<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 10, 1998
REGISTRATION NO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
REGISTRATION STATEMENT
ON
FORM F-4
UNDER
THE SECURITIES ACT OF 1933
--------------------------
NSM STEEL (DELAWARE), INC.
NSM STEEL COMPANY, LTD.
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 3310 APPLIED
CAYMAN ISLAND 3310 N/A
KINGDOM OF THAILAND 3310 N/A
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification code Number) Identification
incorporation or organization) No.)
</TABLE>
--------------------------
ATTN.: SAWASDI HORRUNGRUANG
CHAIRMAN
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
9 RAMKHAMHAENG ROAD
19TH FLOOR, UM TOWER
SUANLUANG, BANGKOK 10250
THAILAND
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
--------------------------
CT CORPORATION SYSTEM
1633 BROADWAY
NEW YORK, NEW YORK 10019
(212) 479-8200
(Name and address, including zip code, and telephone number, including area
code, of agent for service)
--------------------------
COPIES TO:
TIMOTHY GOODELL, ESQ.
WHITE & CASE
1155 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement
--------------------------
If any of the securities being registered on this form are being offered in
connection with the formation of a and there is compliance with General
Instruction G, check the following box. / /
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE PROPOSED AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED PER NOTE(1) OFFERING PRICE(1) FEE(4)
<S> <C> <C> <C> <C>
12% Senior Notes due 2006............. $249,000,000 100% $249,000,000 $73,455
12 1/4% Senior Subordinated Mortgage
Notes due 2008...................... $203,500,000 100% $203,500,000 $60,033
12 3/4% Subordinated Mortgage
Debentures due 2009................. $53,133,016 100% $53,133,016 $15,675
Guarantees of the Guarantor(2)........ (3) (3) (3) None(3)
</TABLE>
(1) In accordance with Rule 457(f)(2) the registration fee is calculated based
on the book value, which has been computed as of June 10, 1998, of the
outstanding securities to be cancelled in the exchange transaction
hereunder.
(2) Each of the securities being registered hereby is being guaranteed by
Nakornthai Strip Mill Public Company Limited.
(3) No additional consideration will be paid by the recipients of the
Guarantees. Pursuant to Rule 457(n) under the Securities Act of 1933, no
separate fee is payable for the Guarantees.
(4) Aggregate amount of registration fee is $149,163.
--------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BY ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION DATED, JUNE 10, 1998
PROSPECTUS CONFIDENTIAL
NSM STEEL (DELAWARE), INC.
NSM STEEL COMPANY, LTD.
[LOGO]
OFFER TO EXCHANGE
12% SENIOR MORTGAGE NOTES DUE 2006,
SERIES B FOR ALL OUTSTANDING
12% SENIOR MORTGAGE NOTES DUE 2006, SERIES A
12 1/4% SENIOR SUBORDINATED MORTGAGE NOTES DUE 2008,
SERIES B FOR ALL OUTSTANDING 12 1/4% SENIOR SUBORDINATED MORTGAGE NOTES DUE
2008, SERIES A
12 3/4% SUBORDINATED MORTGAGE DEBENTURES DUE 2009,
SERIES B FOR ALL OUTSTANDING
12 3/4% SUBORDINATED MORTGAGE DEBENTURES DUE 2009, SERIES A
The 12% Senior Mortgage Notes Due 2006, Series B (the "New Senior Notes"),
which have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to the registration statement (the "Registration
Statement") of which this Prospectus constitutes a part, are being offered (the
"Senior Notes Exchange Offer"), upon the terms and subject to the conditions set
forth in this Prospectus and the accompanying Letter of Transmittal by NSM Steel
(Delaware), Inc. ("NSM (Del)") and NSM Steel Company, Ltd. ("NSM Cayman")
(collectively, the "Note Issuers") in exchange for the total aggregate amount of
the Note Issuers' outstanding 12% Senior Mortgage Notes Due 2006, Series A (the
"Old Senior Notes"). The New Senior Notes are irrevocably and unconditionally
guaranteed (the "Senior Guaranty") as to principal, premium, interest and
Additional Amounts (as defined), if any, by Nakornthai Strip Mill Public Company
Limited ("NSM" or the "Company"). NSM Cayman is a wholly owned subsidiary of the
Company and NSM (Del) is a wholly owned subsidiary of NSM Cayman. The Note
Issuers have been organized solely for the purpose of issuing the Securities (as
defined) and incurring other indebtedness permitted under the Indentures (as
defined).
The 12 1/4% Senior Subordinated Mortgage Notes Due 2008, Series B (the "New
Senior Subordinated Notes") (and collectively with the New Senior Notes, the
"New Notes"), which have been registered under the Securities Act pursuant to a
Registration Statement of which this Prospectus constitutes a part, are being
offered (the "Senior Subordinated Notes Exchange Offer"), upon the terms and
subject to the conditions set forth in this Prospectus and the accompanying
Letter of Transmittal, by the Note Issuers in exchange for the total aggregate
amount of the Note Issuers' outstanding 12 1/4% Senior Subordinated Mortgage
Notes Due 2008, Series A (the "Old Senior Subordinated Notes") (and collectively
with the Old Senior Notes, the "Old Notes). The New Senior Subordinated Notes
are irrevocably and unconditionally guaranteed (the "Senior Subordinated
Guaranty") as to principal, premium, interest and Additional Amounts, if any, by
NSM.
The 12 3/4% Subordinated Mortgage Debentures Due 2009, Series B (the "New
Debentures"), which have been registered under the Securities Act pursuant to a
Registration Statement of which this Prospectus constitutes a part, are being
offered (the "Debentures Exchange Offer"and collectively with the Senior Note
Exchange Offer and the Subordinated Note Exchange Offer, the "Exchange Offers")
upon the terms and subject to the conditions set forth in this Prospectus and
the accompanying Letter of Transmittal by the Note Issuers in exchange for the
total aggregate amount of the Note Issuers' outstanding 12 3/4% Subordinated
Mortgage Debentures Due 2009, Series A (the "Old Debentures"). The New
Debentures are irrevocably and unconditionally guaranteed (the "Debenture
Guaranty", and collectively with the Senior Guaranty and the Senior Subordinated
Guaranty, the "Guaranties") as to principal, premium, interest and Additional
Amounts, if any, by NSM.
The New Senior Notes, New Senior Subordinated Notes and New Debentures will
evidence the same debt as the Old Senior Notes, Old Senior Subordinated Notes
and Old Debentures, respectively, and will be issued under and entitled to the
same benefits under the respective Indenture as either the Old Senior Notes, Old
Senior Subordinated Notes or Old Debentures. In addition, the New Senior Notes
and the Old Senior Notes will be treated as one series of securities under the
Senior Indenture (as defined), the New Senior Subordinated Notes and the Old
Senior Subordinated Notes will be treated as one series of securities under the
Senior Subordinated Indenture (as defined) and the New Debentures and Old
Debentures will be treated as one series of securities under the Debenture
Indenture (as defined). The terms of the New Senior Notes are identical in all
material respects to the terms of the Old Senior Notes, except for certain
transfer restrictions, registration rights and terms providing for an increase
in the interest rate of the Old Senior Notes under certain circumstances
relating to the registration of the New Senior Notes. The New Senior Notes and
the Old Senior Notes are collectively referred to as the Senior Notes. The terms
of the New Senior Subordinated Notes are identical in all material respects to
the terms of the Old Senior Subordinated Notes, except for certain transfer
restrictions, registration rights and terms providing for an increase in the
interest rate on the Old Senior Subordinated Notes under certain circumstances
relating to the registration of the New Senior Subordinated Notes. The New
Senior Subordinated Notes and the Old Senior Subordinated Notes are collectively
referred to as the Senior Subordinated Notes. The Senior Notes and the Senior
Subordinated Notes are collectively referred to as the Notes. The terms of the
New Debentures are identical in all material respects to the terms of the Old
Debentures, except for certain transfer restrictions, registration rights and
terms providing for an increase in the interest rate on the Old Debentures under
certain circumstances relating to the registration of the New Debentures. The
New Debentures and the Old Debentures are collectively referred to as the
Debentures. The Old Senior Notes, the Old Senior Subordinated Notes and the Old
Debentures are collectively referred to as the Old Securities. The New Senior
Notes, the New Senior Subordinated Notes and the New Debentures are collectively
referred to as the New Securities. The Notes and the Debentures are collectively
referred to as the Securities.
(CONTINUED ON NEXT PAGE)
------------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 19 FOR A DISCUSSION OF CERTAIN FACTORS
THAT HOLDERS OF THE OLD NOTES SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE
OFFER AND THAT PROSPECTIVE INVESTORS IN THE NEW NOTES SHOULD CONSIDER IN
CONNECTION WITH SUCH INVESTMENT.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
(COVER PAGE CONTINUED)
Pursuant to an agency agreement between NSM(Del) and NSM Cayman, NSM(Del)
will issue the Notes and pay amounts due thereunder solely as agent of NSM
Cayman. On the date of issue of the Old Securities (the "Issue Date"), the
Company deposited with the Collateral Agent (as defined) (i) the net proceeds of
the Offerings (as defined) (after the payment of certain fees and expenses, as
well as the prepayment of U.S.$50 million of existing indebtedness and U.S.$8.0
million of accrued interest payable to certain Thai financial institutions), and
(ii) the U.S.$18.5 million of cash proceeds from the Equity Investments (as
defined). Of such proceeds, an amount equal to the sum of the interest due on
the Senior Notes on the first three Interest Payment Dates (as defined), the
interest due on the Senior Subordinated Notes on the first two Interest Payment
Dates and the interest due on the Debentures on the first two Interest Payment
Dates was deposited in the Notes DSR Account (as defined) and the balance was
deposited in the Offshore Reserve Account (as defined). The interest due on the
Notes and Debentures on the first two Interest Payment Dates after the Issue
Date shall be paid from the Notes DSR Account. Thereafter, the Company shall at
all times be required to maintain a balance in the Notes DSR Account equal to
the next interest payment on the Senior Notes. Funds held in the Offshore
Reserve Account will be used to construct and start-up the Mill (including the
payment of approximately U.S.$102 million in accounts payable), finance certain
operating expenses and, in certain limited circumstances, to pay interest on
Indebtedness owed by the Company to certain Thai financial institutions.
If the Company achieves Profitable Operations (as defined) prior to December
31, 2001, certain amounts in the Offshore Reserve Account will be released to
the Company. If the Company fails to achieve Profitable Operations by December
31, 2001, the Company must apply any funds then remaining in the Offshore
Reserve Account (i) to tender for the Securities at 100% of the Accreted Value
(as defined) thereof at the date of redemption plus accrued and unpaid interest
and (ii) if there are funds remaining in such account after such tender, to
repay indebtedness to certain Thai financial institutions.
The Senior Notes bear interest on the principal amount at maturity thereof
at a rate of 12% per annum, payable on February 1 and August 1 of each year,
commencing August 1, 1998. The Old Senior Notes were issued at a discount to
their principal amount at maturity. As a result, the stated rate of interest and
original issue discount represents a yield to maturity (based on the issue
price) on the Senior Notes of 14% (computed on a semi-annual bond equivalent
basis). The Senior Notes will mature on February 1, 2006. The Senior Notes will
not be redeemable at the option of the Note Issuers prior to February 1, 2002,
except that until February 1, 2001, the Note Issuers may redeem, at their
option, up to an aggregate of 35% of the aggregate principal amount at maturity
of the Senior Notes originally issued at the redemption price set forth herein
plus accrued interest to the date of redemption with the net proceeds of one or
more Public Equity Offerings (as defined) if at least $162 million principal
amount at maturity of the Senior Notes remains outstanding after each such
redemption. On or after February 1, 2002, the Senior Notes may be redeemed at
the option of the Note Issuers, in whole or in part, at the redemption prices
set forth herein. Upon a Change of Control (as defined), each holder of Senior
Notes will have the right to require the Note Issuers to purchase all or any
part of such holder's Senior Notes at a purchase price equal to 101% of the
Accreted Value thereof, plus accrued and unpaid interest, if any, to the date of
purchase.
The Senior Subordinated Notes bear interest on the principal amount at
maturity thereof at a rate of 12.25% per annum, payable on February 1 and August
1 of each year, commencing August 1, 1998. The Old Senior Subordinated Notes
were issued at a discount to their principal amount at maturity. As a result,
the stated rate of interest and original issue discount will represent a yield
to maturity on the Senior Subordinated Notes of 15% (computed on a semi-annual
bond equivalent basis). The Senior Subordinated Notes will mature on February 1,
2008. The Senior Subordinated Notes will not be redeemable at the option of the
Note Issuers prior to February 1, 2003, except that until February 1, 2001, the
Note Issuers may redeem, at their option, up to an aggregate of 35% of the
aggregate principal amount at maturity of the Senior Subordinated Notes
originally issued at the redemption price set forth herein plus accrued interest
to the date of redemption with the net proceeds of one or more Public Equity
Offerings if at least $132 million principal amount at maturity of the Senior
Subordinated Notes remains outstanding after each such redemption. On or after
February 1, 2003, the Senior Subordinated Notes may be redeemed at the option of
the Note Issuers, in whole or in part, at the redemption prices set forth
herein. Upon a Change of Control, each holder of Senior Subordinated Notes will
have the right to require the Note Issuers to purchase all or any part of such
holder's Senior Subordinated Notes at a purchase price equal to 101% of the
Accreted Value thereof, plus accrued and unpaid interest, if any, to the date of
purchase.
The Debentures bear interest on the principal amount at maturity thereof at
a rate of 12 3/4% per annum, payable on February 1 and August 1 of each year,
commencing August 1, 1998. The Old Debentures were issued at discount to there
principal amount at maturity. The Debentures will mature on February 1, 2009.
The Debentures will not be redeemable at the option of the Note Issuers prior to
February 1, 2003, except that until February 1, 2001, the Note Issuers may
redeem at their option, up to an aggregate of 35% of the aggregate principal
amount at maturity of the Debentures originally issued at the redemption price
set forth herein plus accrued interest to the date of redemption with a note
proceeds of one or more Public Equity offerings if at least $35 million
principal amount of maturity of the Debentures remains outstanding after each
such redemption. On or after February 1, 2003, the Debentures may be redeemed at
the option of the Note Issuers, in whole or in part, at the redemption prices
set forth herein. Upon a Change of Control, each holder of Debentures will have
the right to require the Note Issuers to purchase all or any part of such
holder's Debentures at a purchase price equal to 101% of the Accreted Value
thereof, plus accrued and unpaid interest, if any to the date of purchase.
The Securities will bear original issue discount ("OID"), and the holders of
the Notes will be required to include such OID in gross income for U.S. federal
income tax purposes on a constant yield to maturity basis, in advance of the
receipt of the cash payments to which such income is attributable. See "Tax
Considerations."
The Senior Notes are senior secured obligations of the Note Issuers and rank
senior in right of payment to the Senior Subordinated Notes and the Debentures
and to all future Indebtedness of the Note Issuers that is designated as
subordinate or junior in right of payment to the Senior Notes. The Senior
Subordinated Notes are senior secured obligations of the Note Issuers, but the
payment of principal of, and premium and Additional Amounts (if any) and
interest on the Senior Subordinated Notes is subordinated in right of payment to
the prior payment in full of all Specified Senior Indebtedness (as defined) of
the Note Issuers. The Senior Subordinated Notes rank PARI PASSU in right of
payment with the existing and future senior indebtedness (other than Specified
Senior Indebtedness) of the Note Issuers and senior in right of payment to the
Debentures and all future Indebtedness of the Note Issuers that is designated as
subordinate or junior in right of payment to the Notes.
The Debentures are subordinated obligations of the Note Issuers. The payment
of principal of and premium Additional Amounts (if any) and interest on the
Debentures will be subordinated in right of payment to the prior payment of all
Debentures Specified Senior Indebtedness (as defined) of the Note Issuers. The
Debentures will rank PARI PASSU in right of payment with all with the existing
and future indebtedness (other than Debenture Specified Senior Indebtedness) of
the Note Issuers and all future Indebtedness of the Note Issuers that is
designated as subordinate or junior in right of payment to the Debentures.
The Senior Guaranty is an irrevocable, direct, unconditional and secured
obligation of the Company and ranks PARI PASSU in right of payment to all other
existing and future senior indebtedness of the Company, including the Bank
Credit Facility (as defined), and senior in right of payment to the Senior
Subordinated Guaranty, the Debenture Guaranty and to all future Indebtedness of
the Company that is designated as subordinate or junior in right of payment to
the Senior Guaranty. The Senior Subordinated Guaranty is an irrevocable, direct,
unconditional and secured obligation of the Company and will rank PARI PASSU in
right of payment with the existing and future senior indebtedness (other than
Specified Senior Indebtedness) of the Company, including the Bank Credit
Facility, and senior in right of payment to the Debenture Guaranty and to all
future indebtedness of the Company that is designated as subordinate or junior
in right of payment to the Guaranties (as defined). The Debenture Guaranty is an
irrevocable, direct, unconditional and secured obligation of the Company and
will rank PARI PASSU in right of payment with the existing and future
indebtedness (other than Debenture Specified Senior Indebtedness) of the
Company, and senior in right of payment to all future indebtedness of the
Company that is designated as subordinate or junior in right of payment to the
Debenture Guaranty.
The Notes are secured, on a first priority basis and the Debentures are
secured on a second priority basis, by pledges of the share capital of NSM (Del)
and the Guaranties (other than the Debenture Guaranty) are secured, on a first
priority basis, by a pledge of the share capital of NSM Cayman and by the other
Collateral (as defined), which includes certain real property rights and
moveable assets comprising, and insurance proceeds and certain intangible assets
relating to, the Mill (as defined). The Collateral (other than the pledge of the
Notes DSR Account and the Offshore Reserve Account) will also secure, equally
and ratably with the Guaranties, certain existing Indebtedness under the Bank
Credit Facility. The Collateral also secures, on a second priority basis, the
obligations of the Company in respect of its guarantee of the Debentures.
i
<PAGE>
The Securities will be issued initially in the form of one or more Global
Senior Notes, Global Senior Subordinated Notes and Global Debentures (each as
defined and, collectively, the "Global Securities") in registered form which are
expected to be deposited with The Chase Manhattan Bank, as Book-Entry Depositary
under a Note Depositary Agreement pursuant to which one or more certificateless
depositary interests in respect of the Global Securities will be issued. Except
as described under "Description of the Note Depositary Agreement; Delivery;
Form--Issuance of the Definitive Notes", the Global Securities will not be
available in definitive form. Beneficial interests in the Global Securities will
be shown on, and transfers thereof will be effected only through, records
maintained in book-entry form by The Depository Trust Company ("DTC") and its
participants, including Morgan Guaranty Trust Company of New York, Brussels
Office, as operator of the Euroclear System (the "Euroclear Operator") and Cedel
Bank, societe anonyme ("Cedel"). Such beneficial interests in the Global
Securities are hereinafter referred to as "Book-Entry Interests."
The New Notes are being offered hereunder in order to satisfy certain
obligations of the Company and the Note Issuers under certain registration
rights agreements each dated as of March 12, 1998 (the "Notes Registration
Rights Agreements") each between the Company, the Note Issuers and Nat West
Capital Markets Limited as the initial purchaser of the Old Notes (the "Initial
Purchaser").
The New Debentures are being offered hereunder in order to satisfy certain
obligations of the Company and the Debenture Issuers under the Debentures
Registration Rights Agreement dated as of March 12, 1998 (the "Debentures
Registration Rights Agreement" and collectively with the Notes Registration
Rights Agreement, the "Registration Rights Agreements") between the Company, the
Note Issuers and the Debenture purchasers.
The Company and the Note Issuers are making the Exchange Offers in reliance
on the position of the staff of the Securities and Exchange Commission (the
"Commission") as set forth in certain no-action letters addressed to other
parties in other transactions. However, neither the Company nor the Note Issuers
have sought their own no-action letter and there can be no assurance that the
staff of the Commission will make a similar determination with respect to the
Exchange Offers as in such other circumstances. Based upon these interpretations
by the staff of the Commission, the Company and the Note Issuers believe that
New Securities issued pursuant to the Exchange Offers in exchange for Old
Securities may be offered for resale, resold and otherwise transferred by a
holder thereof other than (i) a broker-dealer who purchased such Old Securities
directly from the Company to resell pursuant to Rule 144A or any other available
exemption under the Securities Act or (ii) a person that is an "affiliate" (as
defined in Rule 405 of the Securities Act) of the Company without compliance
with the registration and prospectus delivery provisions of the Securities Act,
provided that such New Securities are acquired in the ordinary course of such
holder's business and that such holder is not participating, and has no
arrangement or understanding with any person to participate, in the distribution
of such New Securities. Holders of the Old Securities accepting the Exchange
Offers will represent to the Company in the Letter of Transmittal that such
conditions have been met. Any holder who participates in the Exchange Offers for
the purpose of participating in a distribution of the New Securities may not
rely on the position of the staff of the Commission as set forth in these
no-action letters and would have to comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any secondary
resale transaction. A secondary resale transaction in the United States by a
holder who is using the Exchange Offers to participate in the distribution of
New Securities must be covered by a registration statement containing the
selling securityholder information required by Item 507 of Regulation S-K of the
Securities Act.
Each broker-dealer (other than an "affiliate" of the Company) that receives
New Securities for its own account pursuant to the Exchange Offers must
acknowledge that it acquired the Old Securities as a result of market-making
activities or other trading activities and will deliver a prospectus in
connection with any resale of such New Securities. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with resales of New
Securities received in exchange for Old Notes where such Old Securities were
acquired by such broker-dealer as a result of market-making activities or other
trading activities. The Note Issuers have agreed that, for a period of 180 days
after the Expiration Date (as defined herein), it will make this Prospectus
available to any broker-dealer for use in connection with any such resale. See
"Plan of Distribution." Any broker-dealer who is an affiliate of the Note
Issuers may not rely on such no-action letters and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any secondary resale transaction. See "The Exchange Offers."
The New Securities are new securities for which there is currently no
market. The Note Issuers presently does not intend to apply for listing of the
New Securities on any securities exchange or for quotation through the National
Association of Securities Dealers Automated Quotation System ("NASDAQ"). The
Company has been advised by the Initial Purchasers that, following completion of
the Exchange Offers, they presently intend to make a market in the New
Securities; however, the Initial Purchasers are not obligated to do so and any
market-making activities with respect to the New Securities may be discontinued
at any time without notice. There can be no assurance that an active public
market for the New Securities will develop.
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD SECURITIES ARE URGED TO READ THIS PROSPECTUS AND THE
RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO TENDER THEIR
OLD SECURITIES PURSUANT TO THE EXCHANGE OFFERS.
Any Old Securities not tendered and accepted in the Exchange Offers will
remain outstanding and will be entitled to all the rights and preferences and
subject to the limitations applicable thereto under the applicable Indenture.
Following consummation of the Exchange Offers the holders of Old Securities will
continue to be subject to the existing restrictions upon transfer thereof and
the Company and the Note Issuers will have no further obligation to such holders
(other than the Initial Purchasers) to provide for the registration under the
Securities Act of the Old Securities held by them. To the extent that Old
Securities are tendered and accepted in the Exchange Offers, a holder's ability
to sell untendered Old Securities could be adversely affected. It is not
expected that an active market for the Old Securities will develop while they
are subject to restrictions on transfer. The Company will accept for exchange
any and all Old Securities that are validly tendered and not withdrawn on or
prior to 5:00 p.m., New York City time, on the date the Exchange Offers expire,
which will be the date (the "Expiration Date") that is 20 business days
following the later of the date of effectiveness of the registration statement
or the date the Exchange Offer is otherwise commenced, unless the Exchange
Offers are extended by the Company in its sole discretion (but in no event to a
date later than , 1998), in which case the term "Expiration Date"
shall mean the latest date and time to which the Exchange Offers are extended.
Tenders of Old Securities may be withdrawn at any time prior to 5:00 p.m., New
York City time, on the Expiration Date, unless previously accepted for payment
by the Company. The Exchange Offers are not conditioned upon any minimum
principal amount of Old Securities being tendered for exchange. However, the
Exchange Offers are subject to certain conditions which may be waived by the
Company and to the terms and provisions of the Registration Rights Agreements.
Old Securities may be tendered only in denominations of $1,000 and integral
multiples thereof (other than Old Debentures). The Company has agreed to pay the
expenses of the Exchange Offers. See "The Exchange Offers--Fees and Expenses."
The New Securities will bear Interest from the last Interest Payment Date of the
Old Securities to occur prior to the issue date of the New Securities or, if no
such interest has been paid, from March 12, 1998. Holders of the Old Securities
whose Old Securities are accepted for exchange will not receive interest on such
Old Securities for any period subsequent to the last Interest Payment Date to
occur prior to the issue date of the New Securities, if any, and will be deemed
to have waived the right to receive any interest payment on the Old Securities
accrued from and after such Interest Payment Date or, if no such interest has
been paid, from March 12, 1998.
This Prospectus, together with the Letter of Transmittal, is being sent to
all registered holders of Old Securities as of 1998.
Neither the Company nor the Note Issuers will receive any proceeds from the
Exchange Offers. No dealer-manager is being used in connection with the Exchange
Offers. See "Use of Proceeds" and "Plan of Distribution."
Until ,1998, all broker-dealers effecting transactions in the New
Securities, whether or not participating in the Exchange Offers, may be required
to deliver a Prospectus. This is in addition to the obligations of
broker-dealers to deliver a Prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
No broker-dealer, salesperson or other individual has been authorized to
give any information or to make any representation in connection with the
Exchange Offers other than those contained in this Prospectus and Letter of
Transmittal and, if given or made, such information or representation must not
be relied upon as having been authorized by the Company or the Note Issuers. The
delivery of this Prospectus shall not, under any circumstances, create any
implication that the information herein is correct at any time subject to its
date.
THE EXCHANGE OFFERS ARE NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
TENDERS FOR EXCHANGE FROM, HOLDERS OF OLD SECURITIES IN ANY JURISDICTION IN
WHICH THE EXCHANGE OFFERS OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE
WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
ii
<PAGE>
THE SECURITIES HAVE NOT BEEN REGISTERED WITH, RECOMMENDED BY, OR APPROVED BY
ANY REGULATORY AUTHORITY OF THE GOVERNMENT OF THAILAND OR OF THE GOVERNMENT OF
THE CAYMAN ISLANDS, NOR HAS ANY SUCH REGULATORY AUTHORITY PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF
AN OFFER TO BUY, ANY OF THE SECURITIES OFFERED HEREBY BY ANY PERSON IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON TO MAKE AN OFFERING OR A
SOLICITATION. NEITHER THE DELIVERY OF THIS OFFERING MEMORANDUM NOR ANY SALE MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES IMPLY THAT THE INFORMATION SET FORTH
HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
------------------------
THE SECURITIES MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN
THAILAND OR TO ANY RESIDENT OF THAILAND.
------------------------
NO INVITATION MAY BE MADE TO THE PUBLIC IN THE CAYMAN ISLANDS TO SUBSCRIBE
FOR ANY OF THE SECURITIES.
NOTICE TO NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES
WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY
REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A
FINDING BY THE SECRETARY OF STATE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS
TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN
EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT
THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS
OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT
IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER
OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.
------------------------
ENFORCEABILITY OF CIVIL LIABILITIES
NSM Cayman and NSM (Del) are corporations organized under the laws of the
Cayman Islands and the State of Delaware, respectively, and the Company is a
public limited company organized under the laws of Thailand. Certain of the
directors and officers of the Note Issuers and the Company and certain of the
experts named in this Prospectus reside outside the United States, and all or a
substantial portion of the assets of such persons and NSM Cayman and the Company
are located outside the United States. As a result, it may not be possible for
investors to effect service of process within the United States upon such
persons, including with respect to matters arising under the Securities Act, or
to enforce against any of them, the Note Issuers or the Company, judgments of
courts of the United States predicated upon the civil liability provisions of
the Federal securities laws of the United States. The Company has been advised
by its Thailand legal counsel, White & Case (Thailand) Limited, that judgments
of United States courts, including judgments predicated upon the civil liability
provisions of the federal securities laws of the United States, are not
enforceable in Thailand, but such judgment or order in the discretion of the
courts of Thailand may be admitted as evidence of an obligation in new
proceedings instituted in the courts of Thailand, which would consider the issue
on the evidence before it.
iii
<PAGE>
The Note Issuers and the Company have appointed CT Corporation System, New
York, New York, as their agent for service of process in the United States in
respect of any civil suit or action brought against or involving the Note
Issuers or the Company in a United States federal or state court located in the
Borough of Manhattan of the City of New York arising out of, related to or
concerning the offering and sale of Securities under this Prospectus.
------------------------
PRESENTATION OF FINANCIAL INFORMATION
The Company maintains its financial books and records in Thai Baht ("Baht")
and presents its financial statements in conformity with generally accepted
accounting principles in Thailand ("Thai GAAP"). This Prospectus contains
translations of certain Baht amounts into U.S. Dollars ("U.S.$") at specified
rates solely for the convenience of the reader. These translations should not be
construed as representations that the Baht amounts actually represent such U.S.$
amounts or could be converted into U.S.$ at the rate indicated or any other
rate. Unless otherwise indicated, such U.S.$ amounts have been translated from
Baht at an exchange rate 43.10 Baht to U.S.$1.00, which was the noon buying rate
in New York City for cable transfers of Baht as certified for customs purposes
published by the Federal Reserve Bank of New York (the "Noon Buying Rate") at
June 5, 1998. As of March 12, the Issue Date, the Noon Buying Rate for Baht was
43.05 Baht to U.S.$1.00. On May 15, 1998, the Noon Buying Rate for Baht was
39.15 Baht to U.S.$1.00.
The following table sets forth, for the periods and dates indicated,
information concerning the rates of exchange of Baht into U.S.$ based on the
Noon Buying Rate in New York City for cable transfers in foreign currencies as
certified for customs purposes by the Federal Reserve Bank of New York.
<TABLE>
<CAPTION>
AVG. RATE PERIOD END HIGH LOW
----------- ----------- --------- ---------
<S> <C> <C> <C> <C>
1993(1)............................................................... 25.33 25.58 25.61 25.11
1994(1)............................................................... 25.16 25.11 25.60 24.89
1995(1)............................................................... 24.92 25.20 25.70 24.47
1996(1)............................................................... 25.36 25.65 25.80 25.17
1997 Month Ended:(2)
January........................................................... 25.73 25.91 25.97 25.60
February.......................................................... 25.96 25.90 26.10 25.89
March............................................................. 25.96 25.97 26.03 25.89
April............................................................. 26.06 26.13 26.13 25.96
May............................................................... 25.75 24.75 26.11 24.75
June.............................................................. 24.53 25.15 25.40 22.75
July (3).......................................................... 30.27 32.30 32.30 24.52
August............................................................ 32.40 34.50 34.50 31.00
September......................................................... 35.26 35.85 36.55 33.55
October........................................................... 37.54 40.50 40.50 35.80
November.......................................................... 39.09 41.00 41.00 37.40
December.......................................................... 44.31 46.80 47.40 41.20
1998 Month Ended:(2)
January........................................................... 52.98 53.10 56.10 48.30
February.......................................................... 45.99 43.00 51.00 43.00
March............................................................. 41.35 39.60 45.00 38.00
April............................................................. 39.65 38.70 41.20 38.55
May............................................................... 39.20 40.44 40.44 38.55
</TABLE>
SOURCE: FEDERAL RESERVE BANK OF NEW YORK
- ------------------------
(1) The average of the exchange rates on the last day of each month during the
year.
(2) The average of the exchange rates on each day of the month.
(3) Prior to July 1997, the Baht/U.S.$ exchange rate was pegged via a
trade-weighted basket of goods and services at approximately 25
Baht/U.S.$1.00. See "Risk Factors--Exchange Rate Risks."
------------------------
iv
<PAGE>
METRIC EQUIVALENTS
For the convenience of the reader, the following table sets out the
relationship between metric measures and imperial equivalents:
<TABLE>
<S> <C> <C>
1 Tonne = 2,204.6224 Pounds
1 Tonne = 1.1023 Tons (short)
1 Hectare = 2.4711 Acres
1 Kilometer = 0.6214 Miles
1 Meter = 3.2808 Feet
</TABLE>
------------------------
v
<PAGE>
GLOSSARY
<TABLE>
<S> <C>
ASEAN......................... The Association of Southeast Asian Nations
Bank Credit Facility.......... The Credit Facilities Agreement, dated September 27, 1995,
among the Company and The Industrial Finance Corporation of
Thailand, Thai Farmers Bank Public Company Limited, Siam
City Bank Public Company Limited, The Government Savings
Bank, First Bangkok City Bank Public Company Limited,
Nakornthon Bank Public Company Limited, SCF Finance and
Securities Public Company Limited, Siam City Credit Finance
and Security Public Company Limited, IFCT Finance and
Securities Public Company Limited and First City Investment
Finance and Securities Public Company Limited, as such
agreement may be amended, supplemented or otherwise modified
in writing from time to time
BNP........................... Banque Nationale de Paris
BOI........................... Board of Investment of Thailand
BOOT.......................... Build own operate transfer
Co-Gen Facility............... A co-generation electric power plant to be developed in
conjunction with Enron, subject to the execution of
definitive agreements
Combination Line.............. A combination/multipurpose continuous pickling,
cold-rolling, cleaning, annealing hot-dip galvanizing, skin
pass/tension leveling and oiling line. The Combination Line
is part of the Finishing Facilities
Consteel Process.............. The Consteel continuous charging process
CSP........................... Compact strip production
Debenture Offering............ The private placement of the Debentures to be completed on
or before the Issue Date.
DRI........................... Direct reduced iron
DRI Facility.................. NSM's facility for the production of DRI, which includes the
Co-Gen Facility
EAF........................... Electric arc furnace
EBITDA........................ Earnings before interest expense, income taxes, depreciation
and amortization
EGAT.......................... Electric Generating Authority of Thailand
Enron......................... One or more affiliates of Enron Corp.
Equity Investments............ The acquisition from NSM of 158,639,864 newly issued shares
(representing 22.1% of NSM's issued and outstanding shares
after giving effect to the Equity Investments) in aggregate
by the Management Investors and the purchasers of the
Private Placement Shares pursuant to the Management Equity
Investment and the issuance of the Private Placement Shares
respectively.
Finishing Facilities.......... NSM's processing facilities for the production of
high-quality pickled and oiled, cold-rolled, galvanized, and
other value-added steel products
Hatch......................... Hatch Associates Ltd.
Heats......................... Successive melting cycles
Hot Mill...................... NSM's CSP thin-slab hot mill
Hylsa......................... Hylsa S.A.
Hylsa Agreement............... The technical assistance and training agreement entered into
between NSM and Hylsa
</TABLE>
vi
<PAGE>
<TABLE>
<S> <C>
Klockner...................... Klockner Steel Trading
LIBOR......................... London Inter-Bank Offered Rate
Management Co................. NSM Management Company, LLC
Management Equity Investment.. The acquisition of newly-issued and outstanding Ordinary
Shares by the Management Investors
Management Investors.......... SDI, Enron and McDonald
McDonald...................... One or more affiliates of McDonald & Company Securities,
Inc.
Mill.......................... NSM's combined DRI facility, Hot Mill and Finishing
Facilities
NSM........................... Nakornthai Strip Mill Public Company Limited
NSM Cayman.................... NSM Steel Company, Ltd., a wholly owned subsidiary of NSM
NSM (Del)..................... NSM Steel (Delaware), Inc., a wholly owned subsidiary of NSM
Cayman
NTS........................... N.T.S. Steel Group Public Company Limited
Nucor......................... Nucor Corporation
Offerings..................... The issuance by the Note Issuers of the Old Securities
together with the issuance by the Company of the Warrants.
Off-Take Agreements........... Eight year off-take agreements entered into by NSM and
Klockner and NSM and Preussag under which NSM may at its
option sell and Preussag and Klockner, in the aggregate,
will be obligated to purchase up to 100% of NSM's production
in 1998, 1999 and 2000, and 25% of the Company's production
in the years 2001 through 2005
PEA........................... Provincial Electricity Authority of Thailand
Preussag...................... Preussag Handel GmbH
Private Placement Shares...... 64,417,180 Ordinary Shares being privately placed by the
Company concurrently with the Debenture Offering
PTT........................... Petroleum Authority of Thailand
Push-Pull Line................ A push-pull pickling/trimming/oiling line that is part of
the Finishing Facilities
Recoil Line................... A recoil/temper rolling/slitting line that is part of the
Finishing Facilities
SDI........................... Steel Dynamics, Inc.
SDI Agreement................. The management advisory and technical assistance agreement
which will be entered into by SDI and Management Co.
SDI License Agreement......... A 10-year reciprocal license and technology sharing
agreement between SDI and NSM
SDI Warrants.................. The Warrants issued to SDI to purchase up to 11,421,480
Ordinary Shares, which will contain exercise provisions that
will protect SDI from dilution of its equity interest in the
event holders of Warrants exercise such Warrants
SEN........................... Submerged entry nozzle
SET........................... Stock Exchange of Thailand
SIBOR......................... Singapore Inter-Bank Offered Rate
Thai Parties.................. NTS and Mr. Sawasdi Horrungruang
Thailand...................... The Kingdom of Thailand
Transactions.................. The Offerings, the Debenture Offering and the Equity
Investments, and the application of the proceeds therefrom
VOD........................... Vacuum/oxygen/degasser
Working Capital Facility...... The agreement to be entered into between NSM and BNP for the
funding of working capital through the monetizing of NSM's
accounts receivable
</TABLE>
vii
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE IN
THIS PROSPECTUS AND IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS AND NOTES RELATED THERETO APPEARING
ELSEWHERE IN THIS PROSPECTUS. PROSPECTIVE INVESTORS ARE URGED TO READ THIS
PROSPECTUS IN ITS ENTIRETY BEFORE INVESTING IN THE SECURITIES. UNLESS OTHERWISE
STATED IN THIS PROSPECTUS OR UNLESS THE CONTEXT OTHERWISE REQUIRES, REFERENCES
HEREIN TO THE "COMPANY" OR TO "NSM" ARE TO NAKORNTHAI STRIP MILL PUBLIC COMPANY
LIMITED AND ITS SUBSIDIARIES. THE COMPANY'S FISCAL YEAR ENDS DECEMBER 31, AND
THUS, FOR EXAMPLE, "FISCAL YEAR 1997" REFERS TO THE FISCAL YEAR ENDED DECEMBER
31, 1997. CERTAIN FINANCIAL, OPERATING AND STATISTICAL INFORMATION IS PRESENTED
HEREIN IN ROUNDED AMOUNTS. AS A RESULT, CERTAIN AMOUNTS MAY NOT SUM DUE TO SUCH
ROUNDING.
OVERVIEW
NSM is the owner, developer and operator of one of the most advanced and
lowest cost thin-slab/flat-rolled steel mini-mills in the world. NSM's mini-mill
is located in Chonburi, Thailand, and when completed will combine a
technologically advanced mini-mill steel production facility with a contiguous
direct reduced iron facility and finishing facilities. The mini-mill is managed
and operated by NSM Management Company, LLC ("Management Co.") and an
experienced team of international steel executives employed by NSM. Management
Co. receives technical and advisory services from Steel Dynamics, Inc. ("SDI"),
a leading mini-mill operator in the United States, under a long-term management
advisory and technical assistance agreement (the "SDI Agreement"). Concurrently
with the Offerings and in connection with the execution of a license agreement
(the "SDI License Agreement"), which includes the grant by SDI and NSM of
reciprocal license rights to certain technical and operational know-how, SDI
received 74,468,090 ordinary shares, par value 10 Baht per share (The "Ordinary
Shares"). NSM also issued warrants (the "SDI Warrants") to SDI to purchase
11,421,480 Ordinary Shares, which contain exercise provisions that protect SDI
from dilution of its equity interest in the event holders of certain warrants
exercisable for Ordinary Shares issued on the Issue Date in conjunction with the
issuance of the Senior Subordinated Notes (the "Warrants") exercise such
Warrants. In addition to SDI, one or more affiliates of Enron Corp.
(individually and collectively, "Enron"), a U.S.-based company with energy and
project finance expertise throughout the world, and one or more affiliates of
McDonald & Company Securities, Inc. (individually and collectively, "McDonald",
and together with Enron and SDI, the "Management Investors"), acquired (the
"Management Equity Investment") newly issued Ordinary Shares on the Issue Date.
Enron and McDonald, among others, also purchased an aggregate of 45 million
Ordinary Shares in a privately negotiated transaction in the secondary market
for the Company's shares. Enron additionally acquired a significant portion of
the 64,417,180 Ordinary Shares privately placed by the Company concurrently with
the Debenture Offering (the "Private Placement Shares" and, together with the
Management Equity Investment, the "Equity Investments"). Giving effect to the
Transactions and the other purchases described above, the Management Investors
in the aggregate hold a 20.56% interest in the Company's issued and outstanding
Ordinary Shares.
Construction and start-up of the Hot Mill (as defined), the core of the
mini-mill, has been completed. The hot mill rolled its first coil of steel
during operational testing in October 1997 and melted, cast and hot-rolled its
first coil of steel in December 1997. The Company began commercial operations in
the first quarter of 1998. The Company's goal is to be the world's most
efficient and lowest cost producer of high-quality flat-rolled steel products,
including hot-rolled, cold-rolled and galvanized steel, as well as other
specialty steel products. The recent devaluation of the Baht has reduced certain
of the Company's current capital expenditure obligations and may lower certain
of its operating costs.
Upon completion, NSM's mini-mill will consist of three facilities: (i) a
compact strip production ("CSP") thin-slab hot mill (the "Hot Mill") for steel
melting, refining, casting and hot-rolling, (ii) a facility (the "DRI Facility")
for the production of direct reduced iron ("DRI"), which includes a
co-generation electric power plant (the "Co-Gen Facility") in the process of
being developed with Enron, and (iii)
1
<PAGE>
downstream processing facilities for the production of high-quality pickled and
oiled, cold-rolled, galvanized, and other value-added steel products (the
"Finishing Facilities"). The Hot Mill, DRI Facility and Finishing Facilities are
referred to collectively as the "Mill." The Company believes that the Mill's
design utilizes a unique combination of the best commercially proven
technologies currently in use in some of the most efficient and highest quality
steel manufacturing facilities in the world.
The Hot Mill has a designed annual production capacity of 1.5 million
tonnes. The Hot Mill utilizes advanced technology steel melting and refining,
CSP casting and hot-rolling processes and equipment. The Finishing Facilities,
which are expected to be operational in the first quarter of 1999, will
incorporate a multi-purpose high-capacity production line and several lower
capacity production units with a combined rated annual production capacity of
1.5 million tonnes. The DRI Facility, which is expected to be operational during
the second quarter of 1999, will have an annual rated production capacity of
500,000 tonnes and will provide the Company with a low-cost substitute for
approximately 30% of the scrap in its melt mix. The Company believes that this
equipment will allow it to produce thinner gauge, higher value steel in
hot-rolled form with consistently better tolerances, uniformity and surface
qualities relative to certain other flat-rolled steel producers. NSM believes
that the resulting increased product breadth and cost advantages produced by
combining the DRI Facility, Hot Mill and Finishing Facilities together in a
continuous process will allow it to become a world class flat-rolled steel
producer based on cost, quality and timeliness of delivery.
The world's flat-rolled steel market is dominated by integrated steel
producers using conventional blast furnaces and eight- to ten-inch slab
production methods. The Company believes that thin-slab/flat-rolled steel
mini-mills can compete favorably against integrated steel producers in terms of
cost, quality and timeliness of delivery, while producing superior financial
results. Thailand has historically been one of the largest importers of
flat-rolled steel in the world, ranking third in 1996 in terms of net steel
imported. Virtually all of the steel products imported into Thailand are
produced by high-cost integrated steel producers with lengthy delivery
schedules.
The demand for flat-rolled products in Thailand results, in part, from the
development over the past 20 years of several industries including the
manufacturing of pipe and tube, containers, furniture, appliances and automotive
parts and vehicles. NSM is the only flat-rolled steel producer in Thailand.
Accordingly, the Company believes that it is well positioned to capture a
significant share of the demand for flat-rolled steel in Thailand by producing a
broad range of high-quality products.
In order to ensure consistent and efficient mill utilization and to mitigate
NSM's exposure to the economic difficulties currently being experienced in
Thailand, the Company has entered into eight-year off-take agreements with
Preussag Handel GmbH ("Preussag") and Klockner Steel Trading ("Klockner")
(collectively, the "Off-Take Agreements"). Preussag and Klockner are two
international steel trading and processing companies which sell high-quality,
high-grade steel products throughout the world. Under the Off-Take Agreements,
Preussag and Klockner will be obligated to purchase, in aggregate, 100% of the
Company's production in 1998 through 2002, and 25% of the Company's production
in the years 2001 through 2005. NSM may, at is option, reduce the percentage of
its production sold under the Off-Take Agreements to as little as 67% in 1998,
50% in 1999 and 25% in 2000, if the Company believes it could maximize sales
revenues through sales to other customers. Under the Indentures, sales by NSM to
customers other than Preussag and Klockner, to the extent that the aggregate of
such sales results in receivables outstanding in excess of U.S.$10 million, must
be supported by letters of credit if the customer does not have an investment
grade credit rating. All sales to Preussag and Klockner and substantially all
other export sales will be U.S.$ denominated.
In addition to the Off-Take Agreements, the Company has entered into a
commercial assistance agreement with the former chief commercial officer of U.S.
Steel to facilitate the Company's introduction to flat-rolled steel customers.
Based on international customer inquiries received by the Company to date, the
Company believes that it could increase the percentage of its annual production
sold under off-take
2
<PAGE>
agreements in 2001 through 2005 should economic conditions in the Asia-Pacific
region warrant. The Company also believes, that as a low-cost producer of
high-quality steel products, it will have the option to sell its products in
either domestic or world markets, including the United States.
NSM has entered into various arrangements to ensure its access to and
availability of electric power, natural gas, oxygen, coal and iron ore. NSM has
entered into arrangements under which the Provincial Electricity Authority of
Thailand ("PEA") and the Petroleum Authority of Thailand ("PTT") will provide
NSM with electric power and natural gas. PEA and PTT are government entities
charged with providing electricity and natural gas, respectively, to Thailand's
industrial base. NSM will benefit from two new power substations adjacent to the
Mill constructed by Electric Generating Authority of Thailand ("EGAT") and from
two sets of new power lines which run to the Mill site, all recently constructed
by PEA. NSM also has access to a long-term supply of oxygen and other industrial
gases from Bangkok Industrial Gas, which has recently constructed an oxygen
plant adjacent to the Mill. Coal and iron ore, two important raw materials
needed to produce DRI, are being supplied under long-term contracts by SSM Coal
BV ("SSM"), the owner of a Vietnamese coal mine, and MMTC Limited ("MMTC"), an
iron ore trading company based in India.
When complete, the Company estimates that its total investment in the Mill
for property, plant, land, buildings, machinery and equipment will be
approximately U.S.$764 million. The Company's investment in the land, buildings,
machinery and equipment of the Mill as of December 31, 1997 was approximately
U.S.$588 million, including approximately U.S.$514 million in connection with
the construction of the Hot Mill, approximately U.S.$32 million in connection
with the DRI Facility and approximately U.S.$42 million in connection with the
Finishing Facilities.
During 1998, while the DRI Facility and Finishing Facilities are expected to
be under construction, interest on the Notes will be paid from amounts on
deposit in the Notes DSR Account. As of December 31, 1997, after giving pro
forma effect to the Transactions, the Company would have had total shareholders'
equity of U.S.$158 million and total indebtedness of U.S.$771 million, of which
U.S.$336 million would have been secured equally and ratably with the
Guaranties. See "Risk Factors--Risk Related to Forward Looking Information."
PROJECT ADVANTAGES
NSM believes that it enjoys a number of advantages over other flat-rolled
steel producers and that these advantages will facilitate the implementation of
its business strategy. Through the use of advanced technology throughout the
Mill, the Company believes that its projected cost structure will place it among
the lowest cost producers of flat-rolled steel products in the world.
Complementing the Company's projected low cost structure is its designed
capability to produce a full range of flat-rolled products, including high
value-added products that previously could only be produced by higher cost
integrated steel producers. The Company believes that this ability to produce
high value-added products coupled with its projected low cost structure, will
enable it to compete effectively in selling its products, to the domestic and
world steel markets. Further complementing the Company's projected cost
structure and product capabilities will be its right to obtain certain technical
and operational advice and consultation services from SDI, as well as access to
the strategic expertise of Enron and McDonald.
BUSINESS STRATEGY
NSM's business strategy is to use its advanced Hot Mill, DRI Facility and
Finishing Facilities technologies to produce superior quality flat-rolled steel
in a variety of high value-added forms. The principal elements of the Company's
strategy include:
- ACHIEVE CONVERSION COSTS AMONG THE LOWEST IN THE STEEL INDUSTRY. The
Company believes that the design of the Mill represents substantial
efficiency improvements over earlier mini-mills using CSP technology.
These improvements are expected to substantially reduce the cost and
production time
3
<PAGE>
of the steel-making process, limit electric arc furnace ("EAF") power-off
and downtime, reduce consumption of consumable inputs and ultimately
produce higher quality steel. By designing and utilizing equipment that is
efficient, consumes fewer raw materials and improves the consistency and
reliability of the steel making process, the Company believes that its per
tonne manufacturing costs will be among the lowest in the steel industry.
- EMPHASIZE VALUE-ADDED PRODUCTS. NSM believes that it will be able to
produce thinner gauge steel in hot-rolled form with consistently better
uniformity, tolerances and surface quality relative to certain other
flat-rolled steel producers. The Company also believes that its
high-quality, thinner gauge hot-rolled products will compete favorably
with certain more expensive cold-rolled (further processed) products,
enabling it to achieve higher margins. The Company believes that thinner
gauge, hot-rolled products, and other value-added products, may be less
susceptible to the price fluctuations commonly found in the spot market
for commodity grade steel. The design of the Finishing Facilities' process
lines is expected to result in higher quality products, significant cost
savings and yield improvements relative to the processing systems used by
certain other flat-rolled steel producers. In addition, the Company
expects to devote a substantial portion of its hot-rolled capacity to the
production of higher margin pickled and oiled, cold-rolled, galvanized,
and other value added steel products. The Company believes that the
resulting increased product breadth and cost advantages will allow it to
compete favorably on a cost and quality basis with any steel producer in
the world.
- SECURE A SOLID BASELOAD OF U.S.$ SALES. In order to ensure consistent and
efficient Mill utilization and to balance U.S.$ revenues with U.S.$ debt
service and expense requirements, the Company has entered into the
Off-Take Agreements. Under the Off-Take Agreements, Preussag and Klockner
will be obligated to purchase, in aggregate, 100% of the Company's
production in 1998 through 2002, and 25% of the Company's production in
the years 2001 through 2005. NSM may, at is option, reduce the percentage
of its production sold under the Off-Take Agreements to as little as 67%
in 1998, 50% in 1999 and 25% in 2000, if the Company believes it could
maximize sales revenues through sales to other customers. Under the
Indentures, sales by NSM to customers other than Preussag and Klockner, to
the extent that the aggregate of such sales results in receivables
outstanding in excess of U.S.$10 million, must be supported by letters of
credit if the customer does not have an investment grade credit rating.
All sales to Preussag and Klockner and substantially all other export
sales will be U.S.$ denominated. Based on international customer
inquiries, the Company believes that it could substantially increase the
percentage of its annual production sold under off-take agreements in 2001
through 2005 should economic conditions in the Asia-Pacific region
warrant. The Company believes that as a low-cost producer of high-quality
steel products, it will have the option to sell all of its products in
either domestic or world markets, including the United States.
- MAXIMIZE MINI-MILL ADVANTAGES. The Company has adopted a combination of
technologies and management techniques which management believes will
provide it with the flexibility to deliver custom ordered, just-in-time,
high-quality products to customers with minimal lead times. NSM has
adopted management and personnel policies designed to take advantage of
the opportunities inherent in the technological revolution in the
flat-rolled steel industry. The Company expects its energy consumption,
man-hours per tonne produced and the environmental impact of the
operations to be among the lowest in the industry. The Company intends to
use its advanced technologies to develop profitable niche market products.
- UTILIZE LEADING MINI-MILL OPERATIONAL AND MANAGEMENT TECHNIQUES. The
Company has entered into agreements with a number of leading steel
mini-mill developers and operators in order to make available to
Management Co. or the Company certain technical know how and business
practices. Under the terms of the SDI Agreement, SDI, a company whose
executives and managers pioneered the development of thin-slab/flat-rolled
technology and directed the construction and operation of
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the world's first thin-slab/flat-rolled minimill, will provide management
advisory and periodic on-site technical support to Management Co. Hylsa
S.A. ("Hylsa"), under a technical assistance and training agreement (the
"Hylsa Agreement"), has provided training to over 140 NSM employees at its
Monterey, Mexico plant, and will continue to provide training and on-site
technical support. Hylsa is recognized in the world steel making community
for producing high-quality, thin-gauge products utilizing CSP technology.
From early 1996 through mid-1997, the Company received certain technical
assistance and employee training for over 170 NSM employees from Nucor
Corporation ("Nucor"), currently an operator of eight mini-mills in the
United States.
- SECURE RAW MATERIAL SOURCES. The primary raw materials and utilities used
to produce DRI and flat-rolled steel products are coal, iron ore,
electricity and scrap. To secure access to adequate low-cost supplies of
these inputs, NSM has entered into long-term arrangements for the supply
of coal, iron ore and electricity with SSM Coal BV, MMTC Limited, and PEA,
respectively. For scrap, NSM will have access to both the domestic and
global scrap markets. Management believes that due to the recent Baht
devaluation and the logistical and regulatory obstacles to exporting scrap
from Thailand, NSM's near term domestic scrap costs will be U.S.$20-30 per
tonne lower than world market prices.
- EXPLOIT STRATEGIC LOCATION. The Company is the only flat-rolled steel
producer in Thailand, historically one of the world's largest importers of
finished and semi-finished flat-rolled steel. In 1996, Thailand ranked
third in the world in terms of imported steel. The Company believes that
demand in Thailand for steel products will return to historical levels
following improvements in domestic economic conditions. The Company
believes that strong domestic demand combined with import tariffs on
certain steel products would allow the Company to achieve higher profit
margins on the sale of its products in Thailand relative to sales outside
of Thailand.
- UTILIZE THE EXPERTISE OF SDI, ENRON AND MCDONALD. NSM and Management Co.
have contracted to acquire certain strategic and financial expertise that
will enhance NSM's ability to compete both financially and operationally
in the world steel market. By becoming equity owners of NSM and through
their representation on the Company's board of directors, the Company
expects that SDI's, Enron's and McDonald's representatives on the board of
directors will provide the Company with certain know how, expertise and
knowledge.
- PURSUE EXPANSION OPPORTUNITIES. In order to lower production costs through
economies of scale, the Company intends to pursue expansion of the Mill if
market conditions warrant such an expansion. To facilitate expansion of
DRI production capacity, NSM designed the DRI Facility to accommodate a
tripling of capacity. In addition to mitigating NSM's reliance on the
global scrap market, an expanded DRI Facility would produce a significant
amount of additional electric power at economically attractive rates for
use in the Hot Mill. NSM also designed the Hot Mill and Finishing
Facilities to facilitate expansion. In aggregate, the cost of increasing
the capacity of the DRI Facility by 1.0 million tonnes per year, the Hot
Mill by 1.2 million tonnes per year and the Finishing Facilities by
100,000 tonnes per year is estimated by the Company to approximate
U.S.$250 million.
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THE EXCHANGE OFFERS
THE NEW SECURITIES
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The Exchange Offer...... The Note Issuers are offering to exchange pursuant to the
Exchange Offers: (i) a principal amount of U.S. $249,000,000
of the Note Issuer's New Senior Notes for a like principal
amount of the Note Issuer's Old Senior Notes; (ii) a principal
amount of up to U.S. $203,500,000 of the Note Issuer's New
Senior Subordinated Notes for a like principal amount of the
Note Issuer's Old Senior Subordinated Notes; and (iii) a
principal amount of up to U.S. $53,133,016 of the Note
Issuer's New Debentures for a like principal amount of the
Note Issuer's Old Debentures. The Note Issuers will issue the
New Securities on or promptly after the Exchange Date. As of
the date of this Prospectus: (i) an aggregate amount of U.S.
$249,000,000 of the Old Senior Notes is outstanding; (ii) an
aggregate amount of U.S. $203,500,000 of the Old Senior
Subordinated Notes is outstanding; and (iii) an aggregate
amount of U.S. $53,133,016 of the Old Debentures is
outstanding. The terms of the New Securities are identical in
all material respects to the terms of the Old Securities for
which they may be exchanged pursuant to the Exchange Offers,
except that the New Securities have been registered under the
Securities Act and are issued free from any covenant regarding
registration, including terms providing for an increase in the
interest rate on the Old Securities upon a failure to file or
have declared effective an exchange offer registration
statement or to consummate the Exchange Offers by certain
dates. The New Securities will evidence the same debt as the
Old Securities and will be issued under and be entitled to the
same benefits under the Indentures and Guaranties as the Old
Securities. The issuance of the New Securities and the
Exchange Offers are intended to satisfy certain obligations of
the Company and the Note Issuers under the Registration Rights
Agreement. See "The Exchange Offers" and "Description of
Notes."
Interest Payments....... Interest on the New Securities shall accrue from the last
Interest Payment Date (February 1 or August 1) on which
interest was paid on the Old Securities surrendered or, if no
interest has been paid on such Old Securities, from March 12,
1998. See "The Exchange Offers-- Interest on the New
Securities."
Expiration Date......... The Exchange Offers will expire at 5:00 p.m., New York City
time on the date that is 20 business days following the later
of the date of effectiveness of the registration statement or
the date of the Exchange Offers is otherwise commenced unless
extended by the Company in its sole discretion (but in no
event to date later than , 1998). See "The Exchange
Offers--Expiration Date; Extensions; Amendments."
Exchange Date........... The date of acceptance for exchange of the Old Securities and
the consummation of the Exchange Offers will be the first
business day following the Expiration Date unless extended.
See "The Exchange Offers--Terms of the Exchange."
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Conditions of the
Exchange Offer........ The Note Issuer's obligation to consummate the Exchange Offers
will be subject to certain conditions. See "The Exchange
Offers-- Conditions to the Exchange Offers." The Note Issuers
reserves the right to terminate or amend the Exchange Offers
at any time prior to the Expiration Date upon the occurrence
of any such condition.
Withdrawal Rights....... Tenders may be withdrawn at any time prior to 5:00 p.m., New
York City time, on the Expiration Date; otherwise, all tenders
will be irrevocable. See "The Exchange Offers--Withdrawal of
Tenders."
Procedures for Tendering
Old Securities........ See "The Exchange Offers--Procedures for Tendering."
United States Federal
Income Tax
Consequences.......... The exchange of Old Securities for New Securities pursuant to
the Exchange Offers will not result in any income, gain or
loss to holders who participate in the Exchange Offers or to
the Note Issuers for U.S. federal income tax purposes. See
"Tax Considerations."
Resale.................. The Note Issuers are making the Exchange Offers in reliance on
the position of the staff of the Commission as set forth in
certain no-action letters addressed to other parties in other
transactions. However, the Note Issuers have not sought their
own no-action letter and there can be no assurance that the
staff of the Commission would make a similar determination
with respect to the Exchange Offers as in such other
circumstances. Based on these interpretations by the staff of
the Commission, the Note Issuers believes that New Securities
issued pursuant to the Exchange Offers in exchange for Old
Securities may be offered for resale, resold and otherwise
transferred by a holder thereof other than (i) a broker-dealer
who purchased such Old Securities directly from the Note
Issuers to resell pursuant to Rule 144A or any other available
exemption under the Securities Act or (ii) a person that is an
"affiliate" (as defined in Rule 405 of the Securities Act) of
the Note Issuers without compliance with the registration and
prospectus delivery provisions of the Securities Act; PROVIDED
that such New Securities are acquired in the ordinary course
of such holder's business and that such holder is not
participating, and has no arrangement or understanding with
any persons to participate, in the distribution of such New
Securities. Holders of Old Securities accepting the Exchange
Offers will represent to the Note Issuers in the Letter of
Transmittal that such conditions have been met. Any holder who
participates in the Exchange Offers for the purpose of
participating in a distribution of the New Securities may not
rely on the position to the staff of the Commission as set
forth in these no-action letters and would have to comply with
the registration and prospectus delivery requirements of the
Securities Act in connection with any secondary resale
transaction. A secondary resale transaction in the United
States by a holder who is using the Exchange Offers to
participate in the distribution of New Securities must be
covered by a registration statement containing the selling
securityholder information required by Item 507 of Regulation
S-K of the Securities Act. Each broker-dealer (other than an
"affiliate"
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of the Company) that receives New Securities for its own
account pursuant to the Exchange Offers must acknowledge that
it acquired the Old Securities as the result of market-making
activities or other trading activities and will deliver a
prospectus in connection with any resale of such New
Securities. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. This Prospectus, as it may
be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of New Securities
received in exchange for Old Securities where such Old
Securities were acquired by such broker-dealer as a result of
market-making activities or other trading activities. In
addition, pursuant to section 4(3) under the Securities Act,
until , , all dealers effecting transactions in
the New Securities, whether or not participating in the
Exchange Offers, may be required to deliver a Prospectus. The
Note Issuers have agreed that, for a period of 180 days after
the date of this Prospectus, it will make this Prospectus
available to any broker-dealer for use in connection with any
such resale. See "Plan of Distribution." Any broker-dealer who
is an affiliate of the Note Issuers may not rely on such
no-action letters and must comply with the registration and
prospectus delivery requirements of the Securities Act in
connection with any secondary resale transaction. See "The
Exchange Offers--Purpose of the Exchange Offers."
Remaining Old
Securities............ Holders of Old Securities who do not tender such Old
Securities in the Exchange Offers or whose Old Securities are
not accepted for exchange will continue to hold such Old
Securities and will be entitled to all the rights and
preferences, and will be subject to the limitations,
applicable thereto under the Indenture. All untendered and
tendered but unaccepted Old Securities (collectively, the
"Remaining Old Securities") will continue to bear legends
restricting their transfer. In general, the Old Securities may
not be offered or sold unless registered under the Securities
Act, except pursuant to an exemption from, or in a transaction
not subject to, the Securities Act and applicable state
securities laws. To the extent that the Exchange Offers are
effected, the trading market, if any, for the Remaining Old
Securities could be adversely affected. See "Risk
Factors--Consequences of Failure to Properly Tender Old Notes
Pursuant to the Exchange Offers." See "The Exchange
Offers--Terms of the Exchanges."
Exchange Agent.......... The exchange agent with respect to the Exchange Offers is
(the "Exchange Agent"). The address and
telephone number of the Exchange Agent are set forth in "The
Exchange Offers--Exchange Agent."
Use of Proceeds......... There will be no proceeds to the Note Issuers from the
exchange pursuant to the Exchange Offers. See "Use of
Proceeds."
Relationship to the Old
Notes................. The form and terms of the New Securities are substantially the
same as the form and terms of the Old Securities except that
the New Securities are registered under the Securities Act
and, therefore, will not bear
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legends restricting the transfer thereof and will not contain
the registration rights and liquidated damages provisions
relating to the Old Securities. See "Description of Notes" and
"Old Exchange Offer and Registration Rights."
SENIOR NOTES:
Issuers................. NSM (Del) and NSM Cayman, as joint and several obligors.
Pursuant to an agency agreement between NSM (Del) and NSM
Cayman, NSM (Del) will issue the New Senior Notes and pay
amounts due thereunder solely as agent of NSM Cayman.
Senior Notes Offered.... U.S.$249,000,000 million aggregate principal amount at
maturity of 12% Senior Mortgage Notes Due 2006.
Maturity Date........... February 1, 2006.
Yield to Maturity....... 14% (computed on a semi-annual bond equivalent basis).
Senior Guaranty......... Payment of principal of, and premium, interest and Additional
Amounts, if any, on the New Senior Notes will be irrevocably
and unconditionally guaranteed on a senior secured basis by
the Company. The New Senior Guaranty will be secured by the
Collateral.
Ranking................. The New Senior Notes will be senior secured obligations of the
Note Issuers and will rank senior in right of payment to the
New Senior Subordinated Notes and the New Debentures and to
all future Indebtedness of the Note Issuers that is designated
as subordinate or junior in right of payment to the New Senior
Notes. The New Senior Guaranty is an irrevocable, direct,
unconditional and secured obligation of the Company and will
rank PARI PASSU in right of payment with all other existing
and future senior indebtedness of the Company, including the
Bank Credit Facility (as defined), and senior in right of
payment to the New Senior Subordinated Guaranty and the New
Debenture Guaranty and to all future Indebtedness of the
Company that is designated as subordinate or junior in right
of payment to the New Senior Guaranty. Pursuant to the terms
of the Bank Credit Facility, the Company has agreed that,
other than as a result of enforcement of the security
interests granted in the Collateral, in the event that there
are insufficient funds available at any time to make all
payments of principal or interest then due under the Bank
Credit Facility, and the New Notes and the New Debentures, it
will pay 100% of any interest and 50% of any principal then
due under the Bank Credit Facility prior to paying any
interest then due on the New Notes or the New Debentures. In
exchange for this agreement, the lenders under the Bank Credit
Facility have agreed that, in the event the Company has
insufficient funds (except for the funds remaining in the
Off-shore Reserve Account), failure to pay any part of the
additional 50% of any scheduled principal amount due to such
lenders will not be a default under the Bank Credit Facility,
and such amount will be paid out pro rata over the remaining
scheduled principal payments under the Bank Credit Facility.
Optional Redemption..... The New Senior Notes may not be redeemed at the option of the
Note Issuers prior to February 1, 2002, except that until
February 1, 2001, the
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Note Issuers may redeem, at their option, up to an aggregate
of 35% of the aggregate principal amount at maturity of the
New Senior Notes originally issued at a redemption price equal
to 112% of the principal amount at maturity thereof for any
such redemption, together with accrued interest, if any, to
the redemption date, with the net proceeds of one or more
Public Equity Offerings (as defined); PROVIDED, HOWEVER, that
at least U.S.$162 million principal amount at maturity of the
New Senior Notes remains outstanding immediately after each
such redemption. The New Senior Notes may be redeemed by the
Note Issuers at any time and from time to time on or after
February 1, 2002, at the redemption prices set forth herein.
See "Description of Notes and Guaranties--Optional
Redemption."
SENIOR SUBORDINATED
NOTES:
Issuers................. NSM (Del) and NSM Cayman, as joint and several obligors.
Pursuant to an agency agreement between NSM (Del) and NSM
Cayman, NSM (Del) will issue the New Senior Subordinated Notes
and pay amounts due thereunder solely as agent of NSM Cayman.
Senior Subordinated
Notes Offered......... U.S.$203,500,000 aggregate principal amount at maturity of
12 1/4% Senior Subordinated Notes Due 2008.
Maturity Date........... February 1, 2008.
Yield to Maturity....... 15% (computed on a semi-annual bond equivalent basis).
Senior Subordinated
Guaranty.............. Payment of principal of, and premium, interest and Additional
Amounts, if any, on the New Senior Subordinated Notes will be
irrevocably and unconditionally guaranteed on a senior (except
in respect of Specified Senior Indebtedness of the Company)
secured basis by the Company. The New Senior Subordinated
Guaranty will be secured by the Collateral.
Ranking................. The New Senior Subordinated Notes will be senior secured
obligations of the Note Issuers, but the payment of the
principal of, and premium, interest and Additional Amounts, if
any, on the New Senior Subordinated Notes will be subordinate
in right of payment to the prior payment in full of all
Specified Senior Indebtedness of the Note Issuers. The New
Senior Subordinated Notes will rank PARI PASSU in right of
payment with all existing and future senior indebtedness
(other than Specified Senior Indebtedness) of the Note Issuers
and senior in right of payment to the New Debentures and all
future indebtedness of the Note Issuers that is designated as
subordinate or junior in right of payment to the New Senior
Subordinated Notes. The New Senior Subordinated Guaranty is an
irrevocable, direct, unconditional and secured obligation of
the Company and will rank PARI PASSU in right payment with
other existing and future senior indebtedness (other than
Specified Senior Indebtedness) of the Company, including the
Bank Credit Facility, and senior in right of payment to the
New Debenture Guaranty and to all future indebtedness of the
Company that is
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designated as subordinate or junior in right of payment to the
Guaranties.
Optional Redemption..... The New Senior Subordinated Notes may not be redeemed at the
option of the Note Issuers prior to February 1, 2003, except
that until February 1, 2001, the Note Issuers may redeem, at
their option, up to an aggregate of 35% of the aggregate
principal amount at maturity of the New Senior Subordinated
Notes originally issued at a redemption price equal to 112.25%
of the principal amount at maturity thereof for any such
redemption, together with accrued interest, if any, to the
redemption date with the net proceeds of one or more Public
Equity Offerings; PROVIDED, HOWEVER, that at least U.S.$132
million principal amount at maturity of the New Senior
Subordinated Notes remains outstanding immediately after each
such redemption. The New Senior Subordinated Notes may be
redeemed by the Note Issuers at any time and from time to time
on or after February 1, 2003 at the redemption prices set
forth herein. See "Description of Notes and Guaranties--
Optional Redemption."
DEBENTURES
Issuers................. NSM (Del) and NSM Cayman, as joint and several obligors.
Pursuant to an agency agreement between NSM (Del) and NSM
Cayman, NSM (Del) will issue the New Debentures and pay
amounts due thereunder solely as agent of NSM Cayman.
Debentures Offered...... U.S.$53,133,016 aggregate principal amount at maturity of
12 3/4% Subordinated Mortgage Debentures Due 2009.
Maturity Date........... February 1, 2009.
Debenture Guaranty...... Payment of principal of, and premium, interest and Additional
Amounts, if any, on the New Debentures will be irrevocably and
unconditionally guaranteed on a subordinated basis by the
Company. The New Debenture Guaranty will be secured on a
subordinated basis by the Collateral.
Ranking................. The New Debentures will be subordinated obligations of the
Note Issuers. The payment of the principal of, and premium,
interest and Additional Amounts, if any, on the New Debentures
will be subordinate in right of payment to the prior payment
in full of all Debenture Specified Senior Indebtedness of the
Note Issuers. The New Debentures will rank PARI PASSU in right
of payment with all existing and future indebtedness (other
than Debenture Specified Senior Indebtedness) of the Note
Issuers and all future indebtedness of the Note Issuers that
is designated as subordinate or junior in right of payment to
the New Debentures. The New Debenture Guaranty is an
irrevocable, direct, unconditional and secured obligation of
the Company and will rank PARI PASSU in right payment with
other existing and future senior indebtedness (other than
Debenture Specified Senior Indebtedness) of the Company, to
all future indebtedness of the Company that is designated as
subordinate or junior in right of payment to the Debenture
Guaranty.
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Optional Redemption..... The New Debentures may not be redeemed at the option of the
Note Issuers prior to February 1, 2003, except that until
February 1, 2001, the Note Issuers may redeem, at their
option, up to an aggregate of 35% of the aggregate principal
amount at maturity of the New Debentures originally issued at
a redemption price equal to 112.75% of the principal amount at
maturity thereof for any such redemption, together with
accrued interest, if any, to the redemption date with the net
proceeds of one or more Public Equity Offerings; PROVIDED,
HOWEVER, that at least U.S.$35 million principal amount at
maturity of the New Debentures remains outstanding immediately
after each such redemption. The New Debentures redeemed by the
Note Issuers at any time and from time to time on or after
February 1, 2003 at the redemption prices set forth herein.
See "Description of Notes and Guaranties--Optional
Redemption."
COMMON TERMS OF THE
SENIOR NOTES, THE SENIOR
SUBORDINATED NOTES AND THE
DEBENTURES:
Interest Payment Dates.... Interest on the Securities will be payable semiannually in
cash in arrears on February 1 and August 1 of each year,
commencing August 1, 1998.
Sinking Fund Obligation... No later than the fifteenth day following the last day of each
fiscal quarter of the Company (as such fiscal year is in
effect on the Issue Date), the Company will be required to
deposit into the Notes Sinking Fund Account (as defined) an
amount equal to the Cash Flow Sweep Amount (as defined).
Change of Control......... The Note Issuers and the Company will be required to make an
offer to repurchase any and all outstanding Securities at a
purchase price equal to 101% of the Accreted Value thereof,
plus accrued and unpaid interest and Additional Amounts, if
any, to the date of repurchase, upon the occurrence of a
Change of Control. See "Description of Notes and
Guaranties--Repurchase at the Option of the Holders--Change of
Control."
Optional Tax Redemption... Subject to certain exceptions and as more fully described
herein, the Securities may be redeemed at the option of the
Note Issuers at the redemption price set forth herein,
together with accrued and unpaid interest and Additional
Amounts, if any, to the date of redemption, if, as a result of
certain changes in the laws, treaties, regulations,
interpretations or rulings affecting Cayman Islands or
Thailand Taxes, (i) the Note Issuers would be required to pay
certain Additional Amounts or (ii) (x) the Company or NSM
Cayman would be required to deduct or withhold certain Cayman
Islands or Thailand Taxes on payments to a Note Issuer to
allow it to make payments under the Securities or (y) the
Company would be obligated to pay certain Additional Amounts
with respect to payments under the Guaranties, as described in
"Description of Notes and Guaranties--Optional Tax Redemption"
and "Description of Notes and Guaranties--Additional Amounts."
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Withholding Taxes;
Additional Amounts...... Principal of, and interest on, the Securities will be payable
by the Note Issuers free and clear of, and without withholding
or deduction for, Thailand or Cayman Islands Taxes. Payments
under the Guaranties will be made free and clear of, and
without withholding or deduction for, Thailand Taxes. If
either of the Note Issuers or the Company, as the case may be,
is required by law to deduct or withhold Cayman Islands or
Thailand Taxes, the Note Issuers or the Company, as the case
may be, will pay Additional Amounts, subject to certain
exceptions, in respect of such withholding taxes on such
payments.
Certain Covenants......... The Indentures contain certain covenants including, but not
limited to, covenants with respect to the following: (i)
limitations on additional indebtedness of the Note Issuers and
the Company, (ii) limitations on restricted payments, (iii)
limitations on liens, (iv) limitations on the issuance and
sale of capital stock of Restricted Subsidiaries, (v)
limitations on dividends, (vi) limitations on transactions
with Affiliates (as defined), (vii) limitations on issuances
of capital stock, (viii) limitations on lines of business,
(ix) limitations on consolidations, mergers and transfers of
all or substantially all the assets of the Company, (x)
limitations on sales to non-Credit Qualified Purchasers (as
defined) and (i) limitations on sale/leaseback transactions.
See "Description of Notes and Guaranties--Certain Covenants."
Collateral................ The obligations of the Note Issuers under the Notes will be
secured by first priority pledges of the capital stock of NSM
(Del). The obligations of the Note Issuers under the
Debentures will be secured by a second priority pledge on such
stock. The obligations of the Company under the Guaranties
(other than the Debenture Guaranty) will be secured equally
and ratably on a first priority basis by (i) a first mortgage
over the land and buildings comprising the Mill (except for
the Co-Gen Facility); (ii) a security interest in the Offshore
Reserve Account and the Notes DSR Account; (iii) a security
interest in all machinery and equipment located at the Mill;
(iv) an assignment of all insurance and reinsurance policies
maintained by the Company on the Mill (except for the Co-Gen
Facility); (v) an assignment of the Company's rights and
benefits under the Project Documents (as defined); (vi) a
pledge and conditional assignment of the Operating Account,
the Revenue Account and the Notes Sinking Fund Account, (vii)
a pledge of certain Permitted Investments; (viii) a pledge of
all issued and outstanding shares of NSM Cayman; and (ix) an
assignment of Performance Bonds (all such collateral security,
the "Collateral"). The obligations of the Company under the
Debenture Guaranty will be secured by a second priority lien
on the Collateral. Substantially all of the Collateral, other
than the Offshore Reserve Account, the Notes DSR Account and
the pledge of the capital stock of NSM Cayman also secures, on
an equal and ratable basis, certain existing Indebtedness
under the Bank Credit Facility. See "Security Arrangements."
Collateral Accounts....... The Company will establish the following Collateral Accounts
with the Collateral Agent for the benefit INTER ALIA of the
Notes:
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Offshore Reserve
Account:.............. The Offshore Reserve Account was funded on the Issue Date with
the Notes Net Proceeds (as defined) received by the Company
from the proceeds of the Offerings, and the Equity Investments
(less amounts deposited in the Notes DSR Account equal to the
first three interest payments on the Senior Notes, the first
two interest payments on the Senior Subordinated Notes and the
first two interest payments on the Debentures). Funds in the
Offshore Reserve Account may only be used to (i) fund Phase II
Construction Costs (as defined) that are required to be paid
by the Company, pursuant to the applicable construction
budgets, including approximately U.S.$102 million in accounts
payable, and (ii) fund up to U.S.$70 million in the aggregate
of Working Capital Requirements (as defined). Funds held on
deposit in the Offshore Reserve Account may only be invested
in Permitted Foreign Investments (as defined). After Phase II
Completion (as defined) and upon the achievement by the
Company of Profitable Operations prior to December 31, 2001,
the Company may elect, among other things, to apply any
remaining amounts in the Offshore Reserve Account (except to
the extent then required to replenish the Note DSR Account)
toward Phase III Construction Costs (as defined). If the
Company fails to attain Profitable Operations prior to
December 31, 2001, the amounts in the Offshore Reserve Account
will be used to tender for the Securities at a price equal to
100% of the Accreted Value thereof (a "Stage III Tender"). Any
amounts remaining in the Offshore Reserve Account following
the completion of a Stage III Tender will be applied by the
Company (i) first to replenish any required amounts in the
Notes DSR Account (if necessary) and (ii) second to pay
overdue interest, if any, and principal amounts outstanding
under the Bank Credit Facility. See "Description of Notes and
Guaranties--Repurchase at the Option of Holders." The Offshore
Reserve Account shall at all times be maintained in U.S.$ at a
Qualifying Financial Institution (as defined). See
"Description of Notes and Guaranties--Credit Support."
Notes DSR Account:...... The Notes DSR Account was be funded on the Issue Date with a
portion of the Notes Net Proceeds, together with a portion of
the proceeds of the Debenture Offering, equal to the first
three interest payments on the New Senior Notes, the first two
interest payments on the New Senior Subordinated Notes and the
first two interest payments on the New Debentures. Funds in
the Notes DSR Account shall be used to pay interest on the
Securities through February 1, 1999, after which the amount on
deposit in the Notes DSR Account shall, subject to certain
limited exceptions, be equal to the aggregate interest payable
on the New Senior Notes on the next applicable Interest
Payment Date. The Notes DSR Account shall at all times be
maintained in U.S.$ at a Qualifying Financial Institution. See
"Description of Notes and Guaranties--Credit Support."
Notes Sinking Fund
Account:.............. The Notes Sinking Fund Account will be funded on the fifteenth
day following the last day of each fiscal quarter of the
Company in an amount equal to the Cash Flow Sweep Amount.
Funds in the Notes Sinking Fund Account shall be used to
retire Securities at maturity or
</TABLE>
14
<PAGE>
<TABLE>
<S> <C>
to satisfy certain repurchase obligations in respect of the
Securities. Notwithstanding the foregoing, the Note Issuers or
the Company may use amounts held in the Notes Sinking Fund
Account (i) during the period prior to the second anniversary
of the Issue Date and during any period where Profitable
Operations have been achieved and are continuing, to fund
Phase III Construction Costs, to fund working capital
shortfalls, to invest in or acquire Additional Assets or to
purchase, redeem or otherwise acquire for value Senior
Indebtedness of the Company or the Note Issuers and (ii) at
all other times, solely to purchase, redeem or otherwise
acquire for value Securities or to make scheduled principal or
interest payments on Senior Indebtedness of the Company or the
Note Issuers. The Notes Sinking Fund Account shall at all
times be maintained in U.S.$ at a Qualifying Financial
Institution. See "Description of Notes and Guaranties--Credit
Support."
Revenue Account:........ All sales proceeds, insurance proceeds and other amounts
received by the Company and its subsidiaries (to the extent
not required to be deposited in the Offshore Reserve Account
or the Notes DSR Account) shall be deposited in the Revenue
Account. Proceeds deposited into the Revenue Account in an
amount equal to the sum of (i) the aggregate interest payable
on the Securities on the next Interest Payment Date and (ii)
any amount required to be deposited into the Notes Sinking
Fund Account applicable to the then current fiscal quarter, as
estimated in advance in good faith by the Company, shall first
accrue, and at all times be maintained, in U.S.$ at a
Qualifying Financial Institution (subject to certain limited
exceptions). The Company obtained an approval from the Bank of
Thailand to open and maintain the Notes Sinking Fund and
Offshore Sub-Account with commercial banks outside Thailand.
The Company will be able to deposit proceeds from the export
of its products for an amount not to exceed U.S. $130 million
each year through the maturity of the Notes and the
Debentures. Such U.S.$ amounts may be used by the Company for
payments and other uses permitted by the Indentures but, other
than payments of interest on the Securities or deposits into
the Notes Sinking Fund Account, only to the extent all other
amounts on deposit in the Revenue Account are insufficient to
make such payments. The balance of amounts on deposit in the
Revenue Account may be maintained in Baht at a Qualifying
Domestic Financial Institution, which initially shall be the
Bangkok Office of The Chase Manhattan Bank. Amounts in the
Revenue Account (including U.S.$ amounts) will be used (i) to
fund the Operating Account (described below) on a monthly
basis, (ii) fund the Notes Sinking Fund Account, (iii) fund
Working Capital Requirements, (iv) to pay amounts due on the
Securities, and (v) at all times upon achievement of
Profitable Operations, to fund cash dividends and
distributions permitted under the Indentures. Interest due on
the Securities shall, after the first two Interest Payment
Dates, be paid from the Revenue Account, provided that if
there are insufficient funds then available in the Revenue
Account, interest due on the Senior Notes shall be paid from
the Notes DSR Account. See "Description of Notes and
Guaranties--Credit Support."
</TABLE>
15
<PAGE>
<TABLE>
<S> <C>
Operating Account:...... The Operating Account shall be funded monthly from funds held
in the Revenue Account. The amount in the Operating Account
shall on the first day of each calendar month be equal to the
sum of (i) the capital expenditures (including Phase II
Construction Costs to be paid by the Company to vendors in
Thailand) of the Company during that calendar month as
estimated in advance in good faith by NSM and (ii) any amount
required to be paid during such calendar month in connection
with the Bank Credit Facility. Subject to any applicable
exchange control regulations in Thailand, the Operating
Account shall be maintained in U.S.$ at the Thailand branch of
the Collateral Agent, with funds able to be maintained in Baht
to the extent such funds were maintained in Baht in the
Revenue Account and with funds otherwise able to be converted
to Baht on an as-needed or as-required basis only. The Company
obtained an approval from the Bank of Thailand enabling the
Company to maintain foreign currencies in foreign currency
accounts. The accounts are to be maintained at commercial
banks in Thailand or the Industrial Finance Corporation of
Thailand. The accounts are not to exceed the amount of the
Company's obligations in foreign currencies payable within
three months. See "Description of Notes and Guaranties--Credit
Support."
Asset Sale Proceeds....... The Note Issuers and the Company will be required, in certain
circumstances, to apply the net cash proceeds of certain sales
or dispositions of assets, including but not limited to sales
of equity interests in the Note Issuers, pro rata to a
mandatory offer by the Note Issuers and the Company to (i)
purchase Securities at 101% of their Accreted Value thereof on
the date of purchase plus accrued and unpaid interest and
Additional Amounts, if any, thereon, and (ii) the repayment of
principal and accrued and unpaid interest, if any, under the
Bank Credit Facility. See "Descriptions of Notes and
Guaranties-- Repurchase at the Option of Holders--Sale of
Assets and Subsidiary Stock."
</TABLE>
RISK FACTORS
Holders of the Old Securities and prospective investors in the New
Securities should consider carefully all of the information set forth in this
Prospectus and, in particular, should evaluate the specific factors set forth
under "Risk Factors" for risks involved with an investment in the Securities.
16
<PAGE>
SUMMARY FINANCIAL AND PRO FORMA INFORMATION
(AMOUNTS IN THOUSANDS EXCEPT RATIOS)
The following summary financial information as at December 31, 1994, 1995,
1996, 1997 and for the years ended December 31, 1995, 1996, 1997 have been
derived from, and are qualified in their entirety by reference to, the Company's
Audited Financial Statements and Notes thereto appearing elsewhere in this
Prospectus. Such statements have been audited by Peat Marwick Suthee Limited,
independent public accountants, as of and for each of the years in such period.
The Company's Audited Financial Statements are prepared in conformity with
generally accepted accounting principles in Thailand ("Thai GAAP"), which differ
from generally accepted accounting principles in the United States ("U.S.
GAAP"). The following data should be read in conjunction with the Company's
Audited Financial Statements and the Notes thereto, and Management's Discussion
and Analysis of Financial Condition, which are included elsewhere in this
Prospectus. The unaudited pro forma balance sheet information presents the
financial position of the Company as at December 31, 1997 after giving effect to
the Offerings, the Debenture Offering and the Equity Investments and the
application of the proceeds therefrom as if they occurred on that date. The pro
forma adjustments are based on certain assumptions that the Company believes are
reasonable. The unaudited pro forma balance sheet data should be read in
conjunction with "Capitalization," "Management's Discussion and Analysis of
Financial Condition" and the Company's Audited Financial Statements and the
Notes thereto.
<TABLE>
<CAPTION>
DECEMBER 31, 1997
AS AT DECEMBER 31, AS ADJUSTED
---------------------------------------------------- --------------------
1994 1995 1996 1997 1997(1) 1997 1997(1)
------ --------- ---------- ---------- --------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BAHT BAHT BAHT BAHT U.S.$ BAHT U.S.$
BALANCE SHEET DATA:
Thai GAAP
Cash and short-term
investments........ 10 94,588 501,587 17,965 417 12,522,113(2) 290,537(2)
Total current
assets............. 10,064 2,931,914 1,695,602 896,507 20,801 15,833,693 367,371
Deferred charges..... 2,670 60,169 252,202 987,257 22,906 2,997,743 69,553
Property, plant and
equipment, net..... 5,506 2,430,562 9,437,572 24,454,278 567,385 24,454,278 567,385
Notes DSR Account
Non-current
portion............ 643,914 14,940
Total assets......... 18,643 5,423,730 11,387,248 26,344,917 611,251 44,917,198 1,042,162
Current
liabilities........ 8,643 273,730 1,120,328 4,889,573 113,447 4,889,573 113,447
Long term debt....... -- -- 4,156,920 16,639,886 386,076 33,237,222(4) 771,165(4)
Shareholders'
equity............. 10,000 5,150,000 6,110,000 4,815,458 111,728 6,790,404(4) 157,550(4)
U.S. GAAP
Deferred charges..... -- 71,975 90,807 57,580 1,336 1,911,052 44,340
Property, plant and
equipment.......... -- 2,458,269 9,426,805 17,802,722 374,336
Shareholders'
equity............. -- 5,183,665 5,937,838 (2,826,513) (65,580) (1,753,261) (40,679)
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------
1995 1996 1997 1997(1)
---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
BAHT BAHT BAHT U.S.$
CASH FLOW DATA:
Cash flows used in
operating
activities........... (127,293) (247,908) (642,854) (14,916)
Cash flows used in
investing
activities........... (4,981,833) (4,420,468) (12,382,690) (287,301)
Cash flows provided by
financing
activities........... 5,203,704 5,075,375 12,541,922 290,996
OPERATING DATA:
Thai GAAP
Provision for bad
debts.............. -- -- 1,294,542 30,036
---------- ---------- --------- ----------
Net Loss............. -- -- (1,294,542) (30,036)
---------- ---------- --------- ----------
---------- ---------- --------- ----------
Net loss per share... -- -- (2.31) (0.05)
---------- ---------- --------- ----------
---------- ---------- --------- ----------
U.S. GAAP
Interest income...... 111,883 202,790 145,001 3,364
Expenses
Provision for bad
debts............ -- -- 1,294,542 30,036
Administrative..... 68,630 322,990 879,954 20,417
Depreciation....... 1,277 6,053 12,842 298
Foreign exchange
losses........... 143 46,089 6,720,261 155,922
---------- ---------- --------- ----------
70,050 375,132 8,907,599 206,673
---------- ---------- --------- ----------
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------
1995 1996 1997 1997(1)
---------- ---------- --------- ----------
BAHT BAHT BAHT U.S.$
<S> <C> <C> <C> <C> <C> <C> <C>
Income (loss) before
income taxes....... 41,833 (172,342) (8,762,598) (203,309)
Deferred income tax
expenses (bene-
fit)............... 5,848 (5,848) -- --
---------- ---------- --------- ----------
Net income (loss).... 35,985 (166,494) (8,762,598) (203,309)
---------- ---------- --------- ----------
---------- ---------- --------- ----------
Basic and diluted net
income (loss) per
share.............. 0.12 (0.31) (15.65) (0.33)
---------- ---------- --------- ----------
---------- ---------- --------- ----------
OTHER FINANCIAL DATA:
Thai GAAP
Fixed charges(5)..... 2,409 86,152 1,085,898 25,195
Ratio of earnings to
fixed
charges(5)(6)...... -- (7) -- (7) -- (7) -- (7)
U.S. GAAP
Fixed charges(5)..... 2,409 93,350 1,093,096 25,362
Ratio of earnings to
fixed
charges(5)(6)...... 14.9 -- (8) -- (8) -- (8)
</TABLE>
- ------------------------
(1) The translations of the Baht amounts into U.S.$ are included solely for the
convenience of the reader, using the Noon Buying Rate from the Federal
Reserve Bank of New York on June 5, 1998 of 43.10 Baht to U.S.$1.00. The
convenience translations should not be construed as representations that the
Baht amounts could have been, or could in the future be, converted into
U.S.$ at this or any other rate of exchange.
(2) Adjusted to reflect net cash proceeds of the Offerings, the Debenture
Offering and the Equity Investments, including the current portion of the
Notes DSR Account.
(3) Adjusted to reflect the Transactions and the repayment of U.S.$50 million of
senior debt.
(4) Gives effect to the Warrants which have been valued at U.S.$9.0 million.
(5) Fixed charges for any period consist of interest incurred (including
capitalized interest), one-third of rental payments on operating leases
(such amounts being deemed by the Company to represent the interest portion
of such payments) and amortization of debt expenses for such period.
(6) For purposes of computing the ratios of earnings to fixed charges for any
period, earnings consist of income (loss) before income taxes for such
period plus fixed charges deducted in calculating income for such period.
(7) For 1995, 1996 and 1997, earnings were inadequate to cover fixed charges by
2.4 million Baht, 86.2 million Baht and 2,380.4 million Baht (U.S.$55.2
million), respectively, under Thai GAAP.
(8) For 1996 and 1997, earnings were inadequate to cover fixed charges by 252.6
million Baht and 9,848.4 million Baht (U.S.$228.5 million), respectively,
under U.S. GAAP.
18
<PAGE>
RISK FACTORS
AN INVESTMENT IN THE SECURITIES BEING OFFERED BY THIS PROSPECTUS INVOLVES A
HIGH DEGREE OF RISK. IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS
PROSPECTUS, THE FOLLOWING FACTORS, CERTAIN OF WHICH ARE NOT TYPICALLY ASSOCIATED
WITH INVESTING IN SECURITIES OF COMPANIES LOCATED IN THE UNITED STATES, SHOULD
BE CAREFULLY CONSIDERED BY PROSPECTIVE INVESTORS IN EVALUATING AN INVESTMENT IN
THE SECURITIES OFFERED HEREBY.
CONSEQUENCES OF FAILURE TO PROPERLY TENDER OLD SECURITIES PURSUANT TO THE
EXCHANGE OFFER
Holders of Old Securities who do not exchange their Old Securities for New
Securities pursuant to the Exchange Offers will continue to be subject to the
following restrictions on transfer with respect to their Old Securities: (i) the
remaining Old Securities may be resold only if registered pursuant to the
Securities Act, if any exemption from registration is available thereunder, or
if neither such registration nor such exemption is required by law, and (ii) the
remaining Old Securities will bear a legend restricting transfer in the absence
of registration or an exemption therefrom. Issuers do not currently anticipate
that they will register the Old Securities under the Securities Act. To the
extent that Old Securities are tendered and accepted in connection with the
Exchange Offers, any trading market for remaining Old Securities could be
adversely affected.
Issuance of the New Securities in exchange for the Old Securities pursuant
to the Exchange Offers will be made only after timely receipt by the Exchange
Agent of such Old Securities, a properly completed and duly executed Letter of
Transmittal and all other required documents. Therefore, holders of the Old
Securities desiring to tender such Old Securities in exchange for New Securities
should allow sufficient time to ensure timely delivery. The Company and the Note
Issuers are under no duty to give notification of defects or irregularities with
respect to tenders of Old Securities for exchange. Old Securities that are not
tendered or that are tendered but not accepted by the Company and the Note
Issuers for exchange will, following consummation of the Exchange Offer,
continue to be subject to the existing restrictions upon transfer thereof under
the Securities Act and, upon consummation of the Exchange Offers, certain
registration rights under the Registration Rights Agreements will terminate.
OPERATING AND START-UP RISKS
The Company's only assets are the share capital of NSM (Del) and NSM Cayman
and its interest in the Mill, which has no operating history and, with regard to
the DRI Facility and Finishing Facilities, is still under construction.
Management Co. has a very limited history of operations. The Company will be
subject to all of the risks inherent in the establishment of a new steel mill.
The Mill's commercial viability and profitability are dependent upon, among
other things, its completion and successful operation. No assurance can be given
that the Company and Management Co. will be able to complete the Mill, to
sustain successful operations or that its operations will achieve commercial
viability.
Although the Company believes that any start-up difficulties it experiences
will be typical of those encountered when a new steel mill commences production,
there is no assurance that the Company will not continue to experience
operational difficulties beyond those encountered during the start-up process,
or that it will ultimately achieve or be able to sustain full production. Also,
to the extent the quality of the steel produced by the Mill does not comply with
the requirements of the Off-Take Agreements, the purchasers' obligations to
purchase the Company's steel production under the Off-Take Agreements may be
adversely affected. In addition, the Company could experience construction,
start-up or operational difficulties as it implements the DRI Facility and the
Finishing Facilities. There can be no assurance that the Company and Management
Co. will be able to operate the Mill at full capacity or that the DRI Facility
and the Finishing Facilities will be successfully built, started-up and
integrated with the Company's Hot Mill.
The Company's operation of the Hot Mill and the construction and start-up of
the DRI Facility and the Finishing Facilities may place a strain on the
Company's administrative, operational and financial
19
<PAGE>
resources. The failure to produce at full capacity, coordinate its sales and
marketing efforts with production or manage its future development and growth,
or the emergence of unexpected production difficulties, could adversely affect
the Company's business, results of operations, financial condition or prospects
and its ability to pay its obligations on the Securities.
In addition, the operation of the Mill may be adversely affected by many
factors, such as production disruptions, industrial accidents, environmental
hazards, technical difficulties or equipment failures, labor disputes, late
delivery of supplies, and periodic or extended interruptions due to inclement or
hazardous weather conditions, fires, explosions or other accidents or acts of
force majeure. Such risks could result in damage to, or destruction of, the
Mill, personal injury, environmental damage, delays in production, losses and
legal liability. Any prolonged downtime or shutdowns of the Hot Mill, DRI
Facility and Finishing Facilities could materially adversely affect the
Company's business, results of operations, financial condition or prospects and
its ability to pay its obligations under the Securities.
SUBSTANTIAL INDEBTEDNESS; ADVERSE CONSEQUENCES OF FINANCIAL LEVERAGE
Following the Offerings, the Note Issuers and the Company have significant
Indebtedness and debt service obligations. As of December 31, 1997, on a pro
forma basis after giving effect to the Offerings, the Equity Investments and the
application of the net proceeds therefrom as described under "Use of Proceeds,"
the Note Issuers and the Company would have had approximately U.S.$771 million
aggregate principal amount of Indebtedness outstanding (including the
Guaranties), representing approximately 83% of the Company's total consolidated
capitalization excluding working capital. See "Capitalization." There can be no
assurance that the Note Issuers and the Company will have sufficient resources
to pay the interest expense or principal associated with such indebtedness. See
"Description of Certain Indebtedness."
The degree to which the Note Issuers and the Company are leveraged could
have important consequences to holders of the Securities, including: (i) the
Company's ability to obtain additional financing for working capital, capital
expenditures, acquisitions or general corporate purposes will be limited; (ii) a
substantial portion of the Company's expected cash flow from operations will be
required to be dedicated to the payment of interest on the Notes and other
existing indebtedness, thereby reducing the funds available to the Company for
other purposes, including operation of the Mill and future business
opportunities; (iii) the Company is substantially more leveraged than certain of
its competitors, which might place the Company at a competitive disadvantage;
(iv) the Company may be hindered in its ability to adjust rapidly to changing
market conditions; and (v) the Company's substantial degree of leverage could
make it more vulnerable in the event of a downturn in general economic
conditions or in its business.
The Company's ability to meet its debt service obligations and to reduce its
total indebtedness will depend upon the Company's future performance, which will
be subject to general economic conditions and to financial, business, and other
factors affecting the operations of the Mill, many of which are beyond the
control of the Company. There can be no assurance that the Company's business
will be able to generate cash flow at levels sufficient to satisfy its debt
service requirements. If in the future the Company is unable to generate
sufficient cash from the operations of the Mill to allow the Note Issuers to
make scheduled interest payments on the Securities and indebtedness under the
Bank Credit Facility, to make principal payments on indebtedness under the Bank
Credit Facility, to pay the Securities at maturity, or to meet their other
obligations and commitments, the Company will be required to adopt one or more
alternatives, such as refinancing or restructuring the indebtedness of the
Company on the Note Issuers, reducing or delaying planned expansion, selling
assets or seeking to raise additional debt or equity capital. There can be no
assurance that any of these alternatives could be effected on a timely basis, on
satisfactory terms or at all. In addition, the terms of existing or future debt
agreements, including the Indentures, may prohibit the Company from adopting
some of these alternatives.
The Indentures contain financial and operating covenants that will limit the
discretion of the Note Issuers and the Company with respect to certain business
matters. These covenants will place significant
20
<PAGE>
restrictions on, among other things, the ability of the Note Issuers and the
Company to incur additional Indebtedness, to create liens or other encumbrances,
to make certain payments and investments, and to sell or otherwise dispose of
assets and merge or consolidate with other entities. See "Description of Notes
and Guaranties--Certain Covenants." A failure to comply with the obligations
contained in the Indentures could result in an event of default under the
Indentures which could permit acceleration of the related debt and acceleration
of debt under other instruments that contain cross-acceleration or cross-default
provisions. Other outstanding Indebtedness is or will be subject to covenants
that are substantially different than those set forth in the Indentures. In
particular, the covenants and events of default in the Bank Credit Facility and
the up to U.S.$150 million working capital facility provided by BNP (the
"Working Capital Facility") are or will be quite restrictive and generally will
give the bank lenders broad latitude in controlling the management of the
Company in the event of a breach of such agreements. See "Description of Certain
Indebtedness." A failure to comply with the obligations contained in the
documents evidencing the Company's other outstanding Indebtedness could result
in an event of default under such Indebtedness which could permit an
acceleration of the repayment of the Indebtedness under the Securities. A
default on such indebtedness could occur and enforcement of such creditors'
security interests could result even though there had not been any default under
the Indentures. In addition, pursuant to the terms of the Bank Credit Facility,
the Company has agreed that other than as a result of enforcement of the
security interests granted in the Collateral, in the event that there are
insufficient funds available at any time to make all payments of principal or
interest then due under the Bank Credit Facility and the Securities, it will pay
100% of any interest and 50% of any principal then due under the Bank Credit
Facility prior to paying any interest then due on the Securities. See
"Description of Certain Indebtedness," "Description of Notes and Guaranties" and
"Security Arrangements."
POLITICAL AND ECONOMIC FACTORS
The Company's results of operations and financial condition may be
influenced by the political situation in Thailand and by the general state of
the Thai economy. The political situation in Thailand has been unstable from
time to time in recent years and future political and economic instability in
Thailand could have an adverse effect on the Company's business and results of
operations. Any potential investor in the Securities should pay particular
attention to the fact that the Company is governed in Thailand by a political,
economic, legal and regulatory environment that may differ significantly from
that which prevails in other countries.
Thailand is a constitutional monarchy. Under the constitution, the King is
Head of State, Commander of the Armed Forces and Patron of all Religions.
Executive power is vested in the cabinet while legislative power is exercised by
the elected bicameral National Assembly. Thailand has experienced several
changes of government and changes in its political system since World War II. A
new constitution became effective on October 11, 1997. There can be no assurance
that Thailand's current government or political system will continue unchanged
throughout the term of the Securities. Additionally, there can be no assurance
that any future change in the government will be the result of democratic
processes.
Although Thailand's economy has been characterized in the past decade by
high growth rates, in 1996 and particularly in 1997, economic growth slowed
significantly in relation to historical levels. In late 1996 and throughout
1997, Thailand experienced significant economic weakness, resulting primarily
from declines in the property and finance industries, a sharp reduction in
financial liquidity and a general deterioration in investor confidence.
Inflation in Thailand has increased and interest rates have remained among the
highest in the region. In addition, the country has had recurring trade balance
and current account deficits. The government of Thailand also agreed on August
5, 1997, to accept the austerity measures of the International Monetary Fund
("IMF") aimed at rehabilitating and restructuring the economy as a condition to
receipt of IMF-led loans and financial assistance of approximately U.S.$17.2
billion. See "Annex A--The Kingdom of Thailand--IMF-led Financial Assistance"
and "Fiscal Update and Financial Sector Measures." International credit rating
agencies, including Moody's Investors Service, Inc. ("Moody's") and Standard &
Poor's Corporation ("S&P"), have recently downgraded Thai
21
<PAGE>
sovereign as well as various Thai corporate and financial institutions' debt
ratings. Between January 3, 1996 and December 31, 1997, the Stock Exchange of
Thailand Index ("SET") fell from 1,323.43 to 372.69. On December 8, 1997, the
government terminated the operations of 56 of the 91 finance companies in
Thailand. The Company expects that the number of bankruptcies in Thailand and
Southeast Asia generally, including among its potential customers, will
increase.
There can be no assurance that: the deteriorating economy in Thailand and in
Southeast Asia generally; the rise in interest rates and inflation in Thailand
and other Southeast Asian countries; the general decline of share prices on the
SET and other regional stock exchanges; the lack of liquidity and stability in
the Thai and other Southeast Asian finance industries; and other factors
including measures taken by the government of Thailand in response to
deteriorating economic conditions, will not adversely affect the Company's
ability to finance its working capital needs, collect on its receivables for
goods shipped, build market share internationally and in Thailand, or otherwise
adversely affect its financial condition, results of operations or cash flows.
Further, there can be no assurance that the deterioration in the economies of
Thailand and Southeast Asia will not continue or materially worsen. In light of
the deteriorating economies of Thailand and Southeast Asia generally, the
Company's ability to sell projected production levels will depend in significant
part on its ability to access export markets worldwide.
THAI EXCHANGE CONTROL RESTRICTIONS; CONSTRAINTS IMPOSED BY MONETARY CONTROLS
On January 6, 1998, the Thai Cabinet approved the issuance of a Ministry of
Finance regulation to limit the U.S.$ holding period for exporters in an effort
to curtail currency speculation and increase the U.S.$ supply in the local
economy. Previously, exporters were required to be paid within 180 days and to
sell or deposit the proceeds in a foreign currency account with an authorized
bank in Thailand within 15 days of receiving such proceeds. However, according
to the January 1998 Regulation, exporters must now be paid within 120 days,
after which they have seven days in which to sell or deposit the proceeds in a
foreign currency account in Thailand. This requirement applies to all export
proceeds earned by a Thai company outside Thailand.
A Thai entity may open a foreign currency account under the following
conditions: (i) the account must be with an authorized bank in Thailand and the
funds must originate from abroad; (ii) remittance abroad of funds deposited in
such an account for payment of ordinary business transactions would require
submission of supporting evidence and approval of the Bank of Thailand; and
(iii) the total amount of daily outstanding balances in such an account must not
exceed U.S.$5 million, otherwise, such excess amount would be required to be
converted to Baht.
An exemption to these regulations allows a depositor to keep deposits in
U.S.$ up to an amount not to exceed the depositor's obligations to foreign
creditors and the international banking facilities of Thailand commercial banks
payable within the next three months. Funds deposited in a foreign currency
account may be withdrawn for, inter alia, payment of interest and principal due
on offshore debt repayments. Proof that the payment of interest is required must
be submitted with the bank in which the currency is deposited each and every
time an application to withdraw and repatriate foreign currency is made. As a
general matter, the outward remittance from Thailand of dividends, interest or
capital gains from the transfer of securities after payment of any applicable
Thai taxes, if any, may be made if the amount does not exceed U.S.$5,000 per
remittance, beyond which amount, a report must be made to the Bank of Thailand.
Parties may apply for an exemption or relaxation from the "strict
observance" of the above requirements. The Company was able to obtain waivers
from the Bank of Thailand which would allow the Company to keep certain U.S.$
amounts of export earnings offshore in certain account for an amount not to
exceed U.S.$130 million each year through the redemption of the Securities.
Additionally, the Company was also granted an approval from the Bank of Thailand
which would allow the Company to keep U.S.$ amounts in excess of U.S.$5 million
in accounts in Thailand for an amount not to exceed the Company's obligations in
foreign currencies payable within three months from the date of deposit.
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Any excess amount of foreign currencies must be converted into Baht. Such
conversion would require the Company to bear exchange rate risks as many of the
Company's obligations, including payments on the Notes, are U.S.$ denominated.
If the Company is unable to maintain these waivers and is required to convert
such revenue into Baht, any devaluation of the Baht against the U.S.$ could have
an adverse effect on the Company's financial condition as results of operations
and could materially impair the Company's ability to repay its U.S.$
obligations, including payments on the Securities. There can be no assurance
that proceeds of exports will be available in sufficient amounts to satisfy
payment obligations on the Securities.
EXCHANGE RATE FLUCTUATIONS
Prior to July 1997, the Bank of Thailand determined the value of the Baht
based on a "basket," the composition of which was not made public but of which
the U.S.$ was the principal component. Prior to July 1997, the Baht had a
history of stability, trading in a narrow range of 24.47 Baht to 25.97 Baht to
the U.S.$1.00, as a result of frequent intervention by the Bank of Thailand
through purchases and sales of U.S.$. However, on July 2, 1997, under
substantial market pressure, the Government floated the Baht and effectively
ceased such intervention, and the value of the Baht, as reflected in the Noon
Buying Rate, declined from 24.520 Baht per U.S.$1.00 on July 1, 1997 to 56.10
Baht per U.S.$1.00 on January 12, 1998 and stood at 39.15 Baht to U.S.$1.00 on
May 15, 1998. There can be no assurance that the value of the Baht will not
decline further, increase or continue to fluctuate widely against other
currencies in the future. Adverse economic conditions in Thailand and the region
incidental to the devaluation of the Baht may also reduce overall demand for the
Company's products and the Company's customers' ability to pay for them, and
there can be no assurance that such reduced demand will not have an adverse
effect on the Company.
The Company's functional currency is the Baht, however, the Company will
have significant U.S.$ denominated assets and liabilities. Therefore,
fluctuations of the value of the Baht relative to the U.S.$ may cause the
Company to recognize material foreign exchange gains or losses which could
adversely affect the Company's results of operations and financial condition.
The Company from time to time may hedge its currency positions to attempt to
avert any adverse consequences of exchange rate fluctuations; however, there can
be no assurance that the Company will be able to successfully hedge its exchange
rate exposure or that it will be able to hedge such exposure at a satisfactory
cost. See "Annex A--The Kingdom of Thailand."
RANKING OF THE SENIOR SUBORDINATED NOTES AND THE SENIOR SUBORDINATED GUARANTY;
LIMITATIONS ON ENFORCEMENT OF COLLATERAL
The indebtedness evidenced by the Senior Subordinated Notes and the Senior
Subordinated Guaranty will be senior secured obligations of the Note Issuers and
the Company, as the case may be, but the payment of principal of, premium,
interest and Additional Accounts, if any, on the Senior Subordinated Notes and
the Senior Subordinated Guaranty will be subordinate in right of payment to the
prior payment in full of all Specified Senior Indebtedness of the Note Issuers
and the Company, as the case may be. The Senior Subordinated Notes and Senior
Subordinated Guaranty will rank PARI PASSU with all other Senior Indebtedness of
the Note Issuers and the Company, as the case may be, and senior in right of
payment to all existing and future Indebtedness of the Notes Issuers and the
Company that is designated as subordinate or junior in right of payment to the
Notes and Guaranties, including the Debentures. The Senior Notes and certain
refinancings thereof will constitute all the Specified Senior Indebtedness of
the Note Issuers. The Senior Guaranty and guarantees of certain indebtedness
refinancing the Senior Notes will constitute all the Specified Senior
Indebtedness of the Company. The Debentures and the Debenture Guaranty will be
subordinate to all Debenture Specified Senior Indebtedness.
At all times that (a) a Default has occurred and is continuing under the
Senior Note Indenture and (b) the aggregate principal amount owed to the holders
of Senior Notes at such time exceeds U.S.$50 million, the holders of the Senior
Subordinated Notes shall (A) refrain from taking any action toward collection or
enforcement of the Pledged NSM Stock or Collateral, including action toward
foreclosure upon the
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Pledged NSM Stock or Collateral, absent the consent of the holders of a majority
of the aggregate principal amount of Senior Notes outstanding and (B) be deemed
to have voted with respect to the Pledged NSM Stock or Collateral, including
without limitation in any foreclosure, bankruptcy, insolvency or similar
proceeding, in the same manner and to the same effect as the holders of a
majority of the aggregate principal amount of Senior Notes. See "Security
Arrangements--Enforcement of Collateral."
In the event of the bankruptcy, liquidation or reorganization of the Note
Issuers or Company, as the case may be, the assets of the Note Issuers or
Company, respectively, will be available to pay the Senior Subordinated Notes
and the Debentures only after all Specified Senior Indebtedness or Debenture
Specified Senior Indebtedness as the case may be, has been paid in full.
Sufficient funds may not exist to pay amounts due on the Senior Subordinated
Notes and the Debentures in such event. In addition, the subordination
provisions of the Senior Subordinated Note Indenture and the Debenture Indenture
provide that no payment may be made with respect to the Senior Subordinated
Notes and the Debentures during the continuance of a payment default under any
Specified Senior Indebtedness or Debenture Specified Senior Indebtedness, as the
case may be. Furthermore, if certain non-payment defaults exist with respect to
Specified Senior Indebtedness or Debenture Specified Senior Indebtedness, as the
case may be, the holders of such Specified Senior Indebtedness or Debenture
Specified Senior Indebtedness, as the case may be will be able to prevent
payments on the Senior Subordinated Notes or Debentures, as the case may be, for
certain periods of time. See "Description of the Notes--Ranking." However, while
the Senior Subordinated Notes Indenture and the Debenture Indenture (which
govern the terms of subordination) is governed by the laws of the State of New
York, there can be no assurances that a bankruptcy court in Thailand will give
effect to such contractual subordination.
NTS PLEDGE; SUBSTANTIAL OWNERSHIP BY PLEDGEE OR SUCCESSOR
N.T.S. Steel Group Public Company Limited ("NTS"), a steel rebar
manufacturer and an affiliate of the Company, currently holds 31.31% of the
outstanding ordinary shares of the Company. The Thailand Securities Depository
Company Limited, the Company's registry has confirmed that NTS has pledged
30.54% of NSM's outstanding shares (the "Pledged Shares"). The Company believes
that NTS has pledged such shares to certain Thai financial institutions as
security for indebtedness owed to such financial institutions. The Company
believes that NTS is currently in default on its obligations under such
indebtedness.
Under the laws of Thailand, the pledge of the Company's ordinary shares may
be enforced by way of public auction. Alternatively, after the debt is due, the
pledgor and pledgee may agree that the pledgee will become owner of the pledged
shares in full or partial satisfaction of the debt. However, as a condition of
being listed on the SET, the shares held by NTS, as well as certain shares held
by some of the Company's management and major shareholders totaling 55% of NSM's
paid-in capital without giving effect to the Offerings, are subject to SET
restrictions which prevent transfer of the shares during the first year of the
Company's commercial operations. In addition, in the case where the Company
issues and offers new shares for sale to its existing shareholders during the
said first year, those shares subscribed by the Company's management and major
shareholders will also be subject to a transfer restriction. Since the offering
of new shares on the Issue Date was not made to the Company's existing
shareholders, those new shares are not subject to such transfer restriction.
Currently, after giving effect to the Offerings, only 42.86% of NSM's paid-in
capital are subject to transfer restriction for the first year. According to the
SET's regulation, a pledgee which is a financial institution must enter into an
agreement with the shareholder, whose ownership is subject to the SET
restriction, that it will not enforce pledged shares subject to such restriction
during the applicable period. Such pledgee is required to submit a letter to the
SET stating that it has entered into such an agreement with the pledgor. Any of
the Pledged Shares which were pledged to finance companies whose operations were
suspended by the Ministry of Finance may be sold at public auction by the
Financial Restructuring Authority. Persons acquiring the Pledged Shares would
have full rights in such Pledged Shares and would not be restricted in the
exercise of such rights by the Shareholders' Agreement (as defined) to be
entered into by the New Equity Investors and certain Thai parties. See
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"Principle Agreements--Shareholders Agreement." Even after giving effect to the
dilution caused by the Warrants, if one person, group or entity were to acquire
all or a substantial portion of the Pledged Shares, such person, group or entity
is likely to be the single largest shareholder in the Company. While management
of the Company will be governed by the Management Agreement, such a shareholder
would, under the laws of Thailand, have the ability to influence the conduct of
business by the Company. For example, such a shareholder would have the ability,
among other things: (i) to require the board of directors of the Company to
convene a shareholders meeting; (ii) to substantially influence the outcome of
any shareholder vote; (iii) to block any action by the Company that would
require the approval of a supermajority (75%) of the Company's shares, present
at the shareholder meeting, under the laws of Thailand; and (iv) to influence
the election of directors to the Company's board of directors. There can be no
assurance that any future acquiror of the Pledged Shares will exercise its
rights with respect to the Pledged Shares in a manner consistent with the
intentions of the Company and the New Equity Investors for the future conduct of
business by the Company as set forth herein. If such an acquiror of the Pledged
Shares exercises its rights with regard to the Pledged Shares in a manner
inconsistent with the intentions of the Company and the New Equity Investors for
the future conduct of business by the Company there can be no assurance that
such inconsistent exercise will not have an adverse effect on the financial
condition and results of operations of the Company or its ability to repay its
indebtedness including the Securities.
FORWARD LOOKING INFORMATION
This Prospectus contains forward-looking statements. These statements are
based upon the current beliefs of the Company as well as assumptions made by the
Company based upon information currently available to it.
These statements are subject to various risks and uncertainties, including
those described above, as well as potential changes in economic or regulatory
conditions which are largely beyond the Company's control. Should one or more of
these risks materialize or changes occur, or should management's assumptions
prove incorrect, the Company's actual results may vary materially and adversely
from those anticipated or projected. These forward-looking statements reflect
the Company's views with respect to future events and financial performance.
Actual results could differ materially from those projected in the
forward-looking statements as a result of many factors, including the risk
factors set forth above. The words, "believe," "expect" and "anticipate" and
similar expressions identify forward-looking statements. Prospective investors
or purchasers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of their dates. The Company undertakes no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.
NO ASSURANCE OF ADEQUATE COLLATERAL; SHARED COLLATERAL; ABILITY TO REALIZE ON
COLLATERAL
The Notes are secured by a first priority pledge of the capital stock of NSM
(Del). The Debentures will be secured by a second priority pledge of the capital
stock of NSM (Del). The Guaranties (other than the Debenture Guaranty) will be
secured by a first priority pledge of the share capital of NSM Cayman and the
other Collateral. The Collateral will also secure, on an equal and ratable
basis, the obligations of the Company under the Bank Credit Facility (other than
the Offshore Reserve Account, the Notes DSR Account, and the pledge of the share
capital of NSM Cayman) and, on a second priority basis, the obligations of the
Company in respect of the Debenture Guaranty. Pursuant to the terms of the Bank
Credit Facility, the Company has agreed that, other than as a result of
enforcement of the security interests granted in the Collateral, in the event
that there are insufficient funds available at any time to make all payments of
principal or interest then due under the Bank Credit Facility, the Notes and the
Debentures, it will pay 100% of any interest and 50% of any principal then due
under the Bank Credit Facility prior to paying any interest then due on the
Notes or the Debentures.
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A significant portion of the Collateral is shared on an equal and ratable
basis by the holders of the Notes and the parties to the Bank Credit Facility
and, on a second priority basis, the holders of the Debentures. The agreement
governing intercreditor issues with respect to the Collateral provides that
rights will be based on principal amounts outstanding under the Notes and the
Bank Credit Facility. The rights of the holders of Senior Subordinated Notes are
limited so that such holders may not have, during the pendency of a Default
under the Senior Note Indenture, the ability to take enforcement action in
respect of the Collateral or otherwise exercise voting rights in connection with
the Collateral. See "Risk Factors--Ranking of the Senior Subordinated Notes and
Senior Subordinated Guaranty; Limitations on Enforcement of Collateral." The
Company has entered into an agreement with the lenders under the Bank Credit
Facility as to the sharing of rights in the Collateral, including inter-creditor
rights in the Collateral, on terms substantially similiar to those described in
this Prospectus.
In addition, there can be no assurance that the proceeds of any sale by the
Collateral Agent of the Collateral following a default would be sufficient to
satisfy payments due on the Guaranties, especially given that the holders of the
Securities must share their Collateral interests. If such proceeds were not
sufficient to repay all such amounts due on the Guaranties and under the Bank
Credit Facility, then holders of the Guaranties (to the extent not repaid from
the proceeds of the distribution of the Collateral) would have only an unsecured
claim against the Company's remaining assets. There can be no assurance that the
Company's remaining assets would be sufficient to satisfy all unsecured claims
in full or that any such assets would exist. The value of the Collateral in the
event of a liquidation will depend on market and economic conditions, the
availability of buyers and other factors beyond the Company's control. Moreover,
the assets of the Company, if taken and sold individually, would be likely to
result in the receipt of proceeds that are less than the proceeds realizable in
connection with a sale of the business of the Company as a going concern. It is
likely that the Collateral Agent might also seek to sell the Mill and operations
substantially as a whole operation in order to maximize proceeds realized
therefrom. However, the ability of the Collateral Agent to elicit purchasers for
any assets which are subject to the security or the price obtained upon sale or
transfer may be limited or affected by termination rights under the material
contracts.
An arrangement has been effected whereby, in the event enforcement of the
mortgage of the Company's assets in Thailand becomes necessary, the Collateral
Agent will become the registered owner of the Notes and will thereby have
standing to bring an enforcement action in a Thai court. There can be no
assurance that such arrangement will be effective or will be ultimately upheld
in an actual enforcement action. In the event that the standing of the
Collateral Agent to bring an enforcement action were not recognized by a Thai
court, there can be no assurance that holders of the Notes would enjoy the
benefit of their respective security interest in the manner described therein.
See "--Book Entry Interests; Dependence on Intermediaries."
As a result of all of the foregoing, holders of the Securities could face
significant difficulties in enforcing their rights to the Collateral in the
event of a default under the Securities or in collecting sufficient amounts upon
a disposition of such Collateral. If any of the foregoing were to adversely
effect the arrangements in respect of the Collateral, the Securities and
Guaranties could represent only unsecured claims against the Company's assets.
ENFORCEMENT OF THE MORTGAGES
Under Thai law, a mortgage will be invalid until it is registered with the
Provincial Land Office in which the property is located. Such a mortgage extends
to all permanent fixtures and buildings on the land but it does not accord
mortgage rights over buildings erected on the land after the date the mortgage
is registered unless so provided in the mortgage application.
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The Company will also seek to register a mortgage in favor of the parties to
the Bank Credit Facility and the Collateral Agent for all machinery located at
the Mill. According to the Thai Machinery Registration Act, such a mortgage may
only be registered after the import and installation of the machinery. As of the
Issue Date, no machinery of the Company has been registered pursuant to the
Machinery Registration Act. The Company's application for registration is
pending approval with the relevant authorities. The registration process can be
time consuming. In the interim, and for machinery and equipment that does not
qualify for registration under the Machinery Registration Act, a security
interest in such machinery and equipment will be granted pursuant to a pledge in
favor of the parties to the Bank Credit Facility and the Collateral Agent.
According to the Security Documents, the pledgee will appoint a custodian to
possess the pledged machinery. Under Thai law, a pledge is valid only if the
pledged property is in the possession of the pledgee or a third party custodian.
The validity of an arrangement such that the pledgee appoints a custodian to
possess the pledged property which is left at pledgor's plant has not been
tested by Thai courts. Under the pledge agreement and the Security Sharing
Agreement, the Company is obligated to (i) register all Registrable Machinery
(as defined) at the Mill; and (ii) cause the existing pledge to be converted to
a mortgage in favor of the holders of the Notes, the Bank Credit Facility and,
on a second priority basis, the Debentures.
A mortgage, whether it be for land and buildings or machinery, is
enforceable in Thailand only upon order of a court judgment and sale at a public
action, unless (i) interest has been unpaid for five years or more, (ii) the
mortgagor cannot satisfy the court that the value of the property exceeds the
amount due, and (iii) there are no other mortgages or preferential rights
registered on the same property, in which case, foreclosure is possible.
To enforce a mortgage in Thailand, the mortgagee must first issue a notice
to the debtor giving them a reasonable time to satisfy the debt. In the event
the debt cannot be repaid within this timeframe, the mortgagee may file an
action in a court with jurisdiction over the location where the mortgage has
been registered seeking to declare the debtor in default and order the
collateral to be sold at public auction. Once an order is obtained, the court
will order a public auction to be held at which time the property will be sold
to the highest bidder. See "Security Arrangements."
Current Thai law on the enforcement of mortgages may be impacted by the
recently enacted amendment to the bankruptcy law. There has been an attempt to
amend the laws in order to speed up the enforcement procedures. For example, the
sale by public auction of mortgage property can be made with a judicial order.
See "Risk Factors--Thai Bankruptcy--New Business Reorganization Proceedings."
WITHHOLDING TAXES
The Company will make payments to the Note Issuers on terms, in amounts and
on dates so that the Note Issuers may make interest payments to holders on the
Securities. Such payments by the Company to the Note Issuers may be subject to
withholding tax at a rate of 15%. While the Company intends to structure its
payments to the Note Issuers to substantially reduce the effect of such
withholding, there can be no assurance that such measures will prove successful
in reducing the application of withholding taxes. If such measures are
unsuccessful withholding tax may be applied to payments from the Company to the
Note Issuers. The application of such withholding taxes would have an adverse
effect on the financial condition and results of operations of the Company and
may have an adverse effect on the ability of the Company to fund the Issuers'
interest payment obligations on the Notes.
BOOK-ENTRY INTERESTS; DEPENDENCE ON INTERMEDIARIES
Until and unless Definitive Securities are issued in exchange for the
Book-Entry Interests, holders of the Book-Entry Interests will not be considered
the owners or holders of Securities under the Indentures. After payment to the
Book-Entry Depositary, the Note Issuers or the Company, as the case may be, will
have no responsibility or liability for the payment of interest, principal or
other amounts to DTC or to
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holders of Book-Entry Interests. The Book-Entry Depositary, or its nominee, will
be the sole holder of the Securities in the form of the Global Notes.
Accordingly, each person owning a Book-Entry Interest must rely on the
procedures of the Book-Entry Depositary and DTC, and, if such person is not a
participant in DTC, on the procedures of the participant through which such
person owns its interest (including, if applicable, the Euroclear Operator or
Cedel), to exercise any rights of a holder under the Indentures.
Payments of principal and interest on, and other amounts due in respect of,
the Global Securities will be made to the Book-Entry Depositary (as holder of
the Global Securities), which will in turn distribute payments to Cede & Co. (as
nominee of DTC). DTC, upon receipt of any payment from the Book-Entry
Depositary, will promptly credit participants' accounts with payments in amounts
proportionate to their respective ownership of Book-Entry Interests, as shown on
the records of DTC. The Note Issuers expect that payments by participants or
indirect participants to owners of interests in Book-Entry Interests held
through such participants or indirect participants will be governed by standing
customer instructions and customary practices, as is now the case with the
securities held for the accounts of customers in bearer form or registered in
"street name", and will be the responsibility of such participants or indirect
participants. None of the Note Issuers, the Company, the Trustee, the Book-Entry
Depositary, any Paying Agent or the Registrar will have any responsibility or
liability for any aspect of the records relating to, or payments made on account
of, the Book-Entry Interests or for maintaining, supervising or reviewing any
records relating to such Book-Entry Interests.
Unlike holders of the Securities themselves, holders of the Book-Entry
Interests will not have the direct right under the Indentures to act upon
solicitations by the Note Issuers of consents or requests by the Note Issuers
for waivers or other actions from holders of the Securities. Instead, a holder
of Book-Entry Interests will be permitted to act only to the extent it has
received appropriate proxies to do so from DTC and, if applicable, DTC
participants. There can be no assurance that procedures implemented for the
granting of such proxies will be sufficient to enable holders of Book-Entry
Interests to vote on any requested actions on a timely basis. Similarly, upon
the occurrence of an Event of Default under the Securities, holders of
Book-Entry Interests will be restricted to acting through DTC and the Book-Entry
Depositary if and until such Holders request Definitive Securities to be issued.
There can be no assurance that the procedures to be implemented by DTC and the
Book-Entry Depositary under such circumstances will be adequate to ensure the
timely exercise of remedies under the Indentures. For a description of the terms
of the Note Depositary Agreement, see "Note Depositary Agreement; Delivery;
Form".
CYCLICALITY OF STEEL INDUSTRY AND END USER MARKETS
The steel industry is highly cyclical in nature and sensitive to general
economic conditions. The price of steel and steel products in the future may
fluctuate significantly as a result of general economic conditions and other
factors beyond the Company's control. The demand for steel products and, thus,
the financial performance of companies in the steel industry, including the
Company, are generally affected by macroeconomic fluctuations in domestic
economies in which these companies sell their products as well as in the world
economy. Substantially all of the revenues of the Company are derived from the
sale of steel and related products. Accordingly, any significant decrease in
demand for steel and related products or decline in prices for such products
could have a material adverse effect on the business, financial condition,
results of operations or prospects of the Company. The Company's success will be
influenced by a number of market factors, both international and domestic, which
affect the market for steel products and steel scrap (initially the Company's
principal raw material), and which are beyond the control of the Company. There
can be no assurance that the deterioration in the economies of Thailand and
Southeast Asia will not have an adverse effect on the domestic, regional and
global markets for the Company's products. The Company is particularly sensitive
to trends in the oil and gas, gas transmission, construction, commercial
equipment, automotive, rail transportation, agriculture and durable goods
industries, because these industries are significant markets for the Company's
products and are highly cyclical.
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COST OF STEEL SCRAP AND OTHER RAW MATERIALS
The Company requires substantial amounts of raw materials, principally iron
ore fines, iron ore pellets and scrap, in its production process. Until the DRI
Facility is operational, the Company's principal raw material will be steel
scrap. The prices for scrap are subject to market forces largely beyond the
control of the Company, including demand by domestic and international steel
producers, freight costs and speculation. The prices for scrap have varied
significantly and may vary significantly in the future. In addition, the
Company's operations may require substantial amounts of other raw materials and
utilities, including various types of pig iron, DRI, alloys, refractories,
oxygen, natural gas and electricity, the price and availability of which are
also subject to market conditions. Although the Company believes that raw
materials are available in adequate quantities at market prices the availability
and prices of raw materials may be subject to curtailment or changes due to,
among other things, new laws or regulations, suppliers' allocations to other
purchasers, interruptions in production by suppliers, changes in exchange rates
and worldwide price fluctuations. In addition, energy costs, including the cost
of natural gas and electricity, also constitute a substantial portion of the
Company's cash cost of production. The price of some of the Company's production
inputs, particularly energy, have varied significantly and may vary
significantly in the future largely as a result of market conditions and other
factors beyond the control of the Company. Any protracted interruption in the
supply of raw materials or energy, or substantial increases in their costs,
could have a material adverse effect on the business, financial condition,
results of operations or prospects of the Company. The Company may not be able
to adjust its product prices, especially in the short term, to recover any
increases in scrap and other raw material prices. The Company's future
profitability may be adversely affected to the extent that it is unable to pass
on higher raw material and energy costs to its customers. See "Management's
Discussion and Analysis of Financial Condition," "Business--Steel Scrap and
Scrap Substitute Resources" and "Energy Resources."
RISK RELATED TO PROCESS TECHNOLOGY
The Company's process for the production of coal-based DRI is a scale-up
from a commercial steel industries wastes recycling plant, operated by
International Metals Reclamation Company, Inc. ("INMETCO"). The use of coal as a
reductant is made possible by special sulfur removing slag practices in NSM's
ladle metallurgy system. These slag practices and the INMETCO process have each
been used commercially. However, NSM will be the first company to link the two
processes and there can be no assurance that they will perform in accordance
with the Company's expectations.
COMPETITION
The Company has various competitors within the global steel industry.
Generally, the markets in which the Company participates are highly competitive.
The competitive nature of the industry in the future could have an adverse
effect on the business, financial condition, results of operations and prospects
of the Company. The Company competes primarily on the basis of price, quality,
and the ability to meet customers' product specifications and delivery
schedules. Many of the Company's competitors are integrated steel producers
which are larger in terms of steel making capacity, have substantially greater
capital resources and historical operations and, in some cases, have lower raw
material costs than the Company. In addition, competition may increase as a
result of excess capacity created by other producers using mini-mill technology
and traditional steelmakers in order to make their operations more efficient.
For example, several new mini-mills began production in the United States in
1996 and 1997. The highly competitive nature of the global steel industry,
combined with excess production capacity in some products, may in the future
exert downward pressure on prices for the Company's products. The deterioration
in the economies of Southeast Asia may exert further downward pressure on prices
for the Company's products if regional competitors choose to lower their prices
in order to maintain revenues in the face of decreasing regional demand for
steel products. Although the Company believes that it is well-positioned to
compete in the markets where it operates, competitors may develop new products
or production processes that could
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provide advantages to such competitors to the detriment of the Company. There
can be no assurance that the Company will be able to compete effectively in the
future. In addition, in the case of certain product applications, steel competes
with other materials, including plastics, aluminum, graphite composites,
ceramics, glass, wood and concrete. See "Business--Competition."
DEPENDENCE ON KEY PERSONNEL AND MANAGEMENT
The Company's success depends on its ability to attract, motivate and retain
highly skilled and qualified management and technical personnel to operate the
Mill. The Company's ability to maintain its competitive position is dependent to
a large degree on the services of its senior management team, particularly Mr.
John W. Schultes, President and Chief Executive Officer. The loss of Mr.
Schultes' services or those of any of the other members of the Company's senior
management team or an inability to attract, retain and maintain additional
senior management personnel could have a material adverse effect on the
business, financial condition, results of operations or prospects of the
Company. There can be no assurance that the Company will be able to retain its
existing senior management personnel or to attract additional qualified senior
management personnel. In addition, there can be no assurance that the Company
will be able to hire qualified persons when needed or on favorable terms or that
new employees will be successfully assimilated into the Mill's operations.
LABOR MATTERS
The Company believes that its relations with its employees are good.
Nevertheless, there can be no assurance that a work stoppage or strike will not
occur. Work stoppages or other labor-related developments affecting the Company,
including the ability to attract and retain additional employees, could have a
material adverse effect on the business, financial condition, results of
operations and prospects of the Company.
RELIANCE ON MAJOR CUSTOMERS
The Company has entered into the Off-Take Agreements with Preussag and
Klockner pursuant to which they have agreed to purchase up to 100% of the
Company's annual production during 1998 through 2002. Under the Off-Take
Agreements, steel will be sold based on quality and description specified by the
purchaser and be fit for the purpose for which such goods are ordinarily used.
Certain orders may also contain express or implied application requirements.
Non-compliance with such specifications could result in rejections and claims
against the seller. Such claims are usually settled between the producer, the
trading company and the end user. Claims may result in financial damage awards
against the Company. As a result, failure to perform under the Off-Take
Agreements by NSM may have a material adverse effect on the Company's results of
operations and financial condition. Additionally, non-performance by Preussag or
Klockner under the Off-Take Agreements could have a material adverse effect on
the Company's results of operations and financial condition. See "Description of
Material Agreements--Off-Take Agreements."
DEPENDENCE UPON A SINGLE PROJECT
Virtually all of the Company's revenue will be derived from the Mill. The
operations of the Mill are subject to the risks normally encountered in steel
production. Such risks include environmental hazards, industrial accidents,
technical difficulties or failures, labor disputes, late delivery of supplies,
and periodic or extended interruptions due to inclement or hazardous weather
conditions, fires, explosions or other accidents or acts of force majeure. Such
risks could result in damage to or destruction of producing facilities, personal
injury, environmental damage, delays in production, losses and possible legal
liability. Any prolonged downtime or shutdowns at the Mill could materially
adversely affect the Company's financial performance and ability to repay the
principal and interest on the Notes.
30
<PAGE>
INSURANCE
The Company maintains insurance coverage within ranges comparable to other
steel producers. There can be no assurance that such insurance will be available
to the Company in the future on commercially reasonable terms or that any
coverage the Company arranges will be adequate and available to cover any or all
claims which arise. Insurance against environmental risks (including potential
liability for pollution or other hazards as a result of disposal of waste
products occurring from steel production) is not generally available to the
Company or to other companies within the steel industry. To the extent that the
Company is subject to environmental liabilities, the payment of such liabilities
would reduce the funds available to the Company to operate the Mill. The Company
cannot reasonably estimate the cost of future compliance or remedial work or
further investments that may be required as a consequence of changes in
environmental regulation. Among other things, the level of such costs will be
dependent upon the nature and extent of the current and future environmental
regulation, the timing and nature of required or remedial work and the
technology available to meet the required standards. Should the Company be
unable to fund fully the cost of remedying an environmental problem, the Company
might be required to suspend operations or enter into interim compliance
measures pending completion of the required remedy.
REDUCTION OF IMPORT TARIFFS
Thailand currently imposes a tariff on steel imports at the rate of 1% on
iron-ore, pig-iron and scrap; 10% on billets and slabs; 15% on hot-rolled coil;
20% on coated products and cold-rolled products. Thailand is a signatory to the
Uruguay Round of Agreements, under which the signatories have agreed to
eliminate import tariffs on many products and significantly reduce non-tariff
barriers to trade. Pursuant to the Uruguay Round of Agreements of the General
Agreement on Tariffs and Trade, certain developed countries have agreed to
eliminate import tariffs on steel products within 10 years. Although Thailand
has not formally agreed to eliminate its import tariff on steel products, it has
agreed not to increase its import tariff on certain steel products, to greater
than 30%. Additionally, the Association of Southeast Asian Nations ("ASEAN") has
stated its goal to reduce tariffs on steel products to 0-5% by the year 2003
under the ASEAN Free Trade Agreement for imports from ASEAN nations. There is no
guarantee that Thailand will not reduce its import tariff on steel products over
the next few years to conform with the trend towards a more open global market.
A significant reduction in or the elimination of the tariffs on the import price
of steel would lead to increased competition from international producers of
steel as well as a decreased pricing advantage for the Company's steel products
in Thailand and could have an adverse effect on the Company's financial
condition and results of operations.
GOVERNMENT APPROVALS AND REGULATION
Government approvals and permits are currently, and may in the future be,
required in connection with the Company's operations. The Company obtained
waivers from the Bank of Thailand which would allow the Company to keep certain
revenues offshore and would prevent certain U.S.$ funds in Thailand from being
converted into Baht. Obtaining the necessary governmental approvals, permits and
waivers is a complex and time consuming process involving numerous regulatory
agencies. To the extent that such approvals or permits are required and not
obtained, operations may be curtailed or limited and such curtailment or
limitation could have an adverse effect on the Company's financial condition and
results of operations.
The Company's business is currently regulated by the laws and regulations of
Thailand relating to the construction, production, marketing, pricing,
transportation and storage of steel products, taxation, environmental and safety
matters. The Company does not believe that environmental regulations will have a
material adverse effect on its capital expenditures, results of operations or
competitive position, and does not anticipate that any material expenditures
will be required to enable it to comply with existing laws and regulations.
However, the modification of existing laws or regulations or the adoption of new
laws or
31
<PAGE>
regulations pertaining to steel manufacturing for economic, environmental or
other reasons could have a material adverse effect on the Company's financial
condition and results of operations.
The Company's assets and operations are subject to various political,
economic and other uncertainties, including, among other things, the risks of
war, expropriation, nationalization, renegotiation or nullification of existing
concessions and contracts, taxation policies, foreign exchange and repatriation
restrictions, changing political conditions, fluctuations between the Baht and
the U.S.$, currency controls and foreign governmental regulations. The Company
may also be hindered or prevented from enforcing its rights with respect to a
governmental instrumentality because of the doctrine of sovereign immunity.
BOARD OF INVESTMENT COMPLIANCE
The Company derives substantial economic benefits from the promotional
considerations granted to it by the Board of Investment ("BOI"). Such benefits
include the permission to bring foreign experts into Thailand and the exemption
from certain import duties and taxes. While the BOI has only granted two
licenses to produce steel in Thailand, there can be no assurance that the BOI
will not grant additional licenses to potential domestic competitors in the
future. The continued availability of these economic benefits for the Company is
conditional upon the on-going satisfaction of certain requirements, including a
limitation on foreign ownership to 49% of the outstanding equity of NSM. The
limitation on foreign ownership is increased to 39% in connection with the
benefits granted by the BOI on the Finishing Facilities. Failure to satisfy
these requirements may result in the loss of economic benefits which may have an
adverse effect on the Company's financial condition and results of operations.
The granting of licenses for the production of steel products in Thailand to
other potential domestic competitors could also have an adverse effect on the
Company's financial condition and results of operations. See "Business--Board of
Investment."
POTENTIAL CONFLICTS OF INTEREST; AFFILIATE TRANSACTIONS
Under Thai law, a director of a public company is prohibited from owning,
operating or serving as a director of a business of the same nature as, and
competitive with, the company of which he or she is a director unless he or she
informs the shareholders of the company at a meeting of shareholders prior to
his or her appointment or accession to ownership (if the shareholders do not
approve the director's other activities, they can cause the director to resign
or cause the company to pursue other remedies). A number of the directors of the
Company hold interests in or are officers or directors of companies engaged in
various aspects of the steel industry. The Company believes that such directors'
endeavors have been in compliance with the foregoing provision of Thai law.
However, Thai law may be more limited than that of many other jurisdictions in
limiting directors of a company in pursuing corporate opportunities which might
have been of interest to the company if presented to the company. Therefore, in
light of this provision and the other interests of a number of directors of the
Company (such as the Chairman of the Company and other members of his family who
currently sit on the Company's board of directors and also maintain interests in
other companies), the Company may be limited as to the number and type of
corporate opportunities which are presented to it in the future. See
"Management."
Several of the directors of the companies have direct and/or indirect
investments in affiliated companies. In addition, some of these companies also
have direct and indirect investments in each other. A number of arrangements and
transactions have been entered into from time to time between such companies.
Under corporate law in Thailand, directors of a company are required to act at
all times in the best interests of the shareholders with respect to transactions
entered into by the company. In addition, corporate law in Thailand places
certain limitations on the ability of a public company to enter into related
party transactions. See "Related Party Transactions."
Because of the scope of the relationships that exist between the companies
there can be no assurance that such agreement or transactions entered into, if
considered separately, have been or will be effected on
32
<PAGE>
terms no less favorable to the Company than could have been obtained from
non-associated third parties. Such transactions could have an adverse effect on
the Company's financial condition and results of operations. While any future
arrangements are expected to be subject to approval by the Company's board of
directors and, where appropriate, the approval of shareholders, there can be no
assurance that the future arrangements between the Company and the other
associated companies will not involve conflicts of interest.
THAI BANKRUPTCY LAW
CURRENT BANKRUPTCY LAW. The Bankruptcy Act was enacted in 1940 and provides
for the liquidation of an insolvent company. A bankruptcy proceeding is
initiated by a creditor filing a petition for a court order to control the
property of the insolvent company, which will lead to the liquidation of the
company unless the creditors are able to negotiate a settlement. A company
cannot initiate proceedings voluntarily. There is no separate bankruptcy court,
and cumbersome civil procedure rules govern the proceedings. There are no
restrictions on the enforcement of security by secured creditors.
After the court order controlling the property, a receiver (who is an
officer of the Ministry of Justice) is appointed. Creditors must file claims
within two months, and this period may be extended another two months for
foreign creditors. Foreign creditors must provide proof of reciprocity. Secured
creditors may elect to proceed to enforce their security, or to file claims
subject to restrictions in the Bankruptcy Act. Other than secured claims and
certain preferential rights, almost all other creditor claims have the same
general priority. There is a provision for a creditors' committee composed of
creditors which have filed claims to consider any composition of debts which may
be proposed.
The receiver may set aside the following transactions involving the company:
- transactions effected within three years, unless the transferee can prove
it was made in good faith and for consideration.
- transactions effected within three months, if made with an intent to give
undue preference to a creditor.
- fraudulent transactions which prejudices other creditors.
The receiver disposes of the assets of the company by public auction, and
distributes the net proceeds on a pro rata basis to all unsecured creditors,
according to a distribution schedule approved by the court. Although this
distribution is required by the Act to occur within six months of the
commencement of proceedings, in practice it takes years to complete the
liquidation proceedings.
NEW BUSINESS REORGANIZATION PROCEEDINGS. The following summary is based on
the amendment to the Bankruptcy Act (the "Bankruptcy Amendment") effective as of
April 10, 1998, by adding a chapter on reorganization proceedings to facilitate
the financial rehabilitation of insolvent companies.
The Bankruptcy Amendment introduces a reorganization proceeding similar to
that under Chapter 11 of the U.S. Bankruptcy Code and to administration under
the Insolvency Act of 1986 in the United Kingdom. Such proceeding commences when
the court makes an order to that effect, following a hearing to consider a
request for a reorganization proceedings. Such request may be filed by the
company on a voluntary basis, by a creditor with a claim in excess of 10 million
Baht, or by certain regulatory agencies of the government. The request must
include basic information about the business of the Company and the prospects
for its rehabilitation.
If the court issues an order to commence a reorganization proceeding, a
receiver is appointed and creditors (both secured and unsecured) must file their
claims within one month. Claims denominated in foreign currency must be
converted to Thai currency at the exchange rate on the date of the court order,
for the purpose of determining voting rights. The court order brings into effect
provisions which suspend litigation against the company, enforcement of security
by secured creditors unless otherwise ordered by
33
<PAGE>
courts, revocation of licenses by government authorities, and other protections
to aid reaching a successful outcome of the reorganization proceeding.
After the court issues its order, the company's management is divested of
its powers to run the business, and that power is transferred initially to a
receiver. There is a procedure to appoint a plan preparer by the court or by
general resolution of a meeting of creditors. If the Company nominates a plan
preparer; such person shall become the plan preparer unless otherwise provided
by a two-thirds majority amount of voting debt. Before a plan preparer is
appointed, all legal rights of shareholders, except for the right to receive
dividends, shall cease as rights of the shareholders and become rights of the
receiver or temporary management. The plan preparer, or the receiver, assumes
responsibility for management of the company. The plan preparer also has a duty
to formulate a reorganization plan within prescribed time frames. The plan will
include an arrangement for the payment of creditor claims, in whole or in part,
and a description of the steps necessary to rehabilitate the business and the
period thereof which shall not exceed 5 years. The creditors who are eligible to
file their claims and are debtors of the Company at the time the court orders
rehabilitation, may set-off their debts against the Company's debts. A special
resolution (75% vote) of the creditors is required to approve the plan and to
form a committee to monitor its implementation. Once the court approves the
plan, the rights and duties of the plan preparer pass to the plan administrator.
The Bankruptcy Amendment does not include any provision for the
establishment of a separate bankruptcy court in Thailand. Some time will be
required to assess the capability of the civil court to handle complicated
reorganization, and for professions of plan preparers and plan administrators to
develop. In comparison to corporate reorganization proceedings under Chapter 11,
the proposed new Thai reorganization proceeding will present some major
differences, for example:
- all creditors vote on the proposed reorganization plan by "special
resolution", and there is no provision for creditor classification or
class voting as in a Chapter 11 case.
- following the court order to initiate a reorganization proceeding, the
company loses its powers to manage the business, and there is no "debtor
in possession" concept.
- the Bankruptcy Amendment does not include a provision prohibiting
non-debtors from terminating executory contracts.
There is now an attempt to further amend the Bankruptcy Amendment. The
Cabinet recently approved the draft amendment two major proposals are (i)
establishing criteria for courts to consider in deciding whether to approve a
plan, (ii) providing for class voting and (iii) empowering the receiver to deny
executory contracts.
CHANGE OF CONTROL
The Notes, the Guaranties and the Debentures require the Note Issuers and
the Company to make an offer to repurchase any and all outstanding Notes and
Debentures at a purchase price equal to 101% of the Accreted Value (as defined)
thereof, plus accrued and unpaid interest, if any, to the date of purchase, upon
the occurrence of a Change of Control. No repurchase of the Senior Subordinated
Notes will be made until the offer to repurchase the Senior Notes is completed.
No assurance can be given that the Issuers or the Company will have sufficient
funds to purchase any or all of the Notes or the Debentures following a Change
of Control. See "Description of Notes and Guaranties--Repurchase at the Option
of Holders-- Change of Control."
ABSENCE OF PUBLIC MARKET FOR THE SECURITIES
The New Securities are new securities for which there currently is no
established trading market. The Initial Purchaser has informed the Company that
it intends to make a market in the New Securities to the extent permitted by
applicable laws and regulations. However, it is not obligated to do so and any
such
34
<PAGE>
market making may be discontinued at any time without notice in the sole
discretion of the Initial Purchaser. In addition, such market making activity
may be limited during pendency of the Exchange Offer or the effectiveness of a
shelf registration statement in lieu thereof.
Accordingly, there can be no assurance as to the development or liquidity of
any market for the New Securities. The New Securities are expected to be
eligible for trading by qualified buyers in the PORTAL market. The Company does
not intend to apply for listing of the New Securities on any securities exchange
or for quotation through the National Association of Securities Dealers
Automated Quotation System ("NASDAQ").
The liquidity of, and trading market for, the New Securities also may be
adversely affected by general declines in the market for similar securities.
Such declines may adversely affect such liquidity and trading markets
independently of the financial performance of, and prospects for, the Company.
PRE-OPERATING EXPENSES
During the years ended December 31, 1995, 1996 and 1997, the Mill was under
construction and the Company had no operating revenues. Under Thai GAAP, the
Company capitalizes operating expenses incurred prior to beginning commercial
operations as deferred charges. Deferred charges will be amortized over a
10-year period commencing when revenues are earned from operations which will
result in lower reported earnings in future periods. Deferred charges as
reported under Thai GAAP and operating results as calculated under U.S. GAAP for
the Company from inception to December 31, 1997, are as follows (in thousands):
<TABLE>
<CAPTION>
BAHT U.S.$
----------- ----------
<S> <C> <C>
Deferred charges under Thai GAAP........................................................ 987,257 22,906
Net (loss) under U.S. GAAP.............................................................. (8,895,427) (206,390)
</TABLE>
LACK OF ENFORCEMENT OF FOREIGN JUDGMENTS
The Company and the Note Issuers, pursuant to the Indentures will have to
submit to jurisdiction under the laws of the State of New York. However, the
Company and the Note Issuers have been advised by their Thai legal counsel,
White & Case (Thailand) Limited that any judgment or order obtained in a court
outside Thailand, including the United States, would not be enforced as such by
the courts of Thailand, but such judgment or order in the discretion of the
courts of Thailand may be admitted as evidence of an obligation in new
proceedings instituted in the courts of Thailand, which would consider the issue
on the evidence before it. See "Enforceability of Civil Liabilities."
35
<PAGE>
USE OF PROCEEDS
The Company and the Note Issuers will not receive any cash proceeds from the
Exchange Offers. In consideration for issuing the Securities as described in
this Prospectus, the Company and the Note Issuers will receive in exchange Old
Securities in like principal amount, the terms of which are identical in all
material respects to those of the New Securities, except that the New Securities
have been registered under the Securities Act and are issued free of any
covenant regarding registration, including the payment of additional interest
upon a failure to file or have declared effective an exchange offer registration
statement or to consummate the applicable Exchange Offer by certain dates. The
Old Securities surrendered in exchange for the New Securities will be retired
and cancelled and cannot be reissued. Accordingly, the issuance of the New
Securities will not result in any change in the indebtedness of the Company.
36
<PAGE>
CAPITALIZATION
The following table shows the capitalization of the Company as at December
31, 1997 and as adjusted to give effect to the Offerings, the Debenture Offering
and the Equity Investments and prepayment of U.S.$50 million of existing
indebtedness, in Baht and U.S.$ (in thousands).
<TABLE>
<CAPTION>
DECEMBER 31, 1997
---------------------------------------------------
<S> <C> <C> <C> <C>
ACTUAL ACTUAL AS ADJUSTED AS ADJUSTED(1)
BAHT U.S.$ BAHT U.S.$
----------- --------- ----------- --------------
Cash and short-term investments.............................. 17,965 417 14,952,326(2) $ 346,922
Non-current portion: Notes DSR Account....................... -- -- 643,914 14,940
----------- --------- ----------- --------------
Total cash............................................... 17,965 417 15,596,240 $ 361,862
----------- --------- ----------- --------------
----------- --------- ----------- --------------
Long-term debt(3)
Bank Credit Facility(4).................................... 16,639,886 386,076 14,484,886 $ 336,076
Senior Notes............................................... -- -- 9,723,101 225,594
Senior Subordinated Notes.................................. -- -- 7,154,385(5) 165,995(5)
Debentures................................................. -- -- 1,874,850 43,500
----------- --------- ----------- --------------
Total long-term debt..................................... 16,639,886 386,076 33,237,222 771,165
Shareholders' equity(6)
Ordinary Shares, 10 baht par value......................... 5,600,000 129,930 7,186,399 166,738
Premium on share capital................................... 510,000 11,833 510,000 11,833
Warrants................................................... -- -- 388,547(5) 9,015(5)
Retained deficit........................................... (1,294,542) (30,036) (1,294,542) (30,036)
----------- --------- ----------- --------------
Total shareholders' equity............................... 4,815,458 111,727 6,790,404 157,550
----------- --------- ----------- --------------
Total capitalization......................................... 21,455,344 497,803 40,027,626 $ 928,715
----------- --------- ----------- --------------
----------- --------- ----------- --------------
</TABLE>
- ------------------------
(1) The translations of the Baht amounts into U.S.$ are included solely for the
convenience of the reader, using the Noon Buying Rate from the Federal
Reserve Bank of New York on June 5, 1998 of 43.10 Baht to U.S.$1.00. The
convenience translations should not be construed as representations that the
Baht amounts could have been, or could in the future be, converted into
U.S.$ at this or any other rate of exchange.
(2) Including U.S.$56.5 million held in the Notes DSR Account to fund the first
two interest payments on each class of the Notes and the Debentures.
(3) In addition to the Notes, a commitment in respect of up to U.S.$150 million
Working Capital Facility will be put in place at the time of closing. This
facility will be collateralized by certain accounts receivable. The Company
does not expect to draw upon the Working Capital Facility at the time of
closing.
(4) For a description of the Company's existing long-term debt, see "Description
of Certain Indebtedness" and Note 14 to the Company's Audited Financial
Statements appearing elsewhere in this Prospectus.
(5) Gives effect to the Warrants which have been valued at U.S.$9 million.
(6) Concurrently with the Old Offerings, the Company issued 158,639,864 Ordinary
Shares representing 22.1% of the issued and outstanding shares of the
Company, with a value of 1.59 billion Baht (U.S.$36.9 million), including
74,468,090 shares with a value of 744,680,090 Baht (U.S.$17.3 million) which
will be issued to SDI in return for technical and advisory assistance in the
form of the SDI License Agreement. The proceeds of the remaining 84,171,774
shares were 841.7 million Baht (U.S.$19.5 million).
37
<PAGE>
SELECTED FINANCIAL DATA
(AMOUNTS IN THOUSANDS, EXCEPT RATIOS)
The following selected financial data as at December 31, 1994, 1995, 1996,
1997 and for the years ended December 31, 1995, 1996, 1997 have been derived
from, and are qualified in their entirety by reference to, the Company's Audited
Financial Statements and notes thereto appearing elsewhere in this Prospectus.
Such statements have been audited by Peat Marwick Suthee Limited, independent
public accountants, as of and for each of the years in such period. The
Company's Audited Financial Statements are prepared in conformity with Thai GAAP
which differs from U.S. GAAP. The following data should be read in conjunction
with the Company's Audited Financial Statements and the Notes thereto, and
Management's Discussion and Analysis of Financial Condition which are included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AS AT DECEMBER 31,
-----------------------------------------------------
1994 1995 1996 1997 1997(1)
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
BAHT BAHT BAHT BAHT U.S.$
BALANCE SHEET DATA:
Thai GAAP
Cash and short term investments........................ 10 94,588 501,587 17,965 417
Total current assets................................... 10,064 2,931,914 1,695,602 896,507 20,801
Deferred charges....................................... 2,670 60,169 252,202 987,257 22,906
Property, plant and equipment, net..................... 5,506 2,430,562 9,437,572 24,454,278 567,385
Total assets........................................... 18,643 5,423,730 11,387,248 26,344,917 611,251
Current liabilities.................................... 8,643 273,730 1,120,328 4,889,573 113,447
Long-term debt......................................... -- -- 4,156,920 16,639,886 386,076
Shareholders' equity................................... 10,000 5,150,000 6,110,000 4,815,458 111,728
U.S. GAAP
Deferred charges......................................... -- 71,975 90,807 57,580 1,336
Property, plant and equipment............................ -- 2,458,269 9,426,805 17,802,722 374,336
Shareholders' equity..................................... -- 5,183,665 5,937,838 (2,826,513) (65,580)
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------
1995 1996 1997 1997(1)
--------- --------- ---------- ---------
<S> <C> <C> <C> <C>
BAHT BAHT BAHT U.S.$
OPERATING DATA:
Thai GAAP
Provision for bad debts......................................... -- -- 1,294,542 30,036
--------- --------- ---------- ---------
Net Loss........................................................ -- -- (1,294,542) (30,036)
Net loss per share.............................................. -- -- (2.31) (0.05)
--------- --------- ---------- ---------
--------- --------- ---------- ---------
U.S. GAAP
Interest income................................................... 111,883 202,790 145,001 3,364
Expenses
Provision for bad debts......................................... -- -- 1,294,542 30,036
Administrative.................................................. 68,630 322,990 879,954 20,417
Depreciation.................................................... 1,277 6,053 12,842 298
Foreign exchange losses......................................... 143 46,089 6,720,261 155,922
--------- --------- ---------- ---------
70,050 375,132 8,907,599 206,673
--------- --------- ---------- ---------
Income (loss) before income taxes................................. 41,833 (172,342) (8,762,598) (203,309)
Deferred income tax expense (benefit)............................. 5,848 (5,848) -- --
--------- --------- ---------- ---------
Net income (loss)................................................. 35,985 (166,494) (8,762,598) (203,309)
--------- --------- ---------- ---------
--------- --------- ---------- ---------
Basic and diluted net income (loss) per share..................... 0.12 (0.31) (15.65) (0.33)
--------- --------- ---------- ---------
--------- --------- ---------- ---------
CASH FLOW DATA:
Cash flows used in operating activities........................... (127,293) (247,908) (642,854) (14,916)
Cash flows used in investing activities........................... (4,981,833) (4,420,468) (12,382,690) (287,301)
Cash flows provided by financing activities....................... 5,203,704 5,075,375 (12,541,922) 290,996
OTHER FINANCIAL DATA:
Thai GAAP
Fixed charges(2)................................................ 2,409 86,152 1,085,898 25,195
Ratio of earnings to fixed charges(3)(4)........................ -- (4) -- (4) -- (4) -- (4)
U.S. GAAP
Fixed charges(2).................................................. 2,409 93,350 1,093,096 25,362
Ratio of earnings to fixed charges(3)(4) 14.9 -- (5) -- (5) -- (5)
</TABLE>
- ------------------------
(1) The translations of the Baht amounts into U.S.$ are included solely for the
convenience of the reader, using the Noon Buying Rate from the Federal
Reserve Bank of New York on June 5, 1998 of 43.10 Baht to U.S.$1.00. The
convenience translations should not be construed as representations that the
Baht amounts could have been, or could in the future be, converted into
U.S.$ at this or any rate of exchange.
(2) Fixed charges for any period consist of interest incurred (including
capitalized interest), one-third of rental payments on operating leases
(such amounts being deemed by the Company to represent the interest portion
of such payments) and amortization of debt expenses for such period.
(3) For purposes of computing the ratios of earnings to fixed charges for any
period, earnings consist of income (loss) before income taxes for such
period plus fixed charges deducted in calculating income for such period.
(4) For 1995, 1996 and 1997, earnings were inadequate to cover fixed charges by
2.4 million Baht, 86.2 million Baht and 2,380.4 million Baht (U.S.$55.2
million), respectively, under Thai GAAP.
(5) For 1996 and 1997, earnings were inadequate to cover fixed charges by 252.6
million Baht and 9,848.2 million Baht (U.S.$228.5 million), respectively,
under U.S. GAAP.
38
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE COMPANY'S
AUDITED FINANCIAL STATEMENTS AND CERTAIN FINANCIAL PROJECTION INFORMATION THAT
APPEAR ELSEWHERE IN THIS PROSPECTUS. SUCH FINANCIAL STATEMENTS HAVE BEEN
PREPARED IN ACCORDANCE WITH THAI GAAP, WHICH DIFFERS IN CERTAIN RESPECTS FROM
U.S. GAAP. SEE "SUMMARY OF CERTAIN DIFFERENCES BETWEEN THAI GAAP AND U.S. GAAP."
OVERVIEW
The Company was formed in 1994 to develop a thin-slab/flat-rolled steel
mini-mill in Thailand to serve the domestic and world steel markets.
Construction of the Hot Mill began in August 1995. Operational testing of
the tunnel furnace and the rolling mill, key components of the Hot Mill, began
in October 1997 when the Company rolled its first coils from purchased slabs.
Operational testing of the EAF and caster began in December 1997 when the
Company produced its first heat of molten steel which was successfully cast into
slabs and passed through the rolling mill to produce the first coil made
entirely in the Hot Mill. Commercial operations of the Hot Mill began in the
first quarter of 1998. Upon completion of the Hot Mill and commencement of
commercial operations, the Company began to depreciate Hot Mill property, plant
and equipment and amortize related deferred charges.
The Company has begun to construct the DRI Facility to provide a reliable
supply of low-cost raw materials to supplement steel scrap in its melt mix. The
Company has begun to construct the Finishing Facilities to produce a wide array
of value-added products such as pickled and oiled, cold-rolled and galvanized
hot-and cold-rolled products. These value-added products are expected to produce
higher profit margins and reduce the Company's exposure to the volatility of
commodity grade steel prices. The Company will capitalize interest and
pre-operating costs related to the DRI Facility and the Financing Facilities
until these facilities commence operations.
The Company generated its first revenue in the first quarter of 1998. Total
production was 20,587 tonnes which is below the Company's expectations. The
primary factors causing production delays have been shortages of raw materials
caused by a lack of funds for working capital and a general slowdown in
construction of the Mill prior to the completion of the Offerings. Also, the
ramp-up of production has been slowed due to inadequate commissioning support
and slowed delivery of spare parts from key equipment vendors. When the proceeds
of the Offerings became available the Company resumed purchasing raw material
and construction and equipment vendors were paid amounts due. As a result, the
pace of the start-up of the Hot Mill and construction of the DRI and Finishing
Facility improved dramatically. Production has been interrupted by liquid steel
breakouts caused by unforeseeable problems with refractory materials. The
Company and its refractory vendors have procured new refractory material and
altered refractory handling practices to prevent these problems from occurring
in the future. The Company expects production to reach planned levels during the
second half of 1998.
Steel prices in Thailand specifically and in East and in Southeast Asia in
general have declined recent months as a result of the economic turbulence in
the region. As a result, the Company may have difficulties in reaching expected
levels of revenue in the near term. The Company expects steel prices to recover
as the economies of East and Southeast Asia nations stabilize.
GENERAL
The Company's financial statements and the notes thereto as included in this
Prospectus reflect the financial condition of the Company as at December 31,
1994, 1995, 1996 and 1997.
The majority of the Company's long-term debt and related interest expense is
denominated in U.S.$ (see Note 14 to the Audited Financial Statements and
"Description of Other Indebtedness"). Pursuant to Thai GAAP, the balance of such
debt is translated into Baht at period-end exchange rates. Because the
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Company's U.S.$ denominated debt is associated with the construction of the
Mill, any unrealized foreign exchange gains or losses incurred prior to start-up
of the Mill are capitalized as property, plant and equipment. Subsequent to
completion of the Hot Mill unrealized foreign exchange gains and losses incurred
on debt allocated to the Hot Mill will be recognized in the Company's income
statement. The company will continue to capitalize unrealized foreign exchange
gains and losses related to debt which has been allocated to construction of the
DRI Facility and Finishing Facilities.
Although Thailand's economy has been characterized by high growth rates, in
1996 and particularly in 1997 GDP growth slowed significantly in relation to
historical levels. In late 1996 and in 1997 Thailand experienced significant
economic weakness, resulting primarily from declines in the property and finance
industries, a sharp reduction in financial liquidity and a general deterioration
in investor confidence. The deteriorating economy in Thailand is likely to
result in a significant portion of the Company's potential domestic customers
experiencing financial difficulty. Further, the Company expects that the number
of bankruptcies in Thailand and East and Southeast Asia generally, including
among its potential customers, will increase. The Company believes that the
significant devaluation of the Baht and other Asian currencies during the second
half of 1997 will reduce domestic and regional demand for its products.
Specifically the devaluation of the Korean Won and the Japanese Yen will impact
the Company's competitive position. Korea and Japan are the main steel producing
nations in the region.
Changes in exchange rates will affect the Company's results of operations.
Substantially all of the Company's export sales are denominated in U.S.$ and its
domestic prices, which are denominated in Baht, are generally based on
international U.S.$ prices. The Company's operating costs are primarily
denominated in Baht and in U.S.$. As noted above, most of the Company's long
term debt and interest expense is denominated in U.S.$. Therefore, the Company's
financial results may be materially affected by both realized and unrealized
foreign exchange gains and losses.
On July 2, 1997, the Ministry of Finance announced the adoption of a
"managed float" basis for determining the Baht exchange rate, resulting in an
immediate effective devaluation of the Baht. See "Risk Factors--Exchange Rate
Fluctuations". The value of the Baht, as reflected in the Noon Buying Rate,
declined from 24.520 Baht per U.S.$1.00 on July 1, 1997 to 46.80 Baht per
U.S.$1.00 on December 31, 1997. The Noon Buying Rate was 39.60 Baht per
U.S.$1.00 on March 31, 1998. There can be no assurance that the value of the
Baht will not decline further, increase or continue to fluctuate widely against
other currencies in the future. The Company believes that a devaluation of the
Baht, in general, tends to have a beneficial effect on its operating expenses
and capital costs. Adverse economic conditions in Thailand incidental to the
devaluation of the Baht, however, could reduce overall demand for the Company's
products and the Company's customers' ability to pay for them. See "Risk
Factors--Political and Economics Factors." The Company from time to time may
hedge its currency positions to attempt to avert any adverse consequences of
exchange rate exposure at a satisfactory cost.
On January 6, 1998, the Ministry of Finance issued a regulation to limit the
U.S.$ holding period for exports in an effort to curtail currency speculation
and increase the U.S.$ supply in the local economy. According to the ministerial
regulation, exporters must now bring their earnings into Thailand immediately
upon payment, but in no event more than 120 days from the date of export after
which, they have seven days to either sell to or deposit their dollars in a
foreign currency account with an authorized commercial bank in Thailand.
Previously, the Bank of Thailand provided that exporters had 120 days in which
to receive payment for their goods and bring the money into the country, after
which they had a further 15 days to deposit it.
The Company has obtained waivers from the Bank of Thailand which allow the
Company to (i) maintain a portion of the proceeds of export sales in U.S.$ in
bank accounts outside of Thailand; and (ii) maintain U.S.$ in bank accounts in
Thailand in an amount not to exceed the Company's foreign currency obligations
payable within three months. Failure by the Company to maintain these waivers
would force the Company to repatriate a substantial portion of its export
revenue to Thailand and eventually
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convert such revenue in Baht. Such conversion would require the Company to bear
exchange rate risks as many of the Company's obligations, including payments on
the Notes, are U.S.$ denominated. If the Company is unable to maintain these
waivers, any devaluation of the Baht against the U.S.$ could have an adverse
effect on the Company's financial condition and results and could materially
impair the Company's ability to repay its U.S.$ obligations, including payments
on the Notes. See "Risk Factors--Currency Regulation."
The economic environment in which NSM operates is affected substantially by
both BOI promotions granted to NSM and protective measures, such as import
tariffs imposed by the Thailand government. See "Business--Competition." These
factors influence the Company's results both directly (such as through
reductions in tax liabilities) and indirectly (such as by reducing the ability
of non-Thai steel producers to compete with the Company for sales in Thailand).
Generally, the benefits derived by the Company from these sources can be
expected to decline over time. However, the Company believes that, as its
operations mature, its reliance on such benefits will also be reduced. See "Risk
Factors--Board of Investment Compliance." The BOI granted the Company an
exemption from all corporate income taxes on income earned on the production of
hot-rolled steel for a period of seven years.
LIQUIDITY AND FINANCIAL CONDITION
The Company's business is capital intensive and requires substantial
expenditures for, among other things, the purchase and maintenance of equipment
used in its steelmaking operations and compliance with environmental laws. The
Company's liquidity needs arise primarily from capital investments, working
capital requirement and principal and interest payments on its indebtedness.
Since its inception, the Company has met these liquidity requirement with cash
provided by equity and long-term borrowings.
In 1994, the Company issued 100,000 ordinary shares at par value of 100 Baht
per share for total gross proceeds of 10.0 million Baht. Later, the Company
changed is par value to 10 Baht per share and correspondingly adjusted the
number of ordinary shares to 1,000,000 ordinary shares. In 1995, the Company
issued 499,000,000 ordinary shares for gross proceeds of 5.14 billion Baht. In
1995, the Company registered itself as a public company and completed an initial
public offering in Thailand of 60,000,000 ordinary shares for gross proceeds of
960 million Baht in 1996.
In September 1995, the Company obtained a senior credit facility from a
consortium of Thai financial institutions secured by all of the fixed the assets
of the Company (See Note 14 to the Audited Financial Statements). The facility
is composed of a 3.3 billion Baht tranche and a U.S.$308 million tranche which,
together with the above mentioned equity offerings, provided sufficient capital
to build and start-up the Hot Mill. The Company repaid U.S.$50 million of
principle on this facility concurrently with the closing of the Offerings.
In early 1996, the Thai financial institutions providing the funding for the
construction of the Hot Mill indicated that, when needed, they would submit a
proposal to fund the construction of the DRI Facility and the Finishing
Facilities. During the first half of 1997, the Company realized that these
financial institutions might not be in a position to submit such a proposal and
began to structure a financing transaction involving U.S. based debt and equity
investors.
Total capital expenditures to construct the Mill is projected to be U.S.$764
million, U.S.$487 million had been paid as of December 31, 1997.
The Company's estimate of costs to complete the Mill is U.S.$277 million,
including approximately U.S.$102 million which was incurred but unpaid as of
December 31, 1997. The Company had to obtain additional financing through the
Offerings and Equity Investments in order to meet the costs of completing
construction and beginning operations of the Mill. Following the Offerings and
the completion of the Equity Investments, the Company had U.S.$288 million
available to fund completion of the Mill.
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Concurrently with the Offerings, the Company entered into the Working
Capital Facility, which is secured by certain accounts receivable. The Working
Capital Facility is collateralized separately from the Notes based entirely on
funded accounts receivable and has no claim on the Collateral. The Company
believes this facility, together with its cash flows from operations, will be
sufficient to meet its working capital requirements.
The Issuers consummated a private placement consisting of the Debentures and
the Private Placement Shares. The gross proceeds of the Debentures were
U.S.$43.5 million. The gross proceeds of the Private Placement Shares were 644
million Baht (U.S.$14 million). The Debentures have a cash coupon of 12.75%, a
yield to maturity of 16.36% and a maturity date of February 1, 2009. The funds
from the private placement will be used, together with a portion of the net
proceeds of the Offerings, to finance operating expenses and start-up costs
associated with the Mill. See "Description of Certain Indebtedness--Subordinated
Second Mortgage Debentures."
The Company has entered into a commitment with Banque Nationale de Paris
("BNP") under which BNP, acting as the Company's agent, will pursue a
refinancing through the Export-Import Bank of the United States (the "U.S. Ex-Im
Bank") of up to U.S.$158 million of the Company's indebtedness owed to certain
Thai financial institutions. Such refinancing is subject to final credit
approval of the U.S. Ex-Im Bank, definitive documentation and certain other
conditions being met. It is anticipated that this financing would be in the form
of term loans granted by BNP and supported by the U.S. Exim Bank, with drawdowns
to be made directly to suppliers of goods and services to the Company in the
United States. The financing would require unconditional guarantees from the
Company's existing Thai lenders.
U.S. GAAP RECONCILIATION
The Company prepares its financial statements in accordance with Thai GAAP.
For information concerning certain differences between Thai GAAP and U.S. GAAP
as applied to the Company's financial statements, see Note 22 to the Audited
Financial Statements.
EFFECTS OF INFLATION
The Company does not expect inflation in Thailand, where substantially all
of its operations are located, to have material impact on its results of
operations.
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THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
In connection with the sale of the Old Securities, the Company and the Note
Issuers entered the agreements described under "Old Registration Rights"
pursuant to which the Company and the Note Issuers agreed to use their best
efforts to file with the Commission a registration statement with respect to the
exchange of the applicable Old Securities for a series of registered debt
securities with terms identical in all material respects to the terms of the
applicable Old Securities, except that the New Securities have been registered
under the Securities Act and are issued free of any covenant regarding
registration, including the payment of additional interest upon a failure to
file or have declared effective an exchange offer registration statement or to
consummate the Exchange Offer by certain dates.
The Company and the Note Issuers are making the Exchange Offers in reliance
on the position of the staff of the Commission as set forth in the no-action
letter from the Commission's Division of Corporate Finance to Grupo Financiero
InverMexico, S.A., dated April 4, 1995 and the Commission's no-action letters
referenced therein addressed to other parties in other transactions. However,
the Company and the Note Issuers have not sought their own no-action letter and
there can be no assurance that the staff of the Commission would make a similar
determination with respect to the Exchange Offers as in such other
circumstances. Based upon these interpretations by the staff of the Commission,
the Company and the Note Issuers believe that New Securities issued pursuant to
these Exchange Offers in exchange for Old Securities may be offered for resale,
resold and otherwise transferred by a holder thereof other than (i) a
broker-dealer who purchased such Old Securities directly from the Company to
resell pursuant to Rule 144A or any other available exemption under the
Securities Act or (ii) a person that is an "affiliate" (as defined in Rule 405
of the Securities Act) of the Company or the Note Issuers without compliance
with the registration and prospectus deliver provisions of the Securities Act,
provided that such New Securities are acquired in the ordinary course of such
holder's business and that such holder is not participating, and has no
arrangement or understanding with any person to participate, in the distribution
of such New Securities. Holders of Old Securities accepting the Exchange Offer
will represent to the Company and the Note Issuers in the Letter of Transmittal
that such conditions have been met. Any holder who participates in the Exchange
Offer for the purpose of participating in a distribution of the New Securities
may not rely on the position of the staff of the Commission as set forth in
these no-action letters and would have to comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
secondary resale transaction. A secondary resale transaction in the United
States by a holder who is using the Exchange Offers to participate in the
distribution of New Securities must be covered by a registration statement
containing the selling security holder information required by Item 507 of
Regulation S-K of the Securities Act.
Each broker-dealer that receives New Securities for its own account pursuant
to the Exchange Offers must acknowledge that it acquired the Old Securities as a
result of market-making activities or other trading activities and will deliver
a prospectus in connection with any resale of such New Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of New Securities received in
exchange for Old Securities where such Old Securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. The Letter of Transmittal states that by acknowledging and
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. The Company and the
Note Issuers have agreed that for a period of 180 days after the Expiration
Date, they will make this Prospectus available to broker-dealers for use in
connection with any such resale. See "Plan of Distribution."
Except as aforesaid, this Prospectus may not be used for an offer to resell,
resale or other retransfer of New Securities.
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The Exchange Offers are not being made to, nor will the Company and the Note
Issuers accept tenders for exchange from, holders of Old Securities in any
jurisdiction in which the Exchange Offers or the acceptance thereof would not be
in compliance with the securities or blue sky laws of such jurisdiction.
TERMS OF THE EXCHANGE
Upon the terms and subject to the conditions of the Exchange Offer, the
Company and the Note Issuers will, unless such Old Securities are withdrawn in
accordance with the withdrawal rights specified in "Withdrawal of Tenders"
below, accept any and all Old Securities validly tendered prior to 5:00 p.m.,
New York City time, on the Expiration Date. The date of acceptance for exchange
of the Old Securities, and consummation of the Exchange Offer, is the Exchange
Date, which will be the first business day following the Expiration Date (unless
extended as described herein). The Company will issue, on or promptly after the
Exchange Date up to $249,000,000 aggregate principal amount of New Senior Notes
up to 203,500,000 aggregate principal amount of New Senior Subordinate Notes and
up to 53,133,016 aggregate principal amount of New Debentures tendered and
accepted in connection with the Exchange Offer. The New Notes issued in
connection with the Exchange Offer will be delivered on the earliest practicable
date following the Exchange Date. Holders may tender some or all of their Old
Securities in connection with the Exchange Offer. However, Old Securities may be
tendered only in integral multiples of US $1000 (except the Old Debentures,
which may be tendered only in integral multiples of US$1).
The terms of the New Securities are identical in all material respects to
the terms of the Old Securities, except that the New Securities have been
registered under the Securities Act and are issued free from any covenant
regarding registration, including the payment of additional interest upon a
failure to file or have declared effective an exchange offer registration
statement or to consummate the Exchange Offers by certain dates. The New
Securities will evidence the same debt as the Old Securities and will be issued
under and be entitled to the same benefits under the Indenture as the Old
Securities. As of the date of this Prospectus, $249,000,000 aggregate principal
amount of the Old Senior Notes is outstanding, $203,500,000 aggregate principal
amount of Old Senior Subordinate Notes is outstanding and 153,133,016 aggregate
principal amount of Old Debentures is outstanding.
In connection with the issuance of the Old Securities, the Company arranged
for the Old Securities originally purchased by qualified institutional buyers to
be issued and transferable in book-entry form through the facilities of The
Depository Trust Company ("DTC"), acting as depositary. Except as described
under "Book-Entry, Delivery and Form," the New Securities will be issued in the
form of a global note registered in the name of DTC or its nominee and each
holder's interest therein will be transferable in book-entry form through DTC.
See "Description of Note Depositary Agreement, Delivery and Form."
Holders of Old Securities do not have any appraisal or dissenters' rights in
connection with the Exchange Offers. Old Securities which are not tendered for
exchange or are tendered but not accepted in connection with the Exchange Offer
will remain outstanding and be entitled to the benefits of the applicable
Indenture, but will not be entitled to any registration rights under the
applicable registration rights agreement.
The Company shall be deemed to have accepted validly tendered Old Securities
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
for the purposes of receiving the New Securities from the Company.
If any tendered Old Securities are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, certificates for any such unaccepted Old Securities will be returned,
without expense, to the tendering holder thereof as promptly as practicable
after the Expiration Date.
Holders who tender Old Securities in connection with the Exchange Offers
will not be required to pay brokerage commissions or fees or, subject to the
instructions in the Letter of Transmittal, transfer taxes
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with respect to the exchange of Old Securities in connection with the Exchange
Offer. The Company and the Note Issuers will pay all charges and expenses, other
than certain applicable taxes described below, in connection with the Exchange
Offers. See "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on the
date that is 20 business days following the later of the date of effectiveness
of the registration statement or the date of the Exchange Offer is otherwise
commenced unless extended by the Company and the Note Issuers in their sole
discretion (but in no event to a date later than , 1998), in which case
the term "Expiration
Date" shall mean the latest date and time to which the Exchange Offer is
extended.
The Company and the Note Issuers reserve the right, in their sole discretion
(i) to delay accepting any Old Securities, to extend the Exchange Offer or to
terminate the Exchange Offer and to refuse to accept Old Securities not
previously accepted, if any of the conditions set forth below under "Conditions
to the Exchange Offer" shall not have been satisfied and shall not have been
waived by the Company and the Note Issuers (if permitted to be waived by the
Company and the Note Issuers) and (ii) to amend the terms of the Exchange Offer
in any manner. Any such delay in acceptance, extension, termination or amendment
will be followed as promptly as practicable by oral or written notice thereof to
the registered holders. If the Exchange Offers are amended in a manner
determined by the Company and the Note Issuers to constitute a material change,
the Company and the Note Issuers will promptly disclose such amendment by means
of a prospectus supplement that will be distributed to the registered holders of
the Old Securities, and the Company and the Note Issuers will extend the
Exchange Offer for a period of five to ten business days, depending upon the
significance of the amendment and the manner of disclosure to the registered
holders, if the Exchange Offer would otherwise expire during such five to ten
business day period. In no event, however, shall the Exchange Date be later than
the first business day following , 1998.
If the Company and the Note Issuers determine to make a public announcement
of any delay, extension, amendment or termination of the Exchange Offer, the
Company and the Note Issuers shall have no obligation to publish, advertise or
otherwise communicate any such public announcement, other than by making a
timely release to an appropriate news agency.
INTEREST ON THE NEW SECURITIES
The New Securities will bear interest at the same rate as the applicable Old
Security. Interest on the New Securities shall accrue from the last Interest
Payment Date on which interest was paid on the Old Securities surrendered or, in
no interest has been paid on the Old Securities, from March 12, 1998. Interest
on the New Securities will be payable semiannually on February 1 and August 1 of
each year, commencing August 1, 1998.
Holders of Old Securities whose Old Securities are accepted for exchange
will not receive interest on such Old Securities for any period subsequent to
the last interest payment date to occur prior to the issue date of the New
Securities, and will be deemed to have waived the right to receive any interest
payment on the Old Securities accrued from and after such interest payment date.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other term of the Exchange Offers, the Company and the
Note Issuers will not be required to accept for exchange, or to exchange, any
Old Securities for any New Securities, and may terminate or amend the Exchange
Offers before the acceptance of any Old Securities for exchange, if:
(a) any action or proceeding is instituted or threatened in any court or
by or before any governmental agency with respect to the Exchange Offers
which, in the Company's or Note Issuer's reasonable good faith judgment,
would be expected to impair the ability of the Company and the Note Issuers
to proceed with the Exchange Offers, or
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(b) any law, statute, rule or regulation is adopted or enacted, or any
existing law, statue, rule or regulation is interpreted by the Commission or
its staff, which, in the Company's or the Note Issuers' reasonable good
faith judgment, would be expected to impair the ability of the Company and
the Note Issuers to proceed with the Exchange Offers.
If the Company and the Note Issuers determine in their reasonable good faith
judgment that any of the foregoing conditions exist, the Company and the Note
Issuers may (i) refuse to accept any Old Securities and return all tendered Old
Securities to the tendering holder, (ii) extend the Exchange Offers and retain
all Old Securities tendered prior to the expiration of the Exchange Offers,
subject, however, to the rights of holders who tendered such Old Securities to
withdraw their tendered Old Securities which have not been withdrawn. If such
waiver constitutes a material change to the Exchange Offers, the Company and the
Note Issuers will promptly disclose such waiver by means of a prospectus
supplement that will be distributed to the registered holders, and the Company
and the Note Issuers will extend the Exchange Offers for a period of five to ten
business days, depending upon the significance of the waiver and the manner of
disclosure to the registered holders, if the Exchange Offers would otherwise
expire during such five to ten business days. In no event, however, shall the
Exchange Date be a date later than the first business day following ,
1998.
PROCEDURES FOR TENDERING
Only a holder of record of Old Securities on , 1998 may tender such
Old Securities in connection with the Exchange Offers. To tender in connection
with the Exchange Offers, a holder must complete, sign and date the Letter of
Transmittal, or a facsimile thereof, have the signatures thereon guaranteed if
required by the Letter of Transmittal and mail or otherwise deliver such Letter
of Transmittal or such facsimile, together with the Old Securities (unless such
tender is being effected pursuant to the procedure for book-entry transfer
described below) and any other required documents, to the Exchange Agent prior
to 5:00 p.m., New York City time, on the Expiration Date.
Any financial institution that is a participant in DTC's Book-Entry Transfer
Facility system may make book-entry delivery of the Old Securities by causing
DTC to transfer such Old Securities into the Exchange Agent's account in
accordance with DTC's procedure for such transfer. Although delivery of Old
Securities may be effected through book-entry transfer into the Exchange Agent's
Account at DTC, the Letter of Transmittal (or facsimile thereof), with any
required signature guarantees and any other required documents, must, in any
case, be transmitted to and received or confirmed by the Exchange Agent at its
addresses set forth under the caption "Exchange Agent," below, prior to 5:00
p.m., New York City time, on the Expiration Date. DELIVERY OF DOCUMENTS TO DTC
IN ACCORDANCE WITH ITS PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE
AGENT.
The tender by a holder of Old Securities will constitute an agreement
between such holder and the Company and the Note Issuers in accordance with the
terms and subject to the conditions set forth herein and in the Letter of
Transmittal.
The method of delivery of Old Securities and the Letter of Transmittal and
all other required documents to the Exchange Agent is at the election and risk
of the holders. Instead of delivery by mail, it is recommended that holders use
an overnight or hand delivery service. In all cases, sufficient time should be
allowed to assure delivery to the Exchange Agent before the Expiration Date. No
Letter of Transmittal or Old Securities should be sent to the Company or the
Note Issuers. Holders may request their respective brokers, dealers, commercial
banks, trust companies or nominees to effect the tenders for such holders.
Any beneficial owner whose Old Securities are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such owner's own behalf, such owner must,
prior to completing and executing
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the Letter of Transmittal and delivery of such owner's Old Securities, either
make appropriate arrangements to register ownership of the Old Securities in
such owner's name or obtain a properly completed bond power from the registered
holder. The transfer of registered ownership may take considerable time.
Signature on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by an Eligible Institution (as defined below) unless
the Old Securities tendered pursuant thereto are tendered (i) by a registered
holder who has not completed the box entitled "Special Payment Instructions" or
"Special Delivery Instructions" on the Letter of Transmittal, or (ii) for the
account of an Eligible Institution. In the event that signatures on a Letter of
Transmittal or a notice of withdrawal, as the case
may be, are required to be guaranteed, such guarantee must be by a member firm
of a registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or an "eligible guarantor institution" within
the meaning of Rule 17 Ad-15 under the Exchange Act (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the registered
holder of any Old Securities listed therein, such Old Securities must be
endorsed by such registered holder or accompanied by a properly completed bond
power, in such case signed or endorsed in blank by such registered holder as
such registered holder's name appears on such Old Securities.
If the Letter of Transmittal or any Old Securities or bond powers are signed
or endorsed by trustees, executors, administrators, guardians, attorney-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and unless waived by the
Company and the Note Issuers, evidence satisfactory to the Company and the Note
Issuers of their authority to so act must be submitted with the Letter of
Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Old Securities will be
determined by the Company and the Note Issuers in their sole discretion, which
determination will be final and binding. The Company and the Note Issuers
reserve the absolute right to reject any and all Old Securities not properly
tendered or any Old Securities whose acceptance by the Company and the Note
Issuers would, in the opinion of U.S. counsel to the Company and Note Issuers,
be unlawful. The Company and the Note Issuers also reserve the right to waive
any defects, irregularities or conditions of tender as to any particular Old
Securities either before or after the Expiration Date. The Company's and the
Note Issuers' interpretation of the terms and conditions of the Exchange Offers
(including the Instructions in the Letter of Transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Old Securities must be cured within such time as the
Company and the Note Issuers shall determine. Although the Company and the Note
Issuers intend to request the Exchange Agent to notify holders of defects or
irregularities with respect to tenders of Old Securities, neither the Company,
the Note Issuers, the Exchange Agent nor any other person shall have any duty or
incur any liability for failure to give such notification. Tenders of Old
Securities will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Old Securities received by the
Exchange Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering holders, unless otherwise provided in the Letter of
Transmittal, as soon as practicable following the Expiration Date.
In addition, the Company and the Note Issuers reserve the right, as set
forth above under the caption "Conditions to the Exchange Offers," to terminate
the Exchange Offers.
By tendering, each holder represents to the Company and the Note Issuers
that, among other things, the New Securities acquired in connection with the
Exchange Offers are being obtained in the ordinary course of business of the
person receiving such New Securities, whether or not such person is the holder,
that neither the holder nor any such other person has an arrangement or
understanding with any person to participate in the distribution of such New
Securities and that neither the holder nor any such other person is an
"affiliate" (as defined in Rule 405 under the Securities Act) of the Company or
the Note Issuers. If
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the holder is a broker-dealer which will receive New Securities for its own
account in exchange of Old Securities, it will acknowledge that it acquired such
Old Securities as the result of market making activities or other trading
activities and it will deliver a prospectus in connection with any resale of
such New Securities.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Securities and (i) whose Old Securities
are not immediately available, or (ii) who cannot deliver their Old Securities,
the Letter of Transmittal or any other required documents to the Exchange Agent,
or cannot complete the procedure for book-entry transfer, prior to the
Expiration Date, may effect a tender of their Old Securities if:
(a) The tender is made through an Eligible Institution;
(b) Prior to the Expiration Date, the Exchange Agent received from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder, the certificate number(s)
of such Old Securities and the principal amount of Old Securities tendered,
stating that the tender is being made thereby and guaranteeing that, within
five business days after the Expiration Date, the Letter of Transmittal (or
facsimile thereof) together with the certificate(s) representing the Old
Securities to be tendered in proper form for transfer (or confirmation of a
book-entry transfer into the Exchange Agent's account at DTC of Old
Securities delivered electronically) and any other documents required by the
Letter of Transmittal will be deposited by the Eligible Institution with the
Exchange Agent; and
(c) Such properly completed and executed Letter of Transmittal (or
facsimile thereof) as well as the certificate(s) representing all tendered
Old Securities in proper form for transfer (or confirmation of a book-entry
transfer into the Exchange Agent's account at DTC of Old Securities
delivered electronically) and all other documents required by the Letter of
Transmittal are received by the Exchange Agent within five business days
after the Expiration Date.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Securities may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration
Date.
To withdraw a tender of Old Securities in connection with the Exchange
Offer, a written facsimile transmission notice of withdrawal must be received by
the Exchange Agent at its address set forth herein prior to 5:00 p.m., New York
City time, on the Expiration Date. Any such notice of withdrawal must (i)
specify the name of the person who deposited the Old Securities to be withdrawn
(the "Depositor"), (ii) identify the Old Securities to be withdrawn (including
the certificate number or numbers and principal amount of such Old Securities),
(iii) be signed by the Depositor in the same manner as the original signature on
the Letter of Transmittal by which such Old Securities were tendered (including
any required signature guarantees) or be accompanied by documents of transfer
sufficient to have the trustee register the transfer of such Old Securities into
the name of the person withdrawing the tender, and (iv) specify the name in
which any such Old Securities are to be registered, if different from that of
the Depositor. All questions as to the validity, form and eligibility (including
time of receipt) of such withdrawal notices will be determined by the Company
and the Note Issuers, whose determination shall be final and binding on all
parties. Any Old Securities so withdrawn will be deemed not to have been validly
tendered for purposes of the Exchange Offer and no New Securities will be issued
with respect thereto unless Old Securities so withdrawn are validly retendered.
Any Old Securities which have been tendered but which are not accepted for
exchange or which are withdrawn will be returned to the holder thereof without
cost to such holder as soon as practicable after withdrawal, rejection of tender
or termination of the Exchange Offer. Properly withdrawn Old Securities may be
retendered by following one of the procedures described above under the caption
"Procedures for Tendering" at any time prior to the Expiration Date.
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EXCHANGE AGENT
has been appointed as Exchange Agent in connection with the Exchange
Offer. Questions and requests for assistance, requests for additional copies of
this Prospectus or of the Letter of Transmittal should be directed to the
Exchange Agent, at its offices at , New York, New York . The
Exchange Agent's telephone number is (212) - and facsimile number is (212)
- .
FEES AND EXPENSES
The Company and the Note Issuers will not make any payment to brokers,
dealers or others soliciting acceptances of the Exchange Offer. The Company and
the Note Issuers will pay certain other expenses to be incurred in connection
with the Exchange Offer, including the fees and expenses of the Trustee,
accounting and certain legal fees.
Holders who tendered their Old Securities for exchange will not be obligated
to pay any transfer taxes in connection therewith. If, however, New Securities
are to be delivered to, or are to be issued in the name of, any person other
than the registered holder of Old Securities tendered, or if tendered Old
Securities are registered in the name of any person other than the person
signing the Letter of Transmittal, or if a transfer tax is imposed for any
reason other than the exchange of Old Securities in connection with the Exchange
Offer, then the amount of any such transfer taxes (whether imposed on the
registered holder or any other persons) will be payable by the tendering holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes will
be billed directly to such tendered holder.
ACCOUNTING TREATMENT
The New Securities will be recorded at the same carrying value as the Old
Securities as reflected in the Company's and the Note Issuers' accounting
records on the date of the exchange. Accordingly, no gain or loss for accounting
purposes will be recognized by the Company or the Note Issuers upon the
consummation of the Exchange Offer. Any expenses of the Exchange Offer that are
paid by the Company or the Note Issuers will be amortized by the Company or the
Note Issuers, as the case may be, over the term of the New Securities in
accordance with generally accepted accounting principles.
CONSEQUENCES OF FAILURES TO PROPERLY TENDER OLD NOTES IN THE EXCHANGE
Issuance of the New Securities in exchange for the Old Securities pursuant
to the Exchange Offers will be made only after timely receipt by the Exchange
Agent of such Old Securities, a properly completed and duly executed Letter of
Transmittal and all other required documents. Therefore, holders of the Old
Securities desiring to tender such Old Securities in exchange for New Securities
should allow sufficient time to ensure timely delivery. The Company and the Note
Issuers are under no duty to give notification of defects or irregularities with
respect to tenders of Old Securities for exchange. Old Securities that are not
tendered or that are tendered but not accepted by the Company and the Note
Issuers for exchange, will, following consummation of the Exchange Offer,
continue to be subject to the existing restrictions upon transfer thereof under
the Securities Act and, upon consummation of the Exchange Offer, certain
registration rights under the applicable registration rights agreement will
terminate.
In the event the Exchange Offers is consummated, the Company and the Note
Issuers will not be required to register the remaining Old Securities. Remaining
Old Securities will continue to be subject to the following restrictions on
transfer: (i) the remaining Old Securities may be resold only if registered
pursuant to the Securities Act, if any exemption from registration is available
thereunder, or if neither such registration nor such exemption is required by
law, and (ii) the remaining Old Securities will bear a legend restricting
transfer in the absence of registration or an exemption therefrom. The Company
and the Note Issuers do not currently anticipate that they will register the
remaining Old Securities under the Securities Act. To the extent that Old
Securities are tendered and accepted in connection with the Exchange Offers, any
trading market for remaining Old Securities could be adversely affected.
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BUSINESS
OVERVIEW
NSM is the owner, developer and operator of one of the most advanced and
lowest cost thin-slab/flat-rolled steel mini-mills in the world. NSM's mini-mill
is located in Chonburi, Thailand, and when completed will combine a
technologically advanced mini-mill steel production facility with a contiguous
direct reduced iron facility and finishing facilities. The mini-mill is managed
and operated by Management Co. and an experienced team of international steel
executives employed by NSM. Management Co. receives technical and advisory
services from SDI, a leading mini-mill operator in the United States, under the
SDI Agreement. Concurrently with the Offerings and in connection with the SDI
License Agreement which included the grant by SDI and NSM of reciprocal license
rights to certain technical and operational know-how, SDI received 74,468,090
Ordinary Shares. NSM also issued the SDI Warrants to SDI to purchase up to
11,421,480 Ordinary Shares, which contain exercise provisions that protect SDI
from dilution of its equity interest in the event holders of Warrants exercise
such Warrants. In addition to SDI, Enron and McDonald acquired newly issued
Ordinary Shares on the Issue Date. Enron and McDonald, among others, also
purchased an aggregate of 45 million Ordinary Shares in a privately negotiated
transaction in the secondary market for the Company's shares. Enron additionally
acquired a significant portion of the 64,417,180 Ordinary Shares privately
placed by the Company concurrently with the Debenture Offering. Giving effect to
the Transactions and the other purchases described below, the Management
Investors in the aggregate hold a 20.56% interest in the Company's issued and
outstanding Ordinary Shares.
Construction and start-up of the Hot Mill, the core of the mini-mill has
been completed. The Hot Mill rolled its first coil of steel during operational
testing in October 1997 and melted, cast, and hot-rolled its first coil of steel
in December 1997. The Company began commercial operations in the first quarter
of 1998. The Company's goal is to be the world's most efficient and lowest cost
producer of high-quality flat-rolled steel products, including hot-rolled,
cold-rolled and galvanized steel, as well as other specialty steel products. The
recent devaluation of the Baht has reduced certain of the Company's current
capital expenditure obligations and may lower certain of its operating costs.
Upon completion, NSM's mini-mill will consist of three facilities: (i) the
Hot Mill for steel melting, refining, casting and hot-rolling, (ii) the DRI
Facility, for the production of DRI, which includes the Co-Gen Facility being
developed in conjunction with Enron, and (iii) the Finishing Facilities. The
Company believes that the Mill's design utilizes a unique combination of the
best commercially proven technologies currently in use in some of the most
efficient and highest quality steel manufacturing facilities in the world.
The Hot Mill has a designed annual production capacity of 1.5 million
tonnes. The Hot Mill utilizes advanced technology steel melting and refining,
CSP casting and hot-rolling processes and equipment. The Finishing Facilities,
which are expected to be operational in the first quarter of 1999, will
incorporate a multi-purpose high-capacity production line and several lower
capacity production units with a combined rated annual production capacity of
1.5 million tonnes. The DRI Facility, which is expected to be operational during
the second quarter of 1999, will have an annual rated production capacity of
500,000 tonnes and will provide the Company with a low-cost substitute for
approximately 30% of the scrap in its melt mix. The Company believes that this
equipment will allow it to produce thinner gauge, higher value steel in
hot-rolled form with consistently better tolerances, uniformity and surface
qualities relative to other flat-rolled steel producers. NSM believes that the
resulting increased product breadth and cost advantages produced by combining
the DRI Facility, Hot Mill and Finishing Facilities together in a continuous
process will allow it to become a world class flat-rolled steel producer based
on cost, quality and timeliness of delivery.
The world's flat-rolled steel market is dominated by integrated steel
producers using conventional blast furnaces and eight-to-ten-inch slab
production methods. The Company believes that thin-slab/flat-rolled steel
mini-mills can compete favorably against integrated steel producers in terms of
cost, quality and timeliness of delivery, while producing superior financial
results. Thailand is one of the largest
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importers of flat-rolled steel in the world, ranking third in 1996 in terms of
net steel imported. Virtually all of the steel products imported into Thailand
are produced by high-cost integrated steel producers with lengthy delivery
schedules.
The demand for flat-rolled products in Thailand results, in part, from the
development over the past 20 years of several industries including the
manufacturing of pipe and tube, containers, furniture, appliances, automotive
parts and vehicles. NSM is the only flat-rolled steel producer in Thailand.
Accordingly, the Company believes that it is well positioned to capture a
significant share of the demand for flat-rolled steel in Thailand by producing a
broad range of high-quality products.
In order to ensure consistent and efficient mill utilization and to mitigate
NSM's exposure to the economic difficulties currently being experienced in
Thailand, the Company has entered into eight-year off-take agreements with
Preussag and Klockner. Preussag and Klockner are two international steel trading
and processing companies which sell high-quality, high-grade steel products
throughout the world. Under the Off-Take Agreements Preussag and Klockner will
be obligated to purchase, in aggregate, 100% of the Company's production in 1998
through 2002, and 25% of the Company's production in the years 2001 through
2005. NSM may, at is option, reduce the percentage of its production sold under
the Off-Take Agreements to as little as 67% in 1998, 50% in 1999 and 25% in
2000, if the Company believes it could maximize sales revenue through sales to
other customers. Under the Indentures, sales by NSM to customers other than
Preussag and Klockner, to the extent that the aggregate of such sales results in
receivables outstanding in excess of U.S. $10 million, must be supported by
letters of credit if the customer does not have an investment grade credit
rating. All sales to Preussag and Klockner and substantially all other export
sales will be U.S.$ denominated.
In addition to the Off-Take Agreements, the Company has entered into a
commercial assistance agreement with the former chief commercial officer of U.S.
Steel to facilitate the Company's introduction to flat-rolled steel customers.
Based on international customer inquiries received by the Company to date, the
Company believes that it could increase the percentage of its annual production
sold under off-take agreements in 2001 through 2005 should economic conditions
in the Asia-Pacific region warrant. The Company also believes, that as a
low-cost producer of high-quality steel products, it will have the option to
sell its products in either domestic or world markets, including the United
States.
NSM has entered into various agreements to ensure its access to and
availability of electric power, natural gas, oxygen, coal and iron ore. NSM has
entered into arrangements under which PEA and PTT will provide NSM with electric
power and natural gas. PEA and PTT are government entities charged with
providing electricity and natural gas, respectively, to Thailand's industrial
base. NSM will benefit from two new power substations adjacent to the Mill
constructed by EGAT and from two sets of new power lines which run to the Mill
site, all recently constructed by PEA. NSM also has access to a long-term supply
of oxygen and other industrial gases from Bangkok Industrial Gas, which has
recently constructed an oxygen plant adjacent to the Mill. Coal and iron ore,
two important raw materials needed to produce DRI, are being supplied under
long-term contracts by SSM and MMTC.
When complete, the Company estimates that its total investment in the Mill
for property, plant, land, buildings, machinery and equipment will to be
approximately U.S.$764 million. The Company's investment in the land, buildings,
machinery and equipment of the Mill as of December 31, 1997 was approximately
U.S.$588 million, including approximately U.S.$514 million in connection with
the construction of the Hot Mill, approximately U.S.$32 million in connection
with the DRI Facility and approximately U.S.$42 million in connection with the
Finishing Facilities.
During 1998, while the DRI Facility and Finishing Facilities are expected to
be under construction, interest on the Notes will be paid from amounts on
deposit in the Notes DSR Account. As of December 31, 1997, after giving pro
forma effect to the Transactions, the Company would have had total shareholders'
equity of U.S.$158 million and total indebtedness of U.S.$771 million, of which
U.S.$336 million would have been secured equally and ratably with the Guaranties
(other than the Debenture Guaranty).
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PROJECT ADVANTAGES
NSM believes that it enjoys a number of advantages over other flat-rolled
steel producers and that these advantages will facilitate the implementation of
its business strategy. Through the use of advanced technology throughout the
Mill, the Company believes that its projected cost structure will place it among
the lowest cost producers of flat-rolled steel products in the world.
Complementing the Company's projected low cost structure is its designed
capability to produce a full range of flat-rolled products, including high
value-added products that previously could only be produced by higher cost
integrated steel producers. The Company believes that this ability to produce
high value-added products coupled with its projected low cost structure, will
enable it to compete effectively in selling its products, to the domestic and
world steel markets. Further complementing the Company's projected cost
structure and product capabilities will be its right to obtain certain technical
and operational advice and consultation services from SDI, as well as access to
the strategic expertise of Enron and McDonald.
BUSINESS STRATEGY
NSM's business strategy is to use its advanced Hot Mill, DRI Facility and
Finishing Facilities technologies to produce superior quality flat-rolled steel
in a variety of high value-added forms. The principal elements of the Company's
strategy include:
- ACHIEVE CONVERSION COSTS AMONG THE LOWEST IN THE STEEL INDUSTRY. The
Company believes that the design of the Mill represents substantial
efficiency improvements over earlier mini-mills using CSP technology.
These improvements are expected to substantially reduce the cost and
production time of the steel-making process, limit electric arc furnace
("EAF") power-off and downtime, reduce consumption of consumable inputs
and ultimately produce higher quality steel. By designing and utilizing
equipment that is efficient, consumes fewer raw materials and improves the
consistency and reliability of the steelmaking process, the Company
believes that its per tonne manufacturing costs will be among the lowest
in the steel industry.
- EMPHASIZE VALUE-ADDED PRODUCTS. NSM believes that it will be able to
produce thinner gauge steel in hot-rolled form with consistently better
uniformity, tolerances and surface quality relative to other flat-rolled
steel producers. The Company also believes that its high-quality, thinner
gauge hot-rolled products will compete favorably with certain more
expensive cold-rolled (further processed) products, enabling it to achieve
higher margins. Thinner gauge, hot-rolled products, and other value-added
products, may be less susceptible to the price fluctuations commonly found
in the spot market for commodity grade steel. The design of the Finishing
Facilities' process lines is expected to result in higher quality
products, significant cost savings and yield improvements relative to the
processing systems used by most other flat-rolled steel producers. In
addition, the Company expects to devote a substantial portion of its
hot-rolled capacity to the production of higher margin pickled and oiled,
cold-rolled, galvanized, and other value added steel products. The Company
believes that the resulting increased product breadth and cost advantages
will allow it to compete favorably on a cost and quality basis with any
steel producer in the world.
- SECURE A SOLID BASELOAD OF U.S.$ SALES. In order to ensure consistent and
efficient Mill utilization and to balance U.S.$ revenues with U.S.$ debt
service and expense requirements, the Company has entered into the
Off-Take Agreements. Under the Off-Take Agreements, Preussag and Klockner
will be obligated to purchase, in aggregate, 100% of the Company's
production in 1998 through 2002, and 25% of the Company's production in
the years 2001 through 2005. NSM may, at is option, reduce the percentage
of its production sold under the Off-Take Agreements to as little as 67%
in 1998, 50% in 1999 and 25% in 2000, if the Company believes it could
maximize sales revenue through sales to other customers. Under the
Indentures, sales by NSM to customers other that Preussag and Klockner, to
the extent that the aggregate of such sales results in receivables
outstanding in excess of U.S.$10 million, must be supported by letters of
credit if the customer does
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not have an investment grade credit rating. All sales to Preussag,
Klockner and substantially all other export sales will be U.S.$
denominated. Based on international customer inquiries, the Company
believes that it could substantially increase the percentage of its annual
production sold under off-take agreements in 2001 through 2005 should
economic conditions in the Asia-Pacific region warrant. The Company
believes that as a low-cost producer of high-quality steel products, it
will have the option to sell all of its products in either domestic or
world markets, including the United States.
- MAXIMIZE MINI-MILL ADVANTAGES. The Company has adopted a combination of
technologies and management techniques which management believes will
provide it with the flexibility to deliver custom ordered, just-in-time,
high-quality products to customers with minimal lead times. NSM has
adopted management and personnel policies designed to take advantage of
the opportunities inherent in the technological revolution in the
flat-rolled steel industry. The Company expects its energy consumption,
man-hours per tonne produced and the environmental impact of the
operations to be among the lowest in the industry. The Company intends to
use its advanced technologies to develop profitable niche market products.
- UTILIZE LEADING MINI-MILL OPERATIONAL AND MANAGEMENT TECHNIQUES. The
Company has entered into agreements with a number of leading steel
mini-mill developers and operators in order to make available to
Management Co. or the Company certain technical knowhow and business
practices. Under the terms of the SDI Agreement, SDI, a company whose
executives and managers pioneered the development of thin-slab/flat-rolled
technology and directed the construction and operation of the world's
first thin-slab/flat-rolled minimill, will provide management advisory and
periodic on-site technical support to Management Co. Hylsa, under the
Hylsa Agreement, has provided training to over 140 NSM employees at its
Monterey, Mexico plant, and will continue to provide training and on-site
technical support. Hylsa is recognized in the world steel making community
for producing high-quality, thin-gauge products utilizing CSP technology.
From early 1996 through mid-1997, the Company received certain technical
assistance and employee training for over 170 NSM employees from Nucor,
currently an operator of eight mini-mills in the United States.
- SECURE RAW MATERIAL SOURCES. The primary raw materials and utilities used
to produce DRI and flat-rolled steel products are coal, iron ore,
electricity and scrap. To secure access to adequate low-cost supplies of
these inputs, NSM has entered into long-term agreements for the supply of
coal, iron ore and electricity with SSM, MMTC, and PEA, respectively. For
scrap, NSM will have access to both the domestic and global scrap markets.
Management believes that due to the recent Baht devaluation and the
logistical and regulatory obstacles to exporting scrap from Thailand,
NSM's near term domestic scrap costs will be U.S.$20-30 per tonne lower
than world market prices.
- EXPLOIT STRATEGIC LOCATION. The Company is the only flat-rolled steel
producer in Thailand, historically one of the world's largest importers of
finished and semi-finished flat-rolled steel. In 1996, Thailand ranked
sixth in the world in terms of imported steel. The Company believes that
demand in Thailand for steel products will remain strong due in part to
direct foreign investment by steel consuming entities in Thailand. The
Company believes that strong domestic demand combined with import tariffs
on certain steel products would allow the Company to achieve higher profit
margins on the sale of its products in Thailand relative to sales outside
of Thailand.
- UTILIZE THE EXPERTISE OF SDI, ENRON AND MCDONALD. NSM and Management Co.
have contracted to acquire certain strategic and financial expertise that
will enhance NSM's ability to compete both financially and operationally
in the world steel market. By becoming equity owners of NSM and through
their representation on the Company's board of directors, the Company
expects that SDI's, Enron's and McDonald's representatives on the board of
directors will provide the Company with certain know how, expertise and
knowledge.
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- PURSUE EXPANSION OPPORTUNITIES. In order to lower production costs through
economies of scale, the Company intends to pursue expansion of the Mill if
market conditions warrant such an expansion. To facilitate expansion of
DRI production capacity, NSM designed the DRI Facility to accommodate a
tripling of capacity. In addition to mitigating NSM's reliance on the
global scrap market, an expanded DRI Facility would produce a significant
amount of additional electric power at economically attractive rates for
use in the Hot Mill. NSM also designed the Hot Mill and Finishing
Facilities to facilitate expansion. In aggregate, the cost of increasing
the capacity of the DRI Facility by 1.0 million tonnes per year, the Hot
Mill by 1.2 million tonnes per year and the Finishing Facilities by
100,000 tonnes per year is estimated by the Company to approximate
U.S.$250 million.
INDUSTRY OVERVIEW
The world steel industry has historically been and continues to be highly
cyclical, influenced by many factors, including periods of economic growth and
recession, strength and weakness of various currencies, worldwide production
capacity, levels of steel imports and tariffs. The industry as a whole has also
been affected by factors impacting on specific companies, such as failure to
adapt to technological change, plant inefficiency, high inventory and labor
costs. Some lower grades of steel continue to be commodities that respond to
forces of supply and demand, and prices for these grades have been volatile and
have fluctuated in reaction to general and industry specific economic
conditions. However, new technologies, planning and manufacturing practices and
metallurgical know how now allow steel producers to deliver made-to-order
products which are less susceptible to commodity pricing and do not require
large finished good inventories. The Mill is designed to take advantage of such
new technologies, planning, manufacturing practices and metallurgical know how
and, accordingly, the Company believes that it may be less sensitive to business
cycles.
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INTEGRATED V. MINI-MILL STEEL PRODUCTION
There are generally two kinds of primary steel producers, "integrated" and
"mini-mill." The following diagram illustrates the differences in production
methodologies between the typical multi-step integrated mill production process
and the typical continuous mini-mill melting-casting-rolling process.
[LOGO]
Steel manufacturing by an integrated producer involves a series of time
consuming and distinct processes, frequently separated by plant geography. This
process generally involves the following chronological steps: ironmaking,
steelmaking, billet or slab making, reheating, multi-step rolling and
flat-rolling. These processes may, in turn, be followed by various finishing
processes, including cold-rolling, annealing, and various coating processes,
including galvanizing. In integrated producer steelmaking, coal is converted to
coke in a coke oven, combined in a blast furnace with iron ore or pellets and
limestone to produce pig iron, and then combined with scrap in a "basic oxygen"
or other furnace to produce liquid raw steel. Once produced, the liquid raw
steel is metallurgically refined in the ladle metallurgy station and then either
poured into ingots for later reheating and processing or transported to a caster
for casting into a billet or slab, which is then further shaped or rolled into
its final form. Typically, whether by design or as a result of downsizing,
re-configuration or changes in technology, many integrated producers perform
these processes in separate and remote facilities resulting in more costly and
less efficient production than mini-mill producers.
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In contrast, a mini-mill employs an EAF to directly melt steel scrap or
steel scrap substitutes, including DRI, thus entirely eliminating the blast
furnace, coke ovens and reducing other energy- and capital-intensive and
environmentally harmful processes. A mini-mill incorporates the melt shop, ladle
metallurgical, casting and rolling processes into a unified continuous flow. In
typical mini-mills, the melting process begins with the charging of an EAF with
scrap, carbon and lime, after which the EAF's roof is closed and electrodes are
lowered into the scrap through holes in the top of the EAF. Electricity is then
applied to the electrodes and augmented with oxygen to melt the scrap and
produce liquid raw steel.
The liquid raw steel is then checked for chemistry and the necessary
metallurgical adjustments are made while the steel is still in the EAF or, if
the plant has a separate staging area for that process, the material is
transported by ladle to an area commonly known as a ladle metallurgy station.
From there, the liquid raw steel is transported by ladle to a turret at the
continuous caster, where it is transferred into a reservoir called a tundish.
The tundish controls the flow of the liquid steel into a water-cooled
copper-lined mold from which it is usually sent through a tunnel furnace
directly into the rolling process. Similar to NSM, several other operating
mini-mills have provided for further continuous operation by adding finishing
facilities directly into the production process.
Mini-mills are generally characterized by lower costs of production and
higher productivity than integrated steelmakers. This is due, in part, to the
mini-mill's lower capital costs and operating costs resulting from streamlined
production processes and smaller, more efficient layouts which serves to reduce
or eliminate costly re-handling and re-heating of partially finished product.
Mini-mills are also credited with translating technological advances into
competitive advantages by decreasing costs of production and increasing product
quality.
Mini-mills have been producing steel since the early 1960s, when EAFs and
continuous casting were initially commercialized and technological developments
in the steel industry generated a large surplus of scrap. Historically, due to
the mini-mill's initial quality limitations and early power and capacity
limitations, the mini-mills focused almost exclusively on lower-quality,
lower-priced "long products," including merchant shapes such as rebar, wire,
rod, angles and structural. In 1989, an innovative mini-mill operator began
producing flat-rolled steel products and commercialized the world's first CSP
thin-slab flat-rolled mini-mill. The CSP technology employed was provided by SMS
Schloemann-Siemag AG of Germany ("SMS"), the same provider of NSM's, SDI's and
Hylsa's technology. By employing a mold design that casts a 50 mm slab, which is
only 20% of the thickness of the typical 250 mm slabs cast by most integrated
producers, and by using a raw material mix with a cost structure that is lower
and more flexible, mini-mill operators have enjoyed significantly lower costs
relative to integrated steel producers. Although initially limited to
commodity-grade flat-rolled steel products, the CSP technology was subsequently
refined so that today mini-mill operators can produce a wide variety of
high-quality, flat-rolled steel products. NSM's design further advances the
capabilities of the CSP technology such that it believes it will be able to
produce a full spectrum of high-quality steel products, including those
requiring the most demanding applications and new grades that are not presently
commercially available.
The CSP technology is one of the most significant advances in steel
production in the last 40 years. The ability to produce flat-rolled steel from a
thinner slab greatly reduces costs, as less reduction is necessary in the
rolling mill and there is substantially less reheating required prior to
rolling. Most importantly, the development of thin-slab casting technology, with
its lower capital investment requirement, allowed for the entry of the
mini-mills into the flat-rolled segment of the steel market. The technology has
proved to be extremely flexible and cost effective and is continuously being
further refined. NSM has incorporated this technology in an all-encompassing
metallurgical and product concept which takes full advantage of the inherent
synergies with upstream and downstream technology developments, quality
enhancements and product opportunities.
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NSM V. TRADITIONAL MINI-MILLS
Unlike most other mini-mills, NSM designed the Mill to fully incorporate the
advantages inherent in operating a captive DRI Facility. In addition to
mitigating NSM's exposure to the global scrap market, operating the DRI Facility
facilitates its ability to produce the broadest range of flat-rolled steel
products. The consumption of DRI in its melt mix, combined with its
sophisticated ladle metallurgy, will enable NSM to produce ultra clean steel
with significantly lower residual levels and better control of all elements than
steel produced by mini-mills that are 100% scrap and pig iron dependent. The Hot
Mill and Finishing Facilities, which have been designed to produce the highest
quality grades of steel, are expected to enable NSM to compete successfully, in
terms of quality, with not only other mini-mills but integrated steel producers
as well.
Further differentiating NSM from most other flat-rolled mini-mills is the
fact that it has incorporated the ConSteel continuous charging process (the
"ConSteel Process") developed by Intersteel Technology, Inc. into its Hot Mill.
The ConSteel Process eliminates the time and energy losses incurred by other
mini-mills by swinging the roof of the furnace to top charge their meltmix.
Under the Company's Hot Mill design, scrap, which has been preheated by
off-gases from the EAF, will be continuously fed into the molten raw liquid
steel heel in the EAF. The heel is a pool of molten raw liquid steel kept in the
bottom of the EAF which is continuously fed into the mold. The heel, is also
being fed hot DRI on a continuous basis through a gravity controlled feed
system. Thus, NSM will maintain a continuous power-on state and a large heel of
high-quality liquid raw steel. The Company believes that this continuous
operation will drive its steelmaking costs below those typically incurred by
traditional mini-mills. Additionally, NSM's mill has an enhanced
vacuum/oxygen/degasser ("VOD") and a short-coupled coiler. These enhancement
will facilitate NSM's production of ultra-low carbon and other high-quality
steel grades, including thin-gauge, flat-rolled steel products. The initial
production results have already demonstrated the quality benefits of the
advanced meltshop design, resulting in liquid steel quality with nitrogen,
carbon and sulfur levels which are considerably lower than in conventional
mini-mill melt shops.
DESCRIPTION OF FLAT-ROLLED STEEL PRODUCTS
The Company designed the Mill to produce a wide variety of steel products,
including hot-rolled, cold-rolled and ultimately coated products. Each of these
products is described below.
HOT-ROLLED PRODUCTS. All coiled flat-rolled steel is initially hot-rolled,
a process that consists of passing cast steel either directly, as in the case of
NSM, or in reheated slab form through a multi-stand rolling mill to reduce its
thickness to less than 13 mm and, in some mills, including Hylsa and NSM, to
less than 1 mm. Hot-rolled products are traditionally used in the manufacture of
various non-surface critical applications such as automobile suspension arms,
frames, wheels and other unexposed parts in auto and truck bodies, agricultural
equipment, construction products, machinery, tubing, pipe, tools, lawn care
products and guard rails. The addition of the thin-gauge hot-rolling capability
to the CSP process has opened many traditional cold-rolled applications to
thin-gauge hot-rolled steel producers, including SDI and Hylsa. NSM is designed
to capitalize fully on the significant advancement in thin-gauge hot-rolled
steel production.
COLD-ROLLED PRODUCTS. Cold-rolled steel is hot-rolled steel that has been
further processed through a pickling/scale removing line and then through a
rolling mill without reheating until the desired gauge and other physical
properties have been achieved. Cold-rolling reduces gauge and hardens the steel
and, when further processed through an annealing furnace and a temper mill,
improves uniformity, ductility and formability. Cold-rolling and temper/skin
pass rolling also impart various value-added surface finishes and textures.
