================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM T-3
FOR APPLICATIONS FOR QUALIFICATION OF INDENTURES
UNDER THE TRUST INDENTURE ACT OF 1939
METALLURG, INC.
(Name of applicant)
6 EAST 43RD STREET - 12TH FLOOR
NEW YORK, NEW YORK 10005
(Address of principal executive office)
SECURITIES TO BE ISSUED UNDER THE INDENTURE TO BE QUALIFIED
Title of Class Amount
SENIOR SECURED NOTES DUE 2007 $60,000,000(1)
Approximate date of proposed public offering:
ON, OR AS SOON AS PRACTICABLE AFTER, THE EFFECTIVE DATE (AS DEFINED IN THE
APPLICANT'S FOURTH AMENDED AND RESTATED JOINT PLAN OF REORGANIZATION,
DATED DECEMBER 18, 1996).
Name and Address of agent for services:
ERIC L. SCHONDORF, ESQ.
VICE PRESIDENT AND GENERAL COUNSEL
METALLURG, INC.
6 EAST 43RD STREET - 12TH FLOOR
NEW YORK, NEW YORK 10005
(212) 687-9470
Copies to:
RONALD F. DAITZ, ESQ.
WEIL, GOTSHAL & MANGES LLP
767 FIFTH AVENUE
NEW YORK, NEW YORK 10153
(212) 310-8000
THE APPLICANT HEREBY AMENDS THIS APPLICATION FOR QUALIFICATION ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVENESS UNTIL: (I) THE 20TH DAY
AFTER THE FILING OF A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT IT SHALL
SUPERSEDE THIS AMENDMENT, OR (II) SUCH DATE AS THE COMMISSION, ACTING PURSUANT
TO SECTION 307(C) OF THE ACT, MAY DETERMINE UPON THE WRITTEN REQUEST OF THE
APPLICANT.
================================================================================
- --------
(1) The principal amount of the Senior Secured Notes due 2007 is subject to
adjustment as provided for in the Applicant's Fourth Amended and Restated
Joint Plan of Reorganization, dated December 18, 1996.
<PAGE>
GENERAL
1. GENERAL INFORMATION. Furnish the following information as to the applicant:
(a) Form of organization:
A corporation.
(b) State or other sovereign power under the laws of which organized:
New York.
2. SECURITIES ACT EXEMPTION APPLICABLE. State briefly the facts relied upon by
the applicant as a basis for the claim that registration of the indenture
securities under the Securities Act of 1933, as amended (the "Securities Act"),
is not required.
Capitalized terms not otherwise defined in this Form T-3 have the
respective meanings assigned to them in that certain Disclosure Statement (the
"Disclosure Statement"), a copy of which is included as Exhibit T3E.1 to this
Form T-3.
Metallurg, Inc., a New York corporation (the "Applicant"), and a debtor in
possession under chapter 11 of the United States Bankruptcy Code (the
"Bankruptcy Code"), intends to issue Senior Secured Notes due 2007 (the
"Indenture Securities") on or about the Effective Date (defined below), in
accordance with the Applicant's Fourth Amended and Restated Joint Plan of
Reorganization (the "Plan"), which the Applicant, together with Shieldalloy
Metallurgical Corporation, a New York corporation and wholly-owned subsidiary of
the Applicant ("SMC"), filed with the United States Bankruptcy Court for the
Southern District of New York (the "Bankruptcy Court") on December 18, 1996. The
interest rate on the Indenture Securities will be 12% per annum. The Indenture
Securities will mature upon the tenth anniversary of the Effective Date. On or
about February 26, 1997, the Plan was confirmed by the Bankruptcy Court.
The Applicant presently expects that the Effective Date and the
consummation of transactions contemplated by the Plan will occur on or about
April 10, 1997 (the "Effective Date"). On the Effective Date, among other
things, certain of the Applicant's existing creditors will receive, in
satisfaction of existing claims, a pro rata share of the value of the "Plan
Consideration." The Plan Consideration consists of (i) $30,000,000 in cash, (ii)
$60,000,000(1) aggregate principal amount of the Indenture Securities and (iii)
approximately 4,750,000 shares of the Applicant's common stock to be issued
under the Plan.
The Applicant believes that the offer and exchange on the Effective Date
of the Indenture Securities as described above are exempt from the registration
requirements of the Securities Act and of equivalent state securities and "blue
sky" laws, by section 1145(a)(1) of the Bankruptcy Code. Generally, section
1145(a)(1) of the Bankruptcy Code exempts the offer and sale of securities under
a bankruptcy plan of reorganization from registration under the Securities Act
and under equivalent state securities and "blue sky" laws if the following
requirements are satisfied: (i) the securities are issued by the debtor (or its
successor) under a plan of reorganization; (ii) the recipients of the securities
hold a claim against the debtor, an interest in the debtor or a claim for an
administrative expense against the debtor; and (iii) the securities are issued
entirely in exchange for the recipient's claim against or interest in the debtor
or are issued "principally" in such exchange and "partly" for cash or property.
The Applicant believes that the offer and exchange of the Indenture Securities
under the Plan will satisfy such requirements of section 1145(a)(1) of the
Bankruptcy Code and, therefore, such offer and exchange is exempt from the
registration requirements referred to above.
- --------
(1) The principal amount of the Indenture Securities is subject to adjustment
as provided for in the Applicant's Plan.
<PAGE>
AFFILIATIONS
3. AFFILIATES. Furnish a list or diagram of all affiliates of the Applicant and
indicate the respective percentages of voting securities or other bases of
control.
AS OF MARCH 17, 1997
--------------------
Percentage of
Voting Securities
Owned Directly or
Applicant's Controlled Affiliates Indirectly by Applicant
--------------------------------- -----------------------
Companhia Industrial 100%
Fluminense(1)
Metallurg (Canada) Limited(1) 100%
Metallurg (Far East) Limited(1) 100%
Ferrolegeringar Aktiengesellschaft(1) 100%
Metallurg Mexico S.A. de C.V.(1) 100%
Aktiebolaget Ferrolegeringar(1) 100%
Metallurg South Africa (Pty.) Limited(1) 100%
Metallurg International Resources 100%
GmbH(1)
Brandau y Cia S.A.(1) 100%
London & Scandinavian 100%
Metallurgical Co, Limited(1)
Shieldalloy Metallurgical 100%
Corporation(1)
Metallurg do Brasil Ltda.(1) 100%
Turk Maadin Sirketi(1) 100%
Aluminum Powder Company Limited(2) 100%
Metallurg Services, Inc.(1) 100%
2
<PAGE>
Mineracao Serido S.A.(3) 100%
Metallurg S.P. Ind. Com. 100%
de Metais Ltda.(4)
W.T. Mines Limited(6) 100%
Stand 359 Wadeville 100%
Extension 4 (Pty.) Limited(6)
Atlantic Alloys and Chemicals 100%
Limited(1)
Caribbean Metals & Alloys Limited(1) 100%
M & A Powders Limited(2) 100%
Alpoco Developments Limited(9) 100%
Metalloys Limited(9) 100%
Tantalum Corporation(1) 100%
Montan Aktiengesellschaft(1) 100%
S.A. Vickers Limited(2) 100%
H.M.I. Limited(2) 100%
Metal Alloys (South Wales) 100%
Limited(2)
Ferrolegeringar Metallurg Yugoslavia(5) 100%
Montanistica S.A.(1) 100%
MIR (China), Inc.(1) 100%
GfE Metalle und Materialien GmbH(7) 100%
GfE Giesserei und Stahlwerksbedarf(7) 100%
Shawdon Enterprises Limited (8) 100%
FAG Poland Sp. z. o. o.(5) 100%
Metallurg Rijeka(1) 100%
3
<PAGE>
Metallurg Holdings Corporation(1) 100%
Metallurg, Inc.(1) 100%
Shieldalloy Metallurgical Corporation(1) 100%
Elektrowerk Weisweiler GmbH(1) 98%
Gesellschaft fur Elektrometallurgie mbH(1) 99%
GfE Umwelttechnik GmbH(7) 99%
Keramed Medizintechnik GmbH(7) 99%
Metalchimica S.r.l.(5) 95%
Aleaciones Metalurgicas Venezolanas C.A.(1) 80%
Societe Miniere du Kivu(7) 70%
Metallurg International Resources Russia Limited(8) 60%
Ampal, Inc.(1) 50%
RZM-Recyclingzentrum Mittelfranken GmbH(7) 49.95%
AMSA(6) 49%
Compagnie des Mines et Metaux(1) 21%
Solikamsk Magnesium Works(10) 5%
- --------------
(1) Voting securities owned directly by the Applicant. As of the Effective
Date, voting securities of non-U.S. subsidiaries of the Applicant (other
than Metallurg (Canada) Limited and Elektrowerk Weisweiler GmbH) will be
transferred to Metallurg Holdings Corporation.
(2) Voting securities owned directly by London and Scandinavian Metallurgical
Co, Limited.
(3) Voting securities owned directly by Metallurg do Brasil Ltda.
(4) Voting securities owned directly by Companhia Industrial Fluminense.
(5) Voting securities owned directly by Ferrolegeringar Aktiengesellschaft.
(6) Voting securities owned directly by Metallurg South Africa (Pty.) Limited.
(7) Voting securities owned directly by Gesellschaft fur Elektrometallurgie
mbH.
4
<PAGE>
(8) Voting securities owned directly by Metallurg International Resources
GmbH.
(9) Voting securities owned directly by Aluminum Powder Company Limited.
(10) Voting securities owned directly by Shawdon Enterprises Limited.
Applicant's Controlling Affiliates Bases of Control
---------------------------------- ----------------
Not Applicable Not Applicable
AS OF THE EFFECTIVE DATE OF THE PLAN OF REORGANIZATION
The corporate structure of the Applicant will not change from the
structure described above.
MANAGEMENT AND CONTROL
4. DIRECTORS AND EXECUTIVE OFFICERS. List the names and complete mailing
addresses of all directors and executive officers of the Applicant and all
persons chosen to become directors or executive officers. Indicate all offices
with the Applicant held or to be held by each person named.
AS OF MARCH 17, 1997
--------------------
Name Mailing Address Office
- ---- --------------- ------
Michael A. Standen c/o Metallurg, Inc. Chairman of the Board,
6 East 43rd Street, 12th Floor President and Chief
New York, New York 10005 Executive Officer
Steven N. Rappaport c/o Metallurg, Inc. Director
6 East 43rd Street, 12th Floor
New York, New York 10005
Alan D. Ewart c/o Metallurg, Inc. Director
6 East 43rd Street, 12th Floor
New York, New York 10005
Dr. Hans Spilker c/o Metallurg, Inc. Director
6 East 43rd Street, 12th Floor
New York, New York 10005
J. Richard Budd, III c/o Metallurg, Inc. Senior Vice President
6 East 43rd Street, 12th Floor
New York, New York 10005
5
<PAGE>
Michael A. Banks c/o Metallurg, Inc. Vice President
6 East 43rd Street, 12th Floor Administration
New York, New York 10005
Barry C. Nuss c/o Metallurg, Inc. Vice President
6 East 43rd Street, 12th Floor Finance
New York, New York 10005
Eric L. Schondorf c/o Metallurg, Inc. Vice President and
6 East 43rd Street, 12th Floor General Counsel
New York, New York 10005
AS OF THE EFFECTIVE DATE OF THE PLAN OF REORGANIZATION
------------------------------------------------------
It is anticipated that the executive officers of the Applicant will
continue to serve in their respective capacities immediately after consummation
of the Plan. As of the Effective Date, the Applicant's new Board of Directors
will be as follows:
Name Mailing Address Office
- ---- --------------- ------
Michael A. Standen c/o Metallurg, Inc. Chairman of the Board
6 East 43rd Street, 12th Floor and President
New York, New York 10005
Alan D. Ewart c/o Metallurg, Inc. Director
6 East 43rd Street, 12th Floor
New York, New York 10005
John Bauer c/o Contrarian Capital Director
Management, L.L.C.
411 West Putnam Avenue - Suite 225
Greenwich, Connecticut 06830
Herb Seif c/o SBC Capital Markets, Inc. Director
45 Broadway Atrium
New York, New York 10006
Peter Langerman c/o Mutual Series Fund, Inc. Director
51 John F. Kennedy Parkway
Short Hills, New Jersey 07078
6
<PAGE>
5. PRINCIPAL OWNERS OF VOTING SECURITIES. Furnish the following information as
to each person owning 10% or more of the voting securities of the Applicant.
AS OF MARCH 17, 1997
--------------------
Name and Title of Amount % of
Mailing Address Class Owned Owned Class
- --------------- ----------- ----- -----
Voting Trust(1) Common Stock 2,005(2) 100%
c/o Metallurg, Inc.
6 East 43rd Street, 12th Floor
New York, New York 10005
- ------------
(1) The Voting Trust was established by a voting trust agreement, dated July
5, 1989, by and among the beneficial owners of the shares of stock of the
Applicant, the trustees named therein and Hartmann & Craven, Esq., as
depositories.
(2) Mr. Standen is the beneficial owner of 400 shares held of record by the
Voting Trust.
AS OF THE EFFECTIVE DATE OF THE PLAN OF REORGANIZATION(1)
---------------------------------------------------------
Upon consummation of the Plan, all of the currently outstanding securities
of the Applicant will be cancelled. As of the Effective Date of the Plan, the
following persons are expected to own 10% or more of the authorized and
outstanding voting securities of the reorganized Applicant, as provided in the
Plan.
Name and Title of Amount % of
Mailing Address Class Owned Owned Class
- --------------- ----------- ----- -----
Mutual Series Fund, Inc. Common Stock 1,353,000 27.0%
51 John F. Kennedy Parkway
Short Hills, New Jersey 07078
Contrarian Capital Common Stock 839,000 16.8%
Management, L.L.C.
411 West Putnam Avenue - Suite 225
Greenwich, Connecticut 06830
Morgans, Waterfall, Vintiadis Common Stock 743,000 14.9%
& Company, Inc.
10 East 50th Street - 26th Floor
New York, New York 10022
Cerberus Partners, L.P. Common Stock 709,000 14.2%
950 Third Avenue
New York, New York 10022
SBC Capital Markets, Inc. Common Stock 549,000 11.0%
45 Broadway Atrium
New York, New York 10006
- ------------
7
<PAGE>
(1) The amounts set forth in this table are estimates based upon the claims
held by creditors of the Applicant and SMC as of January 23, 1997 as well
as the assumptions set forth in the Applicant's and SMC's Joint Disclosure
Statement for the Plan, dated December 18, 1996. Such claims, in turn, are
based upon the records of the Applicant's claims reconciliation agent as
of January 23, 1997 and other transactions reported to the Applicant but
not reflected on such record.
UNDERWRITERS
6. UNDERWRITERS. Give the name and complete mailing address of (a) each person
who, within three years prior to the date of filing the application, acted as an
underwriter of any securities of the Applicant which were outstanding on the
date of filing the application, and (b) each proposed principal underwriter of
the securities proposed to be offered. As to each person specified in (a), give
the title of each class of securities underwritten.
(a) No person has acted as an underwriter of any securities of the
Applicant, within the three years prior to the date hereof, which
securities are outstanding on the date hereof.
(b) No person will act as underwriter or private placement agent of the
Indenture Securities.
CAPITAL SECURITIES
7. CAPITALIZATION. (a) Furnish the following information as to each authorized
class of securities of the Applicant.
AS OF MARCH 17, 1997
Title of Class Amount Authorized Amount Outstanding
- -------------- ----------------- ------------------
Common Stock 10,000 2,005
ON THE EFFECTIVE DATE OF THE PLAN OF REORGANIZATION
Upon consummation of the Plan, all of the currently outstanding securities
of the Applicant will be cancelled and the authorized and outstanding securities
of the reorganized Applicant, as provided in the Plan, will be as follows:
Title of Class Amount Authorized Amount Outstanding
- -------------- ----------------- ------------------
Common Stock 15,000,000 approximately 5,000,000
Indenture Securities(1) $60,000,000 aggregate $60,000,000 aggregate
principal amount principal amount
- ----------
(1) The principal amount of the Indenture Securities is subject to adjustment
as provided for in the Applicant's Plan.
8
<PAGE>
(b) Give a brief outline of the voting rights of each class of voting
securities referred to in paragraph (a) above.
Each share of Common Stock of the Applicant will be entitled to one vote,
and the Applicant's Certificate of Incorporation will not provide for cumulative
voting. The Indenture Securities are not entitled to any voting rights.
INDENTURE SECURITIES
8. ANALYSIS OF INDENTURE PROVISIONS. Insert at this point the analysis of
indenture provisions required under Section 305(a)(2) of the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act").
All references to the Indenture herein refer to the Indenture (the
"Indenture") to be dated as of the Effective Date between the Applicant, SMC and
IBJ Schroder Bank & Trust Company, as trustee (the "Trustee"). Capitalized terms
used in this Section 8 which are not otherwise defined below or elsewhere in
this Application on Form T-3 have the respective meanings assigned to them in
the Indenture. The following summary of certain provisions of the Indenture does
not purport to be complete and is subject to, and is qualified in its entirety,
by reference to all of the provisions of the Indenture. A copy of the Indenture,
including the form of Indenture Securities, is included as Exhibit T3C hereto.
(A) EVENTS OF DEFAULT AND WITHHOLDING OF NOTICE. The following are Events
of Default under the Indenture: (i) failure by the Company to pay interest on
any Security when the same becomes due and payable, which failure continues for
a period of 30 days; (ii) failure by the Company to pay the principal of any
Security when the same becomes due and payable at maturity, upon redemption or
otherwise or default in the purchase of any Security on the Excess Proceeds
Payment Date or the Change of Control Payment Date pursuant to an Excess
Proceeds Offer or Change of Control Offer which has been made to Holders; (iii)
failure by the Company in the performance of any covenant contained in the
Securities or the Indenture, which failure continues for 30 days after written
notice by the Trustee or Holders of at least 25% of the aggregate principal
amount of the Securities outstanding; (iv) failure by the Company or any
Significant Subsidiary which is a Restricted Subsidiary to pay principal of or,
for a period of five days, interest on any Indebtedness for borrowed money
(other than the Securities) when the same becomes due and payable and the
principal amount of such Indebtedness exceeds $5,000,000 in the aggregate; (v)
failure by the Company or any Significant Subsidiary which is a Restricted
Subsidiary with respect to any Indebtedness for borrowed money exceeding
$5,000,000 in the aggregate, which results in the same becoming due and payable
or being declared due and payable; (vi) failure by the Company or any
Significant Subsidiary which is a Restricted Subsidiary to pay any final
judgment or order for more than $5,000,000, which failure continues for 60 days;
(vii) the occurrence of certain bankruptcy related events; or (viii) the failure
of any Security Document to be in full force and effect in all material
respects.
If an Event of Default occurs and is continuing other than pursuant to the
occurrence of certain bankruptcy related events, then either the Trustee or the
registered owners of at least 25% in aggregate principal amount of the
Securities, by notice in writing to the Company (and to the Trustee if given by
Holders), may declare the unpaid principal of and accrued but unpaid interest on
all the Securities to be due and payable, and upon any such declaration the same
shall become immediately due and payable.
9
<PAGE>
If an Event of Default occurs pursuant to certain bankruptcy related
events, the unpaid principal of and accrued interest but unpaid interest on all
of the Securities shall ipso facto become and be immediately due and payable
with any declaration or other act on the part of the Trustee or any Holder.
The Holders of a majority in principal amount of the then outstanding
Securities by written notice to the Trustee may rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default (except non-payment of principal or
interest that has become due solely because of the acceleration) have been cured
or waived.
The Indenture provides that the Trustee shall give the holders notice of
any event which is an Event of Default within 90 days after it occurs. Except in
the case of a Default or Event of Default in the payment on any Security, the
Trustee may withhold the notice if and so long as a committee of its Trust
Officers in good faith determines that withholding the notice is in the interest
of the Holders.
(B) AUTHENTICATION AND DELIVERY OF SECURITIES; APPLICATION OF PROCEEDS.
Each Security will be signed by one Officer of the Company. A Security will not
be valid until authenticated by the manual signature of the Trustee, such
signature to be conclusive evidence that the Security has been authenticated
under the Indenture.
No provisions are contained in the Indenture with respect to use by the
Company of proceeds of issuance of the Securities. There will be no proceeds
from the issuance of the Securities because such securities will be issued
pursuant to a plan of reorganization approved by the United States Bankruptcy
Court in exchange for the discharge of certain claims arising from ownership of
certain securities of and claims against the debtors involved in the bankruptcy
proceeding.
(C) RELEASE OF COLLATERAL. The Indenture provides that requests for
releases of collateral from the Trustee must comply with the Trust Indenture
Act, to the extent applicable, and that dispositions of collateral in the
Ordinary Course of Business shall not be deemed to impair the security interest
of the Holders under the Security Documents.
(D) SATISFACTION AND DISCHARGE. The Indenture provides that the Indenture
will cease to be of further effect, if (i) either (a) the Company has delivered
the Securities (other than (1) Securities which have been destroyed, lost or
stolen and which have been replaced or paid as provided in the Indenture and (2)
Securities for whose payment has theretofore been 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 the Indenture) have been delivered
to the Trustee cancelled or for cancellation or (b) the Securities not
theretofore delivered to the Trustee cancelled or for cancellation (1) have
become due and payable or (2) will become due and payable at their stated
maturity within one year or (3) are to be called for redemption within one year,
and in the case of (1), (2) and (3), the Company has irrevocably deposited with
the Trustee trust funds in trust in an amount sufficient to pay principal and
interest on the Securities to maturity or redemption, as the case may be; (ii)
the Company has paid or caused to be paid all other sums payable under the
Indenture by the Company; and (iii) the Company has delivered to the Trustee an
Officer's Certificate stating that all conditions precedent provided in the
Indenture relating to satisfaction and discharge of the Indenture have been
complied with. In the event the Securities are defeased as aforesaid, the
Company will be relieved of its obligations under the Indenture, with certain
specified exceptions.
(E) EVIDENCE OF COMPLIANCE WITH CONDITIONS AND COVENANTS. The Company is
required to furnish the Trustee (within 120 days after the end of each fiscal
year) with an Officers' Certificate
10
<PAGE>
of the Company relating to the knowledge of such officers with respect to
performance of each covenant in the Indenture by the Company and to the
existence of any Default that occurred during the fiscal year, and if they do
know of a Default, describing it and its status.
The Indenture provides that upon any application or request by the Company
to the Trustee to take any action under a provision of the Indenture, the
Company must furnish to the Trustee such certificates and opinions as are
required by the Trust Indenture Act or the Indenture. Each such certificate or
opinion must be in the form of an Officers' Certificate or an Opinion of
Counsel. Any certificate or opinion must comply with the requirements of the
Trust Indenture Act and the Indenture.
9. OTHER OBLIGORS. Give the name and complete mailing address of any person,
other than the Applicant, who is an obligor upon the Indenture Securities.
Shieldalloy Metallurgical Corporation
12 West Boulevard
Newfield, NJ 08344
CONTENTS OF APPLICATION FOR QUALIFICATION. This application for qualification
comprises:
(a) Pages numbered __ to __, consecutively. (1)
(b) The statement of eligibility and qualification of the Trustee under
the Indenture to be qualified on Form T-l.
(c) The following exhibits in addition to those filed as part of the
statement of eligibility and qualification of the trustee:
Exhibit T3A.1 Certificate of Incorporation of the Applicant.*
Exhibit T3A.2 Certificate of Amendment to the Certificate of
Incorporation of the Applicant.*
Exhibit T3A.3 Certificate of Incorporation of the
reorganized Applicant.*
Exhibit T3B.1 Amended and Restated By-Laws of the Applicant.*
Exhibit T3B.2 By-Laws of the reorganized Applicant.*
Exhibit T3C Form of Indenture to be qualified (including
forms of Security, Security Agreement and Pledge
Agreement attached as Exhibits A, B and C,
respectively, thereto).
Exhibit T3E.1 Joint Disclosure Statement for Fourth
Amended and Restated Joint Plan of Reorganization,
dated December 18, 1996 (including the appendices
and exhibits attached thereto).*
Exhibit T3E.2 Form of Ballots.*
11
<PAGE>
Exhibit T3E.3 Supplement to Joint Disclosure Statement for
Fourth Amended and Restated Joint Plan of
Reorganization dated December 18, 1996 (including
the exhibit attached thereto).*
Exhibit T3E.4 Notice of Entry of Order Confirming Debtors'
Fourth Amended and Restated Joint Plan of
Reorganization.*
Exhibit T3E.5 Amended Notice of Entry of Order Confirming
Debtors' Fourth Amended and Restated Joint Plan
of Reorganization.*
Exhibit T3E.6 Post Confirmation Order and Notice.*
Exhibit T3F See the cross-reference sheet contained in the
Indenture filed herewith as Exhibit T3C.
- ------------------
(1) Pursuant to Rule 309(a) of Regulation S-T, requirements as to sequential
numbering shall not apply to this electronic format document.
* Previously Filed.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Applicant, Metallurg, Inc., a corporation organized and existing under the laws
of New York, has duly caused this application to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of New York, State of
New York, on the 31st day of March, 1997.
METALLURG, INC.
By /s/ Eric L. Schondorf
------------------------
Attest: /s/ Amy I. Pandit Name: Eric L. Schondorf
Title: Vice President, General Counsel
and Secretary
12
<PAGE>
EXHIBIT INDEX
Exhibit Name and Number Page No.
- ----------------------- --------
Exhibit T3A.1 Certificate of Incorporation of the Applicant.*
Exhibit T3A.2 Certificate of Amendment to the Certificate of
Incorporation of the Applicant.*
Exhibit T3A.3 Certificate of Incorporation of the
reorganized Applicant.*
Exhibit T3B.1 Amended and Restated By-Laws of the Applicant.*
Exhibit T3B.2 By-Laws of the reorganized Applicant.*
Exhibit T3C Form of Indenture to be qualified (including
forms of Security, Security Agreement and Pledge
Agreement attached as Exhibits A, B and C,
respectively, thereto).
Exhibit T3E.1 Joint Disclosure Statement for Fourth
Amended and Restated Joint Plan of Reorganization,
dated December 18, 1996 (including the appendices
and exhibits attached thereto).*
Exhibit T3E.2 Form of Ballots.*
Exhibit T3E.3 Supplement to Joint Disclosure Statement for
Fourth Amended and Restated Joint Plan of
Reorganization dated December 18, 1996 (including
the exhibit attached thereto).*
Exhibit T3E.4 Notice of Entry of Order Confirming Debtors'
Fourth Amended and Restated Joint Plan of
Reorganization.*
Exhibit T3E.5 Amended Notice of Entry of Order Confirming
Debtors' Fourth Amended and Restated Joint Plan
of Reorganization.*
Exhibit T3E.6 Post Confirmation Order and Notice.*
Exhibit T3F See the cross-reference sheet contained in the
Indenture filed herewith as Exhibit T3C.
_________________
* Previously Filed
13
METALLURG, INC.,
as the Company
[$60,000,000]
Senior Secured Notes due 2007
INDENTURE
Dated as of [April 10,] 1997
IBJ SCHRODER BANK & TRUST COMPANY,
Trustee
<PAGE>
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
----------- -----------------
310(a)(1)................................................. 8.10
(a)(2)................................................ 8.10
(a)(3)................................................ N.A.
(a)(4)................................................ N.A.
(b) .................................................. 8.08; 8.10; 12.02
(c) .................................................. N.A.
311(a) ................................................... 8.11
(b) .................................................. 8.11
(c) .................................................. N.A.
312(a) ................................................... 2.05
(b) .................................................. 12.03
(c) .................................................. 12.03
313(a) ................................................... 8.06
(b)(1)................................................ N.A.
(b)(2)................................................ 8.06
(c) .................................................. 8.06; 12.02
(d) .................................................. 8.06
314(a) ................................................... 5.03; 12.02
(b) .................................................. N.A.
(c)(1)................................................ 12.04
(c)(2)................................................ 12.04
(c)(3)................................................ N.A.
(d) .................................................. N.A.
(e) .................................................. 12.05
(f) .................................................. N.A.
315(a) ................................................... 8.01
(b) .................................................. 8.05; 12.02
(c) .................................................. 8.01
(d) .................................................. 8.01
(e) .................................................. 7.11
316(a)(last sentence)..................................... 2.09
(a)(1)(A)............................................. 7.05
(a)(1)(B)............................................. 7.04
(a)(2)................................................ N.A.
(b) .................................................. 7.07
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE>
(c) .................................................. 10.04
317(a)(1)................................................. 7.08
(a)(2)................................................ 7.09
(b) .................................................. 2.04
318(a) ................................................... 12.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
NYFS05...:\40\63140\0003\2185\IND1036R.54P
<PAGE>
TABLE OF CONTENTS
ARTICLE 1.
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions........................................... 1
Section 1.02. Other Definitions..................................... 15
Section 1.03. Incorporation by Reference of Trust
Indenture Act..................................... 16
Section 1.04. Rules of Construction................................. 17
ARTICLE 2.
THE SECURITIES
Section 2.01. Form and Dating....................................... 17
Section 2.02. Execution and Authentication.......................... 18
Section 2.03. Registrar and Paying Agent............................ 18
Section 2.04. Paying Agent to Hold Money in Trust................... 19
Section 2.05. Holder Lists.......................................... 19
Section 2.06. Transfer and Exchange................................. 20
Section 2.07. Replacement Securities................................ 20
Section 2.08. Outstanding Securities................................ 21
Section 2.09. Treasury Securities................................... 21
Section 2.10. Temporary Securities.................................. 22
Section 2.11. Cancellation.......................................... 22
Section 2.12. Defaulted Interest.................................... 22
ARTICLE 3.
GUARANTY
Section 3.01. Guaranty.............................................. 23
Section 3.02. Obligation of Guarantor Unconditional................. 23
Section 3.03. Execution and Delivery of Guaranty.................... 24
Section 3.04. Waiver Relating to Guaranties......................... 25
Section 3.05. Release of Guarantor.................................. 26
Section 3.06. Reinstatement of Guaranty............................. 26
ARTICLE 4.
REDEMPTION
Section 4.01. Notices to Trustee.................................... 26
Section 4.02. Selection of Securities to Be Redeemed................ 27
Section 4.03. Notice of Redemption.................................. 27
i
<PAGE>
Page
Section 4.04. Effect of Notice of Redemption........................ 28
Section 4.05. Deposit of Redemption Price........................... 28
Section 4.06. Securities Redeemed in Part........................... 29
Section 4.07. Optional Redemption................................... 29
Section 4.08. Mandatory Redemption.................................. 29
ARTICLE 5.
