distribution of Class A Common Stock to be offered in such offering would in its
or their reasonable opinion be materially adversely affected by the registration
so requested or commenced, (B) the Company reasonably determines that the
registration and distribution of shares of Class A Common Stock would materially
interfere with any pending or imminent financing, acquisition, corporate
reorganization or other material transaction involving the Company or any of its
subsidiaries or (C) the Company reasonably determines that it is precluded,
either due to circumstances beyond its control or because it is unable or
unwilling for valid corporate purposes to make any disclosures which would be
required to be made therein, from filing any such registration statement or any
amendment thereto or supplementing any prospectus included therein. In the event
that the filing of such registration statement is postponed, ISI shall have the
right to withdraw the request for registration by giving written notice to the
Company within 15 days after receipt of the notice of postponement (and, in the
event of such withdrawal, such
-2-
<PAGE>
request shall be ignored for purposes of determining the number of registrations
to which ISI is entitled pursuant to this paragraph (a)). The Company agrees
that it will terminate any such postponement as promptly as reasonably
practicable and will promptly notify ISI of such termination. In making any such
determination to initiate or terminate a postponement, the Company shall not be
required to consult with or obtain the consent of ISI, and any such
determination shall be the Company's responsibility alone, and ISI shall not be
responsible or have any liability therefor.
(b) If the Company proposes to register any of its Class A Common Stock
under the Securities Act (other than pursuant to paragraph (a) hereof, and other
than (i) securities to be issued pursuant to a stock option or other employee or
director benefit or similar plan or (ii) securities proposed to be issued in
exchange for securities or assets of, or in connection with a merger or
consolidation with, another corporation), the Company shall, as promptly as
practicable, give written notice of the Company's intention to effect such
registration. If, within 15 days after receipt of such notice, ISI submits a
written request to the Company specifying the amount of Subject Stock that it
proposes to sell, the Company shall use its best efforts to include the shares
specified in ISI's request in such registration statement and the Company shall
keep each such registration statement in effect and maintain compliance with
federal and state law and regulation as set forth in clause (c) below.
Notwithstanding the foregoing, if the offering of the Company's Class A Common
Stock pursuant to such registration statement is to be made by or through
underwriters, the Company shall not be required to include the Subject Stock
therein if, but only to the extent that, the underwriter managing the offering
advises the Company in writing that it reasonably believes that such inclusion
would create a substantial possibility of adversely affecting the price, timing
or distribution of the Class A Common Stock to be offered by the Company.
(c) In connection with any offering of shares of the Subject Stock
registered pursuant to this Agreement, the Company shall (i) furnish ISI such
number of copies of any prospectus (including any preliminary prospectus) as it
may reasonably request in order to effect the offering and sale of the Subject
-3-
<PAGE>
Stock to be offered and sold, but only while the Company shall be required under
the provisions hereof to cause the registration statement to remain effective;
(ii) take such reasonable action as shall be necessary to qualify the Subject
Stock covered by such registration statement under such blue sky or other state
securities laws for offer and sale as ISI shall reasonably request; provided,
however, that the Company shall not be obligated to qualify as a foreign
corporation to do business under the laws of any jurisdiction in which it shall
not then be qualified or to file any general consent to service of process in
any jurisdiction in which such a consent has not been previously filed; (iii) at
least 5 days before filing any registration statement or any amendment or
supplement thereto, furnish to ISI and its counsel copies of such documents,
which documents will be subject to the reasonable review of ISI and such
counsel, such review to be conducted with reasonable promptness; and (iv) make
available, upon reasonable notice and during business hours, to ISI and any
attorney, accountant or other agent retained by ISI (collectively, the
"Inspectors"), for inspection by such Inspectors, all financial and other
records, pertinent corporate documents, agreements and properties of the Company
as shall be reasonably requested by ISI or such Inspectors. In connection with
any offering of the Subject Stock registered pursuant to this Agreement, the
Company shall (x) furnish to the underwriter unlegended certificates
representing ownership of the Class A Common Stock being sold in such
denominations as requested and (y) instruct any transfer agent and registrar of
the Class A Common Stock to release any stop transfer orders with respect to
such Class A Common Stock. Upon any registration statement becoming effective
pursuant to this Agreement under Rule 415 of the Securities Act, the Company
shall use its best efforts, subject to the terms of this Agreement, to keep such
registration statement effective for a period not to exceed 180 days (or such
shorter period that will terminate when all Subject Stock covered by such
registration statement has been sold or such registration statement has been
withdrawn).
(d) ISI shall pay all out-of-pocket expenses incurred by ISI in connection
with any registration statement subject to Section 1(a) of this Agreement,
including, without limitation, all underwriting discounts and commissions
related to shares of the Subject Stock being sold by ISI and the fees and
disbursements of its counsel and accountants, the filing fees
-4-
<PAGE>
paid to the Securities and Exchange Commission (the "Commission") and state
securities authorities with respect to the Subject Stock, attorney's fees in
connection with the filings made with the state securities authorities, the
printing fees in connection with such offering and filing fees and related
attorney's fees regarding the review conducted of the underwriting arrangements
by the National Association of Securities Dealers. The Company shall pay all
other expenses in connection with any registration statement subject to Section
1(a) of this Agreement. In the case of the registration of Class A Common Stock
under Section 1(b) of this Agreement, each of the Company and ISI shall be
exclusively responsible for the fees and expenses of its own respective counsel
and accountants. All other expenses of an offering under Section 1(b) shall be
allocated between the Company and ISI on a proportional basis according to the
number of shares included by each in the offering.
(e) In the case of any offering registered pursuant to this Agreement, the
Company agrees to indemnify and hold ISI and each person who controls ISI within
the meaning of Section 15 of the Securities Act and the directors and officers
of ISI harmless against any and all losses, claims, damages or liabilities
(including reasonable legal fees and other reasonable expenses incurred in the
investigation and defense thereof) to which they or any of them may become
subject under the Securities Act or any other statute or common law or
otherwise, insofar as any such losses, claims, damages, liabilities or actions
shall arise out of or shall be based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the registration statement
relating to the sale of such Subject Stock, or the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading or (ii) any untrue statement or alleged untrue statement of
a material fact contained in the prospectus (as amended or supplemented if the
Company shall have filed with the Commission any amendment thereof or supplement
thereto), or the omission or alleged omission to state therein a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading; provided, however, that the
indemnification agreement contained in this paragraph (e) shall not apply to
such losses, claims, damages, liabilities or actions which shall arise out of or
shall
-5-
<PAGE>
be based upon any such untrue statement or alleged untrue statement, or any such
omission or alleged omission, which (x) shall have been made in reliance upon
and in conformity with information furnished in writing to the Company by ISI or
any underwriter for ISI, as the case may be, specifically for use in connection
with the preparation of the registration statement or prospectus contained in
the registration statement or any such amendment thereof or supplement thereto
or (y) contained in any preliminary prospectus (or any prospectus), which untrue
statement or omission or alleged untrue statement or omission was corrected in
the prospectus (or in a supplement thereto) if ISI or an underwriter sold the
Subject Stock to the person alleging such loss, liability, claim, damage or
expense without sending or giving, at or prior to the final written confirmation
of such sale, a copy of the prospectus (or of the prospectus as amended or
supplemented) if the Company had previously complied with the request of ISI or
such underwriter for copies thereof.
(f) In the case of each offering registered pursuant to this Agreement,
ISI shall agree, in the same manner and to the same extent as set forth in
paragraph (e) of this Agreement, severally to indemnify and hold harmless the
Company and each person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act, and the directors and officers of the Company,
with respect to any statement in or omission from such registration statement or
prospectus contained in such registration statement (as amended or as
supplemented, if amended or supplemented as aforesaid), if such statement or
omission shall have been made in reliance upon and in conformity with
information furnished in writing to the Company by ISI or such underwriter, as
the case may be, specifically for use in connection with the preparation of such
registration statement or prospectus contained in such registration statement or
any such amendment thereof or supplement thereto.
(g) Each party indemnified under paragraph (e) or (f) of this Agreement
shall, promptly after receipt of notice of the commencement of any action
against such indemnified party in respect of which indemnity may be sought
hereunder, notify the indemnifying party in writing of the commencement thereof.
The omission of any indemnified party to so notify an indemnifying party of any
such action shall not relieve the indemnifying party from any liability in
respect of such action which it may have to
-6-
<PAGE>
such indemnified party on account of the indemnity agreement contained in
paragraph (e) or (f) of this Agreement, unless (and only to the extent) the
indemnifying party was prejudiced by such omission, and in no event shall
relieve the indemnifying party from any other liability which it may have to
such indemnified party. In case any such action shall be brought against any
indemnified party and it shall notify an indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate therein and, to
the extent that it may desire, jointly with any other indemnifying party
similarly notified, to assume the defense thereof with counsel selected by it
serving as counsel for all indemnified parties, and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under paragraph (e) or (f) of this Agreement for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof, other than reasonable costs of investigation (unless such
indemnified party reasonably objects to such assumption on the grounds that
counsel selected by the indemnifying party faces a conflict of interest in also
representing the indemnified party, in which event the indemnified party shall
be reimbursed by the indemnifying party for the reasonable expenses incurred in
connection with retaining separate legal counsel).
(h) To the extent a party is prohibited by law from performing the
indemnity provided by this Agreement, it shall, in lieu thereof, contribute to
such losses, claims, damages or liabilities to the maximum extent permitted by
law and the above provisions to the extent applicable to such contribution shall
be followed.
Section 2. Limitations on Registration Rights.
--------- ----------------------------------
(a) TERMINATION OF REGISTRATION RIGHTS. The right of ISI to request the
registration of the Subject Stock under this Agreement shall continue until
counsel to the Company, which shall be reasonably acceptable to ISI, delivers an
opinion to the Company that public distribution of all remaining shares of the
Subject Stock in one transaction shall not require registration under the
Securities Act.
-7-
<PAGE>
(b) RULE 144. With a view to making available to ISI the benefits of
certain rules and regulations of the Commission which may permit the sale of
Class A Common Stock to the public without registration, the Company agrees,
after such time as a public market exists for the Class A Common Stock, to :
(i) make and keep public information available as those terms are
understood and defined in Rule 144;
(ii) file with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act; and
(iii) furnish to ISI forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of Rule 144,
and of the Exchange Act, a copy of the most recent annual or quarterly
report of the Company filed with the Commission, if any, and such other
reports and documents of the Company and other information in the
possession of or reasonably obtainable by the Company as ISI may reasonably
request in availing itself of any rule or regulation of the Commission
allowing it to sell securities without registration under the Securities
Act.
(c) RULE 415. ISI may require that the registration statement filed under
Section 1(a) be filed pursuant to Rule 415 under the Securities Act, provided,
however, the Company shall not be required to file a registration statement
pursuant to Rule 415 if the Company is not eligible to file the registration
statement on Form S-3 or any form adopted in place thereof.
(d) RESTRICTIONS ON PUBLIC SALE. ISI agrees not to effect any public sale
or distribution of any Subject Stock, or any securities convertible into or
exchangeable or exercisable for such securities (including a sale pursuant to
Rule 144 under the Act), during the 14 days prior to, and during the 90-day
period beginning on, the effective date of a registration statement filed by the
Company during the period that ISI may request registration of Subject Stock
pursuant to Section 1(a) of this Agreement (except as part of such
registration), if and to the extent requested in writing (with reasonable prior
notice) by the Company in the case of a non-underwritten public offering or by
-8-
<PAGE>
the Company or the managing underwriter or underwriters in the case of an
underwritten public offering.
(e) CESSATION OF SALES FOR MAJOR TRANSACTIONS AND MATERIAL INFORMATION.
ISI agrees that, upon receipt of notice from the Company of any determination
specified in clause (iii)(A), (b) or (C) of the second paragraph of Section
1(a), ISI will immediately discontinue dispositions pursuant to any registration
statement filed pursuant to this Agreement. In the event the Company shall give
any such notice, the 180-day period mentioned in Section 1(c) shall be extended
by the number of days during the period from and including the date of the
giving of such notice pursuant to this clause of Section 2 to and including the
date when ISI receives notice from the Company that ISI may resume dispositions
of Subject Stock pursuant to such registration statement.
(f) ISI'S DUTY TO REPORT. In respect of a registration pursuant to this
Agreement, ISI shall advise the Company immediately if ISI knows or becomes
aware of any matter which ISI believes may result in the inclusion in a
prospectus contained in such registration statement of an untrue statement of a
material fact or the omission of a material fact required to be stated therein
or necessary to make the statements therein not misleading, and shall promptly
notify the Company and assist the Company in preparation and filing with the
Commission of any such amendments or supplements to said registration statement
that may be necessary or appropriate to permit the prospectus included therein
to be used under the Securities Act during the period during which the
prospectus must be delivered in connection with the offering and sale of Subject
Stock.
(g) ISI'S DUTY TO COOPERATE. The Company may require ISI to furnish to
the Company such information regarding the distribution of Subject Stock and
such other information relating to ISI and its ownership of Subject Stock as the
Company may from time to time reasonably request and ISI agrees to furnish the
Company with such information and to cooperate with the Company as necessary to
enable the Company to comply with the provisions of this Agreement.
(h) CESSATION OF SALES WHEN PROSPECTUS IS MISLEADING. Upon receipt of any
notice from the Company of the happening of any event as a result of
which the prospectus included in such
-9-
<PAGE>
registration statement (as then in effect) contains any untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, ISI will immediately discontinue
disposition of the Subject Stock until ISI receives copies of the supplemented
or amended prospectus contemplated by subsection (c) of Section 1 or until it is
advised in writing (the "Advice") by the Company that the use of the prospectus
may be resumed, and has received copies of any additional or supplemental
filings which are incorporated by reference in the prospectus. If so directed by
the Company, ISI will, or will request the managing underwriter or agent, if
any, to, deliver to the Company all copies (other than permanent file copies
then in ISI's possession) of the prospectus covering such Subject Stock current
at the time of receipt of such notice. In the event the Company shall give any
such notice, the 180-day time period mentioned in subsection (c) of Section 1
shall be extended by the number of days during the period from and including the
date of the giving of such notice to and including the date when ISI shall have
received the copies of the supplemented or amended prospectus contemplated by
subsection (c) of Section 1 hereof or the Advice.
(i) UNDERWRITING ARRANGEMENTS. ISI may not participate in any underwritten
registration under Section 1(b) or demand an underwritten registration under
Section 1(a) unless ISI agrees to execute an underwriting agreement with such
underwriter provided, however, that such underwriting agreement must be
reasonably satisfactory to ISI and must be in customary form. In the case of an
underwritten offering registered pursuant to the terms of this Agreement, the
Company agrees, at the request of ISI, to execute an underwriting agreement with
such underwriters, provided, however, that such underwriting agreement must be
reasonably satisfactory to the Company and must be in customary form.
Section 3. Specific Performance.
--------- --------------------
Each of the parties hereto recognizes and acknowledges that a breach by it
of any covenants or agreements contained in this Agreement will cause the other
party to sustain damages for which it would not have an adequate remedy at law
for money damages, and therefore each of the parties hereto agrees that in the
event
- 10-
<PAGE>
of any such breach the aggrieved party shall be entitled to the remedy of the
specific performance of such covenants and agreements and injunctive and other
equitable relief in addition to any other remedy to which it may be entitled, at
law or in equity.
Section 4. Notices.
--------- -------
All notices or other communications under this Agreement shall be in
writing and shall be deemed to be duly given when (a) delivered in person, (b)
deposited in the United States mail or private express mail, postage prepaid, or
(c) sent by facsimile (with a machine confirmation of receipt) addressed as
follows:
If to ISI, to: Inland Steel Industries, Inc.
30 West Monroe Street
Chicago, Illinois 60603
Facsimile: 312-899-3921
Attention: Vice President and
General Counsel
If to the Company, to: Ryerson Tull, Inc.
2621 West 15th Place
Chicago, Illinois 60608
Facsimile: 312-899-3214
Attention: Corporate Secretary
Any party may, by notice to the other party, change the address to which such
notices are to be given.
Section 5. Severability.
--------- ------------
Whenever possible, each provision of this Agreement will be interpreted in
such a manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be prohibited by or invalid under
applicable law, such prohibition or invalidity shall only apply to such
provision, without invalidating the remainder of this Agreement.
Section 6. Assignment.
--------- ----------
This Agreement and all of the provisions hereof shall be binding upon and
inure to the benefit of the parties hereto and
-11-
<PAGE>
their respective successors and assigns; provided, however, that in the case of
multiple assignees, in order for any assignee to exercise any rights under this
Agreement, all assignees must agree among themselves, in a manner reasonably
acceptable to the Company, to exercise their rights under this Agreement in a
manner that will not increase the Company's burdens under this Agreement.
Section 7. Governing Law.
--------- -------------
This Agreement and the legal relations among the parties hereto shall be
governed by and construed in accordance with the laws of the State of Illinois,
without regard to its conflicts of law doctrine.
-12-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of June __, 1996.
Ryerson Tull, Inc.
By:
__________________________
Title:
____________________
Inland Steel Industries, Inc.
By:
__________________________
Title:
____________________
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<PAGE>
[LETTERHEAD OF INLAND STEEL INDUSTRIES]
June 27, 1990
Mr. Carl G. Lusted
Vice President
J. M. Tull Metals Company, Inc.
4400 Peachtree Industrial Blvd.
P.O. Box 4725
Norcross, Georgia 30091
Dear Carl:
In return for your willingness to move from Atlanta to the Chicago area in
order to assume the responsibilities of President of Ryerson Central, Inland
Steel Industries, Inc. ("Inland") agrees as follows:
(1) Sale of your Atlanta home: Inland will pay to you the amount, if any,
by which the purchase price ($230,000.00) of your Atlanta home exceeds the net
sales price (i.e., gross sales price less real estate brokerage commissions and
incidental costs of sale) of such home.
(2) Move from Chicago area: If upon your attainment of the age of 62 or
at such other time as may be mutually acceptable to you and Inland, you desire
to move from the Chicago area, Inland will reimburse you for the reasonable
costs of moving you and your family from the Chicago area to the Atlanta area or
to any other location that is agreed to by both you and Inland.
(3) Sale of Chicago home: In connection with your move from the Chicago
area as set forth in paragraph (2) above, Inland will pay to you the amount, if
any, by which the purchase price of your Chicago home (or the "appraised value"
of your Chicago home at the time you purchase the same, if such appraised value
is less than the purchase price) exceeds the net sales price (i.e., gross sales
price less real estate brokerage commissions and incidental costs of sale) of
such home. "Appraised value"
<PAGE>
Mr. Carl G. Lusted
Page Two
June 27, 1990
means the fair market value of your Chicago home as determined by such appraisal
firm or other organization providing residential real estate appraisal services
as may be acceptable to both you and Inland.
Please acknowledge receipt of this letter by signing and returning the
enclosed copy thereof to me.
Very truly yours,
INLAND STEEL INDUSTRIES, INC.
By /s/ Judd R. Cool
-------------------------
Judd R. Cool
Vice President-
Human Resources
JOSEPH T. RYERSON & SON, INC.
By /s/ W. Gordon Kay
-------------------------
W. Gordon Kay
President
Receipt acknowledged this 29 day of
June, 1990.
/s/ Carl G. Lusted
- -------------------------
Carl G. Lusted
<PAGE>
Copy of Form of Severance Agreement
dated March 27, 1996
between
Inland Steel Industries, Inc.
and each of:
Robert J. Darnall
Jay M. Gratz
Carl G. Lusted
Stephen E. Makarewicz
<PAGE>
Inland Steel Industries, Inc.
30 West Monroe Street
Chicago, Illinois 60603
March 27, 1996
Dear :
Inland Steel Industries, Inc. ("ISI") considers it essential to the
best interests of its stockholders to foster the continuous employment
of key management personnel of a and its subsidiaries (collectively,
the "Company"). In this connection, the Board of Directors of ISI (the
"Board") recognizes that, as is the case with many publicly held
corporations, the possibility of a change in control may exist and that
such possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of
management personnel to the detriment of ISI and its stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of
members of the Company's management, including yourself, to their
assigned duties without distraction in the face of potentially
disturbing circumstances arising from the possibility of a change in
control of the Company, although no such change is now contemplated. In
order to induce you to remain in the employ of the Company and in
consideration of your agreement set forth in Subsection 2(ii) hereof,
ISI agrees that you shall receive the severance benefits set forth in
this letter agreement ("Agreement") in the event your employment with
the Company is terminated subsequent to a "change in control of the
Company" (as defined in Section 2 hereof) under the circumstances
described below. This Agreement shall constitute an amendment and
restatement of and shall supersede the agreement entered into between
you and ISI with respect to these matters dated FIELD (date). In the
event that you receive severance benefits hereunder, such benefits shall
be in lieu of, and you shall not be entitled to receive, any benefits or
payments under any other severance plan, policy or agreement of or with
the Company. In addition, if you are or become entitled
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Page 3
to benefits from the Company pursuant to another agreement providing for
benefits on account of a change in control or the law of a jurisdiction
other than the United States or any state or territory thereof as a
result of an event for which benefits are payable to you pursuant this
Agreement, the benefits paid to you pursuant to this Agreement shall be
reduced by the amount paid to you pursuant to such other agreement or
law.
1. Term of Agreement. This Agreement shall commence on the date
hereof and shall continue in effect through December 31, 1996; provided,
however, that commencing on January 1, 1997 and each January 1
thereafter, the term of this Agreement shall automatically be extended
for one additional year unless, during the preceding year but not later
than June 30 of such preceding year, ISI shall have given notice that it
does not wish to extend this Agreement. Notwithstanding the preceding
sentence: (i) if your employer is a direct or indirect subsidiary of
ISI, this Agreement shall terminate on the date of which ISI ceases to
own, directly or indirectly, at least 80 percent of your employer for
any reason which does not constitute a change in control of the Company;
and (ii) if a change in control of the Company or a potential change in
control of the Company shall have occurred during the original or
extended term of this Agreement, this Agreement shall continue in effect
for a period of twenty-four (24) months beyond the month in which such
change in control of potential change in control of the Company occurred
unless earlier terminated under clause (i) next above.
2. Change in Control; Potential Change in Control. (i) No
benefits shall be payable hereunder unless there shall have been a
potential change in control or a change in control of the Company, as
set forth below. For purposes of this Agreement, a "change in control
of the Company" shall be deemed to have occurred if (A) any "person" (as
such term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")), other than (w) the
Company, (x) a trustee or other fiduciary holding voting securities
under an employee benefit plan of the Company, (y) an underwriter
temporarily holding voting securities pursuant to an offering of such
securities, or (z) a corporation owned, directly or indirectly, by the
securityholders of ISI in substantially the same proportions as their
ownership of voting securities of ISI, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of voting securities of ISI (not including in the voting
securities beneficially owned by such person any voting securities
acquired directly from ISI or its affiliates) representing 40% or more
of the combined voting power of ISI's then outstanding voting
securities; (B) during any period of two consecutive years (not
including any period prior to the execution of this Agreement),
individuals who
at the beginning of such period constitute the Board and any new
director (other than a director designated by a person who has entered
into an agreement with ISI to effect a transaction described in clauses
(A), (C) or (D) of this Subsection)
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whose election by the Board or nomination for election by ISI's
securityholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election was
previously so approved ("Continuing Directors"), cease for any reason to
constitute a majority thereof; (C) the holders of voting securities of
ISI approve a merger or consolidation of ISI with any other corporation,
other than a merger or consolidation which would result in the voting
securities of ISI outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity), in combination with the
ownership of any trustee or other fiduciary holding voting securities
under an employee benefit plan of the Company, at least 60% of the
combined voting power of the voting securities of ISI or such surviving
entity outstanding immediately after such merger or consolidation, or a
merger or consolidation effected to implement a recapitalization of ISI
(or similar transaction) in which no person acquires more than 50% of
the combined voting power of ISI's then outstanding voting securities;
(D) the holders of voting securities of ISI approve a plan of complete
liquidation of ISI or an agreement for the sale or disposition by ISI of
all or substantially all of ISI's assets; or (E) there occurs (x) a sale
or disposition, directly or indirectly, other than to a person described
in subclause (w), (x) or (z) of clause (A) of this Subsection, of voting
securities of your employer, any direct or indirect parent company of
your employer or any company that is a subsidiary of your employer and
is also a significant subsidiary (as defined below) of ISI (your
employer and such a parent or subsidiary being a "Related Company"),
representing 50% or more of the combined voting power of the securities
of such Related Company then outstanding, (y) a merger or consolidation
of a Related Company with any other corporation, other than a merger or
consolidation which would result in 50% or more of the combined voting
power of the surviving company being beneficially owned by ISI or by a
majority owned direct or indirect subsidiary of ISI, or (z) the sale or
disposition of all or substantially all the assets of a Related Company
to a person other than ISI or a majority owned direct or indirect
subsidiary of ISI; provided, however, that no change in control of the
Company shall be deemed to have occurred under this Section 2(i) if (I)
such transaction includes or involves a sale to the public or a
distribution to the stockholders of ISI of more than 50% of the voting
securities of your employer or a direct or indirect parent of your
employer, and (II) your employer or a direct or indirect parent of your
employer agrees to become a successor to ISI under this Agreement or you
are covered by an agreement providing for benefits upon a change in
control of your employer following an event described clause (E). For
purposes of this Agreement, the term "significant subsidiary" has the
meaning given to such term under Rule 405 of the Securities Act of 1933,
as amended.
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(ii) For purposes of this Agreement, a "potential change in
control of the Company" shall be deemed to have occurred if (A) ISI
enters into an agreement, the consummation of which would result in the
occurrence of a change in control of the Company, (B) any person
(including ISI) publicly announces an intention to take or to consider
taking actions which if consummated would constitute a change in control
of the Company; (C) any person, other than (w) the Company, (x) a
trustee or other fiduciary holding voting securities under an employee
benefit plan of the Company, (y) an underwriter temporarily holding
voting securities pursuant to an offering of such securities, or (z) a
corporation owned, directly or indirectly, by the securityholders of ISI
in substantially the same proportions as their ownership of voting
securities of ISI, who is or becomes the beneficial owner, directly or
indirectly, of voting securities of ISI representing 9.5% or more of the
combined voting power of ISI's then outstanding voting securities,
increases his beneficial ownership of such securities by 5% or more over
the percentage so owned by such person on the date hereof; or (D) the
Board adopts a resolution to the effect that, for purposes of this
Agreement, a potential change in control of the Company has occurred.
You agree that, subject to the terms and conditions of this
Agreement, in the event of a potential change in control of the Company,
you will remain in the employ of the Company until the earliest of (i) a
date which is six (6) months from the occurrence of such potential
change in control of the Company, (ii) the termination by you of your
employment by reason of Disability or Retirement, as defined in
Subsection 3(i), or (iii) the occurrence of a change in control of the
Company. If your employment is terminated by the Company without Cause
(as defined in Subsection 3(ii) below) within twelve (12) months after
the occurrence of a potential change in control of the Company and a
change in control of the Company occurs within six (6) months after such
termination, you shall be entitled to the compensation and benefits
hereunder as if your termination of employment without Cause followed a
change in control of the Company; provided, however, that no benefits
shall be payable under this sentence if prior to the change in control
of the Company, ISI ceased to own, directly or indirectly, at least 80%
of the voting securities of your employer.
(iii) The foregoing to the contrary notwithstanding, a change in
control of the Company shall not be deemed to have occurred with respect
to you if (A) the event first giving rise to the potential change in
control of the Company involves a publicly announced transaction or
publicly announced proposed transaction which at the time of the
announcement has not been previously approved by the Board and (B) you
are "part of a purchasing group" proposing the transaction. A change in
control of the Company shall also not be deemed to have occurred with
respect to you if you are part of a purchasing group which consummates
the change in control transaction. You shall be
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deemed "part of a purchasing group" for purposes of the two preceding
sentences if you are an equity participant or have agreed to become an
equity participant in the purchasing company or group (except for (A)
passive ownership of less than 1% of the stock of the purchasing company
or (B) ownership of equity participation in the purchasing company or
group which is otherwise not deemed to be significant, as determined
prior to the change in control of the Company by a majority of the non-
employee Continuing Directors).
3. Termination Following Change in Control. If a change in
control of the Company, as defined in Section 2 hereof, shall have
occurred, you shall be entitled to the benefits provided in Subsection
4(iii) hereof upon the subsequent termination of your employment during
the term of this Agreement unless such termination is (A) because of
your death, Disability or Retirement, (B) by the Company for Cause, or
(C) by you other than for Good Reason.
(i) Disability; Retirement. If, as a result of your incapacity
due to physical or mental illness, you shall have been absent from the
full-time performance of your duties with the Company for six (6)
consecutive months, and within thirty (30) days after written notice of
termination is given you shall not have returned to the full-time
performance of your duties, your employment may be terminated for
"Disability". Termination by the Company or you of your employment
based on "Retirement" shall mean termination on or after your normal
retirement age in accordance with the Company's retirement policy
generally applicable to its salaried employees or in accordance with any
retirement arrangement established with your consent with respect to
you.
(ii) Cause. Termination by the Company of your employment for
"Cause" shall mean termination upon (A) the willful and continued
failure by you to substantially perform your duties with the Company
(other than any such failure resulting from your incapacity due to
physical or mental illness or any such actual or anticipated failure
after the issuance of a Notice of Termination by you for Good Reason as
defined in Subsections 3(iv) and 3(iii), respectively) after a written
demand for substantial performance is delivered to you by the Board,
which demand specifically identifies the manner in which the Board
believes that you have not substantially performed your duties, or (B)
the willful engaging by you in conduct which is demonstrably and
materially injurious to the Company, monetarily or otherwise. For
purposes of this Subsection, no act, or failure to act, on your part
shall be deemed "willful" unless done, or omitted to be done, by you not
in good faith and without reasonable belief that your action or omission
was in the best interest of the Company. Notwithstanding the foregoing,
you shall not be deemed to have been terminated for Cause unless and
until there shall have been
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delivered to you a copy of a resolution duly adopted by the affirmative
vote of not less than three-quarters (3/4) of the entire membership of
the Board at a meeting of the Board called and held for such purpose
(after reasonable notice to you and an opportunity for you, together
with your counsel, to be heard before the Board), finding that in the
good faith opinion of the Board you were guilty of conduct set forth
above in clauses (A) or (B) of the first sentence of this Subsection and
specifying the particulars thereof in detail.
(iii) Good Reason. You shall be entitled to terminate your
employment for Good Reason. For purposes of this Agreement, "Good
Reason" shall mean, without your express written consent, the occurrence
after a change in control of the Company of any of the following
circumstances unless, in the case of paragraphs (A), (E), (F), (G) or
(H), such circumstances are fully corrected prior to the Date of
Termination specified in the Notice of Termination, as defined in
Subsections 3(v) and 3(iv), respectively, given in respect thereof:
(A) the assignment to you of any duties inconsistent with
your status as an executive officer of the Company or a substantial
adverse alteration in the nature or status of your responsibilities
from those in effect immediately prior to the change in control of
the Company other than any such alteration primarily attributable
to the fact that the Company may no longer be a public company;
(B) a reduction by the Company in your annual base salary as
in effect on the date hereof or as the same may be increased from
time to time;
(C) the Company's requiring that your principal place of
business be at an office located more than 50 miles from where your
principal place of business is located immediately prior to the
change in control of the Company, except for required travel on the
Company's business to an extent substantially consistent with your
business travel obligations immediately prior to the change in
control of the Company;
(D) the failure by the Company, without your consent, to pay
to you any portion of your current compensation, or to pay to you
any portion of an installment of deferred compensation under any
deferred compensation program of the Company, within seven (7) days
of the date such compensation is due;
(E) the failure by the Company to continue in effect any
compensation plan in which you participate immediately prior to the
change in control of the Company which is material to your total
compensation, including but not limited
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to the Inland Annual Incentive Plan (the "Annual Incentive Plan"),
Inland Special Achievement Award Plan, Inland 1986 Employee Stock
Purchase Plan, Inland 1995 Incentive Stock Plan, Inland Steel
Industries Supplemental Retirement Benefit Plan for Covered
Employees (the "Supplemental Plan"), Inland Steel Industries
Special Retirement Benefit Plan for Covered Employees (the "Special
Benefit Plan"), Inland Steel Industries Nonqualified Thrift Plan
(the "Nonqualified Thrift Plan"), Inland Steel Industries Pension
Plan (the "Pension Plan") and Inland Steel Industries Thrift Plan
(the "Thrift Plan") or any substitute plans adopted prior to the
change in control, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with respect
to such plan, or the failure by the Company to continue your
participation therein (or in such substitute or alternative plan)
on a basis not materially less favorable, both in terms of the
amount of benefits provided and the level of your participation
relative to other participants, as existed at the time of the
change in control;
(F) the failure by the Company to continue to provide you
with benefits substantially similar to those enjoyed by you under
any of the Company's pension, life insurance, medical, health and
accident, flexible spending or disability plans or programs in
which you were participating at the time of the change in control
of the Company, the taking of any action by the Company which would
directly or indirectly materially reduce any of such benefits or
deprive you of any material fringe benefit enjoyed by you at the
time of the change in control of the Company, or the failure by the
Company to provide you with the number of paid vacation days to
which you are entitled on the basis of years of service with the
Company in accordance with the Company's normal vacation policy in
effect at the time of the change in control of the Company;
(G) the failure of ISI to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement,
as contemplated in Section 5 hereof; or
(H) any purported termination of your employment which is
not effected pursuant to a Notice of Termination satisfying the
requirements of Subsection (iv) below (and, if applicable, the
requirements of Subsection (ii) above); for purposes of this
Agreement, no such purported termination shall be effective.
Your right to terminate your employment pursuant to this Subsection
shall not be affected by your incapacity due to physical or mental
illness. Your continued employment
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Page 9
shall not constitute consent to, or a waiver of rights with respect to,
any circumstance constituting Good Reason hereunder.
(iv) Notice of Termination. Any purported termination of your
employment by the Company or by you shall be communicated by written
Notice of Termination to the other party hereto in accordance with
Section 6 hereof. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a
basis for termination of your employment under the provision so
indicated.