Cold-rolled steel is used in applications that demand a higher quality finish,
such as exposed automotive parts and appliance panels. As a result, cold-rolled
prices are typically higher than hot-rolled prices.
57
<PAGE>
COATED PRODUCTS. Coated steel products are cold-rolled or hot-rolled steels
that have been coated with a non-ferrous metal and/or organic coating to render
them corrosion-resistant and to improve their appearance. Hot-dipped galvanized,
electro galvanized and aluminized products are all types of metallic coated
steels. Coated items are typically the highest value-added flat-rolled products
because they require the greatest degree of processing and tend to have the
strictest quality requirements. Coated steel is used in automotive, appliance,
furniture, roofing, siding, decking, heating and air-conditioning applications.
Other flat-rolled products which are not in the immediate business plan of
NSM are non-coiled flat plate and ultra-light gauge cold-rolled coil, commonly
referred to as tinplate, (i.e., for tinning and subsequent can making). These
products, especially tinplate, are potential future opportunities for NSM.
THE WORLD STEEL MARKET
Steel consumption throughout the world has increased significantly over the
past several years from 649 million tonnes in 1990 to an estimated 690 million
tonnes in 1997. This growth trend is expected to continue into the next decade
with steel consumption projected by the International Iron and Steel Institute
to approximate 797 million tonnes in 2005. This represents a 148 million tonne
increase over 1990 consumption levels. Driving this growth is the continued
industrialization of many areas around the world, including the Asia-Pacific
region, with strong consumption patterns in China. In fact, the Asia-Pacific
region taken as a whole is projected to consume almost 80 million more tonnes of
steel in 1997 than in 1990, with China accounting for 49 million tonnes of this
increase.
WORLD APPARENT STEEL CONSUMPTION
(MILLION TONNES)
<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
COUNTRY 1990 1995 1996 1997E 2000E 2005E
- ------------------------------------------- --------- --------- --------- --------- --------- ---------
China...................................... 53.5 87.4 97.3 102.6 120.0 145.0
Japan...................................... 94.0 80.0 80.6 80.5 80.0 80.0
Other Asia................................. 76.4 121.2 125.7 131.5 137.0 165.0
--------- --------- --------- --------- --------- ---------
Total Asia................................. 223.9 288.6 303.6 314.6 337.0 390.0
European Union............................. 121.6 125.6 115.7 122.5 124.0 124.0
Other W. Europe............................ 13.3 14.5 16.3 17.5 16.0 17.0
Eastern Europe............................. 24.1 17.4 17.1 17.5 18.0 21.0
CIS........................................ 116.6 36.3 35.0 35.0 37.0 40.0
NAFTA...................................... 103.9 118.5 127.9 124.5 125.0 125.0
South America.............................. 16.7 22.9 24.2 26.4 31.0 39.0
Middle East................................ 9.8 9.0 9.7 10.2 12.0 15.0
Africa..................................... 13.4 13.8 14.4 14.2 16.0 18.0
Oceania.................................... 5.4 6.5 6.5 6.7 7.0 8.0
--------- --------- --------- --------- --------- ---------
World Total................................ 648.7 653.1 670.4 689.1 723.0 797.0
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>
E=ESTIMATED
SOURCE: INTERNATIONAL IRON AND STEEL INSTITUTE
Underlying fundamentals leading to this growth projection include the
prospects for fairly low interest and inflation rates for many countries,
including the United States, transferability of technology spurring new factory
construction in countries increasing their industrial base and the need for
continued infrastructure additions and improvements throughout the world.
58
<PAGE>
The following chart depicts regional and country specific consumption levels
of steel products and highlights the differences between countries whose
economies are at various stages of development.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
APPARENT TOTAL STEEL CONSUMPTION PER
CAPITA
<S> <C>
1996 Kg per capita per year.
Vietnam 22
Indonesia 37
Philippines 68
Thailand 152
Australia 351
Malaysia 401
United States 402
Japan 643
Taiwan 854
South Korea 863
Singapore 1308
Source: South East Asia Iron and Steel
Institute
</TABLE>
If Thailand's economy recovers, its per capita steel consumption may begin
to increase toward the consumption levels of industrialized countries. If steel
consumption in Thailand does increase, the Company believes that being the first
producer of iron metallics (via the DRI facility) and of flat-rolled steel
products (via the Hot Mill) in Thailand will give the Company an economic
advantage over its competitors and facilitate the Company's expansion plans due
to its early entry into the marketplace and ability to establish customer
relations. The Company believes that this advantage could be significant as
Thailand's overall raw steel production on a per capita basis is only 4.3% of
South Korea's, 4.7% of Japan's, 6.3% of Taiwan's and 9.2% of the United States.
In virtually every industrialized country, flat-rolled steel products make
up the largest steel product group, accounting for well over 50% of the total
steel consumed. As a percent of total world steel consumption, flat-rolled steel
consumption has been, and is expected to continue, rising as industrialization
spreads throughout the world. Given the continuing emphasis on critical
applications and higher value added flat-rolled steel products, NSM, with its
low cost structure and high-quality product capabilities, is well positioned to
capitalize on this increasing demand.
59
<PAGE>
FLAT-ROLLED CONSUMPTION AS A PERCENT OF TOTAL APPARENT STEEL CONSUMPTION
<TABLE>
<CAPTION>
1985 1996
--------- ---------
<S> <C> <C>
Total World.................................................................................... 40.7% 45.7%
Developed World(1)............................................................................. 51.0% 53.3%
Developing World............................................................................... 32.1% 38.5%
</TABLE>
(1) Developed World defined to include the United States, Japan, Western Europe
(including EU-15), Canada, Australia and New Zealand.
SOURCE: INTERNATIONAL IRON & STEEL INSTITUTE
Further demonstrating the increased importance of flat-rolled steel products
is the fact that China's flat-rolled consumption as a percent of its total
apparent steel consumption increased from 23.5% in 1985 to 29.4% in 1996. Thus,
in 1996, China consumed 28.6 million tonnes of flat-rolled steel. By comparison,
the United States' percent of flat-rolled steel consumption increased from 59.2%
in 1985 to 62.9% in 1996. Flat-rolled steel consumption in the United States in
1996 was 67 million tonnes.
The Off-Take Agreements and the commercial assistance agreement that NSM has
entered into with the former chief commercial officer of USSteel will facilitate
its introduction to flat-rolled steel consumers throughout the world. Both
Preussag and Klockner, with their worldwide network of sales offices, will have
opportunities to sell the higher quality and higher priced flat-rolled steel
products produced by NSM.
The consumption of flat-rolled steel products, whether they are hot-rolled,
cold-rolled, coated, plate or tinplate, continues to move towards higher
value-added non-commodity grades as industrialization continues throughout the
world and new steels and new uses for steel are developed. NSM's emphasis on
high-quality products is expected to position it at the forefront of this trend.
FLAT-ROLLED CONSUMPTION IN THAILAND. Unlike other developing countries,
Thailands' percent of flat-rolled steel consumption is extremely high,
accounting for over 55% of Thailand's 1996 steel consumption. This level of
flat-rolled steel consumption reflects the fact that Thailand is home to a large
number of export-oriented, foreign flat-rolled steel consuming companies.
<TABLE>
<CAPTION>
THAILAND'S FLAT-ROLLED STEEL CONSUMPTION
(MILLIONS OF TONNES)
YEAR ENDED DECEMBER 31,
<S> <C> <C> <C> <C> <C>
1992 1993 1994 1995 1996
--------- --------- --------- --------- ---------
Hot-Rolled(1)..................................... 2.28 2.16 2.60 3.74 3.35
Cold-Rolled....................................... 1.10 1.34 1.39 1.03 1.63
Coated(2)......................................... 0.49 0.49 0.71 0.71 0.72
--- --- --- --- ---
Total............................................. 3.87 3.99 4.70 5.48 5.70
--- --- --- --- ---
--- --- --- --- ---
</TABLE>
- ------------------------------
(1) Includes plate in coiled form.
(2) Includes all metallic and organic coated products.
SOURCE: SOUTHEAST ASIAN IRON AND STEEL INSTITUTE
Thailand's large demand for flat-rolled steel made it the third largest net
importer of steel in 1996.
60
<PAGE>
STEEL IMPORTS DURING 1996
<TABLE>
<CAPTION>
NET IMPORTS
TOTAL TONS OF STEEL (IMPORTS MINUS WORLD RANK
IMPORTED (MILLIONS) EXPORTS) NET IMPORTS
--------------------- ----------------- -----------------
<S> <C> <C> <C>
United States.................................................... 26.4 21.9 1
China............................................................ 16.5 9.8 2
Thailand......................................................... 10.0 9.1 3
Middle East...................................................... 9.4 7.3 4
Taiwan........................................................... 10.6 6.8 5
Malaysia......................................................... 6.0 5.1 6
Other S.E. Asia.................................................. 4.4 4.0 7
Philippines...................................................... 4.0 3.9 8
Singapore........................................................ 4.3 3.4 9
Indonesia........................................................ 3.5 2.8 10
South Korea...................................................... 11.1 1.0 11
SOURCE: INTERNATIONAL IRON & STEEL INSTITUTE
</TABLE>
As the only producer of flat-rolled steel in Thailand, the Company believes
that it will displace a portion of the flat-rolled products shipped into
Thailand. This belief is based on the fact that the Mill is designed to be a
low-cost producer of a full range of flat-rolled products, including high
value-added products. The Mill's location close to Thailand's flat-rolled
consumers also provides domestic consumers with significant savings in terms of
freight and timeliness of delivery.
Additionally, Thailand's flat-rolled steel consumers tend to consume a
disproportionate amount of higher grade steels. This is reflected by the fact
that vis-a-vis other countries, the price levels paid for imported steel are
significantly higher in Thailand.
The following table shows average recent price levels paid by Thai customers
for imported flat-rolled products. The Company believes that these prices are
substantially higher than world spot market commodity prices and also higher
than typical world high-grade product prices.
RECENT PRICE LEVELS IN THAILAND
(PER TONNE IN U.S.$)
<TABLE>
<CAPTION>
Hot-Rolled Cold-Rolled Galvanized
------------------------ ------------------------ ------------------------
1st Half 1st Half 1st Half
Country of Origin 1996 1997 1996 1997 1996 1997
- ---------------------------------------------------- ----- ----------- ----- ----------- ----- -----------
<S> <C> <C> <C> <C> <C> <C>
Japan............................................... 620 570 609 623 949 873
Korea, Taiwan EU & United States.................... 446 460 559 505 845 783
Russia, CIS, China.................................. 332 390 411 401 N/A 572
</TABLE>
PRICES ARE CIF BANGKOK--IMPORT TAXES AND ANTI-DUMPING DUTIES (AS LEVIED ON CIS
PRODUCTS) ARE INCLUDED.
SOURCE: THAILAND CUSTOMS DEPARTMENT
Further facilitating the Company's ability to sell its products
domestically, is the fact that Thailand's flat-rolled consumption base is fairly
diverse, with relatively low dependence on the automotive sector.
61
<PAGE>
THAILAND'S 1996 FLAT-ROLLED STEEL CONSUMPTION
<TABLE>
<CAPTION>
HOT-ROLLED % COLD-ROLLED % COATED %
----------------- ----------------- -----------
<S> <C> <C> <C>
INDUSTRY
Pipe & Tube.............................................................. 36 20 N/A
Construction............................................................. 22 N/A 23
Automotive............................................................... 13 12 7
Vessels/Containers/Cylinders/Cans........................................ 6 31 29
Machinery & Equipment.................................................... 6 10 N/A
Furniture & Appliances................................................... 3 16 13
Others................................................................... 14 11 28
--- --- ---
100 100 100
--- --- ---
--- --- ---
</TABLE>
SOURCES: CHULALONGKORN UNIVERSITY, COMPANY MARKET STUDIES
THE COMPANY'S PRODUCTS AND APPLICATIONS
The Company will use its Hot Mill to produce an array of hot-rolled products
in 900 mm to 1600 mm widths and in thickness from 13 mm to 1 mm. These products
are suitable for the following applications: mechanical and structural tubing;
gas and fluid transmission piping; metal building systems; parts and components
for automobiles, trucks, trailers, and recreational vehicles; rail cars; ships;
barges; marine and agricultural equipment; farm implements; lawn and garden
equipment; industrial machinery and shipping containers. NSM will also sell its
hot-rolled products to entities such as steel service centers that will provide
further processing. The Company believes that the design and operating
innovations made in its Hot Mill will allow its hot-rolled products to have
surface and edge quality characteristics exceeding those of the vast majority of
other steel mills in the world. As demonstrated by SDI and Hylsa, the CSP
technology produces flat-rolled products with unsurpassed metallurgical
uniformity and superior dimensional tolerances, resulting in improved
manufacturability and yield performance.
After completion of the Finishing Facilities, NSM will produce a full range
of hot-rolled, cold-rolled and coated products. At that time, the Company
expects to devote a substantial portion of its hot-rolled steel (down to 1 mm)
to the production of higher-value added products, including galvanized, as well
as thinner gauge cold-rolled products.
MARKETS FOR THE COMPANY'S PRODUCTS
Under the Off-Take Agreements, Preussag and Klockner will be obligated to
purchase, in aggregate, 100% of the Company's production in 1998 through 2002,
and 25% of the Company's production in the years 2001 through 2005. NSM may, at
is option, reduce the percentage of its production sold under the Off-Take
Agreements to as little as 67% in 1998, 50% in 1999 and 25% in 2000, if the
Company believes it could maximize sales revenue through sales to other
customers. Under the Indentures, sales by NSM to customers other than Preussag
and Klockner, to the extent that the aggregate of such sales results in
receivables outstanding in excess of U.S.$10 million, must be supported by
letters of credit if the customer does not have an investment grade credit
rating. All export sales, whether to Preussag, Klockner or other customers will
be U.S.$ denominated. Steel is sold based on internationally accepted product
specifications. Certain orders are anticipated to contain specific application
requirements. Non-compliance with such specifications can result in rejections
and claims against the seller. Such claims are usually settled between the
producer, the trading company and the end user. Claims may result in financial
damage awards against the seller.
Sales outside Thailand are for Preussag's and Klockner's own accounts,
regardless of whether they are purchasing for their own use or for resale. If
the Company receives an unsolicited offer to purchase any products from a
prospective customer outside of Thailand, the Company must notify Preussag and
62
<PAGE>
Klockner of the terms and Preussag and Klockner will then have a right of first
refusal to effect the purchase.
Preussag and Klockner are large, German-based international steel trading
and processing firms. Preussag's origin dates back to Peine/Salzgitter, an
integrated flat-rolled steel producer that is now part of Preussag AG.
Similarly, Klockner's origin dates back to Klockner Bremen, an integrated
flat-rolled steel producer that is now part of the ARBED/Sidmar group. Both
firms have extensive sales, distribution and steel processing facilities
worldwide. Additionally, they have the in-house metallurgical and product
application expertise to serve the high end of the steel market. The Company's
anticipated ability to produce unique high-quality steel grades including
ferritic hot- and cold-rolled steels have already prompted serious inquiries
from many high-quality users in the transmission pipe, structural tubings and
high-strength re-rolling and parts making industries in Asia, Europe and North
America. The American Petroleum Institute ("API") pipe quality standards are the
worldwide accepted specifications for high-quality pipe products. The Company
believes that it is the only producer in Southeast Asia with the required steel
making and rolling facilities to meet the API's high-quality requirements.
On a global basis, steel trading volume has increased significantly over the
past decade. According to International Iron and Steel Institute statistics, 169
million tonnes of steel were traded in 1985 and 231 million tonnes were traded
in 1996. The Company expects the trend of increasing trading activity to
continue as industrialization continues throughout the world.
Steel consumption in Thailand is expected to be reduced in the near term due
to the economic slowdown in Thailand. Thus, the Company's projections assume 90%
export in 1998 and 50% in 1999. Thailand is undersupplied in terms of steel
production and over time, the Company believes that domestic sales will
increase.
SALES AND MARKETING
The Company employs a 12-person direct sales staff, consisting of a manager
of sales and marketing, four field sales managers, two customer technical
service engineers, a quality assurance engineer, and four inside sales and
administration personnel. Similar to SDI, NSM plans on keeping its end user
sales and support staff small and efficient, reflecting its emphasis on
cost-containment and productivity. The expertise of the Company's employees is
being supplemented by a commercial assistance agreement that it has entered into
with Mr. Reuben L. Perin, the former chief commercial officer of U.S. Steel.
This agreement covers marketing, sales, trade and strategic planning issues. Mr.
Perin has been named a director of NSM.
63
<PAGE>
The Company's sales team will work in close cooperation with the sales,
metallurgical and product application professionals at Preussag and Klockner to
fully utilize the Company's quality, made-to-order and customer service
capabilities.
THE COMPANY'S PRODUCTION EQUIPMENT AND TECHNOLOGY
The Mill's design and technical capabilities are based on advanced
technology in virtually every process step and embody various advancements and
improvements. Additionally, NSM has benefited from the technical expertise of
its equipment and technology providers including ABB Industry Limited,
Mannesmann Demag AG, Intersteel Technology, Inc., Bricmont, Inc., Inductotherm
Corporation, SMS, Siemens AG, INCO, INMETCO and Datel Engineering Company, Inc.
and General Electric Company. Further technical enhancements were made through
the research efforts of Dillingen Steel Works in Germany, the University of
Aachen in Germany, Chulalongkorn University in Thailand and the University of
Stockholm in Sweden. The Company's existing equipment and technology, as well as
the Mill's process design are intended to improve steelmaking speed, efficiency
and output, result in minimum energy and power usage, produce flat-rolled steel
of better consistency and tolerances and deliver higher surface and edge
qualities.
BACKGROUND OF ALTERNATIVE SCRAP SUBSTITUTE TECHNOLOGIES. DRI is a metallic
product produced from iron ore that is used as an alternative or complementary
feedstock to scrap in the steelmaking process. Of the approximately 30 million
tonnes of DRI produced in 1996, over 90% was produced by methods which utilize
lump form iron ore or pellets that are treated in a direct reduction shaft
furnace with natural gas to reduce the iron oxide to metallic iron. Although
these processes are proven to work commercially, suitable ore grades and iron
ore pellets tend to command a premium over iron ore fines. Additionally, natural
gas is typically more expensive than using coal as the reductant. Consequently,
NSM elected to utilize technology which permits the use of low-cost iron ore
fines and medium-quality, medium sulfur coals which are available in abundance
throughout the Asia-Pacific region. Long-term supply contracts for iron ore
fines and coal are in place.
THE DRI FACILITY. The DRI Facility consists of the design, construction,
and operation of a facility for the manufacture of DRI for use by NSM as a scrap
substitute. The Company studied and considered many alternative methods of
securing a low-cost captive source of scrap substitute material. The existing
commercial processes differ from the DRI Facility's design by the type of raw
feedstock they employ and the type of reductant that is used to "reduce" the
feedstock to useable iron units. The Company will use the INCO/Inmetco DRI
process, which uses low-cost iron ore fines that are ultimately reduced to DRI
in a rotary hearth furnace using medium-quality coal as the reductant.
The selection of the INCO/INMETCO coal-based DRI process, was made
commercially feasible for use by NSM through the adoption of the well proven
German technology of desulfurization of liquid steel via strong ladle stirring
and certain slag practices. To produce DRI, the Company will use low-cost iron
ore fines, which will be combined with ground coal, mixed with a bentonite
binder and other fluxes, and then pelletized. The resulting "green" pellets will
be fed into a rotary hearth furnace, where they will be heated to 1,300 DEG.C
for approximately 15 minutes, after which they will be removed by water-cooled
screws to refractory-lined containers. The containers will be transported to the
Hot Mill and the DRI will be hot-charged directly into the EAF at 900 DEG.C.
The DRI Facility is under construction and scheduled to commence operation
in the second quarter of 1999. A waste heat recovery and the Co-Gen Facility
will be constructed alongside the DRI Facility. The Co-Gen Facility will further
improve NSM's operating efficiency by lowering the Mill's net energy
consumption. NSM and Enron International, Inc., a subsidiary of Enron, have
negotiated terms for the LOI contemplating, subject to definitive documentation,
that Enron International will provide either lease financing or a BOOT contract
for the Co-Gen Facility. U.S.$20 million of the construction costs for the
Co-Gen Facility will be funded by Enron. Enron and NSM have agreed to work
together to obtain the
64
<PAGE>
remaining funds necessary to complete construction of the Co-Gen Facility.
Infrastructure and certain process equipment has also been designed into the
Co-Gen Facility to support potential expansion to 1.5 million tonnes of annual
DRI and an additional 60 MW of power from waste heat recovery. If expanded and
when operational, after additional expenditures of approximately U.S.$100
million in the DRI Facility and U.S.$170 million in the Hot Mill, the expanded
DRI and steelmaking capacity is projected to reduce the Company's costs of
production by approximately U.S.$65 per tonne for hot-rolled coil.
THE ELECTRIC ARC FURNACE. The Company's EAF is a 180 metric tonne capacity
tap weight, 325 tonne gross weight, technologically advanced furnace that has
been designed to maintain a hot heel of at least 145 tonnes of raw liquid steel.
The EAF, which is being supplied by Mannesmann Demag, is a ConSteel type
AC-powered 130 MVA high-reactance continuous charging eccentric bottom tap
furnace. It is equipped with a reactor on the primary side of the transformer
and all necessary filters and controls to meet international flicker and
harmonics standards and to minimize peak load on the grid.
NSM's EAF design and the ConSteel Process results in continuous melting and
significantly reduces the tap-to-tap time (I.E., the length of time between
successive melting cycles or "heats"). In a conventional single shell EAF with a
60-minute tap-to-tap time, typically 10 to 15 minutes is taken to tap liquid
steel, insert gun refractories into the side wall of the furnace, re-sand and
repair the tap hole and recharge the vessel with scrap. By eliminating the
requirement to recharge the scrap, and reducing the time needed to perform the
other steps through the use of ConSteel Process, NSM gains an approximately 20%
increase in productivity by reducing the tap-to-tap time to under 50 minutes.
Preheating of scrap will also occur in the ConSteel Process. The source of
energy for the preheating is the latent heat and energy from post combustion
gases exhausted into the containment system from the EAF. No natural gas is used
in the ConSteel Process. A downstream waste heat boiler to be added as part of
the DRI will further reduce NSM's net energy consumption.
Additional attractive features of the ConSteel Process are the significant
reduction of dust generation and emissions as well as a higher production yield
due to continuous "flat bath" melting and stable slag formation.
LADLE METALLURGY. NSM's ladle design with its extra high freeboard,
dolomitic lining and large porous plugs for Argon stirring are unique features
of the Hot Mill. NSM's ladle design allows for the production of a full range of
steel products while achieving very high levels of steel cleanliness, precision
chemistry control and low levels of non-metallic inclusions.
The Company has two separate ladle furnaces, two VOD's with a common vacuum
system, extensive alloy handling and feeding systems and precision wire alloy
feeding units. These attributes make the Hot Mill one of the most
technologically advanced steelmaking operations in the world. Specific
improvements over other steelmaking operations include NSM's ability to maximize
the time that the EAF can be used for scrap and DRI melting, while enabling the
raw liquid steel to continue through metallurgical testing, stirring, alloying
and sulfur, nitrogen, hydrogen, phosphor, oxygen and non-metallic inclusion
removal. In addition to these activities, temperature and other refinements to
the raw liquid steel continue all the way through to the casting deck. Once at
the casting deck, the liquid steel, which is now considered refined, is emptied
into the tundish in a continuous process and then directly poured into the
casting machine mold via a submerged entry nozzle ("SEN").
THE THIN-SLAB CASTER. NSM's thin-slab caster was designed and built by SMS
and is equipped with a hydraulically oscillating mold and an electromagnetic
brake to reduce turbulence in the mold. These features, along with a
metallurgical length of eight meters, facilitate NSM's ability to produce
high-quality steels at casting speeds up to eight meters per minute. The caster
also has liquid core reduction capabilities which enable the caster to cast
slabs in a range of thicknesses from 40 mm to 70 mm. This feature, which was
first implemented by SDI, is designed to enhance steel quality and facilitate a
more diversified product
65
<PAGE>
offering by providing for "soft reduction" on segregation sensitive grades and
improving thin-gauge hot-rolling capabilities.
The caster is also equipped with an SEN designed by SDI and SMS. This design
permits the walls of the SEN to be thicker, which results in longer SEN life
which, in turn enables the Company to run a "string" of 12 heats before the SEN
requires replacement. In contrast, most SENs in operation today require
replacement after 10 heats. These advantages directly increase productivity.
Within the SEN, NSM has also incorporated a new baffle design to modify the
fluid flow of refined liquid steel into the mold cavity. These baffles slow and
more evenly distribute the refined liquid steel into the mold as compared to
previous designs. This results in a quieter top surface, or meniscus, of the
refined liquid steel in the mold, producing a more uniform solidification of the
shell and effectively eliminating sub-surface inclusions.
THE HOT-ROLLING MILL. The Company's rolling mill is a state-of-the-art,
six-stand rolling mill designed and built by SMS with provisions for a seventh
stand. The operating procedures of the rolling mill begin when the
Bricmont-supplied tunnel furnace receives a cut-to-length slab from the CSP
caster at casting speed. The tunnel furnace equalizes the slab's temperature
profile to a differential of plus or minus 10 DEG. C along the slab's length,
through its thickness and across its width. The excellent temperature profile of
the slab provides optimum conditions for the subsequent rolling process and thus
ensures an excellent profile, flatness and metallurgical uniformity of the
hot-rolled steel. The rolling mill is equipped with a specially designed
high-pressure (up to 400 bar) water descaling system to remove mill scale after
the steel emerges from the tunnel furnace just before entering the rolling mill.
This system provides an exceptionally clean surface on the steel slab while
minimizing the cooling of the 1100 DEG.C slab.
Once in the rolling mill, the slab thickness is reduced down to the required
level while at all times maintaining proper temperature control. The rolling
mill is equipped with the latest electronic and hydraulic controls including
hydraulic roll-gap setting systems. For control of the strip profile and
flatness, all mill stands are equipped with the SMS Continuous-Variable-Crown
System, which uses axially shiftable work rolls, in combination with work roll
bending. The run out table, with laminar spray cooling, was especially designed
for precise cooling of extremely thin-gauge steel. The Company's closely-spaced
rolls and advanced guidance system on the run-out table help to prevent the
steel from cobbling when rolling lighter gauges. NSM's Number 1 down-coiler is
located only 20 meters from the last stand of the rolling mill to allow accurate
coiling and temperature control of thin gauge steel. The capability to roll at
low temperature (ferritic rolling) and to coil thin-gauge steel at high coiling
temperatures gives NSM unique product capabilities and is a principal advantage
of NSM's short coupled coiler. The Number 2 down-coiler is located 85 meters
from the last stand to provide full controlled laminar cooling of heavier gauge
steel. The coiled steel is moved by an automated coil handling system to either
the shipping warehouse for conventional cooling before loading onto trucks for
shipment or to the accelerated coil cooling system where they are cooled to
ambient temperature in three hours for further processing in the Finishing
Facilities or for faster delivery to customers.
Throughout the rolling process, laser optical measuring equipment and
multiple x-ray devices measure all dimensions, allowing adjustments to occur
continuously and providing feedback information to the Mill's process controls
and computers. All positioning and control equipment used to adjust the rolling
mill is hydraulically operated and regulated electronically to achieve a high
degree of accuracy and repeatability. The entire production process is monitored
and controlled by both business and process computers. An additional flatness
control system is being installed in the rolling mill which will utilize proven
cold mill technology to improve light gauge flatness control for direct shipment
from the Hot Mill.
Production schedules are created based on order input information and
transmitted to the Mill's computers by the plant business system. Mathematical
models then determine the optimum settings for the tunnel furnace, the
hot-rolling mill and the cooling sprays. This information is then directly
transmitted to the equipment controlling the rolling operations. As the material
is processed, operating and quality data are gathered and stored for analysis of
operating performance and for documentation of product
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parameters. The system then coordinates and monitors the shipping process, and
prints all relevant paper work for shipping when the steel leaves the Mill.
NSM's off-take partners Preussag and Klockner, will directly tie-in to NSM's
operating systems to further ensure maximum operating efficiency and customer
service.
THE FINISHING FACILITIES. The Finishing Facilities, which are being
constructed adjacent to the Hot Mill, will consist of: (i) a
combination/multipurpose continuous pickling, cold-rolling, cleaning, annealing,
hot-dip galvanizing, skin pass/tension leveling and oiling line, supplied by SMS
(the "Combination Line"), (ii) a push-pull pickling/trimming/oiling line (the
"Push-Pull Line"), (iii) hydrogen batch annealing furnaces, and (iv) a
recoil/temper rolling/slitting line, also supplied by SMS (the "Recoil Line").
The Combination Line will receive hot-rolled steel from the Hot Mill by a
dedicated coil conveyor. The line consists of three independent yet integrated
sections, the entry section, process section and exit section, each of which is
separated by a storage accumulator to provide continuous operation. The entry
section equipment includes dual pass lines to permit loading of hot-rolled steel
while simultaneously running on the other pass line. The process section
consists of equipment to remove scale, reduce thickness, clean, anneal, coat,
skin pass, correct flatness, side-trim and apply oil. A by-pass allows for
pickling or pickling and cold-rolling without the strip having to pass through
the galvanizing process. The pickling section uses three shallow pickling tanks
containing hydrochloric acid and a multiple stage rinse tank to remove mill
scale. A fume exhaust system is provided to extract fumes from the pickling and
rinse tanks and prevent the escape of fumes into the building. After leaving the
pickling process, the pickled steel passes into the two-stand four-high cold
rolling mill for thickness reduction. Entry and exit thickness gauges, load
cells and other related equipment in combination with a high-precision mass flow
control model provide automatic gauge control to exact tolerances. After leaving
the cold rolling mill, further processing consists of cleaning the cold-rolled
steel in a cascade alkaline cleaning and water rinse to remove any residual
rolling oils and iron fines before entering the heating and annealing furnace.
Next, in the heating and annealing furnace, the cold-rolled steel is heated to
750 DEG.C to recrystallize the cold-rolled grain structure and then cooled to
the galvanizing pot temperature in a protective nitrogen/hydrogen atmosphere. In
the event that the gauge of the steel does not need to be further reduced and
the cold-rolling mill is bypassed, the steel is only heated to the 450 DEG.C
temperature of the galvanizing pot. For galvanizing purposes, an immersion roll,
stabilizing rolls, and air knives and blowers are provided to automatically
control the coating weight of metal on the strip. After passing through a
cooling tower, water quench tank, and strip dryer, the galvanized coated steel
is skin passed on a four-high mill to improve strip luster and surface
smoothness and tension leveled to correct strip flatness suitable for shipping.
The Push-Pull Line will also receive coils from the Hot Mill by a dedicated
coil conveyor. The Push-Pull Line consists of an entry section with a pay-off
reel, a flattening machine, crop shear and a taper shear for preparing the
head-end of the steel. Pickling is carried out in the process section in a
"cascade-type operation" in three stages in which the acid flows counter-current
to the strip pass. The pickled steel leaves the pickling tank via a driven
squeeze roll set and passes into a four-stage counter-current cascade rinse
section and a hot air dryer. Threading is carried out by means of driven squeeze
and transport roll sets. The exit section consists of a loop pit, a pinch roll
set, a side-trimmer, a three-roll bridle, an oiler and a recoiler.
Cold-rolled steel not requiring galvanizing will proceed to the batch
annealing furnaces to reduce the hardness of the steel that is created in the
cold rolling process. The batch annealing furnaces will heat the steel, in order
to soften it, in a hydrogen environment that optimizes the efficiency of the
heating process and produces a product that is superior compared to conventional
annealing furnaces. The batch annealing units heat and then cool the steel in a
controlled batch system for optimum cleanliness and uniformity of metallurgical
properties. Certain grades of cold-rolled steel will be produced in-line on the
Combination Line, by-passing the galvanizing section.
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Product from the annealing furnaces will then be temper-rolled in the Recoil
Line. The Recoil Line is a single stand four-high mill designed for relatively
light reduction. The line includes a slitting/side-trimming and inspection
station as well as an oiling unit. The Recoil Line introduces a small amount of
hardness into the product and further improves the flatness and surface quality
of the product.
In a manner similar to the Hot Mill's process computers, the Combination
Line, Push-Pull Line, annealing furnaces and Recoil Line will be linked by means
of business and process computers. The business systems will be expanded to
include order entry of the additional finished products. All scheduling will be
accomplished in the business computer systems, with schedules transmitted to the
appropriate process related computers. Operating and quality data will also be
collected for analysis and quality control purposes, and for reporting product
data.
STEEL SCRAP AND SCRAP SUBSTITUTE RESOURCES
SCRAP ANALYSIS
Scrap is the most significant raw material in the Company's steelmaking
process representing approximately 32% of the fully loaded cost per tonne of
hot-rolled coil. There are many grades of scrap, but the two main
classifications are obsolete scrap and prompt industrial scrap.
Obsolete scrap is derived from discarded goods including agricultural and
construction equipment, automobiles, construction trash, abandoned military
equipment, appliances, container drums and miscellaneous pieces of steel.
Historically, the collection of obsolete scrap has tended to be a peddler
industry, with collection rates increasing dramatically in periods of economic
distress. This is especially true in developing countries. Collection rate
swings continue based on economic conditions until an efficient collection
system develops. Developed countries such as the United States have efficient
collection systems in place which tend to operate more steadily throughout
economic cycles.
Obsolete scrap comes in many different forms. None are free of metallic
contamination, otherwise known as residual elements. Copper comes from wire
mixed into the scrap or from copper deliberately added to some steels for
corrosion protection. Other residuals include nickel, chromium and molybdenum
contained in various steels for strengthening and toughness purposes, or added
as a coating for decorative or corrosion resistant purposes. The elements
copper, nickel and tin, and to a great extent, chromium and molybdenum cannot be
refined out of steel once they are dissolved into it. The only obsolete scrap
that is relatively low in residuals comes from either old structurals and rails
that were made from Bessemer and open-hearth steel with high iron content or
well sorted and processed shredded scrap from automobiles and other consumer
goods. Unfortunately, the amount of this steel recovered each year is extremely
limited. This is especially true in a country such as Thailand that is in the
early stages of its industrial development. Thus, the value of obsolete scrap in
EAF flat-rolled steelmaking is limited. Unlike most flat-rolled steelmakers
utilizing EAFs, NSM will be able to consume a certain amount of obsolete scrap
in its meltmix due to the fact that the DRI produced in the DRI Facility will be
high in iron content and low in contaminants or residuals.
Prompt industrial scrap is produced as a by-product of various metal working
operations. Steel fabricators, machine shops, stamping plants and auto
production operations, such as those being built and operated in close proximity
to NSM, all generate this type of scrap. Prompt industrial scrap is the most
desirable for EAF steelmaking due to the traceability of its origin.
Approximately 15% of prompt industrial scrap is in the form of turnings.
Unfortunately, most turnings are contaminated with high levels of sulfur oil and
are high in alloy content. Thus, turnings do not represent a source of
low-residual material. Structural and plate scrap generated from fabrication
operations amount to approximately 10% of prompt industrial scrap. Structural
and plate prompt industrial scrap is primarily made from obsolete scrap and, as
such, does not represent a source of low-residual material. The remaining 75% of
prompt industrial scrap is in the form of bundles, clips and bushelings, all of
which are low in residuals. NSM plans to consume initially approximately 25% of
prompt industrial scrap in its melt mix, with the remaining mix consisting of
DRI 20%, pig iron 20% and obsolete scrap 35%. This mix will be adjusted
depending on the price of these materials.
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The table below provides an overview of the typical and range levels of
residuals in various grades of scrap as would be found in a mature industrial
economy such as the United States. EAF flat-rolled steel producers requiring
approximately 0.22% residual level need to melt a significant portion of
bundles, clips and bushelings or supplement their melt mix with DRI, pig iron or
other scrap substitutes. The Company expects that its advanced steel refining
and reduction of sulphur, nitrogen and non-metallic inclusions, combined with
low temperature ferritic rolling, will allow it to tolerate higher residual
concentrations.
TYPICAL AND RANGE OF RESIDUAL LEVELS FOR SCRAP GRADES IN THE USA
<TABLE>
<CAPTION>
% (CU, CR, NI, MO, SN)
-----------------------
<S> <C> <C>
TYPICAL RANGE
----------- ----------
Obsolete Scrap:
No. 1 Heavy Melting................................................. 0.50 0.35-0.50
RR Rails/Wheels..................................................... 0.45 0.40-0.70
Plate and Structural................................................ 0.40 0.20-0.50
Shredded............................................................ 0.55 0.45-0.60
No. 2 Heavy Metal................................................... 0.75 0.45-1.00
No. 2 Bundles....................................................... 0.70 0.35-1.25
Prompt Industrial:
No. 1 Dealer Bundles................................................ 0.15 0.10-0.27
No. 1 Factory Bundles............................................... 0.10 0.05-0.15
Busheling, Clips.................................................... 0.10 0.05-0.15
Cut Structurals..................................................... 0.55 0.40-0.60
Turnings............................................................ 0.75 0.30-1.50
Pig Iron.............................................................. traces
DRI................................................................... traces
</TABLE>
SOURCE: GORDON H. GEIGER, T.P. MCNULTY AND ASSOCIATES, "SCRAP SUPPLY: IS
THERE ENOUGH OF THE RIGHT KIND?", PRESENTED AT THE GORHAM/INTERTECH CONFERENCE
ON "IRON AND STEEL SCRAP SUBSTITUTES," ATLANTA, GA, APRIL 27-29, 1994.
Various studies have shown that the amount of prompt industrial scrap
generated equals approximately 12-20% of steel consumption, depending on scrap
collection and processing practices. For example, in a year when the consumption
of steel equals 10 million tonnes, approximately 1.2 to 2 million tonnes of
prompt industrial scrap will be generated. Of this amount, 75% represents
low-residual tonnes. Thus, the amount of low-residual scrap available in a
country in a year when 10 million tonnes of steel is consumed is 900,000 to 1.5
million tonnes. Thus, in a country such as Thailand where the scrap collection
and processing practices are not fully developed it can be estimated that
900,000 tonnes of low-residual scrap will be available for consumption. The
Company believes that it will be able to purchase approximately 420,000 tonnes
of locally generated low-residual scrap each year during its first years of
operation. This amount is expected to increase over time as Thailand's scrap
collection and processing system matures and the amount of steel consumed in
Thailand increases. Recognizing that Thailand's scrap collection and processing
system is still developing and no efficient export mechanism exists, NSM
believes that locally generated scrap will be available at a U.S.$20-30 per
tonne discount to world market prices.
To supplement the amount of locally generated low-residual scrap available
to it, NSM will purchase scrap on the world market. Many industrialized
countries including the United States, Germany and Japan are net exporters of
scrap. Scrap is a worldwide surplus commodity and its price and availability are
dictated by its supply and demand as well as the price and availibility other
traded metallics, including pig iron, DRI, and others.
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DRI ANALYSIS
The most commonly used scrap substitute is DRI, with over 33 million tonnes
consumed in 1996. DRI is produced through a direct reduction production process
in which oxygen is removed from iron ore in a solid state leaving a metallic
iron product. DRI, unlike scrap and some other scrap substitutes, contains no
nonferrous residuals such as copper, nickel, tin, chromium or molybdenum. There
are two methods of producing DRI, gas-based DRI production and coal-based DRI
production. The DRI Facility will utilize the coal-based DRI production method.
SDI intends to employ a coal-based DRI production method in its Iron Dynamics,
Inc. project.
Gas-based DRI production, which was first commercialized in the early
1970's, accounted for the vast majority of the world's DRI production in 1996.
Gas-based production methods combine pre-treated iron ore that is fed into the
top of a shaft furnace with reformed natural gas that is injected into the
bottom of the shaft reactor. As the pre-treated iron ore flows down and the
reducing gases that are flowing up come in contact with each other the carbon
monoxide and hydrogen in the gas reduces the iron ore to form metallic iron.
NSM designed its DRI Facility to operate under the coal-based method of
production to take advantage of the potentially significant operating savings
associated with coal-based production and to avoid the capital costs associated
with running a pipeline from Burma or the South China Sea, the nearest natural
gas supply. The DRI Facility is based on the INCO/INMETCO DRI design. INCO, the
world's largest nickel producer headquartered in Toronto, Ontario, through its
wholly-owned subsidiary Inmetco has operated a coal-based direct reduction
facility for recycling purposes since 1979. Utilization of the INCO/Inmetco
design for DRI production was made commercially viable by adding well proven
desulfurization slag practices into the steel making process. These additions
will provide NSM with the ability to significantly reduce the cost of DRI
production through the use of low-cost iron ore and lower cost medium-quality,
medium sulfur coals. With gas-based DRI processes, only the highest grades, and
most expensive, iron ore and special low sulfur coals can be used. To supplement
its DRI production, NSM has entered into a technology and process license with
Inmetco that provides NSM with access to operating enhancements.
ENERGY RESOURCES
NSM has entered into various arrangements to ensure its access to and
availability of electric power, natural gas, oxygen, coal and iron ore. NSM has
entered into arrangements under which PEA and PTT will provide NSM with electric
power and natural gas. Both PEA and PTT are government entities charged with
providing electricity and natural gas, respectively, to Thailand's industrial
base. The Company will benefit from two new power substations adjacent to the
Mill and from two sets of new power lines which run to the Mill site all
recently constructed by PEA. The Company has access to a long-term supply of
oxygen and other industrial gases from Bangkok Industrial Gas which has recently
constructed an oxygen plant adjacent to the Mill. Coal and iron ore, two
important raw materials needed to produce DRI, are being supplied by SSM and
MMTC under long-term contracts.
COMPETITION
The Company has various competitors within the global steel industry.
Generally, the markets in which the Company participates are highly competitive.
The competitive nature of the industry in the future could have an adverse
effect on the business, financial condition, results of operations or prospects
of the Company. The Company competes primarily on the basis of price, quality,
and the ability to meet customers' product specifications and delivery
schedules. Many of the Company's competitors are integrated steel producers
which are larger in terms of steel making capacity, have substantially greater
capital resources and historical operations and, in some cases, have lower raw
material costs than the Company. In addition, competition may increase as a
result of excess capacity created by other producers using mini-mill technology
and traditional steelmakers who are making their operations more efficient. For
example, several new mini-mills began production in the United States in 1997.
The highly competitive nature of the global steel industry, combined with excess
production capacity in some products, may in the future exert downward pressure
on prices for certain of the Company's products. The deterioration in the
economics of
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Southeast Asia may exert downward pressure on prices for the Company's products
if regional competitors choose to lower their prices in order to maintain
revenues in the face of decreasing regional demand for steel products. Although
the Company believes that it is well-positioned to compete in the markets where
it operates, competitors may develop new products or production processes that
could provide advantages to such competitors to the detriment of the Company.
There can be no assurance that the Company will be able to compete effectively
in the future. In addition, in the case of certain product applications, steel
competes with other materials, including plastics, aluminum, graphite
composites, ceramics, glass, wood and concrete. There can be no assurance that
the Company will be able to compete effectively in the future. See
"Business--Competition."
NSM is the only flat-rolled steel producer in Thailand. There are however,
two flat-rolled rerolling entities currently in operation in Thailand.
Sahaviriya Steel Industry, a Thai-based company, commissioned a re-rolling mill
in 1994. The Sahaviriya mill has a designed capacity of 2.4 million tonnes per
year, but only rolled 1.2 million tonnes in 1996. LPN Plate Mill, another
Thai-based Company, commissioned a reversing plate mill in 1996. The LPN mill
has a designed capacity of 600,000 tonnes per year. Siam Strip Mill, a
Thai/Japanese joint venture, has announced plans to bring on-line 1.7 million
tonnes per year of hot-rolling capacity in 1999.
FACILITIES
The Mill is situated on a 220-acre site in Chonburi, Thailand, strategically
located in Thailand's Eastern Seaboard, the heart of Thailand's industrial
development. Modern highways connect the plant to domestic customers and the
recently constructed deep seaport of Sriracha Harbor. Two 115,000 volt
transmission lines bring electrical power to the Company's own electrical
sub-station. Water is supplied from a 576,000 m(3) reservoir located adjacent to
the Mill and is supplemented by a 15 m(3)/minute water supply line from the
Chonburi Industrial Estate for backup. Water from this reservoir is pumped to a
service water piping system that links the reservoir to the various water
treatment facilities that support the Mill.
There are three main buildings that comprise the Hot Mill. These are the
melt shop building, the tunnel furnace building and the rolling mill building
which includes the shipping area. Within the Hot Mill, the melt shop building
contains two 350-tonne cranes and two 40-tonne cranes. The tunnel furnace
building contains a 20-tonne crane and the rolling mill building contains two
100-tonne cranes, four 60-tonne cranes and a 20-tonne crane.
The Finishing Facilities and the DRI Facility will both be located adjacent
to the Hot Mill to facilitate efficient steelmaking. Similar to the Hot Mill,
the Finishing Facilities will contain several cranes to maximize the Company's
ability to implement just-in-time delivery schedules.
Office buildings on site will include a general administrative corporate
headquarters building, consisting of 1,100 square meters, a building for the
engineering, management information systems and training personnel, consisting
of 1,100 square meters, and an employee services building consisting of 1,310
square meters which includes shower and locker room facilities, as well as the
plant cafeteria.
Other support facilities include emission control and water treatment
systems. The primary emission control unit is the meltshop bag house which
captures the gasses from the melting operation and cleans them to comply with
U.S. type emissions standards. The bag house is capable of cleaning 50,000
m(3)/minute of these gasses. The water treatment system cleans, cools, and
recirculates the water used by the plant in various processes at the overall
rate of 500 m(3)/minute.
To reduce the risk of equipment failure, NSM follows comprehensive
predictive and preventative maintenance programs, has on-site maintenance and
repair facilities, and maintains an inventory of spare parts and machinery. For
example, the Company maintains spare caster parts, mechanical parts and
electrical controls for its cranes and other tools. The Company believes that it
maintains adequate property damage insurance to provide for reconstruction of
damaged equipment, as well as business interruption insurance to mitigate losses
resulting from any production shutdown caused by an insured loss.
The Company considers its facilities adequate for its needs.
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The Company's executive offices are located at Chonburi Industrial Estate
(Bowin), 358 Moo 6, Highway 331, Sriracha, Chonburi 20230 Thailand and its
telephone number is (66-38) 345-950, facsimile number is (66-38) 345-375.
ENVIRONMENTAL MATTERS
The Company's operations are subject to substantial and still evolving Thai
environmental laws and regulations concerning, among other things, emissions to
the air, discharges to surface and ground water, noise control and the
generation, handling, storage, transportation, treatment and disposal of toxic
and hazardous substances. NSM believes that its facilities are in material
compliance with all provisions of Thailand's environmental laws and does not
believe that future compliance with such provisions will have a material adverse
effect on its financial condition or results of operations. The Company intends
to obtain ISO 14000 environmental certification for its facilities.
EMPLOYEES
The Company's employees are not represented by labor unions. The Company
believes that its relationship with its employees is good.
RESEARCH AND DEVELOPMENT
The Company has agreements with two universities, the Technical University
in Aachen, Germany and Chulalongkorn University in Bangkok for assistance in
research and development activities. Through these agreements, NSM employees
have access to the equipment and considerable knowledge base at both
institutions. It is anticipated that NSM's research will focus on the
development of new steelmaking and DRI processes and value added steel products.
The Company believes that these agreements will help provide a competitive edge
over most other steel producers.
AFFILIATE TRANSACTIONS
The Company is one of a number of affiliated companies which are involved in
various aspects of the steel industry which have directors common to their
respective boards of directors. Several of the directors of the companies have
direct and/or indirect investments in each of these companies. In addition, some
of these companies also have direct and indirect investments in each other. A
number of arrangements and transactions have been entered into from time to time
between such companies. It has been the intention of the affiliated companies
and the respective boards of directors that each of such arrangements or
transactions taken as a whole should accommodate the respective interests of the
relevant affiliated companies in a manner which is fair to both parties and
equitable to the shareholders of each. Under corporate law in Thailand,
directors of a company are required to act at all times in the best interests of
the shareholders with respect to transactions entered into by the company. In
addition, corporate law in Thailand places certain limitations on the ability of
a public company to enter into related party transactions.
Because of the scope of the relationships that exist between the companies,
there can be no assurance that such agreements or transactions entered into, if
considered separately, have been or will be effected on terms no less favorable
to the Company than could have been obtained from non-associated third parties.
While any future arrangements are expected to be subject to approval by the
Company's Board of Directors and, where appropriate, the approval of
shareholders and Management Co. there can be no assurance that the future
arrangements between the Company and the other associated companies will not
involve conflicts of interest.
CONTINGENCIES AND LEGAL PROCEEDINGS
In August 1996, the Company entered into an agreement with Nucor whereby
Nucor would provide training and data relating to the business processes that
the Company would use in its operations in Thailand (the "1996 Agreement"). As
compensation for these services, Nucor was to be reimbursed its out-of-pocket
expenses and, depending on the Company's financial performance (assisted by
Nucor), was to have received cash of between $5 million and up to $15 million,
and options to purchase (for the lesser
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of 75% of market or 16 Baht per share) a minimum of 2 1/2% and up to 5% of the
Company's shares outstanding at the date of exercise.
Nucor delivered a termination notice on October 27, 1997, claiming default
in payment. Nucor reiterated its claim in a subsequent letter asserting rights
to payment of $12.5 million and to stock options in the maximum amount provided
for under the agreement. The Company believes that Nucor's October 27, 1997
notice of termination was invalid.
Disputes under the 1996 Agreement are to be resolved through arbitration. No
arbitral demand has been made by either Nucor or the Company at this time. The
Company does not believe it has any further obligation to Nucor for compensation
and/or stock options. Should an arbitration be commenced, the Company believes
it will prevail and no further compensation would be due Nucor.
The Company and Koch Mineral Services, Inc., ("Koch") have engaged in
certain negotiations concerning Koch's potential equity participation in or
management of Sriracha Harbor, its potential equity participation in NSM and
certain agreements concerning the supply of raw materials or the provision of
transportation services by Koch. Notwithstanding such negotiations, Koch will
not acquire shares of NSM in connection with the Transactions. To date, the
Company has reached no agreement with Koch regarding any potential equity
participation in either NSM or Sriracha Harbor or the supply of raw materials or
the provision of transportation services by Koch, but the Company will continue
to respond to Koch's requests for information. Koch has informed the Company
that it may seek U.S.$500,000 as liquidated damages under a letter regarding
Koch's potential equity participation in NSM or Sriracha Harbor. The Company
does not believe it is liable for such liquidated damages.
Currently and from time to time the Company is involved in litigation
incidental to the conduct of its business, but it is not a party to any other
lawsuit or proceeding that, in the opinion of the Company, is likely to have a
material adverse effect on the Company.
TRANSPORTATION
The Company expects to receive all of its imported raw materials and deliver
most of its finished product by ship. The Company intends to make use of
Sriracha Harbor for the majority of these shipping transactions. Sriracha Harbor
is located approximately 15 miles from the Mill and is owned by Sriracha Harbour
Public Company Limited, an affiliate of NSM. NSM intends to enter agreements
with the management of the harbor to protect access to the harbor for NSM's
shipments.
INSURANCE
In connection with the design, development, supply, installation,
construction, erection, testing, commissioning and maintenance of all Phase II
works of Nakornthai Strip Mill's Direct Reduction Iron (DRI) and Finishing
Facility (the "Project"), the Company maintains the following insurance in form
of cover notes:
(i) Marine Cargo insurance with respect to all machinery, equipment,
accessories, materials and supplies covering the voyage from the Suppliers'
premises to the project sites. The total sum insured is USD 135 Million with the
maximum liability at USD 30 Million per one conveyance/location. The period of
coverage is from 1 May 1998 until completion of all shipments in connection with
the Project. (PURSUANT TO MARINE CARGO COVER NOTE NO.8-330456 DATED MAY 25, 1998
ISSUED BY NEW HAMPSHIRE INSURANCE CO., WHICH IS VALID FOR 45 DAYS FROM MAY 1,
1998.)
(ii) Marine ALOP with respect to the loan interest and all standing charges
related to the interest insured under (i) above. The total sum insured is USD 56
Million, with the indemnity period of 18 months.
The period of coverage is from 1 May 1998 until completion of all shipments in
connection with the Project. (PURSUANT TO MARINE CARGO COVER NOTE NO.8-330456
DATED MAY 25, 1998 ISSUED BY NEW HAMPSHIRE INSURANCE CO., WHICH IS VALID FOR 45
DAYS FROM MAY 1, 1998.)
(iii) Construction & Erection All Risks, Third Party Liability and Advance
Loss of Profits Insurance covering all risks on physical loss or damage other
than those specifically excluded in the Specimen Policy Form dated March 20,
1998. The total sums insured are (a) with respect to Material Damage:
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USD249,400,000; (b) with respect to Third Party Legal Liability: USD5,000,000 in
respect of any one occurrence and unlimited aggregate amount; and (c) with
respect to Advance Loss of Profits: USD56,000,000 on loan interest and all
standing charges with the indemnity period of 18 months. The period of coverage
is from 1 May 1998 until the date of Provisional Acceptance or Production of
Specification Products following successful testing and commissioning, followed
by 12 months of Defects Liability Period. (PURSUANT TO COVER NOTE NO. 003/98
DATED MAY 25, 1998 ISSUED BY NEW HAMPSHIRE INSURANCE CO. AND CIGNA PROPERTY &
CASUALTY INSURANCE CO., LTD., WHICH IS VALID FOR 45 DAYS FROM MAY 1, 1998.)
(iv) Property All Risks Insurance with respect to all risks of physical loss
of or damage to the Real and Personal Property of every kind and description of
or in the control of Nakornthai Strip Mill Public Co., Ltd. and/or NSM Steel
(Delaware), Inc. and/or NSM Steel Company, Ltd. located at 358 Moo 6, Cholburi
Industrial Estate (Bo-win) Highway 331, Amphur Spiracha, Cholburi Province. The
total limit of indemnity is USD823,553,000, being USD560,595,000 for the
property and USD262,958,000 for gross profit (with the indemnity period of 18
months). (PURSUANT TO COVER NOTE NO. 051/98 DATED MAY 26, 1998 ISSUED BY NEW
HAMPSHIRE INSURANCE CO. AND CIGNA PROPERTY & CASUALTY INSURANCE CO., LTD., WHICH
IS VALID FOR 60 DAYS FOR MAY 1, 1998.)
(v) General Liability including Products & Completed Operations and
Employer's Liability Insurance with respect to the liability of Nakornthai Strip
Mill Public Co., Ltd. and/or NSM Steel (Delaware), Inc. and/or NSM Steel
Company, Ltd. The total limit of liability is USD5,000,000 per occurrence and
unlimited aggregate amount (except USD5,000,000 in the aggregate for Products
and/or Completed Operations). (PURSUANT TO COVER NOTE DATED MAY 26, 1998 ISSUED
BY NEW HAMPSHIRE INSURANCE CO., WHICH IS VALID FOR 30 DAYS FROM MAY 26, 1998.)
BOARD OF INVESTMENT
The Company derives substantial economic benefits from the promotional
considerations granted to it by the Board of Investment. Such benefits include
the permission to bring foreign experts into Thailand and the exemption from
certain import duties and taxes. Additionally, the BOI has only granted two
licenses for the production of steel products in Thailand. The continued
availability of these economic benefits for the Company is conditional upon the
on-going satisfaction of certain requirements. Failure to satisfy these
requirements may result in the loss of economic benefits. The tax advantages
granted by the BOI, as well as certain limitations on foreign ownership, expire
seven years following the start of commercial operations for the hot iron plate
and DRI, and eight years for the finishing facilities. The Company agreed in the
Warrant Agreement that the Company will not issue any Ordinary Shares or other
equity interests to any holders if the Company is aware (taking into account its
ability to access relevant information) that the effect of such issuance would
be, assuming the immediate exercise of all then outstanding Warrants, to cause
the Company to exceed the Foreign Ownership Percentage (as defined). See "Risk
Factors--BOI Compliance."
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DESCRIPTION OF THE NOTE ISSUERS
NSM STEEL (DELAWARE), INC.
NSM (Del) is incorporated under the laws of the State of Delaware and is a
wholly owned subsidiary of NSM Cayman, which is a wholly-owned subsidiary of the
Company. NSM (Del) issued Notes, and Debentures pursuant to an Agency Agreement
between NSM Cayman and NSM (Del). NSM (Del), on behalf of NSM Cayman: (i) issued
the Securities and will make payments thereunder; (ii) transfered the proceeds
of such Securities to NSM Cayman; and (iii) will receive payments from such
affiliates and make interest and other payments on such Securities. NSM (Del)
maintains its head office in Bangkok, Thailand and its registered office in
Dover, Delaware. The financial year of NSM (Del) runs from January 1st to
December 31st . The authorized share capital of NSM (Del) consists of 10,000
shares of common stock, par value of U.S.$1.00 per share, all of which are
issued to NSM Cayman. Its shareholders equity as of the closing of the
Transactions was U.S.$10,000. The directors of NSM (Del) are Sawasdi
Horrungruang and John W. Schultes.
NSM STEEL COMPANY, LTD.
NSM Steel Company, Ltd. (NSM Cayman) was incorporated under the laws of the
Cayman Islands on October 23, 1997 and is a wholly owned subsidiary of the
Company. NSM Cayman maintains its registered office at Ugland House, P.O. Box
309, George Town, Grand Cayman, Cayman Islands, British West Indies. The
financial year of NSM Cayman runs from January 1st to December 31st . The
authorized share capital of NSM Cayman consists of 1,000 shares, par value of
U.S.$10.00 per share, all of which are issued to NSM. Its shareholders equity at
1,000 shares was U.S.$10,000.
The directors of NSM Cayman are Sawasdi Horrungruang, Chamni Janchai and
John W. Schultes.
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DESCRIPTION OF PROJECT PARTICIPANTS
SDI
SDI owns and operates a new, thin-slab/flat-rolled steel mini-mill, which
commenced operations in January 1996. SDI was founded by executives and managers
who pioneered the development of thin-slab/ flat-rolled technology and directed
the construction and operation of the world's first CSP thin-slab/flat-rolled
mini-mill. Building upon their past experience with thin-slab/flat-rolled steel
technology, management founded SDI with the intention of combining a
state-of-the-art CSP thin-slab hot mill with a coal-based DRI facility and
certain downstream finishing facilities. Employing SMS designed technology
similar to that employed by the Hot Mill and utilizing many of the same training
programs and compensation incentive systems implemented by NSM, SDI successfully
completed start-up and ramp-up of its hot mill. SDI's finishing facilities are
currently in the start-up phase and its coal-based DRI facility is under
construction with a scheduled start-up date in the third quarter of 1998. SDI
has consistently produced high-quality flat-rolled steel products, including
low-carbon thin-gauge steel products. Additionally, SDI is among the lowest cost
producers of flat-rolled products. In the third quarter of 1997, SDI's seventh
quarter of operation, SDI's operating profit (pre-tax income before interest and
start-up costs) was U.S.$67 per short ton. SDI has sold a certain amount of its
flat-rolled production under long-term off-take contracts to several steel
consumers and trading companies, including Preussag.
ENRON
Enron, an Oregon corporation organized in 1930, is an integrated natural
gas, electricity and finance company with headquarters in Houston, Texas. Enron
is engaged in a number of businesses throughout the world including the
transportation and wholesale marketing of natural gas, the exploration for and
production of natural gas and crude oil, the production, purchase,
transportation and marketing of natural gas liquids and refined petroleum
products, the independent (i.e., non-utility) development, promotion,
construction and operation of power plants, natural gas liquids facilities and
pipelines, and the non-price regulated purchasing and marketing of electricity.
Enron employs approximately 11,700 persons worldwide. Enron's financing and
funding activities support independent exploration and production companies and
other energy-related businesses seeking equity financing. Enron's finance
operations provide a variety of capital products including volumetric production
payments, loans and equity investments. Financings arranged and production
payments purchased totaled U.S.$755 million in 1996. In addition to capital,
Enron also provides marketing and risk management services.
Enron's international operations and development activities principally
involve the development, acquisition, financing, promotion, and operation of
natural gas and power projects in emerging markets and the marketing of natural
gas liquids and other liquid fuels. Enron has expanded its traditional
international asset and infrastructure development business by also offering
merchant, finance and risk management products and services to third parties in
emerging markets.
SMS
SMS, a German-based equipment manufacturing and design firm, is 51% owned by
MAN Aktiengsellschaft, a Deutsche Mark ("DM") 21 billion revenue company, and
49% owned by Siemag Weiss Stiftung and Co. KG, a company with steel mill
equipment manufacturing and design expertise dating back to 1856. SMS is a
leader in providing CSP thin-slab/flat-rolled mini-mills to the steel making
community. With turnover in excess of DM2.7 billion, SMS has sold and helped
commission 11 CSP thin-slab/flat-rolled mini-mills. Included among this group
are Hylsa's mini-mill and SDI's mini-mill. SMS commercialized the world's first
CSP thin-slab/flat-rolled mini-mill in 1989 when SMS's proprietary technology
successfully proved that flat-rolled products could be produced using a mold
design that cast a 50 mm slab rather than the 250 mm slab commonly produced.
SMS's revolutionary technological breakthrough was the culmination of over four
decades of research and paved the way for the modernization of the world's flat-
rolled steel making community. Since 1989, SMS has continually developed
technological enhancements so that today SMS's CSP thin-slab/flat-rolled
mini-mills are capable of producing a full range of high-
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quality flat-rolled products. NSM's Mill is considered by SMS to be among the
most advanced CSP thin-slab/flat-rolled mini-mills ever built.
PREUSSAG
Preussag is the steel trading subsidiary of Preussag AG, a German-based
conglomerate with over 66,000 employees worldwide and annual revenue in excess
of DM25 billion. According to FORTUNE MAGAZINE, Preussag AG is one of the 200
largest industrial companies in the world. Preussag maintains offices in 17
countries, through which it trades and sells approximately 5 million tonnes of
steel each year. Preussag has a large presence in Southeast Asia, where it
operates steel trading offices in Hong Kong and Singapore. Other areas of the
world of significant steel trading activity for Preussag include the Middle
East, Africa and the United States. On a worldwide basis, Preussag had revenue
of approximately DM4 billion for the year ended December 31, 1996 with over
DM2.8 billion of this amount related to steel trading. The remaining portion was
related to steel service center activities in North America, which include the
off-take agreement entered into between Preussag and SDI. An important component
of Preussag's business strategy is the establishment of off-take arrangements
with high-quality, low-cost producers of flat-rolled steel. Building on this
strategy, Preussag has entered into an eight-year off-take agreement with NSM.
KLOCKNER
Klockner is the steel trading operation of Klockner & Co. AG, an
international metal and steel company and a wholly owned subsidiary of VIAG
Aktiengesellschaft. VIAG Aktiengesellschaft is an international holding company
with estimated 1997 annual revenue in excess of DM50 billion. VIAG
Aktiengesellschaft is one of the 100 largest industrial companies in the world.
Klockner and Co. AG is the largest subsidiary in the VIAG Aktiengesellschaft
group of companies with revenue in excess of DM15 billion. Similarly, Klockner
is the largest subsidiary of Klockner and Co. AG with revenue in excess of DM2
billion. With branch offices in more than 50 countries, including offices in
China, Singapore, Japan, Thailand, India and the United States, Klockner traded,
warehoused and processed, in aggregate, over 10 million tonnes of steel during
the year ended December 31, 1996. As a recognized leader in steel trading
volume, Klockner is consistently ranked as one of the dominant steel trading
firms in Europe and Southeast Asia.
MCDONALD
McDonald is a U.S.-based investment banking firm with extensive experience
in the steel industry. Throughout its 75-year history, McDonald has provided
corporate finance advisory, underwriting and brokerage services to its clients.
McDonald structured and arranged the financing for the development, start-up and
operation of SDI's CSP thin-slab hot mill and the subsequent financing for the
development and construction of SDI's coal-based DRI facility and finishing
facilities. McDonald also co-managed SDI's initial public offering and follow-on
public equity offering. McDonald has been serving as a financial advisor to NSM
since September 1997.
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DESCRIPTION OF MATERIAL AGREEMENTS
MANAGEMENT AGREEMENT
NSM entered into a 10-year contract (the "Management Agreement") with
Management Co. to conduct and manage the business affairs of NSM. Pursuant to
the Management Agreement, NSM assigned and delegated to Management Co. the sole
and exclusive right and obligation to control, possess and manage all business
affairs of NSM. Management Co. has the power to: (i) cause NSM to receive all
cash and cash equivalents paid or available to NSM; PROVIDED, HOWEVER, that,
subject to any applicable exchange control regulations in Thailand and the terms
of the Securities and Indentures, all income received, and all amounts available
for purposes of paying costs or debt service payable, in U.S.$ shall be received
and held in, and paid from, U.S.$ accounts outside of Thailand; (ii) hire
employees and confirm employment of personnel presently employed by NSM
reasonably required for the proper conduct of the business of NSM and, in
connection therewith, determine the terms of employment for, and the
compensation and benefits payable to, each such employee; (iii) terminate
employees, with or without cause, subject only to applicable law and the terms
and conditions of any applicable employment agreement; (iv) cause NSM to enter
into contracts for the purchase of raw materials, including scrap steel and
other consumables and for the purchase of freight services for the delivery of
such raw materials; (v) where permitted by applicable law, cause NSM to appoint
a firm of independent public accountants of international standing nominated by
Management Co., which accounting firm shall (a) perform periodic audits of the
financial statements of NSM with full and complete access to its books and
records, all in accordance with generally accepted accounting principles in
effect in Thailand, and (b) from time to time, respond to special or ad hoc
requests of Management Co., in the exercise of its sole discretion, for
accounting services or reports; (vi) conduct on behalf of NSM all marketing and
sales of products and enter into contracts relating thereto; (vii) coordinate
all research and development undertaken by NSM and enter into contracts relating
thereto; (viii) coordinate all corporate finance activities, financial analyses
and investor relations of NSM in accordance with applicable law and enter into
contracts relating thereto; (ix) liaise with Thai government officials in
cooperation with and with the personal involvement of, NSM's Chairman (x)
develop, maintain and monitor income and expense budgets for NSM; (xi) develop,
implement and enforce proper controls over cash receipts and disbursements,
including limitations on check-signing authority and the timing, duration and
amount of monetary and other commitments of NSM for the purchase or sale of
goods and services; PROVIDED that the authorization/signature of both NSM's
Chairman and Management Co. shall be required on contracts with any governmental
entity in Thailand; (xii) control and analyze the availability and pricing of
all raw materials, including, scrap and other metal feedstock, for NSM; (xiii)
develop and analyze the market for the purchase of products, including the
specifications for, and the mix of, and the periodic demand for, such products
and enter into contracts relating thereto; and (xiv) take such other action as
shall be required from time to time to (a) increase the efficiency of the Mill,
(b) improve the efficiency and profitability of NSM, and (c) maximize NSM's
shareholder value.
NSM and its board of directors reserve the right under the Management
Agreement to: (i) approve the construction of any new steel mills proposed to be
owned or operated by NSM; (ii) approve the issuance of new equity shares; (iii)
incur any indebtedness of NSM for borrowed money other than working capital
loans in amounts not exceeding U.S.$10 million (or the Baht equivalent thereof)
outstanding on the date of each such borrowing; (iv) approve the execution of
any contract by or on behalf of NSM other than contracts within Management Co.'s
responsibilities and contracts of less than one year's duration and arising in
the normal course of business; (v) perform any acts and things which, under
applicable law or the Articles of Association of NSM require the approval of the
board of directors and/or the general meeting of shareholders of NSM; and (vi)
if, notwithstanding NSM's request that Management Co. do so, Management Co.
shall fail or decline to enforce its rights against SDI under the Management and
Technical Assistance Agreement and the SDI License Agreement, enforce such
rights of NSM under such agreements; PROVIDED, HOWEVER, that if a Change of
Control shall occur, then, forthwith, those rights referred to in the preceding
clauses (i), (iii) and (iv) shall cease to be reserved to NSM and its Board of
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Directors. In addition, Management Co. has agreed under the Management Agreement
to share with the Company the benefits of, and expertise available under, the
SDI Agreement, including but not limited to arranging for certain of the
Company's personnel to visit and receive technical training at SDI's facilities
in the United States and elsewhere and to cause SDI to furnish technical experts
to the Company in order to render technical assistance in connection with the
manufacture of the Company's products.
Management Co. will not be entitled to any fees or other compensation under
the Management Agreement. However, the Company will be responsible for (1) all
fees incurred by Management Co. in connection with the SDI Agreement and (ii)
all reasonable and necessary out-of-pocket expenses incurred by Management Co.
in the performance of its obligations under the Management Agreement, including,
but not limited to, all commercially reasonable costs of directors and officers
errors and omissions insurance. The Management Agreement is governed by the laws
of the State of New York and requires all disputes or claims to be settled under
the Rules of Conciliation and Arbitration of the International Chamber of
Commerce.
SDI AGREEMENT
NSM entered into an agreement with SDI under which SDI agreed to provide
Management Co. with consultation and technical and advisory services under a
10-year management advisory and technical assistance agreement. Under the terms
of the SDI Agreement, SDI granted Management Co. the right to have and use SDI's
technical information, manufacturing data, formulae, process management methods
and know-how and information concerning SDI's commissioning, start-up, and
operation of its thin-slab/ flat rolled steel mini-mill, including its hot mill,
coal-based DRI facility (subject to the consent of an exclusive licensee of the
DRI process) and finishing facilities. SDI will also (i) advise Management Co.
to the best of its ability in relation to the manufacturing of flat-rolled
products and DRI, (ii) provide Management Co. with reasonable assistance in
relation to the practical application of SDI's technology, (iii) provide
Management Co. with advice and counsel regarding SDI's own management
techniques, methodologies and culture, including employee relations and
incentivization, (iv) assign personnel to render advice and consultation to
Management Co., and (v) provide training to NSM, and, subject to Management
Co.'s control, supervision, and direction, to NSM's supervisory and managerial
personnel and, initially and from time to time, to a reasonable number of
operating personnel in connection with the application of SDI's technology and
management techniques. Where appropriate, NSM will on a reciprocal basis provide
SDI with the services described in (i), (ii), and (v) above.
To implement the SDI Agreement and comply with various conditions therein,
SDI has and will continue to furnish to NSM SDI employees, on a short-term
temporary basis, and to train certain NSM employees so that such NSM employees
will be better qualified to construct, start-up and operate the Mill and train
other NSM employees in such activities.
With the assistance of SDI, Management Co. will cause NSM to model the NSM
operations and operating procedures to approximate SDI's techniques and
methodologies and to produce flat-rolled products and DRI of a quality that are
similar to SDI's. SDI, will have free access to the Mill for the inspection,
testing, and/or review of NSM's operations and quality control.
SDI and Management Co. have also agreed to share information with respect to
improvements made to the production of flat-rolled products and DRI (subject to
the consent of an exclusive licensee of the DRI process) and the experiences and
findings related thereto.
Management Co. will direct NSM to pay SDI an annual fee of U.S.$2 million
during the term of the SDI Agreement and a one-time incentive fee of U.S.$1.3
million.
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SHAREHOLDERS' AGREEMENT
SDI, Enron, McDonald, Sawasdi Horrungruang and NTS (NTS and Mr.
Horrungruang, collectively, the "Thai Parties") and the Company, entered into an
agreement (the "Shareholders' Agreement") whereby the Thai Parties and other
parties caused NSM to issue new equity on a private placement basis to the
Management Investors. As of the Closing Date, new equity represented 14.8% of
all issued shares of NSM. Enron and McDonald received their shares pursuant to
the Shareholders' Agreement, while SDI received its shares pursuant to the SDI
License Agreement and in consideration for the SDI License. The new equity was
issued to the Management Investors at a price of 10 Baht per share. Certain
Management Investors purchased additional equity in privately negotiated
transactions in the secondary market for the Ordinary Shares. This issuance
occured concurrently with the Offerings and the execution and delivery by the
Thai banks of the Bank Credit Facility amendment (the "CFA Amendment").
Pursuant to the Shareholders' Agreement, NSM's governing body is a board of
14 directors. The Management Investors have the right to elect four directors,
one of whom shall be elected by each Management Investor. In addition, McDonald
has the right to elect one additional director of the four, which initially
shall be Mr. John W. Schultes. The Thai Parties have the right to elect six
directors, one of whom shall be Mr. Sawasdi Horrungruang. One director was
nominated by the Thai lenders under the Bank Credit Facility and the parties
have mutually agreed to nominate three independent directors as required by law,
one of whom is Mr. Reuben Perin. These three independent directors will comprise
the audit committee. Additionally, the holders of the Debentures have the right
to elect one director. NSM's board of directors is headed by a Chairman
nominated by the parties to the Shareholders Agreement and elected by a majority
of the board. It was agreed that, initially, the chairman shall be Mr. Sawasdi
Horrungruang.
The Shareholders Agreement provides that, unless otherwise agreed by
Management Co., none of the following actions may be taken by NSM except upon
the adoption of a resolution authorizing such action by (i) the shareholders
(with at least a majority of the shares held by the New Equity Investors voting
in the affirmative), when shareholder action is required under applicable law,
or (ii) the board of directors (with at least a majority of the directors
nominated by the Management Investors voting in the affirmative): (a) any
agreement between NSM and any of its shareholders or any relative or affiliate
of any of its shareholders, or any person if such person's compensation or other
benefits thereunder will directly or indirectly benefit such shareholder or any
of its affiliates (other than as an investor in NSM) and any amendment,
modification or termination of any agreement theretofore executed and
distributed in accordance with this paragraph (a); (b) any equity investment in
any other entity, any purchase of assets of any other entity, any reorganization
of NSM or any merger or consolidation of NSM with or into another entity; (c)
any increase or decrease in the authorized or issued share capital of NSM by
more than the Baht equivalent of U.S.$15 million; (d) any amendment or
modification of the Articles of Association of NSM; (e) any early termination of
any of the Implementing Agreements otherwise than in accordance with the
respective terms thereof; (f) any voluntary dissolution, liquidation, or
winding-up of NSM; (g) entry into any joint venture, partnership, or other
profit-sharing arrangements with any person if the capital invested by NSM in
one transaction or a series of related transactions shall be equal to or greater
than U.S.$10 million; (h) any acquisition, disposal, assignment, transfer,
licensing, or sublicensing of any know-how, trademarks, trade names, trade
secrets, or similar intellectual property rights of any person other than in the
ordinary course of business; (i) any purchase, sale, assignment, transfer, or
disposal of any assets of NSM other than in the ordinary course of business; and
(j) any ordinary course business transaction involving an amount in excess of
U.S.$10 million.
The Shareholders' Agreement restricts the transfer of NSM shares by any of
the parties thereto, except with respect to 3,667,750 newly issued shares
purchased by McDonald which may be transferred to an investor in the Debentures.
The Agreement provides that (i) prior to the first anniversary of the closing
date of the Shareholders' Agreement (the "Closing Date"), no party to the
Shareholders' Agreement may transfer any shares of NSM (except pursuant to any
pledge of such shares in effect on the date the
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Shareholders' Agreement is signed) except that the Thai Parties may collectively
transfer certain shares; PROVIDED that, after giving effect to the aggregate of
all such transfers, the New Equity Investors and the Thai Parties shall, in the
aggregate, hold at least 51% of all issued shares in NSM; and PROVIDED FURTHER
that if the Thai Parties shall transfer any of the shares to a single person or
group of persons acting in concert, (i) such transfer shall be pursuant to a
good faith offer on arms length terms and conditions and be subject to the
rights of the Management Investors under the Shareholders' Agreement (including
the right of first refusal) and (ii) the transferee shall be required to
subscribe to the Shareholders' Agreement and become a party thereto. Before
transferring any shares of NSM pursuant to the preceeding proviso, the
Management Investors, pro rata, shall have the right to purchase such shares at
the same price and on the same terms and conditions offered to the person
referred to above and such offer shall remain outstanding for a certain number
of days. After the first anniversary of the Closing Date, each party to the
Shareholders' Agreement may (a) transfer up to 66% of its shares in NSM during
the period from the first anniversary through the fourth anniversary of the
Closing Date; and (b) transfer up to an additional 9% of its shares in NSM
during the period from the fourth anniversary through the date which is six
months following the payment in full of the Notes, or such longer period as
shall be agreed upon by the parties; and (c) transfer its remaining shares of
NSM freely, without regard to any restriction contained in the Shareholders'
Agreement, after the date which is six months following the payment in full of
the Notes. Notwithstanding the foregoing restrictions, any Management Investor
may transfer all or any part of its NSM shares to one or more of its affiliates.
If any Management Investor shall sell shares of NSM in excess of the amounts
indicated above, or cease to hold at least 33% of its original shares, any
agreement to which it is a party may, if so directed by Management Co., will be
terminated by NSM. Notwithstanding the foregoing, SDI shall agree to hold at
least 25% of its original shares, in addition to the shares it acquires through
the exercise of the SDI Warrants, through 2008. In addition, in connection with
any transfer of NSM shares by a party to the Shareholders' Agreement, each party
(other than the transferring party) will have a right of first offer to purchase
its pro rata share of such shares.
The Shareholders' Agreement has a term of 10 years and is governed by the
laws of Thailand. All disputes arising under the Shareholders' Agreement will be
settled by arbitration in Paris, France under the Rules of Conciliation and
Arbitration of the International Chamber of Commerce.
AGENCY AGREEMENT
NSM Cayman and NSM (Del) have entered into an agency agreement (the "Agency
Agreement"). Under the Agency Agreement, NSM (Del) acted as the agent of NSM
Cayman in connection with the issuance of the Securities. NSM (Del) agreed to,
from time to time, (i) issue the Securities and undertake subsequent borrowings,
and make payments thereunder, solely as the agent of NSM Cayman; (ii) to
transfer the proceeds of such Securities and subsequent borrowings to NSM
Cayman; and (iii) to receive payments from NSM Cayman or such affiliates and
apply such payments to pay principal and interest when due under the Securities
and subsequent borrowings on behalf of NSM Cayman.
To compensate NSM (Del) for its services in acting as the agent of NSM
Cayman with respect to the issuance of the Notes, NSM Cayman agreed to pay NSM
(Del) a fee equal to U.S.$20,000 per annum for each year in which any of the
Securities have been issued by NSM (Del) or in which year any of the Securities
remain outstanding.
Each of NSM Cayman and NSM (Del) agreed not to treat the Securities and
subsequent borrowings as obligations of NSM (Del) for United States federal,
state and local income tax purposes.
SDI LICENSE AGREEMENT
NSM and SDI, entered into a 10-year reciprocal license and technology
sharing agreement, through which they will have access to and the right to use
the other party's flat-rolled and, subject to the consent of an exclusive
licensee of the DRI process, DRI production, operation and product technology.
The consent
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of the exclusive licensee has not been obtained and there can be no assurance
that such consent will be obtained. In entering into the SDI License Agreement,
NSM expects to maximize the development and advancement of certain operating
procedures to enhance the development of new high-quality flat-rolled steel
products.
In return for entering into the SDI License Agreement, SDI received
74,468,090 Ordinary Shares and the SDI Warrants which contain exercise
provisions that protect SDI from dilution of its equity interest in NSM in the
event holders of Warrants exercise such Warrants. SDI will be reimbursed for the
exercise price of the SDI Warrants as it exercises the SDI Warrants. SDI will be
responsible for all U.S. taxes on any amounts payable or shares issuable under
the SDI License Agreement.
OFF-TAKE AGREEMENTS
NSM has entered into separate, but substantially identical eight year
Off-Take Agreements with Klockner and Preussag for the purchase and resale of
products from the NSM Mill. Under the Off-Take Agreements, Preussag and Klockner
will be obligated to purchase, in aggregate, 100% of NSM's production in 1998
through 2002, and 25% of the Company's production in the years 2001 through
2005. NSM may, at is option, reduce the percentage of its production sold under
the Off-Take Agreements to as little as 67% in 1998, 50% in 1999 and 25% in
2000, if the Company believes it could maximize sales revenues through sales to
other customers. Under the Indentures, sales by NSM to customers other than
Preussag and Klockner, to the extent that the aggregate of such sales results in
receivables outstanding in excess of U.S.$10 million, must be supported by
letters of credit if the customer does not have an investment grade credit
rating.
All sales to Preussag, Klockner and substantially all other export sales
will be U.S.$ denominated.
Under the Off-Take Agreements, NSM must deliver products which are of the
quantity, quality and description required; the products must be fit for the
purposes for which the goods of the same description would ordinarily be used;
and goods will not comply with an individual order if they are not fit for any
particular purpose expressly or implied made known to NSM in writing at the time
the order was placed. If a product purchased under the Off-Take Agreements fails
to meet the requirements of the order, the purchaser shall notify NSM of the
defect in writing. The purchaser may require NSM to take the product back and
deliver substitute products or require NSM to remedy the lack of conformity by
repair, unless this is unreasonable with respect to all circumstances. NSM will
reimburse the purchaser's reasonable inspection costs. If NSM fails to deliver
substitute products or repair the defective products within a reasonable period
of time despite the purchaser's request, the purchaser may remedy the lack of
conformity on its own or have it remedied by third parties at NSM's cost. This
also applies if NSM's remedies are not satisfactory. Alternatively, the
purchaser may reduce the price in the same proportion as the value that the
goods actually delivered had at the time of the delivery bears to the value that
conforming goods would have had at that time. The purchaser may forsake these
remedies and declare the order void in case of non-delivery or late delivery.
EMPLOYMENT AGREEMENT
Upon the consummation of the Offering, the Company and Mr. John W. Schultes,
President and CEO of NSM, entered into an eight-year employment agreement (the
"New Employment Agreement"). Under the New Employment Agreement, Mr. Schultes
will receive a base salary of U.S.$240,000 per annum with increases of 5% per
annum (calculated on a cumulative, compounded basis) during the term of the New
Employment Agreement. At the discretion of Management Co., Mr. Schultes will
also be eligible for an annual bonus based on the Company's return on equity,
profitability, operating efficiency and adherence to capital expenditure budgets
and construction timetables. It is also the Company's intention, based on
Management Co.'s decision to institute a share option plan within twelve months
of the Offerings, to grant Mr. Schultes options to acquire shares in NSM in an
amount such that upon the expiration of the term of
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his employment such options can reasonably be expected to produce a U.S.$2
million gain; PROVIDED, HOWEVER, that the financial results set forth in the
Projection are substantially achieved. The New Employment Agreement will contain
provisions limiting Mr. Schultes' ability to compete against NSM should he no
longer be employed by the Company. Under these provisions, Mr. Schultes will be
restricted in his activities with regard to DRI throughout the world and with
regard to flat-rolled steel production in the countries that currently make up
the ASEAN [Update].
COAL SUPPLY AGREEMENT
The Company and SSM have entered into a 10 year contract for the supply of
Vietnamese anthracite coal. This agreement went into effect on April 1, 1997 and
requires the Company to purchase a fixed amount of coal in each of the 10
contract years. By mutual consent, the parties have agreed to delay the start of
deliveries under this contract. The Company retains the option to purchase an
additional set amount in each contract year. The amounts of coal to be purchased
vary over the life of the contract. SSM is penalized if the coal it delivers
fails to meet certain quality standards.
Prices for the coal are set through negotiation between the parties before
the beginning of each contract year. Prices are set in U.S.$ and include
delivery to Sriracha Harbor. Payment is at sight by means of an irrevocable
letter of credit. The Company is separately responsible for demurrage, unloading
and delay. Risk of loss passes from SSM to the Company when the goods are loaded
onto the ship, while ownership passes from SSM upon full payment of all money
due. The agreement is governed by the laws of England and subject to
jurisdiction in the first instance by a competent court in Rotterdam, The
Netherlands.
IRON ORE FINES SUPPLY AGREEMENT
The Company has entered into a five-year contract with MMTC for the supply
of iron ore fines. The Agreement went into effect on February 6, 1997. Price and
tonnage for each contract year is determined through negotiations between the
parties at the start of each year. The price is subject to bonuses and penalties
depending on the quality of the iron ore fines supplied. Payment is in U.S.$ by
a commercial letter of credit. Alternatively, the Company may wire transfer 100%
of the sale value in advance.
Vessels to carry ore under the contract will be chartered by the Company or
MMTC depending on competitiveness. The Company assumes risk of loss once the ore
is loaded onto the vessel and has responsibility for insurance as of that time.
MMTC relinquishes title when it receives reimbursement. The contract is subject
to an arbitration clause where the arbitrator is appointed in accordance with
the provisions of the Rules of Conciliation and Arbitration of the International
Chamber of Commerce. Venue for the arbitration is Singapore.
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MANAGEMENT
DIRECTORS
<TABLE>
<CAPTION>
NAME AGE PRIMARY POSITION
- ---------------------------------------------------- --------- ----------------------------------------------------
<S> <C> <C>
Sawasdi Horrungruang(1)............................. 56 Chairman of the Board of Directors of NSM
Keith Busse(2)...................................... 52 President and CEO of Steel Dynamics, Inc.
John Schultes(3).................................... 49 President and CEO of NSM
David Stickler(4)................................... 37 Managing Director of McDonald & Company Securities,
Inc.
Kevin McConville(5)................................. 40 Vice President of Enron Capital and Trade Resources
Reuben Perin(6)..................................... 58 Former Executive Vice-President of USSteel
Amornrat Leevarapakul(7)............................ 48 Senior Vice President, Corporate Finance Department
No. 1, Industrial Finance Corporation of Thailand
Chamni Janchai...................................... 42 Vice-Chairman of the Board of Directors of NSM
Sunthorn Chailaemlak................................ 56 Senior Deputy Managing Director of NTS Steel Group
(Plc.) Co., Ltd.
Chan Bulakul........................................ 49 President of MCL Co., Ltd.
Anutin Charnvirakul................................. 32 President of Sino-Thai Engineering & Construction
Public Co. Ltd.
Pattama Horrungruang................................ 36 Deputy Managing Director of N.T.S. Steel Group
(Plc.) Co., Ltd.
Chatchai Somsiri.................................... 42 Head of Faculty, Metal Engineering Department,
Chulalongkorn University
Raveewan Peyayopanakul(8)........................... 50 Assistant Professor, Faculty of Business and
Accounting, Thammasert University
Sandeep Alva........................................ 37 President of Hancock Mezzanine Investments
</TABLE>
- ------------------------
(1) Mr. Sawasdi Horrungruang was nominated by the Thai Parties pursuant to the
Shareholders' Agreement.
(2) Mr. Busse will be nominated by the Management Investors pursuant to the
Shareholders' Agreement.
(3) Mr. Schultes was nominated by the Management Investors pursuant to the
Shareholders' Agreement.
(4) Mr. Stickler was nominated by the Management Investors pursuant to the
Shareholders' Agreement.
(5) Mr. McConville was nominated by the Management Investors pursuant to the
Shareholders' Agreement.
(6) Mr. Perin was nominated as an independent director pursuant to the
Shareholders' Agreement.
(7) Mrs. Amonrat was nominated by the lenders under the Bank Credit Facility in
accordance with its terms.
(8) Ms. Raveewan was nominated as an independent director pursuant to the
Shareholders' Agreement.
(9) Mr. Alva was nominated by the holders of the Debentures.
SAWASDI HORRUNGRUANG (56)--Mr. Horrungruang has been Chairman of the Board
of Directors of NSM since its incorporation. Mr. Horrungruang is also Chairman
of the Executive Board of N.T.S. Steel Group (Plc.) Co., Ltd. and Chairman of
the Board of Sriracha Harbour (Plc.) Co., Ltd. He also serves as Vice Chairman
of the Board of Hemraj Land and Development (Plc.) Co., Ltd., Executive Director
of Thai Hong Kong Real Estate Co., Ltd., Executive Director of Ban Chang Group
(Plc.) Co., Ltd., Executive Director of Suntech Group (Plc.) Co., Ltd.,
Executive Director of Bangkok Expressway (Plc.) Co., Ltd., and as Chairman of
the Thai Industrial Estate Association. Mr. Horrungruang is a Senator in the
National Assembly and Vice-Chairman of Thailand's Committee for Industry.
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<PAGE>
KEITH BUSSE (52)--Mr. Busse is President and CEO of Steel Dynamics, Inc. and
a Director of Qualitech Steel Corporation.
JOHN SCHULTES (49)--Mr. Schultes is President and CEO of NSM; a Director of
NSM Cayman and a Director of NSM (Del).
DAVID L. STICKLER (37)--Mr. Stickler is a Managing Director of McDonald &
Company Securities, Inc. and a Director of Qualitech Steel Corporation.
KEVIN MCCONVILLE (40)--Mr. McConville is a Vice President of Enron Capital
and Trade Resources Corp. and a Director of Qualitech Steel Corporation.
REUBEN L. PERIN (58)--Mr. Perin retired in 1997 from his post as Executive
Vice President of U.S. Steel after over 30 years of commercial and operations
management and as Chairman of the Products Applications Committee of the
International Iron & Steel Institute in Brussels, Belgium.
AMORNRAT LEEVARAPAKUL (48)--Mrs. Leeverapakul is a Senior Vice President of
the Corporate Finance Department No. 1 at the Industrial Finance Corporation of
Thailand. Mrs. Leevarapakul also serves as a director of N.T.S. Steel Group
(Plc) Co., Ltd., Patra Porcelain Co., Ltd., Jibuhin [Thailand] Co., Ltd. and
Prachin Traffic Products Co., Ltd.
CHAMNI JANCHAI (42)--Mr. Janchai is Chairman of the Executive Board of
Sriracha Harbour (Plc.) Co., Ltd., Director and Senior Vice Managing Director of
Administration N.T.S. Steel Group (Plc.) Co., Ltd., Executive Director of
Management and Finance, Suntech Group (Plc.) Co., Ltd., and Director of Thai
Theparos Food (Plc.) Co., Ltd.
SUNTHORN CHAILAEMLAK (56)--Mr. Chaelaemlak is Executive Director of
Nakornthai Steel Work Co., Ltd. Mr. Chailaemlak also serves as Director and
Senior Deputy Managing Director of N.T.S. Steel Group (Plc.) Co., Ltd. and as a
Director of Sriracha Harbour (Plc.) Co., Ltd. and as a Director of Metal Star
Company Limited.
CHAN BULAKUL (49)--Mr. Bulakul is President of MCL Co., Ltd. and Chairman of
MCL Research, Ltd. and MCL Management Services, Ltd.
ANUTIN CHARNVIRAKUL (32)--Mr. Charnvirakul is President of Sino-Thai
Engineering & Construction Public Co. Ltd.
PATTAMA HORRUNGRUANG (36)--Ms. Horrungruang is a Director and Deputy
Managing Director of N.T.S. Steel Group (Plc.) Co., Ltd.
CHATCHAI SOMSIRI (42)--Mr. Somsiri was a lecturer of the Faculty of
Engineering's Metal Engineering Department, Chulalongkorn University from 1979
to 1995 and is currently Head of the Metal Engineering Faculty at Chulalongkorn
University.
RAVEEWAN PEYAYOPANAKUL (50)--Ms. Peyayopanakul is an Assistant Professor at
the Faculty of Business and Accounting, Thammasart University. Ms. Peyayopanakul
serves as an independent director of N.T.S. Steel Group (Plc.)
SANDEEP ALVA (37)--Mr. Alva is a President of Hancock Mezzanine Investments
and a senior investment officer of John Hancock Mutual Life Insurance Company.
No family relationship exists between any of the executive officers and
directors, with the exception that Mr. Sawasdi Horrungruang is an uncle of Ms.
Pattama Horrungruang.
EXECUTIVE MANAGEMENT
The Company's management team is comprised of highly experienced and
internationally recognized professionals many of whom have been involved with
NSM since the commencement of the construction phase of the Mill. In addition to
the persons listed, 30 expatriate professionals are employed by NSM and work
together with a team of carefully selected and highly trained Thai
professionals, supervisors and
85
<PAGE>
hourly employees in operations, maintenance, marketing and sales, engineering,
accounting and human resources activities.
JOHN W. SCHULTES (49)--President and Chief Executive Officer of NSM. Mr.
Schultes has over twenty-five years of experience in the engineering and
equipment design fields. Mr. Schultes was with Andritz-Ruthner, an Austrian
equipment and technology firm, as Design Engineer from 1975 until 1980 in
Vienna, Austria. Mr. Schultes moved to Pittsburgh, PA in 1980 and became
Technical Director of Joint Ventures from 1980 until 1981; Manager, Chemical
Plants from 1981-1984; and Director of Engineering from 1984 until 1986. In
1986, Mr. Schultes joined U.S. Steel and from 1986 to 1992, Mr. Schultes served
as Chief Development Engineer--Sheet, Strip and Tin Products, and as Project
Manager of the U.S. Steel Mini-Mill Study Team from 1992 to 1995. Mr. Schultes
has been working at NSM since October 1995.
WIKROM VAJRAGUPTA (44), Executive Vice President. Mr. Vajragupta has 20
years experience in the steel industry including time as metallurgist and
operations manager of an EAF bar mill, and as an adviser to Thai Tinplate
Manufacturing Co., a Kawasaki Steel affiliate. Mr. Vajragupta also served as
Assistant Professor of the Department of Metallurgical Engineering at
Chulalongkorn University, Bangkok. He has also been an advisor to the Thai
government and a member of the Thailand National Committee for the Southeast
Asian Iron and Steel Institute. Mr. Vajragupta has been working at NSM since
January 1994.
WOLFGANG LANDT (58), Manager of DRI, Steelmaking and Casting. Mr. Landt has
over 30 years experience in steelmaking, casting, general management and
international consulting, including extensive integrated steel making and
mini-mill steel making experience. Mr. Landt spent 6 years as General Manager of
Thyssen Hattingen, a German integrated steel mill, where he chaired Thyssen's
Corporate Continuous Casting Committee which developed the CSP thin-slab mold
concept. Mr. Landt has been working at NSM since June 1996.
ROGER BROWN (58), Manager of Hot Rolling and Finishing. Mr. Brown has 30
years experience as Superintendent of Armco Steel Ashland Work's hot mill, cold
mill and finishing operations. He was also the Armco Representative on the
Association of Iron & Steel Engineer's Rolling and Finishing Division. For 4
years he was Site Manager for SMS at Essar Steel, India with responsibility for
implementation and start-up of a new hot strip mill. Mr. Brown has been working
at NSM since October 1996.
KANOKPONG LAOHAJINDA (44), Manager, Finishing Facilities. Mr. Laohajinda has
14 years experience in engineering, maintenance and operations management at
Thai Tinplate Manufacturing Co., a Kawasaki Steel affiliate. Mr. Laohajinda has
been working at NSM since April 1995.
WILLIAM L. HOSICK (60), Manager Commercial. Mr. Hosick has over 30 years
experience in the steel industry with Armco Steel, U.S. Steel and UEC, the
consultancy group of USX Corporation. His experiences include research and
development, purchasing, corporate planning, management, international
consulting, and market, product and process assessment for flat-rolled steel
producers in developing countries. Mr. Hosick has been working at NSM since
September 1996.
HANS H. HARTMANN (61), Manager Technical Services and Continuous
Improvement. Mr. Hartmann has over 30 years of experience with SMS including
extensive experience in steel mill equipment design, project management,
implementation and start-up activities. Mr. Hartmann holds numerous patents and
has extensive knowledge in steel mill equipment design, continuous casting, hot
rolling and steel mill controls. Mr. Hartmann has been working at NSM since
February 1996.
GARY HEASLEY (33), Vice President and Chief Financial Officer, Certified
Public Accountant. Mr. Heasley has 10 years experience in the accounting,
finance and management sectors, including experience at Ernst & Young LLP and
McDonald & Company Securities, Inc. Mr. Heasley became an employee of NSM
subsequent to the Offerings.
SERGE DELISLE (38), Manager of Computer Systems and Accounting. Mr. Delisle
has 15 years experience with CGI, a Canadian management consulting firm. As Vice
President of SPC, the U.S. subsidiary of CGI, Mr. Delisle had responsibility for
development, sales and implementation of the most widely used
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<PAGE>
integrated business system used by flat-rolled mini-mills, including Hylsa and
SDI. Mr. Delisle has been working at NSM since April 1996.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The amount of compensation paid by NSM to its directors and executive
officers for the fiscal year ended December 31, 1997 and 1996 was 23,965,957
Baht and 18,705,600 Baht, respectively.
Compensation paid for the fiscal year ended December 31, 1997, was as follows
(figures in Baht)
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------------------------------------
OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION
- --------------------------------------------------------------------------- --------- ------------ --------- ------------------
<S> <C> <C> <C> <C>
Mr. Sawasdi Horrungruang................................................... 1997 3,000,000 -- 1,317,980(1)
-Chairman
Mr. Chamni Janchai......................................................... 1997 3,600,000 -- 1,506,020(2)
-Vice Chairman
Mr. Wikrom Vajragupta...................................................... 1997 3,240,000 -- 20,000(3)
-Executive Vice President
Mr. John W. Schultes....................................................... 1997 6,000,000 -- 3,133,555(4)
-President and CEO
Mr. William L. Hosick...................................................... 1997 5,445,911 -- 3,843,961(5)
-Commercial Manager
Mr. Serge Delisle.......................................................... 1997 6,664,506 -- 2,052,364(6)
-Manager of Computer Systems and Accounting
</TABLE>
- --------------------------
Note
(1) Tax gross up by NSM of 1,297,980 Baht and Board meeting remuneration of
20,000 Baht.
(2) Tax gross up by NSM of 1,486,020 Baht and Board meeting remuneration of
20,000 Baht.
(3) Board meeting remuneration of 20,000 Baht.
(4) Amount paid for housing of 1,218,826 Baht, tuition fee for children of
650,100 Baht, air fare of 355,060 Baht, insurance premium of 156,658 Baht,
relocation expenses of 153,739 Baht and tax gross up for housing by NSM of
599,171 Baht.
(5) Amount paid for housing of 922,986 Baht, air fare of 314,389 Baht, tax gross
up for housing by NSM of 467,158 Baht, insurance premium of 139,427 Baht and
reimbursement for the loss of his USX pension of 2,000,000 Baht.
(6) Amount paid for housing of 944,020 Baht, tuition fee for children of 374,000
Baht, air fare of 130,181 Baht, insurance premium of 124,007 Baht and tax
gross up for housing by NSM of 480,155 Baht.
REMUNERATION OF DIRECTORS
Unless renounced by any directors, directors of NSM receive remuneration of
20,000 Baht for each meeting of the board of directors of NSM that they attend.
EMPLOYMENT AGREEMENTS
The employment agreements of Wikrom Vajragupta and Kanokpong Laohajinda were
initially in the forms of letters of appointment. Under these letters of
appointment each of them went through a 120-day probation period. Upon
satisfactory completion of such probation, NSM issued letters of confirmation of
employment.
Mr. Vajragupta and Laohajirda may not: (i) engage in acts which may deter
NSM's progress or adversely affect NSM's business or reputation; (ii) work or
hold any position in any organization of suppliers, customers or competitors of
NSM nor accept any compensation therefrom; (iii) disclose any confidential
information, methods, processes or techniques related to the business of NSM or
any of its affiliates; or (iv) retain any copies or reproductions of documents
relating to the affairs of NSM or its affiliates, or any property of NSM, upon
their termination.
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<PAGE>
Under the New Employment Agreement, Mr. Schultes will receive a base salary
of U.S.$240,000 per annum with increases of 5% per annum (calculated on a
cumulative, compounded basis) during the 8-year term of the New Employment
Agreement. At the discretion of Management Co., Mr. Schultes will also be
eligible for an annual bonus based on the Company's return on equity,
profitability, operating efficiency and adherence to capital expenditure budgets
and construction timetables. It is also the Company's intention, based on
Management Co.'s decision to institute a share option plan within twelve months
of the Offerings, to grant Mr. Schultes options to acquire shares in NSM in
amount such that upon the expiration of the term of his employment such options
can reasonably be expected to produce a U.S.$2 million gain. The New Agreement
will contain provisions limiting Mr. Schultes' ability to compete against NSM
should he no longer be employed by the Company. Under these provisions, Mr.
Schultes will be restricted in his activities with regard to DRI throughout the
world and with regard to flat-rolled steel production in the countries that
currently make up the ASEAN [update].
Mr. Delisle's employment agreement provides that NSM will pay Mr. Delisle a
monthly salary of Baht 520,000. If NSM terminates the agreement within the first
2 years, NSM will pay the full salary of the initial 3 years. Thereafter, if NSM
terminates the agreement NSM will pay one year of salary. An annual review of
performance and compensation will be conducted. Additionally, NSM agrees to
provide a car and a driver for business use and certain other benefits to Mr.
Delisle, his wife and his children. This employment agreement runs until March
31, 2001 and will be renewed automatically unless there has been notification at
least one year prior to the agreement's expiration. Each party will provide the
other with at least 6 months prior written notice of termination.
Mr. Hosick's employment agreement provides that NSM will pay Mr. Hosick a
monthly salary of Baht 425,000, with a severance payment of 2 months if NSM
terminates the agreement prior to the expiration date. An additional quarterly
payment of Baht 500,000 will be made for 3 years (12 payments) to reimburse Mr.
Hosick for the loss in his USX pension as a result of accepting an early
retirement. Additionally, NSM agrees to provide a car and a driver for business
use and certain other benefits to Mr. Hosick and his wife. This employment
agreement runs until September 15, 2001. Each party will provide the other with
at least 6 months prior written notice of termination.
EMPLOYEE COMPENSATION
NSM has established certain incentive compensation programs for its
employees that are designed to encourage productivity by paying bonuses to
groups of employees, based on various measures of productivity. These programs
are patterned after incentive programs in place at SDI. The programs are
designed to reward employees for productivity, quality and efficiency efforts.
It is not unusual for a significant amount of an employee's total compensation
to consist of such bonuses.
Productivity is measured by focusing on groups of employees and not
individual performance. Three groups of employees participate in the bonus
program: production, administrative and department managers. Each group of
employees has its own bonus program or programs.
Production employees, consisting of those directly involved in the melting,
casting and rolling processes, are eligible to participate in two cash bonus
programs: the production bonus and the profit sharing bonus. The production
bonus, if any, is based upon the quantity of quality product produced each week.
The amount of the production bonus is determined for and allocated to each shift
of employees. Depending upon the amount of quality product produced, the bonus
may be equal to or greater than the base hourly wage paid to an employee. A
profit sharing bonus is determined and paid to production employees on an annual
basis based on the Company's profits.
NSM has also established a cash bonus plan for administrative employees,
including accountants, engineers, secretaries, accounting clerks and
receptionists. Bonuses under the plan are based upon the Company's return on
assets and on Company profitability.
NSM's managerial employees are compensated based on return on assets and
profit sharing.
Additionally, the Company will invest a portion of its yearly profits in a
Company sponsored employee savings plan. These programs are intended to
encourage employees to be efficient in the performance of their jobs and to
assist the Company in developing and retaining a loyal, enthusiastic workforce.
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<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth after giving effect to the issuance and
exercise of the Warrants and the SDI Warrants, the number of ordinary shares of
NSM to be held by (i) those persons who own(1) more than 10% of NSM's ordinary
shares and (ii) those persons who are NSM's directors and executive officers.
<TABLE>
<CAPTION>
PERCENTAGE OF
SHAREHOLDER'S NAME ORDINARY SHARES TOTAL ISSUED
- ---------------------------------------------------------------------------------- --------------- ---------------
<S> <C> <C>
N.T.S. Steel Group (Plc.) Co., Ltd................................................ 225,000,000 26.2%
Thailand Securities Depository Center Co., Ltd.................................... 51,358,879 6.0
Sawasdi Horrungruang(2)........................................................... 228,707,000 26.6
Steel Dynamics, Inc.(3)........................................................... 85,889,570 10.0
Keith Busse(4).................................................................... 85,889,570 10.0
John Schultes..................................................................... 80,000 *
McDonald & Company Securities, Inc.(5)............................................ 20,084,344 2.3
David Stickler(6)................................................................. 20,084,344 2.3
Enron Capital Trade Resources(7).................................................. 51,913,882 6.0
Kevin McConville(8)............................................................... 51,913,882 6.0
Chamni Janchai.................................................................... 1,000,000 *
Sunthorn Chailaemlak.............................................................. 1,000,000 *
Chan Bulakul...................................................................... 24,000,000 2.8
Anutin Charnvirakul(9)............................................................ 10,000,000 1.2
Amornrat Leevarapukul(10)......................................................... 3,905,504 *
Sandeep Alva(11).................................................................. 27,551,239 3.2
Directors and executive officers as a group................................... 454,131,539 52.1%
</TABLE>
- ------------------------
* Less than 1%
(1) As used herein, the term beneficial ownership with respect to a security is
defined by Rule 13d-3 under the Exchange Act as consisting of sole or shared
voting power (including the power to vote or director the vote) and/or sole
or shared investment power (including the power to dispose or direct the
disposition) with respect to the security through any contract, arrangement,
understanding, relationship, or otherwise, including a right to acquire such
power(s) during the next 60 days. Unless otherwise noted, beneficial
ownership by the persons above consists of sole ownership, voting, and
investment power with respect to all Ordinary Shares shown as beneficially
owned by them.
(2) Mr. Horrungruang is Chairman of the Executive Board of N.T.S. Steel Group
(Plc.) Co., Ltd., which owns 225,000,000 Ordinary Shares. Mr. Horrungruang
disclaims beneficial ownership of such shares.
(3) Steel Dynamics, Inc. owns 74,468,090 Ordinary Shares as of the closing of
the Offerings (representing a 8.8% interest in NSM after giving effect to
the issuance and exercise of the Warrants but excluding the issuance and
exercise of the SDI Warrants). In addition to the 74,468,090 Ordinary Shares
acquired by Steel Dynamics, Inc. as part of the Management Equity
Investment, SDI will be issued the 11,421,480 SDI Warrants, each to purchase
one Ordinary Share of NSM. The SDI Warrants will allow Steel Dynamics, Inc.
to exercise such warrants in order to protect its equity investment from
dilution in the event holders of the Warrants exercise such Warrants.
(4) Mr. Busse is President and CEO of Steel Dynamics, Inc., which owns
74,468,090 Ordinary Shares and 11,421,480 SDI Warrants. Mr. Busse disclaims
beneficial ownership of such Ordinary Shares and SDI Warrants.
(5) McDonald & Company Securities, Inc., or its affiliate acquired 3,667,750
newly issued Ordinary Shares as part of the Management Equity Investment
which has been subsequently transferred to an
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<PAGE>
investor of Private Placement Shares and acquired 20,084,344 Ordinary Shares
in a privately negotiated transaction in the secondary market for the
Ordinary Shares. As a result, after giving effect to the Equity Investments,
McDonald owns an aggregate of 20,084,344 Ordinary Shares (representing a
2.2% interest in NSM after giving effect to the issuance of Warrants).
(6) Mr. Stickler is a Managing Director of McDonald & Company Securities, Inc.,
which directly owns or is affiliated with an owner of 20,084,344 Ordinary
Shares. Mr. Stickler disclaims beneficial ownership of such shares.
(7) Enron Capital & Trade Resources or its affiliate acquired 16,086,844
Ordinary Shares from the Company as part of the Management Equity Investment
and 10,911,382 Ordinary Shares as part of the offering and sale of the
Private Placement Shares. Enron also acquired 24,915,656 Ordinary Shares in
a privately negotiated transaction in the secondary market for the Ordinary
Shares. Enron will acquire 7,438,839 Warrants as a result of its acquisition
of Units. As a result, Enron owns an aggregate of 51,913,882 Ordinary Shares
and 7,361,543 Warrants.
(8) Mr. McConville is Vice President of Enron Capital Trade Resources, which
directly owns or is affiliated with an owner of 51,913,882 Ordinary Shares,
and 7,361,543 Warrants. Mr. McConville disclaims beneficial ownership of
such shares and Warrants.
(9) Mr. Charnvirakul is President of Sino-Thai Engineering & Construction Public
Co. Ltd, which owns 10,000,000 Ordinary Shares. Mr. Charnvirakul disclaims
beneficial ownership of such shares.
(10) Mrs. Leevarapakul is a Senior Vice President at the Industrial Finance
Corp. of Thailand, which owns 3,905,504 Ordinary Shares. Mrs. Leevarapakul
disclaims beneficial ownership of such shares.
(11) Mr. Alva is a Senior Investment Officer at John Hancock Mutual Life
Insurance Company, which owns 27,551,239 Ordinary Shares. Mr. Alva disclaims
beneficial ownership of such shares.
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RELATED PARTY TRANSACTIONS
NO DIRECTOR, OFFICER, PRINCIPAL SHAREHOLDER OR OTHER INSIDER, OR ANY
ASSOCIATE OR AFFILIATE OF SUCH PERSONS HAS OR HAD ANY MATERIAL INTEREST, DIRECT
OR INDIRECT, IN ANY TRANSACTION OR PROPOSED TRANSACTION THAT HAS MATERIALLY
AFFECTED OR WILL MATERIALLY AFFECT THE COMPANY, EXCEPT AS OTHERWISE DISCLOSED
HEREIN AND EXCEPT AS DESCRIBED BELOW:
DESCRIPTION OF TRANSACTIONS INVOLVING NSM AND ITS AFFILIATES
The Company engaged in a series of related party transactions in which it
used money deposited at various Thai financial institutions to set-off the debts
owed by affiliated companies to those same financial institutions. These
transactions are described below. The Company's deposits were in the form of
purchases of promissory notes issued by the financial institutions. The Company
pledged, and/or transferred its right to receive deposits on, the promissory
notes back to the financial institutions to secure the debts of the affiliated
companies. Later, the Company agreed to allow the financial institutions to
set-off the promissory notes against the debts of the affiliated companies.
These transactions resulted in the financial institutions taking the money NSM
had on deposit and NSM accepting the obligations of its affiliated companies.
The activities of these finance companies were suspended in June and August of
1997 by order of the Ministry of Finance and closed down on December 8, 1997.
This order was not directed at these specific transactions, but rather reflected
macro-economic issues in Thailand. The Ministry of Finance ordered that all
promissory notes issued by these finance companies would have to be exchanged
for obligations of Krung Thai Bank Public Company Limited or Krung Thai Thanakit
Finance and Securities Public Company Limited. Furthermore, the Ministry of
Finance ordered that repayment on promissory notes of the finance companies of
over 10 million Baht would be delayed for five years.
Rather than continue to hold illiquid and the potentially uncollectible
promissory notes, in a series of transactions starting in September 1997, the
Company has to date transferred, pledged or secured amounts under these
promissory notes for the benefit of certain affiliates of the company including:
NTS which operates a nearby steel rebar manufacturer plant; Trakkapol Company
Limited ("Trak"); Nakornthai Integrated Steel Company Limited, ("NIS") and Metal
Star Company Limited ("Metal Star") which operate steel re-rolling and
processing plants (Trak, NIS and Metal Star are collectively referred to herein
as the "Affiliates"). NTS has used these promissory notes to set-off loans it
owes to various finance companies. In turn, NTS has agreed to repay NSM for the
value of the set-off, plus interest within 3 years. A finance company owed money
by the Affilates is similarly attempting to set-off their debts. NSM is
challenging the ability of this finance company to set-off the Affiliates' debts
against promissory notes owned by NSM.
The transaction between NSM and NTS was approved by the Extraordinary
Meeting of NSM Shareholders No. 1/2450 held on October 22, 1997. As a result:
(a) the obligation of NTS to NSM is payable prior to the five year maturity of
the finance company promissory notes, (b) NSM has the ability to negotiate with
NTS regarding repayment, whereas repayment from the closed finance companies is
subject to the government liquidation of those finance companies, and (c) NTS
has the ability to pay interest and principal to NSM through cash, steel
deliveries and water deliveries from NTS's reservoir. NSM intends to exchange
the promissory notes issued by the Affiliates' creditor for obligations of Krung
Thai Bank Public Company Limited.
The status of these transactions is unclear due to the December 8, 1997
closure of these financial institutions by the Ministry of Finance. See "Annex
A--Kingdom of Thailand." Under the Audited Financial Statements of the Company,
these obligations of affiliated companies have been fully reserved as
uncollectible debts. Although the Company does not expect to recover on these
obligations, it reserves its right to do so in the future.
The Company used approximately 535,518,313 Baht worth of promissory notes in
a series of related party transactions. On December 27, 1996, the Company
purchased a promissory note from Thai Financial
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Trust Public Company Limited ("TFT") in the amount of 60,000,000 Baht. On March
26, 1997, the Company purchased a promissory note in the amount of 150,000,000
Baht from the Pacific Finance & Securities Public Company Limited ("Pacific").
This note was due on June 26, 1997 and was replaced on December 1, 1997 with
another 150,000,000 Baht promissory note. On August 8, 1996, the Company
purchased a promissory note worth 190,000,000 Baht from the Cathay Finance &
Securities Public Company Limited ("Cathay"). On September 26, 1996, NSM
purchased two promissory notes from the Finance One Public Company Limited worth
an aggregate of 100,000,000 Baht ("Fin-One"). Additionally, the Company owns
three promissory notes in the amount of 224,008,706.83 Baht issued by the Thai
Rung Reung Finance & Securities Company Limited ("Thai Rung").
The Company used the principal amount and interest on the promissory notes
of TFT, Cathay and Fin-One Pacific to set-off debts owed by NTS. In Letters of
Consent dated November 19, 1997, NSM agreed to use the TFT promissory notes to
set-off debts owed by NTS to TFT. Including interest, this set-off was valued at
67,158,920.54 Baht. On March 26, 1997, NSM agreed to use the promissory note
issued by Pacific to secure the debts of NTS. Including interest, this set-off
was valued at $161,468,568 Baht. On August 8, 1996, NSM pledged its Cathay
promissory notes as security for the debts owed by NTS to Cathay. On October 29,
1997, NSM issued a letter to Cathay stating its intention to use the Cathay
promissory notes to repay the debts owed by NTS to Cathay. Including interest,
this set-off was valued at 201,161,029.45 Baht. On September 26, 1996, NSM
pledged its Fin-One promissory notes as security for the debts owed by NTS to
Fin-One. NSM also entered into a separate Pledge Agreement on the same day. This
Pledge Agreement made NSM liable for the full amount of debts owed by NTS to
Fin-One. However, this agreement was superseded by a Letter of Consent dated
November 13, 1997 under which NSM agreed to use its Fin-One promissory notes to
set-off the debt owed by NTS to Fin-One. Including interest, this set-off was
valued at 105,729,794.50. NSM is no longer liable for the full debt owed by NTS
to Fin-One.
Excluding interest, NTS had debts of approximately: 260,000,000 Baht to TFT;
163,000,000 Baht to Pacific; 190,000,000 Baht to Cathay; and 100,000,000 Baht to
Fin-One.
NSM agreed to use its promissory notes to set-off 500,000,000 Baht worth
(excluding interest) of NTS's debt. So far, NSM has set-off approximately
535,518,313 Baht worth of NTS's debts including accrued interest. NTS agreed to
repay NSM for the value of the set-offs within 3 years at an interest rate of
14.8% per annum. The loan may be repaid in a combination of cash, steel
deliveries to NSM and/or NSM's use of water from NTS's reservoir. The Company
may extend the repayment period of the loan. These transactions were approved by
the NSM Extraordinary Meeting of NSM Shareholders No. 1/2540 held on October 22,
1997.
Without giving effect to the Transactions, NTS owns 31.31% of the Company's
total issued shares. Mr. Sawasdi Horrungruang, the Chairman of the Board of
Directors of NSM, owns 15.44% of NTS and is Chairman of the Executive Board of
Directors of NTS. Ms. Siriporn Horrungruang, a sister of Mr. Sawasdi
Horrungruang, owns 8.16% of NTS. Mr. Sawasdi Horrungruang is executor of the
estate of his late brother, Mr. Sawai Horrungruang, which owns 7.46% of NTS.
Additionally, Mr. Sawasdi Horrungruang, Ms. Raveewan Peyayopanakul, Mr. Sunthorn
Chailaemluk, Mr. Chamni Janchai and Ms. Pattama Horrungruang were members of
both the NSM and NTS boards of directors at the time of the transactions
described above.
On March 10, 1997, NSM agreed to use two promissory notes worth, in
aggregate, 210,572,125.78 Baht, from Thai Rung, to secure the obligations of the
following debtors: Trak, NIS and Metal Star. Metal Star and NIS are affiliated
companies of NSM. NSM agreed to secure the debts owed by Trak, NIS and Metal
Star in the amount of 60,000,000 Baht, 70,000,000 Baht and 70,000,000 Baht,
respectively. On October 17, 1997, Thai Rung informed NSM that it would exercise
its rights to set-off these debts because the debtors were in default. Thai Rung
consolidated NSM's promissory notes into one note on October 17, 1997. On
October 28, 1997, NSM requested that this option be delayed until NSM
shareholders resolutions concerning the set-offs were passed. The NSM
shareholders did not approve the Thai Rung set-off. Thai
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Rung subsequently verbally informed NSM that the set-off had already been made.
NSM is considering its options in this matter. It is likely that the outcome of
this transaction will be determined by the FRA.
The Company also made a loan to Metal Star in January 1997 for the amount of
approximately 350,000,000 Baht. This loan matured on December 31, 1997. The rate
of interest on the loan to Metal Star is 16% per annum. This transaction was
approved and ratified by the Extraordinary Meeting of Shareholders No. 1/2540
held on October 22, 1997.
The estate of Mr. Sawai Horrungruang owns 25% of NIS. Mr. Sawai Horrungruang
was a brother of Mr. Sawasdi Horrungruang. Mr. Sawasdi Horrungruang is an
executor of Mr. Sawai Horrungruang's estate. Mr. Sunthorn Chailamlak, a director
of NSM, NTS and Metal Star, owns 25% of NIS. Mr. Sawasdi Horrungruang owns 20%
of NIS. Mr. Sakda Horrungruang, a brother of Mr. Sawasdi Horrungruang, owns 5%
of NIS.
Mr. Sunthorn Chailaemlak, a director of NSM and NTS, owns 30% of Metal Star.
Mr. Sakda Horrungruang, a brother of Mr. Sawasdi Horrungruang, owns 30% of Metal
Star. Mr. Suraphol Jirabut, a brother-in-law of Mr. Sawasdi Horrungruang, owns
19.6% of Metal Star. Mr. Chaiyapol Horrungruang, a nephew of Mr. Sawasdi
Horrungruang owns 8% of Metal Star. Ms. Nuchanart Horrungruang, a niece of Mr.
Sawasdi Horrungruang, owns 6% of Metal Star. Mr. Pravit Horrungruang, a nephew
of Mr. Sawasdi Horrungruang, owns 6% of Metal Star.
The only connection between NSM and Trak is that the wife of one of Mr.
Sawasdi Horrungruang's nephews, Mrs. Siriwan Horrungruang, is on the Trak board
of directors. Thai Rung requested that NSM guarantee Trak's debts. NSM agreed to
guarantee Trak's debts as it did not want to jeopardize its ongoing relationship
with Thai Rung.
The Company has entered into a commercial assistance agreement with Mr.
Reuben L. Perin. Under the terms of the agreement, Mr. Perin will be paid
U.S.$6,000 per month plus expenses. Mr. Perin will spend at least four days each
month assisting the Company in all aspects of sales, marketing and international
trade issues. Mr. Perin has been named a director of NSM.
In addition, Mr. Sawasdi Horrungruang and Mr. Chamni Janchai provided
personal guarantees for interim financing from First-Bangkok City Bank to NSM.
The Company used proceeds from the Offerings to repay the lenders of these loans
and the lenders have released the guarantees provided by Mr. Horrungruang and
Mr. Janchai. The amount of the financing is approximately 400 million Baht. See
"Description of Certain Indebtedness--Interim Financing."
DESCRIPTION OF OTHER TRANSACTIONS
The Company entered into a credit agreement with the Industrial Finance
Corporation of Thailand ("IFCT") for financing in the amount of U.S.$10 million.
Under the agreement, Mr. Sawasdi Horrungruang and Mr. Chamni Janchai provided
personal guarantees for the credit to NSM. NSM used a portion of the proceeds of
the Offerings and Debenture Offering to repay money under the IFCT financing.
The IFCT released Mr. Horrungruang and Mr. Janchai from their liabilities under
their guarantees.
NSM has entered into various agreements with SDI, Enron, and McDonald. SDI
is a Management Investor and received 10% of the outstanding shares on a fully
diluted basis of the Company in return for licensing certain rights to NSM
pursuant to the SDI Agreement. SDI received this percentage through a
combination of Ordinary Shares and the SDI Warrants. The exercise price of the
SDI Warrants will be reimbursed by the Company upon the exercise of the SDI
Warrants. Enron acquired 16,086,844 Ordinary Shares from the Company as part of
the Management Equity Investment and 10,911,382 as part of the offering and sale
of the Private Placement Shares. In addition, Enron acquired 24,918,656 Ordinary
Shares and McDonald acquired 20,084,344 Ordinary Shares, in a privately
negotiated transaction in the secondary market for Ordinary Shares. The sellers
included relatives of Mr. Sawasdi Horrungruang, the Chairman of NSM. Enron has
agreed to work with NSM to obtain all funds (in addition to the U.S.$20 million
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subordinated financing it has committed to date) necessary to complete
construction of the Co-Gen Facility. ECT Securities Corp., an affiliate of
Enron, is a co-manager of the Offering. McDonald is a Management Investor and is
providing investment banking services to NSM. McDonald is also a co-manager of
the Offerings.
In addition to related party transactions involving NSM, SDI, Enron,
McDonald and Mr. Stickler have previously entered into transactions with each
other. Enron is a lender to SDI and Enron and SDI are each investors in
Qualitech Steel Corporation, a U.S.-based minimill and DRI producer. McDonald
and Mr. Stickler are both investors in SDI and Qualitech Steel Corporation.
McDonald has previously and is currently providing investment banking services
to SDI. In satisfaction of fees due for advisory and underwriting services
provided to the Company, McDonald received approximately U.S.$18 million from
the proceeds of the Transactions.
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DESCRIPTION OF CERTAIN INDEBTEDNESS
The following is a brief description of the basic terms of the Company's
Bank Credit Facility and other Indebtedness. The following discussion does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to the instruments governing the indebtedness.
THE BANK CREDIT FACILITY
The Bank Credit Facility provides for (i) a U.S.$308 million term loan
facility (the "U.S.$ Facility") and (ii) a 3.3 billion Baht term loan facility
(the "Baht Facility") (collectively, the "Facilities"). As of December 8, 1997,
U.S.$1.186 million is held as a reserve in case the Deutsche Mark appreciates
compared to the U.S.$.
Interest under the Bank Credit Facility is payable quarterly, on March 1,
June 1, September 1, and December 1 of each year, in arrears at the rate of
either LIBOR plus 2.5 percent per annum or SIBOR plus 2.5 percent per annum for
the U.S.$ Facility and the lower of MLR (Minimum Lender Rate) plus one-half
(0.5) percent per annum or MRR (Minimum Retail Rate) for the Baht Facility.
Payments of principal under the Bank Credit Facility are to be made in 12
semi-annual installments and, in any event, the last repayment shall be made
before the maturity of the Notes and Debentures. Thus, the 12th installment will
be made on the same day as the 11th installment. The first principal repayment
shall be made on the interest payment date which falls four years from the first
drawdown or two years from the commencement of commercial operations of the Hot
Mill, whichever is earlier. The Company used U.S.$50 million from the proceeds
of the Offerings to prepay a portion of the Facilities and U.S.$17 million of
accrued interest payable. Each of the Thai lenders was entitled to prepayment in
accordance with the proportion of (a) loans already advanced by it to the
Company under the Bank Credit Facility and still outstanding to (b) the
aggregate loans already advanced by the Thai lenders to the Company under the
Bank Credit Facility. In connection with any lender who extends the Facilities,
the prepayment shall be used (i) first to settle loans outstanding under the
Baht Facility advanced by such lender and (ii) second, if there is any sum
remaining, to settle loans outstanding under the U.S.$ Facility advanced by such
lender.
On the Issue Date and upon receipt of the prepayment amount plus past due
interest, the Lenders under the Bank Credit Facility released the mortgages and
other security interests on the collateral thereunder and, pursuant to the Bank
Credit Facility and the Security Sharing Agreement, now share equally and
ratably in the Collateral (other than the Offshore Reserve Account and the Notes
DSR Account) with the holders of the Senior Notes and the Senior Subordinated
Notes. See "Security Arrangements--Security Sharing Agreement".
The Lenders also agreed that the holders of the Debentures will share in the
Collateral on a second priority basis.
Pursuant to the Bank Credit Facility, the Company has agreed that, other
than in connection with the enforcement of the security interests granted in the
Collateral, in the event there are insufficient funds available at any time to
make all payments of principal or interest then due under the Bank Credit
Facility and the Notes and the Debentures, the Company will pay 100% of any
interest and 50% of any principal then due under the Bank Credit Facility prior
to paying any interest then due on the Notes and the Debentures. In exchange for
this agreement, the lenders under the Bank Credit Facility have agreed, in such
case that failure to pay the additional 50% (or part thereof) of any scheduled
principal payment due to such lenders will not be a default under the Bank
Credit Facility, and such amount will be paid out pro rata over the then
remaining scheduled principal payments under the Bank Credit Facility. The Bank
Credit Facility also provides that the Company will repay additional principal
each year in an amount equal to 50% of the Company's EBITDA for the immediately
preceeding fiscal year after deducting interest expense, principal payments,
taxation and maintenance capital expenditures, commencing from a fiscal year
after December 31, 1999. For purposes of this provision, "EBITDA" is defined as
earnings before interest expense, taxation, depreciation and amortization.
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The Bank Credit Facility provides for the waiver by the lenders thereunder
of any events of default in connection therewith occurring prior to the Issue
Date.
The Bank Credit Facility contains certain restrictive covenants which impose
restrictions and/or limitations on the operations and activities of the Company
including, among other things: limitations on the payment of dividends in the
years that the Company's obligations have not been fully paid; limitations on
the amendment of the Company's Memorandum or Articles of Association and the
change of the management of the Company and limitations on the execution of
encumbrances (mortgage or otherwise) on, the Company's real property, machinery
or rights, except those that have been made relating to the Offerings, the
Equity Investments and the Working Capital Facility.
WORKING CAPITAL FACILITY
BNP has provided the Company with working capital financing through (i) a
U.S.$150 million offshore revolving receivable discounting facility (the
"Offshore Facility") and (ii) an onshore revolving receivable discounting
facility (the "Onshore Facility" and together with the Offshore Facility, the
"Working Capital Facility") with a U.S.$15 million tranche and a 400 million
Baht tranche. Both the Offshore Facility and the Onshore Facility have final
maturity dates of December 31, 2000.
The Offshore Facility is used to finance offshore receivables generated
through the Company's sales under the Off-Take Agreements. The Onshore Facility
is used to finance domestic sales paid in either Baht or U.S.$.
Advances correspond in amount to accepted receivables, discounted by
reference to LIBOR and the applicable margin. Each advance under the Working
Capital Facility is secured by a guarantee of the underlying receivable from the
relevant offtaker. All amounts payable in respect of such receivables are paid
directly into a collection account maintained with BNP prior to disbursement to
the Revenue Account.
Prior to BNP being obligated to provide funds under the Onshore Facility,
the Company is required to provide evidence that it has requested a Thai bank,
acceptable to BNP, to provide such funding and that such bank declined to do so.
Under the Offshore Facility, BNP will require Preussag's and Klockner's
respective credit quality to meet certain standards in order for receivables
from either of them to qualify as an eligible receivable.
The Working Capital Facility contains certain restrictive covenants which
impose restrictions and/or limitations on the operations and activities of the
Company, including, among other things, compliance with applicable law
limitations on transactions with affiliates, limitations on changes in the
nature of the Company's business, and certain financial reporting requirements.
INTERIM FINANCING
The First Bangkok City Bank provided the Company interim financing in the
form of a letter of credit, a trust receipt, a guaranty and an acceptance or an
aval of notes, in both Thai Baht and foreign currency for the amount of
approximately 400 million Baht (based upon the exchange rate as of October 11,
1997). The credit was granted to finance the Company's purchase of raw
materials. The Company provided The First Bangkok City Bank and the Industrial
Finance Corporation of Thailand with a second mortgage over the land and
buildings comprising the Mill pursuant to Thailand Ex-Im Credit. The mortgage
amount was 600 million Baht with each institution. On the Issue Date, the First
Bangkok City Bank released the mortgage after the Company arranged to deposit an
amount equal to the outstanding amount of the credit and pledge the same with
The First Bangkok City Bank. The Company has also agreed that The First Bangkok
may deduct, hold or set-off the deposit against the Company's obligations
thereunder without further notice.
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Mr. Sawasdi Horrungruang and Mr. Chamni Janchai, two directors of the
Company, who had provided personal guarantees for the financing which guarantees
were released on the Issue Date.
THAILAND EX-IM CREDIT
The Industrial Finance Corporation of Thailand ("IFCT") granted the
Company's application for financing credit for the amount of U.S.$10 million, in
the form of a packing credit pursuant to an agreement dated as of February 13,
1998. The credit has been granted to finance the Company's import and export
activities. The financing period shall not exceed 180 days from the date of each
letter of credit. The interest rate has not been fixed. The Company provided
IFCT, along with the First Bangkok City Bank a second mortgage over the land and
buildings of the Mill. The mortgage amount is 600 million Baht to each
institution.
On the Issue Date, IFCT released the mortgage after, the Company arranged to
deposit the amount equal to the outstanding amount under each letter of credit
with the IFCT of approximately U.S.$2.5 million, and pledge the same, or a bank
acceptable to IFCT to secure the Company's obligation under the credit.
Mr. Sawasdi Horrungruang and Mr. Chamni Janchai, two directors of the
Company, provided personal guarantees which were released on the Issue Date.
Under the agreement, IFCT had levied the following conditions: (i) the
letters of credit to be packed must be made available and must contain
specification on product size, quality, price, volume and definite delivery;
(ii) the products must meet the specifications in the letters of credit before
packing, (iii) the Company must arrange for the issuer of the letter of credit
to confirm that the quality and size of the products meet with the required
specifications and be accepted by the customer (the issuer of a letter of
credit), and (iv) the Company must comply with the terms and conditions of the
export and import credit facilities levied by the Thai Export-Import Bank.
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DESCRIPTION OF NOTES AND GUARANTIES
GENERAL
The New Senior Notes will be issued and the Old Senior Notes were issued
under an indenture, dated as of March 1, 1998 (the "Senior Note Indenture"),
among the Issuers, the Company and The Chase Manhattan Bank, as Trustee (the
"Senior Notes Trustee"). The New Senior Subordinated Notes will be issued and
the Old Senior Subordinated Notes were issued pursuant to an indenture, dated as
of March 1, 1998 (the "Senior Subordinated Note Indenture"), among the Issuers,
the Company and The Chase Manhattan Bank, as Trustee (the "Senior Subordinated
Notes Trustee"). The New Debentures will be issued and the Old Debentures were
issued under an Indenture dated as of March 1, 1998 (the "Debenture Indenture",
and together with the Senior Note Indenture and the Senior Subordinated Note
Indenture the "Indentures"), among the Issuers. The Company and The Chase
Manhattan Bank, as Trustee (the "Debenture Trustee"). The New Senior Notes and
the Old Senior Notes shall be collectively referred to as the "Senior Notes";
the New Senior Subordinated Notes and the Old Senior Subordinated Notes shall be
collectively referred to as the "Senior Subordinated Notes"; and the New
Debentures and the Old Debentures shall be collectively referred to as the
"Debentures." The Senior Notes, the Senior Subordinated Notes and the Debentures
shall be collectively referred to as "Securities." The term "Trustee" shall mean
The Chase Manhattan Bank in its capacity as Senior Notes Trustee, Senior
Subordinated Notes Trustee or Debenture Trustee or all three, as applicable. A
copy of each of the Indentures is available upon request to the Company. The
following is a summary of certain provisions of the Indentures, the Guaranties
and the Securities and does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all the provisions of the Indentures
(including the definitions of certain terms therein and those terms made a part
thereof by the Trust Indenture Act of 1939, as amended), the Guaranties and the
Securities. Capitalized terms used herein and not otherwise defined shall have
the meanings assigned to them in the applicable Indenture.
The Securities will be issued only in fully registered form, without
coupons, in denominations of U.S.$1,000 and any integral multiple of U.S.$1,000
(except in the case of the Debentures which are issued in denominations of
US$1). No service charge will be made for any registration of transfer or
exchange of Securities, but the Issuers may require payment of a sum sufficient
to cover any transfer tax or other similar governmental charge payable in
connection therewith. The Securities may be presented for registration of
transfer and exchange at the offices of the registrar, which initially will be
the Trustee. The Issuers may change any paying agent and registrar without
notice to holders of the Securities.
The principal of, premium, if any, interest on and all other amounts payable
under the Notes will be unconditionally guaranteed by the Company as evidenced
by the Guaranties set forth in the applicable Indenture. See "--Guaranties."
The Securities will be represented by one or more registered notes in global
form and in certain circumstances may be represented by notes in definitive
form. See "Description of the Note Depositary Agreement; Delivery and Form." The
Securities will be transferable, exchangeable and subject to replacement at the
offices of the transfer agents.
TERMS OF NOTES
SENIOR NOTES
The Senior Notes will be secured, senior obligations of the Note Issuers,
limited to U.S.$249 million aggregate principal amount, and will mature on
February 1, 2006. Each Senior Note will bear interest on the aggregate principal
amount at maturity at the rate of 12% per annum from the date of issuance, or
from the most recent date to which interest has been paid or provided for, and
will be payable semi-annually on February 1 and August 1 of each year,
commencing on August 1, 1998, to holders of record at the close of business on
the 15th day of the month immediately preceding the relevant Interest Payment
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Date. The interest rate on the Senior Notes is subject to increase in certain
circumstances. See "Old Registration Rights." Interest will be computed on the
basis of a 360-day year comprised of twelve 30-day months.
SENIOR SUBORDINATED NOTES
The Senior Subordinated Notes will be secured, senior subordinated
obligations of the Note Issuers, limited to U.S.$203.5 million aggregate
principal amount, and will mature on February 1, 2008. Each Senior Subordinated
Note will bear interest on the aggregate principal amount at maturity at a rate
of 12.25% per annum from the date of issuance, or from the most recent date to
which interest has been paid or provided for, and will be payable semi-annually
on February 1 and August 1 of each year, commencing August 1, 2000, to holders
of record at the close of business on the 15th day of the month immediately
preceding the relevant Interest Payment Date. The interest rate on the Senior
Subordinated Notes is subject to increase in certain circumstances. See "Old
Registration Rights." Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
DEBENTURES
The Debentures will be secured, subordinated obligations of the Issuers,
limited to U.S. $53,133,016 million aggregate principal amount, and will mature
on February 1, 2009. Each Debenture will bear interest on the aggregate
principal amount at maturity at the rate of 12 3/4% per annum from the date of
issuance, or from the recent date to which interest has been paid or provided
for, and will be payable semi-annually on February 1 and August 1 of each year,
commencing on August 1, 1998, to holders of record at the close of business on
the 15th day of the month immediately preceding the relevant Interest Payment
Date. The interest rate on the Debentures is subject to increase in certain
circumstances. See "Old Registration Rights." Interest will be computed on the
basis of a 360-day year comprised of twelve 30-day months.
GUARANTIES
Under the Indentures, the Company will irrevocably and unconditionally
guarantee on, (i) in the case of the Senior Guaranty, a senior basis, (ii) in
the case of the Senior Subordinated Notes, a senior (other than in respect of
any Specified Senior Indebtedness of the Company) basis, (iii) and in the case
of the Debentures a subordinated basis the due and punctual payment of the
principal of, premium, if any, and interest on, and all other amounts payable
under, the Securities when and as the same shall become due and payable, whether
on the relevant maturity date, upon acceleration, by call for redemption, upon
repurchase or purchase pursuant to a Change of Control or Asset Disposition or
otherwise. The Company's obligations under the Guaranties are secured by the
Collateral as described under "Security Arrangements." The Company has (i)
agreed that its obligations under the Guaranties will be as principal obligor
and not merely surety, and will be enforceable irrespective of any invalidity,
irregularity or unenforceability of the Securities or the Indentures and (ii)
waived its right to require the Trustee to pursue or exhaust its legal or
equitable remedies against the Issuers prior to exercising its rights under
either of the Guaranties. Each Indenture provides that the applicable Guaranty
will be governed by, and construed in accordance with, the laws of the State of
New York, which laws would not require the Trustee to pursue or exhaust its
legal and equitable remedies against the Issuers prior to exercising their
rights under such Guaranty. There can be no assurance that a Thai court would
give effect to this provision.
The relevant Guaranty will not be discharged with respect to any Security
except by payment in full (or defeasance) in cash of the principal thereof,
premium, if any, and interest thereon and all other amounts payable thereunder.
Moreover, if at any time any amount paid under a Note is rescinded or must
otherwise be restored, the rights of the holders of the Securities under the
applicable Guaranty will be reinstated with respect to such payment.
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SECURITY
The obligations of the Note Issuers under the Securities will be secured by
pledges of the capital stock of NSM (Del). The obligations of the Company under
the Senior Note Guaranty and the Subordinated Note Guaranty will be secured
equally and ratably by (1) a first mortgage over the land and buildings
comprising the Mill (except for the Co-Gen Facility); (2) a security interest in
all amounts in the Notes DSR Account and Offshore Reserve Account; (3) a
security interest in all machinery and moveable property located at the Mill;
(4) an assignment of all insurance and reinsurance policies maintained by the
Company on the Mill (except for the Co-Gen Facility); (5) an assignment of the
Company's rights and benefits under the Project Documents; (6) a conditional
assignment and general pledge of the Revenue Account, the Notes Sinking Fund
Account and the Operating Account; (7) a pledge of certain Permitted
Investments; (8) a pledge of all issued and outstanding shares of NSM Cayman;
and (9) an assignment of Performance Bonds (all such collateral security, the
"Collateral"). The Collateral (other than the Collateral described in clauses
(2) and (8) above) will also secure, on an equal and ratable basis, certain
existing Indebtedness under the Bank Credit Facility. In addition, all
Collateral will secure, on a second priority basis, the obligations of the
Company in respect of the Debenture Guaranty.
There can be no assurance that the proceeds of any sale of the Collateral
following an Event of Default would be sufficient to satisfy payments due on the
Securities. In addition, a substantial portion of the security arrangements
relating to the Collateral will be governed by Thai law and may be subject to
significant restrictions regarding enforceability. See "Risk Factors--No
Assurance of Adequate Collateral; Shared Collateral; Ability to Realize on
Collateral," "--Enforcement of the Mortgages," "--Book-Entry Interests;
Dependence on Intermediaries," "--Thai Bankruptcy Law," "--Lack of Enforcement
of Foreign Judgments" and "Security Arrangements."
CREDIT SUPPORT
NOTES DSR ACCOUNT. The Note Issuers and the Company on the Issue Date
deposited, in an account (the "Notes DSR Account") maintained with the
Collateral Agent, a portion of the Notes Net Proceeds together with a portion of
the proceeds of the Debenture Offering, equal to the sum of (i) the aggregate
interest to be payable on the Senior Notes on the first three Interest Payment
Dates, (ii) the aggregate interest to be payable on the Senior Subordinated
Notes on the first two Interest Payment Dates and (iii) the aggregate interest
to be payable on the Debentures on the first two interest payment dates. Amounts
on deposit in the Notes DSR Account shall at all times be maintained in U.S.$ at
a Qualifying Financial Institution and may only be invested in Permitted Foreign
Investments. The interest due on the Notes on the first two Interest Payment
Dates after the Issue Date, and the interest due on the Debentures on the first
two interest payment dates in respect of the Debentures shall be paid from
amounts on deposit in the Notes DSR Account. Thereafter, the balance in the
Notes DSR Account shall at all times be at least equal to the aggregate interest
payable on the Senior Notes on the next applicable Interest Payment Date.
Notwithstanding the preceding sentence, the Company shall have the right,
assuming no other Event of Default then exists, to cause amounts held in the
Notes DSR Account to be withdrawn to pay interest on the Securities even though
such withdrawal would reduce the amounts remaining in the Notes DSR Account
below the minimum level indicated above; PROVIDED, HOWEVER, that any withdrawal
that would reduce such amounts below the required level may only be made to the
extent sufficient funds are not then available in the Revenue Account to pay
such interest; PROVIDED FURTHER, HOWEVER, that the minimum required level for
the Notes DSR Account must be replenished in full within 30 days following any
such withdrawal.
OFFSHORE RESERVE ACCOUNT. The Note Issuers and the Company on the Issue
Date deposited, in an account (the "Offshore Reserve Account") maintained with
the Collateral Agent, the balance (not otherwise deposited in the Notes DSR
Account) of the Note Net Proceeds, together with the balance of the proceeds of
the Debenture Offering and any Equity Investment Proceeds. Amounts on deposit in
the
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Offshore Reserve Account shall at all times be maintained in U.S.$ at a
Qualifying Financial Institution and may only be invested in Permitted Foreign
Investments. The amounts held in the Offshore Reserve Account may be withdrawn
by the Company only to (i) fund Phase II Construction Costs that are required to
be paid by the Company; PROVIDED that amounts may only be withdrawn to fund such
costs payable to vendors domiciled in Thailand to the extent sufficient funds
are not then available in the Operating Account to fund such costs and (ii) fund
Working Capital Requirements to the extent sufficient funds are not then
available in the Revenue Account to fund such requirements; PROVIDED FURTHER
that the Company may only withdraw funds from the Offshore Reserve Account for
the purpose of funding Working Capital Requirements up to a maximum of U.S.$70
million in the aggregate. If the aggregate amount withdrawn from the Offshore
Reserve Account since the Issue Date for Working Capital Requirements exceeds
U.S.$50 million, or if after giving effect to any proposed withdrawal the
aggregate amount withdrawn from the Offshore Reserve Account for Working Capital
Purposes would exceed $50 million, then amounts in excess of such U.S.$50
million may only be withdrawn for such purposes upon a request by the Company
accompanied by a certificate to the Collateral Agent from the Independent
Engineer or another independent engineering firm of suitably similar
international reputation and experience which is reasonably satisfactory to the
Collateral Agent (a "Substitute Independent Engineer") stating that the funds
available to the Company in the Offshore Reserve Account (after giving effect to
the proposed withdrawal) are sufficient to satisfy all of the Company's
remaining required Phase II Construction Costs through Phase II Completion. At
Phase II Completion, any remaining amounts in the Offshore Reserve Account
(except to the extent then required to replenish the Notes DSR Account) may, at
the Company's option demonstrated by a written request to the Collateral Agent,
be applied to (x) tender for a portion of the Securities then outstanding at
100% of Accreted Value or (y) repay principal amounts outstanding under the Bank
Credit Facility; PROVIDED that if the Company achieves Profitable Operations as
of any date prior to and including December 31, 2001, the Company will as of
such date have the further option, demonstrated by a written request to the
Collateral Agent, to apply any amounts then remaining in the Offshore Reserve
Account (except to the extent then required to replenish the Notes DSR Account)
to the payment of Phase III Construction Costs. Notwithstanding the foregoing,
if the Company fails to achieve Profitable Operations prior to December 31,
2001, any remaining amounts in the Offshore Reserve Account must be used by the
Company to tender for the Securities at a price equal to 100% of the Accreted
Value thereof on the date of purchase (a "Stage III Tender"). Any amounts
remaining in the Offshore Reserve Account after a Stage III Tender will be
applied by the Company (x) first to replenish the Notes DSR Account (if
necessary) and (y) second to pay overdue interest, if any, and principal amounts
outstanding under the Bank Credit Facility.
NOTES SINKING FUND ACCOUNT. The Company shall establish with the Collateral
Agent a sinking fund account (the "Notes Sinking Fund Account") into which the
Company shall deposit, no later than the fifteenth day following the last day of
each fiscal quarter of the Company (based on the Company's fiscal year in effect
on the Issue Date), an amount equal to the Cash Flow Sweep Amount. Amounts on
deposit in the Notes Sinking Fund Account shall at all times be maintained in
U.S.$ at a Qualifying Financial Institution and may only be invested in
Permitted Foreign Investments. The amounts held in the Notes Sinking Fund
Account shall be used to retire Notes at maturity or to satisfy repurchase
obligations in respect of the Notes arising from the offers to repurchase
described under "Repurchase at the Option of Holders--Change of Control,"
"--Sale of Assets and Subsidiary Stock" and "--Offer to Repurchase Upon Failure
to Attain Profitable Operations." Notwithstanding the foregoing, the Note
Issuers or the Company may use amounts held in the Notes Sinking Fund Account
(i) during the period prior to the second anniversary of the Issue Date and
during any period where Profitable Operations have been achieved and are
continuing, to make payments of Phase III Construction Costs, to fund working
capital shortfalls, to invest in or acquire Additional Assets or to purchase,
redeem or otherwise acquire for value Senior Indebtedness of the Company or the
Note Issuers and (ii) at all other times, solely to purchase, redeem or
otherwise acquire for value Notes or to make scheduled principal or interest
payments on Senior Indebtedness of the Company or the Note Issuers.
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REVENUE ACCOUNT. The Company shall establish with the Collateral Agent a
revenue account (the "Revenue Account") into which the Company shall deposit
(directly or through an intermediate fund as described below) all sales
proceeds, all insurance proceeds and all other amounts received by the Company
that are not otherwise required to be deposited in the Notes DSR Account or the
Offshore Reserve Account. Subject to any applicable exchange control regulations
in Thailand, proceeds deposited into the Revenue Account in an amount equal to
the sum of (i) the aggregate interest payable on the Notes on the next Interest
Payment Date, (ii) the aggregate interest payable on the Debentures on the next
interest payment date in respect of the Debentures and (iii) any amount required
to be deposited into the Notes Sinking Fund Account applicable to the then
current fiscal quarter, as estimated in advance in good faith by the Company,
shall first accrue, and at all times be maintained, in U.S.$ at a Qualifying
Financial Institution (the "Offshore Sub-account"); PROVIDED, HOWEVER, that,
notwithstanding the foregoing provision, any sales proceeds denominated in Baht
in the ordinary course of the Company's business consistent with past practice
need not be converted into U.S. $ prior to the date such deposited proceeds may
be used to pay U.S.$ denominated obligations or are otherwise deposited into the
Notes Sinking Fund Account. Amounts held in the Offshore Sub-account may be used
by the Company for payments and other uses permitted by the Indentures but,
other than payments of interest on the Securities or deposits into the Notes
Sinking Fund Account, only to the extent all other amounts on deposit in the
Revenue Account are insufficient to make such payments. The Company has obtained
the Bank of Thailand's approval to maintain a portion of export revenue, not to
exceed U.S. $130 million each year, in accounts offshore. The balance of amounts
on deposit in the Revenue Account may be maintained in Baht at a Qualifying
Domestic Financial Institution, which initially shall be the Bangkok Office of
The Chase Manhattan Bank. Amounts on deposit in the Revenue Account (including
the Offshore Sub-account) will be used (i) to fund the Operating Account on the
first day of each month as provided for below, (ii) to fund the Notes Sinking
Fund Account as provided for above, (iii) fund Working Capital Requirements,
(iv) at all times after the first two Interest Payment Dates, to pay interest
when due on the Securities and, if necessary, to fund required amounts in the
Notes DSR Account, with the balance to be invested in Permitted Foreign
Investments, subject to applicable exchange controls and (v) at all times after
the attainment by the Company of Profitable Operations, to fund cash dividends
and distributions that may be made by the Company as provided in "Certain
Covenants--Limitation on Restricted Payments".
OPERATING ACCOUNT. The Company has established with the Collateral Agent an
operating account (the "Operating Account"), into which the Company shall
deposit on the first day of each calendar month an amount such that, immediately
after giving effect to such deposit, the balance of such account shall be equal
to the sum of (i) the capital expenditures (including Phase II Construction
Costs to be paid by the Company to vendors in Thailand) of the Company during
that calendar month as estimated in advance in good faith by the Company and
(ii) any amount required to be paid during such calendar month in connection
with the Bank Credit Facility. Subject to any applicable exchange control
regulations in Thailand, the Operating Account shall be maintained in U.S.$ at a
Qualifying Domestic Financial Institution, which initially shall be the Bangkok
Office of The Chase Manhattan Bank, with funds able to be maintained in Baht to
the extent such funds were maintained in Baht in the Revenue Account and with
funds converted to Baht on an as-needed or as-required basis only.
RANKING
SENIOR NOTES AND SENIOR GUARANTY
The indebtedness evidenced by the Senior Notes and the Senior Guaranty will
be senior secured obligations of the Note Issuers and the Company, as the case
may be, will rank pari passu in right of payment with all existing and future
Senior Indebtedness and will be senior in right of payment to the Senior
Subordinated Notes and all existing and future Subordinated Indebtedness
(including the Debentures) of the Note Issuers and the Company.
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SENIOR SUBORDINATED NOTES AND SENIOR SUBORDINATED GUARANTY
The indebtedness evidenced by the Senior Subordinated Notes and the Senior
Subordinated Guaranty will be senior secured obligations of the Note Issuers and
the Company, as the case may be, but the payment of principal of, premium,
interest and Additional Amounts, if any, on the Senior Subordinated Notes and
the Senior Subordinated Guaranty will be subordinate in right of payment to the
prior payment in full of all Specified Senior Indebtedness of the Note Issuers
and the Company, as the case may be. The Senior Subordinated Notes and Senior
Subordinated Guaranty will rank pari passu with all other Senior Indebtedness of
the Note Issuers and the Company, as the case may be, and senior in right of
payment to all existing and future subordinated indebtedness of the Notes
Issuers and the Company, including the Debentures. Only Indebtedness of the
Issuers or the Company that is Specified Senior Indebtedness will rank senior to
the Senior Subordinated Notes or the Senior Subordinated Guaranty, as the case
may be, in accordance with the provisions of the Senior Subordinated Note
Indenture.
The Note Issuers may not pay principal of, premium or Additional Amounts (if
any) or interest on, the Senior Subordinated Notes or make any deposit pursuant
to the provisions described under "-- Defeasance" below and may not purchase,
redeem or otherwise retire any Senior Subordinated Notes (collectively, "pay the
Senior Subordinated Notes") if (i) any Specified Senior Indebtedness of the Note
Issuers is not paid when due or (ii) any other default on Specified Senior
Indebtedness of the Note Issuers occurs and the maturity of such Specified
Senior Indebtedness is accelerated in accordance with its terms unless, in
either case, the default has been cured or waived and any such acceleration has
been rescinded or such Specified Senior Indebtedness has been paid in full.
However, the Note Issuers may pay the Senior Subordinated Notes without regard
to the foregoing if the Note Issuers and the Senior Subordinated Note Trustee
receive written notice approving such payment from the Representative of the
holders of the Specified Senior Indebtedness with respect to which either of the
events set forth in clause (i) or (ii) of the immediately preceding sentence has
occurred and is continuing.
In addition, during the continuance of any default (other than a default
described in clause (i) or (ii) of the first sentence of the immediately
preceding paragraph) with respect to any Specified Senior Indebtedness of the
Note Issuers pursuant to which the maturity thereof may be accelerated
immediately without further notice (except such notice as may be required to
effect such acceleration) or the expiration of any applicable grace periods, the
Note Issuers may not pay the Senior Subordinated Notes for a period (a "Payment
Blockage Period") commencing upon the receipt by the Senior Subordinated Note
Trustee (with a copy to the Note Issuers) of written notice (a "Blockage
Notice") of such default from the Representative of the holders of such
Specified Senior Indebtedness specifying an election to effect a Payment
Blockage Period and ending 179 days thereafter (or earlier if such Payment
Blockage Period is terminated (i) by written notice to the Senior Subordinated
Note Trustee and the Note Issuers from the Person or Persons who gave such
Blockage Notice, (ii) because the default giving rise to such Blockage Notice is
no longer continuing or (iii) because such Specified Senior Indebtedness has
been repaid in full).
Notwithstanding the provisions described in the immediately preceding
paragraph, unless the holders of such Specified Senior Indebtedness or the
Representative of such holders have accelerated the maturity of such Specified
Senior Indebtedness, the Note Issuers may resume payments on the Senior
Subordinated Notes after the end of such Payment Blockage Period, including any
missed payments. Not more than one Blockage Notice may be given in any
consecutive 360-day period, irrespective of the number of defaults with respect
to Specified Senior Indebtedness of the Note Issuers during such period.
Upon any payment or distribution of the assets of the Note Issuers upon a
total or partial liquidation or dissolution or reorganization of or similar
proceeding relating to any of the Note Issuers or the property thereof, the
holders of Specified Senior Indebtedness of the Note Issuers will be entitled to
receive payment in full of such Specified Senior Indebtedness before the holders
of Senior Subordinated Notes are entitled to receive any payment and until such
Specified Senior Indebtedness is paid in full, any payment or distribution to
which holders of Senior Subordinated Notes would be entitled but for the
subordination provisions of the Senior Subordinated Note Indenture will be made
to holders of such Specified Senior
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Indebtedness as their interest may appear. If a distribution is made to holders
of Senior Subordinated Notes that due to the subordination provisions should not
have been made to them, such Noteholders are required to hold it in trust for
the holders of Specified Senior Indebtedness of the Note Issuers and pay it over
to them as their interest may appear.
If payment of the Senior Subordinated Notes is accelerated because of an
Event of Default, the Note Issuers or the Company or the Senior Subordinated
Note Trustee shall promptly notify the holders of the Specified Senior
Indebtedness or the Representative of such holders of the acceleration. None of
the Note Issuers and the Company may pay the Senior Subordinated Notes until
five Business Days after such holders or the Representative of the holders of
Specified Senior Indebtedness of the Note Issuers receive notice of such
acceleration and, thereafter, may pay the Senior Subordinated Notes only if the
subordination provisions of the Senior Subordinated Note Indenture otherwise
permit payment at that time.
The obligations of the Company under the Senior Subordinated Guaranty are
subordinated to Specified Senior Indebtedness of the Company. The terms of the
subordination provisions described above with respect to the Note Issuers'
obligations under the Senior Subordinated Notes apply equally to the Company and
the obligations of the Company under the Senior Subordinated Guaranty.
By reason of such subordination provisions contained in the Senior
Subordinated Note Indenture, in the event of insolvency, creditors of the Note
Issuers or the Company who are holders of Specified Senior Indebtedness of the
Issuers or the Company, as the case may be, may recover more, ratably, than the
holders of Senior Subordinated Notes, and creditors of the Note Issuers or the
Company who are not holders of Specified Senior Indebtedness of the Note Issuers
or the Company, as the case may be, may recover less, ratably, than holders of
Specified Senior Indebtedness and may recover more, ratably, than the holders of
the Senior Subordinated Notes.
Pursuant to the terms of the Bank Credit Facility, the Company has agreed
that, other than as a result of enforcement of the security interests granted in
the Collateral, in the event that there are insufficient funds available at any
time to make all payments of principal or interest then due under the Bank
Credit Facility, the Notes and the Debentures, it will pay 100% of any interest
and 50% of any principal then due under the Bank Credit Facility prior to paying
any interest then due on the Notes and the Debentures.
DEBENTURE AND DEBENTURE GUARANTY
The indebtedness evidenced by the Debentures and the Debenture Guaranty will
be subordinated secured obligations of the Note Issuers and the Company, as the
case may be, but the payment of principal of, premium, interest and Additional
Amounts, if any, on the Debentures and the Debenture Guaranty will be
subordinate in right of payment to the prior payment in full of all Debenture
Specified Senior Indebtedness of the Note Issuers and the Company, as the case
may be. The Debentures and Debenture Guaranty will rank senior in right of
payment to all existing and future subordinated indebtedness of the Notes
Issuers and the Company. Only Indebtedness of the Issuers or the Company that is
Debenture Specified Senior Indebtedness will rank senior to the Debentures or
the Debenture Guaranty, as the case may be, in accordance with the provisions of
the Debenture Indenture.
The Issuers may not pay principal of, premium or Additional Amounts (if any)
or interest on, the Debentures or make any deposit pursuant to the provisions
described under "--Defeasance" below and may not purchase, redeem or otherwise
retire any Debentures (collecdtively, "pay the Debentures") if (i) any Debenture
Specified Senior Indebtedness of the Issuers is not paid when due or (ii) any
other default on Debenture Specified Senior Indebtedness of the Issuers occurs
and the maturity of such Debentures Specified Senior Indebtedness is accelerated
in accordance with its terms unless, in either case, the default has been cured
or waived and any such acceleration has been rescinded or such Debenture
Specified Senior Indebtedness has been paid in full. However, the Issuers may
pay the Debentures without regard to the foregoing if the Issuers and the
Debenture Trustee receive written notice approving such payment from the
Representative of the holders of the Debenture Specified Senior Indebtedness
with
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respect to which either of the events set forth in clause (i) or (ii) of the
immediately preceding sentence has occurred and is continuing.
In addition, during the continuance of any default (other than a default
described in clause (i) or (ii) of the first sentence of the immediately
preceding paragraph) with respect to any Debenture Specified Senior Indebtedness
of the Issuers pursuant to which the maturity thereof may be accelerated
immediately without further notice (except such notice as may be required to
effect such acceleration) or the expiration of any applicable grace periods, the
Issuers may not pay the Debentures for a period ("Debenture Payment Blockage
Period") commencing upon the receipt by the Debenture Trustee (with a copy to
the Issuers) of written notice (a "Debenture Blockage Notice") of such default
from the Representative of the holder of such Debenture Specified Senior
Indebtedness specifying an election to effect a Debenture Payment Blockage
Period and ending 179 days thereafter (or earlier if such Debenture Payment
Blockage Period in terminated (i) by written notice to the Debenture Trustee and
the Issuers from the Person or Persons who gave such Debenture Blockage Notice,
(ii) because the default giving rise to such Debenture Blockage Notice is no
longer continuing or (iii) because such Debenture Specified Senior Indebtedness
has been repaid in full).
Notwithstanding the provisions described in the immediately preceding
paragraph, unless the holders of such Debenture Specified Senior Indebtedness or
the Representative of such holders have accelerated the maturity of such
Debenture Specified Senior Indebtedness, the Issuers may resume payments on the
Debentures after the end of such Debenture Payment Blockage Period, including
any missed payments. Not more than one Debenture Blockage Notice may be give in
any consecutive 360-day period, irrespective of the number of defaults with
respect to Debenture Specified Senior Indebtedness of the Issuers during such
period.
Upon any payment or distribution of the assets of the Issuers upon a total
or partial liquidation or dissolution or reorganization of or similar proceeding
relating to any of the Issuers or the property thereof, the holders of Debenture
Specified Senior Indebtedness of the Issuers will be entitled to receive Payment
in full of such Debenture Specified Senior Indebtedness before the holders of
Debentures are entitled to receive any payment and until such Debenture
Specified Senior Indebtedness is paid in full, any payment or distribution to
which holders of Debentures would be entitled but for the subordination
provisions of the Debenture Indenture will be made to holders of such Debenture
Specified Senior Indebtedness as their interest may appear. If a distribution is
made to holders of Debentures that due to the subordination provisions should
not have been made to them, such holders of Debentures are required to hold it
in trust for the holders of Debenture Specified Senior Indebtedness of the
Issuers and pay it over to them as their interest may appear.
If payment of the Debentures is accelerated because of an Event of Default,
the Issuers or the company or the Debenture Trustee shall promptly notify the
holders of the Debenture Specified Senior Indebtedness or the Representative of
such holders of the acceleration. None of the Issuers and the company may pay
the Debentures until five Business Days after such holders or the Representative
of the holders of Debenture Specified Senior Indebtedness of the Issuers receive
notice of such acceleration and, thereafter, may pay the Debentures only if the
subordination provisions of the Debenture Indenture otherwise permit payment at
that time.
The obligations of the Company under the Debenture Guaranty are subordinated
to Debenture Specified Senior Indebtedness of the Company. The terms of the
subordination provisions described above with respect to the Issuers'
obligations under the Debentures apply equally to the Company and the
obligations of the Company under the Debenture Guaranty.
By reason of such subordination provisions contained in the Debenture
Indenture, in the event of insolvency, creditors of the Issuers or the Company
who are holders of Debenture Specified Senior Indebtedness of the Issuers or the
Company, as the case may be, may recover more, ratably, that the holders of
Debentures, and creditors of the Issuers or the Company who are not holders of
Debenture
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Specified Senior Indebtedness of the Issuers or the Company, as the case may be,
may recover less, ratably, than holders of Debenture Specified Senior
Indebtedness and may recover more, ratably, than the holders of the Debentures.
OPTIONAL REDEMPTION
SENIOR NOTES
Except as described below, the Senior Notes will not be redeemable prior to
February 1, 2002. Thereafter, the Senior Notes will be redeemable, at the Note
Issuers' option, in whole or in part, upon not less than 30 nor more than 60
days' prior notice mailed by first-class mail to each holder's registered
address, at the following redemption prices (expressed as a percentage of the
principal amount at maturity), plus accrued and unpaid interest and Additional
Amounts, if any, to the redemption date (subject to the right of holders of
record on the relevant record date to receive interest due on the relevant
Interest Payment Date), if redeemed during the 12-month period commencing on
February 1 of the years set forth below:
<TABLE>
<CAPTION>
REDEMPTION
PERIOD PRICE
- ----------------------------------------------------------------------------- -----------
<S> <C>
2002......................................................................... 106.000%
2003......................................................................... 103.000%
2004 and thereafter.......................................................... 100.000%
</TABLE>
SENIOR SUBORDINATED NOTES
Except as described below, the Senior Subordinated Notes will not be
redeemable prior to February 1, 2003. Thereafter, the Senior Subordinated Notes
will be redeemable, at the Issuer's option, in whole or in part, upon no less
than 30 nor more than 60 days' prior notice mailed by first-class mail to each
holder's registered address, at the following redemption prices (expressed as a
percentage of the principal amount at maturity), plus accrued interest, if any,
to the redemption date (subject to the right of holders of record on the
relevant record date to receive interest due on the relevant Interest Payment
Date), if redeemed during the 12-month period commencing on February 1 of the
years set forth below:
<TABLE>
<CAPTION>
REDEMPTION
PERIOD PRICE
- ---------------------------------------------------------------------------- ------------
<S> <C>
2003........................................................................ 106.1250
2004........................................................................ 104.0417
2005........................................................................ 103.0625
2006 and thereafter......................................................... 100.0000%
</TABLE>
DEBENTURES
Except as described below, Debentures will not be redeemable prior to
February 1, 2003. Thereafter, the Debentures will be redeemable, at the Issuers'
option, in whole or in part, upon no less than 30 nor more than 60 days' prior
notice mailed by first-class mail to each holder's registered address, at the
following redemption prices (expressed as a percentage of the principal amount
at maturity), plus accrued interest, if any, to the redemption date (subject to
the right of holders of record on the relevant record date
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<PAGE>
to receive interest due on the relevant Interest Payment Date), if redeemed
during the 12-month period commencing on February 1 or the years set forth
below:
<TABLE>
<CAPTION>
REDEMPTION
PERIOD PRICE
- --------------------------------------------------------------------------------- -----------
<S> <C>
2003............................................................................. 106.3750
2004............................................................................. 104.2500
2005............................................................................. 103.1875
2006 and thereafter.............................................................. 100.0000%
</TABLE>
In addition, at any time and from time to time prior to February 1, 2001,
the Issuer may redeem in the aggregate up to 35% of the aggregate principal
amount at maturity of each of the Senior Notes originally issued, Senior
Subordinated Notes originally issued and the Debentures originally issued with
the net proceeds of one or more Public Equity Offerings, at a redemption price
(i) in the case of the Senior Notes, of 112% of the principal amount at maturity
at the redemption date thereof, plus accrued interest, if any, to the redemption
date (subject to the right of holders of record on the relevant record date to
receive interest due on the relevant Interest Payment Date), (ii) in the case of
the Senior Subordinated Notes, of 112.25% of the principal amount at maturity
thereof at the redemption date; and (iii) in the case of the Debentures, of
112.75% of the principal amount at maturity thereof at the redemption date
PROVIDED, HOWEVER, that at least $162.0 million principal amount at maturity of
Senior Notes or $132.0 million principal amount at maturity of Senior
Subordinated Notes or $35 million principal amount at maturity of Debentures, as
the case may be, must remain outstanding after each such redemption.
Nothwithstanding the foregoing, the ability of the Issuer to redeem Senior
Subordinated Notes pursuant to this provision may be limited by the limitations
on restricted payments under the Senior Note Indenture. Furthermore, the ability
of the Issuers to redeem Debentures pursuant to this provision may be limited by
the limitations or restricted payments under the Senior Note Indenture and the
Senior Subordinated Note Indentures.
SELECTION OF NOTES FOR OPTIONAL REDEMPTION
In the case of any partial redemption, selection of the Notes for redemption
will be made by the Trustee on a pro rata basis, by lot or by such other method
as the Trustee in its sole discretion shall deem to be fair and appropriate;
PROVIDED, HOWEVER, that if a partial redemption is made with proceeds of a
Public Equity Offering, selection of the Securities or portion thereof for
redemption shall be made by the Trustee only on a pro rata basis, unless such
method is otherwise prohibited. The Securities may be redeemed in part in
multiples of $1,000 principal amount only. Notice of redemption will be sent, by
first class mail, postage prepaid, at least 30 days prior to the date fixed for
redemption to each holder whose Securities are to be redeemed at the last
address for such holder then shown on the registry books. If any Securities is
to be redeemed in part only, the notice of redemption that relates to such
Security shall state the portion of the principal amount thereof to be redeemed.
A new Security in principal amount equal to the unredeemed portion thereof will
be issued in the name of the holder thereof upon cancelation of the original
Security. On and after any redemption date, interest will cease to accrue on the
Securities or part thereof called for redemption as long as the Note Issuers
have deposited with the Paying Agent funds in satisfaction of the redemption
price pursuant to the Indenture.
NOTES CASH FLOW SWEEP
No later than the fifteenth day following the last day of each fiscal
quarter of the Company (as the Company's fiscal year is in effect on the Issue
Date), the Company shall deposit into the Notes Sinking Fund Account an amount
equal to the Cash Flow Sweep Amount.
ADDITIONAL AMOUNTS
(a) All payments made by the Note Issuers under or with respect to the
Securities and by the Company under the Guaranties will be made free and clear
of and without withholding or deduction for or
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on account of any present or future taxes, levies, duties, fees, assessments or
other governmental charges of whatever nature ("Taxes") imposed, levied,
collected or assessed by or on behalf of any taxing authority within the Cayman
Islands or Thailand, unless the Note Issuers are or the Company is, as the case
may be, required to withhold or deduct Taxes by law or by the interpretation or
administration thereof. If the Note Issuers are or the Company is required to
withhold or deduct or if the Note Issuers are or the Company is otherwise
required to pay any amount for or on account of Taxes imposed by a taxing
authority within the Cayman Islands or Thailand from or in respect of any
payment made under or with respect to the Securities or the Guaranties, the Note
Issuers or the Company, as the case may be, will pay such additional amounts
("Additional Amounts") as may be necessary so that the net amount received by
each holder and beneficial owner of Securities (including Additional Amounts)
after such withholding or deduction or other payment of Taxes will not be less
than the amount the holder and beneficial owner would have received if such
Taxes had not been withheld or deducted or paid; PROVIDED that no Additional
Amounts will be payable with respect to a payment made to a holder of Securities
with respect to any Tax: (i) which would not have been imposed, payable or due
but for the existence of any present or former connection between the holder (or
the beneficial owner of, or person ultimately entitled to obtain an interest in,
such Securities) and the Cayman Islands or Thailand, as the case may be, other
than the mere holding of the Securities; (ii) which would not have been imposed,
payable or due if the Securities are held in definitive registered form
("Definitive Registered Notes") and the presentation of Definitive Registered
Notes for payment had occurred within 30 days after the date such payment was
due and payable or was provided for, whichever is later, except for Additional
Amounts with respect to Taxes that would have been imposed had the holder
presented the Note for payment within such 30-day period; (iii) that is an
estate, inheritance, gift, sales, transfer, personal property or similar Tax;
(iv) that is imposed or withheld by reason of the failure of the holder or
beneficial owner of a Security to comply, at the reasonable request of the Note
Issuers or the Company, as the case may be, with certification, information or
other reporting requirements concerning the nationality, residence or identity
of the holder or such beneficial owner if such compliance is required or imposed
by a statute, treaty, regulation or administrative practice of the taxing
jurisdiction as a precondition to exemption from all or part of such Tax; (v) if
the beneficial owner of, or person ultimately entitled to obtain an interest in,
such Securities had been the holder of the Securities and would not be entitled
to the payment of Additional Amounts; or (vi) payable otherwise than by
withholding from payments on or in respect of any Security.
(b) The Note Issuers or the Company, as the case may be, will also (i) make
such withholding or deduction and (ii) remit the full amount deducted or
withheld to the relevant authority in accordance with applicable law. The Note
Issuers or the Company, as the case may be, will make reasonable efforts to
obtain certified copies of tax receipts evidencing the payment of any Taxes so
deducted or withheld from each taxing authority imposing such Taxes. The Note
Issuers or the Company, as the case may be, will furnish to the holders of the
Securities, within 60 days after the date the payment of any Taxes so deducted
or withheld is due pursuant to applicable law, either certified copies of tax
receipts evidencing such payment by the Note Issuers or the Company, as the case
may be, or, if such receipts are not obtainable, other evidence of such payments
by the Note Issuers or the Company.
(c) In addition, the Note Issuers or the Company, as the case may be, will,
upon written request of each holder of Securities (subject to the exclusions set
forth in (i), (ii), (iii), (iv), (v) and (vi) of paragraph (a) above), and
PROVIDED that reasonable supporting documentation is provided, reimburse each
such holder for the amount of any Taxes levied or imposed by the Cayman Islands
or Thailand and paid by such holder as a result of payments made under or with
respect to the Securities or under the relevant Guaranty. Any payment pursuant
to this section shall be an Additional Amount.
(d) At least 30 days prior to each date on which any payment under or with
respect to the Securities or under the Guaranties is due and payable, if the
Note Issuers or the Company will be obligated to pay Additional Amounts with
respect to such payment, the Notes Issuers or the Company will deliver to the
Trustee an Officers' Certificate stating the fact that such Additional Amounts
will be payable and the amounts so payable and will set forth such other
information necessary to enable the Trustee to pay such
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Additional Amounts to the holders of Securities on the payment date. Whenever in
the Indentures or in this "Description of Notes and Guaranties" there is
mentioned, in any context, the payment of amounts based upon the principal of,
premium, if any, interest or of any other amount payable under or with respect
to any Security or any Guaranty such mention shall be deemed to include mention
of the payment of Additional Amounts to the extent that, in such context,
Additional Amounts are, were or would be payable in respect thereof.
(e) In addition, the Note Issuers will pay any stamp, issue, registration,
documentary, value added or other similar taxes and other duties (including
interest and penalties) payable in the Cayman Islands or in Thailand (or any
political subdivision or taxing authority of either jurisdiction) and in the
United States in respect of the creation, issue, offering, execution or
enforcement of the Securities, the Guaranties or any documentation with respect
thereto.
OPTIONAL TAX REDEMPTION
The Securities may be redeemed at the option of the Note Issuers or paid in
full at the option of the Company, in whole but not in part, upon not less than
30 nor more than 60 days' notice given as provided in the Indenture, at any time
at 103% of the principal amount thereof, plus accrued and unpaid interest to the
date fixed for such payment if, as a result of any change in or amendment to the
laws, regulations or governmental policy having the force of law of the Cayman
Islands or Thailand (or of any political subdivision or taxing authority thereof
or therein) or any execution of or amendment to, any treaty or treaties
affecting taxation of which the Cayman Islands or Thailand (or such political
subdivision or taxing authority) is a party, which becomes effective on or after
the date of the Indenture (i) (A) the Note Issuers are required, or would be
required on the next succeeding interest payment date, to pay Additional Amounts
in respect of payments on the Securities as a result of the imposition of Taxes
imposed by the Cayman Islands or Thailand (or any political subdivision or
taxing authority of either jurisdiction); (B) the Company is, or on the next
succeeding interest payment date would be, unable for reasons outside of its
control, to procure payment by the Note Issuers and, with respect to any payment
due, or to become due, under the Securities or the Guaranties, the Company is
required, or would be required on the next succeeding Interest Payment Date, to
pay Additional Amounts as a result of the imposition of Taxes by the Cayman
Islands or Thailand or (C) with respect to any payment to a Note Issuer to
enable a Note Issuer to make any payments under the Securities, the Company or
NSM Cayman is, or on the next interest payment date would be, required to deduct
or withhold Taxes imposed by the Cayman Islands or Thailand (or any political
subdivision or taxing authority of either jurisdiction) and (ii) the payment of
such Additional Amounts cannot be avoided by the use of any reasonable measures
available to the Note Issuers or the Company that do not require undue effort or
costs (including, without limitation, the Company making payments directly to
holders under the applicable Guaranty). In addition, the Note Issuers or the
Company, as the case may be, will also pay to holders on the redemption date any
Additional Amounts which would otherwise be payable; PROVIDED, HOWEVER, that no
such notice of redemption shall be given earlier than 90 days prior to the
earliest date on which the Issuers or the Company, as the case may be, would be
obligated to pay such Additional Amounts if a payment in respect of the Notes or
a Guaranty were then due.
Prior to the publication of the notice of redemption in accordance with the
foregoing, the Note Issuers or the Company shall deliver to the Trustee an
officer's certificate stating that (x) the Note Issuers are or the Company is
entitled to effect such redemption based on a written opinion of counsel or
written advice of a nationally recognized independent tax counsel, such opinion
or advice being reasonably acceptable to the Trustee, that the condition
referred to in either of subclauses (A) or (B) or (C) of clause (i) of the
immediately preceding paragraph is satisfied as a result of such change,
amendment or executed or amended treaty and (y) the condition described in (ii)
of the immediately preceding paragraph is satisfied. Such notice, once delivered
by the Note Issuers or the Company to the Trustee, will be irrevocable.
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REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
The Indentures provide that upon the occurrence of a Change of Control each
holder will have the right to require the Note Issuers to repurchase all or any
part of such holder's Securities at a purchase price in cash equal to 101% of
the Accreted Value thereof on the date of purchase, plus accrued and unpaid
interest and Additional Amounts, if any, to the date of repurchase (subject to
the right of holders of record on the relevant record date to receive interest
due on the relevant Interest Payment Date).
The Senior Note Indenture limits the repurchase of Senior Subordinated Notes
and the Debentures. Prior to repurchasing any Senior Subordinated Notes or
Debentures pursuant to this covenant, the Note Issuers shall (i) repay in full
the Senior Notes or (ii) otherwise obtain the requisite consent under the Senior
Notes to permit the repurchase of the Senior Subordinated Notes or Debentures.
The Senior Subordinated Note Indenture limits the repurchase of the Debentures
in a similar manner. Failure to make a Change of Control offer in respect of the
Senior Notes, Senior Subordinated Notes or the Debentures, as the case may be,
constitutes an Event of Default under the applicable Indenture.
The Indentures provide that within 30 days following any Change of Control,
the Note Issuers shall mail a notice to each holder with a copy to the Trustee
stating: (i) that a Change of Control has occurred and that such holder has the
right to require the Issuers to repurchase such holder's Securities at a price
in cash equal to 101% of the Accreted Value thereof on the date of purchase,
plus accrued and unpaid interest and Additional Amounts, if any, to the date of
repurchase (subject to the right of holders of record on the relevant record
date to receive interest on the relevant Interest Payment Date), (ii) the
repurchase date (which shall not be earlier than 30 days nor later than 60 days
from the date such notice is mailed); and (iii) the procedures determined by the
Note Issuers, consistent with the Indentures, that a holder must follow in order
have its Securities purchased.
The Note Issuers will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
covenant. To the extent that the provisions of any securities laws or
regulations conflict with provisions of the Indentures, the Note Issuers will
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations described in the Indentures by virtue
thereof.
The definition of "Change of Control" includes, among other transactions, a
disposition of all or substantially all of the property and assets of the
Issuers or the Company, including a transaction permitted under the "Merger and
Consolidation" covenant. With respect to the disposition of property or assets,
the phrase "all or substantially all" as used in the Indentures varies according
to the facts and circumstances of the subject transaction, has no clearly
established meaning under New York law (which is the choice of law under the
Indentures) and is subject to judicial interpretation. Accordingly, in certain
circumstances there may be a degree of uncertainty in ascertaining whether a
particular transaction would involve a disposition of "all or substantially all"
of the property or assets of a Person, and therefore it may be unclear as to
whether a Change of Control has occurred and whether the Issuers are required to
make an offer to repurchase the Securities as described above.
The exercise by the holders of their right to require the Note Issuers or
the Company, as the case may be, to repurchase the Securities could cause a
default under other Indebtedness, even if the Change of Control itself does not,
due to the financial effect of such repurchase on the Note Issuers or the
Company, as the case may be. Finally, the Note Issuers' or the Company's, as the
case may be, ability to pay cash to the holders upon a repurchase may be limited
by the Note Issuers' or the Company's then existing financial resources. There
can be no assurance that sufficient funds will be available when necessary to
make any required repurchases.
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The existence of a holders' right to require the Note Issuers or the Company
to repurchase such holder's Notes upon the occurrence of a Change of Control may
deter a third party from seeking to acquire the Company in a transaction that
would constitute a Change of Control.
SALES OF ASSETS AND SUBSIDIARY STOCK.
The Indentures will provide that the Company shall not, and shall not permit
either of the Note Issuers or any Restricted Subsidiaries to, make any Asset
Disposition unless (i) the Company, the Note Issuers or such Restricted
Subsidiary receives consideration at the time of such Asset Disposition at least
equal to the fair market value, as determined in good faith by the Company's
board of directors (including as to the value of all noncash consideration), of
the shares and assets subject to such Asset Disposition, (ii) at least 80% of
the consideration thereof received by the Company, the Note Issuers or such
Restricted Subsidiary is in the form of cash or Cash Equivalents and (iii) an
amount equal to 100% of the Net Available Cash from such Asset Disposition is
applied (A) if at the time of the Asset Disposition the Company has not yet
achieved Profitable Operations, pro rata to a mandatory offer by the Note
Issuers and the Company to purchase Securities at 101% of the Accreted Value
thereof on the date of purchase, plus accrued and unpaid interest and Additional
Amounts, if any, thereon, and the repayment of principal and accrued and unpaid
interest, if any, under the Bank Credit Facility and (B) if at the time of the
Asset Disposition the Company has achieved Profitable Operations, at the
Company's option either to (1) the investment in or acquisition of Additional
Assets within 365 days from the later of such Asset Disposition and the receipt
of such Net Available Cash or (2) pro rata to a mandatory offer by the Note
Issuers and the Company to purchase Securities at 101% of the Accreted Value
thereof on the date of purchase plus accrued and unpaid interest and Additional
Amounts, if any, thereon, and the repayment of principal and accrued and unpaid
interest, if any, under the Bank Credit Facility; PROVIDED that the Note Issuers
and the Company shall be required to redeem Indebtedness pursuant to clause (2)
to the extent of the balance of such Net Available Cash after application in
accordance with clause (1). Notwithstanding the foregoing provisions, Net
Available Cash shall not be required to be applied in accordance herewith to the
extent that the aggregate Net Available Cash from all Asset Dispositions which
are not applied in accordance with this covenant at any time does not exceed
U.S.$10 million. The Note Issuers shall not be required to make an offer to
purchase Securities pursuant to this covenant if the Net Available Cash
available therefor (after application of the proceeds as provided in clause (A))
is less than U.S.$10 million for any particular Asset Disposition (which lesser
amounts shall be carried forward for purposes of determining whether an offer is
required with respect to the Net Available Cash from any subsequent Asset
Disposition).
Notwithstanding the foregoing, to the extent the Senior Note Indenture
limits the repurchase of Senior Subordinated Notes and the Debentures, the Note
Issuers shall not be required to make an offer hereunder for the repurchase of
Senior Subordinated Notes or the Debentures. Similarly, to the extent the Senior
Subordinated Note Indenture limits the repurchase of the Debentures the Issuers
shall not be required to make an offer hereunder for the repurchase of the
Debentures.
For the purposes of this covenant, the following will be deemed to be cash:
(x) the assumption by the transferee of Senior Indebtedness of the Company, the
Note Issuers or any Restricted Subsidiary and the release of the Company, the
Note Issuers or any Restricted Subsidiary from all liability on such Senior
Indebtedness in connection with such Asset Disposition and (y) securities
received by the Company, the Note Issuers or any Restricted Subsidiary from the
transferee that are promptly (and in any event within 60 days) converted by the
Company, the Note Issuers or such Restricted Subsidiary into cash.
OFFER TO REPURCHASE UPON FAILURE TO ATTAIN PROFITABLE OPERATIONS.
As set forth under "Description of Notes and Guaranties--Credit Support",
the Note Issuers and the Company will deposit all of the Notes Net Proceeds
(other than amounts required to be deposited in the Notes DSR Account), together
with the balance of the proceeds of the Debenture Offering and any Equity
Investment Proceeds, into the Offshore Reserve Account to be established and
maintained with the
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Collateral Agent or another Qualifying Financial Institution. If the Company
does not achieve Profitable Operations prior to December 31, 2001, the Note
Issuers shall be required to use any amounts in the Offshore Reserve Account to
undertake a Stage III Tender.
The Note Issuers will be required to purchase Securities tendered pursuant
to a Stage III Tender in accordance with the procedures set forth in the
Indentures.
The Note Issuers will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to the
Indentures. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, the Issuers will comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations under the Indentures by virtue thereof.
CERTAIN COVENANTS
The Indentures contain certain covenants including, among others, the
following:
LIMITATION ON INDEBTEDNESS. (a) Neither the Note Issuers or the Company
shall Incur, nor shall the Company permit any Restricted Subsidiary to Incur,
directly or indirectly, any Indebtedness on or after the Issue Date unless on
the date of such Incurrence and after giving effect thereto the Consolidated
Coverage Ratio would be greater than 3.0:1.0.
(b) Notwithstanding the foregoing paragraph (a), the Note Issuers or the
Company may Incur on or after the Issue Date the following Indebtedness:
(i) Indebtedness of the Company Incurred pursuant to the Credit
Facilities;
(ii) Indebtedness represented by the Securities;
(iii) Indebtedness of the Company Incurred pursuant to Vendor Financing;
PROVIDED, HOWEVER, that the aggregate principal amount of all Vendor
Financing Incurred pursuant to this clause (iii) (other than any such
Indebtedness pursuant to Existing Arrangements) does not exceed U.S.$10
million at any time outstanding;
(iv) Indebtedness of the Issuers represented by Capitalized Lease
Obligations, or purchase money obligations, in each case Incurred for the
purpose of financing all or any part of the purchase price or cost of
construction or improvement of the Mill or Refinancing Indebtedness Incurred
to refinance any such purchase price or cost of construction or improvement,
in each case (other than Refinancing Indebtedness) Incurred no later than 90
days after the date of such acquisition or the date of completion of such
construction or improvement; PROVIDED, HOWEVER, that the principal amount of
any Indebtedness Incurred pursuant to this clause (iv) shall not exceed
U.S.$10 million at any time outstanding;
(v) Indebtedness (A) in respect of performance bonds, bankers'
acceptances and surety or appeal bonds provided by the Company to its
customers in the ordinary course of its business, (B) in respect of
performance bonds or similar obligations of the Company for or in connection
with pledges, deposits or payments made or given in the ordinary course of
business in connection with or to secure statutory, regulatory or similar
obligations, including obligations under health, safety or environmental
obligations and (C) arising from guarantees to suppliers, lessors,
licensees, contractors, franchisees or customers of obligations (other than
Indebtedness) incurred in the ordinary course of business;
(vi) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument drawn against
insufficient funds in the ordinary course of business in an amount not to
exceed U.S. $5 million at any time; PROVIDED that such Indebtedness is
extinguished within two business days of its Incurrence;
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(vii) Indebtedness of the Company under the Working Capital Credit
Facility, as such facility may be amended and/or supplemented from time to
time, PROVIDED in each case that any indebtedness under such facility as
amended or supplemented is secured only by accounts receivable of the
Company;
(viii) Indebtedness of the Company consisting of Permitted Hedging
Obligations;
(ix) Indebtedness outstanding on the Issue Date;
(x) Refinancing Indebtedness in respect of Indebtedness Incurred
pursuant to paragraph (a) or pursuant to clause (ii), (vii), or (ix) or this
clause (x); and
(xi) Indebtedness in an aggregate principal amount which, together with
all other Indebtedness of the Company, the Issuers and the Restricted
Subsidiaries outstanding on the date of Incurrence (other than Indebtedness
permitted by paragraph (a) or clauses (i) through (x) above), does not
exceed U.S.$20 million.
(c) Notwithstanding the foregoing, neither the Note Issuers nor the Company
may incur any Indebtedness if such Indebtedness is expressly subordinate in
right of payment to any Specified Senior Indebtedness or Debenture Specified
Senior Indebtedness, as the case may be, unless such Indebtedness is
Subordinated Indebtedness or is expressly subordinated in right of payment to
Subordinated Indebtedness.
(d) Notwithstanding the foregoing, neither the Company nor the Note Issuers
shall Incur any Indebtedness pursuant to the foregoing paragraph (b) if the
proceeds thereof are used, directly or indirectly, to Refinance any Subordinated
Indebtedness unless such Indebtedness shall be subordinated to the Securities to
at least the same extent as such Subordinated Indebtedness.
(e) For purposes of determining compliance with the foregoing covenant, (i)
in the event that an item of Indebtedness meets the criteria of more than one of
the types of Indebtedness described above, the Company, in its sole discretion,
will classify such item of Indebtedness at the time of its Incurrence and only
be required to include the amount and type of such Indebtedness in one of the
above clauses, and (ii) an item of Indebtedness may be divided and classified in
more than one of the types of Indebtedness described above.
LIMITATION ON RESTRICTED PAYMENTS. (a) Neither the Note Issuers or the
Company will, nor will the Company permit any Restricted Subsidiary to, directly
or indirectly:
(i) declare or pay any dividend or make any other distribution or
payment on or in respect of its Capital Stock (including dividends or
distributions of the Capital Stock of any Restricted Subsidiary), or make
any other payment to the direct or indirect holders (in their capacities as
such) of its Capital Stock (other than dividends or distributions payable in
shares of its Capital Stock (other than Disqualified Stock) or in options,
warrants or other rights to acquire such Capital Stock);
(ii) purchase, redeem or otherwise acquire or retire for value, directly
or indirectly, any of its Capital Stock or any Capital Stock of any of its
Affiliates (other than Capital Stock of any Wholly-Owned Restricted
Subsidiary or Capital Stock of a Person that is, or immediately following
such repurchase will become, a Wholly-Owned Restricted Subsidiary) or
options, warrants or other rights to acquire such Capital Stock;
(iii) make any principal payment on, or repurchase, redeem, defease,
retire or otherwise acquire for value, prior to any scheduled principal
payment, sinking fund payment or maturity, any Subordinated Indebtedness;
(iv) Incur, create or assume any guarantee of Indebtedness of any
Affiliate of the Company (other than a Wholly-Owned Restricted Subsidiary of
the Company) except as permitted under the "Limitation on Indebtedness"
covenant;
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(v) make any Investment in any Person (other than any Permitted
Investment); or
(vi) designate any Restricted Subsidiary as an Unrestricted Subsidiary;
(any of the payments described in paragraphs (i) through (vi) above, other than
any such action that is a Permitted Payment (as defined below), collectively,
"Restricted Payments") unless (x) with respect to payments to be made in the
period prior to December 31, 2001 the Company has achieved Profitable Operations
and (y) at the time of and after giving effect to the proposed Restricted
Payment (the amount of any such Restricted Payment, if other than cash, as
determined by the Board of Directors, whose determination shall be conclusive
and evidenced by a Board Resolution), (1) no Default or Event of Default shall
have occurred and be continuing; (2) immediately before and immediately after
giving effect to such transaction on a pro forma basis, the Issuers or the
Company could Incur U.S.$1.00 of additional Indebtedness under paragraph (a) of
the provisions of the "Limitations on Indebtedness" covenant; and (3) the
aggregate amount of all such Restricted Payments declared or made after the date
of the applicable Indenture does not exceed the sum of:
(A) 50% of the aggregate cumulative Consolidated Net Income of the
Company and its Restricted Subsidiaries accrued during the period (treated
as a single accounting period) beginning on the first day of the Company's
fiscal quarter commencing prior to the date of the applicable Indenture and
ending on the last day of the Company's last fiscal quarter ending prior to
the date of the Restricted Payment (or, if such aggregate cumulative
Consolidated Net Income shall be a loss, 100% of such loss (treating a loss
as a negative number));
(B) the aggregate Net Cash Proceeds received after the date of the
applicable Indenture by the Company from the issuance or sale (other than to
any of its Restricted Subsidiaries) of its Capital Stock (other than
Disqualified Stock) or any options, warrants or rights to purchase such
Capital Stock;
(C) the aggregate Net Cash Proceeds received after the date of the
applicable Indenture by the Company (other than from any of its Restricted
Subsidiaries) upon the exercise of any options or warrants to purchase
Capital Stock (other than Disqualified Stock) of the Company; and
(D) U.S.$10 million.
(b) Notwithstanding the foregoing, and, in the case of clauses (i) through
(iv) below, so long as there is no Default or Event of Default continuing, the
foregoing provisions will not prohibit the following actions (clauses (i)
through (iv) being referred to as "Permitted Payments"):
(i) the payment of any dividend or distribution within 60 days after the
date of declaration thereof, if at such date of declaration such payment
would be permitted by the provisions of paragraph (a) of this section and
such payment will be deemed to have been paid on (and included in the
calculation of the amount of Restricted Payments) such date of declaration
for purposes of the calculation required by paragraph (a) of this section;
(ii) the repurchase, redemption or other acquisition or retirement of
any shares of Capital Stock of the Company in exchange for (including any
such exchange pursuant to the exercise of a conversion right or privilege in
connection with which cash is paid in lieu of the issuance of fractional
shares or scrip), or out of the Net Cash Proceeds of a substantially
concurrent issue and sale for cash (other than to a Restricted Subsidiary)
of other Capital Stock (other than Disqualified Stock) of the Company;
PROVIDED that the Net Cash Proceeds from the issuance of such shares of
Capital Stock are excluded from clauses (3)(B) and (3)(C) of paragraph (a)
of this section, and such repurchases, redemptions or acquisitions shall be
excluded from the calculation of the amount of Restricted Payments;
(iii) any repurchase, redemption, defeasance, retirement or acquisition
for value or payment of principal of any Subordinated Indebtedness in
exchange for, or out of the net proceeds of, a
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substantially concurrent issuance and sale for cash (other than to any
Restricted Subsidiary of the Company) of any Capital Stock (other than
Disqualified Stock) of the Company; PROVIDED that the Net Cash Proceeds from
the issuance of such Qualified Capital Stock are excluded from clauses
(3)(B) and (3)(C) of paragraph (a) of this section, and such repurchases,
redemptions, defeasances, retirements or acquisitions shall be excluded from
the calculation of the amount of Restricted Payments;
(iv) the repurchase, redemption, defeasance, retirement, refinancing,
acquisition for value or payment of principal of any Subordinated
Indebtedness (other than Disqualified Stock) or Pari Passu Indebtedness (a
"refinancing") through the issuance of new Subordinated Indebtedness of the
Company; PROVIDED that any such new Subordinated Indebtedness (1) shall be
in a principal amount that does not exceed the principal amount so
refinanced (or, if the Subordinated Indebtedness so refinanced provides for
an amount less than the principal amount thereof to be due and payable upon
a declaration or acceleration thereof, then such lesser amount as of the
date of determination), plus the amount of any premium required to be paid
in connection with such refinancing pursuant to the terms of such refinanced
Indebtedness and any reasonable out-of-pocket expenses of the Company
incurred in connection with such refinancing; (2) has an Average Life to
Stated Maturity greater than the remaining Average Life to Stated Maturity
of the Securities; (3) has a Stated Maturity for its final scheduled
principal payment later than the Stated Maturity for the final scheduled
principal payment of the Securities; and (4) is expressly subordinated in
right of payment to the Notes at least to the same extent as the
Indebtedness to be refinanced;
(v) with respect to the Senior Note Indenture only, repurchases of
Senior Subordinated Notes pursuant to a Stage III Tender so long as the Note
Issuers and the Company also offer to purchase all outstanding Senior Notes,
and purchase all Senior Notes tendered, in such Stage III Tender; and
(vi) with respect to the Senior Note Indenture and the Subordinated Note
Indenture, repurchases of Debentures pursuant to a Stage III Tender so long
as the Note Issuers and the Company also offer to purchase all outstanding
Senior Notes and Senior Subordinated Notes and purchase all such securities
tendered in such Stage III Tender.
For purposes of this Section, if the Board of Directors designates a
Restricted Subsidiary as an Unrestricted Subsidiary, or a Restricted Subsidiary
is deemed to be so designated, a "Restricted Payment" shall be deemed to have
been made in an amount equal to the fair value of the Investment of the Company
and its other Restricted Subsidiaries in such Restricted Subsidiary as
determined by the Board of Directors with the concurrence of a majority of the
Independent Directors (there being at least one Independent Director), whose
good faith determination shall be conclusive. If a particular Restricted Payment
involves a non-cash payment, including a distribution of assets, then such
Restricted Payment shall be deemed to be in an amount equal to the fair market
value of the non-cash portion of such Restricted Payment as determined by the
Board of Directors, whose good faith determination shall be conclusive.
LIMITATION ON LIENS. Neither the Note Issuers nor the Company will affirm
or permit to exist any Lien of any kind securing any Pari Passu Indebtedness or
Subordinated Indebtedness of the Note Issuers or the Company (including any
assumption, guarantee or other liability with respect thereto by any Subsidiary)
upon any property or assets (including any intercompany notes) of the Note
Issuers or the Company or any Subsidiary owned on the date of the Indentures or
acquired after the date of the Indentures, or any income or profits therefrom,
other than Permitted Liens.
LIMITATION ON ISSUANCE AND SALE OF CAPITAL STOCK OF RESTRICTED
SUBSIDIARIES. Neither the Note Issuers nor the Company will permit (i) any
Restricted Subsidiary to issue any Capital Stock (other than to the Note Issuers
or the Company or any Wholly Owned Restricted Subsidiary) or (ii) any Person
(other than the Note Issuers or the Company or a Wholly Owned Restricted
Subsidiary) to acquire any Capital Stock of any Restricted Subsidiary from the
Note Issuers or the Company or any Restricted Subsidiary, except upon the sale
of all of the outstanding Capital Stock of such Restricted Subsidiary owned by
the Note Issuers or the Company or another Restricted Subsidiary and the
designation of such Subsidiary as an
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Unrestricted Subsidiary; PROVIDED, HOWEVER, that the Note Issuers or the Company
or a Restricted Subsidiary may issue or sell common stock of a Restricted
Subsidiary to a Person that is not an Affiliate of the Company so long as, on or
prior to the consummation of such issuance or sale, such Restricted Subsidiary
issues and delivers a supplemental indenture to the Indentures providing for the
guarantee of the Securities, which guarantee shall be a senior obligation of
such Restricted Subsidiary.
LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES. Neither the Note Issuers or the Company will, and the Company
will not permit any of its Restricted Subsidiaries to, directly or indirectly,
create or otherwise cause or permit to exist or become effective any encumbrance
or restriction on the ability of any Restricted Subsidiary to (a) pay dividends
or make any other distribution on its Capital Stock to the Note Issuers or the
Company or any other Restricted Subsidiary, (b) pay any Indebtedness owed to the
Note Issuers or the Company or any other Restricted Subsidiary, (c) make any
Investment in the Note Issuers or the Company or (d) transfer any of its
properties or assets to the Note Issuers or the Company or any Restricted
Subsidiary, except (i) any encumbrance or restriction pursuant to or in
connection with the Bank Credit Facility as in effect on the Issue Date, (ii)
any encumbrance or restriction with respect to a Restricted Subsidiary that is
not a Restricted Subsidiary of the Company on the date of the applicable
Indenture that is in existence at the time such Person becomes a Restricted
Subsidiary of the Company and not Incurred in connection with, or in
contemplation of, such Person becoming a Restricted Subsidiary, (iii) customary
provisions restricting subletting or assignment of any lease governing a
leasehold interest of the Note Issuers or the Company or any Restricted
Subsidiary and (iv) any encumbrance or restriction existing under any agreement
effecting a Refinancing of Indebtedness referred to in clause (i), (ii) or (iii)
above or this clause (iv); PROVIDED that the terms and conditions of any such
encumbrances or restrictions are not materially less favorable to the Holders
than those under or pursuant to the agreement evidencing such Refinancing
Indebtedness so extended, renewed, refinanced or replaced.
LIMITATION ON AFFILIATE TRANSACTIONS. Neither the Note Issuers or the
Company will, and the Company will not permit any Restricted Subsidiary to,
directly or indirectly, enter into or conduct any transaction or series of
related transactions (including the purchase, sale, lease or exchange of any
property or the rendering of any service) with or for the benefit of any
Affiliate of the Company (an "Affiliate Transaction") unless: (a) the terms of
such Affiliate Transaction are no less favorable to the Note Issuers or the
Company or such Restricted Subsidiary, as the case may be, than those that could
be obtained at the time of such transaction in arm's-length dealings with a
Person who is not such an Affiliate; (b) in the event such Affiliate Transaction
involves an aggregate amount in excess of U.S.$5 million, the terms of such
transaction have been approved by a majority of the members of the Board of
Directors of such Person and by a majority of the disinterested members of such
Board, if any (and such majority or majorities, as the case may be, determines
that such Affiliate Transaction satisfies the criteria in (a) above); and (c) in
the event such Affiliate Transaction involves an aggregate amount in excess of
U.S.$10 million, such Person has received a written opinion from an independent
investment banking firm or other similar expert of nationally recognized
standing that such Affiliate Transaction (i) is fair to the Note Issuers or the
Company or such Restricted Subsidiary, as the case may be, from a financial
point of view, or (ii) complies with the requirements of clause (a) above.
The foregoing paragraph shall not apply to (a) any Restricted Payment
permitted to be made pursuant to the covenant described under "Limitation on
Restricted Payments", (b) loans or advances to employees in the ordinary course
of business of the Company and/or any Subsidiary in aggregate amount outstanding
not to exceed U.S.$1 million at any time, (c) indemnification agreements with,
and the payment of fees and indemnities to, directors, officers and employees of
the Company or any Subsidiary, in each case in the ordinary course of business,
(d) transactions pursuant to agreements in existence on the Issue Date which (x)
are described in this Prospectus or (y) otherwise, in the aggregate, are
immaterial to the Note Issuers, the Company and the Restricted Subsidiaries
taken as a whole, (e) any employment, noncompetition or confidentiality
agreements entered into with its employees in the ordinary course of business,
(f) the
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issuance of Capital Stock (other than Disqualified Stock) of the Note Issuers to
the Company and (g) sublease arrangements on commercial terms covering shared
space.
LIMITATION ON SALE/LEASEBACK TRANSACTIONS. Neither the Note Issuers nor the
Company shall, and the Company shall not permit any Restricted Subsidiary to,
enter into any Sale/Leaseback Transaction with respect to any property unless
(i) the Note Issuers, the Company or such Restricted Subsidiary would be
entitled to (A) Incur Indebtedness in an amount equal to the Attributable
Indebtedness with respect to such Sale/Leaseback Transaction pursuant to the
covenant described under "Limitation on Indebtedness" and (B) create a Lien on
such property securing such Attributable Indebtedness pursuant to the covenant
described under "Limitation on Liens", (ii) the net proceeds received by the
Note Issuers, the Company or any Restricted Subsidiary in connection with such
Sale/Leaseback Transaction are at least equal to the fair value (as determined
by the Board of Directors) of such property and (iii) the proceeds of such
transaction are applied in compliance with the conditions described above under
"Repurchase at the Option of Holders--Sale of Assets and Subsidiary Stock".
LIMITATION ON ISSUANCES OF CAPITAL STOCK. Neither the Note Issuers nor any
Restricted Subsidiary will issue any Capital Stock to any Person other than to
the Company.
LIMITATION ON SALES TO NON-CREDIT QUALIFIED PURCHASERS. Until the earlier
of the third anniversary of the Issue Date and the date upon which the Company
achieves Profitable Operations, the Company shall not permit the aggregate
amount of the accounts receivable of it and its subsidiaries from non-Credit
Qualified Purchasers to exceed U.S.$10 million at any one time outstanding.
LINE OF BUSINESS. The Company will not, and will not permit the Note
Issuers or any Subsidiary to, engage in any business other than its ownership of
the Mill and the assets and liabilities of the Mill and any business ancillary
or reasonably related thereto.
OWNERSHIP. The Company will at all times own 100% of the Capital Stock of
the Note Issuers.
MERGER AND CONSOLIDATION. The Company shall not consolidate with or merge
with or into, or convey, transfer or lease all or substantially all its assets
to, any Person, unless: (i) the resulting, surviving or transferee Person (the
"Successor Company") shall be a corporation organized and existing under the
laws of the United States of America, any state thereof or the District of
Columbia or Thailand, and the Successor Company (if not the Company) shall
expressly assume, by indentures supplemental to the Indentures, executed and
delivered to the Trustee, in form satisfactory to the Trustee, all the
obligations of the Company, including the obligations under such Indenture, the
Security Sharing Agreement and the Security Documents; (ii) immediately after
giving effect to such transaction on a pro forma basis (and treating any
Indebtedness which becomes an obligation of the Successor Company as a result of
such transaction as having been Incurred by the Successor Company at the time of
such transaction), no Default or Event of Default shall have occurred and be
continuing (or would result therefrom); (iii) immediately after giving effect to
such transaction on a pro forma basis (and treating any Indebtedness which
becomes an obligation of the Successor Company as a result of such transaction
as having been Incurred by the Successor Company at the time of such
transaction), the Successor Company would be able to incur an additional
U.S.$1.00 of Indebtedness pursuant to paragraph (a) of the "Limitation on
Indebtedness" covenant; (iv) immediately after giving effect to such transaction
on a pro forma basis (and treating any Indebtedness which becomes an obligation
of the Successor Company or any Restricted Subsidiary as a result of such
transaction as having been Incurred by the Successor Company or such Restricted
Subsidiary at the time of such transaction), the Successor Company shall have
Consolidated Net Worth in an amount which is not less than the Consolidated Net
Worth of the Company immediately prior to such transaction; (v) the Successor
Company shall have delivered to the Trustee an Opinion of Counsel to the effect
that the holders of the Notes will not recognize income, gain, or loss for
United States Federal income tax purposes as a result of such transaction, and
will be subject to United States Federal income tax on the same amounts and at
the same times as would be the case as if the transaction had not occurred, and
there will
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be no additional Thai Taxes and no Taxes of any other jurisdiction imposed on
any payments made pursuant to the Notes or the Guaranties; and (vi) each of the
Company and the Note Issuers shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, stating that such consolidation, merger
or transfer and such supplemental indentures comply with the applicable
Indentures, and the Indentures (including the Guaranties), the Security Sharing
Agreement, the Security Documents, and the Notes remain and will be in full
force and effect against all applicable parties and the Liens with respect to
the Collateral (which shall be first priority perfected Liens unless otherwise
contemplated by the Security Documents) continue in full force and effect.
The Note Issuers shall not consolidate or merge with or into any other
Person, or convey, transfer or lease all or substantially all its assets to any
other Person, and all of its outstanding Capital Stock shall at all times be
owned by the Company free and clear of all Liens (other than Liens securing the
Securities).
The foregoing provisions and other covenants in the Indentures would not
necessarily afford holders of the Securities protection in the event of highly
leveraged or other transactions involving the Company or the Issuers that may
adversely affect holders of the Securities.
SEC REPORTS. The Company and the Note Issuers will furnish the Trustees and
provide to the holders of the Securities, within 15 days after it files them
with the Commission, copies of the reports (the "Financial Statements") and of
the information, documents and other reports (or copies of such portions of any
of the foregoing as the Commission may by rules and regulations prescribe) which
the Company and the Note Issuers file with the Commission pursuant to Section 13
or 15(d) of the Exchange Act. In the event that the Company and the Note Issuers
are not required to file such reports with the Commission pursuant to the
Exchange Act, the Note Issuers will nevertheless deliver Exchange Act
information to the holders of the Securities within 15 days after they would
have been required to file it with the Commission.
INTERCOMPANY NOTE AND CAPITAL CONTRIBUTIONS. (a) On the Issue Date, the
Company issued intercompany notes to the Issuers obligating the Company to make
payments in respect of such Intercompany notes on any date and in the same
amount that any payment (whether a payment of principal when due at Stated
Maturity, upon optional redemption, upon required repurchase, upon declaration
or otherwise or a payment in respect of any interest) is due on the Notes;
PROVIDED, HOWEVER, if after the Issue Date the Issuers and the Company determine
in good faith that such an intercompany note obligation will result in a
material adverse tax consequence to the Issuers or the Company, the Issuers and
the Company may cancel such intercompany note obligation and the Company shall
thereafter comply with clause (b) below.
(b) In the event that at any time the intercompany note referenced in clause
(a) above has been canceled or otherwise is inoperative or unenforceable, then
on or prior to any Interest Payment Date in respect of any Note, or any date
upon which any payment of principal of any Note is required to be made when due
at its Stated Maturity, upon optional redemption, upon required repurchase, upon
declaration or otherwise, the Company shall make a cash contribution to NSM
Cayman in the amount of such interest or principal payment, as the case may be.
EVENTS OF DEFAULT
Each of the following constitutes an Event of Default under the Indentures:
(a) a default in any payment of interest on any Security when due (whether or
not prohibited, in the case of Senior Subordinated Notes or Debentures, by the
provisions described under the caption "--Ranking"), continued for 30 days, (b)
a default in the payment of principal of any Security when due at its Stated
Maturity, upon optional redemption, upon required repurchase, upon declaration
or otherwise (whether or not such payment, in the case of Senior Subordinated
Notes or Debentures, is prohibited by the provisions described under
"--Ranking"), (c) the failure by the Note Issuers or the Company to comply with
its obligations under the "Merger and Consolidation" covenant described under
"Certain Covenants", (d) the failure (i) by the Note Issuers or the Company to
comply for 30 days after notice with any of its obligations under certain
covenants, including the covenants described under "Repurchase at the Option of
Holders"
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above or (ii) by the Company or the Note Issuers or any Restricted Subsidiary to
comply for 30 days after notice with any of its obligations under covenants
described under "--Certain Covenants" (other than a failure to purchase
Securities which shall constitute an Event of Default under clause (b) above),
other than as described in clause (a), (b) or (c) above, (e) the failure by the
Note Issuers or the Company to comply for 60 days after notice with its other
agreements contained in the Indentures, (f) either Guaranty ceases to be in full
force and effect (except as contemplated by the terms thereof) or the Company
denies or disaffirms its obligations under either Guaranty, (g) Indebtedness of
the Company, the Note Issuers or any Restricted Subsidiary is not paid within
any applicable grace period after final maturity or is accelerated by the
holders thereof because of a default and the total amount of such Indebtedness
unpaid or accelerated exceeds U.S.$5 million and such default shall not have
been cured or such acceleration rescinded after a 10-day period, (h) certain
events of bankruptcy, insolvency or reorganization of the Company, the Note
Issuers or any Subsidiary (the "bankruptcy provision"), (i) any judgment or
decree for the payment of money in excess of U.S.$5 million (to the extent not
covered by insurance) is rendered against the Company, the Note Issuers or any
Subsidiary and such judgment or decree shall remain undischarged or unstayed for
a period of 60 days after such judgment becomes final and nonappealable (the
"judgment default provision"), (j) any Account is not maintained as required or
any drawing under any Account is not made when required to be made and in any
such case such failure continues unremedied for five Business Days (or, in the
case of a failure to maintain any required amount in, or to make a drawing
under, the Notes DSR Account, 30 days) (the "account provision"), (k) the
Security Documents shall cease to grant the holders any of the material
collateral or rights purported to be granted thereunder (the "security
provision") or (l) after giving effect to the anticipated receipt and
application of any insurance proceeds, the Mill is abandoned in whole or in
substantial part or is destroyed or made permanently inoperable in whole or in
substantial part (the "abandonment provision").
However, a default under clauses (d) or (e) will not constitute an Event of
Default until the Trustee or the holders of 25% in principal amount at maturity
of the outstanding Senior Notes, Senior Subordinated Notes or the Debentures, as
the case may be, notify the Issuers (with a copy to the Trustee if given by the
holders) of the Default and such Default is not cured within the time specified
in clause (d) or (e) after receipt of such notice.
If an Event of Default with respect to the Senior Notes occurs (other than
an Event of Default with respect to the Issuers or the Company pursuant to the
bankruptcy provision) and is continuing, the Senior Note Trustee or the holders
of at least 25% in principal amount at maturity of the outstanding Senior Notes
by notice to the Note Issuers and the Senior Note Trustee (if the notice is
given by the holders) may declare the Accreted Value as of the date on which the
Senior Notes first become due and payable plus accrued and unpaid interest, if
any, on all the Senior Notes to be due and payable. If an Event of Default with
respect to the Senior Subordinated Notes occurs (other than an Event of Default
with respect to the Note Issuers or the Company pursuant to the bankruptcy
provision) and is continuing, the Senior Subordinated Note Trustee or the
Holders of at least 25% in principal amount at maturity of the outstanding
Senior Subordinated Notes by notice to the Note Issuers and the Senior
Subordinated Note Trustee (if the notice is given by the holders) may declare
the Accreted Value as of the date on which the Senior Subordinated Notes first
became due and payable plus accrued and unpaid interest, if any, on all the
Senior Subordinated Notes to be due and payable. If an Event of Default with
respect to the Debentures occurs (other than an Event of Default with respect to
the Note Issuers or the Company pursuant to the bankruptcy provisions) and is
continuing, the Debenture Trustee or the Holders of least 25% in principal
amount at maturity of the outstanding Debentures by notice to the Note Issuers
and the Debenture Trustee (if notice is given by the holders) may declare the
Accreted Value as of the date on which the Debentures first become due and
payable plus accrued and unpaid interest, if any, on all Debentures to be due
and payable. In either case, upon such a declaration, such Accreted Value and
accrued and unpaid interest shall be due and payable immediately. If an Event of
Default with respect to the Senior Notes, the Senior Subordinated Notes or
Debentures pursuant to the bankruptcy provision occurs, the Accreted Value of,
and accrued and unpaid interest on, such Securities will become and be
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immediately due and payable without any declaration or other act on the part of
the Trustee or any holders. Under certain circumstances, the holders of a
special majority of 60% in principal amount of the outstanding Senior Notes or
the holders of a special majority of 60% in principal amount of the outstanding
Senior Subordinated Notes or the holders of a special majority of 60% in
principal amount of the outstanding Debentures may rescind any such acceleration
with respect to the Senior Notes or Senior Subordinated Notes or Debentures,
respectively, and its consequences.
Subject to the provisions of each Indenture relating to the duties of each
Trustee, if an Event of Default occurs and is continuing, such Trustee will be
under no obligation to exercise any of the rights or powers under the applicable
Indenture at the request or direction of any of the holders unless such holders
have offered to such Trustee reasonable indemnity or security against any loss,
liability or expense resulting therefrom. Except to enforce the right to receive
payment of principal, premium (if any) or interest when due, no holder may
pursue any remedy with respect to the applicable Indenture or the applicable
Notes unless (a) such holder has previously given the applicable Trustee written
notice that an Event of Default is continuing, (b) holders of at least 25% in
principal amount at maturity of the outstanding Senior Notes or Senior
Subordinated Notes or Debentures, as the case may be, have requested the
applicable Trustee to pursue the remedy, (c) such holders have offered the
applicable Trustee reasonable security or indemnity against any loss, liability
or expense, (d) the applicable Trustee has not complied with such request within
60 days after the receipt of the request and the offer of security or indemnity
and (e) the holders of a majority in principal amount at maturity of the
outstanding Senior Notes or Senior Subordinated Notes or Debentures, as the case
may be, have not given the Trustee a direction that, in the reasonable opinion
of the Trustee, is inconsistent with such request within such 60-day period.
Subject to certain restrictions, the holders of a majority in principal amount
at maturity of the outstanding Senior Notes or Senior Subordinated Notes or
Debentures, as the case may be, are given the right to direct the time, method
and place of conducting any proceeding for any remedy available to the
applicable Trustee or of exercising any trust or power conferred on such
Trustee. Such Trustee, however, may refuse to follow any direction that
conflicts with law or the applicable Indenture or that such Trustee determines
is unduly prejudicial to the rights of any other holder or that would involve
such Trustee in personal liability. Prior to taking any action under the
applicable Indenture, the applicable Trustee shall be entitled to
indemnification satisfactory to it in its sole discretion against all losses and
expenses caused by taking or not taking such action.
Such Indenture provides that if a Default occurs and is continuing and is
known to the applicable Trustee, such Trustee must mail to each holder notice of
the Default within 60 days after it occurs. Except in the case of a Default in
the payment of principal of, premium or Additional Amounts (if any) or interest
on any Senior Notes or Senior Subordinated Notes or Debentures, as the case may
be, the Trustee may withhold notice if and so long as its board of directors, a
committee of its board of directors or a committee of its Trust officers in good
faith determines that withholding notice is in the interests of the holders. In
addition, the Note Issuers are required to deliver to each Trustee within 90
days after the end of each fiscal year, a certificate indicating whether the
signers thereof know of any Default that occurred during the previous year. The
Note Issuers also are required to deliver to each Trustee, within 30 days after
the occurrence thereof, written notice of any events which would constitute
certain Defaults.
AMENDMENTS AND WAIVERS
Subject to certain exceptions, each Indenture may be amended with the
consent of the holders of a majority in principal amount at maturity of the
Senior Notes or Senior Subordinated Notes or Debentures, as the case may be,
then outstanding and any existing Default and its consequences (including,
without limitation, an acceleration of the Notes) or compliance with any
provisions may be waived with the consent of the holders of a majority in
principal amount at maturity of the Senior Notes or Senior Subordinated Notes or
Debentures, as the case may be, then outstanding. However, without the consent
of each holder of outstanding Senior Notes or Senior Subordinated Notes or
Debentures, as the case may be, affected, no amendment, supplement or waiver
may, among other things, (i) reduce the principal amount at maturity of
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Senior Notes or Senior Subordinated Notes or Debentures, as the case may be
whose holders must consent to an amendment, supplement or waiver, (ii) reduce
the stated rate of or extend the stated time for payment of interest on any
Senior Note or Senior Subordinated Note or Debentures, as the case may be, (iii)
reduce the principal of or extend the Stated Maturity of any Senior Note or
Senior Subordinated Note or Debentures, as the case may be, (iv) reduce the
premium payable upon the redemption or repurchase of any Senior Note or Senior
Subordinated Note or Debentures, as the case may be, or change the time at which
any Senior Note or Senior Subordinated Note or Debentures, as the case may be,
may be redeemed or repurchased under the applicable Indenture, (v) make any
Senior Note or Senior Subordinated Note or Debentures, as the case may be,
payable in money other than that stated in such Security, (vi) impair the right
of any holder to receive payment of principal of and interest on such holder's
Senior Notes or Senior Subordinated Notes or Debentures, as the case may be on
or after the due dates therefor or to institute suit for the enforcement of any
payment on or with respect to such holder's Notes, (vii) release the Guaranties,
all or substantially all of the Collateral or the requirement to maintain any
Account or (viii) make any change in the amendment provisions which require each
holder's consent or in the waiver provisions.
Without the consent of any holder of Senior Notes or Senior Subordinated
Notes or Debentures, as the case may be , the Note Issuers and the applicable
Trustee may amend the applicable Indenture (and such Trustee and the Company may
amend the applicable Guaranty) to cure any ambiguity, omission, defect or
inconsistency, to provide for the assumption by a successor corporation,
partnership, trust or limited liability company of the obligations of the Note
Issuers under such Indenture (or of the Company under such Guaranty), to provide
for uncertificated Securities in addition to or in place of certificated
Securities (PROVIDED that the uncertificated Securities are issued in registered
form for purposes of Section 163(f) of the Code, or in a manner such that the
uncertificated Securities are described in Section 163(f)(2)(B) of the Code), to
add further Guaranties with respect to the Securities, to add further collateral
security for the Securities, to add to the covenants for the benefit of the
holders or to surrender any right or power conferred upon the Note Issuers or
the Company, to make any change that does not adversely affect the rights of any
holder or to comply with any requirement of the Commission in connection with
the qualification of the Indentures under the Trust Indenture Act.