COVENANTS
Section 5.01. Payment of Securities................................. 30
Section 5.02. Maintenance of Office or Agency....................... 30
Section 5.03. SEC Reports; Financial Statements..................... 31
Section 5.04. Compliance Certificate................................ 31
Section 5.05. Stay, Extension and Usury Laws........................ 32
Section 5.06. Limitation on Restricted Payments..................... 32
Section 5.07. Limitation on Dividend and Other Payment
Restrictions Affecting Restricted
Subsidiaries...................................... 35
Section 5.08. Limitation on Additional Indebtedness................. 35
Section 5.09. Limitations on Transactions with Affiliates........... 35
Section 5.10. Corporate Existence................................... 36
Section 5.11. Limitation on Liens................................... 36
Section 5.12. Change of Control..................................... 36
Section 5.13. Limitations on Asset Sales............................ 38
ARTICLE 6.
SUCCESSORS
Section 6.01. Limitation on Mergers, Consolidations
or Sale of Assets................................. 41
Section 6.02. Successor Company Substituted......................... 42
ARTICLE 7.
DEFAULTS AND REMEDIES
Section 7.01. Events of Default...................................... 42
Section 7.02. Acceleration.......................................... 44
Section 7.03. Other Remedies........................................ 45
Section 7.04. Waiver of Past Defaults............................... 45
Section 7.05. Control by Majority................................... 45
Section 7.06. Limitation on Suits................................... 46
Section 7.07. Rights of Holders to Receive Payment.................. 46
Section 7.08. Collection Suit by Trustee............................ 46
Section 7.09. Trustee May File Proofs of Claim...................... 47
Section 7.10. Priorities............................................ 47
Section 7.11. Undertaking for Costs................................. 48
ii
<PAGE>
Page
ARTICLE 8.
TRUSTEE
Section 8.01. Duties of Trustee..................................... 48
Section 8.02. Rights of Trustee..................................... 50
Section 8.03. Individual Rights of Trustee.......................... 50
Section 8.04. Trustee's Disclaimer.................................. 51
Section 8.05. Notice of Defaults.................................... 51
Section 8.06. Reports by Trustee to Holders......................... 51
Section 8.07. Compensation and Indemnity............................ 51
Section 8.08. Replacement of Trustee................................ 52
Section 8.09. Successor Trustee by Merger, Etc...................... 54
Section 8.10. Eligibility; Disqualification......................... 54
Section 8.11. Preferential Collection of Claims
Against Company................................... 54
ARTICLE 9.
DISCHARGE OF INDENTURE
Section 9.01. Satisfaction and Discharge of Indenture............... 55
Section 9.02. Application of Trust Money............................ 56
Section 9.03. Repayment to Company.................................. 56
Section 9.04. Indemnity for U.S. Government Obligations............. 56
Section 9.05. Reinstatement......................................... 57
ARTICLE 10.
AMENDMENTS
Section 10.01. Without Consent of Holders........................... 57
Section 10.02. With Consent of Holders.............................. 58
Section 10.03. Compliance with Trust Indenture Act.................. 60
Section 10.04. Revocation and Effect of Consents.................... 60
Section 10.05. Notation on or Exchange of Securities................ 60
Section 10.06. Trustee to Sign Amendments, Etc...................... 60
ARTICLE 11.
SECURITY
Section 11.01. Security Documents................................... 61
Section 11.02. Recording, Opinion of Counsel, Etc................... 62
Section 11.03. Trust Indenture Act Requirements..................... 63
Section 11.04. Disposition of Certain Collateral
without Requesting Release....................... 64
Section 11.05. Other Release of Lien................................ 66
Section 11.06. Impairment of Security Interest...................... 67
Section 11.07. Authorization of Receipt of Funds
by the Trustee Under
the Security Documents........................... 67
iii
<PAGE>
Section 11.08. Reliance on Company Request.......................... 67
Section 11.09. Payment of Expenses.................................. 67
Section 11.10. Trustee's Duties..................................... 68
ARTICLE 12.
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls......................... 68
Section 12.02. Notices.............................................. 68
Section 12.03. Communication by Holders with Other Holders.......... 70
Section 12.04. Certificate and Opinion as
to Conditions Precedent.......................... 70
Section 12.05. Statements Required in Certificate
or Opinion....................................... 70
Section 12.06. Rules by Trustee and Agents.......................... 71
Section 12.07. Legal Holidays....................................... 71
Section 12.08. No Recourse Against Others........................... 71
Section 12.09. Governing Law........................................ 71
Section 12.10. No Adverse Interpretation of
Other Agreements................................. 71
Section 12.11. Successors........................................... 72
Section 12.12. Severability......................................... 72
Section 12.13. Counterpart Originals................................ 72
Section 12.14. Table of Contents, Headings, Etc..................... 72
ARTICLE 13.
MEETINGS OF HOLDERS
Section 13.01. Purposes of Meetings................................. 72
Section 13.02. Call of Meetings by Trustee.......................... 73
Section 13.03. Call of Meetings by Company or Holders............... 73
Section 13.04. Persons Entitled to Vote at Meeting.................. 73
Section 13.05. Regulations for Meeting.............................. 73
SIGNATURES
SIGNATURES................................................................. 73
EXHIBIT A FORM OF SECURITY
EXHIBIT B FORM OF SECURITY AGREEMENT
EXHIBIT C FORM OF PLEDGE AGREEMENT
iv
<PAGE>
INDENTURE dated as of [April 10,] 1997 between METALLURG, INC., a
New York corporation (the "Company"), Shieldalloy Metallurgical Corporation, a
New York corporation, as the Guarantor ("SMC" or the "Guarantor"), and IBJ
Schroder Bank & Trust Company, a banking corporation duly organized and existing
under the laws of the State of New York, as trustee (the "Trustee").
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance of the 12% Senior Secured Notes due 2007
(the "Securities").
Each party agrees as follows for the benefit of the other parties
and for the equal and ratable benefit of the Holders of the Securities:
ARTICLE 1.
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.
"Affiliate" means, as applied to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, is defined to mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Asset Acquisition" means (i) an Investment or capital contribution
(by means of transfers of cash or other property to others or payments for
property or services for the account or use of others, or otherwise) by the
Company or any Restricted Subsidiary in any other Person, or any acquisition or
purchase of Capital Stock of another Person by the Company or any Restricted
Subsidiary, in either case pursuant to which such Person shall become a
Restricted Subsidiary or shall be merged with or into or consolidated with the
Company or any Restricted Subsidiary or (ii) an acquisition by the Company or
any Restricted Subsidiary of the property and assets of any Person other than
the Company or
<PAGE>
any Restricted Subsidiary which constitute substantially all of a division,
operating unit or line of business of such Person or which is otherwise outside
the ordinary course of business.
"Asset Sale" means any direct or indirect sale, transfer, conveyance
or lease (which has the effect of a disposition and is not for security
purposes) or other disposition (including by way of merger, consolidation or
sale-leaseback transaction, but not including Restricted Payments permitted
under this Indenture) in one transaction or a series of related transactions by
the Company or any Restricted Subsidiary to any Person (other than the Company
or any Restricted Subsidiary) of (i) all or any of the Capital Stock of any
Restricted Subsidiary, (ii) all or substantially all of the property and assets
of an operating unit or business of the Company or any Restricted Subsidiary or
(iii) any other property and assets of the Company or any Restricted Subsidiary
outside the ordinary course of business of the Company or such Restricted
Subsidiary and, in each case, that is not governed by the provisions of this
Indenture applicable to mergers, consolidations and sales of assets of the
Company; provided, however, that the term "Asset Sale" shall in no case include
any sale, transfer, conveyance, lease or other disposition (including by way of
merger, consolidation or sale-leaseback transaction, but not including
Restricted Payments permitted under this Indenture) in one transaction or a
series of related transactions by the Company or any Restricted Subsidiary to
any Person (i) pursuant to a Company Reincorporation Merger, (ii) pursuant to
a SMC Reincorporation Merger, (iii) of property or equipment that has become
worn out, obsolete or damaged or otherwise unsuitable for use in connection with
the business of the Company or any Restricted Subsidiary, as the case may be,
(iv) involving assets with a Fair Market Value not in excess of $500,000, (v) of
inventory in the ordinary course of business or (vi) for security purposes only.
"Bankruptcy Law" means title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Board" means the Board of Directors of the Company.
"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 and to be in full force and effect on the date of such certification,
and delivered to the Trustee.
"Business Day" means any day other than a Legal Holiday.
"Capitalized Lease" means any lease that would be required to be
capitalized on the balance sheet in accordance with generally accepted
accounting principles.
2
<PAGE>
"Capital Stock" means, with respect to any Person, any and all
shares, interests, participations and rights or other equivalents in the equity
of such Person (however designated and whether voting or non-voting), whether
outstanding at the Issue Date or issued after the Issue Date, including, without
limitation, all Common Stock and Preferred Stock, and any and all rights,
warrants or options exchangeable for or convertible into any thereof.
"Cash Equivalents" means (i) U.S. Government Obligations with
maturities of one year or less from the date of acquisition, (ii) certificates
of deposit, eurodollar time deposits, overnight bank deposits and bankers'
acceptances having maturities of one year or less from the date of acquisition
issued by any commercial bank organized under the laws of the United States or
any state thereof having capital and surplus in excess of $500,000,000, and
(iii) commercial paper of an issuer rated at least "A-1" by Standard & Poor's
Corporation or "P-1" by Moody's Investors Service, Inc., or carrying an
equivalent rating by a nationally recognized rating agency if both of the two
named rating agencies cease publishing ratings of investments.
"Change of Control" means the occurrence of any of the following
events: (a) any "person" or "group" (as such terms are used in Section 13(d) and
Section 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that a
person shall be deemed to have "beneficial ownership" of all securities that
such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of more
than 50% of the total Voting Stock of the Company; or (b) the Company
consolidates with, or merges with or into, another Person or sells, assigns,
conveys, transfers, leases or otherwise disposes of all or substantially all of
its assets to any Person, or any Person consolidates with, or merges with or
into, the Company, in any such event pursuant to a transaction in which the
outstanding Voting Stock of the Company is converted into or exchanged for cash,
securities or other property, other than any such transaction where (i) the
outstanding Voting Stock of the Company is converted into or exchanged for (1)
Voting Stock (other than Disqualified Stock) of the surviving or transferee
corporation or (2) cash, securities and other property in an amount which could
be paid by the Company as a Restricted Payment under this Indenture and (ii)
immediately after such transaction no "person" or "group" (as such terms are
used in Section 13(d) and Section 14(d) of the Exchange Act) is the "beneficial
owner" (as defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except
that a person shall be deemed to have "beneficial ownership" of all securities
that such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of more
than 50% of the total Voting Stock of the surviving or transferee corporation;
or (c) during any
3
<PAGE>
consecutive two-year period, individuals who at the beginning of such period
constituted the Board (together with any new directors whose election by the
Board or whose nomination for election by the stockholders of the Company was
approved by a vote of a majority of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of the Board then in office, including, without limitation, by reason
of the provisions of the Company's Certificate of Incorporation relating to the
rights of certain classes of stockholders to designate and remove directors of
the Company.
"Collateral" means, collectively, all of the property and assets
that are from time to time subject to the Security Documents.
"Common Stock" means, with respect to any Person, any and all
shares, interests, participations and rights or other equivalents in the common
stock or ordinary shares of such Person (however designated and whether voting
or non-voting), whether or not outstanding at the Issue Date, including, without
limitation, all series and classes of such common stock or ordinary shares.
"Company Reincorporation Merger" means a merger of the Company
with and into Metallurg, Inc., a Delaware corporation and wholly-owned
Subsidiary of the Company.
"Company Request" means a written request signed on behalf of the
Company by an Officer of the Company and delivered to the Trustee.
"Consolidated Income Tax Expense" means, for any period, the
provision for corporation, local, foreign and all other income taxes of the
Company and the Restricted Subsidiaries for such period as determined in
accordance with generally accepted accounting principles; provided, that, there
shall be excluded therefrom any income taxes related to the items described in
clauses (i) through (vii) of the definition of Consolidated Net Income for such
period.
"Consolidated Interest Expense" means, for any period, the aggregate
amount of interest in respect of Indebtedness for borrowed money of the Company
and the Restricted Subsidiaries for such period (including, without limitation,
amortization of original issue discount on any Indebtedness for borrowed money
and the interest portion of any deferred payment obligation (other than pension
obligations), calculated in accordance with the effective interest method of
accounting); all commissions, discounts and other fees and charges accrued with
respect to letters of credit and bankers' acceptance financing payable by the
Company and the Restricted Subsidiaries in respect of such period; the net costs
4
<PAGE>
associated with interest rate protection obligations of the Company and the
Restricted Subsidiaries in respect of such period; and interest in respect of
such period on Indebtedness for borrowed money that is guarantied or secured by
the Company or any Restricted Subsidiary; all but the principal component of
rent or other amounts in respect of Capitalized Lease Obligations paid, accrued
or scheduled to be paid or to be accrued by the Company and the Restricted
Subsidiaries during such period; and all dividends on any Preferred Stock or
Disqualified Stock of the Company to the extent paid accrued or scheduled to be
paid or to be accrued during such period; excluding, however, any premiums, fees
and expenses (and any amortization thereof) payable in connection with the
issuance of the Securities. Consolidated Interest Expense shall be determined on
a consolidated basis in conformity with generally accepted accounting
principles.
"Consolidated Net Income" means, for any period, the consolidated
net income (or loss) of the Company and the Restricted Subsidiaries for such
period, as determined on a consolidated basis in conformity with generally
accepted accounting principles, and adjusted, to the extent included in
calculating such consolidated net income, by excluding, without duplication, (i)
all extraordinary gains or losses of such Person (net of fees and expenses
relating to the transaction giving rise thereto) for such period, (ii) income of
the Company and the Restricted Subsidiaries derived from or in respect of all
Investments in Persons other than Restricted Subsidiaries, (iii) the portion of
net income (or loss) allocable to minority interests in unconsolidated Persons
for such period except to the extent actually received by the Company or any
Restricted Subsidiary, (iv) net income (or loss) of any other Person combined
with the Company or a Restricted Subsidiary on a "pooling of interests" basis
attributable to any period prior to the date of combination, (v) any gain or
loss, net of taxes, realized by the Company or a Restricted Subsidiary upon the
termination of any employee pension benefit plan during such period, (vi) gains
or losses in respect of any Asset Sales (net of fees and expenses relating to
the transaction giving rise thereto) during such period and (vii) except in the
case of any restriction or encumbrance permitted under Section 5.07 hereof, the
net income of any Restricted Subsidiary for such period to the extent that the
declaration of dividends or similar distributions by that Restricted Subsidiary
of that income is not at the time permitted, directly or indirectly, by
operation of the terms of its constitutional documents or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Restricted Subsidiary or its stockholders.
"Consolidated Operating Cash Flow" means, with respect to any
period, the Consolidated Net Income of the Company and the Restricted
Subsidiaries for such period (a) increased by the sum of (i) the Consolidated
Income Tax Expense of the Company and the Restricted Subsidiaries accrued
according to generally accepted accounting principles for such period (other
than taxes attributable to extraordinary, unusual or non-recurring gains or
5
<PAGE>
losses); (ii) Consolidated Interest Expense for such period; (iii) depreciation
of the Company and the Restricted Subsidiaries for such period; (iv)
amortization of the Company and the Restricted Subsidiaries for such period,
including, without limitation, amortization of capitalized debt issuance costs
for such period, all determined on a consolidated basis in accordance with
generally accepted accounting principles; and (v) all other non-cash charges
deducted in determining Consolidated Net Income including, without limitation,
non-cash write-offs, write-downs or adjustments and (b) decreased by non-cash
items increasing revenues in determining such Consolidated Net Income. For
purposes of this definition, (i) any Subsidiary of the Company that is a
Restricted Subsidiary on a Transaction Date shall be deemed to have been a
Restricted Subsidiary at all times during the four fiscal quarters immediately
preceding such Transaction Date (the "Reference Period") and (ii) any Subsidiary
of the Company that is not a Restricted Subsidiary on a Transaction Date shall
be deemed not to have been a Restricted Subsidiary at any time during the
Reference Period. In addition to and without limitation of the foregoing, for
purposes of this definition, "Consolidated Operating Cash Flow" shall be
calculated after giving effect on a pro forma basis for the Reference Period to,
without duplication, any Asset Sales or Asset Acquisitions (including, without
limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of the Company or one of the Restricted Subsidiaries
(including any Person who becomes a Restricted Subsidiary as a result of the
Asset Acquisition) incurring, assuming or otherwise being liable for Acquired
Indebtedness) occurring during the period commencing on the first day of the
Reference Period to and including the Transaction Date, as if such Asset Sale or
Asset Acquisition occurred on the first day of the Reference Period.
"Corporate Trust Office" shall be at the address of the Trustee
specified in Section 12.02 or such other address of which the Trustee may give
notice to the Company.
"Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
"Default" means any event which is, or after notice or passage of
time would be, an Event of Default.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock of such Person which, 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, pursuant to a sinking fund
obligation or otherwise, or is exchangeable for Indebtedness or is redeemable at
the option of the holder thereof, in whole or in part, on or prior to the final
maturity date of the Securities.
6
<PAGE>
"Effective Date" means the Issue Date.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar Federal statute, and the rules and regulations of the
SEC thereunder, all as the same shall be in effect at the time.
"Fair Market Value" means the amount which a willing buyer would pay
a willing seller in an arm's-length transaction, with neither being under any
compulsion to buy or sell.
"Fixed Charge Coverage Ratio" means, for any period, the ratio of
(i) Consolidated Operating Cash Flow to (ii) Consolidated Interest Expense, in
each case for such period.
"Guaranty" means a guaranty (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Holder" means a Person in whose name a Security is registered.
"Indebtedness" with respect to any Person, means any indebtedness,
whether or not contingent, whether recourse to all or a portion of the assets of
such Person, in respect of borrowed money or evidenced by bonds, notes,
debentures or similar instruments or letters of credit (or reimbursement
agreements in respect thereof) or representing the balance deferred and unpaid
of the purchase price of any property (including pursuant to capital leases),
except any such purchase price balance that constitutes an accrued expense or a
trade payable, if and to the extent any of the foregoing indebtedness would
appear as a liability upon a balance sheet of such Person prepared on a
consolidated basis in accordance with generally accepted accounting principles,
and shall also include, to the extent not otherwise included, any Guaranty of
indebtedness which would be included within this definition.
"Investment" means any direct or indirect advance, loan or other
extension of credit (other than advances to customers in the ordinary course of
business, which are recorded as accounts receivable on the balance sheet of any
Person and other than advances or loans to officers, directors and employees
permitted by this Indenture) or capital contribution to (by means of any
transfer of cash or other property to others or any payment
7
<PAGE>
for property or services for the account or use of others), or any purchase or
acquisition of Capital Stock, bonds, notes, debentures or other securities
issued by, any other Person.
"Issue Date" means the date of the issuance of the Securities.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell and any filing of or
agreement to give any financing statement under the Uniform Commercial Code (or
equivalent statute) of any jurisdiction).
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds of such Asset Sale in the form of cash or Cash Equivalents, including
payments in respect of deferred payment obligations when received in the form of
cash or Cash Equivalents and proceeds from the conversion of other property
received when converted to cash or Cash Equivalents, net of (i) brokerage
commissions and other fees and expenses (including fees and expenses of counsel
and investment bankers) related to such Asset Sale, (ii) provision for all taxes
(to the extent such taxes are paid or payable) as a result of such Asset Sale or
the subsequent payment of such proceeds to the Company for the payment of such
taxes, (iii) payments made to repay Indebtedness or any other obligation
outstanding at the time of such Asset Sale that either (A) is secured by a Lien
on the property or assets sold or (B) is required to be paid as a result of such
sale, (iv) reserves for any amounts which are prohibited to be paid to the
Company by reason of law, contract or otherwise and (v) appropriate amounts to
be provided by the Company or any Restricted Subsidiary of the Company as a
reserve against any liabilities associated with such Asset Sale or the
subsequent payment of the proceeds of such Asset Sale to the Company for such
reserves, including, without limitation, pension and other post-employment
benefit liabilities, liabilities related to environmental matters and
liabilities under any indemnification obligations associated with such Asset
Sale.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Vice Chairman, the President, the Chief Financial Officer, any
Executive Vice President, any Vice President, the Treasurer or the Secretary of
such Person.
"Officers' Certificate" means a certificate signed by two Officers,
delivered to the Trustee, and which shall include the statements set forth in
Section 12.05.
8
<PAGE>
"Opinion of Counsel" means a written opinion from legal counsel who
may be an employee of, or counsel to, the Company or who may be other counsel
who is reasonably acceptable to the Trustee, and which shall include the
statements set forth in Section 12.05.
"Ordinary Course of Business" means, with respect to sales of
Inventory or services performed, all sales of Inventory or services performed by
the Company in the ordinary course of business, but in any event excluding (i)
"bulk transfers" as defined in Section 6-102 of the Uniform Commercial Code,
(ii) such sales and services after the time there shall have occurred an Event
of Default under Sections 7.01(7) or (8) hereof and (iii) such sales and
services after the time the Trustee has taken possession of such Inventory after
the occurrence of an Event of Default and the Company has rights in such
Inventory pursuant to Section 9-506 of the Uniform Commercial Code.
"Permitted Indebtedness" means: (i) Indebtedness under the Working
Capital Credit Facility in an aggregate principal amount outstanding at the time
not to exceed the sum of 90% of the book value of accounts receivable of the
Company and the Restricted Subsidiaries and 75% of the book value of the
inventory of the Company and the Restricted Subsidiaries; (ii) Indebtedness of a
Restricted Subsidiary (to the extent not included in clause (i) above) under a
working capital, overdraft or similar line of credit in an aggregate amount not
to exceed the sum of 90% of the book value of accounts receivable and 75% of the
book value of the inventory of such Restricted Subsidiary; (iii) Indebtedness
secured by purchase money security interests upon or in any property acquired or
held by the Company or any Restricted Subsidiary in the ordinary course of
business to secure the purchase price of such property incurred solely for the
purpose of financing the acquisition of such property, and Indebtedness in
respect of Capitalized Leases; (iv) other Indebtedness of the Company and the
Restricted Subsidiaries in an aggregate principal amount not to exceed
$10,000,000 at any one time outstanding; (v) Indebtedness represented by the
Securities and this Indenture; (vi) Indebtedness of the Company and the
Restricted Subsidiaries existing as of the Effective Date including, without
limitation, any term loan or revolving credit facility, the net proceeds of
which are used to reduce the principal amount of the Securities (the "Existing
Indebtedness") (other than Indebtedness described in clauses (i) and (ii));
(vii) Indebtedness issued in exchange for, or the proceeds of which are used to
extend, refinance, renew, replace, defease or refund Indebtedness referred to in
clauses (iii) and (vi) above ("Refinancing Indebtedness"); provided, however,
that (a) the principal amount of such Refinancing Indebtedness shall not exceed
the principal amount of Indebtedness so extended, refinanced, renewed, replaced,
defeased or refunded and (b) the Refinancing Indebtedness shall have a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of the Indebtedness so extended, refinanced, renewed, replaced,
9
<PAGE>
defeased or refunded and the Securities; and (viii) Indebtedness between or
among the Company and one or more of the Restricted Subsidiaries.
"Permitted Investments" means: (i) Investments by the Company or any
Restricted Subsidiary in property or assets owned or used in Related Businesses;
(ii) Investments by the Company or any Restricted Subsidiary in any Person
engaged in a Related Business as a result of such Investment (x) such Person
becomes a Wholly Owned Restricted Subsidiary or (y) such Person is merged or
consolidated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Wholly Owned Restricted
Subsidiary; (iii) Investments by the Company or any Restricted Subsidiary in
Cash Equivalents; (iv) Investments by the Company or any Restricted Subsidiary
in mutual or similar funds having assets in excess of $500,000,000; and (v)
Investments by the Company or any Restricted Subsidiary in the Company or any
Restricted Subsidiary.
"Permitted Liens" mean: (i) Liens in favor of the Company or the
Guarantor; (ii) liens on assets of the Company and its Subsidiaries in favor of
the Working Capital Agent, for the benefit of the Working Capital Lenders, to
secure obligations under the Working Capital Credit Facility; (iii) Liens on
property of a Person existing at the time such Person is merged into or
consolidated with the Company or any Subsidiary thereof in a transaction not
prohibited by the terms of this Indenture; provided, however, that such Liens
were in existence prior to and were not granted in contemplation of such merger
or consolidation; (iv) Liens on property existing at the time of acquisition
thereof by the Company or any Subsidiary thereof in a transaction not prohibited
by the terms of this Indenture; provided, however, that such Liens were in
existence prior to the contemplation of such acquisition; (v) statutory Liens of
landlords and warehousemen's, carriers', mechanics', suppliers', materialmen's
or repairmen's or other like Liens, and Liens relating to surety and appeal
bonds, performance bonds, workmen's compensation, unemployment insurance and
other types of social security and other obligations of a like nature incurred
in the ordinary course of business; (vi) Liens existing on the Effective Date;
(vii) Liens for taxes, assessments or governmental charges or claims that are
not yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded; (viii) Liens securing
purchase money Indebtedness and Capitalized Leases; (ix) easements,
rights-of-way, zoning, restrictions, minor defects or irregularities in title
and other similar charges or encumbrances not interfering in any material
respect with the business of the Company or any of its Subsidiaries; (x) Liens
upon specific items of inventory or other goods and proceeds securing
obligations in respect of bankers' acceptances issued or created to facilitate
the purchase, shipment or storage of such inventory or other goods in the
ordinary course of business; (xi) Liens securing reimbursement obligations with
respect to letters of credit which encumber documents and other property
relating to such
10
<PAGE>
letters of credit and the products and proceeds thereof; (xii) Liens in favor of
customs and revenue authorities arising as a matter of law to secure payment of
nondelinquent customs duties in connection with the importation of goods; (xiii)
judgment and attachment Liens not giving rise to a Default or Event of Default;
(xiv) Liens arising out of consignment or similar arrangements for the sale of
goods entered into by the Company or any of its Subsidiaries in the ordinary
course of business in accordance with industry practice; (xv) any interest or
title of a lessor in the property subject to any lease, whether characterized as
capitalized or operating, entered into by the Company or any of its Subsidiaries
in the ordinary course of business; (xvi) Liens arising from filing Uniform
Commercial Code financing statements for precautionary purposes in connection
with true leases of personal property that are otherwise permitted under this
Indenture and under which the Company or any of its Subsidiaries is the lessee;
(xvii) all other Liens incurred in the ordinary course of business; provided
that the aggregate amount of Indebtedness secured by such other Liens shall not
exceed $10,000,000 at any one time outstanding; (xviii) extensions, renewals and
regranting of any liens referred to in clauses (i) through (xvii) above in
connection with any Refinancing Indebtedness permitted under this Indenture; and
(xix) liens in favor of the Trustee provided for in this Indenture.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Plan" means the Company's Fourth Amended and Restated Joint Plan of
Reorganization pursuant to Chapter 11 of the Bankruptcy Code, as amended from
time to time.
"Pledge Agreement" means the agreement substantially in the form of
Exhibit C hereto, executed by the Company in favor of the Trustee, as the same
may be amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof and hereof.
"Preferred Stock" means, with respect to any Person, any and all
shares, interests, participations and rights or other equivalents in the
preferred stock of such Person (however designated and whether voting or
nonvoting), whether or not outstanding at the Issue Date, which is preferred as
to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over shares
of Capital Stock of any other class of such Person.
11
<PAGE>
"Related Business" means the same or a similar line of business as
the Company and its Subsidiaries were engaged in on the Effective Date.
"Restricted Investment" means any Investment other than a Permitted
Investment.
"Restricted Subsidiary" means any Subsidiary of the Company which is
not a Unrestricted Subsidiary.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Securities described above issued under this
Indenture.
"Securities Act" means the Securities Act of 1933, as amended, or
any similar Federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect at the time.
"Security Agreement" means the agreement substantially in the form
of Exhibit B hereto, executed by the Company in favor of the Trustee, as the
same may be amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof and hereof.
"Security Documents" means the Security Agreement and the Pledge
Agreement.
"Significant Subsidiary" means, at any date of determination, any
Subsidiary of the Company that, together with its Subsidiaries, (i) for the most
recent fiscal year of the Company, accounted for more than 10% of the
consolidated revenues of the Company and its Restricted Subsidiaries or (ii) as
of the end of such fiscal year, was the owner of more than 10% of the
consolidated assets of the Company and its Restricted Subsidiaries, all as set
forth on the most recently available consolidated financial statements of the
Company and the Restricted Subsidiaries for such fiscal year.
"SMC Reincorporation Merger" means a merger of SMC with and into
Shieldalloy Metallurgical Corporation, a Delaware corporation and wholly-owned
Subsidiary of the Company.
"Specified Indebtedness" means all indebtedness, obligations and
other liabilities (contingent or otherwise) arising under or with respect to the
Working Capital Credit Facility and all notes, security documents or other
documents, instruments or
12
<PAGE>
agreements executed in connection therewith. The term "Specified Indebtedness"
shall expressly include any and all interest accruing and costs and expenses
incurred after the filing by or against the Company of any petition or like
application under the Bankruptcy Law to the extent allowed or allowable in any
such case or proceeding so commenced.
"Subsidiary" of any Person means a corporation, partnership or other
entity more than 50% of the Voting Stock of which is owned by such Person or one
or more Subsidiaries of such Person.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb), as amended, and as in effect on the date on which this Indenture
is qualified under the TIA, except as provided in Section 10.03 hereof.
"Transaction Date" means, with respect to the incurrence of any
Indebtedness by the Company or any Restricted Subsidiary, the date such
Indebtedness is to be incurred and, with respect to any Restricted Payment, the
date such Restricted Payment is to be made.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Trust Officer" means the chairman or vice chairman of the board of
directors, the chairman or vice-chairman of the executive committee of the board
of directors, the president, any vice-president, assistant vice-president, the
secretary, any assistant secretary, the treasurer, any assistant treasurer, the
cashier, any assistant cashier, any trust officer, any assistant trust officer,
the controller, any assistant controller or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any Person to whom a particular corporate trust matter is referred
because of his/her knowledge of and familiarity with the particular subject, or,
in the case of a successor trustee, an officer assigned to the department,
division or group performing the corporate trust work of such successor.