(v) Date of Termination, Etc. "Date of Termination" shall mean
(A) if your employment is terminated for Disability, thirty (30) days
after Notice of Termination is given (provided that you shall not have
returned to the full-time performance of your duties during such thirty
(30) day period), and (B) if your employment is terminated pursuant to
Subsection (ii) or (iii) above or for any other reason (other than
Disability), the date specified in the Notice of Termination (which, in
the case of a termination pursuant to Subsection (ii) above shall not be
less than thirty (30) days, and in the case of a termination pursuant to
Subsection (iii) above shall not be less than fifteen (15) nor more than
sixty (60) days, respectively, from the date such Notice of Termination
is given); provided that if within fifteen (15) days after any Notice of
Termination is given, or, if later, prior to the Date of Termination (as
determined without regard to this proviso), the party receiving such
Notice of Termination notifies the other party that a dispute exists
concerning the termination, the Date of Termination shall be the date on
which the dispute is finally determined, either by mutual written
agreement of the parties, by a binding arbitration award, or by a final
judgment, order or decree of a court of competent jurisdiction (which is
not appealable or with respect to which the time for appeal therefrom
has expired and no appeal has been perfected) but shall be deemed to be
within the twenty four (24) month period following a change in control
of the Company; provided further that the Date of Termination shall be
extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such
dispute with reasonable diligence. Notwithstanding the pendency of any
such dispute, the Company will continue to pay you your full
compensation in effect when the notice giving rise to the dispute was
given (including, but not limited to, base salary) and continue you as a
participant in all compensation, benefit and insurance plans and
programs in which you were participating when the notice giving rise to
the dispute was given, until the dispute is finally resolved in
accordance with this Subsection. Amounts paid under this Subsection are
in addition to all other amounts due under this Agreement and shall not
be offset against or reduce any other amounts due under this Agreement.
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4. Compensation Upon Termination or During Disability. Following
a change in control of the Company, as defined by Subsection 2(i), upon
termination of your employment or during a period of Disability you
shall be entitled to the following benefits:
(i) During any period that you fail to perform your full-time
duties with the Company as a result of incapacity due to physical or
mental illness, you shall continue to receive your base salary at the
rate in effect at the commencement of any such period, together with all
compensation payable to you under the Pension Plan, Supplemental Plan,
Special Benefit Plan, Annual Incentive Plan, Thrift Plan and
Nonqualified Thrift Plan during such period, until this Agreement is
terminated pursuant to Section 3(i) hereof. Thereafter, in the event
your employment shall be terminated, your benefits shall be determined
under the Company's retirement, insurance and other compensation plans
and programs then in effect in accordance with the terms of such plans
and programs.
(ii) If your employment shall be terminated by the Company for
Cause or by you other than for Good Reason, Disability, death or
Retirement, the Company shall pay you your full base salary through the
Date of Termination at the rate in effect at the time Notice of
Termination is given, plus all other amounts to which you are entitled
under any compensation plan of the Company at the time such payments are
due, and the Company shall have no further obligations to you under this
Agreement.
(iii) If your employment by the Company shall be terminated (a) by
the Company other than for Cause, Retirement or Disability or (b) by you
for Good Reason, then you shall be entitled to the compensation and
benefits provided below:
(A) the Company shall pay you your full base salary through
the Date of Termination at the rate in effect at the time Notice of
Termination is given, plus all other amounts to which you are
entitled under any compensation plan or program of the Company, at
the time such payments are due, except as otherwise provided below.
(B) in lieu of any further salary payments to you for
periods subsequent to the Date of Termination, the Company shall
pay as severance pay to you a lump sum severance payment (together
with the payments provided in paragraphs C, D and E below, the
"Severance Payments") equal to two times the sum of (x) your annual
base salary in effect immediately prior to the occurrence of the
circumstance giving rise to the Notice of Termination given in
respect thereof, and (y) the average annual amount of the Award
paid to you pursuant
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to the Annual Incentive Plan or similar successor plan with respect
to the five years immediately preceding that in which the Date of
Termination occurs, such average annual amount being calculated by
aggregating all such Awards paid with respect to such five years
and dividing such aggregate amount by the number of years for which
such an Award was actually paid to you.
(C) notwithstanding any provision of the Annual Incentive
Plan and the Inland Special Achievement Award Plan, the Company
shall pay to you a lump sum amount equal to the sum of (x) any
incentive compensation which has been allocated or awarded to you
for a completed fiscal year or other measuring period preceding the
Date of Termination but has not yet been paid, and (y) a pro rata
portion to the Date of Termination for the current fiscal year or
other measuring period of the amount equal to the Target Award
percentage applicable to you under the Annual Incentive Plan or
similar successor plan on the Date of Termination times your annual
base salary then in effect.
(D) in lieu of shares of common stock of ISI ("ISI Shares")
issuable upon exercise of outstanding options ("Options"), if any,
granted to you under ISI's stock option plans (which Options shall
be cancelled upon the making of the payment referred to below), you
shall receive an amount in cash equal to the product of (i) the
excess of (x) in the case of incentive stock options (as defined in
section 422A of the Internal Revenue Code of 1986, as amended (the
"Code")) ("ISOs")), granted after the date hereof, the closing
price of ISI's shares as reported on the New York Stock Exchange
Composite Transactions on or nearest the Date of Termination, or,
in the case of all other options, the Change in Control Price (as
defined below), over (y) the per share exercise price of each
Option held by you (whether or not then fully exercisable), times
(ii) the number of ISI Shares covered by each such option. For
purposes of this Agreement, the "Change in Control Price" means:
(1) with respect to a merger or consolidation of ISI described in
Section 2(i)(C) in which the consideration per share of ISI's
common stock to be paid for the acquisition of shares of common
stock specified in the agreement of merger or consolidation is all
in cash, the highest such consideration per share; (2) with respect
to a change in control of the Company by reason of an acquisition
of voting securities described in Section 2(i)(A), the highest
price per share for any share of ISI's common stock paid by any
holder of any of the securities representing 40% or more of the
combined voting power of ISI giving rise to the change in control
of the Company; and (3) with respect to a change in control of the
Company by reason of a merger or consolidation of ISI (other than a
merger or consolidation described in Clause (1) next above),
stockholder approval of an agreement or plan described in
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Section 2(i)(D), a change in the composition of the Board described
in Section 2(i)(B) or a change in control of the Company pursuant
to Section 2(i)(E) (relating to mergers, consolidations and sales
of securities or assets of a Related Company), the highest price
per share of common stock reported on the New York Stock Exchange
Composite Transactions (or, if such shares are not traded on the
New York Stock Exchange, such other principal market on which such
shares are traded) during the sixty (60) day period ending on the
date the change in control of the Company occurs.
(E) in lieu of ISI Shares awarded or issuable to you as
performance and/or restricted shares, if any, pursuant to the
Inland 1995 Incentive Stock Plan, the Inland 1992 Incentive Stock
Plan, the Inland 1988 Incentive Stock Plan, the Inland 1984
Incentive Stock Plan or similar successor plan (which ISI Shares
shall be cancelled upon the making of the payment referred to
below), you shall receive an amount in cash equal to the product of
(i) the Change in Control Price, times (ii) the total of the number
of restricted shares awarded to you and then outstanding pursuant
to the Inland 1995 Incentive Stock Plan, the Inland 1992 Incentive
Stock Plan, the Inland 1988 Incentive Stock Plan, the Inland 1984
Incentive Stock Plan and/or any similar successor plan, plus a
number of performance shares equal to the total number of
performance shares paid or payable to you with respect to the two
immediately preceding performance periods under any performance
award or awards made pursuant to the Inland 1995 Incentive Stock
Plan, the Inland 1992 Incentive Stock Plan and/or any similar
successor plan.
(F) the Company shall also pay to you all legal fees and
expenses incurred by you as a result of such termination (including
all such fees and expenses, if any, incurred in contesting or
disputing any such termination or in seeking to obtain or enforce
any right or benefit provided by this Agreement or in connection
with any tax audit or proceeding to the extent attributable to the
application of Section 4999 of the Code to any payment or benefit
provided hereunder). Such payments shall be made at the later of
the times specified in paragraph (J) below, or within five (5) days
after your request for payment accompanied with such evidence of
fees and expenses incurred as the Company reasonably may require.
(G) in the event that you become entitled to any payments
provided for hereinabove (the "Contract Payments"), if the Contract
Payments or other portion of the Total Payments (as defined below)
will be subject to the tax (the "Excise Tax") imposed by Section
4999 of the Code, the Company shall pay to
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you, no later than the fifth day following the Date of Termination,
an additional amount (the "Gross-Up Payment") such that the net
amount retained by you, after deduction of any Excise Tax on the
Contract Payments and such other Total Payments and any federal and
state and local income and other payroll taxes and Excise Tax upon
the payment provided for by this subsection, shall be equal to the
Contract Payments and such other Total Payments.
(H) for purposes of determining whether any of the payments
will be subject to the Excise Tax and the amount of such Excise
Tax, (i) any other payments or benefits received or to be received
by you in connection with a change in control of the Company or
your termination of employment (whether pursuant to the terms of
this Agreement or any other plan, arrangement or agreement with the
Company, any person whose actions result in a change in control or
any person affiliated with the Company or such person) payable
pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, any person whose actions
result in a change in control or any person affiliated with the
Company or such person (together with the Contract Payments, the
"Total Payments"), shall be treated as "parachute payments" within
the meaning of Section 280G(b)(2) of the Code and all "excess
parachute payments" within the meaning of Section 280G(b)(l) of the
Code shall be treated as subject to the Excise Tax unless in the
opinion of tax counsel selected by ISI's independent auditors and
reasonably acceptable to you, such other payments or benefits (in
whole or in part) do not constitute parachute payments, including
by reason of Section 280G(b)(4)(A) of the Code or such excess
parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning of
Section 280G(b)(4)(B) of the Code in excess of the base amount
allocable to such reasonable compensation within the meaning of
Section 280G(b)(3) of the Code, or are otherwise not subject to the
Excise Tax, (ii) the amount of the Total Payments which shall be
treated as subject to the Excise Tax shall be equal to the lesser
of (A) the amount of the Total Payments or (B) the amount of excess
parachute payments within the meaning of Section 280G(b)(l) of the
Code (after applying clause (i) above), and (iii) the value of any
noncash benefits or any deferred payment or benefit shall be
determined by ISI's independent auditors in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code. For purposes
of determining the amount of the Gross-Up Payment, you shall be
deemed to pay federal income taxes at the highest marginal rate of
federal income taxation in the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of your
residence
<PAGE>
Page 14
on the Date of Termination, net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state
and local taxes.
(I) in the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder
at the time of termination of your employment, you shall repay to
the Company at the time that the amount of such reduction in Excise
Tax is finally determined the portion of the Gross-Up Payment
attributable to such reduction (plus the portion of the Gross-Up
Payment attributable to the Excise Tax and federal and state and
local income tax imposed on the Gross-Up Payment being repaid by
you if such repayment results in a reduction in Excise Tax and/or a
federal and state and local income tax deduction) plus interest on
the amount of such repayment at the rate provided in Section
1274(b)(2)(B) of the Code. In the event that the Excise Tax is
determined to exceed the amount taken into account hereunder at the
time of the termination of your employment (including by reason of
any payment the existence or amount of which cannot be determined
at the time of the Gross-Up Payment), the Company shall make
an additional gross-up payment in respect of such excess (plus any
interest payable with respect to such excess) at the time that the
amount of such excess is finally determined.
(J) the payments provided for in paragraphs (B), (C), (D) and
(E) above, shall be made not later than the fifth day following the
Date of Termination, provided, however, that if the amounts of such
payments cannot be finally determined on or before such day, the
Company shall pay to you on such day an estimate, as determined in
good faith by the Company, of the minimum amount of such payments
and shall pay the remainder of such payments (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code)
as soon as the amount thereof can be determined but in no event
later than the thirtieth day after the Date of Termination. In the
event that the amount of the estimated payments exceeds the amount
subsequently determined to have been due, such excess shall
constitute a loan by the Company to you payable on the fifth day
after demand by the Company (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code).
(iv) If your employment shall be terminated (A) by the Company
other than for Cause, Retirement or Disability or (B) by you for Good
Reason, then for a twenty-four (24) month period after such termination,
the Company shall arrange to provide you with: (1) life, disability,
accident and health insurance benefits substantially similar to those
which you are receiving immediately prior to the Notice of Termination,
(2) financial advisory services similar to those provided currently to
executives of the
<PAGE>
Page 15
Company by Ayco Corporation, and (3) outplacement services. Benefits
otherwise receivable by you pursuant to this Subsection 4(iv) shall be
reduced to the extent comparable benefits are actually received by you
during the twenty-four (24) month period following your termination, and
any such benefits actually received by you shall be reported to the
Company. Any rights that you have to continuation of life, disability,
accident or health coverage under applicable state or federal law shall
be in addition to those provided under this Agreement.
(v) If your employment shall be terminated (A) by the Company
other than for Cause, Retirement or Disability or (B) by you for Good
Reason, then in addition to the retirement benefits to which you are
entitled under the Pension Plan, Supplemental Plan or Special Benefit
Plan or any successor plans thereto, the Company shall pay you in cash
at the time and in the manner provided in paragraph (J) of Subsection
4(iii), a lump sum equal to the excess of (x) the actuarial equivalent
of the retirement pension (taking into account any early retirement
subsidy associated therewith and determined as a straight life annuity
commencing at age sixty-five (65) or any earlier date, but in no event
earlier than the second anniversary of the Date of Termination whichever
annuity yields a greater benefit) which you would have accrued under the
terms of the Pension Plan, Supplemental Plan or Special Benefit Plan
(without regard to any amendments to any such plans made subsequent to a
change in control of the Company and on or prior to the Date of
Termination, which amendment adversely affects in any manner the
computation of retirement benefits thereunder), determined as if you
were fully vested thereunder and had accumulated (after the Date of
Termination) twenty-four (24) additional months of age and service
credit thereunder at the higher of the rate of average compensation
during the twelve (12) months prior to the change in control of the
Company or the rate of average compensation used to calculate your
benefits under such plans immediately preceding the Date of Termination,
over (y) the actuarial equivalent of the retirement pension (taking into
account any early retirement subsidy associated therewith and determined
as a straight life annuity commencing at age sixty-five (65) or any
earlier date, but in no event earlier than the Date of Termination
whichever annuity yields a greater benefit) which you had then accrued
pursuant to the provisions of the Pension Plan. For purposes of this
Subsection, "actuarial equivalent" shall be determined using the same
assumptions utilized under the Pension Plan for purposes of determining
alternative forms of benefits immediately prior to the change in control
of the Company.
(vi) You shall not be required to mitigate the amount of any
payment provided for in this Section 4 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for
in this Section 4 be reduced by any compensation earned by you as the
result of employment by another employer, by retirement benefits,
<PAGE>
Page 16
by offset against any amount claimed to be owed by you to the Company,
or otherwise, except as provided in Section 4(iv).
(vii) In addition to all other amounts payable to you under this
Section 4, you shall be entitled to receive all benefits payable to you
under the Pension Plan, the Thrift Plan, Supplemental Plan, Special
Benefit Plan, Nonqualified Thrift Plan and any other plan or agreement
relating to retirement benefits.
5. Successors; Binding Agreement. (i) ISI will require any
successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business
and/or assets of ISI to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that ISI or the
Company would be required to perform it if no such succession had taken
place. Failure of ISI to obtain such assumption and agreement prior to
the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle you to compensation from the Company in the
same amount and on the same terms as you would be entitled to hereunder
if you terminate your employment for Good Reason following a change in
control of the Company, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall
be deemed the Date of Termination. In the event a successor of ISI
assumes and agrees to perform this Agreement, by operation of law or
otherwise, the term "ISI", as used in this Agreement, shall mean such
successor and the term "Company" shall mean, collectively, such
successor and the affiliates of such successor.
(ii) This Agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
If you should die while any amount would still be payable to you
hereunder if you had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to your devisee, legatee or other designee or, if there
is no such designee, to your estate.
6. Notice. For the purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing
and shall be deemed to have been duly given when delivered or mailed by
United States registered mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth on the first
page of this Agreement, provided that all notice to the Company shall be
directed to the attention of the Board with a copy to the Secretary of
ISI, or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notice of change of
address shall be effective only upon receipt.
<PAGE>
Page 17
7. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by you and such officer as may be
specifically designated by the Board. No waiver by either party hereto
at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party
which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be
governed by the laws of the State of Illinois. All references to
sections of the Exchange Act or the Code shall be deemed also to refer
to any successor provisions to such sections. Any payments provided for
hereunder shall be paid net of any applicable withholding required under
federal, state or local law. The obligations of ISI and the Company
under Section 4 shall survive the expiration of the term of this
Agreement.
8. Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement, which shall remain in full force and
effect.
9. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
10. Settlement of Disputes; Arbitration. All claims by you for
benefits under this Agreement shall be directed to and determined by the
Board and shall be in writing. Any denial by the Board of a claim for
benefits under this Agreement shall be delivered to you in writing and
shall set forth the specific reasons for the denial and the specific
provisions of this Agreement relied upon. The Board shall afford a
reasonable opportunity to you for a review of the decision denying a
claim and shall further allow you to appeal to the Board a decision of
the Board within sixty (60) days after notification by the Board that
your claim has been denied. Any further dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively
by arbitration in Chicago, Illinois, in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction;
provided, however, that you shall be entitled to seek specific
performance of your right to be paid until the Date of Termination
during the pendency of any dispute or controversy arising under or in
connection with this Agreement.
<PAGE>
Page 18
If this letter sets forth our agreement on the subject matter
hereof, kindly sign and return to ISI the enclosed copy of this letter
which will then constitute our agreement on this subject.
Sincerely,
INLAND STEEL INDUSTRIES, INC.
By /s/ Judd R. Cool
______________________________
Judd R. Cool
Vice President-Human Resources
Agreed to this ________ day
of ________________________, 1996.
____________________________
(Signature)
<PAGE>
Inland Steel Industries, Inc.
30 West Monroe Street
Chicago, Illinois 60603
March 27, 1996
Neil S. Novich
431 Washington Avenue
Wilmette, Illinois 60091
Dear Mr. Novich:
Inland Steel Industries, Inc. ("ISI") considers it essential to the
best interests of its stockholders to foster the continuous employment
of key management personnel of a and its subsidiaries (collectively,
the "Company"). In this connection, the Board of Directors of ISI (the
"Board") recognizes that, as is the case with many publicly held
corporations, the possibility of a change in control may exist and that
such possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of
management personnel to the detriment of ISI and its stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of
members of the Company's management, including yourself, to their
assigned duties without distraction in the face of potentially
disturbing circumstances arising from the possibility of a change in
control of the Company, although no such change is now contemplated. In
order to induce you to remain in the employ of the Company and in
consideration of your agreement set forth in Subsection 2(ii) hereof,
ISI agrees that you shall receive the severance benefits set forth in
this letter agreement ("Agreement") in the event your employment with
the Company is terminated subsequent to a "change in control of the
Company" (as defined in Section 2 hereof) under the circumstances
described below. This Agreement shall constitute an amendment and
restatement of and shall supersede the agreement entered into between
you and ISI with respect to these matters dated January 24, 1996. In the
event that you receive severance benefits hereunder, such benefits shall
be in lieu of, and you shall not be entitled to receive, any benefits or
payments under any other severance plan, policy or agreement (except
your employment agreement contained in letters dated April 8, 1994 [your
"Employment Agreement"]) of or with the Company. In addition, if you are
or become entitled
<PAGE>
Page 3
to benefits from the Company pursuant to another agreement providing for
benefits on account of a change in control or the law of a jurisdiction
other than the United States or any state or territory thereof as a
result of an event for which benefits are payable to you pursuant this
Agreement, the benefits paid to you pursuant to this Agreement shall be
reduced by the amount paid to you pursuant to such other agreement or
law.
1. Term of Agreement. This Agreement shall commence on the date
hereof and shall continue in effect through December 31, 1996; provided,
however, that commencing on January 1, 1997 and each January 1
thereafter, the term of this Agreement shall automatically be extended
for one additional year unless, during the preceding year but not later
than June 30 of such preceding year, ISI shall have given notice that it
does not wish to extend this Agreement. Notwithstanding the preceding
sentence: (i) if your employer is a direct or indirect subsidiary of
ISI, this Agreement shall terminate on the date of which ISI ceases to
own, directly or indirectly, at least 80 percent of your employer for
any reason which does not constitute a change in control of the Company;
and (ii) if a change in control of the Company or a potential change in
control of the Company shall have occurred during the original or
extended term of this Agreement, this Agreement shall continue in effect
for a period of twenty-four (24) months beyond the month in which such
change in control of potential change in control of the Company occurred
unless earlier terminated under clause (i) next above.
2. Change in Control; Potential Change in Control. (i) No
benefits shall be payable hereunder unless there shall have been a
potential change in control or a change in control of the Company, as
set forth below. For purposes of this Agreement, a "change in control
of the Company" shall be deemed to have occurred if (A) any "person" (as
such term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")), other than (w) the
Company, (x) a trustee or other fiduciary holding voting securities
under an employee benefit plan of the Company, (y) an underwriter
temporarily holding voting securities pursuant to an offering of such
securities, or (z) a corporation owned, directly or indirectly, by the
securityholders of ISI in substantially the same proportions as their
ownership of voting securities of ISI, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of voting securities of ISI (not including in the voting
securities beneficially owned by such person any voting securities
acquired directly from ISI or its affiliates) representing 40% or more
of the combined voting power of ISI's then outstanding voting
securities; (B) during any period of two consecutive years (not
including any period prior to the execution of this Agreement),
individuals who
at the beginning of such period constitute the Board and any new
director (other than a director designated by a person who has entered
into an agreement with ISI to effect a transaction described in clauses
(A), (C) or (D) of this Subsection)
<PAGE>
Page 4
whose election by the Board or nomination for election by ISI's
securityholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election was
previously so approved ("Continuing Directors"), cease for any reason to
constitute a majority thereof; (C) the holders of voting securities of
ISI approve a merger or consolidation of ISI with any other corporation,
other than a merger or consolidation which would result in the voting
securities of ISI outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity), in combination with the
ownership of any trustee or other fiduciary holding voting securities
under an employee benefit plan of the Company, at least 60% of the
combined voting power of the voting securities of ISI or such surviving
entity outstanding immediately after such merger or consolidation, or a
merger or consolidation effected to implement a recapitalization of ISI
(or similar transaction) in which no person acquires more than 50% of
the combined voting power of ISI's then outstanding voting securities;
(D) the holders of voting securities of ISI approve a plan of complete
liquidation of ISI or an agreement for the sale or disposition by ISI of
all or substantially all of ISI's assets; or (E) there occurs (x) a sale
or disposition, directly or indirectly, other than to a person described
in subclause (w), (x) or (z) of clause (A) of this Subsection, of voting
securities of your employer, any direct or indirect parent company of
your employer or any company that is a subsidiary of your employer and
is also a significant subsidiary (as defined below) of ISI (your
employer and such a parent or subsidiary being a "Related Company"),
representing 50% or more of the combined voting power of the securities
of such Related Company then outstanding, (y) a merger or consolidation
of a Related Company with any other corporation, other than a merger or
consolidation which would result in 50% or more of the combined voting
power of the surviving company being beneficially owned by ISI or by a
majority owned direct or indirect subsidiary of ISI, or (z) the sale or
disposition of all or substantially all the assets of a Related Company
to a person other than ISI or a majority owned direct or indirect
subsidiary of ISI; provided, however, that no change in control of the
Company shall be deemed to have occurred under this Section 2(i) if (I)
such transaction includes or involves a sale to the public or a
distribution to the stockholders of ISI of more than 50% of the voting
securities of your employer or a direct or indirect parent of your
employer, and (II) your employer or a direct or indirect parent of your
employer agrees to become a successor to ISI under this Agreement or you
are covered by an agreement providing for benefits upon a change in
control of your employer following an event described clause (E). For
purposes of this Agreement, the term "significant subsidiary" has the
meaning given to such term under Rule 405 of the Securities Act of 1933,
as amended.
<PAGE>
Page 5
(ii) For purposes of this Agreement, a "potential change in
control of the Company" shall be deemed to have occurred if (A) ISI
enters into an agreement, the consummation of which would result in the
occurrence of a change in control of the Company, (B) any person
(including ISI) publicly announces an intention to take or to consider
taking actions which if consummated would constitute a change in control
of the Company; (C) any person, other than (w) the Company, (x) a
trustee or other fiduciary holding voting securities under an employee
benefit plan of the Company, (y) an underwriter temporarily holding
voting securities pursuant to an offering of such securities, or (z) a
corporation owned, directly or indirectly, by the securityholders of ISI
in substantially the same proportions as their ownership of voting
securities of ISI, who is or becomes the beneficial owner, directly or
indirectly, of voting securities of ISI representing 9.5% or more of the
combined voting power of ISI's then outstanding voting securities,
increases his beneficial ownership of such securities by 5% or more over
the percentage so owned by such person on the date hereof; or (D) the
Board adopts a resolution to the effect that, for purposes of this
Agreement, a potential change in control of the Company has occurred.
You agree that, subject to the terms and conditions of this
Agreement, in the event of a potential change in control of the Company,
you will remain in the employ of the Company until the earliest of (i) a
date which is six (6) months from the occurrence of such potential
change in control of the Company, (ii) the termination by you of your
employment by reason of Disability or Retirement, as defined in
Subsection 3(i), or (iii) the occurrence of a change in control of the
Company. If your employment is terminated by the Company without Cause
(as defined in Subsection 3(ii) below) within twelve (12) months after
the occurrence of a potential change in control of the Company and a
change in control of the Company occurs within six (6) months after such
termination, you shall be entitled to the compensation and benefits
hereunder as if your termination of employment without Cause followed a
change in control of the Company; provided, however, that no benefits
shall be payable under this sentence if prior to the change in control
of the Company, ISI ceased to own, directly or indirectly, at least 80%
of the voting securities of your employer.
(iii) The foregoing to the contrary notwithstanding, a change in
control of the Company shall not be deemed to have occurred with respect
to you if (A) the event first giving rise to the potential change in
control of the Company involves a publicly announced transaction or
publicly announced proposed transaction which at the time of the
announcement has not been previously approved by the Board and (B) you
are "part of a purchasing group" proposing the transaction. A change in
control of the Company shall also not be deemed to have occurred with
respect to you if you are part of a purchasing group which consummates
the change in control transaction. You shall be
<PAGE>
Page 6
deemed "part of a purchasing group" for purposes of the two preceding
sentences if you are an equity participant or have agreed to become an
equity participant in the purchasing company or group (except for (A)
passive ownership of less than 1% of the stock of the purchasing company
or (B) ownership of equity participation in the purchasing company or
group which is otherwise not deemed to be significant, as determined
prior to the change in control of the Company by a majority of the non-
employee Continuing Directors).
3. Termination Following Change in Control. If a change in
control of the Company, as defined in Section 2 hereof, shall have
occurred, you shall be entitled to the benefits provided in Subsection
4(iii) hereof upon the subsequent termination of your employment during
the term of this Agreement unless such termination is (A) because of
your death, Disability or Retirement, (B) by the Company for Cause, or
(C) by you other than for Good Reason; provided, however, that nothing
contained in this Section 3 shall limit or reduce in any way such
benefits, if any, as you may be entitled to receive under provisions of
your Employment Agreement during the term thereof.
(i) Disability; Retirement. If, as a result of your incapacity
due to physical or mental illness, you shall have been absent from the
full-time performance of your duties with the Company for six (6)
consecutive months, and within thirty (30) days after written notice of
termination is given you shall not have returned to the full-time
performance of your duties, your employment may be terminated for
"Disability". Termination by the Company or you of your employment
based on "Retirement" shall mean termination on or after your normal
retirement age in accordance with the Company's retirement policy
generally applicable to its salaried employees or in accordance with any
retirement arrangement established with your consent with respect to
you.
(ii) Cause. Termination by the Company of your employment for
"Cause" shall mean termination upon (A) the willful and continued
failure by you to substantially perform your duties with the Company
(other than any such failure resulting from your incapacity due to
physical or mental illness or any such actual or anticipated failure
after the issuance of a Notice of Termination by you for Good Reason as
defined in Subsections 3(iv) and 3(iii), respectively) after a written
demand for substantial performance is delivered to you by the Board,
which demand specifically identifies the manner in which the Board
believes that you have not substantially performed your duties, or (B)
the willful engaging by you in conduct which is demonstrably and
materially injurious to the Company, monetarily or otherwise. For
purposes of this Subsection, no act, or failure to act, on your part
shall be deemed "willful" unless done, or omitted to be done, by you not
in good faith and without reasonable belief that your action or omission
was in the best interest of the Company. Notwithstanding the foregoing,
you shall not be deemed to have been terminated for Cause unless and
until there shall have been
<PAGE>
Page 7
delivered to you a copy of a resolution duly adopted by the affirmative
vote of not less than three-quarters (3/4) of the entire membership of
the Board at a meeting of the Board called and held for such purpose
(after reasonable notice to you and an opportunity for you, together
with your counsel, to be heard before the Board), finding that in the
good faith opinion of the Board you were guilty of conduct set forth
above in clauses (A) or (B) of the first sentence of this Subsection and
specifying the particulars thereof in detail.
(iii) Good Reason. You shall be entitled to terminate your
employment for Good Reason. For purposes of this Agreement, "Good
Reason" shall mean, without your express written consent, the occurrence
after a change in control of the Company of any of the following
circumstances unless, in the case of paragraphs (A), (E), (F), (G) or
(H), such circumstances are fully corrected prior to the Date of
Termination specified in the Notice of Termination, as defined in
Subsections 3(v) and 3(iv), respectively, given in respect thereof:
(A) the assignment to you of any duties inconsistent with
your status as an executive officer of the Company or a substantial
adverse alteration in the nature or status of your responsibilities
from those in effect immediately prior to the change in control of
the Company other than any such alteration primarily attributable
to the fact that the Company may no longer be a public company;
(B) a reduction by the Company in your annual base salary as
in effect on the date hereof or as the same may be increased from
time to time;
(C) the Company's requiring that your principal place of
business be at an office located more than 50 miles from where your
principal place of business is located immediately prior to the
change in control of the Company, except for required travel on the
Company's business to an extent substantially consistent with your
business travel obligations immediately prior to the change in
control of the Company;
(D) the failure by the Company, without your consent, to pay
to you any portion of your current compensation, or to pay to you
any portion of an installment of deferred compensation under any
deferred compensation program of the Company, within seven (7) days
of the date such compensation is due;
(E) the failure by the Company to continue in effect any
compensation plan in which you participate immediately prior to the
change in control of the Company which is material to your total
compensation, including but not limited
<PAGE>
Page 8
to the Inland Annual Incentive Plan (the "Annual Incentive Plan"),
Inland Special Achievement Award Plan, Inland 1986 Employee Stock
Purchase Plan, Inland 1995 Incentive Stock Plan, Inland Steel
Industries Supplemental Retirement Benefit Plan for Covered
Employees (the "Supplemental Plan"), Inland Steel Industries
Special Retirement Benefit Plan for Covered Employees (the "Special
Benefit Plan"), Inland Steel Industries Nonqualified Thrift Plan
(the "Nonqualified Thrift Plan"), Inland Steel Industries Pension
Plan (the "Pension Plan") and Inland Steel Industries Thrift Plan
(the "Thrift Plan") or any substitute plans adopted prior to the
change in control, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with respect
to such plan, or the failure by the Company to continue your
participation therein (or in such substitute or alternative plan)
on a basis not materially less favorable, both in terms of the
amount of benefits provided and the level of your participation
relative to other participants, as existed at the time of the
change in control;
(F) the failure by the Company to continue to provide you
with benefits substantially similar to those enjoyed by you under
any of the Company's pension, life insurance, medical, health and
accident, flexible spending or disability plans or programs in
which you were participating at the time of the change in control
of the Company, the taking of any action by the Company which would
directly or indirectly materially reduce any of such benefits or
deprive you of any material fringe benefit enjoyed by you at the
time of the change in control of the Company, or the failure by the
Company to provide you with the number of paid vacation days to
which you are entitled on the basis of years of service with the
Company in accordance with the Company's normal vacation policy in
effect at the time of the change in control of the Company;
(G) the failure of ISI to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement,
as contemplated in Section 5 hereof; or
(H) any purported termination of your employment which is
not effected pursuant to a Notice of Termination satisfying the
requirements of Subsection (iv) below (and, if applicable, the
requirements of Subsection (ii) above); for purposes of this
Agreement, no such purported termination shall be effective.
Your right to terminate your employment pursuant to this Subsection
shall not be affected by your incapacity due to physical or mental
illness. Your continued employment
<PAGE>
Page 9
shall not constitute consent to, or a waiver of rights with respect to,
any circumstance constituting Good Reason hereunder.
(iv) Notice of Termination. Any purported termination of your
employment by the Company or by you shall be communicated by written
Notice of Termination to the other party hereto in accordance with
Section 6 hereof. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a
basis for termination of your employment under the provision so
indicated.
(v) Date of Termination, Etc. "Date of Termination" shall mean
(A) if your employment is terminated for Disability, thirty (30) days
after Notice of Termination is given (provided that you shall not have
returned to the full-time performance of your duties during such thirty
(30) day period), and (B) if your employment is terminated pursuant to
Subsection (ii) or (iii) above or for any other reason (other than
Disability), the date specified in the Notice of Termination (which, in
the case of a termination pursuant to Subsection (ii) above shall not be
less than thirty (30) days, and in the case of a termination pursuant to
Subsection (iii) above shall not be less than fifteen (15) nor more than
sixty (60) days, respectively, from the date such Notice of Termination
is given); provided that if within fifteen (15) days after any Notice of
Termination is given, or, if later, prior to the Date of Termination (as
determined without regard to this proviso), the party receiving such
Notice of Termination notifies the other party that a dispute exists
concerning the termination, the Date of Termination shall be the date on
which the dispute is finally determined, either by mutual written
agreement of the parties, by a binding arbitration award, or by a final
judgment, order or decree of a court of competent jurisdiction (which is
not appealable or with respect to which the time for appeal therefrom
has expired and no appeal has been perfected) but shall be deemed to be
within the twenty four (24) month period following a change in control
of the Company; provided further that the Date of Termination shall be
extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such
dispute with reasonable diligence. Notwithstanding the pendency of any
such dispute, the Company will continue to pay you your full
compensation in effect when the notice giving rise to the dispute was
given (including, but not limited to, base salary) and continue you as a
participant in all compensation, benefit and insurance plans and
programs in which you were participating when the notice giving rise to
the dispute was given, until the dispute is finally resolved in
accordance with this Subsection. Amounts paid under this Subsection are
in addition to all other amounts due under this Agreement and shall not
be offset against or reduce any other amounts due under this Agreement.