The consent of the holders of Senior Notes or Senior Subordinated Notes or
Debentures, as the case may be is not necessary under the applicable Indenture
to approve the particular form of any proposed amendment. It is sufficient if
such consent approves the substance of the proposed amendment.
After an amendment under the applicable Indenture or to the applicable
Guaranty becomes effective, the Issuers are required to mail to the holders a
notice briefly describing such amendment. However, the failure to give such
notice to all the holders, or any defect therein, will not impair or affect the
validity of the amendment.
DEFEASANCE
The Note Issuers at any time may terminate all of their and the Company's
obligations under the Senior Notes or Senior Subordinated Notes or Debentures,
as the case may be and the applicable Indenture ("legal defeasance"), except for
certain obligations, including those respecting the defeasance trust and
obligations to register the transfer or exchange of the Senior Notes or Senior
Subordinated Notes or Debentures, as the case may be, to replace mutilated,
destroyed, lost or stolen Senior Notes or Senior Subordinated Notes or
Debentures, as the case may be and to maintain a registrar and paying agent in
respect of the Senior Notes or Senior Subordinated Notes or Debentures, as the
case may be. The Note Issuers at any time may terminate their and the Company's
obligations under the covenants described under "--Certain Covenants" (other
than under "Merger and Consolidation"), the operation of the cross acceleration
provision, the bankruptcy provision with respect to the Company and
Subsidiaries, the judgment default provision, the account provision, the
security provision and the abandonment provision
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described under "Events of Default" above and the limitations contained in
clauses (iii) and (iv) under "-- Certain Covenants--Merger and Consolidation"
("covenant defeasance").
The Note Issuers may exercise their legal defeasance option notwithstanding
their prior exercise of their covenant defeasance option. If the Note Issuers
exercises their legal defeasance option, payment of the Senior Notes or Senior
Subordinated Notes or Debentures, as the case may be may not be accelerated
because of an Event of Default with respect thereto and the Company will be
released from the applicable Guaranty. If the Note Issuers exercises their
covenant defeasance option, payment of the Senior Notes or Senior Subordinated
Notes or Debentures, as the case may be may not be accelerated because of an
Event of Default specified in clause (d), (e), (f), (g), (h) (with respect only
to the Company and its Subsidiaries), (i), (j), (k) or (l) under "Events of
Default" above.
If the Note Issuers exercises its legal defeasance option or covenant
defeasance option, the Company will be released from all its obligations with
respect to the applicable Guaranty and all the Collateral will be released.
In order to exercise either defeasance option, the Note Issuers must
irrevocably deposit in trust (the "defeasance trust") with the applicable
Trustee money or U.S. Government Obligations for the payment of principal,
premium (if any) and interest on the Senior Notes or Senior Subordinated Notes
or Debentures, as the case may be to redemption or maturity, as the case may be,
and must comply with certain other conditions, including delivery to the
applicable Trustee of an Opinion of Counsel to the effect that holders of the
Senior Notes or Senior Subordinated Notes or Debentures, as the case may be will
not recognize income, gain or loss for U.S. Federal income tax purposes as a
result of such deposit and defeasance and will be subject to U.S. Federal income
tax on the same amount and in the same manner and at the same times as would
have been the case if such deposit and defeasance had not occurred (and, in the
case of legal defeasance only, such Opinion of Counsel must be based on a ruling
of the Internal Revenue Service or other change in applicable U.S. Federal
income tax law).
CONCERNING THE TRUSTEE
The Chase Manhattan Bank is to be the Trustee under the Senior Note
Indenture, the Senior Subordinated Note Indenture, and the Debenture Indenture
and, in each case, has been appointed by the Note Issuers as Collateral Agent
and as registrar and paying agent with regard to the respective Securities.
Each Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Note Issuers, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim a security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest (as defined) it
must eliminate such conflict or resign.
The holders of a majority in aggregate principal amount of the then
outstanding Senior Notes, Senior Subordinated Notes or Debentures, as the case
may be issued under the applicable Indenture will have the right to direct the
time, method and place of conducting any proceeding for exercising any remedy
available to the applicable Trustee. Directions to the Collateral Agent will be
effective as provided above under "Security Arrangements--Enforcement of
Collateral." Each Indenture provides that in case an Event of Default shall
occur (which shall not be cured) the applicable Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent person in the
conduct of their own affairs. Subject to such provisions, such Trustee will be
under no obligation to exercise any of its rights or powers under the applicable
Indenture at the request of any of the holders of the Senior Notes or Senior
Subordinated Notes, as the case may be issued thereunder unless they shall have
offered to such Trustee security and indemnity satisfactory to it.
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GOVERNING LAW
Each Indenture and the Securities will be governed by, and construed in
accordance with, the laws of the State of New York without giving effect to
applicable principles of conflicts of law to the extent that the application of
the law of another jurisdiction would be required thereby. The various
agreements creating and governing the Collateral will be governed by, and
construed in accordance with, the laws of the State of New York and Thailand.
ENFORCEABILITY OF JUDGMENTS
Since all of the operating assets of the Issuers and the Company are outside
the United States, any judgment obtained in the United States against the
Issuers or the Company, including judgments with respect to the payment of
principal, interest, redemption price and any purchase price with respect to the
Notes, may not be collectible within the United States. However, the Issuers and
the Company have been advised by their Thai legal counsel, White & Case
(Thailand) Limited, that any judgment or order obtained in a court outside
Thailand, including the United States, would not be enforced as such by the
courts of Thailand, but such judgment or order in the discretion of the courts
of Thailand may be admitted as evidence of an obligation in new proceedings
instituted in the courts of Thailand, which would consider the issue on the
evidence before it.
CONSENT TO JURISDICTION AND SERVICE
The Issuers and the Company have appointed CT Corporation System, 1633
Broadway, New York, New York 10019 as their agent for actions brought with
respect to the Notes, the Guaranties and/or the Indentures in any Federal or
state court located in the Borough of Manhattan in The City of New York and will
submit to such jurisdiction.
CERTAIN DEFINITIONS
"Accounts" means and includes: (i) the Notes DSR Account, (ii) the Offshore
Reserve Account, (iii) the Revenue Account, (iv) the Notes Sinking Fund Account
and (v) the Operating Account.
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"Accreted Value" means, for any particular date of determination (any such
date being herein referred to as a "Specified Date"), the amount provided below
for each U.S.$1,000 principal amount at maturity of Senior Notes, Senior
Subordinated Notes or, as the case may be, the Debentures outstanding:
(i)(A) with respect to the Senior Notes, if the Specified Date occurs on one
of the following Interest Payment Dates, the Accreted Value will equal the
amount set forth below:
<TABLE>
<CAPTION>
ACCRETED
INTEREST PAYMENT VALUE
- --------------------------------------------------------------------------------- ----------
<S> <C>
August 1, 1998................................................................... $ 908.90
February 1, 1999................................................................. 912.50
August 1, 1999................................................................... 916.40
February 1, 2000................................................................. 920.60
August 1, 2000................................................................... 925.00
February 1, 2001................................................................. 929.80
August 1, 2001................................................................... 934.80
February 1, 2002................................................................. 940.30
August 1, 2002................................................................... 946.10
February 1, 2003................................................................. 952.30
August 1, 2003................................................................... 959.00
February 1, 2004................................................................. 966.10
August 1, 2004................................................................... 973.80
February 1, 2005................................................................. 981.90
August 1, 2005................................................................... 990.70
February 1, 2006................................................................. 1,000.00
</TABLE>
(B) with respect to the Senior Subordinated Notes, if the Specified Date
occurs on one of the following Interest Payment Dates, the Accreted Value will
equal the amount set forth below:
<TABLE>
<CAPTION>
ACCRETED
INTEREST PAYMENT VALUE
- --------------------------------------------------------------------------------- ----------
<S> <C>
August 1, 1998................................................................... $ 863.10
February 1, 1999................................................................. 866.50
August 1, 1999................................................................... 870.30
February 1, 2000................................................................. 874.30
August 1, 2000................................................................... 878.60
February 1, 2001................................................................. 883.30
August 1, 2001................................................................... 888.30
February 1, 2002................................................................. 893.60
August 1, 2002................................................................... 899.40
February 1, 2003................................................................. 905.60
August 1, 2003................................................................... 912.30
February 1, 2004................................................................. 919.50
August 1, 2004................................................................... 927.20
February 1, 2005................................................................. 935.50
August 1, 2005................................................................... 944.40
February 1, 2006................................................................. 953.90
August 1, 2006................................................................... 964.20
February 1, 2007................................................................. 975.30
August 1, 2007................................................................... 987.20
February 1, 2008................................................................. 1,000.00
</TABLE>
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(C) with respect to the Debentures, if the Specified Date occurs on one of
the following Interest Payment Dates, the Accreted Value will equal the amount
set forth below:
<TABLE>
<CAPTION>
ACCRETED
INTEREST PAYMENT VALUE
- ----------------------------------------------------------------------------- ----------
<S> <C>
August 1, 1998............................................................... $ 821.70
February 1, 1999............................................................. 825.10
August 1, 1999............................................................... 828.90
February 1, 2000............................................................. 832.90
August 1, 2000............................................................... 837.30
February 1, 2001............................................................. 842.10
August 1, 2001............................................................... 847.20
February 1, 2002............................................................. 852.70
August 1, 2002............................................................... 858.70
February 1, 2003............................................................. 865.20
August 1, 2003............................................................... 872.30
February 1, 2004............................................................. 879.90
August 1, 2004............................................................... 888.10
February 1, 2005............................................................. 897.00
August 1, 2005............................................................... 906.60
February 1, 2006............................................................. 917.00
August 1, 2006............................................................... 928.30
February 1, 2007............................................................. 940.50
August 1, 2007............................................................... 953.60
February 1, 2008............................................................. 967.90
August 1, 2008............................................................... 983.30
February 1, 2009............................................................. 1,000.00
</TABLE>
(ii) in each case, if the Specified Date occurs before the first Interest
Payment Date, the Accreted Value will equal the sum of (1) the respective
original issue price and (2) an amount equal to the product of (a) the
respective Accreted Value for the first Interest Payment Date less such original
issue price multiplied by (b) a fraction, the numerator of which is the number
of days from the Issue Date of the Senior Notes, Senior Subordinated Notes or,
as the case may be, the Debentures, to the Specified Date, using a 360-day year
of twelve 30-day months, and the denominator of which is the number of days
elapsed from the Issue Date of the relevant Securities to the first Interest
Payment Date, using a 360-day year of twelve 30-day months;
(iii) in each case, if the Specified Date occurs between two Interest
Payment Dates, the Accreted Value will equal the sum of (1) the respective
Accreted Value for the Interest Payment Date immediately preceding such
Specified Date and (2) an amount equal to the product of (i) the respective
Accreted Value for the immediately following Interest Payment Date less the
Accreted Value for the immediately preceding Interest Payment Date multiplied by
(ii) a fraction, the numerator of which is the number of days from the
immediately preceding Interest Payment Date to the Specified Date, using a
360-day year of twelve 30-day months, and the denominator of which is 180.
"Additional Assets" means any property or assets (other than Indebtedness
and Capital Stock) relating to the operation of the Mill and purchased with the
proceeds of an Asset Disposition.
"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
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"Agency Agreement" means the agreement between NSM Steel Company, Ltd. and
NSM Steel (Delaware), Inc.
"Asset Disposition" means any sale, lease, transfer, issuance or other
disposition (or series of related sales, leases, transfers, issuances or
dispositions that are part of a common plan) of shares of Capital Stock of (or
any other equity interests in) a Restricted Subsidiary or of any other property
or other assets (each referred to for the purposes of this definition as a
"disposition") by the Issuers, the Company or any Restricted Subsidiary
(including any disposition by means of a merger, consolidation or similar
transaction) other than (i) a disposition of inventory pursuant to a Project
Document or in the ordinary course of business, (ii) a disposition of obsolete
or worn out equipment or equipment that is no longer useful in the conduct of
the business of the Issuers, the Company or a Restricted Subsidiary and that is
disposed of in each case in the ordinary course of business, and (iii)
transactions permitted under "--Certain Covenants--Merger and Consolidation"
above. Notwithstanding anything to the contrary contained above, a Restricted
Payment made in compliance with the "Limitation on Restricted Payments" covenant
shall not constitute an Asset Disposition.
"Attributable Indebtedness" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate borne by the applicable Securities, compounded annually) of the
total obligations of the lessee for rental payments during the remaining term of
the lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
"Average Life" means, as of the date of determination, with respect to any
Indebtedness, the quotient obtained by dividing (i) the sum of the product of
the numbers of years (rounded upwards to the nearest month) from the date of
determination to the dates of each successive scheduled principal payment of
such Indebtedness or redemption multiplied by the amount of such payment by (ii)
the sum of all such payments.
"Board of Directors" means the board of directors of the Company or any duly
authorized committee of such board.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by such Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means any day which is not a legal holiday in the United
States or Thailand.
"Capital Stock" of any Person means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or interests
in (however designated) equity of such Person, including any Preferred Stock,
but excluding any debt securities convertible into such equity.
"Capitalized Lease Obligations" means an obligation that is required to be
classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with U.S. GAAP, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with U.S. GAAP and the Stated Maturity
thereof shall be the date of the last payment of rent or any other amount due
under such lease prior to the first date such lease may be terminated without
penalty.
"Cash Equivalents" means (i) U.S.$, (ii) securities issued or directly and
fully guaranteed or insured by the United States government or any agency or
instrumentality thereof, (iii) certificates of deposit, time deposits and
Eurodollar time deposits with maturities of one year or less from the date of
acquisition, bankers' acceptances with maturities not exceeding one year and
overnight bank deposits, in each case with any Qualifying Financial Institution,
(iv) repurchase obligations for underlying securities of the types described in
clauses (ii) and (iii) entered into with any Qualifying Financial Institution,
(v) commercial paper rated A-1 or the equivalent thereof by Moody's or S&P and
in each case maturing within one year
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after the date of acquisition, (vi) investment funds investing 95% of their
assets in securities of the types described in clauses (i)-(v) above, (vii)
readily marketable direct obligations issued by any state of the United States
of America or any political subdivision thereof having one of the two highest
rating categories obtainable from either Moody's or S&P and (viii) Indebtedness
or preferred stock issued by Persons with a rating of "A" or higher from S&P or
"A-2" or higher from Moody's.
"Cash Flow Sweep Amount" means, with respect to any fiscal quarter of the
Company, an amount equal to (a) 50% of the Company's net income before interest
expense, taxes, depreciation and amortization for such quarter minus (b) the sum
of (i) the Company's accrued interest expense (other than amortization of
original issue discount and deferred debt issuance costs) for such fiscal
quarter, (ii) all scheduled principal payments made by the Company on
indebtedness during such fiscal quarter, (iii) the amount of taxes actually paid
by the Company during such fiscal quarter and (iv) the amount of budgeted
capital expenditures made by the Company during such fiscal quarter for the
maintenance of the Company's properties and assets, PROVIDED, HOWEVER, that the
Cash Flow Sweep Amount in respect of any fiscal quarter shall not exceed the sum
of (x) U.S.$15 million and (y) the difference between (A) U.S.$45 million and
(B) the amount of each Cash Flow Sweep Account in the immediately preceding
three fiscal quarters; PROVIDED FURTHER, HOWEVER, that the amount described in
(y) above shall be adjusted ratably during the first three complete fiscal
quarters following the Issue Date to take into account such shorter periods.
"Change of Control" means (i) any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all or substantially
all of the assets of the Company; (ii) the Company ceasing to own 100% of
capital stock of the Issuers; (iii) a majority of the Board of Directors of the
Company shall consist of Persons who are not Continuing Directors; or (iv) the
acquisition by any Person or group of related Persons for purposes of Section
13(d) of the Exchange Act of the power, directly or indirectly, to vote or
direct the voting of securities having more than 50% of the ordinary voting
power for the election of directors of the Company.
"Coal Supply Agreement" means the agreement between the Company and SSM Coal
BV dated October 16, 1996.
"Co-Gen Facility" means a co-generation electric power plant to be developed
in conjunction with one or more affiliates of Enron Corp.
"Co-Gen Investment" means a loan by the Company to the entity that will
operate a cogeneration facility dedicated to the service of the Mill (i) in an
aggregate amount not to exceed U.S.$15.5 million and (ii) on financial terms
substantially identical to the terms of the Senior Notes.
"Collateral" means all the collateral described in the Security Documents.
"Collateral Agent" means The Chase Manhattan Bank, acting as collateral
agent, and its permitted successors and assigns.
"Commission" means the Securities and Exchange Commission.
"Commodity Commitment" means any commodity future or forward contract,
commodity swap, exchange agreement or derivative or other similar agreement or
arrangement with respect to the commodities market, excluding put options and
similar arrangements and agreements held by the Company or any Subsidiary.
"Company" means Nakornthai Strip Mill Public Company Limited.
"Consolidated Cash Flow" for any period for any Person means the
Consolidated Net Income for such period plus the following to the extent
deducted in calculating such Consolidated Net Income: (i) income tax expense,
(ii) Consolidated Interest Expense, (iii) depreciation expense, (iv)
amortization expense and (v) all other noncash items reducing Consolidated Net
Income (excluding any noncash item to the extent it represents an accrual of or
reserve for cash disbursements for any subsequent period prior to
127
<PAGE>
the Stated Maturity of the Securities or amortization of a prepaid cash expense
that was paid in a prior period), in each case for such Person and its
Subsidiaries for such period. Notwithstanding the foregoing, the income tax
expense, depreciation expense and amortization expense of a Subsidiary shall be
included in Consolidated Cash Flow only to the extent (and in the same
proportion) that the net income of such Subsidiary was included in calculating
Consolidated Net Income.
"Consolidated Cash Interest Expense" means for any period for any Person the
Consolidated Interest Expense for such Person for such period less any portion
thereof not payable in cash.
"Consolidated Coverage Ratio" as of any date of determination means the
ratio of (i) the aggregate amount of Consolidated Cash Flow of the Company for
the period of the most recent four consecutive fiscal quarters ending prior to
the date of such determination and as to which financial statements of the
Company are available to (ii) Consolidated Interest Expense of the Company for
such four fiscal quarters; PROVIDED, HOWEVER, that (A) if the Company has
incurred any Indebtedness since the beginning of such period and through the
date of determination of the Consolidated Coverage Ratio that remains
outstanding or if the transaction giving rise to the need to calculate
Consolidated Coverage Ratio is an Incurrence of Indebtedness, or both,
Consolidated Cash Flow and Consolidated Interest Expense for such period shall
be calculated after giving effect on a pro forma basis to (1) such Indebtedness
as if such Indebtedness had been incurred on the first day of such period
(PROVIDED that if such Indebtedness is incurred under a revolving credit
facility (or similar arrangement) only that portion of such Indebtedness that
constitutes the one-year projected average balance of such Indebtedness (as
determined in good faith by the Board of Directors of the Company) shall be
deemed outstanding for purposes of this calculation), and (2) the discharge of
any other Indebtedness repaid, repurchased, defeased or otherwise discharged
with the proceeds of such new Indebtedness as if such discharge had occurred on
the first day of such period, (B) if since the beginning of such period any
Indebtedness of any party has been repaid, repurchased, defeased or otherwise
discharged (other than Indebtedness under a revolving credit or similar
arrangement unless such revolving credit Indebtedness has been permanently
repaid and has not been replaced), Consolidated Interest Expense for such period
shall be calculated after giving pro forma effect thereto as if such
Indebtedness had been repaid, repurchased, defeased or otherwise discharged on
the first day of such period and (C) if since the beginning of such period the
Company or any Subsidiary shall have made any Asset Disposition, Consolidated
Cash Flow for such period shall be reduced by an amount equal to the
Consolidated Cash Flow (if positive) attributable to the assets which are the
subject of such Asset Disposition for such period or Increased by an amount
equal to the Consolidated Cash Flow (if negative) attributable thereto for such
period, and Consolidated Interest Expense for such period shall be (1) reduced
by an amount equal to the Consolidated Interest Expense attributable to any
Indebtedness of the Issuers repaid, repurchased, defeased or otherwise
discharged in connection with such Asset Disposition for such period and (2)
increased by interest income, if any, attributable to the assets which are the
subject of such Asset Disposition for such period.
"Consolidated Interest Expense" means, for any period for any Person, the
total interest expense of such Person and its Subsidiaries determined in
accordance with U.S. GAAP, PLUS, to the extent not included in such interest
expense (i) interest expense attributable to Capitalized Lease Obligations, (ii)
amortization of debt discount, (iii) capitalized interest, (iv) noncash interest
expense, (v) commissions, discounts and other fees and charges owed with respect
to letters of credit and bankers' acceptance financing and vi) Interest actually
paid by such Person or any such Subsidiary under any Guarantee of Indebtedness
or other obligation of any other Person and less (a) to the extent included in
such interest expense, the amortization of capitalized debt issuance costs and
(b) interest income.
"Consolidated Net Income" means, for any period for any specified Person,
the consolidated net income (loss) of such specified Person and its Subsidiaries
determined in accordance with U.S. GAAP; PROVIDED, HOWEVER, that there shall not
be included in such Consolidated Net Income: (i) any net income (loss) of any
Person acquired by such Person or any of its Subsidiaries in a pooling of
interests transaction for any period prior to the date of such acquisition, (ii)
any net income of any Subsidiary of such specified
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Person if such Subsidiary is subject to restrictions, directly or indirectly, on
the payment of dividends or the making of distributions by such Subsidiary,
directly or indirectly, to such specified Person except to the extent of the
dividends or distributions that may be paid during such period by such
Subsidiary, (iii) any gain or loss realized upon the sale or other disposition
of any assets of such specified Person or its Subsidiaries which are not sold or
otherwise disposed of in the ordinary course of business and any gain or loss
realized upon the sale or other disposition of any Capital Stock of any Person,
(iv) any extraordinary gain or loss, (v) the cumulative effect of a change in
accounting principles, (vi) the net income of any other Person, other than a
Subsidiary of such specified Person, except to the extent of the lesser of (A)
dividends or distributions paid to such specified Person or any of its
Subsidiaries by such other Person and (B) the net income of such other Person
(but in no event less than zero) shall be included and the net loss of such
other Person shall be included only to the extent of the aggregate Investment of
such specified Person or any of its Subsidiaries in such other Person and (vii)
any noncash expenses attributable to grants or exercises of employee stock
options.
"Consolidated Net Worth" of any Person means the total of the amounts shown
on the balance sheet of such Person and its Subsidiaries, determined on a
consolidated basis in accordance with U.S. GAAP, as of the end of the most
recent fiscal quarter of such Person ending prior to the taking of any action
for the purpose of which the determination is being made and for which financial
statements are available (but in no event ending more than 135 days prior to the
taking of such action), as (i) the par or stated value of all outstanding
Capital Stock of such Person plus (ii) paid in capital or capital surplus
relating to such Capital Stock plus (iii) any retained earnings or earned
surplus less (A) any accumulated deficit and (B) any amounts attributable to
Disqualified Stock.
"Continuing Director" of any Person means, as of the date of determination,
any Person who (i) was a member of the Board of Directors of such Person on the
Issue Date or (ii) was nominated for election or elected to the Board of
Directors of such Person with the affirmative vote of a majority of the
Continuing Directors of such Person who were members of such Board of Directors
at the time of such nomination or election.
"Credit Facilities" means, collectively, the Credit Facilities Agreement,
dated September 27, 1995, among the Company and The Industrial Finance
Corporation of Thailand, Thai Farmers Bank Public Company Limited, Siam City
Bank Public Company Limited, The Government Savings Bank, First Bangkok City
Bank Public Company Limited, Nakornthon Bank Public Company Limited, SCF Finance
and Securities Public Company Limited, Siam City Credit Finance and Securities
Public Company Limited, IFCT Finance and Securities Public Company Limited and
First City Investment Finance and Securities Public Company Limited, as such
agreement may be amended, supplemented or otherwise modified in writing from
time to time, including any agreement extending the maturity of, refunding,
refinancing or replacing such agreement (but in no event shall the definition of
Credit Facilities include any amendment, supplement or other modification or
agreement increasing the amount of borrowings available to the Company and its
Subsidiaries).
"Credit Qualified Purchaser" means a purchaser of goods from the Company and
its Subsidiaries (i) pursuant to the Off-Take Agreements, (ii) whose account
receivable is monetized on a non-recourse basis to the Company and its
Subsidiaries pursuant to the terms of the Working Capital Credit Facility, (iii)
which has an investment grade debt rating (or is a controlled subsidiary of a
company with an investment grade debt rating) or (iv) whose account receivable
is fully backed by a letter of credit from a Qualified Financial Institution.
"Currency Agreement" means, in respect of any Person any foreign exchange
contract, currency swap agreement or other similar agreement as to which such
Person is a party or a beneficiary.
"Debentures" means the 12 3/4% Subordinated Second Mortgage Debentures Due
2009 of the Note Issuers.
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"Debenture Specified Senior Indebtedness" means, with respect to the Company
and its Restricted Subsidiaries, (i) Indebtedness of the Company or such
Restricted Subsidiaries represented by the Senior Notes, the Senior Subordinated
Notes and under the Credit Facilities and refinancings thereof with Senior
Indebtedness permitted by the Senior Note Indenture and the Subordinated Note
Indenture and under the Credit Facilities, as the case may be, to the extent the
instrument governing such Refinancing Indebtedness states that it shall be
Specified Senior Indebtedness, and (ii) Indebtedness of the Company Incurred
pursuant to the Senior Guaranty and the Senior Subordinated Guaranty, in the
case of each clause (i) and (ii), together with accrued and unpaid interest
(including Post-Petition Interest) in respect of such Indebtedness.
"Debenture Offering" means the private placement of the Debentures on the
Issue Date.
"Default" means any event, act or condition which with notice or passage of
time or both would become an Event of Default.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
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 (i) matures
or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise,
(ii) is convertible or exchangeable for Indebtedness or Disqualified Stock or
(iii) is redeemable at the option of the holder thereof, in whole or in part, in
each case on or prior to the first anniversary of the Stated Maturity of the
Notes; PROVIDED, HOWEVER, that any Capital Stock that would not constitute
Disqualified Stock but for provisions thereof giving holders thereof the right
to require such Person to repurchase or redeem such Capital Stock upon the
occurrence of an "asset sale" or "change of control" occurring prior to the
first anniversary of the Stated Maturity of the Notes shall not constitute
Disqualified Stock if the "asset sale" or "change of control" provisions
applicable to such Capital Stock are not more favorable to the holders of such
Capital Stock than the provisions described under "--Certain
Covenants--Limitation on Sales of Assets and Subsidiary Stock" and "--Certain
Covenants--Change of Control".
"DRI Plant" means a facility for the production of direct reduced iron and
co-generation power.
"Employment Agreement" means the agreement between the Company and John W.
Schultes dated as of the Issue Date.
"Equity Investment Proceeds" means any amounts received by the Company as a
result of the concurrent sale of equity as of the Issue Date net of all related
fees and expenses.
"Existing Arrangements" shall mean the contracts and other agreements in
effect on the Issue Date to the extent specified in an annex to the Indentures.
"Finishing Facilities" means downstream processing facilities for the
production of high-quality pickled and oiled, cold-rolled, galvanized and other
value-added steel products.
"Guaranty" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness of such other Person (whether arising by virtue of partnership
arrangements, or by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for purposes of assuring in any
other manner the obligee of such Indebtedness of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any Interest Rate Agreement, Currency Agreement or Commodity
Commitment.
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"Hot Mill" means a compact strip production thin-slab hot mill for steel
melting, refining, casting and hot-rolling.
"Incur" means issue, assume, guarantee, incur or otherwise become liable
for. Notwithstanding the foregoing, in the event the Company shall have obtained
Profitable Operations and, thereafter, enters into any revolving credit or
multiple-draw term loan facility in order to fund Phase III Construction Costs,
the Company may treat all or any portion of such revolving credit or
multiple-draw term debt (subject to an aggregate limit of U.S.$150 million) as
being Incurred from and after any date beginning the date that the revolving
credit or multiple-draw term loan facility commitment is extended to the
Company, by furnishing notice thereof to the Trustee, and any borrowings or
reborrowings by the Company under such commitment up to the amount of such
commitment designated by the Company as Incurred shall not be deemed to be new
Incurrences of Indebtedness by the Company; PROVIDED, HOWEVER, that the undrawn
portion of any such revolving or term debt shall be deemed to be outstanding
Indebtedness until such time as the commitment thereunder is terminated.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication), (i) the principal of and premium (if any)
in respect of indebtedness of such Person for borrowed money, (ii) the principal
of and premium (if any) in respect of obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all obligations of
such Person in respect of letters of credit or other similar instruments
(including reimbursement obligations with respect thereto) (other than
obligations with respect to letters of credit securing obligations (other than
obligations described in clauses (i), (ii) and (v)) entered into in the ordinary
course of business of such Person to the extent that such letters of credit are
not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed
no later than the third business day following receipt by such Person of a
demand for reimbursement following payment on the letter of credit), (iv) all
obligations of such Person to pay the deferred and unpaid purchase price of
property or services (except trade payables and accrued expenses incurred in the
ordinary course of business), which purchase price is due more than six months
after the date of placing such property in service or taking delivery and title
thereto or the completion of such services, (v) all Capitalized Lease
Obligations and all Attributable Indebtedness of such Person, (vi) all
indebtedness of other Persons secured by a Lien on any asset of such Person,
whether or not such Indebtedness is assumed by such Person, (vii) all
Indebtedness of other Persons to the extent Guaranteed by such Person, (viii)
the amount of all obligations of such Person with respect to the redemption,
repayment or other repurchase of any Disqualified Stock or any Preferred Stock
of such Person or any of its Subsidiaries to the extent such obligation arises
on or before the Stated Maturity of the Notes (but excluding, in each case,
accrued dividends) and (ix) to the extent not otherwise included in this
definition, obligations under Currency Agreements, Interest Rate Agreements and
Commodity Commitments. The amount of Indebtedness of any Person at any date
shall be the outstanding principal amount of all unconditional obligations as
described above, as such amount would be reflected on a balance sheet prepared
in accordance with U.S. GAAP, and the maximum liability of such Person, upon the
occurrence of the contingency giving rise to the obligation, of any contingent
obligations described above at such date.
"Independent Director" means a member of the board of directors of a Person
that is not an officer, employee or former officer or employee of such Person or
one of its Affiliates and, with respect to any transaction or series of related
transactions, a member of the board of directors who does not have any material
direct or indirect financial interest in or with respect to such transaction or
series of related transactions (including for such purpose the interest of any
other Person with respect to whom such director is also a director, officer or
employee) who is qualified under the regulations prescribed by the Stock
Exchange of Thailand.
"Independent Engineer" means Hatch Associates, Ltd.
"Insolvency or Liquidation Proceeding" means (i) any insolvency or
bankruptcy case or proceeding, or any receivership, liquidation, reorganization
or other similar case or proceeding in connection therewith,
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relating to the Issuers or the Company or any of their respective assets, or
(ii) any liquidation, dissolution or other winding up of the Issuers or the
Company, whether voluntary or involuntary or whether or not involving insolvency
or bankruptcy, or (iii) any assignment for the benefit of creditors or any other
marshaling of assets or liabilities of the Issuers or the Company.
"Interest Payment Date" means the stated maturity of an installment of
interest on the Notes.
"Interest Rate Agreement" means, with respect to any Person, any interest
rate protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar agreement
or arrangement as to which such Person is party or a beneficiary.
"Investment" in any Person means any direct or indirect advance, loan (other
than advances to customers in the ordinary course of business that are recorded
as accounts payable on the balance sheet of such Person) or other extension of
credit (including by way of Guarantee or similar arrangement, but excluding any
debt or extension of credit represented by a bank deposit other than a time
deposit) or capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others), or any purchase or acquisition of Capital Stock, Indebtedness or
other similar instruments issued by such Person.
"Iron Ore Fines Supply Agreement" means the agreement between the Company
and MMTC Limited dated February 6, 1997.
"Issue Date" means the date on which the Notes are originally issued.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Management Agreement" means the agreement between the Company and NSM
Management Company, LLC dated as of the Issue Date.
"Mechanical Completion" means the point in time when the DRI Plant, the Hot
Mill and the Downstream Finishing Facilities have been completed and certified
as complete by the Independent Engineer.
"Mill" means collectively the DRI Plant, the Hot Mill and the Finishing
Facilities.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Available Cash" from an Asset Disposition means cash payments received
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise, but only as and when
received) therefrom, in each case net of (i) all legal, title and recording tax
expenses, commissions and other fees and expenses incurred, and all taxes
required to be paid or accrued as a liability under U.S. GAAP, as a consequence
of such Asset Disposition, (ii) all payments made on any Indebtedness which is
secured by any assets subject to such Asset Disposition in accordance with the
terms of any Lien upon such assets, or which must by its terms, or in order to
obtain a necessary consent to such Asset Disposition or by applicable law, be
repaid out of the proceeds from such Asset Disposition, (iii) all distributions
and other payments required to be made to any Person owning a beneficial
interest in assets subject to sale or minority interest holders in Subsidiaries
or joint ventures as a result of such Asset Disposition, (iv) the deduction of
appropriate amounts to be provided by the seller as a reserve, in accordance
with U.S. GAAP, against any liabilities associated with the assets disposed of
in such Asset Disposition; PROVIDED, HOWEVER, that upon any reduction in such
reserves (other than to the extent resulting from payments of the respective
reserved liabilities), Net Available Cash shall be increased by the amount of
such reduction to reserves, and retained by the Issuers or any Project
Subsidiary after such Asset Disposition and (v) any portion of the purchase
price from an Asset Disposition placed in escrow (whether as a reserve for
adjustment of the purchase price, for satisfaction of indemnities in respect of
such Asset
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Disposition or otherwise in connection with such Asset Disposition); PROVIDED,
HOWEVER, that upon the termination of such escrow, Net Available Cash shall be
increased by any portion of funds therein released to the Issuers, the Company
or any Restricted Subsidiary.
"Net Cash Proceeds," with respect to any issuance or sale of Capital Stock,
means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result of such issuance or sale.
"Notes Net Proceeds" means the net proceeds from the sale of the Notes less
the portion thereof applied to pay in full all Indebtedness of the Company
required to be paid with such proceeds and to pay all fees and expenses relating
to the issuance of the Notes.
"Off-Take Agreements" collectively mean the agreements between the Company
and Preussag Handel GmbH and the Company and Klockner Steel Trading each dated
November 19, 1997, as such agreements may be amended, supplemented or otherwise
modified in writing from time to time.
"Pari Passu", as applied to the ranking of any Indebtedness of a Person in
relation to other Indebtedness of such Person, means that each such Indebtedness
is not subordinated in right of payment to the same Indebtedness as is the
other, and is so subordinate to the same extent, and is not subordinate in right
of payment to each other or to any Indebtedness as to which the other is not so
subordinate.
"Permitted Foreign Investment" means, with respect to any Person, an
Investment by such Person in (i) cash and (ii) Cash Equivalents.
"Permitted Hedging Obligations" means (a) Indebtedness under Hedging
Obligations to the extent related to the Securities and any Refinancing
Indebtedness; and (b) Indebtedness under Commodity Commitments or Currency
Agreements entered into in the ordinary course of business in good faith as a
risk management or hedge against change in market conditions; provided, however,
that in the case of this clause (b) the aggregate amount of commodities
underlying all such Commodity Commitments on any date, for the Company and the
Restricted Subsidiaries, that mature or expire over any 12 month period may not
exceed the Company's expected requirements for such commodities over such 12
month period;.
"Permitted Investments" means (i) investments in direct obligations of the
United States of America maturing within 90 days of the date of acquisition
thereof, (ii) investments in certificates of deposit maturing within 90 days of
the date of acquisition thereof issued by a Qualifying Financial Institution or,
to the extent funds are required by applicable law to be maintained in Baht,
certificates of deposit, promissory notes or other instruments, in each case
able to be pledged, of a Qualifying Domestic Financial Institution, (iii)
investments in commercial paper given the highest rating by S&P and Moody's and
maturing not more than 90 days from the date of acquisition thereof, (iv)
Investments in Phase II Construction Costs, (v) the Co-Gen Investment (less the
amount of any Investment made pursuant to clause (viii) below), (vi) Investments
in transportation and downstream processing assets using the proceeds of the
repayment of the Cogen Investment provided that the Securities are secured by a
Lien on such assets that is senior to or PARI PASSU with any other Lien on such
assets, (vii) restructurings, swaps or other dispositions of the Related Party
Receivable; PROVIDED that (a) any such disposition shall result in the receipt
by the Company of tangible assets and (b) the Securities shall be secured by a
Lien on such assets that is senior to or PARI PASSU with any other Lien on such
assets; and (viii) other investments in an aggregate amount not to exceed the
lesser of an amount equal to (a) the sum of all principal repayments on the
U.S.$15.5 million loan made by the Company in connection with the Co-Gen
Investment and (b) U.S.$15.5 million.
"Permitted Liens" means, with respect to any Person, (a) pledges or deposits
by such Person under workers' compensation laws, unemployment insurance laws or
similar legislation, or good faith deposits in connection with bids, tenders,
contracts (other than for the payment of Indebtedness) or leases to which such
Person is a party, or deposits to secure public or statutory obligations of such
Person or deposits of cash or United States government bonds to secure surety or
appeal bonds to which such Person is a party,
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or deposits as security for contested taxes or import duties or for the payment
of rent, in each case Incurred in the ordinary course of business; (b) Liens
imposed by law, such as carriers', warehousemen's and mechanics' Liens, in each
case for sums not yet due or being contested in good faith by appropriate
proceedings or other Liens arising out of judgments or awards against such
Person with respect to which such Person shall then be proceeding with an appeal
or other proceedings for review; (c) Liens for property taxes not yet subject to
penalties for non-payment or which are being contested in good faith by
appropriate proceedings; (d) Liens in favor of issuers of surety bonds or
letters of credit issued pursuant to the request of and for the account of such
Person in the ordinary course of its business; PROVIDED, HOWEVER, that such
letters of credit do not constitute Indebtedness; (e) minor survey exceptions,
minor encumbrances, easements or reservations of, or rights of others for,
licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines
and other similar purposes, or zoning or other restrictions as to the use of
real property or Liens incidental to the conduct of the business of such Person
or to the ownership of its properties which were not Incurred in connection with
Indebtedness and which do not in the aggregate materially adversely affect the
value of said properties or materially impair their use in the operation of the
business of such Person; (f) Liens securing Indebtedness Incurred to finance the
construction, purchase or lease of, or repairs, improvements or additions to,
property of such Person; PROVIDED, HOWEVER, that the Lien may not extend to any
other property owned by such Person or any of its Subsidiaries at the time the
Lien is Incurred, and the Indebtedness (other than any interest thereon) secured
by the Lien may not be Incurred more than 180 days after the later of the
acquisition, completion of construction, repair, improvement, addition or
commencement of full operation of the property subject to the Lien; (g) Liens to
secure the Notes and the Guaranties and, to the extent such liens secure the
Notes and the Guaranties on a first priority basis, Liens to secure the
Debentures and the Company's Guarantee of the Debentures on a second priority
basis; (h) Liens securing Indebtedness permitted under clause (b)(1) of the
covenant entitled "Limitation on Indebtedness" to the extent such Liens (other
than Liens on inventories) also secure, on an equal and ratable basis, the
Issuers' and the Company's obligations under the Notes; (h) Liens existing on
the Issue Date; (i) Liens on property or shares of Capital Stock of another
Person at the time such other Person becomes a Subsidiary of such Person;
PROVIDED, HOWEVER, that such Liens are not created, incurred or assumed in
connection with, or in contemplation of, such other Person becoming such a
Subsidiary; PROVIDED FURTHER, HOWEVER, that such Lien may not extend to any
other property owned by such Person or any of its Subsidiaries; (j) Liens on
property at the time such Person or any of its Subsidiaries acquires the
property, including any acquisition by means of a merger or consolidation with
or into such Person or a Subsidiary of such Person; PROVIDED, HOWEVER, that such
Liens are not created, incurred or assumed in connection with, or in
contemplation of, such acquisition; PROVIDED FURTHER, HOWEVER, that the Liens
may not extend to any other property owned by such Person or any of its
Subsidiaries; (k) Liens securing Indebtedness or other obligations of a
Subsidiary of such Person owing to such Person or a wholly owned Subsidiary of
such Person; (l) Liens securing Hedging Obligations so long as such Hedging
Obligations relate to Indebtedness that is, and is permitted to be under this
Indenture, secured by a Lien on the same property securing such Hedging
Obligations; and (m) Liens to secure any Refinancing (or successive
Refinancings) as a whole, or in part, of any Indebtedness secured by any Lien
referred to in the foregoing clauses (f), (h), (i) and (j); PROVIDED, HOWEVER,
that (x) such new Lien shall be limited to all or part of the same property that
secured the original Lien (plus improvements to or on such property) and (y) the
Indebtedness secured by such Lien at such time is not increased to any amount
greater than the sum of (A) the outstanding principal amount or, if greater,
committed amount of the Indebtedness described under clauses (f), (h), (i) or
(j) at the time the original Lien became a Permitted Lien and (B) an amount
necessary to pay any fees and expenses, including premiums, related to such
refinancing, refunding, extension, renewal or replacement. For purposes of this
definition, the term "Indebtedness" shall be deemed to include interest on such
Indebtedness.
"Person" means any individual corporation, partnership, joint venture,
association, joint-stock Issuers, trust, unincorporated organization, government
or any agency or political subdivision hereof or any other entity.
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"Phase II Completion" means the completion of the construction of the Hot
Mill, the DRI Plant and the Downstream Finishing Facilities.
"Phase II Construction Costs" mean construction costs associated with the
Hot Mill, the DRI Plant and the Downstream Finishing Facilities, in each case
certified as true and correct by the Independent Engineer.
"Phase III Construction Costs" mean construction costs incurred in
connection with the Mill after Phase II Completion.
"Post-Petition Interest" means all interest accrued or accruing after the
commencement of any Insolvency or Liquidation Proceeding (and interest that
would accrue but for the commencement of any Insolvency or Liquidation
Proceeding) in accordance with and at the contract rate (including, without
limitation, any rate applicable upon default) specified in the agreement or
instrument creating, evidencing or governing any Indebtedness, whether or not,
pursuant to applicable law or otherwise, the claim for such interest is allowed
as a claim in such Insolvency or Liquidation Proceeding.
"Preferred Stock", as applied to the Capital Stock of any corporation, means
Capital Stock of any class or classes (however designated) 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 corporation, over
shares of Capital Stock of any other class of such corporation.
"President and/or CEO" means John W. Schultes or his successor appointed by
Management Co.
"Profitable Operations" means the point in time at which Consolidated Cash
Flow for a consecutive six month period equals at least 200% of Consolidated
Interest Expense for such six month period, to the extent such status has been
demonstrated in a certificate of the General Manager delivered to the Collateral
Agent, accompanied by a certificate of the Company's independent accountants
confirming such results based on a review conducted by such accountants.
"Project Documents" means and includes (i) the Offtake Agreements, (ii) the
SDI Agreement, (iii) the SDI License Agreement, (iv) the Management Agreement,
(v) the Shareholders Agreement, (vi) the Coal Supply Agreement, (vii) the Iron
Ore Fines Supply Agreement, (viii) the Working Capital Credit Facility, (ix) the
Agency Agreement, (x) the Employment Agreement, and (xi) the Sriracha Harbor
Agreement.
"Public Equity Offering" means an offering to the public for cash by the
Issuers or the Company of its common stock, or options, warrants or rights with
respect to its common stock.
"Qualifying Domestic Financial Institution" means a financial institution in
Thailand having capital and surplus in excess of U.S.$1,000,000,000.
"Qualifying Financial Institution" means a financial institution that (i) is
domiciled in the United States, the United Kingdom, France or Germany, (ii) is
located in New York, New York and (iii) has capital and surplus in excess of
U.S.$5,000,000,000.
"Refinance" means, in respect of any Indebtedness, to refinance, extend,
renew, refund, repay, prepay, redeem, defease or retire, or to issue other
Indebtedness in exchange or replacement for, such Indebtedness. "Refinanced" and
"Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances any
Indebtedness of the Company or any Restricted Subsidiary existing on the Issue
Date or incurred in compliance with the Indenture including Indebtedness that
Refinances Refinancing Indebtedness; PROVIDED, HOWEVER, that (i) such
Refinancing Indebtedness has a Stated Maturity no earlier than the Stated
Maturity of the Indebtedness being Refinanced, (ii) such Refinancing
Indebtedness has an Average Life at the time such Refinancing Indebtedness is
Incurred that is equal to or greater than the Average Life of the Indebtedness
being Refinanced and (iii) such Refinancing indebtedness has an aggregate
principal amount (or if Incurred with
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original issue discount, an aggregate issue price) that is equal to or less than
the aggregate principal amount (or if Incurred with original issue discount, the
aggregate accreted value then outstanding or committed (plus fees and expenses,
including any premium and defeasance costs) under the Indebtedness being
Refinanced; PROVIDED, further, however, that Refinancing Indebtedness shall not
include (x) Indebtedness of a Subsidiary that Refinances Indebtedness of the
Company or (y) Indebtedness of the Company or a Restricted Subsidiary that
Refinances Indebtedness of an unrestricted Subsidiary.
"Registrable Machinery" means machinery that qualifies for registration
pursuant to the Machinery Registration Act (Thailand) and that may be mortgaged
to secure a debt.
"Related Party Receivable" means the up to U.S.$50 million of receivables
owed to NSM by certain of its affiliates.
"Representative" means any trustee, agent or representative (if any) for an
issue of Specified Senior Indebtedness of the Company.
"Restricted Subsidiary" means, initially, each Subsidiary of the Company
existing on the date of the Indenture, and any other Subsidiary designated from
time to time by the Board of Directors of the Company as a "Restricted
Subsidiary" in accordance with the Indenture.
"S&P" means Standard & Poor's Rating Services, a division of McGraw-Hill,
Inc., and its successors.
"Sale/Leaseback Transaction" means an arrangement relating to property now
owned or hereafter acquired whereby the Company or a Restricted Subsidiary
transfers such property to a Person and the Company or a Restricted Subsidiary
leases it from such Person.
"SDI Agreement" means the agreement between NSM Management Company, LLC and
Steel Dynamics, Inc. dated as of the Issue Date.
"SDI License Agreement" means the agreement between the Company and Steel
Dynamics, Inc. dated as of the Issue Date.
"Security Documents" means all the agreements, charges, documents and
instruments governing or creating the security interests in the Collateral for
the benefit of the holders of the Notes, the Bank Credit Facility and the
Debentures and shall in any event include (i) Security Sharing Agreement; (ii)
Land and Building Mortgage Agreement; (iii) Pledge of Offshore Reserve Account
and the Notes DSR Account; (iv) Machinery Pledge Agreement; (v) Machinery
Mortgage Agreement; (vi) Assignment of Insurance; (vii) Conditional Assignment
of Project Documents; (viii) Assignment of Operating Account, Note Sinking Fund
Account and Revenue Account; (ix) Pledge of Operating Account and Revenue
Account; (x) Pledge of Permitted Investments; (xi) Pledge of all issued and
outstanding shares of each of the Issuers; (xii) Assignment of Performance Bonds
and (xiii) any other documents relating to the Collateral and executed in
connection with the foregoing.
"Security Sharing Agreement" means an agreement dated as of the Issue Date
among the Issuers, the Company, certain Thai financial institutions party to the
Bank Credit Facility, holders of the Debentures, the Book-Entry Depositary and
the Collateral Agent.
"Senior Indebtedness" means, with respect to any Person, (i) Indebtedness
Incurred pursuant to the Credit Facilities, (ii) the Senior Notes and, with
respect to the Senior Subordinated Note Indenture and the Debenture Indenture,
the Senior Subordinated Notes and (ii) all indebtedness of such Person,
including interest thereon (including Post-Petition Interest), whether
outstanding on the Issue Date or thereafter Incurred, unless in the instrument
creating or evidencing the same or pursuant to which the same is outstanding it
is expressly provided that such obligations are not superior in right of payment
to the Securities or the applicable Guaranty; PROVIDED, HOWEVER, that Senior
Indebtedness shall not include (1) any obligation of such Person, (2) any
liability for Federal, state, local or other taxes owed or owing by such Person,
(3) any accounts payable or other liability to trade creditors arising in the
ordinary course of
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business (including Guaranties thereof or instruments evidencing such
liabilities), (4) any Indebtedness of such Person (other than, in the case of
the Senior Subordinated Indenture and the Debenture Indenture, the Senior
Subordinated Notes) which is expressly subordinate in right of payment to any
other Indebtedness of such Person, including any Subordinated Indebtedness, (5)
any obligations with respect to any Capital Stock, or (6) any Indebtedness
Incurred in violation of the applicable Indenture.
"Shareholders' Agreement" means the agreement dated as of the Issue Date
between Steel Dynamics, Inc., Enron Corp., McDonald & Company Securities, Inc.,
Sawardi Horrungruang, N.T.S. Steel Group (Plc.) Co., Ltd. and NSM and certain
purchasers of Capital Stock of the Company in connection with the Debentures.
"Specified Senior Indebtedness" means, with respect to the Company and its
Restricted Subsidiaries, (i) Indebtedness of the Company or such Restricted
Subsidiaries represented by the Senior Notes and refinancings thereof with
Senior Indebtedness permitted by the Senior Note Indenture to the extent the
instrument governing such Refinancing Indebtedness states that it shall be
Specified Senior Indebtedness, and (ii) Indebtedness of the Company Incurred
pursuant to the Senior Guaranty, in the case of each clause (i) and (ii),
together with accrued and unpaid interest (including Post-Petition Interest) in
respect of such Indebtedness.
"Sriracha Harbor Agreement" means the agreement between Sriracha Harbor
Public Company Limited and the Company, relating to the use by the Company of
the Sriracha Harbor port, dated as of the Issue Date.
"Stated Maturity" means, with respect to any security, the date specified in
such security as the fixed date on which the payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision.
"Subordinated Indebtedness" means Indebtedness of the Company, the Issuers
or a Restricted Subsidiary that is subordinated in right of payment to the
Senior Notes; PROVIDED, HOWEVER, that the term "Subordinated Indebtedness shall
be deemed in the Senior Subordinated Indenture and the Debenture Indenture not
to include the Senior Subordinated Notes.
"Subsidiary" of any Person means any corporation, association, partnership
or other business entity of which more than 50% of the total voting power of
shares of Capital Stock or other Interests (including partnership interests)
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by (i) such Person, (ii) such Person and one
or more Subsidiaries of such Person or (iii) one or more Subsidiaries of such
Person. Unless otherwise specified herein, each reference to a Subsidiary shall
refer to a Subsidiary of the Issuers.
"Thai GAAP" means generally accepted accounting principals in Thailand as in
effect as of the date of the Indentures.
"U.S. GAAP" means generally accepted accounting principles in the United
States as in effect as of the date of the Indenture. All ratios and computations
based on U.S. GAAP contained in the Indenture shall be computed in conformity
with U.S. GAAP.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable or redeemable at the issuer's option.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at
the time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary of
the Company (including any newly acquired or newly formed Subsidiary) to be an
Unrestricted
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Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Capital
Stock or Indebtedness of, or holds any Lien on any property of, the Company or
any other Subsidiary of the Company that is not a Subsidiary of the Subsidiary
to be so designated; PROVIDED, HOWEVER, that either (A) the Subsidiary to be so
designated has total assets of $1,000 or less or (B) if such Subsidiary has
assets greater than $1,000, such designation would be permitted under the
covenant described under "--Certain Covenants--Limitation on Restricted
Payments".
"Vendor Financing" means financing made available by vendors to finance
equipment and/or plant included in the Mill on extended pay terms.
"Wholly-Owned Restricted Subsidiary" means a Restricted Subsidiary all the
outstanding Capital Stock (other than directors' qualifying shares) of which are
owned by the Company or another Wholly-Owned Restricted Subsidiary.
"Working Capital Credit Facility" means the Credit Facility dated as of the
Issue Date between the Company and Banque National de Paris.
"Working Capital Requirements" means general corporate purposes, including
operating expenses, debt service and the Co-Gen Investment.
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SECURITY ARRANGEMENTS
COLLATERAL FOR THE SECURITIES AND THE GUARANTIES
The Note Issuers' obligations under the Securities are secured by a pledge
of the capital stock of NSM (Del) (together with the shares described in clause
(viii) of the immediately following sentence, the "Pledged NSM Stock"). Subject
to certain exceptions described herein, the Company's obligations under the
Guaranties (other than the Debenture Guaranty) are secured equally and ratably,
on a first priority basis, by (i) a first mortgage over the land and buildings
comprising the Mill (except for the Co-Gen Facility); (ii) a security interest
in all amounts in the Offshore Reserve Account and the Notes DSR Account; (iii)
a security interest in all machinery and equipment located at the Mill; (iv) an
assignment of all insurance and reinsurance policies maintained by the Company
on the Mill; (v) an assignment of the Company's rights and benefits under the
Project Documents; (vi) an assignment and pledge of the Revenue Account,
Operating Account and Notes Sinking Fund Account; (vii) a pledge of Permitted
Investments; (viii) a pledge of all issued and outstanding shares of NSM Cayman;
and (ix) an assignment of Performance Bonds (all such collateral security, the
"Collateral").
The Collateral (other than the Offshore Reserve Account and the Notes DSR
Account and the pledge of shares of NSM Cayman) also secures, on an equal and
ratable first priority basis with the Notes and the Guaranties (other than the
Debenture Guaranty), the Indebtedness under the Bank Credit Facility. In
addition, all Collateral secures, on a second priority basis, the obligations of
the Company in respect of the Debenture Guaranty. The respective rights in the
Collateral of the holders of the Notes, the Thai lenders under the Bank Credit
Facility and the holders of the Debentures are governed by the terms of the
Security Sharing Agreement. In the event of a default under the Senior
Indebtedness, there can be no assurance that proceeds upon a distribution will
be sufficient to repay amounts due under the senior Indebtedness, including the
Notes and the Guaranties. See "Risk Factors--No Assurance of Adequate
Collateral; Shared Collateral."
THE SECURITY DOCUMENTS
The Security Documents which create an interest in the various types of
Collateral are as follows: (i) a security interest in the land and buildings
comprising the Mill, except the Co-Gen Facility, has been granted pursuant to a
mortgage; (ii) a security interest in the proceeds in the Offshore Reserve
Account and the Notes DSR Account has been granted pursuant to a conditional
assignment; (iii) a security interest in all machinery and equipment located at
the Mill has been granted initially pursuant to a pledge, and later, for
Registrable Machinery, to be converted to a machinery mortgage; (iv) a security
interest in the insurance policies covering the Mill has been granted pursuant
to an assignment and an assignment of all reinsurance; (v) a security interest
in the rights and benefits under the Project Documents has been granted pursuant
to a conditional assignment; (vi) a security interest in the Operating Account,
Revenue Account and Notes Sinking Fund Account has been granted pursuant to an
assignment and pledge; (vii) a security interest in Permitted Investments has
been granted pursuant to a pledge; (viii) a security interest in all issued and
outstanding shares of each of the Note Issuers has been granted pursuant to a
pledge and (ix) a security interest in the Performance Bonds has been granted
pursuant to an assignment. Other than the pledge of shares and the security
interest in the Offshore Reserve Account, Notes DSR Account and Notes Sinking
Fund Account, which are governed by New York law, the Security Documents are
governed by and construed in accordance with Thai law.
The following summaries do not purport to be a complete description of the
Security Documents or the Security Sharing Agreement referred to below.
SECURITY RIGHTS IN LAND AND BUILDINGS
In Thailand, land ownership is governed primarily by the Land Code, B.E.
2497 (1954) (the "Land Code"), its implementing regulations and Book IV of the
Civil and Commercial Code (the "CCC").
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Title deeds are the most secure form of evidence of land ownership in
Thailand. However, title deeds are not issued for land located in unsurveyed
areas of Thailand.
The approximately 494 rai of land on which the Mill is located is held under
17 separate land title deeds. Under the land title deeds, the Company has the
right to erect, own, occupy and use buildings on such land.
The Mill is located in the Chonburi Industrial Estate (Bo Win) which is
managed by the Hemmaraj Land and Development Public Company Limited ("Hemmaraj")
under the authority of the Industrial Estate Authority of Thailand ("IEAT"). The
Company initially purchased a majority of the land located at the Mill on August
31, 1994 from Hemmaraj and as required by the land purchase agreement, must use
the land in accordance with IEAT regulations.
Under Thai law, a mortgage will not be valid until it is registered with the
local Land Office in which the property is located. Such a mortgage extends to
all permanent fixtures and buildings on the land but it does not accord mortgage
rights over buildings erected on the land after the date the mortgage is
registered unless so provided in the mortgage application.
Another feature of Thai law requires the principal amount of the obligations
secured by mortgages to be expressed in Baht when being registered in the local
Land Office. As a result, the principal amounts secured by the mortgages (the
"Mortgaged Amounts") in the land and buildings comprising the Mill granted as
security for the Company's obligations under the Guaranties, along with other
collateral denominated in Baht, could decrease in terms of U.S.$ in the event of
a depreciation in the value of the Baht in relation to the U.S.$.
In order to mitigate this risk, each mortgage has been registered in a
principal amount expressed in Baht that is based on an exchange rate of Baht to
U.S.$ of Baht 75 to U.S.$1.00. As the actual exchange rate as quoted by the Bank
of Thailand at the close of business on March 12, 1998 was Baht 41.4 to
U.S.$1.00, the use of this rate is designed to allow for a substantial decrease
in the value of the Baht without affecting the integrity of the security
provided by the mortgages. To provide further protection, each mortgage also
provides that the Company is required to increase the Mortgaged Amounts from
time to time in respect of each mortgage at its own expense in order to maintain
a Mortgaged Amount based on an exchange rate of Baht to U.S.$ that is no less
than Baht 15 per U.S.$1.00 higher than the actual exchange rate quoted at the
close of business on any business day by the Bank of Thailand. The mortgages
provide that this obligation of the Company will be triggered if, at any time,
the exchange rate of Baht to U.S.$ upon which the Mortgaged Amounts are then
based does not exceed the actual exchange rate quoted by the Bank of Thailand by
at least Baht 10 per U.S.$1.00.
A mortgage of land can be enforced in Thailand only upon order of a court
judgment and sale at a public auction, unless (i) interest has been unpaid for
five years or more, (ii) the mortgagor cannot satisfy the court that the value
of the property exceeds the amount due, and (iii) there are no other mortgages
or preferential rights registered on the same property, in which case,
foreclosure is possible. Under Thai law, each secured creditor must be
registered as a "mortgagee" in order to enforce their security interest in the
mortgaged property. Normally, an agent such as the Collateral Agent would not
have standing in a Thai court to enforce a mortgage collectively on behalf of
all holders of the Securities since at the time of the Offerings the Collateral
Agent would not be the official registered holder of the Securities.
To enable the holders of the Securities to enforce their security interests
in the Collateral in compliance with Thai law, an arrangement has been effected,
whereby the Collateral Agent will become the record owner of the Securities for
enforcement purposes should enforcement of the mortgage of the Company's assets
in Thailand become necessary. However, there can be no assurance that a Thai
court will recognize the Collateral Agent as having standing to enforce the
mortgages comprising the Collateral on behalf of the holders of the Securities.
See "--Enforcement of Collateral;" "Risk Factors--No Assurance of Adequate
Collateral; Ability to Realize on Collateral" "--Book-Entry Interests;
Dependence on Intermediaries."
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SECURITY RIGHTS IN MACHINERY AND EQUIPMENT
Under Thai law, machinery that has been registered pursuant to the Machinery
Registration Act (the "Act") may be mortgaged to secure a debt ("Registerable
Machinery"). According to the Act, such a mortgage may only be registered after
the import and installation of the machinery and after registration of ownership
under the Act. Enforcement of a machinery mortgage involves the same procedures
as a land mortgage, i.e., a court judgment and public auction, unless for
example interest has been unpaid for 5 years or more, in which case, foreclosure
is possible. Under Thai practice, as is the case with mortgages of land and
buildings, each secured creditor must be registered as a "mortgagee".
As of the Issue Date, no machinery of the Company has been registered
pursuant to the Machinery Registration Act. This is because final acceptance of
the machinery by the Company will not occur by such date. As soon as the
machinery is accepted in accordance with the Machinery Registration Act, they
will be examined by an official of IEAT. At that point, the Company will
register the machinery with the relevant authority. In the interim and for
machinery that is not eligible as Registrable Machinery, a security interest in
such machinery, equipment and construction material located at the Mill shall be
granted by the Company pursuant to a pledge in favor of the Book-Entry
Depositary. Under the Security Sharing Agreement, the Company is obligated to
(i) register all Registrable Machinery at the Mill and (ii) cause the existing
pledge of machinery to be converted to a mortgage registered in favor of the
holders of Senior Indebtedness and the Debentures.
Thai law requires the principal amount of the obligations secured by
mortgages to be expressed in Baht when being registered with the appropriate
Thai authorities. As a result, the Mortgaged Amounts in all of the machinery and
equipment of the Company granted as security for the Company's obligations under
the Guaranties, along with other collateral denominated in Baht, could decrease
in terms of U.S.$ dollars in the event of a depreciation in the value of the
Baht in relation to the U.S.$.
In order to mitigate this risk, the mortgages will be registered in
principal amounts expressed in Baht that are based on the exchange rate, and
also have the benefit of the adjustment mechanism, described above under the
caption "--Security Rights in Land and Buildings".
To enable the holders of the Securities to enforce their security interests
in the Collateral in compliance with Thai law, an arrangement will be effected,
on the Issue Date, whereby the Collateral Agent will become the record owner of
the Securities for enforcement purposes should enforcement of the mortgage of
the Company's assets in Thailand become necessary. However, there can be no
assurance that a Thai court will recognize the Collateral Agent as having
standing to enforce the mortgages comprising the Collateral on behalf of the
holders of the Securities. See "--Enforcement of Collateral;" "Risk Factors--No
Assurance of Adequate Collateral; Ability to Realize on Collateral"
"--Book-Entry Interests; Dependence on Intermediaries."
Under Thai law, a pledge requires satisfaction of elements prescribed in the
CCC, including a pledge of "specific goods" and possession of the goods in the
pledgee or third party.
SECURITY INTEREST IN INSURANCE
The Company has assigned all insurance policies to the parties to the Bank
Credit Facility and the Collateral Agent (the "Insurance Assignment"). The
Insurance Assignment provides that, immediately upon the effectiveness of the
Insurance Assignment or upon the issuance to the Company of additional insurance
policies or reinsurance relating thereto with respect to the property covered by
(or to be covered by) such insurance ("Additional Insurance"), the Company will
give to or obtain from each insurer, broker, underwriter and reinsurer that is a
party to any insurance policies relating to the Collateral (the "Proceeds
Collateral") a formal notice and/or written approval or acknowledgment that the
assignment of the Proceeds Collateral has been made to the Collateral Agent and
will, promptly, but not later than 90 days after the date of the Insurance
Assignment, or, in the case of Additional Insurance which is issued after the
date of the Insurance Assignment, promptly, but not later than 90 days after the
date of the issue of such
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Additional Insurance, obtain and furnish to the Collateral Agent an
acknowledgment or approval of such insurer, broker, underwriter or reinsurer
written and signed on each such insurance policy.
The Company also agreed to comply with the terms of each such insurance
policy, including timely payment of all insurance premiums required thereunder.
All insurance proceeds received in respect of an involuntary loss and which
event is a collateral disposition shall be deposited into the Revenue Account in
accordance with the provisions under "-- Security Sharing Agreement--Proceeds
Received Under the Security Documents."
In Thailand, there is no system of registration of security interests by way
of an assignment. In addition, an assignment of rights is not effective under
Thai law against a third party obligor until either notice of the assignment is
given to the obligor or written acknowledgment of the assignment is received
from the obligor.
ASSIGNMENT AND PLEDGE OF ACCOUNTS
The Company entered into arrangements with the Collateral Agent to
establish, INTER ALIA, the Notes DSR Account, the Offshore Revenue Account, the
Notes Sinking Fund Account, the Revenue Account and the Operating Account, and
to establish the Collateral Agent's rights and obligations with respect thereto.
In addition, the Company granted a security interest in all amounts deposited in
the Company's bank accounts (the "Accounts"). The security interest will be a
perfected security interest only upon formal notice to, or written
acknowledgment by, the bank in which the account is held. Initially, the
Accounts will be held with the Collateral Agent and a perfected security
interest will be established. The Company has the right under the Indentures to
establish sub-accounts or additional accounts to form part of the Accounts,
PROVIDED that the Collateral Agent receives an opinion of counsel from the
Company in form acceptable to the Collateral Agent such that a perfected
security interest over any such account has been established in favor of the
registered holder of Securities prior to any funds being deposited therein.
Unless otherwise provided in the Indentures, the Company is authorized to
continue to control investment decisions with respect to the funds in the
Accounts until a Notice of Actionable Default has been issued by the Trustee or
the Facility Agent under the Bank Credit Facility. At such time, the Collateral
Agent is authorized to control investment decisions with respect to funds in the
Accounts and realize upon its security interest.
There is no registration process with respect to the security interest in
the Accounts and, if multiple security interests are granted over the same
account, the security interest granted first in time will have priority. Except
as otherwise contemplated by the Security Documents, the failure of either the
assignment or pledge of the Accounts to constitute a first priority lien on the
Accounts at any time constitutes an Event of Default. In addition, an assignment
of rights is not effective, under Thai law, against a third party obligor until
either notice of the assignment is given to the obligor or written
acknowledgment of the assignment is received from the obligor.
PLEDGE OF PERMITTED INVESTMENTS
Prior to the first time the Company makes a Permitted Investment described
under "Description of Notes and Guaranties--Certain Covenants--Limitations on
Restricted Payments", the Company agrees to grant security interests, by way of
pledges executed in favor of the Collateral Agent, in all amounts invested in
Permitted Investments. The security interest will be a perfected security
interest only upon formal notice to, or written acknowledgment by, the bank in
which the account is held. Unless otherwise provided in the Indentures, the
Company is authorized to continue to control investment decisions with respect
to Permitted Investments until a Notice of Actionable Default has been issued by
the Trustee. At such time the Collateral Agent is authorized to control
investment decisions with respect to funds in Permitted Investments and realize
upon its security interest.
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PLEDGE OF SHARES
The Securities are secured by a pledge of all issued and outstanding shares
of NSM (Del). The pledge agreement grants a security interest in the capital
stock of NSM (Del) in favor of the Trustee. The pledge agreement is governed by
New York State law.
The Guaranties are secured by the Collateral, including a pledge of all
issued and outstanding shares of NSM Cayman. The pledge agreement grants a
security interest in the capital stock of NSM Cayman in favor of the Collateral
Agent. The pledge agreement is governed by the laws of Cayman Islands.
ASSIGNMENT OF PERFORMANCE BONDS
Under the Bank Credit Facility, the Lenders agreed to release their existing
security interests in five different performance bonds (the "Performance Bonds")
which have been assigned to secure the Company's right to receive payments or
damages arising in connection with certain supply contracts. The Company, the
Collateral Agent and the Lenders entered into a new separate assignment
arrangement whereby (i) the Company assigned all of its interests under the
Performance Bonds to the Collateral Agent and (ii) the Lenders share such
Collateral on a pari passu basis as per the terms of the Security Sharing
Agreement.
As noted previously, in Thailand there is no system of registration of
security interests by way of an assignment. In addition, an assignment of rights
is not effective, under Thai law, against a third party obligor until either
notice of the assignment is given to the obligor or written acknowledgement of
the assignment is received from the obligor.
CONDITIONAL ASSIGNMENT OF PROJECT DOCUMENTS
The Company conditionally assigned all rights, title and interest in and to
the Project Documents related to the construction of the Mill and conditionally
transfer all of its obligations under the Project Documents to the parties to
the Bank Credit Facility and the Collateral Agent (the "Conditional Assignment
of the Project Documents"). The Conditional Assignment of the Project Documents
provides that when the conditional assignment becomes effective, the Thai
Facility Agent and the Collateral Agent may substitute its designee as a party
to the Project Documents in place of the Company.
The conditional assignment shall become effective upon receipt by the
Collateral Agent of a notice of an event of default under the Bank Credit
Facility and the Indentures.
SECURITY SHARING AGREEMENT
The Trustee and the Collateral Agent, on behalf of the holders of the Notes,
the representative of the holders of the Debentures, on behalf of such holders,
and the facility agent (the "Facility Agent") on behalf of the lenders under the
Bank Credit Facility (the Trustee, the Collateral Agent, the Book-Entry
Depositary and the Facility Agent, the "Secured Parties"), and the Company
entered into the Security Sharing Agreement. The Security Sharing Agreement
governed the rights of the Secured Parties with respect to the Collateral,
including the right to direct remedies upon Default.
In order to preserve the priority of the mortgage interests granted to the
holders of the Senior Notes and the Senior Subordinated Notes and the creditors
under the Bank Credit Facility over the second priority mortgage interests
granted to the holders of the Debentures, the Security Sharing Agreement
provides that, in the event the Company is required to effect the Mortgaged
Amounts Adjustment, the interests of the holders of the Senior Notes and the
Senior Subordinated Notes and the creditors under the Bank Credit Facility in
the Mortgaged Amounts resulting from such Mortgage Amounts Adjustment shall
remain and be made prior to the interests of the holders of the Debentures under
the mortgages securing the obligations under the Debentures. Including with
respect to their interests in any such increase (and the Company shall be
required from time to time to execute and deliver any instruments or agreements
as may be reasonably necessary or desirable to confirm the same).
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The Security Sharing Agreement is governed by, and will be construed in
accordance with, Thai law, provided that the Collateral Agent's immunities and
standard of care is governed by New York law. Certain terms used in the Security
Sharing Agreement are defined below.
CERTAIN DEFINITIONS
The following are definitions of certain terms used in the Security Sharing
Agreement:
"Actionable Default" means (i) any Event of Default for the Securities under
and as defined in the Indentures or (ii) any event of default under and as
defined in the Bank Credit Facility, PROVIDED that only those events which give
the applicable secured creditor the right to accelerate indebtedness or result
in the automatic acceleration of Indebtedness, including after notice or passage
of time or both, shall be an Actionable Default.
"Credit Documents" shall mean the Security Sharing Agreement, the Bank
Credit Facility, the Indentures, the purchase agreement in respect of the
Debentures, the Notes, the Debentures and the Security Documents.
"Mortgaged Amounts" means the principal amount, expressed in Thai Baht, of
each of the Mortgages. At the Closing Date, the Mortgage Amounts will be set at
an amount equal to the sum of the Secured Indebtedness secured thereby expressed
in US$ converted to Baht at a rate of Baht 75 to U.S.$1.00.
"Mortgaged Amounts Adjustment" means the obligation of the Company to cause
the Mortgaged Amounts to be increased from time to time at its own expense in
order to maintain at all applicable times a Mortgaged Amount based on an
exchange rate of Baht to U.S.$ (the "Mortgage Conversion Rate") that is no less
than Baht 15 per U.S.$1.00 higher than, i.e., the number of Baht per U.S.$1.00
exceeds by 15 Baht or more the number of Baht per U.S.$1.00 in, the actual
exchange rate (the "Current Exchange Rate") quoted at the close of business on
any business day by the Bank of Thailand (by way of example, if the Current
Exchange Rate is Baht 65 per U.S.$1.00, the Company would be obliged, subject to
the proviso below, to cause the Mortgaged Amounts to be increased to an amount
(expressed in Baht) equal to the Secured Indebtedness secured thereby (expressed
in U.S.$) converted to Baht at a rate of Baht 80 to U.S.$1.00), PROVIDED that
the Company shall undertake the adjustment described herein only at such times
that the Mortgage Conversion Rate does not exceed the Current Exchange Rate at
such time by at least Baht 10 per U.S.$1.00.
"Mortgages" means the Land Mortgages and the Machinery Mortgages.
"Notice of Actionable Default" means a notice delivered to the Collateral
Agent stating that an Actionable Default has occurred, which describes with
reasonable particularity the nature of the Actionable Default and is delivered
to the Collateral Agent by (i) the Trustee for the holders of the Notes, acting
pursuant to the Indentures, (ii) the representative of the holders of the
Debentures or (iii) the Facility Agent (as defined in the Security Sharing
Agreement), acting upon the instructions of the holders of a majority of the
Outstanding Existing Indebtedness Obligations under the Bank Credit Facility. A
notice of Actionable Default shall be deemed to have been given when the notice
referred to in the preceding sentence has actually been received by a
Responsible Officer (as defined in the Security Sharing Agreement) of the
Collateral Agent. A notice of Actionable Default shall be deemed to be
outstanding at all times after such notice was given until the earlier of such
time, if any, as (i) the Collateral Agent has been notified by the Trustee or
the Facility Agent, as the case may be, which delivered such notice, that such
notice has been rescinded or waived or (ii) the Trustee and the Facility Agent,
if any, have determined, in accordance with the provisions described under
"--Exercise of Remedies under the Security Documents," to rescind or waive such
notice.
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"Outstanding Debentures Obligations" generally refer to the sum of (i) the
aggregate principal amount owed to the holders of Debentures at such time and
the aggregate amount of accrued and unpaid interest thereon at such time and
(ii) the aggregate amount of all monetary obligations of the Company and the
Note Issuers that are accrued and owing at such time to the holders of
Debentures, including compensation, indemnification and expense reimbursement
obligations and premium and Additional Amounts, if any. From and after the
delivery of a Notice of Actionable Default that is outstanding pursuant to the
Security Sharing Agreement, such amounts shall be calculated with respect to
amounts due and owing under the Debenture Guaranty, if greater than amounts due
and owing under the Debentures, from and after the delivery of a Notice of
Actionable Default.
"Outstanding Existing Indebtedness Obligations" means, at any time, (i) the
aggregate principal amount owed to the holders of the Bank Credit Facility at
such time and the aggregate amount of accrued and unpaid interest thereon at
such time and (ii) the aggregate amount of all other monetary obligations of the
Company and the Note Issuers that are accrued and owing at such time to the
holders of the Bank Credit Facility, including compensation, indemnification and
expense reimbursement obligations and premium and additional amounts, if any.
"Outstanding Notes Obligations" generally refer to the sum of (i) the
aggregate principal amount owed to the holders of Notes at such time and the
aggregate amount of accrued and unpaid interest thereon at such time and (ii)
the aggregate amount of all monetary obligations of the Company and the Note
Issuers that are accrued and owing at such time to the Trustee or the holders of
Notes, including compensation, indemnification and expense reimbursement
obligations and premium and Additional Amounts, if any. From and after the
delivery of a Notice of Actionable Default that is outstanding pursuant to the
Security Sharing Agreement, such amounts shall be calculated with respect to
amounts due and owing under the Guaranties, if greater than amounts due and
owing under the Notes, from and after the delivery of a Notice of Actionable
Default.
"Total Secured Indebtedness" means without duplication, at any time, the sum
of (i) the Outstanding Notes Obligations at such time, (ii) the Outstanding
Existing Indebtedness Obligations at such time and (iii) the Outstanding
Debentures Obligations at such time.
ENFORCEMENT OF COLLATERAL
The Security Documents provide that the Collateral Agent will act at the
direction of the holders of more than 50% of the outstanding principal amount of
the Notes and Debentures (or, for purposes of enforcement of remedies, 50% of
the Notes and Debentures that have been declared due and payable) with respect
to (i) the pledge of the shares of NSM (Del) or NSM Cayman and (ii) the Offshore
Reserve Account and the Notes DSR Account (in each case, the "Notes Required
Holders"); PROVIDED that if an Event of Default exists thereunder as a result of
a payment default or pursuant to the bankruptcy provision and 60 days have
elapsed with any such default remaining unremedied, then the Notes Required
Holders shall consist of those holders with more than 33 1/3% of the outstanding
principal of the Notes with the 33 1/3% number to be reduced to 10% if any such
default remains unremedied for another 30 days with the 10% number to be further
reduced to 5% if any such default remains unremedied for another 60 days;
PROVIDED FURTHER that, for purposes of such calculation, Outstanding Debentures
Obligations shall be deemed to equal zero during any period where a default
exists under the Senior Note Indenture or the Senior Subordinated Note
Indenture.
With respect to the Collateral to be shared on a PARI PASSU basis with the
parties to the Bank Credit Facility, the Security Sharing Agreement provides
that the Collateral Agent will act at the direction of the holders of more than
50% of the Total Secured Indebtedness (the "Required Holders"); PROVIDED that if
an Actionable Default exists and 60 days have elapsed with any such default
remaining unremedied, then the Required Holders shall consist of those holders
with more than 33 1/3% of the Total Secured Indebtedness,
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with the 33 1/3% number to be reduced to 10% if any such default remains
unremedied for another 30 days with the 10% number to be further reduced to 5%
if any such default remains unremedied for another 60 days; PROVIDED FURTHER
that, for purposes of such calculation, Outstanding Debentures Obligations shall
be deemed to equal zero during any period where a default exists under the
Senior Note Indenture or the Senior Subordinated Note Indenture or the Bank
Credit Facility.
Notwithstanding the preceding two paragraphs, at all times that a Default
has occurred and is continuing under the Senior Note Indenture, the holders of
the Senior Subordinated Notes shall (a) absent the consent of the holders of a
majority of the aggregate principal amount of Senior Notes outstanding, refrain
from taking any action toward collection of or enforcement or otherwise exercise
any rights of such holders of Senior Subordinated Notes with respect to the
Pledged NSM Stock or the Collateral, whether pursuant to applicable law,
contract or otherwise, including any and all rights concerning foreclosure upon
the Pledged NSM Stock or the Collateral and (b) shall (i) with respect to any
bankruptcy, insolvency, or similar proceeding, not be entitled to vote with
respect to the Pledged NSM Stock or the Collateral or their rights with respect
thereto, whether pursuant to applicable law (including applicable bankruptcy or
insolvency law), contract (including the Senior Subordinated Indenture), or
otherwise, and (ii) in connection with any vote in respect of the Pledged NSM
Stock or Collateral (including in any bankruptcy, insolvency or similar
proceeding or otherwise), be deemed to have voted in the same manner and to the
same effect as the holders of a majority of the aggregate principal amount of
Senior Notes then outstanding and the holders of the Senior Subordinated Notes
shall assign pursuant to the Security Sharing Agreement such rights to vote to
the holders of the Senior Notes for the duration of any such Default for the
purposes of effecting any such vote; PROVIDED, that the foregoing provisions (A)
will only apply to the holders of the Senior Subordinated Notes so long as the
amount owed to the holders of the Senior Notes exceeds $50 million and (B) will
not create any contractual obligation on holders of the Senior Notes to take or
refrain from taking any action in respect of the Collateral.
Upon collecting the funds raised from the sale of the shared Collateral, the
Collateral Agent will be required to distribute such proceeds in accordance with
the Security Sharing Agreement. All proceeds shall be distributed to the Secured
Creditors ratably in the proportion that the outstanding Indebtedness owed each
Secured Creditor bears to the Total Secured Indebtedness; PROVIDED, HOWEVER,
that no proceeds shall be distributed to any holder of Debentures until the
Outstanding Notes Obligations and Outstanding Existing Indebtedness Obligations
have been paid in full and discharged.
Under Thai law, the enforcement of a security interest in a mortgage,
whether it be land and buildings or registered machinery, must be effected by
the registered holder of the Note. Only registered secured creditors would be
recognized with standing to enforce a mortgage in a Thai court. To enforce a
mortgage in Thailand, the mortgagee must first issue a notice to the debtor
giving them a reasonable time to satisfy the debt. In the event the debt cannot
be repaid within this timeframe, the mortgagee may file an action in a court
with jurisdiction over the location where the mortgage has been registered
seeking to declare the debtor in default and order the collateral to be sold at
public auction. Once an order is obtained, the court will order a public auction
to be held at which time the property will be sold to the highest bidder.
In the event an action based on the collateral were commenced in a court of
the United States, it is likely that such court would grant judgment only in
U.S.$ even though a substantial portion of the collateral is denominated in a
currency other than U.S.$. It is not clear, however, whether, in granting such
judgment, the role of conversion into U.S.$ would be determined with reference
to the date of default, the date judgment is rendered or some other date.
Holders of Notes would bear the risk of exchange rate fluctuations between the
time the amount of the judgment is calculated and the time the Holder receives
any payment on such judgment in U.S.$.
In the event of bankruptcy of the Company, secured creditors have the option
whether to join in the bankruptcy proceedings. They may join the bankruptcy
proceedings subject to the conditions in Section 96
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of the Bankruptcy Act which allow a secured creditor to claim for the balance of
the indebtedness after enforcing its claim against the property or deducting the
value of the property given as security. They may enforce their security as
provided in Section 95 of the Bankruptcy Act in which case they need not join
the bankruptcy proceedings.
For purposes of the Bankruptcy Act, "security" is defined in Section 6 to
include mortgages, pledges, rights of retention and any preferential rights
which have the same rights as a pledge.
An assignment does not fall within the definition of "security". The effect
of an assignment is similar to that of a transfer of ownership, in that it may
remove property from the estate of a debtor. Assignments and giving of security
may be subject to revocation under the preference provisions in Sections 113 to
115 of the Bankruptcy Act (cancellation of fraudulent acts, and 3-year and
3-month preference provisions), and the provisions of Section 237 of the CCC
(cancellation of fraudulent acts).
PROCEEDS RECEIVED UNDER THE SECURITY DOCUMENTS
The Collateral Agent has established and shall maintain at one or more of
its principal banking offices accounts for the benefit of all holders of Secured
Indebtedness (the "Collateral Accounts").
Except as otherwise explicitly provided in any Security Document or as
otherwise set forth in the Indentures and Security Sharing Agreement, the
Collateral Agent shall deposit into the Collateral Accounts all amounts received
by it in its capacity as Collateral Agent (and not in any other capacity) in
respect of the Collateral or under the Security Documents, including all monies
received on account of any sale of or other realization upon any of the
Collateral pursuant to any Security Document or upon any Collateral Disposition
or otherwise. All proceeds shall be distributed to the Secured Creditors ratably
in the proportion that the outstanding Indebtedness owed each Secured Creditor
bears to the Total Secured Indebtedness; PROVIDED, HOWEVER, that no proceeds
shall be distributed to any holder of Debentures until the Outstanding Notes
Obligations and Outstanding Existing Indebtedness Obligations have been paid in
full and discharged. To the extent not reimbursed by the Company or the Note
Issuers, and subject to certain provisions of the Indentures, the Collateral
Agent shall have the right at any time and from time to time to apply certain
amounts in the Collateral Accounts to the payment of (i) fees, (ii) reasonable
out-of-pocket costs and expenses (including attorney fees and disbursements)
incurred by the Collateral Agent (a) in administering and carrying out its
obligations under the Security Sharing Agreement or any of the Security
Documents, (b) in exercising or attempting to exercise any right or remedy under
the Security Sharing Agreement or any of the Security Documents or (c) in taking
possession of, protecting, preserving or disposing of any item of Collateral,
including tax Liens and enforcement costs, and (iii) all amounts against or for
which the Collateral Agent is to be indemnified or reimbursed under the Security
Sharing Agreement (excluding any such costs, expenses or amounts which have
therefore been reimbursed) until all of such costs, expenses and amounts have
been paid in full.
If no Notice of Actionable Default is outstanding, amounts deposited in the
Collateral Accounts may be released to the Company or the Note Issuers or paid
to the Trustee in accordance with the Indentures and upon the written
instruction of the Trustee. If a foreclosure event has occurred, amounts
deposited or on deposit in the Collateral Accounts shall be applied in the
following order of priority:
FIRST, to the Collateral Agent for amounts owing to it for fees, expenses
and indemnities, then to the Trustee for payment of all Outstanding Notes
Obligations that consist of fees, expenses and indemnities incurred in
connection with the administration of the Indentures and to the Facility Agent
for payment of all Outstanding Existing Indebtedness Obligations that consists
of fees, expenses and indemnities incurred in connection with the administration
of the Bank Credit Facility;
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SECOND, to the Trustee and the Facility Agent ratably in the proportion that
the outstanding Indebtedness owed each bears to the Total Secured Indebtedness;
and
THIRD, the balance, if any, and only if the Outstanding Notes Obligations
and Outstanding Existing Indebtedness Obligations have been paid in full, to the
holders of the Debentures if there are any Outstanding Debenture Obligations, or
otherwise, to the Company.
Under the Security Sharing Agreement, a successor Collateral Agent may be
appointed upon approval of the Company, the Trustee and a majority of the
lenders under the Bank Credit Facility (it being understood that such approval,
in each case, shall not be unreasonably withheld, including in the event that
the standing of the Collateral Agent to bring an enforcement action is not
recognized by a Thai court). Such successor Collateral Agent is required to be a
bank with an office in Bangkok, Thailand, having combined capital and surplus
equivalent to at least U.S.$50.0 million and authorized to perform the functions
of the Collateral Agent under the Security Sharing Agreement.
The Security Sharing Agreement contains customary provisions with respect to
the appointment and authorization of, and the rights and duties of, the
Collateral Agent.
AMENDMENT OF THE SECURITY SHARING AGREEMENT AND THE SECURITY DOCUMENTS
No modification, waiver or amendment of any provision of any Security
Document shall in any event be effective unless the same shall be in writing and
signed by the Trustee or Book-Entry Depositary on behalf of the holders of the
Notes, the holders of a majority of the outstanding principal balance of the
Bank Credit Facility, the Collateral Agent, the Company and the Note Issuers;
PROVIDED, HOWEVER, that (i) no such modification, waiver or amendment shall
adversely affect any of the Collateral Agent's rights, immunities or rights to
indemnification under the Security Sharing Agreement or any Security Document or
expand its duties or obligations under the Security Sharing Agreement or any
Security Document without the prior written consent of the Collateral Agent,
(ii) certain provisions related to the release of Collateral may not be
modified, amended or waived without the prior written consent of the
representatives of the Secured Parties (other than the holders of the
Debentures), (iii) no such modification, waiver or amendment shall (A) change
the provisions discussed in this paragraph "--Amendment of the Security Sharing
Agreement and the Security Documents" or certain provisions discussed under
"--Proceeds Received Under the Security Documents," certain provisions discussed
under "Enforcement of Collateral" and other provisions related to surrender of
Collateral and certain payments, the release of or termination of Liens on all
or substantially all of the Collateral, and successors and assigns and the
acceleration of Indebtedness, in each case, without the prior written consent of
the holders of the Senior Indebtedness or (B) (except to the extent otherwise
set forth in or prohibited by the Security Documents) create any Lien on the
Collateral or any part thereof or terminate any part of the Liens of the
Collateral Agent on the Collateral or deprive the holders of any part of the
security afforded by the Liens of the Security Sharing Agreement or the Security
Documents without the consent of representatives of the Secured Creditors of
outstanding obligation and (iv) no such modification, waiver or amendment shall
deprive the holder of the Debentures of their rights under the Security Sharing
Agreement without the consent of a majority of the holders of Outstanding
Debentures Obligations.
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TAX CONSIDERATIONS
UNITED STATES FEDERAL INCOME TAXATION
The following is a description of the principal U.S. federal income tax
consequences of the exchange of the Old Securities for the New Securities. In
the opinion of White & Case LLP, special tax counsel to the Company, this
description applies only to Securities held as capital assets and does not
address aspects of U.S. federal income taxation that may be applicable to
holders that are subject to special tax rules, such as insurance companies,
tax-exempt organizations, banks or dealers or traders in securities or
currencies or to holders that will hold Securities as part of a position in a
"straddle" or as part of a "hedging", "conversion" or "integrated" transaction
for U.S. federal income tax purposes or that have a "functional currency" other
than the U.S.. In addition, the summary, does not consider the effect of any
foreign, state, local, gift, estate or other tax laws that may be applicable to
a particular investor. Each prospective purchaser should consult its tax advisor
with respect to the U.S. federal, state, local and foreign tax consequences of
exchanging Old Securities for the New Securities.
For purposes of this summary, a "U.S. Holder" is a holder of Securities who,
for U.S. federal income tax purposes, is (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States or any state thereof (including the District of Columbia), (iii)
an estate the income of which is subject to U.S. federal income taxation
regardless of its source; or (iv) a trust (a) the administration over which a
United States court can exercise primary supervision and (b) all of the
substantial decisions of which one or more United States persons have the
authority to control. Notwithstanding the preceding sentence, to the extent
provided in Treasury Regulations, certain trusts in existence on August 20,
1996, and treated as United States persons prior to such date, that elect to
continue to be treated as United States persons will also be a U.S. Holder.
This summary is based on the Internal Revenue Code of 1986, as amended,
existing and proposed Treasury Regulations, administrative pronouncements and
judicial decisions, each as in effect and available on the date hereof. All of
the foregoing are subject to change (possibly with retroactive effect) or
differing interpretations which could affect the tax consequences described
herein.
TAX TREATMENT OF THE EXCHANGE OFFERS
The exchange of Securities by a holder for an New Securities pursuant to the
Exchange Offers will not constitute a taxable exchange for U.S. federal income
tax purposes. A holder will not recognize gain or loss upon the receipt of New
Securities pursuant to the Exchange Offers and a U.S. Holder will be required to
continue to include interest (including original issue discount) on the New
Securities in gross income for U.S. federal income tax purposes in the manner
and to the extent such income was includible under the Securities. A holder's
holding period for New Securities will include the holding period for the Notes
exchanged pursuant to the Exchange Offers and such holder's adjusted basis in
New Securities will be the same as such holder's adjusted basis in such Notes.
THE ABOVE DESCRIPTION IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF
ALL TAX CONSEQUENCES RELATING TO THE EXCHANGE OF OLD SECURITIES FOR NEW
SECURITIES. HOLDERS OF SECURITIES SHOULD CONSULT THEIR OWN TAX ADVISORS
CONCERNING THE TAX CONSEQUENCES OF THEIR PARTICULAR SITUATIONS.
THAI TAXATION
This summary assumes that an investor is not a resident of or doing business
in Thailand for tax purposes.
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TAX TREATMENT OF NOTES
Thai withholding tax would be payable by withholding in respect of payments
under or with respect to the Securities if interest on the Securities were to
paid by or on behalf of the Company from or in Thailand. Although there have
been no precedent Thailand Revenue Rulings on the point, the Company believes,
upon consultation with the competent authorities, that discounts on the
Securities are not subject to withholding tax at the time of issue. Such
discounts will be subject to withholding tax at the rate of 15% at maturity or
when the Notes are redeemed. Payment of interest by the Note Issuers to the
holders of the Notes is not subject to Thai withholding tax. Payments by the
Company to the Note Issuers to fund interest payment obligations on the
Securities may be subject to withholding tax at the rate of 15%. While the
Company intends to structure its interest payments to the Note Issuers to
substantially reduce the effect of such withholding, there can be no assurance
that such measures will prove successful in reducing the application of
withholding taxes. The Company is seeking a favorable opinion of the Thai
Revenue Department for this structure. See "Risk Factors--Withholding Tax" If a
Note Issuer or the Company is required by law to make any such deduction or
withholding, it will pay Additional Amounts as may be necessary so that every
net payment of the principal of and interest on the Notes paid to the holder
thereof will not be less than the amount provided for in such Notes to be then
due and payable, subject to certain exceptions and limitations set forth above
(see "Description of Notes and Guaranties -- Additional Amounts"). The rate of
Thai withholding tax on interest and, when redeemed, discount is normally 15%
(reduced to 10% where the payee is a financial institution incorporated in a
jurisdiction having a tax treaty with Thailand and has no permanent
establishment in Thailand).
CAYMAN ISLANDS TAXATION
The Cayman Islands currently have no foreign exchange control restrictions
and no income, corporate or capital gains tax, estate duty, inheritance tax,
gift tax or withholding tax applicable to NSM Cayman or any holder of
Securities. Accordingly, payment of principal of (including any premium) and
interest on, and any transfer or exchange of, the Notes will not be subject to
taxation in the Cayman Islands, no Cayman Islands withholding tax will be
required on such payments to any holder of Notes and gains derived from the sale
of Securities will not be subject to Cayman Islands capital gains tax. The
Cayman Islands are not party to any double taxation treaties.
NSM Cayman has obtained an undertaking from the Governor-in-Council of the
Cayman Islands that, in accordance with section 6 of the Tax Concessions Law
(1995 Revision) of the Cayman Islands, for a period of 20 years from December
30, 1997 (the date of the undertaking) no law which is enacted in the Cayman
Islands imposing any tax to be levied on profits, income, gains or appreciations
shall apply to NSM Cayman or its operations and, in addition, that no tax to be
levied on profits, income, gains or appreciations or which is in the nature of
estate duty or inheritance tax shall be payable (i) on or in respect of the
shares, debentures or other obligations of NSM Cayman or (ii) by way of the
withholding in whole or in part of a payment of dividend or other distribution
of income or capital by NSM Cayman to its members or a payment of principal or
interest or other sums due under a debenture or other obligation of NSM Cayman.
No stamp duties or similar taxes or charges are payable under the laws of
the Cayman Islands in respect of the execution and issue of the New Securities
unless they are executed in or brought within (for example, for the purposes of
enforcement) the jurisdiction of the Cayman Islands, in which case stamp duty of
0.25% of the face amount thereof is payable on each New Security (up to a
maximum of 250 Cayman Islands Dollars ("C.I.$") (U.S.$305)) unless stamp duty of
C.I.$500 (U.S.$610) has been paid in respect of each tranche of New Securities.
An instrument of transfer in respect of a New Security if executed in or brought
within the jurisdiction of the Cayman Islands will attract a Cayman Islands
stamp duty of C.I.$100 (U.S.$122).
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OLD REGISTRATION RIGHTS
The Note Issuers, the Company, and the Initial Purchasers have entered into
a registration rights agreement dated March 12, 1998 (the "Registration Rights
Agreement") pursuant to which the Note Issuers and the Company have agreed, for
the benefit of the holders, that the Note Issuers will, at their own cost, (i)
within 90 days after the Issue Date, file a registration statement (the
"Exchange Offer Registration Statement") with the Commission with respect to the
Exchange Offer for notes (the "Exchange Notes") of the Note Issuers which will
have terms substantially identical in all material respects to the Notes and be
guaranteed by the Company (except that the Exchange Notes will not contain terms
with respect to transfer restrictions or interest rate increases as described
herein), (ii) use their reasonable efforts to cause the Exchange Offer
Registration Statement to be declared effective under the Securities Act within
180 days after the Issue Date and (iii) use their reasonable efforts to
consummate the Exchange Offer within 210 days after the Issue Date. Upon the
Exchange Offer Registration Statement being declared effective, the Note Issuers
will offer the Exchange Notes in exchange for surrender of the Notes. The Note
Issuers will keep the Exchange Offer open for not less than 20 business days (or
longer if required by applicable law) after the date notice of the Exchange
Offer is mailed to the holders of the Notes. For each of the Notes surrendered
pursuant to the Exchange Offer, the holder who surrendered such Note will
receive an Exchange Note having a principal amount equal to that of the
surrendered Note. Interest on each Exchange Note will accrue from the last
interest payment date on which interest was paid on the Note surrendered in
exchange therefor or, if no interest has been paid on such Note, from the Issue
Date. Under existing Commission interpretations, the Exchange Notes would be
freely transferable by holders thereof other than affiliates of the Note Issuers
after the Exchange Offer without further registration under the Securities Act
if the holder of the Exchange Notes represents that it is acquiring the Exchange
Notes in the ordinary course of business, that it has no arrangement or
understanding with any person to participate in the distribution of the Exchange
Notes and that it is not an affiliate of the Note Issuers, as such terms are
interpreted by the Commission; PROVIDED that broker-dealers ("Participating
Broker-Dealers") receiving Exchange Notes in the Exchange Offer will have a
prospectus delivery requirement with respect to resales of such Exchange Notes.
The Commission has taken the position that the Participating Broker-Dealers may
fulfill their prospectus delivery requirements with respect to the Exchange
Notes (other than a resale of an unsold allotment from the original sale of the
Notes) with the prospectus contained in the Exchange Offer Registration
Statement. The Note Issuers have agreed for a period of 180 days after
consummation of the Exchange Offer to make available a prospectus meeting
requirements of the Securities Act to Participating Broker-Dealers and other
persons, if any, with similar prospectus delivery requirements for use in
connection with any resale of such Exchange Notes.
Each holder who wishes to exchange its Notes for Exchange Notes in the
Exchange Offer will be required to represent that any Exchange Notes to be
received by it will be acquired in the ordinary course of its business and that
at the time of the commencement of the Exchange Offer it has no arrangement or
understanding with any person to participate in the distribution (within the
meaning of the Securities Act) of the Exchange Notes and that it is not an
affiliate of the Note Issuers.
If the holder is not a broker-dealer, it will be required to represent that
it is not engaged in, and does not intend to engage in, the distribution of the
applicable Exchange Notes. If the holder is a broker-dealer that will receive
Exchange Notes for its own account in exchange for Notes that were acquired as a
result of market making activities or other trading activities, it will be
required to acknowledge that it will deliver a prospectus in connection with any
resale of such Exchange Notes.
In the event that (i) applicable law or interpretations of the staff of the
Commission do not permit the Note Issuers to effect such an Exchange Offer, (ii)
for any other reason the Exchange Offer is not consummated within 210 days after
the Issue Date, (iii) under certain circumstances, if the Initial Purchaser
shall so request, or (iv) any holder of the Notes (other than the Initial
Purchaser or an affiliate of the Note Issuers) is not eligible to participate in
the Exchange Offer, the Note Issuers, will at their own cost, (a) as promptly as
practicable, file a shelf registration statement covering resales of the Notes
(a
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"Shelf Registration Statement"), (b) use their reasonable efforts to cause such
Shelf Registration Statement to be declared effective under the Securities Act
by the 245th day after the Issue Date and (c) use their reasonable efforts to
keep effective such Shelf Registration Statement until the earlier of two years
after the Issue Date and such time as all of the Notes have been sold
thereunder. The Note Issuers will, in the event of the filing of a Shelf
Registration Statement, provide to each holder of the Notes copies of the
prospectus which is a part of such Shelf Registration Statement, notify each
such holder when such Shelf Registration Statement has become effective and take
certain other actions as are required to permit unrestricted resales of the
Notes. A holder that sells its Notes pursuant to a Shelf Registration Statement
generally will be required to be named as a selling securityholder in the
related prospectus and to deliver a prospectus to purchasers, will be subject to
certain of the civil liability provisions under the Securities Act in connection
with such sales and will be bound by the provisions of the Registration Rights
Agreement which are applicable to such holder (including certain indemnification
obligations).
Although the Note Issuers intend to file the registration statement
described above, there can be no assurance that such registration statement will
be filed or, if filed, that it will become effective. If the Note Issuers fail
to comply with the above provisions or if such registration statement fails to
become effective, then, as liquidated damages, additional interest (the
"Additional Interest") shall become payable with respect to the Notes as
follows:
(i) if the Exchange Offer Registration Statement is not filed within 90
days following the Issue Date, Additional Interest shall accrue on the Notes
over and above the stated interest at a rate of .50% per annum commencing on
the 91st day after the Issue Date and such Additional Interest rate shall
increase by .50% per annum on the first day of each 90 day period
thereafter;
(ii) if the Exchange Offer Registration Statement is not declared
effective within 180 days following the Issue Date or, if applicable, the
Shelf Registration Statement is not declared effective within 245 days
following the Issue Date, Additional Interest shall accrue on the Notes over
and above the stated interest at a rate of .50% per annum commencing on the
181st day after the Issue Date and such Additional Interest rate shall
increase by .50% per annum on the first day of each 90 day period
thereafter; or
(iii) if (A) the Note Issuers have not exchanged all Notes validly
tendered in accordance with the terms of the Exchange Offer on or prior to
210 days after the Issue Date or (B) the Exchange Offer Registration
Statement ceases to be effective at any time prior to the time that the
Exchange Offer is consummated or (C) if applicable, the Shelf Registration
Statement has been declared effective and such Shelf Registration Statement
ceases to be effective at any time prior to the second anniversary of the
Issue Date (unless all the Notes have been sold thereunder), then Additional
Interest shall accrue on the Notes over and above the stated interest at a
rate of .50% per annum commencing on (x) the 211th day after the Issue Date
with respect to the Notes validly tendered and not exchanged by the Company,
in the case of (A) above, or (y) the day the Exchange Offer Registration
Statement ceases to be effective or usable for its intended purpose in the
case of (B) above, or (z) the day such Shelf Registration Statement ceases
to be effective in the case of (C) above and such Additional Interest rate
shall increase by .50% per annum on the first day of each 90 day period
thereafter; PROVIDED, HOWEVER, that the Additional Interest rate on the
Notes may not exceed in the aggregate 1.5% per annum; and PROVIDED FURTHER,
that (1) upon the filing of the Exchange Offer Registration Statement or
Shelf Registration Statement (in the case of clause (i) above), (2) upon the
effectiveness of the Exchange Offer Registration Statement or Shelf
Registration Statement (in the case of (ii) above), or (3) upon the exchange
of Exchange Notes for all Notes tendered (in the case of clause (iii)(A)
above), or (4) upon the effectiveness of the Exchange Offer Registration
Statement which had ceased to remain effective in the case of clause
(iii)(B) above, or (5) upon the effectiveness of the Shelf Registration
Statement which had ceased to remain effective (in the case of clause
(iii)(C) above), Additional Interest on the Notes as a result of such clause
(or the relevant subclause thereof), as the case may be, shall cease to
accrue.
The Note Issuers, the Company and the original purchasers of the Debentures
entered into a registration rights agreement whereby the Company agreed to
exchange the New Debentures for the Old Debentures no later than two years after
the issue Date.
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PLAN OF DISTRIBUTION
Based on interpretations by the Commission set forth in no-action letters
issued to third parties, the Company believes that New Securities issued
pursuant to the Exchange Offers in exchange for the Old Securities may be
offered for resale, resold and otherwise transferred by holders thereof (other
than any holder which is (i) an "affiliate" of the Note Issuers or the Company
within the meaning of Rule 405 under the Securities Act, (ii) a broker-dealer
who acquired Securities directly from the Note Issuers or the Company or (iii)
broker-dealers who acquired Securities as a result of market-making or other
trading activities) without compliance with the registration and prospectus
delivery provisions of the Securities Act provided that such New Securities are
acquired in the ordinary course of such holders' business, and such holders are
not engaged in, and do not intend to engage in, and have no arrangement or
understanding with any person to participate in, a distribution of such New
Securities; provided that broker-dealers ("Participating Broker-Dealers")
receiving New Securities in the Exchange Offers will be subject to a prospectus
delivery requirement with respect to resales of such New Securities. To date,
the Commission has taken the position that Participating Broker-Dealers may
fulfill their prospectus delivery requirements with respect to transactions
involving an exchange of securities such as the exchange pursuant to the
Exchange Offers (other than a resale of an unsold allotment from the sale of
certain Old Securities to the Initial Purchasers) with the Prospectus, contained
in the Registration Statement. Pursuant to the Registration Rights Agreements,
the Company has agreed to permit Participating Broker-Dealers and other persons,
if any, subject to similar prospectus delivery requirements to use this
Prospectus in connection with the resale of such New Securities. The Note
Issuers and the Company have agreed that, for a period of 180 days after the
Expiration Date, it will make this Prospectus, and any amendment or supplement
to this Prospectus, available to any broker-dealer that requests such documents
in the Letter of Transmittal.
Each holder of the Old Securities who wishes to exchange its Old Securities
for New Securities in the Exchange Offers will be required to make certain
representations to the Note Issuers and the Company as set forth in "The
Exchange Offer--Purpose and Effect of the Exchange Offer." In addition, each
holder who is a broker-dealer and who receives New Securities for its own
account in exchange for Old Securities that were acquired by it as a result of
market-making activities or other trading activities, will be required to
acknowledge that it will deliver a prospectus in connection with any resale by
it of such New Securities.
The Company will not receive any proceeds from any sale of New Securities by
broker-dealers. New Securities received by broker-dealers for their own account
pursuant to the Exchange Offers may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Securities or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Securities. Any
broker-dealer that resells New Securities that were received by it for its own
account pursuant to the Exchange Offers and any broker or dealer that
participates in a distribution of such New Securities may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of New Securities and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that by acknowledging that it will deliver
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
The Note Issuers have agreed to pay all expenses incidental to the Exchange
Offers other than commissions and concessions of any brokers or dealers and will
indemnify holders of the Old Securities (including any broker-dealers) against
certain liabilities, including liabilities under the Securities Act, as set
forth in the Registration Rights Agreements.
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DESCRIPTION OF NOTE DEPOSITARY AGREEMENT; DELIVERY; FORM
GENERAL
The Old Senior Notes Old Senior Subordinated Notes and the Old Debentures
were deposited with The Chase Manhattan Bank as Book-Entry Depositary pursuant
to the terms of the Note Depositary Agreement. The Book-Entry Depositary issued
certificateless depositary interests (representing a 100% interest in the
underlying Securities offered and sold to qualified institutional buyers
("QIBs") pursuant to Rule 144A (the "Old Rule 144A Global Securities"), the
underlying Securities offered and sold to institutional "accredited investors"
(as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act ("IAIs")
who are not QIBs (the "Old IAI Global Securities" and, together with the Rule
144A Global Securities, the "Old U.S. Global Securities") and the underlying
Securities offered and sold to Non-U.S. Persons in reliance on Regulation S (the
"Old Regulation S Global Securities"), respectively) to The Depository Trust
Company ("DTC") or its nominee.
The New Senior Notes New Senior Subordinated Notes and the New Debentures
will be issued in the form of one fully registered New Senior Note in global
form (the "New Global Senior Note"), one fully registered New Senior
Subordinated Note in global form (the "New Global Senior Subordinated Note") and
one fully registered New Debenture in global form (the "New Global Debenture").
The New Global Senior Note New Global Senior Subordinated Note and the New
Global Debenture are collectively referred to herein as the "New Global
Securities." The New Global Securities will be deposited with The Chase
Manhattan Bank as Book-Entry Depositary pursuant to the terms of the Note
Depositary Agreement. The Book-Entry Depositary will issue one or more
certificateless depositary interests representing a 100% interest in the New
Senior Notes and New Senior Subordinated Notes to The Depository Trust Company
("DTC") or its nominee.
Upon confirmation by DTC that the Book-Entry Depositary has custody of the
New Global Securities and upon acceptance by DTC of the certificateless
depositary interest pursuant to the Letter of Representations, DTC will record
beneficial interests in the New Global Securities. Book-Entry Interests will be
recorded in denominations of $1,000 and integral multiples thereof (except for
the New Global Debentures, where such interests will be recorded in
denominations of $1.00). Ownership of Book-Entry Interests will be limited to
Persons that have accounts with DTC ("participants") or Persons that hold
interests in the Book-Entry Interests through participants ("indirect
participants"), including, as applicable, the Euroclear Operator, Cedel, banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with DTC, either directly or indirectly. Indirect participants
shall also include Persons that hold through such indirect participants. The
Book-Entry Interests will not be held in definitive form. Instead, DTC will
credit, on its book-entry registration and transfer system, the participant's
accounts with the respective interests beneficially owned by such participants.
Ownership of Book-Entry Interests will be shown on, and the transfer of these
Book-Entry Interests or the interests therein will be effected only through,
records maintained by DTC (with respect to interests of its participants) and on
the records of participants or indirect participants (with respect to interests
of indirect participants). The laws of some states may require that certain
purchasers of securities take physical delivery of such securities in definitive
form. The foregoing limitations may impair the ability to own, transfer or
pledge Book-Entry Interests.
So long as the Book-Entry Depositary, or its nominee, is the Holder of the
New Global Securities underlying Book-Entry Interests, the Book-Entry Depositary
or such nominee, as the case may be, will be considered the sole legal owner and
holder of such New Senior Notes, New Senior Subordinated Notes represented by
such New Global Securities for all purposes under the Indentures and the New
Senior Notes, New Senior Subordinated Notes and New Debentures. Except as set
forth below, participants or indirect participants will not be entitled to have
Securities or Book-Entry Interests registered in their names, will not receive
or be entitled to receive physical delivery of any New Senior Notes, New Senior
Subordinated Notes or New Debenture represented thereby or such New Global
Securities or any New Senior Notes, New Senior Subordinated Notes or New
Debenture represented thereby in registered form
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<PAGE>
and will not be considered the owners or holders thereof under the Indentures.
Accordingly, each Person holding a Book-Entry Interest must rely on the
procedures of the Book-Entry Depositary and DTC and, indirect participants must
rely on the procedures of the participant or indirect participants through which
such Person owns its interest in the Book-Entry Interests, including, as
applicable, the Euroclear Operator and Cedel, to exercise any rights and
obligations of the holder under the Indentures. See "--Action in Respect of the
New Global Securities and the Book-Entry Interests." If any Definitive Notes are
issued, they will only be issued in registered form.
Unless and until Book-Entry Interests are exchanged for Definitive
Securities (as defined); the certificateless depositary interests held by DTC
may not be transferred except as a whole by DTC to a nominee of DTC or by a
nominee of DTC to DTC or another nominee of DTC or by DTC or any such nominee to
a successor of DTC or a nominee of such successor.
PAYMENTS ON GLOBAL SENIOR NOTES AND GLOBAL SENIOR SUBORDINATED NOTES
Payment of principal of and interest on, any other amount due in respect of,
the New Global Senior Notes, New Global Senior Subordinated Notes and the New
Dentures will be made to the Book-Entry Depositary, as the Holder thereof. All
such amounts will be payable, by a Paying Agent located outside of Thailand, in
dollars or in such other coin or currency of the United States of America as at
the time of payment is legal tender for the payment therein of public and
private debts. Upon receipt of any payment of principal of or interest on the
New Global Securities, the Book-Entry Depositary will distribute all such
payments to Cede & Co., as a nominee of DTC. All such payments will be
distributed without deduction or withholding for any taxes, duties, assessments
or other governmental charges of whatever nature except as may be required by
law. If any such deduction or withholding is required to be made, such
Additional Amounts will be paid by the Note Issuers to the Book-Entry Depositary
as may be necessary in order that the net amounts received by the holder of the
New Global Securities or owners of Book-Entry Interests after such deduction or
withholding shall be not less than the amounts specified in such New Senior Note
or New Senior Subordinated Note or New Debenture, as the case may be, to which
such holder or owner is entitled. DTC, upon receipt of any payment from the
Book-Entry Depositary, will promptly credit participants' accounts with payments
in amounts proportional to their respective ownership of Book-Entry Interests,
as shown on the records of DTC. The Note Issuers expect that payments by
participants to owners of interest in Book-Entry Interests held through such
participants or indirect participants will be governed by standing customer
instructions and customary practices, as is now the case with the securities
held for the accounts of customers in bearer form or registered in "street
name", and will be the responsibility of such participants or indirect
participants. None of the Note Issuers, the Company, the Trustee, the Book-Entry
Depositary or any other agent of the Note Issuers, the Company, the Trustee or
the Book-Entry Depositary will have any responsibility or liability for any
aspect of the records relating to or payments made on account of a participant's
ownership of Book-Entry Interests or for maintaining, supervising or reviewing
any records relating to a participant's ownership of Book-Entry Interests.
INFORMATION REGARDING DTC, THE EUROCLEAR OPERATOR AND CEDEL
DTC, the Euroclear Operator and Cedel have advised the Note Issuers as
follows:
DTC. DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
was created to hold securities of its participants and to facilitate the
clearance and settlement of transactions among its participants in such
securities through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of securities
certificates. DTC participants include securities brokers and dealers (including
the Initial Purchasers), banks, trust companies, clearing corporations and
certain other organizations, some of whom (and/or their representatives) own
DTC.
155
<PAGE>
THE EUROCLEAR OPERATOR AND CEDEL. The Euroclear Operator and Cedel each
hold securities for their account holders and facilitate the clearance and
settlement of securities transactions by electronic book-entry transfers between
their respective account holders, thereby eliminating the need for physical
movements of certificates and any risk from lack of simultaneous transfers of
securities.
The Euroclear Operator and Cedel provide various services including
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. The Euroclear Operator and
Cedel also deal with domestic securities markets in several countries through
established depository and custodial relationships. The Euroclear Operator and
Cedel have established an electronic bridge between their two systems across
which their respective account holders may settle trades with each other.
Account holders in the Euroclear Operator and Cedel are world-wide financial
institutions including underwriters, securities brokers and dealers, banks,
trust companies and clearing corporations. Indirect access to the Euroclear
Operator and Cedel is available to other institutions that clear through or
maintain a custodial relationship with an account holder of either system.
Account holder's overall contractual relations with the Euroclear Operator
and Cedel are governed by the respective rules and operating procedures of the
Euroclear Operator and Cedel and any applicable laws. The Euroclear Operator and
Cedel act under such rules and operating procedures only on behalf of their
respective account holders, and have no record of or relationship with persons
holding through their respective account holders.
The Note Issuers understand that under existing industry practices, if
either the Note Issuers or Trustee requests any action of owners of Book-Entry
Interests or if an owner of a Book-Entry Interest desires to give or take any
action that a holder is entitled to give or take under the Indentures, DTC would
authorize the participants owning the relevant Book-Entry Interests to give or
take such action, and such participants would authorize indirect participants to
give or take such action or would otherwise act upon the instructions of such
indirect participants.
REDEMPTION
In the event the New Global Securities (or a portion thereof) are redeemed,
the Book-Entry Depositary will deliver all amounts received by it in respect of
the redemption of the New Global Securities to DTC and surrender the New Global
Securities to the Trustee for cancelation. The redemption price payable in
connection with the redemption of Book-Entry Interests will be equal to the
amount received by the Book-Entry Depositary in connection with the redemption
of the New Global Securities (or portion thereof). For any redemptions of the
New Global Securities in part, selection of Book-Entry Interests to be redeemed
will be made by DTC on a pro rata basis (or on such other basis as DTC deems
fair and appropriate); PROVIDED that no Book-Entry Interests of U.S.$1,000
principal amount or less shall be redeemed in part. Once redeemed in part, a New
Global Senior Note or New Global Senior Subordinated Note, as the case may be,
in the principal amount equal to the unredeemed portion thereof will be issued
and delivered to the Book-Entry Depositary.
TRANSFERS AND TRANSFER RESTRICTIONS
All transfers of Book-Entry Interests will be recorded in accordance with
the Book-Entry system maintained by DTC, pursuant to customary procedures
established by DTC and its participants. See "-- General". Pursuant to the Note
Depositary Agreement, the New Global Securities may be transferred only to a
successor Book-Entry Depositary.
ISSUANCE OF DEFINITIVE SECURITIES
Holders of Book-Entry Interests will be entitled to receive definitive
Securities in registered form ("Definitive Securities") in exchange for their
holdings of Book-Entry Interests (i) if DTC is at any time unwilling or unable
to continue as, or ceases to be, a clearing agency registered under the Exchange
Act,
156
<PAGE>
and a successor to DTC registered as a clearing agency under the Exchange Act is
not able to be appointed by the Note Issuers within 90 days of such
notification, or (ii) if the Book-Entry Depositary is at any time unwilling or
unable to continue as Book-Entry Depositary and a successor Book-Entry
Depositary is not able to be appointed by the Note Issuers within 90 days. Any
Definitive Securities issued in exchange for Book-Entry Interests will be
registered in such name or names as the Book-Entry Depositary shall instruct the
Trustee based on the instructions of DTC. It is expected that such instructions
will be based upon directions received by DTC from participants with respect to
ownership of Book-Entry Interests.
In addition to the foregoing, on or after the occurrence of an Event of
Default, holders of Book-Entry Interests will be entitled to request and receive
Definitive Securities. Such Definitive Securities will be issued to and
registered in the name of, or as directed by, such Person only upon the request
in writing by the Book-Entry Depositary (based upon the instructions of DTC).
Such a request for, and receipt of, Definitive Securities by holders of
Book-Entry Interests will increase the risks associated with the enforcement of
Collateral hereafter because Thai law would likely not recognize the standing of
such holders to foreclose upon the Collateral.
To the extent permitted by law, the Note Issuers, the Company, the Trustee
and any paying agent shall be entitled to treat the Person in whose name any
Definitive Security is registered as the absolute owner thereof. The Indentures
contain provisions relating to the maintenance by a registrar of a register
reflecting ownership of Definitive Securities, if any, and any other provisions
customary for a registered debt security. Any payments in respect of a
Definitive Security will be made to the Holder appearing on the register at the
close of business on the record date at his address shown on the register.
TRANSFER AND EXCHANGE OF DEFINITIVE SECURITIES
In the event that Definitive Securities have been issued, a holder may
transfer or exchange the Definitive Securities in accordance with the
Indentures. The Registrar and the Trustee may require a holder, among other
things, to furnish appropriate endorsements and transfer documents and the Note
Issuers may require a holder to pay any taxes and fees required by law or
permitted by the Indentures. The Note Issuers are not required to transfer or
exchange any Securities selected for redemption for a period of 15 days before a
selection of Securities to be redeemed. If Definitive Securities are issued, the
Note Issuers will appoint a Person reasonably acceptable to the Trustee, as an
additional paying and transfer agent. Upon the issuance of Definitive
Securities, holders will be able to transfer and exchange Definitive Securities
at the office of such paying and transfer agent; PROVIDED that all transfers and
exchanges must be effected in accordance with the terms of the Indentures and,
among other things, be recorded in the register maintained by the registrar.
ACTION IN RESPECT OF THE GLOBAL NOTES AND THE BOOK-ENTRY INTERESTS
Not later than 10 days after receipt by the Book-Entry Depositary of notice
of any solicitation of consents or requests for a waiver or other action by the
holder of the New Global Securities or holders of the Book-Entry Interests, the
Book-Entry Depositary will mail to DTC a notice containing (a) such information
as is contained in such notice, (b) a statement that at the close of business on
a specified record date DTC will be entitled to instruct the Book-Entry
Depositary as to the consent, waiver or other action, if any, pertaining to the
Book-Entry Interests or the Global Securities and (c) a statement as to the
manner in which such instructions may be given. Upon the written request of DTC,
the Book-Entry Depositary shall endeavor insofar as practicable to take such
action regarding the requested consent, waiver or other action in respect of the
Book-Entry Interests or the Global Securities in accordance with any
instructions set forth in such request. DTC is expected to follow the procedures
described under "-- General" above with respect to soliciting instructions from
its participants. The Book-Entry Depositary will not exercise any discretion in
the granting of consents or waivers or the taking of any other action in respect
of the Book-Entry Interests or the Global Securities.
157
<PAGE>
REPORTS
The Book-Entry Depositary will immediately, and in no event later than 10
days from receipt, send to DTC, a copy of any notices, reports and other
communications received relating to the Note Issuers or the Book-Entry
Interests. Copies of all such notices, reports and communications will be
available for inspection at the office of the listing agent for the Securities.
All notices regarding the Securities will be (i) published in a leading
newspaper having a general circulation in New York (which is expected to be THE
WALL STREET JOURNAL) or (ii) in the case of Definitive Securities, mailed to
Holders by first-class mail at their respective addresses as they appear on the
registration books of the Registrar.
ACTION BY BOOK-ENTRY DEPOSITARY
Subject to certain limitations, upon the occurrence of a default with
respect to the Securities, or in connection with any other right of the holder
of the New Global Securities under the Indentures or the Note Depositary
Agreement, if requested in writing by DTC, the Book-Entry Depositary will take
any such action as shall be requested in such notice.
CHARGES OF BOOK-ENTRY DEPOSITARY
The Note Issuers have agreed to pay all charges of the Book-Entry Depositary
under the Note Depositary Agreement. The Note Issuers have also agreed to
indemnify the Book-Entry Depositary against certain liabilities incurred by it
under the Note Depositary Agreement.
AMENDMENT AND TERMINATION
The Note Depositary Agreement may be amended by agreement among the Note
Issuers and the Book-Entry Depositary. The consent of DTC shall not be required
in connection with any amendment to the Note Depositary Agreement: (i) to cure
any inconsistency, omission, defect or ambiguity in such Agreement; (ii) to add
to the covenants and agreements of the Book-Entry Depositary or the Note
Issuers; (iii) to effectuate the assignment of the Book-Entry Depositary's
rights and duties to a qualified successor; (iv) to comply with the Securities
Act, the Exchange Act, the U.S. Investment Company Act of 1940, as amended, or
the Trust Indenture Act of 1939; or (v) to modify, alter, amend or supplement
the Note Depositary Agreement in any other manner that is not adverse to DTC or
the holders of Book-Entry Interests. Except as set forth above, no amendment
that adversely affects DTC or the holders of Book-Entry Interests may be made to
the Note Depositary Agreement or the Book-Entry Interests without the consent of
DTC.
Upon the issuance of Definitive Securities, the Note Depositary Agreement
will terminate. The Note Depositary Agreement may be terminated upon the
resignation of the Book-Entry Depositary if no successor has been appointed
within 90 days as set forth under "--Resignation or Removal of Book-Entry
Depositary" below.
RESIGNATION OR REMOVAL OF BOOK-ENTRY DEPOSITARY
The Book-Entry Depositary may at any time resign as Book-Entry Depositary
upon 60 days' written notice delivered to each of the Note Issuers and the
Trustee. The Note Issuers may remove the Book-Entry Depositary at any time upon
90 days' written notice. No resignation or removal of the Book-Entry Depositary
and no appointment of a successor Book-Entry Depositary shall become effective
until (i) the acceptance of appointment by the successor Book-Entry Depositary
or (ii) the issuance of Definitive Securities.
OBLIGATION OF BOOK-ENTRY DEPOSITARY
The Book-Entry Depositary will assume no obligation or liability under the
Note Depositary Agreement other than to use good faith and reasonable care in
the performance of its duties under such Agreement.
158
<PAGE>
LEGAL MATTERS
Certain legal matters with respect to the New Securities will be passed upon
for the Company by White & Case LLP, New York, New York, United States counsel
for the Company and White & Case (Thailand) Limited, Thailand counsel for the
Company.
EXPERTS
The financial statements of the Company as of December 31, 1995, 1996, 1997
and for each of the years then ended, have been included herein and in the
registration statement in reliance upon the report of Peat Marwick Suthee
Limited, independent certified public accountants, appearing elsewhere herein
and upon the authority of said firm as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company and the Note Issuers have filed with the Commission a
Registration Statement on Form F-4 under the Securities Act with respect to the
New Notes offered hereby (the "Registration Statement"). This Prospectus, which
constitutes a part of the Registration Statement, does not contain all the
information set forth in the Registration Statements, certain parts of which
have been omitted from this Prospectus in accordance with the rules and
regulations of the Commission. For further information with respect to the
Company, the Note Issuers and the New Securities offered hereby, reference is
made to the Registration Statement, including the exhibits and schedules filed
therewith. Statements made in this Prospectus concerning the contents of any
document referred to herein are not necessarily complete. With respect to each
such document filed with the Commission as an exhibit to the Registration
Statement, reference is made to the exhibit for a more complete description of
the matter involved, and each such statement shall be deemed qualified in its
entirety by such reference.
The Registration Statement, including the exhibits and schedules thereto,
such reports and other information can be inspected and copied at the Public
Reference Section of the Commission at Room 1024, 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549 and at the regional offices of the
Commission located at 7 World Trade Center, 13th Floor, Suite 1300, New York,
New York 10048 and Suite 1400, Northwestern Atrium Center, 14th Floor, 500 West
Madison Street, Chicago, Illinois 60661. Copies of such material can also be
obtained at prescribed rates by writing to the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549
and its public reference facilities in New York, New York, and Chicago,
Illinois. The Registration Statement and the exhibits thereto are available on
the SEC's website (http://www.sec.gov).
The Company is not currently subject to the information requirements of the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"). Upon
consummation of the Exchange Offer and the issuance of the New Securities, the
Company will file with the Trustee (as defined herein), within 15 days after the
Company is required to file the same with the Commission, copies of the annual
reports and the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) that the Company may be required to file as a
"foreign private issuer" (as defined in Rule 3b-4 under the Exchange Act) with
the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or,
if the Company is not required to file information, documents or reports
pursuant to either of said Sections, then it will file with the Trustee and the
Commission, in accordance with rules and regulations prescribed from time to
time by the Commission, such of the supplementary and periodic information,
documents and reports which may be required pursuant to Section 13 of the
Exchange Act in respect of a security of a foreign private issuer listed and
registered on a national securities exchange as may be prescribed from time to
time in such rules and regulations.
159
<PAGE>
As a foreign issuer, the Company will be exempt from certain periodic
reporting requirements under the Exchange Act and certain rules under the
Exchange Act relating to short swing profits reporting and liability and
prescribing the furnishing and content of proxy statements.
This Prospectus contains summaries, believed to be accurate in all material
respects, of certain terms of certain agreements and certain reports; however,
reference is made to the actual agreements (copies of which will be made
available upon request to the Company) for complete information with respect
thereto and all such summaries are qualified in their entirety by this
reference. Any request for the agreements summarized herein or any other
requests for information should be directed to the Corporate Secretary,
Nakornthai Strip Mill Public Company Limited, 9 Ramkhamhaeng Road, 19th Floor,
UM Tower, Suanluang, Bangkok 10250 Thailand.
160
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Independent Auditors' Report............................................................................... F-2
Balance Sheets as of December 31, 1995, 1996 and 1997...................................................... F-3
Statements of Income for the Years Ended December 31, 1995, 1996 and 1997.................................. F-5
Statements of Changes in Shareholders' Equity for the Years Ended December 31, 1995, 1996 and 1997......... F-6
Statements of Cash Flows for the Years Ended December 31, 1995, 1996 and 1997.............................. F-7
Notes to Financial Statements for the Years Ended December 31, 1995, 1996 and 1997......................... F-8
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders of Nakornthai Strip Mill Public Company Limited:
We have audited the accompanying balance sheets of Nakornthai Strip Mill
Public Company Limited as of December 31, 1995, 1996 and 1997 and the related
statements of income, changes in shareholders' equity and cash flows for the
years then ended all expressed in Thai Baht. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards in Thailand, which are substantially similar with those in the United
States of America. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
We draw attention to Note 2 to the financial statements. The operations of
the Company have been affected and will continue to be affected for the
foreseeable future by the economic conditions in Thailand and Asia Pacific
Region in general.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Nakornthai Strip Mill Public
Company Limited as of December 31, 1995, 1996 and 1997 and the results of its
operations and cash flows for the years then ended, in conformity with generally
accepted accounting principles in Thailand.
Generally accepted accounting principles in Thailand vary in certain
significant respects from generally accepted accounting principles in the United
States of America. Application of generally accepted accounting principles in
the United States would have affected shareholders' equity as of December 31,
1995, 1996 and 1997 and results of operations for the years then ended to the
extent summarized in Note 22 to the financial statements.
Nirand Lilamethwat
Certified Public Accountant
Peat Marwick Suthee Limited
Bangkok, February 14, 1998, except as
to Note 21, which is
as of May 12, 1998
F-2
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
BALANCE SHEETS AS AT DECEMBER 31, 1995, 1996 AND 1997
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1995 1996 1997 1997
ASSETS BAHT BAHT BAHT U.S.$
---------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
(UNAUDITED)
CURRENT ASSETS
Cash on hand and at banks................................. 60,001 492,693 15,140 351
Short-term investments
Fixed deposits.......................................... 34,587 8,894 2,825 66
Promissory notes--finance companies..................... 2,719,443 864,116 -- --
---------- ------------ ------------ -----------
Total Short-term investments.......................... 2,754,030 873,010 2,825 66
Inventories............................................... -- -- 459,497 10,661
Loan to related company................................... -- 5,610 750,413 17,411
Less allowance for bad debts............................ -- -- (750,413) (17,411)
---------- ------------ ------------ -----------
Loan to related company--net.......................... -- 5,610 -- --
---------- ------------ ------------ -----------
Other current assets
Deposits and advance payments
- others.............................................. 82,634 49,241 13,663 317
- related party....................................... -- 63,000 60,000 1,392
Insurance claim......................................... -- -- 60,738 1,409
Value added tax recoverable............................. 27,448 145,704 186,662 4,331
Other receivables from related parties.................. -- 1,748 2,648 61
Other................................................... 7,801 64,596 95,334 2,212
---------- ------------ ------------ -----------
Total Other Current Assets............................ 117,883 324,289 419,045 9,722
---------- ------------ ------------ -----------
Total Current Assets.................................. 2,931,914 1,695,602 896,507 20,800
LONG-TERM INVESTMENTS (Note 10)............................. -- -- 544,129 12,625
Less allowance for bad debts.............................. -- -- (544,129) (12,625)
---------- ------------ ------------ -----------
Long-term investments--net................................ -- -- -- --
---------- ------------ ------------ -----------
PROPERTY, PLANT AND EQUIPMENT--NET (Note 11)................ 2,430,562 9,437,572 24,454,278 567,385
OTHER ASSETS
Deferred charges.......................................... 60,169 252,202 987,257 22,906
Deposits.................................................. 1,085 1,872 6,875 160
---------- ------------ ------------ -----------
Total Other Assets.................................... 61,254 254,074 994,132 23,066
---------- ------------ ------------ -----------
Total Assets.......................................... 5,423,730 11,387,248 26,344,917 611,251
---------- ------------ ------------ -----------
---------- ------------ ------------ -----------
</TABLE>
See notes to financial statements
F-3
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
BALANCE SHEETS AS AT DECEMBER 31, 1995, 1996 AND 1997
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1995 1996 1997 1997
LIABILITIES AND SHAREHOLDERS' EQUITY BAHT BAHT BAHT U.S.$
---------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
(UNAUDITED)
CURRENT LIABILITIES
Bank overdrafts and loan from financial
institutions............................................ 339 30,752 162,976 3,781
Short-term loans (Note 13)................................ -- -- 24,700 573
Accounts payable
- other................................................. 199,178 922,262 3,912,926 90,787
- related parties....................................... 385 -- 4,273 99
---------- ------------ ------------ -----------
Total................................................... 199,563 922,262 3,917,199 90,886
Notes payable and advances from related party............. 71,958 -- -- --
Others current liabilities
Accrued expenses
- other............................................... 907 89,312 637,774 14,798
- related parties..................................... -- -- 20,705 480
Retention payables...................................... -- 73,131 111,247 2,581
Other................................................... 963 4,871 14,972 347
---------- ------------ ------------ -----------
Total Other Current Liabilities....................... 1,870 167,314 784,698 18,206
---------- ------------ ------------ -----------
Total Current Liabilities............................. 273,730 1,120,328 4,889,573 113,447
LONG-TERM DEBT (Note 14).................................... -- 4,156,920 16,639,886 386,076
---------- ------------ ------------ -----------
Total Liabilities..................................... 273,730 5,277,248 21,529,459 499,523
SHAREHOLDERS' EQUITY
Share capital (Note 15)
Authorized 650,000,000 shares in 1995 and 1996 and
860,000,000 shares in 1997 Baht 10 par value.......... 6,500,000 6,500,000 8,600,000 199,536
---------- ------------ ------------ -----------
---------- ------------ ------------ -----------
Issued 500,000,000 shares in 1995 and 560,000,000 shares
in 1996 and 1997,
fully paid............................................ 5,000,000 5,600,000 5,600,000 129,931
Premium on share capital.................................. 150,000 510,000 510,000 11,833
Deficit................................................... -- -- (1,294,542) (30,036)
---------- ------------ ------------ -----------
Total Shareholders' Equity............................ 5,150,000 6,110,000 4,815,458 111,728
---------- ------------ ------------ -----------
Total Liabilities and Shareholders' Equity............ 5,423,730 11,387,248 26,344,917 611,251
---------- ------------ ------------ -----------
---------- ------------ ------------ -----------
</TABLE>
See notes to financial statements
F-4
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1995 1996 1997 1997
BAHT BAHT BAHT U.S.$
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
(UNAUDITED)
Provision for bad debts (Notes 5 and 10)................... -- -- 1,294,542 30,036
----------- ----------- ----------- -----------
Net loss................................................... -- -- (1,294,542) (30,036)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Net loss per share......................................... -- -- (2.31) (0.05)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
See notes to financial statements.
F-5
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1996 1997 1997
BAHT BAHT BAHT U.S.$
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
(UNAUDITED)
Share capital:
Ordinary shares
Beginning balance........................................ 10,000 5,000,000 5,600,000 129,931
Shares sold to existing shareholders..................... 4,990,000 -- -- --
Share sold in public offering............................ -- 600,000 -- --
---------- ---------- ----------- -----------
Ending balance........................................... 5,000,000 5,600,000 5,600,000 129,931
---------- ---------- ----------- -----------
Paid in capital
Premium on share capital
Beginning balance........................................ -- 150,000 510,000 11,833
Shares sold to existing shareholders..................... 150,000 -- -- --
Share sold in public offering............................ -- 360,000 -- --
---------- ---------- ----------- -----------
Ending balance........................................... 150,000 510,000 510,000 11,833
---------- ---------- ----------- -----------
Deficit
Beginning balance.......................................... -- -- -- --
Net loss................................................... -- -- (1,294,542) (30,036)
---------- ---------- ----------- -----------
Ending balance............................................. -- -- (1,294,542) (30,036)
---------- ---------- ----------- -----------
Total Shareholders' Equity................................... 5,150,000 6,110,000 4,815,458 (111,728)
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
</TABLE>
See notes to financial statements
F-6
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1996 1997 1997
BAHT BAHT BAHT U.S.$
--------- --------- ---------- -----------
<S> <C> <C> <C> <C>
(UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss....................................................... -- -- (1,294,542) (30,036)
Adjustments to reconcile net loss to net cash used in operating
activities:
Provision for bad debts...................................... -- -- 1,294,542 30,036
Increase in inventories...................................... -- -- (459,497) (10,661)
Increase in value added tax recoverable...................... (27,394) (118,256) (40,958) (951)
Increase in insurance claim.................................. -- -- (60,738) (1,409)
Increase in other current assets............................. (44,814) (35,198) (31,638) (734)
Increase in other assets..................................... (56,905) (186,767) (727,258) (16,874)
Increase in accrued expenses................................. 857 88,405 667,134 15,479
Increase in other current liabilities........................ 963 3,908 10,101 234
--------- --------- ---------- -----------
Net cash used in operating activities.................... (127,293) (247,908) (642,854) (14,916)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of promissory notes.................................. (8,854,066) (9,129,239) (2,481,443) (57,574)
Maturities of promissory notes................................. 6,181,636 10,955,611 2,056,628 47,718
Decrease (increase) in deposits and advance payments........... (82,634) (29,607) 38,578 895
Purchases of property, plant and equipment..................... (2,226,769) (6,290,364) (12,034,569) (279,224)
Increase in retention payables................................. -- 73,131 38,116 884
--------- --------- ---------- -----------
Net cash used in investing activities.................... (4,981,833) (4,420,468) (12,382,690) (287,301)
--------- --------- ---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in bank overdrafts.................................... 339 30,413 34,256 795
Increase in short-term loan.................................... -- -- 24,700 573
Proceeds from issuance of notes payable and advances from
related party................................................ 71,958 -- -- --
Repayment of notes payable and advances from related party..... (8,593) (71,958) -- --
Proceeds from issuance of long-term debt....................... -- 4,156,920 12,482,966 289,628
Proceeds from sale of share capital............................ 5,140,000 960,000 -- --
--------- --------- ---------- -----------
Net cash provided by financing activities................ 5,203,704 5,075,375 12,541,922 290,996
--------- --------- ---------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS............. 94,578 406,999 (483,622) (11,221)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR (Note 7).......... 10 94,588 501,587 11,638
BANK DEPOSIT PLEDGED AS COLLATERAL AT END OF YEAR (Note 7)....... -- -- (2,825) (66)
--------- --------- ---------- -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 7)................ 94,588 501,587 15,140 351
--------- --------- ---------- -----------
--------- --------- ---------- -----------
ADDITIONAL CASH FLOWS INFORMATION
Cash paid during year for interest............................. 2,409 59,145 624,392 14,487
--------- --------- ---------- -----------
--------- --------- ---------- -----------
</TABLE>
See notes to financial statements
F-7
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997
NOTE 1--NATURE OF OPERATIONS
Nakornthai Strip Mill Public Company Limited (the "Company") is a Thai
public company listed on the Stock Exchange of Thailand. The Company was founded
in 1994 to become a producer of flat rolled steel for both domestic use and
export. Through December 31, 1997, the Company was in the development stage and
its activities primarily related to the construction of its mini-mill, which is
located in Thailand. The Company's hot mill, the core of the mini-mill, has been
completed as of December 31, 1997. The Company expects to begin commercial
production of hot-rolled steel in early 1998. The Company's facilities for
production of direct reduced iron and for production of cold-rolled, galvanized
and other value added steel products are still under construction. The Company
expects to complete these facilities in the first quarter of 1999.
NOTE 2--ECONOMIC ENVIRONMENT
The Company expects to sell a significant portion of its products in
Thailand and other countries in the Asia/Pacific region. In addition,
substantially all of the Company's assets are located in Thailand. Recent
adverse economic conditions in Thailand and other countries in the Asia/Pacific
region have resulted in, among other things, a national liquidity crisis in
Thailand, significant depreciation in the value of the Thai Baht and certain
other currencies in the Asia/Pacific region relative to, among others, the U.S.
Dollar, sharply higher domestic interest rates, reduced opportunities for
refinancing or refunding of maturing debts, and a general reduction in spending
throughout the region. In order to partially address this situation, the
Government of Thailand and certain other governments of countries within the
Asia/ Pacific region sought assistance from the International Monetary Fund and
announced policy packages intended to address the structural weaknesses within
their respective economies and financial sectors. These reform policies are
intended to alleviate the economic crisis in Thailand and other countries in the
Asia/Pacific region and improve their respective economies over time. However,
these reform policies may not be effective in the near term or at all. The
current economic conditions in Thailand, and similar conditions in the
Asia/Pacific region, could have a significant negative effect on the financial
position, cash flow, operating results and general levels of business activities
of the Company.
As of December 31, 1997, the Company had net foreign currency denominated
liabilities of approximately Baht 16.3 billion, substantially all in U.S.
Dollars. As a result of the previously discussed depreciation in the Thai Baht
relative to the U.S. Dollar, the Company incurred significant unrealized foreign
exchange losses during 1997. The Company's ultimate foreign exchange gains or
losses with respect to currency fluctuations will depend on future currency
exchange rates and other factors.
As a result of the conditions noted in the previous paragraph, it is at
least reasonably possible that the estimates utilized by the Company as a basis
for supporting the carrying amounts of certain long-lived assets will change in
the near term.
NOTE 3--BASIS OF PRESENTATION
The financial statements of Nakornthai Strip Mill Company Limited are
prepared in accordance with accounting principles generally accepted in
Thailand, including Thai Commerce Ministerial Regulation No.7 dated October 25,
1996, and requirements of the Stock Exchange of Thailand (collectively, "Thai
GAAP"). The financial statements also have been reformatted from the original
Thai statutory financial statement presentation and include certain additional
disclosures in order to conform more closely to the
F-8
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
NOTE 3--BASIS OF PRESENTATION (CONTINUED)
form and content required by the Securities and Exchange Commission of the
United States of America (the "SEC").
NOTE 4-- TRANSLATION OF THAI BAHT AMOUNTS INTO UNITED STATES DOLLAR AMOUNTS
The financial statements are stated in Thai Baht. The translations of the
Thai Baht amounts into United States Dollars ("U.S.$") are included solely for
the convenience of the reader, using the Noon Buying Rate from the Federal
Reserve Bank of New York on June 5, 1998 of Baht 43.1 to U.S.$1.00. The
convenience translations should not be construed as representations that the
Thai Baht amounts have been, could have been, or could in the future be,
converted into United States Dollars at this or any other rate of exchange.
NOTE 5--RELATED PARTY TRANSACTIONS
The Company is majority owned by the Horrungruang family group of companies.
The Company has significant transactions with these related parties. The
financial statements reflect the effects of these transactions on the basis
determined by the companies concerned.
The significant related party transactions as shown in the financial
statement as of and for the years ended December 31, 1995, 1996 and 1997 are as
follows (in millions):
<TABLE>
<CAPTION>
1995 1996 1997
BAHT BAHT BAHT
--------- --------- ---------
<S> <C> <C> <C>
Deposit and advance payments to related company....................................... -- 63.00 60.00
Loans to a related company, including interest receivable............................. -- 5.61 750.41
Advance receivable from related company............................................... -- 1.75 2.65
Notes payable and advances from related company....................................... 71.96 -- --
Accounts payable to related company for construction.................................. 0.39 -- 4.50
Accrued expenses...................................................................... -- -- 20.70
Interest income from related company.................................................. 7.13 39.39 36.92
Purchases of raw material............................................................. -- -- 6.31
Interest expense to related company................................................... 1.40 0.24 --
Management fee paid to related company................................................ 20.26 -- 6.30
Purchase of land from related company................................................. 719.96 -- --
Rental expense........................................................................ -- -- 8.92
Other expense......................................................................... -- -- 4.84
</TABLE>
Deposit and advance payments to related company includes a Baht 60 million
advance payment for water usage under a 19 year agreement. The Company plans to
obtain substantially all of its water needs at market rates from a reservoir
owned by the related company.
As at December 31, 1997, the loans to a related company include Baht 385.52
million related to loans where the Company authorized the conversion of its
promissory notes from finance companies whose operation were suspended by
Ministry of Finance, to promissory notes from the related company by allowing
the finance companies to offset such promissory notes against the related
company's loans from
F-9
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
NOTE 5--RELATED PARTY TRANSACTIONS (CONTINUED)
those finance companies. The loans to a related company mature on January 30,
1998 with interest at 14.80 % per annum and are repayable in cash or in exchange
for raw materials and water usage at market rates. The remaining loan to the
related company amounting to Baht 364.89, including accrued interest, is an
unsecured promissory note that has been renewed several times and is currently
due on December 31, 1997. The promissory note bears 16% interest per annum.
Management has fully reserved these loans due to concerns about the financial
position of the related company.
NOTE 6--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ALLOWANCE FOR DOUBTFUL ACCOUNTS
Allowance for doubtful accounts is an estimate of those amounts which may
prove to be uncollectible, based on review of the current status of existing
receivables.
INVENTORIES
Inventories consist of raw materials and supplies that are stated at the
lower of cost, using the first in, first out method, or market, except fuel and
natural gas which are costed using a moving average method.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. Depreciation is computed
by the straight-line method based on the estimated useful lives of assets of
5-20 years. Depreciation of property and equipment used for administrative
purposes for the years ended December 31, 1995, 1996 and 1997 in the amount of
Baht 1,277,019, 6,053,340 and 12,841,716, respectively, is included in deferred
charges. Interest expense and exchange gains or losses related to liabilities
incurred to finance construction is capitalized as part of the cost of
construction.
DEFERRED CHARGES
Deferred charges consist of pre-operating expenses, which are net of
interest income in the amount of Baht 111.9 million, 202.8 million and 145.0
million for the years ended December 31, 1995, 1996 and 1997, respectively,
costs of issuing debt and costs of increasing share capital which will be
amortized over a ten-year period using the straight-line method commencing when
revenues are earned from operations.
ACCOUNTS IN FOREIGN CURRENCIES
Transactions in foreign currencies are converted into Baht at the rates of
exchange on transaction dates. Assets and liabilities in foreign currencies at
the end of the year are translated into Baht at the rates of exchange on that
date. Gain or loss on translation is included in pre-operating expenses and the
cost of construction.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents are cash on hand and at banks and fixed deposits
at banks with an original maturity of three months or less, excluding amounts
pledged as collateral. While promissory notes
F-10
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
NOTE 6--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
receivable from finance companies are similar to interest bearing deposits, and
generally have maturities of 3 months or less, the Company has adopted a policy
of treating all promissory notes receivable as investments.
USE OF ESTIMATES
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
INCOME TAXES
Income taxes are recognized on the basis of the estimated current income tax
liability for the period in accordance with existing regulations giving
consideration to applicable exemptions.
LOSS PER SHARE
Loss per share is computed by dividing net loss by the weighted average
number of shares outstanding during each year. Weighted average shares
outstanding during the year ended December 31, 1995, 1996 and 1997 were
292,083,333, 535,000,000 and 560,000,000, respectively.
NOTE 7--CASH AND CASH EQUIVALENTS
Cash and cash equivalents consisted of (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
<S> <C> <C> <C>
1995 1996 1997
BAHT BAHT BAHT
--------- --------- ---------
Cash and cash at bank............................................................... 60,001 492,693 15,140
Fixed deposits at banks............................................................. 34,587 8,894 2,825
Less fixed deposits pledged as collateral for guarantees............................ -- -- (2,825)
--------- --------- ---------
Cash and cash equivalents....................................................... 94,588 501,587 15,140
--------- --------- ---------
--------- --------- ---------
</TABLE>
At December 31, 1997, fixed deposits at banks are used as collateral for
guarantees.
NOTE 8--INSURANCE CLAIM
At December 31, 1997, an insurance claim in the amount of Baht 60.74 million
represents a claim submitted to an insurance company for recovery of expenses
incurred to hire a second boat to recover a damaged boat carrying equipment
purchased by the Company. The Company is currently negotiating this claim with
the insurance company and, if not successful in recovering this amount, the cost
will be taken to construction in progress as part of the cost of acquiring the
equipment.
F-11
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
NOTE 9--INVENTORIES
Inventories as at December 31, 1997 consisted of (in thousands):
<TABLE>
<CAPTION>
BAHT
---------
<S> <C>
Raw materials...................................................................... 42,044
Parts and supplies................................................................. 411,998
Goods in transit................................................................... 5,455
---------
Total Inventories.............................................................. 459,497
---------
---------
</TABLE>
NOTE 10--LONG-TERM INVESTMENTS
In June and August 1997, the Thai Government suspended the operations of 58
finance companies with liquidity problems pending approval of rehabilitation
plans. On December 8, 1997, The Thai Government permanently closed 56 of the 58
finance companies. At December 31, 1997, the Company had promissory notes
receivable totaling Baht 544.13 million, including accrued interest, from
finance companies that have been closed.
These promissory notes from the closed finance companies, including accrued
interest, are used as collateral for loans by the finance companies to related
companies. The Company has fully reserved for these promissory notes receivable
due to concern about the recovery of these notes.
NOTE 11--PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------
<S> <C> <C> <C>
1995 1996 1997
BAHT BAHT BAHT
---------- ---------- ------------
Land...................................................................... 719,958 749,658 776,091
Building.................................................................. -- 20,063 20,749
Furniture and fixtures.................................................... 2,753 5,106 16,548
Office equipment.......................................................... 4,821 19,359 49,333
Vehicles.................................................................. 8,137 15,449 18,141
Construction in progress.................................................. 1,696,210 8,635,307 23,593,586
---------- ---------- ------------
2,431,879 9,444,942 24,474,448
LESS Accumulated depreciation............................................. 1,317 7,370 20,170
---------- ---------- ------------
Property, Plant and Equipment--net.................................... 2,430,562 9,437,572 24,454,278
---------- ---------- ------------
---------- ---------- ------------
</TABLE>
Substantially all of the Company's property, plant and equipment is pledged
as collateral for long-term debt. The Company capitalized interest expense of
Baht 85.4 million and Baht 1,032.0 million and exchange losses of Baht 46.1
million and Baht 6,701.4 million as part of the cost of construction during the
years ended December 31, 1996 and 1997, respectively.
F-12
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
NOTE 12--LONG-TERM AGREEMENT
In August 1996, the Company entered into an agreement (the "Agreement") with
a steel producer based in the United States of America (the "US Company")
whereby the US Company would provide training and data relating to the business
processes that the Company would use in its operations. As compensation for
these services, the US Company was to have received cash of up to U.S.$15
million, options to purchase a minimum of 2 1/2% and a maximum of 5% of the
Company's shares outstanding at the date of exercise and reimbursement of
out-of-pocket expenses. The minimum cash compensation was to have been U.S.$5
million. The first installment of U.S.$2.5 million was paid in August 1996 and a
second installment of U.S.$2.5 million was due in August 1997. The remaining
cash of up to U.S.$10 million was to have been payable in increments as
incentive compensation based on the successful start-up of the manufacturing
facility and achievement of certain operating performance objectives over the
first 24 months of operation. Under the Agreement, the options were granted
concurrently with the execution of the Agreement, but the percentage of the
Company's outstanding shares that could be issued upon exercise of the options
in excess of the 2 1/2% minimum was dependent upon the Company achieving certain
production results determined under a preset production model. The purchase
price of shares upon exercise of the options was equal to the lesser of 75% of
the market price at the date of exercise or Baht 16 per share. The options were
exercisable beginning in August 1998 and expired five years thereafter.
The Company did not make the cash payment of U.S.$2.5 million due in August
1997. However, by agreement between the Company and the US Company, the due date
was subsequently extended to October 1, 1997. The Company was unable to make
such payment and the US Company delivered a termination notice on October 27,
1997. The Agreement provides that, upon proper termination, any unpaid amount of
the maximum sum of U.S.$15 million that the US Company could have earned shall
be considered immediately earned and due and payable. The Company believes that
the notice of termination was improper under the terms of the Agreement, and
that the US Company repudiated the Agreement prior to the extended due date for
the payment. The minimum cash compensation of U.S.$5 million, consisting of
U.S.$2.5 million paid in cash and U.S.$2.5 million accrued, and out-of-pocket
expenses paid to the US Company are included in deferred charges as
pre-operating expenses. See subsequent event in Note 21.
NOTE 13--SHORT-TERM LOANS
Short-term loans represent loans from individuals. The Company issued
unsecured promissory notes due on demand bearing interest at 18% per annum.
F-13
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
NOTE 14--LONG-TERM DEBT
On September 27, 1995, the Company entered into a long-term debt agreement
with a group of Thai financial institutions. The agreement makes amounts
available in both U.S. Dollars and in Baht. The Company may borrow up to U.S.$
308 million and up to Baht 3,300 million. U.S.$ amounts borrowed under this
agreement bear interest payable quarterly at SIBOR plus 2.5% per annum and Baht
amounts bear interest at MLR plus 0.5% per annum. These loans are due in 13
semi-annual installments beginning on the earlier of four years after the first
amount is borrowed or two years after the Company's manufacturing facility
begins operations. The Company first borrowed amounts under this agreement in
1996. The amount outstanding at December 31, 1996 is a US Dollar loan of US.$
162 million. The amount outstanding at December 31, 1997 is a U.S.$ loan of
280.51 million and a Baht loan of Baht 3,300 million.
After the manufacturing facility begins operations, the Company must reserve
0.5% of the balance of the U.S.$ loans outstanding as of each year end until the
total reserve is more than 5% of the outstanding balance of the U.S.$ loans.
Such amount must be deposited in a separate bank account and pledged to the
lenders. Substantially all of the Company's property, plant and equipment is
pledged as collateral for this long-term debt.
The agreement contains certain restrictive covenants including the
following. The Company may not utilize amounts borrowed under the agreement for
any business other than the hot-rolled strip mill project. The Company may not
pay dividends in excess of 70% of net income during each year. The Company may
not dispose of, mortgage, pledge or otherwise encumber its property and
equipment or any other assets which is not in the ordinary course of its
business. The Company may not provide guarantees to or on behalf of other
persons which is not in the ordinary course of its business. The Company may not
reduce capital, or dispose of or transfer assets to its shareholders. The
agreement also discusses certain events which would be considered events of
default including any situation that occurred which, in the opinion of the
lenders, is a material adverse change in the business operation, property or
indebtedness of the Company that would impair the Company's ability to comply
with this agreement. A default of payment due to any creditor would also be an
event of default. The Company's obligations under the agreement are guaranteed
by a shareholder. Lawsuits against the guarantor, or if the guarantor is
deceased or otherwise incapacitated, would also be an event of default. If the
Company violates any of these restrictive covenants or an event of default
occurs, all amounts owed under the agreement become immediately due upon the
receipt of notice from the lenders.
The Company was not in compliance with certain restrictive covenants and
certain events of default existed as of December 31, 1997. See subsequent event
in Note 21.
NOTE 15--SHARE CAPITAL
A special resolution was passed by the Extraordinary General Meetings of
shareholders held on May 4, 1995 and May 19, 1995 authorizing a change of a par
value from Baht 100 per share to Baht 10 per share and the increase of share
capital from Baht 10 million to Baht 5,000 million dividing into 500 million
shares of Baht 10 par value. The Company registered the change of par value and
the increase of its share capital on May 29, 1995.
A special resolution was passed by the Extraordinary General Meetings of
shareholders held on July 21, 1995 and October 19, 1995 authorizing an increase
of share capital from Baht 5,000 million to Baht 6,500 million dividing into 650
million shares of Baht 10 par value. The increase of share capital will be
F-14
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
NOTE 15--SHARE CAPITAL (CONTINUED)
issued at prices and conditions as the Board of Directors may deem appropriate.
On June 4, 1996, the Company registered the change of its share capital from
Baht 5,000 million to Baht 5,600 million divided into 560 million shares of Baht
10 par value.
The Extraordinary General Meeting of shareholders held on October 22, 1997
and December 11, 1997, passed a special resolution to authorize a decrease of
share capital from Baht 6,500 million to Baht 5,600 million and an increase of
share capital from Baht 5,600 million to Baht 8,600 million divided into 300
million share of Baht 10 par value. The Company has reserved 194.47 million new
shares for issuance to specific new investors, subject to Thai Securities and
Exchange Commission regulations, and for issuance under the long-term agreement
discussed in Note 12 to the financial statements. The remaining 105.53 million
shares will be distributed as the Board of Directors may deem appropriate.
NOTE 16--CONVERSION OF THE COMPANY INTO A THAI PUBLIC COMPANY
A special resolution was passed by the Extraordinary General Meetings of
shareholders held on July 1, 1995 and July 21, 1995 authorizing the conversion
of the Company into a limited public company in Thailand and the change in its
name from "Nakornthai Strip Mill Company Limited" to "Nakornthai Strip Mill
Public Company Limited." The Company registered its conversion into a Thai
public company on August 9, 1995.
NOTE 17--PROMOTIONAL PRIVILEGES
The Board of Investment granted promotional privileges to the Company by
issuing a certificate for the manufacturing of hot iron plate, Classification
2.25, the manufacture of hot iron plate or cold iron plate. These privileges are
subject to certain conditions which the Company expects to meet. The promotional
privileges will include exemption from corporate income tax of net income
arising from the promoted activities for seven years from the date when revenues
are first earned.
NOTE 18--COMMITMENTS
At December 31, 1997, the Company had commitments under construction
contracts in the amount of Baht 4,131.80 million, and had unused letters of
credit in the amount of Baht 604.75 million. At December 31, 1997, the Company
had a letter of guarantee in the amount of Baht 142.44 million and other
commitments of Baht 6.4 million.
The Company entered into a ten-year take or pay commitment to purchase a
fixed amount of coal per year beginning in 1998. Prices for the coal are
renegotiated at the beginning of each year.
The Company entered into a 20 year take or pay commitment to purchase
various industrial use gases beginning on July 1, 1997. Prices for the gases are
subject to adjustment each year to consider inflation. The Company entered into
a five-year take or pay commitment to purchase natural gas beginning in June
1997. The unit price is subject to adjustment for changes in market prices.
NOTE 19--RECLASSIFICATION OF ACCOUNTS
Certain accounts in the financial statements for 1995 and 1996 have been
reclassified to conform with the presentation of the financial statements for
1997.
F-15
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
NOTE 20--OTHER INFORMATION
The Board of Directors' Meeting held on September 17, 1997 authorized the
establishment of a subsidiary company named NSM Holding Company Limited ("NSM
Holding") in the Cayman Islands for purposes of issuing long-term notes. The
authorized share capital is US$ 10,000 divide into 1,000 common shares of US$ 10
par value. The Company owns 100% of the authorized share capital. The subsidiary
was established on October 23, 1997.
The Extraordinary General Meeting of shareholders held on October 22, 1997
authorized the Company to guarantee debt expected to be issued by NSM Holding of
not more than US$ 750 million with terms not to exceed 10 years.
The Board of Directors' Meeting held on December 26, 1997 authorized the
change in the name of NSM Holding Company Limited to NSM Steel Company Limited
("NSM Steel") and the establishment of a wholly-owned subsidiary company of NSM
Steel named NSM Steel ( Delaware ), Inc. ("NSM Deleware") the United States of
America also for purposes of issuing long-term notes.
NOTE 21--SUBSEQUENT EVENTS
On April 3, 1998, the Company paid U.S.$2.5 million to the US Company
discussed in Note 12 under a letter providing that such payment was in full
satisfaction of all of the Company's obligations under the Company's agreement
with the US Company. By letter dated May 12, 1998, the US Company asserted a
claim to the remaining U.S.$10 million of cash compensation and options to
purchase 5% of the Company's outstanding shares. However, the Company still does
not believe it has any future obligation to the US Company for such cash
compensation and or stock options for the reasons discussed in Note 12 and
intends to vigorously defend against this claim.
The shareholders also approved a special resolution authorizing the Company
to issue and offer warrants for sale as described below.
On March 31, 1998, the Company registered the increase of its share capital
from Baht 5,600,000,000 to Baht 7,186,398,640 dividing into 718,639,864 fully
paid shares with Baht 10 par value.
On March 12, 1998, NSM Steel and NSM Delaware (collectively, the "Issuers")
completed on offering of long-term notes and debentures for total proceeds of
approximately U.S.$444 million. The Issuers immediately loaned the proceeds of
the debt offerings to the Company on terms substantially the same as the terms
received by the Issuers. The long-term notes were issued with an aggregate
principal amount due at maturity of US$ 249,000,000 and US$ 203,500,000 and
mature on February 1, 2006 and February 1, 2008, respectively. The long-term
notes bear interest at the rate of 12% to 12 1/4% per annum that will be paid
semi-annually. The long-term notes were issued at a discount to generate gross
proceeds of US$ 400,604,000. The purchasers of a portion of the long-term notes
received warrants (the "Warrants") to purchase 128,834,356 ordinary shares of
the Company at an exercise price of Baht 10 per share. The Warrants are
exercisable beginning on the first anniversary date of the issue date and expire
on February 1, 2008. The debentures were issued with an aggregate principal
amount due at maturity of US$ 53,133,016 and are due February 1, 2009. The
debentures bear interest at 12 3/4% per annum that will be paid semi-annually.
The debentures were issued at a discount to generate gross proceeds of US$
43,500,000. In conjunction with the debentures offering, the Company issued
64,417,180 ordinary shares for gross proceeds of Baht 644,171,800 through a
private placement. The long-term notes and loans from Thai financial
institutions are secured by a first mortgage over the land and buildings
comprising the mill and all
F-16
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
NOTE 21--SUBSEQUENT EVENTS (CONTINUED)
machinery and equipment located at the mill. The debentures are secured by a
second mortgage on the land and buildings comprising the mill and all machinery
and equipment located at the mill. In addition, the long-term notes and
debentures are secured by all funds remaining in certain cash accounts
maintained with a trustee in the United States. A substantial portion of the
gross proceeds of the Company's recent debt and equity offerings are reserved
for capital expenditures and payment of interest on the long-term notes and
debentures. The Company's access to these funds is restricted to these uses. The
maximum amount of the gross proceeds which can be used for working capital and
general corporate purposes is US$ 70 million.
In connection with the offering, the Company entered into several other
agreements. The Company entered into a 10 year contract with a Management
Company. Pursuant to the agreement, the Company will assign and delegate to
Management Co. the exclusive right and obligation to control, posses and manage
all business affairs for Company. Under the agreement, Management Co. shall not
be entitled to any fee or other compensation for its services. The Company also
entered into a 10 year contract with Steel Dynamics, Inc., "(SDI)", under which
SDI will provide Management Co. with consultation and technical and advisory
services. As compensation for these services, SDI will receive an annual fee of
US$ 2 million and a one-time incentive fee of US$ 1.3 million. The Company also
entered into a license and technology sharing agreement with SDI for a period of
10 years. As compensation for the rights granted to the Company by SDI, the
Company issued 74,468,090 of its ordinary shares to SDI and granted warrants to
SDI to purchase up to 11,421,480 ordinary shares of the Company for Baht 10 per
share. Concurrent with exercise of the warrants, the Company would pay Baht 10
per share to SDI such that there would be no net cost to SDI. The warrants are
exerciseable only to the extent the Warrants discussed above are exercised such
that SDI would maintain its percentage ownership of the Company. Any unexercised
warrants expire on March 12, 2008. The Company also entered into eight year
sales agreements ("Offtake Agreements") with two international steel trading
companies. Pursuant to the Offtake Agreements, the trading companies are
obligated to purchase 100% of the Company's production in 1998, 1999 and 2000,
and 25% of the Company's production in the years 2001 through 2005. The Company
may, at its option, reduce the percentage of its production sold under the
agreements to as little as 67% in 1998, 50% in 1999 and 25% in 2000.
Also in connection with the offering, the Company amended its long-term debt
agreement with the Thai financial institutions. Also, the Company pre-paid US$
50 million of principal and paid all accrued interest due under the loan from
the Thai financial institutions by using funds from the offering. The amendment
modified the restrictive covenants and waived all past violations of the
agreement upon successful completion of the offering. As amended, the remaining
principle is payable semi-annually beginning in the first quarter of 2000.
Installments will be in the amount of US$ 24.01 million for the U.S.$ loan and
Baht 169.18 million for the Baht loan. The first installment will be payable on
March 1, 2000. Interest is payable quarterly at the rate of SIBOR + 2.5% per
annum for the US$ loan and MLR+0.5% per annum for the Baht loan. Also as
amended, the Company must prepay the outstanding balance of the loans by an
amount equal to 50% of annual earnings before depreciation and amortization,
less scheduled debt repayments and maintenance capital expenditures, beginning
in the year 2000.
F-17
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
NOTE 22--RECONCILIATION TO ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE
UNITED STATES OF AMERICA
The Company's financial statements have been prepared in accordance with
Thai GAAP, which differs in certain material respects from Generally Accepted
Accounting Principles in the United States of America ("U.S. GAAP"). Differences
that have an effect on net loss and shareholders' equity are as follows:
A. FOREIGN EXCHANGE GAINS AND LOSSES
Under Thai GAAP, foreign exchange translation gains and losses related to
foreign currency liabilities incurred specifically to fund construction of plant
and equipment are capitalized during the construction period. Under U.S. GAAP,
all foreign exchange translation gains and losses must be included in earnings
in the period in which such gains and losses arise.
B. DEFERRED CHARGES
Thai GAAP permits the deferral of pre-operating expenses, net of interest
income earned, during the pre-operating period. For U.S. GAAP purposes, these
expenses have been expensed as incurred and the related revenue recognized in
the period earned. Under U.S. GAAP, the minimum cash compensation due under the
agreement discussed in Note 12 was being amortized as administrative expense
over the approximate 17 month period of service. The accrual ceased upon
termination of the agreement.
Thai GAAP permits the capitalization and amortization of expenses incurred
for the acquisition of debt as an asset which is then amortized over the life of
the debt. Such amortization is generally provided using the straight-line
method. U.S. GAAP requires the capitalization of debt acquisition costs which
are subsequently amortized over the life of the related debt using the interest
method. The U.S. GAAP income statement has not been adjusted because the impact
of such difference is immaterial.
Both Thai GAAP and U.S. GAAP require the capitalization of costs incurred to
get an asset ready for its intended use. Under Thai GAAP, the cost of
engineering studies for construction projects is capitalized as deferred charges
and amortized on a straight-line basis over a period unrelated to the useful
life of the related assets. Under U.S. GAAP, all costs of getting an asset ready
for its intended use are capitalized as part of the historical cost of that
asset and depreciated over its useful life. This difference currently affects
only classification of the costs but will effect depreciation and shareholders'
equity in future periods.
Under Thai GAAP, costs incurred in connection with offerings of share
capital are deferred and amortized to income. Under U.S. GAAP, such costs are
charged against the proceeds from the offering.
C. STOCK OPTIONS
Under Thai GAAP, no value was ascribed to the stock options discussed in
Note 12 due to the variable exercise price and number of shares. Under U.S.
GAAP, the fair value of the options is not estimable and, therefore, the current
intrinsic value of outstanding options was being expensed through September 30,
1997 as an administrative cost over the vesting period. As discussed Notes 12
and 21, management believes the options have been canceled.
F-18
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
NOTE 22--RECONCILIATION TO ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE
UNITED STATES OF AMERICA (CONTINUED)
D. DEFERRED INCOME TAXES
Thai GAAP has no requirement for establishing deferred income tax assets or
liabilities. The Company has adopted a policy whereby income taxes are
recognized on the basis of the estimated current income tax liability for the
period in accordance with existing regulations giving consideration to
applicable exemptions.
U.S. GAAP requires deferred tax assets and liabilities to be established for
temporary differences between the tax and financial reporting bases of assets
and liabilities. Deferred tax assets and liabilities are measured using the
enacted tax rates applicable to the periods in which the differences are
expected to affect taxable income. Deferred income tax assets are also
established for tax losses which may be carried forward and used to reduce
future taxable income. U.S. GAAP requires a valuation allowance to be
established sufficient to reduce any deferred tax assets to the amount that,
based on the weight of the available evidence, is more likely than not to be
recovered.
E. CAPITALIZATION OF INTEREST EXPENSE
Under Thai GAAP, all interest incurred during the construction period on
debt specifically related to funding construction of plant and equipment is
capitalized as part of the cost of acquiring the assets. Under U.S. GAAP,
interest costs incurred during the construction period are required to be
capitalized as part of the cost of acquiring the asset. Interest costs
recognized on all borrowings and other obligations are eligible for
capitalization. The amount capitalized under U.S. GAAP is based on the effective
interest rates of outstanding borrowings applied to the cumulative expenditures
for the asset. If specific new borrowings are associated with the asset, the
effective interest rate on that borrowing may be applied to that portion of the
cumulative expenditures for the asset. All interest costs have been capitalized
under both Thai GAAP and U.S. GAAP; therefore, the U.S. GAAP income statement
has not been adjusted for this difference. However, a portion of interest
expense amounting to Baht 3.1 million and Baht 56.8 million at December 31, 1996
and 1997, respectively was capitalized as pre-operating expense for Thai GAAP
and such amount has been reclassified to construction in progress under U.S.
GAAP.
F. INSURANCE CLAIM
Under Thai GAAP, as discussed in Note 8, the Company is carrying the costs
of recovering a damaged boat carrying its equipment as a receivable from its
insurance company. Under Thai GAAP, such amount will be reclassified as a
component of the equipment cost if the claim is not successful. Under U.S. GAAP,
such costs are not considered part of the equipment cost and, due to
uncertainties about recoverability from the insurance company, have been
expensed as incurred.
G. RECENT CHANGES IN US GAAP
In June 1997, the U.S. Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130 which requires the
reporting and display of comprehensive income and its components (revenues,
expenses, gains and losses). SFAS No. 130 also requires that the components of
comprehensive income be reported in a financial statement that is displayed with
equal prominence as other financial statements. SFAS No. 130 is effective for
the Company's 1998 financial
F-19
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
NOTE 22--RECONCILIATION TO ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE
UNITED STATES OF AMERICA (CONTINUED)
statements and requires reclassification of all financial statements for prior
periods presented under US GAAP. The Company has not assessed the impact of SFAS
No. 130.
In June 1997, the FASB issued SFAS No. 131 which requires disclosure of
certain information for the Company's reportable operating segments. SFAS No.
131 defines a reportable operating segment as a component of the Company about
which separate financial information is available that is evaluated regularly by
management in deciding how to allocate resources and in assessing performance.
SFAS No. 131 is effective for the Company's 1998 financial statements and
requires comparative information be presented for all prior periods presented
under US GAAP. The Company has not assessed the impact of SFAS No. 131.
F-20
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
NOTE 22--RECONCILIATION TO ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE
UNITED STATES OF AMERICA (CONTINUED)
The following statements of income and deficit for the years ended December
31, 1995, 1996, 1997 and from inception to December 31, 1997, have been prepared
under U.S. GAAP to reflect the impact of the aforementioned differences between
Thai GAAP and U.S. GAAP (in thousands, except per share data):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, FROM INCEPTION TO
-------------------------------------------- DECEMBER 31, 1997
1995 1996 1997 1997 ----------------------
BAHT BAHT BAHT U.S.$ BAHT U.S.$
--------- --------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
Interest income....................................... 111,883 202,790 145,001 3,364 459,673 10,665
--------- --------- --------- ----------- --------- -----------
Expenses
Bad debt expense...................................... -- -- 1,294,542 30,036 1,294,542 30,036
Administrative........................................ 68,630 322,990 879,954 20,417 1,273,854 29,555
Depreciation.......................................... 1,277 6,053 12,842 298 20,212 469
Foreign exchange losses............................... 143 46,089 6,720,261 155,922 6,766,492 156,995
--------- --------- --------- ----------- --------- -----------
70,050 375,132 8,907,599 206,673 9,355,100 217,055
--------- --------- --------- ----------- --------- -----------
Income (loss) before income taxes..................... 41,833 (172,342) (8,762,598) (203,309) (8,895,427) (206,390)
Deferred income tax expense (benefit)................. 5,848 (5,848) -- -- -- --
--------- --------- --------- ----------- --------- -----------
Net income (loss) under U.S. GAAP..................... 35,985 (166,494) (8,762,598) (203,309) (8,895,427) (206,390)
Retained earnings (deficit) accumulated during the
development stage--beginning of year................ (2,320) 33,665 (132,829) (3,081) -- --
--------- --------- --------- ----------- --------- -----------
Retained earnings (deficit) accumulated during the
development stage--end of year...................... 33,665 (132,829) (8,895,427) (206,390) (8,895,427) (206,390)
--------- --------- --------- ----------- --------- -----------
--------- --------- --------- ----------- --------- -----------
Basic and diluted net income (loss) per share......... 0.12 (0.31) (15.65) (0.37)
--------- --------- --------- -----------
--------- --------- --------- -----------
Weighted average shares outstanding................... 292,083 535,000 560,000 560,000
--------- --------- --------- -----------
--------- --------- --------- -----------
</TABLE>
The following is a summary of the aforementioned adjustments to
shareholders' equity that would be required if U.S. GAAP had been applied
instead of Thai GAAP in the financial statements (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------------
1995 1996 1997 1997
BAHT BAHT BAHT U.S.$
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
(UNAUDITED)
Shareholders' equity under Thai GAAP......................... 5,150,000 6,110,000 4,815,458 111,728
Items increasing (decreasing) reported shareholders' equity:
Foreign exchange losses.................................... (143) (46,231) (6,766,492) (156,995)
Deferred income taxes...................................... (5,848) -- -- --
Deferred charges........................................... 39,656 (125,931) (875,479) (20,313)
---------- ---------- ----------- -----------
Net increase (decrease) in reported shareholders'
equity................................................. 33,665 (172,162) (7,641,971) (177,308)
---------- ---------- ----------- -----------
Shareholders' equity (deficit) under U.S. GAAP............... 5,183,665 5,937,838 (2,826,513) (65,580)
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
</TABLE>
F-21
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
NOTE 22--RECONCILIATION TO ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE
UNITED STATES OF AMERICA (CONTINUED)
The following is a reconciliation of deferred charges determined under Thai
GAAP to the amounts determined under U.S. GAAP (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------------
1995 1996 1997 1997
BAHT BAHT BAHT U.S.$
--------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
(UNAUDITED)
Deferred charges under Thai GAAP................................ 60,169 252,202 987,257 22,906
Adjustments required under U.S. GAAP
Construction in progress...................................... (27,850) (35,464) (96,380) (2,236)
Administrative expense........................................ (70,909) (388,358) (1,221,464) (28,340)
Depreciation.................................................. (1,318) (7,371) (20,212) (469)
Interest income............................................... 111,883 314,673 459,673 10,665
Cost of issuing share capital................................. -- (44,875) (51,294) (1,190)
--------- ---------- ----------- -----------
Deferred charges under U.S. GAAP................................ 71,975 90,807 57,580 1,336
--------- ---------- ----------- -----------
--------- ---------- ----------- -----------
</TABLE>
The following is a reconciliation of property, plant and equipment
determined under Thai GAAP to the amounts determined under U.S. GAAP (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------------
1995 1996 1997
BAHT BAHT BAHT 1997
---------- ---------- ------------ BAHT
-----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Property, plant and equipment under Thai GAAP................ 2,430,562 9,437,572 24,454,278 567,385
Adjustments required under U.S. GAAP
Deferred charges classification............................ 27,850 35,464 96,380 2,236
Foreign exchange losses.................................... (143) (46,231) (6,747,936) (156,565)
---------- ---------- ------------ -----------
Property, plant and equipment under U.S. GAAP 2,458,269 9,426,805 17,802,722 413,056
---------- ---------- ------------ -----------
---------- ---------- ------------ -----------
</TABLE>
NOTE 23--ADDITIONAL DISCLOSURES REQUIRED BY U.S. GAAP
A. CUMULATIVE CASH FLOWS
Cumulative net cash used in operating activities from inception to December
31, 1997 was Baht 1,021,091,000. Cumulative net cash used by the Company in
investing activities from inception to December 31, 1997 was Baht
21,800,538,000. Cumulative net cash provided to the Company by financing
activities from inception to December 31, 1997 was Baht 22,839,594.
B. INCOME TAXES
The Company has been granted certain income tax privileges as described in
Note 17 to the financial statements. These privileges are subject to certain
conditions which the Company expects to meet. These income tax privileges had no
impact on current taxes during 1995, 1996 or 1997 since the Company had no
earnings during those years for tax purposes. For U.S. GAAP purposes, deferred
income taxes have been
F-22
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
NOTE 23--ADDITIONAL DISCLOSURES REQUIRED BY U.S. GAAP (CONTINUED)
provided for temporary differences expected to reverse during periods after the
exemption from income tax expires.
On a U.S. GAAP basis, temporary differences giving rise to deferred tax
assets and liabilities as of December 31, 1995, 1996 and 1997 are as follows (in
thousands). All such differences relate to the differences between U.S. and Thai
GAAP as discussed in Note 22.
<TABLE>
<CAPTION>
1995 1996 1997
BAHT BAHT BAHT
--------- --------- -----------
<S> <C> <C> <C>
Deferred tax assets:
Deferred charges.............................................................. -- 14,525 83,671
Property, plant and equipment................................................. -- 1,860 1,140,920
--------- --------- -----------
Gross deferred tax assets................................................... -- 16,385 1,224,591
Valuation allowance........................................................... -- (16,385) (1,224,591)
--------- --------- -----------
Total deferred tax assets................................................... -- -- --
--------- --------- -----------
--------- --------- -----------
Deferred tax liabilities:
Deferred charges.............................................................. (1,062) -- --
Property, plant and equipment................................................. (4,786) -- --
--------- --------- -----------
Total deferred tax liabilities.............................................. (5,848) -- --
--------- --------- -----------
--------- --------- -----------
Net deferred tax asset (liabilities)............................................ (5,848) -- --
--------- --------- -----------
--------- --------- -----------
</TABLE>
A valuation allowance was provided against the deferred tax assets at
December 31, 1996 and 1997 because the Company has no operating history.
C. MATURITIES OF LONG-TERM DEBT
The maturities of long-term debt for each of the five years subsequent to
December 31, 1997 are summarized as follows (in thousands):
<TABLE>
<CAPTION>
BAHT
------------
<S> <C>
1998............................................................................ 2,621,773
1999............................................................................ 2,621,773
2000............................................................................ 2,621,773
2001............................................................................ 2,621,773
2002............................................................................ 2,621,773
Thereafter...................................................................... 3,531,021
------------
16,639,886
------------
------------
</TABLE>
F-23
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995, 1996 AND 1997
NOTE 23--ADDITIONAL DISCLOSURES REQUIRED BY U.S. GAAP (CONTINUED)
D. FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of a financial instrument is the amount at which the
instrument could be exchanged in a current transaction between willing parties.
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it was practical to estimate that
value:
- The carrying amount of cash on hand and at banks, short-term investments,
value added tax recoverable, bank overdrafts and loan from financial
institutions, accounts payable, retention payables and short-term loans
approximate fair value because of the short maturity of these instruments.
- The carrying amount of other receivables from related parties and notes
payable and advances from related party are materially the same as their
fair value.
- The fair value of long-term debt is estimated by discounting the future
cash flows at rates currently offered for similar debt instruments of
comparable maturities. The estimated fair value of long-term debt at
December 31, 1996 and 1997 is Baht 4,056 million and Baht 16,442 million,
respectively.
E. ALLOWANCE FOR BAD DEBTS
The following is a roll forward of the allowance for bad debts for the year
ended December 31, 1997 (in thousands) :
<TABLE>
<CAPTION>
BALANCE AT BALANCE AT
BEGINNING OF ACCOUNTS END OF
YEAR EXPENSES WRITTEN OFF YEAR
----------------- ---------- --------------- ----------
<S> <C> <C> <C> <C>
BAHT BAHT BAHT BAHT
1997........................................................... -- 1,294,542 -- 1,294,542
-- --
-- --
---------- ----------
---------- ----------
</TABLE>
F-24
<PAGE>
ANNEX A
THE KINGDOM OF THAILAND
The following information regarding the Kingdom of Thailand ("Thailand") is
included for information only and has not been independently verified by the
Company or any of their respective affiliates or advisors. All of the data and
other information included below has been obtained from published or public
official sources of Thailand.
GENERAL
Thailand, formerly known as Siam, is situated in Southeast Asia. It is
bounded on the north and west by the Union of Myanmar (Burma), on the north and
east by Laos and on the southeast by Cambodia. In the south it becomes a
peninsula bounded by the Indian Ocean in the west, Malaysia in the south and the
South China Sea in the east. The country covers an area of 514,000 square
kilometers and has an estimated population of 60 million.
Approximately 70% of the population lives in the central and northeastern
regions of the country. By far the largest urban center is Bangkok (which
includes Thon Buri), the capital, where the population has been growing more
rapidly than the national population as a whole, increasing from 3.7 million in
1971 to approximately 5.6 million at the end of 1995.
Approximately 85% of the population of Thailand is of Thai ethnic origin.
The most important minority group is the ethnic Chinese who comprise over 12% of
the population. The predominant religion in Thailand is Buddhism to which 95% of
the population adheres. Islam accounts for 4% and is concentrated in the south
adjacent to Malaysia. The balance of the population is predominantly Christian.
The literacy rate is over 90% for adults over 15 years of age. The official
language is Thai, but the use of English is encouraged, and is part of the
school curriculum.
GOVERNMENT STRUCTURE AND POLITICS
Thailand is a constitutional monarchy. His Majesty King Bhumibol Adulyadej,
Rama IX, who ascended the throne in 1946, is a highly respected symbol of
national unity and provides an important stabilizing influence in the country.
Under the constitution, the King is the Head of State, Commander of the
Armed Forces and Patron of all Religions. He has power to, upon the advice of
the Prime Minister, declare and lift martial law, declare war with the approval
of the National Assembly, conclude treaties with other countries or
international organizations, grant pardons, appoint and remove high ranking
officials in the civil service and commissioned officers in the armed forces. He
is advised in the exercise of his functions by the Privy Council, appointed by
royal command.
The executive power is vested in the cabinet ("Council of Ministers"), which
consists of the Prime Minister and not more than 35 other ministers, each
appointed by royal consent. The cabinet can be dismissed by a vote of
no-confidence of the House of Representatives. The new constitution, enacted in
October 1997 stipulates that the members of the House of Representatives will
lose memberships if they become ministers.
Legislative power is exercised by the bicameral National Assembly, which is
comprised of the Senate and the House of Representatives. Under the
constitution, the President of the House of Representatives is also the
President of the National Assembly. The Prime Minister is nominated by the
president of the National Assembly and appointed by the King. The 200 members of
the Senate, who may not belong to a political party, are elected for six-year
terms. There are 500 members of the House of Representatives, 400 of whom are
elected by popular vote together with 100 members elected under a party list
system. The term of office of members of the House of Representatives is four
years.
A-1
<PAGE>
The Thai legal system with respect to the criminal, civil, commercial, and
special codes is based on British and European legal systems. There is also an
extensive system of administrative law consisting of royal decrees, executive
orders, and ministerial regulations. Thai law relating to family and inheritance
matters is codified based upon traditional Thai laws. The judicial power is
exercised by the courts of justice, consisting of the courts of first instance,
the court of appeal and the Supreme Court. The King appoints all judges of the
courts of justice after they have been approved by the Judicial Commission.
For the purposes of administration the country is divided into 76 provinces,
each under the control of a governor; each province is divided into districts,
sub-districts and villages. The governors are appointed by the King on the
advice of the Minister of Interior, except for the governor of Bangkok, who is
directly elected by Bangkok residents.
RECENT POLITICAL DEVELOPMENTS
After civil unrest in May 1992, an interim government was set up under Mr.
Anand Panyarachun and the House of Representatives was dissolved for a general
election that was held on September 13, 1992. The Democrat party won the most
seats in that election and Mr. Chuan Leekpai, the Democrat Party leader, became
Prime Minister and organized a five party coalition cabinet. However, due to
controversy in connection with the Land Reform Program, Prime Minister Chuan was
forced to dissolve the House. In the ensuing nationwide election held on July 2,
1995, the Chart Thai party won the largest number of seats in the House of
Representatives, leading to the appointment of Mr. Banharn Silpa-archa as Prime
Minister. In September 1996, however, Mr. Banharn was the subject of a censure
debate in the House of Representatives, during which various charges were made
against him, including mismanagement of the Thai economy and improper conduct by
members of his administration. On September 21, prior to the censure vote, Mr.
Banharn announced that he would resign as Prime Minister within the following
week. On September 27, the Prime Minister dissolved the House of
Representatives, as permitted by the constitution in effect at that time, and
announced a new general election, which was held on November 17, 1996. In the
election, the New Aspiration Party ("NAP") headed by former army chief General
Chavalit Yongchaiyudh, won the largest number of seats in Parliament, capturing
125 of 393 seats. NAP's total of 125 seats, however, was far short of an
absolute majority, so that a coalition government of six parties, which together
had a 24-seat majority, was created to control the House of Representatives. The
principal opposition to the new government was the Democrat Party, which won 123
seats in the election.
This coalition government included many members of the previous coalition
government and in its first nine months carried on many of the policies adopted
by the previous government, including economic policies. On September 27, 1997,
Prime Minister Chavalit survived a no confidence vote in the National Assembly
amid widespread criticism of the Government's response to Thailand's economic
crisis and controversy over political reform and a draft new constitution, which
the Prime Minister initially opposed and ultimately supported. However, on
November 7, 1997, Prime Minister Chavalit resigned from office under intense
political pressure. In the interim before constitutionally mandated elections,
Mr. Chuan Leekpai has been appointed to the office of Prime Minister. He
presides over a coalition government that includes the major parties that formed
the opposition to the former government of Prime Minister Chavalit.
On September 27, 1997, the National Assembly approved a new constitution,
which was signed by His Majesty the King on October 11, 1997 and took effect the
same day upon official publication. The new constitution is seen by its
supporters as a means of reforming and modernizing the Thai political system.
The new constitution, which is the first to have sought grassroots input,
expands citizens' rights, increases civil liberties, grants greater access to
official information and encourages participation in the governmental
decision-making process. The rights of local communities to participate in
managing natural resources and the environment have been spelled out. It is
unconstitutional to discriminate against Thai people on the basis of gender,
origin of birth, country of birth, race, language or religious faith. The new
A-2
<PAGE>
constitution also creates monitoring mechanisms against corruption. Members of
the Council of Ministers, as well as their spouses and children, are required to
disclose their assets, and members of the House of Representatives found to be
involved in misconduct can be more easily dismissed. The new constitution makes
voting compulsory. Formerly, low voter turn-out was considered by some to
encourage vote buying.
The constitution allows the Senate more power to scrutinize bills passed by
the House of Representatives and also to appoint members of monitoring agencies,
including a National Counter-Corruption Commission and certain Constitutional
Court judges. In addition, the Senate is empowered to appoint members of the
Election Commission, which supervises and manages all elections to ensure
fairness. Under the constitution, the National Assembly must, by mid-June 1998,
complete the consideration and approval of laws in respect of the elections of
members to the House of Representatives and Senate, the Election Commission and
political parties.
FOREIGN RELATIONS
Thailand has historically adopted a flexible approach in its conduct of
external relations. The success of this approach is evidenced by the fact that
Thailand is the only country in Southeast Asia, and one of the few in all of
Asia, never to be colonized by Western powers. Following the end of World War
II, Thailand's main external concern was to ensure that the spread of communism,
first in China and later in Vietnam, Cambodia and Laos, did not spill over into
Thailand. Consequently, in the early 1950's the Thai Government decided to align
with the West in general, and the United States in particular. In 1954, Thailand
became a party to a regional collective security arrangement called the
Southeast Asia Treaty Organization ("SEATO"). Although SEATO was dissolved in
1977, Thailand and the United States have remained allies under the Manila Pact,
which served as a basis for SEATO and remains in force today.
Thailand is a member of, and enjoys good relations with other members of,
the Association of Southeast Asia Nations, namely, Brunei, Indonesia, Malaysia,
the Philippines, Singapore, Vietnam, Laos and the Union of Myanmar (Burma).
Thailand has shown a strong interest in the development of multilateral
regional relations. It has been a signatory to a number of international
treaties including: the World Trade Organization (formerly the General Agreement
on Tariffs and Trade) (WTO); Agreement between the Government of the Kingdom of
Thailand, the Government of Malaysia and the Government of the Republic of
Indonesia relating to the Delimitation of Continental Shelf Boundaries in the
Northern Part of the Straits of Malacca; the Fifth International Tin Agreement;
the Treaty of Amity and Economic Relations Between the Kingdom of Thailand and
the United States of America; and the International Natural Rubber Agreement. In
the international financial context, Thailand is affiliated with major
multilateral lending institutions, including: the IMF, the World Bank, the
International Development Association (IDA), the International Finance
Corporation (IFC), and the (Asian Development Bank (ADB). Thailand is also a
member of the United Nations, as well as a number of specialized United Nations
agencies, and of the International Coffee Organization, the International Sugar
Organization, the International Natural Rubber Organization and the
International Jute and Allied Fibres Organization.
Thailand is a party to the ASEAN Free Trade Agreement (AFTA) under which no
tariffs greater than 5% will be applied after 2003 on products, other than
certain unprocessed agricultural products, traded among the ASEAN member
countries. AFTA also requires that tariffs on such unprocessed agricultural
products be reduced by 2005.
In November 1996, Thailand and the United States of America signed the
"Convention Between the Government of the United States of America and the
Government of the Kingdom of Thailand for the Avoidance of Double Taxation and
the Prevention of Fiscal Evasion with Respect to Taxes on Income." The treaty
has been ratified by both respective countries and came into force on January 1,
1998, although provisions concerning withholding tax will come into effect only
after a six-month delay. The treaty is expected to improve investment conditions
for U.S. investors.
A-3
<PAGE>
ECONOMY
Thailand's economy operates as a mixed economic system in which the private
sector plays a dominant role. The policy of the government has been to operate
most public utilities as well as to control a number of monopolies, such as the
lottery and domestic tobacco industry, and some other industries, but not to
displace private enterprise in the commercial or industrial sectors of the
economy, except where private capital is unable to develop essential industrial
projects. In particular, the government has begun to look to private industry in
connection with the modernization of telephone services and the development of a
mass transit system and has begun to privatize air transport.
While traditionally the Thai economy was based on agriculture, since the
early 1960's, the country has diversified its agricultural base and placed
increasing emphasis on the industrial and service sectors. The contribution of
agriculture, including crops, livestock, fishery, forestry, agricultural
services, and simple agricultural processing products to Gross Domestic Product
("GDP") decreased from 24% in 1979 to an estimated 10.7% in 1996 and increased
slightly to an estimated 11.2% in 1997, while during the same period the
industrial sector, including mining and quarrying, manufacturing, construction,
transportation and communication as well as electricity and water supply rose
from 36.1% to 47.2%. The contribution of the service sector, including wholesale
and retail trade, banking, insurance and real estate, ownership of dwellings,
public administration and defense and services increased from 39.9% to 41.6%
during the same period. Manufacturing activities at present range from the
production of major construction materials, electrical and electronic components
and goods to the processing of agricultural products.
The performance of Thailand's economy from 1992 through 1996 generally met
the targets set in the Seventh National and Social Development Plan (covering
fiscal years 1992-1996) (the "Seventh Plan"). Nominal GDP increased by an
estimated 70.52% during the period, from approximately 2,830.9 billion Baht in
1992 to approximately 4,827.2 billion Baht in 1996 and per capita GDP rose from
49,410 Baht in 1992 to an estimated 79,653 Baht in 1997. Average annual growth
in real GDP was 8.0% compared to 8.2% targeted in the Seventh Plan; average
annual growth in private sector investment was 7.0%, compared to 8.8% targeted
in the Seventh Plan and exports and imports grew by an average of 14.2% and
13.6%, respectively, compared to 14.7% and 11.4%, respectively, targeted in the
Seventh Plan. Inflation during the period rose at an average annual rate of
4.8%, compared to 5.6% targeted in the Seventh Plan. Real GDP in Thailand grew
by an estimated 5.5% in 1995, a decline from the previous four years.
Thailand's economy currently is experiencing significant contraction. Real
GDP growth is expected to decline from negative 0.4% in 1997 to a range of
negative 4.0% to negative 5.5% in 1998. Under the macroeconomic assumptions
developed in conjunction with the IMF Financial Assistance Program, domestic
consumption is expected to decline by 8.0% and gross fixed investment is
expected to decline by 24.0% in 1998.
The preparation of the Eighth Plan represented a departure from past
practice, as the Eighth Plan is intended to provide only general guidelines for
economic development. The preparation of the Eighth Plan involved extensive
public consultation through seminars held throughout Thailand. Under the Eighth
Plan, the Government's broad policy is to achieve balanced economic growth with
stability. As originally drafted, the Eighth Plan called for, among other
things, reducing the current account deficit as a percentage of GDP, controlling
inflation, mobilizing household savings to at least 10% of GDP, reducing the
percentage of the population below the defined poverty level to less than 10%,
improving the development of human resources and the quality of life, utilizing,
preserving and rehabilitating the natural environment and increasing the
quantity and quality of basic infrastructure in rural areas. One of the main
focuses of the Eighth Plan is human resource development and enhancement of the
productivity of the Thai labor force. The Government had previously increased
the level of compulsory education in the country from six years to nine years
during the Seventh Plan and has made efforts toward increasing the number of
technicians and skilled workers. Meanwhile, the Government is also actively
encouraging private sector corporations to re-train their workforce.
A-4
<PAGE>
The devaluation of the Baht during 1997, combined with the concurrent crisis
in Thailand's financial sector and property markets and related adverse economic
developments in Thailand and other Asian countries, have substantially altered
the assumptions under which the Eighth Plan was developed. Accordingly, the
Government has adopted amendments to the Eighth Plan that reflect Thailand's
current economic and social environment and the economic rehabilitation program
developed in connection with the IMF Financial Assistance Program. The
amendments reflect lower public and private investment spending targets,
increased monitoring of private sector external debt, emphasis of fiscal and
monetary policy on controlling inflation, financial reform, increased export
competitiveness and alleviation of social problems arising from the economic
slowdown, including, INTER ALIA, unemployment. The amendments also target
acceleration of state enterprise reform, decentralization of government power,
privatization of state enterprises, development of human resource programs and
participation of non-governmental organizations in decision-making and policy
formation.
Thailand has obtained a U.S.$17.2 billion loan package from the IMF. The IMF
has imposed strict austerity measures as conditions to this package. These
include tax increases, government spending cuts and implementation of a plan for
financial reform and rehabilitation. In addition, Thailand has agreed to the
following adjusted fiscal goals:
1. Maintain economic growth rates at 3-4 percent in 1997-1998 and aim
for a potential growth rate of 6-7 percent over the medium term.
2. Reduce inflation to 4-5 percent following an initial increase to an
average of 7-8 percent in 1997-1998.
3. Reduce the current account deficit to 5 percent of GDP in 1997 and to
a sustainable level of 3 percent over the medium term.
4. Maintain gross international reserves of about U.S.$23 billion in
1997 and U.S.$25 billion in 1998, equivalent to approximately 4 months of
imports.
As a result of the continued slowdown in the Thai economy, which has been
more severe than previously anticipated due in part to the economic difficulties
experienced by other Asian countries (including lower demand from Japan and
other Southeast Asian trading partners), more pronounced weakness in private
consumption and investment demand and continued liquidity shortages, the
Government, in consultation with the IMF, revised in November 1997, February
1998 and May 1998 certain of its macroeconomic assumptions. The most recent
revisions in May 1998 included lowering the real GDP growth rate for 1998 to a
range of negative 4.0% to negative 5.5% (from negative 3.0% to negative 3.5%
following the February 1998 review), revising the expected inflation level to an
average of 10.5% in 1998 (from 11.6% following the February 1998 review),
increasing the consolidated public sector deficit to approximately 3.0% of GDP
(from 2.0% GDP following the February 1998 review) for the 1998 fiscal year,
increasing the current account surplus to 6.9% of GDP (from 4.0% of GDP
following the February 1998 review) in 1998 and maintaining gross international
reserves of U.S.$26-28 billion for 1998 (as compared to reserves of U.S.$23-25
billion following the February 1998 review) (approximately 6.2 to 6.7 months of
estimated 1998 import value). Actual performance of the economy could vary from
these assumptions, and future adverse developments in Asia could further
exacerbate Thailand's economic difficulties, including by adversely affecting
Thai exports.
The board of the IMF most recently met on December 8, 1997 to evaluate
Thailand's progress in meeting package conditions and approve a second round of
drawings in the amount of U.S.$810 million. On March 9, 1998, the IMF approved a
third round of drawings in the amount of U.S.$270 million. The government
expects to receive an additional disbursement from the IMF of U.S.$138 million
in mid-June 1998. Since August 1997, the IMF has made funds available to
Thailand in the amount of U.S.$2.67 billion.
A-5
<PAGE>
In addition, the World Bank is providing a U.S.$1.5 billion loan package in
order to assist in the reform of the Thai Financial system. The World Bank
released U.S.$350 million on December 30, 1997. Also, Asian Development Bank is
providing U.S.$1.2 billion loan package for on-going project loans and
structural adjustment loans. On December 20, 1997 and March 18, 1998, the total
of U.S.$600 million was released to Thailand.
PRIVATE SECTOR DEVELOPMENT
Thailand has a mixed economy, with almost all industrial and commercial
activity being owned and operated by the private sector and financial activity
being owned and operated by both the public and private sectors. The government
controls some portions of financial activity in Thailand and is responsible for
promoting the necessary infrastructure and a stable environment to foster
economic growth. The government operates most public utilities and some
industries but since 1983 the government has taken steps to liquidate, sell,
lease or contract out a number of government enterprise activities to the
private sector.
Thailand has been one of the largest recipients of foreign direct investment
("FDI") in the Asia Pacific Region, with net direct foreign investment of 53,691
million Baht , 43,812 million Baht , 33,241 million Baht , 49,887 million Baht,
57,472 million Baht and 91,346 million Baht in 1992, 1993, 1994, 1995, 1996 and
1997, respectively. (The drop in 1994 resulted from increased borrowings through
the Bangkok International Banking Facility ("BIBF") and growing FDI of Thais in
several foreign countries, particularly China, ASEAN and Indochinese countries.)
During the 1990's, FDI has been concentrated in a large number of large
companies engaged in manufacturing industries, trade and construction. The
agricultural sector, on the other hand, received less than 0.1% of the total FDI
in 1996 and 1997.
The government of Thailand permits foreign investment and established the
BOI in 1960 to be the focal point of the country's investment promotion. In
1977, the current Investment Promotion Act was passed, which provides for
guarantees, tax exemption and, if necessary, temporary protection to be accorded
to projects undertaking certain activities. Incentives are also provided for
export projects and those located in designated investment promotion zones. The
government, for example, has guaranteed against nationalization, state
competition or monopolization, duty-free government import of competing goods,
and unjustified price control, and, subject to certain restrictions, has
permitted foreign ownership of land, the entry and work of experts, skilled
workers and their families and repatriation of capital and remittance of
profits. Except for designated businesses in which foreign investment is
limited, including banking and service industries, Thai law otherwise permits
foreign majority investment and control of firms undertaking industrial or
commercial activities.
A-6
<PAGE>
SELECTED ECONOMIC DATA
The following table sets forth a summary of certain economic information
relating to Thailand for the years ended December 31, 1992 through 1996 except
as otherwise indicated:
<TABLE>
<CAPTION>
1992 1993 1994 1995(P) 1996(E)
---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Population (million persons)................... 57.79 58.34 59.10 59.46 60.10
GDP
Real GDP at 1988 prices (% change)........... 8.1 8.3 8.9 8.7 6.7
--Agriculture................................ 6.0 -1.9 4.3 3.1 3.1
--Nonagriculture............................. 8.4 9.8 9.5 9.4 7.1
GDP at current prices (billion Baht)......... 2,827.2 3,163.9 3,600.5 4,173.0 4,665.4
(% change)................................... (12.8) (11.9) (13.8) (15.9) (11.8)
Per Capita GNP (Baht)........................ 48,359 53,357 59,940 69,077 75,911
Inflation (Consumer Price Index)............... 4.1 3.3 5.0 5.8 5.9
External Sector (billion Baht)
Exports...................................... 815.2 921.4 1,118.0 1,381.6 1,378.9
(% change)................................... (13.1) (13.0) (21.3) (23.6) (-0.2)
Imports...................................... 1,020.6 1,143.1 1,344.8 1,755.4 1,796.5
(% change)................................... (5.5) (12.0) (17.6) (30.5) (2.3)
Trade balance................................ -205.4 -221.7 -226.8 -373.8 -417.6
Current account balance...................... -160.1 -161.1 -203.2 -337.6 -372.6
(as percentage of GDP)....................... (-5.7) (-5.1) (-5.6) (-8.1) (-8.0)
Capital movements (net)...................... 240.7 265.9 305.9 545.1 456.0
--Private sector(1).......................... 237.2 260.9 301.9 517.6 424.3
--Public sector.............................. 3.5 5.0 4.0 27.5 31.7
Overall balance of payments.................. 77.1 98.8 104.8 179.5 54.6
International reserves (billion U.S.$)....... 21.2 25.4 30.3 37.0 38.7
Total outstanding debt(2) (billion U.S.$).... 43.6 52.1 64.9 82.6 89.8
(Public debt)................................ (13.1) (14.2) (15.7) (16.4) (16.8)
Debt service ratio(2)........................ 11.3 11.2 11.7 11.4 11.8
(Public sector).............................. (3.7) (3.7) (3.4) (2.8) (2.6)
Public Finance (fiscal year)
Cash balance (billion Baht).................. +85.9 +68.9 +65.8 +112.5 +104.3
(as percent of GDP).......................... (+3.0) (+2.2) (+1.8) (+2.7) (+2.2)
Money and Banking
Money supply (M2) (billion Baht)............. 2,117.8 2,507.1 2,829.3 3,310.6 3,726.6
(% change)................................... (15.6) (18.4) (12.9) (17.0) (12.6)
Domestic credit (% change)................... 18.0 22.7 28.9 23.1 14.0
Commercial bank (% change)(3)................ 20.6 23.2 30.1 24.2 14.2
Deposits(4) (% change)....................... 16.2 19.2 13.1 18.2 13.7
Interest rates (end of the year)
--Prime rates................................ 11.5 10.5 11.75 13.75 13.0-
8.25- 10.25- 13.25
8.50-
--Time deposit (1 year)...................... 8.5 7.0 10.25 11.0 9.25
Exchange Rate (annual average) Baht:
U.S.$(Exchange Equalization Fund).......... 25.40 25.32 25.15 24.92 25.34
</TABLE>
- ------------------------
(1) Including commercial banks and BIBFs.
(2) Including commercial banks. The Debt Service Ratio is the ratio of mature
public sector debt to export earnings.
(3) Including BIBFs.
(4) Excluding foreign currency deposit and interbank deposits.
(P) Preliminary figures. (E) Estimates.
SOURCE: THE BANK OF THAILAND, ANNUAL ECONOMIC REPORT 1996.
A-7
<PAGE>
The following table sets forth a summary of certain economic information
relating to Thailand for the months running from June 1997 to November 1997:
BANK OF THAILAND'S MONTHLY STATISTICAL RELEASE
Issued by the Economic Research Department, Bank of Thailand, Bangkok tel.
(662) 282-7803
<TABLE>
<CAPTION>
1997
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
JUN. JUL. AUG. SEP. OCT. NOV.
------------- ------------- ------------- ------------- ------------- -------------
<CAPTION>
(PRELIMINARY) (ESTIMATED)
ACTIVITY AND PRICES (% CHANGE FROM THE SAME PERIOD OF LAST YEAR)
<S> <C> <C> <C> <C> <C> <C>
Manufacturing Production
Index....................... 5.0 3.8 -5.1 -6.7 -12.3 n.a.
(12-month moving average)..... (6.8) (6.7) (5.6) (4.3) (2.3) (n.a.)
Price Investment Index........ 4.1 4.1 2.5 1.4 -0.2 n.a.
Government cash balance (bn.
b) +29.7 -18.7 -21.9 +21.4 -17.4 -11.7
Consumer Price Index 4.4 4.9 6.6 7.0 7.2 7.6
- -Food......................... 5.7 6.9 9.5 9.2 8.0 7.9
- -Non-food..................... 3.4 3.5 4.4 5.3 6.7 7.3
<CAPTION>
EXTERNAL ACCOUNTS (IN MILLIONS OF U.S.$)
<S> <C> <C> <C> <C> <C> <C>
Exports....................... 4,639 4,745 4,790 4,986 5,141 n.a.
[%LU.S.$]..................... [7.4] [7.9] [2.2] [11.5] [11.7] n.a.
Imports....................... 5,558 5,273 5,336 4,767 4,520 n.a.
[%LU.S.$]..................... [-3.6] [-8.7] [-13.3] [-12.2] [-24.5] n.a.
Trade Balance................. -919 -528 -546 219 621 n.a.
Current Account Balance....... -868 -387 -413 81 701 n.a.
Balance of Payments........... -954 -1,706 -4,508 3,674 1,556 -4,716
Official Reserves
(bn.U.S.$).................. 32.4 30.4 25.9 29.6 31.3 26.3
<CAPTION>
MONETARY STATISTICS (IN BILLIONS OF BAHT)
<S> <C> <C> <C> <C> <C> <C>
M1............................ 396.4 393.5 428.4 400.5 407.3 388.0
(%L).......................... (0.8) (-3.6) (7.3) (-1.9) (3.0) (-4.6)
M2............................ 3,958.1 4,047.5 4,139.4 4,166.3 4,239.7 4,263.1
(%L).......................... (11.9) (14.5) (16.7) (16.6) (18.1) (17.0)
M2A........................... 4,721.0 4,702.2 4,622.2 4,574.6 4,600.7 n.a.
(%L).......................... (4.6) (4.1) (2.1) (0.6) (0.8) (n.a.)
Monetary Base................. 514.3 468.5 435.6 433.8 443.5 441.9
(%L).......................... (29.8) (14.6) (9.9) (7.4) (5.5) (5.7)
Bank deposits................. 3,986.9 4,059.4 4,035.0 4,065.5 4,144.1 4,169.1
(%L).......................... (15.9) (18.2) (16.9) (16.5) (18.9) (17.0)
Commercial bank credits....... 5,076.1 5,308.6 5,420.3 5,539.2 5,708.1 5,668.1
(%L).......................... (10.4) (15.3) (16.4) (17.0) (19.6) (17.4)
- -excluding BIBF's............. 4,246.2 4,281.3 4,326.0 4,391.8 4,425.8 4,430.0
(%L).......................... (11.1) (11.5) (11.3) (10.9) (11.0) (9.7)
<CAPTION>
INTEREST RATES (END OF PERIOD)
<S> <C> <C> <C> <C> <C> <C>
- -Prime Rate (MLR)............. 12.75 13.75 13.75 14.25 14.75 14.75
- -Minimum Retail Rate (MRR).... 13.00-13.50 14.00-14.50 14.00-14.50 14.50-15.00 15.00-15.50 15.00-15.50
- -Fixed Deposit Rate (1
year)....................... 8.00-8.75 10.00-11.50 10.00-11.50 10.00-11.50 10.00-11.50 10.00-11.50
- -Interbank Rate (average)..... 15.10 18.66 15.43 23.87 18.72 19.99
EXCHANGE RATE (AVERAGE
BAHT:U.S.$)................. 25.78 30.27 32.48 36.28 37.55 39.30
</TABLE>
A-8
<PAGE>
LABOR SITUATION
In Thailand, the labor force includes Thais aged 13 and over. In 1997,
approximately 46% of the total labor force was employed in the agricultural
sector. Between 1991 and 1996, the labor force increased at an average annual
rate of 0.9% from 31.0 million to 32.4 million. The labor force totaled 32.6
million in 1997. The unemployment rate at the end of 1997 was estimated at 3.5%.
A legal framework, which prescribes the procedures for union formation,
collective bargaining and dispute settlement, was established by the Labor
Relations Act of 1975. Laws relating to working conditions and the protection of
workers promulgated in 1972 are expected to be replaced by the Labor Protection
Act of 1998, currently expects to become effective in August 1998. Only a small
proportion of the work force is organized in labor unions. In 1991, the Thai
government enacted a law which prohibits unionization in all state agencies and
enterprises. However, labor associations are still permitted and serve a
corresponding function.
The government has attended to the welfare of workers through job creation
programs in different areas of the country and periodic minimum wage adjustments
to mitigate the effect of price increases. Effective January 1, 1998, the
minimum wage was 162 Baht per day for the Bangkok metropolis, its five
surrounding provinces (i.e., Nakornpathom, Nonthaburi, Patumthani, Sumutprakarn
and Samutsakorn) and Phuket, 140 Baht per day for Pangnga, Ranong, Chiang Mai,
Chonburi, Nakornratchasima and Saraburi, and 130 Baht per day for all other
provinces.
FOREIGN TRADE AND BALANCE OF PAYMENTS
Foreign trade plays an important role in the Thai economy. Notwithstanding
the diversification which has occurred since the early 1960's, Thailand's
exports are still influenced by fluctuations in world commodity prices, and its
imports are primarily structured by the requirements of a developing country.
Thailand's current account deficit has increased since 1987 principally due
to a trade deficit, and Thailand's terms of trade have declined over the period.
Although exports have risen significantly, imports increased even more rapidly
during this period due to heavy foreign and domestic investment flows. A large
percentage of imports during the past five years have been capital goods.
However, uncertainty concerning protectionism, growing competition for market
share from other countries in the region and continuing fluctuations in world
commodity prices will continue to affect future growth in export earnings.
Tourism has been a major source of foreign exchange earnings for the country.
Since 1993, credit growth has been fueled by both deposits and external
borrowing through the BIBF. The cheaper cost of foreign currency loans
accessible through the BIBFs, coupled with the perceived absence of exchange
rate risk owing to a fixed exchange rate system, generated greater credit
demand.
The large current account deficits over the past three years have been
financed by increases in direct investment, portfolio investment and external
borrowing. The net capital inflows in the past have more than offset the current
account deficits, resulting in a balance of payments surplus and a substantial
increase in the country's international foreign exchange reserves, from
U.S.$20.0 billion in 1992 to U.S.$37.2 billion in 1990, equivalent to
approximately 6.3 months of estimated 1996 imports.
Since 1996, the real estate sector and the stock market have been weakening.
The export market has also become less competitive due to an over valued Baht
and higher labor costs. These market conditions created a general lack of
confidence among depositors and creditors, both domestic and foreign and
therefore lead to capital outflows. In the first half of 1997, the balance of
payments was negative U.S.$7.5 billion.
In September 1997, strong export performance, aided by the depreciation of
the Baht, and a dramatic decrease in imports caused a trade surplus of 1.1
billion Baht. This was the first trade surplus of Thailand in decades. September
exports grew by 8.7% in U.S.$ terms over exports in September, 1996, while
imports
A-9
<PAGE>
for the same period shrank by 12.2%. Growth in exports of high technology
products, such as computers, computer parts, electrical circuits and plastic
products was noteworthy. October saw an estimated trade surplus for the month of
5.3 billion Baht and for November an estimated surplus of 27.3 billion Baht. The
current accounts deficit narrowed to Baht 3.9 billion in September. In 1997, the
current account deficit declined significantly to 2.0% of GDP. For the first two
months of 1998, the current account recorded a surplus of US$2.7 billion.
The government has introduced a number of measures to reduce the current
account deficit with emphasis upon export promotion rather than constraints on
imports. A value added tax of 7%, intended to reduce distortion in the tax
system and encourage more efficient export oriented production was introduced on
January 1, 1992 and was increased to 10% in August 1997. As of early February
1998, the BOI was planning to seek cabinet approval to set up a loan guarantee
body as a mechanism aimed at a liquidity crunch facing exporters and the
agricultural industry.
The following table sets forth Thailand's balance of payments for the years
indicated:
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
(IN MILLIONS OF BAHT)
Exports (f.o.b.)................................. 815,202 921,433 1,118,049 1,381,660 1,378,902
(% change)....................................... 13.1 13.0 21.3 23.6 (0.2)
Imports (c.i.f.)................................. 1,020,582 1,143,108 1,344,831 1,755,456 1,796,549
(% change)....................................... 5.5 12.0 17.6 30.5 2.3
Trade balance.................................... (205,380) (221,675) (226,782) (373,796) (417,647)
Net services & transfers......................... 45,306 60,546 23,629 36,155 45,488
Current account balance.......................... (160,074) (161,129) (203,153) (337,641) (372,159)
Capital and financial account.................... 240,742 265,895 305,851 545,121 493,530
Private.......................................... 237,200 260,939 301,859 517,642 460,555
Public........................................... 3,542 4,956 3,992 27,479 32,975
Net errors & omissions........................... (3,555) (5,975) 2,129 (27,950) (66,763)
Balance of payments.............................. 77,113 98,791 104,827 179,530 54,608
</TABLE>
- ------------------------
SOURCE: THE BANK OF THAILAND MONTHLY BULLETIN, JUNE 1997.
The large current account deficits over the past three years have been
financed by increases in direct investment, portfolio investment and external
borrowing. The capital inflows have more than offset the current account
deficits, resulting in a substantial increase in the country's international
reserves. The country's international reserves were significantly reduced in the
first half of 1997 in connection with the Bank of Thailand's attempt to maintain
a pegged exchange rate prior to July 2, 1997.
EXTERNAL DEBT
Thailand's external debt, both public and private (including short-term)
grew from U.S.$5.7 billion in 1980 to U.S.$25.1 billion in 1990 and to U.S.$91.8
billion at the end of 1997. As of February 1998, the total amount of Thailand's
external debt was US$89.7 billion. It is estimated that substantially all of the
external debt is denominated in U.S.$ and yen. Debt servicing obligations
expressed as a percent of exports of goods and services declined from 14.8% in
1980 to 10.8% in 1990 but increased to 15.8% in 1997 due principally to
increasing levels of private sector external debt.
Foreign borrowings have been on the rise since 1993, due to the commencement
of BIBF in March 1993, prompting subsidiaries of foreign companies to resort to
this new source of funds instead of bringing in foreign direct investment from
their parent companies or regional offices. Since borrowings through BIBF are
regarded as overseas obligations, Thailand's foreign debts have risen
accordingly.
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Thailand's private sector is anticipated to face difficulty in payment of
approximately U.S.$39 billion of short term foreign debt falling due in 1998
although a significant amount of such debt has been voluntarily rolled over on a
short-term basis.
As of mid-February, 1998, the Overseas Economic Cooperation Fund of Japan
was considering providing additional foreign currency loans to the Thai
government in order to boost liquidity. In late February, the president of the
Thai Export-Import Bank estimated that loans from international agencies would
add over 30 billion Baht of liquidity for Thai exporters within several months.
CURRENCY AND FINANCIAL SYSTEM
The Bank of Thailand was established in 1942 as the central bank and is in
charge of implementing monetary policy.
The Bank of Thailand is managed by its Court of Directors which is presently
composed of 10 members, with the Governor to serve as ex-officio Chairman and
two Deputy Governors to serve as Vice-Chairmen. The Governor and the Deputy
Governors are appointed by the King upon the recommendation of the Cabinet after
being nominated by the Minister of Finance, and other members of the court are
appointed by the Cabinet on the advice of the Minister of Finance.
The principal functions of the Bank of Thailand are to act as (1) the
note-issuing authority on behalf of the government, (2) banker to the
government, commercial banks and other financial institutions, and (3) the agent
of the government to manage public debt, to administer exchange controls, to
supervise commercial banks, finance companies, and credit foncier (mortgage
lending) companies, and to deal with multinational monetary organizations. With
respect to exchange rate policy, the Exchange Equalization Fund, founded in 1955
and chaired by the Minister of Finance, is the agency of the government to carry
out exchange rate policy and foreign exchange transactions with banks.
There are 36 commercial banks in Thailand of which 21 are foreign
incorporated banks. As of December 31, 1997, estimated total deposits of
commercial banks were 4,229 billion Baht compared to approximately 3,533 billion
Baht as of December 31, 1996. This represents an increase of 19.7%. Within the
public financial sector there are specialized banking institutions, including
the Government Savings Bank which is the principal institution for small savings
deposits, the Bank of Agriculture and Agricultural Co-operatives which is the
chief source for farm credits, the Government Housing Bank which provides
mortgages to middle and low income individuals, and the Small Industries Finance
Office which advances loans to companies with registered capital or fixed assets
of up to 10 million Baht (U.S.$384,763).
As of March 31, 1998, 52 financial institutions held licenses to operate
offshore banking business through BIBF's. Of these, 15 belong to Thai commercial
banks, 18 to foreign bank branches already operating in Thailand, and 19 to
other foreign banks. As of March 31, 1998, 48 BIBF offices had commenced
operations.
In January 1995, 22 commercial banks were granted permission to operate
Provincial International Banking Facilities ("PIBF") offices. At the end of
1996, 37 PIBF's had begun operations in five different provinces including
Chonburi, Rayong, Ayutthaya, Chiang Mai and Songkhla. In January 1997, seven
foreign banks holding BIBF licenses were granted permission to open full
branches, and an additional three new bank licenses have been provisionally
granted to allow the establishment of new domestic banks.
As of January 1, 1995, the capital adequacy framework of the Committee on
Banking Regulation and Supervisory Practices of the Bank of International
Settlement was fully adopted in Thailand's banking system, which brought the
Thai commercial banks in line with international standards.
Against the background of sizeable non-performing loans carried by some of
the finance companies in their loan portfolio and the liquidity crisis
experienced by all of the finance companies, the Ministry of Finance in July and
August 1997 ordered 58 finance companies to suspend their operations, including
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suspension of trading of the suspended companies' shares on the SET, pending
approval of the rehabilitation plans submitted or to be submitted by the
suspended companies. On December 8, 1997, the Ministry of Finance ordered the
closure of 56 out of the 58 suspended finance companies resulting in an
estimated 20,000 employees losing their jobs. The Association of Finance
Companies believes that strong pressure on the remaining 35 finance companies
may induce mergers in the industry. The remaining finance companies will have to
comply with a higher capital fund to risk assets ratio and other similar rates.
They will also face competition from investors in the sector. The liquidity
crisis and overall lack of confidence in the financial sector by the public are
also felt by smaller commercial banks in Thailand. Depositors reportedly are
transferring their deposits from the smaller banks to larger Thai banks and
local branches of foreign banks. Recent disruption in the finance and property
sectors has severely affected certain property firms, the finance sector and, to
a lesser extent, the banking sector.
On November 6, 1997, the National Assembly passed four emergency decrees the
main purposes of which were to restore confidence and to provide direction and
stability in the financial system. Two of the decrees authorized the creation of
the FRA and the Asset Management Corporation ("AMC"). The objectives of the FRA
are to review the rehabilitation plans of suspended finance companies, to assist
bona fide depositors and creditors of suspended finance companies and to
administer the liquidation of finance companies which cannot be rehabilitated.