"Unrestricted Subsidiary" means any Person of which a majority of
the Capital Stock or other equity securities having ordinary voting power for
the election of directors or other governing body of such Person is owned by the
Company, directly or indirectly, and that has been designated by the Company (by
written notice to the Trustee) as an "Unrestricted Subsidiary," and each
Subsidiary of an Unrestricted Subsidiary; provided, however, that a Person that
is a Subsidiary may not subsequently be designated as an
13
<PAGE>
"Unrestricted Subsidiary" if such designation would result in a Default or Event
of Default. For purposes of the foregoing, the net Investment in any Subsidiary
at the time of such designation shall be deemed made at the time of such
designation. The Board may, by a Board Resolution delivered to the Trustee,
designate any Restricted Subsidiary of the Company (other than a Significant
Subsidiary) (including any newly acquired or newly formed Subsidiary of the
Company) to be an Unrestricted Subsidiary unless such Restricted Subsidiary owns
any Capital Stock of, or owns or holds any Lien on any property of, the Company
or any Restricted Subsidiary, and provided that (i) no Default or Event of
Default shall have occurred and be continuing at the time of or after giving
effect to such designation and (ii) either (A) the Subsidiary to be so
designated has total assets of $10,000 or less or (B) if such Subsidiary has
assets greater than $10,000, such designation would be permitted under Section
5.06. The Board of Directors of the Company may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary of the Company, provided that (i) no
Default or Event of Default shall have occurred and be continuing at the time of
or after giving effect to such designation; (ii) immediately after giving effect
to such designation the Company could incur $1.00 of additional Indebtedness
under the proviso in paragraph (a) of Section 5.08; and (iii) all Liens and
Indebtedness of such Unrestricted Subsidiary outstanding immediately following
such designation would, if incurred at such time, have been permitted to be
incurred for all purposes of this Indenture. Any designation by the Board shall
be evidenced to the Trustee by promptly filing with the Trustee a copy of the
Board Resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions.
Notwithstanding the foregoing, (i) Gesellschaft fur Elektrometallugie GmbH and
its Subsidiaries, (ii) Elektrowerk Weisweller GmbH and its Subsidiaries, (iii)
Metallurg do Brazil Ltda and its Subsidiaries and (iv) Companhia Industrial
Fluminense and its Subsidiaries, shall be deemed to be Unrestricted
Subsidiaries.
"U.S. Government Obligations" mean securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, the timely payment of which is uncondi- tionally guarantied as a full
faith and credit obligation by the United States of America, that, in either
case under clause (i) or (ii), are not callable or redeemable at the option of
the issuer thereof, and shall also include a depository receipt issued by a bank
or trust company as custodian with respect to any such government obligation or
a specific payment of interest on or principal of such government obligation
held by such custodian for the account of the holder of a depository receipt;
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 depository
receipt from any amount received by the custodian in respect of the U.S.
Government
14
<PAGE>
Obligation or the specific payment of interest on or principal on the U.S.
Government Obligation evidenced by such depository receipt.
"Voting Stock" means with respect to any Person, Capital Stock of
any class or kind ordinarily having the power to vote for the election of
directors, managers or other voting members of the governing body of such
Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the then
outstanding aggregate principal amount of such Indebtedness into (ii) the total
of the product obtained by multiplying (x) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (y) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly Owned" means, with respect to any Subsidiary of any Person,
such Subsidiary if all of the outstanding Capital Stock in such Subsidiary
(other than any director's qualifying shares or Investments by foreign nationals
mandated by applicable law) is owned by such Person or one or more Wholly Owned
Subsidiaries of such Person.
"Working Capital Agent" means The First National Bank of Boston, as
agent for the lenders under the Working Capital Credit Facility or any successor
thereto appointed pursuant to the terms of the Working Capital Credit Facility.
"Working Capital Lenders" means each lender under the Working
Capital Credit Facility.
"Working Capital Credit Facility" means a credit facility provided
to the Company, SMC and one or more of their Subsidiaries, all extensions,
renewals, refinancings, replacements and refundings thereof, each as amended,
supplemented or otherwise modified from time to time.
Section 1.02. Other Definitions.
Defined in
Term Section
"Affiliate Transaction" ........................... 5.09
"Change of Control Date" .......................... 5.12
15
<PAGE>
"Change of Control Offer" ......................... 5.12
"Change of Control Payment Date"................... 5.12
"Event of Default" ................................ 7.01
"Excess Proceeds".................................. 5.13
"Exceeds Proceeds Offer"........................... 5.13
"Exceeds Proceeds Payment Date".................... 5.13
"Guarantied Obligations"........................... 3.01
"Legal Holiday" ................................... 12.07
"Paying Agent" .................................... 2.03
"Registrar"........................................ 2.03
"Replacement Assets"............................... 5.13
"Restricted Payments".............................. 5.06
"Securities" ......................................Preamble
"Subject Property"................................. 11.04
"Successor Company" ............................... 6.01
"Successor Guarantor" ............................. 6.01
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Securities;
"indenture security holder" means a Holder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Securities means the Company and any other obligor
on the Securities (including the Guarantor).
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
16
<PAGE>
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles
in the United States;
(3) references to "generally accepted accounting principles" means
generally accepted accounting principles in effect in the United States as
of the time when and for the period as to which such accounting principles
are to be applied, except that for purposes of financial calculations
hereunder, shall mean all principles as in effect on the date hereof;
(4) "including" means including without limitation;
(5) "or" is not exclusive;
(6) words in the singular include the plural, and in the plural
include the singular; and
(7) provisions apply to successive events and transactions.
ARTICLE 2.
THE SECURITIES
Section 2.01. Form and Dating.
The Securities, the notation thereon relating to the Guaranty
pursuant to Article 3 hereof and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A, the terms of which are
incorporated in and made a part of this Indenture. The Securities may have
notations, legends or endorsements required by law, stock exchange rules,
agreements to which the Company is subject or usage. Each Security shall be
dated the date of its authentication. The Securities shall be in denominations
of $1,000 and integral multiples thereof.
17
<PAGE>
Section 2.02. Execution and Authentication.
An Officer of the Company shall sign the Securities for the Company
by manual or facsimile signature. The Company's seal shall be placed or
reproduced on the Securities and may be in facsimile form.
An Officer of Guarantor shall sign the Guaranty pursuant to Article
3 hereof for Guarantor by manual or facsimile signature.
If an Officer of the Company or the Guarantor whose signature is on
a Security no longer holds that office at the time the Security is authenticated
by the Trustee, the Security shall nevertheless be valid.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature of the Trustee shall be conclusive evidence that the Security has been
authenticated under this Indenture.
The Trustee shall authenticate Securities for original issue up to
the aggregate principal amount stated in paragraph 4 of the Securities, upon a
written order of the Company signed by two Officers of the Company, which order
shall set forth the amount and the date of the Securities to be authenticated.
The aggregate principal amount of Securities outstanding at any time may not
exceed the amount set forth in paragraph 4 of the Securities, except as provided
in Sections 2.07 and 2.08 hereof.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate Securities. Unless limited by the term
of such appointment, an authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent for service of notice or
demands.
Section 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency where Securities may
be presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Securities may be presented for payment ("Paying Agent").
The Registrar shall keep a register of the Securities and of their transfer and
exchange. The Company may appoint one or more co-registrars and one or more
additional paying agents. The term "Paying Agent" includes any additional paying
agent. The Company may change any Paying Agent,
18
<PAGE>
Registrar or co-registrar without notice to any Holder. The Company shall notify
the Trustee of the name and address of any Agent not a party to this Indenture.
The Company or any of its Subsidiaries may act as Paying Agent, Registrar or
co-registrar.
The Company shall enter into an appropriate agency agreement with
any Agent not a party to this Indenture, which shall incorporate the provisions
of the TIA. The agreement shall implement the provisions of this Indenture that
relate to such Agent. If the Company fails to appoint or maintain another entity
as Registrar or Paying Agent, or fails to give the foregoing notice, the Trustee
shall act as such, and shall be entitled to appropriate compensation in
accordance with Section 8.07 hereof.
The Company initially appoints the Trustee as Registrar, Paying
Agent and agent for service of notices and demands in connection with the
Securities.
Section 2.04. Paying Agent to Hold Money in Trust.
Not later than 11:00 a.m., New York City time, on each date on which
principal of and interest on the Securities is due and payable, the Company
shall deposit with the Paying Agent, in immediately available funds, a sum
sufficient to pay such principal and interest. The Company shall require each
Paying Agent (other than the Trustee) to agree in writing that the Paying Agent
will hold in trust for the benefit of Holders or the Trustee all money held by
the Paying Agent for the payment of principal of or interest on the Securities,
and will notify the Trustee of any default by the Company in making any such
payment. The Company at any time may require a Paying Agent to pay all money
held by it to the Trustee and to account for any funds disbursed by the Paying
Agent. Upon complying with this Section, the Paying Agent (if other than the
Company) shall have no further liability for the money delivered to the Trustee.
If the Company or a Subsidiary acts as Paying Agent, it shall segregate and hold
in a separate trust fund for the benefit of the Holders all money held by it as
Paying Agent.
Section 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders. If the Trustee is not the Registrar, the Company shall cause to be
furnished to the Trustee at least seven Business Days before each interest
payment date and before the final maturity date and at such other times as the
Trustee may request in writing a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses and taxpayer
identification numbers of the Holders and the Company shall otherwise comply
with TIA ss. 312(a).
19
<PAGE>
Section 2.06. Transfer and Exchange.
When Securities are presented to the Registrar or a co-registrar
with a request to register, transfer or exchange them for an equal principal
amount of Securities of other authorized denominations, the Registrar shall
register the transfer or make the exchange if its requirements for such
transactions are met; provided, however, that any Security presented or
surrendered for registration of transfer or exchange shall be duly endorsed or
accompanied by a written instruction of transfer in form satisfactory to the
Registrar and the Trustee duly executed by the Holder thereof or his attorney
duly authorized in writing. To permit registrations of transfers and exchanges,
the Company shall issue and the Trustee shall authenticate Securities at the
Registrar's request, subject to such rules as the Trustee may reasonably
require.
The Company shall not be required (i) to issue, register the
transfer of or exchange Securities during a period beginning at the opening of
business on a Business Day 15 days before the day of any selection of Securities
for redemption under Section 4.02 and ending at the close of business on the day
of selection 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.
No service charge shall be made to the Holder for any registration
of transfer or exchange (except as otherwise expressly permitted herein), but
the Company may require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith (other than such
transfer tax or similar governmental charge payable upon exchanges (without a
transfer to another Person) pursuant to Section 2.10, 4.06 or 10.05 hereof in
which event the Company will be responsible for the payment of any such taxes).
Prior to due presentment for registration of transfer of any
Security, the Trustee, any Agent and the Company may deem and treat the Person
in whose name any Security is registered as the absolute owner of such Security
for the purpose of receiving payment of principal of and interest on such
Security and for all other purposes whatsoever, whether or not such Security is
overdue, and none of the Trustee, any Agent or the Company shall be affected by
notice to the contrary.
Section 2.07. Replacement Securities.
If any mutilated Security is surrendered to the Trustee or the
Registrar, or the Company and the Trustee receive evidence to their satisfaction
that any Security is lost,
20
<PAGE>
destroyed or wrongfully taken, the Company shall issue and the Trustee shall
authenticate a replacement Security if the requirements of Section 8-405 of the
Uniform Commercial Code are met and the Holder satisfies any other reasonable
requirements of the Trustee. Notwithstanding the foregoing, if any mutilated,
lost, destroyed or wrongfully taken Security has become due or is to become due
within 15 days of the receipt by the Company of a request for replacement, the
Company may pay such Security when due in lieu of issuing a replacement
Security. If required by the Trustee or the Company, an indemnity bond must be
supplied by the Holder that is sufficient in the judgment of the Trustee and the
Company to protect the Company, the Trustee, any Agent and any authenticating
agent from any loss that any of them may suffer if a Security is replaced. The
Company and the Trustee may charge the Holder for any tax that may be imposed
and for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Company.
The provisions of this Section 2.07 are exclusive and shall preclude
all other rights and remedies with respect to the replacement or payment of
mutilated, destroyed, lost or wrongfully taken Securities.
Section 2.08. Outstanding Securities.
The Securities outstanding at any time are all the Securities
authenticated by the Trustee except for those cancelled by it, those delivered
to it for cancellation and those described in this Section 2.08 as not
outstanding.
If a Security is replaced pursuant to Section 2.07 hereof, it ceases
to be outstanding unless the Company and the Trustee receive proof satisfactory
to them that the replaced Security is held by a bona fide purchaser.
If the principal amount of any Security is considered paid under
Section 5.01 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
Subject to Section 2.09 hereof, a Security does not cease to be
outstanding because the Company or one of its Affiliates holds the Security.
Section 2.09. Treasury Securities.
In determining whether the Holders of the required principal amount
of Securities have concurred in any direction, waiver or consent or called for a
meeting of
21
<PAGE>
Holders or are present at a meeting of Holders, Securities owned by the Company
or an Affiliate shall be considered as though not outstanding, except that for
the purposes of determining whether the Trustee shall be protected in relying on
any such direction, waiver or consent, only Securities that a Trust Officer
knows are so owned shall be so disregarded.
Section 2.10. Temporary Securities.
Until definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities. Temporary
Securities shall be substantially in the form of definitive Securities but may
have variations that the Company considers appropriate for temporary Securities.
Without unreasonable delay, the Company shall prepare and the Trustee, upon
receipt of the written order of the Company signed by two Officers, shall
authenticate definitive Securities in exchange for temporary Securities. Until
such exchange, temporary Securities shall be entitled to the same rights,
benefits and privileges as definitive Securities.
Section 2.11. Cancellation.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Securities surrendered to them for registration of transfer, exchange,
replacement or payment. The Trustee shall cancel all Securities surrendered for
registration of transfer, exchange, replacement, payment or cancellation and
shall destroy cancelled Securities (subject to the record-retention requirement
of the Exchange Act) and forward certification of their destruction to the
Company unless the Company shall direct that cancelled Securities be returned to
it. The Company may not issue new Securities to replace Securities that it has
redeemed or paid or that have been delivered to the Trustee for cancellation.
Section 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Securities,
it shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, which date shall be at least five
Business Days prior to the payment date, in each case at the rate provided in
Section 5.01 hereof. The Company shall, with the consent of the Trustee, fix or
cause to be fixed each such special record date and payment date. At least 15
days before a special record date, the Company (or the Trustee, upon the
Company's written request delivered at least 20 days prior to the special record
date, in the name of and at the expense
22
<PAGE>
of the Company) shall mail to the Holders a notice that states the special
record date, the related payment date and the amount of such defaulted interest
to be paid.
ARTICLE 3.
GUARANTY
Section 3.01. Guaranty.
For value received, Guarantor hereby unconditionally guaranties to
the Holders and to the Trustee (i) the due and punctual payment of the principal
of and interest on, the Securities, to the extent lawful, and all other amounts
due and payable to the Trustee under this Indenture by the Company
(collectively, the "Guarantied Obligations"), when and as the same shall become
due and payable, whether at the stated maturity or by declaration of
acceleration, call for redemption or otherwise, and the due and punctual
performance of all other obligations of the Company to the Holders or the
Trustee, according to the terms of the Securities and this Indenture and (ii)
the due and punctual performance in the case of any extension or renewal of time
of payment of any Securities or any such other obligation, whether at stated
maturity or by declaration of acceleration, call for redemption or otherwise,
according to the terms of such extension or renewal. The Guaranty pursuant to
this Article 3 constitutes a guaranty of payment in full when due and not merely
a guaranty of collectibility.
Notwithstanding the foregoing, Guarantor's liability under this
Section 3.01 shall be limited to the maximum amount that would not result in
Guarantor's Guaranty under this Section 3.01 constituting a fraudulent
conveyance or fraudulent transfer under applicable law.
Section 3.02. Obligation of Guarantor Unconditional.
Except as provided in Section 3.05, the obligations of Guarantor
hereunder shall be as aforesaid absolute and unconditional, and shall not be
impaired, modified, released or limited by any occurrence or condition
whatsoever, including, without limitation, (i) any compromise, settlement,
release, waiver, renewal, extension, indulgence or modification of, or any
change in, any of the obligations and liabilities of the Company contained in
the Securities or this Indenture, (ii) any impairment, modification, release or
limitation of the liability of the Company or its estate in bankruptcy, or any
remedy for the enforcement thereof, resulting from the operation of any present
or future provision of any applicable Bankruptcy Law or other statute, as each
may be then in effect or from any
23
<PAGE>
decision of any court, (iii) the assertion or exercise by the Company or the
Trustee of any rights or remedies under the Securities or this Indenture or
their delay in or failure to assert or exercise any such rights or remedies,
(iv) the assignment or the purported assignment of any property as additional
security for the Securities, including, without limitation, all or any part of
the rights of the Company under this Indenture, (v) the extension of the time
for payment by the Company of any payment or other sum or any part thereof owing
or payable under any of the terms and provisions of the Securities or this
Indenture or of the time for performance by the Company of any other obligations
under or arising out of any such terms and provisions or the extension or the
renewal of any thereof, (vi) the modification or amendment (whether material or
otherwise) of any duty, agreement or obligation of the Company set forth in this
Indenture, (vii) the voluntary or involuntary liquidation, dissolution, sale or
other disposition of all or substantially all of the assets, marshalling of
assets and liabilities, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of, or other similar proceeding affecting, the Company or the disaffirmance of
this Guaranty pursuant to this Article 3 or the Securities or this Indenture in
any such proceeding, (viii) the release or discharge of the Company from the
performance or observance of any agreement, covenant, term or condition
contained in the Securities or this Indenture by operation of law, (ix) the
unenforceability of the Securities or this Indenture, (x) any exchange, release
or application of Collateral, or (xi) any other circumstance which might
otherwise constitute a legal or equitable discharge of a surety or guarantor.
Section 3.03. Execution and Delivery of Guaranty.
To evidence its Guaranty set forth in this Article 3, Guarantor
hereby agrees that a notation of such Guaranty shall be placed on each Security
authenticated and delivered by the Trustee and that this Guaranty shall be
executed on behalf of such Guarantor by the manual or facsimile signature of one
Officer of Guarantor.
Guarantor further agrees that its Guaranty pursuant to this Article
3 shall remain in full force and effect notwithstanding any failure to endorse
on each Security a notation of such Guaranty.
If an Officer of Guarantor whose signature is on a Guaranty no
longer holds that office at the time the Trustee authenticates the Security on
which a Guaranty is endorsed, such Guaranty shall be valid nevertheless.
24
<PAGE>
The delivery of any Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the Guaranty
set forth in this Indenture on behalf of Guarantor.
Section 3.04. Waiver Relating to Guaranties.
Guarantor hereby (i) waives diligence, presentment, demand of
payment, filing of claims with a court in the event of the merger, insolvency or
bankruptcy of the Company, any right to require proceeding first against the
Company or to realize on any collateral, protest or notice with respect to the
Guarantied Obligations and all demands whatsoever, (ii) acknowledges that any
agreement, instrument or document evidencing the Guarantied Obligations may be
transferred and that the benefit of its obligations hereunder shall extend to
each holder of any agreement, instrument or document evidencing the Guarantied
Obligations without notice to them and (iii) covenants that its Guaranty
pursuant to this Article 3 will not be discharged except pursuant to Section
3.05 or by complete performance of the Guarantied Obligations and of its
Guaranty pursuant to this Article 3. Guarantor further agrees that, as between
Guarantor, on the one hand, and the Holders and the Trustee, on the other hand,
(i) the maturity of the obligations guarantied hereby may be accelerated as
provided in Article 7 for the purposes of this Guaranty, notwithstanding any
stay, injunction or other prohibition preventing such acceleration in respect of
the obligations guarantied hereby, and (ii) in the event of any declaration of
acceleration of such obligations as provided in Article 7, such obligations
(whether or not due and payable) shall forthwith become due and payable by
Guarantor for the purpose of this Guaranty. In addition, without limiting the
foregoing provisions, upon the effectiveness of any acceleration under Article
7, the Trustee shall promptly make a demand for payment of the Securities under
the Guaranty herein.
Guarantor further agrees that if at any time all or any part of any
payment theretofore applied by any Person to any Guarantied Obligation is, or
must be, rescinded or returned for any reason whatsoever, including, without
limitation, the insolvency, bankruptcy or reorganization of the Company, such
Guarantied Obligation shall for the purposes of its Guaranty pursuant to this
Article 3 to the extent that such payment is or must be rescinded or returned,
be deemed to have continued in existence notwithstanding such application, and
its Guaranty pursuant to this Article 3 shall continue to be effective or be
reinstated, as the case may be, as to such Guarantied Obligations as though such
application had not been made.
Guarantor shall be subrogated to all rights of the Holders against
the Company in respect of any amounts paid to such Holder by the Guarantor
pursuant to the provisions of the Guaranty; provided, however, that the
Guarantor shall not be entitled to enforce, or to
25
<PAGE>
receive any payments arising out of or based upon, such right of subrogation
until the principal of and interest on all Securities issued under this
Indenture shall have been paid in full.
Section 3.05. Release of Guarantor.
Without any action required on the part of Holders, the Trustee, the
Company or the Guarantor, the Guarantor shall be released and discharged from
its obligations under its Guaranty pursuant to this Article 3 upon the sale
(whether effected by sale of all or substantially all of the assets or stock of
the Guarantor), disposition (by consolidation, merger or otherwise) or
dissolution of the Guarantor to the extent permitted hereby if as a result of
such sale, disposition or dissolution, the Guarantor ceases to be a Subsidiary
of the Company; provided, however, that, in the case of a SMC Reincorporation
Merger, the Successor Guarantor assumes by supplemental Indenture in accordance
with Article 6 hereof all of the obligations of the Guarantor under its Guaranty
pursuant to this Article 3.
Section 3.06. Reinstatement of Guaranty.
The Guaranty pursuant to this Article 3 shall, to the fullest extent
permitted by law, continue to be effective or be reinstated, as the case may be,
if at any time payment and performance of the Securities, is, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be restored or
returned by any Holder, whether as a "voidable preference," "fraudulent
conveyance," "fraudulent transfer," or otherwise, all as though such payment or
performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Securities shall, to
the fullest extent permitted by law, be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or returned.
ARTICLE 4.
REDEMPTION
Section 4.01. Notices to Trustee.
If the Company elects to redeem Securities pursuant to the optional
redemption provisions of Section 4.07 hereof, it shall furnish to the Trustee,
at least 40 days but not more than 80 days (unless a shorter period shall be
agreed to by the Trustee) before a redemption date, an Officers' Certificate
setting forth the Section of this Indenture pursuant
26
<PAGE>
to which the redemption shall occur, the redemption date, the principal amount
of Securities to be redeemed and the redemption price.
Section 4.02. Selection of Securities to Be Redeemed.
If less than all of the Securities are to be redeemed, the Trustee
shall select the Securities to be redeemed pro rata or by a method that complies
with applicable legal and securities exchange requirements, if any, and that the
Trustee considers fair and appropriate and in accordance with methods generally
used at the time of selection by fiduciaries in similar circumstances and taking
into account the provisions of the next paragraph. The particular Securities to
be redeemed shall be selected unless otherwise provided herein, not less than 30
or more than 60 days prior to the redemption date by the Trustee from the
outstanding Securities not previously called for redemption.
If the Company shall so direct, Securities registered in the name of
the Company or any Subsidiary thereof shall not be included in the Securities
selected for redemption.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Security selected for
partial redemption, the principal amount thereof to be redeemed. Securities and
portions of them selected shall be in amounts of $1,000 or whole multiples of
$1,000; except that if all of the Securities of a Holder are to be redeemed, the
entire outstanding amount of Securities held by such Holder, even if not a
multiple of $1,000, shall be redeemed. Except as provided in the preceding
sentence, provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption.
Section 4.03. Notice of Redemption.
At least 30 days but not more than 60 days before a redemption date,
the Company shall mail, or cause to be mailed, a notice of redemption by
first-class mail to each Holder whose Securities are to be redeemed.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price;
27
<PAGE>
(3) if any Security is being redeemed in part, the portion of the
principal amount of such Security to be redeemed and that, after the
redemption date, upon surrender of such Security, a new Security or
Securities in principal amount equal to the unredeemed portion will be
issued with an identification number;
(4) the name and address of the Paying Agent;
(5) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(6) that, unless the Company defaults in making such redemption
payment, interest on Securities called for redemption ceases to accrue on
and after the redemption date;
(7) the paragraph of the Securities and/or Section of this Indenture
pursuant to which the Securities called for redemption are being redeemed;
and
(8) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the
Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall deliver to the Trustee, at least 45 days prior to the redemption
date (unless a shorter period shall be agreed to by the Trustee), an Officers'
Certificate requesting that the Trustee give such notice and setting forth the
information to be stated in such notice as provided in the preceding paragraph
of this Section 4.03.
Section 4.04. Effect of Notice of Redemption.
Once notice of redemption is mailed, Securities called for
redemption become due and payable on the redemption date at the redemption price
set forth in the Security. Upon surrender to the Paying Agent, such Securities
shall be paid at the redemption price stated in the notice, plus accrued
interest to the redemption date. Failure to give notice or any defect in the
notice to any Holder shall not affect the validity of the notice to any other
Holder.
28
<PAGE>
Section 4.05. Deposit of Redemption Price.
No later than 11:00 a.m., New York City time, on the redemption
date, the Company shall deposit with the Paying Agent (or if the Company or a
Subsidiary is the Paying Agent, shall segregate and hold in trust) money, in
immediately available funds, sufficient to pay the redemption price of and
accrued interest on all Securities to be redeemed on that date other than
Securities or portions of Securities called for redemption which have been
delivered by the Company to the Trustee for cancellation. The Paying Agent shall
return to the Company any money deposited with the Paying Agent by the Company
in excess of the amount necessary to pay the redemption price of, and accrued
interest on, all Securities to be redeemed. Funds provided for redemption may
also be returned to the Company as provided in Section 9.03.
If the Company complies with the preceding paragraph, interest on
the Securities to be redeemed will cease to accrue on the applicable redemption
date, whether or not such Securities are presented for payment. If any Security
called for redemption shall not be so paid upon surrender for redemption because
of the failure of the Company to comply with the preceding paragraph, interest
will be paid on the unpaid principal from the redemption date until such
principal is paid and, to the extent lawful, on any interest not paid on such
unpaid principal, in each case at the rate provided in Section 5.01 hereof.
Section 4.06. Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the Company
shall issue and the Trustee shall authenticate for the Holder (at the expense of
the Company) a new Security equal in principal amount to the unredeemed portion
of the Security surrendered.
Section 4.07. Optional Redemption.
The Company may redeem all or any portion of the Securities upon the
terms and at the redemption prices set forth in paragraph 5 of the Securities.
Any redemption pursuant to this Section 4.07 shall be made pursuant
to the provisions of Sections 4.01 through 4.06 hereof.
29
<PAGE>
Section 4.08. Mandatory Redemption.
The Company must redeem Securities upon the terms and at the
redemption prices set forth in paragraph 6 of the Securities.
Any redemption pursuant to this Section 4.08 shall be made pursuant
to the provisions of Sections 4.02 through 4.06 hereof.
ARTICLE 5.
COVENANTS
Section 5.01. Payment of Securities.
The Company shall pay the principal of and interest on the
Securities on the dates and in the manner provided in the Securities and in this
Indenture. Principal and interest shall be considered paid on the date due if,
on such date, the Paying Agent holds in accordance with this Indenture money, in
immediately available funds, sufficient to pay all principal and interest then
due and the Paying Agent is not prohibited from paying such money to the Holders
on that date pursuant to the terms of this Indenture.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 2% per annum in excess of the then applicable interest rate on the Securities
to the extent lawful and it shall pay interest (including post-petition interest
in any proceeding under any Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace period) at the same rate to the extent
lawful.
Section 5.02. Maintenance of Office or Agency.
The Company will maintain in the Borough of Manhattan, The City of
New York, an office or agency (which may be an office of the Trustee or
Registrar or any co-registrar) where Securities may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company in respect of the Securities 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.
30
<PAGE>
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind any such designation;
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 the
Borough of Manhattan, The City of New York 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.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.
Section 5.03. SEC Reports; Financial Statements.
The Company shall furnish to the Trustee and the Holders, within 15
days after it files them with the SEC, copies of the annual reports and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as the SEC may by rules and regulations prescribe) that the
Company is required to file with the SEC pursuant to Section 13 or Section 15(d)
of the Exchange Act. Notwithstanding that the Company may not be subject to, or
may not be required to remain subject, to the reporting requirements of Section
13 or Section 15(d) of the Exchange Act, the Company shall furnish to the
Trustee and the Holders, within 15 days after it would have been required to
file such statements with the SEC, all quarterly consolidated financial
statements or annual consolidated financial statements, including any notes
thereto (and with respect to annual consolidated financial statements, an
auditors' report therein by Deloitte & Touche LLP or another firm of established
national reputation), comparable to the consolidated financial statements that
the Company would have been required to include in such reports if the Company
were subject to the requirements of Section 13 or Section 15(d) of the Exchange
Act. The Company also shall comply with the provisions of TIA ss. 314(a).
Section 5.04. Compliance Certificate.
(a) The Company shall deliver to the Trustee, within 120 days after
the end of each fiscal year of the Company, an officers' certificate signed by
the Company's principal executive officer, principal financial officer or
principal accounting officer stating that a review of the activities of the
Company and its Subsidiaries during the preceding fiscal year has been made
under the supervision of the signing officer with a view to determining whether
the Company and each of those Subsidiaries has kept, observed, performed and
fulfilled its obligations under this Indenture, and further stating, as to such
officer signing
31
<PAGE>
such certificate, that to the best of such officer's knowledge the Company and
each of those Subsidiaries has kept, observed, performed and fulfilled each and
every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions hereof
(or, if a Default or Event of Default shall have occurred, describing all such
Defaults or Events of Default of which he may have knowledge and what action the
Company is taking or proposes to take with respect thereto). For the purpose of
this Section 5.04(a), compliance shall be determined without regard to any
period of grace or requirement of notice provided by the terms of this
Indenture.
(b) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the annual reports
delivered to the Trustee and the Holders pursuant to Section 5.03 above shall be
accompanied by a written statement of the Company's independent public
accountants (who shall be Deloitte & Touche LLP or another firm of established
national reputation) that in making the examination necessary for certification
of such annual reports nothing has come to their attention which would lead them
to believe that the Company has violated Section 5.03 of this Indenture or, if
any such violation has occurred, specifying the nature and period of existence
thereof, it being understood that such accountants shall not be liable directly
or indirectly to any Person for any failure to obtain knowledge of any such
violation.