<PAGE>
Page 10
4. Compensation Upon Termination or During Disability. Following
a change in control of the Company, as defined by Subsection 2(i), upon
termination of your employment or during a period of Disability you
shall be entitled to the following benefits minus the amount, if any,
paid to you as a result therefor for comparable benefits pursuant to
your Employment Agreement during the term thereof:
(i) During any period that you fail to perform your full-time
duties with the Company as a result of incapacity due to physical or
mental illness, you shall continue to receive your base salary at the
rate in effect at the commencement of any such period, together with all
compensation payable to you under the Pension Plan, Supplemental Plan,
Special Benefit Plan, Annual Incentive Plan, Thrift Plan and
Nonqualified Thrift Plan during such period, until this Agreement is
terminated pursuant to Section 3(i) hereof. Thereafter, in the event
your employment shall be terminated, your benefits shall be determined
under the Company's retirement, insurance and other compensation plans
and programs then in effect in accordance with the terms of such plans
and programs.
(ii) If your employment shall be terminated by the Company for
Cause or by you other than for Good Reason, Disability, death or
Retirement, the Company shall pay you your full base salary through the
Date of Termination at the rate in effect at the time Notice of
Termination is given, plus all other amounts to which you are entitled
under any compensation plan of the Company at the time such payments are
due, and the Company shall have no further obligations to you under this
Agreement.
(iii) If your employment by the Company shall be terminated (a) by
the Company other than for Cause, Retirement or Disability or (b) by you
for Good Reason, then you shall be entitled to the compensation and
benefits provided below:
(A) the Company shall pay you your full base salary through
the Date of Termination at the rate in effect at the time Notice of
Termination is given, plus all other amounts to which you are
entitled under any compensation plan or program of the Company, at
the time such payments are due, except as otherwise provided below.
(B) in lieu of any further salary payments to you for
periods subsequent to the Date of Termination, the Company shall
pay as severance pay to you a lump sum severance payment (together
with the payments provided in paragraphs C, D and E below, the
"Severance Payments") equal to two times the sum of (x) your annual
base salary in effect immediately prior to the occurrence of the
circumstance giving rise to the Notice of Termination given in
respect thereof, and (y) the average annual amount of the Award
paid to you pursuant
<PAGE>
Page 11
to the Annual Incentive Plan or similar successor plan with respect
to the five years immediately preceding that in which the Date of
Termination occurs, such average annual amount being calculated by
aggregating all such Awards paid with respect to such five years
and dividing such aggregate amount by the number of years for which
such an Award was actually paid to you.
(C) notwithstanding any provision of the Annual Incentive
Plan and the Inland Special Achievement Award Plan, the Company
shall pay to you a lump sum amount equal to the sum of (x) any
incentive compensation which has been allocated or awarded to you
for a completed fiscal year or other measuring period preceding the
Date of Termination but has not yet been paid, and (y) a pro rata
portion to the Date of Termination for the current fiscal year or
other measuring period of the amount equal to the Target Award
percentage applicable to you under the Annual Incentive Plan or
similar successor plan on the Date of Termination times your annual
base salary then in effect.
(D) in lieu of shares of common stock of ISI ("ISI Shares")
issuable upon exercise of outstanding options ("Options"), if any,
granted to you under ISI's stock option plans (which Options shall
be cancelled upon the making of the payment referred to below), you
shall receive an amount in cash equal to the product of (i) the
excess of (x) in the case of incentive stock options (as defined in
section 422A of the Internal Revenue Code of 1986, as amended (the
"Code")) ("ISOs")), granted after the date hereof, the closing
price of ISI's shares as reported on the New York Stock Exchange on
or nearest the Date of Termination, or, in the case of all other
options, the Change in Control Price (as defined below), over (y)
the per share exercise price of each Option held by you (whether or
not then fully exercisable), times (ii) the number of ISI Shares
covered by each such option. For purposes of this Agreement, the
"Change in Control Price" means: (1) with respect to a merger or
consolidation of ISI described in Section 2(i)(C) in which the
consideration per share of ISI's common stock to be paid for the
acquisition of shares of common stock specified in the agreement of
merger or consolidation is all in cash, the highest such
consideration per share; (2) with respect to a change in control of
the Company by reason of an acquisition of voting securities
described in Section 2(i)(A), the highest price per share for any
share of ISI's common stock paid by any holder of any of the
securities representing 40% or more of the combined voting power of
ISI giving rise to the change in control of the Company; and (3)
with respect to a change in control of the Company by reason of a
merger or consolidation of ISI (other than a merger or
consolidation described in Clause (1) next above), stockholder
approval of an agreement or plan described in
<PAGE>
Page 12
Section 2(i)(D), a change in the composition of the Board described
in Section 2(i)(B) or a change in control of the Company pursuant
to Section 2(i)(E) (relating to mergers, consolidations and sales
of securities or assets of a Related Company), the highest price
per share of common stock reported on the New York Stock Exchange
Composite Transactions (or, if such shares are not traded on the
New York Stock Exchange, such other principal market on which such
shares are traded) during the sixty (60) day period ending on the
date the change in control of the Company occurs.
(E) in lieu of ISI Shares awarded or issuable to you as
performance and/or restricted shares, if any, pursuant to the
Inland 1995 Incentive Stock Plan, the Inland 1992 Incentive Stock
Plan, the Inland 1988 Incentive Stock Plan, the Inland 1984
Incentive Stock Plan or similar successor plan (which ISI Shares
shall be cancelled upon the making of the payment referred to
below), you shall receive an amount in cash equal to the product of
(i) the Change in Control Price, times (ii) the total of the number
of restricted shares awarded to you and then outstanding pursuant
to the Inland 1995 Incentive Stock Plan, the Inland 1992 Incentive
Stock Plan, the Inland 1988 Incentive Stock Plan, the Inland 1984
Incentive Stock Plan and/or any similar successor plan, plus a
number of performance shares equal to the total number of
performance shares paid or payable to you with respect to the two
immediately preceding performance periods under any performance
award or awards made pursuant to the Inland 1995 Incentive Stock
Plan, the Inland 1992 Incentive Stock Plan and/or any similar
successor plan.
(F) the Company shall also pay to you all legal fees and
expenses incurred by you as a result of such termination (including
all such fees and expenses, if any, incurred in contesting or
disputing any such termination or in seeking to obtain or enforce
any right or benefit provided by this Agreement or in connection
with any tax audit or proceeding to the extent attributable to the
application of Section 4999 of the Code to any payment or benefit
provided hereunder). Such payments shall be made at the later of
the times specified in paragraph (J) below, or within five (5) days
after your request for payment accompanied with such evidence of
fees and expenses incurred as the Company reasonably may require.
(G) in the event that you become entitled to any payments
provided for hereinabove (the "Contract Payments"), if the Contract
Payments or other portion of the Total Payments (as defined below)
will be subject to the tax (the "Excise Tax") imposed by Section
4999 of the Code, the Company shall pay to
<PAGE>
Page 13
you, no later than the fifth day following the Date of Termination,
an additional amount (the "Gross-Up Payment") such that the net
amount retained by you, after deduction of any Excise Tax on the
Contract Payments and such other Total Payments and any federal and
state and local income and other payroll taxes and Excise Tax upon
the payment provided for by this subsection, shall be equal to the
Contract Payments and such other Total Payments.
(H) for purposes of determining whether any of the payments
will be subject to the Excise Tax and the amount of such Excise
Tax, (i) any other payments or benefits received or to be received
by you in connection with a change in control of the Company or
your termination of employment (whether pursuant to the terms of
this Agreement or any other plan, arrangement or agreement with the
Company, any person whose actions result in a change in control or
any person affiliated with the Company or such person) payable
pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, any person whose actions
result in a change in control or any person affiliated with the
Company or such person (together with the Contract Payments, the
"Total Payments"), shall be treated as "parachute payments" within
the meaning of Section 280G(b)(2) of the Code and all "excess
parachute payments" within the meaning of Section 280G(b)(l) of the
Code shall be treated as subject to the Excise Tax unless in the
opinion of tax counsel selected by ISI's independent auditors and
reasonably acceptable to you, such other payments or benefits (in
whole or in part) do not constitute parachute payments, including
by reason of Section 280G(b)(4)(A) of the Code or such excess
parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning of
Section 280G(b)(4)(B) of the Code in excess of the base amount
allocable to such reasonable compensation within the meaning of
Section 280G(b)(3) of the Code, or are otherwise not subject to the
Excise Tax, (ii) the amount of the Total Payments which shall be
treated as subject to the Excise Tax shall be equal to the lesser
of (A) the amount of the Total Payments or (B) the amount of excess
parachute payments within the meaning of Section 280G(b)(l) of the
Code (after applying clause (i) above), and (iii) the value of any
noncash benefits or any deferred payment or benefit shall be
determined by ISI's independent auditors in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code. For purposes
of determining the amount of the Gross-Up Payment, you shall be
deemed to pay federal income taxes at the highest marginal rate of
federal income taxation in the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of your
residence
<PAGE>
Page 14
on the Date of Termination, net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state
and local taxes.
(I) in the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder
at the time of termination of your employment, you shall repay to
the Company at the time that the amount of such reduction in Excise
Tax is finally determined the portion of the Gross-Up Payment
attributable to such reduction (plus the portion of the Gross-Up
Payment attributable to the Excise Tax and federal and state and
local income tax imposed on the Gross-Up Payment being repaid by
you if such repayment results in a reduction in Excise Tax and/or a
federal and state and local income tax deduction) plus interest on
the amount of such repayment at the rate provided in Section
1274(b)(2)(B) of the Code. In the event that the Excise Tax is
determined to exceed the amount taken into account hereunder at the
time of the termination of your employment (including by reason of
any payment the existence or amount of which cannot be determined
at the time of the Gross-Up Payment), the Company shall make
an additional gross-up payment in respect of such excess (plus any
interest payable with respect to such excess) at the time that the
amount of such excess is finally determined.
(J) the payments provided for in paragraphs (B), (C), (D) and
(E) above, shall be made not later than the fifth day following the
Date of Termination, provided, however, that if the amounts of such
payments cannot be finally determined on or before such day, the
Company shall pay to you on such day an estimate, as determined in
good faith by the Company, of the minimum amount of such payments
and shall pay the remainder of such payments (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code)
as soon as the amount thereof can be determined but in no event
later than the thirtieth day after the Date of Termination. In the
event that the amount of the estimated payments exceeds the amount
subsequently determined to have been due, such excess shall
constitute a loan by the Company to you payable on the fifth day
after demand by the Company (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code).
(iv) If your employment shall be terminated (A) by the Company
other than for Cause, Retirement or Disability or (B) by you for Good
Reason, then for a twenty-four (24) month period after such termination,
the Company shall arrange to provide you with: (1) life, disability,
accident and health insurance benefits substantially similar to those
which you are receiving immediately prior to the Notice of Termination,
(2) financial advisory services similar to those provided currently to
executives of the
<PAGE>
Page 15
Company by Ayco Corporation, and (3) outplacement services. Benefits
otherwise receivable by you pursuant to this Subsection 4(iv) shall be
reduced to the extent comparable benefits are actually received by you
during the twenty-four (24) month period following your termination, and
any such benefits actually received by you shall be reported to the
Company. Any rights that you have to continuation of life, disability,
accident or health coverage under applicable state or federal law shall
be in addition to those provided under this Agreement.
(v) If your employment shall be terminated (A) by the Company
other than for Cause, Retirement or Disability or (B) by you for Good
Reason, then in addition to the retirement benefits to which you are
entitled under the Pension Plan, Supplemental Plan or Special Benefit
Plan or any successor plans thereto, the Company shall pay you in cash
at the time and in the manner provided in paragraph (J) of Subsection
4(iii), a lump sum equal to the excess of (x) the actuarial equivalent
of the retirement pension (taking into account any early retirement
subsidy associated therewith and determined as a straight life annuity
commencing at age sixty-five (65) or any earlier date, but in no event
earlier than the second anniversary of the Date of Termination whichever
annuity yields a greater benefit) which you would have accrued under the
terms of the Pension Plan, Supplemental Plan or Special Benefit Plan
(without regard to any amendments to any such plans made subsequent to a
change in control of the Company and on or prior to the Date of
Termination, which amendment adversely affects in any manner the
computation of retirement benefits thereunder), determined as if you
were fully vested thereunder and had accumulated (after the Date of
Termination) twenty-four (24) additional months of age and service
credit thereunder at the higher of the rate of average compensation
during the twelve (12) months prior to the change in control of the
Company or the rate of average compensation used to calculate your
benefits under such plans immediately preceding the Date of Termination,
over (y) the actuarial equivalent of the retirement pension (taking into
account any early retirement subsidy associated therewith and determined
as a straight life annuity commencing at age sixty-five (65) or any
earlier date, but in no event earlier than the Date of Termination
whichever annuity yields a greater benefit) which you had then accrued
pursuant to the provisions of the Pension Plan. For purposes of this
Subsection, "actuarial equivalent" shall be determined using the same
assumptions utilized under the Pension Plan for purposes of determining
alternative forms of benefits immediately prior to the change in control
of the Company.
(vi) You shall not be required to mitigate the amount of any
payment provided for in this Section 4 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for
in this Section 4 be reduced by any compensation earned by you as the
result of employment by another employer, by retirement benefits,
<PAGE>
Page 16
by offset against any amount claimed to be owed by you to the Company,
or otherwise, except as provided in Section 4(iv).
(vii) In addition to all other amounts payable to you under this
Section 4, you shall be entitled to receive all benefits payable to you
under the Pension Plan, the Thrift Plan, Supplemental Plan, Special
Benefit Plan, Nonqualified Thrift Plan and any other plan or agreement
relating to retirement benefits.
5. Successors; Binding Agreement. (i) ISI will require any
successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business
and/or assets of ISI to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that ISI or the
Company would be required to perform it if no such succession had taken
place. Failure of ISI to obtain such assumption and agreement prior to
the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle you to compensation from the Company in the
same amount and on the same terms as you would be entitled to hereunder
if you terminate your employment for Good Reason following a change in
control of the Company, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall
be deemed the Date of Termination. In the event a successor of ISI
assumes and agrees to perform this Agreement, by operation of law or
otherwise, the term "ISI", as used in this Agreement, shall mean such
successor and the term "Company" shall mean, collectively, such
successor and the affiliates of such successor.
(ii) This Agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
If you should die while any amount would still be payable to you
hereunder if you had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to your devisee, legatee or other designee or, if there
is no such designee, to your estate.
6. Notice. For the purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing
and shall be deemed to have been duly given when delivered or mailed by
United States registered mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth on the first
page of this Agreement, provided that all notice to the Company shall be
directed to the attention of the Board with a copy to the Secretary of
ISI, or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notice of change of
address shall be effective only upon receipt.
<PAGE>
Page 17
7. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by you and such officer as may be
specifically designated by the Board. No waiver by either party hereto
at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party
which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be
governed by the laws of the State of Illinois. All references to
sections of the Exchange Act or the Code shall be deemed also to refer
to any successor provisions to such sections. Any payments provided for
hereunder shall be paid net of any applicable withholding required under
federal, state or local law. The obligations of ISI and the Company
under Section 4 shall survive the expiration of the term of this
Agreement.
8. Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement, which shall remain in full force and
effect.
9. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
10. Settlement of Disputes; Arbitration. All claims by you for
benefits under this Agreement shall be directed to and determined by the
Board and shall be in writing. Any denial by the Board of a claim for
benefits under this Agreement shall be delivered to you in writing and
shall set forth the specific reasons for the denial and the specific
provisions of this Agreement relied upon. The Board shall afford a
reasonable opportunity to you for a review of the decision denying a
claim and shall further allow you to appeal to the Board a decision of
the Board within sixty (60) days after notification by the Board that
your claim has been denied. Any further dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively
by arbitration in Chicago, Illinois, in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction;
provided, however, that you shall be entitled to seek specific
performance of your right to be paid until the Date of Termination
during the pendency of any dispute or controversy arising under or in
connection with this Agreement.
<PAGE>
Page 18
If this letter sets forth our agreement on the subject matter
hereof, kindly sign and return to ISI the enclosed copy of this letter
which will then constitute our agreement on this subject.
Sincerely,
INLAND STEEL INDUSTRIES, INC.
By /s/ Judd R. Cool
------------------------------
Judd R. Cool
Vice President-Human Resources
Agreed to this 27th day
of March, 1996.
/s/ Neil S. Novich
----------------------------
(Signature)
<PAGE>
Copy of Form of Severance Agreement
dated June 10, 1996
between
Ryerson Tull, Inc.
and each of:
Robert J. Darnall
Jay M. Gratz
Carl G. Lusted
Stephen E. Makarewicz
<PAGE>
June 10, 1996
FIELD(1)
Dear FIELD (2):
Ryerson Tull, Inc. ("RTI") considers it essential to the best interests of
its stockholders to foster the continuous employment of key management personnel
of RTI and its affiliates (collectively, the "Company"). In this connection, the
Board of Directors of RTI (the "Board") recognizes that, as is the case with
many publicly held corporations, the possibility of a change in control may
exist and that such possibility, and the uncertainty and questions which it may
raise among management, may result in the departure or distraction of management
personnel to the detriment of RTI and its stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of the
Company's management, including yourself, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from the
possibility of a change in control of the Company, although no such change is
now contemplated. In order to induce you to remain in the employ of the Company
and in consideration of your agreement set forth in Subsection 2 (ii) hereof,
RTI agrees that you shall receive the severance benefits set forth in this
letter agreement ("Agreement") in the event your employment with the Company is
terminated subsequent to a "change in control of the Company" (as defined in
Section 2 hereof) under the circumstances described below. In the event that you
receive severance benefits hereunder, such benefits shall be in lieu of, and you
shall not be entitled to receive, any benefits or payments under any other
severance plan, policy or agreement of or with the Company. In addition, if you
are or become entitled to benefits from the Company pursuant to another
agreement providing for benefits on account of a change in control or the law of
a jurisdiction other than the United States or any state or territory thereof as
a result of an event for which benefits are payable to you pursuant this
Agreement, the benefits paid to you pursuant to this Agreement shall
<PAGE>
be reduced by the amount paid to you pursuant to such other agreement or law;
provided, however, that if you become entitled to benefits under this Agreement
and an agreement with Inland Steel Industries, Inc. ("ISI") on account of a
change in control of ISI or any of its subsidiaries, including RTI and its
subsidiaries, the benefits provided under your agreement with ISI will be
reduced by the amount of benefits payable to you pursuant to this Agreement on
account of such change in control. In no event shall you be entitled to benefits
under an agreement with ISI and this Agreement on account of the same events
constituting a change in control, except as provided in the preceeding sentence.
1. Term of Agreement. This Agreement shall commence on the date hereof
and shall continue in effect through December 31, 1996; provided, however, that
commencing on January 1, 1997 and each January 1 thereafter, the term of this
Agreement shall automatically be extended for one additional year unless, during
the preceding year but not later than June 30 of such preceding year, RTI shall
have given notice that it does not wish to extend this Agreement.
Notwithstanding the preceding sentence, (i) if your employer is a direct or
indirect subsidiary of RTI, this Agreement shall terminate on the date on which
RTI ceases to own, directly or indirectly, at least 80 percent of your employer
for any reason which does not constitute a change in control of the Company, and
(ii) if a change in control of the Company or a potential change in control of
the Company shall have occurred during the original or extended term of this
Agreement, this Agreement shall continue in effect for a period of twenty-four
(24) months beyond the month in which such change in control or potential change
in control of the Company occurred unless earlier terminated under clause (i) of
this Section 1.
2. Change in Control; Potential Change in Control. (i) No benefits shall
be payable hereunder unless there shall have been a potential change in control
or a change in control of the Company, as set forth below. For purposes of this
Agreement, a "change in control of the Company" shall be deemed to have occurred
if (A) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), other than
(w) the Company, (x) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company, (y) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (z) a corporation
owned, directly or indirectly, by the stockholders of RTI in substantially the
same proportions as their ownership of stock of RTI, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of RTI (not including in the securities
beneficially owned by such person any securities acquired directly from RTI or
its affiliates) representing 40% or more of the combined voting power of RTI's
then outstanding securities; (B) during any period of two consecutive years (not
including any period prior 60 days after the date of this Agreement),
individuals who at the beginning of such
Page 2
<PAGE>
period constitute the Board and any new director (other than a director
designated by a person who has entered into an agreement with RTI to effect a
transaction described in clauses (A), (C) or (D) of this Subsection) whose
election by the Board or nomination for election by RTI's stockholders was
approved by a vote of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved ("Continuing
Directors"), cease for any reason to constitute a majority thereof; (C) the
stockholders of RTI approve a merger or consolidation of RTI with any other
corporation, other than a merger or consolidation which would result in the
voting securities of RTI outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity), in combination with the ownership of any
trustee or other fiduciary holding securities under an employee benefit plan of
the Company, at least 60% of the combined voting power of the voting securities
of RTI or such surviving entity outstanding immediately after such merger or
consolidation, or a merger or consolidation effected to implement a
recapitalization of RTI (or similar transaction) in which no person acquires
more than 50% of the combined voting power of RTI's then outstanding securities;
(D) the stockholders of RTI approve a plan of complete liquidation of RTI or an
agreement for the sale or disposition by RTI of all or substantially all of
RTI's assets; or (E) there occurs (x) a sale or disposition, directly or
indirectly, other than to a person described in subclause (w), (x) or (z) of
clause (A) of this Subsection, of securities of your employer, any direct or
indirect parent company of your employer or any company that is a subsidiary of
your employer and is also a significant subsidiary (as defined below) of RTI
(your employer and such a parent or subsidiary being a "Related Company"),
representing 50% or more of the combined voting power of the securities of such
Related Company then outstanding, (y) a merger or consolidation of a Related
Company with any other corporation, other than a merger or consolidation which
would result in 50% or more of the combined voting power of the surviving
company being beneficially owned by RTI or by a majority owned direct or
indirect subsidiary of RTI, or (z) the sale or disposition of all or
substantially all the assets of a Related Company to a person other than RTI or
a majority owned direct or indirect subsidiary of RTI; provided, however, that
no change in control of the Company shall be deemed to have occurred under this
Section 2(ii) if (I) such transaction includes or involves a sale to the public
or a distribution to the stockholders of RTI of more than 50% of the voting
securities of your employer or a direct or indirect parent of your employer, and
(II) your employer or a direct or indirect parent of your employer agrees to
become a successor to RTI under this Agreement or you are covered by an
agreement providing for benefits upon a change in control of your employer
following an event described in clause (E). For purposes of this Agreement, the
term "significant subsidiary" has the meaning given to such term under Rule 405
of the Securities Act of 1933, as amended.
Page 3
<PAGE>
(ii) For purposes of this Agreement, a "potential change in control of the
Company" shall be deemed to have occurred if (A) RTI enters into an agreement,
the consummation of which would result in the occurrence of a change in control
of the Company, (B) any person (including RTI) publicly announces an intention
to take or to consider taking actions which if consummated would constitute a
change in control of the Company; (C) any person, other than (w) the Company,
(x) a trustee or other fiduciary holding securities under an employee benefit
plan of the Company, (y) an underwriter temporarily holding securities pursuant
to an offering of such securities, or (z) a corporation owned, directly or
indirectly, by the stockholders of RTI in substantially the same proportions as
their ownership of stock of RTI, who is or becomes the beneficial owner,
directly or indirectly, of securities of RTI representing 9.5% or more of the
combined voting power of RTI's then outstanding securities, increases his
beneficial ownership of such securities by 5% or more over the percentage so
owned by such person on the date hereof; or (D) the Board adopts a resolution to
the effect that, for purposes of this Agreement, a potential change in control
of the Company has occurred.
You agree that, subject to the terms and conditions of this Agreement, in
the event of a potential change in control of the Company, you will remain in
the employ of the Company until the earliest of (i) a date which is six (6)
months from the occurrence of such potential change in control of the Company,
(ii) the termination by you of your employment by reason of Disability or
Retirement, as defined in Subsection 3(i), or (iii) the occurrence of a change
in control of the Company. If your employment is terminated by the Company
without Cause (as defined in Subsection 3(ii) below) within twelve (12) months
after the occurrence of a potential change in control of the Company and a
change in control of the Company occurs within six (6) months after such
termination, you shall be entitled to the compensation and benefits hereunder as
if your termination of employment without Cause followed a change in control of
the Company; provided, however, that no benefits shall be payable under this
sentence if prior to the change in control of the Company, RTI ceased to own,
directly or indirectly, at least 80% of your employer.
(iii) The foregoing to the contrary notwithstanding, a change in control of
the Company shall not be deemed to have occurred with respect to you if (A) the
event first giving rise to the potential change in control of the Company
involves a publicly announced transaction or publicly announced proposed
transaction which at the time of the announcement has not been previously
approved by the Board and (B) you are "part of a purchasing group" proposing the
transaction. A change in control of the Company shall also not be deemed to have
occurred with respect to you if you are part of a purchasing group which
consummates the change in control transaction. You shall be
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deemed "part of a purchasing group" for purposes of the two preceding sentences
if you are an equity participant or have agreed to become an equity participant
in the purchasing company or group (except for (A) passive ownership of less
than 1% of the stock of the purchasing company or (B) ownership of equity
participation in the purchasing company or group which is otherwise not deemed
to be significant, as determined prior to the change in control of the Company
by a majority of the non-employee Continuing Directors).
3. Termination Following Change in Control. If a change in control of
the Company, as defined in Section 2 hereof, shall have occurred, you shall be
entitled to the benefits provided in Subsection 4(iii) hereof upon the
subsequent termination of your employment during the term of this Agreement
unless such termination is (A) because of your death, Disability or Retirement,
(B) by the Company for Cause, or (C) by you other than for Good Reason.
(i) Disability; Retirement. If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Company for six (6) consecutive months, and
within thirty (30) days after written notice of termination is given you shall
not have returned to the full-time performance of your duties, your employment
may be terminated for "Disability". Termination by the Company or you of your
employment based on "Retirement" shall mean termination on or after your normal
retirement age in accordance with the Company's retirement policy generally
applicable to its salaried employees or in accordance with any retirement
arrangement established with your consent with respect to you.
(ii) Cause. Termination by the Company of your employment for "Cause"
shall mean termination upon (A) the willful and continued failure by you to
substantially perform your duties with the Company (other than any such failure
resulting from your incapacity due to physical or mental illness or any such
actual or anticipated failure after the issuance of a Notice of Termination by
you for Good Reason as defined in Subsections 3(iv) and 3(iii), respectively)
after a written demand for substantial performance is delivered to you by the
Board, which demand specifically identifies the manner in which the Board
believes that you have not substantially performed your duties, or (B) the
willful engaging by you in conduct which is demonstrably and materially
injurious to the Company, monetarily or otherwise. For purposes of this
Subsection, no act, or failure to act, on your part shall be deemed "willful"
unless done, or omitted to be done, by you not in good faith and without
reasonable belief that your action or omission was in the best interest of the
Company. Notwithstanding the foregoing, you shall not be deemed to have been
terminated for Cause unless and until there shall have been
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delivered to you a copy of a resolution duly adopted by the affirmative vote of
not less than three-quarters (3/4) of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after reasonable notice
to you and an opportunity for you, together with your counsel, to be heard
before the Board), finding that in the good faith opinion of the Board you were
guilty of conduct set forth above in clauses (A) or (B) of the first sentence of
this Subsection and specifying the particulars thereof in detail.
(iii) Good Reason. You shall be entitled to terminate your employment for
Good Reason. For purposes of this Agreement, "Good Reason" shall mean, without
your express written consent, the occurrence after a change in control of the
Company of any of the following circumstances unless, in the case of paragraphs
(A), (E), (F), (G) or (H), such circumstances are fully corrected prior to the
Date of Termination specified in the Notice of Termination, as defined in
Subsections 3(v) and 3(iv), respectively, given in respect thereof:
(A) a substantial adverse alteration in the nature or status of your
responsibilities from those in effect immediately prior to the change in
control of the Company other than any such alteration primarily
attributable to the fact that the Company may no longer be a public
company;
(B) a reduction by the Company in your annual base salary as in
effect on the date hereof or as the same may be increased from time to
time;
(C) the Company's requiring that your principal place of business be
at an office located more than 50 miles from where your principal place of
business is located immediately prior to the change in control of the
Company, except for required travel on the Company's business to an extent
substantially consistent with your business travel obligations immediately
prior to the change in control of the Company;
(D) the failure by the Company, without your consent, to pay to you
any portion of your current compensation, or to pay to you any portion of
an installment of deferred compensation under any deferred compensation
program of the Company, within seven (7) days of the date such compensation
is due;
(E) the failure by the Company to continue in effect any compensation
plan in which you participate immediately prior to the change in control of
the Company which is material to your total compensation, including but not
limited to the Inland Steel Industries Annual Incentive Plan (the "Annual
Incentive
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Plan"), Inland Special Achievement Award Plan, Inland 1986 Employee Stock
Purchase Plan, Ryerson Tull 1996 Incentive Stock Plan (the "Incentive
Plan'), Ryerson Tull Supplemental Retirement Benefit Plan for Covered
Employees (the "Supplemental Plan"), Inland Steel Industries Nonqualified
Thrift Plan (the "Nonqualified Thrift Plan"), Ryerson Tull Pension Plan
(the "Pension Plan") and Inland Steel Industries Thrift Plan (the "Thrift
Plan") or any substitute or alternative plans adopted prior to the change
in control (including substitute plans adopted by the Company in
replacement of plans previously sponsored by Inland Steel Industries,
Inc.), unless an equitable arrangement (embodied in an ongoing substitute
or alternative plan) has been made with respect to such plan, or the
failure by the Company to continue your participation therein (or in such
substitute or alternative plan) on a basis not materially less favorable,
both in terms of the amount of benefits provided and the level of your
participation relative to other participants, as existed at the time of the
change in control;
(F) the failure by the Company to continue to provide you with
benefits substantially similar to those enjoyed by you under any of the
Company's pension, life insurance, medical, health and accident, flexible
spending or disability plans or programs in which you were participating at
the time of the change in control of the Company, the taking of any action
by the Company which would directly or indirectly materially reduce any of
such benefits or deprive you of any material fringe benefit enjoyed by you
at the time of the change in control of the Company, or the failure by the
Company to provide you with the number of paid vacation days to which you
are entitled on the basis of years of service with the Company in
accordance with the Company's normal vacation policy in effect at the time
of the change in control of the Company;
(G) the failure of RTI to obtain a satisfactory agreement from any
successor to assume and agree to perform this Agreement, as contemplated in
Section 5 hereof; or
(H) any purported termination of your employment which is not
effected pursuant to a Notice of Termination satisfying the requirements of
Subsection (iv) below (and, if applicable, the requirements of Subsection
(ii) above); for purposes of this Agreement, no such purported termination
shall be effective.
Your right to terminate your employment pursuant to this Subsection shall not be
affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.
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(iv) Notice of Termination. Any purported termination of your employment
by the Company or by you shall be communicated by written Notice of Termination
to the other party hereto in accordance with Section 6 hereof. For purposes of
this Agreement, a "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of your employment under the provision so
indicated.
(v) Date of Termination, Etc. "Date of Termination" shall mean (A) if
your employment is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that you shall not have returned to the full-time
performance of your duties during such thirty (30) day period), and (B) if your
employment is terminated pursuant to Subsection (ii) or (iii) above or for any
other reason (other than Disability), the date specified in the Notice of
Termination (which, in the case of a termination pursuant to Subsection (ii)
above shall not be less than thirty (30) days, and in the case of a termination
pursuant to Subsection (iii) above shall not be less than fifteen (15) nor more
than sixty (60) days, respectively, from the date such Notice of Termination is
given); provided that if within fifteen (15) days after any Notice of
Termination is given, or, if later, prior to the Date of Termination (as
determined without regard to this proviso), the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties, by a
binding arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (which is not appealable or with respect to which the
time for appeal therefrom has expired and no appeal has been perfected) but
shall be deemed to be within the twenty four (24) month period following a
change in control of the Company; provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay you your full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to, base
salary) and continue you as a participant in all compensation, benefit and
insurance plans and programs in which you were participating when the notice
giving rise to the dispute was given, until the dispute is finally resolved in
accordance with this Subsection. Amounts paid under this Subsection are in
addition to all other amounts due under this Agreement and shall not be offset
against or reduce any other amounts due under this Agreement.
4. Compensation Upon Termination or During Disability. Following a change
in control of the Company, as defined by Subsection 2(i), upon termination of
your
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employment or during a period of Disability you shall be entitled to the
following benefits:
(i) During any period that you fail to perform your full-time duties with
the Company as a result of incapacity due to physical or mental illness, you
shall continue to receive your base salary at the rate in effect at the
commencement of any such period, together with all compensation payable to you
under the Pension Plan, Supplemental Plan, Annual Incentive Plan, Thrift Plan
and Nonqualified Thrift Plan during such period, until this Agreement is
terminated pursuant to Section 3(i) hereof. Thereafter, in the event your
employment shall be terminated, your benefits shall be determined under the
Company's retirement, insurance and other compensation plans and programs then
in effect in accordance with the terms of such plans and programs.
(ii) If your employment shall be terminated by the Company for Cause or by
you other than for Good Reason, Disability, death or Retirement, the Company
shall pay you your full base salary through the Date of Termination at the rate
in effect at the time Notice of Termination is given, plus all other amounts to
which you are entitled under any compensation plan or program of the Company at
the time such payments are due, and the Company shall have no further
obligations to you under this Agreement.