Six board members of the FRA were appointed to oversee the work of the FRA. As
of early February 1998, the FRA anticipated auctioning the assets of the closed
finance companies in early March 1998 and complete liquidation of the assets of
the 56 closed finance companies by year end 1998. The primary objective of the
AMC is to bid for the assets of those finance companies that the FRA deems
nonviable. The other emergency decrees amended the Bank of Thailand Act, the
Commercial Banking Act and the Act on the Undertaking of Finance, Securities and
Credit Foncier Business (the "Finance Act"). The new decrees give the Bank of
Thailand, under certain circumstances, new powers to intervene in the operation
of financial institutions. These powers include the power to remove directors or
executives of such financial institutions and to appoint replacement directors
or executives. Finally, the decree amending the Bank of Thailand Act reaffirms
the government's commitment to a government subsidized institution, the FIDF,
that will provide certain guarantees to depositors and creditors. One of the
most important features of the decree amending the Bank of Thailand Act is that,
if necessary, the FIDF can release the collateral pledged to the FIDF by
suspended finance companies. This will allow all creditors of such finance
companies to receive equal treatment.
The AMC is anticipated to have severe funding problems because the total
cost of buying problem assets of the 56 closed finance companies is now
anticipated to be much higher than originally thought. Such estimates range from
200 billion Baht to 700 billion Baht. AMC start-up capital is 1 billion Baht.
In late February, an independent investigation by the Finance Ministry found
that FIDF was likely to write-off at least half of the 800 billion Baht in loans
extended to ailing financial institutions. This expected loss is estimated to
equal the total value of assets held by the Bank of Thailand.
The Bank of Thailand has recently changed capital adequacy requirements
applicable to commercial banks and finance companies based on Bank of
International Settlement requirements. Because of these tough new capital
requirements, surviving finance companies are anticipated to seek substantial
increases in capitalization. Commercial banks will also feel the impact of the
new capital requirements and, according to recent press accounts, are seeking to
sell equity interests to foreign shareholders. In late February, 1998, two of
Thailand's larger banks announced plans to boost capital. In December 1997, the
Bank of Thailand replaced the boards of directors of two smaller banks, First
Bangkok City Bank and Bangkok Metropolitan Bank, in order to encourage these
banks' capital increase programs. In early February, 1998, IMF officials
reportedly characterized the local commercial banks as remaining "relatively
weak".
On February 6, 1998, the Bank of Thailand announced the formal takeover of
three ailing Thai commercial banks: the Siam City Bank Public Company Limited,
First Bangkok City Bank Public
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Company Limited and the Bangkok Bank of Commerce. The move resulted in the
elimination of all shareholders' equity in the three banks by ordering a massive
capital write-down to clear bad debt. The central bank's Financial Institutions
Development Fund ("FIDF") will swap its loans to the three banks for an equity
stake, becoming near 100% shareholder which will, in effect, turn the three
banks into state enterprises. The government is currently developing plans to
privatize these banks during 1998.
This action was similar to the decision by the Bank of Thailand in
mid-January when it ordered the Bangkok Metropolitan Bank Public Company Limited
to write off 11 billion Baht of its capital, reducing the par value of shares to
one one-hundredth of a Baht each. The FIDF will take a 99.96% stake in the bank
after the capital is increased by 25 billion Baht.
On May 18, 1998, the Bank of Thailand ordered seven additional finance
companies, with total assets of approximately Baht 92.2 billion, representing
approximately 15% of the total assets of operating finance companies, to
write-down their capital and announced that the FIDF would recapitalize six of
the seven finance companies by converting into equity approximately Baht 10.84
billion of debt owed by such finance companies to the FIDF and injecting
approximately Baht 620 million of additional capital into the seventh finance
company. The recapitalization is expected to raise the capital-to-risk assets
ratio for all seven companies to at least 9%. The Bank of Thailand also replaced
the board of directors of each company with representatives of the Bank of
Thailand and Krungthai Thanakit Public Company Limited ("KTT"), a subsidiary of
Krungthai Bank Public Company Limited. The Bank of Thailand intends that KTT
will acquire the assets and assume the liabilities of each of the seven
companies, which eventually will be consolidated into KTT. If necessary, the
FIDF may also assist in recapitalizing KTT by providing additional equity
capital. KTT is also expected to be granted a commercial banking license in
connection with such consolidation and recapitalization.
In addition to the Emergency Decrees, in May 1998, the National Assembly
approved five additional emergency decrees with the objective of increasing
liquidity in the Thai economy and expediting the resolution of the financial
sector crisis. These decrees (i) authorize the Government to incur, by no later
than December 31, 2000, external borrowings not to exceed Baht 200 billion in
addition to its authorized external borrowing limits (which are currently set at
a maximum annual limit of 10% of the Government's
annual budget, (ii) authorize Government domestic borrowing of up to Baht 500
billion to refinance the FIDF's short-term borrowings, (iii) exempt the FIDF
from certain bankruptcy law provisions which prevent creditors who have
knowingly provided financial assistance to insolvent financial institutions from
filing debt repayment claims against such financial institutions, (iv) modify
the AMC's charter to permit increased capital and (v) specify procedures for the
sale of assets of closed finance companies by FRA.
The new Bank of Thailand governor, M.R. Chattumongkol Sonakul, has announced
that no financial institution will be ordered to close. However, financial
institutions with serious problems will be compelled to reduce their capital and
be taken over the the FIDF.
MONETARY POLICY
The Bank of Thailand is responsible for controlling the money supply in
Thailand. In furtherance of the country's objective of becoming the financial
center of this region, several financial liberalization policies have been
adopted, including the introduction of BIBF, which permit banks to make loans in
currencies other than Baht, and the relaxation of rules and regulations on the
movement of capital. These liberalization policies may have the effect of
impairing the ability of the authorities to control capital inflows, money
supply, and inflation in the foreseeable future. However, in early February
1998, IMF officials suggested that the reduction of relatively high interest
rates be delayed in an effort to prevent inflation.
Due to an increasingly open economy, external conditions have become
important factors affecting Thailand's economy. During the early 1980's when the
world economy suffered an economic downturn, which caused worldwide reduction of
inflation and declining investment, the country's GDP growth fell to
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around 5.5%. However, since the mid 1980's the world economy has improved and
conditions in trade and investment have changed rapidly. Among other things, the
substantial amount of foreign investment, particularly from Japan, was one of
the major forces behind the economic boom during 1987-1990.
FOREIGN EXCHANGE REGULATION
Throughout the first half of 1997, the Bank of Thailand had been actively
intervening in the foreign exchange markets in order to support the Baht against
the selling pressures of heavy speculation in the markets. However, on July 2,
1997, the former Minister of Finance, Thanong Bidaya, upon the recommendation of
the Bank of Thailand, allowed for the floatation of the Baht by repealing the
November 2, 1984 act which had pegged the value of the Baht against a basket of
currencies. The value of the Baht is now set by conditions in the foreign
exchange markets. The Bank of Thailand engages in the buying and selling of
foreign currency for the purpose of maintaining the stability of the Baht under
the new foreign exchange system. Foreigners and non-resident bank clients are
restricted from buying or selling U.S.$ for speculative purposes.
On August 21, 1997, the Bank of Thailand announced that the bulk of the
official reserves of U.S.$30.0 billion as at end-July had already been sold
forward, with U.S.$23.4 billion falling due within the next 12 months. The Bank
of Thailand's Economic Research Department disclosed that on November 14, 1997,
Thailand's foreign reserves dropped to U.S.$28.3 billion and U.S.$26.3 billion
in the following two weeks. At that time, U.S.$10.6 billion in offshore forward
obligations were still outstanding from the U.S.$14.8 billion in offshore
forward transactions taken out in May, 1997. Outstanding forward obligations
taken in the onshore market for 1997 total about U.S.$8 billion. The Bank of
Thailand maintains a foreign reserves target for 1997 at U.S.$23 billion and for
1998 at U.S.$24.8 billion.
On January 6, 1998, the Thai Cabinet approved the issuance of a Ministry of
Finance regulation to limit the U.S. dollar holding period for exporters in an
effort to curtail currency speculation and increase the U.S. dollar supply in
the local economy. According to the ministerial regulation, exporters must now
bring their earnings into Thailand immediately upon payment, after which, they
have seven days to either sell to or deposit their dollars in a foreign currency
account with an authorized Thai commercial bank. Previously, the Bank of
Thailand provided that exporters had 120 days in which to receive payment for
their goods and bring the money into the country, after which, they had a
further 15 days to deposit it.
As of January 30, 1998, the restrictions underlying the two-tier system were
lifted, and financial institutions may engage in spot foreign exchange
transactions involving Baht with non-residents. In addition, the restrictions on
transfers of Baht in connection with the sale by non-residents of Thai
securities were also removed. To discourage speculative activity, Baht
denominated credit facilities to non-residents are limited to a maximum amount
of Baht 50 million per counterparty in cases where there are no underlying trade
or investment activities in Thailand.
IMF-LED FINANCIAL ASSISTANCE
The Government agreed on August 5, 1997, to accept austerity measures of the
IMF aimed at rehabilitating and restructuring the economy as a condition to
receipt of IMF-led loans and financial assistance of approximately U.S.$17.2
billion. Key rehabilitation goals are:
- restore fiscal, monetary and economic stability immediately,
- maintain foreign exchange reserves equal to 3.5 months import value or a
minimum U.S.$25 billion,
- restore confidence and trust in the finance and banking system to counter
any run on deposits. restructure the FIDF's role to ease the burden on the
government,
- cut the current account deficit from 8% of GDP in 1996 to 5% in 1997 and
3% in 1998,
- maintain annual economic growth at 3-4% in 1997 and 1998,
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- cap inflation at 8-9% in 1997,
- continue with the balanced budget policy to maintain fiscal stability.
- Tackle economic problems and build international credibility through
financial and technical assistance from the IMF and foreign financial
institutions.
On August 20, 1997, the IMF approved a stand-by arrangement for Thailand,
authorizing drawings of about U.S.$3.9 billion over the next 34 months to
support the government's economic program, and in particular, its international
reserve position. Of the total, about U.S.$1.6 billion was available
immediately, and a further U.S.$810 million will be available after a review of
program implementation on December 8, 1997. The total amount of funds provided
by the IMF under the package since August 1997 has been U.S.$2.4 billion.
On October 14, 1997, the government of Thailand announced measures related
to the fiscal year 98 fiscal surplus target agreed to with the IMF, and to the
financial sector restructuring task ahead. On the fiscal front, the Council of
Ministers approved 1400 billion Baht of measures, including excise tax increases
of 400 billion Baht and spending cuts of 100 billion Baht, 70% of which are to
come from public investment projects. With these measures the authorities
believe the 1% of GDP fiscal surplus originally agreed with the IMF can be
achieved. In February, 1998, the government announced additional excise tax
increases, and, in response to a general perception that Thailand's economic
condition has stabilized, relaxed loan package requirements to allow the state
enterprise sector to run a budget deficit of 0.5%.
FISCAL UPDATE AND FINANCIAL SECTOR MEASURES
In the first 11 months of fiscal year 1997, the government budget was 60.6
billion Baht in deficit, an amount above the IMF target of 52.8 billion Baht for
the year. To provide a 1998 budget surplus, the government on August 16, 1997,
put into effect an increase in value added tax ("VAT") from 7% to 10%. The
Revenue Department said such an increase would generate an additional revenue of
Baht 70 billion per annum. In addition, the government reduced its 1998 budget
by 59 billion Baht to 923 billion Baht.
As a first step in reforming and strengthening the country's financial
sector, the Council of Ministers on June 24, 1997, approved four decrees aimed
at restructuring the country's financial sector, and boosting liquidity. The
first decree amended the Commercial Banking Act to allow foreign investors to
hold shares in local banks in excess of the existing 25% limit. The second
decree amended the Finance Act to eliminate several obstacles to mergers among
the financial institutions. Companies are now permitted to transfer debt rights,
without having to notify borrowers, thus speeding up the merger process. The
third decree formalized securitization, with special institutions authorized to
accept assets and issue securities. The fourth decree established a secondary
mortgage corporation, which develops a secondary market for property loans.
As a result of these reforms, Citibank has entered into negotiations to hold
at least 50.1% of the paid up capital of First Bangkok City Bank Plc, a
medium-sized bank. China Development Corporation of Taiwan has shown interest in
buying a 2% to 3% stake in Bangkok Bank Plc, Thailand's largest bank.
On June 27, 1997, the central bank suspended the operations of 16 finance
companies, and ordered them to merge with core finance companies or seek strong
partners. The authorities ordered these companies to prepare rehabilitation
plans and provided depositors with promissory notes in the amount of their
deposits. After the mergers, promissory-note holders are expected to be able to
reclaim their deposits from the new firms. Furthermore, promissory-note holders
are also expected to be able to discount their promissory notes in the secondary
bond market, use them as collateral for loans or exchange their notes for a
certificate of deposit at Krung Thai Bank.
On August 5, 1997, the Thai government suspended an additional 42 finance
and securities companies, bringing the number of suspended finance firms up to
58. The Government said it will protect
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depositors and "bona fide" creditors of the 42 suspended firms, with the option
of exchanging promissory notes and certificates of deposit with Krung Thai Bank,
which is 60% owned by the Finance Ministry. In late November, 1997, the Bank of
Thailand suspended an additional finance firm.
On October 14 new financial sector measures were announced including:
liberalization of the restrictions on foreign participation in the sector,
creation of the AMC, which is to take over, manage and sell bad debts of
financial institutions, the creation of the FRA, which is to regulate financial
institutions and guarantee depositors and other creditors, the introduction of
higher capital requirements and higher provisioning requirements for bad loans,
and the amendment of the bankruptcy laws to make it easier to seize collateral.
On December 8, 1997, the Finance Minister, on the recommendation of the FRA,
announced that only two of suspended finance firms would be allowed to reopen,
and the other 56 suspended firms were ordered closed. The good assets of the
closed finance companies would be transferred to a so-called "good bank," which
was set up in February 1998. Bad assets will be transferred to AMC for
management. Creditors and depositors of closed finance companies have the option
to convert their claims into Krung Thai Bank's certificates of deposit or, as
the case may be, Krung Thai Thanakit Finance and Securities Plc's promissory
notes. The government regulation also prevented the resale of notes held by
depositors. This prevented the resale of these notes at a discount in secondary
capital markets. This has resulted in liquidity problems for depositors.
In May 1998, the Ministry of Finance and the Bank of Thailand also adopted a
15-point program designed to increase liquidity in the Thai economy, including
(i) seeking additional multilateral and bilateral external financing, (ii)
issuing the Debt Securities offered hereby, (iii) improving the FRA auction
process for the assets of the 56 closed finance companies to attract foreign
buyers, (iv) accelerating the raising of capital by commercial banks from
foreign investors, (v) refinancing the FIDF's short-term debt through longer
term domestic borrowings, (vi) encouraging debt restructuring by Thai commercial
banks and their clients, (vii) revising macroeconomic assumptions under the IMF
Financial Assistance Program, (viii) encouraging the restructuring of private
sector external debt, (ix) accelerating the increase of capital by Thai
commercial banks, (x) completing amendments to Thai bankruptcy and foreclosure
laws, (xi) encouraging foreign investment in domestic capital markets, (xii)
accelerating the privatization of state enterprises, (xiii) stabilizing the Baht
and the short-term money markets to facilitate lower interest rates, (xiv)
increasing hire purchase and housing credits, and (xv) timely payment by
Government entities to private sector contractors for services performed.
SOVEREIGN AND CORPORATE CREDIT RATINGS
Moody's Investors Service, Inc. ("Moody's") has currently rated the Kingdom
of Thailand at Ba1, with a negative rating outlook, for its long-term foreign
currency debt, and not Prime for its short-term foreign currency debt, with a
credit watch for a possible downgrade. Moody's has rated foreign currency bank
deposits at B1, with a stable outlook, and short-term foreign currency bank
deposits at not Prime. At the same time, the country's ratings by Standard &
Poor's Corporation are currently BBB- for its long-term, foreign currency debt
rating, and A-3 for its commercial paper and short-term, foreign currency debt,
with a negative overall outlook on foreign currency debt. Additionally, S&P has
a local currency rating on Thailand's long-term debt of A- with a negative
outlook and a short-term local currency credit rating of A-2.
In recent months, various rating agencies have steadily down-graded Thailand
related investments. On April 9, 1997, Moody's downgraded the foreign currency
ceilings for bonds and bank deposits of Thailand from A2 to A3. The agency said
the downward adjustment reflected an incremental deterioration in the country's
creditworthiness stemming (1) from a build up of short term foreign currency
obligations that has contributed to the recent escalation of the country's
overall external debt ratios, (2) structural problems that have adversely
affected Thailand's competitiveness in its traditional manufactured export
industries,
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(3) constraints on the array and effectiveness of macroeconomic policies at the
government's disposal to respond to these challenges and (4) the crisis in the
domestic financial and property sectors.
On September 3, 1997, S&P lowered its long-term, foreign currency rating of
the country from A to A-. At the same time, S&P lowered Thailand's long-term
local currency rating to AA- from AA. S&P said the downgrades reflected
substantial loan losses in the financial sector as well as the diminution of
Thailand's external financial flexibility.
On October 2, 1997, Moody's cut its assessment of Thailand for a second time
that year and maintained a negative outlook, lowering Thailand's long-term
foreign currency country ceiling for bonds and notes and the long-term foreign
currency country ceiling for bank deposits from A3 to Baa1. Moody's said the
downgrades reflected an erosion of assets in the country's financial system
crippled by the slowest economic growth in 30 years, increased foreign debt
following a currency devaluation in July and problems in the property industry.
Moody's had placed these ratings on review for possible downgrade since
September 9, 1997.
On October 24, 1997, S&P again lowered Thailand's long-term, foreign
currency rating to BBB from A- and its long-term local currency rating to A from
AA-. S&P cited weak political leadership as one of the factors for the
downgrade. S&P said the outlook on Thailand's long-term ratings remained
negative.
On November 28, 1997, Moody's downgraded Thailand's ratings for long-term,
foreign currency debt from Baa1 to Baa3 with a negative rating outlook. Moody's
ratings for short-term foreign currency debt remained at Prime-3 under a credit
watch for possible downgrade. Moody's also lowered Thailand's ratings for
foreign currency bank deposits from Ba2 to B1, with a stable outlook. Short-term
foreign currency bank deposits remain unchanged at Not Prime. Moody's maintained
that the downgrades reflected the deterioration in Thailand's credit and
financial fundamentals and concerns that domestic political conditions would
limit the Thai government's progress in meeting conditions of the IMF
stabilization program.
On December 21, 1997, Moody's again downgraded Thailand's rating for foreign
currency debt from Baa3 to the current Ba1.
On January 9, 1998, S&P lowered Thailand's long-term, foreign currency
rating to BBB- from BBB, long-term local currency debt rating to A- from A, and
the short-term local currency debt rating to A-2 from A-1. In making the
downgrades, S&P predicted a 3% economic contraction in 1998 and cited high
interest rates, depreciation of the Baht and the high proportions of
non-performing loans in bank and finance company portfolios.
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ANNEX B
HATCH ASSOCIATES LTD.
2800 SPEAKMAN DRIVE
SHERIDAN SCIENCE AND TECHNOLOGY PARK
MISSISSAUGA, ONTARIO CANADA L5K 2R7
EVALUATION OF OPERATING COST AND PRODUCTION CAPACITY PROJECTIONS OF
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
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INTRODUCTION
Nakornthai Strip Mill Public Company Limited (NSM) is in the final
construction/commissioning of the first stage of its flat rolled mini-mill
located at Chonburi Industrial Estate, Thailand. Construction of the first
stage--electric arc furnace (EAF)--ladle metallurgy--compact strip production
(CSP) is nearly complete, with first production from the EAF scheduled for late
November 1997. The second stage--coal based DRI--pickling--galvanizing--cold
rolling is just commencing construction.
Nakornthai Strip Mill Public Company Limited engaged Hatch Associates, Ltd.,
Toronto, Canada to provide an independent evaluation of their projections for
operating costs and production capacity for the first and second stages of its
facility. The operating cost and production tonnage projections were contained
in the document "McDonald & Company Securities, Inc.", dated October 29, 1997.
Information concerning unit pricing, unit consumptions, equipment specifications
and process productivity was obtained from various documents examined during a
site visitation in late October, 1997. Where possible, contracts or purchase
orders were examined to verify prices of consumables and raw materials.
Productivity of potential "bottleneck" units were examined in greater detail
than other areas since these would be key to achieving the expected capacity.
SUMMARY OF FINDINGS
FACILITIES
The NSM facilities contain (or will soon contain) a rather unique
combination of U.S. flat rolled mini-mill technology and operating philosophy
along with process equipment and technologies more frequently associated with
speciality or higher quality steel producers. The equipment is definitely
"State--of--the-- Art", with a good deal of it similar to that installed at
Nucor's Berkeley, South Carolina plant. Subtle changes in equipment design have
been made where appropriate, however, maintaining the spectra of proven
technology. The latest in level I and level II process control systems are being
installed and have incorporated functions critical to production optimisation.
For example, the loading of scrap onto the Consteel conveyor will be dynamically
monitored and displayed to the scrap loaders in order to insure that scrap feed
to the EAF, which is so critical to this process, is optimised.
The coal based DRI process, lnmetco, will take advantage of iron ore fines
and coal to produce a lower cost iron unit than available from the international
market. The DRI facility will have the capacity to fulfill approximately 30% of
NSM's iron unit requirements. The ladle metallurgy facilities at NSM--ladle
furnaces and vacuum tank degassing--will obviate disadvantages (namely sulfur
from the coal carried into the steel) which may otherwise be associated with the
Inmetco process.
A waste heat generation facility is also planned. This facility would
generate electricity from waste gases from the DRI and EAF processes and will
significantly reduce NSM's overall energy costs.
The EAF will contain the latest in Consteel technology, utilizing the
furnace off--gases to preheat scrap, thereby reducing energy consumption and
scrap melting time. The EAF is also equipped with electric energy reduction
technologies such as large capacity oxygen and carbon injection and submerged
tuyeres for light oil injection.
The ladle metallurgy furnaces and vacuum tank degassers will assist in the
production of high quality steels as well as to provide a buffer between the EAF
and the continuous caster.
The continuous caster and hot strip mill (CSP) will be of SMS' most recent
design. The caster will incorporate "soft reduction" and electromagnetic brake (
EMBR ) technologies to enhance productivity and reliability.
The hot strip mill will contain the latest in work roll shifting and
bending, hydraulics and gauge and shape control.
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The pickle / galvanizing line will target a particular market and contains
equipment (cold reduction, skin passing, tension leveling) seldom seen, even in
new facilities.
PRODUCTIVITY
The projected capacity of the facility is 1.35 million tonnes per year of
hot rolled coils. At a yield of 95% from liquid steel to hot rolled coil, this
equates to 1.42 million tonnes per year of liquid steel. The steelmaking
facilities--Consteel--EAF--ladle furnaces--vacuum degassers should have little
difficulty in achieving this production level. In addition to NSM's own
knowledgeable staff of steelmakers, advisors from Nucor experienced with the
Consteel process will be available during start up.
The continuous caster should also be capable of producing at the 1.35
million tpy rate provided that NSM's product mix does not have an inordinately
high percentage of steel in the narrower width ranges, otherwise production
capacity will suffer.
The start up expectations--651,000 tonnes in year 1 (48% of capacity) and
1,232,000 tonnes in year 2 (91 % of capacity)--are well within the range of
historical start-up curves and should be achievable considering the expertise
available and the training of the personnel.
OPERATING COST
The operating costs, once all of the equipment is installed and operating at
capacity, are projected to be:
<TABLE>
<CAPTION>
THROUGH PROCESS UNIT OPERATING COST $/MT
- ------------------------------------------------------------------------- -------------------
<S> <C>
DRI...................................................................... 84.98
EAF--Melt Shop........................................................... 202.91
Cast Slab................................................................ 215.23
Hot Rolled Coil.......................................................... 231.68
Pickled & Oiled Coil..................................................... 248.41
Galvanized coil.......................................................... 307.04
Sales, General & Administration.......................................... +8.41
</TABLE>
These costs were calculated at an exchange rate of 45.5 Baht:1 $US.
Raw materials and energy comprise approximately 70% of the operating costs
and were examined closely. Electrical energy consumption at the plant is aided
significantly by the planned installation of a waste heat generation facility
which will supply 44 MW of capacity and which will reduce the amount purchased
of electricity by nearly $17 million per year (approximately $12.50/tonne).
Prices for iron ore and coal for the DRI plant have been established through
contractual agreements. Unit costs for other consumables are in line with
international prices. Unit consumptions for energy, electrodes, refractories,
etc. are neither optimistic nor conservative and are representative of the
employed technology.
NSM expects that by year 2001, sufficient domestic scrap will be generated
such that all of its scrap needs will be accommodated from within Thailand. In
our opinion it remains uncertain whether the domestic scrap market will be
sufficient to accommodate 100% of NSM's scrap needs by the year 2001. However,
we also believe that NSM's projected scrap prices--$178/MT for imported scrap
(delivered to site) and at $150/MT for domestic scrap (delivered)--are
conservative, particularly the price for domestic scrap. High quality domestic
scrap is priced in the $100-120/MT range as of late October 1997. Therefore we
feel that NSM's projected price of $150/MT is very conservative, particularly
considering that domestic scrap is traded in Baht. These factors--a lower priced
domestic scrap and a need to import more scrap than planned--will likely offset
each other, resulting in an overall raw material cost which is as stated in
NSM's projections.
B-3
<PAGE>
In the initial review of the operating cost projections, it appeared as
though certain inefficiencies in consumption of energy and other consumables was
not thoroughly accounted for during the start up period--first 2 years, although
lower yields during the start up phase were acknowledged. Projections concerning
these inefficiencies, which are quite normal during start up, were recently
provided to NSM.
OVERALL SUMMARY
NSM's projections of operating cost and production capacity are very
realistic. NSM's flat rolled mini-mill will have State--of--the--Art equipment
which emphasizes the production of quality steel products while concurrently
minimizing energy consumption and yield losses. Such a facility configuration is
critical to success in the South East Asian area where energy and iron unit
costs are generally higher than in other steel producing regions of the world.
The only projection with a degree of uncertainly concerns the capability of
the continuous caster to support 1.35 million tpy if the product mix contains an
inordinately high percentage of narrow product. The market is likely not yet
defined well enough to resolve this issue, however, the productivity penalty, if
any, would be modest at worst.
B-4
<PAGE>
- --------------------------------------------------------------------------------
Resource Strategies
THE OUTLOOK FOR STEEL SHEET PRODUCTS
IN SOUTH EAST ASIA
A report prepared for
Nakornthai Strip Mill Public Company Ltd.
by
Resource Strategies, an affiliated company of CRU International Ltd.
C-1
<PAGE>
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Resource Strategies
THE OUTLOOK FOR STEEL SHEET PRODUCTS IN
SOUTH EAST ASIA
The following provides a brief overview of the outlook for steel sheet
products in Thailand, Malaysia, Indonesia, the Philippines, South Korea and
Taiwan over the period 1991 to 2005.
INTRODUCTION
Steel consumption in the South East Asian region has seen double digit
growth over the last fifteen years, compared with virtually no growth in the
mature economies of Japan, North America and Western Europe. This trend is
likely to continue for the foreseeable future, though recent macroeconomic
developments and currency turmoil in all the Asean countries will dampen growth
prospects for the next couple of years. In the medium term, we expect the region
to remain the fastest growing steel market in the world with steel demand
growing at an annual average of 6-8%. This will provide substantial
opportunities for investment in steel making and rolling facilities to replace
the growing flow of imports into the Asean region from all over the world, from
such places as Japan, India and Russia.
Korea and Taiwan dominate the region in terms of production and consumption
of sheet products, having established integrated steelmaking facilities and
substantial export markets for their products. Though relatively small in size,
many of the Asean countries have seen strong growth in steel consumption,
exceeding an average of 10% per year between 1980 and 1995. With the exception
of Indonesia, the Asean countries all rely heavily on imports, particularly of
steel sheet products, to meet their growing demand requirements. As these
markets have grown, several major new steel making facilities have come on
stream or are planned to do so in the next two years which will substantially
reduce the current dominance of imports.
Though the medium term economic prospects remain good, there has been some
slow down in the region recently. In 1996, industrial production growth rates in
a number of the Asean countries slowed as the region suffered a slow down in
manufacturing exports. Growth rates are expected to slow further this year in
response to the currency markets turmoil evident since early July. This
development continues to create uncertainty and make investors more cautious.
The devaluations against the dollar have had the immediate effect of reducing
regional import demand for steel products. Thailand and to a lesser extent
Indonesia are more severely affected, but Malaysia and the Philippines have also
reduced import levels in recent months in response to the rising dollar.
C-2
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RESOURCE STRATEGIES
[LOGO]
[LOGO]
C-3
<PAGE>
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Resource Strategies
TABLE 1: FLAT PRODUCTS CONSUMPTION BY COUNTRY
<TABLE>
<CAPTION>
YEAR 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
- -------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(UNIT: 000 METRIC TONNES)
HOT-ROLLED COIL
CONSUMPTION
Indonesia........... 649 543 765 499 676 466 482 506 544 591
Korea............... 7,564 5,249 5,767 6,588 6,974 8,875 9,182 9,898 10,690 11,428
Malaysia............ 708 684 806 805 996 880 880 940 1,024 1,147
Philippines......... 376 359 359 413 504 704 739 789 851 918
Taiwan.............. 4,868 4,001 3,608 2,575 2,781 3,001 2,929 3,114 3,347 3,615
Thailand............ 1,586 1,820 1,742 2,103 2,959 2,580 2,264 2,389 2,549 2,801
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total............... 15,751 12,656 13,047 12,983 14,890 16,505 16,477 17,635 19,005 20,500
% Change y-o-y...... (19.6%) 3.1% (0.5%) 14.7% 10.8% (0.2%) 7.0% 7.8% 7.9%
COLD-ROLLED COIL
CONSUMPTION
Indonesia........... 529 382 643 664 810 820 911 975 1,076 1,198
Korea............... 2,031 1,761 1,923 2,415 2,690 2,964 3,153 3,878 4,305 4,649
Malaysia............ 461 427 528 474 570 668 686 723 776 838
Philippines......... 277 262 279 220 460 359 387 415 449 487
Taiwan.............. 1,992 2,204 2,287 2,195 2,227 2,548 2,708 2,906 3,121 3,364
Thailand............ 794 801 976 862 524 1,114 1,057 1,103 1,216 1,301
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total............... 6,084 5,837 6,635 6,831 7,281 8,473 8,902 10,000 10,944 11,838
% Change y-o-y...... (4.1%) 13.7% 3.0% 6.6% 16.4% 5.1% 12.3% 9.4% 8.2%
COATED SHEET
CONSUMPTION
Indonesia........... 284 309 261 412 531 478 510 549 597 647
Korea............... 1,414 1,389 1,828 2,394 2,717 3,015 2,909 3,133 3,350 3,719
Malaysia............ 329 424 494 448 1,195 565 613 668 712 784
Philippines......... 258 325 370 437 473 507 537 579 631 678
Taiwan.............. 1,001 1,219 1,549 1,445 1,624 1,675 1,834 2,018 2,244 2,526
Thailand............ 596 567 633 881 915 913 880 912 963 1,040
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total............... 3,882 4,233 5,135 6,017 7,455 7,153 7,283 7,858 8,496 9,395
% Change y-o-y
<CAPTION>
YEAR 2001 2002 2003 2004 2005
- -------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
HOT-ROLLED COIL
CONSUMPTION
Indonesia........... 658 725 787 857 922
Korea............... 12,113 12,719 13,469 14,022 14,554
Malaysia............ 1,277 1,409 1,540 1,677 1,821
Philippines......... 987 1,062 1,136 1,210 1,292
Taiwan.............. 3,929 4,240 4,579 4,927 5,277
Thailand............ 3,098 3,405 3,667 3,968 4,313
--------- --------- --------- --------- ---------
Total............... 22,061 23,559 25,178 26,660 28,179
% Change y-o-y...... 7.6% 6.8% 6.9% 5.9% 5.7%
COLD-ROLLED COIL
CONSUMPTION
Indonesia........... 1,300 1,409 1,526 1,628 1,749
Korea............... 4,965 5,238 5,547 5,774 5,994
Malaysia............ 942 1,076 1,154 1,234 1,315
Philippines......... 528 569 609 648 693
Taiwan.............. 3,634 3,890 4,128 4,371 4,633
Thailand............ 1,415 1,542 1,661 1,797 1,953
--------- --------- --------- --------- ---------
Total............... 12,783 13,724 14,624 15,453 16,337
% Change y-o-y...... 8.0% 7.4% 6.6% 5.7% 5.7%
COATED SHEET
CONSUMPTION
Indonesia........... 705 760 833 907 979
Korea............... 4,065 4,223 4,472 4,656 4,832
Malaysia............ 877 970 1,060 1,154 1,253
Philippines......... 728 781 836 890 951
Taiwan.............. 2,766 3,029 3,271 3,520 3,770
Thailand............ 1,145 1,269 1,367 1,479 1,608
--------- --------- --------- --------- ---------
Total............... 10,287 11,033 11,839 12,606 13,394
% Change y-o-y
</TABLE>
- ------------------------
Note: Hot-rolled coil includes sheet and strip and does not include hot-rolled
plate: coated sheet includes zinc and other metallic coatings except
tinplate
Source: Resource Strategies.
C-4
<PAGE>
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RESOURCE STRATEGIES
TABLE 2: FLAT PRODUCTS PRODUCTION BY COUNTRY
<TABLE>
<CAPTION>
YEAR 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
- -------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(UNIT: 000 METRIC TONNES)
HOT-ROLLED COIL
PRODUCTION
Indonesia........... 943 770 859 1,103 1,237 1,160 1,250 1,353 1,664 2,179
Korea............... 13,196 14,308 17,132 17,323 17,781 19,458 20,275 21,309 22,801 23,599
Malaysia............ 0 0 0 0 0 0 0 80 480 1,320
Philippines......... 302 281 389 629 785 793 893 982 1,281 2,209
Taiwan.............. 4,218 5,038 5,145 5,341 5,484 5,849 6,217 7,287 8,169 9,802
Thailand............ 0 0 0 510 1,131 1,311 1,325 2,120 2,862 3,463
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total............... 18,659 20,397 23,525 24,906 26,418 28,571 29,961 33,131 37,256 42,572
% Change y-o-y...... 9.3% 15.3% 5.9% 6.1% 8.1% 4.9% 10.6% 12.4% 14.3%
COLD-ROLLED COIL
PRODUCTION
Indonesia........... 476 383 379 553 763 847 898 1,041 1,448 2,244
Korea............... 3,533 3,670 4,453 4,725 4,998 5,066 5,431 5,903 6,777 7,638
Malaysia............ 47 97 139 140 230 480 499 539 620 750
Philippines......... 367 358 415 398 513 463 509 611 825 908
Taiwan.............. 2,290 2,691 3,209 3,405 3,836 4,498 4,660 4,769 4,869 5,074
Thailand............ 0 0 0 0 0 60 258 839 1,258 1,761
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total............... 6,713 7,199 8,595 9,221 10,340 11,414 12,255 13,702 15,796 18,374
% Change y-o-y...... 7.2% 19.4% 7.3% 12.1% 10.4% 7.4% 11.8% 15.3% 16.3%
COATED SHEET
PRODUCTION
Indonesia........... 248 290 216 333 398 415 540 593 712 812
Korea............... 2,328 2,564 2,857 3,013 3,351 3,667 3,916 4,194 5,012 6,195
Malaysia............ 164 144 162 225 279 273 383 521 658 796
Philippines......... 226 278 310 348 350 380 471 636 763 809
Taiwan.............. 437 456 754 1,027 1,248 1,618 1,739 1,878 2,113 2,388
Thailand............ 289 293 354 525 502 512 540 713 1,019 1,203
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total............... 3,692 4,025 4,653 5,471 6,128 6,865 7,589 8,536 10,278 12,203
% Change y-o-y...... 9.0% 15.6% 17.6% 12.0% 12.0% 10.6% 12.5% 20.4% 18.7%
<CAPTION>
YEAR 2001 2002 2003 2004 2005
- -------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
HOT-ROLLED COIL
PRODUCTION
Indonesia........... 2,484 2,857 2,943 3,208 4,170
Korea............... 24,732 27,259 28,350 29,484 31,695
Malaysia............ 1,782 1,871 2,432 3,041 3,497
Philippines......... 2,629 2,761 2,982 3,131 3,193
Taiwan.............. 10,292 10,910 11,674 12,257 13,140
Thailand............ 3,913 4,618 5,310 6,160 7,022
--------- --------- --------- --------- ---------
Total............... 45,833 50,276 53,691 57,280 62,717
% Change y-o-y...... 7.7% 9.7% 6.8% 6.7% 9.5%
COLD-ROLLED COIL
PRODUCTION
Indonesia........... 2,625 2,757 3,087 3,334 3,401
Korea............... 8,478 8,969 9,373 9,635 10,021
Malaysia............ 863 1,018 1,191 1,489 1,638
Philippines......... 1,016 1,067 1,217 1,302 1,549
Taiwan.............. 5,393 5,749 6,186 6,755 7,265
Thailand............ 2,025 2,227 2,571 2,853 3,053
--------- --------- --------- --------- ---------
Total............... 20,400 21,788 23,625 25,369 26,927
% Change y-o-y...... 11.0% 6.8% 8.4% 7.4% 6.1%
COATED SHEET
PRODUCTION
Indonesia........... 840 874 923 964 1,041
Korea............... 6,889 7,165 7,337 7,557 7,919
Malaysia............ 867 954 1,001 1,072 1,179
Philippines......... 850 907 977 997 1,002
Taiwan.............. 2,632 2,879 3,129 3,583 3,924
Thailand............ 1,251 1,293 1,396 1,458 1,488
--------- --------- --------- --------- ---------
Total............... 13,329 14,071 14,763 15,631 16,553
% Change y-o-y...... 9.2% 5.6% 4.9% 5.9% 5.9%
</TABLE>
- ------------------------
Note: Hot-rolled coil includes sheet and strip and does not include hot-rolled
plate: coated sheet includes zinc and other metallic coatings except
tinplate
Source: Resource Strategies.
C-5
<PAGE>
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Resource Strategies
Uncertainty caused by the crisis has reduced steel trading activity with
buyers deferring purchases and sellers not extending terms of credit. In our
forecasts, we have assumed that this crisis is likely to have repercussions for
steel consumption in the region for 1997 and 1998 but that demand will recover
more strongly in 1999 and beyond.
Steel sheet products, hot-rolled, cold-rolled and metallic coated sheet and
coil, which are the markets that NSM will be competing in, account for just
under 40% of total steel product consumption in the Southeast Asian region. The
other 60% or so is primarily reinforcing bar and other long products used in the
construction industry. As these markets develop and the population's prosperity
rises, the demand for consumer durables, such as automotives and consumer
durables, will raise the share of sheet products in total steel consumption.
In order to assess the market opportunities for Nakornthai Strip Mill (NSM)
and the competitor behaviour of existing and new steel sheet producers over the
next ten years, we look at each of the countries of the region in turn. The
accompanying tables provide our estimates of historical and forecast
consumption, production and capacity of hot-rolled, cold-rolled and coated sheet
in each of the major markets discussed. According to our forecasts, total sheet
consumption is forecast to grow robustly at an annual average of 8.2% in
Thailand and 7.4% in the six major consuming countries of the region between
1997 and 2005.
THAILAND
In 1996, Thailand consumed about 4.6m tonnes of sheet products and imported
3.3m tonnes. The sheet market has been growing rapidly over the last five years,
at an annual average rate of 9%. However, growth slowed in 1996 to 4.6%, down
from more than 14% per year in the previous two years. The collapse of the baht
is expected to have a noticeable impact on steel demand in 1997 and 1998.
Imports will fall and domestic producers will face reduced demand and difficulty
in passing on fully the effects of the devaluation in higher baht prices. We
believe that sheet demand could fall almost 9% this year, partially recovering
in 1998 to reach 4.4m tonnes. From 1999, assuming the impact of the currency
crisis has worked through the system, sheet demand is forecast to pick up
strongly growing by as much as 10% per year, so that we estimate that growth of
just over 8% average over the forecast period to 2005.
Sahaviriya Steel Industries is currently the only hot strip producer,
rolling imported slab. It sources its slab from a variety of mills, most
recently from the CIS (Commonwealth of Independent States) and Eastern Europe,
and these varied sources have affected its ability to supply a consistent
quality product. NSM is expected to bring on stream its 1.5m tpy hot strip
mini-mill at the beginning of 1998 and the Japanese joint venture, Siam Strip
Mill, will follow within a year with a further 1.7m tpy of hot rolling capacity.
By the time both of these mills are fully running, Thai demand for hot-rolled
coil (including that for further processing into cold-rolled) is likely to reach
around 5 5.5m tonnes. Hence, these new producers should find good opportunities
in their domestic market for import substitution. Both new producers are making
provision to expand capacity in the longer term.
Thailand has not produced cold-rolled coil to date and imports between 1.5
and 2m tpy. Now there are two new cold mills, Thai Cold-Rolled, which has
recently come on stream and Siam United Steel, which is under construction, with
a joint capacity of 2.2m tpy. Both mills are Japanese joint ventures which are
likely to source the majority of their mother coils from Japan to supply high
quality cold-rolled to Japanese OEM (original equipment manufacturers)
transplants in Thailand and other Asean. BHP Steel (The Broken Hill Proprietary
Company Limited) is installing a 300,000 tpy cold mill and 150,000 tpy
galvanising line. The cold-rolled produced on this mill will be galvanised at
the same location or shipped to Indonesia to the other BHP galvanising line
there. Currently Thailand imports almost half of its coated
C-6
<PAGE>
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RESOURCE STRATEGIES
sheet requirement of almost 1m tpy. This situation should change over the next
five years as NSM brings on 500,000 tpy of galvanising capacity and several
other smaller lines come on stream. By the end of the forecast period, Thailand
could be a net exporter of hot-dipped galvanised sheet.
INDONESIA
Indonesia consumed nearly 1.8m tonnes of sheet products in 1996, and its
consumption of sheet products has risen and fallen regularly over the last five
years, with an underlying trend of +4%. Prospects for future steel consumption
are good as economic growth is forecast to be strong. We are forecasting that
total sheet consumption will rise by 8.5% per year on average over the next nine
years.
Krakatau Steel is a fully integrated steelworks established in 1986 which
produces around 1m tpy of hot-rolled coil and about 50% of the country's
cold-rolled production. The company is planning to expand capacity and may be
privatised to raise the necessary funding. One of the key stumbling blocks has
been on the choice of steelmaking route to supply the increase in capacity. In
1993, regulation of the industry was relaxed allowing investment in flat
products. Several foreign investors, most notably Posco of Korea and Yieh Phui
of Taiwan, are considering joint venture flat product facilities in Indonesia.
There are plans to install galvanising lines that will double existing capacity.
If all the announced planned projects come to fruition, their production is
likely only to meet the growth in domestic demand in the medium term.
C-7
<PAGE>
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Resource Strategies
TABLE 3: ASEAN SHEET CAPACITY, MILLION TPY
<TABLE>
<CAPTION>
START-UP HR CR COATING
COUNTRY COMPANY DATE CAPACITY CAPACITY CAPACITY
- ------------------------------------ ------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INDONESIA........................... EXISTING CAPACITY, END 1996 2.00 1.70 0.75
PLANNED:
Tumbakmas...................... Q1 1997 0.10
Sarana Steel................... 1997 0.07
Bisma Nerendha................. H1 1998 0.10
PT Fumira...................... H1 1998 0.15
KS Posco/Krakatau Phase I...... 1998/9 1.00 --
Keris Mas...................... H1 1999 0.15
Krakatau*...................... 1999 0.50 --
Yieh Phui Enterprises.......... 1999 1.60 --
Other smaller galvanizes....... by 2000 0.10
--- --- ---
TOTAL INDONESIA, END 2000...... 3.50 3.30 1.42
MALAYSIA............................ EXISTING CAPACITY, END 1996 0.00 0.50 0.35
PLANNED:
BHP-Malaysia................... Q1 1997 0.15
Federal Iron Works............. H1 1997 0.20
Ornatube....................... H2 1997 0.25 0.25
Megasteel--Phase I............. H2 1998 2.00
Cold Rolling (Maruichi)........ 1998 0.20
Nusantara Steel Corp........... 1999 1.60
--- --- ---
TOTAL MALAYSIA, END 2000....... 3.60 0.95 0.95
THAILAND............................ EXISTING CAPACITY, END 1996 2.40 0.00 0.70
PLANNED:
Thai Cold-Rolled (SSI)......... 1997 1.20 0.30
Nakornthai Strip Mill (NSM).... H1 1998 1.50
Siam Strip Mill (SSM).......... H1 1999 1.70
Siam United Steel.............. 1998 1.00
Bangkok Steel Industry......... 1998 0.16
BHP-Thailand................... 1998 0.30 0.15
Nakorn Strip Mill (NSM)........ 1999 0.80 0.50
Siam Steel Pipe Group.......... 1998-1999 0.25
Siam Integrated (SSM).......... 1999 0.50
--- --- ---
TOTAL THAILAND, END 2000....... 5.60 3.80 2.06
PHILIPPINES......................... EXISTING CAPACITY, END 1996 1.20 0.85 0.65
PLANNED:
Puyat Steel Corp............... H2 1997 0.15
Coresteel...................... 1997 0.05
Bacnotan Steel................. 1997 0.06
Philippine Steel Coating Q497/98 0.30 0.24
Group..........................
Jacinto Group.................. 1999 1.25
National Steel*................ by 2000 0.50
--- --- ---
TOTAL PHILIPPINES, END 2000.... 2.95 1.20 1.10
</TABLE>
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RESOURCE STRATEGIES
TABLE 3 CONT'D: SOUTH KOREA & TAIWAN SHEET CAPACITY, MILLION TPY
<TABLE>
<CAPTION>
START-UP HR CR COATING
COUNTRY COMPANY DATE CAPACITY CAPACITY CAPACITY
- -------------------------------------- ------------------------------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
KOREA................................. EXISTING CAPACITY, END 1996 18.60 8.35 3.65
PLANNED:
Posco.......................... 1997 1.85
Dongbu Steel*.................. 1998 1.00 1.30 0.90
Hanbo.......................... 1998 2.10 1.55
Hanbo.......................... 1999 1.40
Hyundai Pipe................... 1999 1.80 0.60
Posco*......................... 1999 2.00
Union Steel Manufacturing...... 1999 1.30 0.70
----- ----- ---
TOTAL KOREA, END 2000 23.70 16.15 7.25
TAIWAN................................ EXISTING CAPACITY, END 1996 8.05 5.00 1.70
PLANNED:
China Steel Corp............... Jan-97 2.50
Yieh Loong..................... Q31997 2.40 0.40
Yieh Phui*..................... Q31997 0.30
An Feng........................ 1998 1.00 0.30
CSC/Kuei Yi & Partners......... 1998 1.00
Ornatube....................... 1999 0.25 0.25
Sysco.......................... 1999 0.25
Yieu Phui...................... 1999 0.30 0.30
----- ----- ---
TOTAL TAIWAN, END 2000......... 13.95 7.25 2.80
----- ----- ---
</TABLE>
- ------------------------
* expansion at existing plant.
Data: Resource Strategies, CRU International
C-9
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Resource Strategies
MALAYSIA
The Malaysian sheet market is currently about 2.1m tonnes, and has been
growing at an annual average of 7% in the last five years. It imports 100% of
its hot-rolled coil requirement as it has no hot rolling facility. There are
several proposed new mills, the most ambitious of which is the Megasteel
project, which will commission a 2m tpy hot rolling mill in 1998. It is likely
that the company will install further downstreaming rolling and coating at this
facility in the future. Nusantara Steel has recently announced that it aims to
start producing 1.6m tpy of hot-rolled coil in 1999.
Growth in Malaysian sheet steel consumption is expected to be the strongest
in the region at an annual average of just over 9%. If this growth is realised,
Malaysia will remain a significant net importer of sheet steel unless further
projects are announced.
PHILIPPINES
Philippine sheet steel consumption grew dramatically from very small volumes
over the last five years at an average rate of 11.5% to reach 1.6m tonnes in
1996. We believe that it will grow at an average rate of 7.4% over the next nine
years to reach 2.9m tonnes by 2005.
The previously state-owned National Steel Corp. is currently the only
producer of hot-rolled coil, and like Sahaviriya Steel in Thailand, relies on
imported slab from a variety of sources for feed. This rolling mill has plans to
remove some bottlenecks and expand capacity by 500,000 tpy. The Jacinto Group is
planning to build a Danieli-designed thin slab hot-strip mini-mill with a
capacity of 1.25m tpy. There are several projects planned to install cold
rolling and galvanising facilities. The additions to cold rolling capacity from
announced projects are insufficient to meet the projected growth in demand and
it will remain a net importer of cold-rolled coil unless further projects are
announced.
KOREA
The Korean steel industry dominates the region. Korea is a major player in
the global steel market. It produced 39m tonnes of steel in 1996, of which
Posco, the second largest steel producing company in the world, produced over
24m tonnes, 19.5m tonnes of which was hot-rolled coil. Posco is one of the
lowest cost producers of hot strip in the western world. Total imports of steel
products into Korea in 1996 were 11.1m tonnes. This comprised 4.2m tonnes of
semi finished goods and 6.87m tonnes of finished goods. Total exports of steel
products were 9.89m tonnes. This comprised 0.44m tonnes of semi finished goods
and 9.45m tonnes of finished goods. Overall, net imports of semi finished and
finished goods into Korea in 1996 were 1.65m tonnes.
Korean steel consumption will continue to grow strongly at about 6% per year
on average over the next nine years. There are a large number of sheet steel
projects planned to come on stream over the next five years, though some, such
as Hanbo Steel whose problems have been well-publicised, may take longer to be
realised.
TAIWAN
Strong industrial growth in Taiwan has supported sheet growth. The Taiwanese
sheet steel market was just over 7m tonnes in 1996 and is expected to grow by an
average of almost 8% per year over the forecast period. Remarkably, Taiwan has a
large but mainly balanced trade in sheet products. In 1996, it exported 2.6m
tonnes of sheet, 68% of which was hot-rolled coil, and it imported 2.5m tonnes
of sheet, of which more than 50% was cold-rolled.
C-10
<PAGE>
- --------------------------------------------------------------------------------
RESOURCE STRATEGIES
Total imports of steel products into Taiwan in 1996 were 10.1m tonnes. This
comprised 5.95m tonnes of semi finished goods and 4.1m tonnes of finished goods.
Total exports of steel products were 3.32m tonnes. This comprised 0.02m tonnes
of semi finished goods and 3.3m tonnes of finished goods. Overall, net imports
of semi finished and finished goods into Taiwan in 1996 were 6.78m tonnes.
Hot-rolled output from China Steel Corporation's new hot mill is expanding
rapidly, and Yieh Loong has started production on its new 2.4m tpy hot rolling
mill. Given the predicted growth in demand, the country is likely to be a net
importer of cold-rolled and coated sheet unless further projects are planned.
OTHER ASEAN MARKETS
There are likely to be export opportunities for new Asean producers to
supply the emerging markets for steel in the smaller less developed countries
such as Vietnam, Cambodia, Laos and Burma. These markets are currently consuming
only very small quantities of steel, and most of this is reinforcing bar for
construction. In the longer term, however, these markets will grow and imports
will meet this demand until sufficient demand will support domestic facilities.
China is also expected to remain an importer, particularly of higher value added
sheet products such as high strength low alloy and other specialty grades of
steels.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
FLAT PRODUCTS CONSUMPTION BY COUNTRY
<S> <C>
1996, 2005
1996: 32.1m tonnes
Taiwan 22%
Thailand 14%
Indonesia 5%
Malaysia 7%
Philippines 5%
Korea 46%
2005: 57.9m tonnes
24%
14%
6%
8%
5%
44%
</TABLE>
SUMMARY
- - Regional steel consumption growth, which had been robust up to mid-1997, is
set to moderate this year and in 1998 in response to the economic uncertainty
and lower economic activity. Nevertheless, the growth prospects for the
region remain considerably higher than other steel consuming areas of the
C-11
<PAGE>
- --------------------------------------------------------------------------------
RESOURCE STRATEGIES
world. With the obvious exceptions of Korea and Taiwan, the region has been a
significant net importer of sheet products and is expected to remain so.
- - Long term outlook for steel consumption in the region is good. As economies
of the region develop, consumption of flat products is expected to grow at a
faster rate than long products, because demand for automotives, appliances
and other products made with flat steel will grow with the increasing
prosperity of the population.
- - All of the ASEAN countries state that they are now committed to trade
liberalisation and, as members of Afta, have committed to reducing tariffs on
all steel products to 5% by the year 2003. Therefore, new producers locating
in these markets will be competing in the global steel market and must be
efficient on an international basis.
- - Currency markets are expected to stabilise, albeit at lower levels, in
mid-1998. We expect there to be a general recovery in demand in 1999 and over
the remainder of the forecast period growth should be steady.
- - In several countries, stock market volatility has been exacerbated by the
currency problems and this has made it more difficult to raise funds to
finance capital projects. Several planned new production facilities are
likely to be delayed and some may be suspended indefinitely because of the
recent turmoil. For this reason, imports are likely to continue to play a
significant role for the foreseeable future.
- - Forecast sheet steel prices (shown in the accompanying chart) are likely to
level out in nominal dollar terms in the region. These price levels represent
spot transaction prices for commercial grades; there are substantial premiums
on top of these base prices for higher value-added sheet products supplied to
individual customer requirements. As long as currencies continue to devalue,
the rising cost of steel imports will have a dampening effect on steel
demand.
[LOGO]
C-12
<PAGE>
- --------------------------------------------------------------------------------
RESOURCE STRATEGIES
SOME OF THE COMPETITIVE ADVANTAGES OF NSM
- - Thailand is a significant importer of sheet products and therefore there are
significant opportunities for import substitution.
- - NSM has several advantages over the incumbent hot-rolled producer, Sahaviriya
Steel Industries, because it can be more flexible in response to customers'
requirements in terms of dimensions, grades, quality and just-in-time
delivery. NSM will face more formidable competition from the other new player
in the hot rolling market, the Japanese joint venture Siam Strip Mill when it
comes on stream in late 1998 or early 1999. However, NSM will have almost a
year to establish customer relationships with Thai consumers who currently
must rely on imports. Given our forecasts of sheet consumption, we believe
that there will be room for both players to supply primarily the Thai market
in the medium term.
- - NSM will produce a full range of steel grades including HSLA grades for the
automotive industry and API grades for the higher quality end of the pipe
industry. Therefore, it should be able to compete at the top end of the
hot-rolled coil market with strip sourced from Korea and Taiwan, leaving the
Sahaviriya mill to serve the commercial quality commodity end of the market.
- - The ability to produce a broad range of qualities to tight specifications at
low cost means that the mill output is potentially attractive for export
markets worldwide. NSM has the support of two of the world's biggest global
steel traders who are willing to offtake significant volumes of higher grade
material.
- - The ability to carry out ferritic rolling on the hot strip mill allows the
unique configuration of the finishing plant, combining a two stand cold
rolling mill with an inline galvanising line. This combination facility,
which will primarily produce hot-dipped galvanised sheet, will also be able
to produce a cold-rolled equivalent coil and pickled and oiled. The principal
advantage of this type of facility is its flexibility and low production
costs.
C-13
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER OR SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Enforceability of Civil Liabilities............. iii
Presentation of Financial Information........... iv
Glossary........................................ vi
Prospectus Summary.............................. 1
Risk Factors.................................... 19
Use of Proceeds................................. 36
Capitalization.................................. 37
Selected Financial Data......................... 38
Management's Discussion and Analysis of
Financial Conditions.......................... 39
The Exchange Offer.............................. 43
Business........................................ 50
Description of the Note Issuers................. 75
Description of Project Participants............. 76
Description of Material Agreements.............. 78
Management...................................... 84
Principal Shareholders.......................... 89
Related Party Transactions...................... 91
Description of Certain Indebtedness............. 95
Description of Notes and Guaranties............. 98
Security Arrangements........................... 139
Tax Considerations.............................. 149
Thai Taxation................................... 149
Cayman Islands Taxation......................... 150
Old Registration Rights......................... 151
Plan of Distribution............................ 153
Description of Note Depositary Agreement;
Delivery; Form................................ 154
Legal Matters................................... 159
Experts......................................... 159
Available Information........................... 159
Index to Financial Statements................... F-1
Annex A-The Kingdom of Thailand................. A-1
Annex B-Hatch Associates Report................. B-1
Annex C-RSI Consulting Ltd./CRV Report.......... C-1
</TABLE>
[LOGO]
NSM STEEL (DELAWARE), INC.
NSM STEEL COMPANY, LTD.
OFFER TO EXCHANGE
12% SENIOR MORTGAGE NOTES
DUE 2006, SERIES B FOR ALL OUTSTANDING
12% SENIOR MORTGAGE NOTES
DUE 2006, SERIES A
12 1/4% SENIOR SUBORDINATED MORTGAGE NOTES
DUE 2008, SERIES B FOR ALL OUTSTANDING
12 1/4% SENIOR SUBORDINATED MORTGAGE NOTES
DUE 2008, SERIES A
12 3/4% SUBORDINATED MORTGAGE DEBENTURES
DUE 2009, SERIES B FOR ALL OUTSTANDING
12 3/4% SUBORDINATED MORTGAGE DEBENTURES
DUE 2009, SERIES A
------------------------
PROSPECTUS
---------------------
, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Certificate of Incorporation of NSM Steel (Delaware), Inc. provides that
directors of NSM Steel (Delaware), Inc. shall, to the full extent not prohibited
by the General Corporation Law of the State of Delaware (the "DGCL"), not be
liable to NSM Steel (Delaware), Inc. or its stockholders for monetary damages
for breach of such director's fiduciary duty as a director.
Section 145 of the DGCL provides that a corporation may indemnify directors
and officers as well as other employees and individuals against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement in
connection with specified actions, suits or proceedings, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation, a "derivative action") if they acted in good faith and
in a manner they reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, if they had not reasonable cause to believe their conduct was
unlawful. A similar standard is applicable in the case of derivative actions,
except that indemnification only extends to expenses (including attorneys' fees)
incurred in connection with the defense or settlement of such actions, and the
statute requires court approval before there can be any indemnification where
the person seeking indemnification has been found liable to the corporation. The
statute provides that it is not exclusive of other indemnification that may be
granted by a corporation's bylaws, disinterested director vote, stockholder
vote, agreement or otherwise.
Neither the Articles of Association (By-laws) of Nakornthai Strip Mill
Public Company Limited (the "Company") nor the Public Limited Company Act (the
"PLCA") specifically provide for an indemnification of directors and officers of
the Company. However, the PLCA excludes a director from being held liable to the
Company, any shareholder or the Company's creditor, if her act has been approved
or ratified by the shareholders' resolution, even if it has been rescinded
later. A director may be exempt from liabilities for an alleged breach in
certain situations, e.g., she can prove that she took no part in the alleged
breach, or that she made an objection in the meeting, or that she has taken
reasonable actions or precautions to avoid such a breach.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- --------- --------------------------------------------------------------------------------------------------------
<C> <S>
1.01 Purchase Agreement, dated as of March 2, 1998, among the Note Issuers (as defined), Nakornthai Strip
Mill Public Company Limited (the "Company" or the "Guarantor") and Natwest Capital Markets Limited,
McDonald & Company Securities Inc. and ECT Securities Corp. (the "Initial Purchasers").
3.01 Certificate of Incorporation of NSM Steel (Delaware), Inc. (a "Note Issuer" or "NSM (Del)").
3.02 Articles of Association NSM Steel Company, Ltd. (a "Note Issuer" or "NSM Cayman" and together with NSM
(Del), the "Note Issuers").
3.03 Articles of Association of the Company.
3.04 By-laws of NSM Steel (Delaware), Inc.
4.01 Indenture (Senior Mortgage Notes), dated as of March 1, 1998 among the Note Issuers, the Guarantor and
the Chase Manhattan Bank (the "Senior Note Trustee").
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- --------- --------------------------------------------------------------------------------------------------------
<C> <S>
4.02 Indenture (Senior Subordinated Notes) dated as of March 1, 1998 among the Note Issuers, the Guarantor
and The Chase Manhattan Bank (the "Senior Subordinated Notes Trustee").
4.03 Indenture (Debentures), dated as of March 1, 1998 among the Note Issuers, the Guarantor and the Chase
Manhattan Bank (the "Debentures Trustee").
4.04 Warrant Agreement, dated as of March 12, 1998 between the Company and United States Trust Company of New
York (the "Warrant Agent").
4.05 Registration Rights Agreement, dated as of March 12, 1998 among the Note Issuers, the Guarantor and the
Notes Trustee.
*4.06 Debentures Registration Rights Agreement, dated as of March 12, 1998 among the Note Issuers, the
Guarantor and the Debentures Trustee.
4.07 Security Sharing Agreement, dated as of March 12, 1998 among the Company, the Note Issuers, The
Industrial Finance Corporation of Thailand, Thai Farmers Bank Public Company Limited, Siam City Bank
Public Company Limited, The Government Savings Bank, First Bangkok City Bank Public Company Limited,
Nakornthon Bank Public Company Limited, SCF Finance and Securities Public Company Limited, Siam City
Credit Finance and Securities Public Company Limited, First City Investment Finance Company Limited
and IFCT Finance and Securities Public Company Limited, (collectively, "the Thai Lenders"), and The
Chase Manhattan Bank as the Collateral Agent and the Trustee.
4.08 First Priority Attachment to Land Mortgage, dated as of March 12, 1998 between the Company, the Thai
Lenders and The Chase Manhattan Bank as the Deposit Bank and Collateral Agent.
4.09 Second Priority Attachment to Land Mortgage, dated as of March 12, 1998 between Nakornthai Strip Mill
Company Limited (the "Mortgagor") and the Chase Manhattan Bank as the Mortgagee and the Collateral
Agent.
4.10 Machinery Pledge Agreement dated as of March 12, 1998 between the Company (the "Pledgor"), the Thai
Lenders (the "Pledgees"), Chase Manhattan Bank as the Depository Bank and the Collateral Agent and NSM
Management Company (the "Custodian").
4.11 Conditional Assignment of Onshore Accounts dated as of March 12, 1998 between Nakornthai Strip Mill
Company Limited (the "Assignor"), the Thai Lenders and The Chase Manhattan Bank as the Trustee and the
Collateral Agent.
4.12 Pledge of Accounts dated as of March 12, 1998 between Nakornthai Strip Mill Public Company Limited (the
"Pledgor"), the Thai Lenders and Chase Manhattan Bank as the Trustee and the Pledgee.
4.13 Assignment of Insurance dated as of March 12, 1998 between the Company (the "Assignor"), the Thai
Lenders and The Chase Manhattan Bank as the Trustee and the Collateral Agent.
4.14 Assignment of Bonds dated as of March 12, 1998 between the Assignor, the Thai Lenders and The Chase
Manhattan Bank as the Trustee and the Collateral Agent.
4.15 Conditional Assignment of Project Documents dated as of March 12, 1998 between the Company (the
"Assignor"), the Thai Lenders and the Chase Manhattan Bank as the Trustee and the Collateral Agent.
4.16 Pledge of Thai Permitted Investments dated as of March 12, 1998 between the Company (the "Pledgor"), the
Thai Lenders and the Chase Manhattan Bank as the Trustee and the Pledgee.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- --------- --------------------------------------------------------------------------------------------------------
<C> <S>
4.17 Pledge of NSM Cayman Stock dated as of March 12, 1998 between Nakornthai Strip Mill Public Company
Limited (the "Shareholder") and the Chase Manhattan Bank as the Trustee and the Collateral Agent.
4.18 Pledge of NSM (Del) Stock dated as of March 12, 1998 between NSM Steel Company, Ltd. and Chase Manhattan
Bank as the Trustee and the Collateral Agent.
4.19 Notes DSR Account and Offshore Reserve Account Security Agreement dated as of March 12, 1998 among the
Company, the Note Issuers and Chase Manhattan Bank as the Trustee, Collateral Agent and Deposit Bank.
4.20 Notes Sinking Fund Account and Offshore Revenue Sub-Account Security Agreement dated as of March 12,
1998 among the Company, the Note Issuers, The Chase Manhattan Bank as Trustee, Collateral Agent and
Deposit Bank, and The Industrial Finance Corporation of Thailand (the "Facility Agent" for the Thai
Lenders).
4.21 Amendment No. 1 dated March 12, 1998 to the Credit Facilities Agreement dated September 27, 1995 between
the Company and the Thai Lenders.
*5.01 Opinion of White & Case (Thailand), Thai counsel to the Note Issuers and the Guarantor, as to the
legality of the Securities and the Guranties.
*5.02 Opinion of White & Case LLP, U.S. counsel to the Note Issuers and the Guarantor, as to the legality of
the Securities and the Guaranties.
*8.01 Opinion re U.S. taxation.
*10.01 Shareholders' Agreement dated as of March 12, 1998 among Steel Dynamics, Inc., ECT Thailand Investments,
Inc., NSM McDonald Company, N.T.S Group Public Company Limited, Kuhn Sawasdi Horrungruang and the
Company.
*10.02 Management Agreement dated as of March 12, 1998 between the Company and NSM Management Co. LLC.
10.03 Reciprocal License and Technology Sharing Agreement dated as of March [12], 1998 between Steel Dynamics,
Inc. ("SDI") and the Company
10.04 Management Advisory and Technical Assistance Agreement dated as of March [12], 1998 between SDI and NSM
Management Company.
10.05 BNP Onshore Credit Facility (Onshore Bill Discount Facility Agreement) dated as of March 12, 1998
between the Company and Banque Nationale de Paris as the Agent, the Arranger and the Bank.
10.06 BNP Offshore Credit Facility (Syndicated Offshore Bill Discount Facility Agreement) dated as of March
12, 1998 between the Company and Banque Nationale de Paris as the Agent, the Arranger and the Bank.
*10.07 Preussag Off-Take Agreement (Export Sales and Marketing Agreement) dated as of November 19, 1997 between
Preussag Handel GMBH and the Company.
*10.08 Klockner Off-Take Agreement (Export Sales and Marketing Agreement) dated as of November 19, 1997 between
Klookner Stah-und Metallhandel GMBH and the Company.
10.09 Sriracha Harbour Lease (Throughput Agreement) dated as of March 9, 1998 between Sriracha Harbour Public
Company Limited and the Company.
10.10 Coal Supply Agreement (Contract for the Sale and Purchase of Anthracite Coal) dated as of October 16,
1996 between SSM Coal B.V. and the Company.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- --------- --------------------------------------------------------------------------------------------------------
<C> <S>
10.11 Iron Ore Supply Agreement dated as of February 6, 1997 between MMTC Limited and the Company.
10.12 Hylsa Assistance Agreement dated as of June 6, 1996 between the Company and HYLSA, S.A. de C.V.
*10.13 Reubin Perin Consulting Agreement.
10.14 Employment Agreement for John Schultes dated as of March 12, 1998 between the Company and John W.
Schultes.
10.15 Employment Agreement for Sawasdi Horrungruang dated as of February 14, 1998 between the Company and
Sawasdi Horrungruang.
10.16 Employment Agreement for Chamni Janchai dated as of February 14, 1998 between the Company and Chamni
Janchai.
12.01 Statement re Computation of Ratios.
*21.01 Subsidiaries of the Guarantor.
*23.01 Consent of White & Case (Thailand) re its opinion as to the legality of the Securities and the
Guaranties (included in Exhibit 5.01 hereto).
*23.02 Consent of White & Case LLP re its opinion as to the legality of the Securities and the Guaranties
(included in Exhibit 5.02 hereto).
23.03 Consent of Peat Marwick Suthee Limited.
*23.04 Consent of Hatch Associates Ltd.
*23.05 Consent of Resource Strategies.
24.01 Powers of Attorney for the Note Issuers (See pages II-7-II-9).
*25.01 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939 of The Chase Manhattan
Bank, as Senior Notes Trustee and Senior Subordinated Notes Trustee.
</TABLE>
- ------------------------
* To be filed by amendment.
ITEM 22. UNDERTAKINGS
Each of the undersigned Registrants hereby undertakes that insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Each of the undersigned Registrants hereby undertakes (i) to respond to
requests for information that is incorporated by reference into the prospectus
pursuant to Item 4, 10(b), 11 or 13 of this Form, within one business day of
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means, and (ii) to arrange or provide for a
facility in the U.S. for the purpose of responding to such requests.
II-4
<PAGE>
Each of the undersigned Registrants hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
Each of the undersigned Registrants hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
undersigned undertake that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed to be underwriters, in addition to the
information called for by the other items of the applicable form.
Each of the undersigned Registrants hereby undertakes that every prospectus:
(i) that is filed pursuant to the immediately preceding paragraph or (ii) that
purports to meet the requirements of Section 10(a)(3) of the Act and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Each of the undersigned Registrants hereby undertakes: (1) to file, during
any period in which offers or sales are being made, a post-effective amendment
to this registration statement (i) to include any prospectus required by section
10(a)(3) of the Securities Act of 1933, (ii) to reflect in the prospectus any
facts or events arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set forth in
the registration statement, (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement; (2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; (3) to remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering; and (4) if the registrant is a
foreign private issuer, to file a post-effective amendment to the registration
statement to include any financial statements required by Section210.3-19 of
this chapter at the start of any delayed offering or throughout a continuous
offering.
Each of the undersigned Registrants undertakes that (1) for purposes of
determining liability under the Securities Act of 1933, the information omitted
from the form of prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus filed by such
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of this registration statement as of the time it was
declared effective and (2) for the purpose of determining any liability under
the Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chonburi, Thailand on June 10, 1998.
<TABLE>
<S> <C> <C>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
By: /s/ JOHN W. SCHULTES
------------------------------------------
John W. Schultes
PRESIDENT AND CHIEF
EXECUTIVE OFFICER
</TABLE>
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints and
hereby authorizes John W. Schultes and Gary Heasley, and each of them, as
attorney-in-fact, to sign on such person's behalf, individually and in each
capacity stated below, and to file any amendments, including post-effective
amendments to this registration statement.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons (who include a
majority of the Board of Directors) in the capacities indicated on June 10,
1998:
<TABLE>
<CAPTION>
NAME TITLE
- ------------------------------ --------------------------
<S> <C>
Director, President and
/s/ JOHN W. SCHULTES Chief Executive Officer
- ------------------------------ (Principal Executive
John W. Schultes Officer)
/s/ GARY HEASLEY Chief Financial Officer
- ------------------------------ (Principal Financial and
Gary Heasley Accounting Officer)
/s/ SAWASDI HORRUNGRUANG
- ------------------------------ Chairman of the Board of
Sawasdi Horrungruang Directors
/s/ CHAMNI JANCHAI
- ------------------------------ Vice Chairman of the Board
Chamni Janchai of Directors
- ------------------------------ Director
Keith Busse
/s/ DAVID STICKLER
- ------------------------------ Director
David Stickler
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
NAME TITLE
- ------------------------------ --------------------------
/s/ SUNTHORN CHAILAEMLAK
- ------------------------------ Director
Sunthorn Chailaemlak
<S> <C>
/s/ CHAN BULAKAL
- ------------------------------ Director
Chan Bulakal
- ------------------------------ Director
Kevin McConville
- ------------------------------ Director
Reuben Perin
- ------------------------------ Director
Anutin Charnvirakul
/s/ PATTAMA HORRUNGRUANG
- ------------------------------ Director
Pattama Horrungruang
/s/ CHATCHAI SOMSIRI
- ------------------------------ Director
Chatchai Somsiri
/s/ RAVEEWAN PEYAYOPANAKUL
- ------------------------------ Director
Raveewan Peyayopanakul
/s/ AMONRAT LEEVARAPAKU
- ------------------------------ Director
Amonrat Leevarapaku
- ------------------------------ Director
Sandeep Alva
</TABLE>
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chonburi, Thailand on June 10, 1998.
<TABLE>
<S> <C> <C>
NSM STEEL (DELAWARE), INC.
By: /s/ JOHN SCHULTES
-----------------------------------------
John Schultes
PRESIDENT
</TABLE>
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints and
hereby authorizes John Schultes and Sawasdi Horrungruang, and each of them, as
attorney-in-fact, to sign on such person's behalf, individually and in each
capacity stated below, and to file any amendments, including post-effective
amendments to this registration statement.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on June 10, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------
<S> <C>
/s/ JOHN SCHULTES President
- ------------------------------ (Principal Executive
John Schultes Officer)
Vice President and Chief
/s/ SAWASDI HORRUNGRUANG Financial Officer
- ------------------------------ (Principal Financial and
Sawasdi Horrungruang Accounting Officer)
</TABLE>
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Chonburi, Thailand on June 10, 1998.
<TABLE>
<S> <C> <C>
NSM STEEL COMPANY, LTD.
By: /s/ SAWASDI HORRUNGRUANG
-----------------------------------------
Sawasdi Horrungruang
PRESIDENT
</TABLE>
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints and
hereby authorizes Sawasdi Horrungruang, John Schultes and Chamni Janchai, and
each of them, as attorney-in-fact, to sign on such person's behalf, individually
and in each capacity stated below, and to file any amendments, including post-
effective amendments to this registration statement.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on June 10, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------
<S> <C>
/s/ SAWASDI HORRUNGRUANG President
- ------------------------------ (Principal Executive
Sawasdi Horrungruang Officer)
Vice President and Chief
/s/ JOHN SCHULTES Financial Officer
- ------------------------------ (Principal Financial and
John Schultes Accounting Officer)
/s/ CHAMNI JANCHAI
- ------------------------------ Director
Chamni Janchai
</TABLE>
II-9
<PAGE>
Exhibit 1.01
EXECUTION COPY
NSM STEEL (DELAWARE), INC.
NSM STEEL COMPANY, LTD.
$225,594,000 (Gross Proceeds) 12% Senior Mortgage Notes Due 2006
$175,010,000 (Gross Proceeds) Representing 203,500 Units
Consisting of
12 1/4% Senior Subordinated Mortgage Notes Due 2008
with
Warrants to Purchase 128,834,356 Ordinary Shares of
Nakornthai Strip Mill Public Company Limited
PURCHASE AGREEMENT
March 2, 1998
NATWEST CAPITAL MARKETS LIMITED
MCDONALD & COMPANY SECURITIES, INC.
PAINEWEBBER INCORPORATED
ECT SECURITIES CORP.
c/o Gleacher NatWest Inc.
660 Madison Avenue
New York, N.Y. 10021
Dear Sirs:
1. Introductory. NSM Steel (Delaware) Inc. ("NSM(Del)") and NSM Steel
Company, Ltd. ("NSM Cayman" and, together with NSM (Del), the "Note Issuers"),
propose, subject to the terms and conditions stated herein, to issue and sell to
the several initial purchasers named in Schedule A hereto (the "Purchasers") (i)
$249,000,000 aggregate principal amount at maturity of 12% Senior Mortgage Notes
Due 2006 (the "Senior Notes") and (ii) $175,010,000 (Gross Proceeds)
representing 203,500 Units (the "Units"), each consisting of a $1,000 principal
amount at maturity 12 1/4% Senior Subordinated Mortgage Note Due 2008
(collectively, the "Senior Subordinated Notes") with 633.09266 warrants
(collectively, the "Warrants") each to purchase one ordinary shares, par value
10 Baht per share (collectively, "Ordinary Shares"), of Nakornthai Strip Mill
Public Company Limited (the "Company" and, together with the Note Issuers, the
"Issuers"). The Senior Notes and the Senior Subordinated Notes are collectively
referred to herein as the "Offered Notes", and the Offered Notes, the Units and
the Warrants are collectively referred to herein as the "Offered Securities". In
connection with, and concurrently with the consummation of, the issuance and
sale of the Offered Securities, the Issuers propose to
<PAGE>
consummate (i) a private placement consisting of U.S. $53,133,016 aggregate
principal amount at maturity of 12 3/4% Subordinated Second Mortgage Debentures
Due 2009 (the "Debentures") and (ii) private placements of 158,639,864 Ordinary
Shares (the "Private Shares") in the aggregate. Capitalized terms used but not
defined herein have the respective meanings specified therefor in the Offering
Document (as defined below)).
The Senior Notes will be irrevocably and unconditionally guaranteed (the
"Senior Guaranty") as to principal, premium, interest and Additional Amounts (as
defined in the Indentures (as defined below), if any, by the Company. The Senior
Subordinated Notes will be irrevocably and unconditionally guaranteed (the
"Senior Subordinated Guaranty" and, together with the Senior Guaranty, the
"Guaranties") as to principal, premium, interest and Additional Amounts, if any,
by the Company. The Senior Notes will be issued under an indenture dated as of
March 1, 1998 (the "Senior Note Indenture"), among the Note Issuers, the Company
and The Chase Manhattan Bank ("Chase"), as trustee (the "Senior Notes Trustee").
The Senior Subordinated Notes will be issued pursuant to an indenture, to be
dated as of March 1, 1998 (the "Senior Subordinated Note Indenture" and,
together with the Senior Note Indenture, the "Indentures"), among the Issuers
and Chase, as trustee (the "Senior Subordinated Notes Trustee" and, together
with the Senior Notes Trustee, the "Trustees"). The Warrants will be issued
under a warrant agreement dated as of March 12, 1998 (the "Warrant Agreement"),
between the Company and American Stock Transfer & Trust Company, as warrant
agent (the "Warrant Agent"). The United States Securities Act of 1933 is herein
referred to as the "Securities Act".
To secure their respective obligations under the Offered Notes, the
Guaranties and the Security Documents (as defined in the Offering Document), on
the date of original issue of the Offered Securities (the "Closing Date"): (i)
NSM Cayman will charge to the Trustees (as defined) all its right, title and
interest in all the shares of capital stock of NSM (Del) ("Pledged NSM (Del)
Stock"); (ii) the Company will pledge and assign to Chase, as collateral agent
(in such capacity, the "Collateral Agent") all its right, title and interest in
the share capital of NSM Cayman ("Pledged NSM Cayman Stock" and, together with
the Pledged NSM (Del) Stock, the "Pledged NSM Stock"); (iii) the Company will
grant a mortgage in the land and buildings comprising the Mill, except the
Co-Gen Facility; (iv) the Company will grant a security interest in the proceeds
in the Offshore Reserve Account and the Notes DSR Account; (v) the Company will
grant a pledge in all machinery and equipment located at the Mill, and later,
for Registrable Machinery, converted to a machinery mortgage; (vi) the Company
will grant an assignment and/or designation as co-beneficiary of insurance
policies covering the Mill and an assignment of all reinsurance (the "Insurance
Proceeds"); (vii) the Company will grant a conditional assignment in the rights
and benefits under the Project Documents; (ix) the Company will grant a
conditional assignment and pledge of the Operating Account, Revenue Account
(including without limitation the Offshore Sub-account) and Notes Sinking Fund
Account upon the terms set forth in a pledge of accounts agreement of even date
herewith (the "Pledge of Accounts Agreement"), between the Company and the
Collateral Agent; (x) the Company will grant a pledge of Permitted Investments;
and (xi) the Company will grant an assignment of the Performance Bonds (the
collateral described in clauses (iii)-(xi) above being herein referred to as the
"Closing Date Collateral").
The respective rights in the Closing Date Collateral of the holders of the
Offered Notes the holders of the Debentures and the Thai lenders under the Bank
Credit Facility, will be governed by the terms of a Security Sharing Agreement
dated as of March 12, 1998 (the "Security Sharing Agreement"), among the
Collateral Agent; the Book-Entry Depositary; the Company; the Industrial Finance
Corporation of Thailand, Thai Farmers Bank Public Company Limited, Siam City
Bank Public Company Limited, The Government Savings Bank, First Bangkok City
Bank Public Company Limited, Nakornthon Bank Public Company Limited, SCF Finance
and Securities Public Company Limited, Siam City Credit Finance and Securities
Public Company Limited, IFCT Finance and Securities Public Company Limited and
First City Investment
<PAGE>
3
Finance and Securities Public Company Limited (collectively, the "Thai
Lenders"); and the holders of the Debentures.
The Issuers hereby agree, jointly and severally, with the several
Purchasers as follows:
2. Representations and Warranties of the Issuers. The Issuers represent
and warrant to, and agree with, jointly and severally, the several Purchasers
that:
(a) A preliminary offering circular, a supplement to the preliminary
offering circular and an offering circular relating to the Offered
Securities to be offered by the Purchasers have been prepared by the
Issuers. Such preliminary offering circular, supplemental offering
circular and offering circular, as supplemented as of the date of this
Agreement, together with any other document approved by the Issuers for
use in connection with the contemplated resale of the Offered Securities
are hereinafter collectively referred to as the "Offering Document". On
the date of this Agreement, the Offering Document does not include any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The preceding
sentence does not apply to statements in or omissions from the Offering
Document based upon written information furnished to the Issuers by any
Purchaser through NatWest Capital Markets Limited ("NatWest") specifically
for use therein, it being expressly understood and agreed that the only
such information is that described as such in Section 7(b) hereto.
(b) Each of the Issuers has been duly incorporated and is a validly
existing corporation, in the case of NSM Cayman and NSM (Del), in good
standing under the laws of its jurisdiction of incorporation, and in the
case of the Company, with perpetual corporate existence under the laws of
Thailand, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Offering Document;
and each of the Issuers is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions in which its
ownership or lease of property or the conduct of its business requires
such qualification, except where a failure to be so qualified would not
individually or in the aggregate, have a material adverse effect on (i)
the ability of the Note Issuers or the Company to perform its obligations
under the Indentures, the Registration Rights Agreement, the Offered
Securities, this Agreement, the Note Depositary Agreement, the Warrant
Agreement, the Security Sharing Agreement, the Pledge of Accounts
Agreement or the other Security Documents (collectively, the "Transaction
Documents"), or (ii) the general affairs, management, business, financial
condition, prospects or results of operations of the Mill or the Issuers
(in either of the cases described in clauses (i) and (ii), a "Material
Adverse Effect").
(c) All of the outstanding shares of capital stock of the Issuers
have been duly authorized and validly issued and are fully paid (other
than shares of the Company newly issued, and expected to be paid for, on
the Closing Date), nonassessable and not subject to any preemptive or
similar rights granted by the Company and conform in all material respects
to the description thereof contained in the Offering Memorandum.
(d) Except for the Warrants, there are no, and as of the Closing
Date there will
<PAGE>
4
be no, outstanding securities or obligations (together, "Convertible
Securities") of the Company or any of its subsidiaries convertible into or
exchangeable for any capital stock of the Company or any of its
subsidiaries, nor rights, warrants or options (collectively, "Rights") to
subscribe for or purchase from the Company or any of its subsidiaries any
such capital stock or any such Convertible Securities or obligations, nor
obligations of the Company or any of its subsidiaries to issue Convertible
Securities or Rights.
(e) Each of the Indentures (including the Guaranties) and the
Security Documents has been duly authorized; the Offered Notes, the
Exchange Securities (as defined in the registration rights agreement of
even date herewith among the Issuers and the Purchasers (the "Registration
Rights Agreement")), the Registration Rights Agreement and the Debentures
have been duly authorized; and, in the case of the Offered Notes, when
delivered and paid for pursuant to this Agreement on the Closing Date, or,
in the case of the Exchange Securities, when issued in exchange for the
Offered Notes pursuant to the terms of the Registration Rights Agreement
and the Indentures, each of the Indentures (including the Guaranties), the
Registration Rights Agreement and the Security Documents will have been
duly executed and delivered and will conform in all material respects to
the description thereof contained in the Offering Document, such Offered
Notes and Exchange Securities will have been duly executed, authenticated,
issued and delivered and will conform in all material respects to the
description thereof contained in the Offering Document, and each of the
Indentures (including the Guaranties), the Registration Rights Agreement
and the Security Documents, and such Offered Notes and Exchange Securities
will constitute valid and legally binding obligations of the Issuers, as
the case may be, enforceable in accordance with their terms, except as (x)
the enforceability thereof may be limited by bankruptcy, reorganization,
insolvency, fraudulent conveyance or similar laws affecting creditors'
rights generally and the defenses of set-off or counterclaim, and (y)
rights of acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability and (2) the
validity and enforceability of any term of subordination of the Senior
Subordinated Note Indenture. The Security Documents conform in all
material respects to the description thereof contained in the Offering
Document. On the Closing Date, upon the execution and delivery of the
Security Sharing Agreement and upon delivery to the Collateral Agent of
certificates evidencing the Pledged NSM Stock, the Security Sharing
Agreement and the other Security Documents will subject to the
registration of the mortgages of land, buildings and Registrable
Machinery, create valid, first priority perfected security interests in
the Pledged NSM Stock and the Closing Date Collateral securing the Offered
Notes and the Guaranties in accordance with the terms thereof and the
Pledged NSM Stock and the Closing Date Collateral will be free and clear
of all liens, except those liens created by or pursuant to the Security
Documents or as otherwise contemplated by the Security Sharing Agreement.
The Pledged NSM Stock and the Closing Date Collateral for the Offered
Notes and the Guaranties consist of all the real and personal property of
the Issuers.
(f) The Note Issuers have full power and authority to authorize,
issue and sell the Debentures pursuant to the purchase agreement therefor
(the "Debentures Agreement") and the Company has full power and authority
to authorize, issue and sell the Private Shares pursuant to the
subscription agreements therefor (the "Subscription Agreements"). Each of
the Debentures Agreement and the Subscription Agreements has been duly
<PAGE>
5
authorized by the Issuers party thereto and when duly executed and
delivered by the Issuers (assuming due authorization, execution and
delivery by the counterparties thereto), will be a valid and legally
binding obligation of the applicable Issuers, enforceable against such
Issuers in accordance with its terms, except as (x) the enforceability
thereof may be limited by bankruptcy, reorganization, insolvency,
fraudulent conveyance or similar laws affecting creditors' rights
generally and (y) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability
and (z) rights to indemnity and contribution thereunder may be limited by
the federal securities laws of the United States of the securities laws of
any State thereof or the policy underlying such laws.
(g) The Note Depositary Agreement (as described in the Offering
Document) has been duly authorized by the Issuers and when duly executed
and delivered by the Issuers (assuming due authorization, execution and
delivery by the Book-Entry Depositary), will be a valid and legally
binding obligation of the Issuers, enforceable against the Issuers in
accordance with its terms, except as (x) enforceability thereof may be
limited by bankruptcy, reorganization, insolvency, fraudulent conveyance
or similar laws affecting creditors' rights generally and the defenses of
set-off or counterclaim, and (y) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles
of general applicability. With respect to the foregoing, the Issuers make
no representation or warranty with respect to the indemnification
provisions contained in the Note Depositary Agreement to the extent they
are deemed by a court of law to be contrary to public policy.
(h) The Warrant Agreement has been duly authorized by the Company;
the Warrants have been duly authorized by the Company; and when the
Warrants are delivered and paid for pursuant to this Agreement on the
Closing Date, the Warrant Agreement will have been duly executed and
delivered by the Company, such Warrants and the Warrant Agreement will
conform in all material respects to the description thereof contained in
the Offering Document and the Warrant Agreement and the Warrants will
constitute valid and legally binding obligations of the Company,
enforceable in accordance with their terms, except as (x) the
enforceability thereof may be limited by bankruptcy, reorganization,
insolvency, fraudulent conveyance or similar laws affecting creditors'
rights generally, (y) rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of general
applicability and (z) rights to indemnity and contribution thereunder may
be limited by the federal securities laws of the United States or the
securities laws of any State thereof or the public policy underlying such
laws.
(i) The Company has full power and authority to execute, deliver and
perform its obligations under the Management Agreement, the Shareholders
Agreement, the SDI Agreement, the Agency Agreement, the SDI License
Agreement, the Off-Take Agreements, the Sriarcha Harbor Agreement, the New
Employment Agreement, the Working Capital Credit Facility, the Coal Supply
Agreement and the Iron Ore Fines Supply Agreement (each as described in
the Offering Document and collectively, the "Project Documents"). Each of
the Project Documents has been duly authorized by the Company and when
duly executed and delivered by the Company (assuming due authorization,
execution and delivery by the counterparties thereto), will be a valid and
<PAGE>
6
legally binding obligation of the Company, enforceable against the Company
in accordance with its terms, except as (x) the enforceability thereof may
be limited by bankruptcy, reorganization, insolvency, fraudulent
conveyance or similar laws affecting creditors' rights generally and the
defense of set-off or counterclaim and (y) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles
of general applicability. The statements in the Offering Document insofar
as they describe the provisions of the Project Documents constitute fair
summaries thereof, accurate in all material respects.
(j) The Warrants are convertible into the underlying Ordinary Shares
in accordance with their terms; such underlying shares initially issuable
upon exercise of such Warrants have been duly authorized and reserved for
issuance upon such exercise and, when issued upon such exercise, will be
validly issued, fully paid and nonassessable and conform in all material
respects to the description thereof contained in the Offering Document;
the Private Shares have been duly authorized and, when issued on the
Closing Date, will be validly issued, fully paid and nonassessable and
conform in all material respects to the description thereof contained in
the Offering Document; and the stockholders of the Company have no
preemptive or similar rights with respect to the Warrants, the underlying
Ordinary Shares or the Private Shares.
(k) The Pledge of Accounts Agreement has been duly authorized by the
Company and when duly executed and delivered by the Company, will be a
valid and legally binding obligation of the Company, enforceable against
the Company in accordance with its terms, except as (x) the enforceability
thereof may be limited by bankruptcy, reorganization, insolvency,
fraudulent conveyance or similar laws affecting creditors' rights
generally and (y) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability.
(l) Assuming the accuracy of the representations and warranties of
the Purchasers contained in Section 4, no consent, approval,
authorization, permission, or order of, or filing with, any governmental
agency or body or any court is required for the consummation of the
transactions contemplated by this Agreement in connection with the
issuance and sale of the Offered Securities by the Issuers and the
issuance of the Guaranties by the Company, or for the execution, delivery
and performance of any of the Indentures, the Security Documents
(including the exercise by the Collateral Agent of the rights and remedies
granted to it under any of the Security Documents), the Warrant Agreement,
the Security Sharing Agreement, this Agreement, the Registration Rights
Agreement, the Debentures Agreement, the Subscription Agreements or the
Project Documents except such as may be required under state securities
laws and except for such filings with the Securities and Exchange
Commission (the "Commission") as are required in connection with the
Registration Rights Agreement, and except for the filing and registration
of the mortgage of land and buildings comprising the Mill and the filing
and registration of the mortgage of Registrable Machinery (as defined in
the Offering Document) with the local Land Office in Thailand and except
for the exchange control approval from the authorized agent of the Bank of
Thailand with respect to the purchase and remittance of foreign currency
out of Thailand and except for those the failure of which to obtain would
not, individually or in the aggregate, have a Material Adverse
<PAGE>
7
Effect nor have a material adverse effect on the ability of the Note
Issuers or the Company to perform its obligations under the Debentures
Agreement, the Subscription Agreements or the Project Documents.
(m) Each of this Agreement and the Registration Rights Agreement has
been duly authorized, executed and delivered by the Issuers, and is
enforceable in accordance with its terms, except (x) the enforceability
thereof may be limited by bankruptcy, reorganization, insolvency,
fraudulent conveyance or similar laws affecting creditors' rights
generally, (y) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability
and (z) rights to indemnity and contribution thereunder may be limited by
the federal securities laws of the United States or the securities laws of
any State thereof or the public policy underlying such laws.
(n) The execution, delivery and performance of the Indentures
(including the Guaranties), the Warrant Agreement, the Security Sharing
Agreement, this Agreement, the Registration Rights Agreement, the Pledge
of Accounts Agreement, the other Security Documents, the Debentures
Agreement, the Subscription Agreements and the Project Documents and the
issuance and sale of the Offered Securities, the Debentures and the
Private Shares and compliance with the terms and provisions of each of the
foregoing will not result in a breach or violation of any of the terms and
provisions of, or constitute a default under, (i) assuming compliance with
all applicable securities or "blue sky" laws of the United States or any
state thereof and assuming the accuracy of the representations and
warranties of the Purchasers in Section 4, any statute, rule, regulation
or order of any governmental agency or body or any court, domestic or
foreign, having jurisdiction over the Issuers or any of their respective
properties, (ii) assuming execution and delivery of the Thai Lenders of
the CFA Amendment and the release of the liens in connection therewith,
any agreement or instrument to which any of the Issuers is a party or by
which any of the Issuers is bound or to which any of the properties of the
Issuers is subject, except such breaches, violations, or defaults that
would not reasonably be expected to result in, individually or in the
aggregate, a Material Adverse Effect or (iii) the charter, bylaws or
memorandum and articles of association of the Issuers; and each of the
Issuers has full power and authority to authorize, issue and sell the
Offered Securities, and the Company has full power and authority to
authorize and issue the Guaranties, as contemplated by this Agreement and
the Offering Document.
(o) No material amounts of withholding tax imposed under the laws of
Thailand or the Cayman Islands will be payable in respect of the issuance
and sale to the Purchasers of the Offered Securities as contemplated by
this Agreement, including the payment or crediting of any discount,
commission or fee to any Purchaser, or the resale of the Offered
Securities by the Purchasers to U.S. residents; except that interest
payments under the Notes paid from or in Thailand may be subject to
withholding tax at the rate of 15%, in which case the Company will pay
Additional Amounts as may be necessary so that every net payment of the
principal of and interest on the Notes paid to the holder thereof will not
be less than the amount provided for in such Notes to be then due and
payable. The provisions in relation to the obligation of the Company to
pay Additional Amounts in respect of withholding tax are valid and
enforceable under Thai law.
<PAGE>
8
(p) No stamp duty, registration or documentary taxes, duties or
similar charges are payable under the laws of Thailand or the Cayman
Islands in connection with the creation, issuance, sale and delivery to
the Purchasers of the Offered Securities or the authorization, execution
and delivery of the Transaction Documents, the Debentures Agreement, the
Subscription Agreements or the Project Documents to which the Issuers are
a party or the resale of the Offered Securities by the Purchasers to U.S.
residents, except (i) for the transfer of Warrants, if the instrument of
transfer is executed in Thailand, (ii) the Transaction Documents, if they
are executed in, or after execution brought within, the jurisdiction of
the Cayman Islands and (iii) the Management Agreements, under which fees
payable will be subject to stamp duty in Thailand at the rate of 0.1%.
(q) All security interests (including security interests of the Thai
Lenders) in the Closing Date Collateral, other than those created pursuant
to the Security Documents or contemplated by the Security Sharing
Agreement, will have been terminated and released on or prior to the
Closing Date except where the failure to so terminate or release does not
affect the validity of the Security Documents or the practical realization
of the rights and benefits intended to be afforded thereby.
(r) At the Closing Date, each of the Issuers will have good and
marketable title to all properties and assets described in the Offering
Document as owned by them, in each case free from liens, encumbrances and
defects (other than such liens, encumbrances and defects created under the
Security Documents or contemplated by the Security Sharing Agreement) that
would affect the value thereof or interfere with the use made or to be
made thereof by them, except as described in the Offering Document or to
the extent the failure to have such title or the existence of such liens,
charges, encumbrances or defaults would not, individually or in the
aggregate, have a Material Adverse Effect.
(s) Each of the Issuers possesses (or, if not currently required to
possess, has submitted applications for) all adequate certificates,
authorities or permits issued by appropriate governmental agencies or
bodies necessary to conduct the business now operated, or contemplated in
the Offering Document to be operated, by them and has not received any
notice of proceedings relating to the revocation or modification of any
such certificate, authority or permit, except for those the failure of
which to obtain would not individually or in the aggregate, have a
Material Adverse Effect.
(t) Except as would not, individually or in the aggregate, have a
Material Adverse Effect, none of the Issuers is in violation of any
statute, rule, regulation, decision or order of any governmental agency or
body or any court, domestic or foreign, relating to the use, disposal or
release of hazardous or toxic substances or relating to the protection or
restoration of the environment or human exposure to hazardous or toxic
substances (collectively, "environmental laws"), owns or operates any real
property contaminated with any substance that is subject to any
environmental laws, is liable for any off-site disposal or contamination
pursuant to any environmental laws, or is subject to any claim relating to
any environmental laws; and neither the Note Issuers nor the Company are
aware of any pending investigation which might lead to such a claim.
<PAGE>
9
(u) Except as disclosed in the Offering Document, there are no
pending actions, suits or proceedings against or affecting the Issuers or
any of their respective properties that, if determined adversely to the
Issuers, would, individually or in the aggregate, have a Material Adverse
Effect, or would materially and adversely affect the ability of the
Issuers to perform their respective obligations under the Debentures
Agreement, the Subscription Agreements or the Project Documents, or which
are otherwise material in the context of the sale of the Offered
Securities, the Debentures or the Private Shares; and no such actions,
suits or proceedings are threatened or, to the Issuers' knowledge,
contemplated.
(v) The assumptions used in preparing, and the estimates disclosed
in, the forecasted financial information in the Offering Document under
the caption "Certain Financial Projection Information" have been properly
compiled on the bases described therein and are based on good faith
estimates and assumptions believed by the Issuers to be reasonable as of
the date hereof, it being recognized that such financial projections as to
future events are not to be viewed as facts and that actual results during
the period or periods covered by any such projections may vary from the
projected results and such variations may be material.
(w) There has occurred no development or event involving a
prospective material adverse change in the condition (financial or other),
business, properties or results of operations of the Mill or the Issuers
taken as a whole from that set forth in the Offering Document, and there
has been no dividend or distribution of any kind declared, paid or made by
the Issuers on any class of their respective capital stock.
(x) None of the Issuers is an open-end investment company, unit
investment trust or face-amount certificate company that is or is required
to be registered under Section 8 of the United States Investment Company
Act of 1940 (the "Investment Company Act"), nor are any of them a
closed-end investment company required to be registered, but not
registered, thereunder; and none of the Issuers is and, after giving
effect to the offering and sale of the Offered Securities and the
application of the proceeds thereof as described in the Offering Document,
will be, an "investment company" as defined in the Investment Company Act.
(y) No securities of the same class (within the meaning of Rule
144A(d)(3) under the Securities Act) as the Offered Securities are listed
on any national securities exchange registered under Section 6 of the
Exchange Act, or quoted in a U.S. automated inter-dealer quotation system.
(z) Assuming the accuracy of the representations and warranties of
the Purchasers in Section 4, the offer and sale of the Offered Securities
in the manner contemplated by this Agreement will be exempt from the
registration requirements of the Securities Act; and prior to the
effectiveness of a registration statement as contemplated in the
Registration Rights Agreement, it is not necessary to qualify an indenture
in respect of the Offered Notes under the United States Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act").
(aa) Assuming the accuracy of the representations and warranties of
the
<PAGE>
10
Purchasers in Section 4, neither the Issuers nor any of their affiliates,
nor any person acting on their behalf (i) has, within the six-month period
prior to the date hereof, offered or sold in the United States or to any
U.S. person (as such terms are defined in Regulation S under the
Securities Act) the Offered Securities or any security of the same class
or series as the Offered Securities or (ii) has offered or will offer or
sell the Offered Securities (A) in the United States by means of any form
of general solicitation or general advertising within the meaning of Rule
502(c) under the Securities Act or (B) with respect to any such securities
sold in reliance on Rule 903 of Regulation S ("Regulation S") under the
Securities Act, by means of any directed selling efforts within the
meaning of Rule 902(b) of Regulation S. Assuming the accuracy of the
representations and warranties of the Purchasers in Section 4, the
Issuers, their affiliates and any person acting on their behalf have
complied and will comply with the offering restrictions requirement of
Regulation S. The Issuers have not entered and will not enter into any
contractual arrangement with respect to the distribution of the Offered
Securities except for this Agreement and the Registration Rights
Agreement.
(bb) The proceeds to the Note Issuers from the offering of the
Offered Securities, the Debentures and the Private Shares will be used as
described in the Offering Document.
(cc) Peat Marwick Suthee Limited ("KPMG"), a member firm of KPMG
Peat Marwick, are independent certified public accountants with respect to
the Company as required by the Securities Act and the Rules and
Regulations. The historical financial statements (including the related
notes and supporting schedules) contained in the Offering Document comply
in all material respects with the applicable requirements under the
Securities Act and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"); such financial statements have been prepared in
accordance with generally accepted accounting principles in Thailand
("Thailand GAAP") consistently applied throughout the periods covered
thereby and fairly present the financial position of the entities
purported to be covered thereby at the respective dates indicated and the
results of their operations and their cash flows for the respective
periods indicated; and the financial information contained in the Offering
Document under the headings "Summary--Summary Financial and Pro Forma
Information," "Capitalization," "Selected Financial Data," "Management's
Discussion and Analysis of Financial Conditions" and
"Management--Compensation of Directors and Executive Officers" are derived
from the accounting records of the Company and fairly present the
information purported to be shown thereby. The historical financial and
statistical information and data included in the Offering Document are, in
all material respects, fairly presented. Notes 20 and 21 of the historical
financial statements included in the Offering Document present fairly all
adjustments necessary to reconcile the financial statements to United
States generally accepted accounting principles ("US GAAP") and include
and present fairly all other material disclosures required by US GAAP.
(dd) The Issuers maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with Thai GAAP and US
GAAP and
<PAGE>
11
to maintain asset accountability; (iii) access to assets is permitted only
in accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(ee) The Company maintains, or will obtain pursuant to the
provisions of the Security Documents, with reputable insurance companies,
insurance on the Closing Date Collateral and substantially all of its
other insurable property, in such amounts and against such risks as is
normally carried by corporations engaged in the same or similar businesses
in the Kingdom of Thailand as the Company. All such policies are only
subject to deductibles and exclusions which are typical for similarly
situated companies. The Company has not received notice from any insurer
or agent of such insurer that capital improvements or other expenditures
are required or necessary to be made in order to continue such insurance.
(ff) The Company owns or possesses adequate rights to use all
material patents, patent applications, trademarks, service marks, trade
names, trademark registrations, service mark registrations, copyrights,
licenses and know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures) necessary to carry on its business as presently conducted,
except where the failure to own or possess the same would not,
individually or in the aggregate, have a Material Adverse Effect, and the
Company has not received any notice of infringement of or conflict with
asserted rights of others with respect to the foregoing which, singly or
in the aggregate, if the subject of any unfavorable decision, ruling or
finding, have a Material Adverse Effect.
(gg) No labor disturbance by or dispute with the employees of the
Company exists or, to the best knowledge of the Company, is contemplated
or threatened that, individually or in the aggregate, would have a
Material Adverse Effect.
(hh) On and immediately after the Closing Date, the Company (after
giving effect to the issuance of the Offered Securities and to the other
transactions related thereto as described in the Offering Document) will
be Solvent. As used in this paragraph, the term "Solvent" means, with
respect to a particular date, that on such date (i) the Company is able to
realize upon its assets and pay its debts and other liabilities,
contingent obligations and commitments as they mature and become due in
the normal course of business, and (ii) assuming the sale of the Offered
Securities as contemplated by this Agreement and the Offering Document,
the Company is not incurring debts or liabilities beyond its ability to
pay as such debts and liabilities mature. In computing the amount of such
contingent liabilities at any time, it is intended that such liabilities
will be computed at the amount that, in the light of all the facts and
circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
(ii) The Company does not do business with the government of Cuba or
with any person or affiliate located in Cuba within the meaning of Florida
Statutes Section 517.075.
(jj) No forward-looking statement (within the meaning of Section 27A
of the
<PAGE>
12
Securities Act and Section 21E of the Exchange Act) contained in the
Offering Document has been made or reaffirmed without a reasonable basis
or has been disclosed other than in good faith.
(kk) Neither the Company nor any of its subsidiaries owns any
"margin securities" as that term is defined in Regulations G and U of the
Board of Governors of the Federal Reserve System (the "Federal Reserve
Board"), and none of the proceeds of the sale of the Offered Securities
will be used, directly or indirectly, for the purpose of purchasing or
carrying any margin security, for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or carry any margin
security or for any other purpose which might cause any of the Securities
to be considered a "purpose credit" within the meanings of Regulation G,
T, U or X of the Federal Reserve Board.
(ll) Since the date as of which information is given in the Offering
Document, except as otherwise stated therein, (i) there has been no
material adverse change or any development involving a prospective
material adverse change in the financial condition or in the earnings,
business affairs, management or business prospects of the Company or any
of its subsidiaries, whether or not arising in the ordinary course of
business, (ii) neither the Company nor any of its subsidiaries has
incurred any material liability or obligation, direct or contingent, other
than in the ordinary course of business or in relation to a transaction
between the Company and the Note Issuers, (iii) neither the Company nor
any of its subsidiaries has entered into any material transaction other
than in the ordinary course of business or in relation to a transaction
between the Company and the Note Issuers and (iv) there has not been any
change in the capital stock or long-term debt of the Company or any of its
subsidiaries, or any dividend or distribution of any kind declared, paid
or made by the Company on any class of its capital stock.
(mm) The Company and each of the Note Issuers has the power to
submit, and pursuant to this Agreement and the Indentures, has legally,
validly, effectively and irrevocably submitted to the jurisdiction of any
U.S. Federal or state court in the Borough of Manhattan in The City of New
York, New York, and has the power to designate, appoint and empower and,
pursuant to this Agreement and the Indentures has, or in the case of the
Indentures will have, legally, validly, effectively and irrevocably
designated, appointed and empowered, an agent for service of process in
any suit or proceeding based on or arising under this Agreement or the
Indentures in any U.S. Federal or state court in the Borough of Manhattan
in The City of New York, as provided in Section 15 hereof and in the
Indentures; provided, however, that, in Thailand, no statutory law or
judicial precedent is directly applicable in respect of the submission to
the jurisdiction of a court of any authority outside Thailand, and the
validity and binding effect of such submission by the Company to the
jurisdiction of a foreign court and the waiver to objections to forum is
therefore uncertain.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the (i) Note Issuers agree to sell to the
Purchasers, and the Purchasers agree, severally and not jointly, to purchase
from the Note Issuers, at a purchase price of 90.60% of the principal amount at
maturity thereof plus accrued interest and any increase in Accreted Value (if
any)
<PAGE>
13
thereon from March 12, 1998, to the Closing Date, the respective principal
amounts of Senior Notes set forth opposite the names of the several Purchasers
in Schedule A hereto and (ii) the Issuers agree to sell to the Purchasers, and
the Purchasers agree, severally and not jointly, to purchase from the Issuers,
at a purchase price of $860 per Unit plus accrued interest and any increase in
Accreted Value (if any) thereon from March 12, 1998, to the Closing Date, the
respective number of Units set forth opposite the names of the several
Purchasers in Schedule A hereto.
The Issuers will deliver against payment of the purchase price the Offered
Securities in the form of one or more registered global securities in global
form (the "Global Securities") deposited with The Chase Manhattan Bank as
Book-Entry Depositary pursuant to the terms of the Note Depository Agreement,
and registered in the name of the Book-Entry Depositary, or its nominee. The
Book-Entry Depositary will issue one or more certificateless depositary
interests to the Depositary Trust Company ("DTC"). Upon confirmation by DTC that
the Book-Entry Depositary has custody of the Global Securities and upon
acceptance by DTC of the certificateless depositary interest pursuant to the
applicable Letter of Representations, DTC will record beneficial interests in
the Global Securities. Beneficial interests in the Offered Securities will be
shown on, and transfers thereof will be affected only through, records
maintained in book-entry form by DTC and its participants, including, as
applicable, Morgan Guaranty Trust Company of New York, Brussels office, as
operator of the Eurodollar System and Cedel Bank, societe anonyme. Payment for
the Offered Securities shall be made by the Purchasers in Federal (same day)
funds by wire transfer to an account previously designated to NatWest by the
Note Issuers at a bank acceptable to NatWest, at the office of Cravath, Swaine &
Moore, Worldwide Plaza, 825 Eighth Avenue, New York, New York 10019-7475 at
10:00 A.M. (New York time), on March 12, 1998, or at such other time not later
than seven full business days thereafter as NatWest and the Note Issuers may
agree, such time being herein referred to as the "Closing Date", against
delivery to the Trustee as custodian for the Book-Entry Depositary of the Global
Securities representing all the Offered Securities. The Global Securities will
be made available for checking at the above office of Cravath, Swaine & Moore or
at such other location as NatWest and the Issuers shall agree at least 24 hours
prior to the Closing Date.
4. Representations by Purchasers; Resale by Purchasers.
(a) Each Purchaser severally represents and warrants to the Issuers
that it is an "accredited investor" within the meaning of Regulation D
under the Securities Act.
(b) Each Purchaser severally acknowledges that the Offered
Securities have not been registered under the Securities Act and may not
be offered or sold within the United States or to, or for the account or
benefit of, U.S. persons except in accordance with Regulation S or
pursuant to an exemption from the registration requirements of the
Securities Act. Each Purchaser severally represents and agrees that it has
offered and sold the Offered Securities, and will offer and sell the
Offered Securities (i) as part of its distribution at any time and (ii)
otherwise until 40 days after the later of the commencement of the
offering and the Closing Date, only in accordance with Rule 903 or Rule
144A under the Securities Act ("Rule 144A"). Accordingly, neither such
Purchaser nor its affiliates, nor any persons acting on its or their
behalf, have engaged or will engage in any directed selling efforts with
respect to the Offered Securities, and such Purchaser,
<PAGE>
14
its affiliates and all persons acting on its or their behalf have complied
and will comply with the offering restrictions requirement of Regulation
S. Each Purchaser severally agrees that, at or prior to confirmation of
sale of the Offered Securities, other than a sale pursuant to Rule 144A,
such Purchaser will have sent to each distributor, dealer or person
receiving a selling concession, fee or other remuneration that purchases
the Offered Securities from it during the restricted period a confirmation
or notice to substantially the following effect:
"The Securities covered hereby have not been registered under the
U.S. Securities Act of 1933 (the "Securities Act") and may not be
offered or sold within the United States or to, or for the account
or benefit of, U.S. persons (i) as part of their distribution at any
time or (ii) otherwise until 40 days after the date of the
commencement of the offering and the closing date, except in either
case in accordance with Regulation S (or Rule 144A if available)
under the Securities Act. Terms used above have the meanings given
to them by Regulation S."
Terms used in this subsection (b) have the meanings given to them by
Regulation S.
(c) Each Purchaser severally agrees that it and each of its
affiliates has not entered and will not enter into any contractual
arrangement with respect to the distribution of the Offered Securities
except for any such arrangements with the other Purchasers or affiliates
of the other Purchasers or with the prior written consent of the Note
Issuers.
(d) Each Purchaser severally agrees that it and each of its
affiliates have not and will not solicit offers for an offer or sell the
Offered Securities in the United States by means of any form of general
solicitation or general advertising within the meaning of Rule 502(c)
under the Securities Act, including, but not limited to (i) any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or
radio, or (ii) any seminar or meeting whose attendees have been invited by
any general solicitation or general advertising, or in any manner
involving a public offering within the meaning of Section 4(2) of the Act.
Each Purchaser severally agrees, with respect to resales made in reliance
on Rule 144A of any of the Offered Securities, to deliver either with the
confirmation of such resale or otherwise prior to settlement of such
resale a notice to the effect that the resale of such Offered Securities
has been made in reliance upon the exemption from the registration
requirements of the Securities Act provided by Rule 144A.
(e) Each of the Purchasers severally agrees that they have and will
solicit offers for the Offered Securities only from, and will offer the
Offered Securities only to (A) in the case of offers inside the United
States, (x) persons whom the Purchasers reasonably believe to be QIBs or,
if any such person is buying for one or more institutional accounts for
which such person is acting as fiduciary or agent, only when such person
has represented to the Purchasers that each such account is a QIB, to whom
notice has been given that such sale or delivery is being made in reliance
on Rule 144A, and, in each case, in transactions under Rule 144A or (y) a
limited number of other institutional investors reasonably believed by the
Purchasers to be Accredited Investors that, prior to their
<PAGE>
15
purchase of the Offered Securities, deliver to the Purchasers a letter
containing the representations and agreements set forth in Section 2 above
and (B) in the case of offers outside the United States, to person other
than U.S. persons ("foreign purchasers," which term shall include dealers
or other professional fiduciaries in the United States acting on a
discretionary basis for foreign beneficial owners (other than an estate or
trust)); provided, however, that, in the case of this clause (B), in
purchasing such Offered Securities such persons are deemed to have
represented and agreed as provided under the caption "Transfer
Restrictions" contained in the Offering Document.
(f) Each of the Purchasers severally represents and agrees that (i)
it has not offered or sold and prior to the date six months after the date
of issue of the Offered Securities will not offer or sell any Offered
Securities to persons in the United Kingdom except to persons whose
ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes of their
businesses or otherwise in circumstances which have not resulted and will
not result in an offer to the public in the United Kingdom within the
meaning of the Public Offers of Securities Regulations 1995; (ii) it has
complied and will comply with all applicable provisions of the Financial
Services Act 1986 with respect to anything done by it in relation to the
Offered Securities in, from or otherwise involving the United Kingdom; and
(iii) it has only issued or passed on and will only issue or pass on in
the United Kingdom any document received by it in connection with the
issue of the Offered Securities to a person who is of a kind described in
Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom such
document may otherwise lawfully be issued or passed on.
(g) Each Purchaser severally agrees that the source of funds being
used by it to acquire the Offered Securities does not include the assets
of any "employee benefit plan" (within the meaning of Section 3 of ERISA)
or any "plan" (within the meaning of Section 4975 of the Code).
(h) Each of the Purchasers severally agrees to comply with the
applicable provisions of Rule 144A and Regulation S under the Act. Each of
the Purchasers hereby acknowledge and the Issuers and the Company and, for
purposes of the opinions to be delivered to the Purchasers pursuant to
Section 6(b) hereof, counsel to the Company and Note Issuers will rely
upon the accuracy and truth of the representations contained in this
Section 4 and each of the Purchasers hereby consent to such reliance.
(i) Each of the Purchasers severally agrees that it has not made,
and will not make, on behalf of NSM Cayman any invitation to the public in
the Cayman Islands to subscribe for any of the Offered Securities.
5. Certain Agreements of the Issuers. The Issuers agree, jointly and
severally, with the several Purchasers that:
(a) The Issuers will advise NatWest promptly of any proposal to
amend or supplement the Offering Document and will not effect such
amendment or supplementation without NatWest's consent. If, at any time
prior to the completion of
<PAGE>
16
the resale of the Offered Securities by the Purchasers, any event occurs
as a result of which the Offering Document as then amended or supplemented
would include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, the
Issuers promptly will notify NatWest of such event and promptly will
prepare, at their own expense, an amendment or supplement which will
correct such statement or omission. Neither NatWest's consent to, nor the
Purchasers' delivery to offerees or investors of, any such amendment or
supplement shall constitute a waiver of any of the conditions set forth in
Section 6 hereto.
(b) The Issuers will furnish to NatWest copies of any preliminary
offering circular, the Offering Document and all amendments and
supplements to such documents, in each case as soon as available and in
such quantities as NatWest reasonably requests, and the Issuers will
furnish to NatWest on the Closing Date seven copies of the Offering
Document signed by a duly authorized officer of each of the Issuers. At
any time when any of the Issuers is not subject to Section 13 or 15(d) of
the Exchange Act and is not exempt from reporting pursuant to Rule
12g3-2(b) under the Exchange Act, the Issuers will promptly furnish or
cause to be furnished to each of the Purchasers upon request and, upon
request of holders and prospective purchasers of the Offered Securities,
to such holders and purchasers, copies of the information required to be
delivered to holders and prospective purchasers of the Offered Securities
pursuant to Rule 144A(d)(4) under the Securities Act (or any successor
provision thereto) in order to permit compliance with Rule 144A in
connection with resales by such holders of the Offered Securities. The
Issuers will pay the expenses of printing and distributing to the
Purchasers all such documents.
(c) The Issuers will cooperate with NatWest in arranging for the
qualification of the Offered Securities for sale and the determination of
their eligibility for investment under the laws of such jurisdictions in
the United States as NatWest designates and will continue such
qualifications in effect so long as required for the resale of the Offered
Securities by the Purchasers, provided that neither of the Issuers nor any
of the Company will be required to qualify as a foreign corporation or to
file a general consent to service of process in any such state or subject
itself to taxation in excess of a nominal dollar amount in any state where
it is not then so subject.
(d) During the period of five years after the Closing Date, the
Issuers will furnish, upon request, to NatWest and to each of the other
Purchasers, as soon as practicable after the end of each fiscal year, a
copy of its annual report to stockholders for such year; and the Issuers
will furnish, upon request, to NatWest and to each of the other Purchasers
(i) as soon as available, a copy of each report or financial statement
furnished to or filed with the Commission or any securities exchange on
which any class of securities of either of the Issuers is listed, and (ii)
from time to time, such other information concerning the Issuers as
NatWest may reasonably request.
(e) During the period of two years after the Closing Date, the
Issuers will, upon request, furnish to NatWest, each of the other
Purchasers and any holder of Offered Securities a copy of the restrictions
on transfer applicable to the Offered Securities.
<PAGE>
17
(f) During the period of two years after the Closing Date, the
Issuers will not, and will not permit any of its affiliates (as defined in
Rule 144) to, resell any of the Offered Securities that have been
reacquired by any of them.
(g) None of the Issuers will be or become, an open-end investment
company, unit investment trust or face-amount certificate company that is
or is required to be registered under Section 8 of the Investment Company
Act, or is, or will be or become, a closed-end investment company required
to be registered, but not registered, under the Investment Company Act.
(h) The Issuers will pay all expenses (together with VAT where
applicable) incidental to the performance of their obligations under this
Agreement, the Registration Rights Agreement, the Indentures, the Note
Depositary Agreement, the Security Documents and the Warrant Agreement,
including (i) the fees and expenses of the Trustees, the Book-Entry
Depositary, the Collateral Agent, the Warrant Agent and their professional
advisers; (ii) all expenses in connection with the execution, issue,
authentication, packaging and initial delivery of the Offered Securities,
the preparation and printing of this Agreement, the Registration Rights
Agreement, the Offered Securities, the Indentures, the Note Depositary
Agreement, the Security Documents, the Warrant Agreement, the Offering
Document and amendments and supplements thereto, and any other document
relating to the issuance, offer, sale and delivery of the Offered
Securities; (iii) the cost of qualifying the Offered Securities for
trading in the Private Offerings, Resale and Trading through Automated
Linkages (PORTAL) market and the approval of the Offered Securities for
book-entry transfer by DTC, and, in each case, any expenses incidental
thereto; and (iv) the cost of any advertising approved by the Issuers in
connection with the issue of the Offered Securities. The Issuers will also
pay or reimburse the Purchasers (to the extent incurred by them) for any
expenses (including fees and disbursements of counsel) incurred in
connection with qualification of the Offered Securities for sale under the
laws of such jurisdictions in the United States as NatWest designates and
the printing of memoranda relating thereto, for any fees charged by
investment rating agencies for the rating of the Offered Securities, for
all travel expenses of the Purchasers', the Note Issuers' and the
Company's officers and employees and any other expenses of the Purchasers,
the Note Issuers and the Company in connection with attending or hosting
meetings with prospective purchasers of the Offered Securities from the
Purchasers and for expenses incurred in distributing preliminary offering
circulars and the Offering Document (including any amendments and
supplements thereto) to the Purchasers.
(i) In connection with the offering, until NatWest shall have
notified the Issuers and the other Purchasers of the completion of the
resale of the Offered Securities, neither the Issuers nor any of their
affiliates has or will, either alone or with one or more other persons,
bid for or purchase for any account in which they or any of their
affiliates have a beneficial interest in any Offered Securities or attempt
to induce any person to purchase any Offered Securities; and neither the
Issuers nor any of their affiliates will make bids or purchases for the
purpose of creating actual, or apparent, active trading in, or of raising
the price of, the Offered Securities.
<PAGE>
18
(j) The Issuers will indemnify and hold harmless the Purchasers
against any documentary, stamp or similar issuance tax imposed by
Thailand, the Cayman Islands or the United States (or any State thereof),
including any interest and penalties, on the creation, issuance and sale
of the Offered Securities and on the execution and delivery of this
Agreement. All payments to be made by the Issuers hereunder shall be made
without withholding or deduction for or on account of any present or
future taxes, duties or governmental charges imposed by Thailand or the
Cayman Islands unless the Issuers are compelled by law to deduct or
withhold such taxes, duties or charges. In that event, the Issuers shall
pay such additional amounts as may be necessary in order that the net
amounts received after such withholding or deduction shall equal the
amounts that would have been received if no withholding or deduction had
been made; provided that the Issuers shall not pay such additional amounts
with respect to any taxes, duties or charges that would be required to be
withheld or deducted that would not have been imposed (i) but for the
existence of any present or former connection between the payee and
Thailand or the Cayman Islands, as the case may be, other than the
issuance and sale of the Offered Securities; or (ii) to the extent that
such taxes, duties or charges that would be required to be withheld or
deducted could have been reduced or eliminated by a payee's providing a
document, form or certificate at the request of the Issuers to the Issuers
or to the relevant tax authority.
(k) The Issuers will cause each Offered Security to bear the legend
set forth in the form of note attached as Exhibit 1 to the Rule
144A/Regulation S Appendix to each Indenture or the form of warrant
attached as Exhibit A to the Warrant Agreement, as the case may be, until
such legend shall no longer be necessary or advisable because the Offered
Securities are no longer subject to the restrictions on transfer described
therein.
(l) The proceeds to the Note Issuers from the offering of the
Offered Securities will be used as described in the Offering Document.
6. Conditions of the Obligations of the Purchasers. The obligations of the
several Purchasers to purchase and pay for the Offered Securities will be
subject to the accuracy of the representations and warranties on the part of the
Issuers herein, to the accuracy of the statements of officers of the Issuers
made pursuant to the provisions hereof, to the performance by the Issuers of
their respective obligations hereunder and to the satisfaction as of the Closing
Date of the following additional conditions precedent:
(a) Subsequent to the execution and delivery of this Agreement,
there shall not have occurred (i) a change in U.S. or international
financial, political or economic conditions or currency exchange rates or
exchange controls as would, in the judgment of NatWest, be likely to
prejudice materially the success of the proposed issue, sale or
distribution of the Offered Securities, whether in the primary market or
in respect of dealings in the secondary market, or (ii) (A) any change, or
any development or event involving a prospective change, in the condition
(financial or other), business, properties or results of operations of the
Mill or the Issuers which, in the judgment of NatWest, is material and
adverse and makes it impractical or inadvisable to proceed with completion
of the offering or the sale of and payment for the Offered Securities; (B)
any downgrading
<PAGE>
19
in the rating of any debt securities of either of the Note Issuers or any
of the Company by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Securities
Act), or any public announcement that any such organization has under
surveillance or review its rating of any debt securities of either of the
Note Issuers or any of the Company (other than an announcement with
positive implications of a possible upgrading, and no implication of a
possible downgrading, of such rating); (C) any suspension or limitation of
trading in securities generally on the New York Stock Exchange or the
Nasdaq Stock Market, or any setting of minimum prices for trading on such
exchange or such market, or any suspension of trading of any securities of
the Company or of either of the Note Issuers or any of their respective
subsidiaries on any exchange or in the over-the-counter market; (D) any
banking moratorium declared by U.S. Federal, New York or Thailand
authorities; or (E) any outbreak or escalation of major hostilities in
which the United States or Thailand is involved, any declaration of war by
Congress or any other substantial national or international calamity or
emergency if, in the judgment of NatWest, the effect of any such outbreak,
escalation, declaration, calamity or emergency makes it impractical or
inadvisable to proceed with completion of the offering or sale of and
payment for the Offered Securities.
(b) The Purchasers shall have received on the Closing Date an
opinion (satisfactory to you and counsel for the Purchasers), dated the
Closing Date, of:
(i) White & Case L.L.P., counsel for the Issuers,
substantially to the effect that:
(A) NSM (Del) has been duly incorporated, is validly
existing as a corporation in good standing under the laws of
its jurisdiction of incorporation and has the corporate power
and authority to carry on its business as described in the
Offering Document and to own, lease and operate its
properties;
(B) NSM (Del) is duly qualified and is in good standing
as a foreign corporation authorized to do business in each
jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification,
except where the failure to be so qualified would not have a
material adverse effect;
(C) all the outstanding shares of capital stock of NSM
(Del) have been duly authorized and validly issued and are
fully paid, non-assessable and not subject to any preemptive
or similar rights;
(D) assuming due authorization by NSM Cayman and the
Company, the Offered Securities and the Exchange Securities
have been duly authorized and, in the case of the Offered
Securities, when executed and authenticated in accordance with
the provisions of the Indentures and the Warrant Agreement and
delivered to and paid for by the Purchasers in accordance with
the terms of this Agreement, or, in the case of the Exchange
Securities, when issued in exchange for the Offered Notes
<PAGE>
20
pursuant to the terms of the Registration Rights Agreement and
the Indentures, will be entitled to the benefits of the
Indentures, the Note Depositary Agreement and the Warrant
Agreement, as applicable, and will be valid and binding
obligations of the Note Issuers and the Company, enforceable
in accordance with their terms except as (x) the
enforceability thereof may be limited by bankruptcy,
reorganization, insolvency, fraudulent conveyance or similar
laws affecting creditors' rights generally, (y) rights of
acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability and
(z) except as rights to indemnity and contributions thereunder
may be limited by state or federal securities laws or the
public policy under such laws;
(E) assuming the Guaranties have been duly authorized
and executed by the Company and, assuming due authentication
of the Offered Securities by the Trustees and upon payment and
delivery in accordance with this Agreement, the Guaranties
will constitute valid and legally binding obligations of the
Company entitled to the benefits of the Indentures and
enforceable against the Company in accordance with their
terms, except as (x) the enforceability thereof may be limited
by bankruptcy, reorganization, insolvency, fraudulent
conveyance or similar laws affecting creditors' rights
generally, (y) rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of
general applicability and (z) except as rights to indemnity
and contributions thereunder may be limited by state or
federal securities laws or the public policy under such laws;
(F) the Indentures and the Note Depositary Agreement
have been duly authorized, executed and delivered by NSM (Del)
and, assuming they have been duly authorized, executed and
delivered by NSM Cayman and the Company, are valid and binding
agreements of the Issuers, enforceable against the Note
Issuers and the Company in accordance with their terms except
as (x) the enforceability thereof may be limited by
bankruptcy, reorganization, insolvency, fraudulent conveyance
or similar laws affecting creditors' rights generally, (y)
rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general
applicability and (z) except as rights to indemnity and
contributions thereunder may be limited by state or federal
securities laws or the public policy under such laws;
(G) this Agreement has been duly authorized, executed
and delivered by NSM (Del);
(H) the Registration Rights Agreement has been duly
authorized, executed and delivered by NSM (Del) and, assuming
due authorization, execution and delivery by NSM Cayman and
the Company, is a valid and binding agreement of the Issuers,
enforceable against the Issuers in
<PAGE>
21
accordance with its terms, except as (x) the enforceability
thereof may be limited by bankruptcy, reorganization,
insolvency, fraudulent conveyance or similar laws affecting
creditors' rights generally, (y) rights of acceleration and
the availability of equitable remedies may be limited by
equitable principles of general applicability and (z) except
as to rights to indemnity and contribution hereunder may be
limited by state or federal securities laws or the public
policy under such laws;
(I) the terms of the Offered Securities, the Indentures,
the Note Depositary Agreement, the Registration Rights
Agreement and the Warrant Agreement conform in all material
respects to the descriptions thereof contained in the Offering
Document under the headings "Description of Notes and
Guaranties", "Description of the Units", "Description of the
Note Depositary Agreement; Delivery; Form", "Exchange Offer
and Registration Rights", and "Description of the Warrants";
(J) the execution, delivery and performance of this
Agreement, the Indentures, the Warrant Agreement, the Offered
Securities and the other Transaction Documents to which it is
a party by NSM (Del), compliance by NSM (Del) with all
provisions hereof and thereof and the consummation of the
transactions contemplated hereby and thereby will not conflict
with or constitute a breach of any of the terms or provisions
of, or a default under, any material agreements of NSM (Del)
(which material agreements may be set forth in an officer's
certificate of NSM (Del) attached to such opinion) or the
charter, by-laws, memorandum and articles of association, as
the case may be, of NSM (Del), except such breaches,
violations or defaults that would not reasonably be expected
to result in, individually or in the aggregate, a Material
Adverse Effect;
(K) no further consent, approval, authorization, or
order of, or filing with any Federal, New York or Delaware
governmental agency or body or any court is required for the
Transaction Documents in connection with the issuance and sale
of the Offered Securities by NSM (Del), except that may be
required under the blue sky laws of any United States
jurisdiction in connection with the offer and distribution of
the Offered Securities by the Purchasers;
(L) to such counsel's knowledge, there are no legal or
governmental proceedings pending in any U.S. federal court
located in the State of New York or Delaware or in any New
York State court or before any U.S. federal or New York State
or Delaware governmental authority to which the Note Issuers
and the Company or any of its subsidiaries is a party or to
which any of their respective properties are subject, which
might result, singly or in the aggregate, in a Material
Adverse Effect;
<PAGE>
22
(M) NSM (Del) has the power to submit, and has taken all
necessary corporate action to submit, to the jurisdiction of
any Federal or state court in the Borough of Manhattan, The
City of New York, New York, and to appoint CT Corporation of
New York as its authorized agent for the purposes and to the
extent described in Section 15 of this Agreement and in the
Indentures.
(N) no registration under the Securities Act of the
Offered Securities is required for the sale of the Offered
Securities to the Purchasers as contemplated by this Agreement
or for the Exempt Resales assuming that (i) the Purchaser is a
QIB, IAI or a Regulation S Purchaser, (ii) the accuracy of,
and compliance with, the Purchaser's representations and
agreements contained in Section 4 of this Agreement, (iii) the
accuracy of the representations of the Note Issuers set forth
in Sections 2(aa), 2(bb) and 2(dd) and the compliance by the
Issuers with their agreements in Section 5 of this Agreement;
(O) such counsel has no reason to believe that, as of
the date of the Offering Document or as of the Closing Date,
the Offering Document, as amended or supplemented (other than
the financial statements and other financial and statistical
information contained therein, as to which such counsel need
express no belief), if applicable, contains any untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading;
(P) none of the Note Issuers or the Company is an
open-end investment company, unit investment trust or face
amount certificate company that is or is required to be
registered under Section 8 of the Investment Company Act, nor
are any of them a closed-end investment company required to be
registered, but not registered, thereunder; and neither of the
Note Issuers are, nor the Company is, and, after giving effect
to the offering and sale of the Offered Securities and the
application of the net proceeds thereof as described in the
Offering Document, will not be, an "investment company" as
such term is defined in the Investment Company Act;
(Q) to the best of such counsel's knowledge, except as
described in the Offering Document, there are no contracts,
agreements or understandings between the Note Issuers and any
person granting such person the right to require the Note
Issuers to file a registration statement under the Securities
Act with respect to any securities of the Note Issuers or to
require the Note Issuers to include such securities with the
Securities registered pursuant to any Registration Statement
(as defined in the Registration Rights Agreement);
(R) neither the execution, delivery or performance by
the Note
<PAGE>
23
Issuers of this Agreement nor the issuance or sale of the
Offered Securities under the circumstances contemplated by
this Agreement nor the use of proceeds in the manner
contemplated by the Offering Document will violate Regulation
G, Regulation T, Regulation U or Regulation X of the Board of
Governors of the Federal Reserve System;
(S) the Indentures comply as to form in all material
respects with the requirements of the TIA, and the rules and
regulations of the Commission applicable to an indenture which
is qualified thereunder. It is not necessary in connection
with the offer, sale and delivery of the Offered Notes to the
Purchasers in the manner contemplated by this Agreement or in
connection with the resales to certain QIBs, or to IAIs, to
qualify the Indenture under the TIA;
(T) the statements contained in the Offering Document
under the caption "Tax Considerations United States Federal
Income Taxation," to the extent that they constitute summaries
of matters of United States federal income tax law and legal
conclusions with respects thereto, are accurate in all
material respects;
(U) the Security Documents, to the extent Collateral is
located in the United States, conform in all material respects
to the description thereof contained in the Offering Document
under the heading "Security Arrangements";
(V) on the Closing Date, upon the execution and delivery
of the Security Sharing Agreement, the Security Sharing
Agreement and the other Security Documents will create a valid
and perfected security interest in the Collateral consisting
of Accounts, Financial Assets (as defined in the Security
Agreements) credited to the Accounts, and the Security
Entitlements (as defined in the Security Agreements) of the
respective grantors therein. Such security interest in such
Collateral will be subject to no prior security interest,
lien, charge or encumbrance.
The opinion of White & Case L.L.P. described in Section 6(b)(i)
above shall be rendered to the Purchasers at the request of the Note
Issuers and shall so state therein. In giving such opinion with respect to
the matters covered by Section 6(b)(i)(O), counsel for the Note Issuers
may state that their opinion and belief are based upon their participation
in the preparation of the Offering Document and any amendments or
supplements thereto and review and discussion of the contents thereof, but
are without independent check or verification except as specified.
(ii) Maples and Calder, Asia, counsel for the Issuers,
substantially to the effect that:
(A) NSM Cayman has been duly incorporated, is validly
existing as a corporation in good standing under the laws of
the Cayman Islands
<PAGE>
24
and has the corporate power and authority to carry on its
business as described in the Offering Document and to own,
lease and operate its properties;
(B) NSM Cayman is duly qualified and is in good standing
as a foreign corporation authorized to do business in each
jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification,
except where the failure to be so qualified would not have a
Material Adverse Effect;
(C) all the outstanding shares of capital stock of NSM
Cayman has been duly authorized and validly issued and are
fully paid, non-assessable and not subject to any preemptive
or similar rights;
(D) all the shares of capital stock of NSM (Del) owned
by NSM Cayman are owned free and clear of any Lien;
(E) as of the Closing Date, NSM Cayman owns 100% of the
outstanding shares of NSM (Del);
(F) the Offered Securities and the Exchange Securities
have been duly authorized by NSM Cayman;
(G) the Indentures and the Note Depositary Agreement
have been duly authorized, executed and delivered by NSM
Cayman;
(H) the Registration Rights Agreement has been duly
authorized, executed and delivered by NSM Cayman;
(I) the execution, delivery and performance of this
Agreement, the Indentures, the Warrant Agreement, the Offered
Securities and the other Transaction Documents to which it is
a party, by NSM Cayman, compliance by NSM Cayman with all
provisions hereof and thereof and the consummation of the
transactions contemplated hereby and thereby will not conflict
with or constitute a breach of any of the terms or provisions
of, or a default under, any material agreements of NSM Cayman
(which material agreements may be set forth in an officer's
certificate of NSM Cayman attached to such opinion) or the
charter, by-laws, memorandum and articles of association, as
the case may be, of NSM Cayman or any of its subsidiaries,
except such breaches, violations or defaults that would not
reasonably be expected to result in, individually or in the
aggregate, a material adverse affect;
(J) no further consent, approval, authorization, or
order of, or filing with any Cayman Islands governmental
agency or body or any court is required for the Transaction
Documents in connection with the issuance and sale of the
Offered Securities by the Company;
<PAGE>
25
(K) to such counsel's knowledge there is no legal or
governmental proceedings pending or threatened to which the
Note Issuers and the Company or any of its subsidiaries is or
could be a party or to which any of their respective
properties are or could be subject, which might result, singly
or in the aggregate, in a material adverse effect or is
reasonably likely to materially and adversely affect the
consummation of the transactions contemplated by the
Transaction Documents;
(L) NSM Cayman has the power to submit, and has taken
all necessary corporate action to submit, to the jurisdiction
of any Federal or state court in the Borough of Manhattan, The
City of New York, New York, and to appoint CT Corporation of
New York as its authorized agent for the purposes and to the
extent described in Section 15 of this Agreement and in the
Indentures.
(M) assuming that (A) the Trustees have, at the Closing
Date, possession of the certificates representing the Pledged
NSM (Del) Stock in the State of New York and maintain
continuous possession of such Pledged NSM (Del) Stock, (B) the
Collateral Agent has, at the Closing Date, possession of the
certificates representing the Pledged NSM Cayman Stock in the
State of New York and maintains continuous possession of such
Pledged NSM Cayman Stock and (C) the Trustees are entering
into the Indentures and the Purchasers are purchasing, the
Offered Securities in good faith without notice of any adverse
claim to such Pledged NSM Stock, then after giving effect to
such purchase at the Closing Date, the Collateral Agent has or
the Trustees have, as the case may be, a valid and perfected
security interest, for the benefit of the holders of the Notes
(as defined in the Indentures), in all right, title and
interest of NSM Cayman (with respect to the shares of NSM
(Del)), in and to such Pledged NSM Stock, which security
interest has priority over any other security interest in the
Pledged NSM Stock;
(N) no withholding tax imposed under the laws of the
Cayman Islands will be payable in respect of the issuance and
sale to the Purchasers of the Securities as contemplated by
this Agreement, including the payment or crediting of any
discount, commission or fee to any Purchaser, or the resale of
the Securities by the Purchaser to U.S. residents;
(O) no stamp duty, registration or documentary taxes,
duties or similar charges are payable under the laws of the
Cayman Islands in connection with the creation, issuance, sale
and delivery to the Purchasers of the Offered Securities or
the authorization, execution and delivery of this Agreement,
the Offered Securities or the Transaction Documents to which
the Note Issuers and the Company is a party or the resale of
the
<PAGE>
26
Offered Securities by the Purchasers to U.S. residents;
(P) a court of competent jurisdiction in the Cayman
Islands (a "Cayman Court") would give effect to the choice of
law of the State of New York ("New York Law") as the governing
law of the Transaction Documents and the Offered Securities;
(Q) a Cayman Court would give effect to the appointment
by the Company of CT Corporation System of New York as its
agent to receive service of process in the United States of
America under the Indentures, the Warrant Agreement and this
Agreement and to the provisions in the Indentures, the Warrant
Agreement and this Agreement whereby the Note Issuers submit
to the non-exclusive jurisdiction of a New York Court; and
(iii) White & Case (Thailand) Limited, counsel for the
Company, substantially to the effect that:
(A) the Company has been duly incorporated, is validly
existing as a corporation with perpetual corporate existence
under the laws of Thailand and has the corporate power and
authority to carry on its business as described in the
Offering Document and to own, lease and operate its
properties;
(B) all the Ordinary Shares to be issued in connection
with the Transactions have been duly authorized and, when
issued, will be validly issued and fully paid and not subject
to any preemptive or similar rights;
(C) as of the Closing Date, the Company owns 100% of the
outstanding shares of NSM Cayman;
(D) all the issued and outstanding shares of each of the
Company's subsidiaries are owned, directly or through
subsidiaries, by the Company free and clear of any Lien (other
than the Liens created by the Security Documents);
(E) the Offered Securities and the Exchange Securities,
to the extent authorization of their issuance or the guarantee
of their obligations requires action by the Company, have been
duly authorized by the Company;
(F) the Guaranties have been duly authorized and
executed by the Company;
(G) the Security Documents, to the extent Collateral is
located in Thailand, conform in all material respects to the
description thereof contained in the Offering Document under
the heading "Security Arrangements";
<PAGE>
27
(H) on the Closing Date, upon the execution and delivery
of the Security Sharing Agreement, the Security Sharing
Agreement and the other Security Documents will create valid,
perfected and enforceable security interests in the Closing
Date Collateral, (subject to the filing and registration of
land and buildings, Registrable Machinery with the Central
Marketing Office in Thailand and provided that the Book-Entry
Depositary is the pre-registered holder of the Offered Notes,
securing the Offered Notes, Exchange Securities and the
Guaranties in accordance with the terms thereof and the
Pledged NSM Stock and the Closing Date Collateral will be free
and clear of all liens, except those liens created by or
pursuant to the Security Documents or such liens which would
not, individually or in the aggregate, materially interfere
with the liens created under the Security Documents; provided,
however, that the Civil and Commercial Code of Thailand and
the Bankruptcy Act of Thailand expressly prescribe the rank of
creditors, and such prescribed rank cannot be varied by any
contractual arrangement. There is no reported Supreme Court
judgment as to the legal validity of similar type of
arrangements to those under the terms of subordination of
indebtedness as specified in the Notes;
(I) the Indentures, the Note Depositary Agreement and
the Warrant Agreement have been duly authorized, executed and
delivered by the Company;
(J) the Registration Rights Agreement has been duly
authorized, executed and delivered by the Company;
(K) the Project Documents have been duly authorized,
executed and delivered by the Company and (assuming due
authorization, execution and delivery by the counterparties
thereto) constitute valid and binding obligations of the
Company, enforceable against the Company in accordance with
their terms, except as (x) the enforceability thereof may be
limited by bankruptcy, reorganization, insolvency, fraudulent
conveyance or similar laws affecting creditors' rights
generally and (y) rights of acceleration and the availability
of equitable remedies may be limited by equitable principles
of general applicability. The statements in the Offering
Document insofar as they describe the provisions of the
Project Documents constitute fair summaries thereof, accurate
in all material respects.
(L) the Warrants are convertible into the underlying
ordinary shares of the Company ("Ordinary Shares") in
accordance with their terms; such underlying shares initially
issuable upon exercise of such Warrants have been duly
authorized and reserved for issuance upon such exercise and,
when issued upon such exercise, will be validly issued, fully
paid; the Private Shares have been duly authorized and validly
issued, are
<PAGE>
28
fully paid and conform in all material respects to the
description thereof contained in the Offering Document; and,
to the knowledge of such counsel, the shareholders of the
Company have no preemptive or similar rights with respect to
the Warrants, the underlying Ordinary Shares or the Private
Shares;
(M) the execution, delivery and performance of this
Agreement, the Indentures, the Warrant Agreement, the Offered
Securities and the other Transaction Documents by the Company,
compliance by the Company with all provisions hereof and
thereof and the consummation of the transactions contemplated
hereby and thereby will not conflict with or constitute a
breach of any of the terms or provisions of, or a default
under, any material agreements of the Company (which material
agreements may be set forth in an officer's certificate of the
Company attached to such opinion) or the charter, by-laws,
memorandum and articles of association, as the case may be, of
the Company or any of its subsidiaries, except such breaches,
violations or defaults that would not reasonably be expected
to result in, individually or in the aggregate, a Material
Adverse Affect;
(N) although there is no Thai law or judicial precedent
directly applicable to the issue, such counsel believes that
the indemnification and contribution provisions set forth in
Section 7 of this Agreement do not contravene the public order
or good morals of the people of Thailand;
(O) except as disclosed in the Offering Document, to
such counsel's knowledge there is no legal or governmental
proceedings pending or threatened to which the Company or any
of its subsidiaries is or could be a party or to which any of
their respective properties are or could be subject, which
might result, singly or in the aggregate, in a material
adverse effect or is reasonably likely to materially and
adversely affect the consummation of the transactions
contemplated by the Transaction Documents;
(P) based solely on an attached Officer's Certificate,
the Company has good and valid title in and to the land and
buildings comprising the Mill, free and clear of Liens
(subject, however, only to any Lien that may be created by or
pursuant to the Security Documents);
(Q) the Company has the power to submit, and has taken
all necessary corporate action to submit, to the jurisdiction
of any Federal or state court in the Borough of Manhattan, The
City of New York, New York, and to appoint CT Corporation of
New York as its authorized agent for the purposes and to the
extent described in Section 15, of this Agreement and in the
Indentures;
(R) such counsel has no reason to believe that, as of
the date of
<PAGE>
29
the Offering Document or as of the Closing Date, the Offering
Document, as amended or supplemented (other than the financial
statements and other financial and statistical information
contained therein, as to which such counsel need express no
belief), if applicable, contains any untrue statement of a
material fact or omits to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(S) no stamp duty, registration or documentary taxes,
duties or similar charges are payable under the laws of
Thailand in connection with the creation, issuance, sale and
delivery to the Purchasers of the Offered Securities or the
authorization, execution and delivery of this Agreement, the
Offered Securities or the Transaction Documents to which the
Note Issuers and the Company is a party or the resale of the
Offered Securities by the Purchasers to U.S. residents, except
for the transfer of Warrants if the instrument of transfer is
executed in Thailand;
(T) neither the Company nor the Note Issuers, nor any of
their respective assets, are entitled to immunity (or any
similar defense) from suit, execution, attachment or other
legal process in Thailand;
(U) it is not necessary (A) in order to enable the
Purchasers to exercise or enforce their rights under this
Agreement in Thailand, (B) to enable the Collateral Agent, the
Book-Entry Depositary the Trustee or any holder of Offered
Securities to exercise or enforce any of its rights under any
of the Indentures, the Offered Securities, the Warrant
Agreement and the Security Documents in Thailand or (C) by
reason of the entry into and/or the performance of this
Agreement, the Indentures, the Warrant Agreement or the
Offered Securities that the Purchasers, the Trustees or any
holder of Offered Securities should be licensed, qualified,
authorized or entitled to do business in Thailand;
(V) a court of competent jurisdiction in Thailand (a
"Thai Court") would recognize the choice of law of the State
of New York ("New York Law") as the governing law in respect
of essential elements and effects of the Transaction Documents
and the Offered Securities to the extent that the application
of such laws: (i) are proven to the satisfaction of the courts
of Thailand (which satisfaction is within the discretion of
the Court of Thailand); and (ii) are not considered contrary
to the public order or good morals of the people of Thailand,
the scope of which are issues to be interpreted by the Supreme
Court of Thailand;
(W) a Thai Court would give effect to the appointment by
the Company of CT Corporation System of New York as its agent
to receive service of process in the United States of America
under the Indentures, the Warrant Agreement and this
Agreement; however, no statutory law or judicial precedent is
directly applicable to the provisions in the Indentures,
<PAGE>
30
the Warrant Agreement and this Agreement whereby the Note
Issuers submit to the non-exclusive jurisdiction of a New York
Court and the validity and binding effect of such submission
is therefore uncertain;
(X) any judgment obtained against the Company in the
courts of New York in respect of any sum payable under the
Transaction Documents, the Offered Securities and the Offering
Document would not itself be enforceable by the courts of
Thailand (whether by suit on the judgment or by registration)
but may be admissible as evidence in any new legal proceedings
instituted in the courts of Thailand in Thailand against the
Company;
(Y) the statements under the captions "Risk Factors -
Political and Economic Factors", "Risk Factors - Currency
Regulation", "Risk Factors - NTS Pledge; Substantial Ownership
by Pledgee or Successor", "Risk Factors - No Assurance of
Adequate Collateral; Shared Collateral", "Risk Factors
Enforcement of the Mortgages", "Risk Factors - Thai Bankruptcy
Law", "Risk Factors - Lack of Enforcement of Foreign
Judgments", "Business - Environmental Matters", "Business -
Contingencies and Legal Proceedings", "Description of Material
Agreements", "Description of Notes and Guaranties -
Enforceability of Judgments", "Security Arrangements", "Tax
Considerations", "Thai Taxation" in the Offering Document,
insofar as such statements constitute a summary of the legal
matters, documents or proceedings referred to therein, fairly
present in all material respects such legal matters, documents
and proceedings;
(Z) all security interests in the Closing Date
Collateral, other than those created pursuant to the Security
Documents or contemplated pursuant to the Security Sharing
Agreement, have been terminated;
(AA) the statements contained in the Offering Document
under the caption "Thai Taxation," to the extent that they
constitute matters of Thai income tax law and legal
conclusions with respect thereto, are accurate in all material
respects;
(BB) any judgment or order given in the courts of
Thailand for the enforcement of any of the Transaction
Documents, within the discretion of the courts of Thailand,
may be expressed either in Baht or in an appropriate foreign
currency. Under Section 170 of the Civil and Commercial Code
of Thailand, where a money debt is expressed in a foreign
currency, payment may be made in Thai currency. In such case,
conversion will be based on the current rate of exchange at
the place of payment at the time of payment. Such counsel
expresses no opinion on any provision concerning currency
indemnity contained therein; and
(CC) any agreement attempting to impose an obligation on
a
<PAGE>
31
party to pay for legal fees exceeding the sum that may be
awarded by the courts of Thailand is invalid. The courts of
Thailand have discretion to award legal fees and court costs
in accordance with the rate(s) specified in the Civil
Procedure Code of Thailand. The validity of any provision of
this Agreement with respect to the Company's obligations to
reimburse legal fees in the event of court cases in Thailand
is uncertain.
The opinion of White & Case (Thailand) Limited described in Section
6(b) above shall be rendered to the Purchasers at the request of the Note
Issuers and shall so state therein. In giving such opinion with respect to
the matters covered by Section 6(b)(iii)(S), counsel for the Note Issuers
may state that their opinion and belief are based upon their participation
in the preparation of the Offering Document and any amendments or
supplements thereto and review and discussion of the contents thereof, but
are without independent check or verification except as specified.
(c) The Purchasers shall have received from Cravath, Swaine & Moore,
counsel for the Purchasers, such opinion, dated the Closing Date, with
respect to the validity of the Offered Securities, the Offering Document,
the exemption from registration for the offer and sale of the Offered
Securities by the Note Issuers to the several Purchasers and the initial
resales by the several Purchasers as contemplated hereby and other related
matters as NatWest may require, and the Note Issuers shall have furnished
to such counsel such documents as they request for the purpose of enabling
them to pass upon such matters. In rendering such opinion, Cravath, Swaine
& Moore may rely as to all matters governed by the laws of Thailand upon
the opinion of Chandler and Thong-ek.
(d) The Purchasers shall have received a certificate, dated the
Closing Date, of the Managing Director and a principal financial or
accounting officer of each of the Note Issuers in which such officers, to
the best of their knowledge after reasonable investigation, shall state
that (i) the representations and warranties of the applicable Note Issuer
and the Company in this Agreement are true and correct, (ii) the
applicable Note Issuer and the Company have complied with all agreements
and satisfied all conditions on their respective parts to be performed or
satisfied hereunder at or prior to the Closing Date, (iii) the execution,
delivery and performance of the Indentures, the Security Documents, the
Warrant Agreement, this Agreement, the Note Depositary Agreement, the
Project Documents and the Registration Rights Agreement, and the issuance
and sale of the Offered Securities and the issuance and sale of the
Debentures and the Private Shares and compliance with the terms and
provisions thereof will not result in a breach or violation of any of the
terms and provisions of, or constitute a default under, any agreement or
instrument to which the Note Issuers or the Company is a party or by which
the Note Issuers or the Company is bound or to which any of the properties
of the Note Issuers or the Company is subject, (iv) all shares of capital
stock of the Note Issuers are legally owned, directly or indirectly, by
the Company free and clear of any pledge, lien, security interest, charge,
claim, equity or encumbrance of any kind, except for the security
interests created by or pursuant to the Security Documents or otherwise
contemplated by the Security Documents, (v) there are no outstanding
rights, warrants or options to acquire, or instruments convertible into or
exchangeable for, any shares of the
<PAGE>
32
Note Issuers or the Company and (vi) there has occurred no development or
event involving a prospective material adverse change in the condition
(financial or other), business, properties or results of operations of the
Note Issuers and the Company taken as a whole.
(e) Concurrently with the issue and sale of the Offered Securities,
the Security Documents to be executed and delivered on the Closing Date
shall have been duly authorized, executed and delivered by the Note
Issuers and the Company (to the extent a party thereto); all steps
necessary to perfect the security interests created pursuant to the
Security Documents, including the termination of any liens (including any
liens held by the Thai Lenders) created over the Closing Date Collateral
(other than pursuant to the Security Documents or otherwise contemplated
by the Security Documents), shall have been completed; and the Purchasers
shall have received conformed counterparts of each such Security Document
and all other documents and agreements entered into or received thereunder
in connection with each such Security Document and the termination of any
such existing liens.
(f) NSM Cayman and the Company shall have delivered to the Trustees
or the Collateral Agent, as applicable, the stock certificates of NSM
(Del) and of NSM Cayman, respectively, evidencing the Pledged NSM Stock
pledged to the Trustees or charged to the Collateral Agent, as they case
may be, pursuant to the Security Documents, together with stock powers
executed in blank. Each of NSM Cayman and the Company shall have delivered
to the Trustees or the Collateral Agent, as the case may be, its
irrevocable proxy pursuant to the Security Documents with respect to the
Pledged NSM Stock.
(g) The issue and sale of the Senior Notes and of the Units by the
Issuers shall be consummated concurrently in accordance with the terms of
this Agreement and shall conform in the judgment of the Purchasers to the
descriptions thereof contained in the Offering Document.
(h) Concurrently with or prior to the issue and sale of the Offered
Securities, the Project Documents shall have been duly authorized,
executed and delivered by all parties thereto and shall conform in the
judgment of counsel to the Purchasers to the descriptions thereof
contained in the Offering Document.
(i) Concurrently with or prior to the issue and sale of the Offered
Securities, the CFA Amendment (as defined in the Offering Document) and
the Security Sharing Agreement shall have been duly authorized, executed
and delivered by the Company's Thai Lenders, and shall conform in the
judgment of counsel to the Purchasers to the descriptions thereof
contained in the Offering Document.
(j) Concurrently with or prior to the issue and sale of the Offered
Securities, the Working Capital Facility (as defined in the Offering
Document) in an aggregate available amount of at least $125 million shall
have been duly authorized, executed and delivered by all parties thereto
and shall conform in the judgment of counsel to the Purchasers to the
description thereof contained in the Offering Document.
<PAGE>
33
(k) Concurrently with or prior to the issue and sale of the Offered
Securities, the Company shall have consummated the issuance and sale of
the Debentures and the Private Shares, in each case on terms and
conditions reasonably satisfactory to the Purchasers.
(l) Concurrently with or prior to the issue and sale of the Offered
Securities, the shareholders of the Company shall have duly authorized the
issuance of the Warrants and the underlying Ordinary Shares.
(m) The Purchasers shall be reasonably satisfied on the Closing Date
with the level of all fees and expenses payable by the Issuers.
(n) The Purchasers shall have received a letter, dated the date of
this Agreement, of KPMG, in agreed form, confirming that they are
independent certified public accountants in accordance with the rules
established by The Board of Supervision of Auditing Practices, Ministry of
Commerce in Thailand ("Rules and Regulations") and stating to the effect
that:
(i) in their opinion the financial statements examined by them
and included in the Offering Document comply as to form in all
material respects with generally accepted accounting principles in
Thailand and the related published Rules and Regulations;
(ii) on the basis of a reading of the latest available interim
financial statements of the Company, inquiries of certain officials
of the Company who have responsibility for financial and accounting
matters and other specified procedures, nothing came to their
attention that caused them to believe that:
(A) at the date of the latest available consolidated
balance sheet read by KPMG, or at a subsequent specified date
not more than five business days prior to the date of this
Agreement, there was any change in the capital stock or
paid-in capital, increase in long-term debt or any decreases
in consolidated net current assets or stockholders' equity of
the consolidated companies as compared with amounts shown on
the September 30, 1997, audited consolidated balance sheet
included in the Offering Document; or
(B) for the period of the closing date of the latest
audited consolidated statement of operations included in the
Offering Document to the closing date of the latest available
unaudited consolidated statement of operations read by KPMG
there were any decreases, as compared with the corresponding
period in the preceding year, in consolidated operating
revenues or in the total or per-share amounts of net loss,
except in all cases set forth in clauses (A) and (B) above for
changes, increases or decreases which the Offering Document
discloses have occurred or may occur or which are described in such
letter; and
<PAGE>
34
(iii) they have compared specified Baht amounts (or
percentages derived from such Baht amounts) and other financial
information contained in the Offering Document (in each case to the
extent that such Baht amounts, percentages and other financial
information are derived from the general accounting records of the
Company and its subsidiaries subject to the internal controls of the
Company's accounting system or are derived directly from such
records by analysis or computation) with the results obtained from
inquiries, a reading of such general accounting records and other
procedures specified in such letter and have found such Baht
amounts, percentages and other financial information to be in
agreement with such results, except as otherwise specified in such
letter.
(o) The Issuers shall have received from the Bank of Thailand and
other appropriate Thailand authorities such waivers or approvals of
currency exchange controls and repatriation of funds restrictions as the
Purchasers shall deem necessary to permit the consummation of the
transactions contemplated by the Offering Document in the manner described
therein, and such waiver or approval shall be in full force and effect.
(p) Each of the entities described in the Offering Document as
making equity investments (whether primary or secondary) in the Company
shall have completed such equity investment on or prior to the Closing
Date.
The Issuers will furnish the Purchasers with such conformed copies of such
opinions, certificates, letters and documents as the Purchasers request. NatWest
may in its sole discretion waive on behalf of the Purchasers compliance with any
conditions to the obligations of the Purchasers hereunder, whether in respect of
the Closing Date or otherwise.
7. Indemnification and Contribution.
(a) The Note Issuers and the Company hereby jointly and severally
indemnify and hold harmless each Purchaser against any losses, claims,
damages or liabilities, joint or several, to which such Purchaser may
become subject, under the Securities Act or the Exchange Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of any untrue statement or alleged untrue
statement of any material fact contained in the Offering Document, or any
amendment or supplement thereto, or any related preliminary offering
circular or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and will reimburse each
Purchaser for any legal or other expenses reasonably incurred by such
Purchaser in connection with investigating or defending any such loss,
claim, damage, liability or action as such expenses are incurred;
provided, however, that neither the Note Issuers nor the Company will be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged
untrue statement in or omission or alleged omission from any of such
documents in reliance upon and in conformity with written information
furnished to the Note Issuers or the Company by any Purchaser through
NatWest specifically for use therein, it being understood and agreed that
the only such information consists of the information described as such in
subsection (b) below; provided
<PAGE>
35
further, that with respect to any such untrue statement or omission made
in the preliminary offering circular, the indemnity agreement contained in
this Section 7 shall not inure to the benefit of any such Purchaser from
whom the person asserting any such losses, claims, damages or liabilities
purchased the Offered Securities concerned if both (A) a copy of the
Offering Document was not sent or given to such person at or prior to the
written confirmation of the sale of such Offered Securities to such
person, and (B) the untrue statement or omission in the preliminary
offering circular was corrected in the Offering Document unless, in either
case, such failure to deliver the Offering Document was a result of
noncompliance by any of the Issuers with Section 5(b).
(b) Each of the Purchasers hereby severally and not jointly
indemnifies and holds harmless the Note Issuers and the Company against
any losses, claims, damages or liabilities to which the Note Issuers or
the Company may become subject, under the Securities Act or the Exchange
Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in
the Offering Document, or any amendment or supplement thereto, or any
related preliminary offering circular, or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in each case to
the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance upon
and in conformity with written information furnished to the Note Issuers
or the Company by such Purchaser through NatWest specifically for use
therein, and will reimburse any legal or other expenses reasonably
incurred by the Note Issuers or the Company in connection with
investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred, it being understood and agreed that
the only such information furnished by any Purchaser consists of the
following information in the Offering Document furnished on behalf of each
Purchaser: the last paragraph at the bottom of the cover page concerning
the terms of the offering by the Purchasers, the legend concerning
over-allotments and stabilizing on the first paragraph of page ii and,
under the caption "Plan of Distribution", (i) the second and third
sentence of the second paragraph thereunder, (ii) the fourth paragraph
thereunder and (iii) the fourth sentence of the ninth paragraph
thereunder; it being expressly agreed and acknowledged by the Note Issuers
and the Company that the Purchasers have not provided, and shall bear no
responsibility or liability under this paragraph (b) or otherwise for, the
information contained under the caption "Certain Financial Projection
Information" in the Offering Document.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under subsection (a) or (b) above, notify the
indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party otherwise than under subsection (a)
or (b) above. In case any such action is brought against any indemnified
party and it notifies the indemnifying party of the commencement thereof,
the indemnifying party will be entitled to participate therein and, to the
extent that it may wish, jointly with any other indemnifying party
similarly notified,
<PAGE>
36
to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and after notice
from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable
to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened
action in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on any claims that are the subject
matter of such action.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute
to the amount paid or payable by such indemnified party as a result of the
losses, claims, damages or liabilities referred to in subsection (a) or
(b) above (i) in such proportion as is appropriate to reflect the relative
benefits received by the Note Issuers or the Company on the one hand and
the Purchasers on the other from the offering of the Offered Securities or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only
the relative benefits referred to in clause (i) above but also the
relative fault of the Note Issuers or the Company on the one hand and the
Purchasers on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities as well as
any other relevant equitable considerations. The relative benefits
received by the Note Issuers or the Company on the one hand and the
Purchasers on the other shall be deemed to be in the same proportion as
the total net proceeds from the offering (before deducting expenses)
received by the Note Issuers bear to the total discounts and commissions
received by the Purchasers from the Note Issuers under this Agreement. The
relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Note Issuers, the Company or the Purchasers
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The
amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities referred to in the first sentence of this
subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any action or claim which is the subject of
this subsection (d). Notwithstanding the provisions of this subsection
(d), no Purchaser shall be required to contribute any amount in excess of
the amount by which the total price at which the Offered Securities
purchased by it were resold exceeds the amount of any damages which such
Purchaser has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. The Purchasers'
obligations in this subsection (d) to contribute are several in proportion
to their respective purchase obligations and not joint.
(e) The obligations of the Note Issuers and the Company under this
Section shall
<PAGE>
37
be in addition to any liability which the Note Issuers and the Company may
otherwise have and shall extend, upon the same terms and conditions, to
each person, if any, who controls any Purchaser within the meaning of the
Securities Act or the Exchange Act; and the obligations of the Purchasers
under this Section shall be in addition to any liability which the
respective Purchasers may otherwise have and shall extend, upon the same
terms and conditions, to each person, if any, who controls the Note
Issuers and the Company within the meaning of the Securities Act or the
Exchange Act.
8. Default of Purchasers. If any Purchaser or Purchasers default in their
obligations to purchase Offered Securities hereunder and the total principal
amount of the Senior Notes, or the total number of Units, that such defaulting
Purchaser or Purchasers agreed but failed to purchase does not exceed 10% of the
aggregate principal amount of the Senior Notes, or 10% of the aggregate number
of Units, NatWest may make arrangements satisfactory to the Note Issuers for the
purchase of such Offered Securities by other persons, including any of the
Purchasers, but if no such arrangements are made by the Closing Date, the
non-defaulting Purchasers shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the Offered Securities that such
defaulting Purchasers agreed but failed to purchase. If any Purchaser or
Purchasers so default and the total principal amount of the Senior Notes, or the
total number of Units, with respect to which such default or defaults occur
exceeds 10% of the aggregate principal amount of the Senior Notes, or 10% of the
aggregate number of Units, and arrangements satisfactory to NatWest and the Note
Issuers for the purchase of such Offered Securities by other persons are not
made within 36 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Purchaser or the Note Issuers or the
Company, except as provided in Section 9. As used in this Agreement, the term
"Purchaser" includes any person substituted for a Purchaser under this Section.
Nothing herein will relieve a defaulting Purchaser from liability for its
default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Note Issuers, the Company or their respective officers and of the several
Purchasers set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation, or statement as to the
results thereof, made by or on behalf of any Purchaser, the Note Issuers, the
Company or any of their respective representatives, officers or directors or any
controlling person, and will survive delivery of and payment for the Offered
Securities. If this Agreement is terminated pursuant to Section 8 or if for any
reason the purchase of the Offered Securities by the Purchasers is not
consummated, the Issuers shall remain responsible for the expenses to be paid or
reimbursed by any of them pursuant to Section 5 and the respective obligations
of the Note Issuers, the Company and the Purchasers pursuant to Section 7 shall
remain in effect. If the purchase of the Offered Securities by the Purchasers is
not consummated for any reason other than solely because of the termination of
this Agreement pursuant to Section 8 or the occurrence of any event specified in
clause (c) of Section 6, the Note Issuers or the Company will reimburse the
Purchasers for all out-of-pocket expenses (including fees and disbursements of
counsel) reasonably incurred by them in connection with the offering of the
Offered Securities.
10. Notices. All communications hereunder will be in writing and, if sent
to the Purchasers will be mailed, delivered or telegraphed and confirmed to the
Purchasers, c/o Gleacher NatWest Inc., 660 Madison Avenue, New York, NY 10021,
Attention: Mr. David Wheeler, or,
<PAGE>
38
if sent to the Note Issuers or the Company, will be mailed, delivered or
telegraphed and confirmed to any of them at Chonburi Industrial Estate (Bowin),
358 M006, Highway 331, Sriarcha, Chonburi 20230 Thailand, Attention: Mr. John W.
Schultes; provided, however, that any notice to a Purchaser pursuant to Section
7 will be mailed, delivered or telegraphed and confirmed to such Purchaser.
11. Successors. This Agreement will enure to the benefit of and be binding
upon the parties hereto and their respective successors and the controlling
persons referred to in Section 7, and no other person will have any right or
obligation hereunder, except that holders of Offered Securities shall be
entitled to enforce the agreements for their benefit contained in the second and
third sentences of Section 5(b) hereof against the Note Issuers or the Company
as if such holders were parties thereto.
12. Representation of Purchasers. NatWest will act for the several
Purchasers in connection with this offering and any action taken by NatWest will
be binding upon all the Purchasers.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without regard to principles
of conflicts of laws.
<PAGE>
15. Submission to Jurisdiction. The Issuers hereby submit to the
non-exclusive jurisdiction of the Federal and state courts in the Borough of
Manhattan in The City of New York in any suit or proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby. The Issuers
irrevocably appoint CT Corporation System of New York, as their authorized agent
in the Borough of Manhattan in The City of New York upon which process may be
served in any such suit or proceeding, and agree that service of process upon
such agent, and written notice of said service to the Note Issuers or the
Company, as the case may be, by the person serving the same to the address
provided in Section 10, shall be deemed in every respect effective service of
process upon the Note Issuers or the Company, as the case may be, in any such
suit or proceeding. The Issuers further agree to take any and all action as may
be necessary to maintain such designation and appointment of such agent in full
force and effect for a period of 10 years from the date of this Agreement.
16. Judgment Currency. The obligation of the Issuers in respect of any sum
due to any Purchaser shall, notwithstanding any judgment in a currency other
than United States dollars, not be discharged until the first business day,
following receipt by such Purchaser of any sum adjudged to be so due in such
other currency, on which (and only to the extent that) such Purchaser may in
accordance with normal banking procedures purchase United States dollars with
such other currency; if the United States dollars so purchased are less than the
sum originally due to such Purchaser hereunder, the Issuers agree, as a separate
obligation and notwithstanding any such judgment, to indemnify, jointly and
severally, such Purchaser against such loss. If the United States dollars so
purchased are greater than the sum originally due to such Purchaser hereunder,
such Purchaser agrees to pay to the Note Issuers or the Company, as the case may
be, an amount equal to the excess of the dollars so purchased over the sum
originally due to such Purchaser hereunder.
If the foregoing is in accordance with the Purchasers' understanding of
our agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement among the Note Issuers, the Company
and the several Purchasers in accordance with its terms.
Very truly yours,
NSM STEEL (DELAWARE) INC.
By: /s/ Sawasdi Horrungruang
--------------------------
Title: Chairman
NSM STEEL COMPANY, LTD.
By: /s/ Sawasdi Horrungruang
--------------------------
Title: Chairman
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC
COMPANY LIMITED
By: /s/ Sawasdi Horrungruang
--------------------------
Title: Chairman
<PAGE>
The foregoing Purchase Agreement
is hereby confirmed and accepted
as of the date first above written
NATWEST CAPITAL MARKETS LIMITED
MCDONALD & COMPANY SECURITIES, INC.
PAINEWEBBER INCORPORATED
ECT SECURITIES CORP.
by NATWEST CAPITAL MARKETS LIMITED
By: /s/ A.R. Irby
------------------
Title: Director
<PAGE>
SCHEDULE A
Principal Amount of Number
Purchasers Senior Notes of Units
- ---------- ------------------- --------
NatWest Capital Markets Limited...... $186,750,000 152,625
McDonald & Company Securities, Inc... 22,410,000 18,315
PaineWebber Incorporated............ 24,900,000 20,350
ECT Securities Corp.................. 14,940,000 12,210
------------ -------
Total........ $249,000,000 203,500
============ =======
<PAGE>
Exhibit 3.01
State of Delaware
Office of the Secretary of State
------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "NSM STEEL (DELAWARE), INC.", FILED IN THIS OFFICE ON THE
TWENTY-FIRST DAY OF JANUARY, A.D. 1998, AT 9 O'CLOCK A.M.
---------------------------------------
Edward J. Freel, Secretary of State
2849230 8100 AUTHENTICATION: 8877498
981024504 DATE: 01-21-98
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 01/21/1998
981024504 2849230
================================================================================
CERTIFICATE OF INCORPORATION
OF
NSM STEEL (DELAWARE), INC.
I, THE UNDERSIGNED, in order to form a corporation for the purposes
hereinafter stated, under and pursuant to the provisions of the General
Corporation Law of the State of Delaware, as from time to time amended, do
hereby certify as follows:
FIRST: The name of the Corporation is:
NSM Steel (Delaware), Inc.
SECOND: The registered office of the Corporation in the State of
Delaware is located at 1013 Centre Road, City of Wilmington, County of New
Castle. The name of its registered agent in the State of Delaware at such
address is Corporation Service Company.
THIRD: The purpose of the Corporation is to engage, directly or
indirectly, in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware, as from
time to time in effect.
<PAGE>
FOURTH: The total authorized capital stock of the Corporation shall
be 10,000 shares of Common Stock, all of which are $1.00 par value.
FIFTH: The name and mailing address of the incorporator is as
follows:
Name Mailing Address
---- ---------------
Aron S. Izower 1155 Avenue of the Americas
New York, New York 10036
SIXTH: The business of the Corporation shall be managed under the
direction of the Board of Directors except as otherwise provided by law. The
number of Directors of the Corporation shall be fixed from time to time by, or
in the manner provided in, the By-Laws. Election of Directors need not be by
written ballot unless the By-Laws of the Corporation shall so provide.
SEVENTH: The Board of Directors may make, alter or repeal the
By-Laws of the Corporation except as otherwise provided in the By-Laws adopted
by the Corporation's stockholders.
EIGHTH: The Directors of the Corporation shall be protected from
personal liability, through indemnification or otherwise, to the fullest extent
permitted under the General Corporation Law of the State of Delaware as from
time to time in effect.
1. A Director of the Corporation shall under no circumstances have
any personal liability to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a Director except for those breaches and
acts or omissions with respect to which the General Corporation Law of the State
of Delaware, as from time to time amended, expressly provides that this
provision shall not eliminate or limit such personal liability of Directors.
Neither the modification or repeal of this paragraph 1 of Article EIGHTH nor any
amendment to said General Corporation Law that does not have retroactive
application shall limit the right of
-2-
<PAGE>
Directors hereunder to exculpation from personal liability for any act or
omission occurring prior to such amendment, modification or repeal.
2. The Corporation shall indemnify each Director and Officer of the
Corporation to the fullest extent permitted by applicable law, except as may be
otherwise provided in the Corporation's By-Laws, and in furtherance hereof the
Board of Directors is expressly authorized to amend the Corporation's By-Laws
from time to time to give full effect hereto, notwithstanding possible self
interest of the Directors in the action being taken. Neither the modification or
repeal of this paragraph 2 of Article EIGHTH nor any amendment to the General
Corporation Law of the State of Delaware that does not have retroactive
application shall limit the right of Directors and Officers to indemnification
hereunder with respect to any act or omission occurring prior to such
modification, amendment or repeal.
NINTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
IN WITNESS WHEREOF, I have hereunto set my hand this 20th day of
January, 1998.
/s/ Aron S. Izower
--------------------------
Aron S. Izower
Incorporator
-3-
<PAGE>
STATEMENT OF ORGANIZATION BY INCORPORATOR
of
NSM STEEL (DELAWARE), INC.
The undersigned sole incorporator of NSM Steel (Delaware), Inc., a
Delaware corporation, pursuant to Section 108(c) of the General Corporation Law
of the State of Delaware, makes the following statement and takes the following
action to organize said corporation:
FIRST: The Certificate of Incorporation of NSM Steel (Delaware),
Inc. was filed with the Secretary of State of the State of Delaware on the 21st
day of January, 1998, and a certified copy was recorded in New Castle County on
the 21st day of January, 1998.
SECOND: The By-Laws annexed hereto are hereby adopted as the By-Laws
of the corporation.
THIRD: The number of directors of the corporation shall be two (2)
and the following named persons are hereby elected as the directors of the
corporation to hold office until the first annual meeting of stockholders or
until their successors are elected and qualify:
Sawasdi Horrungruang
John W. Schultes
<PAGE>
IN WITNESS WHEREOF, I have signed this instrument at New York, New
York on the 25th day of February, 1998.
/s/ Aron S. Izower
------------------------------
Aron S. Izower
Sole Incorporator
-2-
<PAGE>
Exhibit 3.02
THE COMPANIES LAW (1995 REVISION)
COMPANY LIMITED BY SHARES
MEMORANDUM OF ASSOCIATION
OF
NSM HOLDING COMPANY LIMITED
1. The name of the Company is NSM Holding Company Limited.
2. The Registered Office of the Company shall be at the offices of
Maples and Calder, Attorneys-at-Law, Ugland House, P.O. Box 309, George Town,
Grand Cayman, Cayman Islands, British West Indies or at such other place as the
Directors may from time to time decide.
3. The objects for which the Company is established are unrestricted and
shall include, but without limitation, the following:
(i)(a) To carry on the business of an investment company and to act as
promoters and entrepreneurs and to carry on business as
financiers, capitalists, concessionaires, merchants, brokers,
traders, dealers, agents, importers and exporters and to
undertake and carry on and execute all kinds of investment,
financial, commercial, mercantile, trading and other operations.
(b) To carry on whether as principals, agents or otherwise howsoever
the business of realtors, developers, consultants, estate
agents or managers, engineers, manufacturers, dealers in or
vendors of all types of property including services.
<PAGE>
(ii) To exercise and enforce all rights and powers conferred by
or incidental to the ownership of any shares, stock, obligations or
other securities including without prejudice to the generality of the
foregoing all such powers of veto or control as may be conferred by
virtue of the holding by the, Company of some special proportion of the
issued or nominal amount thereof, to provide managerial and other
executive, supervisory and consultant services for or in relation to any
company in which the Company is interested upon such terms as may be
thought fit.
(iii) To purchase or otherwise acquire, to sell, exchange,
surrender, lease, mortgage, charge, convert, turn to account, dispose of
and deal with real and personal property and rights of all kinds and, in
particular mortgages, debentures, produce, concessions, options,
contracts, patents, annuities, licenses, stocks, shares, bonds,
policies, debts, business concerns, undertakings, claims, privileges and
chooses in action of all kinds.
(iv) To subscribe for, conditionally or unconditionally, to
underwrite, issue on commission or otherwise, take, hold, deal in and
convert stocks, shares and securities of all kinds and to enter into
partnership or into any arrangement for sharing profits, reciprocal
concessions or cooperation with any person or company and to promote and
aid in promoting, to constitute, form or compromise any company,
syndicate or partnership of any kind, for the purpose of acquiring and
undertaking any property and liabilities of the Company or of advancing,
directly or indirectly, the objects of the Company or for any other
purpose of which the Company may think expedient.
(v) To stand surety for or to guarantees support or secure the
performance of all or any of the obligations of any person, firm or
company whether or not related or affiliated to the Company in any
manner and whether by personal covenant or by mort-
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<PAGE>
gage, charge or lien upon the whole or any part of the undertaking
property and assets of the Company, both present and future, including
its uncalled capital or by any such method and whether or not the
Company shall receive valuable consideration therefore.
(vi) To engage in or carry on any other lawful trade, business
or enterprise which may at any time appear to the Directors of the
Company capable of being conveniently carried on in conjunction with any
of the aforementioned businesses or activities or which may appear to
the Directors of the Company likely to be profitable to the Company.
In the interpretation of this Memorandum of Association in general and of this
Clause 3 in particular no object, business or power specified or mentioned shall
be limited or restricted by reference to or inference from any other object,
business or power, or the name of the Company, or by the juxtaposition of two or
more objects, businesses or powers and that, in the event of any ambiguity in
this clause or elsewhere in this Memorandum of Association, the same shall be
resolved by such interpretation and construction as will widen and enlarge and
not restrict the objects, businesses and powers of and exercisable by the
Company.
4. Except as prohibited or limited by the Companies Law (1995 Revision),
the Company shall have full power and authority to carry out any object and
shall have and be capable of from time to time and at all times exercising any
and all of the powers at any time or from time to time exercisable by a natural
person or body corporate in doing in any part of the world whether as principal,
agent, contractor or otherwise whatever may be considered by it necessary for
the attainment of its objects and whatever else may be considered by it as
incidental or conducive thereto or consequential thereon, including, but without
in any way restricting the generality of the foregoing, the power to make any
alterations or amendments to this Memorandum of Association and the Articles of
Association of the Company considered necessary or convenient in
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<PAGE>
the manner set out in the Articles of Association of the Company, and the power
to do any of the following acts or things, viz:
to pay all expenses of and incidental to the promotion, formation and
incorporation of the Company; to register the Company to do business in any
other jurisdiction; to sell, lease or dispose of any property of the Company; to
draw, make, accept, endorse, discount, execute and issue promissory notes,
debentures, bills of exchange, bills of lading, warrants and other negotiable or
transferable instruments; to lend money or other assets and to act as
guarantors; to borrow or raise money on the security of the undertaking or on
all or any of the assets of the Company including uncalled capital or without
security; to invest monies of the Company in such manner as the Directors
determine; to promote other companies; to sell the undertaking of the Company
for cash or any other consideration; to distribute assets in specie to Members
of the Company; to make charitable or benevolent donations; to pay pensions or
gratuities or provide other benefits in cash or kind to Directors, officers,
employees, past or present and their families; to purchase Directors, officers,
liability insurance and to carry on any trade or business and generally to do
all acts and things which, in the opinion of the Company or the Directors, may
be conveniently or profitably or usefully acquired and dealt with, carried on,
executed or done by the Company in connection with the business aforesaid
PROVIDED THAT the Company shall only carry on the businesses for which a license
is required under the laws of the Cayman Islands when so licensed under the
terms of such laws.
5. The liability of each Member limited to the amount from time to time
unpaid on such Member's shares.
6. The share capital of the Company is US$10,000 divided into 1,000
shares of a nominal or par value of US$10,00 each with power for the Company
insofar as is permitted by
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<PAGE>
law, to redeem or purchase any of its shares and to increase or reduce the said
capital subject to the provisions of the Companies Law (1995 Revision) and the
Articles of Association and to issue any part of its capital, whether original,
redeemed or increased with or without any preference, priority or special
privilege or subject to any postponement of rights or to any conditions or
restrictions and so that unless the conditions of issue shall otherwise,
expressly declare every issue of shares whether declared to be preference or
otherwise shall be subject to the powers hereinbefore, contained.
7. If the Company is registered as exempted, its operations will be
carried on subject to the provisions of Section 192 of the Companies Law (1995
Revision) and, subiect to the provisions of the Companies Law (1995 Revision)
and the Articles of Association, it shall have the power to register by way of
continuation as a body corporate limited by shares under the laws of any
jurisdiction outside the Cayman Islands and to be deregistered in the Cayman
Islands.
WE the several persons whose names and addresses are subscribed are
desirous of being formed into a company in pursuance of this Memorandum of
Association and we respectively agree to take the number of shares in the
capital of the Company set opposite our respective names.
DATED this ___ day of _____, 19__
SIGNATURE and ADDRESS NUMBER OF SHARES
OF EACH SUBSCRIBER TAKEN BY EACH
- --------------------------------------
Shaun Denton, Attorney-At-Law
P.O. Box 309, Grand Cayman One
- --------------------------------------
Adrian Pope, Attorney-At-Law
P.O. Box 309, Grand Cayman One
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<PAGE>
- --------------------------------------
Witness to the above signatures
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<PAGE>
I, ______________________ Registrar of Companies in and for the
Cayman Islands HEREBY CERTIFY that this is a true and correct copy of the
Memorandum of Association of this Company duly incorporated on the ___ day of
________ 199_.
------------------------------
<PAGE>
THE COMPANIES LAW (1995 REVISION)
COMPANY LIMITED BY SHARES
ARTICLES OF ASSOCIATION
OF
NSM HOLDINGCOMPANY LIMITED
1. In the Articles Table A in the Schedule to the Statute does not apply
and, unless there be something in the subject or context inconsistent therewith,
"Articles" mean these Articles as originally framed or as
from time to time altered by Special Resolution.
"Auditors" means the persons for the time being performing
the duties of auditors of the Company.
"Company" means the above-named Company.
"debenture" means debenture stock, mortgages, bonds and any
other such securities of the Company whether
constitute a charge on the assets of the Company
or not.
"Directors" means the directors for the time being of the
Company.
"dividend" includes bonus.
"Member" shall bear the meaning as ascribed to it in the
Statute.
"month" means calendar month.
"paid-up" means paid-up and/or credited as paid-up.
"registered office" means the registered office for the time being
of the Company.
"Seal" means the common seal of the Company and
includes every duplicate seal.
"Secretary" includes an Assistant Secretary and any person
appointed to perform the duties of Secretary of
the Company.
"share" includes a fraction of a share.
<PAGE>
"Special Resolution" has the same meaning as in the Statute and
includes a resolution approved in writing as
described therein.
"Statute" means the Companies Law of the Cayman Islands as
amended and every statutory modification or
reenactment thereof for the time being in force.
"written" and
"in writing" includes all modes of representing or
reproducing words in visible form.
Words importing the singular number only include the plural number and
vice-versa.
Words importing the masculine gender only include the feminine gender.
Words importing persons only include corporations.
2. The business of the Company may be commenced as soon after
incorporation as the Directors shall see fit, notwithstanding that part only of
the shares may have been allotted.
3. The Directors may pay, out of the capital or any other monies of the
Company, all expenses incurred in or about the formation and establishment of
the Company including the expenses of registration.
CERTIFICATES FOR SHARES
4. Certificates representing shares of the Company shall be in such form
as shall be determined by The Directors. Such certificates may be under Seal.
All certificates for shares shall be consecutively numbered or otherwise
identified and shall specify the shares to which they relate. The, name and
address of the person to whom the shares represented thereby are issued, with
the number of shares and date of issue, shall be entered in the register of
Members of the Company. All certificates surrendered to the Company for transfer
shall be cancelled and no new certificate be issued until the former certificate
for a like number of shares have been surrendered and cancelled. The Directors
may authorize signature(s) affixed by some method or system of mechanical
process.
5. Notwithstanding Article 4 of these Articles, if a share certificate
be defaced, lost or destroyed, it may be renewed on payment of a fee of one
dollar (US$1.00) or such less sum and on such terms (if any) as to evidence and
indemnity and the, payment of the expenses incurred by the Company in
investigating evidence, as the Directors may prescribe.
ISSUE OF SHARES
6. Subject to the provisions, if any, in that behalf in the Memorandum
of Association and to any direction that may be given by the Company in general
meeting and without prejudice to any special rights previously conferred on the
holders of existing shares, the Directors may allot, issue, grant options over
or otherwise dispose of shares of the Company (including fractions of a share)
with or without preferred, deferred or other special rights or restrictions,
whether in regard to dividend, voting, return of capital or otherwise and to
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<PAGE>
such persons, at such times and on such other terms as they think proper. The
Company shall not issue shares in bearer form.
7. The Company shall maintain a register of its Members and every person
whose name is entered as a Member in the register of Members shall be entitled
without payment to receive within two months after allotment or lodgement of
transfer (or within such other period as the conditions of issue shall provide)
one certificate for all his shares or several certificates each for one or more
of his shares upon payment of fifty cents (US$0.50) for every certificate after
the first or such less sum as the Directors shall from time to time determine
provided that in respect of a share or shares held jointly by several persons
the Company shall not be bound to issue more than one certificate for a share to
one of the several joint holders shall be sufficient delivery to all such
holders.
TRANSFER OF SHARES
8. The instrument of transfer of any share shall be in writing and shall
be executed by or on behalf of the transferor and the transferor shall be deemed
to remain the holder of a share until the name of the transferee is entered in
the register in respect thereof.
9. The Directors may in their absolute discretion decline to register
any transfer of shares without assigning any reason therefor. If the Directors
refuse to register a transfer they shall notify the transferee within two months
of such refusal.
10. The registration of transfers may be suspended at such time and for
such periods as the Directors may from time to determine, provided always that
such registration shall not be suspended for more than forty-five days in any
year.
REDEEMABLE SHARES
11. (a) Subject to the provisions of the Statute and the Memorandum of
Association, shares may be issued on the terms that they are, or at the option
of the Company or the holder are, to be redeemed on such terms and in such
manner as the Company, before the issue of the shares, may by Special Resolution
determine.
(b) Subject to the provisions of the Statute and the Memorandum
of Association, the Company may purchase its own shares (including
fractions of a share), including any redeemable shares, provided that
the manner of purchase has first been authorized by the Company in
general meeting and may make payment therefor in any manner authorized
by the Statute, including out of capital.
VARIATION OF RIGHTS OF SHARES
12. If at any time the share capital of the Company is divided into
different classes of shares, the rights attached to any class (unless otherwise
provided by the terms of issue of the shares of that class) may, whether or not
the Company is being woundup, be varied with the consent in writing of the
holders of three-fourths of the issued shares of that class, or with the
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<PAGE>
sanction of a Special Resolution passed at a general meeting of the holders of
the shares of that class.
The provisions of these Articles relating to general meeting shall apply
to every such general meeting of the holders of one class of shares except that
the necessary quorum shall be one person holding or representing by proxy at
least one-third of the issued shares of the class and that any holder of shares
of the class present in person or by proxy may demand a poll.
13. The rights conferred upon the holders of the shares of any class
issued with preferred or other rights shall not, unless otherwise expressly
provided by the terms of issue of the shares of that class, be deemed to be
varied by the creation or issue of further shares ranking pari passu therewith.
COMMISSION ON SALE OF SHARES
14. The Company may in so far as the Statute from time to time permits
pay a commission to any person in consideration of his subscribing or agreeing
to subscribe whether absolutely or conditionally for any shares of the Company.
Such commissions may be satisfied by the payment of cash or the lodgement of
fully or partly paid-up shares or partly in one way and partly in the other. The
Company may also on any issue of shares pay such brokerage as may be lawful.
NON-RECOGNITION OF TRUSTS
15. No person shall be recognized by the Company as holding any share
upon any trust and the Company shall not be bound by or be compelled in any way
to recognize (even when having notice thereof) Any equitable, contingent,
future, or partial interest in any share, or any interest in any fractional part
of a share, or (except only as is otherwise provided by these Articles or the
Statute) any other rights in respect of any share except an absolute right to
the entirety thereof in the registered holder.
LIEN ON SHARES
16. The Company shall have a first and paramount lien and charge on all
shares (whether fully paid-up or not) registered in the name of a Member
(whether solely or jointly with others) for all debts, liabilities or
engagements to or with the Company (whether presently payable or not) by such
Member or his estate, either alone or jointly with any other person, whether a
Member or not, but the Directors may at any time declare any share to be wholly
or in part exempt from the provisions of this Article. The registration of a
transfer of any such share shall operate as a waiver of the Company's lien (if
any) thereon. The Company's lien (if any) on a share shall extend to all
dividends or other monies payable in respect thereof,
17. The Company may sell, in such manner as the Directors think fit, any
shares on which the Company has a lien, but no sale shall be made unless a sum
in respect of which the lien exists is presently payable, nor until the
expiration of fourteen days after a notice in writing stating and demanding
payment of such part of the amount in respect of which the lien exists as is
presently payable, has been given to the registered holder or holders for the
time being of the
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<PAGE>
share, or the person, of which the Company has notice, entitled thereto by
reason of his death or bankruptcy.
18. To give effect to any such we the Directors may authorize some
person to transfer the shares sold to the purchaser thereof. The purchaser shall
be registered as the holder of the shares comprised in any such transfer, and he
shall not be bound to see to the application of the purchase money, nor shall
his title to the shares be affected by any irregularity or invalidity in the
proceedings in reference to the sale.
19. The proceeds of such sale shall be received by the Company and
applied in payment of such part of the amount in respect of which the lien
exists as is presently payable and the residue, if any, shall (subject to a like
lien for sums not presently payable as existed upon the shares before the sale)
be paid to the person entitled to the shares at the date of the sale.
CALL ON SHARES
20. (a) The Directors may from time to time make calls upon the Members
in respect of any monies unpaid on their shares (whether on account of the
nominal value of the shares or by way of premium or otherwise) and not by the
conditions of allotment thereof made payable at fixed terms, provided the no
call shall be payable at less than one month from the date fixed for the payment
of the last preceding call, and each Member shall (subject to receiving at least
fourteen days notice specifying the time or times of payment) pay to the Company
at the time or times so specified the amount called on the shares. A call may be
revoked or postponed as the Directors may determine. A call may be made payable
by installments.
(b) A call shall be deemed to have been made at the time when
the resolution of the Directors authorizing such call was passed.
(c) The joint holders of a share shall be jointly and severally
liable to pay all calls in respect thereof.
21. If a sum called in respect of a share is not paid before or on a day
appointed for payment thereof, the persons from whom the sum is due shall pay
interest on the sum from the day appointed for payment thereof to the time of
actual payment at such rate not exceeding ten per cent per annum as the
Directors may determine, but the Directors shall be at liberty to waive payment
of such interest either wholly or in part.
22. Any sum which by the terms of issue of a share becomes payable on
allotment or at any fixed date, whether on account of the nominal value of the
share or by way of premium or otherwise, shall for the purposes of these
Articles be deemed to be a can duly made, notified and payable on the date on
which by the terms of issue the same becomes payable, and in the case of
non-payment all the relevant provisions of these Articles as to payment of
interest forfeiture or otherwise shall apply as if such sum had become payable
by virtue of a call duly made and notified.
23. The Directors may, on the issue of shares, differentiate between the
holders as to the amount of calls or interest to be paid and the times of
payment.
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<PAGE>
24. (a) The Directors may, if they think fit, receive from any Member to
advance the same, all or any of the monies uncalled and unpaid upon any s hares
held by him, and upon all or any of the monies so advanced may (until the same
would but for such advances, become payable) pay interest at such rate not
exceeding (unless the Company in general meeting shall otherwise direct) seven
per cent per annum, as may be agreed upon between the Directors and the Member
paying such sum in advance.
(b) No such sum paid in advance of calls shall entitle the
Member paying such sum to any portion of a dividend declared in respect
of any period prior to the date upon which such sum would, but for such
payment, become presently payable.
FORFEITURE OF SHARES
25. (a) If a Member fails to pay any call or installment of a call or to
make any payment required by the terms of issue on the day appointed for payment
thereof, the Directors may, at any time thereafter during such time as any part
of the call, installment or payment remains unpaid, give notice requiring
payment of so much of the call, installment or payment as is unpaid, together
with any interest which may have accrued and all expenses that have been
incurred by the Company by reason of such nonpayment, Such notice shall name a
day (not earlier than the expiration of fourteen days from the date of giving of
the notice) on or before which the payment required by the notice is to be made,
and shall state that, in the event of nonpayment at or before the time appointed
the shares in respect of which such notice was given will be liable to be
forfeited.
(b) If the requirements of any such notice as aforesaid are not
complied with, any share in respect of which the notice has been may at
the time thereafter, before the payment required by the notice has been
given may at any time thereafter, before the payment required by the
notice has been made, be forfeited by a resolution of the Directors to
that effect. Such forfeiture shall include all dividends declared in
respect of the forfeited share and not, actually paid before the
forfeiture.
(c) A forfeited share may be sold or otherwise disposed of on
such terms and in such manner as the Directors think fit and at any time
before a sale or disposition the forfeiture may be canceled on such
terms as the Directors think fit.
26. A person whose shares have been forfeited shall cease to be a Member
in respect of the, forfeited shares, but shall, notwithstanding, remain liable
to pay to the Company all monies which, at the date of forfeiture were payable
by him to the Company in respect of the shares together with interest thereon,
but his liability shall cease if and when the Company shall have received
payment in full of all monies whenever payable in respect of the shares.
27. A certificate in writing under the hand of one Director or the
Secretary of the Company that a share in the Company has been duly forfeited on
a date stated in the declaration shall be conclusive evidence of the fact
therein stated as against all persons claiming to be entitled to the share. The
Company may receive the consideration given for the share on any sale or
disposition thereof and may execute a transfer of the share in favor of the
person to whom the
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<PAGE>
share is sold or disposed of and he shall thereupon be registered as the holder
of the share and shall not be bound to see to the application of the purchase
money, if any, nor shall his title to the share be affected by any irregularity
or invalidity in the proceedings in reference to the forfeiture, sale or
disposal of the share.
28. The provisions of these Articles as to forfeiture shall apply in the
case of nonpayment of any sum which, by the terms of issue of a share, becomes
payable at a fixed time, whether on account of the nominal value of the share or
by way of premium as if the same had been payable by virtue of a call duly made
and notified.
REGISTRATION OF EMPOWERING INSTRUMENTS
29. The Company shall be entitled to charge a fee not exceeding one
dollar (US$1.00) on the registration of every probate, letters of
administration, certificate of death or marriage, power of attorney, notice in
lieu of distringas, or other instrument.
TRANSMISSION OF SHARES
30. In case of the death of a Member, the survivor or survivors where
the deceased was a joint holder, and the legal personal representatives of the
deceased where he was a sole holder, shall be the only persons recognized by the
Company as having any title to his interest in the shares, but nothing herein
contained shall release the estate of any such deceased holder from any
liability in respect of any shares which had been held by him solely or jointly
with other persons.
31. (a) Any person becoming entitled to a share in consequence of the
death or bankruptcy or liquidation or dissolution of a Member (or in any other
way than by transfer) may, upon such evidence being produced as may from time to
time be required by the Directors and subject as hereinafter provided, elect
either to be registered himself as holder of the share or to make such transfer
of the shares to such other person nominated by him as the deceased or bankrupt
person could have made and to have such person registered as the transferee
thereof, but the Directors shall, in either case, have the same right to decline
or suspend registration as they would have had in the case of a transfer of the
share by that Member before his death or bankruptcy as the case may be.
(b) If the person so becoming entitled shall elect to be
registered himself as holder he shall deliver or send to the Company a
notice in writing signed by him stating that he so elects.
32. A person becoming entitled to a share by reason of the death or
bankruptcy or liquidation or dissolution of the holder (or in any other case
than by transfer) shall be entitled to the same dividends and other advantages
to which be would be entitled if he were the registered holder of the share,
except that he shall not, before being registered as a Member in respect of the
share, be entitled in respect of it to exercise any right conferred by
membership in relation to meetings of the Company PROVIDED HOWEVER that the
Directors may at any time give notice requiring any such person to elect either
to be registered himself or to transfer the share
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<PAGE>
and if the notice is not compiled with within ninety days the Directors may
thereafter withhold payment of all dividends bonuses or other monies payable in
respect of the shares until the requirements of the notice have been complied
with,
AMENDMENT OF MEMORANDUM OF ASSOCIATION, CHANGE OF
LOCATION OF REGISTERED OFFICE & ALTERATION OF CAPITAL
33. (a) Subject to and in so far as permitted by the provisions of the
Statute, the Company may from time to time by ordinary resolution alter or amend
its Memorandum of Association otherwise than with respect to its name and
objects and may, without restricting the generality of the foregoing:
(i) increase the share capital by such sum to be divided into shares
of such amount or without nominal or par value as the resolution
shall prescribe and with such rights, priorities and privileges
annexed thereto, as the Company in general meeting may
determine.
(ii) consolidate and divide all or any of its share capital into
shares of larger amount than its existing shares;
(iii) by subdivision of its existing shares or any of them divide the
whole or any part of its chart capital into shares of smaller
amount than is fixed by the Memorandum of Association or into
shares without nominal or par value;
(iv) cancel any shares which at the date of the passing of the
resolution have not been taken or agreed to be taken by any
person.
(b) All new shares created hereunder shall be subject to the
same provisions with reference to the payment of calls, liens, transfer,
transmission, forfeiture and otherwise as the shares in the original
share capital.
(c) Subject to the provisions of the Statute, the Company may by
Special Resolution change its name or alter its objects.
(d) Without prejudice to Article 11 hereof and subject to the
provisions of the Statute, the Company may by Special Resolution reduce
its share capital and any capital redemption reserve fund.
(e) Subject to the provisions of the Statute, the Company may by
resolution of the Directors change the location of its registered
office.
CLOSING REGISTER OF MEMBERS OR FIXING RECORD DATE
34. For the purpose of determining Members entitled to notice of or to
vote at any meeting of Members or any adjournment thereof, or Members entitled
to receive payment of any dividend, or in order to make a determination of
Members for any other proper purpose, the Directors of the Company may provide
the register of Members shall be closed for transfers for a
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<PAGE>
stated but not to exceed in any case forty days. If the register of Members
shall be so closed for the purpose of determining Members entitled to notice of
or to vote at a meeting of Members such register shall be so closed for at least
ten days immediately preceding such meeting and the record date for such
determination shall be the date of the closure of the register of Members.
35. In lieu of or apart from closing the register of Members, the
Directors may fix in advance a date as the record date for any such
determination of Members entitled to notice of or to vote at a meeting of the
Members and for the purpose of determining the Members entitled to receive
payment of any dividend the Directors may, at or within 90 days prior to the
date of declaration of such dividend fix a subsequent date as the record date
for such determination.
36. If the register of Members is not so closed and no record date is
fixed for the determination of Members entitled to notice of or to vote at a
meeting of Members or Members entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Directors declaring such dividend is adopted, as the case may
be, shall be the record date for such determination of Members. When a
determination of Members entitled to vote at any meeting of Members has been
made as provided in this section, such determination shall apply to any
adjournment thereof.
37. (a) Subject to paragraph (c) hereof, the Company shall within one
year of its incorporation and in each year of its existence thereafter hold a
general meeting as its annual general meeting and shall specify the meeting as
such in the notices calling it. The annual general meeting shall be held at such
time and place as the Directors shall appoint and if no other time and place is
prescribed by them, it shall be held at the registered office on the second
Wednesday in December of each year at ten o'clock in the morning.
(b) At these meetings the report of the Directors (if any) shall
be presented.
(c) If the Company is exempted as defined in the Statute it may
but shall not be obliged to hold an annual general meeting.
38. (a) The Directors may whenever they think fit, and they shall on the
requisition of Members of the Company holding at the date of the deposit of the
requisition not less than one-tenth of such of the paid-up capital of the
Company as at the date of the deposit carries the right of voting at general
meetings of the Company, proceed to convene a general meeting of the Company.
(b) The requisition must state the objects of the meeting and
must be signed by the requisitionists and deposited at the registered
office of the Company and may consist of several documents in like form
each signed by one or more requisitionists.
(c) If the Directors do not within twenty-one days from the date
of the deposit of the requisition duly proceed to convene a general
meeting, the requisitionists, or any of them representing more than
one-half of the total voting rights of all of them, may themselves
convene a general meeting, but any meeting so convened shall not be held
after the expiration of three months after the expiration of the said
twenty-one days.
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(d) A general meeting convened as aforesaid by requisitionists
shall be convened in the same manner as nearly as possible as that in
which general meetings are to be convened by Directors.
NOTICE OF GENERAL MEETINGS
39. At least five days' notice shall be given of an annual general
meeting or any other general meeting. Every notice shall be exclusive of the day
on which it is given or deemed to be given and of the day for which it is given
and shall specify the place, the day and the hour of the meeting and the general
nature of the business and shall be given in manner hereinafter mentioned or in
such other manner if any as may be prescribed by the Company PROVIDED that a
general meeting of the Company shall, whether or not the notice specified in
this regulation has been given and whether or not the provisions of Article 38
have been compiled with, be deemed to have been duly convened if it is so
agreed:
(a) in the case of a general meeting called as an annual general
meeting by all the Members entitled to attend and vote thereat
or theirs proxies; and
(b) in the case of any other general meeting by a majority in number
of the members having a right to attend and vote at the meeting,
being a majority together holding not less than seventyfive per
cent in nominal value or in the case of shares without nominal
or par value seventyfive per cent of the shares in issue, or
their proxies.
40. The accidental omission to give notice of a general meeting to, or
the nonreceipt of notice of a meeting by any person entitled to receive notice
shall not invalidate the proceedings of that meeting.
PROCEEDINGS AT GENERAL MEETINGS
41. No business shall be transacted at any general meeting unless a
quorum of Members is present at the time when the meeting proceeds to business;
two Members present in person or by proxy shall be a quorum provided always that
if the Company has one Member of record the quorum shall be that one Member
present in person or by proxy.
42. A resolution (including a Special Resolution) in writing (in one or
more counterparts) signed by all Members for the time being entitled to receive
notice of and to attend and vote at general meetings (or being corporations by
their duly authorized representatives) shall be as valid and effective as if the
same had been passed at a general meeting of the Company duly convened and held.
43. If within half an hour from the time appointed for the meeting a
quorum is not present, the meeting, if convened upon the requisition of Members,
shall be dissolved and in any other case it shall stand adjourned to the same
day in the next week at the same time and place or to such other time or such
other place as the Directors may determine and if at the adjourned
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meeting a quorum is not present within half an hour from the time appointed for
the meeting the Members present shall be a quorum.
44. The Chairman, if any, of the Board of Directors shall preside as
Chairman at every general meeting of the Company, or if there is no such
Chairman, or if he shall not be present within fifteen minutes after the time
appointed for the holding of the meeting, or is unwilling to act, the Directors
present shall elect one of their number to be Chairman of the meeting.
45. If at any general meeting no Director is willing to act as Chairman
or if no Director is present with fifteen minutes after the time appointed for
holding the meeting, the Members present shall choose one of their number to be
Chairman of the meeting.
46. The Chairman may, with the consent of any general meeting duly
constituted hereunder, and shall if so directed by the meeting, adjourn the
meeting from time to time and from place to place, but no business shall be
transacted at any adjourned meeting other than the business left unfinished at
the meeting from which the adjournment took place. When a general meeting is
adjourned for thirty days or more, notice of the adjourned meeting shall be
given as in the case of an original meeting; save as aforesaid it shall not be
necessary to give any notice of an adjournment or of the business to be
transacted at an adjourned general meeting.
47. At any general meeting a resolution put to the vote of the meeting
shall be decided on a show of hands unless a poll is, before or on the
declaration of the result of the show of hands, demanded by the Chairman or any
other Member present in person or by proxy.
48. Unless a poll be so demanded a declaration by the Chairman that a
resolution has on a show of hands been carried, or carried unanimously, or by a
particular majority, or lost, and an entry to that effect in the Company's
Minute book containing the Minutes of the proceedings of the meeting shall be
conclusive evidence of the fact without proof of the number or proportion of the
votes recorded in favour of or against such resolution.
49. The demand for a poll may be withdrawn.
50. Except as provided in Article 52, if a poll is duly demanded it
shall be taken in such manner as the Chairman directs and the result of the poll
shall be deemed to be the resolution of the general meeting at which the poll
was demanded.
51. In the case of an equality of votes, whether on a show of hands or
on a poll, the Chairman of the general meeting at which the show of hands takes
place or at which the poll is demanded, shall be entitled to a second or casting
vote.
52. A poll demanded on the election of a Chairman or on a question of
adjournment shall be taken forthwith. A poll demanded on any other question
shall be taken at such time as the Chairman of the general meeting directs and
any business other than that upon which a poll has been demanded or is
contingent thereon may be proceeded with pending the taking of the poll.
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VOTES OF MEMBERS
53. Subject to any rights or restrictions for the time being attached to
any class or classes of shares, on a show of hands every Member of record
present in person or by proxy at a general meeting shall have one vote and on a
poll ever Member of record present in person or proxy shall have one vote for
each share registered in his name in the register of Members.
54. In the case of joint holders of record the vote of the senior who
tenders a vote, whether in person or by proxy, shall be accepted to the
exclusion of the votes of the other joint holders, and for this purpose
seniority shall be determined by the order in which the names stand in the
register of Members.
55. A Member of unsound mind, or in respect of whom an order has been
made by any court, having jurisdiction in lunacy, may vote, whether on a show of
hands or on a poll, by his committee, receiver, curator bonis, or other person
in the nature of a committee, receiver or curator bonis appointed by that court,
and any such committee, receiver, curator bonis or other persons may vote by
proxy.
56. No Member shall be entitled to vote at any general meeting unless he
is registered as a shareholder of the Company on the record date for such
meeting nor unless all calls or other sums presently payable by him in respect
of shares in the Company have been paid.
57. No objection shall be raised to the qualification of any voter
except at the general meeting or adjourned general meeting at which the vote
objected to is given or tendered and every vote not disallowed at such general
meeting shall be valid for all purposes. Any such objection made in due time
shall be referred to the Chairman of the general meeting whose decision shall be
final and conclusive.
58. On a poll or on a show of hands votes may be given either personally
or by proxy.
PROXIES
59. The instrument appointing a proxy shall be in writing and shall be
executed under the hand of the appointor or of his attorney duly authorized in
writing, or, if the appointor is a corporation under the hand of an officer or
attorney duly authorized in that behalf. A proxy need not be a Member of the
Company.
60. The instrument appointing a proxy shall be deposited at the
registered office of the Company or at such other place as is specified for that
purpose in the notice convening the meeting no later than the time for holding
the meeting, or adjourned meeting provided that the Chairman of the Meeting may
at his discretion direct that an instrument of proxy shall be deemed to have
been duly deposited upon receipt of telex, cable or telecopy confirmation from
the appointor that the instrument of proxy duly signed is in the course of the
transmission to the Company.
61. The instrument appointing a proxy may be in any usual or common form
and may be expressed to be for a particular meeting or any adjournment thereof
or generally until revoked.
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An instrument appointing a proxy shall be deemed to include the power to demand
or join or concur in demanding a poll.
62. A vote given in accordance with the terms of an instrument of proxy
shall be valid notwithstanding the previous death or insanity of the principal
or revocation of the proxy or of the authority under which the proxy was
executed, or the transfer of the share in respect of which the proxy is given
provided that no intimation in writing of such death, insanity, revocation or
transfer as aforesaid shall have been received by the Company at the registered
office before the commencement of the general meeting, or adjourned meeting at
which it is sought to use the proxy.
63. Any corporation which is a Member of record of the Company may in
accordance with its Articles or in the absence of such provision by resolution
of its Directors or other governing body authorise such person as it thinks fit
to act as its representative at any meeting of the Company or of any class of
Members of the Company, and the person so authorised shall be entitled to
exercise the same powers on behalf of the corporation which he represents as the
corporation could exercise if it were an individual Member of record of the
Company.
64. Shares of its own capital belonging to the Company or held by it in
a fiduciary capacity shall not be voted, directly or indirectly, at any meeting
and shall not be counted in determining the total number of outstanding shares
at any given time.
DIRECTORS
65. There shall be a Board of Directors consisting of not less than on
or more than ten persons (exclusive of alternate Directors) PROVIDED HOWEVER
that the Company may from time to time by ordinary resolution increase or reduce
the limits in the number of Directors. The first Directors of the Company shall
be determined in writing by, or appointed by a resolution of, the subscribers of
the Memorandum of Association or a majority of them.
66. The remuneration to be paid to the Directors shall be such
remuneration as the Directors shall determine. Such remuneration shall be deemed
to accrue from day to day. The Directors shall also be entitled to be paid their
traveling, hotel and other expenses properly incurred by them in going to,
attending and returning from meetings of the Directors, or any committee of the
Directors, or general meetings of the Company, or otherwise in connection with
the business of the Company, or to receive a fixed allowance in respect thereof
as may be determined by the Directors from time to time, or a combination partly
of one such method and partly the other.
67. The Directors may by resolution award special remuneration to any
Director of the Company undertaking any special work or services for, or
undertaking any special mission on behalf of, the Company other than his
ordinary routine work as a Director. Any fees paid to a Director who is also
counsel or solicitor to the Company, or otherwise serves it in a professional
capacity shall be in addition to his remuneration as a Director.
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68. A Director or alternate Director may hold any other office or place
of profit under the Company (other than the office of Auditor) in conjunction
with his office of Director for such period and on such terms as to remuneration
and otherwise as the Directors may determine.
69. A Director or alternate Director may act by himself or his firm in a
professional capacity for the Company and he or his firm shall be entitled to
remuneration for professional services as if he were not a Director or alternate
Director.
70. A shareholding qualification for Directors may be fixed by the
Company in general meeting, but unless and until so fixed no qualification shall
be required.
71. A Director or alternate Director of the Company may be or become a
director or other officer of or otherwise interested in any company promoted by
the Company or in which the Company may be interested as shareholder or
otherwise and no such Director or alternate Director shall be accountable to the
Company for any remuneration or other benefits received by him as a director or
officer of, or from his interest in, such other company.
72. No person shall be disqualified from the office of Director or
alternate Director or prevented by such office from contracting with the
Company, either as vendor, purchaser or otherwise, nor shall any such contract
or any contract or transaction entered into by or on behalf of the Company in
which any Director or alternate Director shall be in any way interested be or be
liable to be avoided, nor shall any Director or alternate Director so
contracting or being so interested be liable to account to the Company for any
profit realised by any such contract or transaction by reason of such Director
holding office or of the fiduciary relation thereby established. A Director (or
his alternate Director in his absence) shall be at liberty to vote in respect of
any contract or transaction in which he is so interested as aforesaid PROVIDED
HOWEVER that the nature of the interest of any Director or alternate Director in
any such contract or transaction shall be disclosed by him or the alternate
Director appointed by him at or prior to its consideration any vote thereon.
73. A general notice that a Director or alternate Director is a
shareholder of any specified firm or company and is to be regarded as interested
in any transaction with such firm or company shall be sufficient disclosure
under Article 72 and after such general notice it shall not be necessary to give
special notice relating to any particular transaction.
ALTERNATE DIRECTORS
74. Subject to the exception contained in Article 82, a Director who
expects to be unable to attend Directors' Meetings because of absence, illness
or otherwise may appoint any person to be an alternate Director to act in his
stead and such appointee whilst he holds office as an alternate Director shall,
in the event of absence therefrom of his appointor, be entitled to attend
meetings of the Directors and to vote thereat and to do, in the place and stead
of his appointor, any other act or thing which his appointor is permitted or
required to do by virtue of his being a Director as if the alternate Director
were the appointor, other than appointment of an alternate to himself, na dhe
shall ipso facto vacate office if and when his appointor ceases to be a Director
or
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removes the appointee from office. Any appointment or removal under this Article
shall be effected by notice in writing under the hand of the Director making the
same.
POWERS AND DUTIES OF DIRECTORS
75. The business of the Company shall be managed by the Directors (or a
sole Director if only one is appointed) who may pay all expenses incurred in
promoting, registering and setting up the Company, and may exercise all such
powers of the Company as are not, from time to time by the Statute, or by these,
or such regulations, being not inconsistent with the aforesaid, as may be
prescribed by the Company in general meeting required to be exercised by the
Company in general meeting PROVIDED HOWEVER that no regulations made by the
Company in general shall invalidate any prior act of the Directors which would
have been valid if that regulation had not been made.
76. The Directors may from time to time and at any time by powers of
attorney appoint any company, firm, person or body of persons, whether nominated
directly or indirectly by the Directors, to be the attorney or attorneys of the
Company for such purpose and with such powers, authorities and discretions (not
exceeding those vested in or exercisable by the Directors under these Articles)
and for such period and subject to such conditions as they may think fit, and
any such powers of attorney may contain such provisions for the protection and
convenience of persons dealing with any such attorneys as the Directors may
think fit and may also authorise any such attorney to delegate all or any of the
powers, authorities and discretions vested in him.
77. All cheques, promissory notes, drafts, bills of exchange and other
negotiable instruments and all receipts for monies paid to the Company shall be
signed, drawn, accepted, endorsed or otherwise executed as the case may be in
such manner as the Directors shall from time to time by resolution determine.
78. The Directors shall cause minutes to be made in books provided for
the purpose:
(a) of all appointments of officers made by the Directors;
(b) of the names of the Directors (including those represented
thereat by an alternate or by proxy) present at each meeting of
the Directors and of any committee of the Directors;
(c) of all resolutions and proceedings at all meetings of the
Company and of the Directors and of committees of Directors.
79. The Directors on behalf of the Company may pay a gratuity or pension
or allowance on retirement to any Director who has held any other salaried
office or place of profit with the Company or to his widow or dependants and may
take contributions to any fund and pay premiums for the purchase or provision of
any such gratuity, pension or allowance.
80. The Directors may exercise all the powers of the Company to borrow
money and to mortgage or charge its undertaking, property and uncalled capital
or any part thereof and to
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issue debentures, debenture stock and other securities whether outright or as
security for any debt, liability or obligation of the Company or of any third
party.
MANAGEMENT
81. (a) The Directors may from time to time provide for the management
of the affairs of the Company in such manner as they shall think fit and the
provisions contained in the three next following paragraphs shall be without
prejudice to the general powers conferred by this paragraph.
(b) The Directors from time to time and at any time may
establish any committees, local boards or agencies for managing any of
the affairs of the Company and may appoint any persons to be members of
such committees or local boards or any managers or agents and may fix
their remuneration.
(c) The Directors from time to time and at any time may delegate
to any such committee, local board, manager or agent any of the powers,
authorities and discretions for the time being vested in the Directors
and may authorise the members for the time being of any such local
board, or any of them to fill up any vacancies therein and to act
notwithstanding vacancies and any such appointment or delegation may be
made on such terms and subject to such conditions as the Directors may
think fit and the Directors may at any time remove any person so
appointed and may annul or vary any such delegation, but no person
dealing in good faith and without notice of any such annulment or
variation shall be affected thereby .
(d) Any such delegates as aforesaid may be authorised by the
Directors to subdelegate all or nay of the powers, authorities, and
discretions for the time being vested in them.
MANAGING DIRECTORS
82. The Directors may, from time to time, appoint one or more of their
body (but not an alternate Director) to the office of Managing Direct or for
such terms and at such remuneration (whether by way of salary, or commission, or
participation in profits, or party in one way and partly in another) as they may
think fit but for his appointment shall be subject to determination ipso facto
if he ceases from any time to be a Director and no alternate Director appointed
by him can act in his stead as a Director Managing Director.
83. The Directors may entrust to and confer upon a Managing Director any
of the powers exercisable by them upon such terms and conditions and with such
restrictions as they may think fit and either collaterally with or to the
exclusion of their own powers and may from time to time revoke, withdraw, alter
or vary all or any of such powers.
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PROCEEDINGS OF DIRECTORS
84. Except as otherwise provided by these Articles, the Directors shall
meet together for the dispatch of business, convening, adjourning and otherwise
regulating their meetings as they think fit. Questions arising at any meeting
shall be decided by a majority of votes of the Directors and alternate Directors
present at a meeting at which there is a quorom, the vote of an alternate
Director not being counted if his appointor be present at such meeting. In case
of an equality of votes, the Chairman shall have a second or casting vote.
85. A Director or alternate Director may, and the Secretary on the
requisition of a Director shall, at any time summon a meeting of the Directors
by at least two days' notice in writing to every Director and alternate Director
which notice shall set forth the general nature of the business to be considered
unless notice is waived by all the Directors (or their alternates) either at,
before or after the meeting is held and PROVIDED FURTHER if notice is given in
person, by cable, telex, or telecopy the same shall be deemed to have been given
on the day it is delivered to the Directors or transmitting organization the
case may be. The provisions of Article 40 shall apply mutatis mutandis with
respect to notices of meetings of Directors.
86. The quorum necessary for the transaction of the business of the
Directors may be fixed by the Directors and unless so fixed shall be two, a
Director and his appointed alternate Director being considered only one person
for this purpose, PROVIDED ALWAYS that if there shall at any time be only a sole
Director the quorum shall be one. For the purposes of this Article an alternate
Director or proxy appointed by a Director shall be counted in a quorum at a
meeting at which the Director appointing him is not present.
87. The continuing Directors may act notwithstanding any vacancy in
their body, but if and so long as their number is reduced below the number fixed
by or pursuant to these Articles as the necessary quorum of Directors the
continuing Directors or Director may act for the purpose of increasing the
number of Directors to that number, or of summoning a general meeting of the
Company, but for no other purpose.
88. The Directors may elect a Chairman of their Board and determine the
period for which he is to hold office; but if no such Chairman is elected, or if
at any meeting the Chairman is not present within five minutes after the time
appointed for holding the same, the Directors present may choose one of their
number to be Chairman of the meeting.
89. The Directors may delegate any of their powers to committees
consisting of such member or members of the Board of Directors (including
Alternate Directors in the absence of their appointors) as they think fit; any
committee so formed shall in the exercise of the powers so delegated conform to
any regulations that may be imposed on it by the Directors.
90. A committee may meet and adjourn as it thinks proper. Questions
arising at any meeting shall be determined by a majority of votes of the members
present, and in the case of an equality of votes the Chairman shall have a
second or casting vote.