(c) So long as any of the Securities are outstanding, the Company
will deliver to the Trustee, forthwith upon any Officer becoming aware of any
Default or Event of Default, an Officers' Certificate specifying such Default or
Event of Default and the action the Company is taking or proposes to take with
respect thereto.
Section 5.05. Stay, Extension and Usury Laws.
The Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, plead or in any manner whatsoever
claim or take the benefit or advantage of any stay, extension or usury 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 (to the extent that it may lawfully do so) that it
will not, by resort to any such law, 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.
32
<PAGE>
Section 5.06. Limitation on Restricted Payments.
The Company will not, nor will it permit any Restricted Subsidiary
to: (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 of the Company (other than Disqualified Stock)); (ii) purchase,
redeem or otherwise acquire or retire for value any of the Company's Capital
Stock; (iii) make any principal payment on, purchase, redeem, retire, defease,
prepay, decrease or otherwise acquire or retire for value prior to a scheduled
final maturity, scheduled repayment or scheduled mandatory payment date
(including pursuant to mandatory repurchase covenants) or maturity date any
Indebtedness subordinated to the Securities of the Company or (iv) make any
Restricted Investments in any Person (all such payments and other actions set
forth in clauses (i) through (iv) above being collectively referred to as
"Restricted Payments") if, after giving effect to such Restricted Payment:
(1) a Default or Event of Default has occurred and is
continuing;
(2) the Company could not incur at least $1.00 of
additional Indebtedness in compliance with Section 5.08; or
(3) the aggregate amount expended for all Restricted
Payments subsequent to the Effective Date (the amount of any
expenditures, if other than cash, as determined in good faith
by the Board) exceeds the sum of (i) 50% of the aggregate
Consolidated Net Income of the Company calculated on a
cumulative basis for the period from the Effective Date to the
last day of the Company's fiscal quarter immediately preceding
the Company's fiscal quarter in which the Restricted Payment
is proposed to be made plus (ii) the aggregate net proceeds,
including cash and the fair market value of property other
than cash (as determined in good faith by the Board) received
by the Company (x) from the issuance after the Effective Date
of Capital Stock of the Company (other than Disqualified
Stock) and (y) upon the exercise after the Effective Date of
any options, warrants or other rights to acquire the Capital
Stock of the Company.
33
<PAGE>
The foregoing limitations on Restricted Payments shall not prohibit:
(a) the payment of any dividend within 60 days after the
date of declaration thereof, if at said date of
declaration such payment would comply with the
provisions hereof; or
(b) the retirement of any shares of the Company's Capital
Stock in exchange for, or out of the net proceeds of the
substantially concurrent sale (other than to a
Restricted Subsidiary of the Company) of, other shares
of the Company's Capital Stock (other than Disqualified
Stock); or
(c) the redemption, repurchase, defeasance or other
acquisition or retirement for value of Indebtedness that
is subordinated in right of payment to the Securities
including accrued and unpaid interest, with the proceeds
of, or in exchange or conversion for, (A) shares of
Capital Stock (other than Disqualified Stock) of the
Company or (B) Refinancing Indebtedness which is
subordinated in right of payment to the Securities to
the same extent as the Indebtedness so refinanced; or
(d) Restricted Payments contemplated by the Plan; or
(e) Investments by the Company or a Restricted Subsidiary
that operates in a Related Business in an aggregate
amount not to exceed $15,000,000; or
(f) payments or distributions pursuant to mergers permitted
by this Indenture; or
(g) extension by the Company or any Restricted Subsidiary of
trade credit on ordinary terms to Unrestricted
Subsidiaries recorded as accounts receivable; or
(h) advances or capital contributions by the Company or
Restricted Subsidiaries in Unrestricted Subsidiaries in
an aggregate amount not to exceed $10,000,000 (net of
any amounts paid after the Issue Date as dividends or
other capital distributions or repayment of advances to
the Company or any Restricted
34
<PAGE>
Subsidiary by Unrestricted Subsidiaries), other than
capital contributions arising as a result of a
conversion of permitted advances to Unrestricted
Subsidiaries to equity in such Unrestricted Subsidiary;
or
(i) Investments in Unrestricted Subsidiaries from capital
contributions to the Company or the sale of Capital
Stock of the Company; or
(j) repurchases of Capital Stock of the Company owned by
employees of the Company or any of its Subsidiaries.
Section 5.07. Limitation on Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries.
The Company will not, and will not permit any Restricted Subsidiary
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any encumbrance or restriction of any kind on the ability of
any Restricted Subsidiary to: (i) pay dividends or make any other distributions
to the Company or any Restricted Subsidiary on its Capital Stock or with respect
to any other interest or participation in, or measured by, its profits; (ii) pay
any Indebtedness or other obligations owed to the Company or any Restricted
Subsidiary; (iii) make loans or advances to the Company or any Restricted
Subsidiary; (iv) transfer any of its property or assets to the Company or any
Restricted Subsidiary; (v) grant Liens on its assets in favor of the Holders; or
(vi) guaranty the Securities or any renewals or refinancings thereof, except for
such encumbrances or restrictions existing under or by reason of: (A) applicable
law, (B) restrictions contained in agreements in effect on the Issue Date and
(C) Permitted Indebtedness.
Section 5.08. Limitation on Additional Indebtedness.
The Company will not, and will not permit any Restricted Subsidiary
to, directly or indirectly, create, incur, issue, assume, guaranty or otherwise
become directly or indirectly liable, contingently or otherwise, or otherwise
become responsible for (collectively, "incur"), any Indebtedness for borrowed
money, other than Permitted Indebtedness; provided, however, that the Company or
its Restricted Subsidiary may incur Indebtedness for borrowed money if, after
giving effect thereto, the Fixed Charge Coverage Ratio of the Company for the
applicable four fiscal quarter period ending immediately prior
35
<PAGE>
to the Transaction Date would have been at least 1.5 to 1.0 after giving pro
forma effect to such incurrence or issuance.
An Unrestricted Subsidiary may incur Indebtedness for borrowed money
in connection with the acquisition by such Unrestricted Subsidiary of the
business, property or assets of, or the Capital Stock or other evidence of
ownership of, any other Person, entity or business only if the recourse of the
holder or holders of such Indebtedness is entirely to the business, property or
assets of such Unrestricted Subsidiary or acquired Person, entity or business
and neither the Company nor any Restricted Subsidiary has any liability with
respect thereto except as described below under Section 5.09.
Section 5.09. Limitations on Transactions with Affiliates.
The Company will not, and will not 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 any
transaction, contract, agreement, understanding, loan, advance or guaranty with,
or for the benefit of, any Affiliate (other than the Company or any Restricted
Subsidiary) (each of the foregoing, an "Affiliate Transaction"), unless such
Affiliate Transaction is a Company Reincorporation Merger or a SMC
Reincorporation Merger or is on terms that are no less favorable to the Company
or Restricted Subsidiary than those that would have been obtained on an
arms-length basis in a comparable transaction by the Company or Restricted
Subsidiary with an unrelated Person, as determined by a majority of the
independent members of the Board in their good faith judgment as evidenced by a
resolution of the Board filed with the Trustee. Except with respect to a
Company Reincorporation Merger and a SMC Reincorporation Merger, any Affiliate
Transaction in excess of $10,000,000 shall be subject to the further requirement
that the Company obtain an opinion of an independent financial advisor stating
that the Affiliate Transaction is fair from a financial point of view to the
Company or such Restricted Subsidiary.
Section 5.10. Corporate Existence.
Subject to Article 5 hereof, the Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect its
corporate existence and the corporate, partnership or other existence of each
Significant Subsidiary in accordance with the respective organizational
documents as they may be from time to time amended of the Company and each such
Significant Subsidiary and the rights (charter and statutory), governmental
licenses and governmental franchises of the Company and each such Significant
Subsidiary; provided, however, that the Company shall not be required to
preserve any such right, license or franchise, or the corporate, partnership or
other existence of any such
36
<PAGE>
Significant Subsidiary, if the preservation thereof is no longer necessary in
the conduct of the business of the Company and the Significant Subsidiaries
taken as a whole and the loss thereof is not adverse in any material respect to
the Holders (which determination, if made in good faith by the Board, shall be
conclusive).
Section 5.11. Limitation on Liens.
The Company will not, directly or indirectly, create, incur, assume
or suffer to exist any Lien upon any of its assets or property now owned or
hereafter acquired by it, except for Permitted Liens.
Section 5.12. Change of Control.
Upon the occurrence of a Change of Control, each Holder shall have
the right to require the repurchase of its Securities by the Company in cash
pursuant to the offer described below (the "Change of Control Offer") at a
purchase price equal to 100% of the principal amount at maturity thereof, plus
accrued and unpaid interest thereon, if any, to the date of payment (the "Change
of Control Payment"). The Company is not required to make a Change of Control
Offer following a Change of Control if a third party makes a Change of Control
Offer that would be in compliance with the provisions described in this Section
5.12 if it were made by the Company and purchases the Securities validly
tendered and not withdrawn. Prior to the mailing of the notice to Holders
provided for in the succeeding paragraph, but in any event within 30 days
following any Change of Control, the Company covenants to (i) repay in full all
Indebtedness of the Company that would prohibit the repurchase of the Securities
as provided for in the succeeding paragraph or (ii) obtain any requisite
consents under instruments governing any such Indebtedness of the Company to
permit the repurchase of the Securities as provided for in the succeeding
paragraph. The Company shall first comply with the covenant in the preceding
sentence before it shall be required to repurchase Securities pursuant to this
Section 5.12.
Within 30 days following the Change of Control, the Company shall
mail a notice to the Trustee and each Holder stating: (i) that a Change of
Control has occurred, that the Change of Control Offer is being made pursuant to
this Section 5.12 and that all Securities validly tendered will be accepted for
payment; (ii) the purchase price and the date of purchase (which shall be a
Business Day no earlier than 30 days nor later than 60 days from the date such
notice is mailed) (the "Change of Control Payment Date"); (iii) that any
Security not tendered will continue to accrue interest pursuant to its terms;
(iv) that unless the Company defaults in the payment of the Change of Control
Payment, any Security accepted for payment pursuant to the Change of Control
Offer shall cease to accrue interest
37
<PAGE>
on and after the Change of Control Payment Date; (v) that Holders electing to
have any Security or portion thereof purchased pursuant to the Change of Control
Offer will be required to surrender such Security, together with a form entitled
"Option of the Holder to Elect Purchase" on the reverse side of such Security
completed, to the Paying Agent at the address specified in the notice prior to
the close of business on the Business Day immediately preceding the Change of
Control Payment Date; (vi) that Holders will be entitled to withdraw their
election if the Paying Agent receives, not later than the close of business on
the third Business Day immediately preceding the Change of Control Payment Date,
a telegram, telex, facsimile transmission or letter setting forth the name of
such Holder, the principal amount of Securities delivered for purchase and a
statement that such Holder is withdrawing his election to have such Securities
purchased; and (vii) that Holders whose Securities are being purchased only in
part will be issued new Securities equal in principal amount to the unpurchased
portion of the Securities surrendered; provided that each Security purchased and
each new Security issued shall be in a principal amount of $1,000 or integral
multiples thereof.
On the Change of Control Payment Date, the Company shall: (i) accept
for payment Securities or portions thereof tendered pursuant to the Change of
Control Offer; (ii) deposit with the Paying Agent money sufficient to pay the
purchase price of all Securities or portions thereof so accepted; and (iii)
deliver, or cause to be delivered, to the Trustee, all Securities or portions
thereof so accepted together with an Officers' Certificate specifying the
Securities or portions thereof accepted for payment by the Company. The Paying
Agent shall promptly mail, to the Holders of Securities so accepted, payment in
an amount equal to the purchase price, and the Trustee shall promptly
authenticate and mail to such Holders a new Security equal in principal amount
to any unpurchased portion of the Securities surrendered; provided that each
Security purchased and each new Security issued shall be in a principal amount
of $1,000 or integral multiples thereof. The Company will publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date. For purposes of this Section 5.12, the Trustee
shall act as Paying Agent.
The Company will comply with Rule 14e-1 under the Exchange Act and
any other securities laws and regulations thereunder to the extent such laws and
regulations are applicable in the event that a Change of Control occurs and the
Company is required to repurchase the Securities under this Section 5.12.
38
<PAGE>
Section 5.13. Limitations on Asset Sales.
The Company will not, and will not permit any Restricted Subsidiary
to, make any Asset Sale unless (a) the Company or such Restricted Subsidiary, as
the case may be, receives consideration at the time of such Asset Sale at least
equal to the Fair Market Value of the shares or assets sold or otherwise
disposed of and (b) at least 80% of such consideration consists of cash or Cash
Equivalents. To the extent the Net Cash Proceeds of any Asset Sale are not
required to be applied to repay or secure, and permanently reduce the
commitments under, any Indebtedness of the Company or any Restricted Subsidiary,
or are not so applied or used to secure, the Company or any Restricted
Subsidiary, may apply such Net Cash Proceeds within 270 days thereof to an
investment in properties and assets that will be used in a Related Business (or
in Capital Stock of any Person that will become a Restricted Subsidiary as a
result of such investment if such Person's primary business consists of a
Related Business) of the Company or any Restricted Subsidiary ("Replacement
Assets"). Notwithstanding the foregoing, the Company or its Restricted
Subsidiaries may retain up to 25% of Net Cash Proceeds from Asset Sales for any
purpose. Any Net Cash Proceeds from any Asset Sale that are neither used to
repay or secure, and permanently reduce the commitments under, any Indebtedness
of any Restricted Subsidiary nor invested in Replacement Assets within such
270-day period (exclusive of up to such 25% referred to in the preceding
sentence) shall constitute "Excess Proceeds" subject to disposition as provided
below.
Within 20 days after the aggregate amount of Excess Proceeds equals
or exceeds $5,000,000, the Company shall make an offer to purchase (an "Excess
Proceeds Offer"), from all Holders of the Securities, that aggregate principal
amount at maturity of Securities as can be purchased by application of such
Excess Proceeds at a price in cash equal to 100% of the outstanding principal
amount at maturity thereof plus accrued and unpaid interest, if any. Each Excess
Proceeds Offer shall remain open for a period of 20 Business Days or such longer
period as may be required by law. To the extent that the principal and accrued
interest of Securities validly tendered and not withdrawn pursuant to an Excess
Proceeds Offer is less than the Excess Proceeds, the Company may use such
deficiency for general corporate purposes. If the principal and accrued interest
of Securities validly tendered and not withdrawn by Holders thereof exceeds the
amount of Securities which can be purchased with the Excess Proceeds, Securities
to be purchased will be selected on a pro rata basis. Upon completion of such
Excess Proceeds Offer, the amount of Excess Proceeds shall be reset to zero.
Notwithstanding the two immediately preceding paragraphs, the
Company and the Restricted Subsidiaries will be permitted to consummate an Asset
Sale without
39
<PAGE>
compliance with such paragraphs to the extent such Asset Sale is contemplated by
the Plan or approved by the Bankruptcy Court (as defined in the Plan) prior to
the Issue Date; provided that any consideration not constituting Replacement
Assets received by the Company or any of the Restricted Subsidiaries in
connection with any Asset Sale permitted to be consummated under this paragraph
shall constitute Net Cash Proceeds subject to the provisions of the two
preceding paragraphs.
The Company shall commence an Excess Proceeds Offer by mailing a
notice to the Trustee and each Holder stating: (i) that the Excess Proceeds
Offer is being made pursuant to this Section 5.13 and that all Securities
validly tendered will be accepted for payment on a pro rata basis; (ii) the
purchase price and the date of purchase (which shall be a Business Day five
Business Days after the expiration date of the Excess Proceeds Offer, the
"Excess Proceeds Payment Date"); (iii) that any Security not tendered will
continue to accrue interest, as the case may be, pursuant to its terms; (iv)
that, unless the Company defaults in the payment of the Excess Proceeds Payment,
any Security accepted for payment pursuant to the Excess Proceeds Offer shall
cease to accrue interest, as the case may be, on and after the Excess Proceeds
Payment Date; (v) that Holders electing to have a Security purchased pursuant to
the Excess Proceeds Offer will be required to surrender the Security, together
with the form entitled "Option of the Holder to Elect Purchase" on the reverse
side of the Security completed, to the Paying Agent at the address specified in
the notice prior to the close of business on the Business Day immediately
preceding the Excess Proceeds Payment Date; (vi) that Holders will be entitled
to withdraw their election if the Paying Agent receives, not later than the
close of business on the date of the expiration of the Excess Proceeds Offer, a
telegram, facsimile transmission or letter setting forth the name of such
Holder, the principal amount of Securities delivered for purchase and a
statement that such Holder is withdrawing his election to have such Securities
purchased; and (vii) that Holders whose Securities are being purchased only in
part will be issued new Securities equal in principal amount to the unpurchased
portion of the Securities surrendered; provided that each Security purchased and
each new Security issued shall be in a principal amount of $1,000 or integral
multiples thereof.
On the date of the expiration of the Excess Proceeds Offer, the
Company shall accept for payment on a pro rata basis Securities or portions
thereof tendered pursuant to the Excess Proceeds Offer; and on or prior to the
Excess Proceeds Payment Date, (i) deposit with the Paying Agent money sufficient
to pay the purchase price of all Securities or portions thereof so accepted; and
(ii) deliver, or cause to be delivered, to the Trustee all Securities or
portions thereof so accepted together with an Officers' Certificate specifying
the Securities or portions thereof accepted for payment by the Company. The
Paying Agent shall promptly mail to the Holders of Securities so accepted
payment in an amount equal to the purchase
40
<PAGE>
price, and the Trustee shall promptly authenticate and mail to such Holders a
new Security equal in principal amount to any unpurchased portion of the
Security surrendered; provided that each Security purchased and each new
Security issued shall be in a principal amount of $1,000 or integral multiples
thereof. The Company will publicly announce the results of the Excess Proceeds
Offer as soon as practicable after the Excess Proceeds Payment Date. For
purposes of this Section 5.13, the Trustee shall act as the Paying Agent.
The Company will comply with Rule 14e-1 under the Exchange Act and
any other securities laws and regulations thereunder to the extent such laws and
regulations are applicable in the event that an Excess Proceeds Offer is
required to be commenced and the Company is required to repurchase the
Securities under this Section 5.13.
ARTICLE 6.
SUCCESSORS
Section 6.01. Limitation on Mergers, Consolidations or Sale of Assets.
(a) The Company shall not consolidate with or merge with or into, or
sell, convey, transfer, lease or otherwise dispose of all or substantially all
of its assets as an entirety to, any Person unless:
(1) the Person formed by or surviving any such consolidation or
merger (if other than the Company), or to which such sale or conveyance
shall have been made (the "Successor Company"), is a corporation organized
and existing under the laws of the United States, any state thereof or the
District of Columbia;
(2) the Successor Company assumes, by supplemental Indenture in a
form reasonably satisfactory to the Trustee, all the obligations of the
Company under the Securities and this Indenture;
(3) if other than in the case of a Company Reincorporation Merger,
immediately after the transaction no Default or Event of Default exists;
(4) except in the case of a Company Reincorporation Merger,
immediately after the transaction, the Company or the Successor Company
would be permitted to incur at least $1.00 of additional Indebtedness for
borrowed money as described in Section 5.08; and
41
<PAGE>
(5) prior to the consummation of the proposed transaction, the
Company delivers to the Trustee an Officers' Certificate to the foregoing
effect and an Opinion of Counsel stating that the proposed transaction and
supplemental Indenture comply with this Indenture.
(b) The Company shall not permit Guarantor to consolidate with or
merge with or into, or sell, convey, transfer, lease or otherwise dispose of all
or substantially all of its assets as an entirety to, any Person unless:
(1) the Person formed by or surviving any such consolidation or
merger (if other than Guarantor), or to which such sale or conveyance
shall have been made (the "Successor Guarantor"), is a corporation
organized and existing under the laws of the United States of America, any
state thereof or the District of Columbia;
(2) the Successor Guarantor assumes by supplemental Indenture in a
form reasonably satisfactory to the Trustee, all the obligations of
Guarantor under the Securities and this Indenture;
(3) if other than in the case of a SMC Reincorporation Merger,
immediately after the transaction no Default or Event of Default exists;
and
(4) prior to the consummation of the proposed transaction, the
Company delivers to the Trustee an Officers' Certificate to the foregoing
effect and an Opinion of Counsel stating that the proposed transaction and
supplemental Indenture comply with this Indenture.
Section 6.02. Successor Company Substituted.
Upon any consolidation or merger, or any sale, transfer, lease,
conveyance or other disposition of all or substantially all of the assets of the
Company or the Guarantor in accordance with Section 6.01, the Successor Company
or the Successor Guarantor formed by such consolidation into or with which the
Company or Guarantor is merged or to which such sale, conveyance, transfer,
lease or other disposition is made shall succeed to, and be substituted for, and
may exercise every right and power of, the Company or the Guarantor under this
Indenture with the same effect as if such Successor Company or such Successor
Guarantor had been named as the Company or the Guarantor herein and thereafter,
except in the case of a lease, the predecessor corporation shall be relieved of
all obligations and covenants under this Indenture and the Securities.
42
<PAGE>
ARTICLE 7.
DEFAULTS AND REMEDIES
Section 7.01. Events of Default.
An "Event of Default" shall include:
(1) default by the Company for 30 days in payment of any interest
due on the Securities when the same becomes due and payable;
(2) default in the payment of the principal of any Securities when
due upon redemption or otherwise or default in the purchase of Securities
on the Excess Proceeds Payment Date or the Change of Control Payment Date
pursuant to an Excess Proceeds Offer or Change of Control Offer which has
been made to Holders;
(3) default by the Company for 30 days in the performance of any
other covenant contained in the Securities or this Indenture after written
notice by the Trustee or Holders of at least 25% of the aggregate
principal amount of the Securities outstanding;
(4) default by the Company or any Significant Subsidiary which is a
Restricted Subsidiary in the payment of any principal of or, for a period
of five days, interest on any Indebtedness for borrowed money (other than
the Securities) when due (after giving effect to any applicable grace
periods) and the principal amount of such Indebtedness exceeds $5,000,000
in the aggregate;
(5) default by the Company or any Significant Subsidiary which is a
Restricted Subsidiary with respect to any Indebtedness for borrowed money
exceeding $5,000,000 in the aggregate, which results in such Indebtedness
becoming due or being declared due and payable;
(6) any final judgment or order is rendered against the Company or
any Significant Subsidiary which is a Restricted Subsidiary for more than
$5,000,000 and such judgment or order remains unpaid, undischarged and
unstayed for 60 days;
(7) the Company or any Restricted Subsidiary which is a Significant
Subsidiary shall, within the meaning of or pursuant to any Bankruptcy Law:
(A) commence a voluntary case or proceeding,
43
<PAGE>
(B) consent to the entry of an order for relief against it in
an involuntary case or proceeding,
(C) consent to the appointment of a Custodian of it or for all
or substantially all of its property,
(D) make a general assignment for the benefit of its creditors
or
(E) generally not pay its debts when such debts become due or
shall admit in writing its inability to pay its debts generally;
(8) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law with respect to the Company or any Restricted
Subsidiary which is a Significant Subsidiary that:
(A) is for relief against such Person in an involuntary case
or proceeding,
(B) appoints a Custodian of such Person for all or
substantially all of its properties, or
(C) orders the liquidation of such Person,
and in each case the order or decree remains unstayed and in effect for 60
days; provided, however, that if the entry of such order or decree is
appealed and dismissed on appeal then the Event of Default hereunder by
reason of the entry of such order or decree shall be deemed to have been
cured; or
(9) the failure of any Security Document to be in full force and
effect in all material respects.
Section 7.02. Acceleration.
If an Event of Default (other than an Event of Default specified in
clause (7) or (8) of Section 7.01) occurs and is continuing, the Trustee may, by
written notice to the Company, or the Holders of at least 25% in principal
amount of the then outstanding Securities may, by written notice to the Company
and the Trustee, declare the unpaid principal of and any accrued but unpaid
interest on all the Securities to be due and payable,
44
<PAGE>
together with the interest accrued thereon, immediately, all without
presentment, demand, notice, protest or other requirements of any kind, all of
which are hereby expressly waived.
If an Event of Default specified in clause (7) or (8) of Section
7.01 occurs, the unpaid principal of and any accrued but unpaid interest on all
the Securities shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any Holder.
The Holders of a majority in principal amount of the then
outstanding Securities by written notice to the Trustee may rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default (except nonpayment of
principal or interest that has become due solely because of the acceleration)
have been cured or waived. No such rescission shall affect any subsequent
Default or Event of Default or impair any right consequent thereto.
Section 7.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal of or interest
on the Securities or to enforce the performance of any provision of the
Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Securities or does not produce any of them in the proceeding. A delay
or omission by the Trustee or any Holder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. Except as set
forth in Section 2.07 hereof, all remedies are cumulative to the extent
permitted by law.
Section 7.04. Waiver of Past Defaults.
Subject to Section 10.02 hereof, the Holders of a majority in
principal amount of the then outstanding Securities by notice to the Trustee may
waive an existing Default or Event of Default and its consequences except a
continuing Default or Event of Default in the payment of the principal of and
interest on any Security. Upon any such waiver, such Default or Event of Default
shall cease to exist and together with 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.
45
<PAGE>
Section 7.05. Control by Majority.
The Holders of a majority in principal amount of the then
outstanding Securities may 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 it. However, the Trustee may refuse to follow any direction
that conflicts with law or this Indenture, that would involve the Trustee in
personal liability or that may be unduly prejudicial to the rights of other
Holders; provided, however, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. The Trustee
shall be entitled to indemnification reasonably satisfactory to it against
losses, liabilities or expenses caused by the taking or not taking of such
action.
Section 7.06. Limitation on Suits.
Subject to Section 7.07 hereof, a Holder may pursue a remedy with
respect to this Indenture or the Securities only if:
(1) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(2) the Holders of at least 25% in principal amount of the then
outstanding Securities make a written request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer and, if requested, provide, to the
Trustee indemnity satisfactory to the Trustee against any loss, liability
or expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(5) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Securities do not give the Trustee a
direction inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over another Holder.
46
<PAGE>
Section 7.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of
any Holder to receive payment of principal of and interest on the Securities, on
or after the respective due dates expressed in the Securities, or to bring suit
for the enforcement of any such payment on or after such respective dates, shall
not be impaired or affected without the consent of the Holder.
Section 7.08. Collection Suit by Trustee.
If an Event of Default specified in Section 7.01(1) or 7.01(2)
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company for the whole
amount of principal of and interest remaining unpaid on the Securities and
interest on overdue principal and, to the extent lawful, interest and 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.
Section 7.09. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relative to the Company (or any
other obligor upon the Securities), its creditors or its property and shall be
entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian 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 to
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 8.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 8.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties which the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or
47
<PAGE>
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, or to authorize the Trustee to vote in respect of
the claim of any Holder in any such proceeding.
Section 7.10. Priorities.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due
under Section 8.07 hereof;
Second: subject to Article 10 hereof, to the Holders for amounts due
and unpaid on the Securities for principal and interest, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Securities for principal and interest, respectively; and
Third: subject to Article 10 hereof, to the Company.
The Trustee may fix a record date and payment date for any payment
to Holders. At least 15 days before such record date, the Company shall mail to
each Holder and the Trustee a notice that states the record date, the payment
date and the amount to be paid.
Section 7.11. 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 or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 7.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 7.07 hereof or a suit by Holders of more than 10% in
principal amount of the then outstanding Securities.
48
<PAGE>
ARTICLE 8.
TRUSTEE
Section 8.01. Duties of Trustee.
(1) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent Person would exercise or use under the circumstances in the conduct of
such Person's own affairs.
(2) Except during the continuance of an Event of Default known to
the Trustee:
(a) The duties of the Trustee shall be determined solely by
the express provisions of this Indenture and the Trustee need perform only
those duties that are specifically set forth in this Indenture and no
others, and no implied covenant or obligation shall be read into this
Indenture against the Trustee.
(b) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture.
However, the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture.
(3) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(a) This paragraph does not limit the effect of paragraph (2)
of this Section.
(b) The Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts.
(c) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 7.05 hereof.
49
<PAGE>
(4) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(1), (2), (3) and (5) of this Section 8.01.
(5) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
(6) Notwithstanding anything to the contrary outstanding, no
provision of this Indenture or any Security Document shall require the Trustee
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or thereunder or in the exercise of
any of its rights or powers, if the Trustee shall have reasonable grounds to
believe that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(7) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
(8) 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 8.01 and to provisions of the TIA.
Section 8.02. Rights of Trustee.
(1) The Trustee may conclusively rely and shall be protected from
acting or refraining from acting based upon any document believed by it to be
genuine and to have been signed or presented by the proper Person. The Trustee
need not investigate any fact or matter stated in the document.
(2) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate (which shall conform to the provisions of Section 12.05
hereof) or an Opinion of Counsel or both. The Trustee shall not be liable for
any action it takes or omits to take in good faith in reliance on such Officers'
Certificate or Opinion of Counsel. The Trustee may consult with counsel and the
written advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection from liability in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance
thereon.
(3) The Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any agent appointed with due care.
50
<PAGE>
(4) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers conferred upon it by this Indenture.
(5) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
Section 8.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company or an
Affiliate of the Company with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. However, the Trustee is
subject to Sections 8.10 and 8.11 hereof.
Section 8.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture, the Security Documents or the
Securities; it shall not be accountable for the Company's use of any money paid
to the Company or upon the Company's direction under any provision hereof, it
shall not be responsible for the use or application of any money received by any
Paying Agent other than the Trustee, and it shall not be responsible for any
statement or recital herein or any statement in the Securities or any other
document in connection with the issuance of the Securities or pursuant to this
Indenture other than its certificate of authentication.
Section 8.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to the Holders a notice of the
Default or Event of Default within 90 days after the occurrence thereof. Except
in the case of a Default or Event of Default in payment on any Security, the
Trustee may withhold the notice if and so long as a committee of its Trust
Officers in good faith determines that withholding the notice is in the
interests of the Holders.
Section 8.06. Reports by Trustee to Holders.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, the Trustee shall mail to the Holders, as their
names and addresses
51
<PAGE>
appear in the register of the Securities, a brief report dated as of such May 15
in accordance with, and to the extent required under, TIA ss. 313(a). The
Trustee also shall comply with TIA ss. 313(b). The Trustee also shall transmit
by mail all reports as required by TIA ss. 313(c).
A copy of each report at the time of its mailing to Holders shall be
filed with the SEC and each securities exchange, if any, on which the Securities
are listed. The Company shall promptly notify the Trustee when the Securities
are listed on any securities exchange.
Section 8.07. Compensation and Indemnity.