(iii) If your employment by the Company shall be terminated (a) by the
Company other than for Cause, Retirement or Disability or (b) by you for Good
Reason, then you shall be entitled to the compensation and benefits provided
below:
(A) the Company shall pay you your full base salary through the Date
of Termination at the rate in effect at the time Notice of Termination is
given, plus all other amounts to which you are entitled under any
compensation plan of the Company, at the time such payments are due, except
as otherwise provided below.
(B) in lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Company shall pay as severance
pay to you a lump sum severance payment (together with the payments
provided in paragraphs C and D below, the "Severance Payments") equal to
the sum of (x) your annual base salary in effect immediately prior to the
occurrence of the circumstance giving rise to the Notice of Termination
given in respect thereof, and (y) the average annual amount of the Award
paid to you pursuant to the Annual Incentive Plan or similar successor plan
with respect to the five years immediately preceding that in which the Date
of Termination occurs, such average annual amount being calculated by
aggregating all such Awards paid
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with respect to such five years and dividing such aggregate amount by the
number of years for which such an Award was actually paid to you.
(C) notwithstanding any provision of the Annual Incentive Plan and
the Inland Special Achievement Award Plan, the Company shall pay to you a
lump sum amount equal to the sum of (x) any incentive compensation which
has been allocated or awarded to you for a completed fiscal year or other
measuring period preceding the Date of Termination but has not yet been
paid, and (y) a pro rata portion to the Date of Termination for the current
fiscal year or other measuring period of the amount equal to the Target
Award percentage applicable to you under the Annual Incentive Plan or
similar successor plan on the Date of Termination times your annual base
salary then in effect.
(D) in lieu of shares of common stock of RTI ("RTI Shares") issuable
upon exercise of outstanding options ("Options"), if any, granted to you
under RTI's stock option plans (which Options shall be cancelled upon the
making of the payment referred to below), you shall receive an amount in
cash equal to the product of (i) the excess of (x) in the case of incentive
stock options (as defined in section 422A of the Internal Revenue Code of
1986, as amended (the "Code")) ("ISOs")), granted after the date hereof,
the closing price of RTI's shares as reported on the New York Stock
Exchange Composite Transactions on or next preceding the Date of
Termination, in the case of all other options, the Change in Control Price
(as defined below), over (y) the per share exercise price of each Option
held by you (whether or not then fully exercisable), times (ii) the number
of RTI Shares covered by each such option. For purposes of this Agreement,
the "Change in Control Price" means (1) with respect to a merger or
consolidation of RTI described in Section 2(i)(C) in which the
consideration per share of RTI's common stock to be paid for the
acquisition of shares of common stock specified in the agreement of merger
or consolidation is all in cash, the highest such consideration per share,
(2) with respect to a change in control of the Company by reason of an
acquisition of securities described in Section 2(i)(A), the highest price
per share for any share of RTI's common stock paid by any holder of any of
the securities representing 40% or more of the combined voting power of RTI
giving rise to the change in control of the Company, and (3) with respect
to a change in control of the Company by reason of a merger or
consolidation of RTI (other than a merger or consolidation described in
Clause (1) next above), stockholder approval of an agreement or plan
described in Section 2(i)(D), a change in the composition of the Board
described in Section 2(i)(B) or a change in control of the Company pursuant
to Section 2(i)(E) (relating to mergers, consolidations and sales of
securities or
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assets of a Related Company), the highest price per share of common stock
reported on the New York Stock Exchange Composite Transactions (or, if such
shares are not traded on the New York Stock Exchange, such other principal
market on which such shares are traded) during the sixty (60) day period
ending on the date the change in control of the Company occurs.
(E) the Company shall also pay to you all legal fees and expenses
incurred by you as a result of such termination (including all such fees
and expenses, if any, incurred in contesting or disputing any such
termination or in seeking to obtain or enforce any right or benefit
provided by this Agreement or in connection with any tax audit or
proceeding to the extent attributable to the application of Section 4999 of
the Code to any payment or benefit provided hereunder). Such payments shall
be made at the later of the times specified in paragraph (F) below, or
within five (5) days after your request for payment accompanied with such
evidence of fees and expenses incurred as the Company reasonably may
require.
(F) the payments provided for in paragraphs (B), (C) and (D) above,
shall be made not later than the fifth day following the Date of
Termination, provided, however, that if the amounts of such payments cannot
be finally determined on or before such day, the Company shall pay to you
on such day an estimate, as determined in good faith by the Company, of the
minimum amount of such payments and shall pay the remainder of such
payments (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined
but in no event later than the thirtieth day after the Date of Termination.
In the event that the amount of the estimated payments exceeds the amount
subsequently determined to have been due, such excess shall constitute a
loan by the Company to you payable on the fifth day after demand by the
Company (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code).
(iv) If your employment shall be terminated (A) by the Company other than
for Cause, Retirement or Disability or (B) by you for Good Reason, then for a
twelve (12) month period after such termination, the Company shall arrange to
provide you with: (1) life, disability, accident and health insurance benefits
substantially similar to those which you are receiving immediately prior to the
Notice of Termination, and (2) outplacement services. Benefits otherwise
receivable by you pursuant to this Subsection 4 (iv) shall be reduced to the
extent comparable benefits are actually received by you during the twelve (12)
month period following your termination, and any such benefits actually received
by you shall be reported to the Company. Any rights that you have to
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continuation of health coverage under applicable state or federal law shall be
in addition to those provided under this Agreement.
(v) If your employment shall be terminated (A) by the Company other than
for Cause, Retirement or Disability or (B) by you for Good Reason, then in
addition to the retirement benefits to which you are entitled under the Pension
Plan or Supplemental Plan or any successor plans thereto, the Company shall pay
you in cash at the time and in the manner provided in paragraph (J) of
Subsection 4(iii), a lump sum equal to the excess of (x) the actuarial
equivalent of the retirement pension (taking into account any early retirement
subsidy associated therewith and determined as a straight life annuity
commencing at age sixty-five (65) or any earlier date, but in no event earlier
than the second anniversary of the Date of Termination whichever annuity yields
a greater benefit) which you would have accrued under the terms of the Pension
Plan or Supplemental Plan (without regard to any amendments to any such plans
made subsequent to a change in control of the Company and on or prior to the
Date of Termination, which amendment adversely affects in any manner the
computation of retirement benefits thereunder), determined as if you were fully
vested thereunder and had accumulated (after the Date of Termination) twelve
(12) additional months of age and service credit thereunder at the higher of the
rate of average compensation during the twelve (12) months prior to the change
in control of the Company or the rate of average compensation used to calculate
your benefits under such plans immediately preceding the Date of Termination,
over (y) the actuarial equivalent of the retirement pension (taking into account
any early retirement subsidy associated therewith and determined as a straight
life annuity commencing at age sixty-five (65) or any earlier date, but in no
event earlier than the Date of Termination whichever annuity yields a greater
benefit) which you had then accrued pursuant to the provisions of the Pension
Plan. For purposes of this Subsection, "actuarial equivalent" shall be
determined using the same assumptions utilized under the Pension Plan for
purposes of determining alternative forms of benefits immediately prior to the
change in control of the Company.
(vi) You shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or otherwise, nor
shall the amount of any payment or benefit provided for in this Section 4 be
reduced by any compensation earned by you as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by you to the Company, or otherwise, except as provided in Section 4(iv).
(vii) Notwithstanding the provisions of Subsection (iii) hereof, if in the
unqualified opinion of tax counsel selected by RTI's independent auditors and
acceptable to you:
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(A) any payments or benefits received or to be received by you,
whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, any person whose actions result
in a change in control of RTI or any person affiliated with RTI or such
person, constitute "parachute payments" (such payments or benefits being
hereinafter referred to as the "Parachute Payments") within the meaning of
Section 280G(b)(2) of the Code, and
(B) the aggregate present value of the Parachute Payments reduced by
any excise tax imposed under Section 4999 of the Code (or any similar tax
that may hereafter be imposed) (the "Excise Tax") and by any federal, state
or local income or any other excise taxes payable by you with respect to
such Parachute Payments would be less than 3 times your "base amount," as
defined in Section 280G(b)(3) of the Code, reduced by any federal, state or
local income taxes payable by you with respect to an amount equal to 2.99
times your base amount, then, in lieu of that portion of the Parachute
Payments to which you would otherwise be entitled under Subsection (iii)
hereof, RTI shall pay to you under this Subsection, no later than the time
specified in Subsection (iii)(F) hereof, a lump sum amount such that the
aggregate present value of the Parachute Payments is equal to 2.99 times
your base amount. For purposes of the preceding paragraph, your base
amount, the present value of the Parachute Payments, the amount of the
Excise Tax, the amount of any federal, state or local income taxes payable
by you and all other appropriate matters shall be determined by RTI's
independent auditors in accordance with the provisions of Section 280G of
the Code or other relevant provisions of the Code and based upon an
unqualified opinion of tax counsel selected by such auditors and acceptable
to you.
(viii) In addition to all other amounts payable to you under this Section
4, you shall be entitled to receive all benefits payable to you under the
Pension Plan, the Thrift Plan, Supplemental Plan, Nonqualified Thrift Plan (or
any substitute or alternative plan or plans) and any other plan or agreement
relating to retirement benefits.
5. Successors; Binding Agreement. (i) RTI will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of RTI to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that RTI or the Company would be required to perform it if no such
succession had taken place. Failure of RTI to obtain such assumption and
agreement prior to the effectiveness of any such succession shall
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be a breach of this Agreement and shall entitle you to compensation from the
Company in the same amount and on the same terms as you would be entitled to
hereunder if you terminate your employment for Good Reason following a change in
control of the Company, except that for purposes of implementing the foregoing,
the date on which any such succession becomes effective shall be deemed the Date
of Termination. In the event a successor of RTI assumes and agrees to perform
this Agreement, by operation of law or otherwise, the term "RTI", as used in
this Agreement, shall mean such successor and the term "Company" shall mean,
collectively, such successor and the affiliates of such successor.
(ii) This Agreement shall inure to the benefit of and be enforceable by
your personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If you should die while any amount
would still be payable to you hereunder if you had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to your devisee, legatee or other designee or, if there
is no such designee, to your estate.
6. Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, provided
that all notice to the Company shall be directed to the attention of the Board
with a copy to the Secretary of RTI, or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon receipt.
7. Miscellaneous. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by you and such officer as may be specifically designated by
the Board. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Illinois. All references to sections of the Exchange
Act or the Code shall be deemed also to refer to any successor provisions to
such sections. Any payments provided for hereunder shall be paid net of any
applicable withholding
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required under federal, state or local law. The obligations of RTI and the
Company under Section 4 shall survive the expiration of the term of this
Agreement.
8. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
9. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
10. Settlement of Disputes; Arbitration. All claims by you for benefits
under this Agreement shall be directed to and determined by the Board and shall
be in writing. Any denial by the Board of a claim for benefits under this
Agreement shall be delivered to you in writing and shall set forth the specific
reasons for the denial and the specific provisions of this Agreement relied
upon. The Board shall afford a reasonable opportunity to you for a review of the
decision denying a claim and shall further allow you to appeal to the Board a
decision of the Board within sixty (60) days after notification by the Board
that your claim has been denied. Any further dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively by
arbitration in Chicago, Illinois, in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however, that you
shall be entitled to seek specific performance of your right to be paid until
the Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to RTI the enclosed copy of this letter which will then
constitute our agreement on this subject.
Sincerely,
RYERSON TULL, INC.
By: ______________________________________________
Its: Vice President - Human Resources
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Agreed to this ________ day
of ________________________, 1996.
________________________________________ (Signature)
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June 10, 1996
Neil S. Novich
431 Washington Avenue
Wilmette, Illinois 60091
Dear Mr. Novich:
Ryerson Tull, Inc. ("RTI") considers it essential to the best interests of
its stockholders to foster the continuous employment of key management personnel
of RTI and its affiliates (collectively, the "Company"). In this connection, the
Board of Directors of RTI (the "Board") recognizes that, as is the case with
many publicly held corporations, the possibility of a change in control may
exist and that such possibility, and the uncertainty and questions which it may
raise among management, may result in the departure or distraction of management
personnel to the detriment of RTI and its stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of the
Company's management, including yourself, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from the
possibility of a change in control of the Company, although no such change is
now contemplated. In order to induce you to remain in the employ of the Company
and in consideration of your agreement set forth in Subsection 2 (ii) hereof,
RTI agrees that you shall receive the severance benefits set forth in this
letter agreement ("Agreement") in the event your employment with the Company is
terminated subsequent to a "change in control of the Company" (as defined in
Section 2 hereof) under the circumstances described below. In the event that you
receive severance benefits hereunder, such benefits shall be in lieu of, and you
shall not be entitled to receive, any benefits or payments under any other
severance plan, policy or agreement (except your employment agreement contained
in letters dated April 8, 1994 [your "Employment Agreement"]) of or with the
Company. In addition, if you are or become entitled to benefits from the Company
pursuant to another agreement providing for benefits on account of a change in
control or the law of a jurisdiction other than the United States or any state
or territory thereof as a result of an event for which benefits are payable to
you pursuant this Agreement, the benefits paid to you pursuant to this Agreement
shall
<PAGE>
be reduced by the amount paid to you pursuant to such other agreement or law;
provided, however, that if you become entitled to benefits under this Agreement
and an agreement with Inland Steel Industries, Inc. ("ISI") on account of a
change in control of ISI or any of its subsidiaries, including RTI and its
subsidiaries, the benefits provided under your agreement with ISI will be
reduced by the amount of benefits payable to you pursuant to this Agreement on
account of such change in control. In no event shall you be entitled to benefits
under an agreement with ISI and this Agreement on account of the same events
constituting a change in control, except as provided in the proceeding sentence.
1. Term of Agreement. This Agreement shall commence on the date hereof
and shall continue in effect through December 31, 1996; provided, however, that
commencing on January 1, 1997 and each January 1 thereafter, the term of this
Agreement shall automatically be extended for one additional year unless, during
the preceding year but not later than June 30 of such preceding year, RTI shall
have given notice that it does not wish to extend this Agreement.
Notwithstanding the preceding sentence, (i) if your employer is a direct or
indirect subsidiary of RTI, this Agreement shall terminate on the date on which
RTI ceases to own, directly or indirectly, at least 80 percent of your employer
for any reason which does not constitute a change in control of the Company, and
(ii) if a change in control of the Company or a potential change in control of
the Company shall have occurred during the original or extended term of this
Agreement, this Agreement shall continue in effect for a period of twenty-four
(24) months beyond the month in which such change in control or potential change
in control of the Company occurred unless earlier terminated under clause (i) of
this Section 1.
2. Change in Control; Potential Change in Control. (i) No benefits shall
be payable hereunder unless there shall have been a potential change in control
or a change in control of the Company, as set forth below. For purposes of this
Agreement, a "change in control of the Company" shall be deemed to have occurred
if (A) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), other than
(w) the Company, (x) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company, (y) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (z) a corporation
owned, directly or indirectly, by the stockholders of RTI in substantially the
same proportions as their ownership of stock of RTI, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of RTI (not including in the securities
beneficially owned by such person any securities acquired directly from RTI or
its affiliates) representing 40% or more of the combined voting power of RTI's
then outstanding securities; (B) during any period of two consecutive years (not
including any period prior 60 days after the date of this Agreement),
individuals who at the beginning of such
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period constitute the Board and any new director (other than a director
designated by a person who has entered into an agreement with RTI to effect a
transaction described in clauses (A), (C) or (D) of this Subsection) whose
election by the Board or nomination for election by RTI's stockholders was
approved by a vote of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved ("Continuing
Directors"), cease for any reason to constitute a majority thereof; (C) the
stockholders of RTI approve a merger or consolidation of RTI with any other
corporation, other than a merger or consolidation which would result in the
voting securities of RTI outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity), in combination with the ownership of any
trustee or other fiduciary holding securities under an employee benefit plan of
the Company, at least 60% of the combined voting power of the voting securities
of RTI or such surviving entity outstanding immediately after such merger or
consolidation, or a merger or consolidation effected to implement a
recapitalization of RTI (or similar transaction) in which no person acquires
more than 50% of the combined voting power of RTI's then outstanding securities;
(D) the stockholders of RTI approve a plan of complete liquidation of RTI or an
agreement for the sale or disposition by RTI of all or substantially all of
RTI's assets; or (E) there occurs (x) a sale or disposition, directly or
indirectly, other than to a person described in subclause (w), (x) or (z) of
clause (A) of this Subsection, of securities of your employer, any direct or
indirect parent company of your employer or any company that is a subsidiary of
your employer and is also a significant subsidiary (as defined below) of RTI
(your employer and such a parent or subsidiary being a "Related Company"),
representing 50% or more of the combined voting power of the securities of such
Related Company then outstanding, (y) a merger or consolidation of a Related
Company with any other corporation, other than a merger or consolidation which
would result in 50% or more of the combined voting power of the surviving
company being beneficially owned by RTI or by a majority owned direct or
indirect subsidiary of RTI, or (z) the sale or disposition of all or
substantially all the assets of a Related Company to a person other than RTI or
a majority owned direct or indirect subsidiary of RTI; provided, however, that
no change in control of the Company shall be deemed to have occurred under this
Section 2(ii) if (I) such transaction includes or involves a sale to the public
or a distribution to the stockholders of RTI of more than 50% of the voting
securities of your employer or a direct or indirect parent of your employer, and
(II) your employer or a direct or indirect parent of your employer agrees to
become a successor to RTI under this Agreement or you are covered by an
agreement providing for benefits upon a change in control of your employer
following an event described in clause (E). For purposes of this Agreement, the
term "significant subsidiary" has the meaning given to such term under Rule 405
of the Securities Act of 1933, as amended.
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(ii) For purposes of this Agreement, a "potential change in control of the
Company" shall be deemed to have occurred if (A) RTI enters into an agreement,
the consummation of which would result in the occurrence of a change in control
of the Company, (B) any person (including RTI) publicly announces an intention
to take or to consider taking actions which if consummated would constitute a
change in control of the Company; (C) any person, other than (w) the Company,
(x) a trustee or other fiduciary holding securities under an employee benefit
plan of the Company, (y) an underwriter temporarily holding securities pursuant
to an offering of such securities, or (z) a corporation owned, directly or
indirectly, by the stockholders of RTI in substantially the same proportions as
their ownership of stock of RTI, who is or becomes the beneficial owner,
directly or indirectly, of securities of RTI representing 9.5% or more of the
combined voting power of RTI's then outstanding securities, increases his
beneficial ownership of such securities by 5% or more over the percentage so
owned by such person on the date hereof; or (D) the Board adopts a resolution to
the effect that, for purposes of this Agreement, a potential change in control
of the Company has occurred.
You agree that, subject to the terms and conditions of this Agreement, in
the event of a potential change in control of the Company, you will remain in
the employ of the Company until the earliest of (i) a date which is six (6)
months from the occurrence of such potential change in control of the Company,
(ii) the termination by you of your employment by reason of Disability or
Retirement, as defined in Subsection 3(i), or (iii) the occurrence of a change
in control of the Company. If your employment is terminated by the Company
without Cause (as defined in Subsection 3(ii) below) within twelve (12) months
after the occurrence of a potential change in control of the Company and a
change in control of the Company occurs within six (6) months after such
termination, you shall be entitled to the compensation and benefits hereunder as
if your termination of employment without Cause followed a change in control of
the Company; provided, however, that no benefits shall be payable under this
sentence if prior to the change in control of the Company, RTI ceased to own,
directly or indirectly, at least 80% of your employer.
(iii) The foregoing to the contrary notwithstanding, a change in control of
the Company shall not be deemed to have occurred with respect to you if (A) the
event first giving rise to the potential change in control of the Company
involves a publicly announced transaction or publicly announced proposed
transaction which at the time of the announcement has not been previously
approved by the Board and (B) you are "part of a purchasing group" proposing the
transaction. A change in control of the Company shall also not be deemed to have
occurred with respect to you if you are part of a purchasing group which
consummates the change in control transaction. You shall be
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deemed "part of a purchasing group" for purposes of the two preceding sentences
if you are an equity participant or have agreed to become an equity participant
in the purchasing company or group (except for (A) passive ownership of less
than 1% of the stock of the purchasing company or (B) ownership of equity
participation in the purchasing company or group which is otherwise not deemed
to be significant, as determined prior to the change in control of the Company
by a majority of the non-employee Continuing Directors).
3. Termination Following Change in Control. If a change in control of
the Company, as defined in Section 2 hereof, shall have occurred, you shall be
entitled to the benefits provided in Subsection 4(iii) hereof upon the
subsequent termination of your employment during the term of this Agreement
unless such termination is (A) because of your death, Disability or Retirement,
(B) by the Company for Cause, or (C) by you other than for Good Reason;
provided, however, that nothing contained in this Section 3 shall limit or
reduce in any way such benefits, if any, as you may be entitled to receive under
provisions of your Employment Agreement during the term thereof.
(i) Disability; Retirement. If, as a result of your incapacity due to
physical or mental illness, you shall have been absent from the full-time
performance of your duties with the Company for six (6) consecutive months, and
within thirty (30) days after written notice of termination is given you shall
not have returned to the full-time performance of your duties, your employment
may be terminated for "Disability". Termination by the Company or you of your
employment based on "Retirement" shall mean termination on or after your normal
retirement age in accordance with the Company's retirement policy generally
applicable to its salaried employees or in accordance with any retirement
arrangement established with your consent with respect to you.
(ii) Cause. Termination by the Company of your employment for "Cause"
shall mean termination upon (A) the willful and continued failure by you to
substantially perform your duties with the Company (other than any such failure
resulting from your incapacity due to physical or mental illness or any such
actual or anticipated failure after the issuance of a Notice of Termination by
you for Good Reason as defined in Subsections 3(iv) and 3(iii), respectively)
after a written demand for substantial performance is delivered to you by the
Board, which demand specifically identifies the manner in which the Board
believes that you have not substantially performed your duties, or (B) the
willful engaging by you in conduct which is demonstrably and materially
injurious to the Company, monetarily or otherwise. For purposes of this
Subsection, no act, or failure to act, on your part shall be deemed "willful"
unless done, or omitted to be done, by you not in good faith and without
reasonable belief that your action or omission was in the best interest of the
Company. Notwithstanding the foregoing, you shall not be deemed to have been
terminated for Cause unless and until there shall have been
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delivered to you a copy of a resolution duly adopted by the affirmative vote of
not less than three-quarters (3/4) of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after reasonable notice
to you and an opportunity for you, together with your counsel, to be heard
before the Board), finding that in the good faith opinion of the Board you were
guilty of conduct set forth above in clauses (A) or (B) of the first sentence of
this Subsection and specifying the particulars thereof in detail.
(iii) Good Reason. You shall be entitled to terminate your employment for
Good Reason. For purposes of this Agreement, "Good Reason" shall mean, without
your express written consent, the occurrence after a change in control of the
Company of any of the following circumstances unless, in the case of paragraphs
(A), (E), (F), (G) or (H), such circumstances are fully corrected prior to the
Date of Termination specified in the Notice of Termination, as defined in
Subsections 3(v) and 3(iv), respectively, given in respect thereof:
(A) the assignment to you of any duties inconsistent with your status
as an executive officer of the Company or a substantial adverse alteration
in the nature or status of your responsibilities from those in effect
immediately prior to the change in control of the Company other than any
such alteration primarily attributable to the fact that the Company may no
longer be a public company;
(B) a reduction by the Company in your annual base salary as in
effect on the date hereof or as the same may be increased from time to
time;
(C) the Company's requiring that your principal place of business be
at an office located more than 50 miles from where your principal place of
business is located immediately prior to the change in control of the
Company, except for required travel on the Company's business to an extent
substantially consistent with your business travel obligations immediately
prior to the change in control of the Company;
(D) the failure by the Company, without your consent, to pay to you
any portion of your current compensation, or to pay to you any portion of
an installment of deferred compensation under any deferred compensation
program of the Company, within seven (7) days of the date such compensation
is due;
(E) the failure by the Company to continue in effect any compensation
plan in which you participate immediately prior to the change in control of
the Company which is material to your total compensation, including but not
limited to the Inland Steel Industries Annual Incentive Plan (the "Annual
Incentive
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Plan"), Inland Special Achievement Award Plan, Inland 1986 Employee Stock
Purchase Plan, Ryerson Tull 1996 Incentive Stock Plan (the "Incentive
Plan'), Ryerson Tull Supplemental Retirement Benefit Plan for Covered
Employees (the "Supplemental Plan"), Inland Steel Industries Nonqualified
Thrift Plan (the "Nonqualified Thrift Plan"), Ryerson Tull Pension Plan
(the "Pension Plan") and Inland Steel Industries Thrift Plan (the "Thrift
Plan") or any substitute or alternative plans adopted prior to the change
in control (including substitute plans adopted by the Company in
replacement of plans previously sponsored by Inland Steel Industries,
Inc.), unless an equitable arrangement (embodied in an ongoing substitute
or alternative plan) has been made with respect to such plan, or the
failure by the Company to continue your participation therein (or in such
substitute or alternative plan) on a basis not materially less favorable,
both in terms of the amount of benefits provided and the level of your
participation relative to other participants, as existed at the time of the
change in control;
(F) the failure by the Company to continue to provide you with
benefits substantially similar to those enjoyed by you under any of the
Company's pension, life insurance, medical, health and accident, flexible
spending or disability plans or programs in which you were participating at
the time of the change in control of the Company, the taking of any action
by the Company which would directly or indirectly materially reduce any of
such benefits or deprive you of any material fringe benefit enjoyed by you
at the time of the change in control of the Company, or the failure by the
Company to provide you with the number of paid vacation days to which you
are entitled on the basis of years of service with the Company in
accordance with the Company's normal vacation policy in effect at the time
of the change in control of the Company;
(G) the failure of RTI to obtain a satisfactory agreement from any
successor to assume and agree to perform this Agreement, as contemplated in
Section 5 hereof; or
(H) any purported termination of your employment which is not
effected pursuant to a Notice of Termination satisfying the requirements of
Subsection (iv) below (and, if applicable, the requirements of Subsection
(ii) above); for purposes of this Agreement, no such purported termination
shall be effective.
Your right to terminate your employment pursuant to this Subsection shall not be
affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.
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(iv) Notice of Termination. Any purported termination of your employment
by the Company or by you shall be communicated by written Notice of Termination
to the other party hereto in accordance with Section 6 hereof. For purposes of
this Agreement, a "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of your employment under the provision so
indicated.
(v) Date of Termination, Etc. "Date of Termination" shall mean (A) if
your employment is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that you shall not have returned to the full-time
performance of your duties during such thirty (30) day period), and (B) if your
employment is terminated pursuant to Subsection (ii) or (iii) above or for any
other reason (other than Disability), the date specified in the Notice of
Termination (which, in the case of a termination pursuant to Subsection (ii)
above shall not be less than thirty (30) days, and in the case of a termination
pursuant to Subsection (iii) above shall not be less than fifteen (15) nor more
than sixty (60) days, respectively, from the date such Notice of Termination is
given); provided that if within fifteen (15) days after any Notice of
Termination is given, or, if later, prior to the Date of Termination (as
determined without regard to this proviso), the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties, by a
binding arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (which is not appealable or with respect to which the
time for appeal therefrom has expired and no appeal has been perfected) but
shall be deemed to be within the twenty four (24) month period following a
change in control of the Company; provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay you your full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to, base
salary) and continue you as a participant in all compensation, benefit and
insurance plans and programs in which you were participating when the notice
giving rise to the dispute was given, until the dispute is finally resolved in
accordance with this Subsection. Amounts paid under this Subsection are in
addition to all other amounts due under this Agreement and shall not be offset
against or reduce any other amounts due under this Agreement.
4. Compensation Upon Termination or During Disability. Following a change
in control of the Company, as defined by Subsection 2(i), upon termination of
your
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employment or during a period of Disability you shall be entitled to the
following benefits minus the amount, if any, paid to you as a result thereof for
comparable benefits pursuant to your Employment Agreement during the term
thereof:
(i) During any period that you fail to perform your full-time duties with
the Company as a result of incapacity due to physical or mental illness, you
shall continue to receive your base salary at the rate in effect at the
commencement of any such period, together with all compensation payable to you
under the Pension Plan, Supplemental Plan, Annual Incentive Plan, Thrift Plan
and Nonqualified Thrift Plan during such period, until this Agreement is
terminated pursuant to Section 3(i) hereof. Thereafter, in the event your
employment shall be terminated, your benefits shall be determined under the
Company's retirement, insurance and other compensation plans and programs then
in effect in accordance with the terms of such plans and programs.
(ii) If your employment shall be terminated by the Company for Cause or by
you other than for Good Reason, Disability, death or Retirement, the Company
shall pay you your full base salary through the Date of Termination at the rate
in effect at the time Notice of Termination is given, plus all other amounts to
which you are entitled under any compensation plan or program of the Company at
the time such payments are due, and the Company shall have no further
obligations to you under this Agreement.
(iii) If your employment by the Company shall be terminated (a) by the
Company other than for Cause, Retirement or Disability or (b) by you for Good
Reason, then you shall be entitled to the compensation and benefits provided
below:
(A) the Company shall pay you your full base salary through the Date
of Termination at the rate in effect at the time Notice of Termination is
given, plus all other amounts to which you are entitled under any
compensation plan or program of the Company, at the time such payments are
due, except as otherwise provided below.
(B) in lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Company shall pay as severance
pay to you a lump sum severance payment (together with the payments
provided in paragraphs C, D and E below, the "Severance Payments") equal to
two times the sum of (x) your annual base salary in effect immediately
prior to the occurrence of the circumstance giving rise to the Notice of
Termination given in respect thereof, and (y) the average annual amount of
the Award paid to you pursuant to the Annual Incentive Plan or similar
successor plan with respect to the five years immediately preceding that in
which the Date of Termination occurs, such average annual amount being
calculated by aggregating all such Awards paid
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with respect to such five years and dividing such aggregate amount by the
number of years for which such an Award was actually paid to you.
(C) notwithstanding any provision of the Annual Incentive Plan and
the Inland Special Achievement Award Plan, the Company shall pay to you a
lump sum amount equal to the sum of (x) any incentive compensation which
has been allocated or awarded to you for a completed fiscal year or other
measuring period preceding the Date of Termination but has not yet been
paid, and (y) a pro rata portion to the Date of Termination for the current
fiscal year or other measuring period of the amount equal to the Target
Award percentage applicable to you under the Annual Incentive Plan or
similar successor plan on the Date of Termination times your annual base
salary then in effect.
(D) in lieu of shares of common stock of RTI ("RTI Shares") issuable
upon exercise of outstanding options ("Options"), if any, granted to you
under RTI's stock option plans (which Options shall be cancelled upon the
making of the payment referred to below), you shall receive an amount in
cash equal to the product of (i) the excess of (x) in the case of incentive
stock options (as defined in section 422A of the Internal Revenue Code of
1986, as amended (the "Code")) ("ISOs")), granted after the date hereof,
the closing price of RTI's shares as reported on the New York Stock
Exchange Composite Transactions on or next preceding the Date of
Termination, in the case of all other options, the Change in Control Price
(as defined below), over (y) the per share exercise price of each Option
held by you (whether or not then fully exercisable), times (ii) the number
of RTI Shares covered by each such option. For purposes of this Agreement,
the "Change in Control Price" means (1) with respect to a merger or
consolidation of RTI described in Section 2(i)(C) in which the
consideration per share of RTI's common stock to be paid for the
acquisition of shares of common stock specified in the agreement of merger
or consolidation is all in cash, the highest such consideration per share,
(2) with respect to a change in control of the Company by reason of an
acquisition of securities described in Section 2(i)(A), the highest price
per share for any share of RTI's common stock paid by any holder of any of
the securities representing 40% or more of the combined voting power of RTI
giving rise to the change in control of the Company, and (3) with respect
to a change in control of the Company by reason of a merger or
consolidation of RTI (other than a merger or consolidation described in
Clause (1) next above), stockholder approval of an agreement or plan
described in Section 2(i)(D), a change in the composition of the Board
described in Section 2(i)(B) or a change in control of the Company pursuant
to Section 2(i)(E) (relating to mergers, consolidations and sales of
securities or
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assets of a Related Company), the highest price per share of common stock
reported on the New York Stock Exchange Composite Transactions (or, if such
shares are not traded on the New York Stock Exchange, such other principal
market on which such shares are traded) during the sixty (60) day period
ending on the date the change in control of the Company occurs.
(E) in lieu of RTI Shares awarded or issuable to you as performance
and/or restricted shares, if any, pursuant to the Incentive Plan or similar
successor plan or plans (which RTI Shares shall be cancelled upon the
making of the payment referred to below), you shall receive an amount in
cash equal to the product of (i) the Change in Control Price, times (ii)
the total of the number of restricted shares awarded to you and then
outstanding pursuant to the Incentive Plan and/or any similar successor
plan(s), plus a number of performance shares equal to the total number of
performance shares paid or payable to you with respect to the two
immediately preceding performance periods under any performance award or
awards made pursuant to the Incentive Plan, and/or any similar successor
plan(s).
(F) the Company shall also pay to you all legal fees and expenses
incurred by you as a result of such termination (including all such fees
and expenses, if any, incurred in contesting or disputing any such
termination or in seeking to obtain or enforce any right or benefit
provided by this Agreement or in connection with any tax audit or
proceeding to the extent attributable to the application of Section 4999 of
the Code to any payment or benefit provided hereunder). Such payments shall
be made at the later of the times specified in paragraph (J) below, or
within five (5) days after your request for payment accompanied with such
evidence of fees and expenses incurred as the Company reasonably may
require.
(G) in the event that you become entitled to any payments provided
for hereinabove (the "Contract Payments"), if the Contract Payments or
other portion of the Total Payments (as defined below) will be subject to
the tax (the "Excise Tax") imposed by Section 4999 of the Code, the Company
shall pay to you, no later than the fifth day following the Date of
Termination, an additional amount (the "Gross-Up Payment") such that the
net amount retained by you, after deduction of any Excise Tax on the
Contract Payments and such other Total Payments and any federal and state
and local income and other payroll taxes and Excise Tax upon the payment
provided for by this subsection, shall be equal to the Contract Payments
and such other Total Payments.