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91. All acts done by any meeting of the Directors or of a committee of
Directors (including any person acting as an alternate Director) shall,
notwithstanding that it be afterwards discovered that there was some defect in
the appointment of any Director or alternate Director, or that they or any of
them were disqualified, be as valid as if every such person bad been duly
appointed and qualified to be a Director or alternate Director as the case may
be.
92. Members of the Board of Directors or of any committee thereof may
participate in a meeting of the Board or of such committee by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other and participation in a
meeting pursuant to this provision shall constitute presence in person at such
meeting. A resolution in writing (in one, or more counterparts), signed by all
the Directors for the time being or all the members of a committee of Directors
(an alternate Director being entitled to sign such resolution on behalf of his
appointor) shall be as valid and effectual as if it had been passed at a meeting
of the Directors or committee as the case may be duly convened and held.
93. (a) A Director may be represented at any meetings of the Board of
Directors by a proxy appointed by him in which event the presence or vote of the
proxy shall for all purposes be deemed to be that of the Director.
(b) The provisions of Articles 59-62 shall mutatis mutandis apply to the
appointment of proxies by Directors.
VACATION OF OFFICE OF DIRECTOR
94. The office of a Director shall be vacated:
(a) if he gives notice in writing to the Company that he resigns
the office of Director;
(b) if he absents himself (without being represented by proxy or
an alternate Director appointed by him) from three consecutive meetings
of the Board of Directors without special leave of absence from the
Directors, and they pass a resolution that he has by reason of such
absence vacated office;
(c) if he dies, becomes bankrupt or makes any arrangement or
composition with his creditors generally;
(d) if he is found a lunatic or becomes of unsound mind.
APPOINTMENT AND REMOVAL OF DIRECTORS
95. The Company may by ordinary resolution appoint any person to be a
Director and may in like manner remove any Director and may in like manner
appoint another person in his stead.
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96. The Directors shall have power at any time and from time to time to
appoint any person to be a Director, either to fill a casual vacancy or as an
addition to the existing Directors but so that the total amount of Directors
(exclusive of alternate Directors) shall not at any time exceed the number fixed
in accordance with these Articles.
PRESUMPTION OF ASSENT
97. A Director of the Company who is present at a meeting of the Board
of Directors at which action on any Company matter is taken shall be presumed to
have assented to the action taken unless his dissent shall be entered in the
Minutes of the meeting or unless he shall file his written dissent from such
action with the person acting as the Secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to such
person immediately after the adjournment of the meeting. Such right to dissent
shall not apply to a Director who voted in favour of such action.
SEAL
98. (a) The Company may, if the Directors so determine, have a Seal
which shall, subject to paragraph (c) hereof, only be used by the authority of
the Directors or of a committee of the Directors authorized by the Directors in
that behalf and every instrument to which the Seal has been affixed shall be
signed by one person who shall be either a Director or the Secretary or
Secretary-Treasurer or some person appointed by the Directors for the purpose.
(b) The Company may have a duplicate Seal or Seals each of which
shall be a facsimile of the Common Seal of the Company and, if the
Directors so determine, with the addition on its face of the name of
every place where it is to be used.
(c) A Director, Secretary or other officer or representative or
a attorney may without further authority of the Directors affix the Seal
of the Company over his signature alone to any document of the Company
required to be authenticated by him under Seal or to be filed with the
Registrar of Companies in the Cayman Islands or elsewhere wheresoever.
OFFICERS
99. The Company may have a President, a Secretary or Secretary-Treasurer
appointed by the Directors who may also from time to time appoint such other
officers as they consider necessary, all for such terms, at such remuneration
and to perform such duties, and subject to such provisions as to
disqualification and removal as the Directors from time to time prescribe.
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DIVIDENDS, DISTRIBUTIONS AND RESERVE
100. Subject to the Statute, the Directors may from time to time declare
dividends (including interim dividends) and distributions on shares of the
Company outstanding and authorize payment of the same out of the funds of the
Company lawfully available therefore.
101. The Directors may, before declaring any dividends or distributions,
set aside such sums as they proper as a reserve or reserves which shall at the
discretion of the Directors, be applicable for any purpose of the Company and
pending such application may, at the like discretion, be employed in the
Business of the Company.
102. No dividend or distribution shall be payable except out of the
profits of the Company, realised or unrealised, or out of the share premium
account or as otherwise permitted by the Statute.
103. Subject to the rights of person, if any, entitled to shares with
special rights as to dividends or distributions, if dividends or distributions
are to be declared on a class of shares they shall be declared and paid
according to the amounts paid or credited as paid on the shares of such class
outstanding on the record date for such dividend or distribution as determined
in accordance with these Articles but no amount paid or credited as paid on a
share in advance of calls shall be treated for the purpose of this Article as
paid on the share.
104. The Directors may deduct from any dividend or distribution payable
to any Member all sums of money (if any) presently payable by him to the Company
on account of calls or otherwise.
105. The Directors may declare that any dividend or distribution be paid
wholly or partly by the distribution of specific assets and in particular of
paid up shares, debentures, or debenture stock of any other company or in any
one or more of such ways and where any difficulty arises in regard to such
distribution, the Directors may settle the same as they think expedient and in
particular may issue fractional certificates and fix the value for distribution
of such specific assets or any part thereof and may determine that cash payments
shall be made to any Members upon the footing of the value so fixed in order to
adjust the rights of all Members and may vest any such specific assets in
trustees as may seem expedient to the Directors.
106. Any dividend, distribution, interest or other monies payable in
cash in respect of shares may be paid by cheque or warrant sent through the post
directed to the registered address of the holder or, in the case of joint
holders, to the holder who is first named on the register of Members or to such
person and to such address as such holder or joint holders may in writing
direct. Every such cheque or warrant shall be made payable to the order of the
person to whom it is sent. Any one of two or more joint holders may give
effectual receipts for any dividends, bonuses, or other monies payable in
respect of the share held by them as joint holders.
107. No dividend or distribution shall bear interest against the
Company.
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CAPITALIZATION
108. The Company may upon the recommendation of the Directors by
ordinary resolution authorise the Directors to capitalize any sum standing to
the credit of any of the Company's reserve accounts (including share premium
account and capital redemption reserve fund) or any sum standing to the credit
of profit and loss account or otherwise available for distribution and to
appropriate such sum to Members in the proportions in which such sum would have
been divisible amongst them had the same been a distribution of profits by way
of dividend and to apply such sum on their behalf in paying up in full unissued
shares for allotment and distribution credited as fully paid up to and amongst
them in the proportion aforesaid. In such event the Directors shall do all acts
and things required to give effect to such capitalization, with full power to
the Directors to made such provisions as they think fit for the case of shares
becoming distributable in fractions (including provisions whereby the benefit of
fractional entitlements accrue to the Company rather than to the Members
concerned). The Directors may authorise any person to enter on behalf of all of
the Members interested into an agreement with the Company providing for such
capitalization and matters incidental thereto and any agreement made under such
authority shall be effective and binding on all concerned.
BOOKS OF ACCOUNT
109. The Directors shall cause proper books of account to be kept with
respect to:
(a) all sums of money received and expended by the Company and
the matters in respect of which the receipt or expenditure takes place;
(b) all sales and purchases of goods by the Company;
(c) the assets and liabilities of the Company.
Proper books shall not be denied to be kept if there are not kept such books of
account as are necessary to give a true and fair view of the state of the
Company's affairs and to explain its transactions.
110. The Directors shall from time to time determine whether and to what
extent and at what times and places and under what conditions or regulations the
accounts and books of the Company or any of them shall be open to the inspection
of Members not being Directors and no Member (not being a Director) shall have
the right of inspecting any account or book or document of the Company except as
conferred by Statute or authorised by the Directors by the Company in general
meeting.
111. The Directors may from time to time cause to be prepared and to be
laid before the Company in general meeting profit and loss accounts, balance
sheets, group accounts (if any) and such other reports and accounts as may be
required by law.
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AUDIT
112. The Company may at any annual general meeting appoint an Auditor or
Auditors of the Company who shall hold office, until the next annual general
meeting and may fix his or their remuneration.
113. The Directors may before the first annual general meeting appoint
an Auditor or Auditors of the Company who shall hold office until the first
annual general meeting unless previously removed, by an ordinary resolution of
the Members in general meeting in which case the Members at that meeting may
appoint Auditors. The Directors may fill any casual vacancy in the office of
Auditor but while any such vacancy continues the surviving or continuing Auditor
or Auditors, if any, may act. The remuneration of any Auditor appointed by the
Directors under this Article may be fixed by the Directors.
114. Every Auditor of the Company shall have a :right of access at all
times to the books and accounts and vouchers of the Company and shall be
entitled to require from the Directors and Officers of the Company such
information and explanation as may be necessary for the performance of the
duties of the auditors.
115. Auditors shall at the next annual general meeting following their
appointment and at any other time during their term of office, upon request of
the Directors or any general meeting of the Members, make a report on the
accounts of the Company in general meeting during their tenure at office.
NOTICES
116. Notices shall be in writing and may be given by the Company to any
Member either personally or by sending it by post, cable, telex or telecopy to
him or to his address as shown in the register of Members, such notice, if
mailed, to be forwarded airmail if the address be outside the Cayman Islands.
117. (a) Where a notice is sent by post, service of the notice shall be
deemed to be effected by properly addressing, prepaying and posting a letter
containing the notice, and to have been effected at the expiration of sixty
hours after the letter containing the same is posted as aforesaid.
(b) Where a notice is sent by cable, telex, or telecopy, service
of the notice shall be deemed to be effected by properly addressing, and
sending such notice through a transmitting organization and to have been
effected on the day the same is sent as aforesaid.
118. A notice may be given by the Company to the joint holders of record
of a share by giving the notice to the joint holder first named on the register
of Members in respect of the share.
119. A notice may be given by the Company to the person or persons which
the Company has been advised are entitled to a share or shares in consequence of
the death or bankruptcy of a Member by sending it through the post as aforesaid
in a pre-paid letter addressed
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to them by name, or by the title of representatives of the deceased, or trustee
of the bankrupt, or by any like description at the address supplied for that
purpose by the persons claiming to be so entitled, or at the option of the
Company by giving the notice in any manner in which the same might have been
given if the death or bankruptcy had not occurred.
120. Notice of every general meeting shall be given in any manner
hereinbefore authorised to:
(a) every person shown as a Member in the register of Members as
of the record date for such meeting except that in the case of joint
holders the notice shall be sufficient if given to the joint holder
first named in the register of Members.
(b) every person upon whom the ownership of a share devolves by
reason of his being a legal personal representative or a trustee in
bankruptcy of a Member of record where the Member of record but for his
death or bankruptcy would be entitled to receive notice of the meeting;
and
No other person shall be entitled to receive notices of general meetings.
WINDING UP
121. If the Company shall be wound up the liquidator may, with the
sanction of a Special Resolution of the Company and any other sanction required
by the Statute, divide amongst the Members in specie or kind the whole or any
part of the assets of the Company (whether they shall consist of property of the
same kind or not) and may for such purpose set such value as he deems fair upon
any property to be divided as aforesaid and may determine how such division
shall be carried out as between the Members or different classes of Members. The
liquidator may with the like sanction, vest the whole or any part of such assets
in trustees upon such trusts for the benefit of the contributories as the
liquidator, with the like sanction, shall think fit, but so that no Member shall
be compelled to accept any shares or other securities whereon there is any
liability.
122. If the Company shall be wound up, and the assets available for
distribution amongst the Members as such shall be insufficient to repay the
whole of the paid-up capital, such assets shall be distributed so that, as
nearly as may be, the losses shall be borne by the Members in proportion to the
capital paid up, or which ought to have been paid up, at the commencement of the
winding up on the shares held by them respectively. And if in a winding up the
assets available for distribution amongst the Members shall be more than
sufficient to repay the whole of the capital paid up at the commencement of the
winding up, the excess shall be distributed amongst the Members in proportion to
the capital paid up at the commencement of the winding up on the shares held by
them respectively. This Article is to be without prejudice to the rights of the
holders of shares issued upon special terms and conditions.
INDEMNITY
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123. The Directors and officers for the time being of the Company and
any trustee for the time being acting in relation to any of the affairs of the
Company and their heirs, executors, administrators and personal representatives
respectively shall be indemnified out of the assets of the Company from and
against all actions, proceedings, costs, charges, losses, damages and expenses
which they or any of them shall or may incur or sustain by reason of any act
done or omitted in or about the execution of their duty in their respective
offices or trusts, except such (if any) as they shall incur or sustain by or
through their own wilful neglect or default respectively and no such Director,
officer or trustee shall be answerable for the acts, receipts, neglects or
defaults of any other Director, officer or trustee or for joining in any receipt
for the sake of conformity or for the solvency or honesty of any banker or other
persons with whom any monies or effects belonging to the Company may be lodged
or deposited for safe custody or for any insufficiency of any security upon
which any monies of the Company may be invested or for any other loss or damage
due to any such cause as aforesaid or which may happen in or about the execution
of his office or trust unless the same shall happen through the wilful neglect
or default of such Director, Officer or trustee.
FINANCIAL YEAR
124. Unless the Directors otherwise prescribe, the financial year of the
Company shall end on 31st December in each year and, following the year of
incorporation, shall begin on 1st January in each year.
AMENDMENTS OF ARTICLES
125. Subject to the Statute, the Company may at any time and from time
to time by Special Resolution alter or amend these Articles in whole or in part.
TRANSFER BY WAY OF CONTINUATION
126. If the Company is exempted as defined in the Statute, it shall,
subject to the provisions of the Statute and with the approval of a Special
Resolution, have the power to register by way of continuation as a body
corporate under the laws of any jurisdiction outside the Cayman Islands and to
be deregistered in the Cayman Islands.
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DATED this 23rd day of October 1997.
/s/ Shaun Denton
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Shaun Denton, Attorney-at-Law
PO Box 309, Grand Cayman
/s/ Adrian Pope
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Adrian Pope, Attorney-at-Law
PO Box 309, Grand Cayman
/s/ [ILLEGIBLE]
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Witness to the above signatures
I, Anthony Ian Goddard Registrar of Companies in and for the Cayman Islands
HEREBY CERTIFY that this is a true and correct copy of the Articles of
Association of this Company duly incorporated on the 23rd day of October, 1997.
/s/ Anthony Ian Goddard
-------------------------
Registrar of Companies
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Exhibit 3.03
(Translation)
Articles of Association
Of
Nakornthai Strip Mill Public Company Limited
-----------------------------------------
Chapter 1 General Provisions
Article 1 The words used in these Articles of Association shall have the
meanings as follows unless otherwise specified:
"Company" means Nakornthai Strip Mill Public Company Limited.
"Law" means The laws governing public limited company and
the laws governing securities and exchange.
"Registrar" means The registrar in accordance with the
laws governing public limited company.
"Share
Registrar" means The person who performs as share registrar of
the Company.
Article 2 Unless specifically provided for by these Articles of Association,
the provisions of the Law shall apply.
Article 3 Any provisions not referred to herein shall be governed and
construed in all respects in accordance with the law.
Chapter 2 Issuance of Shares
Article 4 The shares of the company shall be ordinary shares of equal par
value par value of Baht Ten (Baht 10) each and shall be fully
paid-up in one lump sum.
The Company may issue new ordinary shares to any persons as if they
were paid up in full because such person has given other property in
lieu of money or has granted or permitted the use of copyright to
any work of literature or science, patent, trademark, form or model,
plan, formula, or confidential process, or has provided information
concerning experience in the field of industry, commerce, or
science.
In paying for shares, a subscriber or purchaser cannot offset any
debts with the Company.
<PAGE>
The Company may issue the following instrument as permitted by
resolution of a shareholders' meeting:
4.1 Preferred shares;
4.2 Debentures or convertible debentures into ordinary shares;
4.3 All kinds of equity and debt securities in accordance with the
relevant law; and
4.4 Warrants representing the right to subscribe ordinary shares,
investment units or securities as specified in items 4.1, 4,2
and 4.3.
Article 5 All share certificates of the Company shall enter into name
certificates and bear a print or signature of at least one (1
person) director.
The directors may appoint the Share Registrar in accordance with
laws governing securities and exchange to cause a print or signature
in place. If the Company appoints Thai Securities Depository Company
Limited to be its Share Registrar, the procedures relating to share
registration of the Company shall be as prescribed by the Share
Registrar.
Article 6 The Company shall issue share certificates to shareholders within
two months (2 months) from the date the Registrar has accepted to
register the Company, or from the date of payment for the shares
which has been received in full in the case of the sale of
authorized but unissued or newly-issued shares after registration of
the Company.
Article 7 If any of the share certificates are damaged or defaced, the Company
shall issue a new share certificate to the shareholder when the
shareholder surrenders the former share certificate.
If any of the share certificates are lost or destroyed, the
shareholder must show evidence of notification of such to the
inspection officials or other appropriate evidence to the Company.
On finding all is in order, the Company shall issue a new share
certificate to the shareholder within the time specified by the Law.
The Company may charge a fee for the issuance of a new share
certificate substituting the lost, destroyed, damaged or defaced
certificate, at a rate of no more than that specified in the
ministerial regulations. If the shareholder has paid a fee to the
Company, the Company shall issue a new share certificate to the
shareholder within the time specified by the Law.
Article 8 The Company may not own its own shares or take them in pledge.
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Chapter 3 Transfer of Shares
Article 9 The Company's shares may be transferred without any restriction,
except where the said transfer of shares would result in more than
forty-nine (49) percent of total issued shares of the Company being
held by foreigner.
Article 10 Transfer of shares shall be valid upon the transferor endorsing the
share certificate with the name of the transferee and the signatures
of both transferor and transferee and delivering such share
certificate to the transferee.
The transfer of shares may be set up against the Company upon the
receipt by the Company of the request to register such transfer of
shares, provided that the transferee must submit to the Company the
share certificate endorsed with the name of the transferee and the
signature of both transferor and transferee and the request to
register such transfer of shares and can be set up against third
parties upon the entry of such transfer by the Company in the share
register book. If the Company considers such transfer of share is in
compliance with the Law, it shall register such transfer of shares
within fourteen days (14 days) from the date of receipt of the
request. If the transfer of shares is incorrect or incomplete, the
Company shall notify the applicant accordingly within seven days (7
days).
In the case where the Company issues preferred shares, convertible
preferred shares, in conversion of preferred share into ordinary
shares, the shareholders must submit to the Company a request for
share conversion together and surrender the share certificate. The
conversion into ordinary shares shall be effective from the date of
submission of the request to the Company. The Company shall issue a
new share certificate to the applicant within fourteen days (14
days) from the date of receipt of the request.
The transfer of securities issued under the provision of Article 4
shall be in accordance with the regulations and law related to the
issuance of such kind of securities.
When the shares of the Company become listed on the Stock Exchange
of Thailand, the transfer of shares shall be in accordance with the
laws governing securities and exchange.
Article 11 If the transferee wishes to acquire a new share certificate, he
shall submit to the Company a request in writing bearing signatures
of the transferee and of at least one (1) witness and surrender the
former share certificate to the Company. In this regard, if the
Company considers that the transfer of shares is legally made in
accordance with the Law, it shall register such transfer of shares
within seven days (7 days) and issue a new share certificate within
one month (1 month) from the date of receipt of the request.
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Article 12 In the case of the death or bankruptcy of a shareholder, if the
person entitled to the shares surrenders a share certificate and
produces complete lawful evidence of entitlement, the Company shall
register him as a shareholder and issue a new share certificate
within one month (1 month) from the date of receipt of such
evidence.
Article 13 During the period of twenty-one days (21 days) prior to each
shareholder meeting, the Company may cease to accept registration of
share transfers by notifying the shareholders in advance at the head
office and at every branch office of the Company not less than
fourteen days (14 days) prior to the date of cessation of the
registration of share transfer.
Chapter 4 Board of Directors
Article 14 The Company's Board of Directors shall consist of fourteen (14)
directors. Not less than one half of all directors shall reside in
the Kingdom of Thailand.
A director is entitled to receive an amount to cover an out-of
pocket costs and expenses incurred in connection with the attending
of any meeting of the Board of Directors which includes, but not
limited to, traveling expenses, accommodation expenses, etc. Such
amount shall be fixed by the President as he deems appropriate.
A director is entitled to receive other types of remuneration in the
form of reward of money, fees for attending a meeting, gratuity,
bonus or other remuneration from the Company according to the
Articles of Association or upon the consideration of shareholder
meeting. In this regard, the remuneration may be fixed at a definite
amount or prescribed by rule and fixed at a definite amount from
time to time or taken effect until changes have occurred.
Additionally, a director is entitled to allowances and any benefits
in accordance with the Company's rules.
The contents in the second and third paragraphs shall not bear any
effect on the staff nor employees of the Company so appointed as
directors in receiving remuneration and benefits as staff or
employees of the Company.
Article 15 The appointment of the Company's directors shall be made by the
shareholder meeting in accordance with the following rules and
procedures:
15.1 Each shareholder shall have a number of votes equal to the
number of shares held;
15.2 The appointment of a director may be processed by voting to
elect one or several persons as director or directors as
deemed appropriate by the shareholder meeting. However, each
shareholder must exercise all the votes he has under item 15.1
and cannot divide Ms votes between any person in any case; and
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15.3 The candidates shall be ranked in order descending from the
highest number of votes received to the lowest, and shall be
elected as directors equivalent to the number of directors who
are to be elected. If there is a tie in the last to be elected
and this exceeds the said number of directors, the presiding
Chairman shall have an additional casting vote.
Article 16 At every annual general meeting, one-third of the directors shall be
retired. If the number is not a multiple of three, then the number
nearest to one-third shall be retired. A retiring director is
eligible for re-election.
The directors to retire during the first and second year following
the registration of conversion into a public limited company, shall
be selected by drawing lots. In every subsequent year, the director
.who has been in office for the longest term shall retire.
Article 17 0ther than for vacancy by rotation, a director shall vacate office
upon:
(1) death;
(2) resignation;
(3) lack of qualifications or subject to prohibitive
characteristics under the law on public limited company;
(4) being removed by a resolution of the shareholder meeting under
Article 20; and
(5) being removed by a court order.
Article 18 Any director wishing to resign from the director position shall
submit a resignation letter to the Company. The resignation shall
take effect from the date on which the resignation letter reaches
the Company.
The director who has resigned under the first paragraph may also
send notification of his resignation to the share registrar.
Article 19 In the case of a vacancy on the Board of Directors for reasons
otherwise than by rotation. The Board of Directors shall elect any
person who is qualified and not subject to the prohibited
qualifications under law on public limited company as the substitute
director at the subsequent Board of Directors meeting, unless the
remaining term of office of the said director is less than two
months (2 months).
The aforesaid substitute director shall retain his office only for
the remaining term of office of the director whom he replaces.
Article 20 The shareholders meeting may pass a resolution removing any director
from office prior to the retirement by rotation, by a vote of not
less than three-fourths of the
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number of shareholders attending the meeting and having the right to
vote and the shares held by them shall, in aggregate, be not less
than one half of the number of shares held by the shareholders
attending the meeting and having the right to vote.
Article 21 A director may or may not be a shareholder of the Company.
Article 22 The Board of Directors shall elect one of the directors to be the
Chairman of the Board. Where the Board of Directors deems
appropriate, it may elect one or several directors as Vice-Chairman.
The Vice-Chairman shall have duties as stipulated in the Articles of
Association in the business assigned by the Chairman of the Board.
The Board of Directors may appoint one or several directors to
perform any acts on behalf of the Board of Directors.
Article 23 At a meeting of the Board of Directors, there must be not less than
one half of the total number of directors present to form a quorum.
In the event that the Chairman is absent or is unable to perform the
duties, if there is a Vice-Chairman, the Vice-Chairman shall be the
chairman of the meeting. If there are several Vice-Chairmen, the
directors present at the meeting shall elect one of the
Vice-Chairmen to be the chairman of the meeting. In the absence of
the Vice-Chairman or the Vice-Chairman is unable to perform the
duties, the directors present at the meeting shall elect one among
themselves to be the chairman of the meeting.
Decisions of the meeting, shall be made by a majority vote.
Each director is entitled to one vote, but a director who has
interests in any matter shall not be entitled to vote on such
matter. In the event of a tie vote, the chairman of the meeting
shall have an additional casting vote.
Article 24 The Chairman of the Board is entitled to summon the meeting of the
Board of Directors. In the event that the Chairman is unable to
perform the duties, the Vice-Chairman shall summon the meeting.
In summoning a meeting of the Board of Directors, the Chairman of
the Board or a person entrusted by him shall send notices thereof to
the directors not less than fourteen days (14 days) prior to the
date of the meeting. However, in a case of necessity or urgency for
the purpose of maintaining the rights and interests of the Company,
the summoning of the meeting may be made by other methods and the
date of the meeting may be fixed sooner.
Two directors or more may request the Chairman of the Board to call
a meeting of the Board of Directors. In the event that two directors
or more requesting to call a meeting of the Board of Directors, the
Chairman of the Board or person entrusted by him shall fix the date
of meeting within fourteen days'(14 days) form the date of receipt
of the request.
Article 25 The Chairman of the Board shall fix the date, time and place for a
meeting of the Board of Directors. The place for a meeting may be
specified at a location other
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than the principal place of business of the Company. In the event
that the Chairman of the Board is unable to perform the duties and
the Vice-Chairman calls a meeting of the Board of Directors, the
Vice-Chairman shall fix the date, time and place for a meeting.
Article 26 In the case where a vacancy in the Board of Directors results in the
number of directors be less than the number required for a quorum,
the remaining directors shall not perform any act in the name of the
Board of Directors with the exception of calling a meeting of
shareholders to elect directors to replace all the vacancies.
The meeting under the first paragraph shall be held within one month
(1 month) from the date the number of directors falls below the
number required for a quorum.
The substitute directors referred to in the first paragraph shall
retain office only for the remaining terms of the office of the
directors whom they replace.
Article 27 The Board of Directors of the Company has the power and duties to
manage the Company as follows:
1. To perform in accordance with the law, objectives, Articles of
Association, resolutions of shareholder meetings, the
Management Agreement and any agreements relating thereto and
the License Agreement;
2. To determine interim dividends to shareholders; and
3. To determine the payment of gratuities or other kinds of
benefits to staff or employees of the Company or any person
who works, regularly or not, for the Company except for the
provision specified in the Article 14.
To perform in accordance with its authority and responsibilities,
the Board of Directors may appoint a director or directors or other
persons to perform any tasks on behalf of directors.
Article 28 No director shall operate any business or become a partner in
ordinary partnerships or become a partner with unlimited liability
in limited partnerships or become a director of other juristic
persons which have the same nature as and are in competition with
the business of the Company, unless he notifies the shareholders
meeting prior to the resolution for his appointment.
Article 29 A director shall notify the Company without delay if he has an
interest in a contract entered into the Company or holds shares or
debentures in an increased or decreased amount of the Company or an
affiliate company,
Article 30 The Board of Directors shall hold a meeting at least once in every
three months (3 months).
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Article 31 Except for that provided in Article 5, two directors shall be
authorized to sign with the Company's seal affixed in documents,
instruments or other significant letters to bind the Company.
The shareholders meeting or the meeting of the Board of Directors
may determine and amend the directors' name authorized to sign to
bind the Company with the Company's seal affixed.
Article 32 The Board of Directors may appoint a certain number of directors as
it deems appropriate to be the Executive Board of Directors with the
authority to manage the Company's business assigned by the Board of
Directors. A director of the Executive Board of Directors shall be
appointed to be the Chairman of Executive Directors
An Executive Director is entitled to receive remuneration and
gratuity as determined by the Board of Directors which shall not
cause any effect to the rights of such Executive Director to receive
remuneration or other benefits in accordance with these Articles of
Association as a director.
The Board of Executive Directors shall convene or call for a meeting
as it deems appropriate. The provisions of Articles 22 and 25 shall
be applied mutatis mutandis.
Article 33 The Board of Directors may appoint four (4) persons from the Board
of Directors to serve as directors on the Advisory Board. The
Advisory Board shall consult, advise, give comments and
recommendation to the Board of Directors.
The Advisory Board shall meet once a month.
Article
33/1 The Board of Directors may appoint three (3) persons from the Board
of Directors to serve as directors in the Audit Committee. The Audit
Committee shall have a duty as required by applicable law.
Article
33/2 The following transactions shall be passed by the majority vote of
all the number of directors of the Company:
1. any equity investment in any other entity or
any purchase of assets of any other entity other than those
specified in (2) (b) of Article 40;
2. entry into any joint venture, partnership or other
profit-sharing arrangement with any person;
3. any acquisition, disposition, assignment, transfer, licensing
or sub-licensing of any know-how, trademarks, trade names,
trade secrets or similar intellectual property rights of any
person; and
4. approval of annual budget and expenses.
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Chapter 5 Shareholders Meeting
Article 34 The Board of Directors shall convene an annual general meeting of
shareholders within four months (4 months) from the last day of the
fiscal year of the Company.
Shareholders meetings other than the aforesaid shall be called the
extraordinary meeting. The Board of Directors may summon an
extraordinary meeting whenever it deems appropriate or shareholders
holding shares in aggregate not less than twenty (20) percent of the
total number of issued shares, or shareholders in a number of not
less than twenty-five persons (25 persons) holding shares in
aggregate not less than ten (10) percent of the total number of
issued shares, may at any time subscribe their names in a letter
requesting the Board of Directors to call an extraordinary meeting,
provided that they clearly state the reasons for such request in the
said letter. In this case, the Board of Directors shall call the
shareholder meeting within one month (1 month) from the date of
receipt of such letter from the shareholders
Article 35 The Board of Directors shall specify the date, time and place for
the shareholders meeting. The place of meeting can be specified at a
location other than the principal place of business of the Company.
Article 36 In summoning the shareholders meeting, the Board of Directors shall
prepare an invitation notice of the meeting specifying the place,
date, time, agenda and the matters to be submitted to the meeting
together with appropriate details stating clearly whether they will
be for acknowledgment, for approval or for consideration, including
the opinions of the Board of Directors on the said matters and shall
send the same to the shareholders and the Registrar for information
not less than seven days (7 days) prior to the meeting. Publication
of invitation of the meeting shall also be made in a newspaper for
no less than three consecutive days (3 days) prior to the meeting.
Article 37 At the shareholders meeting, there shall be shareholders and proxies
(if any) attending the meeting in a number amounting to not less
than twenty-five persons (25 persons) or not less than one half of
the total number of shareholders holding shares altogether amounting
to not less than one-half of the total number of shareholders shares
constitute a quorum.
If after one hour from the time fixed for the shareholder meeting,
the number of shareholders present is insufficient to form a quorum
as specified, if such shareholder meeting was convened at the
request of shareholders, it shall be canceled. If such shareholder
meeting was not convened at the request of shareholders, the meeting
shall be called again and, in this latter case, notice calling for
the meeting shall be sent to shareholders no less than seven days (7
days) before the date of the meeting. In the latter meeting, a
quorum is not compulsory.
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Article 38 At the shareholder meeting, the shareholders may authorize other
persons as proxies to attend and vote at the meeting on their
behalf. The instrument appointing the proxy must bear the date and
signature of the shareholder who appoints his proxy and must be in
accordance with the form specified by the Registrar.
The instrument appointing the proxy shall be submitted to the
Chairman of the Board or a person entrusted by him at the meeting
before the attendance of the proxy.
Article 39 At the shareholders meeting, the Chairman of the Board shall preside
over the meeting. If the Chairman is not present or is unable to
perform the duty, the Vice-Chairman, if available, shall preside
over the meeting. If there is no Vice-Chairman, or the Vice-Chairman
is unable to perform the duty, the meeting shall elect one of the
shareholders attending the meeting to preside over the meeting.
Article 40 The resolutions of the shareholders meeting shall be passed by the
following votes:
(1) in an ordinary circumstance which shall include the following
list sdescribed below, the majority vote of shareholders who
attend the meeting and cast their votes. In case of a tie
vote, the chairman of the meeting shall have an additional
casing vote.
(a) any agreement between the Company and any shareholders
or affiliate of any of its shareholders, or any other
person if such person's compensation or other benefits
thereunder will directly or indirectly benefit such
shareholder or any of its controlled affiliates;
(b) any reorganization of the Company;
(c) any early termination of any of the Management Agreement
and any agreements relating thereto and the License
Agreement otherwise than in accordance with the
respective terms thereof; and
(d) any purchase, sale, assignment, transfer or disposal of
any assets of the Company other than in the ordinary
course of business and other than those specified in (2)
(a) and (b) below.
"affiliate" means:
(i) persons related by blood, marriage or registration under
law, such as father, mother, spouse, child, sibling,
uncle and aunt including spouses and children of the
persons aforementioned;
(ii) persons or partnerships under Section 258(l) through (7)
of the Securities and Exchange Act B.E. 2535;
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(iii) a shareholder who directly or indirectly holds shares in
the Company in a total amount exceeding 10 percent of
the Company's paid-up capital and has a power to cause
direction of the management and policy. Such
shareholding shall also include the shares held by a
person in (ii) above.
(2) in the following circumstances, a vote of not less than
seventy-five (75) percent of the total number of votes of
shareholders who attend the meeting and have the right to
vote:
(a) the sale or transfer of the whole or important parts of
the business of the Company to other persons;
(b) the purchase or acceptance of transfer of the business
of other companies or private companies by the Company;
(c) the making, amending or terminating of contracts with
respect to the granting of a lease of the whole or
important parts of the business of the Company;
(d) the assignment of the management of the business of the
Company to any other persons;
(e) the amalgamation of the business with other persons with
the purpose of profit and loss sharing;
(f) the amendment or alteration of the Memorandum or
Articles of Association;
(g) the increase or decrease of the Company's capital or the
issuance of debentures;
(h) the amalgamation or dissolution of the Company; and
(i) the liquidation or winding-up up of the Company
Article 41 Transactions to be conducted at the annual general meeting are as
follows:
(1) Reviewing the report of the Board of Directors covering the
Company's business during the preceding year as proposed by
the Board of Directors;
(2) Considering and approving the balance sheet;
(3) Considering the appropriation of profits;
(4) Electing new directors in place of those who retire by
rotation;
(5) Appointing the auditor; and
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<PAGE>
(6) Other business.
Chapter 6 Accounts, Finance and Audit
Article 42 The fiscal year of the Company shall commence on 1 January and end
on 31 December of every year.
Article 43 The Company shall cause accounts to be made and kept, as well as the
auditing thereof, in accordance with the laws governing such
matters, and shall make a balance sheet and a profit and loss
account at least once every twelve months (12 months) which is the
accounting period of the Company.
Article 44 The Board of Directors shall cause the balance sheet and profit and
loss account to be made as of the end of the fiscal year of the
Company, and shall propose the same to the shareholder meeting for
approval at the annual general meeting. The Board of Directors shall
arrange for the auditor to complete the auditing prior to the
proposal of the said balance sheet and profit and loss account to
the shareholder meeting.
Article 45 The Board of Directors shall send the following documents to the
shareholders the invitation notice of the annual general meeting:
(1) Copies of the audited balance sheet and profit and loss
account which have been audited by the auditor together with
the report of the auditor; and
(2) The annual report of the Board of Directors.
Article 46 Payment of dividends from money other than profit is prohibited. In
the case where the Company still has accumulated losses, payment of
dividends is prohibited.
Dividends shall be equally distributed according to the number of
shares.
Where the shares in the Company have not yet been completely issued
according to the number of shares registered or where the Company
has already registered an increase in capital, the Company may pay
dividends, in whole or in part, by issuing, new ordinary shares to
the shareholders, provided it has the approval of the shareholder
meeting.
The Board of Directors may pay interim dividends to the shareholders
from time to time when the Board of Directors considers that the
Company has sufficient profit and a report thereof shall be made to
the shareholders meeting at the next meeting.
The payment of a dividend shall be made within one month (1 month)
from the date the resolution was passed by the shareholder meeting
or by a meeting of the Board of Directors, as the case may be.
Written notices thereof shall also be sent
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<PAGE>
to the shareholders and publication of the notice of the payment of
dividend shall also be made in a newspaper.
Article 47 The Company must appropriate to a reserve fund, from the annual net
profit not less than five (5) percent of the net profit less the
total accumulated losses brought forward (if any) until the reserve
fund reaches an amount of not less than ten (10) percent of the
registered capital.
Article 48 The auditor shall not be a director, staff member, employee nor a
person holding any position in the Company.
Article 49 The auditor has the power to examine during office hours, the
Company accounts, documents and any other evidence relating to
income and expenditure as well as assets and liabilities of the
Company. In this regard, the auditor is empowered to interrogate the
directors, staff, employees, persons holding any position in the
Company and agents of the Company, including to instruct such
persons to give facts or furnish documents pertaining to the
operations of the Company.
Article 50 The auditor has the duty to attend the shareholders meeting of the
Company every time the balance sheet, profit and loss account, and
problems pertaining to the Company's accounts are considered in
order to make clarification to the shareholders. The Company shall
also send the auditor the reports and documents received by the
shareholders in such shareholders meeting.
Chapter 7 Increase of Capital
Article 51 The Company may increase the amount of its registered capital by the
issuance of new shares which may be made after:
(1) all the shares have been completely issued or fully paid-up,
or if the shares have not been completely issued, the
remaining shares shall be the shares authorized for the
exercise of rights under convertible debentures or warrants to
purchase shares as specified in Article 4;
(2) the shareholders meeting has passed a resolution by not less
than three-fourths of total number of votes of the
shareholders attending the meeting and having the right to
vote; and
(3) the said resolution has been submitted to the Registrar for
the registration of a change of registered capital within
fourteen days (14 days) from the date of the shareholders
meeting passing such resolution.
Article 52 The new shares under Article 51 may be offered for sale in whole or
part and may be first offered for sale to the shareholders in
proportion to the number of shares held by each of them or may be
offered for sale to the public or other persons
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<PAGE>
either in whole or in part in accordance with the resolution of the
shareholder meeting.
When the shareholders meeting has allocated the newly-issued shares
under the first paragraph, the shareholders meeting may authorize
the Board of Directors to determine price of shares, the number of
shares to be issued each time, date of sale of shares and proportion
of rights to subscription of shares.
Chapter 8 Additional Chapter
Article 53 All existing orders, rules and regulations or the approval of the
shareholders meeting of the Company which has been fixed or approved
for the Board of Directors before the date of these Articles of
Association becoming effective and not in contravention with the Law
or these Articles of Association shall be further effective until
such time as otherwise amended.
Article 54 The Company's seal shall be as follows:
[seal]
Article 55 The shareholders meeting shall consider the amendment of these
Articles of Association, if it is deemed appropriate, in accordance
with the Law.
-------------------------------
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<PAGE>
Exhibit 3.04
BY-LAWS
OF
NSM STEEL (DELAWARE), INC,
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I STOCKHOLDERS......................................................1
Section 1. Annual Meeting.............................................1
Section 2. Special Meetings...........................................1
Section 3. Notice of Meetings.........................................1
Section 4. Quorum.....................................................1
Section 5. Organization of Meetings...................................1
Section 6. Voting.....................................................1
Section 7. Inspectors of Election.....................................2
Section 8. Action by Consent..........................................2
ARTICLE II DIRECTORS........................................................2
Section 1. Number, Quorum, Term, Vacancies, Removal...................2
Section 2. Meetings, Notice...........................................3
Section 3. Committees.................................................3
Section 4. Action by Consent..........................................4
ARTICLE III OFFICERS........................................................4
Section 1. Titles and Election........................................4
Section 2. Terms of Office............................................4
Section 3. Removal....................................................4
Section 4. Resignations...............................................4
Section 5. Vacancies..................................................4
Section 6. Chairman of the Board......................................5
Section 7. President..................................................5
Section 8. Vice Presidents............................................5
Section 9. Secretary..................................................5
Section 10. Treasurer..................................................5
Section 11. Duties of Officers may be Delegated........................6
ARTICLE IV INDEMNIFICATION..................................................6
Section 1. Actions by Others..........................................6
Section 2. Actions by or in the Right of the Corporation..............6
Section 3. Successful Defense.........................................7
Section 4. Specific Authorization.....................................7
Section 5. Advance of Expenses........................................7
Section 6. Right of Indemnity not Exclusive...........................7
Section 7. Insurance..................................................7
Section 8. Invalidity of any Provisions of this Article...............8
ARTICLE V CAPITAL STOCK.....................................................8
(i)
<PAGE>
Page
Section 1. Certificates...............................................8
Section 2. Transfer...................................................8
Section 3. Record Dates...............................................8
Section 4. Lost Certificates..........................................8
ARTICLE VI CHECKS, NOTES, ETC...............................................9
Section 1. Checks, Notes, Etc.........................................9
ARTICLE VII MISCELLANEOUS PROVFSIONS.........................................9
Section 1. Offices....................................................9
Section 2. Fiscal Year................................................9
Section 3. Corporate Seal.............................................9
Section 4. Books......................................................9
ARTICLE VIII AMENDMENTS....................................................10
Section 1. Amendments................................................10
(ii)
<PAGE>
BY-LAWS
OF
NSM STEEL (DELAWARE), INC,
ARTICLE I
STOCKHOLDERS
Section 1. Annual Meeting. The annual meeting of the stockholders of the
Corporation shall be held either within or without the State of Delaware, at
such place as the Board of Directors may designate in the call or in a waiver of
notice thereof, on the first Monday in May of each year beginning with the year
1998 (or if such day be a legal holiday, then on the next succeeding day not a
holiday) at 10 a.m., for the purpose of electing directors and for the
transaction of such other business as may properly be brought before the
meeting.
Section 2. Special Meetings. Special Meetings of the stockholders may be
called by the Board of Directors or by the President, and shall be called by the
President or by the Secretary upon the written request of the holders of record
of at least twenty-five per cent (25%) of the shares of stock of the
Corporation, issued and outstanding and entitled to vote, at such times and at
such place either within or without the State of Delaware as may be stated in
the call or in a waiver of notice thereof.
Section 3. Notice of Meetings. Notice of the time, place and purpose of
every meeting of stockholders shall be delivered personally or mailed not less
than ten days nor more than sixty days previous thereto to each stockholder of
record entitled to vote, at his post office address appearing upon the records
of the Corporation or at such other address as shall be furnished in writing by
him to the Corporation for such purpose. Such further notice shall be given as
may be required by law or by these By-Laws. Any meeting may be held without
notice if all stockholders entitled to vote are present in person or by proxy,
or if notice is waived in writing, either before or after the meeting, by those
not present.
Section 4. Quorum. The holders of record of at least a majority of the
shares of the stock of the Corporation, issued and outstanding and entitled to
vote, present in person or by proxy, shall, except as otherwise provided by law
or by these By-Laws, constitute a quorum at all meetings of the stockholders; if
there be no such quorum, the holders of a majority of such shares so present or
represented may adjourn the meeting from time to time until a quorum shall have
been obtained.
Section 5. Organization of Meetings. Meetings of the stockholders shall be
presided over by the Chairman of the Board, if there be one, or if he is not
present by the President, or if he is not present, by a chairman to be chosen at
the meeting. The Secretary of the Corporation, or in his absence an Assistant
Secretary, shall act as Secretary of the meeting, if present.
Section 6. Voting. At each meeting of stockholders, except as otherwise
provided by statute or the Certificate of Incorporation, every holder of record
of stock entitled to vote shall be entitled to one vote in person or by proxy
for each share of such stock standing in his name on
<PAGE>
the records of the Corporation. Elections of directors shall be determined by a
plurality of the votes cast thereat and, except as otherwise provided by
statute, the Certificate of Incorporation, or these By-Laws, all other action
shall be determined by a majority of the votes cast at such meeting. Each proxy
to vote shall be in writing and signed by the stockholder or by his duly
authorized attorney.
At all elections of directors, the voting shall be by ballot or in such
other manner as may be determined by the stockholders present in person or
by proxy entitled to vote at such election. With respect to any other matter
presented to the stockholders for their consideration at a meeting, any
stockholder entitled to vote may, on any question, demand a vote by ballot.
A complete list of the stockholders entitled to vote at each such meeting,
arranged in alphabetical order, with the address of each, and the number of
shares registered in the name of each stockholder, shall be prepared by the
Secretary and shall be open to the examination of any stockholder, for any
purpose germane to the meeting, during ordinary business hours, for a period of
at least ten days prior to the meeting, either at a place within the city where
the meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 7. Inspectors of Election. The Board of Directors in advance of
any meeting of stockholders may appoint one or more Inspectors of Election to
act at the meeting or any adjournment thereof. If Inspectors of Election are not
so appointed, the chairman of the meeting may, and on the request of any
stockholder entitled to vote, shall appoint one or more Inspectors of Election.
Each Inspector of Election, before entering upon the discharge of his duties,
shall take and sign an oath faithfully to execute the duties of Inspector of
Election at such meeting with strict impartiality and according to the best of
his ability. If appointed, Inspectors of Election shall take charge of the polls
and, when the vote is completed, shall make a certificate of the result of the
vote taken and of such other facts as may be required by law.
Section 8. Action by Consent. Any action required or permitted to be taken
at any meeting of stockholders may be taken without a meeting, without prior
notice and without a vote, if, prior to such action, a written consent or
consents thereto, setting forth such action, is signed by the holders of record
of shares of the stock of the Corporation, issued and outstanding and entitled
to vote thereon, having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted.
ARTICLE II
DIRECTORS
Section 1. Number, Quorum, Term, Vacancies, Removal. The Board of
Directors of the Corporation shall consist of at least two but no more than five
persons. The number of
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<PAGE>
directors may be changed by a resolution passed by a majority of the whole Board
or by a vote of the holders of record of at east a majority of the shares of
stock of the Corporation, issued and outstanding and entitled to vote.
A majority of the members of the Board of Directors then holding office
(but not less than one-third of the total number of directors nor less than two
directors) shall constitute a quorum for the transaction of business, but if at
any meeting of the Board there shall be less than a quorum present, a majority
of those present may adjourn the meeting from time to time until a quorum shall
have been obtained.
Directors shall hold office until the next annual election and until their
successors shall have been elected and shall have qualified, unless sooner
displaced.
Whenever any vacancy shall have occurred in the Board of Directors, by
reason of death, resignation, or otherwise, other than removal of a director
with or without cause by a vote of the stockholders, it shall be filled by a
majority of the remaining directors, though less than a quorum (except as
otherwise provided by law), or by the stockholders, and the person so chosen
shall hold office until the next annual election and until his successor is duly
elected and has qualified.
Any one or more of the directors of the Corporation may be removed either
with or without cause at any time by a vote of the holders of record of at least
a ma . ority of the shares of stock of the Corporation, issued and outstanding
and entitled to vote, and thereupon the term of the director or directors who
shall have been so removed shall forthwith terminate and there shall be a
vacancy or vacancies in the Board of Directors, to be filled by a vote of the
stockholders as provided in these By-Laws.
Section 2. Meetings, Notice. Meetings of the Board of Directors shall be
held at such place either within or without the State of Delaware, as may from
time to time be fixed by resolution of the Board, or as may be specified in the
call or in a waiver of notice thereof. Regular meetings of the Board of
Directors shall be held at such times as may from time to time be fixed by
resolution of the Board, and special meetings may be held at any time upon the
call of two directors, the Chairman of the Board, if one be elected, or the
President, by oral, telegraphic or written notice, duly served on or sent or
mailed to each director not less than two days before such meeting. A meeting of
the Board may be held without notice immediately after the annual meeting of
stockholders at the same place at which such meeting was held. Notice need not
be given of regular meetings of the Board. Any meeting may be held without
notice, if all directors are present, or if notice is waived in writing, either
before or after the meeting, by those not present. Any member of the Board of
Directors, or any committee thereof, may participate in a meeting by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other and participation in a
meeting by such means shall constitute presence in person at such meeting.
Section 3. Committees. The Board of Directors may, in its discretion, by
resolution passed by a majority of the whole Board, designate from among its
members one or more committees which shall consist of two or more directors. The
Board may designate one or
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<PAGE>
more directors as alternate members of any such committee, who may replace any
absent or disqualified member at any meeting of the committee. Such committees
shall have and may exercise such powers as shall be conferred or authorized by
the resolution appointing them. A majority of any such committee may determine
its action and fix the time and place of its meetings, unless the Board of
Directors shall otherwise provide. The Board shall have power at any time to
change the membership of any such committee, to fill vacancies in it, or to
dissolve it.
Section 4. Action by Consent. Any action required or permitted to be taken
at any meeting of the Board of Directors, or of any committee thereof, may be
taken without a meeting, if prior to such action a written consent or consents
thereto is signed by all members of the Board, or of such committee as the case
may be, and such written consent or consents is filed with the minutes of
proceedings of the Board or committee.
Section 5. Compensation. The Board of Directors may determine, from time
to time, the amount of compensation which shall be paid to its members. The
Board of Directors shall also have power, in its discretion, to allow a fixed
sum and expenses for attendance at each regular or special meeting of the Board,
or of any committee of the Board; in addition the Board of Directors shall also
have power, in its discretion, to provide for and pay to directors rendering
services to the Corporation not ordinarily rendered by directors, as such,
special compensation appropriate to the value of such services, as determined by
the Board from time to time.
ARTICLE III
OFFICERS
Section 1. Titles and Election. The officers of the Corporation, who shall
be chosen by the Board of Directors at its first meeting after each annual
meeting of stockholders, shall be a President, a Treasurer and a Secretary. The
Board of Directors from time to time may elect a Chairman of the Board, one or
more Vice Presidents, Assistant Secretaries, Assistant Treasurers and such other
officers and agents as it shall deem necessary, and may define their powers and
duties. Any number of offices may be held by the same person.
Section 2. Terms of Office. The officer shall hold office until their
successors are chosen and qualify.
Section 3. Removal. Any officer may be removed, either with or without
cause., at any time, by the affirmative vote of a majority of the Board of
Directors.
Section 4. Resignations. Any officer may resign at any time by giving
written notice to the Board of Directors or to the Secretary. Such resignation
shall take effect at the time specified therein, and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.
Section 5. Vacancies. If the office of any officer or agent becomes vacant
by reason of death, resignation, retirement, disqualification, removal from
office or otherwise, the
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<PAGE>
directors may choose a successor, who shall hold office for the unexpired term
in respect of which such vacancy occurred.
Section 6. Chairman of the Board. The Chairman of the Board of Directors,
if one be elected, shall preside at all meetings of the Board of Directors and
of the stockholders, and he shall have and perform such other duties as from
time to time may be assigned to him by the Board of Directors.
Section 7. President. The President shall be the Chief Executive Officer
of the Corporation and, in the absence of the Chairman, shall preside at all
meetings of the Board of Directors, and of the stockholders. He shall exercise
the powers and perform the duties usual to the chief executive officer and,
subject to the control of the Board of Directors, shall have general management
and control of the affairs and business of the Corporation; he shall appoint and
discharge employees and agents of the Corporation (other than officers elected
by the Board of Directors) and fix their compensation; and he shall see that all
orders and resolutions of the Board of Directors are carried into effect. He
shall have the power to execute bonds, mortgages and other contracts, agreements
and instruments of the Corporation, and shall do and perform such other duties
as from time to time may be assigned to him by the Board of Directors.
Section 8. Vice Presidents. If chosen, the Vice Presidents, in the order
of their seniority, shall, in the absence or disability of the President,
exercise all of the powers and duties of the President. Such Vice Presidents
shall have the power to execute bonds, notes, mortgages and other contracts,
agreements and instruments of the Corporation, and shall do and perform such
other duties incident to the office of Vice President and as the Board of
Directors, or the President shall direct.
Section 9. Secretary. The Secretary shall attend all sessions of the Board
and all meetings of the stockholders and record all votes and the minutes of
proceedings in a book to be kept for that purpose. He shall give, or cause to be
given, notice of all meetings of the stockholders and of the Board of Directors,
and shall perform such other duties as may be prescribed by the Board of
Directors. The Secretary shall affix the corporate seal to any instrument
requiring it, and when so affixed, it shall be attested by the signature of the
Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer
who may affix the seal to any such instrument in the event of the absence or
disability of the Secretary. The Secretary shall have and be the custodian of
the stock records and all other books, records and papers of the Corporation
(other than financial) and shall see that all books, reports, statements,
certificates and other documents and records required by law are properly kept
and filed.
Section 10. Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys, and other valuable effects in the name and to the credit of
the Corporation, in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the Corporation as may be ordered by
the Board, taking proper vouchers for such disbursements, and shall render to
the directors whenever they may require it, an account of all his transactions
as Treasurer and of the financial condition of the Corporation.
-5-
<PAGE>
Section 11. Duties of Officers may be Delegated. In case of the absence or
disability of any officer of the Corporation, or for any other reason that the
Board may deem sufficient, the Board may delegate, for the time being, the
powers or duties, or any of them, of such officer to any other officer, or to
any director.
ARTICLE IIV
INDEMNIFICATION
Section 1. Actions by Others. The Corporation (1) shall indemni any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
Corporation) by reason of the fact that he is or was a director or an officer of
the Corporation and (2) except as otherwise required by Section 3 of this
Article, may indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the Corporation) by reason of the fact that he is or was
an employee or agent of the Corporation, or is or was serving at the request of
the Corporation as a director, officer, employee, agent of or participant in
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Corporation, and with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contenders or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
Section 2. Actions by or in the Right of the Corporation. The Corporation
shall indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the right
of the Corporation to procure a judgment in its favor by reason of the fact that
he is or was a director, officer, employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, officer, employee,
agent of or participant in another corporation, partnership, joint venture,
trust or other enterprise against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Corporation and
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable for
negligence or misconduct in the performance of his duty to the Corporation
unless and only to the extent that the Delaware Court of Chancery or the court
in which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Delaware Court of Chancery or such other court shall deem
proper.
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<PAGE>
Section 3. Successful Defense. To the extent that a person who is or was a
director or officer of the Corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in Section I
or Section 2 of this Article, or in defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
Section 4. Specific Authorization. Any indemnification under Section 1 or
Section 2 of this Article (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the present or former director, officer, employee or agent is
proper in the circumstances because he has met the applicable standard of
conduct set forth in said Sections 1 and 2. Such determination shall be made,
with respect to a person who is a director or officer at the time of such
determination, (1) by the Board of Directors by a majority vote of the directors
who were not and are not parties to such action, suit or proceeding, even though
less than a quorum, or (2) by the Board of Directors by a committee of
disinterested directors designated by a majority vote of such disinterested
directors, even though less than a quorum, or (3) if there are no such
disinterested directors, or if such disinterested directors so direct, by
independent legal counsel in a written opinion, or (4) by the stockholders.
Section 5. Advance of Expenses. Expenses (including attorneys' fees)
incurred by an officer or director who may have a right of indemnification under
this Article in defending a civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding as authorized by the Board
of Directors in the specific case upon receipt of an undertaking by or on behalf
of the director or officer to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the Corporation pursuant
to this Article. Such expenses (including attorneys' fees) incurred by former
directors and officers or other employees and agents may be so paid upon such
terms and conditions, if any, as the Corporation deems appropriate.
Section 6. Right of Indemnity not Exclusive. The indemnification provided
by this Article shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
Section 7. Insurance. The Corporation may purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of or participant in another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article,
Section 145 of the General Corporation Law of the State of Delaware or
otherwise.
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<PAGE>
Section 8. Invalidity of any Provisions of this Article. The invalidity or
unenforceability of any provision of this Article shall not affect the validity
or enforceability of the remaining provisions of this Article.
ARTICLE V
CAPITAL STOCK
Section 1. Certificates. The interest of each stockholder of the
Corporation shall be evidenced by certificates for shares of stock in such form
as the Board of Directors may from time to time prescribe. The certificates of
stock shall be signed by the President or a Vice President and by the Secretary,
or the Treasurer, or an Assistant Secretary, or an Assistant Treasurer, and
countersigned and registered in such manner, if any, as the Board of Directors
may by resolution prescribe. Where any such certificate is countersigned by a
transfer agent other than the Corporation or its employee, or registered by a
registrar other than the Corporation or its employee, the signature of any such
officer may be a facsimile signature. In case any officer or officers who shall
have signed, or whose facsimile signature or signatures shall have been used on,
any such certificate or certificates shall cease to be such officer or officers
of the Corporation, whether because of death, resignation or otherwise, before
such certificate or certificates shall have been delivered by the Corporation,
such certificate or certificates may nevertheless be adopted by the Corporation
and be issued and delivered as though the person or persons who signed such
certificate or certificates or whose facsimile signature or signatures shall
have been used thereon bad not ceased to be such officer or officers of the
Corporation.
Section 2. Transfer. The shares of stock of the Corporation shall be
transferred only upon the books of the Corporation by the holder thereof in
person or by his attorney, upon surrender for cancellation of certificates for
the same number of shares, with an assignment and power of transfer endorsed
thereon or attached thereto, duly executed, with such proof of the authenticity
of the signature as the Corporation or its agents may reasonably require.
Section 3. Record Dates. The Board of Directors may fix in advance a date,
not less than ten nor more than sixty days preceding the date of any meeting of
stockholders, or the date for the payment of any dividend, or the date for the
distribution or allotment of any rights, or the date when any change, conversion
or exchange of capital stock shall go into effect, as a record date for the
determination of the stockholders entitled to notice of, and to vote at, any
such meeting, or entitled to receive payment of any such dividend, or to receive
any distribution or allotment of such rights, or to exercise the rights in
respect of any such change, conversion or exchange of capital stock, and in such
case only such stockholders as shall be stockholders of record on the date so
fixed shall be entitled to such notice of, and to vote at, such meeting, or to
receive payment of such dividend, or to receive such distribution or allotment
or rights or to exercise such rights, as the case may be, notwithstanding any
transfer of any stock on the books of the Corporation after any such record date
fixed as aforesaid.
Section 4. Lost Certificates. In the event that any certificate of stock
is lost, stolen, destroyed or mutilated, the Board of Directors may authorize
the issuance of a new
-8-
<PAGE>
certificate of the same tenor and for the same number of shares in lieu thereof.
The Board may in its discretion, before the issuance of such new certificate,
require the owner of the lost, stolen, destroyed or mutilated certificate, or
the legal representative of the owner to make an affidavit or affirmation
setting forth such facts as to the loss, destruction or mutilation as it deems
necessary, and to give the Corporation a bond in such reasonable sum as it
directs to indemnify the Corporation.
ARTICLE VI
CHECKS, NOTES, ETC.
Section 1. Checks, Notes, Etc. All checks and drafts on t e Corporation's
bank accounts and all bills of exchange and promissory notes, and all
acceptances, obligations and other instruments for the payment of money, may be
signed by the President or any Vice President and may also be signed by such
other officer or officers, agent or agents, as shall be thereunto authorized
from time to time by the Board of Directors.
ARTICLE VII
MISCELLANEOUS PROVFSIONS
Section 1. Offices. The registered office of the Corporation shall be
located at the office of Corporation Service Company, 1013 Centre Road, in the
City of Wilmington, County of New Castle, in the State of Delaware and said
Corporation shall be the registered agent of this Corporation in charge thereof.
The Corporation may have other offices either within or without the State of
Delaware at such places as shall be determined from time to time by the Board of
Directors or the business of the Corporation may require.
Section 2. Fiscal Year. The fiscal year of the Corporation shall be
determined by the Board of Directors.
Section 3. Corporate Seal. The seal of the Corporation shall be circular
in form and contain the name of the Corporation, and the year and state of its
incorporation. Such seal may be altered from time to time at the discretion of
the Board of Directors.
Section 4. Books. There shall be kept at such office of the Corporation as
the Board of Directors shall determine, within or without the State of Delaware,
correct books and records of account of all its business and transactions,
minutes of the proceedings of its stockholders, Board of Directors and
committees, and the stock book, containing the names and addresses of the
stockholders, the number of shares held by them, respectively, and the dates
when they respectively became the owners of record thereof, and in which the
transfer of stock shall be registered, and such other books and records as the
Board of Directors may from time to time determine.
Section 5. Voting of Stock. Unless otherwise specifically authorized
by the Board of Directors, all stock owned by the Corporation, other than stock
of the Corporation, shall be
-9-
<PAGE>
voted, in person or by proxy, by the President or any Vice President of the
Corporation on behalf of the Corporation.
ARTICLE VIII
AMENDMENTS
Section 1. Amendments. The vote of the holders of at least a majority of
the shares of stock of the Corporation, issued and outstanding and entitled to
vote, shall be necessary at any meeting of stockholders to amend or repeal these
By-Laws or to adopt new by-laws. These By-Laws may also be amended or repealed,
or new by-laws adopted, at any meeting of the Board of Directors by the vote of
at least a majority of the entire Board; provided that any by-law adopted by the
Board may be amended or repealed by the stockholders in the manner set forth
above.
Any proposal to amend or repeal these By-Laws or to adopt new bylaws shall
be stated in the notice of the meeting of the Board of Directors or the
stockholders, or in the waiver of notice thereof, as the case may be, unless all
of the directors or the holders of record of all of the shares of stock of the
Corporation, issued and outstanding and entitled to vote, are present at such
meeting.
-10-
<PAGE>
Exhibit 4.01
EXECUTION COPY
================================================================================
NSM STEEL (DELAWARE), INC.
NSM STEEL COMPANY, LTD.
as co-Issuers
12% Senior Mortgage Notes Due 2006
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
as Guarantor
-------------------------
INDENTURE
Dated as of March 1, 1998
-------------------------
THE CHASE MANHATTAN BANK,
Trustee
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions ................................................. 1
SECTION 1.02. Other Definitions............................................ 29
SECTION 1.03. Incorporation by Reference of Trust Indenture Act............ 29
SECTION 1.04. Rules of Construction........................................ 30
SECTION 1.05. Business Day Certificate..................................... 31
ARTICLE II
The Securities
SECTION 2.01. Form and Dating.............................................. 31
SECTION 2.02. Execution and Authentication................................. 33
SECTION 2.03. Registrar and Paying Agent................................... 34
SECTION 2.04. Paying Agent To Hold Money in Trust.......................... 35
SECTION 2.05. Securityholder Lists......................................... 35
SECTION 2.06. Transfer and Exchange........................................ 36
SECTION 2.07. Replacement Securities....................................... 37
SECTION 2.08. Outstanding Securities....................................... 37
SECTION 2.09. Temporary Securities......................................... 38
SECTION 2.10. Cancelation ................................................. 38
SECTION 2.11. Defaulted Interest........................................... 39
SECTION 2.12. CUSIP Numbers ............................................... 39
SECTION 2.13. Book-Entry Provisions for Global Securities.................. 39
SECTION 2.14. Special Transfer Provisions.................................. 42
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee........................................... 47
SECTION 3.02. Selection of Securities To Be Redeemed....................... 47
SECTION 3.03. Notice of Redemption......................................... 47
SECTION 3.04. Effect of Notice of Redemption............................... 48
SECTION 3.05. Deposit of Redemption Price.................................. 49
i
<PAGE>
SECTION 3.06. Securities Redeemed in Part.................................. 49
SECTION 3.07. Optional Redemption.......................................... 49
ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities........................................ 51
SECTION 4.02. Commission Reports........................................... 51
SECTION 4.03. Limitation on Indebtedness................................... 52
SECTION 4.04. Limitation on Restricted Payments............................ 54
SECTION 4.05. Limitation on Liens.......................................... 58
SECTION 4.06. Limitation on Sales of Assets and Subsidiary Stock........... 58
SECTION 4.07. Offer to Repurchase Upon Failure to Attain Profitable
Operations................................................. 61
SECTION 4.08. Limitation on Issuance and Sale of Capital Stock of
Restricted Subsidiaries.................................... 62
SECTION 4.09. Limitation on Dividends and Other Payment Restrictions
Affecting Restricted Subsidiaries.......................... 62
SECTION 4.10. Change of Control............................................ 63
SECTION 4.11. Compliance Certificate....................................... 64
SECTION 4.12. Further Instruments and Acts................................. 64
SECTION 4.13. Limitation on Affiliate Transactions......................... 65
SECTION 4.14. Limitation on Sale Leaseback Transactions.................... 66
SECTION 4.15. Limitation on Issuances of Capital Stock..................... 66
SECTION 4.16. Limitation on Sales to non-Credit Qualified Purchasers....... 66
SECTION 4.17. Line of Business............................................. 66
SECTION 4.18. Ownership ................................................... 66
SECTION 4.19. Use of Proceeds.............................................. 66
SECTION 4.20. Additional Amounts........................................... 66
SECTION 4.21. Maintenance of Office or Agency.............................. 69
SECTION 4.22. Stay, Extension and Usury Laws............................... 69
SECTION 4.23. Insurance ................................................... 70
SECTION 4.24. Compliance with Statutes..................................... 70
SECTION 4.25. Corporate Existence.......................................... 70
SECTION 4.26. Independent Engineer......................................... 70
SECTION 4.27. Securities Cash Flow Sweep................................... 71
SECTION 4.28. Payment of Taxes............................................. 71
ii
<PAGE>
ARTICLE V
Successor Company
SECTION 5.01. Merger and Consolidation..................................... 72
ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default............................................ 73
SECTION 6.02. Acceleration ................................................ 76
SECTION 6.03. Other Remedies............................................... 77
SECTION 6.04. Waiver of Past Defaults...................................... 77
SECTION 6.05. Control by Majority.......................................... 77
SECTION 6.06. Limitation on Suits.......................................... 78
SECTION 6.07. Rights of Holders to Receive Payment......................... 78
SECTION 6.08. Collection Suit by Trustee................................... 78
SECTION 6.09. Trustee May File Proofs of Claim............................. 78
SECTION 6.10. Priorities .................................................. 79
SECTION 6.11. Undertaking for Costs........................................ 79
ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee............................................ 80
SECTION 7.02. Rights of Trustee............................................ 81
SECTION 7.03. Individual Rights of Trustee................................. 82
SECTION 7.04. Trustee's Disclaimer......................................... 82
SECTION 7.05. Notice of Defaults........................................... 83
SECTION 7.06. Reports by Trustee to Holders................................ 83
SECTION 7.07. Compensation and Indemnity................................... 83
SECTION 7.08. Replacement of Trustee....................................... 84
SECTION 7.09. Successor Trustee by Merger.................................. 85
SECTION 7.10. Eligibility; Disqualification................................ 86
SECTION 7.11. Preferential Collection of Claims Against Issuers............ 86
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities; Defeasance............. 86
SECTION 8.02. Conditions to Defeasance..................................... 88
iii
<PAGE>
SECTION 8.03. Application of Trust Money................................... 89
SECTION 8.04. Repayment to Issuers......................................... 89
SECTION 8.05. Indemnity for Government Obligations......................... 89
SECTION 8.06. Reinstatement................................................ 90
ARTICLE IX
Amendments
SECTION 9.01. Without Consent of Holders................................... 90
SECTION 9.02. With Consent of Holders...................................... 91
SECTION 9.03. Compliance with Trust Indenture Act.......................... 92
SECTION 9.04. Revocation and Effect of Consents and Waivers................ 92
SECTION 9.05. Notation on or Exchange of Securities........................ 93
SECTION 9.06. Trustee To Sign Amendments................................... 93
SECTION 9.07. Payment for Consent.......................................... 93
ARTICLE X
Security Documents
SECTION 10.01. Collateral and Security Documents........................... 94
SECTION 10.02. Release of Collateral....................................... 95
SECTION 10.03. Certificates and Opinions................................... 95
SECTION 10.04. Directions to Collateral Agent.............................. 96
ARTICLE XI
Guaranty of Securities, Indemnity
SECTION 11.01. Guaranty ................................................... 96
SECTION 11.02. Indemnity .................................................. 99
SECTION 11.03. Representation and Warranty.................................100
SECTION 11.04. Waiver of Subrogation.......................................100
ARTICLE XII
Miscellaneous
SECTION 12.01. Trust Indenture Act Controls................................101
SECTION 12.02. Notices ....................................................101
iv
<PAGE>
SECTION 12.03. Communication by Holders with Other Holders.................102
SECTION 12.04. Certificate and Opinion as to Conditions Precedent..........102
SECTION 12.05. Statements Required in Certificate or Opinion...............102
SECTION 12.06. When Securities Disregarded.................................103
SECTION 12.07. Rules by Trustee, Paying Agent and Registrar................103
SECTION 12.08. Legal Holidays..............................................103
SECTION 12.09. Governing Law...............................................103
SECTION 12.10. Waiver of Immunities........................................103
SECTION 12.11. Consent to Jurisdiction; Appointment of Agent for
Service of Process; Waiver of Jury Trial..................104
SECTION 12.12. No Recourse Against Others..................................105
SECTION 12.13. Successors .................................................105
SECTION 12.14. Multiple Originals..........................................105
SECTION 12.15. Table of Contents; Headings.................................106
Exhibit A - Form of Initial Security with Guaranty
Exhibit B - Form of Exchange Security with Guaranty
Exhibit C - Form of Transferor Letter of Representation to be Delivered in
Connection with Transfers Pursuant to Regulation S
Exhibit D - Form of Transferor Letter of Representation to be Delivered in
Connection with Transfers Pursuant to Regulation S
Exhibit E - Form of Transferor Letter of Representation to be Delivered in
Connection with Transfers Pursuant to Rule 144A
Exhibit F - Form of Transfer Certificate - IAI Global Security to Rule 144A
Global Security
Exhibit G - Form of Transfer Certificate - Rule 144A Global Security to IAI
Global Security
Exhibit H - Form of Exchange Certificate - Exchanges of U.S. Global Security for
Regulation S Global Security
Exhibit I - Form of Exchange Certificate - Exchanges of Regulation S Global
Security for U.S. Global Security
Exhibit J - Form of Exchange Certificate - Exchanges of U.S. Global Security for
Another U.S. Global Security
ANNEX I - Existing Arrangements
v
<PAGE>
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
- ------- -------
310(a)(1) ......................................... 7.10
(a)(2) ......................................... 7.10
(a)(3) ......................................... N.A.
(a)(4) ......................................... N.A.
(b) ......................................... 7.08; 7.10
(c) ......................................... N.A.
311(a) ......................................... 7.11
(b) ......................................... 7.11
(c) ......................................... N.A.
312(a) ......................................... 2.05
(b) ......................................... 11.03
(c) ......................................... 11.03
313(a) ......................................... 7.06
(b)(1) ......................................... N.A.
(b)(2) ......................................... 7.06
(c) ......................................... 11.02
(d) ......................................... 7.06
314(a) ......................................... 4.02; 4.12; 11.02
(b) ......................................... N.A.
(c)(1) ......................................... 11.04
(c)(2) ......................................... 11.04
(c)(3) ......................................... N.A.
(d) ......................................... N.A.
(e) ......................................... 11.05
(f) ......................................... 4.12
315(a) ......................................... 7.01
(b) ......................................... 7.05; 11.02
(c) ......................................... 7.01
(d) ......................................... 7.01
(e) ......................................... 6.11
316(a)(last
sentence) ......................................... 11.06
(a)(1)(A) ......................................... 6.05
(a)(1)(B) ......................................... 6.04
(a)(2) ......................................... N.A.
(b) ......................................... 6.07
317(a)(1) ......................................... 6.08
(a)(2) ......................................... 6.09
(b) ......................................... 2.04
318(a) ......................................... 11.01
N.A. means Not Applicable.
- ----------
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
vi
<PAGE>
INDENTURE dated as of March 1, 1998, among NSM STEEL
(DELAWARE), INC., a Delaware corporation ("NSM (Del)"), NSM
STEEL COMPANY, LTD., a company incorporated under the laws of
the Cayman Islands ("NSM Cayman" and, together with NSM (Del),
the "Issuers"), Nakornthai Strip Mill Public Company Limited,
a company incorporated under the laws of Thailand (the
"Company") and The Chase Manhattan Bank, a New York banking
corporation, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other parties
and for the equal and ratable benefit of the Holders of the Issuer's 12% Senior
Mortgage Notes Due 2006 (the "Initial Securities") and, if and when issued as
provided in the Registration Rights Agreement of even date herewith, the
Issuer's 12% Senior Mortgage Series A Notes Due 2006 (the "Exchange Securities",
and together with the Initial Securities, the "Securities").
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.
"Accounts" means and includes: (i) the Notes DSR Account, (ii) the
Offshore Reserve Account, (iii) the Revenue Account, (iv) the Notes Sinking Fund
Account and (v) the Operating Account, and any sub-accounts of the foregoing as
described in the Security Sharing Agreement.
"Accreted Value" means, for any particular date of determination
(any such date being herein referred to as a
<PAGE>
2
"Specified Date"), the amount provided below for each U.S.$1,000 principal
amount at maturity of the Securities outstanding:
(i) if the Specified Date occurs on one of the following Interest
Payment Dates, the Accreted Value will equal the amount set forth below:
Accreted
Interest Payment Value
- ---------------- -----
August 1, 1998............................................ $908.90
February 1, 1999.......................................... 912.50
August 1, 1999............................................ 916.40
February 1, 2000.......................................... 920.60
August 1, 2000............................................ 925.00
February 1, 2001.......................................... 929.80
August 1, 2001............................................ 934.80
February 1, 2002.......................................... 940.30
August 1, 2002............................................ 946.10
February 1, 2003.......................................... 952.30
August 1, 2003............................................ 959.00
February 1, 2004.......................................... 966.10
August 1, 2004............................................ 973.80
February 1, 2005.......................................... 981.90
August 1, 2005............................................ 990.70
February 1, 2006.......................................... 1,000.00
(ii) if the Specified Date occurs before the first Interest Payment
Date, the Accreted Value will equal the sum of (1) the original issue price of
the Securities and (2) an amount equal to the product of (a) the respective
Accreted Value for the first Interest Payment Date less such original issue
price multiplied by (b) a fraction, the numerator of which is the number of days
from the Issue Date to the Specified Date, using a 360-day year of twelve 30-day
months, and the denominator of which is the number of days elapsed from the
Issue Date to the first Interest Payment Date, using a 360-day year of twelve
30-day months;
(iii) if the Specified Date occurs between two Interest Payment
Dates, the Accreted Value will equal the sum of (1) the respective Accreted
Value for the Interest Payment Date immediately preceding such Specified Date
and (2) an amount equal to the product of (i) the respective Accreted Value for
the immediately following Interest Payment Date less the Accreted Value for the
immediately preceding Interest Payment Date multiplied by (ii) a fraction, the
numerator of which is the number of days from
<PAGE>
3
the immediately preceding Interest Payment Date to the Specified Date, using a
360-day year of twelve 30-day months, and the denominator of which is 180.
"Additional Assets" means any property or assets (other than
Indebtedness and Capital Stock) relating to the operation of the Mill and
purchased with the proceeds of an Asset Disposition.
"Affiliate" of any specified Person means any other Person, directly
or indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agency Agreement" means the agreement between NSM Steel
Company, Ltd. and NSM Steel (Delaware), Inc.
"Asset Disposition" means any sale, lease, transfer, issuance or
other disposition (or series of related sales, leases, transfers, issuances or
dispositions that are part of a common plan) of shares of Capital Stock of (or
any other equity interests in) a Restricted Subsidiary or of any other property
or other assets (each referred to for the purposes of this definition as a
"disposition") by the Issuers, the Company or any Restricted Subsidiary
(including any disposition by means of a merger, consolidation or similar
transaction) other than (i) a disposition of inventory pursuant to a Project
Document or in the ordinary course of business, (ii) a disposition of obsolete
or worn out equipment or equipment that is no longer useful in the conduct of
the business of the Issuers, the Company or a Restricted Subsidiary and that is
disposed of in each case in the ordinary course of business, and (iii)
transactions permitted under Section 5.01 of this Indenture. Notwithstanding
anything to the contrary contained above, a Restricted Payment made in
compliance with Section 4.04 of this Indenture shall not constitute an Asset
Disposition.
"Attributable Indebtedness" in respect of a Sale/Leaseback
Transaction means, as at the time of determination, the present value
(discounted at the interest rate borne by the Securities, compounded annually)
of the total obligations of the lessee for rental payments during
<PAGE>
4
the remaining term of the lease included in such Sale/Leaseback Transaction
(including any period for which such lease has been extended).
"Average Life" means, as of the date of determination, with respect
to any Indebtedness, the quotient obtained by dividing (i) the sum of the
product of the numbers of years (rounded upwards to the nearest month) from the
date of determination to the dates of each successive scheduled principal
payment of such Indebtedness or redemption multiplied by the amount of such
payment by (ii) the sum of all such payments.
"Bank Credit Facility" means the Credit Facilities Agreement, dated
September 27, 1995, among the Company and The Industrial Finance Corporation of
Thailand, Thai Farmers Bank Public Company Limited, Siam City Bank Public
Company Limited, The Government Savings Bank, First Bangkok City Bank Public
Company Limited, Nakornthon Bank Public Company Limited, SCF Finance and
Securities Public Company Limited, Siam City Credit Finance and Securities
Public Company Limited, IFCT Finance and Securities Public Company Limited and
First City Investment Finance and Securities Public Company Limited.
"Board of Directors" means the board of directors of any of the
Issuers or the Company as the context requires, or any duly authorized committee
of such board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Issuers or the Company to have been
duly adopted by such Board of Directors and to be in full force and effect on
the date of such certification, and delivered to the Trustee.
"Business Day" means any day which is not a legal holiday in the
State of New York or Thailand.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Capitalized Lease Obligations" means an obligation that is required
to be classified and accounted for as a capitalized lease for financial
reporting purposes in accordance with U.S. GAAP, and the amount of Indebtedness
represented by such obligation shall be the capitalized
<PAGE>
5
amount of such obligation determined in accordance with U.S. GAAP and the Stated
Maturity thereof shall be the date of the last payment of rent or any other
amount due under such lease prior to the first date such lease may be terminated
without penalty.
"Cash Equivalents" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof, (iii) certificates of
deposit, time deposits and Eurodollar time deposits with maturities of one year
or less from the date of acquisition, bankers' acceptances with maturities not
exceeding one year and overnight bank deposits, in each case with any Qualifying
Financial Institution, (iv) repurchase obligations for underlying securities of
the types described in clauses (ii) and (iii) entered into with any Qualifying
Financial Institution, (v) commercial paper rated A-1 or the equivalent thereof
by Moody's or S&P and in each case maturing within one year after the date of
acquisition, (vi) investment funds investing 95% of their assets in securities
of the types described in clauses (i)-(v) above, (vii) readily marketable direct
obligations issued by any state of the United States of America or any political
subdivision thereof having one of the two highest rating categories obtainable
from either Moody's or S&P and (viii) Indebtedness or preferred stock issued by
Persons with a rating of "A" or higher from S&P or "A-2" or higher from Moody's.
"Cash Flow Sweep Amount" means, with respect to any fiscal quarter
of the Company, an amount equal to (a) 50% of the Company's net income before
interest expense, taxes, depreciation and amortization for such quarter minus
(b) the sum of (i) the Company's accrued interest expense (other than
amortization of original issue discount and deferred debt issuance costs) for
such fiscal quarter, (ii) all scheduled principal payments made by the Company
on indebtedness during such fiscal quarter, (iii) the amount of taxes actually
paid by the Company during such fiscal quarter and (iv) the amount of budgeted
capital expenditures made by the Company during such fiscal quarter for the
maintenance of the Company's properties and assets; provided, however, that the
Cash Flow Sweep Amount in respect of any fiscal quarter shall not exceed the sum
of (x) U.S.$15 million and (y) the difference between (A) U.S.$45 million and
(B) the amount of each Cash Flow Sweep Account in the immediately preceding
three fiscal quarters; provided further, however, that the amount described in
(y) above shall be adjusted ratably during the
<PAGE>
6
first three complete fiscal quarters following the Issue Date to take into
account such shorter periods.
"Change of Control" means (i) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all or
substantially all of the assets of the Company; (ii) the Company ceasing to own
100% of capital stock of the Issuers; (iii) a majority of the Board of Directors
of the Company shall consist of Persons who are not Continuing Directors; or
(iv) the acquisition by any Person or group of related Persons for purposes of
Section 13(d) of the Exchange Act of the power, directly or indirectly, to vote
or direct the voting of securities having more than 50% of the ordinary voting
power for the election of directors of the Company.
"Coal Supply Agreement" means the agreement between the Company and
SSM Coal BV dated October 16, 1996.
"Code" means the Internal Revenue Code of 1986, as amended.
"Co-Gen Facility" means a co-generation electric power plant to be
developed in conjunction with one or more affiliates of Enron Corp.
"Co-Gen Investment" means a loan by the Company to the entity that
will operate a cogeneration facility dedicated to the service of the Mill (i) in
an aggregate amount not to exceed U.S.$15.5 million and (ii) on financial terms
substantially identical to the terms of the Securities.
"Collateral" means all the collateral described in the Security
Documents.
"Collateral Agent" means The Chase Manhattan Bank, acting as
collateral agent, and its permitted successors and assigns.
"Commission" means the Securities and Exchange Commission.
"Commodity Commitment" means any commodity future or forward
contract, commodity swap, exchange agreement or derivative or other similar
agreement or arrangement with respect to the commodities market, excluding put
options and similar arrangements and agreements held by the Company or any
Subsidiary.
<PAGE>
7
"Company" means Nakornthai Strip Mill Public Company Limited.
"Consolidated Cash Flow" for any period for any Person means the
Consolidated Net Income for such period plus the following to the extent
deducted in calculating such Consolidated Net Income: (i) income tax expense,
(ii) Consolidated Interest Expense, (iii) depreciation expense, (iv)
amortization expense and (v) all other noncash items reducing Consolidated Net
Income (excluding any noncash item to the extent it represents an accrual of or
reserve for cash disbursements for any subsequent period prior to the Stated
Maturity of the Securities or amortization of a prepaid cash expense that was
paid in a prior period), in each case for such Person and its Subsidiaries for
such period. Notwithstanding the foregoing, the income tax expense, depreciation
expense and amortization expense of a Subsidiary shall be included in
Consolidated Cash Flow only to the extent (and in the same proportion) that the
net income of such Subsidiary was included in calculating Consolidated Net
Income.
"Consolidated Cash Interest Expense" means for any period for any
Person the Consolidated Interest Expense for such Person for such period less
any portion thereof not payable in cash.
"Consolidated Coverage Ratio" as of any date of determination means
the ratio of (i) the aggregate amount of Consolidated Cash Flow of the Company
for the period of the most recent four consecutive fiscal quarters ending prior
to the date of such determination and as to which financial statements of the
Company are available to (ii) Consolidated Interest Expense of the Company for
such four fiscal quarters; provided, however, that (A) if the Company has
incurred any Indebtedness since the beginning of such period and through the
date of determination of the Consolidated Coverage Ratio that remains
outstanding or if the transaction giving rise to the need to calculate
Consolidated Coverage Ratio is an Incurrence of Indebtedness, or both,
Consolidated Cash Flow and Consolidated Interest Expense for such period shall
be calculated after giving effect on a pro forma basis to (1) such Indebtedness
as if such Indebtedness had been incurred on the first day of such period
(provided, however, that if such Indebtedness is incurred under a revolving
credit facility (or similar arrangement) only that portion of such Indebtedness
that constitutes the one-year projected average balance of such Indebtedness (as
determined in good faith by the Board of Directors of the Company) shall be
deemed outstanding for purposes of this
<PAGE>
8
calculation), and (2) the discharge of any other Indebtedness repaid,
repurchased, defeased or otherwise discharged with the proceeds of such new
Indebtedness as if such discharge had occurred on the first day of such period,
(B) if since the beginning of such period any Indebtedness of any party has been
repaid, repurchased, defeased or otherwise discharged (other than Indebtedness
under a revolving credit or similar arrangement unless such revolving credit
Indebtedness has been permanently repaid and has not been replaced),
Consolidated Interest Expense for such period shall be calculated after giving
pro forma effect thereto as if such Indebtedness had been repaid, repurchased,
defeased or otherwise discharged on the first day of such period and (C) if
since the beginning of such period the Company or any Subsidiary shall have made
any Asset Disposition, Consolidated Cash Flow for such period shall be reduced
by an amount equal to the Consolidated Cash Flow (if positive) attributable to
the assets which are the subject of such Asset Disposition for such period or
Increased by an amount equal to the Consolidated Cash Flow (if negative)
attributable thereto for such period, and Consolidated Interest Expense for such
period shall be (1) reduced by an amount equal to the Consolidated Interest
Expense attributable to any Indebtedness of the Issuers repaid, repurchased,
defeased or otherwise discharged in connection with such Asset Disposition for
such period and (2) increased by interest income, if any, attributable to the
assets which are the subject of such Asset Disposition for such period.
"Consolidated Interest Expense" means, for any period for any
Person, the total interest expense of such Person and its Subsidiaries
determined in accordance with U.S. GAAP, plus, to the extent not included in
such interest expense (i) interest expense attributable to Capitalized Lease
Obligations, (ii) amortization of debt discount, (iii) capitalized interest,
(iv) noncash interest expense, (v) commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance financing
and (vi) Interest actually paid by such Person or any such Subsidiary under any
Guarantee of Indebtedness or other obligation of any other Person and less (a)
to the extent included in such interest expense, the amortization of capitalized
debt issuance costs and (b) interest income.
"Consolidated Net Income" means, for any period for any specified
Person, the consolidated net income (loss) of such specified Person and its
Subsidiaries determined in accordance with U.S. GAAP; provided, however, that
there shall not be included in such Consolidated Net Income:
<PAGE>
9
(i) any net income (loss) of any Person acquired by such Person or any of its
Subsidiaries in a pooling of interests transaction for any period prior to the
date of such acquisition, (ii) any net income of any Subsidiary of such
specified Person if such Subsidiary is subject to restrictions, directly or
indirectly, on the payment of dividends or the making of distributions by such
Subsidiary, directly or indirectly, to such specified Person except to the
extent of the dividends or distributions that may be paid during such period by
such Subsidiary, (iii) any gain or loss realized upon the sale or other
disposition of any assets of such specified Person or its Subsidiaries which are
not sold or otherwise disposed of in the ordinary course of business and any
gain or loss realized upon the sale or other disposition of any Capital Stock of
any Person, (iv) any extraordinary gain or loss, (v) the cumulative effect of a
change in accounting principles, (vi) the net income of any other Person, other
than a Subsidiary of such specified Person, except to the extent of the lesser
of (A) dividends or distributions paid to such specified Person or any of its
Subsidiaries by such other Person and (B) the net income of such other Person
(but in no event less than zero) shall be included and the net loss of such
other Person shall be included only to the extent of the aggregate Investment of
such specified Person or any of its Subsidiaries in such other Person and (vii)
any noncash expenses attributable to grants or exercises of employee stock
options.
"Consolidated Net Worth" of any Person means the total of the
amounts shown on the balance sheet of such Person and its Subsidiaries,
determined on a consolidated basis in accordance with U.S. GAAP, as of the end
of the most recent fiscal quarter of such Person ending prior to the taking of
any action for the purpose of which the determination is being made and for
which financial statements are available (but in no event ending more than 135
days prior to the taking of such action), as (i) the par or stated value of all
outstanding Capital Stock of such Person plus (ii) paid in capital or capital
surplus relating to such Capital Stock plus (iii) any retained earnings or
earned surplus less (A) any accumulated deficit and (B) any amounts attributable
to Disqualified Stock.
"Continuing Director" of any Person means, as of the date of
determination, any Person who (i) was a member of the Board of Directors of such
Person on the Issue Date or (ii) was nominated for election or elected to the
Board of Directors of such Person with the affirmative vote of a majority of the
Continuing Directors of such Person who were
<PAGE>
10
members of such Board of Directors at the time of such nomination or election.
"Credit Facilities" means the Bank Credit Facility, as such
agreement may be amended, supplemented or otherwise modified in writing from
time to time, including any agreement extending the maturity of, refunding,
Refinancing or replacing such agreement (but in no event shall the definition of
Credit Facilities include any amendment. supplement or other modification or
agreement increasing the amount of borrowings available to the Company and its
Subsidiaries thereunder).
"Credit Party" means the Company or the Issuers or any Restricted
Subsidiary.
"Credit Qualified Purchaser" means a purchaser of goods from the
Company and its Subsidiaries (i) pursuant to the Off-Take Agreements, (ii) whose
account receivable is monetized on a non-recourse basis to the Company and its
Subsidiaries pursuant to the terms of the Working Capital Credit Facility, (iii)
which has an investment grade debt rating (or is a controlled subsidiary of a
company with an investment grade debt rating) or (iv) whose account receivable
is fully backed by a letter of credit from a Qualified Financial Institution.
"Currency Agreement" means, in respect of any Person, any foreign
exchange contract, currency swap agreement or other similar agreement as to
which such Person is a party or a beneficiary.
"Debentures" means the 12 3/4% Subordinated Second Mortgage
Debentures Due 2009 of the Issuers.
"Debenture Offering" means the private placement of the Debentures
on the Issue Date.
"Default" means any event, act or condition which with notice or
passage of time or both would become an Event of Default.
"Definitive Securities" means Securities that are in the form of
Exhibit A or Exhibit B attached hereto that do not include the Global Securities
Legend or Schedule of Increases or Decreases in Global Security thereof.
"Depositary" means, with respect to the Global Securities, the
Person specified in Section 2.03 as the Depositary with respect to such
Securities, until a
<PAGE>
11
successor shall have been appointed and become such pursuant to the applicable
provisions of this Indenture, and thereafter, "Depositary" shall mean or include
such successor.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock 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
(i) matures or is mandatorily redeemable pursuant to a sinking fund obligation
or otherwise, (ii) is convertible or exchangeable for Indebtedness or
Disqualified Stock or (iii) is redeemable at the option of the holder thereof,
in whole or in part, in each case on or prior to the first anniversary of the
Stated Maturity of the Securities; provided, however, that any Capital Stock
that would not constitute Disqualified Stock but for provisions thereof giving
holders thereof the right to require such Person to repurchase or redeem such
Capital Stock upon the occurrence of an "asset sale" or "change of control"
occurring prior to the first anniversary of the Stated Maturity of the
Securities shall not constitute Disqualified Stock of the "asset sale" or
"change of control" provisions applicable to such Capital Stock are not more
favorable to the holders of such Capital Stock than the provisions described
under Sections 4.06 and 4.10 of this Indenture.
"Downstream Finishing Facilities" means the Company's processing
facilities for the production of high-quality pickled and oiled, cold-rolled,
galvanized, and other value-added steel products.
"DRI Plant" means a facility for the production of direct reduced
iron and co-generation power.
"Employment Agreement" means the agreement between the Company and
John W. Schultes dated as of the Issue Date.
"Equity Investment Proceeds" means any amounts received by the
Company as a result of the concurrent sale of equity as of the Issue Date net of
all related fees and expenses.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Securities" means the 12% Senior Mortgage Series A Notes
Due 2006 to be issued pursuant to this Indenture in connection with the offer to
exchange
<PAGE>
12
Securities for the Initial Securities that may be made by the Issuers pursuant
to the Registration Rights Agreement.
"Existing Arrangements" shall mean the contracts and other
agreements in effect on the Issue Date to the extent specified in Annex I to
this Indenture.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any other Person
and any obligation, direct or indirect, contingent or otherwise, of such Person
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness of such other Person (whether arising by virtue of
partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Global Security" means a Security that is in the form of Exhibit A
or Exhibit B hereto that includes the Global Securities Legend and Schedule of
Increases or Decreases in Global Security thereof.
"Global Securities Legend" means the legend set forth under such
caption in the form of Initial Security in Exhibit A hereto.
"Guaranty" means the Guarantee of the Securities by the Company
pursuant to, and as described in, Article XI.
"Hedging Obligations" of any Person means the obligations of such
Person pursuant to any Interest Rate Agreement, Currency Agreement or Commodity
Commitment.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Hot Mill" means the Company's compact strip production thin-slab
hot mill for steel melting, refining, casting and hot-rolling.
<PAGE>
13
"Incur" means issue, assume, guarantee, incur or otherwise become
liable for. Notwithstanding the foregoing, in the event the Company shall have
obtained Profitable Operations and, thereafter, enters into any revolving credit
or multiple-draw term loan facility in order to fund Phase III Construction
Costs, the Company may treat all or any portion of such revolving credit or
multiple-draw term debt (subject to an aggregate limit of U.S.$150 million) as
being Incurred from and after any date beginning the date that the revolving
credit or multiple-draw term loan facility commitment is extended to the
Company, by furnishing notice thereof to the Trustee, and any borrowings or
reborrowings by the Company under such commitment up to the amount of such
commitment designated by the Company as Incurred shall not be deemed to be new
Incurrences of Indebtedness by the Company; provided, however that the undrawn
portion of any such revolving or term debt shall be deemed to be outstanding
Indebtedness until such time as the commitment thereunder is terminated.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication), (i) the principal of and premium (if any)
in respect of indebtedness of such Person for borrowed money, (ii) the principal
of and premium (if any) in respect of obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all obligations of
such Person in respect of letters of credit or other similar instruments
(including reimbursement obligations with respect thereto) (other than
obligations with respect to letters of credit securing obligations (other than
obligations described in clauses (i), (ii) and (v)) entered into in the ordinary
course of business of such Person to the extent that such letters of credit are
not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed
no later than the third business day following receipt by such Person of a
demand for reimbursement following payment on the letter of credit), (iv) all
obligations of such Person to pay the deferred and unpaid purchase price of
property or services (except trade payables and accrued expenses incurred in the
ordinary course of business), which purchase price is due more than six months
after the date of placing such property in service or taking delivery and title
thereto or the completion of such services, (v) all Capitalized Lease
Obligations and all Attributable Indebtedness of such Person, (vi) all
indebtedness of other Persons secured by a Lien on any asset of such Person,
whether or not such Indebtedness is assumed by such Person, (vii) all
Indebtedness of other Persons to the extent Guaranteed by such Person, (viii)
the amount of all obligations of such
<PAGE>
14
Person with respect to the redemption, repayment or other repurchase of any
Disqualified Stock or any Preferred Stock of such Person or any of its
Subsidiaries to the extent such obligation arises on or before the Stated
Maturity of the Securities (but excluding, in each case, accrued dividends) and
(ix) to the extent not otherwise included in this definition, obligations under
Currency Agreements, Interest Rate Agreements and Commodity Commitments. The
amount of Indebtedness of any Person at any date shall be the outstanding
principal amount of all unconditional obligations as described above, as such
amount would be reflected on a balance sheet prepared in accordance with U.S.
GAAP, and the maximum liability of such Person, upon the occurrence of the
contingency giving rise to the obligation, of any contingent obligations
described above at such date.
"Indenture" means this Indenture as amended or supplemented from
time to time.
"Independent Director" means a member of the board of directors of a
Person that is not an officer, employee or former officer or employee of such
Person or one of its Affiliates and, with respect to any transaction or series
of related transactions, a member of the board of directors who does not have
any material direct or indirect financial interest in or with respect to such
transaction or series of related transactions (including for such purpose the
interest of any other Person with respect to whom such director is also a
director, officer or employee) who is qualified under the regulations prescribed
by the Stock Exchange of Thailand.
"Independent Engineer" means Hatch Associates, Ltd.
"Initial Purchasers" means NatWest Capital Markets Limited, McDonald
& Company Securities, Inc., PaineWebber Incorporated and ECT Securities Corp.
"Initial Securities" means the 12% Senior Mortgage Notes Due 2006,
issued under this Indenture on or about the date hereof.
"Insolvency or Liquidation Proceeding" means (i) any insolvency or
bankruptcy case or proceeding, or any receivership, liquidation, reorganization
or other similar case or proceeding in connection therewith, relating to the
Issuers or the Company or any of their respective assets, or (ii) any
liquidation, dissolution or other winding up of the Issuers or the Company,
whether voluntary or involuntary or
<PAGE>
15
whether or not involving insolvency or bankruptcy, or (iii) any assignment for
the benefit of creditors or any other marshaling of assets or liability of the
Issuers or the Company.
"Interest Payment Date" means the stated maturity of an installment
of interest on the Securities.
"Interest Rate Agreement" means, with respect to any Person, any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement as to which such Person is party or a
beneficiary.
"Investment" in any Person means any direct or indirect advance,
loan (other than advances to customers in the ordinary course of business that
are recorded as accounts payable on the balance sheet of such Person) or other
extension of credit (including by way of Guarantee or similar arrangement, but
excluding any debt or extension of credit represented by a bank deposit other
than a time deposit) or capital contribution to (by means of any transfer of
cash or other property to others or any payment for property or services for the
account or use of others), or any purchase or acquisition of Capital Stock,
Indebtedness or other similar instruments issued by such Person.
"Iron Ore Fines Supply Agreement" means the agreement between the
Company and MMTC Limited dated February 6, 1997.
"Issue Date" means the date on which the Securities are originally
issued.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof).
"Management Agreement" means the agreement between the Company and
Management Co. dated as of the Issue Date.
"Management Co." means NSM Management Company, LLC.
"Mechanical Completion" means the point in time when the DRI Plant,
the Hot Mill and the Downstream
<PAGE>
16
Finishing Facilities have been completed and certified as complete by the
Independent Engineer.
"Mill" means collectively the DRI Plant, the Hot Mill and the
Finishing Facilities.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Available Cash" from an Asset Disposition means cash payments
received (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise, but only as
and when received) therefrom, in each case net of (i) all legal, title and
recording tax expenses, commissions and other fees and expenses incurred, and
all taxes required to be paid or accrued as a liability under U.S. GAAP, as a
consequence of such Asset Disposition, (ii) all payments made on any
Indebtedness which is secured by any assets subject to such Asset Disposition in
accordance with the terms of any Lien upon such assets, or which must by its
terms, or in order to obtain a necessary consent to such Asset Disposition or by
applicable law, be repaid out of the proceeds from such Asset Disposition, (iii)
all distributions and other payments required to be made to any Person owning a
beneficial interest in assets subject to sale or minority interest holders in
Subsidiaries or joint ventures as a result of such Asset Disposition, (iv) the
deduction of appropriate amounts to be provided by the seller as a reserve, in
accordance with U.S. GAAP, against any liabilities associated with the assets
disposed of in such Asset Disposition; provided, however, that upon any
reduction in such reserves (other than to the extent resulting from payments of
the respective reserved liabilities), Net Available Cash shall be increased by
the amount of such reduction to reserves, and retained by the Issuers or any
Subsidiary after such Asset Disposition and (v) any portion of the purchase
price from an Asset Disposition placed in escrow (whether as a reserve for
adjustment of the purchase price, for satisfaction of indemnities in respect of
such Asset Disposition or otherwise in connection with such Asset Disposition);
provided, however, that upon the termination of such escrow, Net Available Cash
shall be increased by any portion of funds therein released to the Issuers, the
Company or any Restricted Subsidiary.
"Net Cash Proceeds," with respect to any issuance or sale of Capital
Stock, means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees,
<PAGE>
17
underwriters' or placement agents' fees, discounts or commissions and brokerage,
consultant and other fees actually incurred in connection with such issuance or
sale and net of taxes paid or payable as a result of such issuance or sale.
"Notes DSR Account" means an account maintained with the Collateral
Agent and established by the Company on or prior to the Issue Date into which
shall be deposited on the Issue Date, a portion of the Notes Net Proceeds,
together with a portion of the proceeds of the Debenture Offering, equal to the
sum of (i) the aggregate interest to be payable on the Securities on the first
three interest payment dates in respect thereof, (ii) the aggregate interest to
be payable on the Senior Subordinated Notes on the first two Interest Payment
Dates and (iii) the aggregate interest to be payable on the Debentures on the
first two interest payment dates in respect thereof.
"Note Depositary Agreement" means the agreement of even date
herewith among the Issuers, the Company and The Chase Manhattan Bank as
Book-Entry Depositary.
"Notes Net Proceeds" means the net proceeds from the sale of the
Securities and the Senior Subordinated Notes less the portion thereof applied to
pay in full all Indebtedness of the Company required to be paid with such
proceeds and to pay all fees and expenses relating to the issuance of the
Securities and the Senior Subordinated Notes.
"Notes Sinking Fund Account" means an account maintained with the
Collateral Agent and established by the Company on or prior to the Issue Date
into which shall be deposited no later than the fifteenth day following the last
day of each fiscal quarter of the Company (based on the Company's fiscal year in
effect on the Issue Date), an amount equal to the Cash Flow Sweep Amount.
"Offering Memorandum" means a preliminary offering memorandum, a
supplement to the preliminary offering memorandum and an offering memorandum, as
supplemented as of the date of the Purchase Agreement, together with any other
document approved by the Issuers for use in connection with the contemplated
resale of the Securities.
"Officer" means, in the case of NSM Steel Company, Ltd. and the
Company, any director thereof and, in the case of NSM Steel (Delaware), Inc.,
the Chairman of the Board, the Chief Executive Officer, the Chief Financial
Officer,
<PAGE>
18
the President, any General Manager, the Treasurer or the Secretary.
"Officers' Certificate" means a certificate signed by two Officers.
"Offshore Reserve Account" means an account maintained with the
Collateral Agent and established by the Company on or prior to the Issue Date
into which shall be deposited on the Issue Date, the balance (not otherwise
deposited in the Notes DSR Account) of the Notes Net Proceeds, together with the
balance of the proceeds of the Debenture Offering and Equity Investment
Proceeds.
"Off-Take Agreements" collectively mean the agreements between the
Company and Preussag Handel GmbH and the Company and Klockner Steel Trading each
dated November 19, 1997, as such agreements may be amended, supplemented or
otherwise modified in writing from time to time.
"Operating Account" means an account or accounts maintained with the
Collateral Agent and established by the Company on or prior to the Issue Date
into which shall be deposited on the first day of each calendar month an amount
such that, immediately after giving effect to such deposit, the balance of such
account shall be equal to the sum of (i) the capital expenditures (including
Phase II Construction Costs to be paid by the Company to vendors in Thailand) of
the Company during that calendar month as estimated in advance in good faith by
the Company and (ii) any amount required to be paid during such calendar month
in connection with the Bank Credit Facility.
"Opinion of Counsel" means a written opinion from legal counsel who
is acceptable to the Trustee. The counsel may be an employee of or counsel to
the Issuers or the Trustee.
"Pari Passu", as applied to the ranking of any Indebtedness of a
Person in relation to other Indebtedness of such Person, means that each such
Indebtedness is not subordinated in right of payment to the same Indebtedness as
is the other, and is so subordinate to the same extent, and is not subordinate
in right of payment to each other or to any Indebtedness as to which the other
is not so subordinate.
<PAGE>
19
"Permitted Foreign Investment" means, with respect to any Person, an
Investment by such Person in (i) cash and (ii) Cash Equivalents.
"Permitted Hedging Obligations" means (a) Indebtedness under Hedging
Obligations to the extent related to the Securities and any Refinancing
Indebtedness; and (b) Indebtedness under Commodity Commitments or Currency
Agreements entered into in the ordinary course of business in good faith as a
risk management or hedge against change in market conditions; provided, however,
that in the case of this clause (b) the aggregate amount of commodities
underlying all such Commodity Commitments on any date, for the Company and the
Restricted Subsidiaries, that mature or expire over any 12 month period may not
exceed the Company's expected requirements for such commodities over such 12
month period.
"Permitted Investments" means (i) investments in direct obligations
of the United States of America maturing within 90 days of the date of
acquisition thereof, (ii) investments in certificates of deposit maturing within
90 days of the date of acquisition thereof issued by a Qualifying Financial
Institution, or, to the extent funds are required by applicable law to be
maintained in Baht, certificates of deposit, promissory notes or other
instruments, in each case able to be pledged, of a Qualifying Domestic Financial
Institution (iii) investments in commercial paper given the highest rating by
S&P and Moody's and maturing not more than 90 days from the date of acquisition
thereof, (iv) Investments in Phase II Construction Costs, (v) the Co-Gen
Investment (less the amount of any Investment made pursuant to clause (viii)
below), (vi) Investments in transportation and downstream processing assets
using the proceeds of the repayment of the Cogen Investment provided that the
Securities are secured by a Lien on such assets that is senior to or pari passu
with any other Lien on such assets, (vii) restructurings, swaps or other
dispositions of the Related Party Receivable; provided that (a) any such
disposition shall result in the receipt by the Company of tangible assets and
(b) the Securities shall be secured by a Lien on such assets that is senior to
or pari passu with any other Lien on such assets; and (viii) other investments
in an aggregate amount not to exceed the lesser of an amount equal to (a) the
sum of all principal repayments on the U.S.$15.5 million loan made by the
Company in connection with the Co-Gen Investment and (b) U.S.$15.5 million.
<PAGE>
20
"Permitted Liens" means, with respect to any Person, (a) pledges or
deposits by such Person under workers' compensation laws, unemployment insurance
laws or similar legislation, or good faith deposits in connection with bids,
tenders, contracts (other than for the payment of Indebtedness) or leases to
which such Person is a party, or deposits to secure public or statutory
obligations of such Person or deposits of cash or United States government bonds
to secure surety or appeal bonds to which such Person is a party, or deposits as
security for contested taxes or import duties or for the payment of rent, in
each case Incurred in the ordinary course of business; (b) Liens imposed by law,
such as carriers', warehousemen's and mechanics' Liens, in each case for sums
not yet due or being contested in good faith by appropriate proceedings or other
Liens arising out of judgments or awards against such Person with respect to
which such Person shall then be proceeding with an appeal or other proceedings
for review; (c) Liens for property taxes not yet subject to penalties for
non-payment or which are being contested in good faith by appropriate
proceedings; (d) Liens in favor of issuers of surety bonds or letters of credit
issued pursuant to the request of and for the account of such Person in the
ordinary course of its business; provided, however, that such letters of credit
do not constitute Indebtedness; (e) minor survey exceptions, minor encumbrances,
easements or reservations of, or rights of others for, licenses, rights-of-way,
sewers, electric lines, telegraph and telephone lines and other similar
purposes, or zoning or other restrictions as to the use of real property or
Liens incidental to the conduct of the business of such Person or to the
ownership of its properties which were not Incurred in connection with
Indebtedness and which do not in the aggregate materially adversely affect the
value of said properties or materially impair their use in the operation of the
business of such Person; (f) Liens securing Indebtedness Incurred to finance the
construction, purchase or lease of, or repairs, improvements or additions to,
property of such Person; provided, however, that the Lien may not extend to any
other property owned by such Person or any of its Subsidiaries at the time the
Lien is Incurred, and the Indebtedness (other than any interest thereon) secured
by the Lien may not be Incurred more than 180 days after the later of the
acquisition, completion of construction, repair, improvement, addition or
commencement of full operation of the property subject to the Lien; (g) Liens to
secure the Securities and the Senior Subordinated Notes and the Guaranty and the
Senior Subordinated Guaranty and, to the extent such liens secure the
Securities, Senior Subordinated Notes, Guaranty and Senior Subordinated Guaranty
on a first priority basis, Liens to secure the
<PAGE>
21
Debentures and the Company's Guarantee of the Debentures on a second priority
basis; (h) Liens securing Indebtedness permitted under clause (b)(i) of Section
4.03 of this Indenture to the extent such Liens (other than Liens on
inventories) also secure, on an equal and ratable basis, the Issuers' and the
Company's obligations under the Securities; (i) Liens existing on the Issue
Date; (j) Liens on property or shares of Capital Stock of another Person at the
time such other Person becomes a Subsidiary of such Person; provided, however,
that such Liens are not created, incurred or assumed in connection with, or in
contemplation of, such other Person becoming such a Subsidiary; provided
further, however, that such Lien may not extend to any other property owned by
such Person or any of its Subsidiaries; (k) Liens on property at the time such
Person or any of its Subsidiaries acquires the property, including any
acquisition by means of a merger or consolidation with or into such Person or a
Subsidiary of such Person; provided, however, that such Liens are not created,
incurred or assumed in connection with, or in contemplation of, such
acquisition; provided further, however, that the Liens may not extend to any
other property owned by such Person or any of its Subsidiaries; (l) Liens
securing Indebtedness or other obligations of a Subsidiary of such Person owing
to such Person or a wholly owned Subsidiary of such Person; (m) Liens securing
Hedging Obligations so long as such Hedging Obligations relate to Indebtedness
that is, and is permitted to be under this Indenture, secured by a Lien on the
same property securing such Hedging Obligations; and (n) Liens to secure any
Refinancing (or successive Refinancings) as a whole, or in part, of any
Indebtedness secured by any Lien referred to in the foregoing clauses (f), (i),
(j) and (k); provided, however, that (x) such new Lien shall be limited to all
or part of the same property that secured the original Lien (plus improvements
to or on such property) and (y) the Indebtedness secured by such Lien at such
time is not increased to any amount greater than the sum of (A) the outstanding
principal amount or, if greater, committed amount of the Indebtedness described
under clauses (f), (i), (j) or (k) at the time the original Lien became a
Permitted Lien and (B) an amount necessary to pay any fees and expenses,
including premiums, related to such refinancing, refunding, extension, renewal
or replacement. For purposes of this definition, the term "Indebtedness" shall
be deemed to include interest on such Indebtedness.
"Person" means any individual corporation, partnership, joint
venture, association, joint-stock Issuers, trust, unincorporated organization,
government or
<PAGE>
22
any agency or political subdivision hereof or any other entity.
"Phase II Completion" means the completion of the construction of
the Hot Mill, the DRI Plant and the Downstream Finishing Facilities.
"Phase II Construction Costs" mean construction costs associated
with the Hot Mill, the DRI Plant and the Downstream Finishing Facilities, in
each case certified as true and correct by the Independent Engineer.
"Phase III Construction Costs" mean construction costs incurred in
connection with the Mill after Phase II Completion.
"Post-Petition Interest" means all interest accrued or accruing
after the commencement of any Insolvency or Liquidation Proceeding (and interest
that would accrue but for the commencement of any Insolvency or Liquidation
Proceeding) in accordance with and at the contract rate (including, without
limitation, any rate applicable upon default) specified in the agreement or
instrument creating, evidencing or governing any Indebtedness, whether or not,
pursuant to applicable law or otherwise, the claim for such interest is allowed
as a claim in such Insolvency or Liquidation Proceeding.
"Preferred Stock", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
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
corporation, over shares of Capital Stock of any other class of such
corporation.
"President and/or CEO" means John W. Schultes or his successor
appointed by Management Co.
"principal" of a Security means the principal of the Security plus
the premium, if any, payable on the Security that is due or overdue or is to
become due at the relevant time.
"Private Placement Legend" means the legend set forth under such
caption in the form of Initial Security in Exhibit A hereto.
"Profitable Operations" means the point in time at which
Consolidated Cash Flow for a consecutive six month
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23
period equals at least 200% of Consolidated Interest Expense for such six month
period, to the extent such status has been demonstrated in a certificate of the
General Manager delivered to the Trustee and the Collateral Agent, accompanied
by a certificate of the Company's independent accountants confirming such
results based on a review conducted by such accountants.
"Project Documents" means and includes (i) the Offtake Agreements,
(ii) the SDI Agreement, (iii) the SDI License Agreement, (iv) the Management
Agreement, (v) the Shareholders Agreement, (vi) the Coal Supply Agreement, (vii)
the Iron Ore Fines Supply Agreement, (viii) the Working Capital Credit Facility,
(ix) the Agency Agreement, (x) the Employment Agreement and (xi) the Sriracha
Harbor Agreement.
"Purchase Agreement" means the agreement for the purchase of the
Securities between the Issuers, the Company, and the Initial Purchasers dated
March 2, 1998.
"Public Equity Offering" means an offering to the public for cash by
the Issuers or the Company of its common stock, or options, warrants or rights
with respect to its common stock.
"Qualifying Domestic Financial Institution" means a financial
institution in Thailand having capital and surplus in excess of
U.S.$1,000,000,000.
"Qualifying Financial Institution" means a financial institution
that (i) is domiciled in the United States, the United Kingdom, France or
Germany, (ii) is located in New York, New York and (iii) has capital and surplus
in excess of U.S.$5,000,000,000.
"Redemption Date" means any date on which the Securities are
optionally redeemed pursuant to Section 3.07.
"Refinance" means, in respect of any Indebtedness, to refinance,
extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue
other Indebtedness in exchange or replacement for, such Indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances any
Indebtedness of the Company or any Restricted Subsidiary existing on the Issue
Date or incurred in compliance with the Indenture, including Indebtedness that
Refinances Refinancing Indebtedness; provided, however, that
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24
(i) such Refinancing Indebtedness has a Stated Maturity no earlier than the
Stated Maturity of the Indebtedness being Refinanced, (ii) such Refinancing
Indebtedness has an Average Life at the time such Refinancing Indebtedness is
Incurred that is equal to or greater than the Average Life of the Indebtedness
being Refinanced and (iii) such Refinancing Indebtedness has an aggregate
principal amount (or if Incurred with original issue discount, an aggregate
issue price) that is equal to or less than the aggregate principal amount (or if
Incurred with original issue discount, the aggregate accreted value then
outstanding or committed (plus fees and expenses, including any premium and
defeasance costs) under the Indebtedness being Refinanced; provided, further,
however, that Refinancing Indebtedness shall not include (x) Indebtedness of a
Subsidiary that Refinances Indebtedness of the Company or (y) Indebtedness of
the Company or a Restricted Subsidiary that Refinances Indebtedness of an
Unrestricted Subsidiary.
"Registered Exchange Offer" shall have the meaning set forth in the
Registration Rights Agreement.
"Registrable Machinery" means machinery that qualifies for
registration pursuant to the Machinery Registration Act (Thailand) and that may
be mortgaged to secure a debt.
"Registration Rights Agreement" means the Registration Rights
Agreement dated March 12, 1998, by and between the Initial Purchasers, the
Issuers and the Company, as such agreement may be amended, modified, or
supplemented from time to time in accordance with the terms thereof.
"Related Party Receivable" means the up to U.S.$50 million of
receivables owed to the Company by certain of its affiliates.
"Restricted Period" means the period of 40 consecutive days
beginning on and including the first day after the Issue Date.
"Restricted Subsidiary" means, initially, each Subsidiary of the
Company existing on the date of the Indenture, and any other Subsidiary
designated from time to time by the Board of Directors of the Company as a
"Restricted Subsidiary" in accordance with this Indenture.
"Revenue Account" means an account or accounts maintained with the
Collateral Agent and established by the Company on or prior to the Issue Date
into which shall be
<PAGE>
25
deposited (directly or through an intermediate account) all sales proceeds, all
insurance proceeds and all other amounts received by the Company that are not
otherwise required to be deposited in the Notes DSR Account or the Offshore
Reserve Account.
"S&P" means Standard & Poor's Rating Services, a division of
McGraw-Hill, Inc., and its successors.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired whereby the Company or a Restricted
Subsidiary transfers such property to a Person and the Company or a Restricted
Subsidiary leases it from such Person.
"SDI Agreement" means the agreement between NSM Management Company,
LLC and Steel Dynamics, Inc. dated as of the Issue Date.
"SDI License Agreement" means the agreement between the Company and
Steel Dynamics, Inc. dated as of the Issue Date.
"Securities" means, collectively, the Initial Securities and, when
and if issued as provided in the Registration Rights Agreement, the Exchange
Securities.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Documents" means all the agreements, charges, documents
and instruments governing or creating the security interests in the Collateral
for the benefit of the holders of the Securities, the Senior Subordinated Notes,
the Debentures and (except in respect of (iii) and (xi) below) the Bank Credit
Facility and shall in any event include (i) Security Sharing Agreement; (ii)
Land and Building Mortgage Agreement; (iii) Pledge of Offshore Reserve Account
and the Notes DSR Account; (iv) Machinery Pledge Agreement; (v) Machinery
Mortgage Agreement; (vi) Assignment or designation as co-beneficiary of
Insurance; (vii) Conditional Assignment of Project Documents; (viii) Conditional
Assignment or Pledge of the Notes Sinking Fund Account and Revenue Account; (ix)
Conditional Assignment or Pledge of the Operating Account and Revenue Account;
(x) Pledge of Permitted Investments; (xi) Pledge of all issued and outstanding
shares of each of the Issuers; (xii) Assignment of Performance Bonds; and (xiii)
any other documents relating
<PAGE>
26
to the Collateral and executed in connection with the foregoing.
"Security Sharing Agreement" means the Security Sharing Agreement
dated as of the Issue Date among the Issuers, the Company, certain Thai
financial institutions party to the Bank Credit Facility, the Trustee, the
trustees in respect of the Senior Subordinated Notes and the Debentures, the
Book-Entry Depositary, the book-entry depositary for the Senior Subordinated
Notes and the Debentures, and the Collateral Agent.
"Senior Indebtedness" means, with respect to any Person, (i)
Indebtedness Incurred pursuant to the Credit Facilities, (ii) the Securities and
(iii) all indebtedness of such Person, including interest thereon (including
Post-Petition Interest), whether outstanding on the Issue Date or thereafter
Incurred, unless in the instrument creating or evidencing the same or pursuant
to which the same is outstanding it is expressly provided that such obligations
are not superior in right of payment to the Securities or the applicable
Guaranty; provided, however, that Senior Indebtedness shall not include (1) any
obligation of such Person to any Subsidiary, (2) any liability for Federal,
state, local or other taxes owed or owing by such Person, (3) any accounts
payable or other liability to trade creditors arising in the ordinary course of
business (including Guaranties thereof or instruments evidencing such
liabilities), (4) any Indebtedness of such Person which is expressly subordinate
in right of payment to any other Indebtedness of such Person, including any
Subordinated Indebtedness, (5) any obligations with respect to any Capital
Stock, or (6) any Indebtedness Incurred in violation of the Indenture.
"Senior Subordinated Guaranty" means the Guarantee of the Senior
Subordinated Notes by the Company pursuant to, and as described in, the Senior
Subordinated Security Indenture.
"Senior Subordinated Note Indenture" means the indenture of even
date herewith entered into in connection with the issuance of the Senior
Subordinated Notes, among the Issuers, the Company and the Trustee.
"Senior Subordinated Notes" means the 12 1/4% Senior Subordinated
Mortgage Notes Due 2008 of the Issuers.
"Shareholders' Agreement" means the agreement dated as of the Issue
Date between Steel Dynamics, Inc.,
<PAGE>
27
Enron Corp., McDonald & Company Securities, Inc., Sawasdi Horrungruang and
N.T.S. Steel Group (Plc.) Co., Ltd. and the Company.
"Sriracha Harbor Agreement" means the agreement between Sriracha
Harbor Public Company Limited and the Company, relating to the use by the
Company, of the Sriracha Harbor port to be dated as of the Issue Date.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the payment of principal
of such security is due and payable, including pursuant to any mandatory
redemption provision.
"Subordinated Indebtedness" means Indebtedness of the Company, the
Issuers or a Restricted Subsidiary that is subordinated in right of payment to
the Securities or, any applicable Guarantee of the Securities.
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other Interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by (i) such Person, (ii) such
Person and one or more Subsidiaries of such Person or (iii) one or more
Subsidiaries of such Person. Unless otherwise specified herein, each reference
to a Subsidiary shall refer to a Subsidiary of the Issuers and the Company.
"Thai GAAP" means generally accepted accounting principals in
Thailand as in effect as of the date of this Indenture.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date of this Indenture; provided, however,
that, in the event the Trust Indenture Act of 1939 is amended after such date,
"TIA" means, to the extent required by any such amendments, the Trust Indenture
Act of 1939 as so amended.
"Transfer Restricted Securities" means Securities that bear or are
required to bear the Private Placement Legend.
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28
"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor.
"Trust Officer" means any officer or assistant officer of the
Trustee assigned by the Trustee to administer this Indenture.
"Uniform Commercial Code" means the New York Uniform Commercial Code
as in effect from time to time.
"U.S. GAAP" means generally accepted accounting principles in the
United States as in effect as of the date of the Indenture. All ratios and
computations based on U.S. GAAP contained in the Indenture shall be computed in
conformity with U.S. GAAP.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company
(other than the Issuers) that at the time of determination shall be designated
an Unrestricted Subsidiary by the Board of Directors in the manner provided
below and (ii) any Subsidiary of an Unrestricted Subsidiary. The Board of
Directors may designate any Subsidiary of the Company (including any newly
acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless
such Subsidiary or any of its Subsidiaries owns any Capital Stock or
Indebtedness of, or holds any Lien on any property of, the Company or any other
Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so
designated; provided, however, that either (A) the Subsidiary to be so
designated has total assets of $1,000 or less or (B) if such Subsidiary has
assets greater than $1,000, such designation would be permitted in Section 4.04.
"Vendor Financing" means financing made available by vendors to
finance equipment and/or plant included in the Mill on extended pay terms.
"Wholly-Owned Restricted Subsidiary" means a Restricted Subsidiary
all the outstanding Capital Stock (other than directors' qualifying shares) of
which are owned
<PAGE>
29
by the Company or another Wholly-Owned Restricted Subsidiary.
"Working Capital Credit Facility" means the Credit Facility dated as
of the Issue Date between the Company and Banque Nationale de Paris, as such
agreement may be amended, supplemented, or otherwise modified in writing from
time to time (but in no event shall the definition of Working Capital Credit
Facility includes any amendment, supplement or other modification increasing the
amount of borrowings available to the Company and it Subsidiaries thereunder).
SECTION 1.02. Other Definitions.
Defined in
Term Section
---- -------
"Additional Amounts"................................... 4.20(a)
"Affiliate Transaction" ............................... 4.13
"Agent Members" ....................................... 2.13(a)
"Authorized Agent" .................................... 11.11(b)
"Bankruptcy Law" ...................................... 6.01
"bankruptcy provision" ................................ 6.01
"Book-Entry Depositary" ............................... 2.13
"Collateral"........................................... 10.02
"Company Collateral"................................... 10.01
"covenant defeasance option" .......................... 8.01(b)
"Custodian" ........................................... 6.01
"Definitive Registered Securities" .................... 4.17(a)
"Event of Default" .................................... 6.01
"IAIs" ................................................ 2.01(b)
"IAI Global Security" ................................. 2.01(b)
"legal defeasance option" ............................. 8.01(b)
"Legal Holiday" ....................................... 11.08
"Offer" ............................................... 4.06(b)
"Offer Amount" ........................................ 4.06(c)
"Offer Period" ........................................ 4.06(c)
"Paying Agent" ........................................ 2.03
"Purchase Date" ....................................... 4.06(c)
"QIB Global Security" ................................. 2.01(b)
"QIBs" ................................................ 2.01(b)
"Reports" ............................................. 4.02
"Registrar"............................................ 2.03
"Regulation S" ........................................ 2.01(b)
"Regulation S Global Security" ........................ 2.01(b)
"Restricted Payment" .................................. 4.04
"Stage III Tender"..................................... 4.07
"Successor Company" ................................... 5.01
"Taxes" ............................................... 4.20(a)
"U.S. Global Securities" .............................. 2.01(b)
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30
SECTION 1.03. Incorporation by Reference of Trust Indenture Act.
This Indenture is subject to the mandatory provisions of the TIA, which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"indenture securities" means the Securities.
"indenture security holder" means a Holder or a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Issuers, the Company
and any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
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 Thai GAAP or U.S. GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in
the plural include the singular;
(6) unsecured Indebtedness shall not be deemed to be subordinate or
junior to Secured Indebtedness merely by virtue of its nature as unsecured
Indebtedness;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof that
would be shown on a balance sheet of the Issuers dated such date prepared
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31
in accordance with Thai GAAP or U.S. GAAP and accretion of principal on
such security shall be deemed to be the Incurrence of Indebtedness;
(8) the principal amount of any Preferred Stock shall be (i) the
maximum liquidation value of such Preferred Stock or (ii) the maximum
mandatory redemption or mandatory repurchase price with respect to such
Preferred Stock, whichever is greater; and
(9) unless otherwise indicated, all references in this Indenture to
"$" mean United States dollars and all references to "Baht" mean Thai
Baht.
SECTION 1.05. Business Day Certificate. Within 15 days after the
Issue Date and thereafter, within 15 days prior to the end of each calendar year
while this Indenture remains in effect (with respect to the succeeding calendar
years), the Issuers shall, or shall cause the Collateral Agent to, deliver to
the Trustee an Officers' Certificate (or a written notice in the case of the
Collateral Agent) specifying the days on which banking institutions in Bangkok,
Thailand are authorized or required by law to close.
ARTICLE II
The Securities
SECTION 2.01. Form and Dating. (a) The Initial Securities and the
Trustee's certificate of authentication shall be substantially in the form of
Exhibit A, which is hereby incorporated in and expressly made a part of this
Indenture, and as otherwise provided in this Article II. Any Exchange Securities
and the Trustee's certificate of authentication shall be substantially in the
form of Exhibit B, which is incorporated in and expressly made a part of this
Indenture, and as otherwise provided in this Article II. The Securities may have
notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Issuers or the Company is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Issuers). Each Security shall be dated the date of its authentication.
The terms of the Securities set forth in Exhibits A and B are part of the terms
of this Indenture. The Securities shall be issuable only in registered form
without coupons and only in denominations of $1,000 and integral multiples
thereof.
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32
(b) Global Securities. The Initial Securities are being offered and
sold by the Issuers to the Initial Purchasers pursuant to the Purchase
Agreement.
Initial Securities offered and sold to QIBs in reliance on Rule
144A, as provided in the Purchase Agreement, shall be issued initially in the
form of a single Global Security in global form without interest coupons
substantially in the form of Exhibit A hereto, with such applicable legends as
are set forth in Exhibit A hereto, except as otherwise permitted herein (the
"Rule 144A Global Security"). On the Issue Date a similar Global Security, (the
"IAI Global Security" and, together with the Rule 144A Global Security, the
"U.S. Global Securities") in global form shall also be issued to accommodate
offers and sales of Securities to IAIs. The U.S. Global Securities shall be
deposited initially with the Book-Entry Depositary pursuant to the terms of the
Depositary Agreement, duly executed by the Issuers and authenticated by the
Trustee as hereinafter provided. The aggregate principal amount of each U.S.
Global Security may from time to time be increased or decreased by adjustments
made by annotation or endorsement thereon by the Trustee on behalf of the
Issuers (or by the issue of a further U.S. Global Security of the same type), in
connection with a corresponding decrease or increase in the aggregate principal
amount of the other U.S. Global Security or the Regulation S Global Security or
in consequence of the issue of Definitive Securities or additional U.S.
Securities, as hereinafter provided. The U.S. Global Securities and all other
Initial Securities evidencing the debt, or any portion of the debt, initially
evidenced by such U.S. Global Securities, other than Securities transferred or
exchanged upon certification as provided in Section 2.14(a)(i)(1), (2) or (6),
shall collectively be referred to herein as the "U.S. Securities".
Initial Securities offered and sold in reliance on Regulation S as
provided in the Purchase Agreement, shall be issued initially in the form of a
single Global Security in global form without interest coupons substantially in
the form of Exhibit A hereto, with such applicable legends as are set forth in
Exhibit A hereto, except as otherwise permitted herein, which shall be deposited
initially with the Book-Entry Depositary pursuant to the terms of the Depositary
Agreement, duly executed by the Issuers and authenticated by the Trustee as
hereinafter provided. Such Global Security shall be referred to herein as the
"Regulation S Global Security". The aggregate principal amount of the Regulation
S Global Security may from time to time be increased or decreased by adjustments
made by
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33
annotation or endorsement thereon by the Trustee on behalf of the Issuers (or by
the issue of a further Regulation S Global Security), in connection with a
corresponding decrease or increase in the aggregate principal amount of a U.S.
Global Security or in consequence of the issue of Definitive Securities or
additional Regulation S Securities, as hereinafter provided. The Regulation S
Global Security and all other Initial Securities that are not U.S. Global
Securities shall collectively be referred to herein as the "Regulation S
Securities".
SECTION 2.02. Execution and Authentication. One or more Officers
shall sign the Securities for the Issuers by manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall be
valid nevertheless.
A Security shall not be valid until an authorized officer of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate and make available for delivery (1)
Initial Securities for original issue in an aggregate principal amount at
maturity of $249,000,000, and (2) Exchange Securities for issue only in a
Registered Exchange Offer, pursuant to the Exchange and Registration Rights
Agreement for Initial Securities for a like principal amount of Initial
Securities exchanged pursuant thereto, in each case upon a written order of the
Issuers signed by one Officer thereof. Such order shall specify the amount of
the Securities to be authenticated, the date on which the original issue of
Securities is to be authenticated, whether the Securities are to be Initial
Securities or Exchange Securities, whether the Securities shall bear the Private
Placement Legend, or such other information as the Trustee may reasonably
request. The aggregate principal amount at maturity of Securities outstanding at
any time may not exceed $249,000,000 except as provided in Section 2.07.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Issuers to authenticate the Securities. Any such appointment
shall be evidenced by an instrument signed by an authorized officer of the
Trustee, a copy of which shall be furnished to the Issuers, and the Trustee
shall notify the Holders of the name and address of
<PAGE>
34
any agent not a party to this Indenture. Unless limited by the terms 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 any Registrar, Paying Agent or agent for service of notices and
demands.
SECTION 2.03. Registrar and Paying Agent. The Issuers shall maintain
an office or agency where Securities may be presented for registration of
transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange. The
Issuers may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes any additional paying agent.
The Issuers shall enter into an appropriate agency agreement with
any Registrar, Paying Agent or co-registrar not a party to this Indenture, which
shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Issuers shall notify
the Trustee of the name and address of any such agent. The Issuers may remove
any Paying Agent, Registrar or co-registrar without prior notice to any Holder.
If the Issuers fail to maintain a Registrar or Paying Agent, the Trustee shall
act as such and shall be entitled to appropriate compensation therefor pursuant
to Section 7.07.
The Issuers initially appoint the Trustee as Registrar and Paying
Agent in connection with the Securities.
The Issuers initially appoint The Depository Trust Company to act as
Depositary with respect to the Global Securities.
The Issuers may remove any Registrar or Paying Agent upon written
notice to such Registrar or Paying Agent and to the Trustee; provided, however,
that no such removal shall become effective until (1) acceptance of an
appointment by a successor as evidenced by an appropriate agreement entered into
by the Issuers and such successor Registrar or Paying Agent, as the case may be,
and delivered to the Trustee or (2) notification to the Trustee that the Trustee
shall serve as Registrar or Paying Agent until the appointment of a successor in
accordance with clause (1)
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35
above and shall otherwise comply with TIA ss.312(a). The Registrar or Paying
Agent may resign at any time upon written notice.
The Paying Agent shall comply with all withholding tax, information
reporting and backup withholding tax requirements under the United States
Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury
Regulations issued thereunder in respect of any payment on, or in respect of,
the Securities (including, without limitation, furnishing to the Holders and
collecting Internal Revenue Service ("IRS") Forms 1001, 4224, W-8 or W-9 (or any
successor forms), as the case may be, and filing IRS Forms 1042 and 1042-S with
respect thereto). As promptly as possible after the payment of any withholding
tax, the Paying Agent shall deliver to each Holder appropriate documentation
showing the payment thereof, together with such additional documentary evidence
as such Holders may reasonably request from time to time.
SECTION 2.04. Paying Agent To Hold Money in Trust. Prior to 10:00
A.M., New York City time, on each due date of the principal, interest and
Additional Amounts, if any, on any Security, the Issuers shall deposit with the
Paying Agent a sum sufficient to pay such principal, interest and Additional
Amounts, if any, then so becoming due. The Issuers shall require each Paying
Agent (other than the Trustee) to agree in writing that the Paying Agent shall
hold in trust for the benefit of Securityholders or the Trustee all money held
by the Paying Agent for the payment of principal of or interest on the
Securities and shall notify the Trustee of any default by the Issuers in making
any such payment. The Issuers 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 shall have no
further liability for the money delivered to the Trustee.
Any money deposited with any Paying Agent in trust for the payment
of principal, interest or Additional Amounts, if any, on any Security and
remaining unclaimed for two years after such principal and interest or
Additional Amounts, if any, has become due and payable shall be paid to the
relevant Issuer at its request; and the Securityholders shall thereafter, as
unsecured general creditors, look only to the Issuers for payment thereof, and
all liability of the
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36
Paying Agent with respect to such money shall thereupon cease.
SECTION 2.05. Securityholder 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 Securityholders and shall otherwise comply with
TIA ss.312(a). If the Trustee is not the Registrar, the Issuers shall furnish,
or cause the Registrar to furnish, to the Trustee, in writing at least five
Business Days before each interest payment 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 of Securityholders.
SECTION 2.06. Transfer and Exchange. The Securities shall be issued
in registered form and the transfer of the Securities shall be registerable only
upon the surrender of a Security for registration of transfer. When a Security
is presented to the Registrar or a co-registrar with a request to register a
transfer, the Registrar shall register the transfer as requested if its
requirements therefor are met. When Securities are presented to the Registrar or
a co-registrar with a request to exchange them for an equal principal amount of
Securities of other denominations, the Registrar shall make the exchange as
requested if its requirements therefor are met. To permit registration of
transfers and exchanges, the Issuers shall execute and the Trustee shall
authenticate Securities at the Registrar's or co-registrar's request. The
Issuers may require payment by the Holder of a sum sufficient to pay all taxes,
assessments or other governmental charges in connection with any transfer or
exchange pursuant to this Section. The Issuers shall not be required to make and
the Registrar need not register transfers or exchanges of Securities selected
for redemption (except, in the case of Securities to be redeemed in part, the
portion thereof not to be redeemed) or any Securities for a period of 15 days
before a selection of Securities to be redeemed.
Prior to the due presentation for registration of transfer of any
Security, the Issuers, the Company, the Trustee, the Paying Agent, the Registrar
or any co-registrar may deem and treat the Person in whose name a Security is
registered as the absolute owner of such Security for the purpose of receiving
payment of principal of and, subject to the record date provisions of this
Indenture, interest, if any, on such Security and for all other purposes
whatsoever, whether or not such Security is overdue, and none of the
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Issuers, the Company, the Trustee, the Paying Agent, the Registrar or any
co-registrar shall be affected by notice to the contrary.
The Company may require payment of a sum sufficient to pay all
taxes, assessments or other governmental charges in connection with any transfer
or exchange pursuant to this Section 2.06 (other than in respect of the Exchange
Offer, except as otherwise provided in the Registration Rights Agreement).
All Securities issued upon any registration of transfer or exchange
pursuant to this Section 2.06 will evidence the same debt and will be entitled
to the same benefits under this Indenture as the Securities surrendered upon
such registration of transfer or exchange.
SECTION 2.07. Replacement Securities. If a mutilated Security is
surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Issuers shall issue
and the Trustee shall authenticate a replacement Security if the Trustee's
requirements therefor are met, such that the Holder (i) provides evidence to the
satisfaction of the Issuers or the Trustee within a reasonable time after such
Holder has notice of such loss, destruction or wrongful taking and the Registrar
does not register a transfer prior to receiving such notification, (ii) makes
such a request to the Issuers or the Trustee prior to the Security being
acquired by a bona fide purchaser and (iii) satisfies any other reasonable
requirements of the Trustee. If required by the Trustee or the Issuers, such
Holder shall furnish an indemnity bond sufficient in the judgment of the Trustee
to protect the Issuers, the Trustee, the Paying Agent, the Registrar and any
co-registrar from any loss that any of them may suffer if a Security is
replaced. The Issuers and the Trustee may charge the Holder for their expenses
in replacing a Security. In the event any such mutilated, lost, destroyed or
wrongfully taken Security has become or is about to become due and payable, the
Issuers in their discretion may pay such Security instead of issuing a new
Security in replacement thereof.
Every replacement Security is an additional obligation of the
Issuers.
The provisions of this Section 2.07 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, lost, destroyed or wrongfully taken
Securities.
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SECTION 2.08. Outstanding Securities. Securities outstanding at any
time are all Securities authenticated by the Trustee except for those canceled
by it, those delivered to it for cancelation and those described in this Section
as not outstanding. A Security does not cease to be outstanding because the
Issuers or an Affiliate of the Issuers holds the Security.
If a Security is replaced pursuant to Section 2.07, such replaced
Security ceases to be outstanding unless the Trustee and the Issuers receive
proof satisfactory to them that such replaced Security is held by a bona fide
purchaser.
If the Paying Agent segregates and holds in trust, in accordance
with this Indenture, on a redemption date or maturity date money sufficient to
pay all principal and interest payable on that date with respect to the
Securities (or portions thereof) to be redeemed or maturing, as the case may be,
and the Paying Agent is not prohibited from paying such money to the
Securityholders on that date pursuant to the terms of this Indenture, then on
and after the date such Securities (or portions thereof) cease to be outstanding
and interest on them ceases to accrue.
In determining whether the Holders of the required principal amount
of Securities have concurred in any direction, waiver or consent, Securities
owned by the Issuers or any of their Affiliates shall be disregarded, except
that, for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Securities which a Trust
Officer of the Trustee knows or has reason to know are so owned shall be
disregarded.
SECTION 2.09. Temporary Securities. Until Definitive Securities are
ready for delivery, the Issuers 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 Issuers consider
appropriate for temporary Securities. Without unreasonable delay, the Issuers
shall prepare and the Trustee shall authenticate Definitive Securities and
deliver them in exchange for temporary Securities at the office or agency of the
Issuers, without charge to the Holder.
SECTION 2.10. Cancelation. The Issuers at any time may deliver
Securities to the Trustee for cancelation. The Registrar and the Paying Agent
shall forward to the
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Trustee any Securities surrendered to the Registrar or Paying Agent for
registration of transfer, exchange, payment or cancelation. The Trustee and no
one else shall cancel all Securities surrendered for registration of transfer,
exchange, payment or cancelation and shall dispose of canceled Securities in
accordance with its customary procedures unless otherwise directed by written
direction of an Officer of the Issuers. The Issuers may not issue new Securities
to replace Securities it has redeemed, paid or delivered to the Trustee for
cancelation. The Trustee shall not authenticate Securities in place of canceled
Securities other than pursuant to the terms of this Indenture.
SECTION 2.11. Defaulted Interest. If the Issuers default in a
payment of interest on the Securities, the Issuers shall pay the defaulted
interest (plus interest on such defaulted interest to the extent lawful) in any
lawful manner. The Issuers shall pay the defaulted interest to, in the case of
Definitive Securities, the Persons who are Securityholders or, in the case of a
Global Security, to the Holder thereof on a subsequent special record date. The
Issuers shall fix or cause to be fixed any such special record date and payment
date to the reasonable satisfaction of the Trustee and shall promptly mail or
cause to be mailed to each Securityholder a notice that states the special
record date, the payment date and the amount of defaulted interest to be paid.
The Issuers may make payment of any defaulted interest in any other
lawful manner not inconsistent with the requirements (if applicable) of any
securities exchange on which the Securities may be listed, and upon such notice
as may be required by such exchange, if, after notice given by the Issuers to
the Trustee of the proposed payment pursuant to this paragraph, such manner of
payment shall be deemed practicable by the Trustee.
SECTION 2.12. CUSIP Numbers. The Issuers in issuing the Securities
may use "CUSIP" numbers (if then generally in use) and, if so, the Trustee shall
use "CUSIP" numbers in notices of redemption or exchange as a convenience to
Holders; provided, however, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption or exchange and
that reliance may be placed only on the other identification numbers printed on
the Securities, and any such redemption shall not be affected by any defect in
or omission of such numbers. The Issuers will promptly notify the Trustee of any
change in the CUSIP numbers.
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SECTION 2.13. Book-Entry Provisions for Global Securities. Each
Global Security initially shall be registered in the name of The Chase Manhattan
Bank as Book-Entry Depositary ("Book-Entry Depositary") pursuant to the terms of
the Note Depositary Agreement. The Book-Entry Depositary will issue one or more
certificateless depositary interests to the Depositary. Upon confirmation by the
Depositary that the Book-Entry Depositary has custody of the Global Security and
upon acceptance by the Depositary of the certificateless depositary interest
pursuant to the applicable letter of representations, the Depositary will record
a beneficial interest in such Global Security. Each Global Security shall be
delivered to the Book-Entry Depositary. Beneficial interests in the Global
Securities may be held indirectly through members of or participants in ("Agent
Members") the Depositary (including Cedel and Euroclear in the case of the
Regulation S Global Security).
Agent Members shall have no rights under this Indenture with respect
to any Global Security held on their behalf by the Depositary, or the Book-Entry
Depositary, or under such Global Security, and the Book-Entry Depositary may be
treated by the Issuers, the Company, the Trustee and any agent of the Issuers,
the Company or the Trustee as the absolute owner of such Global Security for all
purposes whatsoever, except as otherwise provided herein. Notwithstanding the
foregoing, nothing herein shall prevent the Issuers, the Company, the Trustee or
any agent of the Issuers, the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Book-Entry
Depositary or shall impair, as between the Depositary and its Agent Members, the
operation of customary practices governing the exercise of the rights of a
Holder of any Security.
(b) Transfers of a non-certificated depositary interest in a Global
Security shall be limited to transfers of such non-certificated depositary
interest in a Global Security in whole, but not in part, to the Depositary, its
successors or their respective nominees. Interests of beneficial owners in a
Global Security may be transferred in accordance with the rules and procedures
of the Depositary (and Agent Member, if applicable) and the provisions of
Sections 2.06 and 2.14. Definitive Securities shall be transferred to all
beneficial owners in exchange for their beneficial interests in a Global
Security if (i) the Depositary notifies the Issuers that it is unwilling or
unable to continue as Depositary for such Global Security or the Depositary
ceases to be a clearing agency registered under the Exchange Act, at a time when
the Depositary is
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required to be so registered in order to act as Depositary, and in each case a
successor depositary is not appointed by the Issuers within 90 days of such
notice, or (ii) Book-Entry Depositary notifies the Issuers that it is unwilling
or unable to continue as Book-Entry Depositary and a successor book-entry
depositary is not appointed by the Issuers within 90 days of such notice or
(iii) an Event of Default has occurred and is continuing and the Registrar has
received a request from the Depositary or the Trustee to permit such transfers.
(c) Any Initial Securities which are presented to the Registrar for
exchange pursuant to the Exchange Offer shall be exchanged for Exchange
Securities of equal principal amount upon surrender to the Registrar of the
Initial Securities to be exchanged; provided, however, that the Initial
Securities so surrendered for exchange shall be duly endorsed and accompanied by
a letter of transmittal or written instrument of transfer in form satisfactory
to the Issuers, the Trustee and the Registrar duly executed by the Holder
thereof or his attorney who shall be duly authorized in writing to execute such
document. Whenever any Initial Securities are so surrendered for exchange, the
Issuers shall execute, and the Trustee shall authenticate and deliver to the
Holder the same aggregate principal amount of Exchange Securities as those
Initial Securities that have been surrendered.
(d) The registered holder of a Global Security may grant proxies and
otherwise authorize any Person, including Agent Members and Persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Securities. Whenever all of a
Global Security is exchanged for one or more Definitive Securities, it shall be
surrendered by the Holder thereof to the Trustee for cancelation. Whenever a
part of a Global Security is exchanged for one or more Definitive Securities the
Global Security shall be surrendered by the Holder thereof to the Trustee who
shall cause an adjustment to be made to Schedule A of such Global Security such
that the principal amount of such Global Security will be equal to the portion
of such Global Security not exchanged and shall thereafter return such Global
Security to such Holder. All Definitive Securities issued in exchange for a
Global Security or any portion thereof shall be registered in such names as the
Depositary, after conferring with the Registrar, shall instruct the Trustee.
Every Security authenticated and delivered in exchange for or in lieu of a
Global Note, or any portion thereof, pursuant to Section 2.14(a), 2.14(b) or
otherwise,
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shall be authenticated and delivered in the form of, and shall be, a Global
Note. A Global Security may not be exchanged for a Definitive Security other
than as provided in Section 2.13(b).
(e) Holders of Initial Securities (or holders of interests therein)
and prospective purchasers designated by such Holders (or holders of interests
therein) will have the right to obtain from the Issuers or the Company upon
request by such Holders (or holders of interests therein) or prospective
purchasers, during any period in which the Issuers or the Company is not subject
to Section 13 or 15(d) of the Exchange Act, or is exempt from reporting pursuant
to 12g3-2(b) under the Exchange Act, the information required by paragraph
d(4)(i) of Rule 144A in connection with any transfer or proposed transfer of
such Securities.
SECTION 2.14. Special Transfer Provisions. (a) Provisions Applicable
Solely to Initial Securities. The following procedures and restrictions shall
not apply with respect to Initial Securities transferred or exchanged for the
account of a Person who is not an Affiliate of the Issuers at the time of the
transfer or exchange and has not been an Affiliate during the preceding three
months, provided a period of at least two years has elapsed since the later of
the date the Initial Securities were acquired from the Issuers or from an
Affiliate of the Issuers.
(i) Notwithstanding any other provisions of this Indenture or the
Securities, transfers and exchanges of interests in an Initial Global Security
of the kinds described in clauses (1) through (5) below and exchanges of
interests in Initial Global Securities or of other Initial Securities as
described in clauses (6) through (9) below, shall be made only in accordance
with this Section 2.14(a), and all transfers of an interest in the Regulation S
Global Security shall comply with clause (10) below.
(1) Transfers of U.S. Global Security to Regulation S Global
Security During the Restricted Period. If the holder of a beneficial interest in
a U.S. Global Security wishes at any time during the Restricted Period to
transfer such interest to a Person who wishes to take delivery thereof in the
form of a beneficial interest in the Regulation S Global Security, such transfer
may be effected, subject to the rules and procedures of the Depositary, the
Euroclear Operator and Cedel, to the extent applicable (the "Applicable
Procedures"), only in accordance with the provisions of this Section
2.14(a)(i)(1). Upon receipt by the Book-Entry Depositary of a certificate in
substantially
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the form set forth in Exhibit C given by the transferor, the Book-Entry
Depositary shall present the Initial Global Securities to the Trustee on behalf
of the Issuers to reduce the principal amount of the U.S. Global Security and to
increase the principal amount of the Regulation S Global Security, by the
principal amount of the beneficial interest in the U.S. Global Security to be so
transferred, by annotation thereon.
(2) Transfers of U.S. Global Security to Regulation S Global
Security After the Expiration of the Restricted Period. If the holder of a
beneficial interest in a U.S. Global Security wishes at any time after the
expiration of the Restricted Period to transfer such interest to a Person who
wishes to take delivery thereof in the form of a beneficial interest in the
Regulation S Global Security, such transfer may be effected, subject to the
Applicable Procedures, only in accordance with this Section 2.14(a)(i)(2). Upon
receipt by the Book-Entry Depositary of a certificate in substantially the form
set forth in Exhibit D given by the transferor, the Book-Entry Depositary shall
present the Initial Global Securities to the Trustee on behalf of the Issuers to
reduce the principal amount of the U.S. Global Security, and to increase the
principal amount of the Regulation S Global Security, by the principal amount of
the beneficial interest in the U.S. Global Security to be so transferred, by
annotation thereon.
(3) Transfers of Regulation S Global Security to U.S. Global
Security. If the holder of a beneficial interest in the Regulation S Global
Security wishes at any time to transfer such interest to a Person who wishes to
take delivery thereof in the form of a beneficial interest in a U.S. Global
Security, such transfer may be effected, subject to the Applicable Procedures,
only in accordance with this Section 2.14(a)(i)(3). Upon compliance with the
Applicable Procedures, the Book-Entry Depositary shall present the Initial
Global Securities to the Trustee on behalf of the Issuers to reduce the
principal amount of the Regulation S Global Security, and to increase the
principal amount of the applicable U.S. Global Security, by the principal amount
of the beneficial interest in the Regulation S Global Security to be so
transferred, by annotation thereon; provided, however, that, prior to the
expiration of the Restricted Period, such transfer shall be made only if, in
addition, the Book-Entry Depositary has received a certificate in substantially
the form set forth in Exhibit E given by the transferor (and, in the case of a
transfer to the IAI Global Security, a signed letter from
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the transferee in substantially the form set forth in Annex A thereto).
(4) Transfers of IAI Global Security to Rule 144A Global Security.
If the holder of a beneficial interest in the IAI Global Security (whether
during the Restricted Period or after the expiration of the Restricted Period)
wishes to transfer such interest to a Person who wishes to take delivery thereof
in the form of a beneficial interest in the Rule 144A Global Security, such
transfer may be effected, subject to the Applicable Procedures, only in
accordance with this Section 2.14(a)(i)(4). Upon receipt by the Book-Entry
Depositary of a certificate in substantially the form set forth in Exhibit F
given by the transferor, the Book-Entry Depositary shall present the Initial
Global Securities to the Trustee on behalf of the Issuers to reduce the
principal amount of the IAI Global Security from which such transfer is to be
made, and to increase the principal amount of the Rule 144A Global Security, by
the principal amount of the beneficial interest in the IAI Global Security to be
so transferred, by annotation thereon.
(5) Transfers of Rule 144A Global Security to IAI Global Security.
If the holder of a beneficial interest in the Rule 144A Global Security (whether
during the Restricted Period or after the expiration of the Restricted Period)
wishes to transfer such interest to a Person who wishes to take delivery thereof
in the form of a beneficial interest in the IAI Global Security, such transfer
may be effected, subject to the Applicable Procedures, only in accordance with
this Section 2.14(a)(i)(5). Upon receipt by the Book-Entry Depositary of a
certificate in substantially the form set forth in Exhibit G given by the
transferor and a signed letter from the transferee substantially in the form set
forth in Annex A thereto, the Book-Entry Depositary shall present the Initial
Global Securities to the Trustee on behalf of the Issuers to reduce the
principal amount of the Rule 144A Global Security from which such transfer is to
be made, and to increase the principal amount of the IAI Global Security, by the
principal amount of the beneficial interest in the Rule 144A Global Security to
be so transferred, by annotation thereon.
(6) Exchanges of U.S. Global Security for Regulation S Global
Security. If the holder of a beneficial interest in a U.S. Global Security
wishes at any time to exchange such interest for a beneficial interest in the
Regulation S Global Security, such exchange may be effected, subject to the
Applicable Procedures, only in accordance with the provisions of this Section
2.14(a)(i)(6). Upon
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receipt by the Book-Entry Depositary of a certificate in substantially the form
set forth in Exhibit H, given by the holder of the beneficial interest, the
Book-Entry Depositary shall present the Initial Global Securities to the Trustee
on behalf of the Issuers to reduce the principal amount of such U.S. Global
Security, and to increase the principal amount of the Regulation S Global
Security, by the principal amount of the beneficial interest in such U.S. Global
Security to be so exchanged, by annotation thereon.
(7) Exchanges of Regulation S Global Security for U.S. Global
Security. If the holder of a beneficial interest in the Regulation S Global
Security wishes at any time to exchange such interest for a beneficial interest
in a U.S. Global Security, such exchange may be effected, subject to the
Applicable Procedures, only in accordance with the provisions of this Section
2.14(a)(i)(7). Upon receipt by the Book-Entry Depositary of a certificate in
substantially the form set forth in Exhibit I, given by the holder of the
beneficial interest, the Book-Entry Depositary shall present the Initial Global
Securities to the Trustee on behalf of the Issuers to reduce the principal
amount of the Regulation S Global Security, and to increase the principal amount
of the applicable U.S. Global Security, by the principal amount of the
beneficial interest in the Regulation S Global Security to be so exchanged, by
annotation thereon.
(8) Exchanges of U.S. Global Security for another U.S. Global
Security. If the holder of a beneficial interest in a U.S. Global Security
wishes at any time to exchange such interest for a beneficial interest in the
other U.S. Global Security, such exchange may be effected, subject to the
Applicable Procedures, only in accordance with the provisions of this Section
2.14(a)(i)(8). Upon receipt by the Book-Entry Depositary of a certificate in
substantially the form set forth in Exhibit J given by the holder of the
beneficial interest (and including, in the case of an exchange into the IAI
Global Security, a signed letter substantially in the form set forth in Annex A
thereto), the Book-Entry Depositary shall present the Initial Global Securities
to the Trustee on behalf of the Issuers to reduce the principal amount of the
U.S. Global Security to be exchanged, and to increase the principal amount of
the other U.S. Global Security, by the principal amount of the beneficial
interest in the U.S. Global Security to be so exchanged, by annotation thereon.
(9) Other Exchanges. In the event that an Initial Global Security or
any portion thereof is exchanged
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for Initial Securities in definitive form pursuant to Section 2.13(b) hereof,
such Definitive Securities may in turn be exchanged (on transfer or otherwise)
for other Definitive Securities and only in accordance with such procedures,
which shall be substantially consistent with the provisions of clauses (1)
through (8) above and (10) below) (including the certification requirements
intended to ensure that transfers and exchanges of beneficial interests in an
Initial Security comply with Rule 144A or Regulation S, as the case may be) and
any Applicable Procedure as may from time to time be adopted by the Issuers and
the Registrar.
(10) Interests in Regulation S Global Security to be Held Through
the Euroclear Operator or Cedel. Until the expiration of the Restricted Period,
interests in the Regulation S Global Security may be held only through the
Euroclear Operator and Cedel; provided, however, that this clause (10) shall not
prohibit any transfer in accordance with Section 2.14(a)(i)(3).
(ii) Each Initial Security issued hereunder shall, upon issuance,
bear the legend set forth on the form of the Security attached hereto as Exhibit
A and such legend shall not be removed from such Initial Security except as
provided in the next sentence. The legend required for an Initial Security may
be removed from an Initial Security if there is delivered to the Issuers such
satisfactory evidence, which may include an opinion of independent counsel
licensed to practice law in the State of New York, as may be reasonably required
by the Issuers, that neither such legend nor the restrictions on transfer set
forth therein are required to ensure that transfers of such Security will not
violate the registration requirements of the Securities Act. Upon provision of
such satisfactory evidence, the Trustee, at the direction of the Issuers, shall
authenticate and deliver in exchange for such Security another Security or
Securities having an equal aggregate principal amount that does not bear such
legend. If such a legend required for an Initial Security has been removed from
an Initial Security as provided above, no other Security issued in exchange for
all or any part of such Security shall bear such legend, unless the Issuers have
reasonable cause to believe that such other Security is a "restricted security"
within the meaning of Rule 144 and instructs the Trustee to cause a legend to
appear thereon.
(b) General. By its acceptance of any Security bearing the Private
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Private
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Placement Legend and agrees that it shall transfer such Security only as
provided in this Indenture.
The Registrar shall retain in accordance with its customary
procedures copies of all letters, notices and other written communications
received pursuant to Section 2.14. The Issuers shall have the right to inspect
and make copies of all such letters, notices or other written communications at
any reasonable time upon the giving of reasonable written notice to the
Registrar.
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee. If the Issuers elect to redeem
Securities pursuant to paragraph 5 of the Securities, they shall notify the
Trustee in writing of the redemption date, the principal amount of Securities to
be redeemed and the paragraph of the Securities pursuant to which the redemption
will occur.
The Issuers shall give each notice to the Trustee provided for in
this Section at least 60 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate from the Issuers to the effect that such redemption will comply with
the conditions herein. Any such notice may be canceled at any time prior to
notice of such redemption being mailed to any Holder and shall thereby be void
and of no effect.
SECTION 3.02. Selection of Securities To Be Redeemed. If fewer than
all the Securities are to be redeemed, the Trustee shall select the Securities
to be redeemed by lot; provided, however, that if a partial redemption is made
with the proceeds of a Public Equity Offering pursuant to Section 3.07(b), the
Trustee shall select the Securities to be redeemed only on a pro rata basis (to
the extent practicable) or by lot, unless such method is otherwise prohibited by
applicable legal and securities exchange requirements, if any. The Trustee shall
make the selection from outstanding Securities not previously called for
redemption. The Trustee may select for redemption portions of the principal of
Securities that have denominations larger than $1,000. Securities and portions
of them the Trustee selects shall be in amounts of $1,000 or a whole multiple of
$1,000. Provisions of this Indenture that apply to Securities called for
redemption
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also apply to portions of Securities called for redemption. The Trustee shall
notify the Issuers promptly (and, in any event, at least 30 days prior to
redemption) of the Securities or portions of Securities to be redeemed.
SECTION 3.03. Notice of Redemption. At least 30 days but not more
than 60 days before a date for redemption of Securities, the Issuers shall mail
a notice of redemption by first-class mail to each Holder of Securities to be
redeemed.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be
surrendered to the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be
redeemed, the certificate numbers and principal amounts of the
particular Securities to be redeemed;
(6) that, unless the Issuers default in making such redemption
payment, interest on Securities (or portion thereof) called for redemption
ceases to accrue on and after the redemption date;
(7) the paragraph of the Securities pursuant to which the Securities
called for redemption are being redeemed;
(8) the CUSIP number, if any, printed on the Securities being
redeemed; and
(9) 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 Issuers' request, the Trustee shall give the notice of
redemption in the Issuers' name and at the Issuers' expense. In such event, the
Issuers shall provide the Trustee with the information required by this Section
at
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least 40 days (unless a shorter period shall be acceptable to the Trustee) prior
to the redemption date.
SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest due on such record date, if
any, to the redemption date; provided that installments of interest due on an
interest payment date that is on or prior to the redemption date shall be
payable to the Securityholder of the redeemed Securities registered on the
relevant record 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.
SECTION 3.05. Deposit of Redemption Price. Prior to 10:00 A.M., New
York City time, on the Business Day immediately preceding the redemption date,
the Issuers shall deposit with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Securities to be redeemed on the
redemption date other than Securities or portions of Securities called for
redemption that have been delivered by the Issuers to the Trustee for
cancelation.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Issuers shall execute and the Trustee
shall authenticate for the Holder (at the Issuers' expense) a new Security equal
in principal amount to the unredeemed portion of the Security surrendered.
SECTION 3.07. Optional Redemption. (a) Except as set forth in the
next two paragraphs, the Securities may not be redeemed prior to February 1,
2002. On and after that date, the Issuers may redeem the Securities in whole at
any time or in part from time to time at the following redemption prices
(expressed in percentages of principal amount at maturity), plus accrued and
unpaid interest and Additional Amounts, if any, to the redemption date (subject
to the right of Holders of record on the relevant record
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50
date to receive interest due on the relevant Interest Payment Date), if redeemed
during the 12-month period beginning on or after February 1 of the years set
forth below:
Redemption
Period Price
- ------ -----
2002............................................ 106.000%
2003............................................ 103.000
2004 and thereafter............................. 100.000
(b) Notwithstanding the foregoing, at any time prior to February 1,
2001, the Company may redeem in the aggregate up to 35% of the original
aggregate principal amount at maturity of Securities with the net cash proceeds
of one or more Public Equity Offerings, at a redemption price (expressed as a
percentage of principal amount at maturity thereof) of 112% plus accrued
interest, if any, to the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
Interest Payment Date); provided, however, that after any such redemption the
aggregate principal amount at maturity of the Securities outstanding must equal
or exceed $162,000,000.
(c) The Securities may be redeemed at the option of the Issuers, in
whole but not in part, or paid in full but not in part prior to maturity at the
option of the Company, upon not less than 30 nor more than 60 days' notice given
as provided in Section 3.03, at any time at 103% of the Accreted Value thereof,
plus accrued and unpaid interest to the date fixed for such payment if, as a
result of any change in or amendment to the laws, regulations or governmental
policy having the force of law of the Cayman Islands or Thailand (or of any
political subdivision or taxing authority thereof or therein) or any execution
of or amendment to, any treaty or treaties affecting taxation of which the
Cayman Islands or Thailand (or such political subdivision or taxing authority)
is a party, which becomes effective on or after the date of the Indenture (i)
(A) the Issuers are required, or would be required on the next succeeding
Interest Payment Date, to pay Additional Amounts in respect of payments on the
Securities in excess of the 15% withholding requirement as of the Closing Date
as a result of the imposition of Taxes imposed by the Cayman Islands or Thailand
(or any political subdivision or taxing authority of either jurisdiction); (B)
the Company is, or on the next succeeding interest payment date would be, unable
for reasons outside of its control, to procure payment by the Issuers and, with
respect to any payment due, or to
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51
become due, under the Securities or the Guaranty, the Company is required, or
would be required on the next succeeding Interest Payment Date, to pay
Additional Amounts as a result of the imposition of Taxes by the Cayman Islands
or Thailand or (C) with respect to any payment to an Issuer to enable an Issuer
to make any payments under the Securities, the Company or NSM Cayman is, or on
the next Interest Payment Date would be, required to deduct or withhold Taxes
imposed by the Cayman Islands or Thailand (or any political subdivision or
taxing authority of either jurisdiction) and (ii) the payment of such Additional
Amounts cannot be avoided by the use of any reasonable measures available to the
Issuers or the Company that do not require undue effort or costs (including,
without limitation, the Company making payments directly to holders under the
Guaranty). In addition, the Issuers or the Company, as the case may be, will
also pay to holders on the redemption date any Additional Amounts which would
otherwise be payable; provided, however, that no such notice of redemption shall
be given earlier than 90 days prior to the earliest date on which the Issuers or
the Company, as the case may be, would be obligated to pay such Additional
Amounts if a payment in respect of the Securities or a Guaranty were then due.
Prior to the publication of the notice of redemption in accordance
with the foregoing, the Issuers or the Company shall deliver to the Trustee an
Officers' Certificate stating that (x) the Issuers are or the Company is
entitled to effect such redemption based on a written opinion of counsel or
written advice of a nationally recognized independent tax counsel, such opinion
or advice being reasonably acceptable to the Trustee, that the condition
referred to in either of subclauses (A) or (B) or (C) of clause (i) of the
immediately preceding paragraph is satisfied as a result of such change,
amendment or executed or amended treaty and (y) the condition described in (ii)
of the immediately preceding paragraph is satisfied. Such notice, once delivered
by the Issuers or the Company to the Trustee, will be irrevocable.
ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities. The Issuers shall promptly 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
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52
shall be considered paid on the date due if on such date the Trustee or the
Paying Agent holds in accordance with this Indenture money sufficient to pay all
principal and interest then due and the Trustee or the Paying Agent, as the case
may be, is not prohibited from paying such money to the Securityholders on that
date pursuant to the terms of this Indenture.
The Issuers shall pay interest on overdue principal at the rate
specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 4.02. Commission Reports. The Company and the Issuers will
furnish the Trustee and provide to the holders of the Securities, within 15 days
after it files them with the Commission, copies of the reports (the "Financial
Statements") and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may by rules and
regulations prescribe) which the Company and the Issuers file with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act ("Reports"). In
the event that the Company and the Issuers are not required to file such reports
with the Commission pursuant to the Exchange Act, the Issuers will nevertheless
deliver Quarterly Reports to the holders of the Securities within 15 days after
they would have been required to file it with the Commission.
SECTION 4.03. Limitation on Indebtedness. (a) Neither the Issuers or
the Company shall Incur, nor shall the Company permit any Restricted Subsidiary
to Incur, directly or indirectly, any Indebtedness on or after the Issue Date
unless on the date of such Incurrence and after giving effect thereto the
Consolidated Coverage Ratio would be greater than 3.0:1.0.
(b) Notwithstanding the foregoing paragraph (a), the Issuers or the
Company may Incur on or after the Issue Date the following Indebtedness:
(i) Indebtedness of the Company Incurred pursuant to the
Credit Facilities;
(ii) Indebtedness represented by the Securities, the Senior
Subordinated Notes and the Debentures;
(iii) Indebtedness of the Company Incurred pursuant to Vendor
Financing; provided, however, that the aggregate principal amount of all
Vendor Financing
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53
Incurred pursuant to this clause (iii) (other than any such Indebtedness
pursuant to Existing Arrangements) does not exceed U.S.$10 million at any
time outstanding;
(iv) Indebtedness of the Issuers represented by Capitalized Lease
Obligations, or purchase money obligations, in each case Incurred for the
purpose of financing all or any part of the purchase price or cost of
construction or improvement of the Mill or Refinancing Indebtedness
Incurred to refinance any such purchase price or cost of construction or
improvement, in each case (other than Refinancing Indebtedness) Incurred
no later than 90 days after the date of such acquisition or the date of
completion of such construction or improvement; provided, however, that
the principal amount of any Indebtedness Incurred pursuant to this clause
(iv) shall not exceed U.S.$10 million at any time outstanding;
(v) Indebtedness (A) in respect of performance bonds, bankers'
acceptances and surety or appeal bonds provided by the Company to its
customers in the ordinary course of its business, (B) in respect of
performance bonds or similar obligations of the Company for or in
connection with pledges, deposits or payments made or given in the
ordinary course of business in connection with or to secure statutory,
regulatory or similar obligations, including obligations under health,
safety or environmental obligations and (C) arising from guarantees to
suppliers, lessors, licensees, contractors, franchisees or customers of
obligations (other than Indebtedness) incurred in the ordinary course of
business,
(vi) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument drawn
against insufficient funds in the ordinary course of business in an amount
not to exceed U.S.$5 million at any time; provided that such Indebtedness
is extinguished within two business days of its Incurrence;
(vii) Indebtedness of the Company under the Working Capital Credit
Facility, as such facility may be amended and/or supplemented from time to
time; provided in each case that any indebtedness under such facility as
amended or supplemented is secured only by accounts receivable of the
Company;
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54
(viii) Indebtedness of the Company consisting of Permitted Hedging
Obligations;
(ix) Indebtedness outstanding on the Issue Date;
(x) Refinancing Indebtedness in respect of Indebtedness Incurred
pursuant to paragraph (a) or pursuant to clause (ii), (vii), or (ix) or
this clause (x); and
(xi) Indebtedness in an aggregate principal amount which, together
with all other Indebtedness of the Company, the Issuers and the Restricted
Subsidiaries outstanding on the date of Incurrence (other than
Indebtedness permitted by paragraph (a) or clauses (i) through (x) above),
does not exceed U.S.$20 million.
(c) Notwithstanding the foregoing, neither the Company nor the
Issuers shall Incur any Indebtedness pursuant to the foregoing paragraph (b) if
the proceeds thereof are used, directly or indirectly, to Refinance any
Subordinated Indebtedness unless such Indebtedness shall be subordinated to the
Securities to at least the same extent as such Subordinated Indebtedness.
(d) For purposes of determining compliance with the foregoing
covenant, (i) in the event that an item of Indebtedness meets the criteria of
more than one of the types of Indebtedness described above, the Company, in its
sole discretion, will classify such item of Indebtedness at the time of its
Incurrence and shall only be required to include the amount and type of such
Indebtedness in one of the above clauses, and (ii) an item of Indebtedness may
be divided and classified in more than one of the types of Indebtedness
described above.
SECTION 4.04. Limitation on Restricted Payments. (a) Neither the
Issuers or the Company will, nor will the Company permit any Restricted
Subsidiary to, directly or indirectly:
(i) declare or pay any dividend or make any other distribution or
payment on or in respect of its Capital Stock (including dividends or
distributions of the Capital Stock of any Restricted Subsidiary), or make
any other payment to the direct or indirect holders (in their capacities
as such) of its Capital Stock (other than dividends or distributions
payable in shares of its Capital Stock (other than Disqualified Stock) or
in
<PAGE>
55
options, warrants or other rights to acquire such Capital Stock);
(ii) purchase, redeem or otherwise acquire or retire for value,
directly or indirectly, any of its Capital Stock or any Capital Stock of
any of its Affiliates (other than Capital Stock of any Wholly-Owned
Restricted Subsidiary or Capital Stock of a Person that is, or immediately
following such repurchase will become, a Wholly-Owned Restricted
Subsidiary) or options, warrants or other rights to acquire such Capital
Stock;
(iii) make any principal payment on, or repurchase, redeem, defease,
retire or otherwise acquire for value, prior to any scheduled principal
payment, sinking fund payment or maturity, any Subordinated Indebtedness;
(iv) Incur, create or assume any guarantee of Indebtedness of any
Affiliate of the Company (other than a Wholly-Owned Restricted Subsidiary
of the Company) except as permitted under Section 4.03(a);
(v) make any Investment in any Person (other than any Permitted
Investment); or
(vi) designate any Restricted Subsidiary as an Unrestricted
Subsidiary;
(any of the payments described in paragraphs (i) through (vi) above, other than
any such action that is a Permitted Payment (as defined below), collectively,
"Restricted Payments") unless (x) with respect to payments to be made in the
period prior to December 31, 2001 the Company has achieved Profitable
Operations, and (y) at the time of and after giving effect to the proposed
Restricted Payment (the amount of any such Restricted Payment, if other than
cash, as determined by the Board of Directors, whose determination shall be
conclusive and evidenced by a Board Resolution), (1) no Default or Event of
Default shall have occurred and be continuing; (2) immediately before and
immediately after giving effect to such transaction on a pro forma basis, the
Issuers or the Company could Incur U.S.$1.00 of additional Indebtedness under
the provisions of Section 4.03(a); and
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56
(3) the aggregate amount of all such Restricted Payments declared or made after
the date of this Indenture does not exceed the sum of:
(A) 50% of the aggregate cumulative Consolidated Net Income of the
Company and its Restricted Subsidiaries accrued during the period (treated
as a single accounting period) beginning on the first day of the Company's
fiscal quarter commencing prior to the date of this Indenture and ending
on the last day of the Company's last fiscal quarter ending prior to the
date of the Restricted Payment (of, if such aggregate cumulative
Consolidated Net Income shall be a loss, 100% of such loss (treating a
loss as a negative number));
(B) the aggregate Net Cash Proceeds received after the date of this
Indenture by the Company from the issuance or sale (other than to any of
its Restricted Subsidiaries) of its Capital Stock (other than Disqualified
Stock) or any options, warrants or rights to purchase such Capital Stock;
(C) the aggregate Net Cash Proceeds received after the date of this
Indenture by the Company (other than from any of its Restricted
Subsidiaries) upon the exercise of any options or warrants to purchase
Capital Stock (other than Disqualified Stock) of the Company; and
(D) U.S.$10 million.
(b) Notwithstanding the foregoing, and, in the case of clauses (i)
through (iv) below, so long as there is no Default or Event of Default
continuing, the foregoing provisions will not prohibit the following actions
(clauses (i) through (iv) being referred to as "Permitted Payments"):
(i) the payment of any dividend or distribution within 60 days after
the date of declaration thereof, if at such date of declaration such
payment would be permitted by the provisions of paragraph (a) of this
section and such payment will be deemed to have been paid on (and included
in the calculation of the amount of Restricted Payments) such date of
declaration for purposes of the calculation required by paragraph (a) of
this section;
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57
(ii) the repurchase, redemption or other acquisition or retirement
of any shares of Capital Stock of the Company in exchange for (including
any such exchange pursuant to the exercise of a conversion right or
privilege in connection with which cash is paid in lieu of the issuance of
fractional shares or scrip), or out of the Net Cash Proceeds of a
substantially concurrent issue and sale for cash (other than to a
Restricted Subsidiary) of other Capital Stock (other than Disqualified
Stock) of the Company; provided that the Net Cash Proceeds from the
issuance of such shares of Capital Stock (other than Disqualified Stock)
are excluded from clauses (3)(B) and (3)(C) of paragraph (a) of this
section, and such repurchases, redemptions or acquisitions shall be
excluded from the calculation of the amount of Restricted Payments;
(iii) any repurchase, redemption, defeasance, retirement or
acquisition for value or payment of principal of any Subordinated
Indebtedness in exchange for, or out of the net proceeds of, a
substantially concurrent issuance and sale for cash (other than to any
Restricted Subsidiary of the Company) of any Capital Stock (other than
Disqualified Stock) of the Company; provided that the Net Cash Proceeds
from the issuance of such Capital Stock (other than Disqualified Stock)
are excluded from clauses (3)(B) and (3)(C) of paragraph (a) of this
section, and such repurchases, redemptions, defeasances, retirements or
acquisitions shall be excluded from the calculation of the amount of
Restricted Payments;
(iv) the repurchase, redemption, defeasance, retirement,
refinancing, acquisition for value or payment of principal of any
Subordinated Indebtedness (other than Disqualified Stock) or Pari Passu
Indebtedness (a "refinancing") through the issuance of new Subordinated
Indebtedness of the Company; provided that any such new Subordinated
Indebtedness (1) shall be in a principal amount that does not exceed the
principal amount so refinanced (or, if the Subordinated Indebtedness so
refinanced provides for an amount less than the principal amount thereof
to be due and payable upon a declaration or acceleration thereof, then
such lesser amount as of the date of determination), plus the amount of
any premium required to be paid in connection with such refinancing
pursuant to the terms of such refinanced Indebtedness and any reasonable
out-of-pocket expenses of the Company incurred in connection with such
refinancing; (2) has an Average
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58
Life to Stated Maturity greater than the remaining Average Life to Stated
Maturity of the Securities; (3) has a Stated Maturity for its final
scheduled principal payment later than the Stated Maturity for the final
scheduled principal payment of the Securities and (4) is expressly
subordinated in right of payment to the Securities at least to the same
extent as the Indebtedness to be refinanced; and
(v) repurchases of Senior Subordinated Notes and Debentures pursuant
to a Stage III Tender so long as the Issuers and the Company also offer to
purchase all outstanding Securities, and purchase all Securities tendered,
in such Stage III Tender.
For purposes of this Section, if the Board of Directors designates a
Restricted Subsidiary as an Unrestricted Subsidiary, or a Restricted Subsidiary
is deemed to be so designated, a "Restricted Payment" shall be deemed to have
been made in an amount equal to the fair value of the Investment of the Company
and its other Restricted Subsidiaries in such Restricted Subsidiary as
determined by the Board of Directors with the concurrence of a majority of the
Independent Directors (there being at least one Independent Director), whose
good-faith determination shall be conclusive. If a particular Restricted Payment
involves a noncash payment, including a distribution of assets, then such
Restricted Payment shall be deemed to be in an amount equal to the fair market
value of the noncash portion of such Restricted Payment as determined by the
Board of Directors, whose good-faith determination shall be conclusive.
SECTION 4.05. Limitation on Liens. Neither the Issuers nor the
Company will affirm or permit to exist any Lien of any kind securing any Pari
Passu Indebtedness or Subordinated Indebtedness of the Issuers or the Company
(including any assumption, guarantee or other liability with respect thereto by
any Subsidiary) upon any property or assets (including any intercompany notes)
of the Issuers or the Company or any Subsidiary owned on the date of the
Indentures or acquired after the date of the Indentures, or any income or
profits therefrom, other than Permitted Liens.
SECTION 4.06. Limitation on Sales of Assets and Subsidiary Stock.
(a) The Company shall not, and shall not permit either of the Issuers or any
Restricted Subsidiary to, make any Asset Disposition unless (i) the Company, the
Issuers or such Restricted Subsidiary receives consideration at the time of such
Asset Disposition at least equal to the
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59
fair market value, as determined in good faith by the Company's Board of
Directors (including as to the value of all non-cash consideration), of the
shares and assets subject to such Asset Disposition, (ii) at least 80% of the
consideration thereof received by the Company, the Issuers or such Restricted
Subsidiary is in the form of cash or Cash Equivalents, (iii) an amount equal to
100% of the Net Available Cash from such Asset Disposition is applied: (A) if at
the time of the Asset Disposition the Company has not yet achieved Profitable
Operations, pro rata to a mandatory offer by the Issuers and the Company to
purchase Securities at 101% of the Accreted Value thereof on the date of
purchase, plus accrued and unpaid interest and Additional Amounts, if any,
thereon, and the repayment of principal and accrued and unpaid interest, if any,
under the Bank Credit Facility and (B) if at the time of the Asset Disposition
the Company has achieved Profitable Operations, at the Company's option either
to (1) the investment in or acquisition of Additional Assets within 365 days
from the later of such Asset Disposition and the receipt of such Net Available
Cash or (2) pro rata to a mandatory offer by the Issuers and the Company to
purchase Securities at 101% of the Accreted Value thereof on the date of
purchase plus accrued and unpaid interest and Additional Amounts, if any,
thereon, and the repayment of principal and accrued and unpaid interest, if any,
under the Bank Credit Facility; provided that the Issuers and the Company shall
be required to purchase Indebtedness pursuant to clause (2) to the extent of the
balance of such Net Available Cash after application in accordance with clause
(1). The Issuers shall not be required to make an offer to purchase Securities
pursuant to this covenant if the Net Available Cash available therefor (after
application of the proceeds as provided in clause (A)) is less than U.S.$10
million for any particular Asset Disposition (which lesser amounts shall be
carried forward for purposes of determining whether an offer is required with
respect to the Net Available Cash from any subsequent Asset Disposition).
Notwithstanding the foregoing provisions, Net Available Cash shall not be
required to be applied in accordance herewith to the extent that the aggregate
Net Available Cash from all Asset Dispositions which are not applied in
accordance with this covenant at any time does not exceed U.S.$10 million.
For the purposes of this Section 4.06, the following will be deemed
to be cash: (x) the assumption by transferee of Senior Indebtedness of the
Company, the Issuers or any Restricted Subsidiary and the release of the
Company, the Issuers or any Restricted Subsidiary from all liability on such
Senior Indebtedness in connection with
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60
such Asset Disposition and (y) securities received by the Company, the Issuers
or any Restricted Subsidiary from the transferee that are promptly (and in any
event within 60 days) converted by the Company, the Issuers or such Restricted
Subsidiary into cash.
(b) In the event of an Asset Disposition that requires the purchase
of Securities pursuant to Section 4.06(a)(iii)(A) or (B)(2), the Issuers shall
be required to purchase Securities tendered by the Holders pursuant to an offer
by the Company for the Securities (the "Offer") at a purchase price of 101% of
the Accreted Value thereof on the date of purchase, plus accrued and unpaid
interest and Additional Amounts, if any, thereon to the Purchase Date (as
defined below) in accordance with the procedures (including prorationing in the
event of oversubscription) set forth in Section 4.06(c).
(c) (1) Promptly, and in any event within 10 days after the Issuers
become obligated to make an Offer, the Issuers shall be obligated to deliver to
the Trustee and send, by first-class mail to each Holder, a written notice
stating that the Holder may elect to have his Securities purchased by the
Issuers either in whole or in part (subject to prorationing as hereinafter
described in the event the Offer is oversubscribed) in integral multiples of
$1,000 of principal amount, at the applicable purchase price. The notice shall
specify a purchase date not less than 30 days nor more than 60 days after the
date of such notice (the "Purchase Date") and shall contain such information
concerning the business of the Issuers which the Issuers in good faith believes
will enable such Holders to make an informed decision (which at a minimum shall
include (i) the most recently filed annual report (including audited
consolidated financial statements) of the Issuers and any other information
provided by the Issuers to its public shareholders generally on an annual basis,
the most recently filed Quarterly Reports, and any current reports of the
Issuers filed subsequent to such Quarterly Report, other than current reports
describing Asset Dispositions otherwise described in the offering materials (or
corresponding successor reports), (ii) a description of material developments in
the Issuers' business subsequent to the date of the latest of such reports, and
(iii) if material, appropriate pro forma financial information) and all
instructions and materials necessary to tender Securities pursuant to the Offer,
together with the address referred to in clause (3).
(2) Not later than the date upon which written notice of an Offer is
delivered to the Trustee as provided
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61
above, the Issuers shall deliver to the Trustee an Officers' Certificate as to
(i) the amount of the Offer (the "Offer Amount"), (ii) the allocation of the Net
Available Cash from the Asset Dispositions pursuant to which such Offer is being
made and (iii) the compliance of such allocation with the provisions of Section
4.06(a). On such date, the Issuers shall also irrevocably deposit with the
Trustee or with the Paying Agent an amount equal to the Offer Amount to be
invested at the written direction of the Issuers in Cash Equivalents and to be
held for payment in accordance with the provisions of this Section. Upon the
expiration of the period for which the Offer remains open (the "Offer Period"),
the Issuers shall deliver to the Trustee for cancelation the Securities or
portions thereof that have been properly tendered to and are to be accepted by
the Issuers. The Trustee (or the Paying Agent, if not the Trustee) shall, on the
Purchase Date, mail or deliver payment to each tendering Holder in the amount of
the purchase price. In the event that the aggregate purchase price of the
Securities delivered by the Issuers to the Trustee is less than the Offer
Amount, the Trustee shall deliver the excess to the Issuers promptly after the
expiration of the Offer Period for application in accordance with this Section.
(3) Holders electing to have a Security purchased shall be required
to surrender the Security, with an appropriate form duly completed, to the
Issuers at the address specified in the notice at least three Business Days
prior to the Purchase Date. Holders shall be entitled to withdraw their election
if the Trustee or the Issuers receives not later than one Business Day prior to
the Purchase Date, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Security which was
delivered by the Holder for purchase and a statement that such Holder is
withdrawing his election to have such Security purchased. If at the expiration
of the Offer Period the aggregate principal amount of Securities surrendered by
Holders exceeds the Offer Amount, the Issuers shall select the Securities to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Issuers so that only Securities in denominations of $1,000,
or integral multiples thereof, shall be purchased). Holders whose Securities are
purchased only in part will be issued new Securities equal in principal amount
to the unpurchased portion of the Securities surrendered.
(4) At the time the Issuers deliver Securities to the Trustee which
are to be accepted for purchase, the
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62
Issuers shall also deliver an Officers' Certificate stating that such Securities
are to be accepted by the Issuers pursuant to and in accordance with the terms
of this Section. A Security shall be deemed to have been accepted for purchase
at the time the Trustee, directly or through an agent, mails or delivers payment
therefor to the surrendering Holder.
(d) The Issuers shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section. To the extent that the provisions of any securities laws or regulations
conflict with provisions of this Section, the Issuers shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section by virtue thereof.
SECTION 4.07. Offer to Repurchase Upon Failure to Attain Profitable
Operations. (a) If the Company does not achieve Profitable Operations prior to
December 31, 2001, the Issuers shall be required to use any amounts in the
Offshore Reserve Account to undertake an offer to purchase Securities (and, at
the Company's election, Senior Subordinated Notes and Debentures) pro rata at
100% of the Accreted Value thereof on the date of purchase, plus accrued and
unpaid interest and Additional Amounts, if any, thereon ("Stage III Tender").
(b) The Issuers will be required to conduct a Stage III Tender and
to purchase tendered Securities in accordance with the procedures set forth in
Section 4.10(b), (c), (d) and (e).
SECTION 4.08. Limitation on Issuance and Sale of Capital Stock of
Restricted Subsidiaries. Neither the Issuers nor the Company will permit (i) any
Restricted Subsidiary to issue any Capital Stock (other than to the Issuers or
the Company or any Wholly Owned Restricted Subsidiary) or (ii) any Person (other
than the Issuers or the Company or a Wholly Owned Restricted Subsidiary) to
acquire any Capital Stock of any Restricted Subsidiary from the Issuers or the
Company or any Restricted Subsidiary, except upon the sale of all of the
outstanding Capital Stock of such Restricted Subsidiary owned by the Issuers or
the Company or another Restricted Subsidiary and the designation of such
Subsidiary as an Unrestricted Subsidiary; provided, however, that the Issuers or
the Company or a Restricted Subsidiary may issue or sell common stock of a
Restricted
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63
Subsidiary to a Person that is not an Affiliate of the Company so long as, on or
prior to the consummation of such issuance or sale, such Restricted Subsidiary
issues and delivers a supplemental indenture to the Indentures providing for the
guarantee of the Securities, which guarantee shall be a senior obligation of
such Restricted Subsidiary.
SECTION 4.09. Limitation on Dividends and Other Payment Restrictions
Affecting Restricted Subsidiaries. Neither the Issuers or the Company will, and
the Company will not permit any of its Restricted Subsidiaries to, directly or
indirectly, create or otherwise cause or permit to exist or become effective any
encumbrance or restriction on the ability of any Restricted Subsidiary to (a)
pay dividends or make any other distribution on its Capital Stock to the Issuers
or the Company or any other Restricted Subsidiary, (b) pay any Indebtedness owed
to the Issuers or the Company or any other Restricted Subsidiary, (c) make any
Investment in the Issuers or the Company or (d) transfer any of its properties
or assets to the Issuers or the Company or any Restricted Subsidiary, except (i)
any encumbrance or restriction pursuant to or in connection with the Bank Credit
Facility or the Securities as in effect on the Issue Date, (ii) any encumbrance
or restriction with respect to a Restricted Subsidiary that is not a Restricted
Subsidiary of the Company on the date of this Indenture that is in existence at
the time such Person becomes a Restricted Subsidiary of the Company and not
Incurred in connection with, or in contemplation, of, such Person becoming a
Restricted Subsidiary, (iii) customary provisions restricting subletting or
assignment of any lease governing a leasehold interest of the Issuers or the
Company or any Restricted Subsidiary and (iv) any encumbrance or restriction
existing under any agreement effecting a Refinancing of Indebtedness referred to
in clause (i), (ii) or (iii) above or this clause (iv); provided that the terms
and conditions of any such encumbrances or restrictions are not materially less
favorable to the Holders than those under or pursuant to the agreement
evidencing such Refinancing Indebtedness so extended, renewed, refinanced or
replaced.
SECTION 4.10. Change of Control. (a) Upon the occurrence of a Change
of Control, each Holder shall have the right to require that the Issuers
repurchase all or any part of such Holder's Securities at a purchase price in
cash equal to 101% of the Accreted Value thereof on the date of purchase, plus
accrued and unpaid interest and Additional Amounts, if any, to date of
repurchase (subject to the right
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of Holders of record on the relevant record date to receive interest due on the
relevant interest payment date), in accordance with the terms contemplated in
Section 4.10(b).
(b) Within 30 days following any Change of Control, the Company
shall mail a notice to each Holder with a copy to the Trustee stating:
(1) that a Change of Control has occurred and that such Holder has
the right to require the Issuers to repurchase such Holder's Securities at
a price in cash equal to 101% of the Accreted Value thereof on the date of
purchase, plus accrued and unpaid interest and Additional Amounts, if any,
to the date of repurchase (subject to the right of Holders of record on a
record date to receive interest due on the relevant interest payment
date);
(2) the repurchase date (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed); and
(3) the procedures determined by the Issuers, consistent with this
Section, that a Holder must follow in order to have its Securities
purchased.
(c) Holders electing to have a Security purchased shall be required
to surrender the Security, with an appropriate form duly completed, to the
Company at the address specified in the notice at least three Business Days
prior to the purchase date. Holders shall be entitled to withdraw their election
if the Trustee or the Company receives not later than one Business Day prior to
the purchase date a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Security which was
delivered for purchase by the Holder and a statement that such Holder is
withdrawing his election to have such Security purchased.
(d) On the purchase date, all Securities purchased by the Company
under this Section shall be delivered to the Trustee for cancelation, and the
Company shall pay the purchase price, plus accrued and unpaid interest, if any,
to the Holders entitled thereto.
(e) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws or regulations are applicable
in connection with the repurchase of Securities
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pursuant to this Section. To the extent that the provisions of any securities
laws or regulations conflict with provisions of this Section, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section by virtue thereof.
SECTION 4.11. Compliance Certificate. The Issuers and the Company
shall deliver to the Trustee within 90 days after the end of each fiscal year of
the Issuers and the Company an Officers' Certificate stating that in the course
of the performance by the signers of their duties as Officers of the Issuers and
the Company they would normally have knowledge of any Default and whether or not
the signers know of any Default that occurred during such period. If they do,
the certificate shall describe the Default, its status and what action the
Company is taking or proposes to take with respect thereto. The Company also
shall comply with Section 314(a)(4) of the TIA.
SECTION 4.12. Further Instruments and Acts. Upon request of the
Trustee, the Issuers shall execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture, the Security Documents and each other
agreement delivered in connection herewith or therewith.
SECTION 4.13. Limitation on Affiliate Transactions. Neither the
Issuers nor the Company will, and the Company will not permit any Restricted
Subsidiary to, directly or indirectly, enter into or conduct any transaction or
series of related transactions (including the purchase, sale, lease or exchange
of any property or the rendering of any service) with or for the benefit of any
Affiliate of the Company (an "Affiliate Transaction") unless: (a) the terms of
such Affiliate Transaction are no less favorable to the Issuers or the Company
or such Restricted Subsidiary, as the case may be, than those that could be
obtained at the time of such transaction in arm's-length dealings with a Person
who is not such an Affiliate; (b) in the event such Affiliate Transaction
involves an aggregate amount in excess of U.S.$5 million, the terms of such
transaction have been approved by a majority of the members of the Board of
Directors of such Person and by a majority of the disinterested members of such
Board, if any (and such majority or majorities, as the case may be, determines
that such Affiliate Transaction satisfies the criteria in (a) above); and (c) in
the event such Affiliate Transaction involves an aggregate amount in
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excess of U.S.$10 million, such Person has received a written opinion from an
independent investment banking firm or other similar expert of nationally
recognized standing that such Affiliate Transaction (i) is fair to the Issuers
or the Company or such Restricted Subsidiary, as the case may be, from a
financial point of view, or (ii) complies with the requirements of clause (a)
above.
The foregoing paragraph shall not apply to (a) any Restricted
Payment permitted to be made pursuant to Section 4.04, (b) loans or advances to
employees in the ordinary course of business of the Company and/or any
Subsidiary in aggregate amount outstanding not to exceed U.S.$l million at any
time, (c) indemnification agreements with, and the payment of fees and
indemnities to, directors, officers and employees of the Company or any
Subsidiary, in each case in the ordinary course of business, (d) transactions
pursuant to agreements in existence on the Issue Date which (x) are described in
the Offering Memorandum or (y) otherwise, in the aggregate, are immaterial to
the Issuers, the Company and the Restricted Subsidiaries taken as a whole, (e)
any employment, noncompetition or confidentiality agreements entered into with
its employees in the ordinary course of business, (f) the issuance of Capital
Stock (other than Disqualified Stock) of the Issuers to the Company and (g)
sublease arrangements on commercial terms covering shared space.
SECTION 4.14. Limitation on Sale Leaseback Transactions. Neither the
Issuers nor the Company shall, and the Company shall not permit any Restricted
Subsidiary to, enter into any Sale/Leaseback Transaction with respect to any
property unless (i) the Issuers, the Company or such Restricted Subsidiary would
be entitled to (A) Incur Indebtedness in an amount equal to the Attributable
Indebtedness with respect to such Sale/Leaseback Transaction pursuant to Section
4.03 and (B) create a Lien on such property securing such Attributable
Indebtedness pursuant to Section 4.05, (ii) the net proceeds received by the
Issuers, the Company or any Restricted Subsidiary in connection with such
Sale/Leaseback Transaction are at least equal to the fair value (as determined
by the Board of Directors) of such property and (iii) the proceeds of such
transaction are applied in compliance with Section 4.06.
SECTION 4.15. Limitation on Issuances of Capital Stock. Neither the
Issuers nor any Restricted Subsidiary will issue any Capital Stock to any Person
other than to the Company.
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SECTION 4.16. Limitation on Sales to non-Credit Qualified
Purchasers. Until the earlier of the third anniversary of the Issue Date and the
date upon which the Company achieves Profitable Operations, the Company shall
not permit the aggregate amount of the accounts receivable of it and its
subsidiaries from non-Credit Qualified Purchasers to exceed U.S.$10 million at
any one time outstanding.
SECTION 4.17. Line of Business. The Company will not, and will not
permit the Issuers or any Subsidiary to, engage in any business other than its
ownership of the Mill and the assets and liabilities of the Mill and any
business ancillary or reasonably related thereto.
SECTION 4.18. Ownership. The Company will at all times own 100% of
the Capital Stock of the Issuers.
SECTION 4.19. Use of Proceeds. The Issuers and the Company shall
apply the proceeds from the sale of the Securities in the manner described in
the Offering Memorandum and establish and maintain the Accounts (as defined in
the Security Sharing Agreement) pursuant to the Security Sharing Agreement.
SECTION 4.20. Additional Amounts. (a) All payments made by the
Issuers under or with respect to the Securities and by the Company under the
Guaranty will be made free and clear of and without withholding or deduction for
or on account of any present or future taxes, levies, duties, fees, assessments
or other governmental charges of whatever nature ("Taxes") imposed, levied,
collected or assessed by or on behalf of any taxing authority within the Cayman
Islands or Thailand, unless the Issuers are or the Company is, as the case may
be, required to withhold or deduct or if the Issuers are or the Company is
otherwise required to pay any amount for or on account of Taxes imposed by a
taxing authority within the Cayman Islands or Thailand from or in respect of any
payment made under or with respect to the Securities or the Guaranty, in which
case the Issuers or the Company, as the case may be, will pay such additional
amounts ("Additional Amounts") as may be necessary so that the net amount
received by each holder and beneficial owner of Securities (including Additional
Amounts) after such withholding or deduction or other payment of Taxes will not
be less than the amount the holder and beneficial owner would have received if
such Taxes had not been withheld or deducted or paid; provided, however, that no
Additional Amounts will be payable with respect to a payment made to a holder of
Securities with respect to any
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Tax: (i) which would not have been imposed, payable or due but for the existence
of any present or former connection between the holder (or the beneficial owner
of, or person ultimately entitled to obtain an interest in, such Securities) and
the Cayman Islands or Thailand, as the case may be, other than the mere holding
of the Securities; (ii) which would not have been imposed, payable or due if the
Securities are held in definitive registered form ("Definitive Registered
Securities") and the presentation of Definitive Registered Securities for
payment had occurred within 30 days after the date such payment was due and
payable or was provided for, whichever is later, except for Additional Amounts
with respect to Taxes that would have been imposed had the holder presented the
Security for payment within such 30-day period; (iii) that is an estate,
inheritance, gift, sales, transfer, personal property or similar Tax; (iv) that
is imposed or withheld by reason of the failure of the holder or beneficial
owner of a Security to comply, at the reasonable request of the Issuers or the
Company, as the case may be, with certification, information or other reporting
requirements concerning the nationality, residence or identity of the holder or
such beneficial owner if such compliance is required or imposed by a statute,
treaty, regulation or administrative practice of the taxing jurisdiction as a
precondition to exemption from all or part of such Tax; (v) if the beneficial
owner of, or person ultimately entitled to obtain an interest in, such
Securities had been the holder of the Securities and would not be entitled to
the payment of Additional Amounts; or (vi) payable otherwise than by withholding
from payments on or in respect of any Security.
(b) The Issuers or the Company, as the case may be, will also (i)
make such withholding or deduction and (ii) remit the full amount deducted or
withheld to the relevant authority in accordance with applicable law. The
Issuers or the Company, as the case may be, will make reasonable efforts to
obtain certified copies of tax receipts evidencing the payment of any Taxes so
deducted or withheld from each taxing authority imposing such Taxes. The Issuers
or the Company, as the case may be, will furnish to the holders of the
Securities, within 60 days after the date the payment of any Taxes so deducted
or withheld is due pursuant to applicable law, either certified copies of tax
receipts evidencing such payment by the Issuers or the Company, as the case may
be, or, if such receipts are not obtainable, other evidence of such payments by
the Issuers or the Company.
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(c) In addition, the Issuers or the Company, as the case may be,
will, upon written request of each holder of Securities (subject to the
exclusions set forth in (i), (ii), (iii), (iv), (v) and (vi) of paragraph (a)
above), and provided that reasonable supporting documentation is provided,
reimburse each such holder for the amount of any Taxes levied or imposed by the
Cayman Islands or Thailand and paid by such holder as a result of payments made
under or with respect to the Securities or under the Guaranty. Any payment
pursuant to this section shall be an Additional Amount.
(d) At least 30 days prior to each date on which any payment under
or with respect to the Securities or under the Guaranty is due and payable, if
the Issuers or the Company will be obligated to pay Additional Amounts with
respect to such payment, the Issuers or the Company will deliver to the Trustee
an Officers' Certificate stating the fact that such Additional Amounts will be
payable and the amounts so payable and will set forth such other information
necessary to enable the Trustee to pay such Additional Amounts to the holders of
Securities on the payment date. Whenever in this Indenture or in the Securities
there is mentioned, in any context, the payment of amounts based upon the
principal of, premium, if any, interest or of any other amount payable under or
with respect to any Security or either Guaranty such mention shall be deemed to
include mention of the payment of Additional Amounts to the extent that, in such
context, Additional Amounts are, were or would be payable in respect thereof.
(e) In addition, the Issuers will pay any stamp, issue,
registration, documentary, value added or other similar taxes and other duties
(including interest and penalties) payable in the Cayman Islands or in Thailand
(or any political subdivision or taxing authority of either jurisdiction) and in
the United States in respect of the creation, issue, offering, execution or
enforcement of the Securities, the Guaranty or any documentation with respect
thereto.
SECTION 4.21. Maintenance of Office or Agency. (a) The Issuers shall
maintain in the Borough of Manhattan, in the City of New York, an office or
agency (which may be an office of the Trustee or an Affiliate of the Trustee,
Registrar or co-registrar) where Securities may be surrendered for registration
of transfer or exchange and where notices and demands to or upon the Issuers in
respect of the Securities, this Indenture and the Guaranty may be served. The
Issuers shall give prior written notice to the
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Trustee of the location, and any change in the location, of such office or
agency. If at any time the Issuers 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.
(b) The Issuers 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 such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Issuers of their obligations to maintain an office or
agency in the Borough of Manhattan, in the City of New York for such purposes.
The Issuers shall give prior 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.
(c) The Issuers hereby designate the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.
SECTION 4.22. Stay, Extension and Usury Laws. Each of the Issuers
and the Company covenants (to the extent it may lawfully do so) that it shall
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, that may affect the covenants or the
performance of this Indenture (including, but not limited to, the payment of the
principal of or interest on the Securities); and the Issuers and the Company (to
the extent that they may lawfully do so) hereby expressly waive all benefit or
advantage of any such law, and covenant that they shall not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted to
the Trustee, but shall suffer and permit the execution of every such power as
though no such law has been enacted.
SECTION 4.23. Insurance. The Company shall as soon as practicable
after the Issue Date obtain, and thereafter at all times maintain in full force
and effect insurance in such amounts, covering such risks and liabilities and
with such deductibles or self-insured retentions as are in accordance with
normal industry practice. The Company shall furnish when obtained and annually
thereafter to the Collateral Agent a summary of the insurance carried by it
together with certificates of insurance and other evidence of such insurance, if
any,
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naming the Collateral Agent as an additional insured and/or loss payee.
SECTION 4.24. Compliance with Statutes. The Company shall, and shall
cause each Subsidiary to, comply with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
Thailand or foreign, in respect of the conduct of its business and the ownership
of its property other than those the non-compliance with which would not
reasonably be expected to have a material adverse effect on the condition
(financial or otherwise), results of operations, business or prospects of the
Company and its Subsidiaries taken as a whole.
SECTION 4.25. Corporate Existence. Subject to Section 5.01, the
Company and the Issuers shall do or cause to be done all things necessary to
preserve and keep in full force and effect their corporate existence, in
accordance with their respective organizational documents (as the same may be
amended from time to time) and the rights (charter and statutory), licenses and
franchises of the Company and the Issuers.
SECTION 4.26. Independent Engineer. Not later than the 90th day
following the Issue Date, the Company shall have hired (and thereafter shall at
all times retain) the Independent Engineer to perform the duties set forth
herein together with such other duties as the Company and such Independent
Engineer may agree.
SECTION 4.27. Securities Cash Flow Sweep. No later than the
fifteenth day following the last day of each fiscal quarter of the Company (as
the Company's fiscal year is in effect on the Issue Date), the Company shall
deposit into the Notes Sinking Fund Account an amount equal to the Cash Flow
Sweep Amount.
SECTION 4.28. Payment of Taxes. The Company will pay or discharge or
cause to be paid or discharged, before the same shall become delinquent, (i) all
material taxes, assessments and governmental charges levied or imposed upon the
Company or the Issuers or upon the income, profits or property of the Company or
the Issuers; provided, however, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings, and against which adequate reserves are being
maintained.
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SECTION 4.29 Intercompany Notes and Capital Contributions. (a) On
the Issue Date, the Company shall issue an intercompany note or notes to the
Issuers obligating the Company to make payments in respect of such intercompany
note or notes on any date and in the same amount that any payment (whether a
payment of principal when due at Stated Maturity, upon optional redemption, upon
required repurchase, upon declaration or otherwise or a payment in respect of
any interest) is due on the Securities; provided, however, if after the Issue
Date the Issuers and the Company determine in good faith that such an
intercompany note obligation will result in a material adverse tax consequence
to the Issuers or the Company, the Issuers and the Company may cancel such
intercompany note obligation and the Company shall thereafter comply with clause
(b) below.
(b) In the event that at any time the intercompany note referenced
in the preceding sentence has been canceled or otherwise declared inoperative or
unenforceable, then on or prior to any Interest Payment Date in respect of any
Security, or any date upon which any payment of principal of any Security is
required to be made when due at its Stated Maturity, upon optional redemption,
upon required repurchase, upon declaration or otherwise, the Company shall make
a cash contribution to NSM Cayman in the amount of such interest or principal
payment, as the case may be.
ARTICLE V
Successor Company
SECTION 5.01. Merger and Consolidation. The Company shall not
consolidate with or merge with or into, or convey, transfer or lease all or
substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the "Successor Company")
shall be a corporation organized and existing under the laws of the United
States of America, any state thereof or the District of Columbia or Thailand,
and the Successor Company (if not the Company) shall expressly assume, by
indenture supplemental to this Indenture, executed and delivered to the Trustee,
in form satisfactory to the Trustee, all the obligations of the Company,
including the obligations under this Indenture, the Security Sharing Agreement
and the Security Documents; (ii) immediately after giving effect to such
transaction on a pro forma basis (and treating any Indebtedness which becomes an
obligation of the Successor Company as a result of such transaction as having
been
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Incurred by the Successor Company at the time of such transaction), no Default
or Event of Default shall have occurred and be continuing (or would result
therefrom); (iii) immediately after giving effect to such transaction on a pro
forma basis (and treating any Indebtedness which becomes an obligation of the
Successor Company as a result of such transaction as having been Incurred by the
Successor Company at the time of such transaction), the Successor Company would
be able to incur an additional U.S.$1.00 of Indebtedness pursuant to the first
paragraph of Section 4.03; (iv) immediately after giving effect to such
transaction on a pro forma basis (and treating any Indebtedness which becomes an
obligation of the Successor Company or any Restricted Subsidiary as a result of
such transaction as having been Incurred by the Successor Company or such
Restricted Subsidiary at the time of such transaction), the Successor Company
shall have Consolidated Net Worth in an amount which is not less than the
Consolidated Net Worth of the Company immediately prior to such transaction; (v)
the Successor Company shall have delivered to the Trustee an Opinion of Counsel
to the effect that the holders of the Securities will not recognize income,
gain, or loss for United States Federal income tax purposes as a result of such
transaction, and will be subject to United States Federal income tax on the same
amounts and at the same times as would be the case as if the transaction had not
occurred, and there will be no additional Thai Taxes and no Taxes of any other
jurisdiction imposed on any payments made pursuant to the Securities or the
Guaranty; and (vi) each of the Company and the Issuers shall have delivered to
the Trustee an Officers' Certificate and an Opinion of Counsel, stating that
such consolidation, merger, conveyance, transfer or lease and such supplemental
indentures comply with this Indenture, and this Indenture (including the
Guaranty), the Security Sharing Agreement, the Security Documents, and the
Securities remain and will be in full force and effect against all applicable
parties and the Liens with respect to the Collateral (which shall be first
priority perfected Liens unless otherwise contemplated by the Security
Documents) continue in full force and effect.
The Successor Company shall be the successor to the Company and
shall succeed to, and be substituted for, and may exercise every right and power
of, the Company under this Indenture, but the predecessor Company in the case of
a conveyance, transfer or lease shall not be released from the obligation to pay
the principal of and interest on the Securities.
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The Issuers shall not consolidate or merge with or into any other
Person, or convey, transfer or lease all or substantially all its assets to any
other Person, and all of its outstanding Capital Stock shall at all times be
owned by the Company free and clear of all Liens (other than Liens securing the
Securities, the Senior Subordinated Notes and the Debentures).
ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default. Each of the following constitutes
an "Event of Default":
(a) a default in any payment of interest on any Security when due,
or the failure by the Company to make any required capital contribution in
respect of a payment of interest on any Security pursuant to Section 4.29,
in each case continued for 30 days;
(b) a default in the payment of principal of any Security when due
at its Stated Maturity, upon optional redemption, upon required
repurchase, upon declaration or otherwise, or the failure of the Company
to make any required capital contribution in respect of a principal
payment on any Security pursuant to Section 4.29;
(c) the failure by the Issuers or the Company to comply with its
obligations under Section 5.01;
(d) the failure by the Issuers or the Company to comply for 30 days
after notice with any of their obligations under Article IV (other than
Section 4.29 and other than a failure to purchase Securities pursuant to
Section 4.06, 4.07 or 4.10, which shall constitute an Event of Default
under clause (b) above), other than as specified in clause (a), (b) or (c)
above;
(e) the failure by the Issuers or the Company to comply for 60 days
after notice with their agreements contained in the Indenture (other than
those referred to in clause (a), (b), (c) and (d) above);
(f) the Guaranty ceases to be in full force and effect (except as
contemplated by the terms thereof) or the Company denies or disaffirms its
obligations under the Guaranty;
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(g) Indebtedness of the Company, the Issuers or any Restricted
Subsidiary is not paid within any applicable grace period after final
maturity or is accelerated by the holders thereof because of a default and
the total amount of such Indebtedness unpaid or accelerated exceeds U.S.$5
million (or its foreign currency equivalent at the time) and such default
shall not have been cured or such acceleration rescinded after a 10-day
period;
(h) the Company, the Issuers or any Subsidiary pursuant to or within
the meaning of any Bankruptcy Law:
(i) commences a voluntary case;
(ii) consents to the entry of an order for relief against it
in an involuntary case;
(iii) consents to the appointment of a Custodian of it or for
any substantial part of its property; or
(iv) makes a general assignment for the benefit of its
creditors;
(i) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against the Company, the Issuers or any
Subsidiary in an involuntary case;
(ii) appoints a Custodian of the Company, the Issuers or any
Subsidiary in an involuntary case;
(iii) orders the winding up or liquidation of the Company, the
Issuers or any Subsidiary;
(j) any judgment or decree for the payment of money in excess of
U.S.$5 million (or its foreign currency equivalent at the time) (to the
extent not covered by insurance) is rendered against the Company, the
Issuers or any Subsidiary and such judgment or decree shall remain
undischarged or unstayed for a period of 60 days after such judgment
becomes final and nonappealable (the "judgment default provision");
(k) any Account or amount therein is not maintained as required or
any drawing under or deposit
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into any Account is not made when required to be made and in any such case
such failure continues unremedied for five Business Days (or, in the case
of a failure to fund or maintain any required amount in, or to make a
drawing under, the Notes DSR Account, 30 days) (the "account provision");
(l) the Security Documents shall cease to grant the holders any of
the material collateral or rights purported to be granted thereunder or
the Company shall fail to increase the Mortgaged Amounts (as defined in
the Security Documents) when required pursuant to the Security Documents
(the "security provision"); or
(m) after giving effect to the anticipated receipt and application
of any insurance proceeds the Mill is abandoned in whole or in substantial
part or is destroyed or made permanently inoperable in whole or in
substantial part (the "abandonment provision").
The term "Bankruptcy Law" means Title 11, United States Code, or any
similar U.S. Federal, state or local law for the relief of debtors or any
comparable or similar foreign laws (including any Thai Law) relating to
bankruptcy, receivership, liquidation, dissolution or similar proceeding. The
term "Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
However, a Default under clauses (d) or (e) will not constitute an
Event of Default until the Trustee or the holders of 25% in principal amount at
maturity of the outstanding Securities, notify the Issuers (with a copy to the
Trustee if given by the holders) of the Default and such default is not cured
within the time specified in clause (d) or (e) after receipt of such notice. The
written notice must specify the Default, demand that it be remedied and state
that the notice is a "Notice of Default".
The Issuers shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any Event of Default and of any event which with the giving of notice or the
lapse of time would become an Event of Default, its status and what action the
Issuers is taking or proposes to take with respect thereto.
SECTION 6.02. Acceleration. If an Event of Default (other than an
Event of Default with respect to clauses (h) or (i) of Section 6.01) occurs and
is
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continuing, the Trustee or the Holders of at least 25% in principal amount at
maturity of the outstanding Securities by notice to the Issuers and the Trustee
(if the notice is given by the holders) may declare the Accreted Value of, and
accrued and unpaid interest, if any, on all the Securities to be due and
payable. Upon such a declaration, such Accreted Value and accrued and unpaid
interest shall be due and payable immediately. If an Event of Default with
respect to the Securities pursuant to clauses (h) and (i) of Section 6.01
(together, the "bankruptcy provision") occurs, the Accreted Value of, and
accrued and unpaid interest on, such Securities will become and be immediately
due and payable without any declaration or other act on the part of the Trustee
or any holders. The Holders of a special majority of 60% in principal amount of
the outstanding Securities by notice to the Trustee may rescind an acceleration
and its consequences if (i) the rescission would not conflict with any judgment
or decree, (ii) all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of
acceleration and (iii) all amounts due to the Trustee under Section 7.07 have
been paid. No such rescission shall affect any subsequent Default or Event of
Default or impair any right consequent thereto. Upon any such acceleration,
Securityholders holding a majority principal amount at maturity of the
Securities shall have the right under the Security Documents to vote to cause
the Trustee to direct the Collateral Agent to act thereunder. Except as directed
by the Securityholders, the Trustee shall have no responsibility before or after
an Event of Default to foreclose or take any other action with respect to the
Collateral or the Security Documents.
SECTION 6.03. 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 Securityholder 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. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
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SECTION 6.04. Waiver of Past Defaults. The Holders of a majority in
principal amount of the Securities by notice to the Trustee may waive an
existing Default and its consequences except (i) a Default in the payment of the
principal of or interest on a Security or (ii) a Default in respect of a
provision that under Section 9.02 cannot be amended without the consent of each
Securityholder affected. When a Default is waived, it is deemed cured, but no
such waiver shall extend to any subsequent or other Default or impair any
consequent right.
SECTION 6.05. Control by Majority. The Holders of a majority in
principal amount of the outstanding Securities may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.01, that the Trustee determines is unduly prejudicial to
the rights of other Securityholders or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
SECTION 6.06. Limitation on Suits. A Securityholder may not pursue
any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the
outstanding Securities make a written request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer to the Trustee reasonable security
or indemnity 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 of security or indemnity; and
(5) the Holders of a majority in principal amount of the outstanding
Securities do not give the Trustee a
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direction inconsistent with the request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the rights
of another Securityholder or to obtain a preference or priority over another
Securityholder.
SECTION 6.07. 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 liquidated damages and interest on the Securities
held by such Holder, 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
such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of Default
specified in Section 6.01(a) or (b) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount then due and owing (together with interest on any
unpaid interest to the extent lawful) and the amounts provided for in Section
7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may 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 and the Securityholders
allowed in any judicial proceedings relative to the Issuers, any Subsidiary or
the Company, their creditors or their property and, unless prohibited by law or
applicable regulations, may vote on behalf of the Holders in any election of a
trustee in bankruptcy or other Person performing similar functions, and any
Custodian in any such judicial proceeding is hereby authorized by each Holder to
make payments to the Trustee and, in the event that the Trustee shall consent to
the making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and its counsel, and any other amounts due
the Trustee under Section 7.07.
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SECTION 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article VI, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, and any liquidated damages
without preference or priority of any kind, according to the amounts due
and payable on the Securities for principal, any liquidated damages and
interest, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any payment
to Securityholders pursuant to this Section.
SECTION 6.11. 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 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 does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of
more than 10% in principal amount of the Securities.
ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise 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.
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(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) 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.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(1) this paragraph does not limit the effect of paragraph (b) of
this Section;
(2) 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; and
(3) 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 6.05.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) 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.
(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise
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incur financial liability in the performance of any of its duties hereunder or
in the exercise of any of its rights or powers, if it shall have reasonable
grounds to believe that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it.
(h) 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 and to the provisions of the TIA.
SECTION 7.02. Rights of Trustee. Subject to Section 7.01: (a) The
Trustee may rely on 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.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on the
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any agent appointed with due care.
(d) 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; provided, however, that the Trustee's conduct does not constitute wilful
misconduct or negligence.
(e) The Trustee may consult with counsel, and the advice or opinion
of counsel with respect to legal matters relating to this Indenture and the
Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
(f) The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, note or other paper or document unless requested in writing to do so
by the Holders of not less than a majority in principal amount of the Securities
at the time outstanding, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or
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matters as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Issuers or the Company, personally or by agent or
attorney.
(g) The Trustee shall not be charged with knowledge of any Default
or Event of Default unless either a Trust Officer of the Trustee assigned to the
Corporate Trust Department of the Trustee (or any successor division or
department of the Trustee) shall have actual knowledge of such Default or Event
of Default or written notice of such Default or Event of Default shall have been
given to the Trustee by the Company or any Holder.
(h) Except as expressly provided in Section 10.04, the Trustee shall
at no time have any responsibility or liability for or with respect to the
legality, validity or enforceability of any Collateral or any arrangement or
agreement between the Collateral Agent and any Person with respect thereto, or
the perfection or priority of any security interest created in any of the
Collateral or the maintenance of any such perfection and priority, or for or
with respect to the sufficiency of the Collateral following any Event of
Default. The Trustee shall have no responsibility for the maintenance of any
Account or the investment of any funds deposited therein or the release of any
funds therefrom.
SECTION 7.03. 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 Issuers or their Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture, the Securities, the Guaranty, any Collateral or any Account, it
shall not be accountable for the Issuers' use of the proceeds from the
Securities, and it shall not be responsible for any statement of the Issuers in
this Indenture or in any document issued in connection with the sale of the
Securities or in the Securities other than the Trustee's certificate of
authentication.
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SECTION 7.05. Notice of Defaults. If a Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall mail to each
Securityholder notice of the Default within 30 days after it is known to a Trust
Officer or written notice of it is received by the Trustee. Except in the case
of a Default in payment of principal of, premium (if any) or interest on any
Security (including payments pursuant to the mandatory redemption provisions of
such Security, if any), 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 Securityholders.
SECTION 7.06. Reports by Trustee to Holders. As promptly as
practicable after each May 15 beginning with the May 15 following the date of
this Indenture, and in any event prior to July 15 in each year, the Trustee
shall mail to each Securityholder a brief report dated as of May 15 that
complies with Section 313(a) of the TIA. The Trustee shall also comply with
Section 313(b) of the TIA.
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange (if any) on which the
Securities are listed. The Issuers agree to notify promptly the Trustee whenever
the Securities become listed on any stock exchange and of any delisting thereof.
SECTION 7.07. Compensation and Indemnity. The Issuers and the
Company jointly and severally agree to pay to the Trustee from time to time
reasonable compensation for its services as set forth in a separate fee letter.
The Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Issuers and the Company jointly and severally
agree to reimburse the Trustee upon request for all reasonable out-of-pocket
expenses incurred or made by it, including costs of collection, in addition to
the compensation for its services. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Trustee's agents,
counsel, accountants and experts. The Issuers and the Company, jointly and
severally shall indemnify the Trustee against any and all loss, liability or
expense (including reasonable attorneys' fees) incurred by it without negligence
or bad faith on its part in connection with the administration of this trust and
the performance of its duties hereunder. The Trustee shall notify the Issuers of
any claim for which it may seek indemnity promptly upon obtaining actual
knowledge thereof; provided that any failure so to notify the Issuers shall not
relieve the
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Issuers or the Company of its indemnity obligations hereunder. The Issuers shall
defend the claim and the indemnified party shall provide reasonable cooperation
at the Issuers' expense in the defense. Such indemnified parties may have
separate counsel and the Issuers shall pay the fees and expenses of such
counsel. The Issuers need not reimburse any expense or indemnify against any
loss, liability or expense incurred by an indemnified party through such party's
own wilful misconduct, negligence or bad faith.
To secure the Issuers' payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee other than money or property held in trust to pay
principal of and interest and any liquidated damages on particular Securities.
The Issuers' payment obligations pursuant to this Section shall
survive the satisfaction or discharge of this Indenture, any rejection or
termination of this Indenture under any bankruptcy law or the resignation or
removal of the Trustee. Without prejudice to any other rights available to the
Trustee under applicable law, when the Trustee incurs expenses after the
occurrence of an Event of Default specified in Section 6.01(h) or (i) with
respect to the Issuers, the expenses are intended to constitute expenses of
administration under the Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign at any
time by so notifying the Issuers; provided that such resignation shall not be
effective until a successor is appointed. The Holders of a majority in principal
amount of the Securities may remove the Trustee by so notifying the Trustee and
may appoint a successor Trustee. The Issuers shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10 of this Indenture
or fails to qualify as Book-Entry Depositary pursuant to Section 3.07 of
the Note Depositary Agreement;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
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If the Trustee resigns, is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Issuers shall promptly appoint a successor
Trustee (subject to the preceding paragraph).