The Company shall pay to the Trustee such compensation for its
services hereunder and under the Security Documents as may be agreed upon by the
Company and the Trustee from time to time. The Trustee's compensation shall not
be limited by any law on compensation of a trustee of an express trust. The
Company shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any loss, liability
or expense incurred by it arising out of or in connection with the acceptance or
administration of its duties, or the exercise of its rights or powers, under
this Indenture or any Security Document, except as set forth in the next
paragraph. The Trustee shall notify the Company promptly of any claim for which
it may seek indemnity. Failure by the Trustee to so notify the Company shall not
relieve the Company of its obligations hereunder. The Company shall defend the
claim and the Trustee shall cooperate in the defense. The Trustee may have
separate counsel and the Company shall pay the reasonable fees and expenses of
such counsel. The Company need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld. The obligation of the
Company under this Section 8.07 shall survive the satisfaction and discharge of
this Indenture and the resignation and removal of the Trustee.
The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee through its own willful misconduct,
negligence or bad faith.
To secure the Company's payment obligations in this Section 8.07,
the Trustee shall have a Lien prior to the Securities, but subject to the
provisions of Section 3 of the
52
<PAGE>
Security Agreement and Section 6 of the Pledge Agreement, on all money or
property held or collected by the Trustee, except that held in trust to pay
principal of and interest on particular Securities. Such Lien shall survive the
satisfaction and discharge of the Indenture and the resignation or removal of
the Trustee.
Section 8.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 8.08.
The Trustee may resign at any time and be discharged from the trust
hereby created by so notifying the Company in writing at least 30 days prior to
the date of the proposed resignation. The Holders of a majority in principal
amount of the then outstanding Securities may remove the Trustee by so notifying
the Trustee and the Company. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 8.10 hereof;
(2) the Trustee is adjudged bankrupt or insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(3) a Custodian or public officer takes charge of the Trustee or its
property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Securities may appoint
a successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the then outstanding Securities
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee after written request by any Holder who has been a
bona fide Holder for at least six months fails to comply with Section 8.10
hereof, such Holder may
53
<PAGE>
petition, on behalf of himself and all others similarly situated, any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to the Holders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, provided all sums owing
to the Trustee hereunder have been paid and subject to the Lien provided for in
Section 8.07 hereof. Notwithstanding replacement of the Trustee pursuant to this
Section 8.08 hereof, the Company's obligations under Section 8.07 hereof shall
continue for the benefit of the retiring Trustee.
Section 8.09. Successor Trustee by Merger, Etc.
If the Trustee consolidates, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee, provided such successor is eligible and qualified under
Section 8.10 hereof.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture and any of the Securities shall have been authenticated but
not delivered, any such successor Trustee may adopt the certificate of
authentication of any predecessor Trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor Trustee may authenticate such Securities
either in the name of any predecessor hereunder or, in the name of the successor
Trustee; and in all such cases such certificates shall have the full force which
it is anywhere in the Securities or in this Indenture provided that the
certificate of the Trustee shall have.
Section 8.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America or of any state thereof authorized under such laws to exercise corporate
trustee power, shall be subject to supervision or examination by Federal or
state authority and shall have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
condition.
54
<PAGE>
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1). The Trustee is subject to TIA ss. 310(b).
Section 8.11. Preferential Collection of Claims Against Company.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE 9.
DISCHARGE OF INDENTURE
Section 9.01. Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect (except as to any
surviving rights of transfer or exchange of the Securities herein expressly
provided for), and the Trustee, on demand of and at the expense of the Company,
shall execute proper instruments acknowledging satisfaction and discharge of
this Indenture, when
(1) either:
(a) all the 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 2.07 hereof and
(ii) Securities for whose payment has theretofore been 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 9.03
hereof) have been delivered to the Trustee cancelled or for cancellation;
or
(b) all such Securities not theretofore delivered to the
Trustee cancelled or 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 irrevocably
deposited or caused to be deposited with the Trustee, pursuant to an
irrevocable trust and security agreement in form and substance reasonably
satisfactory to the Trustee, as trust funds in trust for the purpose an
amount sufficient to pay and discharge the
55
<PAGE>
entire indebtedness on such Securities not theretofore delivered to the
Trustee cancelled or for cancellation, for principal and interest to the
date of such deposit which have become due and payable, or to the stated
maturity date 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 stating that all conditions precedent provided for herein 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 8.07 hereof shall
survive.
Section 9.02. Application of Trust Money.
The Trustee or a trustee satisfactory to the Trustee and the Company
shall hold in trust money or U.S. Government Obligations deposited with it
pursuant to Section 9.01 hereof. It shall apply the deposited money and the
money from U.S. Government Obligations through the Paying Agent and in
accordance with this Indenture to the payment of principal of and interest on
the Securities.
Section 9.03. Repayment to Company.
The Trustee and the Paying Agent shall promptly pay to the Company
upon written request any excess money or securities held by them at any time.
The Trustee and the Paying Agent shall pay to the Company upon
written request any money held by them for the payment of principal or interest
that remains unclaimed for two years after the date upon which such payment
shall have become due; provided, however, that the Company shall have either
caused notice of such payment to be mailed to each Holder entitled thereto not
less than 30 days prior to such repayment or within such period shall have
published such notice in a financial newspaper of widespread circulation
published in The City of New York. After payment to the Company, the Holders
entitled to the money must look to the Company for payment as general creditors
unless an applicable abandoned property law designates another Person, and all
liability of the Trustee and such Paying Agent with respect to such money shall
cease.
56
<PAGE>
Section 9.04. Indemnity for U.S. Government Obligations.
The Company shall pay and shall indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against any deposited U.S.
Government Obligations or the principal and interest received on such U.S.
Government Obligations.
Section 9.05. Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with this Article 9 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to this Article 9
until such time as the Trustee or Paying Agent is permitted to apply all such
money or U.S. Government Obligations in accordance with this Article 9;
provided, however, that if the Company has made any payment of interest on or
principal of any Securities because of 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 or U.S.
Government Obligations held by the Trustee or Paying Agent.
ARTICLE 10.
AMENDMENTS
Section 10.01. Without Consent of Holders.
The Company, the Guarantor and the Trustee may amend this Indenture,
the Securities or any Security Document without the consent of any Holder:
(1) to cure any ambiguity, defect, omission or inconsistency;
(2) to make any change in Article 11 that would limit or terminate
the benefits available to any Working Capital Lender under Article 11 or
the Security Documents;
(3) to reflect any change in generally accepted accounting
principles which becomes effective subsequent to the date of this
Indenture that otherwise would result in any change in any calculation
required to determine compliance with any provision contained in this
Indenture so that the determination of compliance with such
57
<PAGE>
provision will yield the same result as would have obtained prior to such
change in generally accepted accounting principles;
(4) to make any change that does not adversely affect the legal
rights hereunder of any Holder;
(5) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the
Company; or
(6) to make any change to the extent necessary to reflect the
consummation of a Company Reincorporation Merger and a SMC
Reincorporation Merger.
Upon the request of the Company, accompanied by a resolution of the
Board of the Company, authorizing the execution of any such supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
10.06 hereof, the Trustee shall join with the Company and the Guarantor or their
respective successors, in the case of an amendment reflecting a Company
Reincorporation Merger and a SMC Reincorporation Merger, (unless the Guarantor
shall have been released pursuant to Section 3.05 hereof) in the execution of
any supplemental Indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations which
may be therein contained, but the Trustee shall not be obligated to enter into
any such supplemental Indenture which affects its own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may in
its discretion, but shall not be obligated to, enter into such supplemental
Indenture.
After an amendment under this Section 10.01 becomes effective, the
Company shall mail to Holders a notice briefly describing such amendment. The
failure to give such notice to all Holders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section 10.01.
Section 10.02. With Consent of Holders.
The Company and the Trustee may amend this Indenture, the Securities
or any Security Document with the written consent of the Holders of at least a
majority in principal amount of the then outstanding Securities.
Upon the request of the Company, accompanied by a resolution of the
Board authorizing the execution of any such supplemental Indenture, and upon the
filing with the Trustee of evidence satisfactory to the Trustee of the consent
of the Holders as aforesaid, and upon receipt by the Trustee of the documents
described in Section 10.06 hereof, the Trustee shall join with the Company in
the execution of such supplemental Indenture unless such
58
<PAGE>
supplemental Indenture affects the Trustee's own rights, duties or immunities
under this Indenture or otherwise, in which case the Trustee may in its
discretion, but shall not be obligated to, enter into such supplemental
Indenture.
It shall not be necessary for the consent of the Holders under this
Section 10.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment or waiver under this Section 10.02 becomes
effective, the Company shall mail to the Holders of each Security affected
thereby a notice briefly describing the amendment or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental Indenture or waiver.
The Holders of a majority in principal amount of the Securities then outstanding
may waive compliance in a particular instance by the Company with any provision
of this Indenture or the Securities. However, without the consent of each Holder
affected, an amendment or waiver under this Section may not:
(1) change the stated maturity of the principal of, or any
installment of interest on, any Securities;
(2) reduce the principal amount of or interest on, any Security;
(3) change the place or currency of payment of principal of or
interest on, any Security,
(4) impair the right to institute suit for the enforcement of any
payment on or after the redemption date or, in the case of an Excess
Proceeds Offer or a Change of Control Offer which has been made, on or
after the applicable Payment Date of any Security;
(5) reduce the above-stated percentage of outstanding Securities the
consent of whose Holders is necessary to modify or amend this Indenture;
(6) waive a default in the payment of principal of or interest on
the Securities;
(7) reduce the percentage or aggregate principal amount of
outstanding Securities the consent of whose Holders is necessary for
waiver of compliance with certain provisions of this Indenture or for
waiver of certain defaults;
59
<PAGE>
(8) adversely affect the ranking or security of the Securities; or
(9) following the mailing of an Excess Proceeds Offer or a Change of
Control Offer, modify the provisions of this Indenture with respect to
such offer in a manner adverse to the Holders of the Securities.
The Company shall give the Holders of the Securities notice of the effectiveness
of any amendment under this Section 10.02.
Section 10.03. Compliance with Trust Indenture Act.
Every amendment to this Indenture or the Securities at a time when
this Indenture shall be qualified under the TIA shall be set forth in a
supplemental Indenture that complies with the TIA as then in effect.
Section 10.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder is a continuing consent that binds the Holder and
every subsequent Holder of a Security or portion of a Security that evidences
the same Indebtedness as the consenting Holder's Security, even if notation of
the consent is not made on any Security. However, any such Holder or subsequent
Holder may revoke the consent as to his Security or portion of a Security if the
Trustee receives written notice of revocation before the date the amendment,
supplement or waiver becomes effective. An amendment, supplement or waiver
becomes effective in accordance with its terms and thereafter binds every
Holder. The Company may fix a record date for determining which Holders must
consent to such amendment, supplement or waiver, which record date shall be (i)
the later of 30 days prior to the first solicitation of such consent or the date
of the most recent list of Holders furnished to the Trustee pursuant to Section
2.05 hereof prior to such solicitation or (ii) such other date as the Company
shall designate. If a record date is fixed, those Persons who were Holders of
securities at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to consent to such amendment, supplement or
waiver or to revoke any consent previously given, whether or not those Persons
continue to be Holders after such record date.
Section 10.05. Notation on or Exchange of Securities.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Security thereafter authenticated. The Company in
exchange
60
<PAGE>
for all Securities may issue and the Trustee shall authenticate new Securities
that reflect the amendment, supplement or waiver. Failure to make the
appropriate notation or issue a new Security shall not affect the validity and
effect of such amendment, supplement or waiver or of the Security.
Section 10.06. Trustee to Sign Amendments, Etc.
The Trustee shall sign any amendment or supplemental Indenture
authorized pursuant to this Article 10 if the amendment does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. If it does,
the Trustee may, but need not, sign it. In signing or refusing to sign such
amendment or supplemental Indenture, the Trustee shall be entitled to receive,
if requested, an indemnity reasonably satisfactory to it and to receive and,
subject to Section 8.01 hereof, shall be fully protected in relying upon (and
may require), an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that such amendment or supplemental Indenture is authorized or
permitted by this Indenture, that it is not inconsistent herewith, and that it
will be valid and binding upon the Company and the Guarantor in accordance with
its terms. The Company may not sign an amendment or supplemental Indenture until
the Board approves it.
ARTICLE 11.
SECURITY
Section 11.01. Security Documents.
(a) To secure the due and punctual payment of the Securities, the
Company and the Trustee have entered into or will enter into the Security
Documents to create the security interests thereunder and for related matters
including, without limitation, appointment of the Working Capital Agent (or any
other agent or representative) as agent for perfection of the security interests
created pursuant to the Pledge Agreement. The Company covenants and agrees that
it has full right, power and lawful authority to grant, bargain, sell, release,
convey, hypothecate, assign, pledge, transfer, confirm and grant a security
interest in the property constituting the Collateral, in the manner and form
done in the Security Documents or intended to be done, and that the Company (i)
will forever warrant and defend the title to the same against the claims of all
Persons whatsoever in each case free and clear of all Liens whatsoever, except
Liens permitted by Section 5.11 hereof and (ii) will execute, acknowledge and
deliver to the Trustee such further assignments, transfers, assurances or other
instruments and will do or cause to be done all such acts and things as may be
necessary or proper to assure and confirm to the Trustee its interest in the
Collateral, or any
61
<PAGE>
part thereof, as from time to time constituted, and its rights under the
Security Documents so as to render the same available for the security and
benefit of this Indenture and the Securities.
(b) Each Holder, by accepting the Securities, consents and agrees to
all of the terms and provisions of the Security Documents, including the
relative priority of the interests of the Working Capital Lenders and Holders
with respect to the Collateral, as the same may be amended from time to time
pursuant to the provisions of the Security Documents and this Indenture, and
authorizes and directs the Trustee to enter into each Security Document and to
perform its obligations and exercise its rights thereunder in accordance
therewith; provided, however, that if any Security Document limits, qualifies,
or conflicts with the duties imposed by the provisions of the TIA, the TIA
controls except to the extent that (i) the TIA permits such provisions to be
modified by contract or (ii) the SEC has granted any exemption with respect
thereto.
(c) As long as the Specified Indebtedness is secured by a Lien on
any Collateral of the Company, then as between the Working Capital Lenders and
the Holders, (i) the proceeds of any enforcement, collection, execution, levy or
foreclosure proceeding or otherwise, shall be applied first to the payment of
the Specified Indebtedness or held as security for the Specified Indebtedness
and (ii) the Holders shall refrain from taking any action to foreclose upon,
take possession of, liquidate or proceed against, or otherwise exercise any
rights or remedies under this Indenture or the Security Documents with respect
to, any Collateral or hinder or delay the Working Capital Lenders in the
exercise of any of their rights and remedies in respect of the Working Capital
Credit Facility. Upon final payment in full in cash of the Specified
Indebtedness, the Collateral as now or hereafter constituted shall be held for
the equal and ratable benefit of the Holders without preference, priority or
distinction of any thereof over any other by reason of difference in time of
issuance, sale or otherwise, as security for the Securities.
Section 11.02. Recording, Opinion of Counsel, Etc.
The Company will cause, at its own expense, this Indenture, the Security
Documents, and all amendments or supplements thereto, to be registered, recorded
and filed and/or rerecorded and/or re-filed and/or renewed in such manner and in
such place or places, if any, as may be required by law in order fully to
preserve and protect the Liens of the Security Documents (except as expressly
otherwise therein provided) and all parts of the Collateral that may be
preserved or protected by such registering, recording or filing and to
effectuate and preserve the security of the Holders and all rights of the
Trustee.
62
<PAGE>
The Company shall furnish to the Trustee:
(a) promptly after the execution and delivery of this Indenture and
each Security Document or other instrument of further assurance, an
Opinion of Counsel stating that, in the opinion of such counsel, the
Security Documents and other instruments of further assurance, and any
required financing statements with respect thereto, have been properly
recorded, endorsed, registered and filed or other action has been taken,
so as to perfect and make effective the Liens intended to be created
thereby, and reciting the details of such action or stating that, in the
opinion of such counsel, no such action is necessary to make such Liens
effective; and
(b) within 15 days after March 31 in each year beginning with the
year 1998, an Opinion of Counsel, dated as of such date, either stating
that, in the opinion of such counsel, such action has been taken with
respect to the recording, registering, filing, re-recording,
re-registering and re-filing of this Indenture and the Security Documents,
financing statements, supplemental indentures, continuation statements or
other instruments of further assurance as is necessary to maintain the
Liens of the Security Documents and the perfection thereof and reciting
the details of such action, or stating that, in the opinion of counsel, no
such action prior to April 30 of the subsequent year is necessary to
maintain such Lien and the perfection thereof.
The Trustee shall hold in its possession the Security Documents,
except as it from time to time may be required for actions, suits or proceedings
relating to the Security Documents or for the purpose of enforcing or realizing
upon any right or value thereby represented. The Trustee may, from time to time,
in its sole discretion, for the purpose of convenient location of the Security
Documents, appoint one or more agents to hold physical custody, for the account
of the Trustee, of the Security Documents.
Section 11.03. Trust Indenture Act Requirements.
(a) The release of any Collateral from the terms of any Security
Document or the release, in whole or in part, of the Liens created by any
Security Document, will not be deemed to impair the security interests
thereunder in contravention of the provisions of this Indenture if and to the
extent the Collateral or Liens are released pursuant to, and in accordance with,
the applicable provisions hereof and of the Security Documents.
(b) To the extent applicable, the Company shall cause ss. 314(d) of
the TIA relating to the release of Collateral from the Liens of the Security
Documents to be complied with.
63
<PAGE>
(c) In the case of transactions permitted by Section 11.04(b)
hereof, the Company shall deliver to the Trustee, within 15 days after the end
of each of the six-month periods ended on June 30 and December 31 in each year,
an Officers' Certificate to the effect that all transactions effected pursuant
to Section 11.04(b) hereof during the preceding six-month period were made in
the Ordinary Course of Business and that all proceeds therefrom were used by the
Company as permitted herein. The Company shall provide the Trustee with a copy
of any exemption granted by the SEC and promptly inform the Trustee of any
rescission or termination of, or amendment to such exemption.
(d) The fair value of Collateral released from the Liens of the
Security Documents pursuant to Section 11.04(b) hereof shall not be considered
in determining whether the aggregate fair value of Collateral released from the
Liens of the Security Documents in any calendar year exceeds the 10% threshold
specified in Section 314(d)(1) of the TIA; provided that the Company's right to
rely on this sentence at any time is conditioned upon the Company having
furnished to the Trustee all certificates described in Section 11.03(c) hereof
that were required to be furnished to the Trustee at or prior to such time.
Section 11.04. Disposition of Certain Collateral without Requesting Release.
(a) In connection with a sale, lease, exchange, transfer or other
disposition of any of the Collateral in which the Liens of the Working Capital
Lenders are released and the Company delivers the certificate or opinion
required by Section 314(d)(1) of the TIA, the Liens thereon of the Trustee shall
be automatically, unconditionally and simultaneously released and the Trustee
shall execute and deliver to the Working Capital Agent or the Company such
termination statements, releases and other documents as the Working Capital
Agent or the Company may request to effectively confirm such release.
(b) As long as the Company is in compliance with the provisions of
Section 11.03(c) hereof, the Company may, pursuant to and in accordance with
this Indenture and the Security Documents, without requesting the release or
consent of the Trustee,
(i) sell or dispose of in the Ordinary Course of Business free
from the Liens of the Security Documents, any machinery, equipment,
furniture, apparatus, tools or implements, materials or supplies or
other similar property ("Subject Property") which, in its reasonable
opinion, may have become obsolete or unfair for use in the conduct
of its businesses or the operation of the Collateral upon replacing
the same with, or substituting for the same, new Subject Property
constituting Collateral not necessarily of the same character
64
<PAGE>
but being of at least equal value and utility as the Subject
Property so disposed of as long as such new Subject Property becomes
subject to the Liens of the Security Documents, which new Subject
Property shall without further action become Collateral subject to
the Liens of the Security Documents;
(ii) abandon, sell, assign, transfer, license or otherwise
dispose of in the Ordinary Course of Business any personal property
the use of which is no longer necessary or desirable in the proper
conduct of the business of the Company and the maintenance of its
earnings and is not material to the conduct of the business of the
Company and its Subsidiaries taken as a whole;
(iii) grant in the Ordinary Course of Business, rights-of-way
and easements over or in respect of any of the Company's real
property, provided that such grant will not, in the reasonable
opinion of the Company's Board of Directors, impair the usefulness
of such property in the conduct of the Company's business, and will
not be prejudicial to the interests of the Holders;
(iv) sell, transfer or otherwise dispose of Inventory in the
Ordinary Course of Business;
(v) sell, collect, liquidate, factor or otherwise dispose of
Accounts (as defined in the Security Agreement) and accounts
receivable in the Ordinary Course of Business; and
(vi) make cash payments (including for the scheduled repayment
of Indebtedness) from cash that is at any time part of the
Collateral in the Ordinary Course of Business that are not otherwise
prohibited by this Indenture and the Security Documents.
(c) To the extent the Company has not complied with Section 11.03(c)
hereof, the Company shall not dispose of or transfer (by lease, assignment, sale
or otherwise), in any transaction or any series of related transactions,
Collateral pursuant to the provisions of Section 11.04(b) hereof (i) with a fair
value to the Company equal to 10% or more of the aggregate fair value of all
Collateral then existing (as determined in the good faith judgment of the
Company and, if required by the TIA, an independent appraiser) or (ii) if there
is a default in the payment of principal of any of the Securities.
(d) Upon receipt of a Company Request complying with Section 11.08
hereof and subject to the Company's compliance with Section 314(c) of the TIA,
to the extent
65
<PAGE>
applicable, the Trustee shall execute and deliver, within five business days
from the receipt of the Company Request, any instrument deemed by the Company to
be necessary or appropriate to dispose of portions of the Collateral pursuant to
this Section 11.04 if the provisions of this Section 11.04 have been complied
with.
Section 11.05. Other Release of Lien.
(a) As long as no Event of Default has occurred and is continuing,
whenever any property of the Company which shall be subject to the Liens of the
Security Documents is disposed of and Section 11.04 hereof is not applicable,
the Trustee shall release the same from the Liens thereof upon receipt by the
Trustee of the following:
(i) A copy of a resolution of the Board of Directors of the
Company, requesting such release;
(ii) An Officer's Certificate stating in substance as
follows:
(A) That the Company has complied with all conditions
precedent hereunder and under the Security Documents;
(B) That the Company has sold or exchanged, or contracted to
sell or exchange, the property so to be released for a
consideration representing, in the opinion of the
signers, its full value to the Company, which
consideration may be cash and/or other property, to be
described in reasonable detail in such certificate;
(C) That the retention of such property is no longer
desirable in the conduct of the business of the Company;
and
(D) That any money stated in said certificate to have been
received in consideration for any such sale or exchange
is being applied in accordance with Section 5.13 hereof.
(iii) An Opinion of Counsel to the effect that the Security
Documents or other designated deeds or instruments of conveyance,
assignment or transfer covering any property included in the
consideration for such release or acquired with the proceeds of such
sale, are sufficient to subject the same to the security interest
granted by this Indenture or any Security Document and that such
release complies with any applicable requirements of the TIA.
66
<PAGE>
(b) Upon receipt of the Officers' Certificate and Opinion of Counsel
required by Section 11.05(a) hereof, the Trustee must execute, deliver or
acknowledge any necessary or proper instruments of termination, satisfaction or
release to evidence the release of any Lien on Collateral permitted to be
released pursuant to this Indenture or any Security Document.
Section 11.06. Impairment of Security Interest.
The Company will not, and will not permit any Subsidiary to, take or
omit to take any action which reasonably might or would have the result of
affecting or impairing the security interests with respect to the Collateral in
contravention of this Indenture, and the Company shall not (and shall cause the
Subsidiaries not to) grant to, or suffer to exist in favor of, any Person any
interests whatsoever in the Collateral except as permitted by the Security
Documents or this Indenture. The Company will not, and will not permit any
Subsidiary to, enter into any agreement or instrument that by its terms
expressly requires that the proceeds received from the sale of any Collateral be
applied to repay, redeem or otherwise retire any Indebtedness of any Person
other than as set forth in this Article 11 and the Security Documents.
Section 11.07. Authorization of Receipt of Funds by the Trustee Under the
Security Documents.
Subject to the provisions of the Security Documents, the Trustee is
authorized to receive any funds for the benefit of Holders of Securities under
the Security Documents, and to make further distributions of such funds to the
Holders according to the provisions of this Indenture.
Section 11.08. Reliance on Company Request.
The Trustee shall, before taking any action under this Article 11,
be entitled to receive a Company Request, stating that such action will not be
in contravention of the provisions hereof, and such Company Request shall be
full protection to the Trustee for any action taken or omitted to be taken in
reliance thereon; provided that, in the event and as long as this Indenture is
qualified under the TIA, the Trustee's action under this Article 11 shall at all
times be and remain subject to its duties under Section 315 of the TIA.
67
<PAGE>
Section 11.09. Payment of Expenses.
On demand of the Trustee, the Company forthwith shall pay or
satisfactorily provide for all reasonable expenditures incurred by the Trustee
under this Article 11, and the Trustee's entitlement to all such sums shall be
secured by a Lien upon the Collateral.
Section 11.10. Trustee's Duties.
The powers conferred upon the Trustee by this Article 11 are solely
to protect the Liens of this Indenture and the Security Documents and shall not
impose any duty upon the Trustee to exercise any such powers except as expressly
provided in this Indenture. The Trustee shall be under no duty whatsoever to
make or give any presentment, demand for performance, notice of nonperformance,
protest, notice of protest, notice of dishonor, or other notice or demand in
connection with any Collateral, or to take any steps necessary to preserve any
rights against prior parties except as expressly provided in this Indenture and
the Security Documents. The Trustee shall not be liable for failure to collect
or realize upon any or all of the Collateral, or for any delay in so doing, nor
shall the Trustee be under any duty to take any action whatsoever with regard
thereto. The Trustee shall have no duty to comply with any recording, filing or
other legal requirements necessary to establish or maintain the validity,
priority or enforceability of the Liens of this Indenture and the Security
Documents in, or the Trustee's rights in or to, any of the Collateral.
ARTICLE 12.
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by any of Sections 310 to 317, inclusive, of the TIA, through
operation of Section 318(c) of the TIA, such imposed duties shall control except
to the extent that (i) the TIA permits such provisions to be modified by
contract or (ii) the SEC has granted any exemption with respect thereto.
Section 12.02. Notices.
Any notice or communication by the Company or the Trustee to the other is duly
given if in writing and delivered in person or mailed by first-class mail
(registered or certified, return
68
<PAGE>
receipt requested), telecopier or overnight air courier guaranteeing next day
delivery, to the other's address:
If to the Company or Guarantor:
Metallurg, Inc.
6 East 43rd Street, 12th Floor
New York, New York 10005
Attention: Eric L. Schondorf, Esq.
Telecopier No.: (212) 687-9470
With a Copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Ronald F. Daitz, Esq.
Telecopier No.: (212) 310-8007
If to the Trustee:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Attention: Corporate Trust Department
Telecopier No.: (212) 858-2000
With a Copy to:
Proskauer Rose Goetz & Mendelsohn LLP
1585 Broadway
New York, New York 11036
Attention: Sheldon I. Hirshon, Esq.
Telecopier No.: (212) 969-2900
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
69
<PAGE>
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee at the same time.
Section 12.03. Communication by Holders with Other Holders.
Holders may communicate pursuant to TIA ss. 312(b) with other
Holders with respect to their rights under this Indenture or the Securities. The
Company, the Trustee, the Registrar, the Paying Agent and anyone else shall have
the protection of TIA ss. 312(c).
Section 12.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to
take any action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 12.05 hereof) stating that, in the opinion of the signers, all
conditions precedent (including any covenants compliance with which
constitutes a condition precedent), if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 12.05 hereof) stating that, in the opinion of such counsel, all
such conditions precedent (including any such covenants) have been
complied with.
Section 12.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than annual
certificates provided pursuant to Section 5.04 hereof) shall include:
(1) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(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;
70
<PAGE>
(3) a statement that, in the opinion of such Person, such person has
made such examination or investigation as is necessary to enable such
Person 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 or not, in the opinion of such Person,
such condition or covenant has been complied with.
Section 12.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting
of Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 12.07. Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions or trust companies in The City of New York or at a place of payment
are authorized or obligated by law, regulation or executive order to remain
closed. If a payment date is a Legal Holiday at a place of payment, payment may
be made at that place on the next succeeding day that is not a Legal Holiday,
and no interest shall accrue for the intervening period.
Section 12.08. No Recourse Against Others.
An incorporator, director, officer, employee, controlling Person or
stockholder of the Company, as such, or any successor Person thereof shall not
have any liability for any obligations of the Company or Trustee under the
Securities or this Indenture or for any obligations of the Guarantor under the
Guaranty or this Indenture or for any claim based on, in respect of or by reason
of such obligations or their creation. Each Holder by accepting a Security
waives and releases all such liability.
Section 12.09. Governing Law.
THIS INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAW OF THE STATE OF NEW YORK.
71
<PAGE>
Section 12.10. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan
or debt agreement of the Company or a Subsidiary. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.
Section 12.11. Successors.
All agreements of the Company in this Indenture and the Securities
shall bind its successor. All agreements of the Trustee in this Indenture shall
bind its successor.
Section 12.12. Severability.
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 12.13. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
Section 12.14. Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
ARTICLE 13.
MEETINGS OF HOLDERS
Section 13.01. Purposes of Meetings.
A meeting of Holders may be called at any time and from time to time
pursuant to the provisions of this Article 13 for any of the following purposes:
72
<PAGE>
(a) to give any notice to the Company or to the Trustee, or to give
any direction to the Trustee, or to waive any non-performance hereunder and its
consequences, or to take any other action authorized to be taken by Holders
pursuant to any of the provisions of this Indenture;
(b) to remove the Trustee and appoint a successor trustee pursuant
to the provisions of Section 8.08 hereof;
(c) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Article 10 hereof;
(d) to take any other action authorized to be taken by or on behalf
of the Holders of any specified aggregate principal amount of the Securities
under any other provision of this Indenture or under applicable law.
Section 13.02. Call of Meetings by Trustee.
The Trustee may at any time call a meeting of Holders to take any
action specified in Section 13.01 hereof, to be held at such time and at such
place in the State of New York, as the Trustee shall determine. Notice of each
meeting of the Holders, setting forth the time and the place of such meeting
and, in general terms, the action proposed to be taken at such meeting, shall be
mailed by the Trustee to the Holders, not less than 20 but no more than 60 days
prior to the date fixed for the meeting, at their last addresses as they shall
appear on the register of the Securities.