(H) for purposes of determining whether any of the payments will be
subject to the Excise Tax and the amount of such Excise Tax, (i) any other
payments or benefits received or to be received by you in connection with a
change in control of the Company or your termination of employment (whether
pursuant to the terms of this Agreement or any other plan, arrangement or
agreement with the Company, any person whose actions result in a change in
control or any person affiliated with the Company or such person) payable
pursuant to the terms of this Agreement or any other plan, arrangement or
agreement with the Company, any person whose actions result in a change in
control or any person affiliated with the Company or such person (together
with the Contract Payments, the "Total Payments"), shall be treated as
"parachute payments" within the meaning of Section 280G(b)(2) of the Code
and all "excess parachute payments" within the meaning of Section
280G(b)(1) of the Code shall be treated as subject to the Excise Tax unless
in the opinion of tax counsel selected by RTI's independent auditors and
reasonably acceptable to you, such other payments or benefits (in whole or
in part) do not constitute parachute payments, including by reason of
Section 280G(b)(4)(A) of the Code or such excess parachute payments (in
whole or in part) represent reasonable compensation for services actually
rendered within the meaning of Section 280G(b)(4)(B) of the Code in excess
of the base amount allocable to such reasonable compensation within the
meaning of Section 280G(b)(3) of the Code, or are otherwise not subject to
the Excise Tax, (ii) the amount of the Total Payments which shall be
treated as subject to the Excise Tax shall be equal to the lesser of (A)
the amount of the Total Payments or (B) the amount of excess parachute
payments within the meaning of Section 280G(b)(1) of the Code (after
applying clause (i) above), and (iii) the value of any non-cash benefits or
any deferred payment or benefit shall be determined by RTI's independent
auditors in accordance with the principles of Sections 280G(d)(3) and (4)
of the Code. For purposes of determining the amount of the Gross-Up
Payment, you shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of your
residence on the Date of Termination, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state
and local taxes.
(I) in the event that the Excise Tax is subsequently determined to be
less than the amount taken into account hereunder at the time of
termination of your employment, you shall repay to the Company at the time
that the amount of such reduction in Excise Tax is finally determined the
portion of the Gross-Up Payment attributable to such reduction (plus the
portion of the Gross-Up Payment attributable to the Excise Tax and federal
and state and local income tax imposed on the Gross-Up Payment being repaid
by you if such repayment results in a reduction in Excise Tax and/or a
federal and state and local income tax deduction) plus interest on the
amount of such repayment at the rate provided in Section 1274(b)(2)(B) of
the Code. In the event that the Excise Tax is determined to exceed the
amount taken into account hereunder at the time of the termination of your
employment (including by reason of any payment the existence or amount of
which cannot be determined at the time of the Gross-Up Payment), the
Company shall make an additional gross-up payment in respect of such excess
(plus any interest payable with respect to such excess) at the time that
the amount of such excess is finally determined.
(J) the payments provided for in paragraphs (B), (C), (D) and (E)
above, shall be made not later than the fifth day following the Date of
Termination, provided, however, that if the amounts of such payments cannot
be finally determined on or before such day, the Company shall pay to you
on such day an estimate, as determined in good faith by the Company, of the
minimum amount of such payments and shall pay the remainder of such
payments (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined
but in no event later than the thirtieth day after the Date of Termination.
In the event that the amount of the estimated payments exceeds the amount
subsequently determined to have been due, such excess shall constitute a
loan by the Company to you payable on the fifth day after demand by the
Company (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code).
(iv) If your employment shall be terminated (A) by the Company other than
for Cause, Retirement or Disability or (B) by you for Good Reason, then for a
twenty-four (24) month period after such termination, the Company shall arrange
to provide you with: (1) life, disability, accident and health insurance
benefits substantially similar to those which you are receiving immediately
prior to the Notice of Termination, (2) financial advisory services similar to
those provided currently to executives of the Company by Ayco Corporation and
(3) outplacement services. Benefits otherwise receivable by you pursuant to this
Subsection 4 (iv) shall be reduced to the extent comparable benefits are
actually received by you during the twenty-four (24) month period following your
termination, and any such benefits actually received by you shall be reported to
the Company. Any rights that you have to
Page 11
<PAGE>
continuation of life, disability, accident or health coverage under applicable
state or federal law shall be in addition to those provided under this
Agreement.
(v) If your employment shall be terminated (A) by the Company other than
for Cause, Retirement or Disability or (B) by you for Good Reason, then in
addition to the retirement benefits to which you are entitled under the Pension
Plan or Supplemental Plan or any successor plans thereto, the Company shall pay
you in cash at the time and in the manner provided in paragraph (J) of
Subsection 4(iii), a lump sum equal to the excess of (x) the actuarial
equivalent of the retirement pension (taking into account any early retirement
subsidy associated therewith and determined as a straight life annuity
commencing at age sixty-five (65) or any earlier date, but in no event earlier
than the second anniversary of the Date of Termination whichever annuity yields
a greater benefit) which you would have accrued under the terms of the Pension
Plan or Supplemental Plan (without regard to any amendments to any such plans
made subsequent to a change in control of the Company and on or prior to the
Date of Termination, which amendment adversely affects in any manner the
computation of retirement benefits thereunder), determined as if you were fully
vested thereunder and had accumulated (after the Date of Termination) twenty-
four (24) additional months of age and service credit thereunder at the higher
of the rate of average compensation during the twelve (12) months prior to the
change in control of the Company or the rate of average compensation used to
calculate your benefits under such plans immediately preceding the Date of
Termination, over (y) the actuarial equivalent of the retirement pension (taking
into account any early retirement subsidy associated therewith and determined as
a straight life annuity commencing at age sixty-five (65) or any earlier date,
but in no event earlier than the Date of Termination whichever annuity yields a
greater benefit) which you had then accrued pursuant to the provisions of the
Pension Plan. For purposes of this Subsection, "actuarial equivalent" shall be
determined using the same assumptions utilized under the Pension Plan for
purposes of determining alternative forms of benefits immediately prior to the
change in control of the Company.
(vi) You shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or otherwise, nor
shall the amount of any payment or benefit provided for in this Section 4 be
reduced by any compensation earned by you as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by you to the Company, or otherwise, except as provided in Section 4(iv).
Page 12
<PAGE>
(vii) In addition to all other amounts payable to you under this Section
4, you shall be entitled to receive all benefits payable to you under the
Pension Plan, the Thrift Plan, Supplemental Plan, Nonqualified Thrift Plan (or
any substitute or alternative plan or plans) and any other plan or agreement
relating to retirement benefits.
5. Successors; Binding Agreement. (i) RTI will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of RTI to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that RTI or the Company would be required to perform it if no such
succession had taken place. Failure of RTI to obtain such assumption and
agreement prior to the effectiveness of any such succession shall
Page 13
<PAGE>
be a breach of this Agreement and shall entitle you to compensation from the
Company in the same amount and on the same terms as you would be entitled to
hereunder if you terminate your employment for Good Reason following a change in
control of the Company, except that for purposes of implementing the foregoing,
the date on which any such succession becomes effective shall be deemed the Date
of Termination. In the event a successor of RTI assumes and agrees to perform
this Agreement, by operation of law or otherwise, the term "RTI", as used in
this Agreement, shall mean such successor and the term "Company" shall mean,
collectively, such successor and the affiliates of such successor.
(ii) This Agreement shall inure to the benefit of and be enforceable by
your personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If you should die while any amount
would still be payable to you hereunder if you had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to your devisee, legatee or other designee or, if there
is no such designee, to your estate.
6. Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, provided
that all notice to the Company shall be directed to the attention of the Board
with a copy to the Secretary of RTI, or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon receipt.
7. Miscellaneous. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by you and such officer as may be specifically designated by
the Board. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Illinois. All references to sections of the Exchange
Act or the Code shall be deemed also to refer to any successor provisions to
such sections. Any payments provided for hereunder shall be paid net of any
applicable withholding
Page 14
<PAGE>
required under federal, state or local law. The obligations of the RTI and the
Company under Section 4 shall survive the expiration of the term of this
Agreement.
8. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
9. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
10. Settlement of Disputes; Arbitration. All claims by you for benefits
under this Agreement shall be directed to and determined by the Board and shall
be in writing. Any denial by the Board of a claim for benefits under this
Agreement shall be delivered to you in writing and shall set forth the specific
reasons for the denial and the specific provisions of this Agreement relied
upon. The Board shall afford a reasonable opportunity to you for a review of the
decision denying a claim and shall further allow you to appeal to the Board a
decision of the Board within sixty (60) days after notification by the Board
that your claim has been denied. Any further dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively by
arbitration in Chicago, Illinois, in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however, that you
shall be entitled to seek specific performance of your right to be paid until
the Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to RTI the enclosed copy of this letter which will then
constitute our agreement on this subject.
Sincerely,
RYERSON TULL, INC.
By: /s/ William Korda
------------------------------------------
Its: Vice President - Human Resources
Page 15
<PAGE>
Agreed to this 10th day
of June, 1996.
/s/ Neil S. Novich (Signature)
-----------------------------------
Page 16
<PAGE>
RYERSON TULL
DIRECTORS' COMPENSATION PLAN
----------------------------
SECTION 1
---------
General
-------
1.1. Purpose and Effective Date. The Ryerson Tull Directors' Compensation
Plan (the "Plan") has been established by Ryerson Tull, Inc. (the "Company") to
provide an alternative method of compensating those directors of the Company who
do not otherwise receive compensation as employees of the Company or its
affiliates in order to aid the Company in attracting and retaining as directors
persons whose abilities, experience and judgment can contribute to the continued
progress of the Company and to facilitate the directors' ability to acquire a
proprietary interest in the Company. The Plan shall be effective upon the
consummation of the initial public offering of Class A Common Stock, $1.00 par
value per share, of the Company ("Stock"), which date shall be the "Effective
Date" of the Plan as set forth herein.
1.2. Participation. Only Non-Employee Directors of the Company shall be
eligible to participate in the Plan. As of any applicable date, a "Non-Employee
Director" is a person who is serving as a director of the Company who is not an
employee of the Company or any affiliate of the Company as of that date.
1.3. Administration. The authority to manage and control the operation
and administration of the Plan shall be vested in a committee of the Board of
Directors of the Company (the "Board") which committee (the "Committee") shall
have such authorities as delegated to it from time to time by the Board.
Subject to the limitations of the Plan and any limitations on authorities
imposed on the Committee by the Board, the Committee shall have the sole and
complete authority to:
(a) interpret the Plan and to adopt, amend and rescind administrative
guidelines and other rules and regulations relating to the Plan;
<PAGE>
(b) correct any defect or omission and reconcile any inconsistency in the
Plan or in any payment made hereunder; and
(c) to make all other determinations and take all other actions necessary
or advisable for the implementation and administration of the Plan.
The Committee's determinations on matters within its control shall be conclusive
and binding on the Company and all other persons. Notwithstanding the foregoing,
no member of the Committee shall act with respect to the administration of the
Plan in a manner inconsistent with the exempt status of the Plan under Rule 16b-
3 promulgated under the Securities Exchange Act of 1934, as amended ("Rule 16b-
3") as then in effect.
1.4. Shares Subject to the Plan. The shares of Stock which shall be
available for distribution pursuant to the Plan shall be either authorized and
unissued shares or treasury shares (including, in the discretion of the Company,
shares purchased in the open market). The number of shares of Stock to be
distributed pursuant to Non-Employee Directors' elections to receive shares of
Stock in lieu of Cash Retainers (as described in subsection 2.1) shall be
determined in accordance with Section 2. The number of shares of Stock to be
distributed pursuant to Non-Employee Directors' Deferral Elections (as described
in Section 3) shall be determined in accordance with Section 3. The aggregate
number of shares of Stock which are available for issuance under the Plan shall
be 100,000; provided, however, that:
(a) in the event of any merger, consolidation, reorganization,
recapitalization, spinoff, stock dividend, stock split, reverse stock
split, rights offering, exchange or other change in the corporate
structure or capitalization of the Company affecting the Stock, the
number and kind of shares of Stock available for awards under the
Plan shall be equitably adjusted in such manner as the Committee
shall determine in its sole judgment;
(b) in determining what adjustment, if any, is appropriate pursuant to
paragraph (a), the Committee may rely on
<PAGE>
the advice of such experts as it deems appropriate, including
counsel, investment bankers and the accountants of the Company; and
(c) no fractional shares shall be granted or authorized pursuant to any
adjustment pursuant to paragraph (a), although cash payments may be
authorized in lieu of fractional shares that may otherwise result
from such an equitable adjustment.
1.5. Compliance with Applicable Laws. Notwithstanding any other provision
of the Plan, the Company shall have no obligation to deliver any shares of Stock
under the Plan unless such delivery would comply with all applicable laws and
the applicable requirements of any securities exchange or similar entity. Prior
to the delivery of any shares of Stock under the Plan, the Company may require a
written statement that the recipient is acquiring the shares for investment and
not for the purpose or with the intention of distributing the shares. If the
redistribution of shares is restricted pursuant to this subsection 1.5, the
certificates representing such shares may bear a legend referring to such
restrictions.
1.6. Director and Shareholder Status. The Plan will not give any person
the right to continue as a director of the Company, or any right or claim to any
benefits under the Plan unless such right or claim to any benefits has
specifically accrued under the terms of the Plan. Participation in the Plan and
any right to accrued benefits shall not create any rights in a director (or any
other person) as a shareholder of the Company until shares of Stock are
registered in the name of the director (or such other person).
1.7. Definition of Fair Market Value. The "Fair Market Value" of a share
of Stock on any date shall be equal to the average of the high and low prices of
a share of Stock reported on the New York Stock Exchange Composite Transactions
for the applicable date or, if there are no such reported trades for such date,
for the last previous date for which trades were reported.
1.8. Source of Payments. Except for Stock actually delivered pursuant to
the Plan, the Plan constitutes only an unfunded, unsecured promise of the
Company to make payments or
<PAGE>
awards to directors (or other persons) or deliver Stock in the future in
accordance with the terms of the Plan.
1.9. Nonassignment. Neither a director's nor any other person's rights to
payments or awards under the Plan are subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment or
garnishment by creditors of the director.
1.10. Elections. Any notice or document required to be filed with the
Committee under the Plan will be properly filed if delivered or mailed by
registered mail, postage prepaid, to the Committee, in care of the Company, at
the Company's principal executive offices. The Committee may, by advance
written notice to affected persons, revise such notice procedure from time to
time. Any notice required under the Plan may be waived by the person entitled
thereto.
SECTION 2
---------
Payment of Retainer; Election
to Receive Stock in Lieu of Retainer
------------------------------------
2.1. Payment of Retainer. Subject to the terms and conditions of the Plan,
for each year, beginning with the year in which the Effective Date occurs, each
individual who is a Non-Employee Director shall be paid a retainer (the
"Retainer") in accordance with and subject to the following:
(a) for each Fiscal Quarter (as defined below), a "Cash Retainer" shall
be paid to any individual who is a Non-Employee Director on the last
day of such quarter, which Cash Retainer shall be equal to an annual
amount of $20,000 (or one-half of the total retainer (other than any
committee chair fees) specified by the Board from time to time),
payable as of the last day of the applicable Fiscal Quarter in
increments of $5,000, pro rated in bi-monthly increments to reflect
any portion of such Fiscal Quarter during which the individual did
not serve as a Non-Employee Director; and
<PAGE>
(b) as of the date of each Annual Meeting of the Company's stockholders
(the "Annual Meeting"), a "Stock Retainer" shall be paid to each Non-
Employee Director who was a Non-Employee Director immediately prior
to such Annual Meeting, which Stock Retainer shall be payable in that
number of shares of Stock equal to $20,000 (or one-half of the total
retainer (other than committee chair fees) specified by the Board
from time to time) divided by the Fair Market Value of a share of
Stock as of the date of Annual Meeting, pro rated in monthly
increments to reflect any portion of the period commencing with the
Annual Meeting held immediately prior to the Annual Meeting at which
the Stock Retainer is to be paid and ending on the date of the Annual
Meeting for which the Stock Retainer is to be paid during which the
individual did not serve as a Non-Employee Director.
In the event paragraph (b) results in a fractional share, the Fair Market Value
of any such fractional share shall be paid in cash as soon as practicable after
the date of the Annual Meeting but shall be treated for the following provisions
of the Plan as part of the Cash Retainer. For purposes of the Plan, the term
"Fiscal Quarter" shall mean the three-consecutive-month period commencing on the
first day of the month next following the Annual Meeting and each succeeding
three-consecutive month period.
2.2. Election to Receive Stock. Subject to the terms and conditions of the
Plan, each Non-Employee Director may elect to forego receipt of all or any
portion of the Cash Retainer otherwise payable to him or her following the
Effective Date and instead to receive whole shares of Stock of equivalent value
to the Retainer so foregone (determined in accordance with subsection 2.4). A
Non-Employee Director's election under this subsection 2.2 to have all or any
portion of his or her Cash Retainer paid in shares of Stock shall be valid only
if it is in writing, signed by the Non-Employee Director, and filed with the
Committee in accordance with uniform and nondiscriminatory rules adopted by the
Committee.
2.3. Revocation of Election to Receive Stock. Once effective, a Non-
Employee Director's election pursuant to subsection 2.2 to receive Stock in lieu
of his or her Cash
<PAGE>
Retainer shall remain in effect for successive calendar years until it is
revised or revoked. Any such revision or revocation shall be in writing, signed
by the Non-Employee Director and filed with the Committee and shall be effective
for the calendar year next following the date on which it is received by the
Committee, or such later date specified in such notice.
2.4. Equivalent Amount of Stock. The number of whole shares of Stock to be
distributed to any Non-Employee Director by reason of his or her election
pursuant to subsection 2.2 to receive Stock in lieu of his or her Cash Retainer
shall be equal to:
(a) the dollar amount of the Cash Retainer which the Non-Employee
Director has elected to have paid to him or her in shares of Stock;
DIVIDED BY
(b) the Fair Market Value of a share of Stock as of the date on which
such Cash Retainer (or portion thereof) would otherwise have been
payable to the Non-Employee Director.
The Fair Market Value of any fractional share shall be paid to the Non-Employee
Director in cash.
SECTION 3
---------
Deferral Elections
------------------
3.1. Deferrals. Subject to the terms and conditions of the Plan, each Non-
Employee Director may elect to defer the receipt of all or any portion of the
Retainer and Eligible Fees (as defined below) otherwise payable to him or her
for periods on or after the Effective Date. A Non-Employee Director may elect
the deferral described in the preceding sentence by filing a written "Deferral
Election" with the Committee in accordance with uniform and nondiscriminatory
rules adopted by the Committee. A Non-Employee Director's Deferral Election
shall specify the portion of his or her Retainer and Eligible Fees (including
any portion of his or her Stock Retainer or any portion of his or her Cash
Retainer that he or she has elected to receive in Stock pursuant
<PAGE>
to subsection 2.2) to be deferred and the future date as of which distribution
of the deferred amounts is to be made in accordance with the terms and
conditions of the Plan (the "Distribution Date"). If no Distribution Date is
specified in a Non-Employee Director's Deferral Election, the Distribution Date
shall be deemed to be the first business day in January of the year following
the date on which the Non-Employee Director ceases to be a director of the
Company for any reason. A Non-Employee Director's Deferral Election shall be
effective with respect to the portion of his or her Retainer and Eligible Fees
otherwise payable to him or her for services rendered after the last day of the
calendar year in which such election is filed with the Committee; provided,
however, that:
(a) a Deferral Election which is filed within 30 days of the date on
which a director first becomes a Non-Employee Director shall be
effective with respect to all Eligible Fees and Retainer otherwise
payable to him or her after the date of the Deferral Election; and
(b) by notice filed with the Committee in accordance with uniform and
nondiscriminatory rules established by it, a Non-Employee Director
may terminate or modify any Deferral Election as to his or her
Retainer and Eligible Fees payable for services rendered after the
last day of the calendar year in which such notice is filed with the
Committee; provided, however, that no modification may be made to the
Distribution Date unless the Non-Employee Director shall file such
notice with the Committee at least one year prior to the Distribution
Date.
Notwithstanding the provisions of paragraph (b) next above, the Committee may,
in its sole discretion, after considering all of the pertinent facts and
circumstances, approve a change to the Distribution Date which is requested by a
Non-Employee Director less than one year prior thereto. For purposes of the
Plan, the term "Eligible Fees" means the meeting fees, committee fees and
committee chair fees (and does not include any portion of the Retainer) that
would otherwise be payable to the Non-Employee Director by the Company as
established, from time to time, by the Board or any committee thereof.
<PAGE>
3.2. Crediting and Adjustment of Deferred Amounts. The amount of any
Retainer and Eligible Fees deferred pursuant to subsection 3.1 ("Deferred
Compensation") shall be credited to a bookkeeping account maintained by the
Company in the name of the Non-Employee Director (the "Deferred Compensation
Account"), which account shall consist of two subaccounts, the "Company Stock
Subaccount" and the "Cash Subaccount." The amount, if any, of the Stock Retainer
or the Cash Retainer that the Non-Employee Director has elected to receive in
Stock pursuant to subsection 2.2 and with respect to which he or she has filed a
Deferral Election pursuant to subsection 3.1 shall be credited to his or her
Company Stock Subaccount. Any other Deferred Compensation shall be credited to
his or her Cash Subaccount. A Non-Employee Director's Deferred Compensation
Account shall be adjusted as follows:
(a) As of the first day of each calendar quarter (which dates are
referred to herein as "Accounting Dates"), the Non-Employee
Director's Cash Subaccount shall be adjusted as follows:
(i) first, the amount of any distributions made since the last
preceding Accounting Date and attributable to the Cash
Subaccount shall be charged to the Cash Subaccount;
(ii) next, the balance of the Cash Subaccount after adjustment in
accordance with subparagraph (i) next above shall be credited
with interest since the last preceding Accounting Date
computed at the prime rate as reported by The First National
Bank of Chicago (or its successor) for such date or, if such
date is not a business day, for the next preceding business
day;
(iii) finally, after adjustment in accordance with the foregoing
provisions of this paragraph (a), the Cash Subaccount shall be
credited with the portion of the Deferred Compensation
otherwise payable to the Non-Employee Director since the last
preceding Accounting Date which is to be credited to the Cash
Subaccount.
<PAGE>
(b) The Non-Employee Director's Company Stock Subaccount shall be
adjusted as follows:
(i) as of any date on or after the Effective Date on which any
portion of a Non-Employee Director's Retainer would have been
payable to the Non-Employee Director in Stock but for his or
her Deferral Election, the Company Stock Subaccount shall be
credited with a number of "Stock Units" equal to the number of
shares of Stock (including any fractional shares) to which he
or she would have been entitled pursuant to Section 2;
(ii) as of the date on which shares of Stock are distributed to the
Non-Employee Director in accordance with subsection 3.3 below,
an equal number of Stock Units will be subtracted from the
Company Stock Subaccount; and
(iii) as of the record date for any dividend paid on Stock, the
Company Stock Subaccount shall be credited with that number of
additional Stock Units which is equal to the number obtained
by multiplying the number of Stock Units then credited to the
Company Stock Subaccount by the amount of the cash dividend or
the fair market value (as determined by the Board) of any
dividend in kind payable on a share of Stock, and dividing
that product by the then Fair Market Value of a share of
Stock.
In the event of any merger, consolidation, reorganization,
recapitalization, spinoff, stock split, reverse stock split, rights
offering, exchange or other change in the corporate structure or
capitalization of the Company affecting the Stock, each Non-Employee
Director's Company Stock Subaccount shall be equitably adjusted in
such manner as the Committee shall determine in its sole judgment.
3.3. Payment of Deferred Compensation Account. Except as otherwise
provided in this subsection 3.3 or subsection 3.4, the balances credited to the
Cash Subaccount and Company Stock
<PAGE>
Subaccount of a Non-Employee Director's Deferred Compensation Account shall each
be payable to the Non-Employee Director in a lump sum or quarterly installments
(over a period not exceeding ten years) as elected by the Non-Employee Director
in his or her Deferral Election; provided, however, that if no distribution form
was elected by the Non-Employee Director in his or her Deferral Election,
payment shall be made in a lump sum. Installment distributions shall commence as
of the first day of the first calendar quarter after the Distribution Date and
shall continue as of the first day of each calendar quarter thereafter for the
applicable period. Notwithstanding the foregoing, a Non-Employee Director, by
filing a notice with the Committee at least one year prior to the Distribution
Date, may elect to change the number of payments to a single payment or to any
number of quarterly payments not in excess of forty. Each installment payment
shall include a cash portion, if applicable, and a Stock portion, if applicable,
as follows:
(a) The cash portion to be paid as of any date determined under the
foregoing provisions of this Section 3.3 and charged to the Cash
Subaccount shall be equal to the balance of the Cash Subaccount
multiplied by a fraction, the numerator of which is one and the
denominator of which is the number of remaining payments to be made,
including such payment.
(b) The Stock portion to be paid as of any date determined under the
foregoing provisions of this Section 3.3 and charged to the Company
Stock Subaccount shall be distributed in whole shares of Stock, the
number of shares of which shall be determined by rounding to the next
lower integer the product obtained by multiplying the number of Stock
Units then credited to the Non-Employee Director's Company Stock
Subaccount by a fraction, the numerator of which is one and the
denominator of which is the number of remaining payments to be made,
including such payment. The Fair Market Value of any fractional share
of Stock remaining after all installment Stock distributions have
been made to the Non-Employee Director pursuant to this paragraph (b)
shall be paid to the Non-Employee Director in cash.
<PAGE>
Notwithstanding the foregoing, the Committee, in its sole discretion, may
distribute all balances in any Deferred Compensation Account to a Non-Employee
Director (or former Non-Employee Director) in a lump sum as of any date.
3.4. Payments in the Event of Death. If a Non-Employee Director dies
before payment of his or her Deferred Compensation Account commences, all
amounts then credited to his or her Deferred Compensation Account shall be
distributed to his or her Beneficiary (as described below), as soon as
practicable after his or her death, in a lump sum. If a Non-Employee Director
dies after payment of his or her Deferred Compensation Account has commenced but
before the entire balance of such account has been distributed, the remaining
balance thereof shall be distributed to his or her Beneficiary, as soon as
practicable after his or her death, in a lump sum. Any amounts in the Cash
Subaccount shall be distributed in cash and any amounts in the Stock Subaccount
shall be distributed in whole shares of Stock determined in accordance with
paragraph 3.3(b), and the Fair Market Value of any fractional share of Stock
shall be distributed in cash. For purposes of the Plan, the Non-Employee
Director's "Beneficiary" is the person or persons the Non-Employee Director
designates, which designation shall be in writing, signed by the Non-Employee
Director and filed with the Committee prior to the Non-Employee Director's
death. A Beneficiary designation shall be effective when filed with the
Committee in accordance with the preceding sentence. If more than one
Beneficiary has been designated, the balance in the Non-Employee Director's
Deferred Compensation Account shall be distributed to each such Beneficiary per
capita (with cash distributed in lieu of any fractional share of Stock). In the
absence of a Beneficiary designation or if no Beneficiary survives the Non-
Employee Director, the Beneficiary shall be the Non-Employee Director's estate.
SECTION 4
---------
Amendment and Termination
-------------------------
While the Company expects and intends to continue the Plan, the Board
reserves the right to, at any time and in any way, amend, suspend or terminate
the Plan; provided, however, that no amendment, suspension or termination shall:
<PAGE>
(a) be made without shareholder approval to the extent such approval is
required by law, agreement or the rules of any exchange or automated
quotation system upon which the Stock is listed or quoted;
(b) except as provided in subsection 3.3 (relating to lump sum payments
of amounts held in a Non-Employee Director's Deferred Compensation
Account) or this Section 4, materially alter or impair the rights of
a Non-Employee Director under the Plan without the consent of the
Non-Employee Director with respect to rights already accrued
hereunder; or
(c) make any change that would disqualify the Plan or any other plan of
the Company intended to be so qualified from the exemption provided
by Rule 16b-3 under the Securities Exchange Act of 1934, as amended.
<PAGE>
RYERSON TULL
SUPPLEMENTAL RETIREMENT PLAN
Article 1
1.1 Purpose.
--------
It is the intention of Ryerson Tull, Inc. (the "Company") to maintain
appropriate levels of retirement benefits for individuals who are entitled to
benefits under the Ryerson Tull Pension Plan, including any supplements thereto
(collectively, the "Pension Plan"). Accordingly, the Company hereby establishes
the Ryerson Tull Supplemental Retirement Plan (the "Plan") to provide
benefits to eligible persons in a manner so as to maintain the level of total
retirement benefits which, but for the limitations on benefits required by
Section 415 and 401(a)(17) of the Internal Revenue Code of 1986, as amended (the
"Code"), would otherwise be payable to such persons under the Pension Plan. The
Plan shall maintain such total retirement benefit levels by means of
supplemental unfunded payments made by the Employers (as defined in Section 1.3)
to the individuals eligible for such payments as more fully described in
Articles 3 and 4. The Plan is intended to be an "excess benefit plan" described
in Section 3(36) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"); provided, however, that, to the extent, if any, that the Plan
provides benefits which cannot be provided by an excess benefit plan, the Plan
shall constitute an unfunded plan maintained primarily for the purpose of
providing deferred compensation for a select group of management or highly
compensated employees.
1.2 Effective Date.
---------------
The Plan is effective as of April 30, 1996 (the "Effective Date").
1.3 Employers. The Company and any of its affiliates which, with the
consent of the Company, adopt the Plan are referred to collectively herein as
the "Employers" and individually as an "Employer".
1.4 Source of Benefit Payments; Funding Not Required.
--------------------------------------------------
The amount of any benefit payable under the Plan to any Participant (as
defined in Section 3.1) (or Beneficiary (as defined in Section 3.2)) shall be
paid from the general revenues
<PAGE>
of the Employer that employed such Participant; provided, however, that if
a Participant has been employed by more than one Employer, the
portion of his Plan benefits payable by any such Employer shall be in proportion
to the benefit he accrued under the Pension Plan for his period of service
with the applicable Employer. An Employer's obligation under the Plan shall
be reduced to the extent that any amounts due under the Plan are paid from one
or more trusts, the assets of which are subject to the claims of general
creditors of the Employers; provided, however, that nothing in the Plan shall
require the Company or any Employer to establish any trust to provide benefits
under the Plan. None of the individuals entitled to benefits under the Plan
will have any claim on, or any beneficial ownership interest in, any assets of
any Employer, and any rights of such individuals under the Plan will constitute
unsecured contractual rights only.
1.5 Definitions.
-----------
Unless the context clearly requires otherwise, any word, term or phrase
used in the Plan will have the same meaning as is assigned to it under the terms
of the Pension Plan.
ARTICLE 2
2.1 Retirement Committee.
---------------------
The Company hereby delegates authority to administer the Plan to the
Pension Plan Retirement Committee (the "Committee") as established under the
Pension Plan. Any action by the Committee shall be evidenced by a written
document, certified by the Secretary of the Committee. References to the
Company's authority, right, or power to act contained in any notice, disclosure,
or communication which is made with a view toward effectuating the purposes of
the Plan shall be construed to include such actions by the Committee on the
Company's behalf and such actions by others to whom the Committee has delegated
its authority.
2.2 Authority of Committee.
-----------------------
The Committee shall have authority to control and manage the operation and
administration of the Plan, including the authority and discretion to construe
and interpret the Plan, decide all questions of eligibility for and the amount,
manner and time of payment of Supplemental Retirement Benefits (as defined in
Section 3.1) hereunder and such other rights and powers necessary or convenient
to the carrying out of its functions hereunder. The authority and
responsibilities of the
-2-
<PAGE>
Committee shall be coextensive with its authority and responsibilities under the
Pension Plan.
ARTICLE 3
3.1 Participation.
--------------
Each employee or former employee of an Employer who, on or after the
Effective Date, is entitled to an accrued benefit under the Pension Plan the
amount of which is limited by reason of the application of the limitations
imposed by Code Sections 415 or 401(a)(17), as amended from time to time, and
the regulations and rulings thereunder or the terms of the Pension Plan
implementing those limitations (the "Code Limitations") shall be a "Participant"
in the Plan and shall be entitled to receive the benefits (the "Supplemental
Retirement Benefits"), if any, determined in accordance with Article 4 hereof.
Any individual who had an accrued benefit under the Inland Steel Industries
Supplemental Retirement Benefit Plan for Covered Employees and the Inland Steel
Industries Special Retirement Benefit Plan for Covered Employees Plan
(collectively, the "ISI Supplemental Plans") which was assumed by the Company
effective as of the Effective Date shall also be a Participant in the Plan,
subject to the terms and conditions thereof, regardless of whether such
individual would otherwise be a Participant under the foregoing provisions of
this Section 3.1.
3.2 Beneficiary.
------------
The spouse or other person entitled to a benefit under the Pension
Plan upon the death of a Participant hereunder shall, upon the death of the
Participant, be a "Beneficiary" under the Plan entitled to receive the
Supplemental Retirement Benefit, if any, determined in accordance with Article 4
hereof.
3.3 Restricted Participation.
-------------------------
Notwithstanding any other provision of the Plan to the contrary, if
the Committee determines that participation by one or more Participants (or
payment of benefits to any Beneficiary) shall cause the Plan as applied to any
Employer to be subject to Part 2, 3 or 4 of Title I of ERISA, the entire
interest of such Participant or Beneficiary under the Plan shall, in the
discretion of the Committee, be immediately paid to such Participant or
Beneficiary, as applicable, by the applicable Employer, or shall otherwise be
segregated from the Plan, and such Participant(s) or Beneficiary(ies) shall
cease to have any interest under the Plan.
-3-
<PAGE>
ARTICLE 4
4.1 Amount of Supplemental Retirement Benefit.
------------------------------------------
The amount of the Supplemental Retirement Benefit which a Participant
or Beneficiary shall be entitled to receive and the Employers shall be obligated
to pay under the Plan as of any date shall be equal to the greater of the amount
determined under paragraph (a) or (b) below:
(a) the excess, if any, of the amount described in subparagraph (i) of
this Section 4.1 over the amount described in paragraph (ii) of this
Section 4.1:
(i) The amount of the benefit (expressed in the same form and
commencing at the same time as that of the benefit that the
Participant is actually receiving under the Pension Plan) that the
Participant would have been entitled to receive as of that date under
the Pension Plan, determined without regard to the Code Limitations.