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuers. 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 Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in principal amount of the Securities may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this
Section, the Company's obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
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 any of the Securities shall have been authenticated but not
delivered, any such successor to the 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 to the Trustee may authenticate such
Securities
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either in the name of any predecessor hereunder or in the name of the successor
to the 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 7.10. Eligibility; Disqualification. The Trustee shall at
all times satisfy the requirements of TIA ss. 310(a). The Trustee 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. The Trustee shall comply with TIA
ss. 310(b); provided, however, that there shall be excluded from the operation
of TIA ss. 310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Issuers are
outstanding if the requirements for such exclusion set forth in TIA ss.
310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against Issuers. The
Trustee shall comply with 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.
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities; Defeasance. (a)
When (i) the Issuers deliver to the Trustee all outstanding Securities (other
than Securities replaced pursuant to Section 2.07) for cancelation or (ii) all
outstanding Securities have become due and payable, whether at maturity or as a
result of the mailing of a notice of redemption pursuant to Article III hereof
and the Issuers irrevocably deposit with the Trustee funds or U.S. Government
Obligations on which payment of principal and interest when due will be
sufficient to pay at maturity or upon redemption all outstanding Securities,
including interest thereon to maturity or such redemption date (other than
Securities replaced pursuant to Section 2.07), and if in either case the Issuers
pay all other sums payable hereunder by the Issuers, then this Indenture shall,
subject to Section 8.01(c), cease to be of further effect. The Trustee shall
acknowledge satisfaction and discharge of this Indenture on demand of the
Issuers accompanied by an Officers' Certificate and an Opinion of Counsel and at
the cost and expense of the Issuers.
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(b) Subject to Sections 8.01(c) and 8.02, the Issuers at any time
may terminate (i) all of their obligations under the Securities and this
Indenture ("legal defeasance option") or (ii) their obligations under Article IV
(other than those in Section 4.01, 4.11, 4.21 and 4.29), Sections 5.01(iii) and
5.01(iv) and the operation of Section 6.01(d) (except with respect to Sections
4.01, 4.11, 4.21 and 4.29), 6.01(g), 6.01(h) (with respect to Subsidiaries of
the Issuers only), 6.01(i) (with respect to Subsidiaries of the Issuers only),
6.01(j), 6.01(k) and 6.01(l) ("covenant defeasance option"). The Issuers may
exercise their legal defeasance option notwithstanding their prior exercise of
their covenant defeasance option. If the Issuers exercise their legal defeasance
option or their covenant defeasance option, the Company shall be released from
all of its obligations with respect to its Guaranty and all the Collateral will
be released.
If the Issuers exercise their legal defeasance option, payment of
the Securities may not be accelerated because of an Event of Default. If the
Issuers exercise their covenant defeasance option, payment of the Securities may
not be accelerated because of an Event of Default specified in Section 6.01(d)
(except with respect to Section 4.01, 4.11, 4.21 and 4.29), 6.01(e), 6.01(f),
6.01(g), 6.01(h) (with respect only to the Company and its Subsidiaries other
than the Issuers only), 6.01(i) (with respect only to the Company and its
Subsidiaries other than the Issuers only), 6.01(j), 6.01(k) or 6.01(l) or
because of the failure of the Issuers to comply with (iii) and (iv) of Section
5.01.
Upon satisfaction of the conditions set forth herein and upon
request of the Issuers, the Trustee shall acknowledge in writing the discharge
of those obligations that the Issuers terminate.
(c) Notwithstanding clauses (a) and (b) above, the Issuers'
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 7.07, 7.08, 8.04, 8.05 and
8.06 shall survive until the Securities have been paid in full. Thereafter, the
Issuers' obligations in Sections 7.07, 8.04 and 8.05 shall survive.
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SECTION 8.02. Conditions to Defeasance. The Issuers may exercise
their legal defeasance option or its covenant defeasance option only if:
(1) the Issuers irrevocably deposit in trust with the Trustee money
in the form of U.S. dollars or U.S. Government Obligations for the payment
of principal and interest on the Securities to maturity or redemption, as
the case may be;
(2) the Issuers deliver to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment of the deposited U.S. Government Obligations plus any
deposited money without investment will provide cash at such times and in
such amounts as will be sufficient to pay principal and interest when due
on all the Securities to maturity or redemption, as the case may be;
(3) 123 days, or such longer period as may be relevant under any
applicable foreign Bankruptcy Laws, pass after the deposit is made and
during the 123-day or such applicable other period no Default specified in
Section 6.01(h) or (i) with respect to the Issuers occurs which is
continuing at the end of the period;
(4) the deposit does not constitute a default under any other
agreement binding on the Issuers;
(5) the Issuers deliver to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute, or
is qualified as, a regulated investment company under the Investment
Company Act of 1940;
(6) in the case of the legal defeasance option, the Issuers shall
have delivered to the Trustee an Opinion of Counsel stating that (i) the
Issuers have received from, or there has been published by, the Internal
Revenue Service a ruling, or (ii) since the date of this Indenture there
has been a change in the applicable federal income tax or Thailand tax
law, in either case to the effect that, and based thereon such Opinion of
Counsel shall confirm that, the Securityholders will not recognize income,
gain or loss for Federal income tax purposes as a result of such
defeasance and will be subject to federal income tax or Thailand tax on
the same amounts, in the same manner
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and at the same times as would have been the case if such defeasance had
not occurred;
(7) in the case of the covenant defeasance option, the Issuers shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Securityholders will not recognize income, gain or loss for federal income
or Thailand tax purposes as a result of such covenant defeasance and will
be subject to federal income and Thailand tax on the same amounts, in the
same manner and at the same times as would have been the case if such
covenant defeasance had not occurred; and
(8) the Issuers deliver to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of the Securities as contemplated by this Article
VIII have been complied with.
Before or after a deposit, the Issuers may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article III.
SECTION 8.03. Application of Trust Money. The Trustee shall hold in
trust money or U.S. Government Obligations deposited with it pursuant to this
Article VIII. 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 8.04. Repayment to Issuers. The Trustee and the Paying Agent
shall promptly turn over to the Issuers upon request any excess money or
securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee and
the Paying Agent shall pay to the Issuers upon written request any money held by
them for the payment of principal or interest that remains unclaimed for two
years, and, thereafter, Securityholders entitled to the money must look to the
Issuers for payment as general creditors.
SECTION 8.05. Indemnity for Government Obligations. The Issuers
jointly and severally shall pay and shall indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against deposited U.S.
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Government Obligations or the principal and interest received on such U.S.
Government Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with this
Article VIII 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 Issuers' obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article VIII 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 VIII; provided, however, that, if
the Issuers have made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Issuers 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 IX
Amendments
SECTION 9.01. Without Consent of Holders. The Issuers, the Company
and the Trustee may amend this Indenture, any Security Documents, the Securities
or the Guaranty without notice to or consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article V;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to add further Guaranties with respect to the Securities or to
further secure the Securities;
(5) to add to the covenants of the Issuers for the benefit of the
Holders or to surrender any right or
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power herein conferred upon the Issuers or any Securityholder;
(6) to comply with any requirements of the Commission in connection
with qualifying this Indenture under the TIA;
(7) to make any change that does not adversely affect the
rights of any Securityholder; or
(8) to provide for the issuance of the Exchange Securities, which
shall have terms substantially identical in all material respects to the
Initial Securities (except that the transfer restrictions contained in the
Initial Securities shall be modified or eliminated, as appropriate), and
which shall be treated, together with any outstanding Initial Securities,
as a single issue of securities.
After an amendment under this Section becomes effective, the Issuers
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
SECTION 9.02. With Consent of Holders. The Issuers, the Company and
the Trustee may amend this Indenture, any Security Documents, the Securities or
the Guaranty without notice to any Securityholder but with the written consent
of the Holders of at least a majority in principal amount of the Securities then
outstanding. However, without the consent of each Securityholder affected, an
amendment, supplement or waiver may not:
(1) reduce the principal amount of Securities whose Holders must
consent to an amendment, supplement or waiver;
(2) reduce the stated rate of or extend the stated time for payment
of interest or any liquidated damages on any Security;
(3) reduce the principal of or extend the Stated Maturity of any
Security;
(4) reduce the premium payable upon the redemption of any Security
or change the time at which any Security may be redeemed or repurchased in
accordance with Article III;
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(5) make any Security payable in money other than that stated in the
Security;
(6) impair the right of any Holder to receive payment of principal
of and interest on such Holder's Securities on or after the due dates
therefor or to institute suit for the enforcement of any payment of or
with respect to such Holder's Securities;
(7) make any change in Section 6.04 or 6.07 or this Section; or
(8) release the Guaranty, all or substantially all of the Collateral
or the requirement to maintain any Account.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent approves the substance thereof.
After an amendment under this Section becomes effective, the Issuers
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
SECTION 9.03. Compliance with Trust Indenture Act. Every amendment
to this Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the Trustee receives the notice of
revocation before the date the amendment or waiver becomes effective. After an
amendment or waiver becomes effective, it shall bind every Securityholder. An
amendment or waiver becomes effective once the requisite number of consents are
received by the Issuers or the Trustee.
The Issuers may, but shall not be obligated to, fix a record date
for the purpose of determining the
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Securityholders entitled to give their consent or take any other action
described above or required or permitted to be taken pursuant to this Indenture.
If a record date is fixed, then notwithstanding the immediately preceding
paragraph, those Persons who were Securityholders at such record date (or their
duly designated proxies), and only those Persons, shall be entitled to give such
consent or to revoke any consent previously given or to take any such action,
whether or not such Persons continue to be Holders after such record date. No
such consent shall be valid or effective for more than 120 days after such
record date.
SECTION 9.05. Notation on or Exchange of Securities. If an amendment
changes the terms of a Security, the Trustee may require the Holder of the
Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Issuers or the Trustee so determines, the Issuers
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 9.06. Trustee To Sign Amendments. The Trustee shall sign any
amendment authorized pursuant to this Article IX 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 such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Section 7.01) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating, in addition to
the requirements of Section 11.04, that such amendment is authorized or
permitted by this Indenture that such amendment is the legal, valid and binding
obligation of the Issuers and the Company enforceable against them in accordance
with its terms, subject to customary exceptions, and complies with the
provisions hereof (including Section 9.03).
SECTION 9.07. Payment for Consent. Neither the Issuers nor any
Affiliate of the Issuers shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
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the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
ARTICLE X
Security Documents
SECTION 10.01. Collateral and Security Documents. (a) To secure the
due and punctual payment of the obligations of the Issuers and the Company under
this Indenture and the Securities, the Issuers, the Company, the Trustee and the
Collateral Agent have entered into the Security Documents to create the security
interests and related matters. The Trustee, the Issuers and the Company hereby
acknowledge and agree that the Collateral Agent holds the Collateral in trust
for the benefit of the Holders and the Trustee and the other parties secured
under the Security Documents pursuant to the terms of the Security Documents.
(b) Each Holder, by accepting a 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 provisions of the Security Documents and this Indenture,
and authorizes and directs the Collateral Agent to perform its obligations and
exercise its rights under the Security Documents in accordance therewith;
provided, however, that if any provisions of the Security Documents limit,
qualify or conflict with the duties imposed by the provisions of the TIA, the
TIA will control.
(c) As more fully set forth in, and subject to the provisions of,
the Security Documents, the Holders, and the Trustee on behalf of such Holders,
have rights in and to the Collateral which are equal and ratable with the rights
that may be created in favor of the creditors under the Bank Credit Facility and
prior to the rights that may be created in favor of the holders of the
Debentures.
(d) As set forth in and governed by the Security Documents, the
Collateral as now or hereafter constituted shall be held for the benefit of the
Secured Creditors (as defined in the Security Documents) with the preference,
priority or distinction set forth in the Security Documents. As among the
Holders, the Collateral shall be held for the equal and ratable benefit of the
Holders without preference, priority or distinction of any thereof over any
other.
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SECTION 10.02. Release of Collateral. Collateral may be released
from the security interest created by the Security Documents at any time or from
time to time in accordance with the provisions of the Security Documents. The
release of any Collateral from the terms hereof and of the Security Documents or
the release of, in whole or in part, the Liens created by the Security
Documents, will not be deemed to impair the Lien on the Collateral in
contravention of the provisions hereof if and to the extent the Collateral or
Liens are released pursuant to the applicable Security Documents and pursuant to
the terms of this Article X. The Trustee and each of the Holders acknowledge
that a release of Collateral or a Lien strictly in accordance with the terms of
the Security Documents and of this Article X will not be deemed for any purpose
to be an impairment of the Lien on the Collateral in contravention of the terms
of this Indenture. To the extent applicable, the Company and each obligor on the
Securities shall cause ss. 314(d) of the TIA relating to the release of property
or securities from the Lien hereof and of the Security Documents to be complied
with. Any certificate or opinion required by ss. 314(d) of the TIA may be made
by an officer of the Company, except in cases which ss. 314(d) of the TIA
requires that such certificate or opinion be made by an independent person.
SECTION 10.03. Certificates and Opinions. (a) The Issuers and the
Company shall deliver to the Trustee:
(i) promptly after the execution and delivery of this Indenture, an
Opinion of Counsel either stating that in the opinion of such counsel the
Indenture and the Security Documents (including financing statements or
other instruments) have been properly recorded and filed so as to make
effective the security interest intended to be created for the benefit of
the Securityholders, and reciting the details of such action, or stating
that in the opinion of such counsel no such action is necessary to make
such Lien effective; and
(ii) on or before March 1 of each year, an Opinion of Counsel either
stating that in the opinion of such counsel such action has been taken
with respect to the recording, filing, re-recording and re-filing of the
Indenture and the Security Documents (including financing statements or
other instruments) as is necessary to maintain the security interest
intended to be created thereby for the benefit of the Securityholders, and
reciting the details of such action, or
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stating that in the opinion of such counsel no such action is necessary to
maintain such Lien.
(b) The Company shall comply with TIA ss. 314(d), relating to, among
other matters, the release of Collateral from the Lien of the Security Documents
and Officers' Certificates or other documents regarding fair value of the
Collateral, to the extent such provisions are applicable. Any certificate or
opinion required by TIA ss. 314(d) may be executed and delivered by an Officer
of the Company to the extent permitted by TIA ss. 314(d).
SECTION 10.04. Directions to Collateral Agent. Except during the
continuance of an Event of Default, the Trustee in directing the Collateral
Agent to take or refrain from taking actions under the Security Documents may
rely on an Officers' Certificate and Opinion of Counsel delivered to it by the
Company to the effect that the action to be taken or not taken does not
adversely affect the interests of the Securityholders or impair the security of
the Securityholders in contravention of the provisions of the Security Documents
or this Indenture.
ARTICLE XI
Guaranty of Securities, Indemnity
SECTION 11.01. Guaranty. (a) The Company, as principal obligor and
not merely as surety, hereby irrevocably and unconditionally guarantees to each
Holder of a Security authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, that: (i) principal of, premium, if any,
and interest on the Securities (including any Additional Amounts payable in
respect thereof) will be promptly paid in full when due, subject to any
applicable grace period, whether on the relevant Stated Maturity, on an interest
payment date, by acceleration, by call for redemption or upon repurchase or
purchase pursuant to Article 3, Sections 4.06, 4.07 or 4.10 or otherwise and
interest on the overdue principal and premium, if any, and purchase price and
interest on any interest, to the extent lawful (in each case including
Post-Petition Interest relating to the Issuers or the Company), on the
Securities and all other amounts payable under the Securities and obligations of
the Issuers to the Holders or the Trustee hereunder or thereunder will be
promptly paid in full or performed when the same shall become due and payable,
whether on the relevant maturity date, upon acceleration, by call for
redemption, upon repurchase or
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purchase pursuant to a Change of Control, any Asset Disposition, any repurchase
of Securities pursuant to Section 4.07 or otherwise, all in accordance with the
terms hereof and thereof; and (ii) in case of any extension of time of payment
or renewal of any Securities or of any such other obligations, that the same
will be promptly paid in full when due or performed in accordance with the terms
of the extension or renewal, subject to any applicable grace period, whether at
maturity, on an interest payment date, by acceleration, required repurchase or
otherwise. All payments under this Guaranty shall be made in United States
Dollars.
(b) All payments made by the Company under the Guaranty with respect
to the Securities will be made in United States Dollars free and clear of and
without withholding or deduction for or on account of any present or future
Taxes imposed or levied by or on behalf of Thailand (or any political
subdivision or taxing authority of Thailand), unless the Company is required to
withhold or deduct such Taxes by law or by the interpretation or administration
thereof. In the event that payments under the Guaranty are subject to
withholding or deduction for or on account of any present or future Taxes
imposed by Thailand (or any political subdivision or taxing authority of or in
Thailand), the Company shall pay Additional Amounts in such amounts and to the
extent set forth in Section 4.20(a).
(c) The Company hereby agrees that its obligations hereunder shall
be unconditional and irrevocable, irrespective of the validity, regularity or
enforceability of the Securities or this Indenture or the obligations of the
Issuers hereunder or thereunder, the absence of any action to enforce the same,
any waiver or consent by any Holder of the Securities with respect to any
provisions hereof or thereof, the recovery of any judgment against the Issuers,
any action to enforce the same or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a guarantor.
(d) The Company hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Issuers, any right to require a proceeding first against the Issuers, any
right to pursue or exhaust its legal or equitable remedies against the Issuers
(including any right which the Company may have to require the seizure and sale
of the assets of the Issuers to satisfy the outstanding principal of, interest
on or any other amounts payable under
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each Security prior to recourse against the Company or its assets), protest,
notice and all demands whatsoever and covenants that the Guaranty will not be
discharged except by complete performance of the obligations contained in the
Securities and this Indenture. If any Securityholder or the Trustee is required
by any court or otherwise to return to the Issuers, the Company, or any
custodian, trustee, liquidator or other similar official acting in relation to
the Issuers or the Company any amount paid by the Issuers or the Company to the
Trustee or such Securityholder, the Guaranty to the extent theretofore
discharged, shall be reinstated in full force and effect.
(e) The Company agrees that, as between the Company, on the one
hand, and the Holders and the Trustee, on the other hand, (x) the maturity of
the obligations guaranteed hereby may be accelerated as provided in Article VI
for the purposes of the Guaranty, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any acceleration of such obligations
as provided in Section 6.02, such obligations (whether or not then due and
payable) shall forthwith become due and payable by the Company for the purposes
of the Guaranty.
(f) The Company also agrees, to pay any and all costs and expenses
(including reasonable attorneys' fees and expenses) incurred by the Trustee or
any Holders in enforcing any rights under the Guaranty.
(g) The Company hereby waives, in favor of the Holders and the
Trustee, any and all of its rights, protections, privileges and defenses
provided by law to a guarantor and in particular any particular provisions of
the Thailand Civil Code and:
(i) waives any right of set-off which the Company may have against
the registered Holder of a Security in respect of any amounts which are or
may become payable by the registered Holder of a Security to the Issuers;
(ii) agrees that the Company is still under an obligation to make
payment to the registered Holder of a Security or the Trustee under this
Guaranty upon demand by the registered Holder of a Security even though
the registered Holder of a Security has not made any demand upon the
Issuers, the Trustee or the Collateral Agent or taken any steps or
proceedings against the Issuers to seize and sell its assets or
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property to recover the secured indebtedness or, if such steps or
proceedings are taken, the registered Holder of a Security is otherwise
unable to satisfy the Indebtedness under this Indenture from such assets
or property;
(iii) relinquishes any right or privilege which it may have to
demand from any court that the registered Holder of a Security or the
Trustee should split or apportion the Indebtedness under this Indenture
either proportionately or otherwise against the Company and any other
person who has given any Guaranty or other security to the registered
Holder of a Security in respect of the Indebtedness under this Indenture;
(iv) agrees that (subject to the other provisions of this Guaranty)
the Company shall not be entitled to claim from the Issuers any
compensation or release in respect of the obligations and liabilities of
the Company under this Guaranty in circumstances where the Company has not
made any actual payment under this Guaranty;
(v) agrees that the Company shall not make use of any of the
exceptions or defenses against the registered Holder of a Security or the
Trustee which are or may be available to the Issuers and which concerns
the Indebtedness under this Indenture;
(vi) agrees that the Company shall still be bound by and liable
under this Guaranty even though due to the fault of the registered Holder
of a Security or the Trustee, the Company can no longer be subrogated to
the rights, security interests and other privileges of the registered
Holder of a Security against the Issuers;
(vii) agrees that the Company shall not have the right to demand the
Issuers to repay the Indebtedness under this Indenture to the registered
Holder of a Security, or to release the Company from its liability under
this Guaranty in circumstances where the registered Holder of a Security
has granted any time or other indulgence to the Issuers.
SECTION 11.02. Indemnity. (a) The Company hereby irrevocably and
unconditionally agrees as a primary obligor to indemnify (the "Indemnity") fully
the Holders of the Securities and the Trustee for and against any amounts owed
by the Issuers in respect of the Securities and this Indenture that otherwise
would be payable under the Guaranty
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in the event that the Guaranty is for any reason deemed to be unenforceable.
Except as otherwise indicated herein or as the context may otherwise require,
all references herein and in the Securities shall be deemed to constitute
references to the Indemnity.
(b) The obligations of the Company assumed under this Indenture with
respect to the Indemnity are independent undertakings and constitute the
Company's own debt and obligation, as meant by or in accordance with any
applicable provisions of the Thailand Civil Code, separate from the Guaranty
contained in Section 11.01, not accessory to any of the Security Documents, and
with respect to which Indemnity any such provisions of the Thailand Civil Code
do not therefore apply.
SECTION 11.03. Representation and Warranty. The Company hereby
represents and warrants that all acts, conditions and things required to be done
and performed and to have happened precedent to the creation and issuance of the
Guaranty and the Indemnity, and to constitute the same legal, valid and binding
obligations of the Company enforceable in accordance with their respective
terms, have been done and performed and have happened in compliance with all
applicable laws.
SECTION 11.04. Waiver of Subrogation. The Company hereby irrevocably
waives any claim or other rights which it may now or hereafter acquire against
the Issuers that arise from the existence, payment, performance or enforcement
of the Company's obligations under the Guaranty, the Indemnity and this
Indenture, including, without limitation, any right of subrogation,
reimbursement, exoneration, indemnification, any right to participate in any
claim or remedy of any Holder of Securities against the Issuers whether or not
such claim, remedy or right arises in equity, or under contract, statute or
common law, including, without limitation, the right to take or receive from the
Issuers, directly or indirectly, in cash or other property or by setoff or in
any other manner, payment or security on account of such claim or other rights.
If any amount shall be paid to the Company in violation of the preceding
sentence and the Securities shall not have been paid in full, such amount shall
have been deemed to have been paid to the Company for the benefit of, and held
in trust for the benefit of, the Holders of the Securities, and shall forthwith
be paid to the Trustee for the benefit of such Holders to be credited and
applied upon the Securities, whether matured or unmatured, in accordance with
the terms of this Indenture. The Company acknowledges that it will
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receive direct and indirect benefits from the financing arrangements
contemplated by this Indenture and that the waiver set forth in this Section
11.04 is knowingly made in contemplation of such benefits.
ARTICLE XII
Miscellaneous
SECTION 12.01. Trust Indenture Act Controls. If any provision of
this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 12.02. Notices. Any notice or communication shall be in
writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Issuers:
c/o Nakornthai Strip Mill Public Company Limited
Chonburi Industrial Estate (Bowin)
358 Moo 6
Highway 331
Bowin, Sriracha, Chonburi 20230
Thailand
Attention of:
Secretary
if to the Trustee:
The Chase Manhattan Bank
Global Trust Services
450 West 33rd Street, 15th Floor
New York, New York 10001-2697
Attention of:
Valerie Dunbar
The Issuers or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be
mailed to the Securityholder at the
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Securityholder's address as it appears on the registration books of the
Registrar and shall be sufficiently given if so mailed within the time
prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 12.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA ss. 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Issuers, the Trustee, the Registrar 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 Issuers to the Trustee to take or refrain
from taking any action under this Indenture, the Issuers and the Company shall
furnish to the Trustee:
(1) an Officers' Certificate in form reasonably satisfactory to the
Trustee stating that, in the opinion of the signers, all conditions
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 reasonably satisfactory to the
Trustee stating that, in the opinion of such counsel, all such conditions
precedent have been complied with.
SECTION 12.05. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the individual 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;
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(3) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 12.06. When Securities Disregarded. In determining whether
the Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Issuers or by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Issuers shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee knows are so owned shall be so disregarded. Also,
subject to the foregoing, only Securities outstanding at the time shall be
considered in any such determination.
SECTION 12.07. Rules by Trustee, Paying Agent and Registrar. The
Trustee may make reasonable rules for action by or a meeting of Securityholders.
The Registrar and the Paying Agent may make reasonable rules for their
functions.
SECTION 12.08. Legal Holidays. A "Legal Holiday" is a Saturday, a
Sunday or a day on which banking institutions are not required to be open in the
State of New York. If a payment date is a Legal Holiday, payment shall be made
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period. If a regular record date is a Legal Holiday,
the record date shall not be affected.
SECTION 12.09. Governing Law. THIS INDENTURE AND THE SECURITIES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW
TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY. THE VARIOUS AGREEMENTS CREATING AND GOVERNING THE COLLATERAL
WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK AND THAILAND.
SECTION 12.10. Waiver of Immunities. To the extent that the Issuers
or the Company or any of their
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respective properties, assets or revenues may have or may hereafter become
entitled to, or have attributed to it, any right of immunity, on the grounds of
sovereignty or otherwise, from any legal action, suit or proceeding, from the
giving of any relief in any such legal action, suit or proceeding, from setoff
or counterclaim, from the competent jurisdiction of any court, from service of
process, from attachment upon or prior to judgment, from attachment in aid of
execution of judgment, or from execution of judgment, or other legal process or
proceeding for the giving of any relief or for the enforcement of any judgment,
in any competent jurisdiction in which proceedings may at any time be commenced,
with respect to its obligations under the Securities, this Indenture, the
Guaranty or any of the transactions contemplated hereby or thereby, the Issuers
and the Company hereby irrevocably and unconditionally waives and agrees not to
plead or claim, any such immunity and consent to such relief and enforcement.
SECTION 12.11. Consent to Jurisdiction; Appointment of Agent for
Service of Process; Waiver of Jury Trial. (a) The Issuers and the Company agree
that any suit, action or proceeding against Issuers or the Company arising out
of or relating to the Securities, this Indenture, the Guaranty or any of the
transactions contemplated hereby or thereby may be instituted in any state or
U.S. federal court in the Borough of Manhattan, in the City of New York, and any
appellate court from any thereof, and each of them irrevocably submits to the
non-exclusive jurisdiction of such courts in any suit, action or proceeding. The
Issuers and the Company irrevocably waive, to the fullest extent permitted by
law, any objection to any suit, action, or proceeding that may be brought in
connection with the Securities, this Indenture, the Guaranty or any of the
transactions contemplated hereby or thereby, in such courts whether on the
grounds of venue, residence or domicile or on the ground that any such suit,
action or proceeding has been brought in an inconvenient forum. The Issuers and
the Company agree that final judgment in any such suit, action or proceeding
brought in such court shall be conclusive and binding upon the Issuers or the
Company, as the case may be, and may be enforced in any court to the
jurisdiction of which the Issuers or the Company, as the case may be, is subject
by a suit upon such judgment; provided that service of process is affected upon
the Issuers or the Company, as the case may be, in the manner provided by this
Section 12.11.
(b) The Issuers and the Company irrevocably appoints CT Corporation
System, with offices on the date
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hereof at 1633 Broadway, New York, New York 10019, as its authorized agent (the
"Authorized Agent"), upon whom process may be served in any suit, action or
proceeding arising out of or relating to the Securities, this Indenture, the
Guaranty or the transactions contemplated hereby or thereby which may be
instituted in any state or U.S. Federal court in the Borough of Manhattan, The
City of New York, New York, and expressly accepts the non-exclusive jurisdiction
of any such court in respect of any such suit, action or proceeding. Each of the
Issuers and the Company hereby represents and warrants that the Authorized Agent
has accepted such appointment and has agreed to act as said agent for service of
process, and the Issuers and the Company agree to take any and all action,
including the filing of any and all documents that may be necessary to continue
such respective appointment in full force and effect for a period of ten years
from the date of this Indenture. Service of process upon the Authorized Agent
shall be deemed, in every respect, effective service of process upon the Issuers
and the Company. Notwithstanding the foregoing, any action involving the Issuers
or the Company arising out of or relating to the Securities, this Indenture, the
Guaranty or the transactions contemplated hereby or thereby may be instituted in
any court of competent jurisdiction in any other jurisdiction.
(c) Each of the parties to this Indenture hereby irrevocably waives
all right to a trial by jury in any action, proceeding or counterclaim arising
out of or relating to the Securities, this Indenture, any Guaranty or the
transactions contemplated hereby or thereby.
SECTION 12.12. No Recourse Against Others. A director, officer,
employee or stockholder, as such, of the Issuers shall not have any liability
for any obligations of the Issuers under the Securities or this Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder shall waive and release
all such liability. The waiver and release shall be part of the consideration
for the issue of the Securities.
SECTION 12.13. Successors. All agreements of the Issuers and the
Company in this Indenture and the Securities shall bind its successors. All
agreements of the Trustee in this Indenture shall bind its successors.
SECTION 12.14. Multiple Originals. The parties may sign any number
of copies of this Indenture. Each signed copy shall be an original, but all of
them together
<PAGE>
107
represent the same agreement. One signed copy is enough to prove this Indenture.
SECTION 12.15. Table of Contents; Headings. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
IN WITNESS WHEREOF, the parties have caused this Indenture to be
duly executed as of the date first written above.
NSM STEEL (DELAWARE), INC.
by /s/ John W. Shultes
------------------------------
Name: John W. Shultes
Title: President/CEO
NSM STEEL COMPANY, LTD.
by /s/ John W. Shultes
------------------------------
Name: John W. Shultes
Title: President/CEO
NAKORNTHAI STRIP MILL PUBLIC
COMPANY LIMITED
by /s/ John W. Shultes
------------------------------
Name: John W. Shultes
Title: President/CEO
THE CHASE MANHATTAN BANK, as Trustee
by /s/ Valerie Dunbar
------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
[FORM OF FACE OF INITIAL SECURITY]
THIS SECURITY WILL BE CONSIDERED TO HAVE BEEN ISSUED WITH ORIGINAL
ISSUE DISCOUNT ("OID") FOR PURPOSES OF SECTIONS 1271 ET. SEQ. OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED. THE ISSUE DATE OF THIS SECURITY IS MARCH 12,
1998. FOR INFORMATION REGARDING THE ISSUE PRICE, AMOUNT OF OID PER US$1,000 OF
PRINCIPAL AMOUNT AND YIELD TO MATURITY FOR PURPOSES OF THE OID RULES, PLEASE
CONTACT JOHN W. SCHULTES OF NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED,
CHONBURI INDUSTRIAL ESTATE (BOWIN), 358 MOO 6, HIGHWAY 331, BOWIN, SRIRACHA,
CHONBURI 20230, THAILAND.
[Global Securities Legend]
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES
IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY
TO THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF
SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC"), TO THE ISSUERS OR THEIR
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN. (1)
[Private Placement Legend]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REFERRED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES FOR THE
BENEFIT OF THE ISSUERS THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED PRIOR TO THE LATER OF (X) TWO YEARS AFTER THE LATER OF (I)
THE ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO)
- ----------
(1) This paragraph should only be added if the Security is issued in
global form.
<PAGE>
2
OR (II) THE DATE THIS SECURITY WAS ACQUIRED FROM AN AFFILIATE OF THE ISSUERS OR
(Y) THREE MONTHS AFTER THE LAST DATE THAT THIS SECURITY WAS OWNED BY ANY
AFFILIATE OF THE ISSUERS, IN EITHER CASE OTHER THAN (A) TO THE ISSUERS, (B)
PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE
UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E)
TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(A)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS
OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN
EACH CASE IN A TRANSACTION INVOLVING A MINIMUM PRINCIPAL AMOUNT OF US$250,000
FOR SUCH SECURITIES FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER
OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT,
OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUERS' AND THE TRUSTEE'S
RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D), (E) OR
(F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND IN THE CASE OF ANY OF THE
FOREGOING CLAUSES (A) THROUGH (F), A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE ISSUERS AND THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF THE HOLDER AFTER THE LATER OF (X) TWO YEARS AFTER THE LATER OF (I)
THE ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO) OR (II) THE DATE THIS
SECURITY WAS ACQUIRED FROM AN AFFILIATE OF THE ISSUERS OR (Y) THREE MONTHS AFTER
THE LAST DATE THAT THIS SECURITY WAS OWNED BY ANY AFFILIATE OF THE COMPANY.
[Regulation S Legend]
UNTIL 40 DAYS AFTER THE COMMENCEMENT OF THE OFFERING, AN OFFER OR
SALE OF SECURITIES WITHIN THE UNITED STATES BY A DEALER (AS DEFINED IN THE
SECURITIES ACT) MAY VIOLATE THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
IF SUCH OFFER OR SALE IS MADE OTHERWISE THAN IN ACCORDANCE WITH RULE 144A UNDER
THE SECURITIES ACT.
<PAGE>
3
NSM STEEL (DELAWARE), INC.
NSM STEEL COMPANY, LTD.
12% SENIOR MORTGAGE NOTES DUE 2006
No. __ CUSIP No.______________
US$______________
NSM STEEL (DELAWARE), INC., a company organized under the laws of
Delaware, and NSM STEEL COMPANY, LTD., a company organized under the laws of the
Cayman Islands, promise to pay to THE CHASE MANHATTAN BANK, AS BOOK-ENTRY
DEPOSITARY, or its registered assigns, the principal sum of on February 1, 2006.
Interest Payment Dates: February 1 and August 1, commencing
August 1, 1998.
Record Dates: January 15 and July 15, commencing
July 15, 1998 (whether or not a
Business Day).
Additional provisions of this Security are set forth on the other
side of this Security.
Dated:
NSM STEEL (DELAWARE), INC.,
by
-------------------------
Name:
Title:
NSM STEEL COMPANY, LTD.,
by
-------------------------
Name:
Title:
<PAGE>
4
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
THE CHASE MANHATTAN BANK,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture,
by
------------------------------------
Authorized Officer
<PAGE>
5
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
12% Senior Mortgage Notes Due 2006
1. Interest
NSM Steel (Delaware), Inc., a company organized under the laws of
Delaware, and NSM Steel Company, Ltd., a company organized under the laws of the
Cayman Islands (such companies, and their successors and assigns under the
Indenture hereinafter referred to, being herein called the "Issuers"), promise
to pay interest on the principal amount of this Security at the rate per annum
shown above. The Issuers will pay interest semiannually on February 1 and August
1 of each year. Interest on the Securities will accrue from the most recent date
to which interest has been paid or, if no interest has been paid, from March 12,
1998. Interest will be computed on the basis of a 360-day year of twelve 30-day
months. The Issuers shall pay interest on overdue principal at the rate borne by
the Securities plus 1% per annum, and they shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
The Issuers and the Company will use their best efforts to have the
Exchange Offer Registration Statement or, if applicable, the Shelf Registration
Statement (each a "Registration Statement") declared effective by the Commission
as promptly as practicable after the filing thereof. If (i) the Exchange Offer
Registration Statement is not filed within 90 days following the Issue Date,
additional interest shall accrue on the Securities over and above the stated
interest at a rate of .50% per annum commencing on the 91st day after the Issue
Date and such additional interest rate shall increase by .50% per annum on the
first day of each 90 day period thereafter; (ii) the Exchange Offer Registration
Statement is not declared effective within 180 days following the Issue Date or,
if applicable, the Shelf Registration Statement is not declared effective within
245 days following the Issue Date, additional interest shall accrue on the
Securities over and above the stated interest at a rate of .50% per annum
commencing on the 181st day after the Issue Date and such additional interest
rate shall increase by .50% per annum on the first day of each 90 day period
thereafter; or (iii) (A) the Issuers have not exchanged all Securities validly
tendered in accordance with the terms of the Exchange Offer on or prior to 210
days after the Issue Date or (B) the Exchange Offer Registration Statement
ceases to be effective
<PAGE>
6
at any time prior to the time that the Exchange Offer is consummated or (C) if
applicable, the Shelf Registration Statement has been declared effective and
such Shelf Registration Statement ceases to be effective at any time prior to
the second anniversary of the Issue Date (unless all the Securities have been
sold thereunder), then additional interest shall accrue on the Securities over
and above the stated interest at a rate of .50% per annum commencing on (x) the
211th day after the Issue Date with respect to the Securities validly tendered
and not exchanged by the Company, in the case of (A) above, or (y) the day the
Exchange Offer Registration Statement ceases to be effective or usable for its
intended purpose in the case of (B) above, or (z) the day such Shelf
Registration Statement ceases to be effective in the case of (C) above and such
additional interest rate shall increase by .50% per annum on the first day of
each 90 day period thereafter; provided, however, that the additional interest
rate on the Securities may not exceed in the aggregate 1.5% per annum (each such
event referred to in clauses (i) through (iii), a "Registration Default"). All
accrued additional interest shall be paid to Holders in the same manner as
interest payments on the Securities on semi-annual payment dates which
correspond to interest payment dates for the Securities. Following the cure of
all Registration Defaults, the accrual of additional interest will cease. The
Trustee shall have no responsibility with respect to the determination of the
amount of any such additional interest. For purposes of the foregoing,
"Registrable Securities" means (i) each Initial Security until the date on which
such Initial Security has been exchanged for a freely transferable Exchange
Security in the Exchange Offer, (ii) each Initial Security until the date on
which such Initial Security has been effectively registered under the Securities
Act and disposed of in accordance with the Shelf Registration Statement or (iii)
each Initial Security until the date on which such Initial Security is
distributed to the public pursuant to Rule 144 under the Securities Act or is
saleable pursuant to Rule 144(k) under the Securities Act.
2. Method of Payment
The Issuers will pay interest on the Securities (except defaulted
interest) to the Persons who are registered Holders of Securities at the close
of business on the January 15 or July 15 next preceding the interest payment
date even if Securities are canceled after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
<PAGE>
7
collect principal payments. The Issuers will 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 Issuers may pay principal and interest by
check payable in such money. They may mail an interest check to a Holder's
registered address.
3. Paying Agent and Registrar
Initially, THE CHASE MANHATTAN BANK, a New York banking corporation
("Trustee"), will act as Paying Agent and Registrar. The Issuers may appoint and
change any Paying Agent, Registrar or co-registrar without notice.
4. Indenture
The Issuers issued the Securities under an Indenture dated as of
March 1, 1998 (the "Indenture"), among the Issuers, Nakornthai Strip Mill Public
Company Limited (the "Company") 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, except as otherwise provided in the
Indenture (the "Act"). Terms defined in the Indenture and not defined herein
have the meanings ascribed thereto in the Indenture. The Securities are subject
to all such terms, and Securityholders are referred to the Indenture and the Act
for a statement of those terms.
The Securities are secured, senior subordinated obligations of the
Issuers limited to US$203,500,000 aggregate principal amount (subject to Section
2.07 of the Indenture). The Indenture imposes certain limitations on the
Incurrence of Indebtedness by the Issuers and certain of their Subsidiaries, the
payment of dividends on, and redemption of, the Capital Stock of the Issuers and
their Subsidiaries and the redemption of certain subordinated obligations of the
Issuers and their subsidiaries, restricted payments, the creation or existence
of certain Liens, the sale or transfer of assets and Subsidiary stock, the
issuance or sale of Capital Stock of Restricted Subsidiaries, the business
activities and investments of the Issuers and certain of their Subsidiaries,
consolidations, mergers and transfers of all or substantially all the assets of
the Issuers or certain Subsidiaries, and transactions with Affiliates. In
addition, the Indenture limits the ability of the Issuers
<PAGE>
8
and certain of their Subsidiaries to restrict distributions and dividends from
Subsidiaries.
To secure the due and punctual payment of the principal and
additional interest and interest, if any, on the Securities and all other
amounts payable by the Issuers 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 unconditionally guaranteed the Securities on a senior (other than in
respect of any Specified Senior Indebtedness of the Company) basis pursuant to
the terms of the Indenture.
5. Optional Redemption
(a) Except as set forth in the two next succeeding paragraphs, the
Securities may not be redeemed prior to February 1, 2003. On and after that
date, the Issuers may redeem the Securities in whole or in part, upon no less
than 30 nor more than 60 days' prior notice, at the following redemption prices
(expressed in percentages of principal amount at maturity), plus accrued
interest, if any, to the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
Interest Payment Date), if redeemed during the 12-month period commencing on
February 1 of the years set forth below:
Period Percentages
------ -----------
2002 106.0000%
2003 103.0000%
2004 and thereafter 100.0000%
(b) At any time prior to February 1, 2001, the Issuers may redeem in
the aggregate up to 35% of the aggregate principal amount at maturity of
Securities with the net proceeds of one or more Public Equity Offerings by the
Issuers, at a redemption price of 112.25% of the principal amount at maturity
thereof at the redemption date plus accrued interest, if any, to the redemption
date (subject to the right of Holders of record on the relevant record date to
receive interest due on the related interest payment date); provided, however,
that after any such redemption the aggregate principal amount at maturity of the
Securities outstanding must equal or exceed US$132,000,000. In order to effect
the foregoing redemption with the proceeds of any Public Equity Offering, the
Issuers must make such
<PAGE>
9
redemption not more than 60 days after the consummation of any such Public
Equity Offering.
(c) The Securities may be redeemed at the option of the Issuers or
paid in full at the option of the Company, in whole but not in part, upon not
less than 30 nor more than 60 days' notice given as provided in the Indenture,
at any time at 103% of the principal amount thereof, plus accrued and unpaid
interest to the date fixed for such payment if, as a result of any change in or
amendment to the laws, regulations or governmental policy having the force of
law of the Cayman Islands or Thailand (or of any political subdivision or taxing
authority thereof or therein) or any execution of or amendment to, any treaty or
treaties affecting taxation of which the Cayman Islands or Thailand (or such
political subdivision or taxing authority) is a party, which becomes effective
on or after the date of the Indenture (i)(A) the Issuers are required, or would
be required on the next succeeding interest payment date, to pay Additional
Amounts in respect of payments on the Securities as a result of the imposition
of Taxes imposed by the Cayman Islands or Thailand (or any political subdivision
or taxing authority or either jurisdiction); (B) the Company is, or on the next
succeeding Interest Payment Date would be, unable for reasons outside of its
control, to procure payment by the Issuers and, with respect to any payment due,
or to become due, under the Securities or the Guaranty, the Company is required,
or would be required on the next succeeding Interest Payment Date, to pay
Additional Amounts as a result of the imposition of Taxes by the Cayman Islands
or Thailand (or any political subdivision or taxing authority of either
jurisdiction); or (C) with respect to any payment to an Issuer to enable an
Issuer to make any payments under the Securities, the Company or NSM Steel
Company, Ltd. is, or on the next Interest Payment Date would be, required to
deduct or withhold taxes imposed by the Cayman Islands or Thailand (or any
political subdivision or taxing authority of either jurisdiction) and (ii) the
payment of such Additional Amounts cannot be avoided by the use of any
reasonable measures available to the Issuers or the Company that do not require
undue effort or costs (including, without limitation, the Company making
payments directly to Holders under the Guaranty). In addition, the Issuers or
the Company, as the case may be, will also pay to Holders on the redemption date
any Additional Amounts which would otherwise be payable; provided, however, that
no such notice of redemption shall be given earlier than 90 days prior to the
earliest date on which the Issuers or the Company, as the case may be, would be
obligated to pay such
<PAGE>
10
Additional Amounts if a payment in respect of the Securities or the Guaranty
were then due.
Prior to the publication of the notice of redemption in accordance
with the foregoing, the Issuers or the Company shall deliver to the Trustee an
Officers' Certificate stating that (x) the Issuers or the Company are entitled
to effect such redemption based on a written Opinion of Counsel or written
advice of a nationally recognized independent tax counsel, such opinion or
advice being reasonably acceptable to the Trustee, that the condition referred
to in either of subclauses (A) or (B) or (C) of clause (i) of the immediately
preceding paragraph is satisfied as a result of such change, amendment or
executed or amended treaty and (y) the condition described in clause (ii) of the
immediately preceding paragraph is satisfied. Such notice, once delivered by the
Issuers or the Company to the Trustee, will be irrevocable.
6. Notice of Redemption
Notice of redemption will 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 his registered address. Securities in denominations larger than
US$1,000 may be redeemed in part but only in whole multiples of US$1,000. If
money sufficient to pay the redemption price of and accrued interest on all
Securities (or portions thereof) to be redeemed on the redemption date is
deposited with the Paying Agent on or before the redemption date and certain
other conditions are satisfied, on and after such date interest ceases to accrue
on such Securities (or such portions thereof) called for redemption.
7. Put Provisions
Upon a Change of Control, any Holder of Securities will have the
right, subject to certain conditions, to cause the Issuers to repurchase all or
any part of the Securities of such Holder at a purchase price in cash equal to
101% of the Accreted Value of the Securities on the date of purchase plus
accrued and unpaid interest and Additional Amounts, if any, to the date of
repurchase (subject to the right of Holders of record on the relevant record
date to receive interest due on the related Interest Payment Date) as provided
in, and subject to the terms of, the Indenture.
<PAGE>
11
8. Additional Amounts
(a) All payments made by the Issuers under or with respect to the
Securities and by the Company under the Guaranty will be made free and clear of
and without withholding or deduction for or on account of any present or future
taxes, levies, duties, fees, assessments or other governmental charges of
whatever nature ("Taxes") imposed, levied, collected or assessed by or on behalf
of any taxing authority within the Cayman Islands or Thailand, unless the
Issuers are or the Company is, as the case may be, required to withhold or
deduct Taxes by law or by the interpretation or administration thereof. If the
Issuers are or the Company is required to withhold or deduct or if the Issuers
are or the Company is otherwise required to pay any amount for or on account of
Taxes imposed by a taxing authority within the Cayman Islands or Thailand from
or in respect of any payment made under or with respect to the Securities or the
Guaranty, the Issuers or the Company, as the case may be, will pay such
additional amounts ("Additional Amounts") as may be necessary so that the net
amount received by each Holder and beneficial owner of Securities (including
Additional Amounts) after such withholding or deduction or other payment of
Taxes will not be less than the amount such Holder or beneficial owner would
have received if such Taxes had not been withheld or deducted or paid; provided,
however, that no Additional Amounts will be payable with respect to a payment
made to a Holder or beneficial owner of Securities with respect to any Tax: (i)
which would not have been imposed, payable or due but for the existence of any
present or former connection between such Holder (or the beneficial owner of, or
Person ultimately entitled to obtain an interest in, such Securities) and the
Cayman Islands or Thailand, as the case may be, other than the mere holding of
such Securities; (ii) which would not have been imposed, payable or due if such
Securities had been held in definitive registered form ("Definitive Registered
Securities") and the presentation of Definitive Registered Securities for
payment had occurred within 30 days after the date such payment was due and
payable or was provided for, whichever is later, except for Additional Amounts
with respect to Taxes that would have been imposed had the holder presented such
Securities for payment on any date during such 30 day period; (iii) that is an
estate, inheritance, gift, sales, transfer, personal property or similar Tax;
(iv) that is imposed or withheld by reason of the failure of such Holder or
beneficial owner to comply, at the reasonable request of the Issuers or the
Company, as the case may be, with certification, information or other reporting
requirements concerning the nationality, residence or
<PAGE>
12
identity of such Holder or beneficial owner if such compliance is required or
imposed by a statute, treaty, regulation or administrative practice of the
taxing jurisdiction as a precondition to exemption from all or part of such Tax;
(v) if the beneficial owner of, or Person ultimately entitled to obtain an
interest in, such Securities had been the Holder of the Securities and would not
be entitled to the payment of Additional Amounts; or (vi) payable otherwise than
by withholding from payments on or in respect of any Security.
(b) The Issuers or the Company, as the case may be, will also (i)
make such withholding or deduction and (ii) remit the full amount deducted or
withheld to the relevant authority in accordance with applicable law. The
Issuers or the Company, as the case may be, will make reasonable efforts to
obtain certified copies of tax receipts evidencing the payment of any Taxes so
deducted or withheld from each taxing authority imposing such Taxes. The Issuers
or the Company, as the case may be, will furnish to the Holders, within 60 days
after the date the payment of any Taxes so deducted or withheld is due pursuant
to applicable law, either certified copies of tax receipts evidencing such
payment by the Issuers or the Company, as the case may be, or, if such receipts
are not obtainable, other evidence of such payments by the Issuers or the
Company.
(c) In addition, the Issuers or the Company, as the case may be,
will upon written request of each Holder (subject to the exclusions set forth in
(i), (ii), (iii), (iv), (v) and (vi) of paragraph (a) above), and provided that
reasonable supporting documentation is provided, reimburse each such Holder for
the amount of any Taxes levied or imposed by the Cayman Islands or Thailand and
paid by such Holder as a result of payments made under or with respect to the
Securities or under the Guaranty. Any payment pursuant to this section shall be
an Additional Amount.
(d) At least 30 days prior to each date on which any payment under
or with respect to the Securities or under the Guaranty is due and payable, if
the Issuers or the Company will be obligated to pay Additional Amounts with
respect to such payment, the Issuers or the Company will deliver to the Trustee
an Officers' Certificate stating the fact that such Additional Amounts will be
payable and the amounts so payable and will set forth such other information
necessary to enable the Trustee to pay such Additional Amounts to the Holders of
Securities on the payment date.
<PAGE>
13
Whenever in the Indenture or in this Security there is mentioned, in any
context, the payment of amounts based upon the principal of, premium, if any,
interest or of any other amount payable under or with respect to any Security or
the Guaranty such mention shall be deemed to include mention of the payment of
Additional Amounts to the extent that, in such context, Additional Amounts are,
were or would be payable in respect thereof.
(e) In addition, the Issuers will pay any stamp, issue,
registration, documentary, value added or other similar taxes and other duties
(including interest and penalties) payable in the Cayman Islands or Thailand (or
any political subdivision or taxing authority of either jurisdiction) and in the
United States in respect of the creation, issue, offering, execution or
enforcement of the Securities, the Guaranty or any documentation with respect
thereto.
9. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of US$1,000 and any integral multiple of US$1,000. A Holder may
transfer or exchange Securities in accordance with the Indenture. The Registrar
may require a Holder, among other things, to furnish appropriate endorsements or
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not register the transfer of or exchange any
Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) or any
Securities for a period of 15 days before a selection of Securities to be
redeemed or 15 days before an interest payment date.
10. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner
of it for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Issuers at their written request unless an abandoned property law designates
another
<PAGE>
14
Person. After any such payment, Holders entitled to the money must look only to
the Issuers and not to the Trustee for payment.
12. Discharge and Defeasance
Subject to certain conditions, the Issuers at any time may terminate
some or all of their obligations under the Securities and the Indenture if the
Issuers deposit with the Trustee money or U.S. Government Obligations for the
payment of principal, premium (if any) and interest on the Securities to
redemption or maturity, as the case may be.
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount at maturity of the Securities
then outstanding and (ii) any existing Default and its consequences or
noncompliance with any provisions may be waived with the written consent of the
Holders of a majority in principal amount at maturity of the Securities then
outstanding. Subject to certain exceptions set forth in the Indenture, without
the consent of any Securityholder, the Issuers, the Company and the Trustee may
amend the Indenture (and the Trustee and the Company may amend the Guaranty) or
the Securities to cure any ambiguity, omission, defect or inconsistency, or to
comply with Article 5 of the Indenture, to provide for uncertificated Securities
in addition to or in place of certificated Securities, to add further Guaranties
with respect to the Securities or to further secure the Securities, to add
additional covenants or surrender rights and powers conferred upon the Issuers
or the Company, to comply with any request of the SEC in connection with
qualifying the Indenture under the Act or to make any change that does not
adversely affect the rights of any Securityholder.
14. Defaults and Remedies
Under the Indenture, Events of Default include (i) a default in any
payment of interest on any Security when due, continued for 30 days, (ii) a
default in the payment of principal of any Security when due at its Stated
Maturity, upon optional redemption, upon required repurchase, upon declaration
or otherwise, (iii) the failure
<PAGE>
15
by the Issuers or the Company to comply with its obligations under Section 5.01
of the Indenture, (iv) the failure (A) by the Issuers or the Company to comply
for 30 days after notice with any of its obligations under Article 4 of the
Indenture or (B) by the Company or the Issuers or any Restricted Subsidiary to
comply for 30 days after notice with any of its obligations under Article 4 of
the Indenture (other than a failure to purchase Securities which shall
constitute an Event of Default under clause (ii) above), other than as described
in clause (i), (ii) or (iii) above, (v) the failure by the Issuers or the
Company to comply with other agreements in the Securities, the Indenture or the
Note Guaranty, in certain cases subject to notice and lapse of time, (vi) the
Guaranty ceases to be in full force and effect (except as contemplated by the
terms thereof) or the Company denies or disaffirms its obligations under the
Indenture or the Guaranty, (vii) the failure by the Company, the Issuers or any
Restricted Subsidiary to pay any Indebtedness within any applicable grace period
after final maturity or the acceleration of any such Indebtedness by the holders
thereof because of a default if the total amount of such Indebtedness unpaid or
accelerated exceeds US$5 million and such default shall not have been cured or
such acceleration rescinded after a 10-day period, (viii) certain events of
bankruptcy, insolvency or reorganization of the Company, the Issuers or any
Subsidiary, (ix) the rendering of any judgment or decree for the payment of
money in excess of US$5 million (to the extent not covered by insurance) against
the Company, the Issuers or a Subsidiary if (A) an enforcement proceeding
thereon is commenced or (B) such judgment or decree remains outstanding for a
period of 60 days following such judgment and is not discharged, waived or
stayed, (x) any Account is not maintained as required or any drawing under any
Account is not made when required to be made and in any such case such failure
continues unremedied for five Business Days (or, in the case of a failure to
maintain any required amount in, or to make a drawing under, the Notes DSR
Account, 30 days), (xi) the Security Documents shall cease to grant the Holders
any of the material collateral or rights purported to be granted thereunder or
(xii) after giving effect to the anticipated receipt and application of any
insurance proceeds, the Mill is abandoned in whole or in substantial part or is
destroyed or made permanently inoperable in whole or in substantial part. If an
Event of Default with respect to the Securities occurs (other than an Event of
Default with respect to the Issuers or the Company pursuant to certain events of
bankruptcy or insolvency) and is continuing, the Trustee or the Holders of at
least 25% in principal amount at maturity of the outstanding Securities may
declare the Accreted Value
<PAGE>
16
as of the date on which the Securities first became due and payable plus accrued
and unpaid interest, if any, on all the Securities to be due and payable. Upon
such a declaration, such Accreted Value and accrued and unpaid interest shall be
due and payable immediately.
Securityholders may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may refuse to enforce the
Indenture or the Securities unless it receives reasonable indemnity or security.
Subject to certain limitations, Holders of a majority in principal amount of the
Securities may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Securityholders notice of any continuing Default
(except a Default in payment of principal or interest) if it determines that
withholding notice is in the interest of the Holders.
15. Security
(a) The obligations of the Issuers under the Securities, will be
secured by pledges of the capital stock of NSM Steel (Delaware), Inc.
(b) The obligations of the Company under its Guaranty will be
secured equally and ratably by (i) a first mortgage over the land and buildings
comprising the Mill (except for the Co-Gen Facility); (ii) a security interest
in all amounts in the Notes DSR Account and Offshore Reserve Account; (iii) a
security interest in all machinery and movable property located at the Mill;
(iv) an assignment of all insurance and reinsurance policies maintained by the
Company on the Mill (except for the Co-Gen Facility); (v) an assignment of the
Company's rights and benefits under the Project Documents; (vi) a conditional
assignment and general pledge of the Revenue Account, the Notes Sinking Fund
Account and the Operating Account; (vii) a pledge of certain Permitted
Investments; (viii) a pledge of all issued and outstanding shares of NSM Steel
Company, Ltd.; and (ix) an assignment of Performance Bonds (all such collateral
security, the "Collateral"). The Collateral (other than the Collateral described
in clauses (ii) and (viii) above) will also secure, on an equal and ratable
basis, certain existing Indebtedness under the Bank Credit Facility. In
addition, all Collateral will secure, on a second priority basis, the
obligations of the Company in respect of the Debenture Guaranty.
(c) To secure the due and punctual payment of the obligations of the
Issuers and the Company under the
<PAGE>
17
Indenture, the Securities and the Guaranty, the Issuers and the Company have
entered into the Security Documents. The Issuers and the Trustee hereby
acknowledge and agree that the Collateral Agent holds the Collateral in trust
for the benefit of the Holders and other beneficiaries pursuant to the terms of
the Security Sharing Agreement. Each Holder, by accepting or holding a Security,
shall be deemed to have agreed to all the terms and provisions of the Security
Sharing Agreement.
(d) Each Holder, by accepting a Security, shall be deemed to have
authorized the Trustee to act as the representative of the Holders for the
purposes of the Security Sharing Agreement in connection with any communications
or other dealings with the Collateral Agent, and the Collateral Agent shall not
be required to accept communications from any party other than the Trustee, with
respect to any request, instruction, direction, approval, consent, agreement or
other instruction of the Holders under the Indenture or the Security Sharing
Agreement.
16. Trustee Dealings with the Issuers
Subject to certain limitations imposed by the Act, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Issuers or its Affiliates and may otherwise deal with the Issuers
or its Affiliates with the same rights it would have if it were not Trustee.
17. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Issuers, shall not have any liability for any obligations of the Issuers under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
18. Governing Law
THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS
<PAGE>
18
OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION
WOULD BE REQUIRED THEREBY. THE VARIOUS AGREEMENTS CREATING AND GOVERNING THE
COLLATERAL WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK AND THAILAND.
19. Authentication
This Security shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
20. Abbreviations
Customary abbreviations may be used in the name of a Securityholder
or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uni-form Gift to Minors
Act).
21. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Issuers have 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 Securityholders. 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 thereon.
The Issuers will furnish to any Securityholder upon written request
and without charge to the Security-
<PAGE>
19
holder a copy of the Indenture which has in it the text of this Security in
larger type. Requests may be made to:
c/o Nakornthai Strip Mill Public Company Limited
Chonburi Industrial Estate (bowin)
358 Moo 6
Highway 331
Bowin, Sriracha, Chonburi 20230
THAILAND
Attention: John W. Schultes
<PAGE>
20
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to
transfer this Security on the books of the Issuers. 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 Guaranty: ____________________________________________________________
<PAGE>
21
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF
REGISTRABLE SECURITIES
This certificate relates to US$_________ principal amount of Securities held in
(check applicable space) ____ book-entry or _____ definitive form by the
undersigned.
The undersigned (check one box below):
|_| has requested the Trustee by written order to deliver in exchange for its
beneficial interest in the Global Security held by the Depository a
Security or Securities in definitive, registered form of authorized
denominations and an aggregate principal amount equal to its beneficial
interest in such Global Security (or the portion thereof indicated above);
|_| has requested the Trustee by written order to exchange or register the
transfer of a Security or Securities.
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act after the later of the date of original issuance
of such Securities and the last date, if any, on which such Securities were
owned by the Issuers or any Affiliate of the Issuers, the undersigned confirms
that such
<PAGE>
22
Securities are being transferred in accordance with its terms:
CHECK ONE BOX BELOW:
(1) |_| to the Issuers; or
(2) |_| pursuant to an effective registration statement
under the Securities Act of 1933; or
(3) |_| inside the United States to a "qualified
institutional buyer" (as defined in Rule 144A under the
Securities Act of 1933) that purchases for its own
account or for the account of a qualified institutional
buyer to whom notice is given that such transfer is
being made in reliance on Rule 144A, in each case
pursuant to and in compliance with Rule 144A under the
Securities Act of 1933; or
(4) |_| outside the United States in an offshore transaction
within the meaning of Regulation S under the Securities
Act in compliance with Rule 904 under the Securities Act
of 1933; or
(5) |_| pursuant to another available exemption from
registration provided by Rule 144 under the Securities
Act of 1933.
<PAGE>
23
Unless one of the boxes is checked, the Trustee will refuse to register
any of the Securities evidenced by this certificate in the name of any
Person other than the registered Holder thereof; provided, however, that
if box (4) or (5) is checked, the Trustee may require, prior to
registering any such transfer of the Securities, such legal opinions,
certifications and other information as the Issuers have reasonably
requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, such as the exemption provided
by Rule 144 under such Act.
_________________________
Signature
Signature Guaranty:
____________________________ _________________________
Signature must be Guaranteed Signature
________________________________________________________________________________
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, and is aware that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information regarding the Issuers as
the undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the exemption
from registration provided by Rule 144A.
Dated: ________________ ______________________________
NOTICE: To be executed by
an executive officer
<PAGE>
24
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security have
been made:
Date of Amount of Amount of Principal Signature of
Exchange decrease in increase in amount of this authorized
Principal Principal Global officer of
Amount of this Amount of Security Trustee or
Global Security this Global following such Securities
Security decrease or Custodian
increase)
<PAGE>
25
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Issuers
pursuant to Section 4.06, 4.07 or 4.10 of the Indenture, check the box:
|_|
If you want to elect to have only part of this Security purchased by
the Issuers pursuant to Section 4.06 or 4.08 of the Indenture, state the amount:
US$
Date: __________________ Your Signature: __________________
(Sign exactly as your name appears on the other side of the Security)
Signature Guaranty:_______________________________________
(Signature must be Guaranteed by a
participant in a recognized signature
Guaranty medallion program)
<PAGE>
EXHIBIT B
[FORM OF FACE OF EXCHANGE SECURITY]
THIS SECURITY WILL BE CONSIDERED TO HAVE BEEN ISSUED WITH ORIGINAL
ISSUE DISCOUNT ("OID") FOR PURPOSES OF SECTIONS 1271 ET. SEQ. OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED. THE ISSUE DATE OF THIS SECURITY IS MARCH 12,
1998. FOR INFORMATION REGARDING THE ISSUE PRICE, AMOUNT OF OID PER US$1,000 OF
PRINCIPAL AMOUNT AND YIELD TO MATURITY FOR PURPOSES OF THE OID RULES, PLEASE
CONTACT JOHN W. SCHULTES OF NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED,
CHONBURI INDUSTRIAL ESTATE (BOWIN), 358 MOO 6, HIGHWAY 331, BOWIN, SRIRACHA,
CHONBURI 20230, THAILAND.
[Global Securities Legend]
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES
IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY
TO THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF
SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC"), TO THE ISSUERS OR THEIR
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN. (1)
- ----------
(1) This paragraph should only be added if the Security is issued in global
form.
<PAGE>
2
NSM STEEL (DELAWARE), INC.
NSM STEEL COMPANY, LTD.
12% SENIOR MORTGAGE NOTES DUE 2006
No. __ CUSIP No. ______
US$ ______
NSM STEEL (DELAWARE), INC., a company organized under the laws of
Delaware, and NSM STEEL COMPANY, LTD., a company organized under the laws of the
Cayman Islands, promise to pay to THE CHASE MANHATTAN BANK, AS BOOK-ENTRY
DEPOSITARY, or its registered assigns, the principal sum of
on February 1, 2006.
Interest Payment Dates: February 1 and August 1,
commencing August 1, 1998.
Record Dates: January 15 and July 15,
commencing July 15,
1998 (whether or not a
Business Day).
Additional provisions of this Security are set forth on the other
side of this Security.
Dated:
NSM STEEL (DELAWARE), INC.,
by
-------------------------
Name:
Title:
NSM STEEL COMPANY, LTD.,
by
-------------------------
Name:
Title:
<PAGE>
3
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
THE CHASE MANHATTAN BANK,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture,
by
------------------------------------
Authorized Officer
<PAGE>
4
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
12% Senior Mortgage Notes Due 2006
1. Interest
NSM Steel (Delaware), Inc., a company organized under the laws of
Delaware, and NSM Steel Company, Ltd., a company organized under the laws of the
Cayman Islands (such companies, and their successors and assigns under the
Indenture hereinafter referred to, being herein called the "Issuers"), promise
to pay interest on the principal amount of this Security at the rate per annum
shown above. The Issuers will pay interest semiannually on February 1 and August
1 of each year. Interest on the Securities will accrue from the most recent date
to which interest has been paid or, if no interest has been paid, from March 12,
1998. Interest will be computed on the basis of a 360-day year of twelve 30-day
months. The Issuers shall pay interest on overdue principal at the rate borne by
the Securities plus 1% per annum, and they shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
2. Method of Payment
The Issuers will pay interest on the Securities (except defaulted
interest) to the Persons who are registered Holders of Securities at the close
of business on the January 15 or July 15 next preceding the interest payment
date even if Securities are canceled after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Issuers will 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 Issuers may pay principal and interest by
check payable in such money. They may mail an interest check to a Holder's
registered address.
3. Paying Agent and Registrar
Initially, THE CHASE MANHATTAN BANK, a New York banking corporation
("Trustee"), will act as Paying Agent and Registrar. The Issuers may appoint and
change any Paying Agent, Registrar or co-registrar without notice.
<PAGE>
5
4. Indenture
The Issuers issued the Securities under an Indenture dated as of
March 1, 1998 (the "Indenture"), among the Issuers, Nakornthai Strip Mill Public
Company Limited (the "Company") 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, except as otherwise provided in the
Indenture (the "Act"). Terms defined in the Indenture and not defined herein
have the meanings ascribed thereto in the Indenture. The Securities are subject
to all such terms, and Securityholders are referred to the Indenture and the Act
for a statement of those terms.
The Securities are secured, senior subordinated obligations of the
Issuers limited to $203,500,000 aggregate principal amount (subject to Section
2.07 of the Indenture). The Indenture imposes certain limitations on the
Incurrence of Indebtedness by the Issuers and certain of their Subsidiaries, the
payment of dividends on, and redemption of, the Capital Stock of the Issuers and
their Subsidiaries and the redemption of certain subordinated obligations of the
Issuers and their subsidiaries, restricted payments, the creation or existence
of certain Liens, the sale or transfer of assets and Subsidiary stock, the
issuance or sale of Capital Stock of Restricted Subsidiaries, the business
activities and investments of the Issuers and certain of their Subsidiaries,
consolidations, mergers and transfers of all or substantially all the assets of
the Issuers or certain Subsidiaries, and transactions with Affiliates. In
addition, the Indenture limits the ability of the Issuers and certain of their
Subsidiaries to restrict distributions and dividends from Subsidiaries.
To secure the due and punctual payment of the principal and
interest, if any, on the Securities and all other amounts payable by the Issuers
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 unconditionally
guaranteed the Securities on a senior (other than in respect of any Specified
Senior Indebtedness of the Company) basis pursuant to the terms of the
Indenture.
<PAGE>
6
5. Optional Redemption
(a) Except as set forth in the two next succeeding paragraphs, the
Securities may not be redeemed prior to February 1, 2003. On and after that
date, the Issuers may redeem the Securities in whole or in part, upon no less
than 30 nor more than 60 days' prior notice, at the following redemption prices
(expressed in percentages of principal amount at maturity), plus accrued
interest, if any, to the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
Interest Payment Date), if redeemed during the 12-month period commencing on
February 1 of the years set forth below:
Period Percentages
------ -----------
2002 106.0000%
2003 103.0000%
2004 and thereafter 100.0000%
(b) At any time prior to February 1, 2001, the Issuers may redeem in
the aggregate up to 35% of the aggregate principal amount at maturity of
Securities with the net proceeds of one or more Public Equity Offerings by the
Issuers, at a redemption price of 112.25% of the principal amount at maturity
thereof at the redemption date plus accrued interest, if any, to the redemption
date (subject to the right of Holders of record on the relevant record date to
receive interest due on the related interest payment date); provided, however,
that after any such redemption the aggregate principal amount at maturity of the
Securities outstanding must equal or exceed US$132,000,000. In order to effect
the foregoing redemption with the proceeds of any Public Equity Offering, the
Issuers must make such redemption not more than 60 days after the consummation
of any such Public Equity Offering.
(c) The Securities may be redeemed at the option of the Issuers or
paid in full at the option of the Company, in whole but not in part, upon not
less than 30 nor more than 60 days' notice given as provided in the Indenture,
at any time at 103% of the principal amount thereof, plus accrued and unpaid
interest to the date fixed for such payment if, as a result of any change in or
amendment to the laws, regulations or governmental policy having the force of
law of the Cayman Islands or Thailand (or of any political subdivision or taxing
authority thereof or therein) or any execution of or amendment to, any treaty or
treaties
<PAGE>
7
affecting taxation of which the Cayman Islands or Thailand (or such political
subdivision or taxing authority) is a party, which becomes effective on or after
the date of the Indenture (i)(A) the Issuers are required, or would be required
on the next succeeding interest payment date, to pay Additional Amounts in
respect of payments on the Securities as a result of the imposition of Taxes
imposed by the Cayman Islands or Thailand (or any political subdivision or
taxing authority or either jurisdiction); (B) the Company is, or on the next
succeeding Interest Payment Date would be, unable for reasons outside of its
control, to procure payment by the Issuers and, with respect to any payment due,
or to become due, under the Securities or the Guaranty, the Company is required,
or would be required on the next succeeding Interest Payment Date, to pay
Additional Amounts as a result of the imposition of Taxes by the Cayman Islands
or Thailand (or any political subdivision or taxing authority of either
jurisdiction); or (C) with respect to any payment to an Issuer to enable an
Issuer to make any payments under the Securities, the Company or NSM Steel
Company, Ltd. is, or on the next Interest Payment Date would be, required to
deduct or withhold taxes imposed by the Cayman Islands or Thailand (or any
political subdivision or taxing authority of either jurisdiction) and (ii) the
payment of such Additional Amounts cannot be avoided by the use of any
reasonable measures available to the Issuers or the Company that do not require
undue effort or costs (including, without limitation, the Company making
payments directly to Holders under the Guaranty). In addition, the Issuers or
the Company, as the case may be, will also pay to Holders on the redemption date
any Additional Amounts which would otherwise be payable; provided, however, that
no such notice of redemption shall be given earlier than 90 days prior to the
earliest date on which the Issuers or the Company, as the case may be, would be
obligated to pay such Additional Amounts if a payment in respect of the
Securities or the Guaranty were then due.
Prior to the publication of the notice of redemption in accordance
with the foregoing, the Issuers or the Company shall deliver to the Trustee an
Officers' Certificate stating that (x) the Issuers or the Company are entitled
to effect such redemption based on a written Opinion of Counsel or written
advice of a nationally recognized independent tax counsel, such opinion or
advice being reasonably acceptable to the Trustee, that the condition referred
to in either of subclauses (A) or (B) or (C) of clause (i) of the immediately
preceding paragraph is satisfied as a result of such change, amendment or
executed or amended treaty and (y) the condition described in
<PAGE>
8
clause (ii) of the immediately preceding paragraph is satisfied. Such notice,
once delivered by the Issuers or the Company to the Trustee, will be
irrevocable.
6. Notice of Redemption
Notice of redemption will 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 his registered address. Securities in denominations larger than
US$1,000 may be redeemed in part but only in whole multiples of US$1,000. If
money sufficient to pay the redemption price of and accrued interest on all
Securities (or portions thereof) to be redeemed on the redemption date is
deposited with the Paying Agent on or before the redemption date and certain
other conditions are satisfied, on and after such date interest ceases to accrue
on such Securities (or such portions thereof) called for redemption.
7. Put Provisions
Upon a Change of Control, any Holder of Securities will have the
right, subject to certain conditions, to cause the Issuers to repurchase all or
any part of the Securities of such Holder at a purchase price in cash equal to
101% of the Accreted Value of the Securities on the date of purchase plus
accrued and unpaid interest and Additional Amounts, if any, to the date of
repurchase (subject to the right of Holders of record on the relevant record
date to receive interest due on the related Interest Payment Date) as provided
in, and subject to the terms of, the Indenture.
8. Additional Amounts
(a) All payments made by the Issuers under or with respect to the
Securities and by the Company under the Guaranty will be made free and clear of
and without withholding or deduction for or on account of any present or future
taxes, levies, duties, fees, assessments or other governmental charges of
whatever nature ("Taxes") imposed, levied, collected or assessed by or on behalf
of any taxing authority within the Cayman Islands or Thailand, unless the
Issuers are or the Company is, as the case may be, required to withhold or
deduct Taxes by law or by the interpretation or administration thereof. If the
Issuers are or the Company is required to withhold or deduct or if the Issuers
are or the Company is otherwise required to pay any amount
<PAGE>
9
for or on account of Taxes imposed by a taxing authority within the Cayman
Islands or Thailand from or in respect of any payment made under or with respect
to the Securities or the Guaranty, the Issuers or the Company, as the case may
be, will pay such additional amounts ("Additional Amounts") as may be necessary
so that the net amount received by each Holder and beneficial owner of
Securities (including Additional Amounts) after such withholding or deduction or
other payment of Taxes will not be less than the amount such Holder or
beneficial owner would have received if such Taxes had not been withheld or
deducted or paid; provided, however, that no Additional Amounts will be payable
with respect to a payment made to a Holder or beneficial owner of Securities
with respect to any Tax: (i) which would not have been imposed, payable or due
but for the existence of any present or former connection between such Holder
(or the beneficial owner of, or Person ultimately entitled to obtain an interest
in, such Securities) and the Cayman Islands or Thailand, as the case may be,
other than the mere holding of such Securities; (ii) which would not have been
imposed, payable or due if such Securities had been held in definitive
registered form ("Definitive Registered Securities") and the presentation of
Definitive Registered Securities for payment had occurred within 30 days after
the date such payment was due and payable or was provided for, whichever is
later, except for Additional Amounts with respect to Taxes that would have been
imposed had the holder presented such Securities for payment on any date during
such 30 day period; (iii) that is an estate, inheritance, gift, sales, transfer,
personal property or similar Tax; (iv) that is imposed or withheld by reason of
the failure of such Holder or beneficial owner to comply, at the reasonable
request of the Issuers or the Company, as the case may be, with certification,
information or other reporting requirements concerning the nationality,
residence or identity of such Holder or beneficial owner if such compliance is
required or imposed by a statute, treaty, regulation or administrative practice
of the taxing jurisdiction as a precondition to exemption from all or part of
such Tax; (v) if the beneficial owner of, or Person ultimately entitled to
obtain an interest in, such Securities had been the Holder of the Securities and
would not be entitled to the payment of Additional Amounts; or (vi) payable
otherwise than by withholding from payments on or in respect of any Security.
(b) The Issuers or the Company, as the case may be, will also (i)
make such withholding or deduction and (ii) remit the full amount deducted or
withheld to the relevant authority in accordance with applicable law. The
<PAGE>
10
Issuers or the Company, as the case may be, will make reasonable efforts to
obtain certified copies of tax receipts evidencing the payment of any Taxes so
deducted or withheld from each taxing authority imposing such Taxes. The Issuers
or the Company, as the case may be, will furnish to the Holders, within 60 days
after the date the payment of any Taxes so deducted or withheld is due pursuant
to applicable law, either certified copies of tax receipts evidencing such
payment by the Issuers or the Company, as the case may be, or, if such receipts
are not obtainable, other evidence of such payments by the Issuers or the
Company.
(c) In addition, the Issuers or the Company, as the case may be,
will upon written request of each Holder (subject to the exclusions set forth in
(i), (ii), (iii), (iv), (v) and (vi) of paragraph (a) above), and provided that
reasonable supporting documentation is provided, reimburse each such Holder for
the amount of any Taxes levied or imposed by the Cayman Islands or Thailand and
paid by such Holder as a result of payments made under or with respect to the
Securities or under the Guaranty. Any payment pursuant to this section shall be
an Additional Amount.
(d) At least 30 days prior to each date on which any payment under
or with respect to the Securities or under the Guaranty is due and payable, if
the Issuers or the Company will be obligated to pay Additional Amounts with
respect to such payment, the Issuers or the Company will deliver to the Trustee
an Officers' Certificate stating the fact that such Additional Amounts will be
payable and the amounts so payable and will set forth such other information
necessary to enable the Trustee to pay such Additional Amounts to the Holders of
Securities on the payment date. Whenever in the Indenture or in this Security
there is mentioned, in any context, the payment of amounts based upon the
principal of, premium, if any, interest or of any other amount payable under or
with respect to any Security or the Guaranty such mention shall be deemed to
include mention of the payment of Additional Amounts to the extent that, in such
context, Additional Amounts are, were or would be payable in respect thereof.
(e) In addition, the Issuers will pay any stamp, issue,
registration, documentary, value added or other similar taxes and other duties
(including interest and penalties) payable in the Cayman Islands or Thailand (or
any political subdivision or taxing authority of either jurisdiction) and in the
United States in respect of the
<PAGE>
11
creation, issue, offering, execution or enforcement of the Securities, the
Guaranty or any documentation with respect thereto.
9. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of US$1,000 and any integral multiple of US$1,000. A Holder may
transfer or exchange Securities in accordance with the Indenture. The Registrar
may require a Holder, among other things, to furnish appropriate endorsements or
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not register the transfer of or exchange any
Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) or any
Securities for a period of 15 days before a selection of Securities to be
redeemed or 15 days before an interest payment date.
10. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner
of it for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Issuers at their written request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Issuers and not to the Trustee for payment.
12. Discharge and Defeasance
Subject to certain conditions, the Issuers at any time may terminate
some or all of their obligations under the Securities and the Indenture if the
Issuers deposit with the Trustee money or U.S. Government Obligations for the
payment of principal, premium (if any) and interest on the Securities to
redemption or maturity, as the case may be.
<PAGE>
12
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount at maturity of the Securities
then outstanding and (ii) any existing Default and its consequences or
noncompliance with any provisions may be waived with the written consent of the
Holders of a majority in principal amount at maturity of the Securities then
outstanding. Subject to certain exceptions set forth in the Indenture, without
the consent of any Securityholder, the Issuers, the Company and the Trustee may
amend the Indenture (and the Trustee and the Company may amend the Guaranty) or
the Securities to cure any ambiguity, omission, defect or inconsistency, or to
comply with Article 5 of the Indenture, to provide for uncertificated Securities
in addition to or in place of certificated Securities, to add further Guaranties
with respect to the Securities or to further secure the Securities, to add
additional covenants or surrender rights and powers conferred upon the Issuers
or the Company, to comply with any request of the SEC in connection with
qualifying the Indenture under the Act or to make any change that does not
adversely affect the rights of any Securityholder.
14. Defaults and Remedies
Under the Indenture, Events of Default include (i) a default in any
payment of interest on any Security when due, continued for 30 days, (ii) a
default in the payment of principal of any Security when due at its Stated
Maturity, upon optional redemption, upon required repurchase, upon declaration
or otherwise, (iii) the failure by the Issuers or the Company to comply with its
obligations under Section 5.01 of the Indenture, (iv) the failure (A) by the
Issuers or the Company to comply for 30 days after notice with any of its
obligations under Article 4 of the Indenture or (B) by the Company or the
Issuers or any Restricted Subsidiary to comply for 30 days after notice with any
of its obligations under Article 4 of the Indenture (other than a failure to
purchase Securities which shall constitute an Event of Default under clause (ii)
above), other than as described in clause (i), (ii) or (iii) above, (v) the
failure by the Issuers or the Company to comply with other agreements in the
Securities, the Indenture or the Note Guaranty, in certain cases subject to
notice and lapse of time, (vi) the Guaranty ceases to be in full force and
effect (except as contemplated by the terms thereof) or the
<PAGE>
13
Company denies or disaffirms its obligations under the Indenture or the
Guaranty, (vii) the failure by the Company, the Issuers or any Restricted
Subsidiary to pay any Indebtedness within any applicable grace period after
final maturity or the acceleration of any such Indebtedness by the holders
thereof because of a default if the total amount of such Indebtedness unpaid or
accelerated exceeds US$5 million and such default shall not have been cured or
such acceleration rescinded after a 10-day period, (viii) certain events of
bankruptcy, insolvency or reorganization of the Company, the Issuers or any
Subsidiary, (ix) the rendering of any judgment or decree for the payment of
money in excess of US$5 million (to the extent not covered by insurance) against
the Company, the Issuers or a Subsidiary if (A) an enforcement proceeding
thereon is commenced or (B) such judgment or decree remains outstanding for a
period of 60 days following such judgment and is not discharged, waived or
stayed, (x) any Account is not maintained as required or any drawing under any
Account is not made when required to be made and in any such case such failure
continues unremedied for five Business Days (or, in the case of a failure to
maintain any required amount in, or to make a drawing under, the Notes DSR
Account, 30 days), (xi) the Security Documents shall cease to grant the Holders
any of the material collateral or rights purported to be granted thereunder or
(xii) after giving effect to the anticipated receipt and application of any
insurance proceeds, the Mill is abandoned in whole or in substantial part or is
destroyed or made permanently inoperable in whole or in substantial part. If an
Event of Default with respect to the Securities occurs (other than an Event of
Default with respect to the Issuers or the Company pursuant to certain events of
bankruptcy or insolvency) and is continuing, the Trustee or the Holders of at
least 25% in principal amount at maturity of the outstanding Securities may
declare the Accreted Value as of the date on which the Securities first became
due and payable plus accrued and unpaid interest, if any, on all the Securities
to be due and payable. Upon such a declaration, such Accreted Value and accrued
and unpaid interest shall be due and payable immediately.
Securityholders may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may refuse to enforce the
Indenture or the Securities unless it receives reasonable indemnity or security.
Subject to certain limitations, Holders of a majority in principal amount of the
Securities may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Securityholders notice of any continuing Default
(except a Default in payment of principal or interest) if it
<PAGE>
14
determines that withholding notice is in the interest of the Holders.
15. Security
(a) The obligations of the Issuers under the Securities, will be
secured by pledges of the capital stock of NSM Steel (Delaware), Inc.
(b) The obligations of the Company under its Guaranty will be
secured equally and ratably by (i) a first mortgage over the land and buildings
comprising the Mill (except for the Co-Gen Facility); (ii) a security interest
in all amounts in the Notes DSR Account and Offshore Reserve Account; (iii) a
security interest in all machinery and movable property located at the Mill;
(iv) an assignment of all insurance and reinsurance policies maintained by the
Company on the Mill (except for the Co-Gen Facility); (v) an assignment of the
Company's rights and benefits under the Project Documents; (vi) a conditional
assignment and general pledge of the Revenue Account, the Notes Sinking Fund
Account and the Operating Account; (vii) a pledge of certain Permitted
Investments; (viii) a pledge of all issued and outstanding shares of NSM Steel
Company, Ltd.; and (ix) an assignment of Performance Bonds (all such collateral
security, the "Collateral"). The Collateral (other than the Collateral described
in clauses (ii) and (viii) above) will also secure, on an equal and ratable
basis, certain existing Indebtedness under the Bank Credit Facility. In
addition, all Collateral will secure, on a second priority basis, the
obligations of the Company in respect of the Debenture Guaranty.
(c) To secure the due and punctual payment of the obligations of the
Issuers and the Company under the Indenture, the Securities and the Guaranty,
the Issuers and the Company have entered into the Security Documents. The
Issuers and the Trustee hereby acknowledge and agree that the Collateral Agent
holds the Collateral in trust for the benefit of the Holders and other
beneficiaries pursuant to the terms of the Security Sharing Agreement. Each
Holder, by accepting or holding a Security, shall be deemed to have agreed to
all the terms and provisions of the Security Sharing Agreement.
(d) Each Holder, by accepting a Security, shall be deemed to have
authorized the Trustee to act as the representative of the Holders for the
purposes of the Security Sharing Agreement in connection with any communications
or other dealings with the Collateral Agent,
<PAGE>
15
and the Collateral Agent shall not be required to accept communications from any
party other than the Trustee, with respect to any request, instruction,
direction, approval, consent, agreement or other instruction of the Holders
under the Indenture or the Security Sharing Agreement.
16. Trustee Dealings with the Issuers
Subject to certain limitations imposed by the Act, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Issuers or its Affiliates and may otherwise deal with the Issuers
or its Affiliates with the same rights it would have if it were not Trustee.
17. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Issuers, shall not have any liability for any obligations of the Issuers under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
18. Governing Law
THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. THE VARIOUS AGREEMENTS CREATING
AND GOVERNING THE COLLATERAL WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK AND THAILAND.
19. Authentication
This Security shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
<PAGE>
16
20. Abbreviations
Customary abbreviations may be used in the name of a Securityholder
or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uni-form Gift to Minors
Act).
21. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Issuers have 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 Securityholders. 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 thereon.
The Issuers will furnish to any Securityholder upon written request
and without charge to the Securityholder a copy of the Indenture which has in it
the text of this Security in larger type. Requests may be made to:
c/o Nakornthai Strip Mill Public Company Limited
Chonburi Industrial Estate (bowin)
358 Moo 6
Highway 331
Bowin, Sriracha, Chonburi 20230
THAILAND
Attention: John W. Schultes
<PAGE>
17
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to this Security on
the books of the Issuers. 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 Guaranty: ______________________________________
<PAGE>
18
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security have
been made:
Date of Amount of Amount of Principal Signature of
Exchange decrease in increase in amount of this authorized
Principal Principal Amount Global Security officer of
Amount of this of this Global following such Trustee or
Global Security Security decrease or Securities
increase) Custodian
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Issuers
pursuant to Section 4.06, 4.07 or 4.10 of the Indenture, check the box:
|_|
If you want to elect to have only part of this Security purchased by
the Issuers pursuant to Section 4.06 or 4.08 of the Indenture, state the amount:
US$
Date: __________________ Your Signature: __________________
(Sign exactly as your name appears on the other side of the Security)
Signature Guaranty:_______________________________________
(Signature must be Guaranteed by a
participant in a recognized signature
Guaranty medallion program)
<PAGE>
EXHIBIT C
FORM OF TRANSFER CERTIFICATE - *
U.S. GLOBAL SECURITY TO
REGULATION S GLOBAL SECURITY
DURING THE RESTRICTED PERIOD
(Transfers pursuant to Section 2.14(a)(i)(1)
of the Indenture)
The Chase Manhattan Bank
Global Trust Services
450 West 33rd Street, 15th Floor
New York, New York 10001-2697
Attention: Valerie Dunbar
Re: NSM Steel (Delaware), Inc. and NSM Steel Company, Ltd.
(together, the "Issuers")
12% Senior Mortgage Notes Due 2006 (the "Securities")
Reference is hereby made to the Indenture dated as of March 1, 1998
(the "Indenture"), among the Issuers, Nakorn Thai Strip Mill Public Company
Limited (the "Guarantor") and The Chase Manhattan Bank, as Trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to US$______________ aggregate principal amount
of Securities which are evidenced by the U.S. Global Securities (CUSIP No. ) and
held by you on behalf of The Depository Trust Company who in turn is holding an
interest therein on behalf of the undersigned (the "Transferor"). The Transferor
has requested a transfer of such beneficial interest in the Securities to a
Person who, during the Restricted Period, will take delivery thereof in the form
of an equal aggregate principal amount of Securities evidenced by the Regulation
S Global Security (CINS No. ), which amount, immediately after such transfer, is
to be held with the Depositary through the Euroclear Operator or Cedel or both.
In connection with such request and in respect of such Securities,
the Transferor does hereby certify that such transfer has been effected pursuant
to and in accordance with Rule 903 or Rule 904 under the United States
Securities Act of 1933, as amended (the "Securities Act") and accordingly the
Transferor does hereby further certify that:
<PAGE>
2
(1) the offer of the Securities was not made to a person in
the United States or to or for the account or benefit of a U.S.
person;
(2) either:
(A) at the time the buy order was originated, the transferee
was outside the United States or the Transferor and any person
acting on its behalf reasonably believed that the transferee was
outside the United States, or
(B) the transaction was executed in, on or through the
facilities of a designated offshore securities market and neither
the Transferor nor any person acting on its behalf knows that the
transaction was pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or 904(b) of
Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act; and
(5) upon completion of the transaction, the beneficial
interest being transferred as described above will be held with the
Depositary through the Euroclear Operator or Cedel or both.
This certificate and the statements contained herein are made for
the benefit of the Issuers, the Guarantor and the Initial Purchasers. Terms used
in this certificate and not otherwise defined in the Indenture have the meanings
set forth in Regulation S under the Securities Act.
Dated: [Insert Name of Transferor]
By:__________________________
Name:
Title:
<PAGE>
3
(If the transferor is a corporation,
partnership or fiduciary, the title to the
Person signing on behalf of such transferor
must be stated.)
- ----------
* If the Security is a Definitive Security, appropriate changes need to be
made to this form of transfer certificate.
<PAGE>
EXHIBIT D
FORM OF TRANSFER CERTIFICATE - *
U.S. GLOBAL SECURITY TO
REGULATION S GLOBAL SECURITY
AFTER THE RESTRICTED PERIOD
(Transfers pursuant to Section 2.14(a)(i)(2)
of the Indenture)
The Chase Manhattan Bank
Global Trust Services
450 West 33rd Street, 15th Floor
New York, New York 10001-2697
Attention: Valerie Dunbar
Re: NSM Steel (Delaware), Inc. and NSM Steel Company, Ltd.
(together, the "Issuers")
12% Senior Mortgage Notes Due 2006 (the "Securities")
Reference is hereby made to the Indenture dated as of March 1, 1998
(the "Indenture"), among the Issuers, Nakorn Thai Strip Mill Public Company
Limited (the "Guarantor") and The Chase Manhattan Bank, as Trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to US$______________ aggregate principal amount
of Securities which are evidenced by the U.S. Global Securities (CUSIP No. ) and
held by you on behalf of The Depository Trust Company who in turn is holding an
interest therein on behalf of the undersigned (the "Transferor"). The Transferor
has requested a transfer of such beneficial interest in the Securities to a
Person who will take delivery thereof in the form of an equal aggregate
principal amount of Securities evidenced by the Regulation S Global Security
(CINS No. ).
In connection with such request and in respect of such Securities,
the Transferor does hereby certify that such transfer has been effected pursuant
to and in accordance with Rule 903 and Rule 904 under the United States
Securities Act of 1933, as amended (the "Securities Act") and accordingly the
Transferor does hereby certify that:
(1) the offer of the Securities was not made to a person in
the United States or to or for the account or benefit of a U.S.
person;
<PAGE>
2
(2) either:
(A) at the time the buy order was originated, the transferee
was outside the United States or the Transferor and any person
acting on its behalf reasonably believed that the transferee was
outside the United States, or
(B) the transaction was executed in, on or through the
facilities of a designated offshore securities market and neither
the Transferor nor any person acting on its behalf knows that the
transaction was pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or 904(b) of
Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act; and
This certificate and the statements contained herein are made for
the benefit of the Issuers, the Guarantor and the Initial Purchasers. Terms used
in this certificate and not otherwise defined in the Indenture have the meanings
set forth in Regulation S under the Securities Act.
Dated: [Insert Name of Transferor]
By:__________________________
Name:
Title:
(If the transferor is a corporation,
partnership or fiduciary, the title to the
Person signing on behalf of such transferor
must be stated.)
- ----------
* If the Security is a Definitive Security, appropriate changes need to be
made to this form of transfer certificate.
<PAGE>
EXHIBIT E
FORM OF TRANSFER CERTIFICATE - *
REGULATION S GLOBAL SECURITY TO
U.S. GLOBAL SECURITY
DURING THE RESTRICTED PERIOD
(Transfers pursuant to Section 2.14(a)(i)(3)
of the Indenture)
The Chase Manhattan Bank
Global Trust Services
450 West 33rd Street, 15th Floor
New York, New York 10001-2697
Attention: Valerie Dunbar
Re: NSM Steel (Delaware), Inc. and NSM Steel Company, Ltd.
(together, the "Issuers")
12% Senior Mortgage Notes Due 2006 (the "Securities")
Reference is hereby made to the Indenture dated as of March 1, 1998
(the "Indenture"), among the Issuers, Nakorn Thai Strip Mill Public Company
Limited (the "Guarantor") and The Chase Manhattan Bank, as Trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to US$________ aggregate principal amount of
Securities which are evidenced by the Regulation S Global Security (CINS No. )
and held by you through the Euroclear Operator or Cedel or both on behalf of the
Depository Trust Company who in turn is holding an interest therein on behalf of
[insert name of transferor] (the "Transferor"). The Transferor has requested a
transfer of such beneficial interest in the Securities to a Person who, and
during the Restricted Period, will take delivery thereof in the form of an equal
principal amount of Securities evidenced by the U.S. Global Security (CUSIP
No. ).
In connection with such request and in respect of such Securities,
the Transferor does hereby certify that such transfer has been effected pursuant
to and in accordance with Rule 144A under the United States Securities Act of
1933, as amended, and accordingly the Transferor does hereby further certify
that the Securities are being transferred to a person that the Transferor
reasonably believes is purchasing the Securities for its own account, or for one
or more accounts with respect to which such Person exercises sole investment
discretion, and such Person
<PAGE>
2
and each such account is a "qualified institutional buyer" within the meaning of
Rule 144A, in each case in a transaction meeting the requirements of Rule 144A
and in accordance with any applicable securities laws of any state of the United
States.
This certificate and the statements contained herein are made for
the benefit of the Issuers, the Guarantor and the Initial Purchasers.
Dated:
[Insert Name of Transferor]
By: ________________________
Name:
Title:
(If the transferor is a corporation,
partnership or fiduciary, the title of the
Person signing on behalf of such transferor
must be stated.)
- ----------
* If the Security is a Definitive Security, appropriate changes need to be
made to this form of transfer certificate.
<PAGE>
EXHIBIT F
FORM OF TRANSFER CERTIFICATE - *
IAI GLOBAL SECURITY TO
RULE 144A GLOBAL SECURITY
(Transfers pursuant to Section 2.14(a)(i)(4)
of the Indenture)
The Chase Manhattan Bank
Global Trust Services
450 West 33rd Street, 15th Floor
New York, New York 10001-2697
Attention: Valerie Dunbar
Re: NSM Steel (Delaware), Inc. and NSM Steel Company, Ltd.
(together, the "Issuers")
12% Senior Mortgage Notes Due 2006 (the "Securities")
Reference is hereby made to the Indenture dated as of March 1, 1998
(the "Indenture"), among the Issuers, Nakorn Thai Strip Mill Public Company
Limited (the "Guarantor") and The Chase Manhattan Bank, as Trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to US$________ aggregate principal amount of
Securities which are evidenced by the IAI Global Security (CUSIP No. ) and held
by you on behalf of the Depository Trust Company who in turn is holding an
interest therein on behalf of [insert name of transferor] (the "Transferor").
The Transferor has requested a transfer of such beneficial interest in the
Securities to a Person who will take delivery thereof in the form of an equal
principal amount of Securities evidenced by the Rule 144A Global Security (CUSIP
No. ).
In connection with such request and in respect of such Securities,
the Transferor does hereby certify that such transfer has been effected pursuant
to and in accordance with Rule 144A under the United States Securities Act of
1933, as amended, and accordingly the Transferor does hereby further certify
that the Transferor and any person acting on its behalf reasonably believes that
(i) the transferee of such Securities is purchasing the Securities for its own
account, or for one or more accounts with respect to which such transferee
exercises sole investment discretion, (ii) such transferee and each such account
is a "qualified institutional buyer" within the meaning of Rule 144A, and (iii)
such transferee is purchasing the Securities
<PAGE>
2
in a transaction meeting the requirements of Rule 144A and in accordance with
any applicable securities laws of any state of the United States.
This certificate and the statements contained herein are made for
the benefit of the Issuers, the Guarantor and the Initial Purchasers.
Dated:
[Insert Name of Transferor]
By: _______________________
Name:
Title:
(If the transferor is a corporation,
partnership or fiduciary, the title of the
Person signing on behalf of such transferor
must be stated.)
- ----------
* If the Security is a Definitive Security, appropriate changes need to be
made to this form of transfer certificate.
<PAGE>
EXHIBIT G
FORM OF TRANSFER CERTIFICATE - *
RULE 144A GLOBAL SECURITY TO
IAI GLOBAL SECURITY
(Transfers pursuant to Section 2.14(a)(i)(5)
of the Indenture)
The Chase Manhattan Bank
Global Trust Services
450 West 33rd Street, 15th Floor
New York, New York 10001-2697
Attention: Valerie Dunbar
Re: NSM Steel (Delaware), Inc. and NSM Steel Company, Ltd.
(together, the "Issuers")
12% Senior Mortgage Notes Due 2006 (the "Securities")
Reference is hereby made to the Indenture dated as of March 1, 1998
(the "Indenture"), among the Issuers, Nakorn Thai Strip Mill Public Company
Limited (the "Guarantor") and The Chase Manhattan Bank, as Trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to US$_________ aggregate principal amount of
Securities which are evidenced by the Rule 144A Global Security (CUSIP No. ) and
held by you on behalf of the Depository Trust Company who in turn is holding an
interest therein on behalf of [insert name of transferor] (the "Transferor").
The Transferor has requested a transfer of such beneficial interest in the
Securities to a Person who will take delivery thereof in the form of an equal
principal amount of Securities evidenced by the IAI Global Security (CUSIP No.
).
In connection with such request and in respect of such Securities,
the Transferor does hereby certify that such transfer has been made to an
Institutional Accredited Investor purchasing for its own account, or for the
account of an Institutional Accredited Investor, in a principal amount of
Securities of US$250,000 or greater, that has furnished to the Depositary a
signed letter substantially in the form set forth in Annex A hereto and (ii)
effected in accordance with any applicable securities laws of any state of the
United States.
<PAGE>
2
This certificate and the statements contained herein are made for
the benefit of the Issuers, the Guarantor and the Initial Purchasers.
Dated:
[Insert Name of Transferor]
By: _______________________
Name:
Title:
(If the transferor is a corporation,
partnership or fiduciary, the title of the
Person signing on behalf of such transferor
must be stated.)
- ----------
* If the Security is a Definitive Security, appropriate changes need to be
made to this form of transfer certificate.
<PAGE>
ANNEX A
to
EXHIBIT G
ACCREDITED INVESTOR LETTER
Ladies and Gentlemen:
In connection with our proposed purchase of 12% Senior Mortgage Notes Due
2006 (the "Senior Notes") of NSM Steel (Delaware), Inc., a Delaware corporation,
and NSM Steel Company, Ltd., a Cayman Islands company, as co-issuers (the "Note
Issuers") and 203,500 Units (the "Units"), each consisting of one 12 1/4% Senior
Subordinated Mortgage Note Due 2008 (the "Senior Subordinated Note") of the Note
Issuers and 633.09266 warrants (collectively, the "Warrants") to purchase one
ordinary share, par value 10 Baht per share (collectively, the "Ordinary
Shares") of Nakornthai Strip Mill Public Company Limited (the "Company"), all as
described in the Offering Memorandum relating to the offerings, we confirm that:
1. We have received a copy of the Offering Memorandum (the "Offering
Memorandum"), dated March 2, 1998, relating to the Senior Notes, Units, Senior
Subordinated Notes and Warrants (collectively, the "Securities") and such other
information as we deem necessary in order to make an investment decision with
respect thereto. We acknowledge that we have read and agreed to the matters
stated on pages 1, 2 and 3 of the Offering Memorandum and in the section
entitled "Transfer Restrictions" of the Offering Memorandum, including the
restrictions on duplication and circulation of the Offering Memorandum.
2. We understand that any subsequent transfer of the Securities is subject
to certain restrictions and conditions set forth in the Indentures relating to
the Notes and the Senior Subordinated Mortgage Notes (collectively, the "Notes")
and the Warrant Agreement (as described in the Offering Memorandum) and we agree
to be bound by, and not to resell, pledge or otherwise transfer the Securities
except in compliance with, such restrictions and conditions and the Securities
Act of 1933, as amended (the "Securities Act").
3. We understand that the offer and sale of the Securities have not been
registered under the Securities Act, and that the Securities may not be offered
or sold except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we or they Should sell or otherwise transfer any Securities
prior to the date
A-1
<PAGE>
which is two years after the original issuance of the Securities, we will do so
in accordance with the provisions of any applicable state securities ("blue
sky") laws and only (i) to the Note Issuers, (ii) inside the United States in
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act), (iii) inside the
United States to an institutional "accredited investor" (as defined below) that,
prior to such transfer, furnishes (or has furnished on its behalf by a United
States broker-dealer) to the Trustee (as defined in the Indentures relating to
the Notes) or the Warrant Agent (as defined in the Warrant Agreement relating to
the Warrants), a signed letter containing certain representations and agreements
relating to the restrictions on transfer of' the Securities (the form of which
letter can be obtained from the Trustee or the Warrant Agent) and, if such
transfer is in respect of an aggregate principal amount of Securities of less
than U.S.$250,000, an opinion of counsel acceptable to the Note Issuers that
such transfer is in compliance with the registration requirements of the
Securities Act, (iv) outside the United States in accordance with Rule 904 of
Regulation S under the Securities Act, (v) pursuant to an exemption from
registration provided by Rule 144 under the Securities Act (if available), or
(vi) pursuant to an effective registration statement under the Securities Act,
and we further agree to provide to any person purchasing any of the Securities
from us a notice advising such purchaser that resales of the Securities are
restricted as stated herein.
4. We are not acquiring the Securities for or on behalf of, and will not
transfer the Securities to, any pension or welfare plan (as defined in Section 3
of the Employee Retirement Income Security Act of 1974), except as permitted in
the section entitled "Transfer Restrictions" of the Offering Memorandum.
5. We understand that, on any proposed resale or other transfer of any
Securities, we will be required to furnish to the Trustee and the Note Issuers
such certification, legal opinions and other information as the Trustee and the
Note Issuers may reasonably require to confirm that the proposed sale complies
with the foregoing restrictions. We further understand that the Securities
purchased by us will bear a legend to the foregoing effect.
6. We are an institutional "accredited investor" (as defined in Rule 501
(a)(1), (a)(2), (a)(3) or (a)(7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters
A-2
<PAGE>
as to be capable of evaluating the merits and risks of our investment in the
Securities, and we and any accounts for which we are acting are each able to
bear the economic risk of our or their investment, as the case may be.
7. We are acquiring the Securities purchased by us for our account or for
one or more accounts (each of which is an institutional "accredited investor" or
"qualified institutional buyer") as to each of which we exercise sole investment
discretion.
You, the Note Issuers, the Trustee and the Warrant Agent are entitled to
rely upon this letter and are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative or legal proceeding or
official inquiry with respect to the matters covered hereby.
Very truly yours,
By
--------------------
Name:
A-3
<PAGE>
EXHIBIT H
FORM OF EXCHANGE CERTIFICATE - *
EXCHANGES OF U.S. GLOBAL SECURITY
FOR REGULATION S GLOBAL SECURITY
(Exchange Pursuant to Section 2.14(a)(i)(6)
of the Indenture)
The Chase Manhattan Bank
Global Trust Services
450 West 33rd Street, 15th Floor
New York, New York 10001-2697
Attention: Valerie Dunbar
Re: NSM Steel (Delaware), Inc. and NSM Steel Company, Ltd.
(together, the "Issuers")
12% Senior Mortgage Notes Due 2006 (the "Securities")
Reference is hereby made to the Indenture dated as of March 1, 1998
(the "Indenture"), among the Issuers, Nakorn Thai Strip Mill Public Company
Limited (the "Guarantor") and The Chase Manhattan Bank, as Trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to US$_________ aggregate principal amount of
Securities which are evidenced by the [Rule 144A Global Security (CUSIP No.
883060AA3)] [IAI Global Security (CUSIP No. )] and held by you on behalf of The
Depository Trust Company who in turn is holding an interest therein on behalf of
the undersigned (the "Beneficial Owner"). The Beneficial Owner has requested
that its beneficial interest in such Securities be exchanged for a beneficial
interest in an equal aggregate principal amount of Securities evidenced by the
Regulation S Global Security (CINS No. ).
In connection with such request and in respect of such Securities,
the Beneficial Owner does hereby certify that (a) upon such exchange, it will be
the beneficial owner of such Securities, (b) it is [not a U.S. person (as
defined in Regulation S under the Securities Act) and is]** located outside the
United States (within the meaning of Regulation S) and acquired, or has agreed
to acquire and upon such exchange will have acquired, such Securities in an
offshore transaction (within the meaning of Regulation S) outside the United
States and otherwise in compliance with Regulation S[, (c) it is not an
"affiliate" (as defined in Rule 144 under the Securities Act) of the Company or
a
<PAGE>
2
person acting on behalf of such an affiliate and (d) it is not in the business
of buying and selling securities or, if it is in such business, it did not
acquire such Securities from the Company or any affiliate thereof in the initial
distribution of the Securities].** [In addition, the Beneficial Owner hereby
agrees that it will not, on or before the 40th day after the Issue Date, offer,
sell, pledge or otherwise transfer the Securities issued in such exchange except
(a) to a Person who it reasonably believes (or it and anyone acting on its
behalf reasonably believes) is a "qualified institutional buyer" within the
meaning of Rule 144A under the Securities Act in a transaction meeting the
requirements of Rule 144A and in accordance with any applicable securities laws
of any state of the United States, (b) in an offshore transaction meeting the
requirements of Rule 903 or Rule 904 under the Securities Act or (c) to an
Institutional Accredited Investor purchasing for its own account or for the
account of such an Institutional Accredited Investor, in each case in a minimum
principal amount of Securities of US$250,000, that has delivered to the
Depositary a transfer letter in the form required by the Indenture which
provides among other things, that the transferee is acquiring such Securities
not for distribution in violation of the Securities Act, and, in each case, in
accordance with any applicable securities laws of any state of the United
States.]**
This certificate and the statements contained herein are made for
the benefit of the Issuers, the Guarantor and the Initial Purchasers.
Dated:
[Insert Name of Beneficial Owner]
By: _______________________
Name:
Title:
<PAGE>
3
(If the Beneficial Owner is a corporation,
partnership or fiduciary, the title of the
Person signing on behalf of such transferor
must be stated.)
- ----------
* If the Security is a Definitive Security, appropriate changes need to be
made to this form of exchange certificate.
** Insert these bracketed provisions only if the exchange will occur during the
Restricted Period.
<PAGE>
EXHIBIT I
FORM OF EXCHANGE CERTIFICATE - *
EXCHANGES OF REGULATION S GLOBAL SECURITY
FOR U.S. GLOBAL SECURITY
(Exchange pursuant to Section 2.14(a)(i)(7)
of the Indenture)
The Chase Manhattan Bank
Global Trust Services
450 West 33rd Street, 15th Floor
New York, New York 10001-2697
Attention: Valerie Dunbar
Re: NSM Steel (Delaware), Inc. and NSM Steel Company, Ltd.
(together, the "Issuers")
12% Senior Mortgage Notes Due 2006 (the "Securities")
Reference is hereby made to the Indenture dated as of March 1, 1998
(the "Indenture"), among the Issuers, Nakorn Thai Strip Mill Public Company
Limited (the "Guarantor") and The Chase Manhattan Bank, as Trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to US$__________ aggregate principal amount of
Securities which are evidenced by the Regulation S Global Security (CINS No. )
and held by you on behalf of The Depository Trust Company who in turn is holding
an interest therein on behalf of the undersigned (the "Beneficial Owner"). The
Beneficial Owner has requested that its beneficial interest in such Securities
be exchanged for a beneficial interest in an equal aggregate principal amount of
Securities evidenced by the [Rule 144A Global Security (CUSIP No. )] [IAI
Global Security (CUSIP No. )].
In connection with such request and in respect of such Securities,
as the Beneficial Owner we acknowledge (or if we are acting for the account of
another Person, such Person has confirmed to us in writing that it acknowledges)
that the Securities have not been and will not be registered under the
Securities Act of 1933, as amended (the "Securities Act"). We certify that we
are (or it is) the beneficial owner of the Securities and that we are (or it is)
[a "qualified institutional buyer": (as defined in Rule 144A under the
Securities Act) acting for our own account or for the account of one or more
qualified institutional buyers, and, accordingly, we agree (or if we were acting
for
<PAGE>
2
the account of one or more qualified institutional buyers, each such qualified
institutional buyer]** [an Institutional Accredited Investor acting for our own
account or on the account of an Institutional Accredited Investor, exchanging
beneficial interests in an aggregate principal amount of Securities of
US$250,000 or greater, have (or it has) furnished the Depositary a signed letter
substantially in the form set forth in Annex A hereto, and accordingly, we agree
(or if we are acting on behalf of an Institutional Accredited Investor, such
Institutional Accredited Investor]*** has confirmed to us that it agrees) that
we (or it) will not offer, sell, pledge or otherwise transfer the Securities
except in accordance with the Private Placement Legend set forth in the
Securities which limits sales, among other things, (i) (A) to a Person whom we
and anyone acting on our behalf reasonably believe (or it and anyone acting on
its behalf reasonably believes) is a qualified institutional buyer in a
transaction meeting the requirements of Rule 144A, (B) pursuant to the exemption
from registration under the Act provided by Rule 144 (if available) or (C) to an
Institutional Accredited Investor purchasing for its own account or for the
account of an Institutional Accredited Investor, in a minimum principal amount
of Securities of US$250,000 that delivers a letter to the Depositary in the form
required by the Indenture, in each case in accordance with any applicable
securities laws of the states of the United States or (ii) in an offshore
transaction meeting the requirements of Rule 903 or Rule 904 of Regulation S, in
each case subject to the requirements of the Indenture.
If we are a broker-dealer, we further certify that we are acting for
the account of our customer and that our customer has confirmed the accuracy of
the representations contained herein that are applicable to it (including the
representations with respect to beneficial ownership).
This certificate and the statements contained herein are made for
the benefit of the Issuers, the Guarantor and the Initial Purchasers. Terms used
in this certificate and not otherwise defined in the Indenture have
<PAGE>
3
the meanings set forth in Regulation S under the Securities Act.
Dated:
[Insert Name of Transferor]
By: _______________________
Name:
Title:
(If the transferor is a corporation,
partnership or fiduciary, the title to the
Person signing on behalf of such transferor
must be stated.)
- ----------
* If the Security is a Definitive Security, appropriate changes need to be
made to this form of transfer certificate.
** For exchange into Rule 144A Global Security.
*** For exchange into IAI Global Security.
<PAGE>
ANNEX A
to
EXHIBIT I
ACCREDITED INVESTOR LETTER
Ladies and Gentlemen:
In connection with our proposed purchase of 12% Senior Mortgage Notes Due
2006 (the "Senior Notes") of NSM Steel (Delaware), Inc., a Delaware corporation,
and NSM Steel Company, Ltd., a Cayman Islands company, as co-issuers (the "Note
Issuers") and 203,500 Units (the "Units"), each consisting of one 12 1/4% Senior
Subordinated Mortgage Note Due 2008 (the "Senior Subordinated Note") of the Note
Issuers and 633.09266 warrants (collectively, the "Warrants") to purchase one
ordinary share, par value 10 Baht per share (collectively, the "Ordinary
Shares") of Nakornthai Strip Mill Public Company Limited (the "Company"), all as
described in the Offering Memorandum relating to the offerings, we confirm that:
1. We have received a copy of the Offering Memorandum (the "Offering
Memorandum"), dated March 2, 1998, relating to the Senior Notes, Units, Senior
Subordinated Notes and Warrants (collectively, the "Securities") and such other
information as we deem necessary in order to make an investment decision with
respect thereto. We acknowledge that we have read and agreed to the matters
stated on pages 1, 2 and 3 of the Offering Memorandum and in the section
entitled "Transfer Restrictions" of the Offering Memorandum, including the
restrictions on duplication and circulation of the Offering Memorandum.
2. We understand that any subsequent transfer of the Securities is subject
to certain restrictions and conditions set forth in the Indentures relating to
the Notes and the Senior Subordinated Mortgage Notes (collectively, the "Notes")
and the Warrant Agreement (as described in the Offering Memorandum) and we agree
to be bound by, and not to resell, pledge or otherwise transfer the Securities
except in compliance with, such restrictions and conditions and the Securities
Act of 1933, as amended (the "Securities Act").
3. We understand that the offer and sale of the Securities have not been
registered under the Securities Act, and that the Securities may not be offered
or sold except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we or they Should sell or otherwise transfer any Securities
prior to the date
A-1
<PAGE>
which is two years after the original issuance of the Securities, we will do so
in accordance with the provisions of any applicable state securities ("blue
sky") laws and only (i) to the Note Issuers, (ii) inside the United States in
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act), (iii) inside the
United States to an institutional "accredited investor" (as defined below) that,
prior to such transfer, furnishes (or has furnished on its behalf by a United
States broker-dealer) to the Trustee (as defined in the Indentures relating to
the Notes) or the Warrant Agent (as defined in the Warrant Agreement relating to
the Warrants), a signed letter containing certain representations and agreements
relating to the restrictions on transfer of' the Securities (the form of which
letter can be obtained from the Trustee or the Warrant Agent) and, if such
transfer is in respect of an aggregate principal amount of Securities of less
than U.S.$250,000, an opinion of counsel acceptable to the Note Issuers that
such transfer is in compliance with the registration requirements of the
Securities Act, (iv) outside the United States in accordance with Rule 904 of
Regulation S under the Securities Act, (v) pursuant to an exemption from
registration provided by Rule 144 under the Securities Act (if available), or
(vi) pursuant to an effective registration statement under the Securities Act,
and we further agree to provide to any person purchasing any of the Securities
from us a notice advising such purchaser that resales of the Securities are
restricted as stated herein.
4. We are not acquiring the Securities for or on behalf of, and will not
transfer the Securities to, any pension or welfare plan (as defined in Section 3
of the Employee Retirement Income Security Act of 1974), except as permitted in
the section entitled "Transfer Restrictions" of the Offering Memorandum.
5. We understand that, on any proposed resale or other transfer of any
Securities, we will be required to furnish to the Trustee and the Note Issuers
such certification, legal opinions and other information as the Trustee and the
Note Issuers may reasonably require to confirm that the proposed sale complies
with the foregoing restrictions. We further understand that the Securities
purchased by us will bear a legend to the foregoing effect.
6. We are an institutional "accredited investor" (as defined in Rule 501
(a)(1), (a)(2), (a)(3) or (a)(7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our
A-2
<PAGE>
investment in the Securities, and we and any accounts for which we are acting
are each able to bear the economic risk of our or their investment, as the case
may be.
7. We are acquiring the Securities purchased by us for our account or for
one or more accounts (each of which is an institutional "accredited investor" or
"qualified institutional buyer") as to each of which we exercise sole investment
discretion.
You, the Note Issuers, the Trustee and the Warrant Agent are entitled to
rely upon this letter and are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative or legal proceeding or
official inquiry with respect to the matters covered hereby.
Very truly yours,
By
---------------------------
Name:
A-3
<PAGE>
EXHIBIT J
FORM OF EXCHANGE CERTIFICATE - *
EXCHANGES OF U.S. GLOBAL SECURITY
FOR ANOTHER U.S. GLOBAL SECURITY
(Exchange pursuant to Section 2.14(a)(i)(8)
of the Indenture)
The Chase Manhattan Bank
Global Trust Services
450 West 33rd Street, 15th Floor
New York, New York 10001-2697
Attention: Valerie Dunbar
Re: NSM Steel (Delaware), Inc. and NSM Steel Company, Ltd.
(together, the "Issuers")
12% Senior Mortgage Notes Due 2006 (the "Securities")
Reference is hereby made to the Indenture dated as of March 1, 1998
(the "Indenture"), among the Issuers, Nakorn Thai Strip Mill Public Company
Limited (the "Guarantor") and The Chase Manhattan Bank, as Trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to US$_________ aggregate principal amount of
Securities which are evidenced by the [Rule 144A Global Security (CUSIP No. )]
[IAI Global Security (CUSIP No. )] and held by you on behalf of The Depository
Trust Company who in turn is holding an interest therein on behalf of the
undersigned (the "Beneficial Owner"). The Beneficial Owner has requested that
its beneficial interest in such Securities be exchanged for a beneficial
interest in an equal aggregate principal amount of Securities evidenced by the
[Rule 144A Global Security (CUSIP No. )] [IAI Global Security (CUSIP No. )].
In connection with such request and in respect of such Securities,
as the Beneficial Owner we acknowledge (or if we are acting for the account of
another Person, such Person has confirmed to us in writing that it acknowledges)
that the Securities have not been and will not be registered under the
Securities Act of 1933, as amended (the "Securities Act").
We certify that we are (or it is) the beneficial owner of the
Securities and that we are (or it is) [a "qualified institutional buyer": (as
defined in Rule 144A
<PAGE>
2
under the Act) acting for our own account or for the account of one or more
qualified institutional buyers, and, accordingly, we agree (or if we were acting
for the account of one or more qualified institutional buyers, each such
qualified institutional buyer]** [an Institutional Accredited Investor acting
for our own account or the account of an Institutional Accredited Investor,
exchanging beneficial interests in an aggregate principal amount of Securities
of US$250,000 or greater, and have (or it has) furnished the Depositary a signed
letter substantially in the form set forth in Annex A hereto, and accordingly,
we agree (or if we are acting on behalf of an Institutional Accredited
Investors, such Institutional Accredited Investor]*** has confirmed to us that
it agrees) that we (or it) will not offer, sell, pledge or otherwise transfer
the Securities except (A) to a Person whom we and anyone acting on our behalf
reasonably believe (or it and anyone acting on its behalf reasonably believes)
is a qualified institutional buyer in a transaction meeting the requirements of
Rule 144A, (B) pursuant to the exemption from registration under the Act
provided by Rule 144 (if available) or (C) to an Institutional Accredited
Investor purchasing for its own account or for the account of such an
Institutional Accredited Investor, in a minimum principal amount of Securities
of US$250,000, that delivers a letter to the Depositary in the form required by
the Indenture, in each case in accordance with any applicable securities laws of
the states of the United States or (ii) in an offshore transaction meeting the
requirements of Rule 903 or Rule 904 of Regulation S.
If we are a broker-dealer, we further certify that we are acting for
the account of our customer and that our customer has confirmed the accuracy of
the representations contained herein that are applicable to it (including the
representations with respect to beneficial ownership).
This certificate and the statements contained herein are made for
the benefit of the Issuers, the Guarantor and the Initial Purchasers. Terms used
in this certificate and not otherwise defined in the Indenture have
<PAGE>
3
the meanings set forth in Regulation S under the Securities Act.
Dated:
[Insert Name of Transferor]
By: _______________________
Name:
Title:
(If the transferor is a corporation,
partnership or fiduciary, the title to the
Person signing on behalf of such transferor
must be stated.)
- ----------
* If the Security is a Definitive Security, appropriate changes need to be
made to this form of transfer certificate.
** For exchanges into Rule 144A Global Security.
*** For exchanges into IAI Global Security.
<PAGE>
ANNEX A
to
EXHIBIT J
ACCREDITED INVESTOR LETTER
Ladies and Gentlemen:
In connection with our proposed purchase of 12% Senior Mortgage Notes Due
2006 (the "Senior Notes") of NSM Steel (Delaware), Inc., a Delaware corporation,
and NSM Steel Company, Ltd., a Cayman Islands company, as co-issuers (the "Note
Issuers") and 203,500 Units (the "Units"), each consisting of one 12 1/4% Senior
Subordinated Mortgage Note Due 2008 (the "Senior Subordinated Note") of the Note
Issuers and 633.09266 warrants (collectively, the "Warrants") to purchase one
ordinary share, par value 10 Baht per share (collectively, the "Ordinary
Shares") of Nakornthai Strip Mill Public Company Limited (the "Company"), all as
described in the Offering Memorandum relating to the offerings, we confirm that:
1. We have received a copy of the Offering Memorandum (the "Offering
Memorandum"), dated March 2, 1998, relating to the Senior Notes, Units, Senior
Subordinated Notes and Warrants (collectively, the "Securities") and such other
information as we deem necessary in order to make an investment decision with
respect thereto. We acknowledge that we have read and agreed to the matters
stated on pages 1, 2 and 3 of the Offering Memorandum and in the section
entitled "Transfer Restrictions" of the Offering Memorandum, including the
restrictions on duplication and circulation of the Offering Memorandum.
2. We understand that any subsequent transfer of the Securities is subject
to certain restrictions and conditions set forth in the Indentures relating to
the Notes and the Senior Subordinated Mortgage Notes (collectively, the "Notes")
and the Warrant Agreement (as described in the Offering Memorandum) and we agree
to be bound by, and not to resell, pledge or otherwise transfer the Securities
except in compliance with, such restrictions and conditions and the Securities
Act of 1933, as amended (the "Securities Act").
3. We understand that the offer and sale of the Securities have not been
registered under the Securities Act, and that the Securities may not be offered
or sold except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we or they Should sell or otherwise transfer any Securities
prior to the date which is two years after the original issuance of the
A-1
<PAGE>
Securities, we will do so in accordance with the provisions of any applicable
state securities ("blue sky") laws and only (i) to the Note Issuers, (ii) inside
the United States in accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined in Rule 144A under the Securities
Act), (iii) inside the United States to an institutional "accredited investor"
(as defined below) that, prior to such transfer, furnishes (or has furnished on
its behalf by a United States broker-dealer) to the Trustee (as defined in the
Indentures relating to the Notes) or the Warrant Agent (as defined in the
Warrant Agreement relating to the Warrants), a signed letter containing certain
representations and agreements relating to the restrictions on transfer of' the
Securities (the form of which letter can be obtained from the Trustee or the
Warrant Agent) and, if such transfer is in respect of an aggregate principal
amount of Securities of less than U.S.$250,000, an opinion of counsel acceptable
to the Note Issuers that such transfer is in compliance with the registration
requirements of the Securities Act, (iv) outside the United States in accordance
with Rule 904 of Regulation S under the Securities Act, (v) pursuant to an
exemption from registration provided by Rule 144 under the Securities Act (if
available), or (vi) pursuant to an effective registration statement under the
Securities Act, and we further agree to provide to any person purchasing any of
the Securities from us a notice advising such purchaser that resales of the
Securities are restricted as stated herein.
4. We are not acquiring the Securities for or on behalf of, and will not
transfer the Securities to, any pension or welfare plan (as defined in Section 3
of the Employee Retirement Income Security Act of 1974), except as permitted in
the section entitled "Transfer Restrictions" of the Offering Memorandum.
5. We understand that, on any proposed resale or other transfer of any
Securities, we will be required to furnish to the Trustee and the Note Issuers
such certification, legal opinions and other information as the Trustee and the
Note Issuers may reasonably require to confirm that the proposed sale complies
with the foregoing restrictions. We further understand that the Securities
purchased by us will bear a legend to the foregoing effect.
6. We are an institutional "accredited investor" (as defined in Rule 501
(a)(1), (a)(2), (a)(3) or (a)(7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Securities,
and we and any accounts for
A-2
<PAGE>
which we are acting are each able to bear the economic risk of our or their
investment, as the case may be.
7. We are acquiring the Securities purchased by us for our account or for
one or more accounts (each of which is an institutional "accredited investor" or
"qualified institutional buyer") as to each of which we exercise sole investment
discretion.
You, the Note Issuers, the Trustee and the Warrant Agent are entitled to
rely upon this letter and are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative or legal proceeding or
official inquiry with respect to the matters covered hereby.
Very truly yours,
By
-------------------------
Name:
A-3
<PAGE>
ANNEX I
EXISTING ARRANGEMENTS
None.
<PAGE>
Exhibit 4.02
EXECUTION COPY
================================================================================
NSM STEEL (DELAWARE), INC.
NSM STEEL COMPANY, LTD.
as co-Issuers
12 1/4% Senior Subordinated Mortgage Notes Due 2008
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
as Guarantor
-------------------------
INDENTURE
Dated as of March 1, 1998
-------------------------
THE CHASE MANHATTAN BANK,
Trustee
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions ......................................... 1
SECTION 1.02. Other Definitions ................................... 29
SECTION 1.03. Incorporation by Reference of Trust Indenture Act ... 30
SECTION 1.04. Rules of Construction ............................... 30
SECTION 1.05. Business Day Certificate ............................ 31
ARTICLE II
The Securities
SECTION 2.01. Form and Dating ..................................... 31
SECTION 2.02. Execution and Authentication ........................ 33
SECTION 2.03. Registrar and Paying Agent .......................... 34
SECTION 2.04. Paying Agent To Hold Money in Trust ................. 35
SECTION 2.05. Securityholder Lists ................................ 36
SECTION 2.06. Transfer and Exchange ............................... 36
SECTION 2.07. Replacement Securities .............................. 37
SECTION 2.08. Outstanding Securities .............................. 38
SECTION 2.09. Temporary Securities ................................ 39
SECTION 2.10. Cancelation ......................................... 39
SECTION 2.11. Defaulted Interest .................................. 39
SECTION 2.12. CUSIP Numbers ....................................... 40
SECTION 2.13. Book-Entry Provisions for Global Securities ......... 40
SECTION 2.14. Special Transfer Provisions ......................... 42
SECTION 2.15. Allocation of Purchase Price ........................ 47
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee .................................. 47
SECTION 3.02. Selection of Securities To Be Redeemed .............. 48
SECTION 3.03. Notice of Redemption ................................ 48
SECTION 3.04. Effect of Notice of Redemption ...................... 49
SECTION 3.05. Deposit of Redemption Price ......................... 49
i
<PAGE>
SECTION 3.06. Securities Redeemed in Part ......................... 50
SECTION 3.07. Optional Redemption ................................. 50
ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities ............................... 52
SECTION 4.02. Commission Reports. ................................. 52
SECTION 4.03. Limitation on Indebtedness .......................... 52
SECTION 4.04. Limitation on Restricted Payments ................... 55
SECTION 4.05. Limitation on Liens ................................. 58
SECTION 4.06. Limitation on Sales of Assets and Subsidiary Stock .. 59
SECTION 4.07. Offer to Repurchase Upon Failure to Attain .......... 62
Profitable Operations ............................ 63
SECTION 4.08. Limitation on Issuance and Sale of Capital Stock of
Restricted Subsidiaries .......................... 63
SECTION 4.09. Limitation on Dividends and Other Payment
Restrictions Affecting Restricted Subsidiaries ... 63
SECTION 4.10. Change of Control ................................... 64
SECTION 4.11. Compliance Certificate .............................. 65
SECTION 4.12. Further Instruments and Acts ........................ 65
SECTION 4.13. Limitation on Affiliate Transactions ................ 65
SECTION 4.14. Limitation on Sale Leaseback Transactions ........... 66
SECTION 4.15. Limitation on Issuances of Capital Stock ............ 67
SECTION 4.16. Limitation on Sales to non-Credit Qualified
Purchasers ....................................... 67
SECTION 4.17. Line of Business .................................... 67
SECTION 4.18. Ownership ........................................... 67
SECTION 4.19. Use of Proceeds ..................................... 67
SECTION 4.20. Additional Amounts .................................. 67
SECTION 4.21. Maintenance of Office or Agency ..................... 70
SECTION 4.22. Stay, Extension and Usury Laws ...................... 70
SECTION 4.23. Insurance ........................................... 71
SECTION 4.24. Compliance with Statutes ............................ 71
SECTION 4.25. Corporate Existence ................................. 71
SECTION 4.26. Independent Engineer ................................ 71
SECTION 4.27. Securities Cash Flow Sweep .......................... 71
SECTION 4.28. Payment of Taxes .................................... 72
SECTION 4.29. Intercompany Notes and Capital Contributions ........ 72
ii
<PAGE>
ARTICLE V
Successor Company
SECTION 5.01. Merger and Consolidation ............................ 72
ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default ................................... 74
SECTION 6.02. Acceleration ........................................ 77
SECTION 6.03. Other Remedies ...................................... 78
SECTION 6.04. Waiver of Past Defaults ............................. 78
SECTION 6.05. Control by Majority ................................. 78
SECTION 6.06. Limitation on Suits ................................. 79
SECTION 6.07. Rights of Holders to Receive Payment ................ 79
SECTION 6.08. Collection Suit by Trustee .......................... 79
SECTION 6.09. Trustee May File Proofs of Claim .................... 79
SECTION 6.10. Priorities .......................................... 80
SECTION 6.11. Undertaking for Costs ............................... 80
ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee ................................... 81
SECTION 7.02. Rights of Trustee ................................... 82
SECTION 7.03. Individual Rights of Trustee ........................ 83
SECTION 7.04. Trustee's Disclaimer ................................ 83
SECTION 7.05. Notice of Defaults .................................. 84
SECTION 7.06. Reports by Trustee to Holders ....................... 84
SECTION 7.07. Compensation and Indemnity .......................... 84
SECTION 7.08. Replacement of Trustee .............................. 85
SECTION 7.09. Successor Trustee by Merger ......................... 86
SECTION 7.10. Eligibility; Disqualification ....................... 87
SECTION 7.11. Preferential Collection of Claims Against Issuers ... 87
iii
<PAGE>
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities; Defeasance .... 87
SECTION 8.02. Conditions to Defeasance ............................ 89
SECTION 8.03. Application of Trust Money .......................... 90
SECTION 8.04. Repayment to Issuers ................................ 90
SECTION 8.05. Indemnity for Government Obligations ................ 90
SECTION 8.06. Reinstatement ....................................... 91
ARTICLE IX
Amendments
SECTION 9.01. Without Consent of Holders .......................... 91
SECTION 9.02. With Consent of Holders ............................. 92
SECTION 9.03. Compliance with Trust Indenture Act ................. 93
SECTION 9.04. Revocation and Effect of Consents and Waivers ....... 93
SECTION 9.05. Notation on or Exchange of Securities ............... 94
SECTION 9.06. Trustee To Sign Amendments .......................... 94
SECTION 9.07. Payment for Consent ................................. 94
ARTICLE X
Security Documents
SECTION 10.01. Collateral and Security Documents .................. 95
SECTION 10.02. Release of Collateral .............................. 96
SECTION 10.03. Certificates and Opinions .......................... 96
SECTION 10.04. Directions to Collateral Agent ..................... 97
ARTICLE XI
Subordination of Securities
SECTION 11.01. Agreement To Subordinate ........................... 97
SECTION 11.02. Liquidation, Dissolution, Bankruptcy ............... 97
SECTION 11.03. Default on Specified Senior Indebtedness of the
Issuers .......................................... 98
iv
<PAGE>
SECTION 11.04. Acceleration of Payment of Securities .............. 99
SECTION 11.05. When Distribution Must Be Paid Over ................ 99
SECTION 11.06. Subrogation ........................................ 100
SECTION 11.07. Relative Rights .................................... 100
SECTION 11.08. Subordination May Not Be Impaired by Issuers ....... 100
SECTION 11.09. Rights of Trustee and Paying Agent ................. 100
SECTION 11.10. Distribution or Notice to Representative ........... 101
SECTION 11.11. Article XI Not To Prevent Events of Default or
Limit Right To Accelerate .................... 101
SECTION 11.12. Trust Moneys Not Subordinated ...................... 101
SECTION 11.13. Trustee Entitled To Rely ........................... 101
SECTION 11.14. Trustee To Effectuate Subordination ................ 102
SECTION 11.15. Trustee Not Fiduciary for Holders of Specified
Senior Indebtedness .......................... 102
SECTION 11.16. Reliance by Holders of Specified Senior
Indebtedness on Subordination Provisions ..... 102
ARTICLE XII
Guaranty of Securities, Indemnity
SECTION 12.01. Guaranty ........................................... 103
SECTION 12.02. Indemnity .......................................... 106
SECTION 12.03. Representation and Warranty ........................ 107
SECTION 12.04. Waiver of Subrogation .............................. 107
ARTICLE XIII
Subordination of Guaranty
Section 13.01. Agreement To Subordinate ........................... 108
Section 13.02. Liquidation, Dissolution, Bankruptcy ............... 108
Section 13.03. Default on Specified Senior Indebtedness of the
Company ...................................... 108
Section 13.04. Demand for Payment ................................. 110
Section 13.05. When Distribution Must Be Paid Over ................ 110
Section 13.06. Subrogation ........................................ 110
v
<PAGE>
Section 13.07. Relative Rights .................................... 110
Section 13.08. Subordination May Not Be Impaired by the Company ... 111
Section 13.09. Rights of Trustee and Paying Agent ................. 111
Section 13.10. Distribution or Notice to Representative ........... 111
Section 13.11. Article XIII Not To Prevent Defaults Under the
Guaranty or Limit Right To Demand Payment .... 111
Section 13.12. Trustee Entitled To Rely ........................... 112
Section 13.13. Trustee To Effectuate Subordination ................ 112
Section 13.14. Trustee Not Fiduciary for Holders of Senior
Indebtedness of the Company .................. 112
Section 13.15. Reliance by Holders of Specified Senior Indebtedness
of the Company on Subordination Provisions ... 113
ARTICLE XIV
Miscellaneous
SECTION 14.01. Trust Indenture Act Controls ....................... 113
SECTION 14.02. Notices ............................................ 113
SECTION 14.03. Communication by Holders with Other Holders ........ 114
SECTION 14.04. Certificate and Opinion as to Conditions Precedent . 114
SECTION 14.05. Statements Required in Certificate or Opinion ...... 115
SECTION 14.06. When Securities Disregarded ........................ 115
SECTION 14.07. Rules by Trustee, Paying Agent and Registrar ....... 115
SECTION 14.08. Legal Holidays ..................................... 115
SECTION 14.09. Governing Law ...................................... 116
SECTION 14.10. Waiver of Immunities ............................... 116
SECTION 14.11. Consent to Jurisdiction; Appointment of Agent for
Service of Process; Waiver of Jury Trial ..... 116
SECTION 14.12. No Recourse Against Others ......................... 118
SECTION 14.13. Successors ......................................... 118
SECTION 14.14. Multiple Originals ................................. 118
SECTION 14.15. Table of Contents; Headings ........................ 118
vi
<PAGE>
Exhibit A - Form of Initial Security with Guaranty
Exhibit B - Form of Exchange Security with Guaranty
Exhibit C - Form of Transferor Letter of Representation to be Delivered in
Connection with Transfers Pursuant to Regulation S
Exhibit D - Form of Transferor Letter of Representation to be Delivered in
Connection with Transfers Pursuant to Regulation S
Exhibit E - Form of Transferor Letter of Representation to be Delivered in
Connection with Transfers Pursuant to Rule 144A
Exhibit F - Form of Transfer Certificate - IAI Global Security to Rule 144A
Global Security
Exhibit G - Form of Transfer Certificate - Rule 144A Global Security to IAI
Global Security
Exhibit H - Form of Exchange Certificate - Exchanges of U.S. Global Security
for Regulation S Global Security
Exhibit I - Form of Exchange Certificate - Exchanges of Regulation S Global
Security for U.S. Global Security
Exhibit J - Form of Exchange Certificate - Exchanges of U.S. Global Security
for Another U.S. Global Security
ANNEX I - Existing Arrangements
vii
<PAGE>
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
- ------- -------
310(a)(1) .............................................. 7.10
(a)(2) .............................................. 7.10
(a)(3) .............................................. N.A.
(a)(4) .............................................. N.A.
(b) .............................................. 7.08; 7.10
(c) .............................................. N.A.
311(a) .............................................. 7.11
(b) .............................................. 7.11
(c) .............................................. N.A.
312(a) .............................................. 2.05
(b) .............................................. 12.03
(c) .............................................. 12.03
313(a) .............................................. 7.06
(b)(1) .............................................. N.A.
(b)(2) .............................................. 7.06
(c) .............................................. 12.02
(d) .............................................. 7.06
314(a) .............................................. 4.02; 4.12; 12.02
(b) .............................................. N.A.
(c)(1) .............................................. 12.04
(c)(2) .............................................. 12.04
(c)(3) .............................................. N.A.
(d) .............................................. N.A.
(f) .............................................. 4.12
315(a) .............................................. 7.01
(b) .............................................. 7.05; 12.02
(c) .............................................. 7.01
(d) .............................................. 7.01
(e) .............................................. 6.11
316(a)(1)(A) .............................................. 6.05
(a)(1)(B) .............................................. 6.04
(a)(2) .............................................. N.A.
(b) .............................................. 6.07
317(a)(1) .............................................. 6.08
(a)(2) .............................................. 6.09
(b) .............................................. 2.04
318(a) .............................................. 12.01
N.A. means Not Applicable.
- ---------------------
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
viii
<PAGE>
INDENTURE dated as of March 1, 1998, among NSM STEEL
(DELAWARE), INC., a Delaware corporation ("NSM (Del)"), NSM
STEEL COMPANY, LTD., a company incorporated under the laws of
the Cayman Islands ("NSM Cayman" and, together with NSM (Del),
the "Issuers"), Nakornthai Strip Mill Public Company Limited,
a company incorporated under the laws of Thailand (the
"Company") and The Chase Manhattan Bank, a New York banking
corporation, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other parties
and for the equal and ratable benefit of the Holders of the Issuer's 12 1/4%
Senior Subordinated Mortgage Notes Due 2008 (the "Initial Securities") and, if
and when issued as provided in the Registration Rights Agreement of even date
herewith, the Issuer's 12 1/4% Senior Subordinated Mortgage Series A Notes Due
2008 (the "Exchange Securities", and together with the Initial Securities, the
"Securities").
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions
"Accounts" means and includes: (i) the Notes DSR Account, (ii) the
Offshore Reserve Account, (iii) the Revenue Account, (iv) the Notes Sinking Fund
Account and (v) the Operating Account, and any sub-accounts of the foregoing as
described in the Security Sharing Agreement.
"Accreted Value" means, for any particular date of determination
(any such date being herein referred to as a
<PAGE>
2
"Specified Date"), the amount provided below for each U.S.$1,000 principal
amount at maturity of the Securities outstanding:
(i) if the Specified Date occurs on one of the following Interest
Payment Dates, the Accreted Value will equal the amount set forth below:
Accreted
Interest Payment Value
- ------------------ ---------
August 1, 1998 .................................................. $ 863.10
February 1, 1999 ................................................ 866.50
August 1, 1999 .................................................. 870.30
February 1, 2000 ................................................ 874.30
August 1, 2000 .................................................. 878.60
February 1, 2001 ................................................ 883.30
August 1, 2001 .................................................. 888.30
February 1, 2002 ................................................ 893.60
August 1, 2002 .................................................. 899.40
February 1, 2003 ................................................ 905.60
August 1, 2003 .................................................. 912.30
February 1, 2004 ................................................ 919.50
August 1, 2004 .................................................. 927.20
February 1, 2005 ................................................ 935.50
August 1, 2005 .................................................. 944.40
February 1, 2006 ................................................ 953.90
August 1, 2006 .................................................. 964.20
February 1, 2007 ................................................ 975.30
August 1, 2007 .................................................. 987.20
February 1, 2008 ................................................ 1,000.00
(ii) if the Specified Date occurs before the first Interest Payment
Date, the Accreted Value will equal the sum of (1) the original issue price of
the Securities and (2) an amount equal to the product of (a) the respective
Accreted Value for the first Interest Payment Date less such original issue
price multiplied by (b) a fraction, the numerator of which is the number of days
from the Issue Date to the Specified Date, using a 360-day year of twelve 30-day
months, and the denominator of which is the number of days elapsed from the
Issue Date to the first Interest Payment Date, using a 360-day year of twelve
30-day months;
(iii) if the Specified Date occurs between two Interest Payment
Dates, the Accreted Value will equal the sum of (1) the respective Accreted
Value for the Interest Payment Date immediately preceding such Specified Date
and (2) an amount equal to the product of (i) the respective
<PAGE>
3
Accreted Value for the immediately following Interest Payment Date less the
Accreted Value for the immediately preceding Interest Payment Date multiplied by
(ii) a fraction, the numerator of which is the number of days from the
immediately preceding Interest Payment Date to the Specified Date, using a
360-day year of twelve 30-day months, and the denominator of which is 180.
"Additional Assets" means any property or assets (other than
Indebtedness and Capital Stock) relating to the operation of the Mill and
purchased with the proceeds of an Asset Disposition.
"Affiliate" of any specified Person means any other Person, directly
or indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agency Agreement" means the agreement between NSM Steel Company,
Ltd. and NSM Steel (Delaware), Inc.
"Asset Disposition" means any sale, lease, transfer, issuance or
other disposition (or series of related sales, leases, transfers, issuances or
dispositions that are part of a common plan) of shares of Capital Stock of (or
any other equity interests in) a Restricted Subsidiary or of any other property
or other assets (each referred to for the purposes of this definition as a
"disposition") by the Issuers, the Company or any Restricted Subsidiary
(including any disposition by means of a merger, consolidation or similar
transaction) other than (i) a disposition of inventory pursuant to a Project
Document or in the ordinary course of business, (ii) a disposition of obsolete
or worn out equipment or equipment that is no longer useful in the conduct of
the business of the Issuers, the Company or a Restricted Subsidiary and that is
disposed of in each case in the ordinary course of business, and (iii)
transactions permitted under Section 5.01 of this Indenture. Notwithstanding
anything to the contrary contained above, a Restricted Payment made in
compliance with Section 4.04 shall not constitute an Asset Disposition.
"Attributable Indebtedness" in respect of a Sale/Leaseback
Transaction means, as at the time of
<PAGE>
4
determination, the present value (discounted at the interest rate borne by the
Securities, compounded annually) of the total obligations of the lessee for
rental payments during the remaining term of the lease included in such
Sale/Leaseback Transaction (including any period for which such lease has been
extended).
"Average Life" means, as of the date of determination, with respect
to any Indebtedness, the quotient obtained by dividing (i) the sum of the
product of the numbers of years (rounded upwards to the nearest month) from the
date of determination to the dates of each successive scheduled principal
payment of such Indebtedness or redemption multiplied by the amount of such
payment by (ii) the sum of all such payments.
"Bank Credit Facility" means the Credit Facilities Agreement, dated
September 27, 1995, among the Company and The Industrial Finance Corporation of
Thailand, Thai Farmers Bank Public Company Limited, Siam City Bank Public
Company Limited, The Government Savings Bank, First Bangkok City Bank Public
Company Limited, Nakornthon Bank Public Company Limited, SCF Finance and
Securities Public Company Limited, Siam City Credit Finance and Securities
Public Company Limited, IFCT Finance and Securities Public Company Limited and
First City Investment Finance and Securities Public Company Limited.
"Board of Directors" means the board of directors of any of the
Issuers or the Company, as the context requires, or any duly authorized
committee of such board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Issuers or the Company to have been
duly adopted by such Board of Directors and to be in full force and effect on
the date of such certification, and delivered to the Trustee.
"Business Day" means any day which is not a legal holiday in the
State of New York or Thailand.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Capitalized Lease Obligations" means an obligation that is required
to be classified and accounted
<PAGE>
5
for as a capitalized lease for financial reporting purposes in accordance with
U.S. GAAP, and the amount of Indebtedness represented by such obligation shall
be the capitalized amount of such obligation determined in accordance with U.S.
GAAP and the Stated Maturity thereof shall be the date of the last payment of
rent or any other amount due under such lease prior to the first date such lease
may be terminated without penalty.
"Cash Equivalents" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof, (iii) certificates of
deposit, time deposits and Eurodollar time deposits with maturities of one year
or less from the date of acquisition, bankers' acceptances with maturities not
exceeding one year and overnight bank deposits, in each case with any Qualifying
Financial Institution, (iv) repurchase obligations for underlying securities of
the types described in clauses (ii) and (iii) entered into with any Qualifying
Financial Institution, (v) commercial paper rated A-1 or the equivalent thereof
by Moody's or S&P and in each case maturing within one year after the date of
acquisition, (vi) investment funds investing 95% of their assets in securities
of the types described in clauses (i)-(v) above, (vii) readily marketable direct
obligations issued by any state of the United States of America or any political
subdivision thereof having one of the two highest rating categories obtainable
from either Moody's or S&P and (viii) Indebtedness or preferred stock issued by
Persons with a rating of "A" or higher from S&P or "A-2" or higher from Moody's.
"Cash Flow Sweep Amount" means, with respect to any fiscal quarter
of the Company, an amount equal to (a) 50% of the Company's net income before
interest expense, taxes, depreciation and amortization for such quarter minus
(b) the sum of (i) the Company's accrued interest expense (other than
amortization of original issue discount and deferred debt issuance costs) for
such fiscal quarter, (ii) all scheduled principal payments made by the Company
on indebtedness during such fiscal quarter, (iii) the amount of taxes actually
paid by the Company during such fiscal quarter and (iv) the amount of budgeted
capital expenditures made by the Company during such fiscal quarter for the
maintenance of the Company's properties and assets; provided, however, that the
Cash Flow Sweep Amount in respect of any fiscal quarter shall not exceed the sum
of (x) U.S.$15 million and (y) the difference between (A) U.S.$45 million and
(B) the amount of each Cash Flow
<PAGE>
6
Sweep Account in the immediately preceding three fiscal quarters; provided
further, however, that the amount described in (y) above shall be adjusted
ratably during the first three complete fiscal quarters following the Issue Date
to take into account such shorter periods.
"Change of Control" means (i) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all or
substantially all of the assets of the Company; (ii) the Company ceasing to own
100% of capital stock of the Issuers; (iii) a majority of the Board of Directors
of the Company shall consist of Persons who are not Continuing Directors; or
(iv) the acquisition by any Person or group of related Persons for purposes of
Section 13(d) of the Exchange Act of the power, directly or indirectly, to vote
or direct the voting of securities having more than 50% of the ordinary voting
power for the election of directors of the Company.
"Coal Supply Agreement" means the agreement between the Company and
SSM Coal BV dated October 16, 1996.
"Code" means the Internal Revenue Code of 1986, as amended.
"Co-Gen Facility" means a co-generation electric power plant to be
developed in conjunction with one or more affiliates of Enron Corp.
"Co-Gen Investment" means a loan by the Company to the entity that
will operate a cogeneration facility dedicated to the service of the Mill (i) in
an aggregate amount not to exceed U.S.$15.5 million and (ii) on financial terms
substantially identical to the terms of the Senior Notes.
"Collateral" means all the collateral described in the Security
Documents.
"Collateral Agent" means The Chase Manhattan Bank, acting as
collateral agent, and its permitted successors and assigns.
"Commission" means the Securities and Exchange Commission.
"Commodity Commitment" means any commodity future or forward
contract, commodity swap, exchange agreement or derivative or other similar
agreement or arrangement with respect to the commodities market, excluding put
options and
<PAGE>
7
similar arrangements and agreements held by the Company or any Subsidiary.
"Company" means Nakornthai Strip Mill Public Company Limited.
"Consolidated Cash Flow" for any period for any Person means the
Consolidated Net Income for such period plus the following to the extent
deducted in calculating such Consolidated Net Income: (i) income tax expense,
(ii) Consolidated Interest Expense, (iii) depreciation expense, (iv)
amortization expense and (v) all other noncash items reducing Consolidated Net
Income (excluding any noncash item to the extent it represents an accrual of or
reserve for cash disbursements for any subsequent period prior to the Stated
Maturity of the Securities or amortization of a prepaid cash expense that was
paid in a prior period), in each case for such Person and its Subsidiaries for
such period. Notwithstanding the foregoing, the income tax expense, depreciation
expense and amortization expense of a Subsidiary shall be included in
Consolidated Cash Flow only to the extent (and in the same proportion) that the
net income of such Subsidiary was included in calculating Consolidated Net
Income.
"Consolidated Cash Interest Expense" means for any period for any
Person the Consolidated Interest Expense for such Person for such period less
any portion thereof not payable in cash.
"Consolidated Coverage Ratio" as of any date of determination means
the ratio of (i) the aggregate amount of Consolidated Cash Flow of the Company
for the period of the most recent four consecutive fiscal quarters ending prior
to the date of such determination and as to which financial statements of the
Company are available to (ii) Consolidated Interest Expense of the Company for
such four fiscal quarters; provided, however, that (A) if the Company has
incurred any Indebtedness since the beginning of such period and through the
date of determination of the Consolidated Coverage Ratio that remains
outstanding or if the transaction giving rise to the need to calculate
Consolidated Coverage Ratio is an Incurrence of Indebtedness, or both,
Consolidated Cash Flow and Consolidated Interest Expense for such period shall
be calculated after giving effect on a pro forma basis to (1) such Indebtedness
as if such Indebtedness had been incurred on the first day of such period
(provided that if such Indebtedness is incurred under a revolving credit
facility (or similar arrangement) only that portion
<PAGE>
8
of such Indebtedness that constitutes the one-year projected average balance of
such Indebtedness (as determined in good faith by the Board of Directors of the
Company) shall be deemed outstanding for purposes of this calculation), and (2)
the discharge of any other Indebtedness repaid, repurchased, defeased or
otherwise discharged with the proceeds of such new Indebtedness as if such
discharge had occurred on the first day of such period, (B) if since the
beginning of such period any Indebtedness of any party has been repaid,
repurchased, defeased or otherwise discharged (other than Indebtedness under a
revolving credit or similar arrangement unless such revolving credit
Indebtedness has been permanently repaid and has not been replaced),
Consolidated Interest Expense for such period shall be calculated after giving
pro forma effect thereto as if such Indebtedness had been repaid, repurchased,
defeased or otherwise discharged on the first day of such period and (C) if
since the beginning of such period the Company or any Subsidiary shall have made
any Asset Disposition, Consolidated Cash Flow for such period shall be reduced
by an amount equal to the Consolidated Cash Flow (if positive) attributable to
the assets which are the subject of such Asset Disposition for such period or
Increased by an amount equal to the Consolidated Cash Flow (if negative)
attributable thereto for such period, and Consolidated Interest Expense for such
period shall be (1) reduced by an amount equal to the Consolidated Interest
Expense attributable to any Indebtedness of the Issuers repaid, repurchased,
defeased or otherwise discharged in connection with such Asset Disposition for
such period and (2) increased by interest income, if any, attributable to the
assets which are the subject of such Asset Disposition for such period.
"Consolidated Interest Expense" means, for any period for any
Person, the total interest expense of such Person and its Subsidiaries
determined in accordance with U.S. GAAP, plus, to the extent not included in
such interest expense (i) interest expense attributable to Capitalized Lease
Obligations, (ii) amortization of debt discount, (iii) capitalized interest,
(iv) noncash interest expense, (v) commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance financing
and (vi) Interest actually paid by such Person or any such Subsidiary under any
Guarantee of Indebtedness or other obligation of any other Person and less (a)
to the extent included in such interest expense, the amortization of capitalized
debt issuance costs and (b) interest income.
<PAGE>
9
"Consolidated Net Income" means, for any period for any specified
Person, the consolidated net income (loss) of such specified Person and its
Subsidiaries determined in accordance with U.S. GAAP; provided, however, that
there shall not be included in such Consolidated Net Income: (i) any net income
(loss) of any Person acquired by such Person or any of its Subsidiaries in a
pooling of interests transaction for any period prior to the date of such
acquisition, (ii) any net income of any Subsidiary of such specified Person if
such Subsidiary is subject to restrictions, directly or indirectly, on the
payment of dividends or the making of distributions by such Subsidiary, directly
or indirectly, to such specified Person except to the extent of the dividends or
distributions that may be paid during such period by such Subsidiary, (iii) any
gain or loss realized upon the sale or other disposition of any assets of such
specified Person or its Subsidiaries which are not sold or otherwise disposed of
in the ordinary course of business and any gain or loss realized upon the sale
or other disposition of any Capital Stock of any Person, (iv) any extraordinary
gain or loss, (v) the cumulative effect of a change in accounting principles,
(vi) the net income of any other Person, other than a Subsidiary of such
specified Person, except to the extent of the lesser of (A) dividends or
distributions paid to such specified Person or any of its Subsidiaries by such
other Person and (B) the net income of such other Person (but in no event less
than zero) shall be included and the net loss of such other Person shall be
included only to the extent of the aggregate Investment of such specified Person
or any of its Subsidiaries in such other Person and (vii) any noncash expenses
attributable to grants or exercises of employee stock options.
"Consolidated Net Worth" of any Person means the total of the
amounts shown on the balance sheet of such Person and its Subsidiaries,
determined on a consolidated basis in accordance with U.S. GAAP, as of the end
of the most recent fiscal quarter of such Person ending prior to the taking of
any action for the purpose of which the determination is being made and for
which financial statements are available (but in no event ending more than 135
days prior to the taking of such action), as (i) the par or stated value of all
outstanding Capital Stock of such Person plus (ii) paid in capital or capital
surplus relating to such Capital Stock plus (iii) any retained earnings or
earned surplus less (A) any accumulated deficit and (B) any amounts attributable
to Disqualified Stock.
"Continuing Director" of any Person means, as of the date of
determination, any Person who (i) was a member
<PAGE>
10
of the Board of Directors of such Person on the Issue Date or (ii) was nominated
for election or elected to the Board of Directors of such Person with the
affirmative vote of a majority of the Continuing Directors of such Person who
were members of such Board of Directors at the time of such nomination or
election.
"Credit Facilities" means the Bank Credit Facility, as such
agreement may be amended, supplemented or otherwise modified in writing from
time to time, including any agreement extending the maturity of, refunding,
Refinancing or replacing such agreement (but in no event shall the definition of
Credit Facilities include any amendment, supplement or other modification or
agreement increasing the amount of borrowings available to the Company and its
Subsidiaries thereunder).
"Credit Party" means the Company or the Issuers or any Restricted
Subsidiary.
"Credit Qualified Purchaser" means a purchaser of goods from the
Company and its Subsidiaries (i) pursuant to the Off-Take Agreements, (ii) whose
account receivable is monetized on a non-recourse basis to the Company and its
Subsidiaries pursuant to the terms of the Working Capital Credit Facility, (iii)
which has an investment grade debt rating (or is a controlled subsidiary of a
company with an investment grade debt rating) or (iv) whose account receivable
is fully backed by a letter of credit from a Qualified Financial Institution.
"Currency Agreement" means, in respect of any Person, any foreign
exchange contract, currency swap agreement or other similar agreement as to
which such Person is a party or a beneficiary.
"Debentures" means the 12 3/4% Subordinated Second Mortgage
Debentures Due 2009 of the Issuers.
"Debenture Offering" means the private placement of the Debentures
on the Issue Date.
"Default" means any event, act or condition which with notice or
passage of time or both would become an Event of Default.
"Definitive Securities" means Securities that are in the form of
Exhibit A or Exhibit B attached hereto that do not include the Global Securities
Legend or Schedule of Increases or Decreases in Global Security thereof.
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11
"Depositary" means, with respect to the Global Securities, the
Person specified in Section 2.03 as the Depositary with respect to such
Securities, until a successor shall have been appointed and become such pursuant
to the applicable provisions of this Indenture, and thereafter, "Depositary"
shall mean or include such successor.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock 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
(i) matures or is mandatorily redeemable pursuant to a sinking fund obligation
or otherwise, (ii) is convertible or exchangeable for Indebtedness or
Disqualified Stock or (iii) is redeemable at the option of the holder thereof,
in whole or in part, in each case on or prior to the first anniversary of the
Stated Maturity of the Securities; provided, however, that any Capital Stock
that would not constitute Disqualified Stock but for provisions thereof giving
holders thereof the right to require such Person to repurchase or redeem such
Capital Stock upon the occurrence of an "asset sale" or "change of control"
occurring prior to the first anniversary of the Stated Maturity of the
Securities shall not constitute Disqualified Stock if the "asset sale" or
"change of control" provisions applicable to such Capital Stock are not more
favorable to the holders of such Capital Stock than the provisions described
under Sections 4.06 and 4.10 of this Indenture.
"Downstream Finishing Facilities" means the Company's processing
facilities for the production of high-quality pickled and oiled, cold-rolled,
galvanized, and other value-added steel products.
"DRI Plant" means a facility for the production of direct reduced
iron and co-generation power.
"Employment Agreement" means the agreement between the Company and
John W. Schultes dated as of the Issue Date.
"Equity Investment Proceeds" means any amounts received by the
Company as a result of the concurrent sale of equity as of the Issue Date net of
all related fees and expenses.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
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12
"Exchange Securities" means the 12 1/4% Senior Subordinated Mortgage
Series A Notes Due 2008 to be issued pursuant to this Indenture in connection
with the offer to exchange Securities for the Initial Securities that may be
made by the Issuers pursuant to the Registration Rights Agreement.
"Existing Arrangements" shall mean the contracts and other
agreements in effect on the Issue Date to the extent specified in Annex I to
this Indenture.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any other Person
and any obligation, direct or indirect, contingent or otherwise, of such Person
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness of such other Person (whether arising by virtue of
partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Global Security" means a Security that is in the form of Exhibit A
or Exhibit B hereto that includes the Global Securities Legend and Schedule of
Increases or Decreases in Global Security thereof.
"Global Securities Legend" means the legend set forth under such
caption in the form of Initial Security in Exhibit A hereto.
"Guaranty" means the Guarantee of the Securities by the Company
pursuant to, and as described in, Article XII.
"Hedging Obligations" of any Person means the obligations of such
Person pursuant to any Interest Rate Agreement, Currency Agreement or Commodity
Commitment.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
<PAGE>
13
"Hot Mill" means the Company's compact strip production thin-slab hot mill for
steel melting, refining, casting and hot-rolling.
"Incur" means issue, assume, guarantee, incur or otherwise become
liable for. Notwithstanding the foregoing, in the event the Company shall have
obtained Profitable Operations and, thereafter, enters into any revolving credit
or multiple-draw term loan facility in order to fund Phase III Construction
Costs, the Company may treat all or any portion of such revolving credit or
multiple-draw term debt (subject to an aggregate limit of U.S.$150 million) as
being Incurred from and after any date beginning the date that the revolving
credit or multiple-draw term loan facility commitment is extended to the
Company, by furnishing notice thereof to the Trustee, and any borrowings or
reborrowings by the Company under such commitment up to the amount of such
commitment designated by the Company as Incurred shall not be deemed to be new
Incurrences of Indebtedness by the Company; provided, however that the undrawn
portion of any such revolving or term debt shall be deemed to be outstanding
Indebtedness until such time as the commitment thereunder is terminated.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication), (i) the principal of and premium (if any)
in respect of indebtedness of such Person for borrowed money, (ii) the principal
of and premium (if any) in respect of obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all obligations of
such Person in respect of letters of credit or other similar instruments
(including reimbursement obligations with respect thereto) (other than
obligations with respect to letters of credit securing obligations (other than
obligations described in clauses (i), (ii) and (v)) entered into in the ordinary
course of business of such Person to the extent that such letters of credit are
not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed
no later than the third business day following receipt by such Person of a
demand for reimbursement following payment on the letter of credit), (iv) all
obligations of such Person to pay the deferred and unpaid purchase price of
property or services (except trade payables and accrued expenses incurred in the
ordinary course of business), which purchase price is due more than six months
after the date of placing such property in service or taking delivery and title
thereto or the completion of such services, (v) all Capitalized Lease
Obligations and all Attributable Indebtedness of such Person, (vi) all
indebtedness of other Persons secured by a
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14
Lien on any asset of such Person, whether or not such Indebtedness is assumed by
such Person, (vii) all Indebtedness of other Persons to the extent Guaranteed by
such Person, (viii) the amount of all obligations of such Person with respect to
the redemption, repayment or other repurchase of any Disqualified Stock or any
Preferred Stock of such Person or any of its Subsidiaries to the extent such
obligation arises on or before the Stated Maturity of the Securities (but
excluding, in each case, accrued dividends) and (ix) to the extent not otherwise
included in this definition, obligations under Currency Agreements, Interest
Rate Agreements and Commodity Commitments. The amount of Indebtedness of any
Person at any date shall be the outstanding principal amount of all
unconditional obligations as described above, as such amount would be reflected
on a balance sheet prepared in accordance with U.S. GAAP, and the maximum
liability of such Person, upon the occurrence of the contingency giving rise to
the obligation, of any contingent obligations described above at such date.
"Indenture" means this Indenture as amended or supplemented from
time to time.
"Independent Director" means a member of the board of directors of a
Person that is not an officer, employee or former officer or employee of such
Person or one of its Affiliates and, with respect to any transaction or series
of related transactions, a member of the board of directors who does not have
any material direct or indirect financial interest in or with respect to such
transaction or series of related transactions (including for such purpose the
interest of any other Person with respect to whom such director is also a
director, officer or employee) who is qualified under the regulations prescribed
by the Stock Exchange of Thailand.
"Independent Engineer" means Hatch Associates, Ltd.
"Initial Purchasers" means NatWest Capital Markets Limited, McDonald
& Company Securities, Inc., PaineWebber Incorporated and ECT Securities Corp.
"Initial Securities" means the 12 1/4% Senior Subordinated Mortgage
Notes Due 2006, issued under this Indenture on or about the date hereof.
"Insolvency or Liquidation Proceeding" means (i) any insolvency or
bankruptcy case or proceeding, or any
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15
receivership, liquidation, reorganization or other similar case or proceeding in
connection therewith, relating to the Issuers or the Company or any of their
respective assets, or (ii) any liquidation, dissolution or other winding up of
the Issuers or the Company, whether voluntary or involuntary or whether or not
involving insolvency or bankruptcy, or (iii) any assignment for the benefit of
creditors or any other marshaling of assets or liability of the Issuers or the
Company.
"Interest Payment Date" means the stated maturity of an installment
of interest on the Securities.
"Interest Rate Agreement" means, with respect to any Person, any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement as to which such Person is party or a
beneficiary.
"Investment" in any Person means any direct or indirect advance,
loan (other than advances to customers in the ordinary course of business that
are recorded as accounts payable on the balance sheet of such Person) or other
extension of credit (including by way of Guarantee or similar arrangement, but
excluding any debt or extension of credit represented by a bank deposit other
than a time deposit) or capital contribution to (by means of any transfer of
cash or other property to others or any payment for property or services for the
account or use of others), or any purchase or acquisition of Capital Stock,
Indebtedness or other similar instruments issued by such Person.
"Iron Ore Fines Supply Agreement" means the agreement between the
Company and MMTC Limited dated February 6, 1997.
"Issue Date" means the date on which the Securities are originally
issued.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof).
"Management Agreement" means the agreement between the Company and
Management Co. dated as of the Issue Date.
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16
"Management Co." means NSM Management Company, LLC.
"Mechanical Completion" means the point in time when the DRI Plant,
the Hot Mill and the Downstream Finishing Facilities have been completed and
certified as complete by the Independent Engineer.
"Mill" means collectively the DRI Plant, the Hot Mill and the
Finishing Facilities.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Available Cash" from an Asset Disposition means cash payments
received (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise, but only as
and when received) therefrom, in each case net of (i) all legal, title and
recording tax expenses, commissions and other fees and expenses incurred, and
all taxes required to be paid or accrued as a liability under U.S. GAAP, as a
consequence of such Asset Disposition, (ii) all payments made on any
Indebtedness which is secured by any assets subject to such Asset Disposition in
accordance with the terms of any Lien upon such assets, or which must by its
terms, or in order to obtain a necessary consent to such Asset Disposition or by
applicable law, be repaid out of the proceeds from such Asset Disposition, (iii)
all distributions and other payments required to be made to any Person owning a
beneficial interest in assets subject to sale or minority interest holders in
Subsidiaries or joint ventures as a result of such Asset Disposition, (iv) the
deduction of appropriate amounts to be provided by the seller as a reserve, in
accordance with U.S. GAAP, against any liabilities associated with the assets
disposed of in such Asset Disposition; provided, however, that upon any
reduction in such reserves (other than to the extent resulting from payments of
the respective reserved liabilities), Net Available Cash shall be increased by
the amount of such reduction to reserves, and retained by the Issuers, the
Company or any Restricted Subsidiary after such Asset Disposition and (v) any
portion of the purchase price from an Asset Disposition placed in escrow
(whether as a reserve for adjustment of the purchase price, for satisfaction of
indemnities in respect of such Asset Disposition or otherwise in connection with
such Asset Disposition); provided, however, that upon the termination of such
escrow, Net Available Cash shall be increased by any
<PAGE>
17
portion of funds therein released to the Issuers, the Company or any Restricted
Subsidiary.
"Net Cash Proceeds," with respect to any issuance or sale of Capital
Stock, means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result of such issuance or sale.
"Note Depositary Agreement" means the agreement of even date
herewith among the Issuers, the Company and The Chase Manhattan Bank as
Book-Entry Depositary.
"Notes DSR Account" means an account maintained with the Collateral
Agent and established by the Company on or prior to the Issue Date into which
shall be deposited on the Issue Date, a portion of the Notes Net Proceeds,
together with a portion of the proceeds of the Debenture Offering, equal to the
sum of (i) the aggregate interest to be payable on the Senior Notes on the first
three interest payment dates in respect thereof, (ii) the aggregate interest to
be payable on the Securities on the first two Interest Payment Dates and (iii)
the aggregate interest to be payable on the Debentures on the first two interest
payment dates in respect thereof.
"Notes Net Proceeds" means the net proceeds from the sale of the
Securities and the Senior Notes less the portion thereof applied to pay in full
all Indebtedness of the Company required to be paid with such proceeds and to
pay all fees and expenses relating to the issuance of the Securities and the
Senior Notes.
"Notes Sinking Fund Account" means an account maintained with the
Collateral Agent and established by the Company on or prior to the Issue Date
into which shall be deposited no later than the fifteenth day following the last
day of each fiscal quarter of the Company (based on the Company's fiscal year in
effect on the Issue Date), an amount equal to the Cash Flow Sweep Amount.
"Offering Memorandum" means a preliminary offering memorandum, a
supplement to the preliminary offering memorandum and an offering memorandum, as
supplemented as of the date of the Purchase Agreement, together with any other
document approved by the Issuers for use in connection with the contemplated
resale of the Securities.
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18
"Officer" means, in the case of NSM Steel Company, Ltd. and the
Company, any director thereof and, in the case of NSM Steel (Delaware), Inc.,
the Chairman of the Board, the Chief Executive Officer, the Chief Financial
Officer, the President, any General Manager, the Treasurer or the Secretary.
"Officers' Certificate" means a certificate signed by two Officers.
"Offshore Reserve Account" means an account maintained with the
Collateral Agent and established by the Company on or prior to the Issue Date
into which shall be deposited on the Issue Date, the balance (not otherwise
deposited in the Notes DSR Account) of the Notes Net Proceeds, together with the
balance of the proceeds of the Debenture Offering and Equity Investment
Proceeds.
"Off-Take Agreements" collectively mean the agreements between the
Company and Preussag Handel GmbH and the Company and Klockner Steel Trading each
dated November 19, 1997, as such agreements may be amended, supplemented or
otherwise modified in writing from time to time.
"Operating Account" means an account or accounts maintained with the
Collateral Agent and established by the Company on or prior to the Issue Date
into which shall be deposited on the first day of each calendar month an amount
such that, immediately after giving effect to such deposit, the balance of such
account shall be equal to the sum of (i) the capital expenditures (including
Phase II Construction Costs to be paid by the Company to vendors in Thailand) of
the Company during that calendar month as estimated in advance in good faith by
the Company and (ii) any amount required to be paid during such calendar month
in connection with the Bank Credit Facility.
"Opinion of Counsel" means a written opinion from legal counsel who
is acceptable to the Trustee. The counsel may be an employee of or counsel to
the Issuers or the Trustee.
"Pari Passu", as applied to the ranking of any Indebtedness of a
Person in relation to other Indebtedness of such Person, means that each such
Indebtedness is not subordinated in right of payment to the same Indebtedness as
is the other, and is so subordinate to the same extent, and is not subordinate
in right of payment to each other or to
<PAGE>
19
any Indebtedness as to which the other is not so subordinate.
"Permitted Foreign Investment" means, with respect to any Person, an
Investment by such Person in (i) cash and (ii) Cash Equivalents.
"Permitted Hedging Obligations" means (a) Indebtedness under Hedging
Obligations to the extent related to the Securities and any Refinancing
Indebtedness; and (b) Indebtedness under Commodity Commitments or Currency
Agreements entered into in the ordinary course of business in good faith as a
risk management or hedge against change in market conditions; provided, however,
that in the case of this clause (b) the aggregate amount of commodities
underlying all such Commodity Commitments on any date, for the Company and the
Restricted Subsidiaries, that mature or expire over any 12 month period may not
exceed the Company's expected requirements for such commodities over such 12
month period.
"Permitted Investments" means (i) investments in direct obligations
of the United States of America maturing within 90 days of the date of
acquisition thereof, (ii) investments in certificates of deposit maturing within
90 days of the date of acquisition thereof issued by a Qualifying Financial
Institution, or, to the extent funds are required by applicable law to be
maintained in Baht, certificates of deposit, promissory notes or other
instruments, in each case able to be pledged, of a Qualifying Domestic Financial
Institution (iii) investments in commercial paper given the highest rating by
S&P and Moody's and maturing not more than 90 days from the date of acquisition
thereof, (iv) Investments in Phase II Construction Costs, (v) the Co-Gen
Investment (less the amount of any Investment made pursuant to clause (viii)
below), (vi) Investments in transportation and downstream processing assets
using the proceeds of the repayment of the Cogen Investment provided that the
Securities are secured by a Lien on such assets that is senior to or pari passu
with any other Lien on such assets, (vii) restructurings, swaps or other
dispositions of the Related Party Receivable; provided that (a) any such
disposition shall result in the receipt by the Company of tangible assets and
(b) the Securities shall be secured by a Lien on such assets that is senior to
or pari passu with any other Lien on such assets; and (viii) other investments
in an aggregate amount not to exceed the lesser of an amount equal to (a) the
sum of all principal repayments on the
<PAGE>
20
U.S.$15.5 million loan made by the Company in connection with the Co-Gen
Investment and (b) U.S.$15.5 million.
"Permitted Liens" means, with respect to any Person, (a) pledges or
deposits by such Person under workers' compensation laws, unemployment insurance
laws or similar legislation, or good faith deposits in connection with bids,
tenders, contracts (other than for the payment of Indebtedness) or leases to
which such Person is a party, or deposits to secure public or statutory
obligations of such Person or deposits of cash or United States government bonds
to secure surety or appeal bonds to which such Person is a party, or deposits as
security for contested taxes or import duties or for the payment of rent, in
each case Incurred in the ordinary course of business; (b) Liens imposed by law,
such as carriers', warehousemen's and mechanics' Liens, in each case for sums
not yet due or being contested in good faith by appropriate proceedings or other
Liens arising out of judgments or awards against such Person with respect to
which such Person shall then be proceeding with an appeal or other proceedings
for review; (c) Liens for property taxes not yet subject to penalties for
non-payment or which are being contested in good faith by appropriate
proceedings; (d) Liens in favor of issuers of surety bonds or letters of credit
issued pursuant to the request of and for the account of such Person in the
ordinary course of its business, provided, however, that such letters of credit
do not constitute Indebtedness; (e) minor survey exceptions, minor encumbrances,
easements or reservations of, or rights of others for, licenses, rights-of-way,
sewers, electric lines, telegraph and telephone lines and other similar
purposes, or zoning or other restrictions as to the use of real property or
Liens incidental to the conduct of the business of such Person or to the
ownership of its properties which were not Incurred in connection with
Indebtedness and which do not in the aggregate materially adversely affect the
value of said properties or materially impair their use in the operation of the
business of such Person; (f) Liens securing Indebtedness Incurred to finance the
construction, purchase or lease of, or repairs, improvements or additions to,
property of such Person; provided, however, that the Lien may not extend to any
other property owned by such Person or any of its Subsidiaries at the time the
Lien is Incurred, and the Indebtedness (other than any interest thereon) secured
by the Lien may not be Incurred more than 180 days after the later of the
acquisition, completion of construction, repair, improvement, addition or
commencement of full operation of the property subject to the Lien; (g) Liens to
secure the Securities and the Senior Notes and the Guaranty and the Senior
Guaranty and, to the extent such liens secure
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21
the Securities, Senior Notes, Guaranty and Senior Guaranty on a first priority
basis, Liens to secure the Debentures and the Company's Guarantee of the
Debentures on a second priority basis; (h) Liens securing Indebtedness permitted
under clause (b)(i) of Section 4.03 of this Indenture to the extent such Liens
(other than Liens on inventories) also secure, on an equal and ratable basis,
the Issuers' and the Company's obligations under the Securities; (i) Liens
existing on the Issue Date; (j) Liens on property or shares of Capital Stock of
another Person at the time such other Person becomes a Subsidiary of such
Person; provided, however, that such Liens are not created, incurred or assumed
in connection with, or in contemplation of, such other Person becoming such a
Subsidiary; provided further, however, that such Lien may not extend to any
other property owned by such Person or any of its Subsidiaries; (k) Liens on
property at the time such Person or any of its Subsidiaries acquires the
property, including any acquisition by means of a merger or consolidation with
or into such Person or a Subsidiary of such Person; provided, however that such
Liens are not created, incurred or assumed in connection with, or in
contemplation of, such acquisition; provided further, however, that the Liens
may not extend to any other property owned by such Person or any of its
Subsidiaries; (l) Liens securing Indebtedness or other obligations of a
Subsidiary of such Person owing to such Person or a wholly owned Subsidiary of
such Person; (m) Liens securing Hedging Obligations so long as such Hedging
Obligations relate to Indebtedness that is, and is permitted to be under this
Indenture, secured by a Lien on the same property securing such Hedging
Obligations; and (n) Liens to secure any Refinancing (or successive
Refinancings) as a whole, or in part, of any Indebtedness secured by any Lien
referred to in the foregoing clauses (f), (i), (j) and (k); provided, however
that (x) such new Lien shall be limited to all or part of the same property that
secured the original Lien (plus improvements to or on such property) and (y) the
Indebtedness secured by such Lien at such time is not increased to any amount
greater than the sum of (A) the outstanding principal amount or, if greater,
committed amount of the Indebtedness described under clauses (f), (i), (j) or
(k) at the time the original Lien became a Permitted Lien and (B) an amount
necessary to pay any fees and expenses, including premiums, related to such
refinancing, refunding, extension, renewal or replacement. For purposes of this
definition, the term "Indebtedness" shall be deemed to include interest on such
Indebtedness.
"Person" means any individual corporation, partnership, joint
venture, association, joint-stock
<PAGE>
22
Issuers, trust, unincorporated organization, government or any agency or
political subdivision hereof or any other entity.
"Phase II Completion" means the completion of the construction of
the Hot Mill, the DRI Plant and the Downstream Finishing Facilities.
"Phase II Construction Costs" mean construction costs associated
with the Hot Mill, the DRI Plant and the Downstream Finishing Facilities, in
each case certified as true and correct by the Independent Engineer.
"Phase III Construction Costs" mean construction costs incurred in
connection with the Mill after Phase II Completion.
"Post-Petition Interest" means all interest accrued or accruing
after the commencement of any Insolvency or Liquidation Proceeding (and interest
that would accrue but for the commencement of any Insolvency or Liquidation
Proceeding) in accordance with and at the contract rate (including, without
limitation, any rate applicable upon default) specified in the agreement or
instrument creating, evidencing or governing any Indebtedness, whether or not,
pursuant to applicable law or otherwise, the claim for such interest is allowed
as a claim in such Insolvency or Liquidation Proceeding.
"Preferred Stock", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
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
corporation, over shares of Capital Stock of any other class of such
corporation.
"President and/or CEO" means John W. Schultes or his successor
appointed by Management Co.
"principal" of a Security means the principal of the Security plus
the premium, if any, payable on the Security that is due or overdue or is to
become due at the relevant time.
"Private Placement Legend" means the legend set forth under such
caption in the form of Initial Security in Exhibit A hereto.
<PAGE>
23
"Profitable Operations" means the point in time at which
Consolidated Cash Flow for a consecutive six month period equals at least 200%
of Consolidated Interest Expense for such six month period, to the extent such
status has been demonstrated in a certificate of the General Manager delivered
to the Trustee and the Collateral Agent, accompanied by a certificate of the
Company's independent accountants confirming such results based on a review
conducted by such accountants.
"Project Documents" means and includes (i) the Offtake Agreements,
(ii) the SDI Agreement, (iii) the SDI License Agreement, (iv) the Management
Agreement, (v) the Shareholders Agreement, (vi) the Coal Supply Agreement, (vii)
the Iron Ore Fines Supply Agreement, (viii) the Working Capital Credit Facility,
(ix) the Agency Agreement, (x) the Employment Agreement and (xi) the Sriracha
Harbor Agreement.
"Purchase Agreement" means the agreement for the purchase of the
Securities between the Issuers, the Company, and the Initial Purchasers dated
March 2, 1998.
"Public Equity Offering" means an offering to the public for cash by
the Issuers or the Company of its common stock, or options, warrants or rights
with respect to its common stock.
"Qualifying Domestic Financial Institution" means a financial
institution in Thailand having capital and surplus in excess of
U.S.$1,000,000,000.
"Qualifying Financial Institution" means a financial institution
that (i) is domiciled in the United States, the United Kingdom, France or
Germany, (ii) is located in New York, New York and (iii) has capital and surplus
in excess of U.S.$5,000,000,000.
"Redemption Date" means any date on which the Securities are
optionally redeemed pursuant to Section 3.07.
"Refinance" means, in respect of any Indebtedness, to refinance,
extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue
other Indebtedness in exchange or replacement for, such Indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances any
Indebtedness of the Company or any Restricted Subsidiary existing on the Issue
Date or incurred in
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24
compliance with the Indenture, including Indebtedness that Refinances
Refinancing Indebtedness; provided, however, that (i) such Refinancing
Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the
Indebtedness being Refinanced, (ii) such Refinancing Indebtedness has an Average
Life at the time such Refinancing Indebtedness is Incurred that is equal to or
greater than the Average Life of the Indebtedness being Refinanced and (iii)
such Refinancing Indebtedness has an aggregate principal amount (or if Incurred
with original issue discount, an aggregate issue price) that is equal to or less
than the aggregate principal amount (or if Incurred with original issue
discount, the aggregate accreted value then outstanding or committed (plus fees
and expenses, including any premium and defeasance costs) under the Indebtedness
being Refinanced; provided, further, however, that Refinancing Indebtedness
shall not include (x) Indebtedness of a Subsidiary that Refinances Indebtedness
of the Company or (y) Indebtedness of the Company or a Restricted Subsidiary
that Refinances Indebtedness of an Unrestricted Subsidiary.
"Registered Exchange Offer" shall have the meaning set forth in the
Registration Rights Agreement.
"Registrable Machinery" means machinery that qualifies for
registration pursuant to the Machinery Registration Act (Thailand) and that may
be mortgaged to secure a debt.
"Registration Rights Agreement" means the Registration Rights
Agreement dated March 12, 1998, by and between the Initial Purchasers, the
Issuers and the Company, as such agreement may be amended, modified, or
supplemented from time to time in accordance with the terms thereof.
"Related Party Receivable" means the up to U.S.$50 million of
receivables owed to the Company by certain of its affiliates.
"Representative" means any trustee, agent or representative (if any)
for any issue of Specified Senior Indebtedness of the Company.
"Restricted Period" means the period of 40 consecutive days
beginning on and including the first day after the Issue Date.
"Restricted Subsidiary" means, initially, each Subsidiary of the
Company existing on the date of the Indenture, and any other Subsidiary
designated from time to
<PAGE>
25
time by the Board of Directors of the Company as a "Restricted Subsidiary" in
accordance with this Indenture.
"Revenue Account" means an account or accounts maintained with the
Collateral Agent and established by the Company on or prior to the Issue Date
into which shall be deposited (directly or through an intermediate account) all
sales proceeds, all insurance proceeds and all other amounts received by the
Company that are not otherwise required to be deposited in the Notes DSR Account
or the Offshore Reserve Account.
"S&P" means Standard & Poor's Rating Services, a division of
McGraw-Hill, Inc., and its successors.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired whereby the Company or a Restricted
Subsidiary transfers such property to a Person and the Company or a Restricted
Subsidiary leases it from such Person.
"SDI Agreement" means the agreement between NSM Management Company,
LLC and Steel Dynamics, Inc. dated as of the Issue Date.
"SDI License Agreement" means the agreement between the Company and
Steel Dynamics, Inc. dated as of the Issue Date.
"Securities" means, collectively, the Initial Securities and, when
and if issued as provided in the Registration Rights Agreement, the Exchange
Securities.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Documents" means all the agreements, charges, documents
and instruments governing or creating the security interests in the Collateral
for the benefit of the holders of the Securities, the Senior Notes, the
Debentures and (except in respect of (iii) and (xi) below) the Bank Credit
Facility and shall in any event include (i) Security Sharing Agreement; (ii)
Land and Building Mortgage Agreement; (iii) Pledge of Offshore Reserve Account
and the Notes DSR Account; (iv) Machinery Pledge Agreement; (v) Machinery
Mortgage Agreement; (vi) Assignment or designation as co-beneficiary of
Insurance; (vii) Conditional Assignment of Project Documents; (viii) Conditional
Assignment or Pledge of the Notes Sinking Fund Account and Revenue Account; (ix)
Conditional
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26
Assignment or Pledge of the Operating Account and Revenue Account; (x) Pledge of
Permitted Investments; (xi) Pledge of all issued and outstanding shares of each
of the Issuers; (xii) Assignment of Performance Bonds; and (xiii) any other
documents relating to the Collateral and executed in connection with the
foregoing.
"Security Sharing Agreement" means the Security Sharing Agreement
dated as of the Issue Date among the Issuers, the Company, certain Thai
financial institutions party to the Bank Credit Facility, the Trustee, the
trustees in respect of the Senior Notes and the Debentures, the Book-Entry
Depositary, the book-entry depositary for the Senior Notes and the Debentures,
and the Collateral Agent.
"Senior Guaranty" means the Guarantee of the Senior Notes by the
Company pursuant to, and as described in, the Senior Note Indenture.
"Senior Indebtedness" means, with respect to any Person, (i)
Indebtedness Incurred pursuant to the Credit Facilities, (ii) the Senior Notes
and the Securities and (iii) all indebtedness of such Person, including interest
thereon (including Post-Petition Interest), whether outstanding on the Issue
Date or thereafter Incurred, unless in the instrument creating or evidencing the
same or pursuant to which the same is outstanding it is expressly provided that
such obligations are not superior in right of payment to the Securities or the
applicable Guaranty; provided, however, that Senior Indebtedness shall not
include (1) any obligation of such Person to any Subsidiary, (2) any liability
for Federal, state, local or other taxes owed or owing by such Person, (3) any
accounts payable or other liability to trade creditors arising in the ordinary
course of business (including Guaranties thereof or instruments evidencing such
liabilities), (4) any Indebtedness of such Person (other than the Securities)
which is expressly subordinate in right of payment to any other Indebtedness of
such Person, including any Subordinated Indebtedness, (5) any obligations with
respect to any Capital Stock, or (6) any Indebtedness Incurred in violation of
the Indenture.
"Senior Notes" means the 12% Senior Mortgage Notes Due 2006 of the
Issuers.
"Senior Note Indenture" means the indenture of even date herewith
entered into in connection with the issuance of the Senior Notes, among the
Issuers, the Company and the Trustee.
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27
"Shareholders' Agreement" means the agreement dated as of the Issue
Date between Steel Dynamics, Inc., Enron Corp., McDonald & Company Securities,
Inc., Sawasdi Horrungruang and N.T.S. Steel Group (Plc.) Co., Ltd. and the
Company.
"Specified Senior Indebtedness" means, with respect to the Company
and its Restricted Subsidiaries, (i) Indebtedness of the Company or such
Restricted Subsidiaries represented by the Senior Notes and refinancings thereof
with Senior Indebtedness permitted by the Senior Note Indenture to the extent
the instrument governing such Refinancing Indebtedness states that it shall be
Specified Senior Indebtedness, and (ii) Indebtedness of the Company Incurred
pursuant to the Senior Guaranty, in the case of each clause (i) and (ii),
together with accrued and unpaid interest (including Post-Petition Interest) in
respect of such Indebtedness.
"Sriracha Harbor Agreement" means the agreement between Sriracha
Harbor Public Company Limited and the Company, relating to the use by the
Company, of the Sriracha Harbor port to be dated as of the Issue Date.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the payment of principal
of such security is due and payable, including pursuant to any mandatory
redemption provision.
"Subordinated Indebtedness" means Indebtedness of the Company, the
Issuers or a Restricted Subsidiary that is subordinated in right of payment to
the Senior Notes or, any applicable Guarantee of the Senior Notes; provided,
however, that the term "Subordinated Indebtedness" shall be deemed not to
include the Securities.
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other Interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by (i) such Person, (ii) such
Person and one or more Subsidiaries of such Person or (iii) one or more
Subsidiaries of such Person. Unless otherwise specified herein, each reference
to a Subsidiary shall refer to a Subsidiary of the Issuers and the Company.
<PAGE>
28
"Thai GAAP" means generally accepted accounting principals in
Thailand as in effect as of the date of this Indenture.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date of this Indenture; provided, however,
that, in the event the Trust Indenture Act of 1939 is amended after such date,
"TIA" means, to the extent required by any such amendments, the Trust Indenture
Act of 1939 as so amended.
"Transfer Restricted Securities" means Securities that bear or are
required to bear the Private Placement Legend.
"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor.
"Trust Officer" means any officer or assistant officer of the
Trustee assigned by the Trustee to administer this Indenture.
"Uniform Commercial Code" means the New York Uniform Commercial Code
as in effect from time to time.
"U.S. GAAP" means generally accepted accounting principles in the
United States as in effect as of the date of the Indenture. All ratios and
computations based on U.S. GAAP contained in the Indenture shall be computed in
conformity with U.S. GAAP.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company
(other than the Issuers) that at the time of determination shall be designated
an Unrestricted Subsidiary by the Board of Directors in the manner provided
below and (ii) any Subsidiary of an Unrestricted Subsidiary. The Board of
Directors may designate any Subsidiary of the Company (including any newly
acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless
such Subsidiary or any of its Subsidiaries owns any Capital Stock or
Indebtedness of, or holds any Lien on any property of,
<PAGE>
29
the Company or any other Subsidiary of the Company that is not a Subsidiary of
the Subsidiary to be so designated; provided, however, that either (A) the
Subsidiary to be so designated has total assets of $1,000 or less or (B) if such
Subsidiary has assets greater than $1,000, such designation would be permitted
in Section 4.04.
"Vendor Financing" means financing made available by vendors to
finance equipment and/or plant included in the Mill on extended pay terms.
"Wholly-Owned Restricted Subsidiary" means a Restricted Subsidiary
all the outstanding Capital Stock (other than directors' qualifying shares) of
which are owned by the Company or another Wholly-Owned Restricted Subsidiary.
"Working Capital Credit Facility" means the Credit Facility dated as
of the Issue Date between the Company and Banque Nationale de Paris, as such
agreement may be amended, supplemented, or otherwise modified in writing from
time to time (but in no event shall the definition of Working Capital Credit
Facility include any amendment, supplement or other modification increasing the
amount of borrowings available to the Company and its subsidiaries thereunder).
SECTION 1.02. Other Definitions.
Defined in
Term Section
---- -------
"Additional Amounts".................... 4.20(a)
"Affiliate Transaction" ................ 4.13
"Agent Members" ........................ 2.13(a)
"Authorized Agent" ..................... 12.11(b)
"Bankruptcy Law" ....................... 6.01
"bankruptcy provision" ................. 6.01
"Book-Entry Depositary" ................ 2.13
"Collateral"............................ 10.02
"Company Collateral".................... 10.01
"covenant defeasance option" ........... 8.01(b)
"Custodian" ............................ 6.01
"Definitive Registered Securities" ..... 4.17(a)
"Event of Default" ..................... 6.01
"IAIs" ................................. 2.01(b)
"IAI Global Security" .................. 2.01(b)
"legal defeasance option" .............. 8.01(b)
"Legal Holiday" ........................ 12.08
"Obligations ........................... 13.01
"Offer" ................................ 4.06(b)
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30
"Offer Amount" ......................... 4.06(c)
"Offer Period" ......................... 4.06(c)
"Paying Agent" ......................... 2.03
"Purchase Date" ........................ 4.06(c)
"QIB Global Security" .................. 2.01(b)
"QIBs" ................................. 2.01(b)
"Reports" .............................. 4.02
"Registrar"............................. 2.03
"Regulation S" ......................... 2.01(b)
"Regulation S Global Security" ......... 2.01(b)
"Restricted Payment" ................... 4.04
"Stage III Tender"...................... 4.07
"Successor Company" .................... 5.01
"Taxes" ................................ 4.20(a)
"U.S. Global Securities" ............... 2.01(b)
SECTION 1.03. Incorporation by Reference of Trust Indenture Act.
This Indenture is subject to the mandatory provisions of the TIA, which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"indenture securities" means the Securities.
"indenture security holder" means a Holder or a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Issuers, the Company
and any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
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 Thai GAAP or U.S. GAAP;
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31
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the plural
include the singular;
(6) unsecured Indebtedness shall not be deemed to be subordinate or
junior to Secured Indebtedness merely by virtue of its nature as unsecured
Indebtedness;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof that
would be shown on a balance sheet of the Issuers dated such date prepared
in accordance with Thai GAAP or U.S. GAAP and accretion of principal on
such security shall be deemed to be the Incurrence of Indebtedness;
(8) the principal amount of any Preferred Stock shall be (i) the
maximum liquidation value of such Preferred Stock or (ii) the maximum
mandatory redemption or mandatory repurchase price with respect to such
Preferred Stock, whichever is greater; and
(9) unless otherwise indicated, all references in this Indenture to
"$" mean United States dollars and all references to "Baht" mean Thai
Baht.
SECTION 1.05. Business Day Certificate. Within 15 days after the
Issue Date and thereafter, within 15 days prior to the end of each calendar year
while this Indenture remains in effect (with respect to the succeeding calendar
years), the Issuers shall, or shall cause the Collateral Agent to, deliver to
the Trustee an Officers' Certificate (or a written notice in the case of the
Collateral Agent) specifying the days on which banking institutions in Bangkok,
Thailand are authorized or required by law to close.
ARTICLE II
The Securities
SECTION 2.01. Form and Dating. (a) The Initial Securities and the
Trustee's certificate of authentication shall be substantially in the form of
Exhibit A, which is hereby incorporated in and expressly made a part of this
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32
Indenture, and as otherwise provided in this Article II. Any Exchange Securities
and the Trustee's certificate of authentication shall be substantially in the
form of Exhibit B, which is incorporated in and expressly made a part of this
Indenture, and as otherwise provided in this Article II. The Securities may have
notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Issuers or the Company is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Issuers). Each Security shall be dated the date of its authentication.
The terms of the Securities set forth in Exhibits A and B are part of the terms
of this Indenture. The Securities shall be issuable only in registered form
without coupons and only in denominations of $1,000 and integral multiples
thereof.
(b) Global Securities. The Initial Securities are being offered and
sold by the Issuers to the Initial Purchasers pursuant to the Purchase
Agreement.
Initial Securities offered and sold to QIBs in reliance on Rule
144A, as provided in the Purchase Agreement, shall be issued initially in the
form of a single Global Security in global form without interest coupons
substantially in the form of Exhibit A hereto, with such applicable legends as
are set forth in Exhibit A hereto, except as otherwise permitted herein (the
"Rule 144A Global Security"). On the Issue Date a similar Global Security, (the
"IAI Global Security" and, together with the Rule 144A Global Security, the
"U.S. Global Securities") in global form shall also be issued to accommodate
offers and sales of Securities to IAIs. The U.S. Global Securities shall be
deposited initially with the Book-Entry Depositary pursuant to the terms of the
Depositary Agreement, duly executed by the Issuers and authenticated by the
Trustee as hereinafter provided. The aggregate principal amount of each U.S.
Global Security may from time to time be increased or decreased by adjustments
made by annotation or endorsement thereon by the Trustee on behalf of the
Issuers (or by the issue of a further U.S. Global Security of the same type), in
connection with a corresponding decrease or increase in the aggregate principal
amount of the other U.S. Global Security or the Regulation S Global Security or
in consequence of the issue of Definitive Securities or additional U.S.
Securities, as hereinafter provided. The U.S. Global Securities and all other
Initial Securities evidencing the debt, or any portion of the debt, initially
evidenced by such U.S. Global Securities, other than Securities transferred or
exchanged upon certification as
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33
provided in Section 2.14(a)(i)(1), (2) or (6), shall collectively be referred to
herein as the "U.S. Securities".
Initial Securities offered and sold in reliance on Regulation S as
provided in the Purchase Agreement, shall be issued initially in the form of a
single Global Security in global form without interest coupons substantially in
the form of Exhibit A hereto, with such applicable legends as are set forth in
Exhibit A hereto, except as otherwise permitted herein, which shall be deposited
initially with the Book-Entry Depositary pursuant to the terms of the Depositary
Agreement, duly executed by the Issuers and authenticated by the Trustee as
hereinafter provided. Such Global Security shall be referred to herein as the
"Regulation S Global Security". The aggregate principal amount of the Regulation
S Global Security may from time to time be increased or decreased by adjustments
made by annotation or endorsement thereon by the Trustee on behalf of the
Issuers (or by the issue of a further Regulation S Global Security), in
connection with a corresponding decrease or increase in the aggregate principal
amount of a U.S. Global Security or in consequence of the issue of Definitive
Securities or additional Regulation S Securities, as hereinafter provided. The
Regulation S Global Security and all other Initial Securities that are not U.S.
Global Securities shall collectively be referred to herein as the "Regulation S
Securities".
SECTION 2.02. Execution and Authentication. One or more Officers
shall sign the Securities for the Issuers by manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall be
valid nevertheless.
A Security shall not be valid until an authorized officer of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate and make available for delivery (1)
Initial Securities for original issue in an aggregate principal amount at
maturity of $203,500,000, and (2) Exchange Securities for issue only in a
Registered Exchange Offer, pursuant to the Exchange and Registration Rights
Agreement for Initial Securities for a like principal amount of Initial
Securities exchanged pursuant thereto, in
<PAGE>
34
each case upon a written order of the Issuers signed by one Officer thereof.
Such order shall specify the amount of the Securities to be authenticated, the
date on which the original issue of Securities is to be authenticated, whether
the Securities are to be Initial Securities or Exchange Securities, whether the
Securities shall bear the Private Placement Legend, or such other information as
the Trustee may reasonably request. The aggregate principal amount at maturity
of Securities outstanding at any time may not exceed $203,500,000 except as
provided in Section 2.07.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Issuers to authenticate the Securities. Any such appointment
shall be evidenced by an instrument signed by an authorized officer of the
Trustee, a copy of which shall be furnished to the Issuers, and the Trustee
shall notify the Holders of the name and address of any agent not a party to
this Indenture. Unless limited by the terms 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 any
Registrar, Paying Agent or agent for service of notices and demands.
SECTION 2.03. Registrar and Paying Agent. The Issuers shall maintain
an office or agency where Securities may be presented for registration of
transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange. The
Issuers may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes any additional paying agent.
The Issuers shall enter into an appropriate agency agreement with
any Registrar, Paying Agent or co-registrar not a party to this Indenture, which
shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Issuers shall notify
the Trustee of the name and address of any such agent. The Issuers may remove
any Paying Agent, Registrar or co-registrar without prior notice to any Holder.
If the Issuers fail to maintain a Registrar or Paying Agent, the Trustee shall
act as such and shall be entitled to appropriate compensation therefor pursuant
to Section 7.07.
<PAGE>
35
The Issuers initially appoint the Trustee as Registrar and Paying
Agent in connection with the Securities.
The Issuers initially appoint The Depository Trust Company to act as
Depositary with respect to the Global Securities.
The Issuers may remove any Registrar or Paying Agent upon written
notice to such Registrar or Paying Agent and to the Trustee; provided, however,
that no such removal shall become effective until (1) acceptance of an
appointment by a successor as evidenced by an appropriate agreement entered into
by the Issuers and such successor Registrar or Paying Agent, as the case may be,
and delivered to the Trustee or (2) notification to the Trustee that the Trustee
shall serve as Registrar or Paying Agent until the appointment of a successor in
accordance with clause (1) above and shall otherwise comply with TIA ss.312(a).
The Registrar or Paying Agent may resign at any time upon written notice.
The Paying Agent shall comply with all withholding tax, information
reporting and backup withholding tax requirements under the United States
Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury
Regulations issued thereunder in respect of any payment on, or in respect of,
the Securities (including, without limitation, furnishing to the Holders and
collecting Internal Revenue Service ("IRS") Forms 1001, 4224, W-8 or W-9 (or any
successor forms), as the case may be, and filing IRS Forms 1042 and 1042-S with
respect thereto). As promptly as possible after the payment of any withholding
tax, the Paying Agent shall deliver to each Holder appropriate documentation
showing the payment thereof, together with such additional documentary evidence
as such Holders may reasonably request from time to time.
SECTION 2.04. Paying Agent To Hold Money in Trust. Prior to 10:00
A.M., New York City time, on each due date of the principal, interest and
Additional Amounts, if any, on any Security, the Issuers shall deposit with the
Paying Agent a sum sufficient to pay such principal, interest and Additional
Amounts, if any, then so becoming due. The Issuers shall require each Paying
Agent (other than the Trustee) to agree in writing that the Paying Agent shall
hold in trust for the benefit of Securityholders or the Trustee all money held
by the Paying Agent for the payment of principal of or interest on the
Securities and shall notify the Trustee of any default by the Issuers in
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36
making any such payment. The Issuers 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 shall
have no further liability for the money delivered to the Trustee.
Any money deposited with any Paying Agent in trust for the payment
of principal, interest or Additional Amounts, if any, on any Security and
remaining unclaimed for two years after such principal and interest or
Additional Amounts, if any, has become due and payable shall be paid to the
relevant Issuer at its request; and the Securityholders shall thereafter, as
unsecured general creditors, look only to the Issuers for payment thereof, and
all liability of the Paying Agent with respect to such money shall thereupon
cease.
SECTION 2.05. Securityholder 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 Securityholders and shall otherwise comply with
TIA ss.312(a). If the Trustee is not the Registrar, the Issuers shall furnish,
or cause the Registrar to furnish, to the Trustee, in writing at least five
Business Days before each interest payment 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 of Securityholders.
SECTION 2.06. Transfer and Exchange. The Securities shall be issued
in registered form and the transfer of the Securities shall be registerable only
upon the surrender of a Security for registration of transfer. When a Security
is presented to the Registrar or a co-registrar with a request to register a
transfer, the Registrar shall register the transfer as requested if its
requirements therefor are met. When Securities are presented to the Registrar or
a co-registrar with a request to exchange them for an equal principal amount of
Securities of other denominations, the Registrar shall make the exchange as
requested if its requirements therefor are met. To permit registration of
transfers and exchanges, the Issuers shall execute and the Trustee shall
authenticate Securities at the Registrar's or co-registrar's request. The
Issuers may require payment by the Holder of a sum sufficient to pay all taxes,
assessments or other governmental charges in connection with any transfer or
exchange pursuant to this Section. The Issuers shall not be required to make and
the Registrar need not register
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37
transfers or exchanges of Securities selected for redemption (except, in the
case of Securities to be redeemed in part, the portion thereof not to be
redeemed) or any Securities for a period of 15 days before a selection of
Securities to be redeemed.
Prior to the due presentation for registration of transfer of any
Security, the Issuers, the Company, the Trustee, the Paying Agent, the Registrar
or any co-registrar may deem and treat the Person in whose name a Security is
registered as the absolute owner of such Security for the purpose of receiving
payment of principal of and, subject to the record date provisions of this
Indenture, interest, if any, on such Security and for all other purposes
whatsoever, whether or not such Security is overdue, and none of the Issuers,
the Company, the Trustee, the Paying Agent, the Registrar or any co-registrar
shall be affected by notice to the contrary.
The Company may require payment of a sum sufficient to pay all
taxes, assessments or other governmental charges in connection with any transfer
or exchange pursuant to Section 2.06 (other than in respect of the Exchange
Offer, except as otherwise provided in the Registration Rights Agreement).
All Securities issued upon any registration of transfer or exchange
pursuant to this Section 2.06 will evidence the same debt and will be entitled
to the same benefits under this Indenture as the Securities surrendered upon
such registration of transfer or exchange.
SECTION 2.07. Replacement Securities. If a mutilated Security is
surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Issuers shall issue
and the Trustee shall authenticate a replacement Security if the Trustee's
requirements therefor are met, such that the Holder (i) provides evidence to the
satisfaction of the Issuers or the Trustee within a reasonable time after such
Holder has notice of such loss, destruction or wrongful taking and the Registrar
does not register a transfer prior to receiving such notification, (ii) makes
such a request to the Issuers or the Trustee prior to the Security being
acquired by a bona fide purchaser and (iii) satisfies any other reasonable
requirements of the Trustee. If required by the Trustee or the Issuers, such
Holder shall furnish an indemnity bond sufficient in the judgment of the Trustee
to protect the Issuers, the Trustee, the Paying Agent, the Registrar and any
co-registrar from any loss that any of
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38
them may suffer if a Security is replaced. The Issuers and the Trustee may
charge the Holder for their expenses in replacing a Security. In the event any
such mutilated, lost, destroyed or wrongfully taken Security has become or is
about to become due and payable, the Issuers in their discretion may pay such
Security instead of issuing a new Security in replacement thereof.
Every replacement Security is an additional obligation of the
Issuers.
The provisions of this Section 2.07 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, lost, destroyed or wrongfully taken
Securities.
SECTION 2.08. Outstanding Securities. Securities outstanding at any
time are all Securities authenticated by the Trustee except for those canceled
by it, those delivered to it for cancelation and those described in this Section
as not outstanding. A Security does not cease to be outstanding because the
Issuers or an Affiliate of the Issuers holds the Security.
If a Security is replaced pursuant to Section 2.07, such replaced
Security ceases to be outstanding unless the Trustee and the Issuers receive
proof satisfactory to them that such replaced Security is held by a bona fide
purchaser.
If the Paying Agent segregates and holds in trust, in accordance
with this Indenture, on a redemption date or maturity date money sufficient to
pay all principal and interest payable on that date with respect to the
Securities (or portions thereof) to be redeemed or maturing, as the case may be,
and the Paying Agent is not prohibited from paying such money to the
Securityholders on that date pursuant to the terms of this Indenture, then on
and after the date such Securities (or portions thereof) cease to be outstanding
and interest on them ceases to accrue.
In determining whether the Holders of the required principal amount
of Securities have concurred in any direction, waiver or consent, Securities
owned by the Issuers or any of their Affiliates shall be disregarded, except
that, for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Securities which a Trust
Officer of the Trustee knows or has reason to know are so owned shall be
disregarded.
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39
SECTION 2.09. Temporary Securities. Until Definitive Securities are
ready for delivery, the Issuers 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 Issuers consider
appropriate for temporary Securities. Without unreasonable delay, the Issuers
shall prepare and the Trustee shall authenticate Definitive Securities and
deliver them in exchange for temporary Securities at the office or agency of the
Issuers, without charge to the Holder.
SECTION 2.10. Cancelation. The Issuers at any time may deliver
Securities to the Trustee for cancelation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to the Registrar or
Paying Agent for registration of transfer, exchange, payment or cancelation. The
Trustee and no one else shall cancel all Securities surrendered for registration
of transfer, exchange, payment or cancelation and shall dispose of canceled
Securities in accordance with its customary procedures unless otherwise directed
by written direction of an Officer of the Issuers. The Issuers may not issue new
Securities to replace Securities it has redeemed, paid or delivered to the
Trustee for cancelation. The Trustee shall not authenticate Securities in place
of canceled Securities other than pursuant to the terms of this Indenture.
SECTION 2.11. Defaulted Interest. If the Issuers default in a
payment of interest on the Securities, the Issuers shall pay the defaulted
interest (plus interest on such defaulted interest to the extent lawful) in any
lawful manner. The Issuers shall pay the defaulted interest to, in the case of
Definitive Securities, the Persons who are Securityholders or, in the case of a
Global Security, to the Holder thereof on a subsequent special record date. The
Issuers shall fix or cause to be fixed any such special record date and payment
date to the reasonable satisfaction of the Trustee and shall promptly mail or
cause to be mailed to each Securityholder a notice that states the special
record date, the payment date and the amount of defaulted interest to be paid.
The Issuers may make payment of any defaulted interest in any other
lawful manner not inconsistent with the requirements (if applicable) of any
securities exchange on which the Securities may be listed, and upon such notice
as may be required by such exchange, if, after notice given by the Issuers to
the Trustee of the proposed payment
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40
pursuant to this paragraph, such manner of payment shall be deemed practicable
by the Trustee.
SECTION 2.12. CUSIP Numbers. The Issuers in issuing the Securities
may use "CUSIP" numbers (if then generally in use) and, if so, the Trustee shall
use "CUSIP" numbers in notices of redemption or exchange as a convenience to
Holders; provided, however, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption or exchange and
that reliance may be placed only on the other identification numbers printed on
the Securities, and any such redemption shall not be affected by any defect in
or omission of such numbers. The Issuers will promptly notify the Trustee of any
change in the CUSIP numbers.
SECTION 2.13. Book-Entry Provisions for Global Securities. Each
Global Security initially shall be registered in the name of The Chase Manhattan
Bank as Book-Entry Depositary ("Book-Entry Depositary") pursuant to the terms of
the Note Depositary Agreement. The Book-Entry Depositary will issue one or more
certificateless depositary interests to the Depositary. Upon confirmation by the
Depositary that the Book-Entry Depositary has custody of the Global Security and
upon acceptance by the Depositary of the certificateless depositary interest
pursuant to the applicable letter of representations, the Depositary will record
a beneficial interest in such Global Security. Each Global Security shall be
delivered to the Book-Entry Depositary. Beneficial interests in the Global
Securities may be held indirectly through members of or participants in ("Agent
Members") the Depositary (including Cedel and Euroclear in the case of the
Regulation S Global Security).
Agent Members shall have no rights under this Indenture with respect
to any Global Security held on their behalf by the Depositary, or the Book-Entry
Depositary, or under such Global Security, and the Book-Entry Depositary may be
treated by the Issuers, the Company, the Trustee and any agent of the Issuers,
the Company or the Trustee as the absolute owner of such Global Security for all
purposes whatsoever, except as otherwise provided herein. Notwithstanding the
foregoing, nothing herein shall prevent the Issuers, the Company, the Trustee or
any agent of the Issuers, the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Book-Entry
Depositary or shall impair, as between the Depositary and its Agent Members, the
operation
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41
of customary practices governing the exercise of the rights of a Holder of any
Security.
(b) Transfers of a non-certificated depositary interest in a Global
Security shall be limited to transfers of such non-certificated depositary
interest in a Global Security in whole, but not in part, to the Depositary, its
successors or their respective nominees. Interests of beneficial owners in a
Global Security may be transferred in accordance with the rules and procedures
of the Depositary (and Agent Member, if applicable) and the provisions of
Sections 2.06 and 2.14. Definitive Securities shall be transferred to all
beneficial owners in exchange for their beneficial interests in a Global
Security if (i) the Depositary notifies the Issuers that it is unwilling or
unable to continue as Depositary for such Global Security or the Depositary
ceases to be a clearing agency registered under the Exchange Act, at a time when
the Depositary is required to be so registered in order to act as Depositary,
and in each case a successor depositary is not appointed by the Issuers within
90 days of such notice, or (ii) Book-Entry Depositary notifies the Issuers that
it is unwilling or unable to continue as Book-Entry Depositary and a successor
book-entry depositary is not appointed by the Issuers within 90 days of such
notice or (iii) an Event of Default has occurred and is continuing and the
Registrar has received a request from the Depositary or the Trustee to permit
such transfers.
(c) Any Initial Securities which are presented to the Registrar for
exchange pursuant to the Exchange Offer shall be exchanged for Exchange
Securities of equal principal amount upon surrender to the Registrar of the
Initial Securities to be exchanged; provided, however, that the Initial
Securities so surrendered for exchange shall be duly endorsed and accompanied by
a letter of transmittal or written instrument of transfer in form satisfactory
to the Issuers, the Trustee and the Registrar duly executed by the Holder
thereof or his attorney who shall be duly authorized in writing to execute such
document. Whenever any Initial Securities are so surrendered for exchange, the
Issuers shall execute, and the Trustee shall authenticate and deliver to the
Holder the same aggregate principal amount of Exchange Securities as those
Initial Securities that have been surrendered.
(d) The registered holder of a Global Security may grant proxies and
otherwise authorize any Person, including Agent Members and Persons that may
hold interests
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42
through Agent Members, to take any action which a Holder is entitled to take
under this Indenture or the Securities. Whenever all of a Global Security is
exchanged for one or more Definitive Securities, it shall be surrendered by the
Holder thereof to the Trustee for cancellation. Whenever a part of a Global
Security is exchanged for one or more Definitive Securities the Global Security
shall be surrendered by the Holder thereof to the Trustee who shall cause an
adjustment to be made to Schedule A of such Global Security such that the
principal amount of such Global Security will be equal to the portion of such
Global Security not exchanged and shall thereafter return such Global Security
to such Holder. All Definitive Securities issued in exchange for a Global
Security or any portion thereof shall be registered in such names as the
Depositary, after conferring with the Registrar, shall instruct the Trustee.
Every Security authenticated and delivered in exchange for or in lieu of a
Global Security, or any portion thereof, pursuant to Section 2.14(a), 2.14(b) or
otherwise, shall be authenticated and delivered in the form of, and shall be, a
Global Security. A Global Security may not be exchanged for a Definitive
Security other than as provided in Section 2.13(b).
(e) Holders of Initial Securities (or holders of interests therein)
and prospective purchasers designated by such Holders (or holders of interests
therein) will have the right to obtain from the Issuers or the Company upon
request by such Holders (or holders of interests therein) or prospective
purchasers, during any period in which the Issuers or the Company is not subject
to Section 13 or 15(d) of the Exchange Act, or is exempt from reporting pursuant
to 12g3-2(b) under the Exchange Act, the information required by paragraph
d(4)(i) of Rule 144A in connection with any transfer or proposed transfer of
such Securities.
SECTION 2.14. Special Transfer Provisions. (a) Provisions Applicable
Solely to Initial Securities. The following procedures and restrictions shall
not apply with respect to Initial Securities transferred or exchanged for the
account of a Person who is not an Affiliate of the Issuers at the time of the
transfer or exchange and has not been an Affiliate during the preceding three
months, provided a period of at least two years has elapsed since the later of
the date the Initial Securities were acquired from the Issuers or from an
Affiliate of the Issuers.
(i) Notwithstanding any other provisions of this Indenture or the
Securities, transfers and exchanges of interests in an Initial Global Security
of the kinds
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43
described in clauses (1) through (5) below and exchanges of interests in Initial
Global Securities or of other Initial Securities as described in clauses (6)
through (9) below, shall be made only in accordance with this Section 2.14(a),
and all transfers of an interest in the Regulation S Global Security shall
comply with clause (10) below.
(1) Transfers of U.S. Global Security to Regulation S Global
Security During the Restricted Period. If the holder of a beneficial interest in
a U.S. Global Security wishes at any time during the Restricted Period to
transfer such interest to a Person who wishes to take delivery thereof in the
form of a beneficial interest in the Regulation S Global Security, such transfer
may be effected, subject to the rules and procedures of the Depositary, the
Euroclear Operator and Cedel, to the extent applicable (the "Applicable
Procedures"), only in accordance with the provisions of this Section
2.14(a)(i)(1). Upon receipt by the Book-Entry Depositary of a certificate in
substantially the form set forth in Exhibit C given by the transferor, the
Book-Entry Depositary shall present the Initial Global Securities to the Trustee
on behalf of the Issuers to reduce the principal amount of the U.S. Global
Security and to increase the principal amount of the Regulation S Global
Security, by the principal amount of the beneficial interest in the U.S. Global
Security to be so transferred, by annotation thereon.
(2) Transfers of U.S. Global Security to Regulation S Global
Security After the Expiration of the Restricted Period. If the holder of a
beneficial interest in a U.S. Global Security wishes at any time after the
expiration of the Restricted Period to transfer such interest to a Person who
wishes to take delivery thereof in the form of a beneficial interest in the
Regulation S Global Security, such transfer may be effected, subject to the
Applicable Procedures, only in accordance with this Section 2.14(a)(i)(2). Upon
receipt by the Book-Entry Depositary of a certificate in substantially the form
set forth in Exhibit D given by the transferor, the Book-Entry Depositary shall
present the Initial Global Securities to the Trustee on behalf of the Issuers to
reduce the principal amount of the U.S. Global Security, and to increase the
principal amount of the Regulation S Global Security, by the principal amount of
the beneficial interest in the U.S. Global Security to be so transferred, by
annotation thereon.
(3) Transfers of Regulation S Global Security to U.S. Global
Security. If the holder of a beneficial interest in the Regulation S Global
Security wishes at any
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44
time to transfer such interest to a Person who wishes to take delivery thereof
in the form of a beneficial interest in a U.S. Global Security, such transfer
may be effected, subject to the Applicable Procedures, only in accordance with
this Section 2.14(a)(i)(3). Upon compliance with the Applicable Procedures, the
Book-Entry Depositary shall present the Initial Global Securities to the Trustee
on behalf of the Issuers to reduce the principal amount of the Regulation S
Global Security, and to increase the principal amount of the applicable U.S.
Global Security, by the principal amount of the beneficial interest in the
Regulation S Global Security to be so transferred, by annotation thereon;
provided, however, that, prior to the expiration of the Restricted Period, such
transfer shall be made only if, in addition, the Book-Entry Depositary has
received a certificate in substantially the form set forth in Exhibit E given by
the transferor (and, in the case of a transfer to the IAI Global Security, a
signed letter from the transferee in substantially the form set forth in Annex A
thereto).
(4) Transfers of IAI Global Security to Rule 144A Global Security.
If the holder of a beneficial interest in the IAI Global Security (whether
during the Restricted Period or after the expiration of the Restricted Period)
wishes to transfer such interest to a Person who wishes to take delivery thereof
in the form of a beneficial interest in the Rule 144A Global Security, such
transfer may be effected, subject to the Applicable Procedures, only in
accordance with this Section 2.14(a)(i)(4). Upon receipt by the Book-Entry
Depositary of a certificate in substantially the form set forth in Exhibit F
given by the transferor, the Book-Entry Depositary shall present the Initial
Global Securities to the Trustee on behalf of the Issuers to reduce the
principal amount of the IAI Global Security from which such transfer is to be
made, and to increase the principal amount of the Rule 144A Global Security, by
the principal amount of the beneficial interest in the IAI Global Security to be
so transferred, by annotation thereon.
(5) Transfers of Rule 144A Global Security to IAI Global Security.
If the holder of a beneficial interest in the Rule 144A Global Security (whether
during the Restricted Period or after the expiration of the Restricted Period)
wishes to transfer such interest to a Person who wishes to take delivery thereof
in the form of a beneficial interest in the IAI Global Security, such transfer
may be effected, subject to the Applicable Procedures, only in accordance with
this Section 2.14(a)(i)(5). Upon receipt by the Book-Entry Depositary of a
certificate in substantially the
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form set forth in Exhibit G given by the transferor and a signed letter from the
transferee substantially in the form set forth in Annex A thereto, the
Book-Entry Depositary shall present the Initial Global Securities to the Trustee
on behalf of the Issuers to reduce the principal amount of the Rule 144A Global
Security from which such transfer is to be made, and to increase the principal
amount of the IAI Global Security, by the principal amount of the beneficial
interest in the Rule 144A Global Security to be so transferred, by annotation
thereon.
(6) Exchanges of U.S. Global Security for Regulation S Global
Security. If the holder of a beneficial interest in a U.S. Global Security
wishes at any time to exchange such interest for a beneficial interest in the
Regulation S Global Security, such exchange may be effected, subject to the
Applicable Procedures, only in accordance with the provisions of this Section
2.14(a)(i)(6). Upon receipt by the Book-Entry Depositary of a certificate in
substantially the form set forth in Exhibit H, given by the holder of the
beneficial interest, the Book-Entry Depositary shall present the Initial Global
Securities to the Trustee on behalf of the Issuers to reduce the principal
amount of such U.S. Global Security, and to increase the principal amount of the
Regulation S Global Security, by the principal amount of the beneficial interest
in such U.S. Global Security to be so exchanged, by annotation thereon.
(7) Exchanges of Regulation S Global Security for U.S. Global
Security. If the holder of a beneficial interest in the Regulation S Global
Security wishes at any time to exchange such interest for a beneficial interest
in a U.S. Global Security, such exchange may be effected, subject to the
Applicable Procedures, only in accordance with the provisions of this Section
2.14(a)(i)(7). Upon receipt by the Book-Entry Depositary of a certificate in
substantially the form set forth in Exhibit I, given by the holder of the
beneficial interest, the Book-Entry Depositary shall present the Initial Global
Securities to the Trustee on behalf of the Issuers to reduce the principal
amount of the Regulation S Global Security, and to increase the principal amount
of the applicable U.S. Global Security, by the principal amount of the
beneficial interest in the Regulation S Global Security to be so exchanged, by
annotation thereon.