Section 13.03. Call of Meetings by Company or Holders.
If at any time the Company, pursuant to a resolution of its Board of
Directors, or the Holders of at least 20% in aggregate principal amount of the
Securities then outstanding, shall have requested the Trustee to call a meeting
of Holders of Securities to take any action authorized in Section 13.01 hereof,
by written request setting forth in reasonable detail the action proposed to be
taken at the meeting, and the Trustee shall not have mailed notice of such
meeting within 20 days after receipt of such request, then the Company or the
Holders of Securities in the amount above specified, as the case may be, may
determine the time and the place in the State of New York for such meeting, and
may call such meeting by mailing notice thereof as provided in Section 13.02
hereof.
73
<PAGE>
Section 13.04. Persons Entitled to Vote at Meeting.
To be entitled to vote at any meeting of Holders of Securities, a
Person shall (a) be a Holder of Securities or (b) be a Person appointed by an
instrument in writing as proxy by a Holder of Securities. The only Persons who
shall be entitled to be present or speak at any meeting of the Holders of the
Securities shall be the Persons entitled to vote at such meeting and their
counsel and any representatives of the Company and its counsel.
Section 13.05. Regulations for Meeting.
Notwithstanding any other provisions of this Indenture, the Trustee
may make such reasonable regulations as it may deem advisable for any meeting of
Holders in regard to the appointment of proxies, the proof of the holding of
Securities, the appointment and duties of inspectors of votes, the submission
and examination of proxies and other evidence of the right to vote, and such
other matters concerning the conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting unless the meeting shall have been called by the Company
or by Holders as provided in Section 13.03 hereof, in which case the Company or
the Holders calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman, and a permanent chairman and a permanent secretary
of the meeting shall be elected by vote of the Holders of a majority in
principal amount of the Securities represented at the meeting and entitled to
vote.
At any meeting of Holders, the presence of Persons holding or
representing Securities in an aggregate principal amount sufficient to take
action upon the business for the transaction of which such meeting was called
shall be necessary to constitute a quorum; but, if less than a quorum be
present, the Persons holding or representing a majority in aggregate principal
amount of the Securities represented at the meeting may adjourn such meeting
with the same effect, for all intents and purposes, as though a quorum had been
present.
74
<PAGE>
SIGNATURES
METALLURG, INC.
By:______________________________
Attest: ______________________ Name:
Title:
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
By:______________________________
Attest: ______________________ Name:
Title:
Accepted and agreed to, solely with respect to the Guaranty of the
Securities and all express obligations of the Guarantor set forth herein.
SHIELDALLOY METALLURGICAL CORPORATION
By:______________________________
Attest: ______________________ Name:
Title:
75
<PAGE>
EXHIBIT A
(Face of Security)
No. ______
METALLURG, INC.
12% Senior Secured Notes due 2007
CUSIP [ ]
METALLURG, INC., a New York
corporation organized and existing under the laws
of the State of Delaware, promises to pay to __________________________ or
registered
assigns, the principal sum of Dollars
as set forth herein.
Maturity Date: [________ __, 2007]
Interest Payment Dates: January 1 and July 1
Record Dates: December 15 and June 15
Reference is hereby made to the further provisions of this Security set forth on
the reverse side hereof, which further provisions shall for all purposes have
the same effect as if set forth at this place.
ATTEST: METALLURG, INC.
By:
------------------------------ ----------------------------
Eric L. Schondorf Michael A. Standen
Secretary President
A-1
<PAGE>
[SEAL]
Dated:
Certificate of Authentication: This is one of
the Securities referred to in the within-
mentioned Indenture.
IBJ SCHRODER BANK & TRUST COMPANY, as Trustee
- ----------------------------,
By:
Authorized Officer
A-2
<PAGE>
(Back of Security)
METALLURG, INC.
12% Senior Secured Notes due 2007
1. Interest. METALLURG, INC., a New York corporation (the
"Company"), promises to pay interest on the principal amount of this Security at
an interest rate of 12% per annum. The Company shall pay interest semi-annually
in arrears on January 1 and July 1 to the holders of record of this Security
("Holders") at the close of business on December 15 and June 15 next preceding
the interest payment date. Interest shall initially accrue from January 1, 1997
and the first interest payment date will be July 1, 1997. Interest shall be
computed on the basis of a 365- or 366-day year.
2. Method of Payment. The Company shall pay interest on the
Securities (except defaulted interest) to the Persons who are registered Holders
of Securities at the close of business on the record date for the next interest
payment date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company shall pay principal and interest in money of the
United States that at the time of payment is legal tender for payment of public
and private debts. However, the Company may pay principal and interest by check
payable in such money. It may mail an interest check to a Holder's registered
address.
3. Paying Agent and Registrar. Initially, IBJ Schroder Bank & Trust
Company, a New York corporation, as trustee (the "Trustee"), shall act as Paying
Agent and Registrar. The Company may change any Paying Agent, Registrar or
co-registrar without prior notice. The Company or any of its subsidiaries may
act in any such capacity.
4. Indenture. The Company issued the Securities under an Indenture
dated as of [April 10,] 1997 (the "Indenture") among the Company, the Guarantor
and the Trustee. The terms of the Securities include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date
of the Indenture. The Securities are subject to, and qualified by, all such
terms, certain of which are summarized herein, and Holders are referred to the
Indenture and such Act for a statement of such terms. The Securities are secured
obligations of the Company limited to [$60,000,000] in aggregate principal
amount.
A-3
<PAGE>
The Indenture contains certain covenants that, among other things,
limit (i) the issuance of additional indebtedness by the Company, (ii) certain
transactions with affiliates, (iii) sales of assets, including capital stock of
subsidiaries, and (iv) certain consolidations, mergers and transfers of assets.
5. Optional Redemption. The Company may redeem the Securities, in
whole or in part, at any time or from time to time, prior to maturity, upon not
less than 30 nor more than 60 days prior notice, at 103% of principal amount of
the Securities plus accrued and unpaid interest, if any, to the redemption date,
if redeemed prior to July 1, 1999, and thereafter at 100% of the principal
amount of the Securities plus accrued and unpaid interest, if any, to the
redemption date.
6. Mandatory Redemption. The Company will be required to make a
mandatory redemption in respect of the Securities as follows:
Principal Amount
Date To Be Redeemed
---- --------------
[April 10,] 2004 $2,500,000
[April 10,] 2005 $2,500,000
[April 10,] 2006 $2,500,000
7. Notice of Redemption. Notice of redemption shall be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder of Securities to be redeemed at such Holder's registered address.
If less than all of the Securities are to be redeemed, the Trustee
shall select the Securities to be redeemed pro rata or by a method that complies
with applicable legal and securities exchange requirements, if any, and that the
Trustee considers fair and appropriate and in accordance with methods generally
used at the time of selection by fiduciaries in similar circumstances and taking
into account the provisions of the next paragraph. The particular Securities to
be redeemed shall be selected unless otherwise provided herein, not less than 30
or more than 60 days prior to the redemption date by the Trustee from the
outstanding Securities not previously called for redemption.
If the Company shall so direct, Securities registered in the name of
the Company or any Subsidiary thereof shall not be included in the Securities
selected for redemption.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Security selected for
partial redemption, the principal amount thereof to be redeemed. Securities and
portions of them selected shall be in
A-4
<PAGE>
amounts of $1,000 or whole multiples of $1,000; except that if all of the
Securities of a Holder are to be redeemed, the entire outstanding amount of
Securities held by such Holder, even if not a multiple of $1,000, shall be
redeemed. Except as provided in the preceding sentence, provisions of the
Indenture that apply to Securities called for redemption also apply to portions
of Securities called for redemption.
If this Security is redeemed subsequent to a record date with
respect to any interest payment date specified above and prior to such interest
payment date, then any accrued interest shall be paid to the Person who
surrenders this Security for redemption.
8. Repurchase at Option of Holder. Sections 5.12 and 5.13 of the
Indenture provide that upon the occurrence of a Change of Control or, under
certain circumstances, after an Asset Sale, and subject to further limitations
contained therein, the Company shall make an offer to purchase certain amounts
of the Securities in accordance with the procedures set forth in the Indenture.
Holders of Securities that are subject to an offer to purchase will receive an
offer to purchase from the Company prior to any related purchase date, and may
elect to have such Securities purchased by completing the form entitled "Option
of Holder to Elect Purchase" appearing below.
9. Security Documents. In order to secure the due and punctual
payment of the principal of and interest on the Securities and all other amounts
payable by the Company under the Indenture and the Securities when and as the
same shall be due and payable, whether at maturity, by acceleration or
otherwise, according to the terms of the Securities and the Indenture, the
Company has granted Liens on the Collateral to the Trustee for the benefit of
the Holders of the Securities pursuant to the Indenture and the Security
Documents. The Securities will be secured by Liens on the Collateral that are
subordinate to the Liens of the holders of Specified Indebtedness and certain
other permitted encumbrances.
Each Holder, by accepting this Security, acknowledges and agrees
that, as provided in the Security Documents, the Liens on the Collateral granted
to the Holders shall be subordinated and junior to the prior Liens on and
security interests in the Collateral and all proceeds thereof granted to the
holders of Specified Indebtedness.
Each Holder, by accepting this Security, agrees to all of the terms
and provisions of the Security Documents, as the same may be amended from time
to time pursuant to the respective provisions thereof and the Indenture.
The Trustee and each Holder acknowledge that a release of any of the
Collateral or any Lien strictly in accordance with the terms and provisions of
the Security Documents and the terms and provisions of the Indenture will not be
deemed for any purpose to be an impairment of the security under the Indenture.
A-5
<PAGE>
10. Denominations, Transfer, Exchange. The Securities are in
registered form in denominations of $1,000 and integral multiples of $1,000. The
transfer of Securities may be registered and Securities may be exchanged as
provided in the Indenture. The Registrar may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and to pay
any taxes and fees required by law or permitted by the Indenture. The Registrar
need not exchange or register the transfer of any Security or portion of a
Security selected for redemption. Also, it need not exchange or register the
transfer of any Securities for a period of 15 days before a selection of
Securities to be redeemed.
11. Persons Deemed Owners. The registered Holder of a Security shall
be treated as its owner for all purposes.
12. Amendments and Waivers. Subject to certain exceptions, the
Indenture or the Securities may be amended with the consent of the Holders of at
least a majority in principal amount of the then outstanding Securities, and any
existing Default may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Securities. Without the consent of any
Holder, the Indenture or the Securities may be amended to cure any ambiguity,
defect, omission or inconsistency, to make any change that does not adversely
affect the rights of any Holder, to make any change to the extent necessary to
reflect the consummation of a Company Reincorporation Merger and a SMC
Reincorporation Merger or to reflect certain changes in generally accepted
accounting principles.
13. Defaults and Remedies. Events of Default are set forth in the
Indenture. If an Event of Default occurs and is continuing (other than an Event
of Default specified in Sections 7.01(7) and (8) (with respect to the Company)),
the Trustee may, by written notice to the Company, or the Holders of at least
25% in principal amount of the then outstanding Securities may, by written
notice to the Company and the Trustee, declare the unpaid principal of and any
accrued but unpaid interest on all the then outstanding Securities to be due and
payable, together with the interest accrued thereon, immediately, all without
presentment, demand, notice, protest or other requirements of any kind. Holders
may not enforce the Indenture or the Securities except as provided in the
Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Securities. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Securities may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders notice of any continuing default (except a default in
payment of principal or interest) if it determines that withholding notice is in
their interests. The Company must furnish an annual compliance certificate to
the Trustee.
14. Trustee Dealings with the Company. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not Trustee.
A-6
<PAGE>
15. No Recourse Against Others. An incorporator, a director,
officer, employee or stockholder, as such, of the Company shall not have any
liability for any obligations of the Company under the Securities or the
Indenture or for any obligations of a Guarantor under the Guaranties or the
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Holder by accepting a Security waives and
releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
16. Authentication. This Security shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
17. Abbreviations. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act.)
18. Indenture. Each Holder, by accepting a Security, agrees to be
bound by all of the terms and provisions of the Indenture, as the same may be
amended from time to time.
19. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Securities and has directed the Trustee to
use CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed hereon or thereon.
20. THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
The Trustee will, at the expense of the Company, furnish to any
Holder upon written request and without charge a copy of the Indenture. Request
may be made to:
Attention:
A-7
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign
and transfer this Security to:
- -----------------------------------------------------------------
(insert assignee's soc. sec. or tax I.D. no.)
- -----------------------------------------------------------------
- -----------------------------------------------------------------
- -----------------------------------------------------------------
- -----------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint ____________________________ agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
Date:_______________ Your signature:_____________________________
(Sign exactly as your name
appears on the other side of
this Security)
Signature Guarantee:_________________________
(All signatures must be guaranteed by a member of a national securities exchange
or of the National Association of Securities Dealers, Inc. or by a commercial
bank or trust company located in the United States.)
A-8
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company pursuant to
Section 5.12 or 5.13 of the Indenture, check the box:
[ ]
If you want to elect to have any part of this Security purchased by the Company
pursuant to Section 5.12 or 5.13 of the Indenture, state the amount:
$_______________
Date: Your Signature:
(Sign exactly as your
name appears on the
other side of this
Security)
Signature Guarantee:
(All signatures must be guaranteed by a member of a national securities exchange
or of the National Association of Securities Dealers, Inc. or by a commercial
bank or trust company located in the United States.)
A-9
<PAGE>
FORM OF NOTATION ON SECURITY
RELATING TO GUARANTY
This Security is guarantied as provided in Article 3 of the Indenture and shall
be subject to the provisions relating to release and discharge of the
Guarantor's obligations under this Guaranty provided therein.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly executed
in facsimile by its duly authorized officer.
SHIELDALLOY METALLURGICAL CORPORATION
By:______________________
Name:
Title:
<PAGE>
EXHIBIT B
FORM OF
SECURITY AGREEMENT
SECURITY AGREEMENT, dated [April 10,] 1997, made by Metallurg,
Inc., a New York corporation (the "Grantor"), in favor of IBJ Schroder
Bank & Trust Company, a banking corporation duly organized and
existing under the laws of the State of New York, as trustee (the
"Trustee"), acting on behalf of the holders (the "Holders" and
together with the Trustee, the "Secured Parties") of certain senior
secured notes due 2007 of the Grantor (the "Securities").
W I T N E S S E T H :
-------------------
WHEREAS, pursuant to the Indenture, dated as of [April 10,]
1997, between the Grantor, Shieldalloy Metallurgical Corporation, a
New York corporation and direct, wholly owned subsidiary of the
Grantor and the Trustee (said Indenture, as it may be amended,
supplemented or otherwise modified from time to time, being the
"Indenture"), the Securities were issued to the Holders;
WHEREAS, pursuant to the terms of Section 11.01 of the
Indenture, the Grantor has agreed to grant the security interests
contemplated herein;
WHEREAS, to secure the Specified Indebtedness, the Grantor
has granted a security interest (the "Senior Lien") in the Collateral
(as hereinafter defined) pursuant to the security agreement, dated
[April 10,] 1997, in favor of the Working Capital Agent, as agent for
the Working Capital Lenders (the "WCCF Security Agreement");
WHEREAS, the Senior Lien is to be senior and prior to the
Lien created hereby in favor the Trustee; and
NOW, THEREFORE, the Grantor hereby agrees with the Trustee
on behalf and for the ratable benefit of the Holders as follows:
1. Defined Terms. Capitalized terms used herein and not
-------------
otherwise defined herein have the meanings ascribed to them in the
Indenture. As used in this Agreement, the following terms have the
meanings specified below (such meanings being equally applicable to
both the singular and plural forms of the terms defined):
<PAGE>
"Account" means any "account," as such term is defined
-------
in Section 9-106 of the UCC, now owned or hereafter acquired
by the Grantor and, in any event, includes, without
limitation, (i) all accounts receivable, book debts and
other forms of obligations (other than forms of obligations
evidenced by Chattel Paper, Documents or Instruments) now
owned or hereafter received or acquired by or belonging or
owing to the Grantor (including, without limitation, under
any trade name, style or division thereof) whether arising
out of goods sold or services rendered by the Grantor or
from any other transaction, whether or not the same involves
the sale of goods or services by the Grantor (including,
without limitation, any such obligation which might be
characterized as an account or contract right under the
UCC), (ii) all of Grantor's rights in, to and under all pur-
chase orders or receipts now owned or hereafter acquired by
it for goods or services, and all of Grantor's rights to any
goods represented by any of the foregoing (including,
without limitation, unpaid seller's rights of rescission,
replevin, reclamation and stoppage in transit and rights to
returned, reclaimed or repossessed goods), (iii) all moneys
due or to become due to the Grantor under all contracts for
the sale of goods or the performance of services or both by
the Grantor (whether or not yet earned by performance on the
part of the Grantor or in connection with any other
transaction), now in existence or hereafter occurring, in-
cluding, without limitation, the right to receive the pro-
ceeds of said purchase orders and contracts, and (iv) all
collateral security and guarantees of any kind given by any
Person with respect to any of the foregoing.
"Account Debtor" means any "account debtor," as such
--------------
term is defined in Section 9-105(1)(a) of the UCC.
"Chattel Paper" means any "chattel paper," as such term
-------------
is defined in Section 9-105(1)(b) of the UCC, now owned or
hereafter acquired by the Grantor.
"Collateral" has the meaning assigned to such term in
----------
Section 2 of this Agreement.
"Contracts" means all contracts, undertakings or other
---------
agreements (other than Chattel Paper, Documents or
Instruments) in or under which the Grantor may now or
hereafter have any right, title or interest, including,
without limitation, with respect to an Account, any
agreement relating to the terms of payment or the terms of
performance thereof.
B-2
<PAGE>
"Documents" means any "document," as such term is
---------
defined in Section 9-105(1)(f) of the UCC, now owned or
hereafter acquired by the Grantor.
"Equipment" means any "equipment," as such term is
---------
defined in Section 9-109(2) of the UCC, now owned or
hereafter acquired by the Grantor and, in any event,
includes, without limitation, all machinery, equipment,
furnishings, fixtures, vehicles, computers and other
electronic data-processing and office equipment now owned or
hereafter acquired by the Grantor and any and all additions,
substitutions and replacements of any of the foregoing,
wherever located, together with all attachments, components,
parts, equipment and accessories installed thereon or
affixed thereto.
"General Intangibles" means any "general intangibles,"
-------------------
as such term is defined in Section 9-106 of the UCC, now
owned or hereafter acquired by the Grantor and, in any
event, includes, without limitation, all customer lists,
trademarks, patents, rights in intellectual property,
licenses, permits, copyrights, trade secrets, proprietary or
confidential information, inventions (whether patented or
patentable or not) and technical information, procedures,
designs, knowledge, know-how, software, data bases, data,
skill, expertise, experience, processes, models, drawings,
materials and records, goodwill, rights of indemnification
and all right, title and interest which the Grantor may now
or hereafter have in or under any Contract, now owned or
hereafter acquired by the Grantor.
"Grantor" has the meaning specified in the preamble
-------
hereto.
"Holders" have the meaning specified in the preamble
-------
hereto.
"Indenture" has the meaning specified in the recitals
---------
hereto.
"Insolvency or Liquidation Proceeding" shall mean (i)
------------------------------------
any voluntary or involuntary case or proceeding under
Bankruptcy Law with respect to the Grantor, (ii) any other
voluntary or involuntary insolvency, reorganization or
bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or
proceeding with respect to the Grantor or to any of its
respective assets, or (iii) any liquidation, dissolution,
reorganization or winding up of the Grantor whether
voluntary or involuntary and whether or
B-3
<PAGE>
not involving insolvency or bankruptcy, or (iv) any
assignment for the benefit of creditors or any other
marshalling of assets and liabilities of the Grantor.
"Instrument" means any "instrument," as such term is
----------
defined in Section 9-105(1)(i) of the UCC, now owned or
hereafter acquired by the Grantor, other than instruments
that constitute, or are a part of a group of writings that
constitute, Chattel Paper.
"Inventory" means any "inventory," as such term is
---------
defined in Section 9-109(4) of the UCC, now owned or here-
after acquired by the Grantor wherever located, and, in any
event, includes, without limitation, all inventory,
merchandise, goods and other personal property now owned or
hereafter acquired by the Grantor which are held for sale or
lease or are furnished or are to be furnished under a
contract of service or which constitute raw materials, work
in process or materials used or consumed or to be used or
consumed in the Grantor's business, or the processing,
packaging, delivery or shipping of the same, and all
finished goods.
"Proceeds" means "proceeds," as such term is defined in
--------
Section 9-306(1) of the UCC, and, in any event, shall
include, without limitation, (i) any and all proceeds of any
insurance, indemnity, warranty or guaranty payable to the
Grantor from time to time with respect to any of the
Collateral, (ii) any and all payments (in any form whatso-
ever) made or due and payable to the Grantor from time to
time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of
the Collateral by any governmental authority (or any Person
acting under color of governmental authority), and (iii) any
and all other amounts from time to time paid or payable
under or in connection with any of the Collateral.
"Secured Parties" has the meaning specified in the
---------------
preamble hereto.
"Securities" has the meaning specified in the preamble
----------
hereto.
"Senior Lien" has the meaning specified in the recitals
-----------
hereto.
"Transaction Documents" means this Agreement, the
---------------------
Indenture, the Pledge Agreement and the Securities.
"Trustee" has the meaning specified in the preamble
-------
hereto.
B-4
<PAGE>
"UCC" means the Uniform Commercial Code as the same
---
may, from time to time, be in effect in the State of New
York; provided, however, in the event that, by reason of
-------- -------
mandatory provisions of law, any or all of the attachment,
perfection or priority of the Trustee's and the Holders' se-
curity interest in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than
the State of New York, the term "UCC" shall mean the Uniform
Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such attach-
ment, perfection or priority and for purposes of definitions
related to such provisions.
"WCCF Security Agreement" has the meaning specified in
-----------------------
the recitals hereto.
2. Grant of Security Interest. A. As collateral security
--------------------------
for the full and prompt payment when due (whether at stated maturity,
by acceleration or otherwise) of the Securities and to induce the
Holders to accept the Securities, the Grantor hereby assigns, conveys,
pledges, hypothecates and transfers to the Trustee, on behalf and for
the ratable benefit of the Holders, and hereby grants to the Trustee,
on behalf and for the ratable benefit of the Holders, a security
interest in, all of the Grantor's right, title and interest in, to and
under the following (all of which being hereinafter collectively
referred to as the "Collateral"), which security interest shall be
junior and subordinated to the Senior Lien as provided in Section 3
hereof:
(i) all Accounts;
(ii) all Contracts;
(iii) all Documents;
(iv) all Instruments;
(v) all Inventory;
(vi) all Chattel Paper;
(vii) all Equipment;
(viii) all General Intangibles;
B-5
<PAGE>
(ix) to the extent not otherwise included, all Proceeds of
each of the foregoing and all accessions to, substitutions and
replacements for, and rents, profits and products of, each of the
foregoing; and
provided, however, that any Contract shall not be
-------- -------
Collateral if the granting hereunder of a security interest
in such Contract would violate the terms thereof or would
result in the non-breaching party under such Contract
obtaining the right to terminate such Contact.
3. Subordination to the Senior Lien. (a) The Secured
--------------------------------
Parties hereby expressly agree as follows:
(i) that notwithstanding the date, manner (including,
without limitation, the Liens on the Collateral) granted to
the Secured Parties or of any Liens granted to the Working
Capital Agent, for the benefit of the Working Capital
Lenders, and notwithstanding any provision of the UCC, or
any applicable law or decision or any other Transaction
Document or the Working Capital Credit Facility or any other
circumstances whatsoever, each Secured Party hereby agrees
that
(A) the Working Capital Agent, for the benefit of
the Working Capital Lenders, shall have a senior and
prior Lien on and security interest in the Collateral
and all proceeds thereof to secure the claims of such
holders;
(B) any Lien in the Collateral now or hereafter
held by the Secured Parties regardless of how acquired,
whether by grant, statute, operation of law,
subrogation or otherwise, shall be junior and
subordinate in all respects to all Liens in the
Collateral securing Specified Indebtedness; and
(C) all Liens securing Specified Indebtedness
shall be and remain senior to all Liens securing the
Securities for all purposes, whether or not such Liens
securing Specified Indebtedness are subordinated to any
Lien securing any other obligations of the Grantor;
(ii) neither the Trustee nor any Holder shall contest
or support any other Person in contesting, in any action or
proceeding or otherwise (including, without limitation, any
Insolvency or Liquidation Proceeding), the
B-6
<PAGE>
validity or enforceability of the Specified Indebtedness or
the perfection or priority of any Lien securing Specified
Indebtedness held by the Working Capital Agent or the
Working Capital Lenders;
(iii) neither the Trustee nor any Holder shall take or
receive from or on behalf of the Grantor directly or
indirectly, in cash or other property or by setoff,
counterclaim or in any manner (whether pursuant to any
enforcement, collection, execution, levy or foreclosure
proceeding or otherwise) any Collateral or any proceeds of
Collateral, unless and until all Specified Indebtedness
shall have been paid in full in cash; provided, however,
-------- -------
that nothing herein shall preclude the Grantor from making
the payments in respect of the Securities required by the
terms thereof;
(iv) unless and until the Specified Indebtedness has
been paid in full in cash, neither the Trustee nor any
Holder shall assert any remedy in respect of the Collateral
or any Lien therein held by the Trustee on behalf and for
the ratable benefit of the Holders (including, without
limitation, under or in respect of the Transaction
Documents); and
(v) unless and until all Specified Indebtedness has
been paid in full in cash, neither the Trustee nor any
Holder will commence, or join with any Person (other than
the Working Capital Lenders and the Working Capital Agent)
in commencing any enforcement, collection, execution, levy
or foreclosure proceeding or otherwise in respect of the
Collateral or any Lien therein granted under any Transaction
Document or otherwise.
(b) Any proceeds of Collateral received by the Trustee or
any Holder in contravention of this Section 3, and, if
applicable, any sums received by the Trustee under Section 507(b)
of the federal Bankruptcy Law, shall be segregated and held in
trust and forthwith paid over to the Working Capital Agent for
the benefit of the Working Capital Lenders in the same form
received, with any necessary endorsements or as a court of
competent jurisdiction may otherwise direct.
(c) The Grantor may sell, lease, exchange, transfer or
otherwise dispose of Collateral pursuant to the provisions of
Section 11.04(b) and Section 11.03(c) of the Indenture without
requesting the release or consent of the Trustee, as provided
more fully in the Indenture. In connection with any sale, lease,
exchange, transfer or other disposition of any Collateral
pursuant to Section 11.04(a) of the Indenture, in which the Liens
of the Working Capital Lenders are released and the Company
delivers the
B-7
<PAGE>
certificate or opinion required by Section 314(d)(1) of the TIA,
the Liens thereon of the Secured Parties shall be automatically,
unconditionally and simultaneously released and the Trustee shall
execute and deliver to the Working Capital Agent or the Grantor
such termination statements, releases and other documents as the
Working Capital Agent or the Grantor may request to effectively
confirm such release.
(d) Each Secured Party hereby waives any and all rights it
may have to object to the manner in which the Working Capital
Agent or the Working Capital Lenders seek to enforce or collect
the Specified Indebtedness or the Liens granted in any of the
Collateral, including waiving any right based on any duty to
conduct any such sale, lease, exchange, transfer or other
disposition in a commercially reasonable manner.
(e) In furtherance of the foregoing, the Trustee, on behalf
and for the ratable benefit of the Holders from time to time,
will execute and deliver to the Working Capital Agent undated UCC
termination statements in respect of all of the Collateral in
such number and such jurisdictions as determined by the Working
Capital Agent. Each Secured Party hereby appoints the Working
Capital Agent as its attorney-in-fact and authorizes the Working
Capital Agent to complete the UCC termination statements and file
them in order to carry out the purposes of this Section 3(e).
This appointment and authorization is coupled with an interest
and is irrevocable.
(f) If at any time any payment made or value received with
respect to any Specified Indebtedness is rescinded or must
otherwise be returned by the Working Capital Agent or any Working
Capital Lender upon the insolvency, bankruptcy, or reorganization
of the Grantor, or otherwise, then (i) to the extent necessary to
repay in full in cash the Specified Indebtedness, the Trustee
will, upon written demand by the Working Capital Agent, deliver
to the Working Capital Agent any funds or property previously
received by the Trustee with respect to the Collateral and then
held by the Trustee, and (ii) to the extent previously
terminated, the Senior Lien and the other rights and priorities
in favor of the Working Capital Agent and the Working Capital
Lenders under this Section 3 shall be reinstated as though such
payment had not been made or value received.
(g) The provisions of this Section 3 are and are intended
solely for the purpose of defining the relative rights of the
Holders of the Securities on the one hand and the Working Capital
Lenders on the other hand. Nothing contained in this Section 3
or any other Transaction Document is intended to or shall (i)
impair, as
B-8
<PAGE>
among the Grantor, its creditors (other than the Working Capital
Lenders) and the Secured Parties, the obligation of the Grantor,
which is absolute and unconditional, to pay to the Secured
Parties the principal of and interest on, and any other amount
payable by the Grantor under the Transaction Documents as and
when the same shall become due and payable in accordance with its
terms; or (ii) affect the relative rights against the Grantor of
the Secured Parties and its creditors (other than the Working
Capital Lenders); or (iii) prevent the Secured Parties from
accelerating the Securities and the Trustee commencing any action
to enforce or collect any payments theretofore due under the
Indenture or the Securities, provided that the Trustee may not
take action to foreclose or otherwise realize on the Collateral
if any Specified Indebtedness is then outstanding in
contravention of this Section 3. If any provision of this
Agreement (including, without limitation, this Section 3)
conflicts with the duties imposed by the provisions of the TIA,
to the extent applicable, the TIA controls except to the extent
that (i) the TIA permits such provisions to be modified by
contract or (ii) the SEC has granted any exemption with respect
thereto.