(ii) The amount of benefit which the Participant or Beneficiary
actually receives under the Pension Plan as of that date (determined
with regard to the Code Limitations applicable under the Pension
Plan).
OR
(b) The aggregate amount of the benefit accrued by the Participant or
Beneficiary, as applicable, as of the Effective Date under the provisions
of the ISI Supplemental Plans.
It is the intent of this Section 4.1 that the Supplemental Retirement Benefit
described above shall be determined at all times in a manner consistent with
then current Code Limitations. Accordingly, the determinations made pursuant to
this Section 4.1 shall be based upon adjustments employed in determining the
amount of the benefit described above, and shall be subject to adjustments which
reflect the Code Limitations with respect to the computation of benefits under
the Pension Plan. No Supplemental Retirement Benefit shall be payable to any
Participant or Beneficiary unless, at the time of the Participant's termination
of employment with the Employers and their affiliates, the Participant has been
credited with at least five Years of Vesting Service under the Pension Plan;
provided, however, that, in the event of a Change in Control (as defined in
Section 5.3), all benefits accrued under the Plan as of the date such Change
in
-4-
<PAGE>
Control shall become fully and irrevocably vested and shall become distributable
to Participants (and Beneficiaries) at such time and in such manner pursuant to
the provisions of the Plan as in effect on the day immediately preceding the
date of such Change in Control.
4.2 Payment of Supplemental Retirement Benefit.
-------------------------------------------
(a) Except as otherwise provided herein, the Supplemental Retirement
Benefit which a Participant or Beneficiary is eligible to receive shall be
paid by the Employers at the same time, in the same form and subject to
substantially the same conditions, as is the benefit paid to such
Participant or Beneficiary under the Pension Plan.
(b) To the extent provided by Section 4.4, the Employers may purchase
an annuity with respect to any portion of a Participant's or Beneficiary's
Supplemental Retirement Benefit in full satisfaction thereof. The
Employers shall be obligated to purchase an annuity to the extent provided
by Section 4.4(h).
(c) The Employers may, in their sole discretion, distribute the
Supplemental Retirement Benefit of any Participant described in Section
4.4(a) in a lump sum at the time of the Participant's termination of
employment.
(d) Notwithstanding any other provision of this Plan, a Participant
who, as of the Effective Date, was a Participant in and had an accrued
benefit under the ISI Supplemental Plans (or any Beneficiary of such a
Participant) shall not be entitled to any portion of his Supplemental
Retirement Benefit which is attributable to benefits accrued under the ISI
Supplemental Plans unless such Participant (or Beneficiary, if applicable)
agrees that his right to benefits supplemental to those of the Pension Plan
is limited to his rights under this Plan and that he shall have no claim
under or against the ISI Supplemental Plans or against Inland Steel
Industries, Inc. or any of its affiliates for any benefits accrued under
the ISI Supplemental Plans.
(e) Notwithstanding any other provision of the Plan to the contrary,
if a Participant's or Beneficiary's
-5-
<PAGE>
Supplemental Retirement Benefit is paid in a lump sum, such payment shall
be in complete satisfaction of all amounts otherwise payable to such
Participant or Beneficiary under the Plan and neither the Participant nor
Beneficiary shall have any further rights to benefits under the Plan (other
than benefits based on additional accruals of benefits (other than
increases described in Section 4.3) under the Pension Plan). Any optional
form of benefit payable under the Plan, including a lump sum, shall be the
actuarial equivalent of the benefit otherwise payable to the Participant or
Beneficiary, determined by applying the appropriate interest rate and other
actuarial assumptions then set forth in the Pension Plan.
4.3 Pension Plan Increase.
----------------------
In the event the Pension Plan is amended to increase the benefit
payable to participants or beneficiaries then receiving benefits under the
Pension Plan, benefits payable under the Plan shall be adjusted or commenced
accordingly for Participants or Beneficiaries; provided that no such adjustment
shall be made if the Participant or Beneficiary received a single sum
distribution under the Plan; and provided, further, that no such adjustment
shall be made with respect to any portion of a Participant's or Beneficiary's
Supplemental Retirement Benefit for which an annuity has been purchased pursuant
to Section 4.4.
4.4 Purchase of Annuities.
----------------------
The Employers shall not be obligated to purchase an annuity for any
Participant or for any portion of a Participant's Supplemental Retirement
Benefit, notwithstanding the purchase of an annuity with respect to any other
Participant or any other portion of the Participant's Supplemental Retirement
Benefit. The purchase of annuities under the Plan shall be governed by the
following:
(a) The purchase of annuities under this Section 4.4 shall be limited
to Supplemental Retirement Benefits payable to Participants who meet all of
the following requirements:
(i) completion of at least five years of Vesting Service under
the Pension Plan;
(ii) annual compensation in excess of $150,000; and
(iii) attainment of age 55.
-6-
<PAGE>
(b) Any annuity purchased with respect to any Participant's
Supplemental Retirement Benefit shall be issued to and distributed to such
Participant, who shall be the sole owner of such annuity and shall contain
such terms not inconsistent with this Section 4.4 as the Committee shall
determine in its sole discretion.
(c) Annuity payments to a Participant under any annuity purchased
pursuant to this Section 4.4 shall commence as of the date on which the
Participant attains age 65 or the first day of the month thereafter;
provided, however, that any such annuity may provide that, in the event of
the Participant's death prior to attainment of age 65, benefits payable to
any Beneficiary may commence as of any earlier date provided by the terms
of the annuity.
(d) The monthly benefit amount to be provided by any annuity purchased
pursuant to this Section 4.4 shall be such amount as the Committee, in its
sole discretion, determines would provide, on an after-tax basis, an amount
equal to the amount estimated to be the after-tax benefit to the
Participant of monthly benefits payable by the Employers under Section 4.2,
commencing at the Participant's age 65. Such determination shall be made
by the Committee, in its sole discretion, based upon such rates and factors
as the Committee, in its sole discretion, deems appropriate. No change in
annuity benefits shall be required by reason of any subsequent change in
such rates and factors; provided, however, that in determining the amount
of any subsequent annuity purchased under this Section 4.4, the Committee
may, in its sole discretion, take into account any change in such rates and
factors and the benefits payable under any annuity previously purchased
under this Section 4.4. Notwithstanding the foregoing, with the consent of
the Participant, the Committee may substitute any form of fixed or variable
annuity in lieu of the annuity otherwise provided by this paragraph (d),
provided that such substitution does not result in a change in the cost of
the annuity or the commencement date of the annuity payments.
(e) The Company shall make a tax gross-up payment to any Participant
for whom an annuity is purchased under this Section 4.4 in such amount as
the Committee shall determine, in its sole discretion, would be necessary
to make such Participant whole for federal, state and local income taxes
attributable to the receipt of the annuity and the gross-up payment, based
upon such tax rates as the Committee shall determine in its sole
discretion.
(f) To the extent that the Company has purchased an annuity under this
Section 4.4 with respect to any portion
-7-
<PAGE>
of a Participant's Supplemental Retirement Benefit, such annuity and the
tax gross-up payment under paragraph (e) above shall be in full
satisfaction of all obligations of the Employers to the Participant or his
Beneficiary attributable to such portion of the Participant's Supplemental
Retirement Benefit.
(g) A purchase of an annuity under this Section 4.4 shall have no
effect on the monthly benefits payable to the Participant under Sections
4.1 and 4.3 prior to the Participant's attainment of age 65. In the event
of the Participant's death prior to attainment of age 65, the benefit
payable to any Beneficiary of the Participant shall be determined solely on
the basis of the monthly benefits which would otherwise have been payable
to the Participant under the Plan prior to attainment of age 65 and taking
into account the amount payable to the Beneficiary under the Pension Plan.
(h) If an annuity has not been purchased in accordance with the
foregoing provisions of this Section 4.4 with respect to any portion of the
Supplemental Retirement Benefit payable after attainment of age 65 to a
Participant who meets all of the requirements of paragraph (a) above then,
except for any portion payable in the form of a lump sum in accordance with
Section 4.2, upon such Participant's termination of employment with the
Employers and their affiliates, the Company shall, as soon as practicable
thereafter, purchase an annuity for such portion in accordance with
paragraphs (b) through (g) above.
ARTICLE 5
5.1 Amendment to Conform with Law.
------------------------------
The Company may make such changes in, additions to, and substitutions
in the provisions of the Plan, to take effect retroactively or otherwise, as
deemed necessary or advisable for the purpose of conforming the Plan to any
present or future law relating to plans of this or a similar nature, and to the
administrative regulations and rulings promulgated thereunder.
5.2 Other Amendments and Termination.
---------------------------------
The Company may amend or terminate the Plan at any time, without the
consent of any Participant or Beneficiary; provided, however, that:
-8-
<PAGE>
(a) the provisions of Section 5.3 may not be amended after the date
of a Change in Control without the written consent of a majority in both
number and interest of the Participants in the Plan, other than those
Participants who are both (i) not employed by the Company and its
affiliates (collectively "RTI") as of the date of the Change in Control,
and (ii) not receiving nor could have commenced receiving benefits under
the Pension Plan as of the date of the Change in Control, both immediately
prior to the Change in Control and at the date of such amendment; and
(b) the Plan shall not be amended or terminated so as to reduce or
cancel the benefits which have accrued to a Participant or Beneficiary
prior to the later of the date of adoption of the amendment or termination
or the effective date thereof, and in the event of such amendment or
termination, any such accrued benefit hereunder shall not be reduced or
cancelled.
Notwithstanding the provisions of paragraph (b) next above, in the event the
Pension Plan is terminated or curtailed with the result that pension payments
to retired employees and survivor and contingent annuity payments to
beneficiaries are discontinued or reduced the Supplemental Retirement Plan
Benefit then being paid or in the future payable pursuant to the Plan shall
similarly be discontinued or reduced in the same ratio as payments under the
Pension Plan are discontinued or reduced.
5.3 Manner and Form of Amendment or Termination.
--------------------------------------------
Any amendment or termination of the Plan by the Company shall be made
only by action of the Board of Directors of the Company or any officer of the
Company duly authorized by the Board of Directors. Certification of any
amendment or termination of the Plan shall be furnished to the Committee by the
Company.
5.4 Notice of Amendment or Termination.
-----------------------------------
The Committee shall notify Participants or Beneficiaries who are
affected by any amendment or termination of the Plan within a reasonable time
thereof.
5.5 Change in Control. For purposes of this Section 5.5, a "Change in
Control" shall be deemed to have occurred if:
(a) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
other than (i) the Company and its affiliated (collectively referred to
herein as "RTI"), (ii) a trustee or other fiduciary holding securities
-9-
<PAGE>
under an employee benefit plan of RTI, (ii) an underwriter temporarily
holding securities pursuant to an offering of such securities, or (iv) a
corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock
of the Company, is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company (not including in the securities beneficially owned by such person
any securities acquired directly from RTI) representing 40% or more of the
combined voting power of the Company's then outstanding securities;
(b) during any period of two consecutive years individuals who at the
beginning of such period constitute the Board of Directors of the Company
and any new director (other than a director designated by a person who has
entered into an agreement with the Company to effect a transaction
described in paragraphs (a), (c) or (d) of this Section 5.3, whose election
by the Board or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for
any reason to constitute a majority thereof;
(c) the stockholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than (i) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan of RTI,
at least 60% of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after such merger
or consolidation, or (ii) a merger or consolidation effected to implement
a recapitalization of the Company (or similar transaction) in which no
person acquires more than 50% of the combined voting power of the Company's
then outstanding securities; or
(d) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or substantially all of the Company's assets.
-10-
<PAGE>
A Change in Control shall also be deemed to occur with respect to any
Participant or Beneficiary for purposes of the Plan if there occurs:
(1) a sale or disposition, directly or indirectly, other than to
a person described in clause (i), (ii) or (iii) of paragraph (a) next
above, of securities of the Participant's employer, any direct or
indirect parent company of the Participant's employer or any company
that is a subsidiary of the Participant's employer and is also a
significant subsidiary (as defined below) of the Company (the
Participant's employer and such a parent or subsidiary being a "Related
Company"), representing 50% or more of the combined voting power of the
securities of such Related Company then outstanding;
(2) a merger or consolidation of a Related Company with any other
corporation, other than a merger or consolidation which would result in
50% or more of the combined voting power of the surviving company being
beneficially owned by a majority owned direct or indirect subsidiary of
the Company; or
(3) the sale or disposition of all or substantially all the assets
of a Related Company to a person other than a majority owned direct or
indirect subsidiary of the Company.
Notwithstanding the foregoing, no Change in Control shall be deemed to
have occurred with respect to a Participant for purposes of the Plan if
(I) such transaction includes or involves a sale to the public or a distribution
to the stockholders of the Company of more than 50% of the voting securities of
the Participant's employer or a direct or indirect parent of the Participant's
employer, and (II) the Participant's employer or a direct or indirect parent of
the Participant's employer agrees to become a successor to the Company under an
individual agreement between the Company and the Participant or the Participant
is covered by an agreement providing for benefits upon a change in control of
his or her employer following an event described clauses (2), (2) or (3) next
above. For purposes of the Plan, the term "significant subsidiary" has the
meaning given to such term under Rule 405 of the Securities Act of 1933, as
amended.
ARTICLE 6
6.1 No Right to Employment.
-----------------------
Neither the creation of the Plan nor anything contained herein shall
be construed as giving any Participant hereunder or
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<PAGE>
other employees of the Employers any right to remain in the employ of the
Employers or any affiliate thereof.
6.2 Successors and Assigns.
-----------------------
All rights and obligations of this Plan shall inure to, and be binding
upon the successors and assigns of the Company.
6.3 Inalienability.
---------------
Except so far as may be contrary to the laws of any state having
jurisdiction in the premises, a Participant or Beneficiary shall have no right
to assign, transfer, hypothecate, encumber, commute or anticipate his interest
in any payments under the Plan and such payments shall not in any way be subject
to any claim against any Participant or Beneficiary.
6.4 Incompetency.
-------------
If any Participant or Beneficiary is, in the opinion of the Committee,
legally incapable of giving a valid receipt and discharge for any payment, the
Committee may, at its option, direct that such payment or any party thereof be
made to such person or persons who in the opinion of the Committee are caring
for and supporting such Participant or Beneficiary, unless it has received due
notice of claim from a duly appointed guardian or conservator of the estate of
the Participant or Beneficiary. A payment so made will be a complete discharge
of the obligations under this Plan to the extent of and as to that payment, and
neither the Committee nor the Employers will have any obligation regarding the
application of the payment.
6.5 Controlling Law.
----------------
To the extent not preempted by the laws of the United States of
America, the laws of the State of Illinois shall be the controlling state law in
all matters relating to the Plan.
6.6 Severability.
-------------
If any provisions of the Plan shall be held illegal or invalid for any
reason, the illegality or invalidity shall not affect the remaining parts of the
Plan, but the Plan shall be construed and enforced as if the illegal and invalid
provisions never had been included herein.
6.7 Limitations on Provisions.
--------------------------
The provisions of the Plan and any Supplemental Retirement Benefits
shall be limited as described herein. Any benefit payable under the Pension
Plan shall be paid solely in
-12-
<PAGE>
accordance with the terms and provisions of the Pension Plan, as appropriate,
and nothing in the Plan shall operate or be construed in any way to modify,
amend, or affect the terms and provisions of the Pension Plan.
6.8 Gender and Number.
------------------
Whenever the context requires or permits, the gender and number of
words shall be interchangeable.
ARTICLE 7
7.1 Application for Benefits and Review Procedures.
-----------------------------------------------
The Claims Procedure set forth in the Pension Plan shall apply to any
claim for benefits under the Plan. The "Plan Administrator" for purposes of
applying such Claims Procedure to this Plan shall be the Committee.
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<PAGE>
RYERSON TULL 1996 INCENTIVE STOCK PLAN
1. PURPOSE.
The purpose of the Ryerson Tull 1996 Incentive Stock Plan (the "Plan") is
to attract and retain outstanding individuals as officers and key employees of
Ryerson Tull, Inc. (the "Company") and its subsidiaries, and to furnish
incentives to such individuals through rewards based upon the ownership and
performance of the Common Stock (as defined in Section 3). To this end, the
Committee hereinafter designated may grant stock options, stock appreciation
rights, restricted stock awards, and performance awards, or combinations
thereof, to officers and other key employees of the Company and its
subsidiaries, on the terms and subject to the conditions set forth in this Plan.
2. PARTICIPANTS.
Participants in the Plan shall consist of such officers and other key
employees of the Company and its subsidiaries as the Committee in its sole
discretion may select from time to time to receive stock options, stock
appreciation rights, restricted stock awards or performance awards, either
singly or in combination, as the Committee may determine in its sole discretion.
Individuals who receive awards of Substitute Options and Substitute Restricted
Stock pursuant to Section 14 shall also be Participants in the Plan. Any
director of the Company or any of its subsidiaries who is not also an employee
of the Company or any of its subsidiaries shall not be eligible to receive stock
options, stock appreciation rights, restricted stock awards or performance
awards under the Plan. As used in the Plan, the term "subsidiary" means (a) any
corporation of which the Company owns or controls, directly or indirectly, 50%
or more of the outstanding shares of capital stock entitled to vote for the
election of directors or (b) any partnership, joint venture, or other business
entity in respect of which the Company, directly or indirectly, has comparable
ownership or control.
3. SHARES RESERVED UNDER THE PLAN.
Subject to adjustment pursuant to the provisions of Section 11 of the Plan,
the maximum number of shares of Class A Common
<PAGE>
Stock, $1.00 par value per share, of the Company ("Common Stock") which may be
issued pursuant to grants or awards made under the Plan shall not exceed
2,300,000. No more than 800,000 shares of Common Stock shall be issued pursuant
to restricted stock awards and performance awards under the Plan.
The following restrictions shall apply to all grants and awards under the
Plan other than grants and awards which by their terms are not intended to
comply with the "Performance-Based Exception" (defined below in this Section 3):
(a) the maximum aggregate number of shares of Common Stock that may be
granted or awarded under the Plan to any participant under the Plan during any
three year period shall be 1,500,000; and
(b) the maximum aggregate cash payout with respect to grants or awards
under the Plan in any fiscal year of the Company to any Named Executive Officer
(defined below in this Section 3) shall be $1,000,000.
For purposes of the Plan, "Named Executive Officer" shall mean a
participant who is one of the group of "covered employees" as defined in the
regulations promulgated under section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code") or any successor statute, and "Performance-Based
Exception" shall mean the performance-based exception from the deductibility
limitations as set forth in Section 162(m) of the Code.
Except to the extent otherwise determined by the Committee, any shares of
Common Stock subject to grants or awards under the Plan that terminate by
expiration, cancellation or otherwise without the issuance of such shares
(including shares underlying a stock appreciation right exercised for stock, to
the extent that such underlying shares are not issued), that are settled in cash
(to the extent so settled), or, in the case of restricted stock awards, that
terminate without vesting, shall become available for future grants and awards
under the Plan. Shares of Common Stock to be issued pursuant to grants or awards
under the Plan may be authorized and unissued shares of Common Stock, treasury
Common Stock, or any combination thereof.
4. ADMINISTRATION OF THE PLAN.
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<PAGE>
The Plan shall be administered by the Compensation Committee (the
"Committee") of the Board of Directors of the Company (the "Board"). To the
extent necessary to comply with the exemption provided by rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") or any
successor rule ("Rule 16b-3"), no member of the Committee shall be eligible to
receive any grant, or shall have been eligible to receive any grant for at least
one year prior to becoming a member, under the Plan or any other discretionary
stock option, stock appreciation rights or other stock plan of the Company or
any affiliate of the Company, other than the Ryerson Tull Directors'
Compensation Plan. Subject to the provisions of the Plan, the Committee shall
have authority (i) to determine which employees of the Company and its
subsidiaries shall be eligible for participation in the Plan; (ii) to select
employees to receive grants under the Plan; (iii) to determine the form of
grant, whether as a stock option, stock appreciation right, restricted stock
award, performance award or a combination thereof, the number of shares of
Common Stock or units subject to the grant, the time and conditions of exercise
or vesting, the fair market value of the Common Stock for purposes of the Plan,
and all other terms and conditions of any grant and to amend such awards or
accelerate the time of exercise or vesting thereof; and (iv) to prescribe the
form of agreement, certificate or other instrument evidencing the grant. The
Committee shall also have authority to interpret the Plan and to establish,
amend and rescind rules and regulations for the administration of the Plan, and
all such interpretations, rules and regulations shall be conclusive and binding
on all persons.
5. EFFECTIVE DATE OF PLAN.
The Plan shall be effective upon approval by the stockholder(s) of the
Company.
6. STOCK OPTIONS.
(a) GRANTS. Subject to the terms of the Plan, options to purchase shares
of Common Stock, including "incentive stock options" within the meaning of
Section 422 of the Code, may be granted from time to time to such officers and
other key employees of the Company and its subsidiaries as may be selected by
the Committee. Each grant of an option under the Plan may designate whether the
option is intended to be an incentive stock
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option or a "nonqualified" stock option. Any option not so designated shall be
deemed to be a "nonqualified" stock option.
(b) TERMS OF OPTIONS. An option shall be exercisable in whole or in such
installments and at such times as may be determined by the Committee in its sole
discretion, provided that no option shall be exercisable less than six months or
more than ten years after the date of grant (except in the case of death or
physical or mental incapacity). The per share option price shall not be less
than the greater of par value or 100% of the fair market value of a share of
Common Stock on the date the option is granted. Upon exercise, the option price
may be paid in cash, in shares of Common Stock having a fair market value equal
to the option price which have been owned by the Participant for at least 6
months prior thereto, or in a combination thereof. The Committee may also allow
the cashless exercise of options by holders thereof, as permitted under
regulations promulgated by the Board of Governors of the Federal Reserve System,
subject to any applicable restrictions necessary to comply with rules adopted by
the Securities and Exchange Commission, and the exercise of options by holders
thereof by any other means that the Committee determines to be consistent with
the Plan's purpose and applicable law, including loans, with or without
interest, made by the Company to the holder thereof.
(c) RESTRICTIONS RELATING TO INCENTIVE STOCK OPTIONS. To the extent
required by the Code, the aggregate fair market value (determined as of the time
the option is granted) of the Common Stock with respect to which incentive stock
options are exercisable for the first time by an employee during any calendar
year (under the Plan or any other plan of the Company or any of its
subsidiaries) shall not exceed $100,000.
(d) TERMINATION OF EMPLOYMENT. If an optionee ceases to be employed by
the Company or any of its subsidiaries by reason of (i) death, (ii) physical or
mental incapacity, (iii) retirement on or after the normal retirement date
provided for in and pursuant to any pension plan of the Company or any
subsidiary of the Company in effect at the time of such retirement, or (iv)
early retirement (with the consent of the Committee) provided for in and
pursuant to any such pension plan, any option held by such optionee may be
exercised, with respect to all or any part of the Common Stock as to which such
option was not theretofore
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exercised (whether or not such option was otherwise then exercisable), for such
period from and after the date of such cessation of employment (not extending,
however, beyond the date of expiration of such option) as the Committee may
determine at the time of the grant or at any time thereafter. If an optionee
ceases to be employed by the Company and any of its subsidiaries for any reason
other than a reason set forth in the immediately preceding sentence, any option
granted to such optionee may be exercised for a period ending on the 30th day
following the date of such cessation of employment or the date of expiration of
such option, whichever first occurs, but only with respect to that number of
shares of Common Stock for which such option was exercisable immediately prior
to the date of cessation of employment, except as otherwise determined by the
Committee at the time of grant or any time thereafter.
(e) ADDITIONAL TERMS AND CONDITIONS. The agreement or instrument
evidencing the grant of a stock option may contain such other terms, provisions
and conditions not inconsistent with the Plan as may be determined by the
Committee in its sole discretion.
7. STOCK APPRECIATION RIGHTS.
(a) GRANTS. Subject to the terms of the Plan, rights entitling the
grantee to receive cash or shares of Common Stock having a fair market value
equal to the appreciation in market value of a stated number of shares of such
Common Stock from the date of the grant to the date of exercise, or, in the case
of rights granted in tandem with or by reference to a stock option granted prior
to the grant of such rights, from the date of grant of such related stock option
to the date of exercise, may be granted from time to time to such officers and
other key employees of the Company and its subsidiaries as may be selected by
the Committee.
(b) TERMS OF GRANT. Such rights may be granted in tandem with or by
reference to a related stock option, in which event the grantee may elect to
exercise either the stock option or the right, but not both, as to the shares
subject to the stock option and the right, or the right may be granted
independently of a stock option. Rights granted in tandem with or by reference
to a related stock option shall be exercisable to the extent, and only
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to the extent, that the related option is exercisable, provided that no such
right (except in the case of death or physical or mental incapacity) shall be
exercisable prior to the expiration of six months following the date the right
is granted. Rights granted independently of a stock option shall be exercisable
in whole or in such installments and at such times as may be determined by the
Committee, provided that no right (except in the case of death or physical or
mental incapacity) shall be exercisable less than six months or more than ten
years after the date of grant. Further, in the event that any employee to whom
rights are granted independently of a stock option ceases to be an employee of
the Company and its subsidiaries, such rights shall be exercisable only to the
extent and upon the conditions that stock options are exercisable in accordance
with the provisions of paragraph (d) of Section 6 of the Plan. The Committee may
at the time of the grant or at any time thereafter impose such additional terms
and conditions on the exercise of stock appreciation rights as it deems
necessary or desirable for any reason, including for compliance with Section
16(a) or Section 16(b) of the Exchange Act and the rules and regulations
thereunder.
(c) PAYMENT ON EXERCISE. Upon exercise of a stock appreciation right, the
holder shall be paid the excess of the then fair market value of the number of
shares of Common Stock to which the right relates over the fair market value of
such number of shares at the date of grant of the right or of the related stock
option, as the case may be. Such excess shall be paid in cash or in shares of
Common Stock having a fair market value equal to such excess, or in such
combination thereof, as may be provided in the grant of such right (which may
permit the holder to elect between cash and Common Stock or to elect a
combination thereof), or, if no such provision is made in the grant, as the
Committee shall determine upon exercise of the right, provided, in any event,
that the holder shall be paid cash in lieu of any fractional share of Common
Stock to which such holder would otherwise be entitled.
(d) ADDITIONAL TERMS AND CONDITIONS. The agreement or instrument
evidencing the grant of stock appreciation rights may contain such other terms,
provisions and conditions not inconsistent with the Plan as may be determined by
the Committee in its sole discretion.
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8. RESTRICTED STOCK AWARDS.
Subject to the terms of the Plan, restricted stock awards consisting of
shares of Common Stock may be made from time to time to such officers and other
key employees of the Company and its subsidiaries as may be selected by the
Committee, provided that any such employee (except an employee whose terms of
employment include the granting of a restricted stock award) shall have been
employed by the Company or any of its subsidiaries for at least six months. Such
awards shall be contingent on the employee's continuing employment with the
Company or its subsidiaries for a period to be specified in the award, which
(except in the case of death or physical or mental incapacity) shall not be less
than six months or more than ten years from the date of award, and shall be
subject to such additional terms and conditions as the Committee in its sole
discretion deems appropriate, including, but not by way of limitation,
restrictions on the sale or other disposition of such shares during the
restriction period. Except as otherwise determined by the Committee at the time
of the award, the holder of a restricted stock award shall have the right to
vote the restricted shares and to receive dividends thereon, unless and until
such shares are forfeited.
9. PERFORMANCE AWARDS
(a) AWARDS. Performance awards consisting of (i) shares of Common Stock,
(ii) monetary units or (iii) units which are expressed in terms of shares of
Common Stock may be made from time to time to such officers and other key
employees of the Company and its subsidiaries as may be selected by the
Committee. Subject to the provisions of Section 12 below, such awards shall be
contingent on the achievement over a period of not less than six months or more
than ten years of such corporate, division, subsidiary, group or other measures
and goals as shall be established by the Committee. Subject to the provisions of
Section 12 below, such measures and goals may be revised by the Committee at any
time from time to time during the performance period. Except as may otherwise be
determined by the Committee at the time of the award or at any time thereafter,
a performance award shall terminate if the grantee of the award does not remain
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continuously in the employ of the Company or its subsidiaries at all times
during the applicable performance period.
(b) RIGHTS WITH RESPECT TO SHARES AND SHARE UNITS. If a performance award
consists of shares of Common Stock or units which are expressed in terms of
shares of such Common Stock, amounts equal to dividends otherwise payable on a
like number of shares may, if the award so provides, be converted into
additional such shares (to the extent that shares are then available for
issuance under the Plan) or credited as additional units and paid to the
participant if and when, and to the extent that, payment is made pursuant to
such award.
(c) PAYMENT. Payment of a performance award following the end of the
performance period, if such award consists of monetary units or units expressed
in terms of shares of Common Stock, may be made in cash, shares of Common Stock,
or a combination thereof, as determined by the Committee. Any payment made in
Common Stock shall be based on the fair market value of such stock on the
payment date.
10. PERFORMANCE MEASURES APPLICABLE TO AWARDS TO NAMED EXECUTIVE OFFICERS
Unless and until the Committee proposes for stockholder vote a change in
the general performance measures set forth in this Section 10, the attainment of
which may determine the degree of payout or vesting with respect to awards under
the Plan which are designed to qualify for the Performance-Based Exception, the
performance measure(s) to be used for purposes of such awards shall be chosen
from among the following alternatives: safety (including total injury frequency,
lost workday rates or cases, medical treatment cases and fatalities); quality
control (including critical product characteristics and defects); cost control
(including cost as a percentage of sales); capital structure (including debt and
equity levels, debt-to-equity ratios, and debt-to total-capitalization ratios);
inventory turnover; customer performance or satisfaction; revenue growth; net
income; conformity to cash flow plans; return on investment; and operating
profit to operating assets.
The Committee shall have the discretion to establish performance goals
based upon the foregoing performance measures
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and to adjust such goals and the methodology used to measure the determination
of the degree of attainment of such goals; provided, however, that awards under
the Plan that are intended to qualify for the Performance-Based Exception and
that are issued to or held by Named Executive Officers may not be adjusted in a
manner that increases such award. The Committee shall retain the discretion to
adjust such awards in a manner that does not increase such awards. Furthermore,
the Committee shall not make any adjustment to awards under the Plan issued to
or held by Named Executive Officers that are intended to comply with the
Performance-Based Exception if the result of such adjustment would be the
disqualification of such award under the Performance-Based Exception.
In the event that applicable laws change to permit the Committee greater
discretion to amend or replace the foregoing performance measures applicable to
awards to Named Executive Officers without obtaining stockholder approval of
such changes, the Committee shall have sole discretion to make such changes
without obtaining such approval. In addition, in the event that the Committee
determines that it is advisable to grant awards under the Plan to Named
Executive Officers that may not qualify for the Performance-Based Exception, the
Committee may make such grants upon any performance measures it deems
appropriate with the understanding that they may not satisfy the requirements of
Section 162(m) of the Code.
11. ADJUSTMENTS FOR CHANGES IN CAPITALIZATION, ETC.
Subject to the provisions of Section 12 herein, in the event of any change
in corporate capitalization, such as a stock split, reverse stock split, stock
dividend, or a corporate transaction, such as a merger, consolidation, or
separation, including a spin-off, or other distribution of stock or property of
the Company or its subsidiaries (other than normal cash dividends), any
reorganization (whether or not such reorganization comes within the definition
of such term in Code Section 368) or any partial or complete liquidation of the
Company or its subsidiaries, such adjustment shall be made in the number and
class of shares which may be delivered under Section 3 (including the number of
shares referred to in the last sentence of the first paragraph of Section 3 and
in subparagraph (a) of the second paragraph of Section 3), and in the number and
class of and/or price of shares
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subject to outstanding grants or awards under the Plan, as may be determined to
be appropriate and equitable by the Committee, in its sole discretion, to
prevent dilution or enlargement of rights; provided, however, that the number of
shares subject to any grants or awards under the Plan shall always be a whole
number.
12. EFFECT OF CHANGE IN CONTROL.
(a) ACCELERATION OF BENEFITS. Subject to the following sentence, in the
event of a "Change in Control" as defined in paragraph (b) of this Section 12,
(i) the value of all outstanding stock options, stock appreciation rights and
restricted stock awards (whether or not then fully exercisable or vested) shall
be cashed out on the basis of the "Change in Control Price" (as defined in
paragraph (c) of this Section 12) as of the date the Change in Control occurs,
provided, however, that any stock options or stock appreciation rights
outstanding for less than six months shall not be cashed out until six months
after the respective date of grant, and provided, further, that the Committee
may provide for the immediate vesting instead of the cashing out of restricted
stock awards in such circumstances as it deems appropriate; and (ii) all
outstanding performance awards shall be cashed out in such manner and in such
amount or amounts as determined by the Committee in its sole discretion. In the
event of a transaction which is intended to be accounted for through the
pooling-of-interest accounting method, (i) in lieu of cashing out all or any
portion of the outstanding stock options, stock appreciation rights, restricted
stock awards and performance awards, the Committee, in its discretion, may cause
such grants or awards to vest, and may limit payment to shares of Common Stock,
and (ii) the Committee, in its discretion, may extend the exercise period for
stock options and stock appreciation rights, but not beyond the earlier of (A)
30 days after the end of the pooling period or (B) the original term of the
stock option or stock appreciation right.
(b) CHANGE IN CONTROL. For purposes of this Section 12, a Change in
Control means the happening of any of the following:
(i) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than (w) the Company and its affiliates
(collectively referred to herein
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as "RTI"), (x) a trustee or other fiduciary holding securities under an
employee benefit plan of RTI, (y) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (z) a corporation
owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the
Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Company (not including in the securities beneficially owned by such person
any securities acquired directly from the Company or its affiliates)
representing 40% or more of the combined voting power of the Company's then
outstanding securities;
(ii) during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board and any new director
(other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clauses
(i), (ii) or (iv) of this Subsection) whose election by the Board or
nomination for election by the Company's stockholders was approved by a
vote of at least two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election or
nomination for election was previously so approved cease for any reason to
constitute a majority thereof;
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity), in combination with the ownership of
any trustee or other fiduciary holding securities under an employee benefit
plan of RTI, at least 60% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation, or a merger or consolidation effected
to implement a recapitalization of the Company (or similar transaction) in
which no person acquires more than 50% of the combined voting power of the
Company's then outstanding securities; or
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(iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by
the Company of all or substantially all of the Company's assets.