(8) Exchanges of U.S. Global Security for another U.S. Global
Security. If the holder of a beneficial interest in a U.S. Global Security
wishes at any time to exchange such interest for a beneficial interest in the
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46
other U.S. Global Security, such exchange may be effected, subject to the
Applicable Procedures, only in accordance with the provisions of this Section
2.14(a)(i)(8). Upon receipt by the Book-Entry Depositary of a certificate in
substantially the form set forth in Exhibit J given by the holder of the
beneficial interest (and including, in the case of an exchange into the IAI
Global Security, a signed letter substantially in the form set forth in Annex A
thereto), the Book-Entry Depositary shall present the Initial Global Securities
to the Trustee on behalf of the Issuers to reduce the principal amount of the
U.S. Global Security to be exchanged, and to increase the principal amount of
the other U.S. Global Security, by the principal amount of the beneficial
interest in the U.S. Global Security to be so exchanged, by annotation thereon.
(9) Other Exchanges. In the event that an Initial Global Security or
any portion thereof is exchanged for Initial Securities in definitive form
pursuant to Section 2.13(b) hereof, such Definitive Securities may in turn be
exchanged (on transfer or otherwise) for other Definitive Securities and only in
accordance with such procedures, which shall be substantially consistent with
the provisions of clauses (1) through (8) above and (10) below) (including the
certification requirements intended to ensure that transfers and exchanges of
beneficial interests in an Initial Security comply with Rule 144A or Regulation
S, as the case may be) and any Applicable Procedure as may from time to time be
adopted by the Issuers and the Registrar.
(10) Interests in Regulation S Global Security to be Held Through
the Euroclear Operator or Cedel. Until the expiration of the Restricted Period,
interests in the Regulation S Global Security may be held only through the
Euroclear Operator and Cedel; provided, however, that this clause (10) shall not
prohibit any transfer in accordance with Section 2.14(a)(i)(3).
(ii) Each Initial Security issued hereunder shall, upon issuance,
bear the legend set forth on the form of the Security attached hereto as Exhibit
A and such legend shall not be removed from such Initial Security except as
provided in the next sentence. The legend required for an Initial Security may
be removed from an Initial Security if there is delivered to the Issuers such
satisfactory evidence, which may include an opinion of independent counsel
licensed to practice law in the State of New York, as may be reasonably required
by the Issuers, that neither such legend nor the restrictions on transfer set
forth therein are required to ensure that transfers of such
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Security will not violate the registration requirements of the Securities Act.
Upon provision of such satisfactory evidence, the Trustee, at the direction of
the Issuers, shall authenticate and deliver in exchange for such Security
another Security or Securities having an equal aggregate principal amount that
does not bear such legend. If such a legend required for an Initial Security has
been removed from an Initial Security as provided above, no other Security
issued in exchange for all or any part of such Security shall bear such legend,
unless the Issuers have reasonable cause to believe that such other Security is
a "restricted security" within the meaning of Rule 144 and instructs the Trustee
to cause a legend to appear thereon.
(b) General. By its acceptance of any Security bearing the Private
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Private
Placement Legend and agrees that it shall transfer such Security only as
provided in this Indenture.
The Registrar shall retain in accordance with its customary
procedures copies of all letters, notices and other written communications
received pursuant to Section 2.14. The Issuers shall have the right to inspect
and make copies of all such letters, notices or other written communications at
any reasonable time upon the giving of reasonable written notice to the
Registrar.
SECTION 2.15. Allocation of Purchase Price. Based on the Company's
estimate of the relative fair market values of the Initial Securities and the
warrants issued in conjunction with the Initial Securities (the "Warrants"), the
Issuers and the Trustee (on behalf of the Securityholders) agree to treat for
U.S. federal income tax purposes $955.70 of each $1,000 of principal amount of
the Initial Securities as allocable to the Initial Securities (which amount the
Company will treat as the issue price of such Securities for U.S. federal income
tax purposes) and $44.30 as allocable to the Warrants.
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee. If the Issuers elect to redeem
Securities pursuant to paragraph 5 of the Securities, they shall notify the
Trustee in writing of the redemption date, the principal amount of Securities to
be
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redeemed and the paragraph of the Securities pursuant to which the redemption
will occur.
The Issuers shall give each notice to the Trustee provided for in
this Section at least 60 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate from the Issuers to the effect that such redemption will comply with
the conditions herein. Any such notice may be canceled at any time prior to
notice of such redemption being mailed to any Holder and shall thereby be void
and of no effect.
SECTION 3.02. Selection of Securities To Be Redeemed. If fewer than
all the Securities are to be redeemed, the Trustee shall select the Securities
to be redeemed by lot; provided, however, that if a partial redemption is made
with the proceeds of a Public Equity Offering pursuant to Section 3.07(b), the
Trustee shall select the Securities to be redeemed only on a pro rata basis (to
the extent practicable) or by lot, unless such method is otherwise prohibited by
applicable legal and securities exchange requirements, if any. The Trustee shall
make the selection from outstanding Securities not previously called for
redemption. The Trustee may select for redemption portions of the principal of
Securities that have denominations larger than $1,000. Securities and portions
of them the Trustee selects shall be in amounts of $1,000 or a whole multiple of
$1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption. The
Trustee shall notify the Issuers promptly (and, in any event, at least 30 days
prior to redemption) of the Securities or portions of Securities to be redeemed.
SECTION 3.03. Notice of Redemption. At least 30 days but not more
than 60 days before a date for redemption of Securities, the Issuers shall mail
a notice of redemption by first-class mail to each Holder of Securities to be
redeemed.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
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(4) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be redeemed,
the certificate numbers and principal amounts of the particular Securities
to be redeemed;
(6) that, unless the Issuers default in making such redemption
payment, interest on Securities (or portion thereof) called for redemption
ceases to accrue on and after the redemption date;
(7) the paragraph of the Securities pursuant to which the Securities
called for redemption are being redeemed;
(8) the CUSIP number, if any, printed on the Securities being
redeemed; and
(9) 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 Issuers' request, the Trustee shall give the notice of
redemption in the Issuers' name and at the Issuers' expense. In such event, the
Issuers shall provide the Trustee with the information required by this Section
at least 40 days (unless a shorter period shall be acceptable to the Trustee)
prior to the redemption date.
SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest, if any, to the redemption
date; provided that installments of interest due on an interest payment date
that is on or prior to the redemption date shall be payable to the
Securityholder of the redeemed Securities registered on the relevant record
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.
SECTION 3.05. Deposit of Redemption Price. Prior to 10:00 A.M., New
York City time, on the Business Day immediately preceding the redemption date,
the Issuers shall deposit with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Securities
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to be redeemed on the redemption date other than Securities or portions of
Securities called for redemption that have been delivered by the Issuers to the
Trustee for cancelation.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Issuers shall execute and the Trustee
shall authenticate for the Holder (at the Issuers' expense) a new Security equal
in principal amount to the unredeemed portion of the Security surrendered.
SECTION 3.07. Optional Redemption. (a) Except as set forth in the
next two paragraphs, the Securities may not be redeemed prior to February 1,
2003. On and after that date, the Issuers may redeem the Securities in whole at
any time or in part from time to time at the following redemption prices
(expressed in percentages of principal amount at maturity), plus accrued
interest to the redemption date (subject to the right of Holders of record on
the relevant record date to receive interest due on the relevant Interest
Payment Date), if redeemed during the 12-month period beginning on or after
February 1 of the years set forth below:
Redemption
Period Price
- ------ ----------
2003 ................................................... 106.1250%
2004 ................................................... 104.0417
2005 ................................................... 103.0625
2006 and thereafter .................................... 100.0000
(b) Notwithstanding the foregoing, at any time prior to February 1,
2001, the Company may redeem in the aggregate up to 35% of the original
aggregate principal amount at maturity of Securities with the net cash proceeds
of one or more Public Equity Offerings, at a redemption price (expressed as a
percentage of principal amount at maturity thereof) of 112.25% plus accrued
interest, if any, to the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
Interest Payment Date); provided, however, that after any such redemption the
aggregate principal amount at maturity of the Securities outstanding must equal
or exceed $132,000,000.
(c) The Securities may be redeemed at the option of the Issuers, in
whole but not in part, or paid in full but not in part prior to maturity at the
option of the Company, upon not less than 30 nor more than 60 days' notice
<PAGE>
51
given as provided in Section 3.03, at any time at 103% of the Accreted Value
thereof, plus accrued and unpaid interest to the date fixed for such payment if,
as a result of any change in or amendment to the laws, regulations or
governmental policy having the force of law of the Cayman Islands or Thailand
(or of any political subdivision or taxing authority thereof or therein) or any
execution of or amendment to, any treaty or treaties affecting taxation of which
the Cayman Islands or Thailand (or such political subdivision or taxing
authority) is a party, which becomes effective on or after the date of the
Indenture (i) (A) the Issuers are required, or would be required on the next
succeeding Interest Payment Date, to pay Additional Amounts in respect of
payments on the Securities in excess of the 15% withholding requirement as of
the Closing Date as a result of the imposition of Taxes imposed by the Cayman
Islands or Thailand (or any political subdivision or taxing authority of either
jurisdiction); (B) the Company is, or on the next succeeding interest payment
date would be, unable for reasons outside of its control, to procure payment by
the Issuers and, with respect to any payment due, or to become due, under the
Securities or the Guaranty, the Company is required, or would be required on the
next succeeding Interest Payment Date, to pay Additional Amounts as a result of
the imposition of Taxes by the Cayman Islands or Thailand or (C) with respect to
any payment to an Issuer to enable an Issuer to make any payments under the
Securities, the Company or NSM Cayman is, or on the next Interest Payment Date
would be, required to deduct or withhold Taxes imposed by the Cayman Islands or
Thailand (or any political subdivision or taxing authority of either
jurisdiction) and (ii) the payment of such Additional Amounts cannot be avoided
by the use of any reasonable measures available to the Issuers or the Company
that do not require undue effort or costs (including, without limitation, the
Company making payments directly to holders under the Guaranty). In addition,
the Issuers or the Company, as the case may be, will also pay to holders on the
redemption date any Additional Amounts which would otherwise be payable;
provided, however, that no such notice of redemption shall be given earlier than
90 days prior to the earliest date on which the Issuers or the Company, as the
case may be, would be obligated to pay such Additional Amounts if a payment in
respect of the Securities or a Guaranty were then due.
Prior to the publication of the notice of redemption in accordance
with the foregoing, the Issuers or the Company shall deliver to the Trustee an
Officers' Certificate stating that (x) the Issuers are or the Company is
entitled to effect such redemption based on a written
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52
opinion of counsel or written advice of a nationally recognized independent tax
counsel, such opinion or advice being reasonably acceptable to the Trustee, that
the condition referred to in either of subclauses (A) or (B) or (C) of clause
(i) of the immediately preceding paragraph is satisfied as a result of such
change, amendment or executed or amended treaty and (y) the condition described
in (ii) of the immediately preceding paragraph is satisfied. Such notice, once
delivered by the Issuers or the Company to the Trustee, will be irrevocable.
ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities. The Issuers shall promptly 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 Trustee or the Paying
Agent holds in accordance with this Indenture money sufficient to pay all
principal and interest then due and the Trustee or the Paying Agent, as the case
may be, is not prohibited from paying such money to the Securityholders on that
date pursuant to the terms of this Indenture.
The Issuers shall pay interest on overdue principal at the rate
specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 4.02. Commission Reports. The Company and the Issuers will
furnish the Trustee and provide to the holders of the Securities, within 15 days
after it files them with the Commission, copies of the reports (the "Financial
Statements") and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may by rules and
regulations prescribe) which the Company and the Issuers file with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act ("Reports"). In
the event that the Company and the Issuers are not required to file such reports
with the Commission pursuant to the Exchange Act, the Issuers will nevertheless
deliver Quarterly Reports to the holders of the Securities within 15 days after
they would have been required to file it with the Commission.
SECTION 4.03. Limitation on Indebtedness. (a) Neither the Issuers or
the Company shall Incur, nor
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53
shall the Company permit any Restricted Subsidiary to Incur, directly or
indirectly, any Indebtedness on or after the Issue Date unless on the date of
such Incurrence and after giving effect thereto the Consolidated Coverage Ratio
would be greater than 3.0:1.0.
(b) Notwithstanding the foregoing paragraph (a), the Issuers or the
Company may Incur on or after the Issue Date the following Indebtedness:
(i) Indebtedness of the Company Incurred pursuant to the Credit
Facilities;
(ii) Indebtedness represented by the Securities, the Senior Notes
and the Debentures;
(iii) Indebtedness of the Company Incurred pursuant to Vendor
Financing; provided, however, that the aggregate principal amount of all
Vendor Financing Incurred pursuant to this clause (iii) (other than any
such Indebtedness pursuant to Existing Arrangements) does not exceed
U.S.$10 million at any time outstanding;
(iv) Indebtedness of the Issuers represented by Capitalized Lease
Obligations, or purchase money obligations, in each case Incurred for the
purpose of financing all or any part of the purchase price or cost of
construction or improvement of the Mill or Refinancing Indebtedness
Incurred to refinance any such purchase price or cost of construction or
improvement, in each case (other than Refinancing Indebtedness) Incurred
no later than 90 days after the date of such acquisition or the date of
completion of such construction or improvement; provided, however, that
the principal amount of any Indebtedness Incurred pursuant to this clause
(iv) shall not exceed U.S.$10 million at any time outstanding;
(v) Indebtedness (A) in respect of performance bonds, bankers'
acceptances and surety or appeal bonds provided by the Company to its
customers in the ordinary course of its business, (B) in respect of
performance bonds or similar obligations of the Company for or in
connection with pledges, deposits or payments made or given in the
ordinary course of business in connection with or to secure statutory,
regulatory or similar obligations, including obligations under health,
safety or environmental obligations and (C) arising from guarantees to
suppliers, lessors, licensees, contractors, franchisees or customers of
<PAGE>
54
obligations (other than Indebtedness) incurred in the ordinary course of
business,
(vi) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument drawn
against insufficient funds in the ordinary course of business in an amount
not to exceed U.S.$5 million at any time; provided that such Indebtedness
is extinguished within two business days of its Incurrence;
(vii) Indebtedness of the Company under the Working Capital Credit
Facility, as such facility may be amended and/or supplemented from time to
time; provided in each case that any indebtedness under such facility as
amended or supplemented is secured only by accounts receivable of the
Company;
(viii) Indebtedness of the Company consisting of Permitted Hedging
Obligations;
(ix) Indebtedness outstanding on the Issue Date;
(x) Refinancing Indebtedness in respect of Indebtedness Incurred
pursuant to paragraph (a) or pursuant to clause (ii), (vii), or (ix) or
this clause (x); and
(xi) Indebtedness in an aggregate principal amount which, together
with all other Indebtedness of the Company, the Issuers and the Restricted
Subsidiaries outstanding on the date of Incurrence (other than
Indebtedness permitted by paragraph (a) or clauses (i) through (x) above),
does not exceed U.S.$20 million.
(c) Notwithstanding the foregoing, neither the Issuers nor the
Company may incur any Indebtedness if such Indebtedness is expressly subordinate
in right of payment to any Specified Senior Indebtedness unless such
Indebtedness is expressly subordinated in right of payment to the Securities to
at least the same extent as to such Specified Senior Indebtedness.
(d) Notwithstanding the foregoing, neither the Company nor the
Issuers shall Incur any Indebtedness pursuant to the foregoing paragraph (b) if
the proceeds thereof are used, directly or indirectly, to Refinance any
Subordinated Indebtedness unless such Indebtedness shall be subordinated to the
Securities to at least the same extent as such Subordinated Indebtedness.
<PAGE>
55
(e) For purposes of determining compliance with the foregoing
covenant, (i) in the event that an item of Indebtedness meets the criteria of
more than one of the types of Indebtedness described above, the Company, in its
sole discretion, will classify such item of Indebtedness at the time of its
Incurrence and shall only be required to include the amount and type of such
Indebtedness in one of the above clauses, and (ii) an item of Indebtedness may
be divided and classified in more than one of the types of Indebtedness
described above.
SECTION 4.04. Limitation on Restricted Payments. (a) Neither the
Issuers or the Company will, nor will the Company permit any Restricted
Subsidiary to, directly or indirectly:
(i) declare or pay any dividend or make any other distribution or
payment on or in respect of its Capital Stock (including dividends or
distributions of the Capital Stock of any Restricted Subsidiary), or make
any other payment to the direct or indirect holders (in their capacities
as such) of its Capital Stock (other than dividends or distributions
payable in shares of its Capital Stock (other than Disqualified Stock) or
in options, warrants or other rights to acquire such Capital Stock);
(ii) purchase, redeem or otherwise acquire or retire for value,
directly or indirectly, any of its Capital Stock or any Capital Stock of
any of its Affiliates (other than Capital Stock of any Wholly-Owned
Restricted Subsidiary or Capital Stock of a Person that is, or immediately
following such repurchase will become, a Wholly-Owned Restricted
Subsidiary) or options, warrants or other rights to acquire such Capital
Stock;
(iii) make any principal payment on, or repurchase, redeem, defease,
retire or otherwise acquire for value, prior to any scheduled principal
payment, sinking fund payment or maturity, any Subordinated Indebtedness;
(iv) Incur, create or assume any guarantee of Indebtedness of any
Affiliate of the Company (other than a Wholly-Owned Restricted Subsidiary
of the Company) except as permitted under Section 4.03(a);
(v) make any Investment in any Person (other than any Permitted
Investments); or
<PAGE>
56
(vi) designate any Restricted Subsidiary as an Unrestricted
Subsidiary;
(any of the payments described in paragraphs (i) through (vi) above, other than
any such action that is a Permitted Payment (as defined below), collectively,
"Restricted Payments") unless (x) with respect to payments to be made in the
period prior to December 31, 2001 the Company has achieved Profitable
Operations, and (y) at the time of and after giving effect to the proposed
Restricted Payment (the amount of any such Restricted Payment, if other than
cash, as determined by the Board of Directors, whose determination shall be
conclusive and evidenced by a Board Resolution), (1) no Default or Event of
Default shall have occurred and be continuing; (2) immediately before and
immediately after giving effect to such transaction on a pro forma basis, the
Issuers or the Company could Incur U.S.$1.00 of additional Indebtedness under
the provisions of Section 4.03(a); and (3) the aggregate amount of all such
Restricted Payments declared or made after the date of this Indenture does not
exceed the sum of:
(A) 50% of the aggregate cumulative Consolidated Net Income of
the Company and its Restricted Subsidiaries accrued during the
period (treated as a single accounting period) beginning on the
first day of the Company's fiscal quarter commencing prior to the
date of this Indenture and ending on the last day of the Company's
last fiscal quarter ending prior to the date of the Restricted
Payment (or, if such aggregate cumulative Consolidated Net Income
shall be a loss, 100% of such loss (treating a loss as a negative
number));
(B) the aggregate Net Cash Proceeds received after the date of
this Indenture by the Company from the issuance or sale (other than
to any of its Restricted Subsidiaries) of its Capital Stock (other
than Disqualified Stock) or any options, warrants or rights to
purchase such Capital Stock;
(C) the aggregate Net Cash Proceeds received after the date of
this Indenture by the Company (other than from any of its Restricted
Subsidiaries) upon the exercise of any options or warrants to
purchase Capital Stock (other than Disqualified Stock) of the
Company; and
(D) U.S.$10 million.
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57
(b) Notwithstanding the foregoing, and, in the case of clauses (i)
through (iv) below, so long as there is no Default or Event of Default
continuing, the foregoing provisions will not prohibit the following actions
(clauses (i) through (iv) being referred to as "Permitted Payments"):
(i) the payment of any dividend or distribution within 60 days after
the date of declaration thereof, if at such date of declaration such
payment would be permitted by the provisions of paragraph (a) of this
section and such payment will be deemed to have been paid on (and included
in the calculation of the amount of Restricted Payments) such date of
declaration for purposes of the calculation required by paragraph (a) of
this section;
(ii) the repurchase, redemption or other acquisition or retirement
of any shares of Capital Stock of the Company in exchange for (including
any such exchange pursuant to the exercise of a conversion right or
privilege in connection with which cash is paid in lieu of the issuance of
fractional shares or scrip), or out of the Net Cash Proceeds of a
substantially concurrent issue and sale for cash (other than to a
Restricted Subsidiary) of other Capital Stock (other than Disqualified
Stock) of the Company; provided that the Net Cash Proceeds from the
issuance of such shares of Capital Stock (other than Disqualified Stock)
are excluded from clauses (3)(B) and (3)(C) of paragraph (a) of this
section, and such repurchases, redemptions or acquisitions shall be
excluded from the calculation of the amount of Restricted Payments;
(iii) any repurchase, redemption, defeasance, retirement or
acquisition for value or payment of principal of any Subordinated
Indebtedness in exchange for, or out of the net proceeds of, a
substantially concurrent issuance and sale for cash (other than to any
Restricted Subsidiary of the Company) of any Capital Stock (other than
Disqualified Stock) of the Company; provided that the Net Cash Proceeds
from the issuance of such Capital Stock (other than Disqualified Stock)
are excluded from clauses (3)(B) and (3)(C) of paragraph (a) of this
section, and such repurchases, redemptions, defeasances, retirements or
acquisitions shall be excluded from the calculation of the amount of
Restricted Payments;
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58
(iv) the repurchase, redemption, defeasance, retirement,
refinancing, acquisition for value or payment of principal of any
Subordinated Indebtedness (other than Disqualified Stock) or Pari Passu
Indebtedness (a "refinancing") through the issuance of new Subordinated
Indebtedness of the Company; provided that any such new Subordinated
Indebtedness (1) shall be in a principal amount that does not exceed the
principal amount so refinanced (or, if the Subordinated Indebtedness so
refinanced provides for an amount less than the principal amount thereof
to be due and payable upon a declaration or acceleration thereof, then
such lesser amount as of the date of determination), plus the amount of
any premium required to be paid in connection with such refinancing
pursuant to the terms of such refinanced Indebtedness and any reasonable
out-of-pocket expenses of the Company incurred in connection with such
refinancing; (2) has an Average Life to Stated Maturity greater than the
remaining Average Life to Stated Maturity of the Securities; (3) has a
Stated Maturity for its final scheduled principal payment later than the
Stated Maturity for the final scheduled principal payment of the
Securities and (4) is expressly subordinated in right of payment to the
Securities at least to the same extent as the Indebtedness to be
refinanced; and
(v) repurchases of Debentures pursuant to a Stage III Tender so long
as the Issuers and the Company also offer to purchase all outstanding
Securities, and purchase all Securities tendered, in such Stage III
Tender.
For purposes of this Section, if the Board of Directors designates a
Restricted Subsidiary as an Unrestricted Subsidiary, or a Restricted Subsidiary
is deemed to be so designated, a "Restricted Payment" shall be deemed to have
been made in an amount equal to the fair value of the Investment of the Company
and its other Restricted Subsidiaries in such Restricted Subsidiary as
determined by the Board of Directors with the concurrence of a majority of the
Independent Directors (there being at least one Independent Director), whose
good-faith determination shall be conclusive. If a particular Restricted Payment
involves a noncash payment, including a distribution of assets, then such
Restricted Payment shall be deemed to be in an amount equal to the fair market
value of the noncash portion of such Restricted Payment as determined by the
Board of Directors, whose good-faith determination shall be conclusive.
<PAGE>
59
SECTION 4.05. Limitation on Liens. Neither the Issuers nor the
Company will affirm or permit to exist any Lien of any kind securing any Pari
Passu Indebtedness or Subordinated Indebtedness of the Issuers or the Company
(including any assumption, guarantee or other liability with respect thereto by
any Subsidiary) upon any property or assets (including any intercompany notes)
of the Issuers or the Company or any Subsidiary owned on the date of the
Indentures or acquired after the date of the Indentures, or any income or
profits therefrom, other than Permitted Liens.
SECTION 4.06. Limitation on Sales of Assets and Subsidiary Stock.
(a) The Company shall not, and shall not permit either of the Issuers or any
Restricted Subsidiary to, make any Asset Disposition unless (i) the Company, the
Issuers or such Restricted Subsidiary receives consideration at the time of such
Asset Disposition at least equal to the fair market value, as determined in good
faith by the Company's Board of Directors (including as to the value of all
non-cash consideration), of the shares and assets subject to such Asset
Disposition, (ii) at least 80% of the consideration thereof received by the
Company, the Issuers or such Restricted Subsidiary is in the form of cash or
Cash Equivalents, (iii) an amount equal to 100% of the Net Available Cash from
such Asset Disposition is applied: (A) if at the time of the Asset Disposition
the Company has not yet achieved Profitable Operations, pro rata to a mandatory
offer by the Issuers and the Company to purchase Securities at 101% of the
Accreted Value thereof on the date of purchase, plus accrued and unpaid interest
and Additional Amounts, if any, thereon, and the repayment of principal and
accrued and unpaid interest, if any, under the Bank Credit Facility and (B) if
at the time of the Asset Disposition the Company has achieved Profitable
Operations, at the Company's option either to (1) the investment in or
acquisition of Additional Assets within 365 days from the later of such Asset
Disposition and the receipt of such Net Available Cash or (2) pro rata to a
mandatory offer by the Issuers and the Company to purchase Securities at 101% of
the Accreted Value thereof on the date of purchase plus accrued and unpaid
interest and Additional Amounts, if any, thereon, and the repayment of principal
and accrued and unpaid interest, if any, under the Bank Credit Facility;
provided that the Issuers and the Company shall be required to purchase
Indebtedness pursuant to clause (2) to the extent of the balance of such Net
Available Cash after application in accordance with clause (1). The Issuers
shall not be required to make an offer to purchase Securities pursuant to this
covenant if the Net Available Cash available therefor (after application of the
proceeds as provided in clause (A)) is less than U.S.$10 million for any
particular
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60
Asset Disposition (which lesser amounts shall be carried forward for purposes of
determining whether an offer is required with respect to the Net Available Cash
from any subsequent Asset Disposition). Notwithstanding the foregoing
provisions, Net Available Cash shall not be required to be applied in accordance
herewith to the extent that the aggregate Net Available Cash from all Asset
Dispositions which are not applied in accordance with this covenant at any time
does not exceed U.S.$10 million.
Notwithstanding the foregoing, to the extent the Senior Note
Indenture limits the repurchase of Securities, the Issuers shall not be required
to make an offer hereunder for the repurchase of Securities.
For the purposes of this Section 4.06, the following will be deemed
to be cash: (x) the assumption by transferee of Senior Indebtedness of the
Company, the Issuers or any Restricted Subsidiary and the release of the
Company, the Issuers or any Restricted Subsidiary from all liability on such
Senior Indebtedness in connection with such Asset Disposition and (y) securities
received by the Company, the Issuers or any Restricted Subsidiary from the
transferee that are promptly (and in any event within 60 days) converted by the
Company, the Issuers or such Restricted Subsidiary into cash.
(b) In the event of an Asset Disposition that requires the purchase
of Securities pursuant to Section 4.06(a)(iii)(A) or (B)(2), the Issuers shall
be required to purchase Securities tendered by the Holders pursuant to an offer
by the Company for the Securities (the "Offer") at a purchase price of 101% of
the Accreted Value thereof on the date of purchase, plus accrued and unpaid
interest and Additional Amounts, if any, thereon to the Purchase Date (as
defined below) in accordance with the procedures (including prorationing in the
event of oversubscription) set forth in Section 4.06(c).
(c) (1) Promptly, and in any event within 10 days after the Issuers
become obligated to make an Offer, the Issuers shall be obligated to deliver to
the Trustee and send, by first-class mail to each Holder, a written notice
stating that the Holder may elect to have his Securities purchased by the
Issuers either in whole or in part (subject to prorationing as hereinafter
described in the event the Offer is oversubscribed) in integral multiples of
$1,000 of principal amount, at the applicable purchase price. The notice shall
specify a purchase date not less than 30 days nor more than 60 days after the
date of such notice (the "Purchase Date") and shall contain such information
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61
concerning the business of the Issuers which the Issuers in good faith believes
will enable such Holders to make an informed decision (which at a minimum shall
include (i) the most recently filed annual report (including audited
consolidated financial statements) of the Issuers and any other information
provided by the Issuers to its public shareholders generally on an annual basis,
the most recently filed Reports, and any current reports of the Issuers filed
subsequent to such Report, other than current reports describing Asset
Dispositions otherwise described in the offering materials (or corresponding
successor reports), (ii) a description of material developments in the Issuers'
business subsequent to the date of the latest of such reports, and (iii) if
material, appropriate pro forma financial information) and all instructions and
materials necessary to tender Securities pursuant to the Offer, together with
the address referred to in clause (3).
(2) Not later than the date upon which written notice of an Offer is
delivered to the Trustee as provided above, the Issuers shall deliver to the
Trustee an Officers' Certificate as to (i) the amount of the Offer (the "Offer
Amount"), (ii) the allocation of the Net Available Cash from the Asset
Dispositions pursuant to which such Offer is being made and (iii) the compliance
of such allocation with the provisions of Section 4.06(a). On such date, the
Issuers shall also irrevocably deposit with the Trustee or with the Paying Agent
an amount equal to the Offer Amount to be invested at the written direction of
the Issuers in Cash Equivalents and to be held for payment in accordance with
the provisions of this Section. Upon the expiration of the period for which the
Offer remains open (the "Offer Period"), the Issuers shall deliver to the
Trustee for cancelation the Securities or portions thereof that have been
properly tendered to and are to be accepted by the Issuers. The Trustee (or the
Paying Agent, if not the Trustee) shall, on the Purchase Date, mail or deliver
payment to each tendering Holder in the amount of the purchase price. In the
event that the aggregate purchase price of the Securities delivered by the
Issuers to the Trustee is less than the Offer Amount, the Trustee shall deliver
the excess to the Issuers promptly after the expiration of the Offer Period for
application in accordance with this Section.
(3) Holders electing to have a Security purchased shall be required
to surrender the Security, with an appropriate form duly completed, to the
Issuers at the address specified in the notice at least three Business Days
prior to the Purchase Date. Holders shall be entitled to withdraw their election
if the Trustee or the Issuers
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62
receives not later than one Business Day prior to the Purchase Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the Holder,
the principal amount of the Security which was delivered by the Holder for
purchase and a statement that such Holder is withdrawing his election to have
such Security purchased. If at the expiration of the Offer Period the aggregate
principal amount of Securities surrendered by Holders exceeds the Offer Amount,
the Issuers shall select the Securities to be purchased on a pro rata basis
(with such adjustments as may be deemed appropriate by the Issuers so that only
Securities in denominations of $1,000, or integral multiples thereof, shall be
purchased). Holders whose Securities are purchased only in part will be issued
new Securities equal in principal amount to the unpurchased portion of the
Securities surrendered.
(4) At the time the Issuers deliver Securities to the Trustee which
are to be accepted for purchase, the Issuers shall also deliver an Officers'
Certificate stating that such Securities are to be accepted by the Issuers
pursuant to and in accordance with the terms of this Section. A Security shall
be deemed to have been accepted for purchase at the time the Trustee, directly
or through an agent, mails or delivers payment therefor to the surrendering
Holder.
(d) The Issuers shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section. To the extent that the provisions of any securities laws or regulations
conflict with provisions of this Section, the Issuers shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section by virtue thereof.
SECTION 4.07. Offer to Repurchase Upon Failure to Attain Profitable
Operations. (a) If the Company does not achieve Profitable Operations prior to
December 31, 2001, the Issuers shall be required to use any amounts in the
Offshore Reserve Account to undertake an offer to purchase Securities (and, at
the Company's election, Senior Notes and Debentures) pro rata at 100% of the
Accreted Value thereof on the date of purchase, plus accrued and unpaid interest
and Additional Amounts, if any, thereon ("Stage III Tender").
(b) The Issuers will be required to conduct a Stage III Tender and
to purchase tendered Securities in
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63
accordance with the procedures set forth in Section 4.10(b), (c), (d) and (e).
SECTION 4.08. Limitation on Issuance and Sale of Capital Stock of
Restricted Subsidiaries. Neither the Issuers nor the Company will permit (i) any
Restricted Subsidiary to issue any Capital Stock (other than to the Issuers or
the Company or any Wholly Owned Restricted Subsidiary) or (ii) any Person (other
than the Issuers or the Company or a Wholly Owned Restricted Subsidiary) to
acquire any Capital Stock of any Restricted Subsidiary from the Issuers or the
Company or any Restricted Subsidiary, except upon the sale of all of the
outstanding Capital Stock of such Restricted Subsidiary owned by the Issuers or
the Company or another Restricted Subsidiary and the designation of such
Subsidiary as an Unrestricted Subsidiary; provided, however, that the Issuers or
the Company or a Restricted Subsidiary may issue or sell common stock of a
Restricted Subsidiary to a Person that is not an Affiliate of the Company so
long as, on or prior to the consummation of such issuance or sale, such
Restricted Subsidiary issues and delivers a supplemental indenture to the
Indentures providing for the guarantee of the Securities, which guarantee shall
be a senior obligation of such Restricted Subsidiary.
SECTION 4.09. Limitation on Dividends and Other Payment Restrictions
Affecting Restricted Subsidiaries. Neither the Issuers or the Company will, and
the Company will not permit any of its Restricted Subsidiaries to, directly or
indirectly, create or otherwise cause or permit to exist or become effective any
encumbrance or restriction on the ability of any Restricted Subsidiary to (a)
pay dividends or make any other distribution on its Capital Stock to the Issuers
or the Company or any other Restricted Subsidiary, (b) pay any Indebtedness owed
to the Issuers or the Company or any other Restricted Subsidiary, (c) make any
Investment in the Issuers or the Company or (d) transfer any of its properties
or assets to the Issuers or the Company or any Restricted Subsidiary, except (i)
any encumbrance or restriction pursuant to or in connection with the Bank Credit
Facility or the Securities as in effect on the Issue Date, (ii) any encumbrance
or restriction, with respect to a Restricted Subsidiary that is not a Restricted
Subsidiary of the Company on the date of this Indenture that is in existence at
the time such Person becomes a Restricted Subsidiary of the Company and not
Incurred in connection with, or in contemplation, of, such Person becoming a
Restricted Subsidiary, (iii) customary provisions restricting subletting or
assignment of any lease governing a leasehold interest of the Issuers or the
Company or any
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Restricted Subsidiary and (iv) any encumbrance or restriction existing under any
agreement effecting a Refinancing of Indebtedness referred to in clause (i),
(ii) or (iii) above or this clause (iv); provided that the terms and conditions
of any such encumbrances or restrictions are not materially less favorable to
the Holders than those under or pursuant to the agreement evidencing such
Refinancing Indebtedness so extended, renewed, refinanced or replaced.
SECTION 4.10. Change of Control. (a) Upon the occurrence of a Change
of Control, each Holder shall have the right to require that the Issuers
repurchase all or any part of such Holder's Securities at a purchase price in
cash equal to 101% of the Accreted Value thereof on the date of purchase, plus
accrued and unpaid interest and Additional Amounts, if any, to date of
repurchase (subject to the right of Holders of record on the relevant record
date to receive interest due on the relevant interest payment date), in
accordance with the terms contemplated in Section 4.10(b); provided, however,
that prior to repurchasing any Securities pursuant to this Section 4.10(a), the
Issuers shall (i) repay in full the Senior Notes or (ii) otherwise obtain the
requisite consent under the Senior Notes to permit the repurchase of the
Securities.
(b) Within 30 days following any Change of Control, the Company
shall mail a notice to each Holder with a copy to the Trustee stating:
(1) that a Change of Control has occurred and that such Holder has
the right to require the Issuers to repurchase such Holder's Securities at
a price in cash equal to 101% of the Accreted Value thereof on the date of
purchase, plus accrued and unpaid interest and Additional Amounts, if any,
to the date of repurchase (subject to the right of Holders of record on a
record date to receive interest due on the relevant interest payment
date);
(2) the repurchase date (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed); and
(3) the procedures determined by the Issuers, consistent with this
Section, that a Holder must follow in order to have its Securities
purchased.
(c) Holders electing to have a Security purchased shall be required
to surrender the Security, with an appropriate form duly completed, to the
Company at the
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address specified in the notice at least three Business Days prior to the
purchase date. Holders shall be entitled to withdraw their election if the
Trustee or the Company receives not later than one Business Day prior to the
purchase date a telegram, telex, facsimile transmission or letter setting forth
the name of the Holder, the principal amount of the Security which was delivered
for purchase by the Holder and a statement that such Holder is withdrawing his
election to have such Security purchased.
(d) On the purchase date, all Securities purchased by the Company
under this Section shall be delivered to the Trustee for cancelation, and the
Company shall pay the purchase price, plus accrued and unpaid interest, if any,
to the Holders entitled thereto.
(e) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws or regulations are applicable
in connection with the repurchase of Securities pursuant to this Section. To the
extent that the provisions of any securities laws or regulations conflict with
provisions of this Section, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under this Section by virtue thereof.
SECTION 4.11. Compliance Certificate. The Issuers and the Company
shall deliver to the Trustee within 90 days after the end of each fiscal year of
the Issuers and the Company an Officers' Certificate stating that in the course
of the performance by the signers of their duties as Officers of the Issuers and
the Company they would normally have knowledge of any Default and whether or not
the signers know of any Default that occurred during such period. If they do,
the certificate shall describe the Default, its status and what action the
Company is taking or proposes to take with respect thereto. The Company also
shall comply with Section 314(a)(4) of the TIA.
SECTION 4.12. Further Instruments and Acts. Upon request of the
Trustee, the Issuers shall execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture, the Security Documents and each other
agreement delivered in connection herewith or therewith.
SECTION 4.13. Limitation on Affiliate Transactions. Neither the
Issuers nor the Company will, and
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the Company will not permit any Restricted Subsidiary to, directly or
indirectly, enter into or conduct any transaction or series of related
transactions (including the purchase, sale, lease or exchange of any property or
the rendering of any service) with or for the benefit of any Affiliate of the
Company (an "Affiliate Transaction") unless: (a) the terms of such Affiliate
Transaction are no less favorable to the Issuers or the Company or such
Restricted Subsidiary, as the case may be, than those that could be obtained at
the time of such transaction in arm's-length dealings with a Person who is not
such an Affiliate; (b) in the event such Affiliate Transaction involves an
aggregate amount in excess of U.S.$5 million, the terms of such transaction have
been approved by a majority of the members of the Board of Directors of such
Person and by a majority of the disinterested members of such Board, if any (and
such majority or majorities, as the case may be, determines that such Affiliate
Transaction satisfies the criteria in (a) above); and (c) in the event such
Affiliate Transaction involves an aggregate amount in excess of U.S.$10 million,
such Person has received a written opinion from an independent investment
banking firm or other similar expert of nationally recognized standing that such
Affiliate Transaction (i) is fair to the Issuers or the Company or such
Restricted Subsidiary, as the case may be, from a financial point of view, or
(ii) complies with the requirements of clause (a) above.
The foregoing paragraph shall not apply to (a) any Restricted
Payment permitted to be made pursuant to Section 4.04, (b) loans or advances to
employees in the ordinary course of business of the Company and/or any
Subsidiary in aggregate amount outstanding not to exceed U.S.$l million at any
time, (c) indemnification agreements with, and the payment of fees and
indemnities to, directors, officers and employees of the Company or any
Subsidiary, in each case in the ordinary course of business, (d) transactions
pursuant to agreements in existence on the Issue Date which (x) are described in
the Offering Memorandum or (y) otherwise, in the aggregate, are immaterial to
the Issuers, the Company and the Restricted Subsidiaries taken as a whole, (e)
any employment, noncompetition or confidentiality agreements entered into with
its employees in the ordinary course of business, (f) the issuance of Capital
Stock (other than Disqualified Stock) of the Issuers to the Company and (g)
sublease arrangements on commercial terms covering shared space.
SECTION 4.14. Limitation on Sale Leaseback Transactions. Neither the
Issuers nor the Company shall, and the Company shall not permit any Restricted
Subsidiary
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to, enter into any Sale/Leaseback Transaction with respect to any property
unless (i) the Issuers, the Company or such Restricted Subsidiary would be
entitled to (A) Incur Indebtedness in an amount equal to the Attributable
Indebtedness with respect to such Sale/Leaseback Transaction pursuant to Section
4.03 and (B) create a Lien on such property securing such Attributable
Indebtedness pursuant to Section 4.05, (ii) the net proceeds received by the
Issuers, the Company or any Restricted Subsidiary in connection with such
Sale/Leaseback Transaction are at least equal to the fair value (as determined
by the Board of Directors) of such property and (iii) the proceeds of such
transaction are applied in compliance with Section 4.06.
SECTION 4.15. Limitation on Issuances of Capital Stock. Neither the
Issuers nor any Restricted Subsidiary will issue any Capital Stock to any Person
other than to the Company.
SECTION 4.16. Limitation on Sales to non-Credit Qualified
Purchasers. Until the earlier of the third anniversary of the Issue Date and the
date upon which the Company achieves Profitable Operations, the Company shall
not permit the aggregate amount of the accounts receivable of it and its
subsidiaries from non-Credit Qualified Purchasers to exceed U.S.$10 million at
any one time outstanding.
SECTION 4.17. Line of Business. The Company will not, and will not
permit the Issuers or any Subsidiary to, engage in any business other than its
ownership of the Mill and the assets and liabilities of the Mill and any
business ancillary or reasonably related thereto.
SECTION 4.18. Ownership. The Company will at all times own 100% of
the Capital Stock of the Issuers.
SECTION 4.19. Use of Proceeds. The Issuers and the Company shall
apply the proceeds from the sale of the Securities in the manner described in
the Offering Memorandum and establish and maintain the Accounts (as defined in
the Security Sharing Agreement) pursuant to the Security Sharing Agreement.
SECTION 4.20. Additional Amounts. (a) All payments made by the
Issuers under or with respect to the Securities and by the Company under the
Guaranty will be made free and clear of and without withholding or deduction for
or on account of any present or future taxes, levies, duties, fees, assessments
or other governmental charges of whatever nature ("Taxes") imposed, levied,
collected or
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assessed by or on behalf of any taxing authority within the Cayman Islands or
Thailand, unless the Issuers are or the Company is, as the case may be, required
to withhold or deduct or if the Issuers are or the Company is otherwise required
to pay any amount for or on account of Taxes imposed by a taxing authority
within the Cayman Islands or Thailand from or in respect of any payment made
under or with respect to the Securities or the Guaranty, in which case the
Issuers or the Company, as the case may be, will pay such additional amounts
("Additional Amounts") as may be necessary so that the net amount received by
each holder and beneficial owner of Securities (including Additional Amounts)
after such withholding or deduction or other payment of Taxes will not be less
than the amount the holder and beneficial owner would have received if such
Taxes had not been withheld or deducted or paid; provided, however, that no
Additional Amounts will be payable with respect to a payment made to a holder of
Securities with respect to any Tax: (i) which would not have been imposed,
payable or due but for the existence of any present or former connection between
the holder (or the beneficial owner of, or person ultimately entitled to obtain
an interest in, such Securities) and the Cayman Islands or Thailand, as the case
may be, other than the mere holding of the Securities; (ii) which would not have
been imposed, payable or due if the Securities are held in definitive registered
form ("Definitive Registered Securities") and the presentation of Definitive
Registered Securities for payment had occurred within 30 days after the date
such payment was due and payable or was provided for, whichever is later, except
for Additional Amounts with respect to Taxes that would have been imposed had
the holder presented the Security for payment within such 30-day period; (iii)
that is an estate, inheritance, gift, sales, transfer, personal property or
similar Tax; (iv) that is imposed or withheld by reason of the failure of the
holder or beneficial owner of a Security to comply, at the reasonable request of
the Issuers or the Company, as the case may be, with certification, information
or other reporting requirements concerning the nationality, residence or
identity of the holder or such beneficial owner if such compliance is required
or imposed by a statute, treaty, regulation or administrative practice of the
taxing jurisdiction as a precondition to exemption from all or part of such Tax;
(v) if the beneficial owner of, or person ultimately entitled to obtain an
interest in, such Securities had been the holder of the Securities and would not
be entitled to the payment of Additional Amounts; or (vi) payable otherwise than
by withholding from payments on or in respect of any Security.
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(b) The Issuers or the Company, as the case may be, will also (i)
make such withholding or deduction and (ii) remit the full amount deducted or
withheld to the relevant authority in accordance with applicable law. The
Issuers or the Company, as the case may be, will make reasonable efforts to
obtain certified copies of tax receipts evidencing the payment of any Taxes so
deducted or withheld from each taxing authority imposing such Taxes. The Issuers
or the Company, as the case may be, will furnish to the holders of the
Securities, within 60 days after the date the payment of any Taxes so deducted
or withheld is due pursuant to applicable law, either certified copies of tax
receipts evidencing such payment by the Issuers or the Company, as the case may
be, or, if such receipts are not obtainable, other evidence of such payments by
the Issuers or the Company.
(c) In addition, the Issuers or the Company, as the case may be,
will, upon written request of each holder of Securities (subject to the
exclusions set forth in (i), (ii), (iii), (iv), (v) and (vi) of paragraph (a)
above), and provided that reasonable supporting documentation is provided,
reimburse each such holder for the amount of any Taxes levied or imposed by the
Cayman Islands or Thailand and paid by such holder as a result of payments made
under or with respect to the Securities or under the Guaranty. Any payment
pursuant to this section shall be an Additional Amount.
(d) At least 30 days prior to each date on which any payment under
or with respect to the Securities or under the Guaranty is due and payable, if
the Issuers or the Company will be obligated to pay Additional Amounts with
respect to such payment, the Issuers or the Company will deliver to the Trustee
an Officers' Certificate stating the fact that such Additional Amounts will be
payable and the amounts so payable and will set forth such other information
necessary to enable the Trustee to pay such Additional Amounts to the holders of
Securities on the payment date. Whenever in this Indenture or in the Securities
there is mentioned, in any context, the payment of amounts based upon the
principal of, premium, if any, interest or of any other amount payable under or
with respect to any Security or either Guaranty such mention shall be deemed to
include mention of the payment of Additional Amounts to the extent that, in such
context, Additional Amounts are, were or would be payable in respect thereof.
(e) In addition, the Issuers will pay any stamp, issue,
registration, documentary, value added or other similar taxes and other duties
(including interest and
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penalties) payable in the Cayman Islands or in Thailand (or any political
subdivision or taxing authority of either jurisdiction) and in the United States
in respect of the creation, issue, offering, execution or enforcement of the
Securities, the Guaranty or any documentation with respect thereto.
SECTION 4.21. Maintenance of Office or Agency. (a) The Issuers shall
maintain in the Borough of Manhattan, in the City of New York, an office or
agency (which may be an office of the Trustee or an Affiliate of the Trustee,
Registrar or co-registrar) where Securities may be surrendered for registration
of transfer or exchange and where notices and demands to or upon the Issuers in
respect of the Securities, this Indenture and the Guaranty may be served. The
Issuers shall give prior written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Issuers
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.
(b) The Issuers 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 such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Issuers of their obligations to maintain an office or
agency in the Borough of Manhattan, in the City of New York for such purposes.
The Issuers shall give prior 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.
(c) The Issuers hereby designate the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.
SECTION 4.22. Stay, Extension and Usury Laws. Each of the Issuers
and the Company covenants (to the extent it may lawfully do so) that it shall
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, that may affect the covenants or the
performance of this Indenture (including, but not limited to, the payment of the
principal of or interest on the Securities); and the Issuers and the Company (to
the extent that they may lawfully do so) hereby expressly waive all benefit or
advantage of any such law, and covenant that they shall not, by resort to any
such
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71
law, hinder, delay or impede the execution of any power herein granted to the
Trustee, but shall suffer and permit the execution of every such power as though
no such law has been enacted.
SECTION 4.23. Insurance. The Company shall as soon as practicable
after the Issue Date obtain, and thereafter at all times maintain in full force
and effect insurance in such amounts, covering such risks and liabilities and
with such deductibles or self-insured retentions as are in accordance with
normal industry practice. The Company shall furnish when obtained and annually
thereafter to the Collateral Agent a summary of the insurance carried by it
together with certificates of insurance and other evidence of such insurance, if
any, naming the Collateral Agent as an additional insured and/or loss payee.
SECTION 4.24. Compliance with Statutes. The Company shall, and shall
cause each Subsidiary to, comply with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
Thailand or foreign, in respect of the conduct of its business and the ownership
of its property other than those the non-compliance with which would not
reasonably be expected to have a material adverse effect on the condition
(financial or otherwise), results of operations, business or prospects of the
Company and its Subsidiaries taken as a whole.
SECTION 4.25. Corporate Existence. Subject to Section 5.01, the
Company and the Issuers shall do or cause to be done all things necessary to
preserve and keep in full force and effect their corporate existence, in
accordance with their respective organizational documents (as the same may be
amended from time to time) and the rights (charter and statutory), licenses and
franchises of the Company and the Issuers.
SECTION 4.26. Independent Engineer. Not later than the 90th day
following the Issue Date, the Company shall have hired (and thereafter shall at
all times retain) the Independent Engineer to perform the duties set forth
herein together with such other duties as the Company and such Independent
Engineer may agree.
SECTION 4.27. Securities Cash Flow Sweep. No later than the
fifteenth day following the last day of each fiscal quarter of the Company (as
the Company's fiscal year is in effect on the Issue Date), the Company shall
deposit
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into the Notes Net Fund Account an amount equal to the Cash Flow Sweep Amount.
SECTION 4.28. Payment of Taxes. The Company will pay or discharge or
cause to be paid or discharged, before the same shall become delinquent, (i) all
material taxes, assessments and governmental charges levied or imposed upon the
Company or the Issuers or upon the income, profits or property of the Company or
the Issuers; provided, however, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings, and against which adequate reserves are being
maintained.
SECTION 4.29 Intercompany Notes and Capital Contributions. (a) On
the Issue Date, the Company shall issue an intercompany note or notes to the
Issuers obligating the Company to make payments in respect of such intercompany
note or notes on any date and in the same amount that any payment (whether a
payment of principal when due at Stated Maturity, upon optional redemption, upon
required repurchase, upon declaration or otherwise or a payment in respect of
any interest) is due on the Securities; provided, however, if after the Issue
Date the Issuers and the Company determine in good faith that such an
intercompany note obligation will result in a material adverse tax consequence
to the Issuers or the Company, the Issuers and the Company may cancel such
intercompany note obligation and the Company shall thereafter comply with clause
(b) below.
(b) In the event that at any time the intercompany note referenced
in the preceding sentence has been canceled or otherwise declared inoperative or
unenforceable, then on or prior to any Interest Payment Date in respect of any
Security, or any date upon which any payment of principal of any Security is
required to be made when due at its Stated Maturity, upon optional redemption,
upon required repurchase, upon declaration or otherwise, the Company shall make
a cash contribution to NSM Cayman in the amount of such interest or principal
payment, as the case may be.
ARTICLE V
Successor Company
SECTION 5.01. Merger and Consolidation. The Company shall not
consolidate with or merge with or into, or convey, transfer or lease all or
substantially all its
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assets to, any Person, unless: (i) the resulting, surviving or transferee Person
(the "Successor Company") shall be a corporation organized and existing under
the laws of the United States of America, any state thereof or the District of
Columbia or Thailand, and the Successor Company (if not the Company) shall
expressly assume, by indenture supplemental to this Indenture, executed and
delivered to the Trustee, in form satisfactory to the Trustee, all the
obligations of the Company, including the obligations under this Indenture, the
Security Sharing Agreement and the Security Documents; (ii) immediately after
giving effect to such transaction on a pro forma basis (and treating any
Indebtedness which becomes an obligation of the Successor Company as a result of
such transaction as having been Incurred by the Successor Company at the time of
such transaction), no Default or Event of Default shall have occurred and be
continuing (or would result therefrom); (iii) immediately after giving effect to
such transaction on a pro forma basis (and treating any Indebtedness which
becomes an obligation of the Successor Company as a result of such transaction
as having been Incurred by the Successor Company at the time of such
transaction), the Successor Company would be able to incur an additional
U.S.$1.00 of Indebtedness pursuant to the first paragraph of Section 4.03; (iv)
immediately after giving effect to such transaction on a pro forma basis (and
treating any Indebtedness which becomes an obligation of the Successor Company
or any Restricted Subsidiary as a result of such transaction as having been
Incurred by the Successor Company or such Restricted Subsidiary at the time of
such transaction), the Successor Company shall have Consolidated Net Worth in an
amount which is not less than the Consolidated Net Worth of the Company
immediately prior to such transaction; (v) the Successor Company shall have
delivered to the Trustee an Opinion of Counsel to the effect that the holders of
the Securities will not recognize income, gain, or loss for United States
Federal income tax purposes as a result of such transaction, and will be subject
to United States Federal income tax on the same amounts and at the same times as
would be the case as if the transaction had not occurred, and there will be no
additional Thai Taxes and no Taxes of any other jurisdiction imposed on any
payments made pursuant to the Securities or the Guaranty; and (vi) each of the
Company and the Issuers shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, stating that such consolidation, merger,
conveyance, transfer or lease and such supplemental indentures comply with this
Indenture, and this Indenture (including the Guaranty), the Security Sharing
Agreement, the Security Documents, and the Securities remain and will be in full
force and effect against all applicable parties
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and the Liens with respect to the Collateral (which shall be first priority
perfected Liens unless otherwise contemplated by the Security Documents)
continue in full force and effect.
The Successor Company shall be the successor to the Company and
shall succeed to, and be substituted for, and may exercise every right and power
of, the Company under this Indenture, but the predecessor Company in the case of
a conveyance, transfer or lease shall not be released from the obligation to pay
the principal of and interest on the Securities.
The Issuers shall not consolidate or merge with or into any other
Person, or convey, transfer or lease all or substantially all its assets to any
other Person, and all of its outstanding Capital Stock shall at all times be
owned by the Company free and clear of all Liens (other than Liens securing the
Securities, the Senior Notes and the Debentures).
ARTICLE VI
Defaults and Remedies
SECTION 6.01. Events of Default. Each of the following constitutes
an "Event of Default":
(a) a default in any payment of interest on any Security when due
(whether or not such payment is prohibited by the provisions of Article
XI), or the failure of the Company to make any required capital
contribution in respect of a payment of interest on any Security pursuant
to Section 4.29, in each case continued for 30 days;
(b) a default in the payment of principal of any Security when due
at its Stated Maturity, upon optional redemption, upon required
repurchase, upon declaration or otherwise (whether or not such payment is
prohibited by Article XI), or the failure of the Company to make any
required capital contribution in respect of a principal payment on any
Security pursuant to Section 4.29;
(c) the failure by the Issuers or the Company to comply with its
obligations under Section 5.01;
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(d) the failure by the Issuers or the Company to comply for 30 days
after notice with any of their respective obligations under Article IV
(other than Section 4.29 and other than a failure to purchase Securities
pursuant to Section 4.06, 4.07 or 4.10, which shall constitute an Event of
Default under clause (b) above), other than as specified in clause (a),
(b) or (c) above;
(e) the failure by the Issuers or the Company to comply for 60 days
after notice with their respective agreements contained in the Indenture
(other than those referred to in clause (a), (b), (c) and (d) above);
(f) the Guaranty ceases to be in full force and effect (except as
contemplated by the terms thereof) or the Company denies or disaffirms its
obligations under the Guaranty;
(g) Indebtedness of the Company, the Issuers or any Restricted
Subsidiary is not paid within any applicable grace period after final
maturity or is accelerated by the holders thereof because of a default and
the total amount of such Indebtedness unpaid or accelerated exceeds U.S.$5
million (or its foreign currency equivalent at the time) and such default
shall not have been cured or such acceleration rescinded after a 10-day
period;
(h) the Company, the Issuers or any Subsidiary pursuant to or within
the meaning of any Bankruptcy Law:
(i) commences a voluntary case;
(ii) consents to the entry of an order for relief against it
in an involuntary case;
(iii) consents to the appointment of a Custodian of it or for
any substantial part of its property; or
(iv) makes a general assignment for the benefit of its
creditors;
(i) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against the Company, the Issuers or any
Subsidiary in an involuntary case;
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(ii) appoints a Custodian of the Company, the Issuers or any
Subsidiary or for any substantial part of its property; or
(iii) orders the winding up or liquidation of the Company, the
Issuers or any Subsidiary;
(j) any judgment or decree for the payment of money in excess of
U.S.$5 million (or its foreign currency equivalent at the time) (to the
extent not covered by insurance) is rendered against the Company, the
Issuers or any Subsidiary and such judgment or decree shall remain
undischarged or unstayed for a period of 60 days after such judgment
becomes final and nonappealable (the "judgment default provision");
(k) any Account or amount therein is not maintained as required or
any drawing under or deposit into any Account is not made when required to
be made and in any such case such failure continues unremedied for five
Business Days (or, in the case of a failure to fund or maintain any
required amount in, or to make a drawing under, the Notes DSR Account, 30
days) (the "account provision");
(l) the Security Documents shall cease to grant the holders any of
the material collateral or rights purported to be granted thereunder or
the Company shall fail to increase the Mortgaged Amounts (as defined in
the Security Documents) when required pursuant to the Security Documents
(the "security provision"); or
(m) after giving effect to the anticipated receipt and application
of any insurance proceeds the Mill is abandoned in whole or in substantial
part or is destroyed or made permanently inoperable in whole or in
substantial part (the "abandonment provision").
However, a Default under clauses (d) or (e) will not constitute an
Event of Default until the Trustee or the holders of 25% in principal amount at
maturity of the outstanding Securities, notify the Issuers (with a copy to the
Trustee if given by the holders) of the Default and such default is not cured
within the time specified in clause (d) or (e) after receipt of such notice. The
written notice must specify the Default, demand that it be remedied and state
that the notice is a "Notice of Default".
The term "Bankruptcy Law" means Title 11, United States Code, or any
similar U.S. Federal, state or local law for the relief of debtors or any
comparable or similar
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foreign laws (including any Thai law) relating to bankruptcy, receivership,
liquidation, dissolution or similar proceeding. The term "Custodian" means any
receiver, trustee, assignee, liquidator, custodian or similar official under any
Bankruptcy Law.
The Issuers shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any Event of Default and of any event which with the giving of notice or the
lapse of time would become an Event of Default, its status and what action the
Issuers is taking or proposes to take with respect thereto.
SECTION 6.02. Acceleration. If an Event of Default (other than an
Event of Default with respect to clauses (h) or (i) of Section 6.01 occurs and
is continuing, the Trustee or the Holders of at least 25% in principal amount at
maturity of the outstanding Securities by notice to the Issuers and the Trustee
(if the notice is given by the holders) may declare the Accreted Value of, and
accrued and unpaid interest, if any, on all the Securities to be due and
payable. Upon such a declaration, such Accreted Value and accrued and unpaid
interest shall be due and payable immediately. If an Event of Default with
respect to the Securities pursuant to clauses (h) and (i) of Section 6.01
(together, the "bankruptcy provision") occurs, the Accreted Value of, and
accrued and unpaid interest on, such Securities will become and be immediately
due and payable without any declaration or other act on the part of the Trustee
or any holders. The Holders of a special majority of 60% in principal amount of
the outstanding Securities by notice to the Trustee may rescind an acceleration
and its consequences if (i) the rescission would not conflict with any judgment
or decree, (ii) all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of
acceleration and (iii) all amounts due to the Trustee under Section 7.07 have
been paid. No such rescission shall affect any subsequent Default or Event of
Default or impair any right consequent thereto. Upon any such acceleration,
Securityholders holding a majority principal amount at maturity of the
Securities shall have the right under the Security Documents to vote to cause
the Trustee to direct the Collateral Agent to act thereunder. Except as directed
by the Securityholders, the Trustee shall have no responsibility before or after
an Event of Default to foreclose or take any other action with respect to the
Collateral or the Security Documents.
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SECTION 6.03. 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 Securityholder 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. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of a majority in
principal amount of the Securities by notice to the Trustee may waive an
existing Default and its consequences except (i) a Default in the payment of the
principal of or interest on a Security or (ii) a Default in respect of a
provision that under Section 9.02 cannot be amended without the consent of each
Securityholder affected. When a Default is waived, it is deemed cured, but no
such waiver shall extend to any subsequent or other Default or impair any
consequent right.
SECTION 6.05. Control by Majority. The Holders of a majority in
principal amount of the outstanding Securities may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.01, that the Trustee determines is unduly prejudicial to
the rights of other Securityholders or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
SECTION 6.06. Limitation on Suits. A Securityholder may not pursue
any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
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(2) the Holders of at least 25% in principal amount of the
outstanding Securities make a written request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer to the Trustee reasonable security
or indemnity 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 of security or indemnity; and
(5) the Holders of a majority in principal amount of the outstanding
Securities do not give the Trustee a direction inconsistent with the
request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the rights
of another Securityholder or to obtain a preference or priority over
another Securityholder.
SECTION 6.07. 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 liquidated damages and interest on the Securities
held by such Holder, 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
such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of Default
specified in Section 6.01(a) or (b) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount then due and owing (together with interest on any
unpaid interest to the extent lawful) and the amounts provided for in Section
7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may 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 and the Securityholders
allowed in any judicial proceedings relative to the Issuers, any Subsidiary or
the Company, their creditors or their property and, unless prohibited by law or
applicable regulations, may vote on behalf of the Holders in any election of a
trustee in bankruptcy or other Person performing similar functions, and any
Custodian in any such judicial proceeding is hereby authorized by each Holder to
make payments to the Trustee and, in the event that the
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Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and its counsel, and any
other amounts due the Trustee under Section 7.07.
SECTION 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article VI, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: subject to Articles XI and XIII, to Securityholders for
amounts due and unpaid on the Securities for principal and interest,
ratably, and any liquidated damages without preference or priority of any
kind, according to the amounts due and payable on the Securities for
principal, any liquidated damages and interest, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any payment
to Securityholders pursuant to this Section.
SECTION 6.11. 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 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 does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of
more than 10% in principal amount of the Securities.
ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their
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exercise as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) 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.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(1) this paragraph does not limit the effect of paragraph (b) of
this Section;
(2) 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; and
(3) 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 6.05.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) 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.
(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
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(g) No provision of this Indenture 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 in the exercise of any of its
rights or powers, if it 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.
(h) 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 and to the provisions of the TIA.
SECTION 7.02. Rights of Trustee. Subject to Section 7.01: (a) The
Trustee may rely on 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.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on the
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any agent appointed with due care.
(d) 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; provided, however, that the Trustee's conduct does not constitute wilful
misconduct or negligence.
(e) The Trustee may consult with counsel, and the advice or opinion
of counsel with respect to legal matters relating to this Indenture and the
Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
(f) The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, note or other paper or document unless requested in writing to do so
by the Holders of not less than a majority in principal amount of the Securities
at the time outstanding, but the Trustee, in its discretion, may make
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such further inquiry or investigation into such facts or matters as it may see
fit, and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Issuers or the Company, personally or by agent or attorney.
(g) The Trustee shall not be charged with knowledge of any Default
or Event of Default unless either a Trust Officer of the Trustee assigned to the
Corporate Trust Department of the Trustee (or any successor division or
department of the Trustee) shall have actual knowledge of such Default or Event
of Default or written notice of such Default or Event of Default shall have been
given to the Trustee by the Company or any Holder.
(h) Except as expressly provided in Section 10.04, the Trustee shall
at no time have any responsibility or liability for or with respect to the
legality, validity or enforceability of any Collateral or any arrangement or
agreement between the Collateral Agent and any Person with respect thereto, or
the perfection or priority of any security interest created in any of the
Collateral or the maintenance of any such perfection and priority, or for or
with respect to the sufficiency of the Collateral following any Event of
Default. The Trustee shall have no responsibility for the maintenance of any
Account or the investment of any funds deposited therein or the release of any
funds therefrom.
SECTION 7.03. 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 Issuers or their Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture, the Securities, the Guaranty, any Collateral or any Account, it
shall not be accountable for the Issuers' use of the proceeds from the
Securities, and it shall not be responsible for any statement of the Issuers in
this Indenture or in any document issued in connection with the sale of the
Securities or in the Securities other than the Trustee's certificate of
authentication.
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SECTION 7.05. Notice of Defaults. If a Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall mail to each
Securityholder notice of the Default within 30 days after it is known to a Trust
Officer or written notice of it is received by the Trustee. Except in the case
of a Default in payment of principal of, premium (if any) or interest on any
Security (including payments pursuant to the mandatory redemption provisions of
such Security, if any), 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 Securityholders.
SECTION 7.06. Reports by Trustee to Holders. As promptly as
practicable after each May 15 beginning with the May 15 following the date of
this Indenture, and in any event prior to July 15 in each year, the Trustee
shall mail to each Securityholder a brief report dated as of May 15 that
complies with Section 313(a) of the TIA. The Trustee shall also comply with
Section 313(b) of the TIA.
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange (if any) on which the
Securities are listed. The Issuers agree to notify promptly the Trustee whenever
the Securities become listed on any stock exchange and of any delisting thereof.
SECTION 7.07. Compensation and Indemnity. The Issuers and the
Company jointly and severally agree to pay to the Trustee from time to time
reasonable compensation for its services as set forth in a separate fee letter.
The Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Issuers and the Company jointly and severally
agree to reimburse the Trustee upon request for all reasonable out-of-pocket
expenses incurred or made by it, including costs of collection, in addition to
the compensation for its services. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Trustee's agents,
counsel, accountants and experts. The Issuers and the Company, jointly and
severally shall indemnify the Trustee against any and all loss, liability or
expense (including reasonable attorneys' fees) incurred by it without negligence
or bad faith on its part in connection with the administration of this trust and
the performance of its duties hereunder. The Trustee shall notify the Issuers of
any claim for which it may seek indemnity promptly upon obtaining actual
knowledge thereof; provided that any failure so to notify the Issuers shall not
relieve the Issuers or the Company of its indemnity obligations
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hereunder. The Issuers shall defend the claim and the indemnified party shall
provide reasonable cooperation at the Issuers' expense in the defense. Such
indemnified parties may have separate counsel and the Issuers shall pay the fees
and expenses of such counsel. The Issuers need not reimburse any expense or
indemnify against any loss, liability or expense incurred by an indemnified
party through such party's own wilful misconduct, negligence or bad faith.
To secure the Issuers' payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee other than money or property held in trust to pay
principal of and interest and any liquidated damages on particular Securities.
The Issuers' payment obligations pursuant to this Section shall
survive the satisfaction or discharge of this Indenture, any rejection or
termination of this Indenture under any bankruptcy law or the resignation or
removal of the Trustee. Without prejudice to any other rights available to the
Trustee under applicable law, when the Trustee incurs expenses after the
occurrence of an Event of Default specified in Section 6.01(h) or (i) with
respect to the Issuers, the expenses are intended to constitute expenses of
administration under the Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign at any
time by so notifying the Issuers; provided that such resignation shall not be
effective until a successor is appointed. The Holders of a majority in principal
amount of the Securities may remove the Trustee by so notifying the Trustee and
may appoint a successor Trustee. The Issuers shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10 of this Indenture
or fails to qualify as Book-Entry Depositary pursuant to Section 3.07 of
the Note Depositary Agreement;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee
or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee
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in such event being referred to herein as the retiring Trustee), the Issuers
shall promptly appoint a successor Trustee (subject to the preceding paragraph).
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuers. 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 Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in principal amount of the Securities may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this
Section, the Company's obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
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 any of the Securities shall have been authenticated but not
delivered, any such successor to the 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 to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is
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anywhere in the Securities or in this Indenture provided that the certificate of
the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall at
all times satisfy the requirements of TIA ss. 310(a). The Trustee 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. The Trustee shall comply with TIA
ss. 310(b); provided, however, that there shall be excluded from the operation
of TIA ss. 310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Issuers are
outstanding if the requirements for such exclusion set forth in TIA ss.
310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against Issuers. The
Trustee shall comply with 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.
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities; Defeasance. (a)
When (i) the Issuers deliver to the Trustee all outstanding Securities (other
than Securities replaced pursuant to Section 2.07) for cancelation or (ii) all
outstanding Securities have become due and payable, whether at maturity or as a
result of the mailing of a notice of redemption pursuant to Article III hereof
and the Issuers irrevocably deposit with the Trustee funds or U.S. Government
Obligations on which payment of principal and interest when due will be
sufficient to pay at maturity or upon redemption all outstanding Securities,
including interest thereon to maturity or such redemption date (other than
Securities replaced pursuant to Section 2.07), and if in either case the Issuers
pay all other sums payable hereunder by the Issuers, then this Indenture shall,
subject to Section 8.01(c), cease to be of further effect. The Trustee shall
acknowledge satisfaction and discharge of this Indenture on demand of the
Issuers accompanied by an Officers' Certificate and an Opinion of Counsel and at
the cost and expense of the Issuers.
(b) Subject to Sections 8.01(c) and 8.02, the Issuers at any time
may terminate (i) all of their obligations under the Securities and this
Indenture ("legal
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defeasance option") or (ii) their obligations under Article IV (other than those
in Sections 4.01, 4.11, 4.21 and 4.29), Sections 5.01(iii) and 5.01(iv) and the
operation of Section 6.01(d) (except with respect to Sections 4.01, 4.11, 4.21
and 4.29), 6.01(g), 6.01(h) (with respect to Subsidiaries of the Issuers only),
6.01(i) (with respect to Subsidiaries of the Issuers only), 6.01(j), 6.01(k) and
6.01(l) ("covenant defeasance option"). The Issuers may exercise their legal
defeasance option notwithstanding their prior exercise of their covenant
defeasance option. If the Issuers exercise their legal defeasance option or
their covenant defeasance option, the Company shall be released from all of its
obligations with respect to its Guaranty and all the Collateral will be
released.
If the Issuers exercise their legal defeasance option, payment of
the Securities may not be accelerated because of an Event of Default. If the
Issuers exercise their covenant defeasance option, payment of the Securities may
not be accelerated because of an Event of Default specified in Section 6.01(d)
(except with respect to Section 4.01, 4.11, 4.21 and 4.29), 6.01(e), 6.01(f),
6.01(g), 6.01(h) (with respect only to the Company and its Subsidiaries other
than the Issuers only), 6.01(i) (with respect only to the Company and its
Subsidiaries other than the Issuers only), 6.01(j), 6.01(k) or 6.01(l) or
because of the failure of the Issuers to comply with (iii) and (iv) of Section
5.01.
Upon satisfaction of the conditions set forth herein and upon
request of the Issuers, the Trustee shall acknowledge in writing the discharge
of those obligations that the Issuers terminate.
(c) Notwithstanding clauses (a) and (b) above, the Issuers'
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 7.07, 7.08, 8.04, 8.05 and
8.06 shall survive until the Securities have been paid in full. Thereafter, the
Issuers' obligations in Sections 7.07, 8.04 and 8.05 shall survive.
SECTION 8.02. Conditions to Defeasance. The Issuers may exercise
their legal defeasance option or its covenant defeasance option only if:
(1) the Issuers irrevocably deposit in trust with the Trustee money
in the form of U.S. dollars or U.S. Government Obligations for the payment
of principal and interest on the Securities to maturity or redemption, as
the case may be;
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(2) the Issuers deliver to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment of the deposited U.S. Government Obligations plus any
deposited money without investment will provide cash at such times and in
such amounts as will be sufficient to pay principal and interest when due
on all the Securities to maturity or redemption, as the case may be;
(3) 123 days, or such longer period as may be relevant under any
applicable foreign Bankruptcy Laws, pass after the deposit is made and
during the 123-day or such applicable other period no Default specified in
Section 6.01(h) or (i) with respect to the Issuers occurs which is
continuing at the end of the period;
(4) the deposit does not constitute a default under any other
agreement binding on the Issuers;
(5) the Issuers deliver to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute, or
is qualified as, a regulated investment company under the Investment
Company Act of 1940;
(6) in the case of the legal defeasance option, the Issuers shall
have delivered to the Trustee an Opinion of Counsel stating that (i) the
Issuers have received from, or there has been published by, the Internal
Revenue Service a ruling, or (ii) since the date of this Indenture there
has been a change in the applicable federal income tax or Thailand tax
law, in either case to the effect that, and based thereon such Opinion of
Counsel shall confirm that, the Securityholders will not recognize income,
gain or loss for Federal income or Thailand tax purposes as a result of
such defeasance and will be subject to federal income or Thailand tax on
the same amounts, in the same manner and at the same times as would have
been the case if such defeasance had not occurred;
(7) in the case of the covenant defeasance option, the Issuers shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Securityholders will not recognize income, gain or loss for Federal income
or Thailand tax purposes as a result of such covenant defeasance and will
be subject to federal income and Thailand tax on the same amounts, in the
same manner and at the same times as would have
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been the case if such covenant defeasance had not occurred; and
(8) the Issuers deliver to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of the Securities as contemplated by this Article
VIII have been complied with.
Before or after a deposit, the Issuers may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article III.
SECTION 8.03. Application of Trust Money. The Trustee shall hold in
trust money or U.S. Government Obligations deposited with it pursuant to this
Article VIII. 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 8.04. Repayment to Issuers. The Trustee and the Paying Agent
shall promptly turn over to the Issuers upon request any excess money or
securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee and
the Paying Agent shall pay to the Issuers upon written request any money held by
them for the payment of principal or interest that remains unclaimed for two
years, and, thereafter, Securityholders entitled to the money must look to the
Issuers for payment as general creditors.
SECTION 8.05. Indemnity for Government Obligations. The Issuers
jointly and severally shall pay and shall indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against deposited U.S. Government
Obligations or the principal and interest received on such U.S. Government
Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with this
Article VIII 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 Issuers' obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article VIII until such time as
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the Trustee or Paying Agent is permitted to apply all such money or U.S.
Government Obligations in accordance with this Article VIII; provided, however,
that, if the Issuers have made any payment of interest on or principal of any
Securities because of the reinstatement of its obligations, the Issuers 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 IX
Amendments
SECTION 9.01. Without Consent of Holders. The Issuers, the Company
and the Trustee may amend this Indenture, any Security Documents, the Securities
or the Guaranty without notice to or consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article V;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to add further Guaranties with respect to the Securities or to
further secure the Securities;
(5) to add to the covenants of the Issuers for the benefit of the
Holders or to surrender any right or power herein conferred upon the
Issuers or any Securityholder;
(6) to comply with any requirements of the Commission in connection
with qualifying this Indenture under the TIA;
(7) to make any change that does not adversely affect the rights of
any Securityholder; or
(8) to provide for the issuance of the Exchange Securities, which
shall have terms substantially identical in all material respects to the
Initial
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Securities (except that the transfer restrictions contained in the Initial
Securities shall be modified or eliminated, as appropriate), and which
shall be treated, together with any outstanding Initial Securities, as a
single issue of securities.
After an amendment under this Section becomes effective, the Issuers
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
SECTION 9.02. With Consent of Holders. The Issuers, the Company and
the Trustee may amend this Indenture, any Security Documents, the Securities or
the Guaranty without notice to any Securityholder but with the written consent
of the Holders of at least a majority in principal amount of the Securities then
outstanding. However, without the consent of each Securityholder affected, an
amendment, supplement or waiver may not:
(1) reduce the principal amount of Securities whose Holders must
consent to an amendment, supplement or waiver;
(2) reduce the stated rate of or extend the stated time for payment
of interest or any liquidated damages on any Security;
(3) reduce the principal of or extend the Stated Maturity of any
Security;
(4) reduce the premium payable upon the redemption of any Security
or change the time at which any Security may be redeemed or repurchased in
accordance with Article III;
(5) make any Security payable in money other than that stated in the
Security;
(6) impair the right of any Holder to receive payment of principal
of and interest on such Holder's Securities on or after the due dates
therefor or to institute suit for the enforcement of any payment of or
with respect to such Holder's Securities;
(7) make any change in Section 6.04 or 6.07 or this Section; or
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(8) release the Guaranty, all or substantially all of the Collateral
or the requirement to maintain any Account.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent approves the substance thereof.
After an amendment under this Section becomes effective, the Issuers
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
SECTION 9.03. Compliance with Trust Indenture Act. Every amendment
to this Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the Trustee receives the notice of
revocation before the date the amendment or waiver becomes effective. After an
amendment or waiver becomes effective, it shall bind every Securityholder. An
amendment or waiver becomes effective once the requisite number of consents are
received by the Issuers or the Trustee.
The Issuers may, but shall not be obligated to, fix a record date
for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 120 days after such record date.
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SECTION 9.05. Notation on or Exchange of Securities. If an amendment
changes the terms of a Security, the Trustee may require the Holder of the
Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Issuers or the Trustee so determines, the Issuers
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 9.06. Trustee To Sign Amendments. The Trustee shall sign any
amendment authorized pursuant to this Article IX 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 such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Section 7.01) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating, in addition to
the requirements of Section 12.04, that such amendment is authorized or
permitted by this Indenture that such amendment is the legal, valid and binding
obligation of the Issuers and the Company enforceable against them in accordance
with its terms, subject to customary exceptions, and complies with the
provisions hereof (including Section 9.03).
SECTION 9.07. Payment for Consent. Neither the Issuers nor any
Affiliate of the Issuers shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
ARTICLE X
Security Documents
SECTION 10.01. Collateral and Security Documents. (a) To secure the
due and punctual payment of the obligations of the Issuers and the Company under
this Indenture and the Securities, the Issuers, the Company, the Trustee and the
Collateral Agent have entered into the Security Documents to create the security
interests and
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related matters. The Trustee, the Issuers and the Company hereby acknowledge and
agree that the Collateral Agent holds the Collateral in trust for the benefit of
the Holders and the Trustee and the other parties secured under the Security
Documents pursuant to the terms of the Security Documents.
(b) Each Holder, by accepting a 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 provisions of the Security Documents and this Indenture,
and authorizes and directs the Collateral Agent to perform its obligations and
exercise its rights under the Security Documents in accordance therewith;
provided, however, that if any provisions of the Security Documents limit,
qualify or conflict with the duties imposed by the provisions of the TIA, the
TIA will control.
(c) As more fully set forth in, and subject to the provisions of,
the Security Documents, the Holders, and the Trustee on behalf of such Holders,
have rights in and to the Collateral which are equal and ratable with the rights
that may be created in favor of the creditors under the Bank Credit Facility and
prior to the rights that may be created in favor of the holders of the
Debentures.
(d) As set forth in and governed by the Security Documents, the
Collateral as now or hereafter constituted shall be held for the benefit of the
Secured Creditors (as defined in the Security Documents) with the preference,
priority or distinction set forth in the Security Documents. As among the
Holders, the Collateral shall be held for the equal and ratable benefit of the
Holders without preference, priority or distinction of any thereof over any
other.
SECTION 10.02. Release of Collateral. Collateral may be released
from the security interest created by the Security Documents at any time or from
time to time in accordance with the provisions of the Security Documents. The
release of any Collateral from the terms hereof and of the Security Documents or
the release of, in whole or in part, the Liens created by the Security
Documents, will not be deemed to impair the Lien on the Collateral in
contravention of the provisions hereof if and to the extent the Collateral or
Liens are released pursuant to the applicable Security Documents and pursuant to
the terms of this Article X. The Trustee and each of the Holders acknowledge
that a release of Collateral or a Lien strictly in accordance with the terms of
the Security Documents and of this Article X will not be deemed for any purpose
to be an impairment of the Lien on the Collateral in contravention of the terms
of this Indenture. To the extent applicable,
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96
the Company and each obligor on the Securities shall cause ss. 314(d) of the TIA
relating to the release of property or securities from the Lien hereof and of
the Security Documents to be complied with. Any certificate or opinion required
by ss. 314(d) of the TIA may be made by an officer of the Company, except in
cases which ss. 314(d) of the TIA requires that such certificate or opinion be
made by an independent person.
SECTION 10.03. Certificates and Opinions. (a) The Issuers and the
Company shall deliver to the Trustee:
(i) promptly after the execution and delivery of this Indenture, an
Opinion of Counsel either stating that in the opinion of such counsel the
Indenture and the Security Documents (including financing statements or
other instruments) have been properly recorded and filed so as to make
effective the security interest intended to be created for the benefit of
the Securityholders, and reciting the details of such action, or stating
that in the opinion of such counsel no such action is necessary to make
such Lien effective; and
(ii) on or before March 1 of each year, an Opinion of Counsel either
stating that in the opinion of such counsel such action has been taken
with respect to the recording, filing, re-recording and re-filing of the
Indenture and the Security Documents (including financing statements or
other instruments) as is necessary to maintain the security interest
intended to be created thereby for the benefit of the Securityholders, and
reciting the details of such action, or stating that in the opinion of
such counsel no such action is necessary to maintain such Lien.
(b) The Company shall comply with TIA ss. 314(d), relating to, among
other matters, the release of Collateral from the Lien of the Security Documents
and Officers' Certificates or other documents regarding fair value of the
Collateral, to the extent such provisions are applicable. Any certificate or
opinion required by TIA ss. 314(d) may be executed and delivered by an Officer
of the Company to the extent permitted by TIA ss. 314(d).
SECTION 10.04. Directions to Collateral Agent. Except during the
continuance of an Event of Default, the Trustee in directing the Collateral
Agent to take or refrain from taking actions under the Security Documents may
rely on an Officers' Certificate and Opinion of Counsel delivered to
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it by the Company to the effect that the action to be taken or not taken does
not adversely affect the interests of the Securityholders or impair the security
of the Securityholders in contravention of the provisions of the Security
Documents or this Indenture.
ARTICLE XI
Subordination of Securities
SECTION 11.01. Agreement To Subordinate. The Issuers agree, and each
Securityholder by accepting a Security agrees, that the Indebtedness evidenced
by the Securities is subordinated in right of payment to the extent and in the
manner provided in this Article XI, to the prior payment in full in cash or cash
equivalents of all Specified Senior Indebtedness of the Issuers and that the
subordination is for the benefit of and enforceable by the holders of such
Specified Senior Indebtedness. The Securities shall in all respects rank pari
passu with all other Senior Indebtedness of the Issuers and only Indebtedness of
the Issuers which is Specified Senior Indebtedness shall rank senior to the
Securities in accordance with the provisions set forth herein. All provisions of
this Article XI shall be subject to Section 11.12.
SECTION 11.02. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of the Issuers to creditors upon a total
or partial liquidation or a total or partial dissolution of the Issuers or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Issuers or their property:
(1) holders of Specified Senior Indebtedness of the Issuers shall be
entitled to receive payment in full in cash or cash equivalents of such
Specified Senior Indebtedness before Securityholders shall be entitled to
receive any payment of principal of, interest on or any other amount
payable in respect of the Securities; and
(2) until such Specified Senior Indebtedness is paid in full in cash
or cash equivalents, any distribution to which Securityholders would be
entitled but for this Article XI shall be made to holders of such
Specified Senior Indebtedness as their interests may appear, except that
Securityholders may receive shares of stock and any debt securities that
are subor-
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dinated to such Specified Senior Indebtedness, and to any debt securities
received by holders of Specified Senior Indebtedness of the Issuers, to at
least the same extent as the Securities are subordinated to Specified
Senior Indebtedness of the Issuers.
SECTION 11.03. Default on Specified Senior Indebtedness of the
Issuers. The Issuers may not pay the principal of, interest on or any other
amount payable in respect of the Securities or make any deposit pursuant to
Section 8.01 and may not repurchase, redeem or defease any Securities
(collectively, "pay the Securities") if (i) any Specified Senior Indebtedness of
the Issuers is not paid when due or (ii) any other default on such Specified
Senior Indebtedness occurs and the maturity of such Specified Senior
Indebtedness is accelerated in accordance with its terms unless, in either case,
(x) the default has been cured or waived and any such acceleration has been
rescinded or (y) such Specified Senior Indebtedness has been paid in full;
provided, however, that the Issuers may pay the Securities without regard to the
foregoing if the Issuers and the Trustee receive written notice approving such
payment from the Representative of such Specified Senior Indebtedness with
respect to which either of the events set forth in clause (i) or (ii) of this
sentence has occurred and is continuing. During the continuance of any default
(other than a default described in clause (i) or (ii) of the preceding sentence)
with respect to any Specified Senior Indebtedness of the Issuers pursuant to
which the maturity thereof may be accelerated immediately without further notice
(except such notice as may be required to effect such acceleration) or after the
expiration of any applicable grace periods, the Issuers may not pay the
Securities for a period (a "Payment Blockage Period") commencing upon the
receipt by the Issuers and the Trustee of written notice (a "Blockage Notice")
of such default from the Representative of such Specified Senior Indebtedness
specifying an election to effect a Payment Blockage Period and ending 179 days
thereafter (or earlier if such Payment Blockage Period is terminated (i) by
written notice to the Trustee and the Issuers from the Person or Persons who
gave such Blockage Notice, (ii) because the Specified Senior Indebtedness has
been repaid in full or (iii) because the default giving rise to such Blockage
Notice is no longer continuing). Notwithstanding the provisions described in the
immediately preceding sentence (but subject to the provisions contained in the
first sentence of this Section), unless the holders of Specified Senior
Indebtedness of the Issuers or the Representative of such holders shall have
accelerated the maturity of such Specified Senior Indebtedness, the Issuers may
resume payments on the Securities after such Payment
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Blockage Period. The Securities shall not be subject to more than one Payment
Blockage Period in any consecutive 360-day period, irrespective of the number of
defaults with respect to Specified Senior Indebtedness of the Issuers during
such period. For purposes of this Section, no default or event of default which
existed or was continuing on the date of the commencement of any Payment
Blockage Period with respect to the Specified Senior Indebtedness initiating
such Payment Blockage Period shall be, or be made, the basis of the commencement
of a subsequent Payment Blockage Period by the Representative of such Specified
Senior Indebtedness, whether or not within a period of 360 consecutive days,
unless such default or event of default shall have been cured or waived for a
period of not less than 90 consecutive days.
SECTION 11.04. Acceleration of Payment of Securities. If payment of
the Securities is accelerated because of an Event of Default, the Issuers or the
Trustee shall promptly notify the holders of the Specified Senior Indebtedness
of the Issuers (or their Representative) of the acceleration.
SECTION 11.05. When Distribution Must Be Paid Over. If a
distribution is made to Securityholders that because of this Article XI should
not have been made to them, the Securityholders who receive the distribution
shall hold it in trust for holders of Specified Senior Indebtedness of the
Issuers and pay it over to them as their interests may appear.
SECTION 11.06. Subrogation. After all Specified Senior Indebtedness
of the Issuers is paid in full in cash or cash equivalents and until the
Securities are paid in full, the Securityholders shall be subrogated to the
rights of holders of such Specified Senior Indebtedness to receive distributions
applicable to such Specified Senior Indebtedness. A distribution made under this
Article XI to holders of such Specified Senior Indebtedness which otherwise
would have been made to Securityholders is not, as between the Issuers and
Securityholders, a payment by the Issuers on such Specified Senior Indebtedness.
SECTION 11.07. Relative Rights. This Article XI defines the relative
rights of Securityholders and holders of Specified Senior Indebtedness of the
Issuers. Nothing in this Indenture shall:
(1) impair, as between the Issuers and Securityholders, the
obligation of the Issuers, which is absolute and unconditional, to pay
principal of and
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interest on the Securities in accordance with their terms; or
(2) prevent the Trustee or any Securityholder from exercising its
available remedies upon a Default or Event of Default, subject to the
rights of holders of Specified Senior Indebtedness of the Issuers to
receive distributions otherwise payable to Securityholders.
SECTION 11.08. Subordination May Not Be Impaired by Issuers. No
right of any holder of Specified Senior Indebtedness of the Issuers to enforce
the subordination of the Indebtedness evidenced by the Securities shall be
impaired by any act or failure to act by the Issuers or by its failure to comply
with this Indenture.
SECTION 11.09. Rights of Trustee and Paying Agent. Notwithstanding
Section 11.03, the Trustee or Paying Agent may continue to make payments on the
Securities and shall not be charged with knowledge of the existence of facts
that would prohibit the making of any such payments unless, not less than two
Business Days prior to the date of such payment, a Trust Officer of the Trustee
receives notice satisfactory to it that payments may not be made under this
Article XI. The Issuers, the Registrar or co-registrar, the Paying Agent, a
Representative or a holder of Senior Indebtedness may give the notice; provided,
however, that, if the holders of Specified Senior Indebtedness of the Issuers
have a Representative, only the Representative may give the notice.
The Trustee in its individual or any other capacity may hold
Specified Senior Indebtedness of the Issuers with the same rights it would have
if it were not Trustee. The Registrar and co-registrar and the Paying Agent may
do the same with like rights. The Trustee shall be entitled to all the rights
set forth in this Article XI with respect to any Specified Senior Indebtedness
of the Issuers which may at any time be held by it, to the same extent as any
other holder of such Specified Senior Indebtedness; and nothing in Article 7
shall deprive the Trustee of any of its rights as such holder. Nothing in this
Article XI shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 7.07.
SECTION 11.10. Distribution or Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Specified Senior
Indebtedness of the Issuers, the distribution may be made and the notice given
to their Representative (if any).
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SECTION 11.11. Article XI Not To Prevent Events of Default or Limit
Right To Accelerate. The failure to make a payment pursuant to the Securities by
reason of any provision in this Article XI shall not be construed as preventing
the occurrence of a Default or Event of Default. Nothing in this Article XI
shall have any effect on the right of the Securityholders or the Trustee to
accelerate the maturity of the Securities.
SECTION 11.12. Trust Moneys Not Subordinated. Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust under Article 8 hereunder by the
Trustee for the payment of principal of and interest on the Securities shall not
be subordinated to the prior payment of any Specified Senior Indebtedness or
subject to the restrictions set forth in this Article XI, and none of the
Securityholders shall be obligated to pay over any such amount to the Issuers or
any holder of Specified Senior Indebtedness of the Issuers or any other creditor
of the Issuers.
SECTION 11.13. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article XI, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 11.02
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representative for the holders of Specified
Senior Indebtedness of the Issuers for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of such
Specified Senior Indebtedness, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article XI. In the event that the Trustee determines, in good faith,
that evidence is required with respect to the right of any Person as a holder of
Specified Senior Indebtedness of the Issuers to participate in any payment or
distribution pursuant to this Article XI, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of such Specified Senior Indebtedness held by such Person, the extent to which
such Person is entitled to participate in such payment or distribution and other
facts pertinent to the rights of such Person under this Article XI and, if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment. The provisions of
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Sections 7.01 and 7.02 shall be applicable to all actions or omissions of
actions by the Trustee pursuant to this Article XI.
SECTION 11.14. Trustee To Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Securityholders and the holders of
Specified Senior Indebtedness of the Issuers as provided in this Article XI and
appoints the Trustee as attorney-in-fact for any and all such purposes.
SECTION 11.15. Trustee Not Fiduciary for Holders of Specified Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Specified Senior Indebtedness and shall not be liable to any such
holders if it shall mistakenly pay over or distribute to Securityholders or the
Issuers or any other Person, money or assets to which any holders of Specified
Senior Indebtedness of the Issuers shall be entitled by virtue of this Article
XI or otherwise.
SECTION 11.16. Reliance by Holders of Specified Senior Indebtedness
on Subordination Provisions. Each Securityholder by accepting a Security
acknowledges and agrees that the foregoing subordination provisions are, and are
intended to be, an inducement and a consideration to each holder of any
Specified Senior Indebtedness of the Issuers, whether such Specified Senior
Indebtedness was created or acquired before or after the issuance of the
Securities, to acquire and continue to hold, or to continue to hold, such
Specified Senior Indebtedness and such holder of such Specified Senior
Indebtedness shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold, such
Specified Senior Indebtedness.
ARTICLE XII
Guaranty of Securities, Indemnity
SECTION 12.01. Guaranty. (a) The Company, as principal obligor and
not merely as surety, hereby irrevocably and unconditionally guarantees to each
Holder of a Security authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, that: (i) principal of, premium, if any,
and interest on the Securities (including any Additional Amounts payable in
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respect thereof) will be promptly paid in full when due, subject to any
applicable grace period, whether on the relevant Stated Maturity, on an interest
payment date, by acceleration, by call for redemption or upon repurchase or
purchase pursuant to Article 3, Sections 4.06, 4.07 or 4.10 or otherwise and
interest on the overdue principal and premium, if any, and purchase price and
interest on any interest, to the extent lawful (in each case including
Post-Petition Interest relating to the Issuers or the Company), on the
Securities and all other amounts payable under the Securities and obligations of
the Issuers to the Holders or the Trustee hereunder or thereunder will be
promptly paid in full or performed when the same shall become due and payable,
whether on the relevant maturity date, upon acceleration, by call for
redemption, upon repurchase or purchase pursuant to a Change of Control, any
Asset Disposition, any repurchase of Securities pursuant to Section 4.07 or
otherwise, all in accordance with the terms hereof and thereof; and (ii) in case
of any extension of time of payment or renewal of any Securities or of any such
other obligations, that the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, subject to
any applicable grace period, whether at maturity, on an interest payment date,
by acceleration, required repurchase or otherwise. All payments under this
Guaranty shall be made in United States Dollars.
(b) All payments made by the Company under the Guaranty with respect
to the Securities will be made in United States Dollars free and clear of and
without withholding or deduction for or on account of any present or future
Taxes imposed or levied by or on behalf of Thailand (or any political
subdivision or taxing authority of Thailand), unless the Company is required to
withhold or deduct such Taxes by law or by the interpretation or administration
thereof. In the event that payments under the Guaranty are subject to
withholding or deduction for or on account of any present or future Taxes
imposed by Thailand (or any political subdivision or taxing authority of or in
Thailand), the Company shall pay Additional Amounts in such amounts and to the
extent set forth in Section 4.20(a).
(c) The Company hereby agrees that its obligations hereunder shall
be unconditional and irrevocable, irrespective of the validity, regularity or
enforceability of the Securities or this Indenture or the obligations of the
Issuers hereunder or thereunder, the absence of any action to enforce the same,
any waiver or consent by any Holder of the Securities with respect to any
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provisions hereof or thereof, the recovery of any judgment against the Issuers,
any action to enforce the same or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a guarantor.
(d) The Company hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Issuers, any right to require a proceeding first against the Issuers, any
right to pursue or exhaust its legal or equitable remedies against the Issuers
(including any right which the Company may have to require the seizure and sale
of the assets of the Issuers to satisfy the outstanding principal of, interest
on or any other amounts payable under each Security prior to recourse against
the Company or its assets), protest, notice and all demands whatsoever and
covenants that the Guaranty will not be discharged except by complete
performance of the obligations contained in the Securities and this Indenture.
If any Securityholder or the Trustee is required by any court or otherwise to
return to the Issuers, the Company, or any custodian, trustee, liquidator or
other similar official acting in relation to the Issuers or the Company any
amount paid by the Issuers or the Company to the Trustee or such Securityholder,
the Guaranty to the extent theretofore discharged, shall be reinstated in full
force and effect.
(e) The Company agrees that, as between the Company, on the one
hand, and the Holders and the Trustee, on the other hand, (x) the maturity of
the obligations guaranteed hereby may be accelerated as provided in Article VI
for the purposes of the Guaranty, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any acceleration of such obligations
as provided in Section 6.02, such obligations (whether or not then due and
payable) shall forthwith become due and payable by the Company for the purposes
of the Guaranty.
(f) The Company also agrees, to pay any and all costs and expenses
(including reasonable attorneys' fees and expenses) incurred by the Trustee or
any Holders in enforcing any rights under the Guaranty.
(g) The Company hereby waives, in favor of the Holders and the
Trustee, any and all of its rights, protections, privileges and defenses
provided by law to a guarantor and in particular any applicable provisions of
the Thailand Civil Code and:
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(i) waives any right of set-off which the Company may have against
the registered Holder of a Security in respect of any amounts which are or
may become payable by the registered Holder of a Security to the Issuers;
(ii) agrees that the Company is still under an obligation to make
payment to the registered Holder of a Security or the Trustee under this
Guaranty upon demand by the registered Holder of a Security even though
the registered Holder of a Security has not made any demand upon the
Issuers, the Trustee or the Collateral Agent or taken any steps or
proceedings against the Issuers to seize and sell its assets or property
to recover the secured indebtedness or, if such steps or proceedings are
taken, the registered Holder of a Security is otherwise unable to satisfy
the Indebtedness under this Indenture from such assets or property;
(iii) relinquishes any right or privilege which it may have to
demand from any court that the registered Holder of a Security or the
Trustee should split or apportion the Indebtedness under this Indenture
either proportionately or otherwise against the Company and any other
person who has given any Guaranty or other security to the registered
Holder of a Security in respect of the Indebtedness under this Indenture;
(iv) agrees that (subject to the other provisions of this Guaranty)
the Company shall not be entitled to claim from the Issuers any
compensation or release in respect of the obligations and liabilities of
the Company under this Guaranty in circumstances where the Company has not
made any actual payment under this Guaranty;
(v) agrees that the Company shall not make use of any of the
exceptions or defenses against the registered Holder of a Security or the
Trustee which are or may be available to the Issuers and which concerns
the Indebtedness under this Indenture;
(vi) agrees that the Company shall still be bound by and liable
under this Guaranty even though due to the fault of the registered Holder
of a Security or the Trustee, the Company can no longer be subrogated to
the rights, security interests and other privileges of the registered
Holder of a Security against the Issuers;
(vii) agrees that the Company shall not have the right to demand the
Issuers to repay the Indebtedness
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under this Indenture to the registered Holder of a Security, or to release
the Company from its liability under this Guaranty in circumstances where
the registered Holder of a Security has granted any time or other
indulgence to the Issuers.
SECTION 12.02. Indemnity. (a) The Company hereby irrevocably and
unconditionally agrees as a primary obligor to indemnify (the "Indemnity") fully
the Holders of the Securities and the Trustee for and against any amounts owed
by the Issuers in respect of the Securities and this Indenture that otherwise
would be payable under the Guaranty in the event that the Guaranty is for any
reason deemed to be unenforceable. Except as otherwise indicated herein or as
the context may otherwise require, all references herein and in the Securities
shall be deemed to constitute references to the Indemnity.
(b) The obligations of the Company assumed under this Indenture with
respect to the Indemnity are independent undertakings and constitute the
Company's own debt and obligation, as meant by or in accordance with any
applicable provisions of the Thailand Civil Code, separate from the Guaranty
contained in Section 12.01, not accessory to any of the Security Documents, and
with respect to which Indemnity of any such provision of the Thailand Civil Code
does not therefore apply.
SECTION 12.03. Representation and Warranty. The Company hereby
represents and warrants that all acts, conditions and things required to be done
and performed and to have happened precedent to the creation and issuance of the
Guaranty and the Indemnity, and to constitute the same legal, valid and binding
obligations of the Company enforceable in accordance with their respective
terms, have been done and performed and have happened in compliance with all
applicable laws.
SECTION 12.04. Waiver of Subrogation. The Company hereby irrevocably
waives any claim or other rights which it may now or hereafter acquire against
the Issuers that arise from the existence, payment, performance or enforcement
of the Company's obligations under the Guaranty, the Indemnity and this
Indenture, including, without limitation, any right of subrogation,
reimbursement, exoneration, indemnification, any right to participate in any
claim or remedy of any Holder of Securities against the Issuers whether or not
such claim, remedy or right arises in equity, or under contract, statute or
common law, including, without limitation, the right to take or receive from the
Issuers, directly or indirectly, in cash or other property
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107
or by setoff or in any other manner, payment or security on account of such
claim or other rights. If any amount shall be paid to the Company in violation
of the preceding sentence and the Securities shall not have been paid in full,
such amount shall have been deemed to have been paid to the Company for the
benefit of, and held in trust for the benefit of, the Holders of the Securities,
and shall forthwith be paid to the Trustee for the benefit of such Holders to be
credited and applied upon the Securities, whether matured or unmatured, in
accordance with the terms of this Indenture. The Company acknowledges that it
will receive direct and indirect benefits from the financing arrangements
contemplated by this Indenture and that the waiver set forth in this Section
12.04 is knowingly made in contemplation of such benefits.
ARTICLE XIII
Subordination of Guaranty
Section 13.01. Agreement To Subordinate. The Company agrees, and
each Securityholder by accepting a Security agrees, that the obligations of the
Company under the Guaranty (the "Obligations") are subordinated in right of
payment, to the extent and in the manner provided in this Article XIII, to the
prior payment in full in cash or cash equivalents of all Specified Senior
Indebtedness of the Company and that the subordination is for the benefit of and
enforceable by the holders of such Specified Senior Indebtedness. The
Obligations of the Company shall in all respects rank pari passu with all other
Senior Indebtedness of the Company and only Indebtedness of the Company which is
Specified Senior Indebtedness shall rank senior to the Guaranty in accordance
with the provisions set forth herein.
Section 13.02. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of the Company to creditors upon a total
or partial liquidation or a total or partial dissolution of the Company or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or its property:
(1) holders of Specified Senior Indebtedness of the Company shall be
entitled to receive payment in full of such Specified Senior Indebtedness
in cash or cash equivalents before Securityholders shall be entitled to
receive any payment pursuant to any Obligations of the Company; and
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108
(2) until the Specified Senior Indebtedness of the Company is paid
in full in cash or cash equivalents, any distribution to which
Securityholders would be entitled but for this Article XIII shall be made
to holders of such Specified Senior Indebtedness as their interests may
appear, except that Securityholders may receive shares of stock and any
debt securities of the Company that are subordinated to Specified Senior
Indebtedness of the Company, and to any debt securities received by
holders of Specified Senior Indebtedness of the Company, to at least the
same extent as the Obligations of the Company are subordinated to
Specified Senior Indebtedness of the Company.
Section 13.03. Default on Specified Senior Indebtedness of the
Company. The Company may not make any payment pursuant to any of its Obligations
or repurchase, redeem or otherwise retire or defease any Securities or other
Obligations (collectively, "pay its Guaranty") if (i) any Specified Senior
Indebtedness of the Company is not paid when due or (ii) any other default on
Specified Senior Indebtedness of the Company occurs and the maturity of such
Specified Senior Indebtedness is accelerated in accordance with its terms
unless, in either case, (x) the default has been cured or waived and any such
acceleration has been rescinded or (y) such Specified Senior Indebtedness has
been paid in full; provided, however, that the Company may pay its Guaranty
without regard to the foregoing if the Company and the Trustee receive written
notice approving such payment from the Representative of the Specified Senior
Indebtedness with respect to which either of the events set forth in clause (i)
or (ii) of this sentence has occurred and is continuing. During the continuance
of any default (other than a default described in clause (i) or (ii) of the
preceding sentence) with respect to any Specified Senior Indebtedness of the
Company pursuant to which the maturity thereof may be accelerated immediately
without further notice (except such notice as may be required to effect such
acceleration) or the expiration of any applicable grace periods, the Company may
not pay its Guaranty for a period (a "Guaranty Payment Blockage Period")
commencing upon the receipt by the Trustee (with a copy to the Company) of
written notice (a "Guaranty Blockage Notice") of such default from the
Representative of the holders of such Specified Senior Indebtedness specifying
an election to effect a Guaranty Payment Blockage Period and ending 179 days
thereafter (or earlier if such Guaranty Payment Blockage Period is terminated
(i) by written notice to the Trustee and the Company from the Person or Persons
who gave such Guaranty Blockage Notice, (ii) because the default giving rise to
such Guaranty Blockage Notice is no longer
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109
continuing or (iii) because such Specified Senior Indebtedness has been repaid
in full). Notwithstanding the provisions described in the immediately preceding
sentence (but subject to the provisions contained in the first sentence of this
Section), unless the holders of Specified Senior Indebtedness giving such
Guaranty Blockage Notice or the Representative of such holders shall have
accelerated the maturity of such Specified Senior Indebtedness, the Company
shall resume payments pursuant to its Obligations after the end of such Guaranty
Payment Blockage Period. The Guaranty shall not be subject to more than one
Guaranty Payment Blockage Period in any consecutive 360-day period, irrespective
of the number of defaults with respect to Specified Senior Indebtedness of the
Company during such period. For purposes of this Section, no default or event of
default which existed or was continuing on the date of the commencement of any
Guaranty Payment Blockage Period with respect to the Specified Senior
Indebtedness initiating such Guaranty Payment Blockage Period shall be, or be
made, the basis of the commencement of a subsequent Guaranty Payment Blockage
Period by the Representative of such Specified Senior Indebtedness, whether or
not within a period of 360 consecutive days, unless such default or event of
default shall have been cured or waived for a period of not less than 90
consecutive days.
Section 13.04. Demand for Payment. If a demand for payment (upon
receipt of the requisite information from the Company) is made on the Company
pursuant to Article XIII, the Company or the Trustee shall promptly notify the
holders of Specified Senior Indebtedness (or their Representatives) of the
Company of such demand.
Section 13.05. When Distribution Must Be Paid Over. If a
distribution is made to Securityholders that because of this Article XIII should
not have been made to them, the Securityholders who receive the distribution
shall hold it in trust for holders of the relevant Specified Senior Indebtedness
and pay it over to them or their Representative as their interests may appear.
Section 13.06. Subrogation. After all Specified Senior Indebtedness
of the Company is paid in full and until the Securities are paid in full,
Securityholders shall be subrogated to the rights of holders of such Specified
Senior Indebtedness to receive distributions applicable to Specified Senior
Indebtedness. A distribution made under this Article XIII to holders of such
Specified Senior Indebtedness which otherwise would have been made to
Securityholders is not, as between the Company and
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110
Securityholders, a payment by the Company on such Specified Senior Indebtedness.
Section 13.07. Relative Rights. This Article XIII defines the
relative rights of Securityholders and holders of Specified Senior Indebtedness
of the Company. Nothing in this Indenture shall:
(1) impair, as between the Company and Securityholders, the
obligation of the Company, which is absolute and unconditional, to pay its
Obligations to the extent set forth in Article XIII; or
(2) prevent the Trustee or any Securityholder from exercising its
available remedies upon a default by the Company under its Obligations,
subject to the rights of holders of Specified Senior Indebtedness of the
Company to receive distributions otherwise payable to Securityholders.
Section 13.08. Subordination May Not Be Impaired by the Company. No
right of any holder of Specified Senior Indebtedness of the Company to enforce
the subordination of the Obligations of the Company shall be impaired by any act
or failure to act by the Company or by its failure to comply with this
Indenture.
Section 13.09. Rights of Trustee and Paying Agent. Notwithstanding
Section 13.03, the Trustee or Paying Agent may continue to make payments
pursuant to the Guaranty and shall not be charged with knowledge of the
existence of facts that would prohibit the making of any such payments unless,
not less than two Business Days prior to the date of such payment, a Trust
Officer of the Trustee receives written notice satisfactory to it that payments
may not be made under this Article XIII. The Company, the Trustee, the Registrar
or co-registrar, the Paying Agent, a Representative or a holder of Specified
Senior Indebtedness of the Company may give the notice; provided, however, that,
if an issue of Specified Senior Indebtedness of the Company has a
Representative, only the Representative may give the notice.
The Trustee in its individual or any other capacity may hold
Specified Senior Indebtedness of the Company with the same rights it would have
if it were not Trustee. The Registrar and co-registrar and the Paying Agent may
do the same with like rights. The Trustee shall be entitled to all the rights
set forth in this Article 12 with respect to any Specified Senior Indebtedness
of the Company which may at any time be held by it, to the same extent as any
other holder of such Specified Senior Indebtedness of the Company;
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111
and nothing in Article 7 shall deprive the Trustee of any of its rights as such
holder. Nothing in this Article 12 shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 7.07.
Section 13.10. Distribution or Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Specified Senior
Indebtedness of the Company, the distribution may be made and the notice given
to their Representative (if any).
Section 13.11. Article XIII Not To Prevent Defaults Under the
Guaranty or Limit Right To Demand Payment. The failure to make a payment
pursuant to the Guaranty by reason of any provision in this Article shall not be
construed as preventing the occurrence of a default under the Guaranty. Nothing
in this Article XIII shall have any effect on the right of the Securityholders
or the Trustee to make a demand for payment on the Company pursuant to Article
XIII.
Section 13.12. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article XIII, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 13.02
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representative for the holders of Specified
Senior Indebtedness of the Company for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of such
Senior Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article XIII. In the event that the Trustee
determines, in good faith, that evidence is required with respect to the right
of any Person as a holder of Specified Senior Indebtedness of the Company to
participate in any payment or distribution pursuant to this Article XIII, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Specified Senior Indebtedness of
the Company held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and other facts pertinent to the
rights of such Person under this Article XIII, and, if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment. The
provisions of Sections 7.01 and
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112
7.02 shall be applicable to all actions or omissions of actions by the Trustee
pursuant to this Article 12.
Section 13.13. Trustee To Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Securityholders and the holders of
Specified Senior Indebtedness of the Company as provided in this Article XIII
and appoints the Trustee as attorney-in-fact for any and all such purposes.
Section 13.14. Trustee Not Fiduciary for Holders of Senior
Indebtedness of the Company. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Specified Senior Indebtedness of the Company
and shall not be liable to any such holders if it shall mistakenly pay over or
distribute to Securityholders or any other Person, money or assets to which any
holders of such Specified Senior Indebtedness shall be entitled by virtue of
this Article XIII or otherwise.
Section 13.15. Reliance by Holders of Specified Senior Indebtedness
of the Company on Subordination Provisions. Each Securityholder by accepting a
Security acknowledges and agrees that the foregoing subordination provisions
are, and are intended to be, an inducement and a consideration to each holder of
any Specified Senior Indebtedness of the Company, whether such Specified Senior
Indebtedness was created or acquired before or after the issuance of the
Security, to acquire and continue to hold, or to continue to hold, such
Specified Senior Indebtedness and such holder of Specified Senior Indebtedness
shall be deemed conclusively to have relied on such subordination provisions in
acquiring and continuing to hold, or in continuing to hold, such Specified
Senior Indebtedness.
ARTICLE XIV
Miscellaneous
SECTION 14.01. Trust Indenture Act Controls. If any provision of
this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
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113
SECTION 14.02. Notices. Any notice or communication shall be in
writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Issuers:
c/o Nakornthai Strip Mill Public Company Limited
Chonburi Industrial Estate (Bowin)
358 Moo 6
Highway 331
Bowin, Sriracha, Chonburi 20230
Thailand
Attention of:
John W. Schultes
if to the Trustee:
The Chase Manhattan Bank
Global Trust Services
450 West 33rd Street, 15th Floor
New York, New York 10001-2697
Attention of:
Valerie Dunbar
The Issuers or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be
mailed to the Securityholder at the Securityholder's address as it appears on
the registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 14.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA ss. 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Issuers, the Trustee, the Registrar and anyone else shall have
the protection of TIA ss. 312(c).
<PAGE>
114
SECTION 14.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Issuers to the Trustee to take or refrain
from taking any action under this Indenture, the Issuers and the Company shall
furnish to the Trustee:
(1) an Officers' Certificate in form reasonably satisfactory to the
Trustee stating that, in the opinion of the signers, all conditions
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 reasonably satisfactory to the
Trustee stating that, in the opinion of such counsel, all such conditions
precedent have been complied with.
SECTION 14.05. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the individual 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;
(3) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 14.06. When Securities Disregarded. In determining whether
the Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Issuers or by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Issuers shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee knows are so
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115
owned shall be so disregarded. Also, subject to the foregoing, only Securities
outstanding at the time shall be considered in any such determination.
SECTION 14.07. Rules by Trustee, Paying Agent and Registrar. The
Trustee may make reasonable rules for action by or a meeting of Securityholders.
The Registrar and the Paying Agent may make reasonable rules for their
functions.
SECTION 14.08. Legal Holidays. A "Legal Holiday" is a Saturday, a
Sunday or a day on which banking institutions are not required to be open in the
State of New York. If a payment date is a Legal Holiday, payment shall be made
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period. If a regular record date is a Legal Holiday,
the record date shall not be affected.
SECTION 14.09. Governing Law. THIS INDENTURE AND THE SECURITIES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW
TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY. THE VARIOUS AGREEMENTS CREATING AND GOVERNING THE COLLATERAL
WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK AND THAILAND.
SECTION 14.10. Waiver of Immunities. To the extent that the Issuers
or the Company or any of their respective properties, assets or revenues may
have or may hereafter become entitled to, or have attributed to it, any right of
immunity, on the grounds of sovereignty or otherwise, from any legal action,
suit or proceeding, from the giving of any relief in any such legal action, suit
or proceeding, from setoff or counterclaim, from the competent jurisdiction of
any court, from service of process, from attachment upon or prior to judgment,
from attachment in aid of execution of judgment, or from execution of judgment,
or other legal process or proceeding for the giving of any relief or for the
enforcement of any judgment, in any competent jurisdiction in which proceedings
may at any time be commenced, with respect to its obligations under the
Securities, this Indenture, the Guaranty or any of the transactions contemplated
hereby or thereby, the Issuers and the Company hereby irrevocably and
unconditionally waives and agrees not to plead or claim, any such immunity and
consent to such relief and enforcement.
SECTION 14.11. Consent to Jurisdiction; Appointment of Agent for
Service of Process; Waiver of Jury
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116
Trial. (a) The Issuers and the Company agree that any suit, action or proceeding
against Issuers or the Company arising out of or relating to the Securities,
this Indenture, the Guaranty or any of the transactions contemplated hereby or
thereby may be instituted in any state or U.S. federal court in the Borough of
Manhattan, in the City of New York, and any appellate court from any thereof,
and each of them irrevocably submits to the non-exclusive jurisdiction of such
courts in any suit, action or proceeding. The Issuers and the Company
irrevocably waive, to the fullest extent permitted by law, any objection to any
suit, action, or proceeding that may be brought in connection with the
Securities, this Indenture, the Guaranty or any of the transactions contemplated
hereby or thereby, in such courts whether on the grounds of venue, residence or
domicile or on the ground that any such suit, action or proceeding has been
brought in an inconvenient forum. The Issuers and the Company agree that final
judgment in any such suit, action or proceeding brought in such court shall be
conclusive and binding upon the Issuers or the Company, as the case may be, and
may be enforced in any court to the jurisdiction of which the Issuers or the
Company, as the case may be, is subject by a suit upon such judgment; provided
that service of process is affected upon the Issuers or the Company, as the case
may be, in the manner provided by this Section 14.11.
(b) The Issuers and the Company irrevocably appoints CT Corporation
System, with offices on the date hereof at 1633 Broadway, New York, New York
10019, as its authorized agent (the "Authorized Agent"), upon whom process may
be served in any suit, action or proceeding arising out of or relating to the
Securities, this Indenture, the Guaranty or the transactions contemplated hereby
or thereby which may be instituted in any state or U.S. Federal court in the
Borough of Manhattan, The City of New York, New York, and expressly accepts the
non-exclusive jurisdiction of any such court in respect of any such suit, action
or proceeding. Each of the Issuers and the Company hereby represents and
warrants that the Authorized Agent has accepted such appointment and has agreed
to act as said agent for service of process, and the Issuers and the Company
agree to take any and all action, including the filing of any and all documents
that may be necessary to continue such respective appointment in full force and
effect for a period of ten years from the date of this Indenture. Service of
process upon the Authorized Agent shall be deemed, in every respect, effective
service of process upon the Issuers and the Company. Notwithstanding the
foregoing, any action involving the Issuers or the Company arising out of or
relating to the Securities, this
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117
Indenture, the Guaranty or the transactions contemplated hereby or thereby may
be instituted in any court of competent jurisdiction in any other jurisdiction.
(c) Each of the parties to this Indenture hereby irrevocably waives
all right to a trial by jury in any action, proceeding or counterclaim arising
out of or relating to the Securities, this Indenture, any Guaranty or the
transactions contemplated hereby or thereby.
SECTION 14.12. No Recourse Against Others. A director, officer,
employee or stockholder, as such, of the Issuers shall not have any liability
for any obligations of the Issuers under the Securities or this Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder shall waive and release
all such liability. The waiver and release shall be part of the consideration
for the issue of the Securities.
SECTION 14.13. Successors. All agreements of the Issuers and the
Company in this Indenture and the Securities shall bind its successors. All
agreements of the Trustee in this Indenture shall bind its successors.
SECTION 14.14. Multiple 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. One signed copy is enough to prove
this Indenture.
SECTION 14.15. Table of Contents; Headings. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
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118
IN WITNESS WHEREOF, the parties have caused this Indenture to be
duly executed as of the date first written above.
NSM STEEL (DELAWARE), INC.
by : /s/ John W. Shultes
--------------------------------
Name: John W. Shultes
Title: President/CEO
NSM STEEL COMPANY, LTD.
by : /s/ John W. Shultes
--------------------------------
Name: John W. Shultes
Title: President/CEO
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
by : /s/ John W. Shultes
--------------------------------
Name: John W. Shultes
Title: President/CEO
THE CHASE MANHATTAN BANK, as Trustee
by : /s/ Valerie Dunbar
--------------------------------
Name: Valerie Dunbar
Title:
<PAGE>
EXHIBIT A
[FORM OF FACE OF INITIAL SECURITY]
THIS SECURITY WILL BE CONSIDERED TO HAVE BEEN ISSUED WITH ORIGINAL
ISSUE DISCOUNT ("OID") FOR PURPOSES OF SECTIONS 1271 ET. SEQ. OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED. THE ISSUE DATE OF THIS SECURITY IS MARCH 12,
1998. FOR INFORMATION REGARDING THE ISSUE PRICE, AMOUNT OF OID PER US$1,000 OF
PRINCIPAL AMOUNT AND YIELD TO MATURITY FOR PURPOSES OF THE OID RULES, PLEASE
CONTACT JOHN W. SCHULTES OF NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED,
CHONBURI INDUSTRIAL ESTATE (BOWIN), 358 MOO 6, HIGHWAY 331, BOWIN, SRIRACHA,
CHONBURI 20230, THAILAND.
[Global Securities Legend]
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES
IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY
TO THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF
SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC"), TO THE ISSUERS OR THEIR
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN. (1)
[Private Placement Legend]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REFERRED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES FOR THE
BENEFIT OF THE ISSUERS THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED PRIOR TO THE LATER OF (X) TWO YEARS AFTER THE LATER OF (I)
THE ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO) OR (II) THE DATE THIS
SECURITY WAS ACQUIRED FROM AN
- ----------
(1) This paragraph should only be added if the Security is issued in global
form.
<PAGE>
2
AFFILIATE OF THE ISSUERS OR (Y) THREE MONTHS AFTER THE LAST DATE THAT THIS
SECURITY WAS OWNED BY ANY AFFILIATE OF THE ISSUERS, IN EITHER CASE OTHER THAN
(A) TO THE ISSUERS, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES
ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER"
AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING
OF RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING
THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, IN EACH CASE IN A TRANSACTION INVOLVING A MINIMUM PRINCIPAL
AMOUNT OF US$250,000 FOR SUCH SECURITIES FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUERS' AND THE
TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE
(D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION
OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN THE CASE OF ANY OF THE
FOREGOING CLAUSES (A) THROUGH (F), A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE ISSUERS AND THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF THE HOLDER AFTER THE LATER OF (X) TWO YEARS AFTER THE LATER OF (I)
THE ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO) OR (II) THE DATE THIS
SECURITY WAS ACQUIRED FROM AN AFFILIATE OF THE ISSUERS OR (Y) THREE MONTHS AFTER
THE LAST DATE THAT THIS SECURITY WAS OWNED BY ANY AFFILIATE OF THE COMPANY.
[Regulation S Legend]
UNTIL 40 DAYS AFTER THE COMMENCEMENT OF THE OFFERING, AN OFFER OR
SALE OF SECURITIES WITHIN THE UNITED STATES BY A DEALER (AS DEFINED IN THE
SECURITIES ACT) MAY VIOLATE THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
IF SUCH OFFER OR SALE IS MADE OTHERWISE THAN IN ACCORDANCE WITH RULE 144A UNDER
THE SECURITIES ACT.
NSM STEEL (DELAWARE), INC.
<PAGE>
3
NSM STEEL COMPANY, LTD.
12 1/4% SENIOR SUBORDINATED MORTGAGE NOTE DUE 2008
No. __ CUSIP No. ______
US$ ______
NSM STEEL (DELAWARE), INC., a company organized under the laws of
Delaware, and NSM STEEL COMPANY, LTD., a company organized under the laws of the
Cayman Islands, promise to pay to THE CHASE MANHATTAN BANK, AS BOOK-ENTRY
DEPOSITARY, or its registered assigns, the principal sum of on February 1, 2008.
Interest Payment Dates: February 1 and August 1,
commencing August 1, 1998.
Record Dates: January 15 and July 15,
commencing July 15, 1998
(whether or not a Business
Day).
Additional provisions of this Security are set forth on the other
side of this Security.
Dated:
NSM STEEL (DELAWARE), INC.,
by
-------------------------
Name:
Title:
NSM STEEL COMPANY, LTD.,
by
-------------------------
Name:
Title:
<PAGE>
4
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
THE CHASE MANHATTAN BANK,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture,
by
------------------------------------
Authorized Officer
<PAGE>
5
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
12 1/4% Senior Subordinated Mortgage Note Due 2008
1. Interest
NSM Steel (Delaware), Inc., a company organized under the laws of
Delaware, and NSM Steel Company, Ltd., a company organized under the laws of the
Cayman Islands (such companies, and their successors and assigns under the
Indenture hereinafter referred to, being herein called the "Issuers"), promise
to pay interest on the principal amount of this Security at the rate per annum
shown above. The Issuers will pay interest semiannually on February 1 and August
1 of each year. Interest on the Securities will accrue from the most recent date
to which interest has been paid or, if no interest has been paid, from March 12,
1998. Interest will be computed on the basis of a 360-day year of twelve 30-day
months. The Issuers shall pay interest on overdue principal at the rate borne by
the Securities plus 1% per annum, and they shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
The Issuers and the Company will use their best efforts to have the
Exchange Offer Registration Statement or, if applicable, the Shelf Registration
Statement (each a "Registration Statement") declared effective by the Commission
as promptly as practicable after the filing thereof. If (i) the Exchange Offer
Registration Statement is not filed within 90 days following the Issue Date,
additional interest shall accrue on the Securities over and above the stated
interest at a rate of .50% per annum commencing on the 91st day after the Issue
Date and such additional interest rate shall increase by .50% per annum on the
first day of each 90 day period thereafter; (ii) the Exchange Offer Registration
Statement is not declared effective within 180 days following the Issue Date or,
if applicable, the Shelf Registration Statement is not declared effective within
245 days following the Issue Date, additional interest shall accrue on the
Securities over and above the stated interest at a rate of .50% per annum
commencing on the 181st day after the Issue Date and such additional interest
rate shall increase by .50% per annum on the first day of each 90 day period
thereafter; or (iii) (A) the Issuers have not exchanged all Securities validly
tendered in accordance with the terms of the Exchange Offer on or prior to 210
days after the Issue Date or (B) the Exchange Offer Registration Statement
ceases to be effective at any time prior to the time that the Exchange Offer is
<PAGE>
6
consummated or (C) if applicable, the Shelf Registration Statement has been
declared effective and such Shelf Registration Statement ceases to be effective
at any time prior to the second anniversary of the Issue Date (unless all the
Securities have been sold thereunder), then additional interest shall accrue on
the Securities over and above the stated interest at a rate of .50% per annum
commencing on (x) the 211th day after the Issue Date with respect to the
Securities validly tendered and not exchanged by the Company, in the case of (A)
above, or (y) the day the Exchange Offer Registration Statement ceases to be
effective or usable for its intended purpose in the case of (B) above, or (z)
the day such Shelf Registration Statement ceases to be effective in the case of
(C) above and such additional interest rate shall increase by .50% per annum on
the first day of each 90 day period thereafter; provided, however, that the
additional interest rate on the Securities may not exceed in the aggregate 1.5%
per annum (each such event referred to in clauses (i) through (iii), a
"Registration Default"). All accrued additional interest shall be paid to
Holders in the same manner as interest payments on the Securities on semi-annual
payment dates which correspond to interest payment dates for the Securities.
Following the cure of all Registration Defaults, the accrual of additional
interest will cease. The Trustee shall have no responsibility with respect to
the determination of the amount of any such additional interest. For purposes of
the foregoing, "Registrable Securities" means (i) each Initial Security until
the date on which such Initial Security has been exchanged for a freely
transferable Exchange Security in the Exchange Offer, (ii) each Initial Security
until the date on which such Initial Security has been effectively registered
under the Securities Act and disposed of in accordance with the Shelf
Registration Statement or (iii) each Initial Security until the date on which
such Initial Security is distributed to the public pursuant to Rule 144 under
the Securities Act or is saleable pursuant to Rule 144(k) under the Securities
Act.
2. Method of Payment
The Issuers will pay interest on the Securities (except defaulted
interest) to the Persons who are registered Holders of Securities at the close
of business on the January 15 or July 15 next preceding the interest payment
date even if Securities are canceled after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Issuers will pay principal and interest in money
of the United States that at the time
<PAGE>
7
of payment is legal tender for payment of public and private debts. However, the
Issuers may pay principal and interest by check payable in such money. They may
mail an interest check to a Holder's registered address.
3. Paying Agent and Registrar
Initially, THE CHASE MANHATTAN BANK, a New York banking corporation
("Trustee"), will act as Paying Agent and Registrar. The Issuers may appoint and
change any Paying Agent, Registrar or co-registrar without notice.
4. Indenture
The Issuers issued the Securities under an Indenture dated as of
March 1, 1998 (the "Indenture"), among the Issuers, Nakornthai Strip Mill Public
Company Limited (the "Company") 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, except as otherwise provided in the
Indenture (the "Act"). Terms defined in the Indenture and not defined herein
have the meanings ascribed thereto in the Indenture. The Securities are subject
to all such terms, and Securityholders are referred to the Indenture and the Act
for a statement of those terms.
The Securities are secured, senior subordinated obligations of the
Issuers limited to US$203,500,000 aggregate principal amount (subject to Section
2.07 of the Indenture). The Indenture imposes certain limitations on the
Incurrence of Indebtedness by the Issuers and certain of their Subsidiaries, the
payment of dividends on, and redemption of, the Capital Stock of the Issuers and
their Subsidiaries and the redemption of certain subordinated obligations of the
Issuers and their subsidiaries, restricted payments, the creation or existence
of certain Liens, the sale or transfer of assets and Subsidiary stock, the
issuance or sale of Capital Stock of Restricted Subsidiaries, the business
activities and investments of the Issuers and certain of their Subsidiaries,
consolidations, mergers and transfers of all or substantially all the assets of
the Issuers or certain Subsidiaries, and transactions with Affiliates. In
addition, the Indenture limits the ability of the Issuers and certain of their
Subsidiaries to restrict distributions and dividends from Subsidiaries.
<PAGE>
8
To secure the due and punctual payment of the principal and
additional interest and interest, if any, on the Securities and all other
amounts payable by the Issuers 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 unconditionally guaranteed the Securities on a senior (other than in
respect of any Specified Senior Indebtedness of the Company) basis pursuant to
the terms of the Indenture.
5. Optional Redemption
(a) Except as set forth in the two next succeeding paragraphs, the
Securities may not be redeemed prior to February 1, 2003. On and after that
date, the Issuers may redeem the Securities in whole or in part, upon no less
than 30 nor more than 60 days' prior notice, at the following redemption prices
(expressed in percentages of principal amount at maturity), plus accrued
interest, if any, to the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
Interest Payment Date), if redeemed during the 12-month period commencing on
February 1 of the years set forth below:
Period Percentages
------ -----------
2003 106.1250%
2004 104.0417%
2005 103.0625%
2006 and thereafter 100.0000%
(b) At any time prior to February 1, 2001, the Issuers may redeem in
the aggregate up to 35% of the aggregate principal amount at maturity of
Securities with the net proceeds of one or more Public Equity Offerings by the
Issuers, at a redemption price of 112.25% of the principal amount at maturity
thereof at the redemption date plus accrued interest, if any, to the redemption
date (subject to the right of Holders of record on the relevant record date to
receive interest due on the related interest payment date); provided, however,
that after any such redemption the aggregate principal amount at maturity of the
Securities outstanding must equal or exceed US$132,000,000. In order to effect
the foregoing redemption with the proceeds of any Public Equity Offering, the
Issuers must make such redemption not more than 60 days after the consummation
of any such Public Equity Offering.
<PAGE>
9
(c) The Securities may be redeemed at the option of the Issuers or
paid in full at the option of the Company, in whole but not in part, upon not
less than 30 nor more than 60 days' notice given as provided in the Indenture,
at any time at 103% of the principal amount thereof, plus accrued and unpaid
interest to the date fixed for such payment if, as a result of any change in or
amendment to the laws, regulations or governmental policy having the force of
law of the Cayman Islands or Thailand (or of any political subdivision or taxing
authority thereof or therein) or any execution of or amendment to, any treaty or
treaties affecting taxation of which the Cayman Islands or Thailand (or such
political subdivision or taxing authority) is a party, which becomes effective
on or after the date of the Indenture (i)(A) the Issuers are required, or would
be required on the next succeeding interest payment date, to pay Additional
Amounts in respect of payments on the Securities as a result of the imposition
of Taxes imposed by the Cayman Islands or Thailand (or any political subdivision
or taxing authority or either jurisdiction); (B) the Company is, or on the next
succeeding Interest Payment Date would be, unable for reasons outside of its
control, to procure payment by the Issuers and, with respect to any payment due,
or to become due, under the Securities or the Guaranty, the Company is required,
or would be required on the next succeeding Interest Payment Date, to pay
Additional Amounts as a result of the imposition of Taxes by the Cayman Islands
or Thailand (or any political subdivision or taxing authority of either
jurisdiction); or (C) with respect to any payment to an Issuer to enable an
Issuer to make any payments under the Securities, the Company or NSM Steel
Company, Ltd. is, or on the next Interest Payment Date would be, required to
deduct or withhold taxes imposed by the Cayman Islands or Thailand (or any
political subdivision or taxing authority of either jurisdiction) and (ii) the
payment of such Additional Amounts cannot be avoided by the use of any
reasonable measures available to the Issuers or the Company that do not require
undue effort or costs (including, without limitation, the Company making
payments directly to Holders under the Guaranty). In addition, the Issuers or
the Company, as the case may be, will also pay to Holders on the redemption date
any Additional Amounts which would otherwise be payable; provided, however, that
no such notice of redemption shall be given earlier than 90 days prior to the
earliest date on which the Issuers or the Company, as the case may be, would be
obligated to pay such Additional Amounts if a payment in respect of the
Securities or the Guaranty were then due.
Prior to the publication of the notice of redemption in accordance
with the foregoing, the Issuers or
<PAGE>
10
the Company shall deliver to the Trustee an Officers' Certificate stating that
(x) the Issuers or the Company are entitled to effect such redemption based on a
written Opinion of Counsel or written advice of a nationally recognized
independent tax counsel, such opinion or advice being reasonably acceptable to
the Trustee, that the condition referred to in either of subclauses (A) or (B)
or (C) of clause (i) of the immediately preceding paragraph is satisfied as a
result of such change, amendment or executed or amended treaty and (y) the
condition described in clause (ii) of the immediately preceding paragraph is
satisfied. Such notice, once delivered by the Issuers or the Company to the
Trustee, will be irrevocable.
6. Notice of Redemption
Notice of redemption will 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 his registered address. Securities in denominations larger than
US$1,000 may be redeemed in part but only in whole multiples of US$1,000. If
money sufficient to pay the redemption price of and accrued interest on all
Securities (or portions thereof) to be redeemed on the redemption date is
deposited with the Paying Agent on or before the redemption date and certain
other conditions are satisfied, on and after such date interest ceases to accrue
on such Securities (or such portions thereof) called for redemption.
7. Put Provisions
Upon a Change of Control, any Holder of Securities will have the
right, subject to certain conditions, to cause the Issuers to repurchase all or
any part of the Securities of such Holder at a purchase price in cash equal to
101% of the Accreted Value of the Securities on the date of purchase plus
accrued and unpaid interest and Additional Amounts, if any, to the date of
repurchase (subject to the right of Holders of record on the relevant record
date to receive interest due on the related Interest Payment Date) as provided
in, and subject to the terms of, the Indenture.
8. Additional Amounts
(a) All payments made by the Issuers under or with respect to the
Securities and by the Company under the Guaranty will be made free and clear of
and without withholding or deduction for or on account of any present or
<PAGE>
11
future taxes, levies, duties, fees, assessments or other governmental charges of
whatever nature ("Taxes") imposed, levied, collected or assessed by or on behalf
of any taxing authority within the Cayman Islands or Thailand, unless the
Issuers are or the Company is, as the case may be, required to withhold or
deduct Taxes by law or by the interpretation or administration thereof. If the
Issuers are or the Company is required to withhold or deduct or if the Issuers
are or the Company is otherwise required to pay any amount for or on account of
Taxes imposed by a taxing authority within the Cayman Islands or Thailand from
or in respect of any payment made under or with respect to the Securities or the
Guaranty, the Issuers or the Company, as the case may be, will pay such
additional amounts ("Additional Amounts") as may be necessary so that the net
amount received by each Holder and beneficial owner of Securities (including
Additional Amounts) after such withholding or deduction or other payment of
Taxes will not be less than the amount such Holder or beneficial owner would
have received if such Taxes had not been withheld or deducted or paid; provided,
however, that no Additional Amounts will be payable with respect to a payment
made to a Holder or beneficial owner of Securities with respect to any Tax: (i)
which would not have been imposed, payable or due but for the existence of any
present or former connection between such Holder (or the beneficial owner of, or
Person ultimately entitled to obtain an interest in, such Securities) and the
Cayman Islands or Thailand, as the case may be, other than the mere holding of
such Securities; (ii) which would not have been imposed, payable or due if such
Securities had been held in definitive registered form ("Definitive Registered
Securities") and the presentation of Definitive Registered Securities for
payment had occurred within 30 days after the date such payment was due and
payable or was provided for, whichever is later, except for Additional Amounts
with respect to Taxes that would have been imposed had the holder presented such
Securities for payment on any date during such 30 day period; (iii) that is an
estate, inheritance, gift, sales, transfer, personal property or similar Tax;
(iv) that is imposed or withheld by reason of the failure of such Holder or
beneficial owner to comply, at the reasonable request of the Issuers or the
Company, as the case may be, with certification, information or other reporting
requirements concerning the nationality, residence or identity of such Holder or
beneficial owner if such compliance is required or imposed by a statute, treaty,
regulation or administrative practice of the taxing jurisdiction as a
precondition to exemption from all or part of such Tax; (v) if the beneficial
owner of, or Person ultimately entitled to obtain an interest in, such
Securities had been the Holder of the Securities and would
<PAGE>
12
not be entitled to the payment of Additional Amounts; or (vi) payable otherwise
than by withholding from payments on or in respect of any Security.
(b) The Issuers or the Company, as the case may be, will also (i)
make such withholding or deduction and (ii) remit the full amount deducted or
withheld to the relevant authority in accordance with applicable law. The
Issuers or the Company, as the case may be, will make reasonable efforts to
obtain certified copies of tax receipts evidencing the payment of any Taxes so
deducted or withheld from each taxing authority imposing such Taxes. The Issuers
or the Company, as the case may be, will furnish to the Holders, within 60 days
after the date the payment of any Taxes so deducted or withheld is due pursuant
to applicable law, either certified copies of tax receipts evidencing such
payment by the Issuers or the Company, as the case may be, or, if such receipts
are not obtainable, other evidence of such payments by the Issuers or the
Company.
(c) In addition, the Issuers or the Company, as the case may be,
will upon written request of each Holder (subject to the exclusions set forth in
(i), (ii), (iii), (iv), (v) and (vi) of paragraph (a) above), and provided that
reasonable supporting documentation is provided, reimburse each such Holder for
the amount of any Taxes levied or imposed by the Cayman Islands or Thailand and
paid by such Holder as a result of payments made under or with respect to the
Securities or under the Guaranty. Any payment pursuant to this section shall be
an Additional Amount.
(d) At least 30 days prior to each date on which any payment under
or with respect to the Securities or under the Guaranty is due and payable, if
the Issuers or the Company will be obligated to pay Additional Amounts with
respect to such payment, the Issuers or the Company will deliver to the Trustee
an Officers' Certificate stating the fact that such Additional Amounts will be
payable and the amounts so payable and will set forth such other information
necessary to enable the Trustee to pay such Additional Amounts to the Holders of
Securities on the payment date. Whenever in the Indenture or in this Security
there is mentioned, in any context, the payment of amounts based upon the
principal of, premium, if any, interest or of any other amount payable under or
with respect to any Security or the Guaranty such mention shall be deemed to
include mention of the payment of Additional Amounts to the extent that, in such
context, Additional Amounts are, were or would be payable in respect thereof.
<PAGE>
13
(e) In addition, the Issuers will pay any stamp, issue,
registration, documentary, value added or other similar taxes and other duties
(including interest and penalties) payable in the Cayman Islands or Thailand (or
any political subdivision or taxing authority of either jurisdiction) and in the
United States in respect of the creation, issue, offering, execution or
enforcement of the Securities, the Guaranty or any documentation with respect
thereto.
9. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of US$1,000 and any integral multiple of US$1,000. A Holder may
transfer or exchange Securities in accordance with the Indenture. The Registrar
may require a Holder, among other things, to furnish appropriate endorsements or
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not register the transfer of or exchange any
Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) or any
Securities for a period of 15 days before a selection of Securities to be
redeemed or 15 days before an interest payment date.
10. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner
of it for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Issuers at their written request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Issuers and not to the Trustee for payment.
<PAGE>
14
12. Discharge and Defeasance
Subject to certain conditions, the Issuers at any time may terminate
some or all of their obligations under the Securities and the Indenture if the
Issuers deposit with the Trustee money or U.S. Government Obligations for the
payment of principal, premium (if any) and interest on the Securities to
redemption or maturity, as the case may be.
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount at maturity of the Securities
then outstanding and (ii) any existing Default and its consequences or
noncompliance with any provisions may be waived with the written consent of the
Holders of a majority in principal amount at maturity of the Securities then
outstanding. Subject to certain exceptions set forth in the Indenture, without
the consent of any Securityholder, the Issuers, the Company and the Trustee may
amend the Indenture (and the Trustee and the Company may amend the Guaranty) or
the Securities to cure any ambiguity, omission, defect or inconsistency, or to
comply with Article 5 of the Indenture, to provide for uncertificated Securities
in addition to or in place of certificated Securities, to add further Guaranties
with respect to the Securities or to further secure the Securities, to add
additional covenants or surrender rights and powers conferred upon the Issuers
or the Company, to comply with any request of the SEC in connection with
qualifying the Indenture under the Act or to make any change that does not
adversely affect the rights of any Securityholder.
14. Defaults and Remedies
Under the Indenture, Events of Default include (i) a default in any
payment of interest on any Security when due, continued for 30 days, (ii) a
default in the payment of principal of any Security when due at its Stated
Maturity, upon optional redemption, upon required repurchase, upon declaration
or otherwise, (iii) the failure by the Issuers or the Company to comply with its
obligations under Section 5.01 of the Indenture, (iv) the failure (A) by the
Issuers or the Company to comply for 30 days after notice
<PAGE>
15
with any of its obligations under Article 4 of the Indenture or (B) by the
Company or the Issuers or any Restricted Subsidiary to comply for 30 days after
notice with any of its obligations under Article 4 of the Indenture (other than
a failure to purchase Securities which shall constitute an Event of Default
under clause (ii) above), other than as described in clause (i), (ii) or (iii)
above, (v) the failure by the Issuers or the Company to comply with other
agreements in the Securities, the Indenture or the Note Guaranty, in certain
cases subject to notice and lapse of time, (vi) the Guaranty ceases to be in
full force and effect (except as contemplated by the terms thereof) or the
Company denies or disaffirms its obligations under the Indenture or the
Guaranty, (vii) the failure by the Company, the Issuers or any Restricted
Subsidiary to pay any Indebtedness within any applicable grace period after
final maturity or the acceleration of any such Indebtedness by the holders
thereof because of a default if the total amount of such Indebtedness unpaid or
accelerated exceeds US$5 million and such default shall not have been cured or
such acceleration rescinded after a 10-day period, (viii) certain events of
bankruptcy, insolvency or reorganization of the Company, the Issuers or any
Subsidiary, (ix) the rendering of any judgment or decree for the payment of
money in excess of US$5 million (to the extent not covered by insurance) against
the Company, the Issuers or a Subsidiary if (A) an enforcement proceeding
thereon is commenced or (B) such judgment or decree remains outstanding for a
period of 60 days following such judgment and is not discharged, waived or
stayed, (x) any Account is not maintained as required or any drawing under any
Account is not made when required to be made and in any such case such failure
continues unremedied for five Business Days (or, in the case of a failure to
maintain any required amount in, or to make a drawing under, the Notes DSR
Account, 30 days), (xi) the Security Documents shall cease to grant the Holders
any of the material collateral or rights purported to be granted thereunder or
(xii) after giving effect to the anticipated receipt and application of any
insurance proceeds, the Mill is abandoned in whole or in substantial part or is
destroyed or made permanently inoperable in whole or in substantial part. If an
Event of Default with respect to the Securities occurs (other than an Event of
Default with respect to the Issuers or the Company pursuant to certain events of
bankruptcy or insolvency) and is continuing, the Trustee or the Holders of at
least 25% in principal amount at maturity of the outstanding Securities may
declare the Accreted Value as of the date on which the Securities first became
due and payable plus accrued and unpaid interest, if any, on all the Securities
to be due and payable. Upon such a declaration, such Accreted Value and accrued
and unpaid interest shall be due and payable immediately.
<PAGE>
16
Securityholders may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may refuse to enforce the
Indenture or the Securities unless it receives reasonable indemnity or security.
Subject to certain limitations, Holders of a majority in principal amount of the
Securities may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Securityholders notice of any continuing Default
(except a Default in payment of principal or interest) if it determines that
withholding notice is in the interest of the Holders.
15. Security
(a) The obligations of the Issuers under the Securities, will be
secured by pledges of the capital stock of NSM Steel (Delaware), Inc.
(b) The obligations of the Company under its Guaranty will be
secured equally and ratably by (i) a first mortgage over the land and buildings
comprising the Mill (except for the Co-Gen Facility); (ii) a security interest
in all amounts in the Notes DSR Account and Offshore Reserve Account; (iii) a
security interest in all machinery and movable property located at the Mill;
(iv) an assignment of all insurance and reinsurance policies maintained by the
Company on the Mill (except for the Co-Gen Facility); (v) an assignment of the
Company's rights and benefits under the Project Documents; (vi) a conditional
assignment and general pledge of the Revenue Account, the Notes Sinking Fund
Account and the Operating Account; (vii) a pledge of certain Permitted
Investments; (viii) a pledge of all issued and outstanding shares of NSM Steel
Company, Ltd.; and (ix) an assignment of Performance Bonds (all such collateral
security, the "Collateral"). The Collateral (other than the Collateral described
in clauses (ii) and (viii) above) will also secure, on an equal and ratable
basis, certain existing Indebtedness under the Bank Credit Facility. In
addition, all Collateral will secure, on a second priority basis, the
obligations of the Company in respect of the Debenture Guaranty.
(c) To secure the due and punctual payment of the obligations of the
Issuers and the Company under the Indenture, the Securities and the Guaranty,
the Issuers and the Company have entered into the Security Documents. The
Issuers and the Trustee hereby acknowledge and agree that the Collateral Agent
holds the Collateral in trust for the benefit of the Holders and other
beneficiaries pursuant to the terms of the Security Sharing Agreement. Each
Holder, by accepting or holding a Security, shall be deemed to have
<PAGE>
17
agreed to all the terms and provisions of the Security Sharing Agreement.
(d) Each Holder, by accepting a Security, shall be deemed to have
authorized the Trustee to act as the representative of the Holders for the
purposes of the Security Sharing Agreement in connection with any communications
or other dealings with the Collateral Agent, and the Collateral Agent shall not
be required to accept communications from any party other than the Trustee, with
respect to any request, instruction, direction, approval, consent, agreement or
other instruction of the Holders under the Indenture or the Security Sharing
Agreement.
16. Trustee Dealings with the Issuers
Subject to certain limitations imposed by the Act, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Issuers or its Affiliates and may otherwise deal with the Issuers
or its Affiliates with the same rights it would have if it were not Trustee.
17. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Issuers, shall not have any liability for any obligations of the Issuers under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
18. Governing Law
THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. THE VARIOUS AGREEMENTS CREATING
AND GOVERNING THE COLLATERAL WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK AND THAILAND.
<PAGE>
18
19. Authentication
This Security shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
20. Abbreviations
Customary abbreviations may be used in the name of a Securityholder
or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
21. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Issuers have 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 Securityholders. 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 thereon.
The Issuers will furnish to any Securityholder upon written request
and without charge to the Securityholder a copy of the Indenture which has in it
the text of this Security in larger type. Requests may be made to:
c/o Nakornthai Strip Mill Public Company Limited
Chonburi Industrial Estate (bowin)
358 Moo 6
Highway 331
Bowin, Sriracha, Chonburi 20230
THAILAND
Attention: John W. Schultes
<PAGE>
19
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to
transfer this Security on the books of the Issuers. 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 Guaranty: ______________________________________
<PAGE>
20
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF
REGISTRABLE SECURITIES
This certificate relates to US$_________ principal amount of Securities held in
(check applicable space) ____ book-entry or _____ definitive form by the
undersigned.
The undersigned (check one box below):
|_| has requested the Trustee by written order to deliver in exchange for its
beneficial interest in the Global Security held by the Depository a
Security or Securities in definitive, registered form of authorized
denominations and an aggregate principal amount equal to its beneficial
interest in such Global Security (or the portion thereof indicated above);
|_| has requested the Trustee by written order to exchange or register the
transfer of a Security or Securities.
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act after the later of the date of original issuance
of such Securities and the last date, if any, on which such Securities were
owned by the Issuers or any Affiliate of the Issuers, the undersigned confirms
that such
<PAGE>
21
Securities are being transferred in accordance with its terms:
CHECK ONE BOX BELOW:
(1) |_| to the Issuers; or
(2) |_| pursuant to an effective registration statement under
the Securities Act of 1933; or
(3) |_| inside the United States to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act
of 1933) that purchases for its own account or for the
account of a qualified institutional buyer to whom
notice is given that such transfer is being made in
reliance on Rule 144A, in each case pursuant to and in
compliance with Rule 144A under the Securities Act of
1933; or
(4) |_| outside the United States in an offshore transaction
within the meaning of Regulation S under the Securities
Act in compliance with Rule 904 under the Securities Act
of 1933; or
(5) |_| pursuant to another available exemption from
registration provided by Rule 144 under the Securities
Act of 1933.
<PAGE>
22
Unless one of the boxes is checked, the Trustee will refuse to register
any of the Securities evidenced by this certificate in the name of any
Person other than the registered Holder thereof; provided, however, that
if box (4) or (5) is checked, the Trustee may require, prior to
registering any such transfer of the Securities, such legal opinions,
certifications and other information as the Issuers have reasonably
requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, such as the exemption provided
by Rule 144 under such Act.
__________________________
Signature
Signature Guaranty:
_____________________ __________________________
Signature must be Guaranteed Signature
________________________________________________________________________________
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, and is aware that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information regarding the Issuers as
the undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the exemption
from registration provided by Rule 144A.
Dated: ________________ __________________________
NOTICE: To be executed by
an executive officer
<PAGE>
23
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security have
been made:
Date of Amount of Amount of Principal amount Signature of
Exchange decrease in increase in of this Global authorized
Principal Principal Security officer of
Amount of this Amount of this following such Trustee or
Global Security Global Security decrease or Securities
increase) Custodian
<PAGE>
24
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Issuers
pursuant to Section 4.06, 4.07 or 4.10 of the Indenture, check the box:
|_|
If you want to elect to have only part of this Security purchased by
the Issuers pursuant to Section 4.06 or 4.08 of the Indenture, state the amount:
US$
Date: __________________ Your Signature: __________________
(Sign exactly as your name appears on the other side of the Security)
Signature Guaranty:_______________________________________
(Signature must be Guaranteed by a
participant in a recognized signature
Guaranty medallion program)
<PAGE>
EXHIBIT B
[FORM OF FACE OF EXCHANGE SECURITY]
THIS SECURITY WILL BE CONSIDERED TO HAVE BEEN ISSUED WITH ORIGINAL
ISSUE DISCOUNT ("OID") FOR PURPOSES OF SECTIONS 1271 ET. SEQ. OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED. THE ISSUE DATE OF THIS SECURITY IS MARCH 12,
1998. FOR INFORMATION REGARDING THE ISSUE PRICE, AMOUNT OF OID PER US$1,000 OF
PRINCIPAL AMOUNT AND YIELD TO MATURITY FOR PURPOSES OF THE OID RULES, PLEASE
CONTACT JOHN W. SCHULTES OF NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED,
CHONBURI INDUSTRIAL ESTATE (BOWIN), 358 MOO 6, HIGHWAY 331, BOWIN, SRIRACHA,
CHONBURI 20230, THAILAND.
[Global Securities Legend]
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES
IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY
TO THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF
SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC"), TO THE ISSUERS OR THEIR
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN. (1)
- ----------
(1) This paragraph should only be added if the Security is issued in global
form.
<PAGE>
2
NSM STEEL (DELAWARE), INC.
NSM STEEL COMPANY, LTD.
12 1/4% SENIOR SUBORDINATED MORTGAGE NOTE DUE 2008
No. __ CUSIP No. ______
US$ ______
NSM STEEL (DELAWARE), INC., a company organized under the laws of
Delaware, and NSM STEEL COMPANY, LTD., a company organized under the laws of the
Cayman Islands, promise to pay to THE CHASE MANHATTAN BANK, AS BOOK-ENTRY
DEPOSITARY, or its registered assigns, the principal sum of
on February 1, 2008.
Interest Payment Dates: February 1 and August 1,
commencing August 1, 1998.
Record Dates: January 15 and July 15,
commencing July 15,
1998 (whether or not a
Business Day).
Additional provisions of this Security are set forth on the other
side of this Security.
Dated:
NSM STEEL (DELAWARE), INC.,
by
-------------------------
Name:
Title:
NSM STEEL COMPANY, LTD.,
by
-------------------------
Name:
Title:
<PAGE>
3
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
THE CHASE MANHATTAN BANK,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture,
by
------------------------------------
Authorized Officer
<PAGE>
4
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
12 1/4% Senior Subordinated Mortgage Note Due 2008
1. Interest
NSM Steel (Delaware), Inc., a company organized under the laws of
Delaware, and NSM Steel Company, Ltd., a company organized under the laws of the
Cayman Islands (such companies, and their successors and assigns under the
Indenture hereinafter referred to, being herein called the "Issuers"), promise
to pay interest on the principal amount of this Security at the rate per annum
shown above. The Issuers will pay interest semiannually on February 1 and August
1 of each year. Interest on the Securities will accrue from the most recent date
to which interest has been paid or, if no interest has been paid, from March 12,
1998. Interest will be computed on the basis of a 360-day year of twelve 30-day
months. The Issuers shall pay interest on overdue principal at the rate borne by
the Securities plus 1% per annum, and they shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
2. Method of Payment
The Issuers will pay interest on the Securities (except defaulted
interest) to the Persons who are registered Holders of Securities at the close
of business on the January 15 or July 15 next preceding the interest payment
date even if Securities are canceled after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Issuers will 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 Issuers may pay principal and interest by
check payable in such money. They may mail an interest check to a Holder's
registered address.
3. Paying Agent and Registrar
Initially, THE CHASE MANHATTAN BANK, a New York banking corporation
("Trustee"), will act as Paying Agent and Registrar. The Issuers may appoint and
change any Paying Agent, Registrar or co-registrar without notice.
<PAGE>
5
4. Indenture
The Issuers issued the Securities under an Indenture dated as of
March 1, 1998 (the "Indenture"), among the Issuers, Nakornthai Strip Mill Public
Company Limited (the "Company") 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, except as otherwise provided in the
Indenture (the "Act"). Terms defined in the Indenture and not defined herein
have the meanings ascribed thereto in the Indenture. The Securities are subject
to all such terms, and Securityholders are referred to the Indenture and the Act
for a statement of those terms.
The Securities are secured, senior subordinated obligations of the
Issuers limited to $203,500,000 aggregate principal amount (subject to Section
2.07 of the Indenture). The Indenture imposes certain limitations on the
Incurrence of Indebtedness by the Issuers and certain of their Subsidiaries, the
payment of dividends on, and redemption of, the Capital Stock of the Issuers and
their Subsidiaries and the redemption of certain subordinated obligations of the
Issuers and their subsidiaries, restricted payments, the creation or existence
of certain Liens, the sale or transfer of assets and Subsidiary stock, the
issuance or sale of Capital Stock of Restricted Subsidiaries, the business
activities and investments of the Issuers and certain of their Subsidiaries,
consolidations, mergers and transfers of all or substantially all the assets of
the Issuers or certain Subsidiaries, and transactions with Affiliates. In
addition, the Indenture limits the ability of the Issuers and certain of their
Subsidiaries to restrict distributions and dividends from Subsidiaries.
To secure the due and punctual payment of the principal and
interest, if any, on the Securities and all other amounts payable by the Issuers
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 unconditionally
guaranteed the Securities on a senior (other than in respect of any Specified
Senior Indebtedness of the Company) basis pursuant to the terms of the
Indenture.
<PAGE>
6
5. Optional Redemption
(a) Except as set forth in the two next succeeding paragraphs, the
Securities may not be redeemed prior to February 1, 2003. On and after that
date, the Issuers may redeem the Securities in whole or in part, upon no less
than 30 nor more than 60 days' prior notice, at the following redemption prices
(expressed in percentages of principal amount at maturity), plus accrued
interest, if any, to the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
Interest Payment Date), if redeemed during the 12-month period commencing on
February 1 of the years set forth below:
Period Percentages
------ -----------
2003 106.1250%
2004 104.0417%
2005 103.0625%
2006 and thereafter 100.0000%
(b) At any time prior to February 1, 2001, the Issuers may redeem in
the aggregate up to 35% of the aggregate principal amount at maturity of
Securities with the net proceeds of one or more Public Equity Offerings by the
Issuers, at a redemption price of 112.25% of the principal amount at maturity
thereof at the redemption date plus accrued interest, if any, to the redemption
date (subject to the right of Holders of record on the relevant record date to
receive interest due on the related interest payment date); provided, however,
that after any such redemption the aggregate principal amount at maturity of the
Securities outstanding must equal or exceed US$132,000,000. In order to effect
the foregoing redemption with the proceeds of any Public Equity Offering, the
Issuers must make such redemption not more than 60 days after the consummation
of any such Public Equity Offering.
(c) The Securities may be redeemed at the option of the Issuers or
paid in full at the option of the Company, in whole but not in part, upon not
less than 30 nor more than 60 days' notice given as provided in the Indenture,
at any time at 103% of the principal amount thereof, plus accrued and unpaid
interest to the date fixed for such payment if, as a result of any change in or
amendment to the laws, regulations or governmental policy having the force of
law of the Cayman Islands or Thailand (or of any political subdivision or taxing
authority thereof or therein) or any execution of or amendment to, any treaty or
treaties
<PAGE>
7
affecting taxation of which the Cayman Islands or Thailand (or such political
subdivision or taxing authority) is a party, which becomes effective on or after
the date of the Indenture (i)(A) the Issuers are required, or would be required
on the next succeeding interest payment date, to pay Additional Amounts in
respect of payments on the Securities as a result of the imposition of Taxes
imposed by the Cayman Islands or Thailand (or any political subdivision or
taxing authority or either jurisdiction); (B) the Company is, or on the next
succeeding Interest Payment Date would be, unable for reasons outside of its
control, to procure payment by the Issuers and, with respect to any payment due,
or to become due, under the Securities or the Guaranty, the Company is required,
or would be required on the next succeeding Interest Payment Date, to pay
Additional Amounts as a result of the imposition of Taxes by the Cayman Islands
or Thailand (or any political subdivision or taxing authority of either
jurisdiction); or (C) with respect to any payment to an Issuer to enable an
Issuer to make any payments under the Securities, the Company or NSM Steel
Company, Ltd. is, or on the next Interest Payment Date would be, required to
deduct or withhold taxes imposed by the Cayman Islands or Thailand (or any
political subdivision or taxing authority of either jurisdiction) and (ii) the
payment of such Additional Amounts cannot be avoided by the use of any
reasonable measures available to the Issuers or the Company that do not require
undue effort or costs (including, without limitation, the Company making
payments directly to Holders under the Guaranty). In addition, the Issuers or
the Company, as the case may be, will also pay to Holders on the redemption date
any Additional Amounts which would otherwise be payable; provided, however, that
no such notice of redemption shall be given earlier than 90 days prior to the
earliest date on which the Issuers or the Company, as the case may be, would be
obligated to pay such Additional Amounts if a payment in respect of the
Securities or the Guaranty were then due.
Prior to the publication of the notice of redemption in accordance
with the foregoing, the Issuers or the Company shall deliver to the Trustee an
Officers' Certificate stating that (x) the Issuers or the Company are entitled
to effect such redemption based on a written Opinion of Counsel or written
advice of a nationally recognized independent tax counsel, such opinion or
advice being reasonably acceptable to the Trustee, that the condition referred
to in either of subclauses (A) or (B) or (C) of clause (i) of the immediately
preceding paragraph is satisfied as a result of such change, amendment or
executed or amended treaty and (y) the condition described in clause (ii) of the
immediately preceding paragraph is
<PAGE>
8
satisfied. Such notice, once delivered by the Issuers or the Company to the
Trustee, will be irrevocable.
6. Notice of Redemption
Notice of redemption will 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 his registered address. Securities in denominations larger than
US$1,000 may be redeemed in part but only in whole multiples of US$1,000. If
money sufficient to pay the redemption price of and accrued interest on all
Securities (or portions thereof) to be redeemed on the redemption date is
deposited with the Paying Agent on or before the redemption date and certain
other conditions are satisfied, on and after such date interest ceases to accrue
on such Securities (or such portions thereof) called for redemption.
7. Put Provisions
Upon a Change of Control, any Holder of Securities will have the
right, subject to certain conditions, to cause the Issuers to repurchase all or
any part of the Securities of such Holder at a purchase price in cash equal to
101% of the Accreted Value of the Securities on the date of purchase plus
accrued and unpaid interest and Additional Amounts, if any, to the date of
repurchase (subject to the right of Holders of record on the relevant record
date to receive interest due on the related Interest Payment Date) as provided
in, and subject to the terms of, the Indenture.
8. Additional Amounts
(a) All payments made by the Issuers under or with respect to the
Securities and by the Company under the Guaranty will be made free and clear of
and without withholding or deduction for or on account of any present or future
taxes, levies, duties, fees, assessments or other governmental charges of
whatever nature ("Taxes") imposed, levied, collected or assessed by or on behalf
of any taxing authority within the Cayman Islands or Thailand, unless the
Issuers are or the Company is, as the case may be, required to withhold or
deduct Taxes by law or by the interpretation or administration thereof. If the
Issuers are or the Company is required to withhold or deduct or if the Issuers
are or the Company is otherwise required to pay any amount for or on account of
Taxes imposed by a taxing authority within the Cayman Islands or Thailand from
or in respect of
<PAGE>
9
any payment made under or with respect to the Securities or the Guaranty, the
Issuers or the Company, as the case may be, will pay such additional amounts
("Additional Amounts") as may be necessary so that the net amount received by
each Holder and beneficial owner of Securities (including Additional Amounts)
after such withholding or deduction or other payment of Taxes will not be less
than the amount such Holder or beneficial owner would have received if such
Taxes had not been withheld or deducted or paid; provided, however, that no
Additional Amounts will be payable with respect to a payment made to a Holder or
beneficial owner of Securities with respect to any Tax: (i) which would not have
been imposed, payable or due but for the existence of any present or former
connection between such Holder (or the beneficial owner of, or Person ultimately
entitled to obtain an interest in, such Securities) and the Cayman Islands or
Thailand, as the case may be, other than the mere holding of such Securities;
(ii) which would not have been imposed, payable or due if such Securities had
been held in definitive registered form ("Definitive Registered Securities") and
the presentation of Definitive Registered Securities for payment had occurred
within 30 days after the date such payment was due and payable or was provided
for, whichever is later, except for Additional Amounts with respect to Taxes
that would have been imposed had the holder presented such Securities for
payment on any date during such 30 day period; (iii) that is an estate,
inheritance, gift, sales, transfer, personal property or similar Tax; (iv) that
is imposed or withheld by reason of the failure of such Holder or beneficial
owner to comply, at the reasonable request of the Issuers or the Company, as the
case may be, with certification, information or other reporting requirements
concerning the nationality, residence or identity of such Holder or beneficial
owner if such compliance is required or imposed by a statute, treaty, regulation
or administrative practice of the taxing jurisdiction as a precondition to
exemption from all or part of such Tax; (v) if the beneficial owner of, or
Person ultimately entitled to obtain an interest in, such Securities had been
the Holder of the Securities and would not be entitled to the payment of
Additional Amounts; or (vi) payable otherwise than by withholding from payments
on or in respect of any Security.
(b) The Issuers or the Company, as the case may be, will also (i)
make such withholding or deduction and (ii) remit the full amount deducted or
withheld to the relevant authority in accordance with applicable law. The
Issuers or the Company, as the case may be, will make reasonable efforts to
obtain certified copies of tax receipts evidencing the payment of any Taxes so
deducted or
<PAGE>
10
withheld from each taxing authority imposing such Taxes. The Issuers or the
Company, as the case may be, will furnish to the Holders, within 60 days after
the date the payment of any Taxes so deducted or withheld is due pursuant to
applicable law, either certified copies of tax receipts evidencing such payment
by the Issuers or the Company, as the case may be, or, if such receipts are not
obtainable, other evidence of such payments by the Issuers or the Company.
(c) In addition, the Issuers or the Company, as the case may be,
will upon written request of each Holder (subject to the exclusions set forth in
(i), (ii), (iii), (iv), (v) and (vi) of paragraph (a) above), and provided that
reasonable supporting documentation is provided, reimburse each such Holder for
the amount of any Taxes levied or imposed by the Cayman Islands or Thailand and
paid by such Holder as a result of payments made under or with respect to the
Securities or under the Guaranty. Any payment pursuant to this section shall be
an Additional Amount.
(d) At least 30 days prior to each date on which any payment under
or with respect to the Securities or under the Guaranty is due and payable, if
the Issuers or the Company will be obligated to pay Additional Amounts with
respect to such payment, the Issuers or the Company will deliver to the Trustee
an Officers' Certificate stating the fact that such Additional Amounts will be
payable and the amounts so payable and will set forth such other information
necessary to enable the Trustee to pay such Additional Amounts to the Holders of
Securities on the payment date. Whenever in the Indenture or in this Security
there is mentioned, in any context, the payment of amounts based upon the
principal of, premium, if any, interest or of any other amount payable under or
with respect to any Security or the Guaranty such mention shall be deemed to
include mention of the payment of Additional Amounts to the extent that, in such
context, Additional Amounts are, were or would be payable in respect thereof.
(e) In addition, the Issuers will pay any stamp, issue,
registration, documentary, value added or other similar taxes and other duties
(including interest and penalties) payable in the Cayman Islands or Thailand (or
any political subdivision or taxing authority of either jurisdiction) and in the
United States in respect of the creation, issue, offering, execution or
enforcement of the Securities, the Guaranty or any documentation with respect
thereto.
<PAGE>
11
9. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of US$1,000 and any integral multiple of US$1,000. A Holder may
transfer or exchange Securities in accordance with the Indenture. The Registrar
may require a Holder, among other things, to furnish appropriate endorsements or
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not register the transfer of or exchange any
Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) or any
Securities for a period of 15 days before a selection of Securities to be
redeemed or 15 days before an interest payment date.
10. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner
of it for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Issuers at their written request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Issuers and not to the Trustee for payment.
12. Discharge and Defeasance
Subject to certain conditions, the Issuers at any time may terminate
some or all of their obligations under the Securities and the Indenture if the
Issuers deposit with the Trustee money or U.S. Government Obligations for the
payment of principal, premium (if any) and interest on the Securities to
redemption or maturity, as the case may be.
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least
<PAGE>
12
a majority in principal amount at maturity of the Securities then outstanding
and (ii) any existing Default and its consequences or noncompliance with any
provisions may be waived with the written consent of the Holders of a majority
in principal amount at maturity of the Securities then outstanding. Subject to
certain exceptions set forth in the Indenture, without the consent of any
Securityholder, the Issuers, the Company and the Trustee may amend the Indenture
(and the Trustee and the Company may amend the Guaranty) or the Securities to
cure any ambiguity, omission, defect or inconsistency, or to comply with Article
5 of the Indenture, to provide for uncertificated Securities in addition to or
in place of certificated Securities, to add further Guaranties with respect to
the Securities or to further secure the Securities, to add additional covenants
or surrender rights and powers conferred upon the Issuers or the Company, to
comply with any request of the SEC in connection with qualifying the Indenture
under the Act or to make any change that does not adversely affect the rights of
any Securityholder.
14. Defaults and Remedies
Under the Indenture, Events of Default include (i) a default in any
payment of interest on any Security when due, continued for 30 days, (ii) a
default in the payment of principal of any Security when due at its Stated
Maturity, upon optional redemption, upon required repurchase, upon declaration
or otherwise, (iii) the failure by the Issuers or the Company to comply with its
obligations under Section 5.01 of the Indenture, (iv) the failure (A) by the
Issuers or the Company to comply for 30 days after notice with any of its
obligations under Article 4 of the Indenture or (B) by the Company or the
Issuers or any Restricted Subsidiary to comply for 30 days after notice with any
of its obligations under Article 4 of the Indenture (other than a failure to
purchase Securities which shall constitute an Event of Default under clause (ii)
above), other than as described in clause (i), (ii) or (iii) above, (v) the
failure by the Issuers or the Company to comply with other agreements in the
Securities, the Indenture or the Note Guaranty, in certain cases subject to
notice and lapse of time, (vi) the Guaranty ceases to be in full force and
effect (except as contemplated by the terms thereof) or the Company denies or
disaffirms its obligations under the Indenture or the Guaranty, (vii) the
failure by the Company, the Issuers or any Restricted Subsidiary to pay any
Indebtedness within any applicable grace period after final maturity or the
acceleration of any such Indebtedness by the holders thereof because of a
default if the total amount of
<PAGE>
13
such Indebtedness unpaid or accelerated exceeds US$5 million and such default
shall not have been cured or such acceleration rescinded after a 10-day period,
(viii) certain events of bankruptcy, insolvency or reorganization of the
Company, the Issuers or any Subsidiary, (ix) the rendering of any judgment or
decree for the payment of money in excess of US$5 million (to the extent not
covered by insurance) against the Company, the Issuers or a Subsidiary if (A) an
enforcement proceeding thereon is commenced or (B) such judgment or decree
remains outstanding for a period of 60 days following such judgment and is not
discharged, waived or stayed, (x) any Account is not maintained as required or
any drawing under any Account is not made when required to be made and in any
such case such failure continues unremedied for five Business Days (or, in the
case of a failure to maintain any required amount in, or to make a drawing
under, the Notes DSR Account, 30 days), (xi) the Security Documents shall cease
to grant the Holders any of the material collateral or rights purported to be
granted thereunder or (xii) after giving effect to the anticipated receipt and
application of any insurance proceeds, the Mill is abandoned in whole or in
substantial part or is destroyed or made permanently inoperable in whole or in
substantial part. If an Event of Default with respect to the Securities occurs
(other than an Event of Default with respect to the Issuers or the Company
pursuant to certain events of bankruptcy or insolvency) and is continuing, the
Trustee or the Holders of at least 25% in principal amount at maturity of the
outstanding Securities may declare the Accreted Value as of the date on which
the Securities first became due and payable plus accrued and unpaid interest, if
any, on all the Securities to be due and payable. Upon such a declaration, such
Accreted Value and accrued and unpaid interest shall be due and payable
immediately.
Securityholders may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may refuse to enforce the
Indenture or the Securities unless it receives reasonable indemnity or security.
Subject to certain limitations, Holders of a majority in principal amount of the
Securities may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Securityholders notice of any continuing Default
(except a Default in payment of principal or interest) if it determines that
withholding notice is in the interest of the Holders.
<PAGE>
14
15. Security
(a) The obligations of the Issuers under the Securities, will be
secured by pledges of the capital stock of NSM Steel (Delaware), Inc.
(b) The obligations of the Company under its Guaranty will be
secured equally and ratably by (i) a first mortgage over the land and buildings
comprising the Mill (except for the Co-Gen Facility); (ii) a security interest
in all amounts in the Notes DSR Account and Offshore Reserve Account; (iii) a
security interest in all machinery and movable property located at the Mill;
(iv) an assignment of all insurance and reinsurance policies maintained by the
Company on the Mill (except for the Co-Gen Facility); (v) an assignment of the
Company's rights and benefits under the Project Documents; (vi) a conditional
assignment and general pledge of the Revenue Account, the Notes Sinking Fund
Account and the Operating Account; (vii) a pledge of certain Permitted
Investments; (viii) a pledge of all issued and outstanding shares of NSM Steel
Company, Ltd.; and (ix) an assignment of Performance Bonds (all such collateral
security, the "Collateral"). The Collateral (other than the Collateral described
in clauses (ii) and (viii) above) will also secure, on an equal and ratable
basis, certain existing Indebtedness under the Bank Credit Facility. In
addition, all Collateral will secure, on a second priority basis, the
obligations of the Company in respect of the Debenture Guaranty.
(c) To secure the due and punctual payment of the obligations of the
Issuers and the Company under the Indenture, the Securities and the Guaranty,
the Issuers and the Company have entered into the Security Documents. The
Issuers and the Trustee hereby acknowledge and agree that the Collateral Agent
holds the Collateral in trust for the benefit of the Holders and other
beneficiaries pursuant to the terms of the Security Sharing Agreement. Each
Holder, by accepting or holding a Security, shall be deemed to have agreed to
all the terms and provisions of the Security Sharing Agreement.
(d) Each Holder, by accepting a Security, shall be deemed to have
authorized the Trustee to act as the representative of the Holders for the
purposes of the Security Sharing Agreement in connection with any communications
or other dealings with the Collateral Agent, and the Collateral Agent shall not
be required to accept communications from any party other than the Trustee, with
respect to any request, instruction, direction, approval,
<PAGE>
15
consent, agreement or other instruction of the Holders under the Indenture or
the Security Sharing Agreement.
16. Trustee Dealings with the Issuers
Subject to certain limitations imposed by the Act, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Issuers or its Affiliates and may otherwise deal with the Issuers
or its Affiliates with the same rights it would have if it were not Trustee.
17. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Issuers, shall not have any liability for any obligations of the Issuers under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
18. Governing Law
THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. THE VARIOUS AGREEMENTS CREATING
AND GOVERNING THE COLLATERAL WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK AND THAILAND.
19. Authentication
This Security shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
<PAGE>
16
20. Abbreviations
Customary abbreviations may be used in the name of a Securityholder
or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
21. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Issuers have 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 Securityholders. 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 thereon.
The Issuers will furnish to any Securityholder upon written request
and without charge to the Securityholder a copy of the Indenture which has in it
the text of this Security in larger type. Requests may be made to:
c/o Nakornthai Strip Mill Public Company Limited
Chonburi Industrial Estate (bowin)
358 Moo 6
Highway 331
Bowin, Sriracha, Chonburi 20230
THAILAND
Attention: John W. Schultes
<PAGE>
17
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to this Security on
the books of the Issuers. 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 Guaranty: ______________________________________
<PAGE>
18
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security have
been made:
Date of Amount of Amount of Principal Signature of
Exchange decrease in increase in amount of this authorized
Principal Principal Amount Global Security officer of
Amount of this of this Global following such Trustee or
Global Security Security decrease or Securities
increase) Custodian
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Issuers
pursuant to Section 4.06, 4.07 or 4.10 of the Indenture, check the box:
|_|
If you want to elect to have only part of this Security purchased by
the Issuers pursuant to Section 4.06 or 4.08 of the Indenture, state the amount:
US$
Date: __________________ Your Signature: __________________
(Sign exactly as your name appears on the other side of the Security)
Signature Guaranty:_______________________________________
(Signature must be Guaranteed by a
participant in a recognized signature
Guaranty medallion program)
<PAGE>
EXHIBIT C
FORM OF TRANSFER CERTIFICATE - *
U.S. GLOBAL SECURITY TO
REGULATION S GLOBAL SECURITY
DURING THE RESTRICTED PERIOD
(Transfers pursuant to Section 2.14(a)(i)(1)
of the Indenture)
The Chase Manhattan Bank
Global Trust Services
450 West 33rd Street, 15th Floor
New York, New York 10001-2697
Attention: Valerie Dunbar
Re: NSM Steel (Delaware), Inc. and NSM Steel Company, Ltd.
(together, the "Issuers")
12 1/4% Senior Subordinated Mortgage Notes Due 2008 (the
"Securities")
Reference is hereby made to the Indenture dated as of March 1, 1998
(the "Indenture"), among the Issuers, Nakorn Thai Strip Mill Public Company
Limited (the "Guarantor") and The Chase Manhattan Bank, as Trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to US$______________ aggregate principal amount
of Securities which are evidenced by the U.S. Global Securities (CUSIP No. )
and held by you on behalf of The Depository Trust Company who in turn is holding
an interest therein on behalf of the undersigned (the "Transferor"). The
Transferor has requested a transfer of such beneficial interest in the
Securities to a Person who, during the Restricted Period, will take delivery
thereof in the form of an equal aggregate principal amount of Securities
evidenced by the Regulation S Global Security (CINS No. ), which amount,
immediately after such transfer, is to be held with the Depositary through the
Euroclear Operator or Cedel or both.
In connection with such request and in respect of such Securities,
the Transferor does hereby certify that such transfer has been effected pursuant
to and in accordance with Rule 903 or Rule 904 under the United States
Securities Act of 1933, as amended (the "Securities Act") and accordingly the
Transferor does hereby further certify that:
<PAGE>
2
(1) the offer of the Securities was not made to a person in
the United States or to or for the account or benefit of a U.S.
person;
(2) either:
(A) at the time the buy order was originated, the transferee
was outside the United States or the Transferor and any person
acting on its behalf reasonably believed that the transferee was
outside the United States, or
(B) the transaction was executed in, on or through the
facilities of a designated offshore securities market and neither
the Transferor nor any person acting on its behalf knows that the
transaction was pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or 904(b) of
Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act; and
(5) upon completion of the transaction, the beneficial
interest being transferred as described above will be held with the
Depositary through the Euroclear Operator or Cedel or both.
This certificate and the statements contained herein are made for
the benefit of the Issuers, the Guarantor and the Initial Purchasers. Terms used
in this certificate and not otherwise defined in the Indenture have the meanings
set forth in Regulation S under the Securities Act.
Dated: [Insert Name of Transferor]
By:__________________________
Name:
Title:
<PAGE>
3
(If the transferor is a corporation,
partnership or fiduciary, the title to the
Person signing on behalf of such transferor
must be stated.)
- ----------
* If the Security is a Definitive Security, appropriate changes need to be
made to this form of transfer certificate.
<PAGE>
EXHIBIT D
FORM OF TRANSFER CERTIFICATE - *
U.S. GLOBAL SECURITY TO
REGULATION S GLOBAL SECURITY
AFTER THE RESTRICTED PERIOD
(Transfers pursuant to Section 2.14(a)(i)(2)
of the Indenture)
The Chase Manhattan Bank
Global Trust Services
450 West 33rd Street, 15th Floor
New York, New York 10001-2697
Attention: Valerie Dunbar
Re: NSM Steel (Delaware), Inc. and NSM Steel Company, Ltd.
(together, the "Issuers")
12 1/4% Senior Subordinated Mortgage Notes Due 2008 (the
"Securities")
Reference is hereby made to the Indenture dated as of March 1, 1998
(the "Indenture"), among the Issuers, Nakorn Thai Strip Mill Public Company
Limited (the "Guarantor") and The Chase Manhattan Bank, as Trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to US$______________ aggregate principal amount
of Securities which are evidenced by the U.S. Global Securities (CUSIP No. )
and held by you on behalf of The Depository Trust Company who in turn is holding
an interest therein on behalf of the undersigned (the "Transferor"). The
Transferor has requested a transfer of such beneficial interest in the
Securities to a Person who will take delivery thereof in the form of an equal
aggregate principal amount of Securities evidenced by the Regulation S Global
Security (CINS No. ).
In connection with such request and in respect of such Securities,
the Transferor does hereby certify that such transfer has been effected pursuant
to and in accordance with Rule 903 and Rule 904 under the United States
Securities Act of 1933, as amended (the "Securities Act") and accordingly the
Transferor does hereby certify that:
(1) the offer of the Securities was not made to a person in
the United States or to or for the account or benefit of a U.S.
person;
<PAGE>
2
(2) either:
(A) at the time the buy order was originated, the transferee
was outside the United States or the Transferor and any person
acting on its behalf reasonably believed that the transferee was
outside the United States, or
(B) the transaction was executed in, on or through the
facilities of a designated offshore securities market and neither
the Transferor nor any person acting on its behalf knows that the
transaction was pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or 904(b) of
Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act; and
This certificate and the statements contained herein are made for
the benefit of the Issuers, the Guarantor and the Initial Purchasers. Terms used
in this certificate and not otherwise defined in the Indenture have the meanings
set forth in Regulation S under the Securities Act.
Dated: [Insert Name of Transferor]
By:__________________________
Name:
Title:
(If the transferor is a corporation,
partnership or fiduciary, the title to the
Person signing on behalf of such transferor
must be stated.)
- ----------
* If the Security is a Definitive Security, appropriate changes need to be
made to this form of transfer certificate.
<PAGE>
EXHIBIT E
FORM OF TRANSFER CERTIFICATE - *
REGULATION S GLOBAL SECURITY TO
U.S. GLOBAL SECURITY
DURING THE RESTRICTED PERIOD
(Transfers pursuant to Section 2.14(a)(i)(3)
of the Indenture)
The Chase Manhattan Bank
Global Trust Services
450 West 33rd Street, 15th Floor
New York, New York 10001-2697
Attention: Valerie Dunbar
Re: NSM Steel (Delaware), Inc. and NSM Steel Company, Ltd.
(together, the "Issuers")
12 1/4% Senior Subordinated Mortgage Notes Due 2008
(the "Securities")
Reference is hereby made to the Indenture dated as of March 1, 1998
(the "Indenture"), among the Issuers, Nakorn Thai Strip Mill Public Company
Limited (the "Guarantor") and The Chase Manhattan Bank, as Trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to US$________ aggregate principal amount of
Securities which are evidenced by the Regulation S Global Security (CINS
No. ) and held by you through the Euroclear Operator or Cedel or both on
behalf of the Depository Trust Company who in turn is holding an interest
therein on behalf of [insert name of transferor] (the "Transferor"). The
Transferor has requested a transfer of such beneficial interest in the
Securities to a Person who, and during the Restricted Period, will take delivery
thereof in the form of an equal principal amount of Securities evidenced by the
U.S. Global Security (CUSIP No. ).
In connection with such request and in respect of such Securities,
the Transferor does hereby certify that such transfer has been effected pursuant
to and in accordance with Rule 144A under the United States Securities Act of
1933, as amended, and accordingly the Transferor does hereby further certify
that the Securities are being transferred to a person that the Transferor
reasonably believes is purchasing the Securities for its own account, or for one
or more accounts with respect to which such Person exercises sole investment
discretion, and such Person
<PAGE>
3
and each such account is a "qualified institutional buyer" within the meaning of
Rule 144A, in each case in a transaction meeting the requirements of Rule 144A
and in accordance with any applicable securities laws of any state of the United
States.
This certificate and the statements contained herein are made for
the benefit of the Issuers, the Guarantor and the Initial Purchasers.
Dated:
[Insert Name of Transferor]
By: ________________________
Name:
Title:
(If the transferor is a corporation,
partnership or fiduciary, the title of the
Person signing on behalf of such transferor
must be stated.)
- ----------
* If the Security is a Definitive Security, appropriate changes need to be
made to this form of transfer certificate.
<PAGE>
EXHIBIT F
FORM OF TRANSFER CERTIFICATE - *
IAI GLOBAL SECURITY TO
RULE 144A GLOBAL SECURITY
(Transfers pursuant to Section 2.14(a)(i)(4)
of the Indenture)
The Chase Manhattan Bank
Global Trust Services
450 West 33rd Street, 15th Floor
New York, New York 10001-2697
Attention: Valerie Dunbar
Re: NSM Steel (Delaware), Inc. and NSM Steel Company, Ltd.
(together, the "Issuers")
12 1/4% Senior Subordinated Mortgage Notes Due 2008 (the
"Securities")
Reference is hereby made to the Indenture dated as of March 1, 1998
(the "Indenture"), among the Issuers, Nakorn Thai Strip Mill Public Company
Limited (the "Guarantor") and The Chase Manhattan Bank, as Trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to US$________ aggregate principal amount of
Securities which are evidenced by the IAI Global Security (CUSIP No. ) and
held by you on behalf of the Depository Trust Company who in turn is holding an
interest therein on behalf of [insert name of transferor] (the "Transferor").
The Transferor has requested a transfer of such beneficial interest in the
Securities to a Person who will take delivery thereof in the form of an equal
principal amount of Securities evidenced by the Rule 144A Global Security (CUSIP
No. ).
In connection with such request and in respect of such Securities,
the Transferor does hereby certify that such transfer has been effected pursuant
to and in accordance with Rule 144A under the United States Securities Act of
1933, as amended, and accordingly the Transferor does hereby further certify
that the Transferor and any person acting on its behalf reasonably believes that
(i) the transferee of such Securities is purchasing the Securities for its own
account, or for one or more accounts with respect to which such transferee
exercises sole investment discretion, (ii) such transferee and each such account
is a "qualified institutional buyer" within the meaning of Rule 144A, and (iii)
such transferee is purchasing the Securities
<PAGE>
4
in a transaction meeting the requirements of Rule 144A and in accordance with
any applicable securities laws of any state of the United States.
This certificate and the statements contained herein are made for
the benefit of the Issuers, the Guarantor and the Initial Purchasers.
Dated:
[Insert Name of Transferor]
By: _______________________
Name:
Title:
(If the transferor is a corporation,
partnership or fiduciary, the title of the
Person signing on behalf of such transferor
must be stated.)
- ----------
* If the Security is a Definitive Security, appropriate changes need to be
made to this form of transfer certificate.
<PAGE>
EXHIBIT G
FORM OF TRANSFER CERTIFICATE - *
RULE 144A GLOBAL SECURITY TO
IAI GLOBAL SECURITY
(Transfers pursuant to Section 2.14(a)(i)(5)
of the Indenture)
The Chase Manhattan Bank
Global Trust Services
450 West 33rd Street, 15th Floor
New York, New York 10001-2697
Attention: Valerie Dunbar
Re: NSM Steel (Delaware), Inc. and NSM Steel Company, Ltd.
(together, the "Issuers")
12 1/4% Senior Subordinated Mortgage Notes Due 2008 (the
"Securities")
Reference is hereby made to the Indenture dated as of March 1, 1998
(the "Indenture"), among the Issuers, Nakorn Thai Strip Mill Public Company
Limited (the "Guarantor") and The Chase Manhattan Bank, as Trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to US$_________ aggregate principal amount of
Securities which are evidenced by the Rule 144A Global Security (CUSIP No. )
and held by you on behalf of the Depository Trust Company who in turn is holding
an interest therein on behalf of [insert name of transferor] (the "Transferor").
The Transferor has requested a transfer of such beneficial interest in the
Securities to a Person who will take delivery thereof in the form of an equal
principal amount of Securities evidenced by the IAI Global Security (CUSIP
No. ).
In connection with such request and in respect of such Securities,
the Transferor does hereby certify that such transfer has been made to an
Institutional Accredited Investor purchasing for its own account, or for the
account of an Institutional Accredited Investor, in a principal amount of
Securities of US$250,000 or greater, that has furnished to the Depositary a
signed letter substantially in the form set forth in Annex A hereto and (ii)
effected in accordance with any applicable securities laws of any state of the
United States.
<PAGE>
2
This certificate and the statements contained herein are made for
the benefit of the Issuers, the Guarantor and the Initial Purchasers.
Dated:
[Insert Name of Transferor]
By: _______________________
Name:
Title:
(If the transferor is a corporation,
partnership or fiduciary, the title of the
Person signing on behalf of such transferor
must be stated.)
- ----------
* If the Security is a Definitive Security, appropriate changes need to be
made to this form of transfer certificate.
<PAGE>
ANNEX A
to
EXHIBIT G
ACCREDITED INVESTOR LETTER
Ladies and Gentlemen:
In connection with our proposed purchase of 12% Senior Mortgage Notes Due
2006 (the "Senior Notes") of NSM Steel (Delaware), Inc., a Delaware corporation,
and NSM Steel Company, Ltd., a Cayman Islands company, as co-issuers (the "Note
Issuers") and 203,500 Units (the "Units"), each consisting of one 12 1/4% Senior
Subordinated Mortgage Note Due 2008 (the "Senior Subordinated Note") of the Note
Issuers and 633.09266 warrants (collectively, the "Warrants") to purchase one
ordinary share, par value 10 Baht per share (collectively, the "Ordinary
Shares") of Nakornthai Strip Mill Public Company Limited (the "Company"), all as
described in the Offering Memorandum relating to the offerings, we confirm that:
1. We have received a copy of the Offering Memorandum (the "Offering
Memorandum"), dated March 2, 1998, relating to the Senior Notes, Units, Senior
Subordinated Notes and Warrants (collectively, the "Securities") and such other
information as we deem necessary in order to make an investment decision with
respect thereto. We acknowledge that we have read and agreed to the matters
stated on pages 1, 2 and 3 of the Offering Memorandum and in the section
entitled "Transfer Restrictions" of the Offering Memorandum, including the
restrictions on duplication and circulation of the Offering Memorandum.
2. We understand that any subsequent transfer of the Securities is subject
to certain restrictions and conditions set forth in the Indentures relating to
the Notes and the Senior Subordinated Mortgage Notes (collectively, the "Notes")
and the Warrant Agreement (as described in the Offering Memorandum) and we agree
to be bound by, and not to resell, pledge or otherwise transfer the Securities
except in compliance with, such restrictions and conditions and the Securities
Act of 1933, as amended (the "Securities Act").
3. We understand that the offer and sale of the Securities have not been
registered under the Securities Act, and that the Securities may not be offered
or sold except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we or they Should sell or otherwise transfer any Securities
prior to the date which is two years after the original issuance of the
Securities, we will do so in accordance with the provisions
A-1
<PAGE>
of any applicable state securities ("blue sky") laws and only (i) to the Note
Issuers, (ii) inside the United States in accordance with Rule 144A under the
Securities Act to a "qualified institutional buyer" (as defined in Rule 144A
under the Securities Act), (iii) inside the United States to an institutional
"accredited investor" (as defined below) that, prior to such transfer, furnishes
(or has furnished on its behalf by a United States broker-dealer) to the Trustee
(as defined in the Indentures relating to the Notes) or the Warrant Agent (as
defined in the Warrant Agreement relating to the Warrants), a signed letter
containing certain representations and agreements relating to the restrictions
on transfer of' the Securities (the form of which letter can be obtained from
the Trustee or the Warrant Agent) and, if such transfer is in respect of an
aggregate principal amount of Securities of less than U.S.$250,000, an opinion
of counsel acceptable to the Note Issuers that such transfer is in compliance
with the registration requirements of the Securities Act, (iv) outside the
United States in accordance with Rule 904 of Regulation S under the Securities
Act, (v) pursuant to an exemption from registration provided by Rule 144 under
the Securities Act (if available), or (vi) pursuant to an effective registration
statement under the Securities Act, and we further agree to provide to any
person purchasing any of the Securities from us a notice advising such purchaser
that resales of the Securities are restricted as stated herein.
4. We are not acquiring the Securities for or on behalf of, and will not
transfer the Securities to, any pension or welfare plan (as defined in Section 3
of the Employee Retirement Income Security Act of 1974), except as permitted in
the section entitled "Transfer Restrictions" of the Offering Memorandum.
5. We understand that, on any proposed resale or other transfer of any
Securities, we will be required to furnish to the Trustee and the Note Issuers
such certification, legal opinions and other information as the Trustee and the
Note Issuers may reasonably require to confirm that the proposed sale complies
with the foregoing restrictions. We further understand that the Securities
purchased by us will bear a legend to the foregoing effect.
6. We are an institutional "accredited investor" (as defined in Rule 501
(a)(1), (a)(2), (a)(3) or (a)(7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Securities,
and we and any accounts for
A-2
<PAGE>
which we are acting are each able to bear the economic risk of our or their
investment, as the case may be.
7. We are acquiring the Securities purchased by us for our account or for
one or more accounts (each of which is an institutional "accredited investor" or
"qualified institutional buyer") as to each of which we exercise sole investment
discretion.
You, the Note Issuers, the Trustee and the Warrant Agent are entitled to
rely upon this letter and are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative or legal proceeding or
official inquiry with respect to the matters covered hereby.
Very truly yours,
By
--------------------
Name:
A-3
<PAGE>
EXHIBIT H
FORM OF EXCHANGE CERTIFICATE - *
EXCHANGES OF U.S. GLOBAL SECURITY
FOR REGULATION S GLOBAL SECURITY
(Exchange Pursuant to Section 2.14(a)(i)(6)
of the Indenture)
The Chase Manhattan Bank
Global Trust Services
450 West 33rd Street, 15th Floor
New York, New York 10001-2697
Attention: Valerie Dunbar
Re: NSM Steel (Delaware), Inc. and NSM Steel Company, Ltd.
(together, the "Issuers")
12 1/4% Senior Subordinated Mortgage Notes Due 2008
(the "Securities")
Reference is hereby made to the Indenture dated as of March 1, 1998
(the "Indenture"), among the Issuers, Nakorn Thai Strip Mill Public Company
Limited (the "Guarantor") and The Chase Manhattan Bank, as Trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to US$_________ aggregate principal amount of
Securities which are evidenced by the [Rule 144A Global Security (CUSIP No.
883060AA3)] [IAI Global Security (CUSIP No. )] and held by you on behalf of
The Depository Trust Company who in turn is holding an interest therein on
behalf of the undersigned (the "Beneficial Owner"). The Beneficial Owner has
requested that its beneficial interest in such Securities be exchanged for a
beneficial interest in an equal aggregate principal amount of Securities
evidenced by the Regulation S Global Security (CINS No. ).
In connection with such request and in respect of such Securities,
the Beneficial Owner does hereby certify that (a) upon such exchange, it will be
the beneficial owner of such Securities, (b) it is [not a U.S. person (as
defined in Regulation S under the Securities Act) and is]** located outside the
United States (within the meaning of Regulation S) and acquired, or has agreed
to acquire and upon such exchange will have acquired, such Securities in an
offshore transaction (within the meaning of Regulation S) outside the United
States and otherwise in compliance with Regulation S[, (c) it is not an
"affiliate" (as defined in Rule 144 under the Securities Act) of the Company or
a
<PAGE>
2
person acting on behalf of such an affiliate and (d) it is not in the business
of buying and selling securities or, if it is in such business, it did not
acquire such Securities from the Company or any affiliate thereof in the initial
distribution of the Securities].** [In addition, the Beneficial Owner hereby
agrees that it will not, on or before the 40th day after the Issue Date, offer,
sell, pledge or otherwise transfer the Securities issued in such exchange except
(a) to a Person who it reasonably believes (or it and anyone acting on its
behalf reasonably believes) is a "qualified institutional buyer" within the
meaning of Rule 144A under the Securities Act in a transaction meeting the
requirements of Rule 144A and in accordance with any applicable securities laws
of any state of the United States, (b) in an offshore transaction meeting the
requirements of Rule 903 or Rule 904 under the Securities Act or (c) to an
Institutional Accredited Investor purchasing for its own account or for the
account of such an Institutional Accredited Investor, in each case in a minimum
principal amount of Securities of US$250,000, that has delivered to the
Depositary a transfer letter in the form required by the Indenture which
provides among other things, that the transferee is acquiring such Securities
not for distribution in violation of the Securities Act, and, in each case, in
accordance with any applicable securities laws of any state of the United
States.]**
This certificate and the statements contained herein are made for
the benefit of the Issuers, the Guarantor and the Initial Purchasers.
Dated:
[Insert Name of Beneficial Owner]
By: _______________________
Name:
Title:
<PAGE>
3
(If the Beneficial Owner is a corporation,
partnership or fiduciary, the title of the
Person signing on behalf of such transferor
must be stated.)
- ----------
* If the Security is a Definitive Security, appropriate changes need to be
made to this form of exchange certificate.
** Insert these bracketed provisions only if the exchange will occur during the
Restricted Period.
<PAGE>
EXHIBIT I
FORM OF EXCHANGE CERTIFICATE - *
EXCHANGES OF REGULATION S GLOBAL SECURITY
FOR U.S. GLOBAL SECURITY
(Exchange pursuant to Section 2.14(a)(i)(7)
of the Indenture)
The Chase Manhattan Bank
Global Trust Services
450 West 33rd Street, 15th Floor
New York, New York 10001-2697
Attention: Valerie Dunbar
Re: NSM Steel (Delaware), Inc. and NSM Steel Company, Ltd.
(together, the "Issuers")
12 1/4% Senior Subordinated Mortgage Notes Due 2008
(the "Securities")
Reference is hereby made to the Indenture dated as of March 1, 1998
(the "Indenture"), among the Issuers, Nakorn Thai Strip Mill Public Company
Limited (the "Guarantor") and The Chase Manhattan Bank, as Trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to US$__________ aggregate principal amount of
Securities which are evidenced by the Regulation S Global Security (CINS
No. ) and held by you on behalf of The Depository Trust Company who in turn
is holding an interest therein on behalf of the undersigned (the "Beneficial
Owner"). The Beneficial Owner has requested that its beneficial interest in such
Securities be exchanged for a beneficial interest in an equal aggregate
principal amount of Securities evidenced by the [Rule 144A Global Security
(CUSIP No. )] [IAI Global Security (CUSIP No. )].
In connection with such request and in respect of such Securities,
as the Beneficial Owner we acknowledge (or if we are acting for the account of
another Person, such Person has confirmed to us in writing that it acknowledges)
that the Securities have not been and will not be registered under the
Securities Act of 1933, as amended (the "Securities Act"). We certify that we
are (or it is) the beneficial owner of the Securities and that we are (or it is)
[a "qualified institutional buyer": (as defined in Rule 144A under the
Securities Act) acting for our own account or for the account of one or more
qualified institutional buyers, and, accordingly, we agree (or if we were acting
for
<PAGE>
2
the account of one or more qualified institutional buyers, each such qualified
institutional buyer]** [an Institutional Accredited Investor acting for our own
account or on the account of an Institutional Accredited Investor, exchanging
beneficial interests in an aggregate principal amount of Securities of
US$250,000 or greater, have (or it has) furnished the Depositary a signed letter
substantially in the form set forth in Annex A hereto, and accordingly, we agree
(or if we are acting on behalf of an Institutional Accredited Investor, such
Institutional Accredited Investor]*** has confirmed to us that it agrees) that
we (or it) will not offer, sell, pledge or otherwise transfer the Securities
except in accordance with the Private Placement Legend set forth in the
Securities which limits sales, among other things, (i) (A) to a Person whom we
and anyone acting on our behalf reasonably believe (or it and anyone acting on
its behalf reasonably believes) is a qualified institutional buyer in a
transaction meeting the requirements of Rule 144A, (B) pursuant to the exemption
from registration under the Act provided by Rule 144 (if available) or (C) to an
Institutional Accredited Investor purchasing for its own account or for the
account of an Institutional Accredited Investor, in a minimum principal amount
of Securities of US$250,000 that delivers a letter to the Depositary in the form
required by the Indenture, in each case in accordance with any applicable
securities laws of the states of the United States or (ii) in an offshore
transaction meeting the requirements of Rule 903 or Rule 904 of Regulation S, in
each case subject to the requirements of the Indenture.
If we are a broker-dealer, we further certify that we are acting for
the account of our customer and that our customer has confirmed the accuracy of
the representations contained herein that are applicable to it (including the
representations with respect to beneficial ownership).
This certificate and the statements contained herein are made for
the benefit of the Issuers, the Guarantor and the Initial Purchasers. Terms used
in this certificate and not otherwise defined in the Indenture have
<PAGE>
3
the meanings set forth in Regulation S under the Securities Act.
Dated:
[Insert Name of Transferor]
By: _______________________
Name:
Title:
(If the transferor is a corporation,
partnership or fiduciary, the title to the
Person signing on behalf of such transferor
must be stated.)
- ----------
* If the Security is a Definitive Security, appropriate changes need to be
made to this form of transfer certificate.
** For exchange into Rule 144A Global Security.
*** For exchange into IAI Global Security.
<PAGE>
ANNEX A
to
EXHIBIT I
ACCREDITED INVESTOR LETTER
Ladies and Gentlemen:
In connection with our proposed purchase of 12% Senior Mortgage Notes Due
2006 (the "Senior Notes") of NSM Steel (Delaware), Inc., a Delaware corporation,
and NSM Steel Company, Ltd., a Cayman Islands company, as co-issuers (the "Note
Issuers") and 203,500 Units (the "Units"), each consisting of one 12 1/4% Senior
Subordinated Mortgage Note Due 2008 (the "Senior Subordinated Note") of the Note
Issuers and 633.09266 warrants (collectively, the "Warrants") to purchase one
ordinary share, par value 10 Baht per share (collectively, the "Ordinary
Shares") of Nakornthai Strip Mill Public Company Limited (the "Company"), all as
described in the Offering Memorandum relating to the offerings, we confirm that:
1. We have received a copy of the Offering Memorandum (the "Offering
Memorandum"), dated March 2, 1998, relating to the Senior Notes, Units, Senior
Subordinated Notes and Warrants (collectively, the "Securities") and such other
information as we deem necessary in order to make an investment decision with
respect thereto. We acknowledge that we have read and agreed to the matters
stated on pages 1, 2 and 3 of the Offering Memorandum and in the section
entitled "Transfer Restrictions" of the Offering Memorandum, including the
restrictions on duplication and circulation of the Offering Memorandum.
2. We understand that any subsequent transfer of the Securities is subject
to certain restrictions and conditions set forth in the Indentures relating to
the Notes and the Senior Subordinated Mortgage Notes (collectively, the "Notes")
and the Warrant Agreement (as described in the Offering Memorandum) and we agree
to be bound by, and not to resell, pledge or otherwise transfer the Securities
except in compliance with, such restrictions and conditions and the Securities
Act of 1933, as amended (the "Securities Act").
3. We understand that the offer and sale of the Securities have not been
registered under the Securities Act, and that the Securities may not be offered
or sold except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we or they Should sell or otherwise transfer any Securities
prior to the date which is two years after the original issuance of the
Securities, we will do so in accordance with the provisions
A-1
<PAGE>
of any applicable state securities ("blue sky") laws and only (i) to the Note
Issuers, (ii) inside the United States in accordance with Rule 144A under the
Securities Act to a "qualified institutional buyer" (as defined in Rule 144A
under the Securities Act), (iii) inside the United States to an institutional
"accredited investor" (as defined below) that, prior to such transfer, furnishes
(or has furnished on its behalf by a United States broker-dealer) to the Trustee
(as defined in the Indentures relating to the Notes) or the Warrant Agent (as
defined in the Warrant Agreement relating to the Warrants), a signed letter
containing certain representations and agreements relating to the restrictions
on transfer of' the Securities (the form of which letter can be obtained from
the Trustee or the Warrant Agent) and, if such transfer is in respect of an
aggregate principal amount of Securities of less than U.S.$250,000, an opinion
of counsel acceptable to the Note Issuers that such transfer is in compliance
with the registration requirements of the Securities Act, (iv) outside the
United States in accordance with Rule 904 of Regulation S under the Securities
Act, (v) pursuant to an exemption from registration provided by Rule 144 under
the Securities Act (if available), or (vi) pursuant to an effective registration
statement under the Securities Act, and we further agree to provide to any
person purchasing any of the Securities from us a notice advising such purchaser
that resales of the Securities are restricted as stated herein.
4. We are not acquiring the Securities for or on behalf of, and will not
transfer the Securities to, any pension or welfare plan (as defined in Section 3
of the Employee Retirement Income Security Act of 1974), except as permitted in
the section entitled "Transfer Restrictions" of the Offering Memorandum.
5. We understand that, on any proposed resale or other transfer of any
Securities, we will be required to furnish to the Trustee and the Note Issuers
such certification, legal opinions and other information as the Trustee and the
Note Issuers may reasonably require to confirm that the proposed sale complies
with the foregoing restrictions. We further understand that the Securities
purchased by us will bear a legend to the foregoing effect.
6. We are an institutional "accredited investor" (as defined in Rule 501
(a)(1), (a)(2), (a)(3) or (a)(7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Securities,
and we and any accounts for
A-2
<PAGE>
which we are acting are each able to bear the economic risk of our or their
investment, as the case may be.
7. We are acquiring the Securities purchased by us for our account or for
one or more accounts (each of which is an institutional "accredited investor" or
"qualified institutional buyer") as to each of which we exercise sole investment
discretion.
You, the Note Issuers, the Trustee and the Warrant Agent are entitled to
rely upon this letter and are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative or legal proceeding or
official inquiry with respect to the matters covered hereby.
Very truly yours,
By
---------------------------
Name:
A-3
<PAGE>
EXHIBIT J
FORM OF EXCHANGE CERTIFICATE - *
EXCHANGES OF U.S. GLOBAL SECURITY
FOR ANOTHER U.S. GLOBAL SECURITY
(Exchange pursuant to Section 2.14(a)(i)(8)
of the Indenture)
The Chase Manhattan Bank
Global Trust Services
450 West 33rd Street, 15th Floor
New York, New York 10001-2697
Attention: Valerie Dunbar
Re: NSM Steel (Delaware), Inc. and NSM Steel Company, Ltd.
(together, the "Issuers")
12 1/4% Senior Subordinated Mortgage Notes Due 2008
(the "Securities")
Reference is hereby made to the Indenture dated as of March 1, 1998
(the "Indenture"), among the Issuers, Nakorn Thai Strip Mill Public Company
Limited (the "Guarantor") and The Chase Manhattan Bank, as Trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to US$_________ aggregate principal amount of
Securities which are evidenced by the [Rule 144A Global Security (CUSIP
No. )] [IAI Global Security (CUSIP No. )] and held by you on behalf of
The Depository Trust Company who in turn is holding an interest therein on
behalf of the undersigned (the "Beneficial Owner"). The Beneficial Owner has
requested that its beneficial interest in such Securities be exchanged for a
beneficial interest in an equal aggregate principal amount of Securities
evidenced by the [Rule 144A Global Security (CUSIP No. )] [IAI Global
Security (CUSIP No. )].
In connection with such request and in respect of such Securities,
as the Beneficial Owner we acknowledge (or if we are acting for the account of
another Person, such Person has confirmed to us in writing that it acknowledges)
that the Securities have not been and will not be registered under the
Securities Act of 1933, as amended (the "Securities Act").
We certify that we are (or it is) the beneficial owner of the
Securities and that we are (or it is) [a "qualified institutional buyer": (as
defined in Rule 144A
<PAGE>
2
under the Act) acting for our own account or for the account of one or more
qualified institutional buyers, and, accordingly, we agree (or if we were acting
for the account of one or more qualified institutional buyers, each such
qualified institutional buyer]** [an Institutional Accredited Investor acting
for our own account or the account of an Institutional Accredited Investor,
exchanging beneficial interests in an aggregate principal amount of Securities
of US$250,000 or greater, and have (or it has) furnished the Depositary a signed
letter substantially in the form set forth in Annex A hereto, and accordingly,
we agree (or if we are acting on behalf of an Institutional Accredited
Investors, such Institutional Accredited Investor]*** has confirmed to us that
it agrees) that we (or it) will not offer, sell, pledge or otherwise transfer
the Securities except (A) to a Person whom we and anyone acting on our behalf
reasonably believe (or it and anyone acting on its behalf reasonably believes)
is a qualified institutional buyer in a transaction meeting the requirements of
Rule 144A, (B) pursuant to the exemption from registration under the Act
provided by Rule 144 (if available) or (C) to an Institutional Accredited
Investor purchasing for its own account or for the account of such an
Institutional Accredited Investor, in a minimum principal amount of Securities
of US$250,000, that delivers a letter to the Depositary in the form required by
the Indenture, in each case in accordance with any applicable securities laws of
the states of the United States or (ii) in an offshore transaction meeting the
requirements of Rule 903 or Rule 904 of Regulation S.
If we are a broker-dealer, we further certify that we are acting for
the account of our customer and that our customer has confirmed the accuracy of
the representations contained herein that are applicable to it (including the
representations with respect to beneficial ownership).
This certificate and the statements contained herein are made for
the benefit of the Issuers, the Guarantor and the Initial Purchasers. Terms used
in this certificate and not otherwise defined in the Indenture have
<PAGE>
3
the meanings set forth in Regulation S under the Securities Act.
Dated:
[Insert Name of Transferor]
By: _______________________
Name:
Title:
(If the transferor is a corporation,
partnership or fiduciary, the title to the
Person signing on behalf of such transferor
must be stated.)
- ----------
* If the Security is a Definitive Security, appropriate changes need to be
made to this form of transfer certificate.
** For exchanges into Rule 144A Global Security.
*** For exchanges into IAI Global Security.
<PAGE>
ANNEX A
to
EXHIBIT J
ACCREDITED INVESTOR LETTER
Ladies and Gentlemen:
In connection with our proposed purchase of 12% Senior Mortgage Notes Due
2006 (the "Senior Notes") of NSM Steel (Delaware), Inc., a Delaware corporation,
and NSM Steel Company, Ltd., a Cayman Islands company, as co-issuers (the "Note
Issuers") and 203,500 Units (the "Units"), each consisting of one 12 1/4% Senior
Subordinated Mortgage Note Due 2008 (the "Senior Subordinated Note") of the Note
Issuers and 633.09266 warrants (collectively, the "Warrants") to purchase one
ordinary share, par value 10 Baht per share (collectively, the "Ordinary
Shares") of Nakornthai Strip Mill Public Company Limited (the "Company"), all as
described in the Offering Memorandum relating to the offerings, we confirm that:
1. We have received a copy of the Offering Memorandum (the "Offering
Memorandum"), dated March 2, 1998, relating to the Senior Notes, Units, Senior
Subordinated Notes and Warrants (collectively, the "Securities") and such other
information as we deem necessary in order to make an investment decision with
respect thereto. We acknowledge that we have read and agreed to the matters
stated on pages 1, 2 and 3 of the Offering Memorandum and in the section
entitled "Transfer Restrictions" of the Offering Memorandum, including the
restrictions on duplication and circulation of the Offering Memorandum.
2. We understand that any subsequent transfer of the Securities is subject
to certain restrictions and conditions set forth in the Indentures relating to
the Notes and the Senior Subordinated Mortgage Notes (collectively, the "Notes")
and the Warrant Agreement (as described in the Offering Memorandum) and we agree
to be bound by, and not to resell, pledge or otherwise transfer the Securities
except in compliance with, such restrictions and conditions and the Securities
Act of 1933, as amended (the "Securities Act").
3. We understand that the offer and sale of the Securities have not been
registered under the Securities Act, and that the Securities may not be offered
or sold except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we or they Should sell or otherwise transfer any Securities
prior to the date which is two years after the original issuance of the
Securities, we will do so in accordance with the provisions of any applicable
state securities ("blue sky") laws and
A-1
<PAGE>
only (i) to the Note Issuers, (ii) inside the United States in accordance with
Rule 144A under the Securities Act to a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act), (iii) inside the United States
to an institutional "accredited investor" (as defined below) that, prior to such
transfer, furnishes (or has furnished on its behalf by a United States
broker-dealer) to the Trustee (as defined in the Indentures relating to the
Notes) or the Warrant Agent (as defined in the Warrant Agreement relating to the
Warrants), a signed letter containing certain representations and agreements
relating to the restrictions on transfer of' the Securities (the form of which
letter can be obtained from the Trustee or the Warrant Agent) and, if such
transfer is in respect of an aggregate principal amount of Securities of less
than U.S.$250,000, an opinion of counsel acceptable to the Note Issuers that
such transfer is in compliance with the registration requirements of the
Securities Act, (iv) outside the United States in accordance with Rule 904 of
Regulation S under the Securities Act, (v) pursuant to an exemption from
registration provided by Rule 144 under the Securities Act (if available), or
(vi) pursuant to an effective registration statement under the Securities Act,
and we further agree to provide to any person purchasing any of the Securities
from us a notice advising such purchaser that resales of the Securities are
restricted as stated herein.
4. We are not acquiring the Securities for or on behalf of, and will not
transfer the Securities to, any pension or welfare plan (as defined in Section 3
of the Employee Retirement Income Security Act of 1974), except as permitted in
the section entitled "Transfer Restrictions" of the Offering Memorandum.
5. We understand that, on any proposed resale or other transfer of any
Securities, we will be required to furnish to the Trustee and the Note Issuers
such certification, legal opinions and other information as the Trustee and the
Note Issuers may reasonably require to confirm that the proposed sale complies
with the foregoing restrictions. We further understand that the Securities
purchased by us will bear a legend to the foregoing effect.
6. We are an institutional "accredited investor" (as defined in Rule 501
(a)(1), (a)(2), (a)(3) or (a)(7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Securities,
and we and any accounts for which we are acting are each able to bear the
economic risk of our or their investment, as the case may be.
A-2
<PAGE>
7. We are acquiring the Securities purchased by us for our account or for
one or more accounts (each of which is an institutional "accredited investor" or
"qualified institutional buyer") as to each of which we exercise sole investment
discretion.
You, the Note Issuers, the Trustee and the Warrant Agent are entitled to
rely upon this letter and are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative or legal proceeding or
official inquiry with respect to the matters covered hereby.
Very truly yours,
By
-------------------------
Name:
A-3
<PAGE>
ANNEX I
EXISTING ARRANGEMENTS
None.
<PAGE>
Exhibit 4.03
================================================================================
NSM STEEL (DELAWARE), INC.
NSM STEEL COMPANY, LTD.
as co-Issuers
12 3/4% Subordinated Second Mortgage Debentures Due 2009
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
as Guarantor
----------------------------------
INDENTURE
Dated as of March 1, 1998
----------------------------------
THE CHASE MANHATTAN BANK,
Trustee
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I Definitions and Incorporation by Reference.................1
SECTION 1.01 Definitions................................................1
SECTION 1.02 Other Definitions.........................................22
SECTION 1.03 Incorporation by Reference of Trust Indenture Act.........23
SECTION 1.04 Rules of Construction.....................................23
SECTION 1.05 Business Day Certificate..................................24
ARTICLE II The Securities............................................24
SECTION 2.01 Form and Dating...........................................24
SECTION 2.02 Execution and Authentication..............................25
SECTION 2.03 Registrar and Paying Agent................................26
SECTION 2.04 Paying Agent to Hold Money in Trust.......................27
SECTION 2.05 Securityholder Lists......................................27
SECTION 2.06 Transfer and Exchange.....................................27
SECTION 2.07 Replacement Securities....................................28
SECTION 2.08 Outstanding Securities....................................29
SECTION 2.09 Temporary Securities......................................29
SECTION 2.10 Cancellation..............................................29
SECTION 2.11 Defaulted Interest........................................30
SECTION 2.12 CUSIP Numbers.............................................30
SECTION 2.13 Book-Entry Provisions for Global Securities...............30
SECTION 2.14 Special Transfer Provisions...............................32
ARTICLE III Redemption................................................36
SECTION 3.01 Notices to Trustee........................................36
SECTION 3.02 Selection of Securities to Be Redeemed....................36
SECTION 3.03 Notice of Redemption......................................36
SECTION 3.04 Effect of Notice of Redemption............................37
SECTION 3.05 Deposit of Redemption Price...............................37
SECTION 3.06 Securities Redeemed in Part...............................37
SECTION 3.07 Optional Redemption.......................................37
ARTICLE IV Covenants.................................................39
SECTION 4.01 Payment of Securities.....................................39
SECTION 4.02 Commission Reports........................................39
SECTION 4.03 Limitation on Indebtedness................................39
SECTION 4.04 Limitation on Restricted Payments.........................41
SECTION 4.05 Limitation on Liens.......................................44
SECTION 4.06 Limitation on Sales of Assets and Subsidiary Stock........44
SECTION 4.07 Offer to Repurchase Upon Failure to Attain Profitable
Operations .............................................46
(i)
<PAGE>
Page
----
SECTION 4.08 Limitation on Issuance and Sale of Capital Stock of
Restricted Subsidiaries ................................46
SECTION 4.09 Limitation on Dividends and Other Payment Restrictions
Affecting Restricted Subsidiaries ......................47
SECTION 4.10 Change of Control.........................................47
SECTION 4.11 Compliance Certificate....................................48
SECTION 4.12 Further Instruments and Acts..............................48
SECTION 4.13 Limitation on Affiliate Transactions......................49
SECTION 4.14 Limitation on Sale Leaseback Transactions.................49
SECTION 4.15 Limitation on Issuances of Capital Stock..................49
SECTION 4.16 Limitation on Sales to nonCredit Qualified Purchasers.....50
SECTION 4.17 Line of Business..........................................50
SECTION 4.18 Ownership.................................................50
SECTION 4.19 Use of Proceeds...........................................50
SECTION 4.20 Additional Amounts........................................50
SECTION 4.21 Maintenance of Office or Agency...........................51
SECTION 4.22 Stay, Extension and Usury Laws............................52
SECTION 4.23 Insurance.................................................52
SECTION 4.24 Compliance with Statutes..................................52
SECTION 4.25 Corporate Existence.......................................53
SECTION 4.26 Independent Engineer......................................53
SECTION 4.27 Securities Cash Flow Sweep................................53
SECTION 4.28 Payment of Taxes..........................................53
SECTION 4.29 Intercompany Notes and Capital Contributions..............53
SECTION 4.30 Financial and Business Information........................53
SECTION 4.31 Inspection................................................56
SECTION 4.32 Other Covenants...........................................56
ARTICLE V Successor Company.........................................57
SECTION 5.01 Merger and Consolidation..................................57
ARTICLE VI Defaults and Remedies.....................................59
SECTION 6.01 Events of Default.........................................59
SECTION 6.02 Acceleration..............................................61
SECTION 6.03 Other Remedies............................................61
SECTION 6.04 Waiver of Past Defaults...................................62
SECTION 6.05 Control by Majority.......................................62
SECTION 6.06 Limitation on Suits.......................................62
SECTION 6.07 Rights of Holders to Receive Payment......................62
SECTION 6.08 Collection Suit by Trustee................................63
SECTION 6.09 Trustee May File Proofs of Claim..........................63
SECTION 6.10 Priorities................................................63
SECTION 6.11 Undertaking for Costs.....................................63
ARTICLE VII Trustee...................................................64
SECTION 7.01 Duties of Trustee.........................................64
SECTION 7.02 Rights of Trustee.........................................65
SECTION 7.03 Individual Rights of Trustee..............................66
(ii)
<PAGE>
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SECTION 7.04 Trustee's Disclaimer......................................66
SECTION 7.05 Notice of Defaults........................................66
SECTION 7.06 Reports by Trustee to Holders.............................66
SECTION 7.07 Compensation and Indemnity................................66
SECTION 7.08 Replacement of Trustee....................................67
SECTION 7.09 Successor Trustee by Merger...............................68
SECTION 7.10 Eligibility; Disqualification.............................68
SECTION 7.11 Preferential Collection of Claims Against Issuers.........68
ARTICLE VIII Discharge of Indenture; Defeasance........................68
SECTION 8.01 Discharge of Liability on Securities; Defeasance..........68
SECTION 8.02 Conditions to Defeasance..................................69
SECTION 8.03 Application of Trust Money................................70
SECTION 8.04 Repayment to Issuers......................................71
SECTION 8.05 Indemnity for Government Obligations......................71
SECTION 8.06 Reinstatement.............................................71
ARTICLE IX Amendments................................................71
SECTION 9.01 Without Consent of Holders................................71
SECTION 9.02 With Consent of Holders...................................72
SECTION 9.03 Compliance with Trust Indenture Act.......................73
SECTION 9.04 Revocation and Effect of Consents and Waivers.............73
SECTION 9.05 Notation on or Exchange of Securities.....................73
SECTION 9.06 Trustee to Sign Amendments................................73
SECTION 9.07 Payment for Consent.......................................74
ARTICLE X Security Documents........................................74
SECTION 10.01 Collateral and Security Documents.........................74
SECTION 10.02 Release of Collateral.....................................75
SECTION 10.03 Certificates and Opinions.................................75
SECTION 10.04 Directions to Collateral Agent............................75
ARTICLE XI Subordination of Securities... ..........................76
SECTION 11.01 Agreement to Subordinate..................................76
SECTION 11.02 Liquidation, Dissolution, Bankruptcy......................76
SECTION 11.03 Default on Specified Senior Indebtedness of the Issuers...76
SECTION 11.04 Acceleration of Payment of Securities.....................77
SECTION 11.05 When Distribution Must Be Paid Over.......................77
SECTION 11.06 Subrogation...............................................77
SECTION 11.07 Relative Rights...........................................77
SECTION 11.08 Subordination May Not Be Impaired by Issuers..............78
SECTION 11.09 Rights of Trustee and Paying Agent........................78
SECTION 11.10 Distribution or Notice to Representative..................78
SECTION 11.11 Article XI Not to Prevent Events of Default or Limit
Right to Accelerate ....................................78
SECTION 11.12 Trust Moneys Not Subordinated.............................78
SECTION 11.13 Trustee Entitled to Rely..................................79
(iii)
<PAGE>
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SECTION 11.14 Trustee to Effectuate Subordination.......................79
SECTION 11.15 Trustee Not Fiduciary for Holders of Specified Senior
Indebtedness ...........................................79
SECTION 11.16 Reliance by Holders of Specified Senior Indebtedness on
Subordination Provisions ...............................79
ARTICLE XII Guaranty of Securities, Indemnity.........................80
SECTION 12.01 Guaranty..................................................80
SECTION 12.02 Indemnity.................................................82
SECTION 12.03 Representation and Warranty...............................82
SECTION 12.04 Waiver of Subrogation.....................................82
ARTICLE XIII Subordination of Guaranty.................................83
SECTION 13.01 Agreement to Subordinate..................................83
SECTION 13.02 Liquidation, Dissolution, Bankruptcy......................83
SECTION 13.03 Default on Specified Senior Indebtedness of the Company...84
SECTION 13.04 Demand for Payment........................................84
SECTION 13.05 When Distribution Must Be Paid Over.......................85
SECTION 13.06 Subrogation...............................................85
SECTION 13.07 Relative Rights...........................................85
SECTION 13.08 Subordination May Not Be Impaired by the Company..........85
SECTION 13.09 Rights of Trustee and Paying Agent........................85
SECTION 13.10 Distribution or Notice to Representative..................86
SECTION 13.11 Article XIII Not to Prevent Defaults Under the Guaranty
or Limit Right to Demand Payment .......................86
SECTION 13.12 Trustee Entitled to Rely..................................86
SECTION 13.13 Trustee to Effectuate Subordination.......................86
SECTION 13.14 Trustee Not Fiduciary for Holders of Senior Indebtedness
of the Company .........................................86
SECTION 13.15 Reliance by Holders of Specified Senior Indebtedness of
the Company on Subordination Provisions ................87
ARTICLE XIV Miscellaneous.............................................87
SECTION 14.01 Trust Indenture Act Controls..............................87
SECTION 14.02 Notices...................................................87
SECTION 14.03 Communication by Holders with Other Holders...............88
SECTION 14.04 Certificate and Opinion as to Conditions Precedent........88
SECTION 14.05 Statements Required in Certificate or Opinion.............88
SECTION 14.06 When Securities Disregarded...............................88
SECTION 14.07 Rules by Trustee, Paying Agent and Registrar..............89
SECTION 14.08 Legal Holidays............................................89
SECTION 14.09 Governing Law.............................................89
SECTION 14.10 Waiver of Immunities......................................89
SECTION 14.11 Consent to Jurisdiction; Appointment of Agent for
Service of Process; Waiver of Jury Trial ...............89
SECTION 14.12 No Recourse Against Others................................90
SECTION 14.13 Successors................................................90
SECTION 14.14 Multiple Originals........................................90
(iv)
<PAGE>
SECTION 14.15 Table of Contents; Headings...............................91
Exhibit A - Form of Initial Security with Guaranty
Exhibit B - Form of Exchange Security with Guaranty
Exhibit C - Form of Transferor Letter of Representation to be Delivered in
Connection with Transfers Pursuant to Regulation S
Exhibit D - Form of Transferor Letter of Representation to be Delivered in
Connection with Transfers Pursuant to Regulation S
Exhibit E - Form of Transferor Letter of Representation to be Delivered in
Connection with Transfers Pursuant to Regulation S
Exhibit F - Form of Transferor Letter of Representation to be Delivered in
Connection with Transfers Pursuant to 144A Global Security
Exhibit G - Form of Transferor Letter of Representation to be Delivered in
Connection with Transfers Pursuant to IAI Global Security
Exhibit H - Form of Exchange Certificate - Exchanges of U.S. Global Security
for Regulation S Global Security
Exhibit I - Form of Exchange Certificate - Exchanges of Regulation S Global
Security for U.S. Global Security
Exhibit J - Form of Exchange Certificate - Exchanges of U.S. Global Security
for Another U.S. Global Security
<PAGE>
CROSS-REFERENCE TABLE
Page
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TIA Section Indenture Section
310(a)(1)............................................ 7.10
(a)(2)............................................ 7.10
(a)(3)............................................ N.A.