4. Rights of the Secured Parties.
-----------------------------
It is expressly agreed by the Grantor that, anything herein
to the contrary notwithstanding, the Grantor shall remain liable
under each of the Contracts to observe and perform all the
conditions and obligations to be observed and performed by it
thereunder and the Grantor shall perform all of its duties and
obligations thereunder, all in accordance with and pursuant to
the terms and provisions of each such Contract. Neither the
Trustee nor any Holder shall have any obligation or liability
under any Contract by reason of or arising out of this Agreement
or the granting of a security interest in any Contract to the
Trustee on behalf and for the ratable benefit of the Holders of a
security interest therein or the receipt by the Trustee or any
Holder of any payment relating to any Contract pursuant hereto,
nor shall the Trustee or any Holder be required or obligated in
any manner to perform or fulfill any of the obligations of the
Grantor under or pursuant to any Contract, or to make any
payment, or to make any inquiry as to the nature or the
sufficiency of any payment received by it or the sufficiency of
any performance by any party under any Contract, or to present or
file any claim, or to take any action to collect or enforce any
performance or the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or
times.
B-9
<PAGE>
5. Representations and Warranties. The Grantor hereby
------------------------------
represents and warrants to the Secured Parties as follows:
(a) The Grantor is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
New York.
(b) The execution, delivery and performance by the Grantor
of this Agreement are within the Grantor's corporate powers, have
been duly authorized by all necessary corporate action, do not
contravene the Grantor's certificate of incorporation or by-laws,
any requirement of law or any order or decree of any court, or
any contractual obligation of the Grantor, and do not result in
or require the creation of any Lien (other than pursuant to the
Indenture) upon or with respect to any of its properties.
(c) No consent, authorization, approval or other action by,
and no notice to or filing with, any governmental authority is
required for the due execution, delivery and performance by the
Grantor of this Agreement except for filing of the UCC financing
statements listed on Schedule I hereto.
(d) This Agreement has been duly executed and delivered by
the Grantor and is the legal, valid and binding obligation of the
Grantor, enforceable against the Grantor in accordance with its
terms.
(e) There are no pending or, to the Grantor's knowledge,
threatened actions, investigations or proceedings affecting the
Grantor or any of its Subsidiaries before any court, governmental
authority or arbitrator other than those that in the aggregate
have no reasonable likelihood of having a material adverse effect
on the rights or remedies of the Holders or the ability of the
Grantor to perform its obligations hereunder.
(f) The Grantor is the sole owner of each item of the
Collateral in which it purports to grant a security interest
hereunder, having good title thereto, free and clear of any and
all Liens, except for the security interest granted pursuant to
this Agreement and other Permitted Liens. No material amounts
payable under or in connection with any of its Accounts or
Contracts are evidenced by Instruments which have not been
delivered to the Trustee or the Working Capital Agent pursuant to
the terms of the WCCF Security Agreement.
B-10
<PAGE>
(g) No effective security agreement, financing statement,
equivalent security or lien instrument or continuation statement
covering all or any part of the Collateral is on file or of
record in any public office, except such as may have been filed
by the Grantor in favor of the Trustee pursuant to this Agreement
or such as relate to other Permitted Liens.
(h) This Agreement is effective to create a valid and
continuing Lien on the Collateral; appropriate financing
statements have been filed in the jurisdictions listed on
Schedule I hereto, such Lien is perfected as to all Collateral in
which a Lien may be perfected by the filing of a financing
statement under the UCC except as provided in Section 6(m)
hereof, and is prior to all other Liens, except as to the Senior
Lien, certain other Permitted Liens and to the extent that
financing statements are not required pursuant to Section 6(m)
hereof.
(i) The Grantor's principal place of business and the place
where its records concerning the Collateral are kept and the
location of its Inventory and Equipment are set forth on Schedule
II hereto.
(j) The amount represented by the Grantor to the Trustee
from time to time as owing by each Account Debtor or by all
Account Debtors in respect of the Accounts of the Grantor will at
such time be the correct amount actually and unconditionally
owing by such Account Debtors thereunder.
6. Covenants. The Grantor covenants and agrees with the
---------
Trustee that from and after the date of this Agreement and until the
obligations under the Securities are fully satisfied:
(a) Maintenance of Records. The Grantor will keep and
----------------------
maintain at its own cost and expense satisfactory and complete
records of the Collateral, including, without limitation, a
record of all payments received and all credits granted with
respect to the Collateral and all other dealings with the
Collateral. The Grantor will mark its books and records
pertaining to the Collateral to evidence this Agreement and the
Lien and security interests granted hereby. For the Trustee's
and the Holders' further security, the Grantor agrees that the
Trustee and the Holders shall have a special property interest in
all of the Grantor's books and records pertaining to the
Collateral and, subject to the provisions of Section 3 hereof,
upon the occurrence and during the continuance of any Event of
Default, the Grantor shall deliver and turn over any such books
and records to the Trustee or to its representatives at any time
on demand of the Trustee. Prior to the occurrence of an Event of
Default and upon
B-11
<PAGE>
reasonable notice from the Trustee, the Grantor shall permit any
representative of the Trustee to inspect such books and records
and will provide photocopies thereof to the Trustee.
(b) Indemnification. In any suit, proceeding or action
---------------
brought by the Trustee or any Holder relating to any Account,
Chattel Paper, Contract, General Intangible or Instrument for any
sum owing thereunder, or to enforce any provision of any Account,
Chattel Paper, Contract, General Intangible or Instrument, the
Grantor will save, indemnify and keep each of the Trustee and the
Holders harmless from and against all expense, loss or damage
suffered by reason of any defense, set-off, counterclaim,
recoupment or reduction of liability whatsoever of the obligor
thereunder, arising out of a breach by the Grantor of any
obligation thereunder or arising out of any other agreement,
Indebtedness or liability at any time owing to, or in favor of,
such obligor or its successors from the Grantor, and all such
obligations of the Grantor shall be and remain enforceable
against and only against the Grantor and shall not be enforceable
against the Trustee or the Holders.
(c) Compliance with Laws, Etc. The Grantor will comply, in
-------------------------
all material respects, with all acts, rules, regulations, orders,
decrees and directions of any governmental authority, applicable
to the Collateral or any part thereof or to the operation of the
Grantor's business; provided, however, that the Grantor may
-------- -------
contest any act, regulation, order, decree or direction in any
reasonable manner which shall not, in the sole opinion of the
Trustee, adversely affect the Trustee's rights hereunder or
adversely affect its Lien on and security interest in the
Collateral.
(d) Payment. The Grantor will pay promptly when due all
-------
taxes, assessments and governmental charges or levies imposed
upon the Collateral or in respect of its income or profits
therefrom and all claims of any kind (including, without
limitation, claims for labor, materials and supplies), except
that no such charge need be paid if (i) such non-payment does not
involve any danger of the sale, forfeiture or loss of any of the
Collateral or any interest therein, and (ii) such charge is
adequately reserved against in accordance with and to the extent
required by generally accepted accounting principles.
(e) Compliance with Terms of Accounts, Etc. In all material
--------------------------------------
respects, the Grantor will comply with and perform with all
obligations, covenants, conditions and agreements with respect to
any Account, Chattel Paper or Contract and all other agreements
to which it is a party or by which it is bound.
B-12
<PAGE>
(f) Limitation on Liens on Collateral. The Grantor will not
---------------------------------
create, permit or suffer to exist, and will defend the Collateral
against and take such other action as is necessary to remove, any
Lien on the Collateral except Permitted Liens, and will defend
the right, title and interest of the Trustee and the Holders in
and to any of the Grantor's rights under the Contracts, Chattel
Paper, General Intangibles, Equipment, Documents, Instruments,
and Inventory and in and to the Proceeds thereof against the
claims and demands of all Persons whomsoever.
(g) Maintenance of Insurance. The Grantor will maintain,
------------------------
with financially sound and reputable companies, insurance
policies (i) insuring its Inventory and Equipment against loss by
fire, explosion, theft and such other casualties as are usually
insured against by companies engaged in the same or similar
businesses and (ii) insuring the Grantor and the Trustee and the
Holders against liability for personal injury and property damage
relating to such Inventory and Equipment, such policies to be in
such amounts and against at least such risks as are usually
insured against in the same general area by companies engaged in
the same or a similar business, naming the Trustee, subject to
the Senior Lien, as an additional insured with a lender loss
payable clause in favor of the Trustee on behalf and for the
ratable benefit of the Holders. The Grantor shall, if so
requested by the Trustee, deliver to the Trustee as often as the
Trustee may reasonably request, a report of a reputable insurance
broker satisfactory to the Trustee with respect to the insurance
on its Inventory and Equipment. All insurance with respect to
the Inventory and Equipment shall (i) contain a clause which
provides that the Secured Parties' interest under the policy will
not be invalidated by any act or omission of, or any breach of
warranty by, the insured, or by any change in the title,
ownership or possession of the insured property, or by the use of
the property for purposes more hazardous than is permitted in the
policy, and (ii) provide that no cancellation, reduction in
amount or change in coverage thereof shall be effective until at
least ten days after receipt by the Trustee of written notice
thereof.
(h) Limitations on Disposition. The Grantor will not sell,
--------------------------
lease, transfer or otherwise dispose of any of the Collateral, or
attempt or contract to do so, except as permitted by the
Indenture.
(i) Further Identification of Collateral. The Grantor will,
------------------------------------
if so requested by the Trustee, furnish to the Trustee, as often
as the Trustee reasonably requests, statements and schedules
further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Trustee may
reasonably request, all in reasonable detail.
B-13
<PAGE>
(j) Right of Inspection. Upon reasonable notice to the
-------------------
Grantor (unless an Event of Default has occurred and is
continuing, in which case no notice is necessary), the Trustee
shall at all times have full and free access during normal
business hours to all the books and records and correspondence of
the Grantor, and the Trustee or its representatives may examine
the same, take extracts therefrom and make photocopies thereof,
and the Grantor agrees to render to the Trustee, at the Grantor's
cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto. Upon reasonable notice
to the Grantor (unless an Event of Default has occurred and is
continuing, in which case no notice is necessary) but subject to
the provisions of Section 3 hereof, the Trustee and its
representatives shall also have the right to enter into and upon
any premises where any of the Inventory and Equipment is located
for the purpose of inspecting the same, observing its use or
otherwise protecting its interests therein.
(k) Maintenance of Equipment. The Grantor will keep and
------------------------
maintain the Equipment in good operating condition sufficient for
the continuation of the business conducted by the Grantor on a
basis consistent with past practices, and the Grantor will
provide all maintenance and service and all repairs necessary for
such purpose.
(l) Continuous Perfection. The Grantor will not change its
---------------------
name, identity or corporate structure in any manner which might
make any financing or continuation statement filed in connection
herewith seriously misleading within the meaning of Section
9-402(7) of the UCC (or any other then applicable provision of
the UCC) unless the Grantor shall have given the Trustee at least
30 days' prior written notice thereof and shall have taken all
action (or made arrangements to take such action substantially
simultaneously with such change if it is impossible to take such
action in advance) necessary or reasonably requested by the
Trustee to amend such financing statement or continuation state-
ment so that it is not seriously misleading. The Grantor will
not change its principal place of business or remove its records
or change the location of its Inventory and Equipment, each as
set forth on Schedule II hereto, unless it gives the Trustee at
least 30 days' prior written notice thereof and has taken such
action as is necessary to cause the security interest of the
Trustee in the Collateral to continue to be perfected.
(m) Collateral Perfection. The Grantor shall not be
---------------------
required to file UCC financing statements or their equivalents in
any jurisdiction (i) outside of the United States, (ii) where the
value of Collateral located in such jurisdiction is less than
$100,000 or (iii) if the Grantor would incur any recording fees
or taxes in connection with any such filing other than nominal
fees or taxes. The Grantor shall be only
B-14
<PAGE>
required to use commercially reasonable efforts in obtaining
waivers from third-party bailees.
7. The Trustee's Appointment as Attorney-in-Fact. (a)
---------------------------------------------
Subject to the provisions of Section 3 hereof,
(i) the Grantor hereby irrevocably constitutes and
appoints the Trustee and any officer or agent thereof, with
full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority
in the place and stead of the Grantor and in the name of the
Grantor or in its own name, from time to time in the
Trustee's discretion, for the purpose of carrying out the
terms of this Agreement, to take any and all appropriate
action and to execute and deliver any and all documents and
instruments which the Trustee may deem necessary or
desirable to accomplish the purposes of this Agreement and,
without limiting the generality of the foregoing, hereby
gives the Trustee the power and right, on behalf of the
Grantor, without notice to or assent by the Grantor to do
the following:
(ii) to ask, demand, collect, receive and give
acquittances and receipts for any and all moneys due and to
become due under any Collateral and, in the name of the
Grantor or in its own name or otherwise, to take possession
of and endorse and collect any checks, drafts, notes,
acceptances or other Instruments for the payment of moneys
due under any Collateral and to file any claim or to take
any other action or proceeding in any court of law or equity
or otherwise deemed appropriate by the Trustee for the
purpose of collecting any and all such moneys due under any
Collateral whenever payable and to file any claim or to take
any other action or proceeding in any court of law or equity
or otherwise deemed appropriate by the Trustee for the
purpose of collecting any and all such moneys due under any
Collateral whenever payable;
(iii) to pay or discharge taxes, Liens, security
interests or other encumbrances levied or placed on or
threatened against the Collateral, to effect any repairs or
any insurance called for by the terms of this Agreement and
to pay all or any part of the premiums therefor and the
costs thereof; and
(iv) (A) to direct any party liable for any payment
under any of the Collateral to make payment of any and all
moneys due, and to become due thereunder, directly to the
Trustee or as the Trustee shall direct; (B) to
B-15
<PAGE>
receive payment of and receipt for any and all moneys,
claims and other amounts due, and to become due at any time,
in respect of or arising out of any Collateral; (C) to sign
and indorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications and notices in
connection with Accounts and other Documents constituting or
relating to the Collateral; (D) to commence and prosecute
any suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect the Collateral or
any part thereof and to enforce any other right in respect
of any Collateral; (E) to defend any suit, action or
proceeding brought against the Grantor with respect to any
Collateral; (F) to settle, compromise or adjust any suit,
action or proceeding described above and, in connection
therewith, to give such discharges or releases as the
Trustee may deem appropriate; (G) to license or, to the
extent permitted by an applicable license, sublicense,
whether general, special or otherwise, and whether on an
exclusive or non-exclusive basis, any patent or trademark,
throughout the world for such term or terms, on such
conditions, and in such manner, as the Trustee shall in its
sole discretion determine; and (H) generally to sell,
transfer, pledge, make any agreement with respect to or
otherwise deal with any of the Collateral as fully and
completely as though the Trustee were the absolute owner
thereof for all purposes, and to do, at the Trustee's option
and the Grantor's expense, at any time, or from time to
time, all acts and things which the Trustee reasonably deems
necessary to protect, preserve or realize upon the
Collateral and the Trustee's and the Holders' Lien therein,
in order to effect the intent of this Agreement, all as
fully and effectively as the Grantor might do.
(b) The Trustee agrees that, except upon the occurrence and
during the continuance of any Event of Default but subject to the
provisions of Section 3 hereof, it will forbear from exercising
the power of attorney or any rights granted to the Trustee
pursuant to this Section 7. The Grantor hereby ratifies, to the
extent permitted by law, all that any said attorney shall
lawfully do or cause to be done by virtue hereof. The power of
attorney granted pursuant to this Section 7, being coupled with
an interest, shall be irrevocable until the Securities are
indefeasibly paid in full.
(c) The powers conferred on the Trustee hereunder are solely
to protect the Trustee's and the Holders' interests in the
Collateral and shall not impose any duty upon it to exercise any
such powers. The Trustee shall be accountable only for amounts
that it actually receives as a result of the exercise of such
powers and neither
B-16
<PAGE>
it nor any of its officers, directors, employees or agents shall
be responsible to the Grantor for any act or failure to act,
except for its own gross negligence or willful misconduct.
(d) Subject to the provisions of Section 3 hereof, the
Grantor also authorizes the Trustee, at any time and from time to
time upon the occurrence and during the continuance of an Event
of Default, (i) to communicate in its own name with any party to
any Contract with regard to the assignment of the right, title
and interest of the Grantor in and under the Contracts hereunder
and other matters relating thereto and (ii) to execute, in
connection with the sale provided for in Section 9 hereof, any
endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral.
8. Performance by the Trustee of the Grantor's
-------------------------------------------
Obligations. If the Grantor fails to perform or comply with any of
-----------
its agreements contained herein and the Trustee, as provided for by
the terms of this Agreement, shall itself perform or comply, or
otherwise cause performance or compliance, with such agreement, the
reasonable expenses of the Trustee incurred in connection with such
performance or compliance, shall be payable by the Grantor to the
Trustee on demand and shall constitute obligations secured hereby.
9. Remedies, Rights Upon an Event of Default.
-----------------------------------------
(a) If any Event of Default shall occur and be continuing,
the Trustee shall, subject to the provisions of Section 3 hereof
and the Indenture, at the request of the Holders of at least 25%
of the aggregate principal amount of the outstanding Securities,
or may with the consent of the Holders of a majority in principal
amount of the outstanding Securities, exercise in addition to all
other rights and remedies granted to it in this Agreement, the
Indenture or any other instrument or agreement securing,
evidencing or relating to the Securities, all rights and remedies
of a secured party under the UCC. Without limiting the
generality of the foregoing, the Grantor expressly agrees that in
any such event the Trustee, without demand of performance or
other demand, advertisement or notice of any kind (except the
notice specified below of time and place of public or private
sale) to or upon the Grantor or any other Person (all and each of
which demands, advertisements and/or notices are hereby expressly
waived to the maximum extent permitted by the UCC and other
applicable law) but subject to the provisions of Section 3
hereof, may forthwith collect, receive, appropriate and realize
upon the Collateral, or any part thereof, and/or may forthwith
sell, lease, assign, give an option or options to purchase, or
sell or otherwise dispose of and deliver said Collateral (or
contract to do so), or any part thereof, in one or
B-17
<PAGE>
more parcels at public or private sale or sales, at any exchange
or broker's board or any of the Trustee's offices or elsewhere at
such prices as it may deem best, for cash or on credit or for
future delivery without assumption of any credit risk. The
Trustee or any Holder shall have the right upon any such public
sale or sales, and, to the extent permitted by law, upon any such
private sale or sales, to purchase the whole or any part of said
Collateral so sold, free of any right or equity of redemption,
which equity of redemption the Grantor hereby releases. The
Grantor further agrees, at the Trustee's request to assemble the
Collateral and make it available to the Trustee at places which
the Trustee shall reasonably select, whether at the Grantor's
premises or elsewhere. Subject to the provisions of Section 3
hereof, the Trustee shall apply the net proceeds of any such
collection, recovery receipt, appropriation, realization or sale,
as provided in Section 9(d) hereof, with the Grantor remaining
liable for any deficiency remaining unpaid after such
application, and only after so paying over such net proceeds and
after the payment by the Trustee of any other amount required by
any provision of law, including Section 9-504(1)(c) of the UCC,
need the Trustee to account for the surplus, if any, to the
Grantor. To the maximum extent permitted by applicable law, the
Grantor waives all claims, damages, and demands against the
Secured Parties arising out of the repossession, retention or
sale of the Collateral. The Grantor agrees that the Trustee need
not give more that ten days' notice of the time and place of any
public sale or of the time after which a private sale may take
place and that such notice is reasonable notification of such
matters. The Grantor shall remain liable for any deficiency if
the proceeds of any sale or disposition of the Collateral are
insufficient to pay all amounts to which the Secured Parties are
entitled, the Grantor also being liable for the reasonable fees
and expenses of any attorneys employed by the Trustee and the
Holders to collect such deficiency.
(b) The Grantor also agrees to pay all reasonable costs of
the Trustee and the Holders, including, without limitation,
reasonable attorneys' fees, incurred in connection with the
enforcement of any of its rights and remedies hereunder.
(c) The Grantor hereby waives presentment, demand, protest
or any notice (to the maximum extent permitted by applicable law)
of any kind in connection with this Agreement or any Collateral.
(d) After the termination and release of the Senior Lien and
subject to the provisions of Section 3 hereof, the Proceeds of
any sale, disposition or other realization upon all or any part
of the Collateral shall be distributed by the Trustee in the
following order of priorities:
B-18
<PAGE>
First, to the payment of the reasonable costs and expenses
of such sale, including, without limitation, reasonable expenses
of the Trustee and its agents including the reasonable fees and
expenses of its counsel, all reasonable expenses, liabilities and
advances made or incurred by the Trustee and the Holders in
connection therewith or pursuant to Section 8 hereof and all
other amounts to which the Trustee may be entitled under Section
8.07 of the Indenture;
Second, to the Holders pro rata for the payment in full of
the Securities; and
Finally, after payment in full of all the Securities, to the
payment of the Grantor, or its successors or assigns, or to
whomsoever may be lawfully entitled to receive the same as a
court of competent jurisdiction may direct.
10. Limitation on the Secured Parties' Duty in Respect of
-----------------------------------------------------
Collateral. No Secured Party shall have any duty as to any Collateral
----------
in its possession or control or in the possession or control of any
agent or nominee of it or any income thereon or as to the preservation
of rights against prior parties or any other rights pertaining
thereto, except that each Secured Party shall use reasonable care with
respect to the Collateral in its possession or under its control.
Upon request of the Grantor, the Trustee shall account for any moneys
received by it in respect of any foreclosure on or disposition of the
Collateral.
11. Security Interest Absolute. All rights of the Trustee
--------------------------
and security interests hereunder, and all obligations of the Grantor
hereunder, shall be absolute and unconditional irrespective of:
(i) any lack of validity or enforceability of any
provision of the Indenture, the Securities or any other
Transaction Document or any other agreement or instrument
relating thereto;
(ii) any change in the time, manner or place of payment
of, or in any other term of, or any increase in the amount
of, all or any of the Securities, or any other amendment or
waiver of any term of, or any consent to any departure from
any requirement of, the Indenture, the Securities or any
other Transaction Document;
(iii) any exchange, release or non-perfection of any Lien
on any other collateral, or any release or amendment or
waiver of any term of any guaranty of, or consent to
departure from any requirement of any guaranty of, all or
any of the Securities; or
B-19
<PAGE>
(iv) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, a
borrower or a pledgor.
12. Continuing Security Interest. This Agreement shall
----------------------------
create a continuing security interest in the Collateral and shall (i)
remain in full force and effect until payment in full of the
Securities, (ii) be binding upon the Grantor, its successors and
assigns, and (iii) inure, together with the rights and remedies of the
Trustee and the Holders hereunder, to the benefit of and be
enforceable by the Secured Parties and their respective successors,
transferees and assigns. At such time as no Securities are
outstanding, the Grantor shall be entitled to the return, upon its
request and at its expense, of such of the Collateral as shall not
have been sold or otherwise applied pursuant to the terms hereof.
13. Notices. All notices and other communications
-------
provided for hereunder shall be in writing (including telegraphic,
telex, telecopy, or cable communication) and certified mailed,
telegraphed, telexed, telecopied, cabled or delivered by hand, if to
the Grantor or the Trustee, addressed to it as provided in the
Indenture, or, as to each party, at such other address as shall be
designated by such party in a written notice to each other party
complying as to delivery with the terms of this Section 11. All such
notices and other communications shall, when certified mailed,
telegraphed, telexed, telecopied, cabled or delivered, be effective
three Business Days after being deposited in the mails, or when
delivered to the telegraph company, confirmed by telex answerback,
telecopied with automatic confirmation of receipt, delivered to the
cable company, or delivered by hand to the addressee or its agent,
respectively.
14. Amendments, Etc. No amendment or waiver of any
---------------
provision of this Agreement nor consent to any departure by the
Grantor therefrom shall in any event be effective unless the same
shall be in writing, approved by the Holders of a majority in
principal amount of the outstanding Securities (except as otherwise
provided under Section 10.02 of the Indenture) and signed by the
Trustee, and then any such waiver or consent shall only be effective
in the specific instance and for the specific purpose for which given.
15. No Waiver; Remedies. (a) No failure on the part of any
-------------------
Secured Party to exercise, and no delay in exercising any right here-
under shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative, may be exercised singly or
concurrently, and are not exclusive of any remedies provided by law or
any other Transaction Document.
B-20
<PAGE>
(b) Failure by any of the Secured Parties at any time or
times hereafter to require strict performance by the Grantor or any
other Person of any of the provisions, warranties, terms or conditions
contained in any Transaction Document now or at any time or times
hereafter executed by the Grantor or any such other Person and
delivered to any of the Secured Parties shall not waive, affect or
diminish any right of any of the Secured Parties at any time or times
hereafter to demand strict performance thereof, and such right shall
not be deemed to have been modified or waived by any course of conduct
or knowledge of any of the Secured Parties, or any agent, officer or
employee of any Secured Party.
16. Successors and Assigns. This Agreement and all
----------------------
obligations of the Grantor hereunder shall be binding upon the
successors and assigns of the Grantor, and shall, together with the
rights and remedies of the Trustee hereunder, inure to the benefit of
the Trustee, the Holders, and their respective successors and assigns.
17. Governing Law. This Agreement shall be governed
-------------
by, and be construed and interpreted in accordance with, the law of
the State of New York. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or
invalidity and without invalidating the remaining provisions of this
Agreement.
18. Waiver of Jury Trial. The Grantor waives any right
--------------------
it may have to trial by jury in any action or proceeding to enforce or
defend any rights or remedies hereunder, under the Indenture or under
any of the other Transaction Documents or any other document relating
to any of the foregoing.
19. Further Indemnification. The Grantor agrees to pay,
-----------------------
and to hold the Trustee and each Holder harmless from, any and all
liabilities with respect to, or resulting from any delay in paying,
any and all excise, sales or other similar taxes which may be payable
or determined to be payable with respect to any of the Collateral or
in connection with any of the transactions contemplated by this
Agreement.
20. Section Titles. The Section titles contained in this
--------------
Agreement are and shall be without substantive meaning or content of
any kind whatsoever and are not a part of this Agreement.
B-21
<PAGE>
IN WITNESS WHEREOF, The Grantor has caused this Agreement to
be executed and delivered by its duly authorized officer on the date
first above written.
METALLURG, INC.
By:
------------------------------------
Name:
Title:
Accepted and acknowledged by:
IBJ Schroder Bank & Trust Company, as Trustee
By:
---------------------------------
Name:
Title:
B-22
<PAGE>
SCHEDULE I TO SECURITY AGREEMENT
FILINGS
-------
JURISDICTION FILING OFFICE
------------ -------------
<PAGE>
SCHEDULE II
SCHEDULE II TO SECURITY AGREEMENT
LOCATION OF RECORDS AND CERTAIN COLLATERAL
------------------------------------------
Principal Place of
Business and
Location of Records
-------------------
Location of
Inventory
and Equipment
-------------
<PAGE>
EXHIBIT C
FORM OF
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated [April 10,] 1997, made by Metallurg, Inc., a
New York corporation (the "Pledgor"), and IBJ Schroder Bank & Trust Company, a
banking corporation duly organized and existing under the laws of the State of
New York, as trustee (the "Trustee"), acting on behalf of the holders (the
"Holders" and together with the Trustee, the "Secured Parties") of the senior
secured notes due 2007 of the Pledgor (the "Securities").
W I T N E S S E T H:
WHEREAS, pursuant to the Indenture, dated as of [April 10,] 1997,
between the Pledgor, Shieldalloy Metallurgical Corporation, a New York
corporation and direct, wholly owned subsidiary of the Pledgor ("SMC"), and the
Trustee (said Indenture, as it may be amended, supplemented or otherwise
modified from time to time, being the "Indenture"), the Securities were issued
to the Holders;
WHEREAS, pursuant to the terms of Section 11.01 of the Indenture,
the Pledgor has agreed to grant the security interests contemplated herein;
WHEREAS, the Pledgor is the legal and beneficial owner of the shares
of capital stock described in Schedule I hereto and issued by the issuers named
therein (the "Pledged Shares");
WHEREAS, to secure the Specified Indebtedness, the Pledgor has
granted a security interest (the "Senior Pledge") in the Collateral (as
hereinafter defined) pursuant to the pledge agreement, dated [April 10,] 1997,
in favor of the Working Capital Agent, as agent for the Working Capital Lenders
(the "WCCF Pledge Agreement");
WHEREAS, the Senior Pledge is to be senior and prior to the Lien
created hereby in favor of the Trustee; and
NOW, THEREFORE, in consideration of the premises, the parties hereto
hereby mutually agree:
<PAGE>
SECTION 1. Defined Terms. Capitalized terms used herein and not
otherwise defined herein have the meanings ascribed to them in the Indenture.
SECTION 2. Pledge. (a) The Pledgor hereby pledges to the Trustee on
behalf and for the ratable benefit of the Holders and grants to the Trustee on
behalf and for the ratable benefit of the Holders a security interest in the
following (all of which being hereinafter collectively referred to as the
"Pledged Collateral"), which security interest shall be junior and subordinated
to the Senior Pledge as provided in Section 6 hereof:
(i) all of the Pledged Shares;
(ii) all additional shares of stock or other securities of SMC
from time to time acquired by the Pledgor in any manner and
all shares of stock or other securities of any Person who,
after the date of this Agreement, becomes, as a result of any
occurrence, a Significant Subsidiary of the Borrower;
provided, however, that there are no other Liens (other than a
Lien in favor of the Working Capital Lenders) on the shares of
such Significant Subsidiary (any such shares being "Additional
Pledged Shares");
(iii) the certificates representing the shares referred to in
clauses (i) and (ii) above; and
(iv) all dividends, cash, instruments and other property or
proceeds, from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the
foregoing.
provided, however, that nothing herein shall require the Pledgor to pledge any
shares or any Additional Pledged Shares to the extent such pledge is not
permitted by law.
SECTION 3. Security Interest. This Agreement secures and the Pledged
Collateral is security for the full and prompt payment when due (whether at
stated maturity, by acceleration or otherwise) of the Securities.
SECTION 4. Delivery of Pledged Collateral. As long as the Senior
Pledge shall not have been terminated or released with respect thereto, all
certificates or instruments representing or evidencing the Pledged Collateral
shall be delivered to, and held on behalf of the Trustee, by the Working Capital
Agent pursuant to Section 7 hereof and shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank. Upon the termination and the release of the Senior
2
<PAGE>
Pledge but subject to the provisions of Section 6 hereof, the Working Capital
Agent shall deliver to the Trustee such Pledged Collateral (including all
instruments of transfer and assignment) in its possession or otherwise held
pursuant to this Agreement, except to the extent that the Working Capital Agent
on behalf of the Working Capital Lenders has retained, otherwise acquired, sold
or otherwise disposed of the Pledged Collateral in full or partial satisfaction
of the Senior Pledge.
SECTION 5. Representations and Warranties. The Pledgor represents
and warrants to the Trustee for the benefit of the Holders:
(a) The Pledged Shares (i) have been duly authorized and validly
issued; (ii) are fully paid and non-assessable; (iii) the Pledged Shares issued
by the Issuers listed in Part A of Schedule I constitute 100% of the issued and
outstanding shares of stock of such Issuer and (iv) the Pledged Shares issued by
the Issuers listed in Part B of Schedule I constitute at least 65% of the issued
and outstanding shares of stock of such Issuer.