A Change in Control shall also be deemed to occur with respect to any
Participant for purposes of the Plan if there occurs:
(1) a sale or disposition, directly or indirectly, other than to a
person described in subclause (w), (x) or (z) of clause (i) next above, of
securities of the Participant's employer, any direct or indirect parent
company of the Participant's employer or any company that is a subsidiary
of the Participant's employer and is also a significant subsidiary (as
defined below) of the Company (the Participant's employer and such a parent
or subsidiary being a "Related Company"), representing 50% or more of the
combined voting power of the securities of such Related Company then
outstanding;
(2) a merger or consolidation of a Related Company with any other
corporation, other than a merger or consolidation which would result in 50%
or more of the combined voting power of the surviving company being
beneficially owned by a majority owned direct or indirect subsidiary of the
Company; or
(3) the sale or disposition of all or substantially all the assets of
a Related Company to a person other than a majority owned direct or
indirect subsidiary of the Company.
Notwithstanding the foregoing, no Change in Control shall be deemed to have
occurred with respect to a Participant for purposes of the Plan if (I) such
transaction includes or involves a sale to the public or a distribution to the
stockholders of the Company of more than 50% of the voting securities of the
Participant's employer or a direct or indirect parent of the Participant's
employer, and (II) the Participant's employer or a direct or indirect parent of
the Participant's employer agrees to become a successor to the Company under an
individual agreement between the Company and the Participant or the Participant
is covered by an agreement providing for benefits upon a change in
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control of his or her employer following an event described clauses (1), (2) or
(3) next above. For purposes of the Plan, the term "significant subsidiary" has
the meaning given to such term under Rule 405 of the Securities Act of 1933, as
amended.
(c) CHANGE IN CONTROL PRICE. For purposes of this Section 12, Change in
Control Price means:
(i) with respect to a Change in Control by reason of a merger or
consolidation of the Company described in paragraph (b)(iii) of this
Section 12 in which the consideration per share of Common Stock to be paid
for the acquisition of shares of Common Stock specified in the agreement of
merger or consolidation is all in cash, the highest such consideration per
share;
(ii) with respect to a Change in Control by reason of an acquisition
of securities described in paragraph (b)(i) of this Section 12, the highest
price per share for any share of the Common Stock paid by any holder of any
of the securities representing 40% or more of the combined voting power of
the Company giving rise to the Change in Control; and
(iii) with respect to a Change in Control by reason of a merger or
consolidation of the Company (other than a merger or consolidation
described in paragraph (b)(iii) of this Section or a change in the
composition of the Board of Directors described in paragraph (b)(ii) of
this Section 12, the highest price per share of Common Stock reported on
the Composite Transactions (or, if such shares are not traded on the New
York Stock Exchange, such other principal market on which such shares are
traded) during the sixty-day period ending on the date the Change in
Control occurs, except that, in the case of incentive stock options and
stock appreciation rights relating to incentive stock options, the holder
may not receive an amount in excess of the maximum amount that will enable
such option to continue to qualify as an incentive stock option.
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13. AMENDMENT AND TERMINATION OF PLAN.
The Plan may be amended by the Board in any respect, provided that, without
stockholder approval, no amendment (other than pursuant to Section 11 of the
Plan) shall increase the maximum number of shares available for issuance under
the Plan if such action would result in awards under the Plan no longer being
exempt under Rule 16b-3 as then in effect. In addition, no amendment may impair
the rights of a participant under any stock option, stock appreciation right,
restricted stock award or performance award previously granted under the Plan
without the consent of such participant, unless required by law. The Plan may
also be terminated at any time by the Board. No further grants may be made under
the Plan after termination, but termination shall not affect the rights of any
participant under, or the authority of the Committee with respect to, any grants
or awards made prior to termination.
14. GRANT OF SUBSTITUTE AWARDS
(a) SUBSTITUTE OPTIONS. In lieu of outstanding options to purchase Inland
Steel Industries, Inc. ("ISI") common stock ("ISI Options") granted pursuant to
the Inland 1995 Incentive Stock Plan, the Inland 1992 Incentive Stock Plan, the
Inland 1988 Incentive Stock Plan or the Inland 1984 Incentive Stock Plan
(collectively, the "ISI Incentive Plans") to officers and employees of ISI and
its subsidiaries who are or who become officers or employees of the Company or
any of its subsidiaries on or after the closing date of the initial public
offering of Common Stock and prior to the date on which the Company and its
subsidiaries cease to be treated as a single employer with ISI under section
414(b) or (c) of the Code ("Transferred Employees"), such Transferred Employees
shall receive a grant of "Substitute Stock Options" under the Plan; provided
that the Committee, in its sole discretion, may award Substitute Stock Options
to any Transferred Employee with respect to less than all (including none) of
his or her outstanding options under the ISI Incentive Plans, in which case the
outstanding ISI Options for which no Substitute Stock Options have been granted
will remain outstanding. The number of shares of Common Stock subject to any
Substitute Stock Option shall bear the same ratio to the number of shares of ISI
common stock subject to the corresponding ISI Option as the Average Value (as
defined below) of a share of ISI
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common stock bears to the Average Value of a share of Common Stock. The per
share option price of Common Stock subject to the Substitute Stock Option shall
be equal to the amount which bears the same ratio to the Average Value of a
share of Common Stock as the per share option price of ISI common stock under
the ISI Option bears to the Average Value of a share of ISI common stock. Other
than the option price and number of shares, the Substitute Stock Options shall
be subject to the same terms and conditions as the ISI Options. The term
"Average Value" means the average closing price of Common Stock or ISI common
stock, as applicable, as reported, in the case of Common Stock, on the New York
Stock Exchange Composite Transactions (the "Composite Transactions") (or, if
such shares are not traded on the New York Stock Exchange, such other principal
market on which such shares are traded) for the first ten trading days after the
date of the substitution.
(b) SUBSTITUTE RESTRICTED STOCK. In lieu of outstanding shares of
restricted ISI common stock ("ISI Restricted Stock") granted pursuant to the ISI
Incentive Plans to Transferred Employees, such Transferred Employees shall
receive a grant of "Substitute Restricted Stock" under the Plan; provided that
the Committee, in its sole discretion, may award Substitute Restricted Stock to
any Transferred Employee with respect to less than all (including none) of his
or her outstanding restricted stock under the ISI Incentive Plans, in which case
the outstanding ISI Restricted Stock for which no Substitute Restricted Stock
has been granted will remain outstanding. The number of shares of Substitute
Restricted Stock shall bear the same ratio to the number of shares of ISI
Restricted Stock as the Average Value of a share of ISI common stock bears to
the Average Value of a share of Common Stock. Other than the number of shares,
the Substitute Restricted Stock shall be subject to the same terms and
conditions as the ISI Restricted Stock.
15. MISCELLANEOUS.
(a) NO RIGHT TO A GRANT. Neither the adoption of the Plan nor any action
of the Board or of the Committee shall be deemed to give any employee any right
to be selected as a participant or to be granted a stock option, stock
appreciation right, restricted stock award or performance award.
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(b) RIGHTS AS STOCKHOLDERS. No person shall have any rights as a
stockholder of the Company with respect to any shares covered by a stock option,
stock appreciation right, or performance award until the date of the issuance of
a stock certificate to such person pursuant to such stock option, right or
award.
(c) EMPLOYMENT. Nothing contained in this Plan shall be deemed to confer
upon any employee any right of continued employment with the Company or any of
its subsidiaries or to limit or diminish in any way the right of the Company or
any such subsidiary to terminate his or her employment at any time with or
without cause.
(d) TAXES. The Company shall be entitled to deduct from any payment under
the Plan the amount of any tax required by law to be withheld with respect to
such payment or may require any participant to pay such amount to the Company
prior to and as a condition of making such payment. In addition, the Committee
may, in its discretion and subject to such rules as it may adopt from time to
time, permit a participant to elect to have the Company withhold from any
payment under the Plan (or to have the Company accept from the participant), for
tax withholding purposes, shares of Common Stock, valued at their fair market
value, but in no event shall the fair market value of the number of shares so
withheld (or accepted) exceed the amount necessary to meet the maximum Federal,
state and local marginal tax rates then in effect that are applicable to the
participant and to the particular transaction.
(e) NONTRANSFERABILITY. Except as permitted by the Committee, no stock
option, stock appreciation right, restricted stock award or performance award
shall be transferable except by will or the laws of descent and distribution,
and, during the holder's lifetime, stock options and stock appreciation rights
shall be exercisable only by, and shares subject to restricted stock awards and
payments pursuant to performance awards shall be delivered or made only to, such
holder or such holder's duly appointed legal representative.
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CORPORATE SEPARATION AGREEMENT
THIS CORPORATE SEPARATION AGREEMENT, dated June __, 1996, is by and among
Inland Steel Industries, Inc., a Delaware corporation ("Inland"), and Ryerson
Tull, Inc., a Delaware corporation ("Ryerson Tull"). Capitalized terms used
herein and not otherwise defined shall have the respective meanings assigned to
them in Article I hereof.
WHEREAS, the Board of Directors of Inland has determined that it is in the
best interests of Inland and its stockholders for Ryerson Tull to issue and sell
in an initial public offering up to 15% of the common stock of Ryerson Tull; and
WHEREAS, it is appropriate and desirable to set forth certain agreements
governing the relationship between Inland and Ryerson Tull and their respective
Subsidiaries following such initial public offering.
NOW, THEREFORE, the parties, intending to be legally bound, agree as
follows:
ARTICLE I
DEFINITIONS
For the purpose of this Agreement the following terms shall have the
following meanings:
"Action" means any demand, action, suit, countersuit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority or any
arbitration or mediation tribunal.
"Affiliate" of any Person means a Person that Controls, is Controlled by,
or is under common Control with such Person.
"Agreement" means this Corporate Separation Agreement, as it may be
amended, modified or supplemented from time to time.
"Allocated Amount" has the meaning set forth in Section 3.2.
"Class A Common Stock" means the Class A Common Stock, $1.00 par value, of
Ryerson Tull.
"Class B Common Stock" means the Class B Common Stock, $1.00 par value, of
Ryerson Tull.
"Closing Date" means the first time at which any shares of Ryerson Common
Stock are sold to the Underwriters pursuant to the IPO in accordance with the
terms of the Underwriting Agreement.
"Control" means the possession, directly or indirectly, by any Person of
the power to direct or cause the direction of the management and policies of
another Person, whether through ownership of voting securities or other
interests, by contract or otherwise.
<PAGE>
"Cross-License Agreement" means the Cross-License Agreement dated the date
hereof between Inland and Ryerson Tull, as it may be amended, modified or
supplemented from time to time.
"Environmental Law" means any federal, state, local, foreign or
international statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, common law (including tort and environmental
nuisance law), legal doctrine, order, judgment, decree, injunction, requirement
or agreement with any Governmental Authority, now or hereafter in effect
relating to health, safety, pollution or the environment (including ambient air,
surface water, groundwater, land surface or subsurface strata) or to emissions,
discharges, releases or threatened releases of any substance currently or at any
time hereafter listed, defined, designated or classified as hazardous, toxic,
waste, radioactive or dangerous, or otherwise regulated, under any of the
foregoing, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of any such substances,
including the Comprehensive Environmental Response, Compensation and Liability
Act, the Superfund Amendments and Reauthorization Act and the Resource
Conservation and Recovery Act and comparable provisions in state, local, foreign
or international law.
"Environmental Liabilities" means all Liabilities relating to, arising out
of or resulting from any Environmental Law or contract or agreement (or
provision thereof) relating to environmental, health or safety matters
(including all removal, remediation or cleanup costs, investigatory costs,
governmental response costs, natural resources damages, property damages,
personal injury damages, costs of compliance with any settlement, judgment or
other determination of Liability and indemnity, contribution or similar
obligations) and all costs and expenses (including allocated costs of in-house
counsel and other personnel), interest, fines, penalties or other monetary
sanctions in connection therewith.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ESOP Guarantee" means the Guaranty and Contingent Purchase Agreement dated
as of August 15, 1990 between Joseph T. Ryerson & Son, Inc., a Subsidiary of
Ryerson Tull, and the note purchasers named therein relating to $146,913,151
original aggregate principal amount of Guaranteed ESOP Notes issued by the
Inland Steel Industries Thrift Plan ESOP Trust.
"Governmental Authority" means any federal, state, local, foreign or
international court, government, department, commission, board, bureau, agency,
official or other regulatory, administrative or governmental authority.
"Group" means either the Inland Group or the Ryerson Tull Group, as the
context requires.
"Indemnifying Party" has the meaning set forth in Section 4.5(a).
"Indemnitee" means an Inland Indemnitee or a Ryerson Tull Indemnitee, as
the case may be.
"Information" means information, whether or not patentable or
copyrightable, in written, oral, electronic or other tangible or intangible
form, stored in any medium, including studies, reports, records, books,
contracts, instruments, surveys, discoveries, ideas, concepts, know-how,
techniques, designs, specifications, drawings,
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blueprints, diagrams, models, prototypes, samples, flow charts, data, computer
data, disks, diskettes, tapes, computer programs or other software, marketing
plans, customer names, communications by or to attorneys (including attorney-
client privileged communications), memoranda and other materials prepared by
attorneys or under their direction (including attorney work product), and other
technical, financial, employee or business information or data.
"Inland" has the meaning set forth in the opening paragraph.
"Inland Group" means Inland and each Person (other than any member of the
Ryerson Tull Group) that is an Affiliate of Inland as of the Tull Closing Date
and at any time thereafter.
"Inland Indemnitees" has the meaning set forth in Section 4.1.
"Insurance Proceeds" means those monies: (a) received by an insured from an
insurance carrier; or (b) paid by an insurance carrier on behalf of the insured;
in any such case net of any applicable premium adjustments (including reserves
and retrospectively rated premium adjustments) and net of any costs or expenses
(including allocated costs of in-house counsel and other personnel) incurred in
the collection thereof.
"IPO" means the initial public offering by Ryerson Tull of shares of its
Class A Common Stock pursuant to the Registration Statement on Form S-1, as
amended (No. 333-3229), originally filed by Ryerson with the Securities and
Exchange Commission on May 7, 1996.
"Joint Marketing Period" means the period commencing on the date hereof and
ending June 30, 2001; provided, however, that the Joint Marketing Period may be
terminated at any time by the mutual consent of Inland and Ryerson Tull or by
either party upon sixty (60) days prior written notice to the other.
"Liabilities" means any and all losses, claims, charges, debts, demands,
actions, causes of action, suits, damages, obligations, payments, costs and
expenses, whether absolute or contingent, matured or unmatured, liquidated or
unliquidated, accrued or unaccrued, known or unknown, whenever arising, and
including those arising under any law, rule, regulation, Action, threatened or
contemplated Action (including the costs and expenses of demands, assessments,
judgments, settlements and compromises relating thereto and attorneys' fees and
any and all costs and expenses (including allocated costs of in-house counsel
and other personnel), whatsoever reasonably incurred in investigating, preparing
or defending against any such Actions or threatened or contemplated Actions),
order or consent decree of any Governmental Authority or any award of any
arbitrator or mediator of any kind, and those arising under any contract,
commitment or undertaking, including those arising under this Agreement whether
or not recorded or reflected or required to be recorded or reflected on the
books and records or financial statements of any Person.
"Operating Asset Ratio" means the ratio, determined by Inland in good faith
from time to time, of the consolidated operating assets of Ryerson to the total
consolidated operating assets of Inland.
"Person" means an individual, a general or limited partnership, a
corporation, a trust, a joint venture, an unincorporated organization, a limited
liability entity, any other entity and any Governmental Authority.
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"Ryerson Tull" has the meaning set forth in the opening paragraph.
"Ryerson Tull Group" means Ryerson Tull, each Subsidiary of Ryerson Tull
and each other Person that is controlled directly or indirectly by Ryerson Tull
as of the Closing Date and at any time thereafter.
"Ryerson Tull Indemnitees" has the meaning set forth in Section 4.2.
"Services" has the meaning set forth in Section 3.1.
"Services Period" means the period commencing on the date hereof and ending
June 30, 2001; provided, however, that the Services Period may be terminated at
any time by the mutual consent of Inland and Ryerson Tull or by either party
upon sixty (60) days prior written notice to the other.
"Subsidiary" of any Person means any corporation or other organization,
whether incorporated or unincorporated, of which securities or interests having
by the terms thereof ordinary voting power to elect at least a majority of the
board of directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or Controlled
by such Person or by any one or more of its Subsidiaries or by such Person and
one or more of its Subsidiaries; provided, however that no Person that is not
directly or indirectly wholly owned by any other Person shall be a Subsidiary of
such other Person unless such other Person Controls, or has the right, power or
ability to Control, that Person.
"Tax Sharing Agreement" means the Tax Sharing Agreement, dated as of the
date hereof by and between Inland and Ryerson Tull, as it may be amended,
modified or supplemented from time to time.
"Taxes" means income, gross receipts, franchise, sales, use, rental,
turnover, business, occupation, excise, value-added, tangible and intangible
personal property and stamp taxes, levies, assessments, imposts, duties, charges
or withholdings of any nature, together with any and all penalties, additions to
tax, fines or interest thereon imposed upon any member of the Inland Group or
the Ryerson Tull Group by any federal, state or local government, political
subdivision or taxing authority in the United States or its possessions, by any
government or taxing authority of or in a foreign country or by any
international authority.
"Third Party Claim" has the meaning set forth in Section 4.5(a).
"Underwriters" means the managing underwriters for the IPO.
"Underwriting Agreement" means the underwriting agreement among Ryerson
Tull and the Underwriters with respect to the IPO.
ARTICLE II
SEPARATE CORPORATE EXISTENCE
2.1. CORPORATE SEPARATION. For so long as the number of shares of Class B
Common Stock outstanding shall represent not less than 50 percent of the sum of
the number of outstanding shares of Class
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B Common Stock and the number of outstanding shares of Class A Common Stock,
each of Ryerson Tull and Inland shall observe the applicable legal requirements
for its recognition as a corporation separate and apart from each member of the
other's Group. Without limiting the generality of the foregoing, Ryerson and
Inland shall each take such actions during such period as shall be reasonably
required in order that:
(a) Any transaction between any member of the Ryerson Tull Group and
any member of the Inland Group will be the type of transaction which would
be entered into by a prudent Person in the position of such member of the
Ryerson Tull Group with a member of the Inland Group, and will be on terms
that are at least as favorable (but no more favorable) as may be obtained
from a Person that is not a member of the Inland Group.
(b) Ryerson Tull shall observe all corporate formalities, including,
without limitation, (i) the maintenance of corporate records, books of
account and stationery for each member of the Ryerson Tull Group separate
from those of every member of the Inland Group and (ii) the holding of
regular meetings of its board of directors and stockholders.
(c) Ryerson Tull shall have its own executive officers who shall not
be officers or employees of Inland or any other member of the Inland Group,
provided that Ryerson Tull's Chairman of the Board, its Chief Executive
Officer and up to one-half of the remaining executive officers of Ryerson
Tull may be officers or employees of Inland or another member of the Inland
Group.
(d) Ryerson Tull and Inland shall each maintain the assets of each
member of its Group separate from those of the members of the other's
Group.
(e) Except as contemplated by the Tax Sharing Agreement, Ryerson Tull
and Inland shall each account for and manage the liabilities of each member
of its Group separately from those of the other and members of the other's
Group, including payment of all payroll and administrative expenses and
related taxes from its own assets; provided that any member of the Inland
Group may incur and pay expenses on behalf of any member of the Ryerson
Tull Group as contemplated hereunder, which expenses will be reimbursed as
provided herein.
(f) Ryerson Tull and Inland each shall (i) maintain financial records
separate and apart from the other, (ii) prepare, not less than quarterly,
consolidated financial statements, and (iii) prepare annual consolidated
audited financial statements (consisting of, at least, a balance sheet and
statements of income and cash flows).
(g) Ryerson Tull will conduct its business at offices separate from
the offices of members of the Inland Group, which offices of Ryerson Tull
may consist of office space shared with a member of the Inland Group, a
portion of which is allocated solely to Ryerson Tull; provided that where
common facilities are used, the allocation of costs are in accordance with
paragraph (a) of this Section 2.1.
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(h) Other than the ESOP Guarantee, no member of the Ryerson Tull Group
nor any member of the Inland Group shall pledge its assets for the benefit
of, or grant guarantees or otherwise hold out its credit as being available
to satisfy the obligations of, any member of the other's Group.
ARTICLE III
SUPPORT SERVICES
3.1. SERVICES TO BE RENDERED. Inland shall render to members of the
Ryerson Tull Group from time to time during the Services Period, upon request of
Ryerson Tull, routine and ordinary services consistent with past practice and
which Inland can provide with its staff, facilities and resources (the
"Services"), including, but not limited to the following:
(a) accounting and auditing services;
(b) bonding requirements;
(c) computer systems (including physical computers, applications,
electronic mail and support);
(d) pension and employee benefit plan administration, including
management, sales and purchases of pensions assets, Internal Revenue
Service and Pension Benefit Guaranty Corporation reporting, and funding and
reporting calculations;
(e) financial and cash management, debt administration and management
of banking relationships;
(f) government relations;
(g) insurance and related risk management;
(h) investor and public relations;
(i) services of the Inland law department, including the corporate
secretary functions;
(j) tax administration (including Federal income, state income, local
income and property tax preparation, filing and contesting returns and
valuations);
(k) human resources;
(l) information technology;
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(m) office space at 30 West Monroe Street, Chicago, Illinois 60603;
and
(n) senior management support services.
3.2. COMPENSATION. For the Services rendered by Inland to members of the
Ryerson Tull Group pursuant to this Article III, Ryerson Tull shall pay to
Inland a fee (the "Allocated Amount") equal to (i) the specific distinguishable
costs incurred by Inland in providing the Services, such as directly related
out-of-pocket expenses including, without limitation, tax payments, legal fees
and lease payments, and (ii) a proration (based on the Operating Asset Ratio) of
all corporate administrative expenses incurred by Inland and not otherwise
charged under the foregoing clause (i). The Allocated Amounts are intended to
allow Inland only to recover its costs and expenses without realizing any
profit. The Allocated Amounts will be invoiced at the end of each month during
the Services Period, and Ryerson Tull shall pay to Inland such invoiced amounts
within 30 days of receipt of the invoice. If Ryerson Tull is restricted at any
time from making payment of the Allocated Amounts due to restrictions in its
financing arrangements, or otherwise, the amounts then due hereunder shall
accrue interest at the prime rate of Ryerson Tull's lead commercial bank.
3.3. JOINT MARKETING EFFORTS. Ryerson Tull and Inland agree during the
Joint Marketing Period to cooperate in the joint marketing efforts known as the
"red diamond program" which is intended to maximize the satisfaction of
customers of Ryerson Tull and/or Inland. Neither Ryerson Tull nor Inland is
entitled to fees or to be reimbursed for any expenses in connection with the
joint marketing efforts contemplated by this Section 3.3.
3.4. PREVENTION OF PERFORMANCE. Neither Ryerson Tull nor Inland shall be
determined to be in violation of this Agreement if it is prevented from
performing any of its obligations hereunder for any reason beyond its reasonable
control, including without limitation, acts of God, nature, or public enemy,
strikes, or limitations of law, regulations or rules of the Federal or of any
state or local government or of any agency thereof.
3.5. NO WARRANTIES. By agreeing to provide the Services as an
accommodation to members of the Ryerson Tull Group and to participate in the
joint marketing efforts contemplated by Section 3.3, neither Ryerson Tull nor
Inland is making any representations or warranties as to the quality,
suitability or adequacy of the Services or such joint marketing efforts for any
purpose or use. In providing the Services and participating in the joint
marketing efforts contemplated by Section 3.3, neither Ryerson Tull nor Inland
shall be obligated to (i) hire any additional employees; (ii) maintain the
employment of any specific current employee; or (iii) purchase, lease or license
any additional equipment, software or facility.
3.6. INDEPENDENT CONTRACTOR. It is expressly agreed that Ryerson Tull and
Inland are at all times each acting and performing hereunder as an independent
contractor and not as agent for the other, and that no act of commission or
omission of either party hereto shall be construed to make or render the other
party its principal, agent, joint venturer or associate, except to the extent
specified herein. Neither Ryerson Tull nor Inland assumes any responsibility
under this Article other than to render the Services called for under this
Article or the joint marketing efforts contemplated by Section 3.3 in good faith
and shall have no liability to the other except for gross negligence or wilful
misconduct. Ryerson Tull's and Inland's sole remedy on account of
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the failure of the other to render the Services or participate in joint
marketing efforts as contemplated by Section 3.3 as and when required hereunder
shall be to procure such services elsewhere.
ARTICLE IV
INDEMNIFICATION
4.1. INDEMNIFICATION BY RYERSON TULL. Ryerson Tull shall indemnify, defend
and hold harmless Inland, each other member of the Inland Group and each of
their respective directors, officers, employees and agents, and each of the
heirs, executors, successors and assigns of any of the foregoing (collectively,
the "Inland Indemnitees"), from and against any and all Liabilities of the
Inland Indemnitees relating to, arising out of or resulting from:
(a) the business or operations of any member of the Ryerson Tull Group
prior to the Closing Date including, without limitation, Liabilities
for Taxes, Environmental Liabilities and Liabilities under ERISA and
employee benefit plans; or
(b) the Control of Ryerson Tull by Inland.
4.2. INDEMNIFICATION BY INLAND. Inland shall indemnify, defend and hold
harmless Ryerson Tull, each other member of the Ryerson Tull Group and each of
their respective directors, officers, employees and agents, and each of the
heirs, executors, successors and assigns of any of the foregoing (collectively,
the "Ryerson Tull Indemnitees"), from and against any and all Liabilities of the
Ryerson Tull Indemnitees relating to, arising out of or resulting from:
(a) the business or operations of any member of the Inland Group prior to
the Closing Date including, without limitation, Liabilities for Taxes,
Environmental Liabilities and Liabilities under ERISA and employee
benefit plans; or
(b) the Control of Ryerson Tull by Inland.
4.3. LIMITATION. No Indemnitee shall be entitled to indemnification under
Section 4.1 or 4.2 from and against any Liability relating to, arising out of or
resulting from its own or any Affiliate's negligence or wilful misconduct;
provided that if a Liability relates to, arises out of or results from the
negligence of both a member of the Inland Group and a member of the Ryerson Tull
Group, then the responsibility of each such Person shall be shared in proportion
to their relative degrees of negligence.
4.4. INSURANCE PROCEEDS. The parties intend that any Liability subject to
indemnification or reimbursement pursuant to this Article IV will be net of
Insurance Proceeds that actually reduce the amount of the Liability.
4.5. THIRD PARTY CLAIMS. (a) If an Indemnitee shall receive notice or
otherwise learn of the assertion by a Person (including any Governmental
Authority) who is not a member of the Inland Group or the Ryerson Tull Group of
any claim or of the commencement by any such Person of any Action (collectively,
a
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"Third Party Claim") with respect to which the other party (the "Indemnifying
Party") may be obligated to provide indemnification to such Indemnitee pursuant
to Section 4.1 or 4.2, such Indemnitee shall give such Indemnifying Party
written notice thereof within 20 days after becoming aware of such Third Party
Claim. Any such notice shall describe the Third Party Claim in reasonable
detail. Notwithstanding the foregoing, the failure of any Indemnitee or other
Person to give notice as provided in this Section 4.5(a) shall not relieve the
related Indemnifying Party of its obligations under this Article IV, except to
the extent that such Indemnifying Party is actually prejudiced by such failure
to give notice.
(b) An Indemnifying Party may elect to defend (and, unless the Indemnifying
Party has specified any reservations or exceptions, to seek to settle or
compromise), at such Indemnifying Party's own expense and by such Indemnifying
Party's own counsel, any Third Party Claim. Within 30 days after the receipt of
notice from an Indemnitee in accordance with Section 4.5(a) (or sooner, if the
nature of such Third Party Claim so requires), the Indemnifying Party shall
notify the Indemnitee of its election as to whether the Indemnifying Party will
assume responsibility for defending such Third Party Claim, which election
shall specify any reservations or exceptions. After notice from an Indemnifying
Party to an Indemnitee of its election to assume the defense of a Third Party
Claim, such Indemnitee shall have the right to employ separate counsel and to
participate in (but not control) the defense, compromise, or settlement thereof,
but the fees and expenses of such counsel shall be the expense of such
Indemnitee except as set forth in the next sentence. In the event that the
Indemnifying Party has elected to assume the defense of the Third Party Claim
but has specified, and continues to assert, any reservations or exceptions in
such notice, then, in any such case, the reasonable fees and expenses of one
separate counsel for all Indemnitees shall be borne by the Indemnifying Party.
(c) If an Indemnifying Party elects not to assume responsibility for
defending a Third Party Claim, or fails to notify an Indemnitee of its election
as provided in Section 4.5(b), such Indemnitee may defend such Third Party Claim
at the cost and expense (including allocated costs of in-house counsel and other
personnel) of the Indemnifying Party.
(d) Unless the Indemnifying Party has failed to assume the defense of the
Third Party Claim in accordance with the terms of this Agreement, no Indemnitee
may settle or compromise any Third Party Claim without the consent of the
Indemnifying Party.
(e) No Indemnifying Party shall consent to entry of any judgment or enter
into any settlement of the Third Party Claim without the consent of the
Indemnitee if the effect thereof is to permit any injunction, declaratory
judgment, other order or other nonmonetary relief to be entered, directly or
indirectly, against any Indemnitee.
4.6. ADDITIONAL MATTERS. (a) Any claim on account of a Liability which
does not result from a Third Party Claim shall be asserted by written notice
given by the Indemnitee to the related Indemnifying Party. Such Indemnifying
Party shall have a period of 30 days after the receipt of such notice within
which to respond thereto. If such Indemnifying Party does not respond within
such 30-day period, such Indemnifying Party shall be deemed to have refused to
accept responsibility to make payment. If such Indemnifying Party does not
respond within such 30-day period or rejects such claim in whole or in part,
such Indemnitee shall be free to pursue such remedies as may be available to
such party as contemplated by this Agreement.
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(b) In the event of payment by or on behalf of any Indemnifying Party to
any Indemnitee in connection with any Third Party Claim, such Indemnifying Party
shall be subrogated to and shall stand in the place of such Indemnitee as to any
events or circumstances in respect of which such Indemnitee may have any right,
defense or claim relating to such Third Party Claim against any claimant or
plaintiff asserting such Third Party Claim or against any other person. Such
Indemnitee shall cooperate with such Indemnifying Party in a reasonable manner,
and at the cost and expense (including allocated costs of in-house counsel and
other personnel) of such Indemnifying Party, in prosecuting any subrogated
right, defense or claim.
(c) In the event of an Action in which the Indemnifying Party is not a
named defendant, if either the Indemnified Party or Indemnifying Party shall so
request, the parties shall endeavor to substitute the Indemnifying Party for the
named defendant, if at all practicable. If such substitution or addition cannot
be achieved for any reason or is not requested, the named defendant shall allow
the Indemnifying Party to manage the Action as set forth in this Section. The
Indemnifying Party shall fully indemnify the named defendant against all costs
of defending the Action (including court costs, sanctions imposed by a court,
attorneys' fees, experts' fees and all other external expenses, and the
allocated costs of in-house counsel and other personnel), the costs of any
judgment or settlement, and the cost of any interest or penalties relating to
any judgment or settlement.
4.7. REMEDIES CUMULATIVE. The remedies provided in this Article IV shall
be cumulative and shall not preclude assertion by any Indemnitee of any other
rights or the seeking of any and all other remedies against any Indemnifying
Party.
ARTICLE V
CONFIDENTIALITY
5.1. CONFIDENTIAL INFORMATION. Subject to Section 5.2, each of Inland or
Ryerson Tull, on behalf of itself and each member of its respective Group,
agrees to hold, and to cause its respective directors, officers, employees,
agents, accountants, counsel and other advisors and representatives to hold, in
strict confidence, with at least the same degree of care that applies to
Inland's confidential and proprietary information pursuant to policies in effect
as of the Closing Date, all Information concerning each such other Group that is
either in its possession (including Information in its possession prior to the
date hereof or the Closing Date) or furnished by any such other Group or its
respective directors, officers, employees, agents, accountants, counsel and
other advisors and representatives at any time pursuant to this Agreement or
otherwise, and shall not use any such Information other than for such purposes
as shall be expressly permitted hereunder or thereunder, except, in each case,
to the extent that such Information has been (i) in the public domain through no
fault of such party or any member of such Group or any of their respective
directors, officers, employees, agents, accountants, counsel and other advisors
and representatives, (ii) later lawfully acquired from other sources by such
party (or any member of such party's Group) which sources are not themselves
bound by a confidentiality obligation), or (iii) independently generated without
reference to any proprietary or confidential Information of the other party.
5.2. PROTECTIVE ARRANGEMENTS. In the event that any party or any member of
its Group either determines on the advice of its counsel that it is required to
disclose any Information pursuant to applicable law or receives any demand under
lawful process or from any Governmental Authority to disclose or provide
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Information of any other party (or any member of any other party's Group) that
is subject to the confidentiality provisions hereof, such party shall notify the
other party prior to disclosing or providing such Information and shall
cooperate at the expense of the requesting party in seeking any reasonable
protective arrangements requested by such other party. Subject to the foregoing,
the Person that received such request may thereafter disclose or provide
Information to the extent required by such law (as so advised by counsel) or by
lawful process or such Governmental Authority.
ARTICLE VI
MISCELLANEOUS
6.1. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party.
6.2. ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
previous agreements, negotiations, discussions, writings, understandings,
commitments and conversations with respect to such subject matter.
6.3. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois.
6.4. ASSIGNABILITY. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that no party hereto may assign its respective rights or
delegate its respective obligations under this Agreement without the express
prior written consent of the other party hereto.
6.5. NOTICES. All notices or other communications under this Agreement
shall be in writing and shall be deemed to be duly given when (a) delivered in
person, (b) deposited in the United States mail or private express mail, postage
prepaid, or (c) sent by facsimile (with a machine confirmation of receipt)
addressed as follows:
If to Inland, to: Inland Steel Industries, Inc.
30 West Monroe Street
Chicago, Illinois 60603
Facsimile: (312) 899-3921
Attention: Vice President and General Counsel
If to Ryerson Tull, to: Ryerson Tull, Inc.
2621 West 15th Place
Chicago, Illinois 60608
Facsimile: (312) 899-3214
Attention: Corporate Secretary
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Any party may, by notice to the other party, change the address to which such
notices are to be given.
6.6. SEVERABILITY. If any provision of this Agreement or the application
thereof to any Person or circumstance is determined by a court of competent
jurisdiction to be invalid, void or unenforceable, the remaining provisions
hereof or thereof, or the application of such provision to Persons or
circumstances or in jurisdictions other than those as to which it has been held
invalid or unenforceable, shall remain in full force and effect and shall in no
way be affected, impaired or invalidated thereby, so long as the economic or
legal substance of the transactions contemplated hereby or thereby, as the case
may be, is not affected in any manner adverse to any party. Upon such
determination, the parties shall negotiate in good faith in an effort to agree
upon such a suitable and equitable provision to effect the original intent of
the parties.
6.7. AMENDMENTS. No provisions of this Agreement shall be deemed waived,
amended, supplemented or modified by any party, unless such waiver, amendment,
supplement or modification is in writing and signed by the authorized
representative of the party against whom it is sought to enforce such waiver,
amendment, supplement or modification.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives.
INLAND STEEL INDUSTRIES, INC.
By: ____________________________
Name: ____________________________
Title: ____________________________
RYERSON TULL, INC.
By: ____________________________
Name: ____________________________
Title: ____________________________
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CROSS-LICENSE AGREEMENT
This Agreement ("Agreement") is entered into this ___ day of June, 1996, by
and between INLAND STEEL INDUSTRIES, INC., a Delaware corporation ("ISI"), and
RYERSON TULL, INC., a Delaware corporation ("Ryerson Tull").
WHEREAS, ISI is the owner of all right, title and interest in and to the
property listed on Schedule 1 hereto (the "Designated ISI Intellectual
Property") together with the goodwill associated therewith;
WHEREAS, Ryerson Tull is the owner of all right, title and interest in and
to the property and know-how listed on Schedule 2 hereto (the "Designated
Ryerson Tull Intellectual Property") together with the goodwill associated
therewith;
WHEREAS, ISI is desirous of obtaining a license to use the Designated
Ryerson Tull Intellectual Property; and
WHEREAS, Ryerson Tull is desirous of obtaining a license to use the
Designated ISI Intellectual Property;
NOW, THEREFORE, it is hereby agreed as follows:
1. Definitions.
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1.1 "Licensed Intellectual Property" means, collectively, the Designated
ISI Intellectual Property and the Designated Ryerson Tull Intellectual Property.
1.2 "Respective Licensed Intellectual Property" means the specific
Licensed Intellectual Property (either the Designated ISI Intellectual Property
or the Designated Ryerson Tull Intellectual Property) granted to each party
hereunder.
1.3 Given the cross-licensing provided by this Agreement, "Licensee" means
the party which receives a license from the other party for any given Licensed
Intellectual Property.
1.4 Given the cross-licensing provided by this Agreement, "Licensor" means
the party which grants a license to the other party for any given Licensed
Intellectual Property.
2. Cross-License Grants.
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2.1 ISI hereby grants to Ryerson Tull for itself and for the benefit of
its subsidiaries, and Ryerson Tull hereby accepts in each such capacity, a
royalty-free license to use the Designated ISI Intellectual Property in
association with its distribution business operations throughout the world.
<PAGE>
2.2 Ryerson Tull hereby grants to ISI for itself and its subsidiaries
(other than Ryerson Tull and its subsidiaries), and ISI hereby accepts in each
such capacity, a royalty-free license to use the Designated Ryerson Tull
Intellectual Property in association with its business operations throughout the
world other than in North America.
2.3 Each Licensor shall provide such assistance in transferring the
Licensed Intellectual Property as is reasonably requested by the Licensee in
order to obtain the full benefit of the Licensed Intellectual Property.
3. Term.
----
The licenses granted under this Agreement with respect to the Licensed
Intellectual Property shall, unless sooner terminated as provided elsewhere in
this Agreement, terminate automatically, and with no further action on the part
of either party, when the number of outstanding shares of Class B Common Stock,
$1.00 par value ("Class B Common Stock"), of Ryerson Tull outstanding represents
less than 50% of the sum of the number of outstanding shares of Class A Common
Stock, $1.00 par value, and such outstanding shares of Class B Common Stock of
Ryerson Tull.
4. Quality Control.
---------------
4.1 Each Licensee agrees that the goods and services sold by such Licensee
under its Respective Licensed Intellectual Property shall at least be
commensurate with the nature and quality of comparable goods and services
presently offered by such Licensee, which nature and quality each Licensor deems
satisfactory.
4.2 Each Licensee agrees to provide to Licensor, at such times as Licensor
may reasonably request, specimens of the products to which such Licensee applies
its Respective Licensed Intellectual Property, samples of product labels,
packaging, advertisements, promotional materials, and any other materials which
Licensor may request which demonstrate the manner in which Licensee uses its
Respective Licensed Intellectual Property.
4.3 Each Licensor may conduct reasonable inspections during reasonable
business hours of the Licensee's facilities for the purpose of ensuring that the
quality of the goods and services are in compliance with the terms of this
Agreement. The Licensor shall supply the Licensee with ten (10) days advance
written notice regarding any such inspection.
5. Compliance.
----------
The parties agree that the goods sold and services provided under this
Agreement shall comply with all federal, state and local laws and regulations
pertaining to such products and services.
-2-
<PAGE>
6. Royalty; Reimbursement.
----------------------
6.1 The licenses granted herein shall be royalty-free.
6.2 Each Licensee shall promptly reimburse the Licensor for reasonable
expenses incurred by the Licensor (including out-of-pocket expenses and the
mutually agreeable expense allocation of employees, based upon salary, benefits
and other personnel costs) in connection with the provision of any Licensed
Intellectual Property.
7. Ownership.
---------
Each Licensee agrees that this Agreement is personal and does not give it
the right to assign the rights granted herein, or any right, title, or ownership
interest in its Respective Licensed Intellectual Property without the written
consent of the other party; provided, however, that (i) Ryerson Tull as Licensee
shall have the right to permit any of its subsidiaries and affiliates to use the
Designated ISI Intellectual Property in accordance with this Agreement, and (ii)
ISI as Licensee shall have the right to permit any of its subsidiaries,
affiliates and joint ventures (other than Ryerson Tull and its subsidiaries and
affiliates) to use the Ryerson Tull Designated Intellectual Property in
accordance with this Agreement. Each Licensee further agrees that it will not
challenge the validity of this Agreement or of any of the Licensor's Licensed
Intellectual Property, whether registered or not. Each Licensee further agrees
to cooperate with the Licensor and tender all documents necessary to assist the
Licensor in obtaining or maintaining state or federal registrations of
Licensor's Respective Licensed Intellectual Property.
8. Assignment.
----------
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns; provided, however,
that no party hereto may assign its respective rights or delegate its respective
obligations under this Agreement without the express prior written consent of
the other party hereto.
9. Termination.
-----------
9.1 This Agreement may be terminated at any time by the mutual consent of
ISI and Ryerson Tull or by either party upon sixty (60) days' prior written
notice to the other party.
9.2 Unless otherwise agreed to in writing by the parties, upon termination
of this Agreement, the parties will immediately discontinue all use of their
Respective Licensed Intellectual Property and shall return to the other party
all inventory of packaging, labels, materials and the like displaying such
Licensed Intellectual Property.
-3-
<PAGE>
9.3 Following termination of this Agreement, each Licensor shall have the
right to a license (which may be exclusive) of any part of the other's Licensed
Intellectual Property for a transition period of up to two (2) years at a fair
market value license fee and upon such other terms as may be mutually agreed
upon by Licensor and Licensee. If Licensor and Licensee are unable to agree
upon such terms, the fair market value license fee and other terms shall be
determined by a qualified, independent expert selected by the accounting firm(s)
regularly employed by Licensor and Licensee.
10. Notices.
-------
10.1 Each Licensee agrees to notify the Licensor of any and all complaints
from customers, consumers, or any state or government agency with regard to the
goods and services offered under its Respective Licensed Intellectual Property,
to keep accurate records with regard thereto and to furnish copies of such
records to the other party upon request. Each Licensee also agrees to notify
the Licensor of any and all lawsuits brought which involve its Respective
Licensed Intellectual Property.
10.2 Each Licensee agrees to promptly notify the Licensor of any use of
names, package designs, labels or configurations that may come to its attention
which are similar to its Respective Licensed Intellectual Property.
10.3 All notices or other communications under this Agreement shall be in
writing and shall be deemed to be duly given when (a) delivered in person, (b)
deposited in the United States mail or private express mail, postage prepaid, or
(c) sent by facsimile (with a machine confirmation of receipt) addressed as
follows:
If to ISI, to: Inland Steel Industries, Inc.
30 West Monroe Street
Chicago, Illinois 60603
Facsimile: 312-899-3921
Attention: Vice President and General Counsel
If to Ryerson Tull, to: Ryerson Tull, Inc.
2621 West 15th Place
Chicago, Illinois 60608
Facsimile: 312-899-3214
Attention: Corporate Secretary
Any party may, by notice to the other party, change the address to which such
notices are to be given.
11. Governing Law.
-------------
This Agreement shall be construed in accordance with and governed by the
laws of the State of Illinois.
-4-
<PAGE>
12. Complete Agreement.
------------------
This Agreement constitutes the complete agreement between the parties with
respect to the subject matter hereof and supersedes any and all previous
agreements, oral or written, that may have been made between the parties or
acquired by the parties. This Agreement may be amended only in writing by an
agreement executed by the parties hereto.
13. Severability.
------------
If any provision of this Agreement or the application thereof to any Person
or circumstance is determined by a court of competent jurisdiction to be
invalid, void or unenforceable, the remaining provisions hereof or thereof, or
the application of such provisions hereof or thereof, or the application of such
provision to Persons or circumstances or in jurisdictions other than those as to
which it has been held invalid or unenforceable, shall remain in full force and
effect and shall in no way be affected, impaired or invalidated thereby, so long
as the economic or legal substance of the transactions contemplated hereby or
thereby, as the case may be, is not affected in any manner adverse to any party.
Upon such determination, the parties shall negotiate in good faith in an effort
to agree upon such a suitable and equitable provision to effect the original
intent of the parties.
14. Amendments.
----------
No provisions of this Agreement shall be deemed waived, amended,
supplemented or modified by any party, unless such waiver, amendment, supplement
or modification is in writing and signed by the authorized representative of the
party against whom it is sought to enforce such waiver, amendment, supplement or
modification.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives.
INLAND STEEL INDUSTRIES, INC.
By:
--------------------------------
Its:
----------------------------
RYERSON TULL, INC.
-5-
<PAGE>
By:
--------------------------------
Its:
----------------------------
-6-
<PAGE>
SCHEDULE 1
Designated ISI Intellectual Property
------------------------------------
The red diamond logo of Inland Steel Industries, Inc.
<PAGE>
SCHEDULE 2
Designated Ryerson Tull Intellectual Property
---------------------------------------------
The name "Ryerson".
Know-how of Ryerson Tull, Inc., including technical assistance and
consultation regarding data processing systems, logistics, inventory and
material management, engineering and cost reduction services, material
processing and assembling and network integration.
<PAGE>
TAX SHARING AGREEMENT
This TAX SHARING AGREEMENT is made and entered into as of this ______ day
of _________, 1996 by and among INLAND STEEL INDUSTRIES, INC. ("ISI") and
RYERSON TULL, INC. ("Ryerson Tull").
RECITALS:
--------
A. The Board of Directors of ISI has determined that it is in the
best interests of ISI and its stockholders for Ryerson Tull to issue and
sell in an initial public offering up to 15% of the common stock of Ryerson
Tull.
B. ISI and Ryerson Tull wish to provide for the proper treatment of
tax liability incurred by ISI and affiliates of ISI other than Ryerson
Tull, on one hand, and Ryerson Tull and its operating subsidiaries on the
other hand .
WITNESSETH:
----------
NOW, THEREFORE, for and in consideration of the foregoing recitals and the
mutual covenants set forth herein, the parties agree as follows:
1. Federal Income Taxes.
1.1. ISI and Ryerson Tull acknowledge that Financial Accounting Standards
Board statement on Accounting for Income Taxes ("FAS 109") governs the
requirements to account for and allocate current and deferred federal income tax
expense for a group that files a consolidated income tax return. Historically,
ISI has administered compliance with FAS 109 among ISI, Ryerson Tull, Inland
Steel Company, Joseph T. Ryerson & Son, Inc., J. M. Tull Metals Co., Inc., AFCO
Metals, Inc. Inland Steel Administrative Services Company, and Magnetics
International, Inc. (the "Consolidated Group").
1.2. Regular and Alternative Minimum Tax. ISI and Ryerson Tull agree to
follow the following procedures in connection with the determination and
allocation of regular and alternative minimum federal income tax liability.
1.2.1. Each member of the Consolidated Group, as such group is now or
hereafter constituted, shall determine its own regular income tax liability
based on its separate company taxable income. If the Consolidated Group
uses net operating loss ("NOL") carry forwards, each member will use the
appropriate portion of that year's carry forward previously allocated to
such member, if any.
1.2.2. If some members of the Consolidated Group have a regular
taxable income for the year but one or other members of the Consolidated
Group have a regular tax loss, the loss company(ies) will record an income
tax credit not to exceed the positive tax charges recorded by the
profitable members.
1.2.3. Each member of the Consolidated Group will determine its own
tentative minimum tax and alternative minimum tax ("AMT").
-1-
<PAGE>
1.2.4. If the Consolidated Group has an AMT liability for the year,
the consolidated AMT will be allocated to appropriate members of the
Consolidated Group based upon the analyis required in Paragraph 1.2.3.
1.2.5. Any consolidated NOL carry forwards or AMT credit carry
forwards generated during the year will be allocated to appropriate members
in the Consolidated Group.
1.2.6. If the Consolidated Group uses AMT credit carry forwards, each
member will use the appropriate portion of that year's carry forward
previously allocated to it, if any.
1.2.7. Each member will record as its current tax provision its
separate company regular income tax liability and its allocated AMT
liability as determined in accordance with Paragraphs 1.2.1. through 1.2.6.
1.3. Deferred Income Taxes.
Each member of the Consolidated Group will record the difference between
(1) its cumulative temporary differences at the end of the year multiplied by
the statutory tax rate and (2) its cumulative temporary differences at the
beginning of the current year multiplied by the statutory tax rate. Each member
of the Consolidated Group will also record the tax effects of increases or
decreases in NOL carry forwards and AMT credit carry forwards allocated to it in
accordance with the provisions of Paragraph 1.2.7 and increases or decreases in
other tax credit carry forwards allocated to it, if any. For purposes of this
Agreement, the term "temporary differences" shall have the meaning assigned to
such term in FAS 109.
1.4. Payment.
Each member of the Consolidated Group will pay its current provision for
the year to, or receive cash if its current provision is a credit from, ISI. If
the Consolidated Group is able to use carry forwards from a prior year that were
allocated to a specific member of the Consolidated Group, but such member was
not individually able to do so, then ISI will pay such member for the use of
such member's attributes. For purposes of this Agreement, each member's
"current provision" shall be the amount recorded as its "current provision" in
its applicable statement of operations contained within its financial
statements.
2. State and Local Income Taxes.
The following provisions shall govern the determination and allocation of
state and local income taxes for states that have unitary or combined tax laws
and for states where the liability is based solely on the results of the
individual company regardless of applicable consolidation principles.
2.1. Separate Company States. The current income tax liability for each
member of the state consolidated group will be determined on a stand-alone basis
in accordance with applicable state laws. No deferred taxes will be provided
for because they have been deemed to be immaterial in the states involved.
-2-
<PAGE>
2.2. Unitary or Combined Tax Laws (other than Indiana).
Each member of a state group will pay a charge to ISI in lieu of State
income tax in those years when such member has State Taxable income and ISI
incurs a unitary or combined State income tax liability. Such charge in lieu of
State income tax is to be determined based upon the proportion that each such
member's State taxable income bears to total taxable income for the appropriate
state group as a whole. For example, the quotient of the member's unitary or
combined state taxable income divided by the total sum of unitary or combined
taxable income times the state income tax liability equals the applicable charge
in lieu of state income tax.
2.3 Indiana Income Taxes.
Current and deferred Indiana income taxes will be provided for by each
member of the Indiana consolidated group which has a nexus in Indiana. The
method for determining and allocating Indiana state income taxes will be the
same methodology used to determine federal income taxes and will include the
determination of a current liability based on the consolidated apportionment
factors and the determination of a net deferred liability or asset based on
temporary differences and allocated tax attributes.
3. Adjustments
Audit adjustments and refunds will be charged or paid to Ryerson Tull in
accordance with the calculation of tax liability set forth in this Agreement.
4. Notices.
Any notice to be given hereunder by either party hereto to the other may be
transmitted by facsimile (with a machine confirmation of receipt), may be
personally delivered or may be deposited in the United States mail, registered
or certified, postage prepaid and return receipt requested, addressed to the
party for whom intended as follows:
To Ryerson Tull: Ryerson Tull, Inc.
2621 West 15th Place
Chicago, IL 60608
Attention: Vice President-Finance
Fax Number: (312) 762-0179
To ISI: Inland Steel Industries, Inc.
30 W. Monroe Street
Chicago, IL 60603
Attention: Director-Taxes
Fax Number: (312) 899-3544
Either party may change its address at any time by notifying the other, in
writing, of such change. Service of any such notice shall be deemed complete at
the time of delivery.
-3-
<PAGE>
5. Governing Law.
This Agreement has been delivered in, and shall in all respects be governed
by, and construed in accordance with, the laws of the State of Illinois
applicable to agreements made and to be performed entirely within such State,
including all matters of construction, validity and performance.
6. Severability.
Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
INLAND STEEL INDUSTRIES, INC. RYERSON TULL, INC.
By: By:
------------------------- -------------------------
Name: Name:
----------------------- -----------------------
Title: Title:
---------------------- ----------------------
-4-
<PAGE>
==============================================================================
GUARANTY AND CONTINGENT PURCHASE AGREEMENT
OF
JOSEPH T. RYERSON & SON, INC.
Dated as of August 15, 1990
Re:
$50,400,400 8.03% Guaranteed ESOP Notes,
Series A, Due July 2, 1997
$34,464,151 8.51% Guaranteed ESOP Notes,
Series B, Due July 2, 2000
and
$62,048,600 8.88% Guaranteed ESOP Notes,
Series C, Due July 2, 2004
of
the Inland Steel Industries
Thrift Plan ESOP Trust
==============================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION HEADING Page
<S> <C> <C>
PARTIES.................................................... 1
RECITALS................................................... 1
1. GUARANTEED INDEBTEDNESS................................. 2
1.1. Guaranty.......................................... 2
1.2. Seniority of Obligations.......................... 3
2. LIABILITY ABSOLUTE AND UNCONDITIONAL.................... 3
2.1. Unconditional Guaranty............................ 3
2.2. Recovery of Guaranteed Indebtedness............... 4
2.3. Liability of Issuer............................... 4
2.4. Waiver............................................ 4
2.5. Notice of Transfer................................ 5
3. REPRESENTATIONS AND WARRANTIES.......................... 5
4. OBLIGATION OF COMPANY TO PURCHASE NOTES................. 5
4.1. Put Event; Required Purchase...................... 5
4.2. Continuing Obligation............................. 7
5. EXCHANGE OF NOTES....................................... 7
6. COMPANY COVENANTS....................................... 7
6.1. Corporate Existence, etc.......................... 7
6.2. Insurance......................................... 8
6.3. Taxes, Claims for Labor and Materials,
Compliance with Laws............................. 8
6.4. Maintenance, etc.................................. 8
6.5. Nature of Business................................ 8
6.6. Consolidated Tangible Net Worth................... 8
6.7. Limitation on Funded Debt......................... 8
6.8. Limitation on Liens............................... 9
6.9. Dividends, Stock Purchases........................ 11
6.10. Limitation on Sale and Leasebacks................. 12
6.11. Mergers, Consolidations and Sales of Assets....... 12
6.12. Repurchase of Notes............................... 14
6.13. Transactions with Affiliates...................... 14
6.14. Termination of Pension Plans...................... 14
6.15 ERISA Covenants................................... 14
6.16. Reports and Rights of Inspection.................. 15
6.17. Tax Exempt Status of Plan and Trust............... 17
6.18. Contributions to the Issuer....................... 17
6.19. Indemnity......................................... 17
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
SECTION HEADING PAGE
<S> <C> <C>
7. INTERPRETATION OF AGREEMENT; DEFINITIONS....................... 18
7.1. Definitions.............................................. 18
7.2. Directly or Indirectly................................... 24
7.3. Accounting Principles.................................... 24
8. MISCELLANEOUS.................................................. 24
8.1. Governing Law............................................ 24
8.2. Notices.................................................. 24
8.3. Successors and Assigns................................... 25
8.4. Survival of Covenants and Representations; Survival
of Indemnification...................................... 25
8.5. Severability........................ .................... 25
8.6. (a) Amendments and Modifications........................ 25
(b) Solicitation of Noteholders......................... 26
8.7. Reproduction of Documents................................ 26
8.8. Expenses, Stamp Tax Indemnity............................ 26
8.9. Confidentiality.......................................... 27
8.10. Captions................................................. 27
8.11. Counterparts............................................. 27
SIGNATURE PAGE.................................................... 28
</TABLE>
ATTACHMENTS TO GUARANTY AND CONTINGENT PURCHASE AGREEMENT:
Schedule I
Exhibit A -- Funded Debt
-ii-
<PAGE>
Joseph T. Ryerson & Son, Inc.
----------------------------
Long-Term Debt
As of September 20, 1990
------------------------
<TABLE>
<CAPTION>
Note 1 - Long-term Debt
- -----------------------
The Company's long-term debt is comprised of the following:
<S> <C>
Industrial Revenue Bonds:
Houston Plant at 60% of prime rate up to 11%;
due in quarterly installments through
January 1, 1994 $ 2,060,000
Tulsa plant at 85.56% of prime rate up to 11%;
due in quarterly installments through
June 30, 1993 1,050,000
Loopco Leveling Line at 70% of prime rate with
8.4% minimum; due in monthly installments through
August 15, 1992, Marquette Bank 172,500
Tension Level Line at 75% of reference rate
(currently 9.2243%); due in monthly installments
through August 1, 1992 375,000
Mortgages at 9% and ll%; due in monthly installments
through October 1, 1993 718,101
Mortgage at 10.25%; Keelor, MN; due in monthly
installments through November 1, 1997 2,269,640
Mortgage at 9%; Keelor, Iowa; due in monthly
installments through October 1, 1992 338,441
----------
6,983,682
Less amounts due within one year (1,977,215)
----------
Long-term debt at September 20, 1990 $ 5,007,467
==========
</TABLE>
A-2
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated February 19, 1996,
relating to the financial statements of Ryerson Tull, Inc. (formerly Inland
Materials Distribution Group, Inc.), which appears in such Prospectus. We also
consent to the application of such report to the Financial Statement Schedules
for the three years ended December 31, 1995 listed under Item 16(b) of this
Registration Statement when such schedules are read in conjunction with the
financial statements referred to in our report. The audits referred to in such
report also included these schedules. We also consent to the references to us
under the headings "Experts" and "Selected Financial Data" in such Prospectus.
However, it should be noted that Price Waterhouse LLP has not prepared or
certified such "Selected Financial Data."
PRICE WATERHOUSE LLP
Chicago, Illinois
June 10, 1996
<PAGE>
RYERSON TULL, INC.
POWER OF ATTORNEY
----------------------------
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, as a director and
(or) officer of Ryerson Tull, Inc., a Delaware corporation (the "Corporation"),
do hereby nominate, constitute and appoint Vicki L. Avril, George A. Ranney, Jr.
and Charles B. Salowitz, or any one or more of them, my true and lawful
attorneys-in-fact and agents to do any and all acts and things and to execute
any and all instruments which said attorneys-in-fact and agents, or any of them,
may deem necessary or advisable to enable the Corporation to comply with the
Securities Act of 1933, as amended, and any requirements of the Securities and
Exchange Commission in respect thereof, in connection with the registration
under said Act of not to exceed 6,000,000 shares of Class A Common Stock, $1.00
par value per share, of the Corporation, including specifically, but without
limitation thereof, full power and authority to sign my name as a director and
(or) officer of said Corporation to a registration statement on Form S-1, or
such other form for the registration of securities as the Securities and
Exchange Commission may require covering such shares and to any amendment or
amendments (including, without limitation, post-effective amendments) or
supplements to said registration statement or statements and to the prospectus
or prospectuses relating thereto, and to certify on my behalf that, to the best
of my knowledge and belief, the Corporation meets all of the requirements for
filing on Form S-1; hereby ratifying and confirming all that said attorneys-in-
fact and agents, or any of them, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 7th day of May, 1996.
/s/ Robert J. Darnall
------------------------------
Robert J. Darnall
<PAGE>
RYERSON TULL, INC.
POWER OF ATTORNEY
----------------------------
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, as a director and
(or) officer of Ryerson Tull, Inc., a Delaware corporation (the "Corporation"),
do hereby nominate, constitute and appoint Vicki L. Avril, George A. Ranney, Jr.
and Charles B. Salowitz, or any one or more of them, my true and lawful
attorneys-in-fact and agents to do any and all acts and things and to execute
any and all instruments which said attorneys-in-fact and agents, or any of them,
may deem necessary or advisable to enable the Corporation to comply with the
Securities Act of 1933, as amended, and any requirements of the Securities and
Exchange Commission in respect thereof, in connection with the registration
under said Act of not to exceed 6,000,000 shares of Class A Common Stock, $1.00
par value per share, of the Corporation, including specifically, but without
limitation thereof, full power and authority to sign my name as a director and
(or) officer of said Corporation to a registration statement on Form S-1, or
such other form for the registration of securities as the Securities and
Exchange Commission may require covering such shares and to any amendment or
amendments (including, without limitation, post-effective amendments) or
supplements to said registration statement or statements and to the prospectus
or prospectuses relating thereto, and to certify on my behalf that, to the best
of my knowledge and belief, the Corporation meets all of the requirements for
filing on Form S-1; hereby ratifying and confirming all that said attorneys-in-
fact and agents, or any of them, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 7th day of May, 1996.
/s/ Neil S. Novich
------------------------------
Neil S. Novich
<PAGE>
RYERSON TULL, INC.
POWER OF ATTORNEY
----------------------------
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, as a director and
(or) officer of Ryerson Tull, Inc., a Delaware corporation (the "Corporation"),
do hereby nominate, constitute and appoint Vicki L. Avril, George A. Ranney, Jr.
and Charles B. Salowitz, or any one or more of them, my true and lawful
attorneys-in-fact and agents to do any and all acts and things and to execute
any and all instruments which said attorneys-in-fact and agents, or any of them,
may deem necessary or advisable to enable the Corporation to comply with the
Securities Act of 1933, as amended, and any requirements of the Securities and
Exchange Commission in respect thereof, in connection with the registration
under said Act of not to exceed 6,000,000 shares of Class A Common Stock, $1.00
par value per share, of the Corporation, including specifically, but without
limitation thereof, full power and authority to sign my name as a director and
(or) officer of said Corporation to a registration statement on Form S-1, or
such other form for the registration of securities as the Securities and
Exchange Commission may require covering such shares and to any amendment or
amendments (including, without limitation, post-effective amendments) or
supplements to said registration statement or statements and to the prospectus
or prospectuses relating thereto, and to certify on my behalf that, to the best
of my knowledge and belief, the Corporation meets all of the requirements for
filing on Form S-1; hereby ratifying and confirming all that said attorneys-in-
fact and agents, or any of them, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 7th day of May, 1996.
/s/ Jay M. Gratz
------------------------------
Jay M. Gratz
<PAGE>
RYERSON TULL, INC.
POWER OF ATTORNEY
----------------------------
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, as a director and
(or) officer of Ryerson Tull, Inc., a Delaware corporation (the "Corporation"),
do hereby nominate, constitute and appoint Vicki L. Avril, George A. Ranney, Jr.
and Charles B. Salowitz, or any one or more of them, my true and lawful
attorneys-in-fact and agents to do any and all acts and things and to execute
any and all instruments which said attorneys-in-fact and agents, or any of them,
may deem necessary or advisable to enable the Corporation to comply with the
Securities Act of 1933, as amended, and any requirements of the Securities and
Exchange Commission in respect thereof, in connection with the registration
under said Act of not to exceed 6,000,000 shares of Class A Common Stock, $1.00
par value per share, of the Corporation, including specifically, but without
limitation thereof, full power and authority to sign my name as a director and
(or) officer of said Corporation to a registration statement on Form S-1, or
such other form for the registration of securities as the Securities and
Exchange Commission may require covering such shares and to any amendment or
amendments (including, without limitation, post-effective amendments) or
supplements to said registration statement or statements and to the prospectus
or prospectuses relating thereto, and to certify on my behalf that, to the best
of my knowledge and belief, the Corporation meets all of the requirements for
filing on Form S-1; hereby ratifying and confirming all that said attorneys-in-
fact and agents, or any of them, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 22nd day of May, 1996.
/s/ Lily L. May
------------------------------
Lily L. May
<PAGE>
RYERSON TULL, INC.
POWER OF ATTORNEY
----------------------------
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, as a director and
(or) officer of Ryerson Tull, Inc., a Delaware corporation (the "Corporation"),
do hereby nominate, constitute and appoint Vicki L. Avril, George A. Ranney, Jr.
and Charles B. Salowitz, or any one or more of them, my true and lawful
attorneys-in-fact and agents to do any and all acts and things and to execute
any and all instruments which said attorneys-in-fact and agents, or any of them,
may deem necessary or advisable to enable the Corporation to comply with the
Securities Act of 1933, as amended, and any requirements of the Securities and
Exchange Commission in respect thereof, in connection with the registration
under said Act of not to exceed 6,000,000 shares of Class A Common Stock, $1.00
par value per share, of the Corporation, including specifically, but without
limitation thereof, full power and authority to sign my name as a director and
(or) officer of said Corporation to a registration statement on Form S-1, or
such other form for the registration of securities as the Securities and
Exchange Commission may require covering such shares and to any amendment or
amendments (including, without limitation, post-effective amendments) or
supplements to said registration statement or statements and to the prospectus
or prospectuses relating thereto, and to certify on my behalf that, to the best
of my knowledge and belief, the Corporation meets all of the requirements for
filing on Form S-1; hereby ratifying and confirming all that said attorneys-in-
fact and agents, or any of them, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 10th day of June,
1996.
/s/ James A. Henderson
------------------------------
James A. Henderson
<PAGE>
RYERSON TULL, INC.
POWER OF ATTORNEY
----------------------------
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, as a director and
(or) officer of Ryerson Tull, Inc., a Delaware corporation (the "Corporation"),
do hereby nominate, constitute and appoint Vicki L. Avril, George A. Ranney, Jr.
and Charles B. Salowitz, or any one or more of them, my true and lawful
attorneys-in-fact and agents to do any and all acts and things and to execute
any and all instruments which said attorneys-in-fact and agents, or any of them,
may deem necessary or advisable to enable the Corporation to comply with the
Securities Act of 1933, as amended, and any requirements of the Securities and
Exchange Commission in respect thereof, in connection with the registration
under said Act of not to exceed 6,000,000 shares of Class A Common Stock, $1.00
par value per share, of the Corporation, including specifically, but without
limitation thereof, full power and authority to sign my name as a director and
(or) officer of said Corporation to a registration statement on Form S-1, or
such other form for the registration of securities as the Securities and
Exchange Commission may require covering such shares and to any amendment or
amendments (including, without limitation, post-effective amendments) or
supplements to said registration statement or statements and to the prospectus
or prospectuses relating thereto, and to certify on my behalf that, to the best
of my knowledge and belief, the Corporation meets all of the requirements for
filing on Form S-1; hereby ratifying and confirming all that said attorneys-in-
fact and agents, or any of them, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 10th day of June,
1996.
/s/ Donald S. Perkins
------------------------------
Donald S. Perkins
<PAGE>
RYERSON TULL, INC.
POWER OF ATTORNEY
----------------------------
KNOW ALL MEN BY THESE PRESENTS, that I, the undersigned, as a director and
(or) officer of Ryerson Tull, Inc., a Delaware corporation (the "Corporation"),
do hereby nominate, constitute and appoint Vicki L. Avril, George A. Ranney, Jr.
and Charles B. Salowitz, or any one or more of them, my true and lawful
attorneys-in-fact and agents to do any and all acts and things and to execute
any and all instruments which said attorneys-in-fact and agents, or any of them,
may deem necessary or advisable to enable the Corporation to comply with the
Securities Act of 1933, as amended, and any requirements of the Securities and
Exchange Commission in respect thereof, in connection with the registration
under said Act of not to exceed 6,000,000 shares of Class A Common Stock, $1.00
par value per share, of the Corporation, including specifically, but without
limitation thereof, full power and authority to sign my name as a director and
(or) officer of said Corporation to a registration statement on Form S-1, or
such other form for the registration of securities as the Securities and
Exchange Commission may require covering such shares and to any amendment or
amendments (including, without limitation, post-effective amendments) or
supplements to said registration statement or statements and to the prospectus
or prospectuses relating thereto, and to certify on my behalf that, to the best
of my knowledge and belief, the Corporation meets all of the requirements for
filing on Form S-1; hereby ratifying and confirming all that said attorneys-in-
fact and agents, or any of them, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 10th day of June,
1996.
/s/ Jean-Pierre Rosso
------------------------------
Jean-Pierre Rosso