(b) The Pledgor is the legal and beneficial owner of the Pledged
Collateral free and clear of any Lien, except for the Lien created by this
Agreement and the Senior Pledge.
(c) The pledge of the Pledged Shares and Additional Pledged Shares
pursuant to this Agreement creates a valid and perfected security interest in
the Pledged Collateral, in favor of the Trustee on behalf and for the ratable
benefit of the Holders securing the payment of all of the Securities.
(d) No consent, authorization, approval, or other action by, and no
notice to or filing with, any governmental authority is required either (i) for
the pledge by the Pledgor of the Pledged Collateral pursuant to this Agreement
or for the due execution, delivery or performance of this Agreement by the
Pledgor, or (ii) for the exercise by the Trustee of the voting or other rights
provided for in this Agreement or of the remedies in respect of the Pledged
Collateral pursuant to this Agreement, except as may be required in connection
with the disposition of the Pledged Collateral by laws affecting the offering
and sale of securities generally.
(e) The execution, delivery and performance by the Pledgor of this
Agreement are within the Pledgor's corporate powers, have been duly authorized
by all necessary corporate action, do not contravene the Pledgor's certificate
of incorporation or by-laws, any requirement of law, any order or decree of any
court applicable to the Pledgor or any contractual obligation of the Pledgor.
3
<PAGE>
(f) There are no pending or, to the Pledgor's knowledge, threatened
actions, investigations or proceedings affecting the Pledgor or any of its
Subsidiaries before any court, governmental authority or arbitrator other than
those that in the aggregate have no reasonable likelihood of having a material
adverse effect on the rights or remedies of the Holders or the ability of the
Pledgor to perform its obligations hereunder.
SECTION 6. Subordination to the Senior Pledge. (a) The Secured
Parties hereby expressly agree as follows:
(i) that notwithstanding the date, manner (including, without
limitation, the Liens on the Pledged Collateral) granted to the
Secured Parties or of any Liens granted to the Working Capital
Agent, for the benefit of the Working Capital Lenders, and
notwithstanding any provision of the Uniform Commercial Code (the
"UCC") in effect in the State of New York at that time, or any
applicable law or decision or any other Transaction Document or the
Working Capital Credit Facility or any other circumstances
whatsoever, each Secured Party hereby agrees that
(A) the Working Capital Agent, for the benefit of the
Working Capital Lenders, shall have a senior and prior Lien on
and security interest in the Pledged Collateral and all
proceeds thereof to secure the claims of such holders; and
(B) any Lien in the Pledged Collateral now or hereafter
held by the Secured Parties regardless of how acquired,
whether by grant, statute, operation of law, subrogation or
otherwise, shall be junior and subordinate in all respects to
all Liens in the Pledged Collateral securing Specified
Indebtedness; and
(C) all Liens securing Specified Indebtedness shall be
and remain senior to all Liens securing the Securities for all
purposes, whether or not such Liens securing Specified
Indebtedness are subordinated to any Lien securing any other
obligations of the Pledgor;
(ii) neither the Trustee nor any Holder shall contest or
support any other Person in contesting, in any action or proceeding
or otherwise (including, without limitation, any Insolvency or
Liquidation Proceeding (as defined in the Security Agreement)), the
validity or enforceability of the Specified Indebtedness or the
perfection or priority of any Lien securing
4
<PAGE>
Specified Indebtedness held by the Working Capital Agent or the
Working Capital Lenders;
(iii) neither the Trustee nor any Holder shall take or receive
from or on behalf of the Pledgor directly or indirectly, in cash or
other property or by setoff, counterclaim or in any manner (whether
pursuant to any enforcement, collection, execution, levy or
foreclosure proceeding or otherwise) any Pledged Collateral or any
proceeds of Pledged Collateral, unless and until all Specified
Indebtedness shall have been paid in full in cash, provided,
however, that nothing herein shall preclude the Pledgor from making
the payments in respect of the Securities required by the terms
thereof;
(iv) unless and until the Specified Indebtedness has been paid
in full in cash, neither the Trustee nor any Holder shall assert any
remedy in respect of the Pledged Collateral or any Lien therein held
by the Trustee on behalf and for the ratable benefit of the Holders
(including, without limitation, under or in respect of the
Transaction Documents); and
(v) unless and until all Specified Indebtedness has been paid
in full in cash, neither the Trustee nor any Holder will commence,
or join with any Person (other than the Working Capital Lenders and
the Working Capital Agent) in commencing any enforcement,
collection, execution, levy or foreclosure proceeding or otherwise
in respect of the Pledged Collateral or any Lien therein granted
under any Transaction Document or otherwise.
(b) Any proceeds of the Pledged Collateral received by the Trustee
or any Holder in contravention of this Section 6 and, if applicable, any sums
received by the Trustee under Section 507(b) of the federal Bankruptcy Law shall
be segregated and held in trust and forthwith paid over to the Working Capital
Agent for the benefit of the Working Capital Lenders in the same form received,
with any necessary endorsements or as a court of competent jurisdiction may
otherwise direct.
(c) The Pledgor may sell, lease, exchange, transfer or otherwise
dispose of Pledged Collateral pursuant to the provisions of Section 11.04(b) and
Section 11.03(c) of the Indenture without requesting the release or consent of
the Trustee, as provided more fully in the Indenture. In connection with any
sale, lease, exchange, transfer or other disposition of any Pledged Collateral
pursuant to Section 11.04(a) of the Indenture, in which the Liens of the Working
Capital Lenders are released and the Company delivers the certificate or opinion
required by Section 314(d)(1) of the TIA, the Liens thereon of the Secured
Parties shall be automatically, unconditionally and simultaneously released and
the Trustee shall execute and
5
<PAGE>
deliver to the Working Capital Agent or the Pledgor such termination statements,
releases and other documents as the Working Capital Agent or the Pledgor may
request to effectively confirm such release. Notwithstanding the foregoing, a
SMC Reincorporation Merger shall not be deemed to be a sale, lease, exchange,
transfer or other disposition of Pledged Collateral for purposes of this
Agreement and the Indenture; provided, however, that the provisions of Article 6
of the Indenture are satisfied with respect thereto.
(d) Each Secured Party hereby waives any and all rights it may have
to object to the manner in which the Working Capital Agent or the Working
Capital Lenders seek to enforce or collect the Specified Indebtedness or the
Liens granted in any of the Pledged Collateral, including waiving any right
based on any duty to conduct any such sale, lease, exchange, transfer or other
disposition in a commercially reasonable manner.
(e) If at any time any payment made or value received with respect
to any Specified Indebtedness is rescinded or must otherwise be returned by the
Working Capital Agent or any Working Capital Lender upon the insolvency,
bankruptcy, or reorganization of the Pledgor, or otherwise, then (i) to the
extent necessary to repay in full in cash the Specified Indebtedness, the
Trustee will, upon written demand by the Working Capital Agent, deliver to the
Working Capital Agent any property or funds previously received by the Trustee
with respect to the Collateral and then held by the Trustee and (ii) to the
extent previously terminated, the Senior Pledge and the other rights and
priorities in favor of the Working Capital Agent and the Working Capital Lenders
under this Section 6 shall be reinstated as though such payment had not been
made or value received.
(f) The provisions of this Section 6 are and are intended solely for
the purpose of defining the relative rights of the Holders of the Securities on
the one hand and the Working Capital Lenders on the other hand. Nothing
contained in this Section 6 or any other Transaction Document is intended to or
shall (i) impair, as among the Pledgor, its creditors (other than the Working
Capital Lenders) and the Secured Parties, the obligation of the Pledgor, which
is absolute and unconditional, to pay to the Secured Parties the principal of
and interest on, and any other amount payable by the Pledgor under the
Transaction Documents as and when the same shall become due and payable in
accordance with its terms; or (ii) affect the relative rights of the Secured
Parties against the Pledgor and its creditors (other than the Working Capital
Lenders); or (iii) prevent the Secured Parties from accelerating the Securities
and the Trustee commencing any action to enforce or collect any payments
theretofore due under the Indenture or the Securities, provided that the Trustee
may not take action to foreclose or otherwise realize on the Pledged Collateral
if any Specified Indebtedness is then outstanding in contravention of this
Section 6. If any provision of this Agreement (including, without limitation,
this Section 6) conflicts with the duties imposed by the provisions of the TIA,
to the extent applicable, the TIA controls except to the extent that the TIA
permits such provisions to be modified by contract and except to the extent of
any exemption with respect thereto granted by the SEC.
6
<PAGE>
SECTION 7. Agent for Perfection. (a) The Secured Parties hereby
appoint the Working Capital Agent as their agent to hold the Pledged Collateral,
including the certificates evidencing the Pledged Shares and the Additional
Pledged Shares, if any, for the limited purpose of perfecting the security
interest created by this Agreement, and the Working Capital Agent by its counter
signature hereof, hereby accepts such appointment and acknowledges that it holds
the Pledged Collateral, including the certificates evidencing the Pledged Shares
and the Additional Pledged Shares, if any, that are in its possession pursuant
to the Senior Pledge and as agent for the Secured Parties hereunder. The Secured
Parties agree that the Working Capital Agent shall not have any obligation to
the Secured Parties in holding the Pledged Collateral, including the
certificates representing the Pledged Shares and the Additional Pledged Shares,
if any, as their agent hereunder except to exercise the same care in respect of
such Pledged Collateral as it exercises in holding such Pledged Collateral for
the benefit of the Working Capital Lenders pursuant to the WCCF Pledge
Agreement, and that the Working Capital Agent shall not be liable to the Trustee
or the Secured Parties for any loss, costs, or damages which may result from any
act or omission on its part in holding such certificates or instruments, unless
caused by the Working Capital Agent's gross negligence or willful misconduct.
The Working Capital Agent acknowledges and agrees that notwithstanding its
appointment as agent for the Secured Parties to hold the Pledged Collateral on
behalf of the Secured Parties, the Working Capital Agent shall have no right or
authorization to take any action on behalf, or in the name, of any Secured Party
with respect to the Pledged Collateral, without the prior written consent of the
Trustee and Holders of at least a majority in principal amount of the
outstanding Securities.
(b) The Working Capital Agent hereby agrees that, upon termination
and release of the Senior Pledge (prior to the indefeasible payment in full of
the Securities) but subject to the provisions of Section 6 hereof, the Working
Capital Agent shall deliver to the Trustee all Pledged Collateral in its
possession, except to the extent that the Working Capital Agent and the Working
Capital Lenders have retained, or otherwise acquired, sold or otherwise disposed
of the Pledged Collateral in full or partial satisfaction of the Senior Pledge.
SECTION 8. Further Assurances, Etc. (a) The Pledgor agrees that at
any time and from time to time, at the cost and expense of the Pledgor, the
Pledgor will promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or desirable, or that the
Trustee may request, in order to perfect and protect the Lien granted or
purported to be granted hereby or to enable the Trustee to exercise and enforce
its rights and remedies hereunder with respect to any Pledged Collateral.
7
<PAGE>
(b) The Pledgor agrees to defend the title to the Pledged Collateral
and the Lien thereon of the Trustee against the claim of any other Person and to
maintain and preserve such Lien until indefeasible payment in full of all of the
Securities.
SECTION 9. Voting Rights; Dividends; Etc.
(a) As long as no Event of Default shall have occurred and be
continuing (or, in the case of subsection (a)(i) of this Section 9, as long as
no notice thereof shall have been given by the Trustee to the Pledgor) but
subject to the terms of the Senior Pledge:
(i) The Pledgor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Pledged
Collateral or any part thereof.
(ii) The Pledgor shall be entitled to receive and retain any
and all dividends paid in respect of the Pledged Collateral, other
than any and all
(A) dividends paid or payable other than in cash in
respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in
exchange for, any Pledged Collateral,
(B) dividends and other distributions paid or payable in
cash in respect of any Pledged Shares or Additional Pledged
Shares in connection with a partial or total liquidation or
dissolution or in connection with a reduction of capital,
capital surplus or paid-in-surplus, and
(C) cash paid, payable or otherwise distributed in
redemption of, or in exchange for, any Pledged Collateral,
all of which, as long as the Senior Pledge shall not have been
terminated and released, the Pledgor shall forthwith deliver to the
Working Capital Agent to be applied to the Working Capital Credit
Facility or to be held as part of the Senior Pledge as provided
therein. Upon the termination and the release of the Senior Pledge,
such property or funds shall thereafter be delivered to the Trustee
to hold as Pledged Collateral and shall, if received by the Pledgor,
be received in trust for the benefit of the Trustee, be segregated
from the other property or funds of the Pledgor, and be forthwith
delivered to the Trustee as Pledged Collateral in the same form as
so received (with any necessary indorsement).
8
<PAGE>
(iii) The Trustee shall execute and deliver (or cause to be
executed and delivered) to the Pledgor all such proxies and other
instruments as the Pledgor may reasonably request for the purpose of
enabling the Pledgor to exercise the voting and other rights which
it is entitled to exercise pursuant to paragraph (i) above and to
receive the dividends which it is authorized to receive and retain
pursuant to paragraph (ii) above.
(b) Subject to the provisions of Section 6 hereof, upon the
occurrence and during the continuance of an Event of Default:
(i) Upon notice by the Trustee to the Pledgor, all rights of
the Pledgor to exercise the voting and other consensual rights which
it would otherwise be entitled to exercise pursuant to Section
9(a)(i) above shall cease, and all such rights shall thereupon
become vested in the Trustee who shall thereupon have the sole right
to exercise such voting and other consensual rights.
(ii) All rights of the Pledgor to receive the dividends which
it would otherwise be authorized to receive and retain pursuant to
Section 9(a)(ii) above shall cease, and all such rights shall
thereupon become vested in the Trustee who shall thereupon have the
sole right to receive and hold as Pledged Collateral such dividends.
(iii) All dividends which are received by the Pledgor contrary
to the provisions of paragraph (ii) of this Section 9(b) shall be
received in trust for the benefit of the Trustee, shall be
segregated from other funds of the Pledgor and shall be forthwith
paid over to the Trustee as Pledged Collateral in the same form as
so received (with any necessary indorsement).
(iv) The Pledgor shall, if necessary to permit the Trustee to
exercise the voting and other rights which it may be entitled to
exercise pursuant to Section 9(b)(i) above and to receive all
dividends and distributions which it may be entitled to receive
under Section 9(b)(ii) above, execute and deliver to the Trustee,
from time to time and upon written notice of the Trustee,
appropriate proxies, dividend payment orders and other instruments
as the Trustee may reasonably request. The foregoing shall not in
any way limit the Trustee's power and authority granted pursuant to
Section 11 hereof.
9
<PAGE>
SECTION 10. Transfers and Other Liens; Additional Pledged Shares.
(a) The Pledgor agrees that it will not (i) sell or otherwise
dispose of, or grant any option or warrant with respect to, any of the Pledged
Collateral (it being understood that a SMC Reincorporation Merger shall not be
deemed a sale, lease, exchange or other disposition of Pledged Collateral for
purposes of this Agreement and the Indenture; provided, however, that the
provisions of Article 6 of the Indenture are satisfied with respect thereto) or
(ii) create or permit to exist any Lien upon or with respect to any of the
Pledged Collateral, except for the Lien created pursuant to this Agreement, the
Indenture and the Senior Pledge.
(b) The Pledgor agrees that it will (i) cause each issuer of the
Pledged Shares not to issue any shares of stock or other securities in addition
to or in substitution for the Pledged Shares, except to the Pledgor, (ii) pledge
hereunder, immediately upon its acquisition (directly or indirectly) thereof,
but subject to Sections 6 and 7 hereof, any and all Additional Pledged Shares
and (iii) promptly (and in any event within three Business Days) deliver to the
Trustee a Pledge Amendment, duly executed by the Pledgor, in substantially the
form of Schedule III hereto (a "Pledge Amendment"), in respect of the Additional
Pledged Shares, together, subject to the provisions of Sections 6 and 7 hereof,
with all certificates or other instruments representing or evidencing the same
(in form suitable for transfer by delivery or accompanied by duly executed
instruments of transfer or assignment in blank). The Pledgor hereby (i)
authorizes the Trustee to attach each Pledge Amendment to this Pledge Agreement,
(ii) agrees that all Additional Pledged Shares listed on any Pledge Amendment
delivered to the Trustee shall for all purposes hereunder constitute Pledged
Shares and be subject to the provisions of Section 6 hereof, and (iii) is deemed
to have made, upon such delivery, the representations and warranties contained
in Section 5 hereof with respect to such Pledged Collateral.
SECTION 11. Trustee Appointed Attorney-in-Fact and Proxy. Subject to
the provisions of Sections 6 and 7 hereof, the Pledgor hereby irrevocably
constitutes and appoints the Trustee and any officer or agent thereof, with full
power of substitution, as its true and lawful attorney-in-fact and proxy with
full irrevocable power and authority in the place and stead of the Pledgor and
in the name of the Pledgor or in its own name, from time to time in the
Trustee's discretion, for the purpose of carrying out the terms of this
Agreement, to take any and all appropriate action and to execute and deliver any
and all documents and instruments which the Trustee may deem necessary or
advisable to accomplish the purposes of this Agreement, including, without
limitation, to receive, indorse and collect all instruments made payable to the
Pledgor representing any dividend or other distribution or payment in respect of
the Pledged Collateral or any part thereof, to give full discharge for the same,
and to vote or grant any consent in respect of the Pledged Shares authorized by
Section 9(b) hereof. The Pledgor hereby ratifies, to the extent permitted by
law, all that any said attorney shall lawfully do or cause to be done by virtue
hereof. This power, being coupled with an interest, is irrevocable until the
Securities are paid in full.
10
<PAGE>
SECTION 12. Trustee May Perform. If the Pledgor fails to perform any
agreement contained herein, the Trustee, subject to the provisions of Section 6
hereof, may itself perform, or cause performance of, such agreement, and the
expenses of the Trustee incurred in connection therewith shall be payable by the
Pledgor under Section 15 hereof and constitute obligations secured hereby.
SECTION 13. Reasonable Care. In addition to and not in limitation of
Section 7 hereof, the Trustee shall be deemed to have exercised reasonable care
in the custody and preservation of the Pledged Collateral in its possession if
the Pledged Collateral is accorded treatment substantially equal to that which
the Trustee accords its own property, it being understood that neither the
Trustee nor any other Secured Party shall have responsibility for (i)
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Pledged Collateral, whether
or not the Trustee or any other Secured Party has or is deemed to have knowledge
of any such matter, or (ii) taking any necessary steps to preserve rights
against any Person with respect to any Pledged Collateral.
SECTION 14. Remedies upon Default. Subject to the provisions of
Section 6 hereof, if any Event of Default shall have occurred and be continuing:
(a) The Trustee may exercise in respect of the Pledged Collateral,
in addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party after default
under the UCC, and the Trustee may also and without notice except as specified
below, sell the Pledged Collateral or any part thereof in one or more parcels at
public or private sale, at any exchange, broker's board or at any office of the
Trustee or elsewhere, for cash, on credit or for future delivery, and upon such
other terms as the Trustee may deem commercially reasonable. The Pledgor agrees
that, to the extent notice of sale shall be required by law, at least ten days'
notice to the Pledgor of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable notification.
The Trustee shall not be obligated to make any sale of Pledged Collateral
regardless of notice of sale having been given. The Trustee may adjourn any
public or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned. The Pledgor hereby waives any claims
against the Trustee arising by reason of the fact that the price at which any
Pledged Collateral may have been sold at such a private sale was less than the
price which might have been obtained at a public sale, even if the Trustee
accepts the first offer received and does not offer such Pledged Collateral to
more than one offeree.
11
<PAGE>
(b) If the Trustee shall determine to exercise its right to sell all
or any of the Pledged Collateral pursuant to this Section 14, the Pledgor agrees
that, upon request of the Trustee, the Pledgor will, at its own cost and
expense:
(i) execute and deliver, and use its best efforts to cause
each issuer of the Pledged Shares or the Additional Pledged Shares
and its directors and officers to execute and deliver, all such
instruments and documents, and do or cause to be done all such other
acts and things, as may be necessary or, in the opinion of the
Trustee, necessary or advisable to register such Pledged Shares or
the Additional Pledged Shares under the provisions of the Securities
Act of 1933, as from time to time amended (the "Securities Act"),
and to cause the registration statement relating thereto to become
effective and to remain effective for such period as prospectuses
are required by law to be furnished, and to make all amendments and
supplements thereto and to the related prospectus which, in the
opinion of the Trustee, are necessary or advisable, all in
conformity with the requirements of the Securities Act and the rules
and regulations of the Securities and Exchange Commission ("SEC")
applicable thereto;
(ii) use its best efforts to qualify the Pledged Collateral
under the state securities or "Blue Sky" laws and to obtain all
necessary governmental approvals for the sale of the Pledged
Collateral, as requested by the Trustee;
(iii) make available to its security holders, as soon as
practicable, an earning statement which will satisfy the provisions
of Section 11(a) of the Securities Act; and
(iv) do or cause to be done all such other acts and things as
may be necessary to make such sale of the Pledged Collateral or any
part thereof valid and binding and in compliance with applicable
law.
The Pledgor further acknowledges the impossibility of ascertaining the amount of
damages which would be suffered by the Secured Parties by reason of the failure
by the Pledgor to perform any of the covenants contained in this Section 14 and,
consequently, agrees that, if the Pledgor shall fail to perform any of such
covenants, it shall pay, as liquidated damages and not as a penalty, an amount
equal to the value of the Pledged Collateral on the date the Trustee shall
demand compliance with this Section 14.
(c) The Pledgor recognizes that, by reason of the aforementioned
requirements and certain prohibitions contained in the Securities Act and
applicable state
12
<PAGE>
securities laws, the Trustee may, at its option, elect not to require the
Pledgor to register all or any part of the Pledged Collateral and may therefore
be compelled, with respect to any sale of all or any part of the Pledged
Collateral, to limit purchasers to those who will agree, among other things, to
acquire such securities for their own account, for investment, and not with a
view to the distribution or resale thereof. The Pledgor acknowledges and agrees
that any such sale may result in prices and other terms less favorable to the
seller than if such sale were a public sale without such restrictions and,
notwithstanding such circumstances, agrees that any such sale shall be deemed to
have been made in a commercially reasonable manner. The Trustee shall be under
no obligation to delay the sale of any of the Pledged Collateral for the period
of time necessary to permit the Pledgor to register such securities for public
sale under the Securities Act or under applicable state securities laws, even if
the Pledgor would agree to do so.
(d) If the Trustee determines to exercise its right to sell any or
all of the Pledged Collateral, upon written request, the Pledgor shall, from
time to time, furnish to the Trustee all such information as the Trustee may
request in order to determine the number of shares and other instruments
included in the Pledged Collateral which may be sold by the Trustee as exempt
transactions under the Securities Act and rules of the SEC thereunder, as the
same are from time to time in effect.
(e) Subject to the provisions of Section 6 hereof, any cash held by
the Trustee as Pledged Collateral and all cash proceeds received by the Trustee
in respect of any sale of, collection from, or other realization upon all or any
part of the Pledged Collateral shall be applied by the Trustee:
First, to the payment of the reasonable costs and expenses of such
sale, including, without limitation, reasonable expenses of the Trustee and its
agents including the reasonable fees and expenses of its counsel, all reasonable
expenses, liabilities and advances made or incurred by the Trustee in connection
therewith or pursuant to Sections 11 or 15 hereof and all other amounts to which
the Trustee may be entitled under Section 8.07 of the Indenture;
Second, to the Holders, pro rata, for the payment in full of the
Securities; and
Finally, after payment in full of all of the Securities, to the
payment to the Pledgor, or its successors or assigns, or to whomsoever may be
lawfully entitled to receive the same as a court of competent jurisdiction may
direct.
SECTION 15. Expenses. The Pledgor will upon demand pay to the
Trustee the amount of any and all reasonable expenses, including, without
limitation, the reasonable
13
<PAGE>
fees and expenses of the Trustee's counsel and of any experts and agents, which
the Trustee may incur in connection with (i) the administration of this
Agreement, (ii) the custody or preservation of, sale of, collection from, or
other realization upon, any of the Pledged Collateral, (iii) the exercise or
enforcement of any of the rights and remedies hereunder of the Trustee, the
Working Capital Agent and the Holders, or (iv) the failure by the Pledgor to
perform or observe any of the provisions hereof.
SECTION 16. Security Interest Absolute. All rights of the Trustee
and security interests hereunder, and all obligations of the Pledgor hereunder,
shall be absolute and unconditional irrespective of:
(i) any lack of validity or enforceability of any provision of
the Indenture, the Securities or any other Transaction Document or
any other agreement or instrument relating thereto;
(ii) any change in the time, manner or place of payment of, or
in any other term of, or any increase in the amount of, all or any
of the Securities, or any other amendment or waiver of any term of,
or any consent to any departure from any requirement of, the
Indenture, the Securities or any other Transaction Document;
(iii) any exchange, release or non-perfection of any Lien on
any other collateral, or any release or amendment or waiver of any
term of any guaranty of, or consent to departure from any
requirement of any guaranty of, all or any of the Securities; or
(iv) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, a borrower or a pledgor.
SECTION 17. Amendments, Etc. No amendment or waiver of any provision
of this Agreement nor consent to any departure by the Pledgor herefrom shall in
any event be effective unless the same shall be in writing, approved by the
Holders of a majority in principal amount of the outstanding Securities (except
as otherwise provided under Section 10.02 of the Indenture) and signed by the
Trustee, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 18. Addresses for Notices. All notices, communications and
deliveries required or permitted by this Agreement shall be made in writing
signed by the party making the same, shall specify the Section of this Agreement
pursuant to which it is given or being made, and shall be deemed given or made
(i) on the date delivered if
14
<PAGE>
delivered by telecopy or in person, (ii) on the third business day after it is
mailed if mailed by registered or certified mail (return receipt requested)
(with postage and other fees prepaid), or (iii) on the day after it is
delivered, prepaid, to an overnight express delivery service that confirms to
the sender delivery on such day, as follows:
To the Pledgor:
Metallurg, Inc.
6 East 43rd Street, 12th Floor
New York, New York 10005
Attn: Eric L. Schondorf, Esq.
Telecopy No.: (212) 687-9470
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attn: Ronald F. Daitz, Esq.
Telecopy No.: (212) 310-8007
To the Working Capital Agent:
The First National Bank of Boston
100 Federal Street
Boston, Massachusetts 02110
Attn: James J. Ward, Vice President
Telecopy No.: (617) 434-2309
With a copy to:
Bingham, Dana & Gould LLP
150 Federal Street
Boston, Massachusetts 02110
Attn: Edwin E. Smith, Esq.
Telecopy No.: (617) 951-8736
15
<PAGE>
To the Trustee:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Attn: Corporate Trust Department
Telecopy No.: (212) 858-2952
or to such other representative or at such other address of a party as such
party hereto may furnish to the other Parties in writing. If notice is given
pursuant to this Section 18 of any assignment to a permitted successor or assign
of a party hereto, the notice shall be given as set forth above to such
successor or assign of such party.
SECTION 19. Continuing Security Interest. This Agreement shall
create a continuing security interest in the Pledged Collateral and shall (i)
remain in full force and effect until payment in full of the Securities, (ii) be
binding upon the Pledgor, its successors and assigns, and (iii) inure, together
with the rights and remedies of the Trustee and the Holders hereunder, to the
benefit of and be enforceable by the Secured Parties and their respective
successors, transferees and assigns. At such time as no Securities are
outstanding, the Pledgor shall be entitled to the return, upon its request and
at its expense, of such of the Pledged Collateral as shall not have been sold or
otherwise applied pursuant to the terms hereof.
SECTION 20. Governing Law; Severability. This Agreement shall be
governed by, and be construed and interpreted in accordance with, the law of the
State of New York. Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity and without invalidating the remaining provisions of
this Agreement. Unless otherwise defined herein or in the Indenture, terms
defined in Article 9 of the UCC as in effect in the State of New York are used
herein as therein defined.
SECTION 21. Waiver of Jury Trial. The Pledgor waives any right it
may have to a trial by jury in respect of any litigation based on, or arising
out of, under or in connection with, this Agreement or any other Transaction
Document, or any course of conduct, course of dealing, verbal or written
statement or other action of any Secured Party.
16
<PAGE>
SECTION 22. Section Titles. The Section titles contained in this
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not part of this Agreement.
IN WITNESS WHEREOF, the Pledgor has caused this Agreement to be duly
executed and delivered by its duly authorized officer on the date first above
written.
METALLURG, INC.
By:_________________________________
Name:
Title:
Accepted and Acknowledged:
IBJ SCHRODER BANK & TRUST COMPANY, as Trustee
By:____________________________
Name:
Title:
Accepted and Acknowledged as to Sections 4 and 7 hereof:
THE FIRST NATIONAL BANK OF BOSTON, as Working Capital Agent
By:____________________________
Name:
Title:
17
<PAGE>
SCHEDULE I TO PLEDGE AGREEMENT
Attached to and forming a part of that certain Pledge Agreement, dated
[April 10,] 1997, between Metallurg, Inc., a New York corporation, and IBJ
Schroder Bank & Trust Company, as Trustee.
<TABLE>
<CAPTION>
Stock Certificate Outstanding Pledged
Stock Issuer Class of Stock No(s). Shares Par Value Shares
- ------------ -------------- ------ ------ --------- ------
<S> <C> <C> <C> <C> <C>
</TABLE>
18
<PAGE>
SCHEDULE III TO PLEDGE AGREEMENT
PLEDGE AMENDMENT
This Pledge Amendment, dated ________, 19__, is delivered pursuant
to Section 10(b) of the Pledge Agreement referred to below. The undersigned
hereby agrees that this Pledge Amendment may be attached to the Pledge
Agreement, dated [April 10,] 1997, between the undersigned and IBJ Schroder Bank
& Trust Company, as Trustee on behalf of and for the ratable benefit of the
Holders referred to therein, and that the Additional Pledged Shares listed on
this Pledge Amendment shall be and become part of the Pledged Collateral
referred to in the Pledge Agreement and shall secure all Securities of the
undersigned. The terms defined in the Pledge Agreement or Indenture are being
used herein as therein defined.
METALLURG, INC.
By:_________________________________
Name:
Title:
Stock
Certificate Number
Issuer Class of Stock No(s). Par Value of Shares
19
NYFS05...:\40\63140\0003\1711\EXHN076P.24L