(a)(4)............................................ N.A.
(b)............................................... 7.08; 7.10
(c)............................................... N.A.
311(a)............................................... 7.11
(b)............................................... 7.11
(c)............................................... N.A.
312(a)............................................... 2.05
(b)............................................... 12.03
(c)............................................... 12.03
313(a)............................................... 7.06
(b)(1)............................................ N.A.
(b)(2)............................................ 7.06
(c)............................................... 12.02
(d)............................................... 7.06
314(a)............................................... 4.02; 4.12; 12.02
(b)............................................... N.A.
(c)(1)............................................ 12.04
(c)(2)............................................ 12.04
(c)(3)............................................ N.A.
(d)............................................... N.A.
(e)............................................... 12.05
(f)............................................... 4.12
315(a)............................................... 7.01
(b)............................................... 7.05; 12.02
(c)............................................... 7.01
(d)............................................... 7.01
(e)............................................... 6.11
316(a) (last sentence)............................... 12.06
(a)(1)(A)......................................... 6.05
(a)(1)(B)......................................... 6.04
(a)(2)............................................ N.A.
(b)............................................... 6.07
317(a)(1)............................................ 6.08
(a)(2)............................................ 6.09
(b)............................................... 2.04
318(a)............................................... 12.01
N.A. means Not Applicable.
- ----------
Note: This Cross-Reference Table shall not, for any purpose, be deemed
to be part of the Indenture.
(vi)
<PAGE>
INDENTURE dated as of March 1, 1998, among NSM STEEL (DELAWARE),
INC., a Delaware corporation ("NSM (Del)"), NSM STEEL COMPANY, LTD., a company
incorporated under the laws of the Cayman Islands ("NSM Cayman" and, together
with NSM (Del), the "Issuers"), Nakornthai Strip Mill Public Company Limited, a
company incorporated under the laws of Thailand (the "Company") and The Chase
Manhattan Bank, a New York banking corporation, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other parties
and for the equal and ratable benefit of the Holders of the Issuer's 12 3/4%
Subordinated Second Mortgage Debentures Due 2009 (the "Initial Securities") and,
if and when issued as provided in the Registration Rights Agreement of even date
herewith, the Issuer's 12 3/4 Subordinated Second Mortgage Series A Debentures
Due 2009 (the "Exchange Securities", and together with the Initial Securities,
the "Securities").
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01 Definitions.
"Accounts" means and includes: (i) the Notes DSR Account, (ii) the
Offshore Reserve Account, (iii) the Revenue Account, (iv) the Notes Sinking Fund
Account and (v) the Operating Account, and any sub-accounts of the foregoing as
described in the Security Sharing Agreement.
"Accreted Value" means, for any particular date of determination
(any such date being herein referred to as a "Specified Date"), the amount
provided below for each U.S.$1,000 principal amount at maturity of the
Securities outstanding:
(i) if the Specified Date occurs on one of the following Interest
Payment Dates, the Accreted Value will equal the amount set forth below:
Accreted
Interest Payment Value
August 1, 1998 ............................................. $ 821.70
February 1, 1999 ........................................... 825.10
August 1, 1999 ............................................. 828.90
February 1, 2000 ........................................... 832.90
August 1, 2000 ............................................. 837.30
February 1, 2001 ........................................... 842.10
August 1, 2001 ............................................. 847.20
February 1, 2002 ........................................... 852.70
August 1, 2002 ............................................. 858.70
February 1, 2003 ........................................... 865.20
<PAGE>
Accreted
Interest Payment Value
August 1, 2003 ............................................. 872.30
February 1, 2004 ........................................... 879.90
August 1, 2004 ............................................. 888.10
February 1, 2005 ........................................... 897.00
August 1, 2005 ............................................. 906.60
February 1, 2006 ........................................... 917.00
August 1, 2006 ............................................. 928.30
February 1, 2007 ........................................... 940.50
August 1, 2007 ............................................. 953.60
February 1, 2008 ........................................... 967.90
August 1, 2008 ............................................. 983.30
February 1, 2009 ........................................... 1,000.00
(ii) if the Specified Date occurs before the first Interest Payment
Date, the Accreted Value will equal the sum of (1) the original issue
price of the Securities and (2) an amount equal to the product of (a) the
respective Accreted Value for the first Interest Payment Date less such
original issue price multiplied by (b) a fraction, the numerator of which
is the number of days from the Issue Date to the Specified Date, using a
360-day year of twelve 30-day months, and the denominator of which is the
number of days elapsed from the Issue Date to the first Interest Payment
Date, using a 360-day year of twelve 30-day months;
(iii) if the Specified Date occurs between two Interest Payment
Dates, the Accreted Value will equal the sum of (1) the respective
Accreted Value for the Interest Payment Date immediately preceding such
Specified Date and (2) an amount equal to the product of (i) the
respective Accreted Value for the immediately following Interest Payment
Date less the Accreted Value for the immediately preceding Interest
Payment Date multiplied by (ii) a fraction, the numerator of which is the
number of days from the immediately preceding Interest Payment Date to the
Specified Date, using a 360-day year of twelve 30-day months, and the
denominator of which is 180.
"Additional Assets" means any property or assets (other than
Indebtedness and Capital Stock) relating to the operation of the Mill and
purchased with the proceeds of an Asset Disposition.
"Affiliate" of any specified Person means any other Person, directly
or indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
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<PAGE>
"Agency Agreement" means the agreement between NSM Steel Company,
Ltd. and NSM Steel (Delaware), Inc. dated as of the date hereof.
"Asset Disposition" means any sale, lease, transfer, issuance or
other disposition (or series of related sales, leases, transfers, issuances or
dispositions that are part of a common plan) of shares of Capital Stock of (or
any other equity interests in) a Restricted Subsidiary or of any other property
or other assets (each referred to for the purposes of this definition as a
"disposition") by the Issuers, the Company or any Restricted Subsidiary
(including any disposition by means of a merger, consolidation or similar
transaction) other than (i) a disposition of inventory pursuant to a Project
Document or in the ordinary course of business, (ii) a disposition of obsolete
or worn-out equipment or equipment that is no longer useful in the conduct of
the business of the Issuers, the Company or a Restricted Subsidiary and that is
disposed of in each case in the ordinary course of business, and (iii)
transactions permitted under Section 5.01 of this Indenture. Notwithstanding
anything to the contrary contained above, a Restricted Payment made in
compliance with Section 4.04 shall not constitute an Asset Disposition.
"Attributable Indebtedness" in respect of a Sale/Leaseback
Transaction means, as at the time of determination, the present value
(discounted at the interest rate borne by the Securities, compounded annually)
of the total obligations of the lessee for rental payments during the remaining
term of the lease included in such Sale/Leaseback Transaction (including any
period for which such lease has been extended).
"Average Life" means, as of the date of determination, with respect
to any Indebtedness, the quotient obtained by dividing (i) the sum of the
product of the numbers of years (rounded upwards to the nearest month) from the
date of determination to the dates of each successive scheduled principal
payment of such Indebtedness or redemption multiplied by the amount of such
payment by (ii) the sum of all such payments.
"Bank Credit Facility" means the Credit Facilities Agreement, dated
September 27, 1995, among the Company and The Industrial Finance Corporation of
Thailand, Thai Farmers Bank Public Company Limited, Siam City Bank Public
Company Limited, The Government Savings Bank, First Bangkok City Bank Public
Company Limited, Nakornthon Bank Public Company Limited, SCF Finance and
Securities Public Company Limited, Siam City Credit Finance and Securities
Public Company Limited, IFCT Finance and Securities Public Company Limited and
First City Investment Finance and Securities Public Company Limited.
"Board of Directors" means the board of directors of any of the
Issuers or the Company, as the context requires, or any duly authorized
committee of such board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Issuers or the Company to have been
duly adopted by such Board of Directors and to be in full force and effect on
the date of such certification, and delivered to the Trustee.
"Business Day" means any day which is not a legal holiday in the
State of New York or Thailand.
-3-
<PAGE>
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Capitalized Lease Obligations" means an obligation that is required
to be classified and accounted for as a capitalized lease for financial
reporting purposes in accordance with U.S. GAAP, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with U.S. GAAP and the Stated Maturity
thereof shall be the date of the last payment of rent or any other amount due
under such lease prior to the first date such lease may be terminated without
penalty.
"Cash Equivalents" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof, (iii) certificates of
deposit, time deposits and Eurodollar time deposits with maturities of one year
or less from the date of acquisition, bankers' acceptances with maturities not
exceeding one year and overnight bank deposits, in each case with any Qualifying
Financial Institution, (iv) repurchase obligations for underlying securities of
the types described in clauses (ii) and (iii) entered into with any Qualifying
Financial Institution, (v) commercial paper rated A-1 or the equivalent thereof
by Moody's or S&P and in each case maturing within one year after the date of
acquisition, (vi) investment funds investing 95% of their assets in securities
of the types described in clauses (i)-(v) above, (vii) readily marketable direct
obligations issued by any state of the United States of America or any political
subdivision thereof having one of the two highest rating categories obtainable
from either Moody's or S&P and (viii) Indebtedness or preferred stock issued by
Persons with a rating of "A" or higher from S&P or "A-2" or higher from Moody's.
"Cash Flow Sweep Amount" means, with respect to any fiscal quarter
of the Company, an amount equal to (a) 50% of the Company's net income before
interest expense, taxes, depreciation and amortization for such quarter minus
(b) the sum of (i) the Company's accrued interest expense (other than
amortization of original issue discount and deferred debt issuance costs) for
such fiscal quarter, (ii) all scheduled principal payments made by the Company
on indebtedness during such fiscal quarter, (iii) the amount of taxes actually
paid by the Company during such fiscal quarter and (iv) the amount of budgeted
capital expenditures made by the Company during such fiscal quarter for the
maintenance of the Company's properties and assets; provided, however, that the
Cash Flow Sweep Amount in respect of any fiscal quarter shall not exceed the sum
of (x) U.S.$15 million and (y) the difference between (A) U.S.$45 million and
(B) the amount of each Cash Flow Sweep Account in the immediately preceding
three fiscal quarters; provided further, however, that the amount described in
(y) above shall be adjusted ratably during the first three complete fiscal
quarters following the Issue Date to take into account such shorter periods.
"Change of Control" means (i) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all or
substantially all of the assets of the Company; (ii) the Company ceasing to own
100% of capital stock of the Issuers (iii) a majority of the Board of Directors
of the Company shall consist of Persons who are not Continuing Directors; or
(iv) the acquisition by any Person or group of related Persons for purposes of
-4-
<PAGE>
Section 13(d) of the Exchange Act of the power, directly or indirectly, to vote
or direct the voting of securities having more than 50% of the ordinary voting
power for the election of directors of the Company.
"Coal Supply Agreement" means the agreement between the Company and
SSM Coal BV dated October 16, 1996.
"Code" means the Internal Revenue Code of 1986, as amended.
"Co-Gen Facility" means a co-generation electric power plant to be
developed in conjunction with one or more affiliates of Enron Corp.
"Co-Gen Investment" means a loan by the Company to the entity that
will operate a cogeneration facility dedicated to the service of the Mill (i) in
an aggregate amount not to exceed U.S.$15.5 million and (ii) on financial terms
substantially identical to the terms of the Senior Notes.
"Collateral" means all the collateral described in the Security
Documents.
"Collateral Agent" means The Chase Manhattan Bank, acting as
collateral agent, and its permitted successors and assigns.
"Commission" means the Securities and Exchange Commission.
"Commodity Commitment" means any commodity future or forward
contract, commodity swap, exchange agreement or derivative or other similar
agreement or arrangement with respect to the commodities market, excluding put
options and similar arrangements and agreements held by the Company or any
Subsidiary.
"Company" means Nakornthai Strip Mill Public Company Limited.
"Consolidated Cash Flow" for any period for any Person means the
Consolidated Net Income for such period plus the following to the extent
deducted in calculating such Consolidated Net Income: (i) income tax expense,
(ii) Consolidated Interest Expense, (iii) depreciation expense, (iv)
amortization expense and (v) all other noncash items reducing Consolidated Net
Income (excluding any noncash item to the extent it represents an accrual of or
reserve for cash disbursements for any subsequent period prior to the Stated
Maturity of the Securities or amortization of a prepaid cash expense that was
paid in a prior period), in each case for such Person and its Subsidiaries for
such period. Notwithstanding the foregoing, the income tax expense, depreciation
expense and amortization expense of a Subsidiary shall be included in
Consolidated Cash Flow only to the extent (and in the same proportion) that the
net income of such Subsidiary was included in calculating Consolidated Net
Income.
"Consolidated Cash Interest Expense" means for any period for any
Person the Consolidated Interest Expense for such Person for such period less
any portion thereof not payable in cash.
-5-
<PAGE>
"Consolidated Coverage Ratio" as of any date of determination means
the ratio of (i) the aggregate amount of Consolidated Cash Flow of the Company
for the period of the most recent four consecutive fiscal quarters ending prior
to the date of such determination and as to which financial statements of the
Company are available to (ii) Consolidated Interest Expense of the Company for
such four fiscal quarters; provided, however, that (A) if the Company has
incurred any Indebtedness since the beginning of such period and through the
date of determination of the Consolidated Coverage Ratio that remains
outstanding or if the transaction giving rise to the need to calculate
Consolidated Coverage Ratio is an Incurrence of Indebtedness, or both,
Consolidated Cash Flow and Consolidated Interest Expense for such period shall
be calculated after giving effect on a pro forma basis to (1) such Indebtedness
as if such Indebtedness had been incurred on the first day of such period
(provided that if such Indebtedness is incurred under a revolving credit
facility (or similar arrangement) only that portion of such Indebtedness that
constitutes the one-year projected average balance of such Indebtedness (as
determined in good faith by the Board of Directors of the Company) shall be
deemed outstanding for purposes of this calculation), and (2) the discharge of
any other Indebtedness repaid, repurchased, defeased or otherwise discharged
with the proceeds of such new Indebtedness as if such discharge had occurred on
the first day of such period, (B) if since the beginning of such period any
Indebtedness of any party has been repaid, repurchased, defeased or otherwise
discharged (other than Indebtedness under a revolving credit or similar
arrangement unless such revolving credit Indebtedness has been permanently
repaid and has not been replaced), Consolidated Interest Expense for such period
shall be calculated after giving pro forma effect thereto as if such
Indebtedness had been repaid, repurchased, defeased or otherwise discharged on
the first day of such period and (C) if since the beginning of such period the
Company or any Subsidiary shall have made any Asset Disposition, Consolidated
Cash Flow for such period shall be reduced by an amount equal to the
Consolidated Cash Flow (if positive) attributable to the assets which are the
subject of such Asset Disposition for such period or Increased by an amount
equal to the Consolidated Cash Flow (if negative) attributable thereto for such
period, and Consolidated Interest Expense for such period shall be (1) reduced
by an amount equal to the Consolidated Interest Expense attributable to any
Indebtedness of the Issuers repaid, repurchased, defeased or otherwise
discharged in connection with such Asset Disposition for such period and (2)
increased by interest income, if any, attributable to the assets which are the
subject of such Asset Disposition for such period.
"Consolidated Interest Expense" means, for any period for any
Person, the total interest expense of such Person and its Subsidiaries
determined in accordance with U.S. GAAP, plus, to the extent not included in
such interest expense (i) interest expense attributable to Capitalized Lease
Obligations, (ii) amortization of debt discount, (iii) capitalized interest,
(iv) noncash interest expense, (v) commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance financing
and (vi) Interest actually paid by such Person or any such Subsidiary under any
Guarantee of Indebtedness or other obligation of any other Person and less (a)
to the extent included in such interest expense, the amortization of capitalized
debt issuance costs and (b) interest income.
"Consolidated Net Income" means, for any period for any specified
Person, the consolidated net income (loss) of such specified Person and its
Subsidiaries determined in accordance with U.S. GAAP; provided, however, that
there shall not be included in such Consolidated Net Income: (i) any net income
(loss) of any Person acquired by such Person or any of its Subsidi-
-6-
<PAGE>
aries in a pooling of interests transaction for any period prior to the date of
such acquisition, (ii) any net income of any Subsidiary of such specified Person
if such Subsidiary is subject to restrictions, directly or indirectly, on the
payment of dividends or the making of distributions by such Subsidiary, directly
or indirectly, to such specified Person except to the extent of the dividends or
distributions that may be paid during such period by such Subsidiary, (iii) any
gain or loss realized upon the sale or other disposition of any assets of such
specified Person or its Subsidiaries which are not sold or otherwise disposed of
in the ordinary course of business and any gain or loss realized upon the sale
or other disposition of any Capital Stock of any Person, (iv) any extraordinary
gain or loss, (v) the cumulative effect of a change in accounting principles,
(vi) the net income of any other Person, other than a Subsidiary of such
specified Person, except to the extent of the lesser of (A) dividends or
distributions paid to such specified Person or any of its Subsidiaries by such
other Person and (B) the net income of such other Person (but in no event less
than zero) shall be included and the net loss of such other Person shall be
included only to the extent of the aggregate Investment of such specified Person
or any of its Subsidiaries in such other Person and (vii) any noncash expenses
attributable to grants or exercises of employee stock options.
"Consolidated Net Worth" of any Person means the total of the
amounts shown on the balance sheet of such Person and its Subsidiaries,
determined on a consolidated basis in accordance with U.S. GAAP, as of the end
of the most recent fiscal quarter of such Person ending prior to the taking of
any action for the purpose of which the determination is being made and for
which financial statements are available (but in no event ending more than 135
days prior to the taking of such action), as (i) the par or stated value of all
outstanding Capital Stock of such Person plus (ii) paid in capital or capital
surplus relating to such Capital Stock plus (iii) any retained earnings or
earned surplus less (A) any accumulated deficit and (B) any amounts attributable
to Disqualified Stock.
"Continuing Director" of any Person means, as of the date of
determination, any Person who (i) was a member of the Board of Directors of such
Person on the Issue Date or (ii) was nominated for election or elected to the
Board of Directors of such Person with the affirmative vote of a majority of the
Continuing Directors of such Person who were members of such Board of Directors
at the time of such nomination or election.
"Credit Facilities" means the Bank Credit Facility, as such
agreement may be amended, supplemented or otherwise modified in writing from
time to time, including any agreement extending the maturity of, refunding,
Refinancing or replacing such agreement (but in no event shall the definition of
Credit Facilities include any amendment supplement or other modification or
agreement increasing the amount of borrowings available to the Company and its
Subsidiaries thereunder).
"Credit Party" means the Company or the Issuers or any Restricted
Subsidiary.
"Credit Qualified Purchaser" means a purchaser of goods from the
Company and its Subsidiaries (i) pursuant to the Off-Take Agreements, (ii) whose
account receivable is monetized on a non-recourse basis to the Company and its
Subsidiaries pursuant to the terms of the Working Capital Credit Facility, (iii)
which has an investment grade debt rating (or is a controlled
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subsidiary of a company with an investment grade debt rating) or (iv) whose
account receivable is fully backed by a letter of credit from a Qualified
Financial Institution.
"Currency Agreement" means, in respect of any Person, any foreign
exchange contract, currency swap agreement or other similar agreement as to
which such Person is a party or a beneficiary.
"Debenture Depositary Agreement" means the agreement of even date
herewith among the Issuers, the Company and The Chase Manhattan Bank as
Book-Entry Depositary.
"Default" means any event, act or condition which with notice or
passage of time or both would become an Event of Default.
"Definitive Securities" means Securities that are in the form of
Exhibit A or Exhibit B attached hereto that do not include the Global Securities
Legend or Schedule of Increases or Decreases in Global Security thereof.
"Depositary" means, with respect to the Global Securities, the
Person specified in Section 2.03 as the Depositary with respect to such
Securities, until a successor shall have been appointed and become such pursuant
to the applicable provisions of this Indenture, and thereafter, "Depositary"
shall mean or include such successor.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock 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
(i) matures or is mandatorily redeemable pursuant to a sinking fund obligation
or otherwise, (ii) is convertible or exchangeable for Indebtedness or
Disqualified Stock or (iii) is redeemable at the option of the holder thereof,
in whole or in part, in each case on or prior to the first anniversary of the
Stated Maturity of the Securities; provided, however, that any Capital Stock
that would not constitute Disqualified Stock but for provisions thereof giving
holders thereof the right to require such Person to repurchase or redeem such
Capital Stock upon the occurrence of an "asset sale" or "change of control"
occurring prior to the first anniversary of the Stated Maturity of the
Securities shall not constitute Disqualified Stock of the "asset sale" or
"change of control" provisions applicable to such Capital Stock are not more
favorable to the holders of such Capital Stock than the provisions described
under Sections 4.06 and 4.10 of this Indenture.
"Downstream Finishing Facilities" means the Company's processing
facilities for the production of high-quality pickled and oiled, cold-rolled,
galvanized, and other value-added steel products.
"DRI Plant" means the Company's facility for the production of
direct reduced iron and co-generation power.
"Employment Agreement" means the agreement between the Company and
John W. Schultes dated as of the Issue Date.
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<PAGE>
"Equity Investment Proceeds" means any amounts received by the
Company as a result of the concurrent sale of equity as of the Issue Date net of
all related fees and expenses.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Securities" means the 12 3/4% Subordinated Second Mortgage
Debentures Due 2009 to be issued pursuant to this Indenture in connection with
the offer to exchange Securities for the Initial Securities that may be made by
the Issuers pursuant to the Registration Rights Agreement.
"Existing Arrangements" shall mean the contracts and other
agreements in effect on the Issue Date to the extent specified in Annex I to
this Indenture.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any other Person
and any obligation, direct or indirect, contingent or otherwise, of such Person
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness of such other Person (whether arising by virtue of
partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Global Security" means a Security that is in the form of Exhibit A
or Exhibit B hereto that includes the Global Securities Legend and Schedule of
Increases or Decreases in Global Security thereof.
"Global Securities Legend" means the legend set forth under such
caption in the form of Initial Security in Exhibit A hereto.
"Guaranty" means the Guarantee of the Securities by the Company
pursuant to, and as described in, Article XII.
"Hedging Obligations" of any Person means the obligations of such
Person pursuant to any Interest Rate Agreement, Currency Agreement or Commodity
Commitment.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Hot Mill" means the Company's compact strip production thin-slab
hot mill for steel melting, refining, casting and hot-rolling.
"Incur" means issue, assume, guarantee, incur or otherwise become
liable for. Notwithstanding the foregoing, in the event the Company shall have
obtained Profitable Operations and, thereafter, enters into any revolving credit
or multiple-draw term loan facility in
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order to fund Phase III Construction Costs, the Company may treat all or any
portion of such revolving credit or multiple-draw term debt (subject to an
aggregate limit of U.S.$150 million) as being Incurred from and after any date
beginning the date that the revolving credit or multiple-draw term loan facility
commitment is extended to the Company, by furnishing notice thereof to the
Trustee, and any borrowings or reborrowings by the Company under such commitment
up to the amount of such commitment designated by the Company as Incurred shall
not be deemed to be new Incurrences of Indebtedness by the Company; provided,
however, that the undrawn portion of any such revolving or term debt shall be
deemed to be outstanding Indebtedness until such time as the commitment
thereunder is terminated.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication), (i) the principal of and premium (if any)
in respect of indebtedness of such Person for borrowed money, (ii) the principal
of and premium (if any) in respect of obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all obligations of
such Person in respect of letters of credit or other similar instruments
(including reimbursement obligations with respect thereto) (other than
obligations with respect to letters of credit securing obligations (other than
obligations described in clauses (i), (ii) and (v)) entered into in the ordinary
course of business of such Person to the extent that such letters of credit are
not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed
no later than the third business day following receipt by such Person of a
demand for reimbursement following payment on the letter of credit), (iv) all
obligations of such Person to pay the deferred and unpaid purchase price of
property or services (except trade payables and accrued expenses incurred in the
ordinary course of business), which purchase price is due more than six months
after the date of placing such property in service or taking delivery and title
thereto or the completion of such services, (v) all Capitalized Lease
Obligations and all Attributable Indebtedness of such Person, (vi) all
indebtedness of other Persons secured by a Lien on any asset of such Person,
whether or not such Indebtedness is assumed by such Person, (vii) all
Indebtedness of other Persons to the extent Guaranteed by such Person, (viii)
the amount of all obligations of such Person with respect to the redemption,
repayment or other repurchase of any Disqualified Stock or any Preferred Stock
of such Person or any of its Subsidiaries to the extent such obligation arises
on or before the Stated Maturity of the Securities (but excluding, in each case,
accrued dividends) and (ix) to the extent not otherwise included in this
definition, obligations under Currency Agreements, Interest Rate Agreements and
Commodity Commitments. The amount of Indebtedness of any Person at any date
shall be the outstanding principal amount of all unconditional obligations as
described above, as such amount would be reflected on a balance sheet prepared
in accordance with U.S. GAAP, and the maximum liability of such Person, upon the
occurrence of the contingency giving rise to the obligation, of any contingent
obligations described above at such date.
"Indenture" means this Indenture as amended or supplemented from
time to time.
"Independent Director" means a member of the board of directors of a
Person that is not an officer, employee or former officer or employee of such
Person or one of its Affiliates and, with respect to any transaction or series
of related transactions, a member of the board of directors who does not have
any material direct or indirect financial interest in or with respect to such
transaction or series of related transactions (including for such purpose the
interest of any
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<PAGE>
other Person with respect to whom such director is also a director, officer or
employee) who is qualified under the regulations prescribed by the Stock
Exchange of Thailand.
"Independent Engineer" means Hatch Associates, Ltd.
"Initial Securities" means the 12 3/4% Subordinated Second Mortgage
Debentures Due 2009, issued under this Indenture on or about the date hereof.
"Insolvency or Liquidation Proceeding" means (i) any insolvency or
bankruptcy case or proceeding, or any receivership, liquidation, reorganization
or other similar case or proceeding in connection therewith, relating to the
Issuers or the Company or any of their respective assets, or (ii) any
liquidation, dissolution or other winding up of the Issuers or the Company,
whether voluntary or involuntary or whether or not involving insolvency or
bankruptcy, or (iii) any assignment for the benefit of creditors or any other
marshaling of assets or liability of the Issuers or the Company.
"Interest Payment Date" means the stated maturity of an installment
of interest on the Securities.
"Interest Rate Agreement" means, with respect to any Person, any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement as to which such Person is party or a
beneficiary.
"Investment" in any Person means any direct or indirect advance,
loan (other than advances to customers in the ordinary course of business that
are recorded as accounts payable on the balance sheet of such Person) or other
extension of credit (including by way of Guarantee or
similar arrangement, but excluding any debt or extension of credit
represented by a bank deposit other than a time deposit) or capital contribution
to (by means of any transfer of cash or other property to others or any payment
for property or services for the account or use of others), or any purchase or
acquisition of Capital Stock, Indebtedness or other similar instruments issued
by such Person.
"Iron Ore Fines Supply Agreement" means the agreement between the
Company and MMTC Limited dated February 6, 1997.
"Issue Date" means the date on which the Securities are originally
issued.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof).
"Majority Holders" means, at any time, the holder or holders of at
least a majority in aggregate principal amount of the then outstanding
Securities.
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<PAGE>
"Management Agreement" means the agreement between the Company and
Management Co. dated as of the Issue Date.
"Management Co." means NSM Management Company, LLC.
"Material" means material in relation to (a) the business,
operations, affairs, financial condition, assets or properties of the Company
and its Subsidiaries taken as a whole or (b) the ability of the Company to
perform its obligations under this Indenture, the Notes, the Securities, the
Security Documents, the Project Documents or (c) the validity or enforceability
of the Indenture or the Notes, the Securities, the Security Documents or the
Project Documents.
"Mechanical Completion" means the point in time when the DRI Plant,
the Hot Mill and the Downstream Finishing Facilities have been completed and
certified as complete by the Independent Engineer.
"Mill" means collectively the DRI Plant, the Hot Mill and the
Finishing Facilities.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Available Cash" from an Asset Disposition means cash payments
received (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise, but only as
and when received) therefrom, in each case net of (i) all legal, title and
recording tax expenses, commissions and other fees and expenses incurred, and
all taxes required to be paid or accrued as a liability under U.S. GAAP, as a
consequence of such Asset Disposition, (ii) all payments made on any
Indebtedness which is secured by any assets subject to such Asset Disposition in
accordance with the terms of any Lien upon such assets, or which must by its
terms, or in order to obtain a necessary consent to such Asset Disposition or by
applicable law, be repaid out of the proceeds from such Asset Disposition, (iii)
all distributions and other payments required to be made to any Person owning a
beneficial interest in assets subject to sale or minority interest holders in
Subsidiaries or joint ventures as a result of such Asset Disposition, (iv) the
deduction of appropriate amounts to be provided by the seller as a reserve, in
accordance with U.S. GAAP, against any liabilities associated with the assets
disposed of in such Asset Disposition; provided, however, that upon any
reduction in such reserves (other than to the extent resulting from payments of
the respective reserved liabilities), Net Available Cash shall be increased by
the amount of such reduction to reserves, and retained by the Issuers, the
Company or any Restricted Subsidiary after such Asset Disposition and (v) any
portion of the purchase price from an Asset Disposition placed in escrow
(whether as a reserve for adjustment of the purchase price, for satisfaction of
indemnities in respect of such Asset Disposition or otherwise in connection with
such Asset Disposition); provided, however, that upon the termination of such
escrow, Net Available Cash shall be increased by any portion of funds therein
released to the Issuers, the Company or any Restricted Subsidiary.
"Net Cash Proceeds," with respect to any issuance or sale of Capital
Stock, means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees
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<PAGE>
actually incurred in connection with such issuance or sale and net of taxes paid
or payable as a result of such issuance or sale.
"Notes" means collectively the Senior Notes and the Senior
Subordinated Notes.
"Notes DSR Account" means an account maintained with the Collateral
Agent and established by the Company on or prior to the Issue Date into which
shall be deposited on the Issue Date, a portion of the Notes Net Proceeds,
together with a portion of the proceeds of the offering of the Securities, equal
to the sum of (i) the aggregate interest to be payable on the Senior Notes on
the first three interest payment dates in respect thereof, (ii) the aggregate
interest to be payable on the Senior Subordinated Notes on the first two
Interest Payment Dates and (iii) the aggregate interest to be payable on the
Securities on the first two interest payment dates in respect thereof.
"Notes Guaranties" means the Guarantees of the Notes by the Company
pursuant to, and as described in, the Senior Note Indenture and the Senior
Subordinated Note Indenture.
"Notes Net Proceeds" means the net proceeds from the sale of the
Notes less the portion thereof applied to pay in full all Indebtedness of the
Company required to be paid with such proceeds and to pay all fees and expenses
relating to the issuance of the Notes.
"Notes Sinking Fund Account" means an account maintained with the
Collateral Agent and established by the Company on or prior to the Issue Date
into which shall be deposited no later than the fifteenth day following the last
day of each fiscal quarter of the Company (based on the Company's fiscal year in
effect on the Issue Date), an amount equal to the Cash Flow Sweep Amount as well
as any amount required to be deposited therein under Section 4.32(e).
"Offering Memorandum" means a preliminary offering memorandum, a
supplement to the preliminary offering memorandum and an offering memorandum, as
supplemented as of March 2, 1998, together with any other document approved by
the Issuers for use in connection with the contemplated resale of the
Securities.
"Officer" means, in the case of NSM Steel Company, Ltd. and the
Company, any director thereof and, in the case of NSM Steel (Delaware), Inc.,
the Chairman of the Board, the Chief Executive Officer, the Chief Financial
Officer, the President, any General Manager, the Treasurer or the Secretary.
"Officers' Certificate" means a certificate signed by two Officers.
"Offshore Reserve Account" means an account maintained with the
Collateral Agent and established by the Company on or prior to the Issue Date
into which shall be deposited on the Issue Date, the balance (not otherwise
deposited in the Notes DSR Account) of the Notes Net Proceeds, together with the
balance of the proceeds of the offering of the Securities and Equity Investment
Proceeds.
"Off-Take Agreements" collectively mean the agreements between the
Company and Preussag Handel GmbH and the Company and Klockner Steel Trading each
dated November
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19, 1997, as such agreements may be amended, supplemented or otherwise modified
in writing from time to time.
"Operating Account" means an account or accounts maintained with the
Collateral Agent and established by the Company on or prior to the Issue Date
into which shall be deposited on the first day of each calendar month an amount
such that, immediately after giving effect to such deposit, the balance of such
account shall be equal to the sum of (i) the capital expenditures (including
Phase II Construction Costs to be paid by the Company to vendors in Thailand) of
the Company during that calendar month as estimated in advance in good faith by
the Company and (ii) any amount required to be paid during such calendar month
in connection with the Bank Credit Facility.
"Opinion of Counsel" means a written opinion from legal counsel who
is acceptable to the Trustee. The counsel may be an employee of or counsel to
the Issuers or the Trustee.
"Pari Passu", as applied to the ranking of any Indebtedness of a
Person in relation to other Indebtedness of such Person, means that each such
Indebtedness is not subordinated in right of payment to the same Indebtedness as
is the other, and is so subordinate to the same extent, and is not subordinate
in right of payment to each other or to any Indebtedness as to which the other
is not so subordinate.
"Permitted Foreign Investment" means, with respect to any Person, an
Investment by such Person in (i) cash and (ii) Cash Equivalents.
"Permitted Hedging Obligations" means (a) Indebtedness under Hedging
Obligations to the extent related to the Securities and any Refinancing
Indebtedness; and (b) Indebtedness under Commodity Commitments or Currency
Agreements entered into in the ordinary course of business in good faith as a
risk management or hedge against change in market conditions; provided, however,
that in the case of this clause (b) the aggregate amount of commodities
underlying all such Commodity Commitments on any date, for the Company and the
Restricted Subsidiaries, that mature or expire over any 12 month period may not
exceed the Company's expected requirements for such commodities over such 12
month period.
"Permitted Investments" means (i) investments in direct obligations
of the United States of America maturing within 90 days of the date of
acquisition thereof, (ii) investments in certificates of deposit maturing within
90 days of the date of acquisition thereof issued by a Qualifying Financial
Institution, (iii) investments in commercial paper given the highest rating by
S&P and Moody's and maturing not more than 90 days from the date of acquisition
thereof, (iv) Investments in Phase II Construction Costs, (v) the Co-Gen
Investment (less the amount of any Investment made pursuant to clause (viii)
below), (vi) Investments in transportation and downstream processing assets
using the proceeds of the repayment of the Cogen Investment provided that the
Securities are secured by a Lien on such assets that is senior to or pari passu
with any other Lien on such assets other than Liens securing the Notes and the
Credit Facilities, (vii) restructurings, swaps or other dispositions of the
Related Party Receivable; provided that (a) any such disposition shall result in
the receipt by the Company of tangible assets and (b) the
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Securities shall be secured by a Lien on such assets that is senior to or pari
passu with any other Lien on such assets, other than Liens securing the Notes
and the Credit Facilities; and (viii) other investments in an aggregate amount
not to exceed the lesser of an amount equal to (a) the sum of all principal
repayments on the U.S.$15.5 million loan made by the Company in connection with
the Co-Gen Investment and (b) U.S.$15.5 million.
"Permitted Liens" means, with respect to any Person, (a) pledges or
deposits by such Person under workers' compensation laws, unemployment insurance
laws or similar legislation, or good faith deposits in connection with bids,
tenders, contracts (other than for the payment of Indebtedness) or leases to
which such Person is a party, or deposits to secure public or statutory
obligations of such Person or deposits of cash or United States government bonds
to secure surety or appeal bonds to which such Person is a party, or deposits as
security for contested taxes or import duties or for the payment of rent, in
each case Incurred in the ordinary course of business; (b) Liens imposed by law,
such as carriers', warehousemen's and mechanics' Liens, in each case for sums
not yet due or being contested in good faith by appropriate proceedings or other
Liens arising out of judgments or awards against such Person with respect to
which such Person shall then be proceeding with an appeal or other proceedings
for review; (c) Liens for property taxes not yet subject to penalties for
non-payment or which are being contested in good faith by appropriate
proceedings; (d) Liens in favor of issuers of surety bonds or letters of credit
issued pursuant to the request of and for the account of such Person in the
ordinary course of its business provided, however, that such letters of credit
do not constitute Indebtedness; (e) minor survey exceptions, minor encumbrances,
easements or reservations of, or rights of others for, licenses, rights-of-way,
sewers, electric lines, telegraph and telephone lines and other similar
purposes, or zoning or other restrictions as to the use of real property or
Liens incidental to the conduct of the business of such Person or to the
ownership of its properties which were not Incurred in connection with
Indebtedness and which do not in the aggregate materially adversely affect the
value of said properties or materially impair their use in the operation of the
business of such Person; (f) Liens securing Indebtedness Incurred to finance the
construction, purchase or lease of, or repairs, improvements or additions to,
property of such Person; provided, however, that the Lien may not extend to any
other property owned by such Person or any of its Subsidiaries at the time the
Lien is Incurred, and the Indebtedness (other than any interest thereon) secured
by the Lien may not be Incurred more than 180 days after the later of the
acquisition, completion of construction, repair, improvement, addition or
commencement of full operation of the property subject to the Lien; (g) Liens to
secure the Notes, Securities, Guaranty and Notes Guaranties; (h) Liens securing
Indebtedness permitted under clause (b)(i) of Section 4.03 of this Indenture to
the extent such Liens (other than Liens on inventories) also secure, on an equal
and ratable basis, the Issuers' and the Company's obligations under the Senior
Subordinated Notes; (i) Liens existing on the Issue Date; (j) Liens on property
or shares of Capital Stock of another Person at the time such other Person
becomes a Subsidiary of such Person; provided, however, that such Liens are not
created, incurred or assumed in connection with, or in contemplation of, such
other Person becoming such a Subsidiary; provided further, however, that such
Lien may not extend to any other property owned by such Person or any of its
Subsidiaries; (k) Liens on property at the time such Person or any of its
Subsidiaries acquires the property, including any acquisition by means of a
merger or consolidation with or into such Person or a Subsidiary of such Person;
provided, however, that such Liens are not created, incurred or assumed in
connec-
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tion with, or in contemplation of, such acquisition; provided further, however,
that the Liens may not extend to any other property owned by such Person or any
of its Subsidiaries; (l) Liens securing Indebtedness or other obligations of a
Subsidiary of such Person owing to such Person or a wholly owned Subsidiary of
such Person; (m) Liens securing Hedging Obligations so long as such Hedging
Obligations relate to Indebtedness that is, and is permitted to be under this
Indenture, secured by a Lien on the same property securing such Hedging
Obligations; and (n) Liens to secure any Refinancing (or successive
Refinancings) as a whole, or in part, of any Indebtedness secured by any Lien
referred to in the foregoing clauses (f), (i), (j) and (k); provided, however,
that (x) such new Lien shall be limited to all or part of the same property that
secured the original Lien (plus improvements to or on such property) and (y) the
Indebtedness secured by such Lien at such time is not increased to any amount
greater than the sum of (A) the outstanding principal amount or, if greater,
committed amount of the Indebtedness described under clauses (f), (i), (j) or
(k) at the time the original Lien became a Permitted Lien and (B) an amount
necessary to pay any fees and expenses, including premiums, related to such
refinancing, refunding, extension, renewal or replacement. For purposes of this
definition, the term "Indebtedness" shall be deemed to include interest on such
Indebtedness.
"Person" means any individual corporation, partnership, joint
venture, association, joint-stock Issuers, trust, unincorporated organization,
government or any agency or political subdivision hereof or any other entity.
"Phase II Completion" means the completion of the construction of
the Hot Mill, the DRI Plant and the Downstream Finishing Facilities.
"Phase II Construction Costs" mean construction costs associated
with the Hot Mill, the DRI Plant and the Downstream Finishing Facilities, in
each case certified as true and correct by the Independent Engineer.
"Phase III Construction Costs" mean construction costs incurred in
connection with the Mill after Phase II Completion.
"Post-Petition Interest" means all interest accrued or accruing
after the commencement of any Insolvency or Liquidation Proceeding (and interest
that would accrue but for the commencement of any Insolvency or Liquidation
Proceeding) in accordance with and at the contract rate (including, without
limitation, any rate applicable upon default) specified in the agreement or
instrument creating, evidencing or governing any Indebtedness, whether or not,
pursuant to applicable law or otherwise, the claim for such interest is allowed
as a claim in such Insolvency or Liquidation Proceeding.
"Preferred Stock", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
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
corporation, over shares of Capital Stock of any other class of such
corporation.
"President and/or CEO" means John W. Schultes or his successor
appointed by Management Co.
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"principal" of a Security means the principal of the Security plus
the premium, if any, payable on the Security that is due or overdue or is to
become due at the relevant time.
"Private Placement Legend" means the legend set forth under such
caption in the form of Initial Security in Exhibit A hereto.
"Profitable Operations" means the point in time at which
Consolidated Cash Flow for a consecutive six month period equals at least 200%
of Consolidated Interest Expense for such six month period, to the extent such
status has been demonstrated in a certificate of the General Manager delivered
to the Trustee and the Collateral Agent, accompanied by a certificate of the
Company's independent accountants confirming such results based on a review
conducted by such accountants.
"Project Documents" means and includes (i) the Offtake Agreements,
(ii) the SDI Agreement, (iii) the SDI License Agreement, (iv) the Management
Agreement, (v) the Shareholders Agreement, (vi) the Coal Supply Agreement, (vii)
the Iron Ore Fines Supply Agreement, (viii) the Working Capital Credit Facility,
(ix) the Agency Agreement, (x) the Employment Agreement, and (xi) the Sriracha
Harbor Agreement.
"Purchase Agreements" means the agreements for the purchase of the
Securities between the Issuers, the Company, and the Purchasers each dated March
12, 1998.
"Purchasers" has the meaning given in the Purchase Agreements.
"Public Equity Offering" means an offering to the public for cash by
the Issuers or the Company of its common stock, or options, warrants or rights
with respect to its common stock.
"Qualifying Domestic Financial Institution" means a financial
institution in Thailand having capital and surplus in excess of
U.S.$1,000,000,000.
"Qualifying Financial Institution" means a financial institution
that (i) is domiciled in the United States, the United Kingdom, France or
Germany, (ii) is located in New York, New York and (iii) has capital and surplus
in excess of U.S.$5,000,000,000.
"Redemption Date" means any date on which the Securities are
optionally redeemed pursuant to Section 3.07.
"Refinance" means, in respect of any Indebtedness, to refinance,
extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue
other Indebtedness in exchange or replacement for, such Indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances any
Indebtedness of the Company or any Restricted Subsidiary existing on the Issue
Date or incurred in compliance with the Indenture, including Indebtedness that
Refinances Refinancing Indebtedness; provided, however, that (i) such
Refinancing Indebtedness has a Stated Maturity no earlier than the Stated
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Maturity of the Indebtedness being Refinanced, (ii) such Refinancing
Indebtedness has an Average Life at the time such Refinancing Indebtedness is
Incurred that is equal to or greater than the Average Life of the Indebtedness
being Refinanced and (iii) such Refinancing Indebtedness has an aggregate
principal amount (or if Incurred with original issue discount, an aggregate
issue price) that is equal to or less than the aggregate principal amount (or if
Incurred with original issue discount, the aggregate accreted value then
outstanding or committed (plus fees and expenses, including any premium and
defeasance costs) under the Indebtedness being Refinanced; provided further,
however, that Refinancing Indebtedness shall not include (x) Indebtedness of a
Subsidiary that Refinances Indebtedness of the Company or (y) Indebtedness of
the Company or a Restricted Subsidiary that Refinances Indebtedness of an
Unrestricted Subsidiary.
"Registered Exchange Offer" shall have the meaning set forth in the
Registration Rights Agreement.
"Registrable Machinery" means machinery that qualifies for
registration pursuant to the Machinery Registration Act (Thailand) and that may
be mortgaged to secure a debt.
"Registration Rights Agreement" means the Registration Rights
Agreement dated March 12, 1998, by and between the Purchasers, the Issuers and
the Company, as such agreement may be amended, modified, or supplemented from
time to time in accordance with the terms thereof.
"Related Party Receivable" means the up to U.S.$50 million of
receivables owed to the Company by certain of its affiliates.
"Representative" means any trustee, agent or representative (if any)
for any issue of Specified Senior Indebtedness of the Company.
"Restricted Subsidiary" means, initially, each Subsidiary of the
Company existing on the date of the Indenture, and any other Subsidiary
designated from time to time by the Board of Directors of the Company as a
"Restricted Subsidiary" in accordance with this Indenture.
"Restricted Period" means the period of 40 consecutive days
beginning on and including the first day after the Issue Date.
"Revenue Account" means an account or accounts maintained with the
Collateral Agent and established by the Company on or prior to the Issue Date
into which shall be deposited (directly or through an intermediate account) all
sales proceeds, all insurance proceeds and all other amounts received by the
Company that are not otherwise required to be deposited in the Notes DSR Account
or the Offshore Reserve Account.
"S&P" means Standard & Poor's Rating Services, a division of
McGraw-Hill, Inc., and its successors.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired whereby the Company or a Restricted
Subsidiary transfers such property to a Person and the Company or a Restricted
Subsidiary leases it from such Person.
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"SDI Agreement" means the agreement between NSM Management Company,
LLC and Steel Dynamics, Inc. dated as of the Issue Date.
"SDI License Agreement" means the agreement between the Company and
Steel Dynamics, Inc. dated as of the Issue Date.
"Securities" means, collectively, the Initial Securities and, when
and if issued as provided in the Registration Rights Agreement, the Exchange
Securities.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Documents" means all the agreements, charges, documents
and instruments governing or creating the security interests in the Collateral
for the benefit of the holders of the Securities, the Senior Notes, the Senior
Subordinated Notes and (except in respect of (iii) and (xi) below) the Bank
Credit Facility and shall in any event include (i) Security Sharing Agreement;
(ii) Land and Building Mortgage Agreement; (iii) Pledge of Offshore Reserve
Account and the Notes DSR Account; (iv) Machinery Pledge Agreement; (v)
Machinery Mortgage Agreement; (vi) Assignment or designation as co-beneficiary
of Insurance; (vii) Conditional Assignment of Project Documents; (viii)
Conditional Assignment or Pledge of the Note Sinking Fund Account and Revenue
Account; (ix) Conditional Assignment or Pledge of the Operating Account and
Revenue Account; (x) Pledge of Permitted Investments; (xi) Pledge of all issued
and outstanding shares of each of the Issuers; (xii) Assignment of Performance
Bonds; and (xiii) any other documents relating to the Collateral and executed in
connection with the foregoing.
"Security Sharing Agreement" means the Security Sharing Agreement
dated as of the Issue Date among the Issuers, the Company, certain Thai
financial institutions party to the Bank Credit Facility, the Trustee, the
trustees in respect of the Senior Notes and the Senior Subordinated Notes, the
Book-Entry Depositary, the book-entry depository for the Senior Notes and the
Senior Subordinated Notes and the Collateral Agent.
"Senior Financial Officer" means the chief financial officer,
principal accounting officer, treasurer or comptroller of the Company.
"Senior Guaranty" means the Guarantee of the Senior Notes by the
Company pursuant to, and as described in, the Senior Note Indenture.
"Senior Indebtedness" means, with respect to any Person, (i)
Indebtedness Incurred pursuant to the Credit Facilities, (ii) the Senior Notes,
(iii) the Senior Subordinated Notes and (iv) all indebtedness of such Person,
including interest thereon (including Post-Petition Interest), whether
outstanding on the Issue Date or thereafter Incurred, unless in the instrument
creating or evidencing the same or pursuant to which the same is outstanding it
is expressly provided that such obligations are not superior in right of payment
to the Securities or the applicable Guaranty; provided, however, that Senior
Indebtedness shall not include (1) any obligation of such Person to any
Subsidiary, (2) any liability for Federal, state, local or other taxes owed or
owing by such Person, (3) any accounts payable or other liability to trade
creditors arising in the ordinary course of business (including Guaranties
thereof or instruments evidencing
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such liabilities), (4) any Indebtedness of such Person (other than the
Securities) which is expressly subordinate in right of payment to any other
Indebtedness of such Person, including any Subordinated Indebtedness, (5) any
obligations with respect to any Capital Stock, or (6) any Indebtedness Incurred
in violation of the Indenture.
"Senior Notes" means the 12% Senior Mortgage Notes Due 2006 of the
Issuers.
"Senior Note Indenture" means the indenture of even date herewith
entered into in connection with the issuance of the Senior Notes, among the
Issuers, the Company and the Trustee.
"Senior Subordinated Guaranty" means, the Guarantee of the Senior
Subordinated Notes by the Company pursuant to the Senior Subordinated Note
Indenture."
"Senior Subordinated Notes" means the 12 1/4% Senior Subordinated
Mortgage Notes due 2008.
"Senior Subordinated Note Indenture" means the indenture of even
date herewith entered into in connection with the Senior Subordinated Notes
among the Issuers, the Company and the Trustee.
"Shareholders' Agreement" means the agreement dated as of the Issue
Date between Steel Dynamics, Inc., Enron Corp., McDonald & Company Securities,
Inc., Sawardi Horrungruang and N.T.S. Steel Group (Plc.) Co., Ltd., and the
Company.
"Specified Senior Indebtedness" means, with respect to the Company
and its Restricted Subsidiaries, (i) Indebtedness of the Company or such
Restricted Subsidiaries represented by the Senior Notes, the Senior Subordinated
Notes and under the Credit Facilities and refinancings thereof with Senior
Indebtedness permitted by the Senior Note Indenture and the Subordinated Note
Indenture and under the Credit Facilities, as the case may be, to the extent the
instrument governing such Refinancing Indebtedness states that it shall be
Specified Senior Indebtedness, and (ii) Indebtedness of the Company Incurred
pursuant to the Senior Guaranty and the Senior Subordinated Guaranty, in the
case of each clause (i) and (ii), together with accrued and unpaid interest
(including Post-Petition Interest) in respect of such Indebtedness.
"Sriracha Harbor Agreement" means the agreement between Sriracha
Harbor Public Company Limited and the Company, relating to the use by the
Company, of the Sriracha Harbor port to be dated as of the Issue Date.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the payment of principal
of such security is due and payable, including pursuant to any mandatory
redemption provision.
"Subordinated Indebtedness" means Indebtedness of the Company, the
Issuers or a Restricted Subsidiary that is subordinated in right of payment to
the Senior Notes, or any applicable Guarantee of the Senior Notes; provided,
however, that the term "Subordinated
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Indebtedness" shall be deemed not to include the Senior Subordinated Notes, or
any applicable Guarantee of the Senior Subordinated Notes.
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other Interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by (i) such Person, (ii) such
Person and one or more Subsidiaries of such Person or (iii) one or more
Subsidiaries of such Person. Unless otherwise specified herein, each reference
to a Subsidiary shall refer to a Subsidiary of the Issuers and the Company.
"Thai GAAP" means generally accepted accounting principals in
Thailand as in effect as of the date of this Indenture.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date of this Indenture; provided, however,
that, in the event the Trust Indenture Act of 1939 is amended after such date,
"TIA" means, to the extent required by any such amendments, the Trust Indenture
Act of 1939 as so amended.
"Transfer Restricted Securities" means Securities that bear or are
required to bear the Private Placement Legend.
"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor.
"Trust Officer" means any officer or assistant officer of the
Trustee assigned by the Trustee to administer this Indenture.
"Uniform Commercial Code" means the New York Uniform Commercial Code
as in effect from time to time.
"U.S. GAAP" means generally accepted accounting principles in the
United States as in effect as of the date of the Indenture. All ratios and
computations based on U.S. GAAP contained in the Indenture shall be computed in
conformity with U.S. GAAP.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company
(other than the Issuers) that at the time of determination shall be designated
an Unrestricted Subsidiary by the Board of Directors in the manner provided
below and (ii) any Subsidiary of an Unrestricted Subsidiary. The Board of
Directors may designate any Subsidiary of the Company (including any newly
acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless
such Subsidiary or any of its Subsidiaries owns any Capital Stock or
Indebtedness of, or holds any Lien
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on any property of, the Company or any other Subsidiary of the Company that is
not a Subsidiary of the Subsidiary to be so designated; provided, however, that
either (A) the Subsidiary to be so designated has total assets of $1,000 or less
or (B) if such Subsidiary has assets greater than $1,000, such designation would
be permitted in Section 4.04.
"Vendor Financing" means financing made available by vendors to
finance equipment and/or plant included in the Mill on extended pay terms.
"Wholly-Owned Restricted Subsidiary" means a Restricted Subsidiary
all the outstanding Capital Stock (other than directors' qualifying shares) of
which are owned by the Company or another Wholly-Owned Restricted Subsidiary.
"Working Capital Credit Facility" means the Credit Facility dated as
of the Issue Date between the Company and Banque Nationale de Paris, as such
agreement may be amended, supplemented, or otherwise modified in writing from
time to time (but in no event shall the definition of Working Capital Credit
Facility include any amendment, supplement or other modification increasing the
amount of borrowings available to the Company and its subsidiaries thereunder).
"Working Capital Requirements" means general corporate purposes,
including operating expenses, debt service and the Co-Gen Investments.
SECTION 1.02 Other Definitions.
Defined in
Term Section
"Additional Amounts" ....................................... 4.20(a)
"Affiliate Transaction" .................................... 4.13
"Agent Members" ............................................ 2.13(a)
"Authorized Agent" ......................................... 12.11(b)
"Bankruptcy Law" ........................................... 6.01
"bankruptcy provision" ..................................... 6.01
"Book-Entry Depositary" .................................... 2.13
"Collateral" ............................................... 10.02
"Company Collateral" ....................................... 10.01
"covenant defeasance option" ............................... 8.01(b)
"Custodian" ................................................ 6.01
"Definitive Registered Securities" ......................... 4.17(a)
"Event of Default" ......................................... 6.01
"IAIs" ..................................................... 2.01(b)
"IAI Global Security" ...................................... 2.01(b)
"legal defeasance option" .................................. 8.01(b)
"Legal Holiday" ............................................ 12.08
"Obligations" .............................................. 13.01
"Offer" .................................................... 4.06(b)
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"Offer Amount" ............................................. 4.06(c)
"Offer Period" ............................................. 4.06(c)
"Paying Agent" ............................................. 2.03
"Purchase Date" ............................................ 4.06(c)
"QIB Global Security" ...................................... 2.01(b)
"QIBs" ..................................................... 2.01(b)
"Reports" .................................................. 4.02
"Registrar" ................................................ 2.03
"Regulation S" ............................................. 2.01(b)
"Regulation S Global Security" ............................. 2.01(b)
"Restricted Payment" ....................................... 4.04
"Stage III Tender" ......................................... 4.07
"Successor Company" ........................................ 5.01
"Taxes" .................................................... 4.20(a)
"U.S. Global Securities" ................................... 2.01(b)
SECTION 1.03 Incorporation by Reference of Trust Indenture Act. This
Indenture is subject to the mandatory provisions of the TIA, which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"indenture securities" means the Securities.
"indenture security holder" means a Holder or a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Issuers, the Company
and any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
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 Thai GAAP or U.S. GAAP;
(3) "or" is not exclusive;
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(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the plural
include the singular;
(6) unsecured Indebtedness shall not be deemed to be subordinate or
junior to Secured Indebtedness merely by virtue of its nature as unsecured
Indebtedness;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof that
would be shown on a balance sheet of the Issuers dated such date prepared
in accordance with Thai GAAP or U.S. GAAP and accretion of principal on
such security shall be deemed to be the Incurrence of Indebtedness;
(8) the principal amount of any Preferred Stock shall be (i) the
maximum liquidation value of such Preferred Stock or (ii) the maximum
mandatory redemption or mandatory repurchase price with respect to such
Preferred Stock, whichever is greater; and
(9) unless otherwise indicated, all references in this Indenture to
"$" mean United States dollars and all references to "Baht" mean Thai
Baht.
SECTION 1.05 Business Day Certificate. Within 15 days after the
Issue Date and thereafter, within 15 days prior to the end of each calendar year
while this Indenture remains in effect (with respect to the succeeding calendar
years), the Issuers shall, or shall cause the Collateral Agent to, deliver to
the Trustee an Officers' Certificate (or a written notice in the case of the
Collateral Agent) specifying the days on which banking institutions in Bangkok,
Thailand are authorized or required by law to close.
ARTICLE II
The Securities
SECTION 2.01 Form and Dating. (a) The Initial Securities and the
Trustee's certificate of authentication shall be substantially in the form of
Exhibit A, which is hereby incorporated in and expressly made a part of this
Indenture, and as otherwise provided in this Article II. Any Exchange Securities
and the Trustee's certificate of authentication shall be substantially in the
form of Exhibit B, which is incorporated in and expressly made a part of this
Indenture, and as otherwise provided in this Article II. The Securities may have
notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Issuers or the Company is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Issuers). Each Security shall be dated the date of its authentication.
The terms of the Securities set forth in Exhibits A and B are part of the terms
of this Indenture. The Securities shall be issuable only in registered form
without coupons and only in denominations of $1 and integral multiples of US $1.
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(b) Global Securities. The Initial Securities are being offered and
sold by the Issuers to the Purchasers pursuant to the Purchase Agreements.
Initial Securities offered and sold to the Purchasers, as provided
in the Purchase Agreements, shall be issued initially in the form of a single
Global Security in global form without interest coupons substantially in the
form of Exhibit A hereto, with such applicable legends as are set forth in
Exhibit A hereto, except as otherwise permitted herein (the "IAI Global
Security"). On the Issue Date a similar Global Security, (the "144A Global
Security" and, together with the IAI Global Security, the "U.S. Global
Securities") in global form shall also be issued to accommodate offers and sales
of Securities in reliance on Rule 144A. The U.S. Global Securities shall be
deposited initially with the Book-Entry Depositary pursuant to the terms of the
Depositary Agreement, duly executed by the Issuers and authenticated by the
Trustee as hereinafter provided. The aggregate principal amount of each U.S.
Global Security may from time to time be increased or decreased by adjustments
made by annotation or endorsement thereon by the Trustee on behalf of the
Issuers (or by the issue of a further U.S. Global Security of the same type), in
connection with a corresponding decrease or increase in the aggregate principal
amount of the other U.S. Global Security or the Regulation S Global Security or
in consequence of the issue of Definitive Securities or additional U.S.
Securities, as hereinafter provided. The U.S. Global Securities and all other
Initial Securities evidencing the debt, or any portion of the debt, initially
evidenced by such U.S. Global Securities, other than Securities transferred or
exchanged upon certification as provided in Section 2.14(a)(i)(1), (2) or (6),
shall collectively be referred to herein as the "U.S. Securities".
Initial Securities offered and sold in reliance on Regulation S as
provided in the Purchase Agreements, shall be issued initially in the form of a
single Global Security in global form without interest coupons substantially in
the form of Exhibit A hereto, with such applicable legends as are set forth in
Exhibit A hereto, except as otherwise permitted herein, which shall be deposited
initially with the Book-Entry Depositary pursuant to the terms of the Debenture
Depositary Agreement, duly executed by the Issuers and authenticated by the
Trustee as hereinafter provided. Such Global Security shall be referred to
herein as the "Regulation S Global Security". The aggregate principal amount of
the Regulation S Global Security may from time to time be increased or decreased
by adjustments made by annotation or endorsement thereon by the Trustee on
behalf of the Issuers (or by the issue of a further Regulation S Global
Security), in connection with a corresponding decrease or increase in the
aggregate principal amount of a U.S. Global Security or in consequence of the
issue of Definitive Securities or additional Regulation S Securities, as
hereinafter provided. The Regulation S Global Security and all other Initial
Securities that are not U.S. Global Securities shall collectively be referred to
herein as the "Regulation S Securities".
SECTION 2.02 Execution and Authentication. One or more Officers
shall sign the Securities for the Issuers by manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall be
valid nevertheless.
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A Security shall not be valid until an authorized officer of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate and make available for delivery (1)
Initial Securities for original issue in an aggregate principal amount at
maturity of $53,133,016, and (2) Exchange Securities for issue only in a
Registered Exchange Offer, pursuant to the Exchange and Registration Rights
Agreement for Initial Securities for a like principal amount of Initial
Securities exchanged pursuant thereto, in each case upon a written order of the
Issuers signed by one Officer thereof. Such order shall specify the amount of
the Securities to be authenticated, the date on which the original issue of
Securities is to be authenticated, whether the Securities are to be Initial
Securities or Exchange Securities whether the Securities shall bear the Private
Placement Legend, or such other information as the Trustee may reasonably
request. The aggregate principal amount at maturity of Securities outstanding at
any time may not exceed $53,133,016 except as provided in Section 2.07.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Issuers to authenticate the Securities. Any such appointment
shall be evidenced by an instrument signed by an authorized officer of the
Trustee, a copy of which shall be furnished to the Issuers, and the Trustee
shall notify the Holders of the name and address of any agent not a party to
this Indenture. Unless limited by the terms 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 any
Registrar, Paying Agent or agent for service of notices and demands.
SECTION 2.03 Registrar and Paying Agent. The Issuers shall maintain
an office or agency where Securities may be presented for registration of
transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange. The
Issuers may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes any additional paying agent.
The Issuers shall enter into an appropriate agency agreement with
any Registrar, Paying Agent or co-registrar not a party to this Indenture, which
shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Issuers shall notify
the Trustee of the name and address of any such agent. The Issuers may remove
any Paying Agent, Registrar or co-registrar without prior notice to any Holder.
If the Issuers fail to maintain a Registrar or Paying Agent, the Trustee shall
act as such and shall be entitled to appropriate compensation therefor pursuant
to Section 7.07.
The Issuers initially appoint the Trustee as Registrar and Paying
Agent in connection with the Securities.
The Issuers initially appoint The Depository Trust Company to act as
Depositary with respect to the Global Securities.
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The Issuers may remove any Registrar or Paying Agent upon written
notice to such Registrar or Paying Agent and to the Trustee; provided, however,
that no such removal shall become effective until (1) acceptance of an
appointment by a successor as evidenced by an appropriate agreement entered into
by the Issuers and such successor Registrar or Paying Agent, as the case may be,
and delivered to the Trustee or (2) notification to the Trustee that the Trustee
shall serve as Registrar or Paying Agent until the appointment of a successor in
accordance with clause (1) above and shall otherwise comply with TIA ss.312(a).
The Registrar or Paying Agent may resign at any time upon written notice.
The Paying Agent shall comply with all withholding tax, information
reporting and backup withholding tax requirements under the United States
Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury
Regulations issued thereunder in respect of any payment on, or in respect of,
the Securities (including, without limitation, furnishing to the Holders and
collecting Internal Revenue Service ("IRS") Forms 1001, 4224, W-8 or W-9 (or any
successor forms), as the case may be, and filing IRS Forms 1042 and 1042-S with
respect thereto). As promptly as possible after the payment of any withholding
tax, the Paying Agent shall deliver to each Holder appropriate documentation
showing the payment thereof, together with such additional documentary evidence
as such Holders may reasonably request from time to time.
SECTION 2.04 Paying Agent to Hold Money in Trust. Prior to 10:00
A.M., New York City time, on each due date of the principal, interest and
Additional Amounts, if any, on any Security, the Issuers shall deposit with the
Paying Agent a sum sufficient to pay such principal, interest and Additional
Amounts, if any, then so becoming due. The Issuers shall require each Paying
Agent (other than the Trustee) to agree in writing that the Paying Agent shall
hold in trust for the benefit of Securityholders or the Trustee all money held
by the Paying Agent for the payment of principal of or interest on the
Securities and shall notify the Trustee of any default by the Issuers in making
any such payment. The Issuers 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 shall have no
further liability for the money delivered to the Trustee.
Any money deposited with any Paying Agent in trust for the payment
of principal, interest or Additional Amounts, if any, on any Security and
remaining unclaimed for two years after such principal and interest has become
due and payable shall be paid to the relevant Issuer at its request; and the
Securityholders shall thereafter, as unsecured general creditors, look only to
the Issuers for payment thereof, and all liability of the Paying Agent with
respect to such money shall thereupon cease.
SECTION 2.05 Securityholder 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 Securityholders and shall otherwise comply with
TIA ss.312(a). If the Trustee is not the Registrar, the Issuers shall furnish,
or cause the Registrar to furnish, to the Trustee, in writing at least five
Business Days before each interest payment 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 of Securityholders.
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SECTION 2.06 Transfer and Exchange. The Securities shall be issued
in registered form and the transfer of the Securities shall be registerable only
upon the surrender of a Security for registration of transfer. When a Security
is presented to the Registrar or a co-registrar with a request to register a
transfer, the Registrar shall register the transfer as requested if its
requirements therefor are met. When Securities are presented to the Registrar or
a co-registrar with a request to exchange them for an equal principal amount of
Securities of other denominations, the Registrar shall make the exchange as
requested if its requirements therefor are met. To permit registration of
transfers and exchanges, the Issuers shall execute and the Trustee shall
authenticate Securities at the Registrar's or co-registrar's request. The
Issuers may require payment by the Holder of a sum sufficient to pay all taxes,
assessments or other governmental charges in connection with any transfer or
exchange pursuant to this Section. The Issuers shall not be required to make and
the Registrar need not register transfers or exchanges of Securities selected
for redemption (except, in the case of Securities to be redeemed in part, the
portion thereof not to be redeemed) or any Securities for a period of 15 days
before a selection of Securities to be redeemed.
Prior to the due presentation for registration of transfer of any
Security, the Issuers, the Company, the Trustee, the Paying Agent, the Registrar
or any co-registrar may deem and treat the Person in whose name a Security is
registered as the absolute owner of such Security for the purpose of receiving
payment of principal of and, subject to the record date provisions of this
Indenture, interest, if any, on such Security and for all other purposes
whatsoever, whether or not such Security is overdue, and none of the Issuers,
the Company, the Trustee, the Paying Agent, the Registrar or any co-registrar
shall be affected by notice to the contrary.
The Company may require payment of a sum sufficient to pay all
taxes, assessments or other governmental charges in connection with any transfer
or exchange pursuant to Section 2.06 (other than in respect of the Exchange
Offer, except as otherwise provided in the Registration Rights Agreement).
All Securities issued upon any registration of transfer or exchange
pursuant to this Section 2.06 will evidence the same debt and will be entitled
to the same benefits under this Indenture as the Securities surrendered upon
such registration of transfer or exchange.
SECTION 2.07 Replacement Securities. If a mutilated Security is
surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Issuers shall issue
and the Trustee shall authenticate a replacement Security if the Trustee's
requirements therefor are met, such that the Holder (i) provides evidence to the
satisfaction of the Issuers or the Trustee within a reasonable time after such
Holder has notice of such loss, destruction or wrongful taking and the Registrar
does not register a transfer prior to receiving such notification, (ii) makes
such a request to the Issuers or the Trustee prior to the Security being
acquired by a bona fide purchaser and (iii) satisfies any other reasonable
requirements of the Trustee. If required by the Trustee or the Issuers, such
Holder shall furnish an indemnity bond sufficient in the judgment of the Trustee
to protect the Issuers, the Trustee, the Paying Agent, the Registrar and any
co-registrar from any loss that any of them may suffer if a Security is
replaced. The Issuers and the Trustee may charge the Holder for their expenses
in replacing a Security. In the event any such mutilated, lost, destroyed or
wrongfully taken Security
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has become or is about to become due and payable, the Issuers in their
discretion may pay such Security instead of issuing a new Security in
replacement thereof.
Every replacement Security is an additional obligation of the
Issuers.
The provisions of this Section 2.07 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, lost, destroyed or wrongfully taken
Securities.
SECTION 2.08 Outstanding Securities. Securities outstanding at any
time are all Securities authenticated by the Trustee except for those canceled
by it, those delivered to it for cancellation and those described in this
Section as not outstanding. A Security does not cease to be outstanding because
the Issuers or an Affiliate of the Issuers holds the Security.
If a Security is replaced pursuant to Section 2.07, such replaced
Security ceases to be outstanding unless the Trustee and the Issuers receive
proof satisfactory to them that such replaced Security is held by a bona fide
purchaser.
If the Paying Agent segregates and holds in trust, in accordance
with this Indenture, on a redemption date or maturity date money sufficient to
pay all principal and interest payable on that date with respect to the
Securities (or portions thereof) to be redeemed or maturing, as the case may be,
and the Paying Agent is not prohibited from paying such money to the
Securityholders on that date pursuant to the terms of this Indenture, then on
and after the date such Securities (or portions thereof) cease to be outstanding
and interest on them ceases to accrue.
In determining whether the Holders of the required principal amount
of Securities have concurred in any direction, waiver or consent, Securities
owned by the Issuers or any of their Affiliates shall be disregarded, except
that, for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Securities which a Trust
Officer of the Trustee knows or has reason to know are so owned shall be
disregarded.
SECTION 2.09 Temporary Securities. Until Definitive Securities are
ready for delivery, the Issuers 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 Issuers consider
appropriate for temporary Securities. Without unreasonable delay, the Issuers
shall prepare and the Trustee shall authenticate Definitive Securities and
deliver them in exchange for temporary Securities at the office or agency of the
Issuers, without charge to the Holder.
SECTION 2.10 Cancellation. The Issuers at any time may deliver
Securities to the Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to the Registrar or
Paying Agent for registration of transfer, exchange, payment or cancellation.
The Trustee and no one else shall cancel all Securities surrendered for
registration of transfer, exchange, payment or cancellation and shall dispose of
canceled Securities in accordance with its customary procedures unless otherwise
directed by written direction of an
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Officer of the Issuers. The Issuers may not issue new Securities to replace
Securities it has redeemed, paid or delivered to the Trustee for cancellation.
The Trustee shall not authenticate Securities in place of canceled Securities
other than pursuant to the terms of this Indenture.
SECTION 2.11 Defaulted Interest. If the Issuers default in a payment
of interest on the Securities, the Issuers shall pay the defaulted interest
(plus interest on such defaulted interest to the extent lawful) in any lawful
manner. The Issuers shall pay the defaulted interest to, in the case of
Definitive Securities, the Persons who are Securityholders or, in the case of a
Global Security, to the Holder thereof on a subsequent special record date. The
Issuers shall fix or cause to be fixed any such special record date and payment
date to the reasonable satisfaction of the Trustee and shall promptly mail or
cause to be mailed to each Securityholder a notice that states the special
record date, the payment date and the amount of defaulted interest to be paid.
The Issuers may make payment of any defaulted interest in any other
lawful manner not inconsistent with the requirements (if applicable) of any
securities exchange on which the Securities may be listed, and upon such notice
as may be required by such exchange, if, after notice given by the Issuers to
the Trustee of the proposed payment pursuant to this paragraph, such manner of
payment shall be deemed practicable by the Trustee.
SECTION 2.12 CUSIP Numbers. The Issuers in issuing the Securities
may use "CUSIP" numbers (if then generally in use) and, if so, the Trustee shall
use "CUSIP" numbers in notices of redemption or exchange as a convenience to
Holders; provided, however, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption or exchange and
that reliance may be placed only on the other identification numbers printed on
the Securities, and any such redemption shall not be affected by any defect in
or omission of such numbers. The Issuers will promptly notify the Trustee of any
change in the CUSIP numbers.
SECTION 2.13 Book-Entry Provisions for Global Securities. (a) Each
Global Security initially shall be registered in the name of The Chase Manhattan
Bank as Book-Entry Depositary ("Book-Entry Depositary") pursuant to the terms of
the Debenture Depositary Agreement. The Book-Entry Depositary will issue one or
more certificateless depositary interests to the Depositary. Upon confirmation
by the Depositary that the Book-Entry Depositary has custody of the Global
Security and upon acceptance by the Depositary of the certificateless depositary
interest pursuant to the applicable letter of representations, the Depositary
will record a beneficial interest in such Global Security. Each Global Security
shall be delivered to the Book-Entry Depositary. Beneficial interests in the
Global Securities may be held indirectly through members of or participants in
("Agent Members") the Depositary (including Cedel and Euroclear in the case of
the Regulation S Global Security).
Agent Members shall have no rights under this Indenture with respect
to any Global Security held on their behalf by the Depositary, or the Book-Entry
Depositary, or under such Global Security, and the Book-Entry Depositary may be
treated by the Issuers, the Company, the Trustee and any agent of the Issuers,
the Company or the Trustee as the absolute owner of such Global Security for all
purposes whatsoever, except as otherwise provided herein. Notwithstanding the
foregoing, nothing herein shall prevent the Issuers, the Company, the Trustee or
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any agent of the Issuers, the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Book-Entry
Depositary or shall impair, as between the Book-Entry Depositary and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a Holder of any Security.
(b) Transfers of a non-certificated depositary interest in a Global
Security shall be limited to transfers of such non-certificated depositary
interest in a Global Security in whole, but not in part, to the Depositary, its
successors or their respective nominees. Interests of beneficial owners in a
Global Security may be transferred in accordance with the rules and procedures
of the Depositary (and Agent Member, if applicable) and the provisions of
Sections 2.06 and 2.14. Definitive Securities shall be transferred to all
beneficial owners in exchange for their beneficial interests in a Global
Security if (i) the Depositary notifies the Issuers that it is unwilling or
unable to continue as Depositary for such Global Security or the Depositary
ceases to be a clearing agency registered under the Exchange Act, at a time when
the Depositary is required to be so registered in order to act as Depositary,
and in each case a successor depositary is not appointed by the Issuers within
90 days of such notice, or (ii) Book-Entry Depositary notifies the Issuers that
it is unwilling or unable to continue as Book-Entry Depositary and a successor
book-entry depositary is not appointed by the Issuers within 90 days of such
notice or (iii) an Event of Default has occurred and is continuing and the
Registrar has received a request from the Depositary or the Trustee to permit
such transfers.
(c) Any Initial Securities which are presented to the Registrar for
exchange pursuant to the Exchange Offer shall be exchanged for Exchange
Securities of equal principal amount upon surrender to the Registrar of the
Initial Securities to be exchanged; provided, however, that the Initial
Securities so surrendered for exchange shall be duly endorsed and accompanied by
a letter of transmittal or written instrument of transfer in form satisfactory
to the Issuers, the Trustee and the Registrar duly executed by the Holder
thereof or his attorney who shall be duly authorized in writing to execute such
document. Whenever any Initial Securities are so surrendered for exchange, the
Issuers shall execute, and the Trustee shall authenticate and deliver to the
Holder the same aggregate principal amount of Exchange Securities as those
Initial Securities that have been surrendered.
(d) The registered holder of a Global Security may grant proxies and
otherwise authorize any Person, including Agent Members and Persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Securities. Whenever all of a
Global Security is exchanged for one or more Definitive Securities, it shall be
surrendered by the Holder thereof to the Trustee for cancellation. Whenever a
part of a Global Security is exchanged for one or more Definitive Securities the
Global Security shall be surrendered by the Holder thereof to the Trustee who
shall cause an adjustment to be made to Schedule A of such Global Security such
that the principal amount of such Global Security will be equal to the portion
of such Global Security not exchanged and shall thereafter return such Global
Security to such Holder. All Definitive Securities issued in exchange for a
Global Security or any portion thereof shall be registered in such names as the
Depositary, after conferring with the Registrar, shall instruct the Trustee.
Every Security authenticated and delivered in exchange for or in lieu of a
Global Security, or any portion thereof, pursuant to Section 2.14(a), 2.14(b) or
otherwise, shall be authenticated and delivered in the form of, and shall be, a
Global Security or a
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Definitive Security. A Global Security may not be exchanged for a Definitive
Security other than as provided in this Section 2.13(b).
(e) Holders of Initial Securities (or holders of interests therein)
and prospective purchasers designated by such Holders (or holders of interests
therein) will have the right to obtain from the Issuers or the Company upon
request by such Holders (or holders of interests therein) or prospective
purchasers, during any period in which the Issuers or the Company is not subject
to Section 13 or 15(d) of the Exchange Act, or is exempt from reporting pursuant
to 12g3-2(b) under the Exchange Act, the information required by paragraph
d(4)(i) of Rule 144A in connection with any transfer or proposed transfer of
such Securities.
SECTION 2.14 Special Transfer Provisions. (a) Provisions Applicable
Solely to Initial Securities. The following procedures and restrictions shall
not apply with respect to Initial Securities transferred or exchanged for the
account of a Person who is not an Affiliate of the Issuers at the time of the
transfer or exchange and has not been an Affiliate during the preceding three
months, provided a period of at least two years has elapsed since the later of
the date the Initial Securities were acquired from the Issuers or from an
Affiliate of the Issuers.
(i) Notwithstanding any other provisions of this Indenture or the
Securities, transfers and exchanges of interests in an Initial Global
Security of the kinds described in clauses (1) through (5) below and
exchanges of interests in Initial Global Securities or of other Initial
Securities as described in clauses (6) through (9) below, shall be made
only in accordance with this Section 2.14(a), and all transfers of an
interest in the Regulation S Global Security shall comply with clause (10)
below.
(1) Transfers of U.S. Global Security to Regulation S Global
Security During the Restricted Period. If the holder of a beneficial
interest in a U.S. Global Security wishes at any time during the
Restricted Period to transfer such interest to a Person who wishes
to take delivery thereof in the form of a beneficial interest in the
Regulation S Global Security, such transfer may be effected, subject
to the rules and procedures of the Depositary, the Euroclear
Operator and Cedel, to the extent applicable (the "Applicable
Procedures"), only in accordance with the provisions of this Section
2.14(a)(i)(1). Upon receipt by the Book-Entry Depositary of a
certificate in substantially the form set forth in Exhibit C given
by the transferor, the Book-Entry Depositary shall present the
Initial Global Securities to the Trustee on behalf of the Issuers to
reduce the principal amount of the U.S. Global Security and to
increase the principal amount of the Regulation S Global Security,
by the principal amount of the beneficial interest in the U.S.
Global Security to be so transferred, by annotation thereon.
(2) Transfers of U.S. Global Security to Regulation S Global
Security After the Expiration of the Restricted Period. If the
holder of a beneficial interest in the U.S. Global Security wishes
at any time after the expiration of the Restricted Period to
transfer such interest to a Person who wishes to take delivery
thereof in the form of a beneficial interest in the Regulation S
Global Security, such transfer may be effected, subject to the
Applicable Procedures, only in accordance with this
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Section 2.14(a)(i)(2). Upon receipt by the Book-Entry Depositary of
a certificate in substantially the form set forth in Exhibit D given
by the transferor, the Book-Entry Depositary shall present the
Initial Global Securities to the Trustee on behalf of the Issuers to
reduce the principal amount of the U.S. Global Security, and to
increase the principal amount of the Regulation S Global Security,
by the principal amount of the beneficial interest in the U.S.
Global Security to be so transferred, by annotation thereon.
(3) Transfers of Regulation S Global Security to U.S. Global
Security. If the holder of a beneficial interest in the Regulation S
Global Security wishes at any time to transfer such interest to a
Person who wishes to take delivery thereof in the form of a
beneficial interest in a U.S. Global Security, such transfer may be
effected, subject to the Applicable Procedures, only in accordance
with this Section 2.14(a)(i)(3). Upon compliance with the Applicable
Provisions, the Book-Entry Depositary shall present the Initial
Global Securities to the Trustee on behalf of the Issuers to reduce
the principal amount of the Regulation S Global Security, and to
increase the principal amount of the applicable U.S. Global
Security, by the principal amount of the beneficial interest in the
Regulation S Global Security to be so transferred, by annotation
thereon; provided, however, that, prior to the expiration of the
Restricted Period, such transfer shall be made only if, in addition,
the Book Entry Depositary has received a certificate in
substantially the form set forth in Exhibit E given by the
transferor (and, in the case of a transfer to the IAI Global
Security, a signed letter from the transferee in substantially the
form set forth in Annex A thereto)
(4) Transfers of IAI Global Security to Rule 144A Global
Security. If the holder of a beneficial interest in the IAI Global
Security (whether during the Restricted Period or after the
expiration of the Restricted Period) wishes to transfer such
interest to a Person who wishes to take delivery thereof in the form
of a beneficial interest in the Rule 144A Global Security, such
transfer may be effected, subject to the Applicable Procedures, only
in accordance with this Section 2.14(a)(i)(4). Upon receipt by the
Book-Entry Depositary of a certificate in substantially the form set
forth in Exhibit F given by the transferor, the Book-Entry
Depositary shall present the Initial Global Securities to the
Trustee on behalf of the Issuers to reduce the principal amount of
the IAI Global Security from which such transfer is to be made, and
to increase the principal amount of the Rule 144A Global Security,
by the principal amount of the beneficial interest in the IAI Global
Security to be so transferred, by annotation thereon.
(5) Transfers of Rule 144A Global Security to IAI Global
Security. If the holder of a beneficial interest in the Rule 144A
Global Security (whether during the Restricted Period or after the
expiration of the Restricted Period) wishes to transfer such
interest to a Person who wishes to take delivery thereof in the form
of a beneficial interest in the IAI Global Security, such transfer
may be effected, subject to the Applicable Procedures, only in
accordance with this Section 2.14(a)(i)(5). Upon receipt by the
Book-Entry Depositary of a certificate
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in substantially the form set forth in Exhibit G given by the
transferor and a signed letter from the transferee substantially in
the form set forth in Annex A thereto, the Book-Entry Depositary on
behalf of the Issuers shall present the Initial Global Securities to
the Trustee to reduce the principal amount of the Rule 144A Global
Security from which such transfer is to be made, and to increase the
principal amount of the IAI Global Security, by the principal amount
of the beneficial interest in the Rule 144A Global Security to be so
transferred, by annotation thereon.
(6) Exchanges of U.S. Global Security for Regulation S Global
Security. If the holder of a beneficial interest in a U.S. Global
Security wishes at any time to exchange such interest for a
beneficial interest in the Regulation S Global Security, such
exchange may be effected, subject to the Applicable Procedures, only
in accordance with the provisions of this Section 2.14(a)(i)(6).
Upon receipt by the Book-Entry Depositary of a certificate in
substantially the form set forth in Exhibit H, given by the holder
of the beneficial interest, the Book-Entry Depositary shall present
the Initial Global Securities to the Trustee on behalf of the
Issuers to reduce the principal amount of such U.S. Global Security,
and to increase the principal amount of the Regulation S Global
Security, by the principal amount of the beneficial interest in such
U.S. Global Security to be so exchanged, by annotation thereon.
(7) Exchanges of Regulation S Global Security for U.S. Global
Security. If the holder of a beneficial interest in the Regulation S
Global Security wishes at any time to exchange such interest for a
beneficial interest in a U.S. Global Security, such exchange may be
effected, subject to the Applicable Procedures, only in accordance
with the provisions of this Section 2.14(a)(i)(7). Upon receipt by
the Book-Entry Depositary of a certificate in substantially the form
set forth in Exhibit I, given by the holder of the beneficial
interest, the Book-Entry Depositary shall present the Initial Global
Securities to the Trustee on behalf of the Issuers or its agent to
reduce the principal amount of the Regulation S Global Security, and
to increase the principal amount of the applicable U.S. Global
Security, by the principal amount of the beneficial interest in the
Regulation S Global Security to be so exchanged, by annotation
thereon.
(8) Exchanges of U.S. Global Security for another U.S. Global
Security. If the holder of a beneficial interest in a U.S. Global
Security wishes at any time to exchange such interest for a
beneficial interest in the other U.S. Global Security, such exchange
may be effected, subject to the Applicable Procedures, only in
accordance with the provisions of this Section 2.14(a)(i)(8). Upon
receipt by the Book-Entry Depositary of a certificate in
substantially the form set forth in Exhibit J given by the holder of
the beneficial interest (and including, in the case of an exchange
into the IAI Global Security, a signed letter substantially in the
form set forth in Annex A thereto), the Book-Entry Depositary shall
present the Initial Global Securities to the Trustee on behalf of
the Issuers to reduce the principal amount of the U.S. Global
Security to be exchanged, and to increase the principal
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amount of the other U.S. Global Security, by the principal amount of
the beneficial interest in the U.S. Global Security to be so
exchanged, by annotation thereon.
(9) Other Exchanges. In the event that an Initial Global
Security or any portion thereof is exchanged for Initial Securities
in definitive form pursuant to Section 2.13(b) hereof, such
Definitive Securities may in turn be exchanged (on transfer or
otherwise) for other Definitive Securities and only in accordance
with such procedures, which shall be substantially consistent with
the provisions of clauses (1) through (8) above and (10) below)
(including the certification requirements intended to ensure that
transfers and exchanges of beneficial interests in an Initial
Security comply with Rule 144A or Regulation S, as the case may be)
and any Applicable Procedure as may from time to time be adopted by
the Issuers and the Registrar.
(10) Interests in Regulation S Global Security to be Held
Through the Euroclear Operator or Cedel. Until the expiration of the
Restricted Period, interests in the Regulation S Global Security may
be held only through the Euroclear Operator and Cedel; provided,
however, that this clause (10) shall not prohibit any transfer in
accordance with Section 2.14(a)(i)(3).
(ii) Each Initial Security issued hereunder shall, upon issuance,
bear the legend set forth on the form of the Security attached hereto as
Exhibit A and such legend shall not be removed from such Initial Security
except as provided in the next sentence. The legend required for an
Initial Security may be removed from an Initial Security if there is
delivered to the Issuers such satisfactory evidence, which may include an
opinion of independent counsel licensed to practice law in the State of
New York, as may be reasonably required by the Issuers, that neither such
legend nor the restrictions on transfer set forth therein are required to
ensure that transfers of such Security will not violate the registration
requirements of the Securities Act. Upon provision of such satisfactory
evidence, the Trustee, at the direction of the Issuers, shall authenticate
and deliver in exchange for such Security another Security or Securities
having an equal aggregate principal amount that does not bear such legend.
If such a legend required for an Initial Security has been removed from an
Initial Security as provided above, no other Security issued in exchange
for all or any part of such Security shall bear such legend, unless the
Issuers have reasonable cause to believe that such other Security is a
"restricted security" within the meaning of Rule 144 and instructs the
Trustee to cause a legend to appear thereon.
(b) General. By its acceptance of any Security bearing the Private
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Private
Placement Legend and agrees that it shall transfer such Security only as
provided in this Indenture.
The Registrar shall retain in accordance with its customary
procedures copies of all letters, notices and other written communications
received pursuant to Section 2.14. The Issuers shall have the right to inspect
and make copies of all such letters, notices or other written
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communications at any reasonable time upon the giving of reasonable written
notice to the Registrar.
ARTICLE III
Redemption
SECTION 3.01 Notices to Trustee. If the Issuers elect to redeem
Securities pursuant to paragraph 5 of the Securities, they shall notify the
Trustee in writing of the redemption date, the principal amount of Securities to
be redeemed and the paragraph of the Securities pursuant to which the redemption
will occur.
The Issuers shall give each notice to the Trustee provided for in
this Section at least 60 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate from the Issuers to the effect that such redemption will comply with
the conditions herein. Any such notice may be canceled at any time prior to
notice of such redemption being mailed to any Holder and shall thereby be void
and of no effect.
SECTION 3.02 Selection of Securities to Be Redeemed. If a partial
redemption is made pursuant to Section 3.07(a) or with the proceeds of a Public
Equity Offering pursuant to Section 3.07(b), the Trustee shall select the
Securities to be redeemed only on a pro rata basis (to the extent practicable)
or by lot, unless such method is otherwise prohibited by applicable legal and
securities exchange requirements, if any. The Trustee shall make the selection
from outstanding Securities not previously called for redemption. The Trustee
may select for redemption portions of the principal of Securities that have
denominations larger than $1. Securities and portions of them the Trustee
selects shall be in amounts of $1 or a whole multiple of $1. Provisions of this
Indenture that apply to Securities called for redemption also apply to portions
of Securities called for redemption. The Trustee shall notify the Issuers
promptly (and, in any event, at least 30 days prior to redemption) of the
Securities or portions of Securities to be redeemed.
SECTION 3.03 Notice of Redemption. At least 30 days but not more
than 60 days before a date for redemption of Securities, the Issuers shall mail
a notice of redemption by first-class mail to each Holder of Securities to be
redeemed.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
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(5) if fewer than all the outstanding Securities are to be redeemed,
the certificate numbers and principal amounts of the particular Securities
to be redeemed;
(6) that, unless the Issuers default in making such redemption
payment, interest on Securities (or portion thereof) called for redemption
ceases to accrue on and after the redemption date;
(7) the paragraph of the Securities pursuant to which the Securities
called for redemption are being redeemed;
(8) the CUSIP number, if any, printed on the Securities being
redeemed; and
(9) 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 Issuers' request, the Trustee shall give the notice of
redemption in the Issuers' name and at the Issuers' expense. In such event, the
Issuers shall provide the Trustee with the information required by this Section
at least 40 days (unless a shorter period shall be acceptable to the Trustee)
prior to the redemption date.
SECTION 3.04 Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest, if any, to the redemption
date; provided that installments of interest due on an interest payment date
that is on or prior to the redemption date shall be payable to the
Securityholder of the redeemed Securities registered on the relevant record
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.
SECTION 3.05 Deposit of Redemption Price. Prior to 10:00 A.M., New
York City time, on the Business Day immediately preceding the redemption date,
the Issuers shall deposit with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Securities to be redeemed on the
redemption date other than Securities or portions of Securities called for
redemption that have been delivered by the Issuers to the Trustee for
cancellation.
SECTION 3.06 Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Issuers shall execute and the Trustee
shall authenticate for the Holder (at the Issuers' expense) a new Security equal
in principal amount to the unredeemed portion of the Security surrendered.
SECTION 3.07 Optional Redemption. (a) Except as set forth in the
next two paragraphs, the Securities may not be redeemed prior to February 1,
2003. On and after that date, the Issuers may redeem the Securities in whole at
any time or in part from time to time at the following redemption prices
(expressed in percentages of principal amount at maturity), plus accrued
interest to the redemption date (subject to the right of Holders of record on
the relevant
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record date to receive interest due on the relevant Interest Payment Date), if
redeemed during the 12-month period beginning on or after February 1 of the
years set forth below:
Redemption
Period Price
2003 106.3750%
2004 104.2500
2005 103.1875
2006 and thereafter 100.0000%
(b) Notwithstanding the foregoing, at any time prior to February 1,
2001, the Company may redeem in the aggregate up to 35% of the original
aggregate principal amount at maturity of Securities with the net cash proceeds
of one or more Public Equity Offerings, at a redemption price (expressed as a
percentage of principal amount at maturity thereof) of 112.75% plus accrued
interest, if any, to the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
Interest Payment Date); provided, however, that after any such redemption the
aggregate principal amount at maturity of the Securities outstanding must equal
or exceed $35,000,000.
(c) The Securities may be redeemed at the option of the Issuers, in
whole but not in part, or paid in full but not in part prior to maturity at the
option of the Company, upon not less than 30 nor more than 60 days' notice given
as provided in Section 3.03, at any time at 103% of the Accreted Value thereof,
plus accrued and unpaid interest to the date fixed for such payment if, as a
result of any change in or amendment to the laws, regulations or governmental
policy having the force of law of the Cayman Islands or Thailand (or of any
political subdivision or taxing authority thereof or therein) or any execution
of or amendment to, any treaty or treaties affecting taxation of which the
Cayman Islands or Thailand (or such political subdivision or taxing authority)
is a party, which becomes effective on or after the date of the Indenture (i)
(A) the Issuers are required, or would be required on the next succeeding
Interest Payment Date, to pay Additional Amounts in respect of payments on the
Securities in excess of the 15% withholding requirement as of the Closing Date
as a result of the imposition of Taxes imposed by the Cayman Islands or Thailand
(or any political subdivision or taxing authority of either jurisdiction); (B)
the Company is, or on the next succeeding interest payment date would be, unable
for reasons outside of its control, to procure payment by the Issuers and, with
respect to any payment due, or to become due, under the Securities or the
Guaranty, the Company is required, or would be required on the next succeeding
Interest Payment Date, to pay Additional Amounts as a result of the imposition
of Taxes by the Cayman Islands or Thailand or (C) with respect to any payment to
an Issuer to enable an Issuer to make any payments under the Securities, the
Company or NSM Cayman is, or on the next Interest Payment Date would be,
required to deduct or withhold Taxes imposed by the Cayman Islands or Thailand
(or any political subdivision or taxing authority of either jurisdiction) and
(ii) the payment of such Additional Amounts cannot be avoided by the use of any
reasonable measures available to the Issuers or the Company that do not require
undue effort or costs (including, without limitation, the Company making
payments directly to holders under the Guaranty). In addition, the Issuers or
the Company, as the case may be, will also pay to holders on the redemption date
any Additional Amounts which would otherwise be payable;
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provided, however, that no such notice of redemption shall be given earlier than
90 days prior to the earliest date on which the Issuers or the Company, as the
case may be, would be obligated to pay such Additional Amounts if a payment in
respect of the Securities or a Guaranty were then due.
Prior to the publication of the notice of redemption in accordance
with the foregoing, the Issuers or the Company shall deliver to the Trustee an
Officers' Certificate stating that (x) the Issuers are or the Company is
entitled to effect such redemption based on a written opinion of counsel or
written advice of a nationally recognized independent tax counsel, such opinion
or advice being reasonably acceptable to the Trustee, that the condition
referred to in either of subclauses (A) or (B) or (C) of clause (i) of the
immediately preceding paragraph is satisfied as a result of such change,
amendment or executed or amended treaty and (y) the condition described in (ii)
of the immediately preceding paragraph is satisfied. Such notice, once delivered
by the Issuers or the Company to the Trustee, will be irrevocable.
ARTICLE IV
Covenants
SECTION 4.01 Payment of Securities. The Issuers shall promptly 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 Trustee or the Paying
Agent holds in accordance with this Indenture money sufficient to pay all
principal and interest then due and the Trustee or the Paying Agent, as the case
may be, is not prohibited from paying such money to the Securityholders on that
date pursuant to the terms of this Indenture.
The Issuers shall pay interest on overdue principal at the rate
specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 4.02 Commission Reports. The Company and the Issuers will
furnish the Trustee and provide to the holders of the Securities, within 15 days
after it files them with the Commission, copies of the reports (the "Financial
Statements") and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may by rules and
regulations prescribe) which the Company and the Issuers file with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act ("Reports"). In
the event that the Company and the Issuers are not required to file such reports
with the Commission pursuant to the Exchange Act, the Issuers will nevertheless
deliver Exchange Act information (including quarterly, annual and periodic
reports) to the holders of the Securities within 15 days after they would have
been required to file it with the Commission.
SECTION 4.03 Limitation on Indebtedness. (a) Neither the Issuers or
the Company shall Incur, nor shall the Company permit any Restricted Subsidiary
to Incur, directly or
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indirectly, any Indebtedness on or after the Issue Date unless on the date of
such Incurrence and after giving effect thereto the Consolidated Coverage Ratio
would be greater than 3.0:1.0.
(b) Notwithstanding the foregoing paragraph (a), the Issuers or the
Company may Incur on or after the Issue Date the following Indebtedness:
(i) Indebtedness of the Company Incurred pursuant to the Credit
Facilities;
(ii) Indebtedness represented by the Securities and the Notes;
(iii) Indebtedness of the Company Incurred pursuant to Vendor
Financing; provided, however, that the aggregate principal amount of all
Vendor Financing Incurred pursuant to this clause (iii) (other than any
such Indebtedness pursuant to Existing Arrangements) does not exceed
U.S.$10 million at any time outstanding;
(iv) Indebtedness of the Issuers represented by Capitalized Lease
Obligations, or purchase money obligations, in each case Incurred for the
purpose of financing all or any part of the purchase price or cost of
construction or improvement of the Mill or Refinancing Indebtedness
Incurred to refinance any such purchase price or cost of construction or
improvement, in each case (other than Refinancing Indebtedness) Incurred
no later than 90 days after the date of such acquisition or the date of
completion of such construction or improvement; provided, however, that
the principal amount of any Indebtedness Incurred pursuant to this clause
(iv) shall not exceed U.S.$10 million at any time outstanding;
(v) Indebtedness (A) in respect of performance bonds, bankers'
acceptances and surety or appeal bonds provided by the Company to its
customers in the ordinary course of its business, (B) in respect of
performance bonds or similar obligations of the Company for or in
connection with pledges, deposits or payments made or given in the
ordinary course of business in connection with or to secure statutory,
regulatory or similar obligations, including obligations under health,
safety or environmental obligations and (C) arising from guarantees to
suppliers, lessors, licensees, contractors, franchisees or customers of
obligations (other than Indebtedness) incurred in the ordinary course of
business,
(vi) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument drawn
against insufficient funds in the ordinary course of business in an amount
not to exceed U.S.$5 million at any time; provided that such Indebtedness
is extinguished within two business days of its Incurrence;
(vii) Indebtedness of the Company under the Working Capital Credit
Facility, as such facility may be amended and/or supplemented from time to
time; provided in each case that any indebtedness under such facility as
amended or supplemented is secured only by accounts receivable of the
Company,
(viii) Indebtedness of the Company consisting of Permitted Hedging
Obligations;
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(ix) Indebtedness outstanding on the Issue Date;
(x) Refinancing Indebtedness in respect of Indebtedness Incurred
pursuant to paragraph (a) or pursuant to clause (ii), (vii), or (ix) or
this clause (x); and
(xi) Indebtedness in an aggregate principal amount which, together
with all other Indebtedness of the Company, the Issuers and the Restricted
Subsidiaries outstanding on the date of Incurrence (other than
Indebtedness permitted by paragraph (a) or clauses (i) through (x) above),
does not exceed U.S.$20 million.
(c) Notwithstanding the foregoing, neither the Issuers nor the
Company may incur any Indebtedness if such Indebtedness is expressly subordinate
in right of payment to any Specified Senior Indebtedness unless such
Indebtedness is expressly subordinated in right of payment to the Securities to
at least the same extent as such Specified Senior Indebtedness.
(d) Notwithstanding the foregoing, neither the Company nor the
Issuers shall Incur any Indebtedness pursuant to the foregoing paragraph (b) if
the proceeds thereof are used, directly or indirectly, to Refinance any
Subordinated Indebtedness unless such Indebtedness shall be subordinated to the
Securities to at least the same extent as such Subordinated Indebtedness.
(e) For purposes of determining compliance with the foregoing
covenant, (i) in the event that an item of Indebtedness meets the criteria of
more than one of the types of Indebtedness described above, the Company, in its
sole discretion, will classify such item of Indebtedness at the time of its
Incurrence and shall only be required to include the amount and type of such
Indebtedness in one of the above clauses, and (ii) an item of Indebtedness may
be divided and classified in more than one of the types of Indebtedness
described above.
SECTION 4.04 Limitation on Restricted Payments. (a) Neither the
Issuers or the Company will, nor will the Company permit any Restricted
Subsidiary to, directly or indirectly:
(i) declare or pay any dividend or make any other distribution or
payment on or in respect of its Capital Stock (including dividends or
distributions of the Capital Stock of any Restricted Subsidiary), or make
any other payment to the direct or indirect holders (in their capacities
as such) of its Capital Stock (other than dividends or distributions
payable in shares of its Capital Stock (other than Disqualified Stock) or
in options, warrants or other rights to acquire such Capital Stock);
(ii) purchase, redeem or otherwise acquire or retire for value,
directly or indirectly, any of its Capital Stock or any Capital Stock of
any of its Affiliates (other than Capital Stock of any Wholly-Owned
Restricted Subsidiary or Capital Stock of a Person that is, or immediately
following such repurchase will become, a Wholly-Owned Restricted
Subsidiary) or options, warrants or other rights to acquire such Capital
Stock;
(iii) make any principal payment on, or repurchase, redeem, defease,
retire or otherwise acquire for value, prior to any scheduled principal
payment, sinking fund payment or maturity, any Subordinated Indebtedness;
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(iv) Incur, create or assume any guarantee of Indebtedness of any
Affiliate of the Company (other than a Wholly-Owned Restricted Subsidiary
of the Company) except as permitted under the Section 4.03(a);
(v) make any Investment in any Person (other than any Permitted
Investments); or
(vi) designate any Restricted Subsidiary as an Unrestricted
Subsidiary;
(any of the payments described in paragraphs (i) through (vi) above, other than
any such action that is a Permitted Payment (as defined below), collectively,
"Restricted Payments") unless (x) with respect to payments to be made in the
period prior to December 31, 2001 the Company has achieved Profitable
Operations, and (y) at the time of and after giving effect to the proposed
Restricted Payment (the amount of any such Restricted Payment, if other than
cash, as determined by the Board of Directors, whose determination shall be
conclusive and evidenced by a Board Resolution), (1) no Default or Event of
Default shall have occurred and be continuing; (2) immediately before and
immediately after giving effect to such transaction on a pro forma basis, the
Issuers or the Company could Incur U.S.$1.00 of additional Indebtedness under
the provisions of Section 4.03(a); and (3) the aggregate amount of all such
Restricted Payments declared or made after the date of this Indenture does not
exceed the sum of:
(A) 50% of the aggregate cumulative Consolidated Net Income of the
Company and its Restricted Subsidiaries accrued during the period (treated
as a single accounting period) beginning on the first day of the Company's
fiscal quarter commencing prior to the date of this Indenture and ending
on the last day of the Company's last fiscal quarter ending prior to the
date of the Restricted Payment (or, if such aggregate cumulative
Consolidated Net Income shall be a loss, 100% of such loss (treating a
loss as a negative number));
(B) the aggregate Net Cash Proceeds received after the date of this
Indenture by the Company from the issuance or sale (other than to any of
its Restricted Subsidiaries) of its Capital Stock (other than Disqualified
Stock) or any options, warrants or rights to purchase such Capital Stock;
(C) the aggregate Net Cash Proceeds received after the date of this
Indenture by the Company (other than from any of its Restricted
Subsidiaries) upon the exercise of any options or warrants to purchase
Capital Stock (other than Disqualified Stock) of the Company; and
(D) U.S.$10 million.
(b) Notwithstanding the foregoing, and, in the case of clauses (i)
through (iv) below, so long as there is no Default or Event of Default
continuing, the foregoing provisions will not prohibit the following actions
(clauses (i) through (iv) being referred to as "Permitted Payments"):
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(i) the payment of any dividend or distribution within 60 days after
the date of declaration thereof, if at such date of declaration such
payment would be permitted by the provisions of paragraph (a) of this
section and such payment will be deemed to have been paid on (and included
in the calculation of the amount of Restricted Payments) such date of
declaration for purposes of the calculation required by paragraph (a) of
this section;
(ii) the repurchase, redemption or other acquisition or retirement
of any shares of Capital Stock of the Company in exchange for (including
any such exchange pursuant to the exercise of a conversion right or
privilege in connection with which cash is paid in lieu of the issuance of
fractional shares or scrip), or out of the Net Cash Proceeds of a
substantially concurrent issue and sale for cash (other than to a
Restricted Subsidiary) of other Capital Stock (other than Disqualified
Stock) of the Company; provided that the Net Cash Proceeds from the
issuance of such shares of Capital Stock (other than Disqualified Stock)
are excluded from clauses (3)(B) and (3)(C) of paragraph (a) of this
section, and such repurchases, redemptions or acquisitions shall be
excluded from the calculation of the amount of Restricted Payments;
(iii) any repurchase, redemption, defeasance, retirement or
acquisition for value or payment of principal of any Subordinated
Indebtedness in exchange for, or out of the net proceeds of, a
substantially concurrent issuance and sale for cash (other than to any
Restricted Subsidiary of the Company) of any Capital Stock (other than
Disqualified Stock) of the Company; provided that the Net Cash Proceeds
from the issuance of such Capital Stock (other than Disqualified Stock)
are excluded from clauses (3)(B) and (3)(C) of paragraph (a) of this
section, and such repurchases, redemptions, defeasances, retirements or
acquisitions shall be excluded from the calculation of the amount of
Restricted Payments; and
(iv) the repurchase, redemption, defeasance, retirement,
refinancing, acquisition for value or payment of principal of any
Subordinated Indebtedness (other than Disqualified Stock) or Pari Passu
Indebtedness (a "refinancing") through the issuance of new Subordinated
Indebtedness of the Company; provided that any such new Subordinated
Indebtedness (1) shall be in a principal amount that does not exceed the
principal amount so refinanced (or, if the Subordinated Indebtedness so
refinanced provides for an amount less than the principal amount thereof
to be due and payable upon a declaration or acceleration thereof, then
such lesser amount as of the date of determination), plus the amount of
any premium required to be paid in connection with such refinancing
pursuant to the terms of such refinanced Indebtedness and any reasonable
out-of-pocket expenses of the Company incurred in connection with such
refinancing; (2) has an Average Life to Stated Maturity greater than the
remaining Average Life to Stated Maturity of the Securities; (3) has a
Stated Maturity for its final scheduled principal payment later than the
Stated Maturity for the final scheduled principal payment of the
Securities and (4) is expressly subordinated in right of payment to the
Securities at least to the same extent as the Indebtedness to be
refinanced.
For purposes of this Section, if the Board of Directors designates a
Restricted Subsidiary as an Unrestricted Subsidiary, or a Restricted Subsidiary
is deemed to be so
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designated, a "Restricted Payment" shall be deemed to have been made in an
amount equal to the fair value of the Investment of the Company and its other
Restricted Subsidiaries in such Restricted Subsidiary as determined by the Board
of Directors with the concurrence of a majority of the Independent Directors
(there being at least one Independent Director), whose good-faith determination
shall be conclusive. If a particular Restricted Payment involves a noncash
payment, including a distribution of assets, then such Restricted Payment shall
be deemed to be in an amount equal to the fair market value of the noncash
portion of such Restricted Payment as determined by the Board of Directors,
whose good-faith determination shall be conclusive.
SECTION 4.05 Limitation on Liens. Neither the Issuers nor the
Company will affirm or permit to exist any Lien of any kind securing any Pari
Passu Indebtedness or Subordinated Indebtedness of the Issuers or the Company
(including any assumption, guarantee or other liability with respect thereto by
any Subsidiary) upon any property or assets (including any intercompany notes)
of the Issuers or the Company or any Subsidiary owned on the date of the
Indentures or acquired after the date of the Indentures, or any income or
profits therefrom, other than Permitted Liens.
SECTION 4.06 Limitation on Sales of Assets and Subsidiary Stock. (a)
The Company shall not, and shall not permit either of the Issuers or any
Restricted Subsidiary to, make any Asset Disposition unless (i) the Company, the
Issuers or such Restricted Subsidiary receives consideration at the time of such
Asset Disposition at least equal to the fair market value, as determined in good
faith by the Company's Board of Directors (including as to the value of all
non-cash consideration), of the shares and assets subject to such Asset
Disposition, (ii) at least 80% of the consideration thereof received by the
Company, the Issuers or such Restricted Subsidiary is in the form of cash or
Cash Equivalents, (iii) an amount equal to 100% of the Net Available Cash from
such Asset Disposition is applied: (A) if at the time of the Asset Disposition
the Company has not yet achieved Profitable Operations, pro rata to a mandatory
offer by the Issuers and the Company to purchase Securities at 101% of the
Accreted Value thereof on the date of purchase, plus accrued and unpaid interest
and Additional Amounts, if any, thereon, and the repayment of principal and
accrued and unpaid interest, if any, under the Bank Credit Facility and (B) if
at the time of the Asset Disposition the Company has achieved Profitable
Operations, at the Company's option either to (1) the investment in or
acquisition of Additional Assets within 365 days from the later of such Asset
Disposition and the receipt of such Net Available Cash or (2) pro rata to a
mandatory offer by the Issuers and the Company to purchase Securities at 101% of
the Accreted Value thereof on the date of purchase plus accrued and unpaid
interest and Additional Amounts, if any, thereon, and the repayment of principal
and accrued and unpaid interest, if any, under the Bank Credit Facility;
provided that the Issuers and the Company shall be required to purchase
Indebtedness pursuant to clause (2) to the extent of the balance of such Net
Available Cash after application in accordance with clause (1). The Issuers
shall not be required to make an offer to purchase Securities pursuant to this
covenant if the Net Available Cash available therefor (after application of the
proceeds as provided in clause (A)) is less than U.S.$10 million for any
particular Asset Disposition (which lesser amounts shall be carried forward for
purposes of determining whether an offer is required with respect to the Net
Available Cash from any subsequent Asset Disposition). Notwithstanding the
foregoing provisions, Net Available Cash shall not be required to be applied in
accordance herewith to the extent that the aggregate
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Net Available Cash from all Asset Dispositions which are not applied in
accordance with this covenant at any time does not exceed U.S.$10 million.
Notwithstanding the foregoing, to the extent the Senior Note
Indenture and the Senior Subordinated Note Indenture limits the repurchase of
Securities, the Issuers shall not be required to make an offer hereunder for the
repurchase of Securities.
For the purposes of this Section 4.06, the following will be deemed
to be cash: (x) the assumption by transferee of Senior Indebtedness of the
Company, the Issuers or any Restricted Subsidiary and the release of the
Company, the Issuers or any Restricted Subsidiary from all liability on such
Senior Indebtedness in connection with such Asset Disposition and (y) securities
received by the Company, the Issuers or any Restricted Subsidiary from the
transferee that are promptly (and in any event within 60 days) converted by the
Company, the Issuers or such Restricted Subsidiary into cash.
(b) In the event of an Asset Disposition that requires the purchase
of Securities pursuant to Section 4.06(a)(iii)(A) or (B)(2), the Issuers shall
be required to purchase Securities tendered by the Holders pursuant to an offer
by the Company for the Securities (the "Offer") at a purchase price (the
"Purchase Price") of 101% of the Accreted Value thereof on the date of purchase,
plus accrued and unpaid interest and Additional Amounts, if any, thereon to the
Purchase Date (as defined below) in accordance with the procedures (including
prorationing in the event of oversubscription) set forth in Section 4.06(c).
(c) (1) Promptly, and in any event within 10 days after the Issuers
become obligated to make an Offer, the Issuers shall be obligated to deliver to
the Trustee and send, by first-class mail to each Holder, a written notice
stating that the Holder may elect to have his Securities purchased by the
Issuers either in whole or in part (subject to prorationing as hereinafter
described in the event the Offer is oversubscribed) in integral multiples of $1
of principal amount, at the Purchase Price. The notice shall specify a purchase
date not less than 30 days nor more than 60 days after the date of such notice
(the "Purchase Date") and shall contain such information concerning the business
of the Issuers which the Issuers in good faith believes will enable such Holders
to make an informed decision (which at a minimum shall include (i) the most
recently filed annual report (including audited consolidated financial
statements) of the Issuers and any other information provided by the Issuers to
its public shareholders generally on an annual basis, the most recently filed
Reports, and any current reports of the Issuers filed subsequent to such Report,
other than current reports describing Asset Dispositions otherwise described in
the offering materials (or corresponding successor reports), (ii) a description
of material developments in the Issuers' business subsequent to the date of the
latest of such reports, and (iii) if material, appropriate pro forma financial
information) and all instructions and materials necessary to tender Securities
pursuant to the Offer, together with the address referred to in clause (3).
(2) Not later than the date upon which written notice of an Offer is
delivered to the Trustee as provided above, the Issuers shall deliver to the
Trustee an Officers' Certificate as to (i) the amount of the Offer (the "Offer
Amount"), (ii) the allocation of the Net Available Cash from the Asset
Dispositions pursuant to which such Offer is being made and (iii) the compliance
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of such allocation with the provisions of Section 4.06(a). On such date, the
Issuers shall also irrevocably deposit with the Trustee or with the Paying Agent
an amount equal to the Offer Amount to be invested at the written direction of
the Issuers in Cash Equivalents and to be held for payment in accordance with
the provisions of this Section. Upon the expiration of the period for which the
Offer remains open (the "Offer Period"), the Issuers shall deliver to the
Trustee for cancellation the Securities or portions thereof that have been
properly tendered to and are to be accepted by the Issuers. The Trustee (or the
Paying Agent, if not the Trustee) shall, on the Purchase Date, mail or deliver
payment to each tendering Holder in the amount of the purchase price. In the
event that the aggregate purchase price of the Securities delivered by the
Issuers to the Trustee is less than the Offer Amount, the Trustee shall deliver
the excess to the Issuers promptly after the expiration of the Offer Period for
application in accordance with this Section.
(3) Holders electing to have a Security purchased shall be required
to surrender the Security, with an appropriate form duly completed, to the
Issuers at the address specified in the notice at least three Business Days
prior to the Purchase Date. Holders shall be entitled to withdraw their election
if the Trustee or the Issuers receives not later than one Business Day prior to
the Purchase Date, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Security which was
delivered by the Holder for purchase and a statement that such Holder is
withdrawing his election to have such Security purchased. If at the expiration
of the Offer Period the aggregate principal amount of Securities surrendered by
Holders exceeds the Offer Amount, the Issuers shall select the Securities to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Issuers so that only Securities in denominations of $1, or
integral multiples thereof, shall be purchased). Holders whose Securities are
purchased only in part will be issued new Securities equal in principal amount
to the unpurchased portion of the Securities surrendered.
(4) At the time the Issuers deliver Securities to the Trustee which
are to be accepted for purchase, the Issuers shall also deliver an Officers'
Certificate stating that such Securities are to be accepted by the Issuers
pursuant to and in accordance with the terms of this Section. A Security shall
be deemed to have been accepted for purchase at the time the Trustee, directly
or through an agent, mails or delivers payment therefor to the surrendering
Holder.
(d) The Issuers shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section. To the extent that the provisions of any securities laws or regulations
conflict with provisions of this Section, the Issuers shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section by virtue thereof.
SECTION 4.07 Offer to Repurchase Upon Failure to Attain Profitable
Operations. (a) If the Company does not achieve Profitable Operations prior to
December 31, 2001, the Issuers shall be required to use any amounts in the
Offshore Reserve Account to undertake an offer to purchase Securities (and, at
the Company's election, the Notes) pro rata at 100% of the Accreted Value
thereof on the date of purchase, plus accrued and unpaid interest and Additional
Amounts, if any, thereon ("Stage III Tender").
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(b) The Issuers will be required to conduct a Stage III Tender and
to purchase tendered Securities in accordance with the procedures set forth in
Section 4.10(b), (c), (d) and (e).
SECTION 4.08 Limitation on Issuance and Sale of Capital Stock of
Restricted Subsidiaries. Neither the Issuers nor the Company will permit (i) any
Restricted Subsidiary to issue any Capital Stock (other than to the Issuers or
the Company or any Wholly Owned Restricted Subsidiary ) or (ii) any Person
(other than the Issuers or the Company or a Wholly Owned Restricted Subsidiary)
to acquire any Capital Stock of any Restricted Subsidiary from the Issuers or
the Company or any Restricted Subsidiary, except upon the sale of all of the
outstanding Capital Stock of such Restricted Subsidiary owned by the Issuers or
the Company or another Restricted Subsidiary and the designation of such
Subsidiary as an Unrestricted Subsidiary; provided, however, that the Issuers or
the Company or a Restricted Subsidiary may issue or sell common stock of a
Restricted Subsidiary to a Person that is not an Affiliate of the Company so
long as, on or prior to the consummation of such issuance or sale, such
Restricted Subsidiary issues and delivers a supplemental indenture to the
Indentures providing for the guarantee of the Securities, which guarantee shall
be a senior obligation of such Restricted Subsidiary.
SECTION 4.09 Limitation on Dividends and Other Payment Restrictions
Affecting Restricted Subsidiaries. Neither the Issuers or the Company will, and
the Company will not permit any of its Restricted Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any Restricted Subsidiary to (a)
pay dividends or make any other distribution on its Capital Stock to the Issuers
or the Company or any other Restricted Subsidiary, (b) pay any Indebtedness owed
to the Issuers or the Company or any other Restricted Subsidiary, (c) make any
Investment in the Issuers or the Company or (d) transfer any of its properties
or assets to the Issuers or the Company or any Restricted Subsidiary, except (i)
any encumbrance or restriction pursuant to or in connection with the Bank Credit
Facility or the Securities as in effect on the Issue Date, (ii) any encumbrance
or restriction, with respect to a Restricted Subsidiary that is not a Restricted
Subsidiary of the Company on the date of this Indenture, in existence at the
time such Person becomes a Restricted Subsidiary of the Company and not Incurred
in connection with, or in contemplation, of, such Person becoming a Restricted
Subsidiary, (iii) customary provisions restricting subletting or assignment of
any lease governing a leasehold interest of the Issuers or the Company or any
Restricted Subsidiary and (iv) any encumbrance or restriction existing under any
agreement effecting a Refinancing of Indebtedness referred to in clause (i),
(ii) or (iii) above or this clause (iv); provided that the terms and conditions
of any such encumbrances or restrictions are not materially less favorable to
the Holders than those under or pursuant to the agreement evidencing such
Refinancing, Indebtedness so extended, renewed, refinanced or replaced.
SECTION 4.10 Change of Control. (a) Upon the occurrence of a Change
of Control, each Holder shall have the right to require that the Issuers
repurchase all or any part of such Holder's Securities at a purchase price in
cash equal to 101% of the Accreted Value thereof on the date of purchase, plus
accrued and unpaid interest and Additional Amounts, if any, to date of
repurchase (subject to the right of Holders of record on the relevant record
date to receive interest due on the relevant interest payment date), in
accordance with the terms contemplated in Section 4.10(b); provided, however,
that prior to repurchasing any Securities pursuant to this
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Section 4.10(a), the Issuers shall (i) repay in full the Senior Notes and the
Senior Subordinated Notes or (ii) otherwise obtain the requisite consent under
the Senior Notes and the Senior Subordinated Notes to permit the repurchase of
the Securities.
(b) Within 30 days following any Change of Control, the Company
shall mail a notice to each Holder with a copy to the Trustee stating:
(1) that a Change of Control has occurred and that such Holder has
the right to require the Issuers to repurchase such Holder's Securities at
a price in cash equal to 101% of the Accreted Value thereof on the date of
purchase, plus accrued and unpaid interest and Additional Amounts, if any,
to the date of repurchase (subject to the right of Holders of record on a
record date to receive interest due on the relevant interest payment
date);
(2) the repurchase date (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed); and
(3) the procedures determined by the Issuers, consistent with this
Section, that a Holder must follow in order to have its Securities
purchased.
(c) Holders electing to have a Security purchased shall be required
to surrender the Security, with an appropriate form duly completed, to the
Company at the address specified in the notice at least three Business Days
prior to the purchase date. Holders shall be entitled to withdraw their election
if the Trustee or the Company receives not later than one Business Day prior to
the purchase date a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Security which was
delivered for purchase by the Holder and a statement that such Holder is
withdrawing his election to have such Security purchased.
(d) On the purchase date, all Securities purchased by the Company
under this Section shall be delivered to the Trustee for cancellation, and the
Company shall pay the purchase price, plus accrued and unpaid interest, if any,
to the Holders entitled thereto.
(e) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws or regulations are applicable
in connection with the repurchase of Securities pursuant to this Section. To the
extent that the provisions of any securities laws or regulations conflict with
provisions of this Section, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under this Section by virtue thereof.
SECTION 4.11 Compliance Certificate. The Issuers and the Company
shall deliver to the Trustee within 90 days after the end of each fiscal year of
the Issuers and the Company an Officers' Certificate stating that in the course
of the performance by the signers of their duties as Officers of the Issuers and
the Company they would normally have knowledge of any Default and whether or not
the signers know of any Default that occurred during such period. If they do,
the certificate shall describe the Default, its status and what action the
Company is
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taking or proposes to take with respect thereto. The Company also shall comply
with Section 314(a)(4) of the TIA.
SECTION 4.12 Further Instruments and Acts. Upon request of the
Trustee, the Issuers shall execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture, the Security Documents and each other
agreement delivered in connection herewith or therewith.
SECTION 4.13 Limitation on Affiliate Transactions. Neither the
Issuers nor the Company will, and the Company will not permit any Restricted
Subsidiary to, directly or indirectly, enter into or conduct any transaction or
series of related transactions (including the purchase, sale, lease or exchange
of any property or the rendering of any service) with or for the benefit of any
Affiliate of the Company (an "Affiliate Transaction") unless: (a) the terms of
such Affiliate Transaction are no less favorable to the Issuers or the Company
or such Restricted Subsidiary, as the case may be, than those that could be
obtained at the time of such transaction in arm's-length dealings with a Person
who is not such an Affiliate; (b) in the event such Affiliate Transaction
involves an aggregate amount in excess of U.S.$5 million, the terms of such
transaction have been approved by a majority of the members of the Board of
Directors of such Person and by a majority of the disinterested members of such
Board, if any (and such majority or majorities, as the case may be, determines
that such Affiliate Transaction satisfies the criteria in (a) above); and (c) in
the event such Affiliate Transaction involves an aggregate amount in excess of
U.S.$10 million, such Person has received a written opinion from an independent
investment banking firm or other similar expert of nationally recognized
standing that such Affiliate Transaction (i) is fair to the Issuers or the
Company or such Restricted Subsidiary, as the case may be, from a financial
point of view, or (ii) complies with the requirements of clause (a) above.
The foregoing paragraph shall not apply to (a) any Restricted
Payment permitted to be made pursuant to Section 4.04, (b) loans or advances to
employees in the ordinary course of business of the Company and/or any
Subsidiary in aggregate amount outstanding not to exceed U.S.$l million at any
time, (c) indemnification agreements with, and the payment of fees and
indemnities to, directors, officers and employees of the Company or any
Subsidiary, in each case in the ordinary course of business, (d) transactions
pursuant to agreements in existence on the Issue Date which (x) are described in
the Offering Memorandum or (y) otherwise, in the aggregate, are immaterial to
the Issuers, the Company and the Restricted Subsidiaries taken as a whole, (e)
any employment, noncompetition or confidentiality agreements entered into with
its employees in the ordinary course of business, (f) the issuance of Capital
Stock (other than Disqualified Stock) of the Issuers to the Company, and (g)
sublease arrangements on commercial terms covering shared space.
SECTION 4.14 Limitation on Sale Leaseback Transactions. Neither the
Issuers nor the Company shall, and the Company shall not permit any Restricted
Subsidiary to, enter into any Sale/Leaseback Transaction with respect to any
property unless (i) the Issuers, the Company or such Restricted Subsidiary would
be entitled to (A) Incur Indebtedness in an amount equal to the Attributable
Indebtedness with respect to such Sale/Leaseback Transaction pursuant to Section
4.03 and (B) create a Lien on such property securing such Attributable
Indebtedness pursuant to Section 4.05, (ii) the net proceeds received by the
Issuers, the Company or any Restricted
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Subsidiary in connection with such Sale/Leaseback Transaction are at least equal
to the fair value (as determined by the Board of Directors) of such property and
(iii) the proceeds of such transaction are applied in compliance with Section
4.06.
SECTION 4.15 Limitation on Issuances of Capital Stock. Neither the
Issuers nor any Restricted Subsidiary will issue any Capital Stock to any Person
other than to the Company.
SECTION 4.16 Limitation on Sales to non-Credit Qualified Purchasers.
Until the earlier of the third anniversary of the Issue Date and the date upon
which the Company achieves Profitable Operations, the Company shall not permit
the aggregate amount of the accounts receivable of it and its subsidiaries from
non-Credit Qualified Purchasers to exceed U.S.$10 million at any one time
outstanding.
SECTION 4.17 Line of Business. The Company will not, and will not
permit the Issuers or any Subsidiary to, engage in any business other than its
ownership of the Mill and the assets and liabilities of the Mill and any
business ancillary or reasonably related thereto.
SECTION 4.18 Ownership. The Company will at all times own 100% of
the Capital Stock of the Issuers.
SECTION 4.19 Use of Proceeds. The Issuers and the Company shall
apply the proceeds from the sale of the Securities in the manner described in
the Offering Memorandum and establish and maintain the Accounts (as defined in
the Security Sharing Agreement) pursuant to the Security Sharing Agreement.
SECTION 4.20 Additional Amounts. (a) All payments made by the
Issuers under or with respect to the Securities and by the Company under the
Guaranty will be made free and clear of and without withholding or deduction for
or on account of any present or future taxes, levies, duties, fees, assessments
or other governmental charges of whatever nature ("Taxes") imposed, levied,
collected or assessed by or on behalf of any taxing authority within the Cayman
Islands or Thailand, unless the Issuers are or the Company is, as the case may
be, required to withhold or deduct or if the Issuers are or the Company is
otherwise required to pay any amount for or on account of Taxes imposed by a
taxing authority within the Cayman Islands or Thailand from or in respect of any
payment made under or with respect to the Securities or the Guaranty, in which
case the Issuers or the Company, as the case may be, will pay such additional
amounts ("Additional Amounts") as may be necessary so that the net amount
received by each holder and beneficial owner of Securities (including Additional
Amounts) after such withholding or deduction or other payment of Taxes will not
be less than the amount the holder and beneficial owner would have received if
such Taxes had not been withheld or deducted or paid; provided, however, that no
Additional Amounts will be payable with respect to a payment made to a holder of
Securities with respect to any Tax: (i) which would not have been imposed,
payable or due but for the existence of any present or former connection between
the holder (or the beneficial owner of, or person ultimately entitled to obtain
an interest in, such Securities) and the Cayman Islands or Thailand, as the case
may be, other than the mere holding of the Securities; (ii) which would not have
been imposed, payable or due if the Securities are held in definitive registered
form ("Definitive Registered Securities") and the presentation of Definitive
Registered Securities for
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payment had occurred within 30 days after the date such payment was due and
payable or was provided for, whichever is later, except for Additional Amounts
with respect to Taxes that would have been imposed had the holder presented the
Security for payment within such 30-day period; (iii) that is an estate,
inheritance, gift, sales, transfer, personal property or similar Tax; (iv) that
is imposed or withheld by reason of the failure of the holder or beneficial
owner of a Security to comply, at the reasonable request of the Issuers or the
Company, as the case may be, with certification, information or other reporting
requirements concerning the nationality, residence or identity of the holder or
such beneficial owner if such compliance is required or imposed by a statute,
treaty, regulation or administrative practice of the taxing jurisdiction as a
precondition to exemption from all or part of such Tax; (v) if the beneficial
owner of, or person ultimately entitled to obtain an interest in, such
Securities had been the holder of the Securities and would not be entitled to
the payment of Additional Amounts; or (vi) payable otherwise than by withholding
from payments on or in respect of any Security.
(b) The Issuers or the Company, as the case may be, will also (i)
make such withholding or deduction and (ii) remit the full amount deducted or
withheld to the relevant authority in accordance with applicable law. The
Issuers or the Company, as the case may be, will make reasonable efforts to
obtain certified copies of tax receipts evidencing the payment of any Taxes so
deducted or withheld from each taxing authority imposing such Taxes. The Issuers
or the Company, as the case may be, will furnish to the holders of the
Securities, within 60 days after the date the payment of any Taxes so deducted
or withheld is due pursuant to applicable law, either certified copies of tax
receipts evidencing such payment by the Issuers or the Company, as the case may
be, or, if such receipts are not obtainable, other evidence of such payments by
the Issuers or the Company.
(c) In addition, the Issuers or the Company, as the case may be,
will, upon written request of each holder of Securities (subject to the
exclusions set forth in (i), (ii), (iii), (iv), (v) and (vi) of paragraph (a)
above), and provided that reasonable supporting documentation is provided,
reimburse each such holder for the amount of any Taxes levied or imposed by the
Cayman Islands or Thailand and paid by such holder as a result of payments made
under or with respect to the Securities or under the Guaranty. Any payment
pursuant to this section shall be an Additional Amount.
(d) At least 30 days prior to each date on which any payment under
or with respect to the Securities or under the Guaranty is due and payable, if
the Issuers or the Company will be obligated to pay Additional Amounts with
respect to such payment, the Issuers or the Company will deliver to the Trustee
an Officers' Certificate stating the fact that such Additional Amounts will be
payable and the amounts so payable and will set forth such other information
necessary to enable the Trustee to pay such Additional Amounts to the holders of
Securities on the payment date. Whenever in this Indenture or in the Securities
there is mentioned, in any context, the payment of amounts based upon the
principal of, premium, if any, interest or of any other amount payable under or
with respect to any Security or either Guaranty such mention shall be deemed to
include mention of the payment of Additional Amounts to the extent that, in such
context, Additional Amounts are, were or would be payable in respect thereof.
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(e) In addition, the Issuers will pay any stamp, issue,
registration, documentary, value added or other similar taxes and other duties
(including interest and penalties) payable in the Cayman Islands or in Thailand
(or any political subdivision or taxing authority of either jurisdiction) and in
the United States in respect of the creation, issue, offering, execution or
enforcement of the Securities, the Guaranty or any documentation with respect
thereto.
SECTION 4.21 Maintenance of Office or Agency. (a) The Issuers shall
maintain in the Borough of Manhattan, in the City of New York, an office or
agency (which may be an office of the Trustee or an Affiliate of the Trustee,
Registrar or co-registrar) where Securities may be surrendered for registration
of transfer or exchange and where notices and demands to or upon the Issuers in
respect of the Securities, this Indenture and the Guaranty may be served. The
Issuers shall give prior written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Issuers
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.
(b) The Issuers 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 such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Issuers of their obligation to maintain an office or
agency in the Borough of Manhattan, in the City of New York for such purposes.
The Issuers shall give prior 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.
(c) The Issuers hereby designate the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.
SECTION 4.22 Stay, Extension and Usury Laws. Each of the Issuers and
the Company covenants (to the extent it may lawfully do so) that it shall 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, that may affect the covenants or the
performance of this Indenture (including, but not limited to, the payment of the
principal of or interest on the Securities); and the Issuers and the Company (to
the extent that they may lawfully do so) hereby expressly waive all benefit or
advantage of any such law, and covenant that they shall not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted to
the Trustee, but shall suffer and permit the execution of every such power as
though no such law has been enacted.
SECTION 4.23 Insurance. The Company shall as soon as practicable
after the Issue Date obtain, and thereafter at all times maintain in full force
and effect insurance in such amounts, covering such risks and liabilities and
with such deductibles or self-insured retentions as are in accordance with
normal industry practice. The Company shall furnish when obtained and annually
thereafter to the Collateral Agent a summary of the insurance carried by it
together with certificates of insurance and other evidence of such insurance, if
any, naming the Collateral Agent as an additional insured and/or loss payee.
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SECTION 4.24 Compliance with Statutes. The Company shall, and shall
cause each Subsidiary to, comply with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
Thailand or foreign, in respect of the conduct of its business and the ownership
of its property other than those the non-compliance with which would not
reasonably be expected to have a material adverse effect on the condition
(financial or otherwise), results of operations, business or prospects of the
Company and its Subsidiaries taken as a whole.
SECTION 4.25 Corporate Existence. Subject to Section 5.01, the
Company and the Issuers shall do or cause to be done all things necessary to
preserve and keep in full force and effect their corporate existence, in
accordance with their respective organizational documents (as the same may be
amended from time to time) and the rights (charter and statutory), licenses and
franchises of the Company and the Issuers.
SECTION 4.26 Independent Engineer. Not later than the 90th day
following the Issue Date, the Company shall have hired (and thereafter shall at
all times retain) the Independent Engineer to perform the duties set forth
herein together with such other duties as the Company and such Independent
Engineer may agree.
SECTION 4.27 Securities Cash Flow Sweep. No later than the fifteenth
day following the last day of each fiscal quarter of the Company (as the
Company's fiscal year is in effect on the Issue Date), the Company shall deposit
into the Notes Sinking Fund Account an amount equal to the Cash Flow Sweep
Amount.
SECTION 4.28 Payment of Taxes. The Company will pay or discharge or
cause to be paid or discharged, before the same shall become delinquent, all
material taxes, assessments and governmental charges levied or imposed upon the
Company or the Issuers or upon the income, profits or property of the Company or
the Issuers; provided, however, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings, and against which adequate reserves are being
maintained.
SECTION 4.29 Intercompany Notes and Capital Contributions. (a) On
the Issue Date, the Company shall issue an intercompany note or notes to the
Issuers obligating the Company to make payments in respect of such intercompany
note or notes on any date and in the same amount that any payment (whether a
payment of principal when due at Stated Maturity, upon optional redemption, upon
required repurchase, upon declaration or otherwise or a payment in respect of
any interest) is due on the Securities; provided, however, if after the Issue
Date the Issuers and the Company determine in good faith that such an
intercompany note obligation will result in a material adverse tax consequence
to the Issuers or the Company, the Issuers and the Company may cancel such
intercompany note obligation and the Company shall thereafter comply with clause
(b) below.
(b) In the event that at any time the intercompany note referenced
in the preceding sentence has been canceled or otherwise declared inoperative or
unenforceable, then on or prior to any Interest Payment Date in respect of any
Security, or any date upon which any payment of
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principal of any Security is required to be made when due at its Stated
Maturity, upon optional redemption, upon required repurchase, upon declaration
or otherwise, the Company shall make a cash contribution to NSM Cayman in the
amount of such interest or principal payment, as the case may be.
SECTION 4.30 Financial and Business Information. The Company shall
deliver to the Trustee:
(a) Monthly Statements -- within 30 days after the end of each
fiscal month of the Company, duplicate copies of,
(1) a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such fiscal month, and
(2) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and its
Subsidiaries, for such fiscal month
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with Thai GAAP applicable to monthly
financial statements generally, and certified by a Senior Financial
Officer as fairly presenting, in all material respects, the financial
position of the companies being reported on and their results of
operations and cash flows, subject to changes resulting from year-end
adjustments.
(b) Quarterly Statements -- within 60 days after the end of each
quarterly fiscal period in each fiscal year of the Company (other than the
last quarterly fiscal period of each such fiscal year), duplicate copies
of,
(1) a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such quarter, and
(2) a consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and its
Subsidiaries, for such quarter and (in the case of the second and
third quarters) for the portion of the fiscal year ending with such
quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with Thai GAAP applicable to quarterly
financial statements generally, and certified by a Senior Financial
Officer as fairly presenting, in all material respects, the financial
position of the companies being reported on and their results of
operations and cash flows, subject to changes resulting from year-end
adjustments, provided that delivery within the time period specified above
of copies of the Company's Quarterly Report on Form 10-Q prepared in
compliance with the requirements therefor and filed with the Securities
and Exchange Commission shall be deemed to satisfy the requirements of
this Section 4.28(b);
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(c) Annual Statements -- within 100 days after the end of each
fiscal year of the Company, duplicate copies of,
(1) a consolidated and consolidating balance sheet of the
Company and its Subsidiaries, as the end of such year, and
(2) a consolidated and consolidating statements of income,
changes in shareholders' equity and cash flows of the Company and
its Subsidiaries, for such year,
setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail, prepared in accordance
with Thai GAAP, and accompanied
(i) by an opinion thereon of independent certified public
accountants of recognized national standing, which opinion shall
state that such financial statements present fairly, in all material
respects, the financial position of the companies being reported
upon and their results of operations and cash flows and have been
prepared in conformity with Thai GAAP, and that the examination of
such accountants in connection with such financial statements has
been made in accordance with generally accepted auditing standards,
and that such audit provides a reasonable basis for such opinion in
the circumstances, and
(ii) a certificate of such accountants stating that they have
reviewed this Agreement and stating further whether, in making their
audit, they have become aware of any condition or event that then
constitutes a Default or an Event of Default, and, if they are aware
that any such condition or event then exists, specifying the nature
and period of the existence thereof (it being understood that such
accountants shall not be liable, directly or indirectly, for any
failure to obtain knowledge of any Default or Event of Default
unless such accountants should have obtained knowledge thereof in
making an audit in accordance with generally accepted auditing
standards or did not make such an audit),
provided that the delivery within the time period specified above of the
Company's Annual Report on Form 10-K for such fiscal year (together with
the Company's annual report to shareholders, if any, prepared pursuant to
Rule 14a-3 under the Exchange Act) prepared in accordance with the
requirements therefor and filed with the Commission, together with the
accountant's certificate described in clause (ii) above, shall be deemed
to satisfy the requirements of this Section 4.30(c);
(d) Budgets -- Prior to the commencement of each fiscal year of the
Company, budgets of the Company and its Subsidiaries for such fiscal year
in reasonable detail as customarily prepared by management of the Company;
(e) Requested Information -- with reasonable promptness, such other
data and information relating to the business, operations, affairs,
financial condition, assets or properties of the Company or any of its
Subsidiaries or relating to the ability of the Company
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or its Subsidiaries to perform their respective obligations hereunder and
under the Notes as from time to time may be reasonably requested by the
Trustee.
(f) Certification -- Each set of financial statements delivered to
the Trustee pursuant to this Section 4.30 shall be accompanied by a
certificate of a Senior Financial Officer setting forth a statement that
such officer has reviewed the relevant terms hereof and has made, or
caused to be made, under his or her supervision, a review of the
transactions and conditions of the Company and its Subsidiaries from the
beginning of the monthly, quarterly or annual period covered by the
statements then being furnished to the date of the certificate and that
such review shall not have disclosed the existence during such period of
any condition or event that constitutes a Default or an Event of Default
or, if any such condition or event existed or exists (including, without
limitation, any such event or condition resulting from the failure of the
Companies or any Subsidiary to comply with any Environmental Law),
specifying the nature and period of existence thereof and what action the
Company or its Subsidiaries shall have taken or proposes to take with
respect thereto.
SECTION 4.31 Inspection. The Company shall permit the
representatives of each holder of Securities that is an Institutional Investor:
(a) No Default - if no Default or Event of Default then exists, at
the expense of such holder and upon reasonable prior notice to the
Company, to visit the principal executive office of the Company, to
discuss the affairs, finances and accounts of the Company and its
Subsidiaries with the Company's officers, and (with the consent of the
Company, which consent will not be unreasonably withheld) its independent
public accountants, and (with the consent of the Company, which consent
will not be unreasonably withheld) to visit the other offices and
properties of the Company and each Subsidiary, all at such reasonable
times and as often as may be reasonably requested in writing; and
(b) Default -- if a Default or Event of Default then exists, at the
expense of the Company to visit and inspect any of the offices or
properties of the Company or any Subsidiary, to examine all their
respective books of account, records, reports and other papers, to make
copies and extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers and independent
public accountants (and by this provision the Company authorizes said
accountants to discuss the affairs, finances and accounts of the Company
and its Subsidiaries), all at such times and as often as may be requested.
SECTION 4.32 Other Covenants. (a) The Company will not consent to
the amendment of Sections 4.1 and 5.3 of the Shareholders Agreement.
(b) The Company will deposit into the Notes DSR Account on or prior
to the Issue Date an amount equal to the aggregate interest to be payable
on the Securities on the first two interest payment dates in respect
thereof.
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(c) The Majority Holders shall be entitled, at each annual meeting
of stockholders or special meeting to elect directors, to elect one member
of the Board of Directors of the Company. The Company shall take all
action necessary for one member of the Board of Directors to be elected by
the Majority Holders at each annual meeting of stockholders or special
meeting to elect directors. The Majority Holders shall notify the Company
of the name of the member of the Board of Directors selected by the
Majority Holders pursuant to this Section 4.32(b). Notwithstanding the
foregoing, for so long as John Hancock Mutual Life Insurance Co.
("Hancock") or any of its Affiliates are Holders of any of the Securities,
then Hancock shall be entitled to exercise such nomination rights.
(d) The Company shall cause to be deposited in the Offshore
Sub-Account all non-Baht revenue, including all proceeds from the sale of
goods and services, all insurance proceeds, all proceeds from the Working
Capital Credit Facility and all other amounts received by the Company that
are otherwise not required to be deposited in the Notes DSR Account or the
Offshore Reserve Account. Amounts held in the Offshore Sub-Account may be
used by the Company for payments and other uses permitted by the
Indentures but (other than payments of interest on the Senior Notes, the
Senior Subordinated Notes and the Securities or deposits into the Notes
Sinking Fund Account) only to the extent all other amounts on deposit in
the US$ Revenue Account and Baht Revenue Account (both as defined in the
Security Sharing Agreement) are insufficient to make such payments.
(e) Commencing with the first fiscal quarter of the Company ending
after the first anniversary of the Issue Date, and for each fiscal quarter
thereafter, the Company will deposit into the Notes Sinking Fund Account
the greater of $15 million or one-fourth the amount of $ U.S. denominated
interest on indebtedness of the Company or the Issuers due in the fiscal
year in which such fiscal quarter falls; provided, however, that any
amounts so deposited may be withdrawn at any time in order to pay interest
and/or principal on any $ U.S. denominated indebtedness of the Company or
the Issuers or, in the event that the Company reasonably believes that it
or the Issuers is about to default on any Baht denominated indebtedness,
to pay interest and/or principal on such Baht denominated indebtedness. By
way of clarification, notwithstanding the fact that Section 2.3(c) of
Annex A to the Security Sharing Agreement would otherwise allow the
Company to do so, the Company agrees that it shall not withdraw funds from
the Notes Sinking Fund Account solely as a result of obtaining Profitable
Operations, and shall only withdraw funds therefrom if otherwise permitted
hereunder and under the terms of the Security Sharing Agreement.
(f) Upon any discharge of any one or more of the Credit Facilities,
the Senior Notes or the Senior Subordinated Notes, the Issuers and the
Company hereby agree to enter into such conforming changes to the Security
Documents as shall be reasonably satisfactory to the Trustee in order to
confirm the rights provided to the Holders (including the second priority
interests granted thereunder), which conforming changes shall mutatis
mutandis give effect to the discharge of the Credit Facilities, the Senior
Notes or the Senior Subordinated Notes, as applicable.
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ARTICLE V
Successor Company
SECTION 5.01 Merger and Consolidation. The Company shall not
consolidate with or merge with or into, or convey, transfer or lease all or
substantially all its assets to, any Person, unless: (i) the resulting,
surviving or transferee Person (the "Successor Company") shall be a corporation
organized and existing under the laws of the United States of America, any state
thereof or the District of Columbia or Thailand, and the Successor Company (if
not the Company) shall expressly assume, by indenture supplemental to this
Indenture, executed and delivered to the Trustee, in form satisfactory to the
Trustee, all the obligations of the Company, including the obligations under
this Indenture, the Security Sharing Agreement and the Security Documents; (ii)
immediately after giving effect to such transaction on a pro forma basis (and
treating any Indebtedness which becomes an obligation of the Successor Company
as a result of such transaction as having been Incurred by the Successor Company
at the time of such transaction), no Default or Event of Default shall have
occurred and be continuing (or would result therefrom); (iii) immediately after
giving effect to such transaction on a pro forma basis (and treating any
Indebtedness which becomes an obligation of the Successor Company as a result of
such transaction as having been Incurred by the Successor Company at the time of
such transaction), the Successor Company would be able to incur an additional
U.S.$1.00 of Indebtedness pursuant to the first paragraph of Section 4.03; (iv)
immediately after giving effect to such transaction on a pro forma basis (and
treating any Indebtedness which becomes an obligation of the Successor Company
or any Restricted Subsidiary as a result of such transaction as having been
Incurred by the Successor Company or such Restricted Subsidiary at the time of
such transaction), the Successor Company shall have Consolidated Net Worth in an
amount which is not less than the Consolidated Net Worth of the Company
immediately prior to such transaction; (v) the Successor Company shall have
delivered to the Trustee an Opinion of Counsel to the effect that the holders of
the Securities will not recognize income, gain, or loss for United States
Federal income tax purposes as a result of such transaction, and will be subject
to United States Federal income tax on the same amounts and at the same times as
would be the case as if the transaction had not occurred, and there will be no
additional Thai Taxes and no Taxes of any other jurisdiction imposed on any
payments made pursuant to the Securities or the Guaranty; and (vi) each of the
Company and the Issuers shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, stating that such consolidation, merger,
conveyance, transfer or lease and such supplemental indentures comply with this
Indenture, and this Indenture (including the Guaranty), the Security Sharing
Agreement, the Security Documents, and the Securities remain and will be in full
force and effect against all applicable parties and the Liens with respect to
the Collateral (which shall be first priority perfected Liens unless otherwise
contemplated by the Security Documents) continue in full force and effect.
The Successor Company shall be the successor to the Company and
shall succeed to, and be substituted for, and may exercise every right and power
of, the Company under this Indenture, but the predecessor Company in the case of
a conveyance, transfer or lease shall not be released from the obligation to pay
the principal of and interest on the Securities.
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The Issuers shall not consolidate or merge with or into any other
Person, or convey, transfer or lease all or substantially all its assets to any
other Person, and all of its outstanding Capital Stock shall at all times be
owned by the Company free and clear of all Liens (other than Liens securing the
Securities, the Senior Notes and the Debentures).
ARTICLE VI
Defaults and Remedies
SECTION 6.01 Events of Default. Each of the following constitutes an
"Event of Default":
(a) a default in any payment of interest on any Security when due
(whether or not such payment is prohibited by the provisions of Article
XI), or the failure of the Company to make any required capital
contribution in respect of a payment of interest on any Security pursuant
to Section 4.29, in each case continued for 30 days;
(b) a default in the payment of principal of any Security when due
at its Stated Maturity, upon optional redemption, upon required
repurchase, upon declaration or otherwise (whether or not such payment is
prohibited by Article XI) or the failure of the Company to make any
required capital contribution in respect of a principal payment on any
Security pursuant to Section 4.29;
(c) the failure by the Issuers or the Company to comply with its
obligations under Section 5.01;
(d) the failure by the Issuers or the Company to comply for 30 days
after notice with any of their respective obligations under Article IV
(other than Section 4.29 and other than a failure to purchase Securities
pursuant to Section 4.06, 4.07 or 4.10 which shall constitute an Event of
Default under clause (b) above), other than as specified in clause (a),
(b) or (c) above;
(e) the failure by the Issuers or the Company to comply for 60 days
after notice with their respective agreements contained in the Indenture
(other than those referred to in clause (a), (b), (c) and (d) above);
(f) the Guaranty ceases to be in full force and effect (except as
contemplated by the terms thereof) or the Company denies or disaffirms its
obligations under the Guaranty;
(g) Indebtedness of the Company, the Issuers or any Restricted
Subsidiary is not paid within any applicable grace period after final
maturity or is accelerated by the holders thereof because of a default and
the total amount of such Indebtedness unpaid or accelerated exceeds U.S.$5
million (or its foreign currency equivalent at the time) and such default
shall not have been cured or such acceleration rescinded after a 10-day
period;
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(h) the Company, the Issuers or any Subsidiary pursuant to or within
the meaning of any Bankruptcy Law:
(i) commences a voluntary case;
(ii) consents to the entry of an order for relief against it
in an involuntary case;
(iii) consents to the appointment of a Custodian of it or for
any substantial part of its property; or
(iv) makes a general assignment for the benefit of its
creditors;
(i) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against the Company, the Issuers or any
Subsidiary in an involuntary case;
(ii) appoints a Custodian of the Company, the Issuers or any
Subsidiary or for any substantial part of its property; or
(iii) orders the winding up or liquidation of the Company, the
Issuers or any Subsidiary;
(j) any judgment or decree for the payment of money in excess of
U.S.$5 million (or its foreign currency equivalent) (to the extent not
covered by insurance) is rendered against the Company, the Issuers or any
Subsidiary and such judgment or decree shall remain undischarged or
unstayed for a period of 60 days after such judgment becomes final and
nonappealable (the "judgment default provision");
(k) any Account or amount therein is not maintained as required or
any drawing under or deposit into any Account is not made when required to
be made and in any such case such failure continues unremedied for five
Business Days (or, in the case of a failure to find or maintain any
required amount in, or to make a drawing under, the Notes DSR Account, 30
days) (the "account provision");
(l) the Security Documents shall cease to grant the holders any of
the material collateral or rights purported to be granted thereunder or
the Company shall fail to increase the Mortgaged Amounts (as defined in
the Security Documents) when required pursuant to the Security Documents
(the "security provision"); or
(m) after giving effect to the anticipated receipt and application
of any insurance proceeds the Mill is abandoned in whole or in substantial
part or is destroyed or made permanently inoperable in whole or in
substantial part (the "abandonment provision").
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However, a Default under clauses (d) or (e) will not constitute an
Event of Default until the Trustee or the holders of 25% in principal amount at
maturity of the outstanding Securities, notify the Issuers (with a copy to the
Trustee if given by the holders) of the Default and such default is not cured
within the time specified in clause (d) or (e) after receipt of such notice. The
written notice must specify the Default, demand that it be remedied and state
that the notice is a "Notice of Default".
The term "Bankruptcy Law" means Title 11, United States Code, or any
similar U.S. Federal, state or local law for the relief of debtors or any
comparable or similar foreign laws (including any Thai law) relating to
bankruptcy, receivership, liquidation, dissolution or similar proceeding. The
term "Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
The Issuers shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any Event of Default and of any event which with the giving of notice or the
lapse of time would become an Event of Default under clause (a), (d), (e), (g),
(j) or (k), its status and what action the Issuers is taking or proposes to take
with respect thereto.
SECTION 6.02 Acceleration. If an Event of Default (other than an
Event of Default with respect to clauses (h) or (i) of Section 6.01 occurs and
is continuing, the Trustee or the Holders of at least 25% in principal amount at
maturity of the outstanding Securities by notice to the Issuers and the Trustee
(if the notice is given by the holders) may declare the Accreted Value of, and
accrued and unpaid interest, if any, on all the Securities to be due and
payable. Upon such a declaration, such Accreted Value and accrued and unpaid
interest shall be due and payable immediately. If an Event of Default with
respect to the Securities pursuant to clauses (h) and (i) of Section 6.01
(together, the "bankruptcy provision") occurs, the Accreted Value of, and
accrued and unpaid interest on, such Securities will become and be immediately
due and payable without any declaration or other act on the part of the Trustee
or any holders. The Holders of a special majority of 60% in principal amount of
the outstanding Securities by notice to the Trustee may rescind an acceleration
and its consequences if (i) the rescission would not conflict with any judgment
or decree, (ii) all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of
acceleration and (iii) all amounts due to the Trustee under Section 7.07 have
been paid. No such rescission shall affect any subsequent Default or Event of
Default or impair any right consequent thereto. Upon any such acceleration,
Securityholders holding a majority and principal amount at maturity of the
Securities shall have the right under the Security Documents to vote to cause
the Trustee to direct the Collateral Agent to act thereunder. Except as directed
by the Securityholders, the Trustee shall have no responsibility before or after
an Event of Default to foreclose or take any other action with respect to the
Collateral or the Security Documents.
SECTION 6.03 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.
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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 Securityholder 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. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04 Waiver of Defaults. The Majority Holders by notice to
the Trustee may waive an existing Default and its consequences except (i) a
Default in the payment of the principal of or interest on a Security or (ii) a
Default in respect of a provision that under Section 9.02 cannot be amended
without the consent of each Securityholder affected. When a Default is waived,
it is deemed cured, but no such waiver shall extend to any subsequent or other
Default or impair any consequent right.
SECTION 6.05 Control by Majority. The Majority Holders may direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee or of exercising any trust or power conferred on the Trustee.
However, the Trustee may refuse to follow any direction that conflicts with law
or this Indenture or, subject to Section 7.01, that the Trustee determines is
unduly prejudicial to the rights of other Securityholders or would involve the
Trustee in personal liability; provided, however, that the Trustee may take any
other action deemed proper by the Trustee that is not inconsistent with such
direction. Prior to taking any action hereunder, the Trustee shall be entitled
to indemnification satisfactory to it in its sole discretion against all losses
and expenses caused by taking or not taking such action.
SECTION 6.06 Limitation on Suits. A Securityholder may not pursue
any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the
outstanding Securities make a written request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer to the Trustee reasonable security
or indemnity 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 of security or indemnity; and
(5) the Holders of a majority in principal amount of the outstanding
Securities do not give the Trustee a direction inconsistent with the
request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the rights
of another Securityholder or to obtain a preference or priority over another
Securityholder.
SECTION 6.07 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
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liquidated damages and interest on the Securities held by such Holder, 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 such Holder.
SECTION 6.08 Collection Suit by Trustee. If an Event of Default
specified in Section 6.01(a) or (b) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount then due and owing (together with interest on any
unpaid interest to the extent lawful) and the amounts provided for in Section
7.07.
SECTION 6.09 Trustee May File Proofs of Claim. The Trustee may 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 and the Securityholders
allowed in any judicial proceedings relative to the Issuers, any Subsidiary or
the Company, their creditors or their property and, unless prohibited by law or
applicable regulations, may vote on behalf of the Holders in any election of a
trustee in bankruptcy or other Person performing similar functions, and any
Custodian in any such judicial proceeding is hereby authorized by each Holder to
make payments to the Trustee and, in the event that the Trustee shall consent to
the making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and its counsel, and any other amounts due
the Trustee under Section 7.07.
SECTION 6.10 Priorities. If the Trustee collects any money or
property pursuant to this Article VI, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: subject to Articles XI and XIII, to Securityholders for
amounts due and unpaid on the Securities for principal and interest,
ratably, and any liquidated damages without preference or priority of any
kind, according to the amounts due and payable on the Securities for
principal, any liquidated damages and interest, respectively;
THIRD: any other amounts to the Securityholders hereunder, under the
Purchase Agreements, the Security Documents, and under any other documents
delivered in connection herewith or therewith, which amounts shall be
shared pro rata (based on amount owed) among all Securityholders owed any
such amounts; and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any payment
to Securityholders pursuant to this Section.
SECTION 6.11 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 Trustee, a court in its discretion may
require the filing by any party litigant in the
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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 does
not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07
or a suit by Holders of more than 10% in principal amount of the Securities.
ARTICLE VII
Trustee
SECTION 7.01 Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise 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.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) 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.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b) of
this Section;
(2) 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; and
(3) 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 6.05.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) 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.
(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
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(g) No provision of this Indenture 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 in the exercise of any of its
rights or powers, if it 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.
(h) 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 and to the provisions of the TIA.
SECTION 7.02 Rights of Trustee. Subject to Section 7.01: (a) The
Trustee may rely on 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.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on the
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any agent appointed with due care.
(d) 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; provided, however, that the Trustee's conduct does not constitute
willful misconduct or negligence.
(e) The Trustee may consult with counsel, and the advice or opinion
of counsel with respect to legal matters relating to this Indenture and the
Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
(f) The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, note or other paper or document unless requested in writing to do so
by the Holders of not less than a majority in principal amount of the Securities
at the time outstanding, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Issuers or the Company, personally or by agent or attorney.
(g) The Trustee shall not be charged with knowledge of any Default
or Event of Default unless either a Trust Officer of the Trustee assigned to the
Corporate Trust Department of the Trustee (or any successor division or
department of the Trustee) shall have actual knowledge of such Default or Event
of Default or written notice of such Default or Event of Default shall have been
given to the Trustee by the Company or any Holder.
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(h) Except as expressly provided in Section 10.04, the Trustee shall
at no time have any responsibility or liability for or with respect to the
legality, validity or enforceability of any Collateral or any arrangement or
agreement between the Collateral Agent and any Person with respect thereto, or
the perfection or priority of any security interest created in any of the
Collateral or the maintenance of any such perfection and priority, or for or
with respect to the sufficiency of the Collateral following any Event of
Default. The Trustee shall have no responsibility for the maintenance of any
Account or the investment of any funds deposited therein or the release of any
funds therefrom.
SECTION 7.03 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 Issuers or their Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.04 Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture, the Securities, the Guaranty, any Collateral or any Account, it
shall not be accountable for the Issuers' use of the proceeds from the
Securities, and it shall not be responsible for any statement of the Issuers in
this Indenture or in any document issued in connection with the sale of the
Securities or in the Securities other than the Trustee's certificate of
authentication.
SECTION 7.05 Notice of Defaults. If a Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall mail to each
Securityholder notice of the Default within 30 days after it is known to a Trust
Officer or written notice of it is received by the Trustee. Except in the case
of a Default in payment of principal of, premium (if any) or interest on any
Security (including payments pursuant to the mandatory redemption provisions of
such Security, if any), 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 Securityholders.
SECTION 7.06 Reports by Trustee to Holders. As promptly as
practicable after each May 15 beginning with the May 15 following the date of
this Indenture, and in any event prior to July 15 in each year, the Trustee
shall mail to each Securityholder a brief report dated as of May 15 that
complies with Section 313(a) of the TIA. The Trustee shall also comply with
Section 313(b) of the TIA.
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange (if any) on which the
Securities are listed. The Issuers agree to notify promptly the Trustee whenever
the Securities become listed on any stock exchange and of any delisting thereof.
SECTION 7.07 Compensation and Indemnity. The Issuers and the Company
jointly and severally agree to pay to the Trustee from time to time reasonable
compensation for its services as set forth in a separate fee letter. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Issuers and the Company jointly and severally
agree to reimburse the Trustee upon request for all reasonable out-of-pocket
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expenses incurred or made by it, including costs of collection, in addition to
the compensation for its services. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Trustee's agents,
counsel, accountants and experts. The Issuers and the Company, jointly and
severally shall indemnify the Trustee against any and all loss, liability or
expense (including reasonable attorneys' fees) incurred by it without negligence
or bad faith on its part in connection with the administration of this trust and
the performance of its duties hereunder. The Trustee shall notify the Issuers of
any claim for which it may seek indemnity promptly upon obtaining actual
knowledge thereof; provided that any failure so to notify the Issuers shall not
relieve the Issuers or the Company of its indemnity obligations hereunder. The
Issuers shall defend the claim and the indemnified party shall provide
reasonable cooperation at the Issuers' expense in the defense. Such indemnified
parties may have separate counsel and the Issuers shall pay the fees and
expenses of such counsel. The Issuers need not reimburse any expense or
indemnify against any loss, liability or expense incurred by an indemnified
party through such party's own willful misconduct, negligence or bad faith.
To secure the Issuers' payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee other than money or property held in trust to pay
principal of and interest and any liquidated damages on particular Securities.
The Issuers' payment obligations pursuant to this Section shall
survive the satisfaction or discharge of this Indenture, any rejection or
termination of this Indenture under any bankruptcy law or the resignation or
removal of the Trustee. Without prejudice to any other rights available to the
Trustee under applicable law, when the Trustee incurs expenses after the
occurrence of an Event of Default specified in Section 6.01(h) or (i) with
respect to the Issuers, the expenses are intended to constitute expenses of
administration under the Bankruptcy Law.
SECTION 7.08 Replacement of Trustee. The Trustee may resign at any
time by so notifying the Issuers; provided that such resignation shall not be
effective until a successor is appointed. The Holders of a majority in principal
amount of the Securities may remove the Trustee by so notifying the Trustee and
may appoint a successor Trustee. The Issuers shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10 of this Indenture
or fails to qualify as Book-Entry Depositary pursuant to Section 3.07 of
the Debenture Depositary Agreement;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee
or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Issuers shall promptly appoint a successor
Trustee (subject to the preceding paragraph).
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A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuers. 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 Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in principal amount of the Securities may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this
Section, the Company's obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
SECTION 7.09 Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
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 any of the Securities shall have been authenticated but not
delivered, any such successor to the 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 to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the 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 7.10 Eligibility; Disqualification. The Trustee shall at all
times satisfy the requirements of TIA ss. 310(a). The Trustee 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. The Trustee shall comply with TIA
ss. 310(b); provided, however, that there shall be excluded from the operation
of TIA ss. 310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Issuers are
outstanding if the requirements for such exclusion set forth in TIA ss.
310(b)(1) are met.
SECTION 7.11 Preferential Collection of Claims Against Issuers. The
Trustee shall comply with 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.
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ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01 Discharge of Liability on Securities; Defeasance. (a)
When (i) the Issuers deliver to the Trustee all outstanding Securities (other
than Securities replaced pursuant to Section 2.07) for cancellation or (ii) all
outstanding Securities have become due and payable, whether at maturity or as a
result of the mailing of a notice of redemption pursuant to Article III hereof
and the Issuers irrevocably deposit with the Trustee funds or U.S. Government
Obligations on which payment of principal and interest when due will be
sufficient to pay at maturity or upon redemption all outstanding Securities,
including interest thereon to maturity or such redemption date (other than
Securities replaced pursuant to Section 2.07), and if in either case the Issuers
pay all other sums payable hereunder by the Issuers, then this Indenture shall,
subject to Section 8.01(c), cease to be of further effect. The Trustee shall
acknowledge satisfaction and discharge of this Indenture on demand of the
Issuers accompanied by an Officers' Certificate and an Opinion of Counsel and at
the cost and expense of the Issuers.
(b) Subject to Sections 8.01(c) and 8.02, the Issuers at any time
may terminate (i) all of their obligations under the Securities and this
Indenture ("legal defeasance option") or (ii) their obligations under Article IV
(other than those in Sections 4.01, 4.11, 4.21 and 4.29), Sections 5.01(iii) and
5.01(iv) and the operation of Section 6.01(d) (except with respect to Sections
4.01, 4.11, 4.21 and 4.29), 6.01(g), 6.01(h) (with respect to Subsidiaries of
the Issuers only), 6.01(i) (with respect to Subsidiaries of the Issuers only),
6.01(j), 6.01(k) and 6.01(l) ("covenant defeasance option"). The Issuers may
exercise their legal defeasance option notwithstanding their prior exercise of
their covenant defeasance option. If the Issuers exercise their legal defeasance
option or their covenant defeasance option, the Company shall be released from
all of its obligations with respect to its Guaranty and all the Collateral will
be released.
If the Issuers exercise their legal defeasance option, payment of
the Securities may not be accelerated because of an Event of Default. If the
Issuers exercise their covenant defeasance option, payment of the Securities may
not be accelerated because of an Event of Default specified in Section 6.01(d)
(except with respect to Section 4.01, 4.11, 4.21 and 4.29), 6.01(e), 6.01(f),
6.01(g), 6.01(h) (with respect only to the Company and its Subsidiaries other
than the Issuers only), 6.01(i) (with respect to Subsidiaries of the Issuers
only), 6.01(j), 6.01(k) or 6.01(l) or because of the failure of the Issuers to
comply with (iii) and (iv) of Section 5.01.
Upon satisfaction of the conditions set forth herein and upon
request of the Issuers, the Trustee shall acknowledge in writing the discharge
of those obligations that the Issuers terminate.
(c) Notwithstanding clauses (a) and (b) above, the Issuers'
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 7.07, 7.08, 8.04, 8.05 and
8.06 shall survive until the Securities have been paid in full. Thereafter, the
Issuers' obligations in Sections 7.07, 8.04 and 8.05 shall survive.
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SECTION 8.02 Conditions to Defeasance. The Issuers may exercise
their legal defeasance option or its covenant defeasance option only if:
(1) the Issuers irrevocably deposit in trust with the Trustee money
in the form of U.S. dollars or U.S. Government Obligations for the payment
of principal and interest on the Securities to maturity or redemption, as
the case may be;
(2) the Issuers deliver to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment of the deposited U.S. Government Obligations plus any
deposited money without investment will provide cash at such times and in
such amounts as will be sufficient to pay principal and interest when due
on all the Securities to maturity or redemption, as the case may be;
(3) 123 days, or such longer period as may be relevant under any
applicable foreign Bankruptcy Laws, pass after the deposit is made and
during the 123-day or such applicable other period no Default specified in
Section 6.01(h) or (i) with respect to the Issuers occurs which is
continuing at the end of the period;
(4) the deposit does not constitute a default under any other
agreement binding on the Issuers;
(5) the Issuers deliver to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute, or
is qualified as, a regulated investment company under the Investment
Company Act of 1940;
(6) in the case of the legal defeasance option, the Issuers shall
have delivered to the Trustee an Opinion of Counsel stating that (i) the
Issuers have received from, or there has been published by, the Internal
Revenue Service a ruling, or (ii) since the date of this Indenture there
has been a change in the applicable federal income tax or Thailand tax
law, in either case to the effect that, and based thereon such Opinion of
Counsel shall confirm that, the Securityholders will not recognize income,
gain or loss for Federal income or Thailand tax purposes as a result of
such defeasance and will be subject to federal income or Thailand tax on
the same amounts, in the same manner and at the same times as would have
been the case if such defeasance had not occurred;
(7) in the case of the covenant defeasance option, the Issuers shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Securityholders will not recognize income, gain or loss for Federal income
or Thailand tax purposes as a result of such covenant defeasance and will
be subject to Federal income and Thailand tax on the same amounts, in the
same manner and at the same times as would have been the case if such
covenant defeasance had not occurred; and
(8) the Issuers deliver to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of the Securities as contemplated by this Article
VIII have been complied with.
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Before or after a deposit, the Issuers may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article III.
SECTION 8.03 Application of Trust Money. The Trustee shall hold in
trust money or U.S. Government Obligations deposited with it pursuant to this
Article VIII. 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 8.04 Repayment to Issuers. The Trustee and the Paying Agent
shall promptly turn over to the Issuers upon request any excess money or
securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee and
the Paying Agent shall pay to the Issuers upon written request any money held by
them for the payment of principal or interest that remains unclaimed for two
years, and, thereafter, Securityholders entitled to the money must look to the
Issuers for payment as general creditors.
SECTION 8.05 Indemnity for Government Obligations. The Issuers shall
jointly and severally pay and shall indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against deposited U.S. Government
Obligations or the principal and interest received on such U.S. Government
Obligations.
SECTION 8.06 Reinstatement. If the Trustee or Paying Agent is unable
to apply any money or U.S. Government Obligations in accordance with this
Article VIII 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 Issuers' obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article VIII 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 VIII; provided, however, that, if
the Issuers have made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Issuers 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 IX
Amendments
SECTION 9.01 Without Consent of Holders. The Issuers, the Company
and the Trustee may amend this Indenture, any Security Documents, the Securities
or the Guaranty without notice to or consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article V;
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(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to add further Guaranties with respect to the Securities or to
further secure the Securities;
(5) to add to the covenants of the Issuers for the benefit of the
Holders or to surrender any right or power herein conferred upon the
Issuers or any Securityholder;
(6) to comply with any requirements of the Commission in connection
with qualifying this Indenture under the TIA;
(7) to make any change that does not adversely affect the rights of
any Securityholder; or
(8) to provide for the issuance of the Exchange Securities, which
shall have terms substantially identical in all material respects to the
Initial Securities (except that the transfer restrictions contained in the
Initial Securities shall be modified or eliminated, as appropriate), and
which shall be treated, together with any outstanding Initial Securities,
as a single issue of securities.
After an amendment under this Section becomes effective, the Issuers
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
SECTION 9.02 With Consent of Holders. The Issuers, the Company and
the Trustee may amend this Indenture, any Security Documents, the Securities or
the Guaranty without notice to any Securityholder but with the written consent
of the Majority Holders. However, without the consent of each Securityholder
affected, an amendment, supplement or waiver may not:
(1) reduce the principal amount of Securities whose Holders must
consent to an amendment, supplement or waiver;
(2) reduce the stated rate of or extend the stated time for payment
of interest or any liquidated damages on any Security;
(3) reduce the principal of or extend the Stated Maturity of any
Security;
(4) reduce the premium payable upon the redemption of any Security
or change the time at which any Security may be redeemed or repurchased in
accordance with Article III;
(5) make any Security payable in money other than that stated in the
Security;
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(6) impair the right of Holder to receive payment of principal of
and interest on such Holder's Securities on or after the due dates
therefor or to institute suit for the enforcement of any payment of or
with respect to such Holder's Securities;
(7) make any change in Section 6.04 or 6.07 or this Section; or
(8) release the Guaranty, all or substantially all of the Collateral
or the requirement to maintain any Account.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent approves the substance thereof.
After an amendment under this Section becomes effective, the Issuers
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
SECTION 9.03 Compliance with Trust Indenture Act. Every amendment to
this Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 9.04 Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the Trustee receives the notice of
revocation before the date the amendment or waiver becomes effective. After an
amendment or waiver becomes effective, it shall bind every Securityholder. An
amendment or waiver becomes effective once the requisite number of consents are
received by the Issuers or the Trustee.
The Issuers may, but shall not be obligated to, fix a record date
for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 120 days after such record date.
SECTION 9.05 Notation on or Exchange of Securities. If an amendment
changes the terms of a Security, the Trustee may require the Holder of the
Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Issuers or the Trustee so determines, the Issuers
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security
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that reflects the changed terms. Failure to make the appropriate notation or to
issue a new Security shall not affect the validity of such amendment.
SECTION 9.06 Trustee to Sign Amendments. The Trustee shall sign any
amendment authorized pursuant to this Article IX 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 such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Section 7.01) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating, in addition to
the requirements of Section 12.04, that such amendment is authorized or
permitted by this Indenture that such amendment is the legal, valid and binding
obligation of the Issuers and the Company enforceable against them in accordance
with its terms, subject to customary exceptions, and complies with the
provisions hereof (including Section 9.03).
SECTION 9.07 Payment for Consent. Neither the Issuers nor any
Affiliate of the Issuers shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
ARTICLE X
Security Documents
SECTION 10.01 Collateral and Security Documents. (a) To secure the
due and punctual payment of the obligations of the Issuers and the Company under
this Indenture and the Securities, the Issuers, the Company, the Trustee and the
Collateral Agent have entered into the Security Documents to create the security
interests and related matters. The Trustee, the Issuers and the Company hereby
acknowledge and agree that the Collateral Agent holds the Collateral in trust
for the benefit of the Holders and the Trustee and the other parties secured
under the Security Documents pursuant to the terms of the Security Documents.
(b) Each Holder, by accepting a 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 provisions of the Security Documents and this Indenture,
and authorizes and directs the Collateral Agent to perform its obligations and
exercise its rights under the Security Documents in accordance therewith;
provided, however, that if any provisions of the Security Documents limit,
qualify or conflict with the duties imposed by the provisions of the TIA, the
TIA will control.
(c) As more fully set forth in, and subject to the provisions of,
the Security Documents, the Holders, and the Trustee on behalf of such Holders,
have rights in and to the Collateral which are second in priority and
subordinated to the rights created in favor of the creditors under the Bank
Credit Facility and the holders of the Notes.
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(d) As set forth in and governed by the Security Documents, the
Collateral as now or hereafter constituted shall be held for the benefit of the
Secured Creditors (as defined in the Security Documents) with the preference,
priority or distinction set forth in the Security Documents. As among the
Holders, the Collateral shall be held for the equal and ratable benefit of the
Holders without preference, priority or distinction of any thereof over any
other.
SECTION 10.02 Release of Collateral. Collateral may be released from
the security interest created by the Security Documents at any time or from time
to time in accordance with the provisions of the Security Documents. The release
of any Collateral from the terms hereof and of the Security Documents or the
release of, in whole or in part, the Liens created by the Security Documents,
will not be deemed to impair the Lien on the Collateral in contravention of the
provisions hereof if and to the extent the Collateral or Liens are released
pursuant to the applicable Security Documents and pursuant to the terms of this
Article 10. The Trustee and each of the Holders acknowledge that a release of
Collateral or a Lien strictly in accordance with the terms of the Security
Documents and of this Article 10 will not be deemed for any purpose to be an
impairment of the Lien on the Collateral in contravention of the terms of this
Indenture. To the extent applicable, the Company and each obligor on the
Securities shall cause ss. 314(d) of the TIA relating to the release of property
or securities from the Lien hereof and of the Security Documents to be complied
with. Any certificate or opinion required by ss. 314(d) of the TIA may be made
by an officer of the Company, except in cases which ss. 314(d) of the TIA
requires that such certificate or opinion be made by an independent person.
SECTION 10.03 Certificates and Opinions. (a) The Issuers and the
Company shall deliver to the Trustee:
(i) promptly after the execution and delivery of this Indenture, an
Opinion of Counsel either stating that in the opinion of such counsel the
Indenture and the Security Documents (including financing statements or
other instruments) have been properly recorded and filed so as to make
effective the security interest intended to be created for the benefit of
the Securityholders, and reciting the details of such action, or stating
that in the opinion of such counsel no such action is necessary to make
such Lien effective; and
(ii) on or before March 1 of each year, an Opinion of Counsel either
stating that in the opinion of such counsel such action has been taken
with respect to the recording, filing, re-recording and re-filing of the
Indenture and the Security Documents (including financing statements or
other instruments) as is necessary to maintain the security interest
intended to be created thereby for the benefit of the Securityholders, and
reciting the details of such action, or stating that in the opinion of
such counsel no such action is necessary to maintain such Lien.
(b) The Company shall comply with TIA ss. 314(d), relating to, among
other matters, the release of Collateral from the Lien of the Security Documents
and Officers' Certificates or other documents regarding fair value of the
Collateral, to the extent such provisions are applicable. Any certificate or
opinion required by TIA ss. 314(d) may be executed and delivered by an Officer
of the Company to the extent permitted by TIA ss. 314(d).
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SECTION 10.04 Directions to Collateral Agent. Except during the
continuance of an Event of Default, the Trustee in directing the Collateral
Agent to take or refrain from taking actions under the Security Documents may
rely on an Officers' Certificate and Opinion of Counsel delivered to it by the
Company to the effect that the action to be taken or not taken does not
adversely affect the interests of the Securityholders or impair the security of
the Securityholders in contravention of the provisions of the Security Documents
or this Indenture.
ARTICLE XI
Subordination of Securities
SECTION 11.01 Agreement to Subordinate. The Issuers agree, and each
Securityholder by accepting a Security agrees, that the Indebtedness evidenced
by the Securities is subordinated in right of payment to the extent and in the
manner provided in this Article XI, to the prior payment in full in cash or cash
equivalents of all Specified Senior Indebtedness of the Issuers and that the
subordination is for the benefit of and enforceable by the holders of such
Specified Senior Indebtedness. The Securities shall in all respects rank pari
passu with all other Senior Indebtedness of the Issuers and only Indebtedness of
the Issuers which is Specified Senior Indebtedness shall rank senior to the
Securities in accordance with the provisions set forth herein. All provisions of
this Article XI shall be subject to Section 11.12.
SECTION 11.02 Liquidation, Dissolution, Bankruptcy. Upon any payment
or distribution of the assets of the Issuers to creditors upon a total or
partial liquidation or a total or partial dissolution of the Issuers or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Issuers or their property:
(1) holders of Specified Senior Indebtedness of the Issuers shall be
entitled to receive payment in full in cash or cash equivalents of such
Specified Senior Indebtedness before Securityholders shall be entitled to
receive any payment of principal of, interest on or any other amount
payable in respect of the Securities; and
(2) until such Specified Senior Indebtedness is paid in full in cash
or cash equivalents, any distribution to which Securityholders would be
entitled but for this Article XI shall be made to holders of such
Specified Senior Indebtedness as their interests may appear, except that
Securityholders may receive shares of stock and any debt securities that
are subordinated to such Specified Senior Indebtedness, and to any debt
securities received by holders of Specified Senior Indebtedness of the
Issuers, to at least the same extent as the Securities are subordinated to
Specified Senior Indebtedness of the Issuers.
SECTION 11.03 Default on Specified Senior Indebtedness of the
Issuers. The Issuers may not pay the principal of, interest on or any other
amount payable in respect of the Securities or make any deposit pursuant to
Section 8.01 and may not repurchase, redeem or defease any Securities
(collectively, "pay the Securities") if (i) any Specified Senior Indebtedness of
the Issuers is not paid when due or (ii) any other default on such Specified
Senior Indebtedness occurs and the maturity of such Specified Senior
Indebtedness is accelerated in accordance with its terms unless, in either case,
(x) the default has been cured or waived and any such acceleration
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has been rescinded or (y) such Specified Senior Indebtedness has been paid in
full; provided, however, that the Issuers may pay the Securities without regard
to the foregoing if the Issuers and the Trustee receive written notice approving
such payment from the Representative of such Specified Senior Indebtedness with
respect to which either of the events set forth in clause (i) or (ii) of this
sentence has occurred and is continuing. During the continuance of any default
(other than a default described in clause (i) or (ii) of the preceding sentence)
with respect to any Specified Senior Indebtedness of the Issuers pursuant to
which the maturity thereof may be accelerated immediately without further notice
(except such notice as may be required to effect such acceleration) or after the
expiration of any applicable grace periods, the Issuers may not pay the
Securities for a period (a "Payment Blockage Period") commencing upon the
receipt by the Issuers and the Trustee of written notice (a "Blockage Notice")
of such default from the Representative of such Specified Senior Indebtedness
specifying an election to effect a Payment Blockage Period and ending 179 days
thereafter (or earlier if such Payment Blockage Period is terminated (i) by
written notice to the Trustee and the Issuers from the Person or Persons who
gave such Blockage Notice, (ii) because the Specified Senior Indebtedness has
been repaid in full or (iii) because the default giving rise to such Blockage
Notice is no longer continuing). Notwithstanding the provisions described in the
immediately preceding sentence (but subject to the provisions contained in the
first sentence of this Section), unless the holders of Specified Senior
Indebtedness of the Issuers or the Representative of such holders shall have
accelerated the maturity of such Specified Senior Indebtedness, the Issuers may
resume payments on the Securities after such Payment Blockage Period. The
Securities shall not be subject to more than one Payment Blockage Period in any
consecutive 360-day period, irrespective of the number of defaults with respect
to Specified Senior Indebtedness of the Issuers during such period. For purposes
of this Section, no default or event of default which existed or was continuing
on the date of the commencement of any Payment Blockage Period with respect to
the Specified Senior Indebtedness initiating such Payment Blockage Period shall
be, or be made, the basis of the commencement of a subsequent Payment Blockage
Period by the Representative of such Specified Senior Indebtedness, whether or
not within a period of 360 consecutive days, unless such default or event of
default shall have been cured or waived for a period of not less than 90
consecutive days.
SECTION 11.04 Acceleration of Payment of Securities. If payment of
the Securities is accelerated because of an Event of Default, the Issuers or the
Trustee shall promptly notify the holders of the Specified Senior Indebtedness
of the Issuers (or their Representative) of the acceleration.
SECTION 11.05 When Distribution Must Be Paid Over. If a distribution
is made to Securityholders that because of this Article XI should not have been
made to them, the Securityholders who receive the distribution shall hold it in
trust for holders of Specified Senior Indebtedness of the Issuers and pay it
over to them as their interests may appear.
SECTION 11.06 Subrogation. After all Specified Senior Indebtedness
of the Issuers is paid in full in cash or cash equivalents and until the
Securities are paid in full, the Securityholders shall be subrogated to the
rights of holders of such Specified Senior Indebtedness to receive distributions
applicable to such Specified Senior Indebtedness. A distribution made under this
Article XI to holders of such Specified Senior Indebtedness which otherwise
would
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have been made to Securityholders is not, as between the Issuers and
Securityholders, a payment by the Issuers on such Specified Senior Indebtedness.
SECTION 11.07 Relative Rights. This Article XI defines the relative
rights of Securityholders and holders of Specified Senior Indebtedness of the
Issuers. Nothing in this Indenture shall:
(1) impair, as between the Issuers and Securityholders, the
obligation of the Issuers, which is absolute and unconditional, to pay
principal of and interest on the Securities in accordance with their
terms; or
(2) prevent the Trustee or any Securityholder from exercising its
available remedies upon a Default or Event of Default, subject to the
rights of holders of Specified Senior Indebtedness of the Issuers to
receive distributions otherwise payable to Securityholders.
SECTION 11.08 Subordination May Not Be Impaired by Issuers. No right
of any holder of Specified Senior Indebtedness of the Issuers to enforce the
subordination of the Indebtedness evidenced by the Securities shall be impaired
by any act or failure to act by the Issuers or by its failure to comply with
this Indenture.
SECTION 11.09 Rights of Trustee and Paying Agent. Notwithstanding
Section 11.03, the Trustee or Paying Agent may continue to make payments on the
Securities and shall not be charged with knowledge of the existence of facts
that would prohibit the making of any such payments unless, not less than two
Business Days prior to the date of such payment, a Trust Officer of the Trustee
receives notice satisfactory to it that payments may not be made under this
Article XI. The Issuers, the Registrar or co-registrar, the Paying Agent, a
Representative or a holder of Senior Indebtedness may give the notice; provided,
however, that, if the holders of Specified Senior Indebtedness of the Issuers
have a Representative, only the Representative may give the notice.
The Trustee in its individual or any other capacity may hold
Specified Senior Indebtedness of the Issuers with the same rights it would have
if it were not Trustee. The Registrar and co-registrar and the Paying Agent may
do the same with like rights. The Trustee shall be entitled to all the rights
set forth in this Article XI with respect to any Specified Senior Indebtedness
of the Issuers which may at any time be held by it, to the same extent as any
other holder of such Specified Senior Indebtedness; and nothing in Article 7
shall deprive the Trustee of any of its rights as such holder. Nothing in this
Article XI shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 7.07.
SECTION 11.10 Distribution or Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Specified Senior
Indebtedness of the Issuers, the distribution may be made and the notice given
to their Representative (if any).
SECTION 11.11 Article XI Not to Prevent Events of Default or Limit
Right to Accelerate. The failure to make a payment pursuant to the Securities by
reason of any provision
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in this Article XI shall not be construed as preventing the occurrence of a
Default or Event of Default. Nothing in this Article XI shall have any effect on
the right of the Securityholders or the Trustee to accelerate the maturity of
the Securities.
SECTION 11.12 Trust Moneys Not Subordinated. Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust under Article 8 hereunder by the
Trustee for the payment of principal of and interest on the Securities shall not
be subordinated to the prior payment of any Specified Senior Indebtedness or
subject to the restrictions set forth in this Article XI, and none of the
Securityholders shall be obligated to pay over any such amount to the Issuers or
any holder of Specified Senior Indebtedness of the Issuers or any other creditor
of the Issuers.
SECTION 11.13 Trustee Entitled to Rely. Upon any payment or
distribution pursuant to this Article XI, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 11.02
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representative for the holders of Specified
Senior Indebtedness of the Issuers for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of such
Specified Senior Indebtedness, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article XI. In the event that the Trustee determines, in good faith,
that evidence is required with respect to the right of any Person as a holder of
Specified Senior Indebtedness of the Issuers to participate in any payment or
distribution pursuant to this Article XI, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of such Specified Senior Indebtedness held by such Person, the extent to which
such Person is entitled to participate in such payment or distribution and other
facts pertinent to the rights of such Person under this Article XI and, if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment. The provisions of Sections 7.01 and 7.02 shall be applicable to all
actions or omissions of actions by the Trustee pursuant to this Article XI.
SECTION 11.14 Trustee to Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Securityholders and the holders of
Specified Senior Indebtedness of the Issuers as provided in this Article XI and
appoints the Trustee as attorney-in-fact for any and all such purposes.
SECTION 11.15 Trustee Not Fiduciary for Holders of Specified Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Specified Senior Indebtedness and shall not be liable to any such
holders if it shall mistakenly pay over or distribute to Securityholders or the
Issuers or any other Person, money or assets to which any holders of Specified
Senior Indebtedness of the Issuers shall be entitled by virtue of this Article
XI or otherwise.
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SECTION 11.16 Reliance by Holders of Specified Senior Indebtedness
on Subordination Provisions. Each Securityholder by accepting a Security
acknowledges and agrees that the foregoing subordination provisions are, and are
intended to be, an inducement and a consideration to each holder of any
Specified Senior Indebtedness of the Issuers, whether such Specified Senior
Indebtedness was created or acquired before or after the issuance of the
Securities, to acquire and continue to hold, or to continue to hold, such
Specified Senior Indebtedness and such holder of such Specified Senior
Indebtedness shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold, such
Specified Senior Indebtedness.
ARTICLE XII
Guaranty of Securities, Indemnity
SECTION 12.01 Guaranty. (a) The Company, as principal obligor and
not merely as surety, hereby irrevocably and unconditionally guarantees to each
Holder of a Security authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, that: (i) principal of, premium, if any,
and interest on the Securities (including any Additional Amounts payable in
respect thereof) will be promptly paid in full when due, subject to any
applicable grace period, whether on the relevant Stated Maturity, on an interest
payment date, by acceleration, by call for redemption or upon repurchase or
purchase pursuant to Article 3, Sections 4.06, 4.07 or 4.10 or otherwise and
interest on the overdue principal and premium, if any, and purchase price and
interest on any interest, to the extent lawful (in each case Post-Petition
Interest relating to the Issuers or the Company), on the Securities and all
other amounts payable under the Securities and obligations of the Issuers to the
Holders or the Trustee hereunder or thereunder will be promptly paid in full or
performed when the same shall become due and payable, whether on the relevant
maturity date, upon acceleration, by call for redemption, upon repurchase or
purchase pursuant to a Change of Control, any Asset Disposition, any repurchase
of Securities pursuant to Section 4.07 or otherwise, all in accordance with the
terms hereof and thereof; and (ii) in case of any extension of time of payment
or renewal of any Securities or of any such other obligations, that the same
will be promptly paid in full when due or performed in accordance with the terms
of the extension or renewal, subject to any applicable grace period, whether at
maturity, on an interest payment date, by acceleration, required repurchase or
otherwise. All payments under this Guaranty shall be made in United States
Dollars.
(b) All payments made by the Company under the Guaranty with respect
to the Securities will be made in United States Dollars free and clear of and
without withholding or deduction for or on account of any present or future
Taxes imposed or levied by or on behalf of Thailand (or any political
subdivision or taxing authority of Thailand), unless the Company is required to
withhold or deduct such Taxes by law or by the interpretation or administration
thereof. In the event that payments under the Guaranty are subject to
withholding or deduction for or on account of any present or future Taxes
imposed by Thailand (or any political subdivision or taxing authority of or in
Thailand), the Company shall pay Additional Amounts in such amounts and to the
extent set forth in Section 4.20(a).
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(c) The Company hereby agrees that its obligations hereunder shall
be unconditional and irrevocable, irrespective of the validity, regularity or
enforceability of the Securities or this Indenture or the obligations of the
Issuers hereunder or thereunder, the absence of any action to enforce the same,
any waiver or consent by any Holder of the Securities with respect to any
provisions hereof or thereof, the recovery of any judgment against the Issuers,
any action to enforce the same or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a guarantor.
(d) The Company hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Issuers, any right to require a proceeding first against the Issuers, any
right to pursue or exhaust its legal or equitable remedies against the Issuers
(including any right which the Company may have to require the seizure and sale
of the assets of the Issuers to satisfy the outstanding principal of, interest
on or any other amounts payable under each Note prior to recourse against the
Company or its assets), protest, notice and all demands whatsoever and covenants
that the Guaranty will not be discharged except by complete performance of the
obligations contained in the Securities and this Indenture. If any
Securityholder or the Trustee is required by any court or otherwise to return to
the Issuers, the Company, or any custodian, trustee, liquidator or other similar
official acting in relation to the Issuers or the Company any amount paid by the
Issuers or the Company to the Trustee or such Securityholder, the Guaranty to
the extent theretofore discharged, shall be reinstated in full force and effect.
(e) The Company agrees that, as between the Company, on the one
hand, and the Holders and the Trustee, on the other hand, (x) the maturity of
the obligations guaranteed hereby may be accelerated as provided in Article VI
for the purposes of the Guaranty, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any acceleration of such obligations
as provided in Section 6.02, such obligations (whether or not then due and
payable) shall forthwith become due and payable by the Company for the purposes
of the Guaranty.
(f) The Company also agrees, to pay any and all costs and expenses
(including reasonable attorneys' fees and expenses) incurred by the Trustee or
any Holders in enforcing any rights under the Guaranty.
(g) The Company hereby waives, in favor of the Holders and the
Trustee, any and all of its rights, protections, privileges and defenses
provided by law to a guarantor and in particular any applicable provisions of
the Thailand Civil Code and:
(i) waives any right of set-off which the Company may have against
the registered Holder of a Security in respect of any amounts which are or
may become payable by the registered Holder of a Security to the Issuers;
(ii) agrees that the Company is still under an obligation to make
payment to the registered Holder of a Security or the Trustee under this
Guaranty upon demand by the registered Holder of a Security even though
the registered Holder of a Security has not made any demand upon the
Issuers, the Trustee or the Collateral Agent or taken any steps
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or proceedings against the Issuers to seize and sell its assets or
property to recover the secured indebtedness or, if such steps or
proceedings are taken, the registered Holder of a Security is otherwise
unable to satisfy the Indebtedness under this Indenture from such assets
or property;
(iii) relinquishes any right or privilege which it may have to
demand from any court that the registered Holder of a Security or the
Trustee should split or apportion the Indebtedness under this Indenture
either proportionately or otherwise against the Company and any other
person who has given any Guaranty or other security to the registered
Holder of a Security in respect of the Indebtedness under this Indenture;
(iv) agrees that (subject to the other provisions of this Guaranty)
the Company shall not be entitled to claim from the Issuers any
compensation or release in respect of the obligations and liabilities of
the Company under this Guaranty in circumstances where the Company has not
made any actual payment under this Guaranty;
(v) agrees that the Company shall not make use of any of the
exceptions or defenses against the registered Holder of a Security or the
Trustee which are or may be available to the Issuers and which concerns
the Indebtedness under this Indenture;
(vi) agrees that the Company shall still be bound by and liable
under this Guaranty even though due to the fault of the registered Holder
of a Security or the Trustee, the Company can no longer be subrogated to
the rights, security interests and other privileges of the registered
Holder of a Security against the Issuers;
(vii) agrees that the Company shall not have the right to demand the
Issuers to repay the Indebtedness under this Indenture to the registered
Holder of a Security, or to release the Company from its liability under
this Guaranty in circumstances where the registered Holder of a Security
has granted any time or other indulgence to the Issuers.
SECTION 12.02 Indemnity. (a) The Company hereby irrevocably and
unconditionally agrees as a primary obligor to indemnify (the "Indemnity") fully
the Holders of the Securities and the Trustee for and against any amounts owed
by the Issuers in respect of the Securities and this Indenture that otherwise
would be payable under the Guaranty in the event that the Guaranty is for any
reason deemed to be unenforceable. Except as otherwise indicated herein or as
the context may otherwise require, all references herein and in the Securities
shall be deemed to constitute references to the Indemnity.
(b) The obligations of the Company assumed under this Indenture with
respect to the Indemnity are independent undertakings and constitute the
Company's own debt and obligation, as meant by or in accordance with any
applicable provisions of the Thailand Civil Code, separate from the Guaranty
contained in Section 12.01, not accessory to any of the Security Documents, and
with respect to which Indemnity of any such provision of the Thailand Civil Code
does not therefore apply.
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SECTION 12.03 Representation and Warranty. The Company hereby
represents and warrants that all acts, conditions and things required to be done
and performed and to have happened precedent to the creation and issuance of the
Guaranty and the Indemnity, and to constitute the same legal, valid and binding
obligations of the Company enforceable in accordance with their respective
terms, have been done and performed and have happened in compliance with all
applicable laws.
SECTION 12.04 Waiver of Subrogation. The Company hereby irrevocably
waives any claim or other rights which it may now or hereafter acquire against
the Issuers that arise from the existence, payment, performance or enforcement
of the Company's obligations under the Guaranty, the Indemnity and this
Indenture, including, without limitation, any right of subrogation,
reimbursement, exoneration, indemnification, any right to participate in any
claim or remedy of any Holder of Securities against the Issuers whether or not
such claim, remedy or right arises in equity, or under contract, statute or
common law, including, without limitation, the right to take or receive from the
Issuers, directly or indirectly, in cash or other property or by setoff or in
any other manner, payment or security on account of such claim or other rights.
If any amount shall be paid to the Company in violation of the preceding
sentence and the Securities shall not have been paid in full, such amount shall
have been deemed to have been paid to the Company for the benefit of, and held
in trust for the benefit of, the Holders of the Securities, and shall forthwith
be paid to the Trustee for the benefit of such Holders to be credited and
applied upon the Securities, whether matured or unmatured, in accordance with
the terms of this Indenture. The Company acknowledges that it will receive
direct and indirect benefits from the financing arrangements contemplated by
this Indenture and that the waiver set forth in this Section 12.04 is knowingly
made in contemplation of such benefits.
ARTICLE XIII
Subordination of Guaranty
SECTION 13.01 Agreement to Subordinate. The Company agrees, and each
Securityholder by accepting a Security agrees, that the obligations of the
Company under the Guaranty (the "Obligations") are subordinated in right of
payment, to the extent and in the manner provided in this Article XIII, to the
prior payment in full in cash or cash equivalents of all Specified Senior
Indebtedness of the Company and that the subordination is for the benefit of and
enforceable by the holders of such Specified Senior Indebtedness. The
Obligations of the Company shall in all respects rank pari passu with all other
Senior Indebtedness of the Company and only Indebtedness of the Company which is
Specified Senior Indebtedness shall rank senior to the Guaranty in accordance
with the provisions set forth herein.
SECTION 13.02 Liquidation, Dissolution, Bankruptcy. Upon any payment
or distribution of the assets of the Company to creditors upon a total or
partial liquidation or a total or partial dissolution of the Company or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or its property:
(1) holders of Specified Senior Indebtedness of the Company shall be
entitled to receive payment in full of such Specified Senior Indebtedness
in cash or cash
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equivalents before Securityholders shall be entitled to receive any
payment pursuant to any Obligations of the Company; and
(2) until the Specified Senior Indebtedness of the Company is paid
in full in cash or cash equivalents, any distribution to which
Securityholders would be entitled but for this Article XIII shall be made
to holders of such Specified Senior Indebtedness of the Company as their
interests may appear, except that Securityholders may receive shares of
stock and any debt securities of the Company that are subordinated to
Specified Senior Indebtedness, and to any debt securities received by
holders of Specified Senior Indebtedness of the Company, to at least the
same extent as the Obligations of the Company are subordinated to
Specified Senior Indebtedness of the Company.
SECTION 13.03 Default on Specified Senior Indebtedness of the
Company. The Company may not make any payment pursuant to any of its Obligations
or repurchase, redeem or otherwise retire or defease any Securities or other
Obligations (collectively, "pay its Guaranty") if (i) any Specified Senior
Indebtedness of the Company is not paid when due or (ii) any other default on
Specified Senior Indebtedness of the Company occurs and the maturity of such
Specified Senior Indebtedness is accelerated in accordance with its terms
unless, in either case, (x) the default has been cured or waived and any such
acceleration has been rescinded or (y) such Specified Senior Indebtedness has
been paid in full; provided, however, that the Company may pay its Guaranty
without regard to the foregoing if the Company and the Trustee receive written
notice approving such payment from the Representative of the Specified Senior
Indebtedness with respect to which either of the events set forth in clause (i)
or (ii) of this sentence has occurred and is continuing. During the continuance
of any default (other than a default described in clause (i) or (ii) of the
preceding sentence) with respect to any Specified Senior Indebtedness of the
Company pursuant to which the maturity thereof may be accelerated immediately
without further notice (except such notice as may be required to effect such
acceleration) or the expiration of any applicable grace periods, the Company may
not pay its Guaranty for a period (a "Guaranty Payment Blockage Period")
commencing upon the receipt by the Trustee (with a copy to the Company) of
written notice (a "Guaranty Blockage Notice") of such default from the
Representative of the holders of such Specified Senior Indebtedness specifying
an election to effect a Guaranty Payment Blockage Period and ending 179 days
thereafter (or earlier if such Guaranty Payment Blockage Period is terminated
(i) by written notice to the Trustee and the Company from the Person or Persons
who gave such Guaranty Blockage Notice, (ii) because the default giving rise to
such Guaranty Blockage Notice is no longer continuing or (iii) because such
Specified Senior Indebtedness has been repaid in full). Notwithstanding the
provisions described in the immediately preceding sentence (but subject to the
provisions contained in the first sentence of this Section), unless the holders
of Specified Senior Indebtedness giving such Guaranty Blockage Notice or the
Representative of such holders shall have accelerated the maturity of such
Specified Senior Indebtedness, the Company shall resume payments pursuant to its
Obligations after the end of such Guaranty Payment Blockage Period. The Guaranty
shall not be subject to more than one Guaranty Payment Blockage Period in any
consecutive 360-day period, irrespective of the number of defaults with respect
to Specified Senior Indebtedness of the Company during such period. For purposes
of this Section, no default or event of default which existed or was continuing
on the date of the commencement of any Guaranty Payment Blockage Period with
respect to the Specified Senior Indebtedness initiating such Guaranty Payment
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Blockage Period shall be, or be made, the basis of the commencement of a
subsequent Guaranty Payment Blockage Period by the Representative of such
Specified Senior Indebtedness, whether or not within a period of 360 consecutive
days, unless such default or event of default shall have been cured or waived
for a period of not less than 90 consecutive days.
SECTION 13.04 Demand for Payment. If a demand for payment (upon
receipt of the requisite information from the Company) is made on the Company
pursuant to Article XIII, the Company or the Trustee shall promptly notify the
holders of Specified Senior Indebtedness (or their Representatives) of the
Company of such demand.
SECTION 13.05 When Distribution Must Be Paid Over. If a distribution
is made to Securityholders that because of this Article XIII should not have
been made to them, the Securityholders who receive the distribution shall hold
it in trust for holders of the relevant Specified Senior Indebtedness and pay it
over to them or their Representative as their interests may appear.
SECTION 13.06 Subrogation. After all Specified Senior Indebtedness
of the Company is paid in full and until the Securities are paid in full,
Securityholders shall be subrogated to the rights of holders of such Specified
Senior Indebtedness to receive distributions applicable to Specified Senior
Indebtedness. A distribution made under this Article XIII to holders of such
Specified Senior Indebtedness which otherwise would have been made to
Securityholders is not, as between the Company and Securityholders, a payment by
the Company on such Specified Senior Indebtedness.
SECTION 13.07 Relative Rights. This Article XIII defines the
relative rights of Securityholders and holders of Specified Senior Indebtedness
of the Company. Nothing in this Indenture shall:
(1) impair, as between the Company and Securityholders, the
obligation of the Company, which is absolute and unconditional, to pay its
Obligations to the extent set forth in Article XIII; or
(2) prevent the Trustee or any Securityholder from exercising its
available remedies upon a default by the Company under its Obligations,
subject to the rights of holders of Specified Senior Indebtedness of the
Company to receive distributions otherwise payable to Securityholders.
SECTION 13.08 Subordination May Not Be Impaired by the Company. No
right of any holder of Specified Senior Indebtedness of the Company to enforce
the subordination of the Obligations of the Company shall be impaired by any act
or failure to act by the Company or by its failure to comply with this
Indenture.
SECTION 13.09 Rights of Trustee and Paying Agent. Notwithstanding
Section 13.03, the Trustee or Paying Agent may continue to make payments
pursuant to the Guaranty and shall not be charged with knowledge of the
existence of facts that would prohibit the making of any such payments unless,
not less than two Business Days prior to the date of such payment, a
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Trust Officer of the Trustee receives written notice satisfactory to it that
payments may not be made under this Article XIII. The Company, the Trustee, the
Registrar or co-registrar, the Paying Agent, a Representative or a holder of
Specified Senior Indebtedness of the Company may give the notice; provided,
however, that, if an issue of Specified Senior Indebtedness of the Company has a
Representative, only the Representative may give the notice.
The Trustee in its individual or any other capacity may hold
Specified Senior Indebtedness of the Company with the same rights it would have
if it were not Trustee. The Registrar and co-registrar and the Paying Agent may
do the same with like rights. The Trustee shall be entitled to all the rights
set forth in this Article 12 with respect to any Specified Senior Indebtedness
of the Company which may at any time be held by it, to the same extent as any
other holder of such Specified Senior Indebtedness of the Company; and nothing
in Article 7 shall deprive the Trustee of any of its rights as such holder.
Nothing in this Article 12 shall apply to claims of, or payments to, the Trustee
under or pursuant to Section 7.07.
SECTION 13.10 Distribution or Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Specified Senior
Indebtedness of the Company, the distribution may be made and the notice given
to their Representative (if any).
SECTION 13.11 Article XIII Not to Prevent Defaults Under the
Guaranty or Limit Right to Demand Payment. The failure to make a payment
pursuant to the Guaranty by reason of any provision in this Article shall not be
construed as preventing the occurrence of a default under the Guaranty. Nothing
in this Article XIII shall have any effect on the right of the Securityholders
or the Trustee to make a demand for payment on the Company pursuant to Article
XIII.
SECTION 13.12 Trustee Entitled to Rely. Upon any payment or
distribution pursuant to this Article XIII, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 13.02
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representative for the holders of Specified
Senior Indebtedness of the Company for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of such
Senior Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article XIII. In the event that the Trustee
determines, in good faith, that evidence is required with respect to the right
of any Person as a holder of Specified Senior Indebtedness of the Company to
participate in any payment or distribution pursuant to this Article XIII, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Specified Senior Indebtedness of
the Company held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and other facts pertinent to the
rights of such Person under this Article XIII, and, if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment. The
provisions of Sections 7.01 and 7.02 shall be applicable to all actions or
omissions of actions by the Trustee pursuant to this Article 12.
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SECTION 13.13 Trustee to Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Securityholders and the holders of
Specified Senior Indebtedness of the Company as provided in this Article XIII
and appoints the Trustee as attorney-in-fact for any and all such purposes.
SECTION 13.14 Trustee Not Fiduciary for Holders of Senior
Indebtedness of the Company. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Specified Senior Indebtedness of the Company
and shall not be liable to any such holders if it shall mistakenly pay over or
distribute to Securityholders or any other Person, money or assets to which any
holders of such Specified Senior Indebtedness shall be entitled by virtue of
this Article XIII or otherwise.
SECTION 13.15 Reliance by Holders of Specified Senior Indebtedness
of the Company on Subordination Provisions. Each Securityholder by accepting a
Security acknowledges and agrees that the foregoing subordination provisions
are, and are intended to be, an inducement and a consideration to each holder of
any Specified Senior Indebtedness of the Company, whether such Specified Senior
Indebtedness was created or acquired before or after the issuance of the
Security, to acquire and continue to hold, or to continue to hold, such
Specified Senior Indebtedness and such holder of Specified Senior Indebtedness
shall be deemed conclusively to have relied on such subordination provisions in
acquiring and continuing to hold, or in continuing to hold, such Specified
Senior Indebtedness.
ARTICLE XIV
Miscellaneous
SECTION 14.01 Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 14.02 Notices. Any notice or communication shall be in
writing and delivered in person or mailed by first-class mail addressed as
follows:
(a) if to the Issuers:
c/o Nakornthai Strip Mill Public Company Limited
Chonburi Industrial Estate (Bowin)
358 Moo 6
Highway 331
Bowin, Sriracha, Chonburi 20230
Thailand
Attention: John W. Schultes
if to the Trustee:
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The Chase Manhattan Bank
Global Trust Services
450 West 33rd Street, 15th Floor
New York, New York 10001-2697
Attention: Valerie Dunbar
The Issuers or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be
mailed to the Securityholder at the Securityholder's address as it appears on
the registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 14.03 Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA ss. 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Issuers, the Trustee, the Registrar and anyone else shall have
the protection of TIA ss. 312(c).
SECTION 14.04 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Issuers to the Trustee to take or refrain
from taking any action under this Indenture, the Issuers and the Company shall
furnish to the Trustee:
(1) an Officers' Certificate in form reasonably satisfactory to the
Trustee stating that, in the opinion of the signers, all conditions
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 reasonably satisfactory to the
Trustee stating that, in the opinion of such counsel, all such conditions
precedent have been complied with.
SECTION 14.05 Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the individual 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;
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(3) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 14.06 When Securities Disregarded. In determining whether
the Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Issuers or by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Issuers shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee knows are so owned shall be so disregarded. Also,
subject to the foregoing, only Securities outstanding at the time shall be
considered in any such determination.
SECTION 14.07 Rules by Trustee, Paying Agent and Registrar. The
Trustee may make reasonable rules for action by or a meeting of Securityholders.
The Registrar and the Paying Agent may make reasonable rules for their
functions.
SECTION 14.08 Legal Holidays. A "Legal Holiday" is a Saturday, a
Sunday or a day on which banking institutions are not required to be open in the
State of New York. If a payment date is a Legal Holiday, payment shall be made
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period. If a regular record date is a Legal Holiday,
the record date shall not be affected.
SECTION 14.09 Governing Law. THIS INDENTURE AND THE SECURITIES SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO
THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY. THE VARIOUS AGREEMENTS CREATING AND GOVERNING THE COLLATERAL
WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK AND THAILAND.
SECTION 14.10 Waiver of Immunities. To the extent that the Issuers
or the Company or any of their respective properties, assets or revenues may
have or may hereafter become entitled to, or have attributed to it, any right of
immunity, on the grounds of sovereignty or otherwise, from any legal action,
suit or proceeding, from the giving of any relief in any such legal action, suit
or proceeding, from setoff or counterclaim, from the competent jurisdiction of
any court, from service of process, from attachment upon or prior to judgment,
from attachment in aid of execution of judgment, or from execution of judgment,
or other legal process or proceeding for the giving of any relief or for the
enforcement of any judgment, in any competent jurisdiction in which proceedings
may at any time be commenced, with respect to its obligations under the
Securities, this Indenture, the Guaranty or any of the transactions contemplated
hereby
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or thereby, the Issuers and the Company hereby irrevocably and unconditionally
waives and agrees not to plead or claim, any such immunity and consent to such
relief and enforcement.
SECTION 14.11 Consent to Jurisdiction; Appointment of Agent for
Service of Process; Waiver of Jury Trial. (a) The Issuers and the Company agree
that any suit, action or proceeding against Issuers or the Company arising out
of or relating to the Securities, this Indenture, the Guaranty or any of the
transactions contemplated hereby or thereby may be instituted in any state or
U.S. federal court in the Borough of Manhattan, in the City of New York, and any
appellate court from any thereof, and each of them irrevocably submits to the
non-exclusive jurisdiction of such courts in any suit, action or proceeding. The
Issuers and the Company irrevocably waive, to the fullest extent permitted by
law, any objection to any suit, action, or proceeding that may be brought in
connection with the Securities, this Indenture, the Guaranty or any of the
transactions contemplated hereby or thereby, in such courts whether on the
grounds of venue, residence or domicile or on the ground that any such suit,
action or proceeding has been brought in an inconvenient forum. The Issuers and
the Company agree that final judgment in any such suit, action or proceeding
brought in such court shall be conclusive and binding upon the Issuers or the
Company, as the case may be, and may be enforced in any court to the
jurisdiction of which the Issuers or the Company, as the case may be, is subject
by a suit upon such judgment; provided that service of process is affected upon
the Issuers or the Company, as the case may be, in the manner provided by this
Section 14.11.
(b) The Issuers and the Company irrevocably appoints CT Corporation
System, with offices on the date hereof at 1633 Broadway, New York, New York
10019, as its authorized agent (the "Authorized Agent"), upon whom process may
be served in any suit, action or proceeding arising out of or relating to the
Securities, this Indenture, the Guaranty or the transactions contemplated hereby
or thereby which may be instituted in any state or U.S. Federal court in the
Borough of Manhattan, The City of New York, New York, and expressly accepts the
non-exclusive jurisdiction of any such court in respect of any such suit, action
or proceeding. Each of the Issuers and the Company hereby represents and
warrants that the Authorized Agent has accepted such appointment and has agreed
to act as said agent for service of process, and the Issuers and the Company
agree to take any and all action, including the filing of any and all documents
that may be necessary to continue such respective appointment in full force and
effect for a period of ten years from the date of this Indenture. Service of
process upon the Authorized Agent shall be deemed, in every respect, effective
service of process upon the Issuers and the Company. Notwithstanding the
foregoing, any action involving the Issuers or the Company arising out of or
relating to the Securities, this Indenture, the Guaranty or the transactions
contemplated hereby or thereby may be instituted in any court of competent
jurisdiction in any other jurisdiction.
(c) Each of the parties to this Indenture hereby irrevocably waives
all right to a trial by jury in any action, proceeding or counterclaim arising
out of or relating to the Securities, this Indenture, any Guaranty or the
transactions contemplated hereby or thereby.
SECTION 14.12 No Recourse Against Others. A director, officer,
employee or stockholder, as such, of the Issuers shall not have any liability
for any obligations of the Issuers under the Securities or this Indenture or for
any claim based on, in respect of or by reason of such
-90-
<PAGE>
obligations or their creation. By accepting a Security, each Securityholder
shall waive and release all such liability. The waiver and release shall be part
of the consideration for the issue of the Securities.
SECTION 14.13 Successors. All agreements of the Issuers and the
Company in this Indenture and the Securities shall bind its successors. All
agreements of the Trustee in this Indenture shall bind its successors.
SECTION 14.14 Multiple 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. One signed copy is enough to prove this
Indenture.
SECTION 14.15 Table of Contents; Headings. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
-91-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Indenture to be
duly executed as of the date first written above.
NSM STEEL (DELAWARE), INC.
By: /s/ John W. Schultes
---------------------------
Name: John W. Schultes
Title: President/CEO
NSM STEEL COMPANY, LTD.
By: /s/ John W. Schultes
---------------------------
Name: John W. Schultes
Title: President/CEO
NAKORNTHAI STRIP MILL PUBLIC COMPANY
LIMITED
By /s/ John W. Schultes
---------------------------
Name: John W. Schultes
Title: President/CEO
THE CHASE MANHATTAN BANK,
as Trustee
By: /s/ Valerie Dunbar
---------------------------
Name: Valerie Dunbar
Title: Vice President
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On December 4, 1997, before me personally came ______________, to me
known, who, being by me duly sworn, did depose and say that he is the
_______________ of United States Trust Company of New York, a New York banking
corporation and that he signed his name thereto on behalf of such corporation.
----------------------------
Notary Public in and for
the State of New York
Name:
-----------------------
My commission expires:
----------------------------
<PAGE>
Exhibit 4.04
EXECUTION COPY
================================================================================
WARRANT AGREEMENT
Dated as of
March 12, 1998
between
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
and
UNITED STATES TRUST COMPANY OF NEW YORK
as the Warrant Agent
---------------------------------------------
Warrants for
Ordinary Shares of
Nakornthai Strip Mill Public Company Limited
---------------------------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1 Definitions ...................................................... 1
SECTION 1.01. Definitions .............................................. 1
SECTION 1.02. Other Definitions ........................................ 4
SECTION 1.03. Rules of Construction .................................... 4
ARTICLE 2 Warrant Certificates ............................................. 5
SECTION 2.01. Form and Dating .......................................... 5
SECTION 2.02. Legends .................................................. 5
SECTION 2.03. Execution and Countersignature ........................... 7
SECTION 2.04. Global Warrants .......................................... 7
SECTION 2.05. Separation of Warrants and Notes ......................... 8
SECTION 2.06. Transfer and Exchange .................................... 8
SECTION 2.07. Replacement Certificates ................................. 9
SECTION 2.08. Temporary Certificates ................................... 9
SECTION 2.09. Cancelation .............................................. 10
SECTION 2.10. Book-Entry Provisions for the Rule 144A ..................
Global Warrant, the IAI Global Warrant and the ...........
Regulation S Global Warrant .............................. 10
SECTION 2.11. Special Transfer Provisions .............................. 12
ARTICLE 3 Exercise Terms ................................................... 15
SECTION 3.01. Exercise Price ........................................... 14
SECTION 3.02. Exercise Periods ......................................... 14
SECTION 3.03. Expiration ............................................... 14
SECTION 3.04. Manner of Exercise ....................................... 15
SECTION 3.05. Issuance of Warrant Shares ............................... 15
SECTION 3.06. Fractional Warrant Shares ................................ 16
SECTION 3.07. Reservation of Warrant Shares ............................ 16
SECTION 3.08. Compliance with Law ...................................... 17
SECTION 3.09. Foreign Shareholders ..................................... 17
ARTICLE 4 Antidilution Provisions .......................................... 21
SECTION 4.01. Changes in Ordinary Shares ............................... 19
SECTION 4.02. Cash Dividends and Other Distributions ................... 20
SECTION 4.03. Rights Issue ............................................. 21
SECTION 4.04 Issuance of Ordinary Shares or Rights .................... 22
SECTION 4.05. Combination; Liquidation ................................. 22
SECTION 4.06. Other Events ............................................. 23
SECTION 4.07. Superseding Adjustment ................................... 24
SECTION 4.08. Minimum Adjustment ....................................... 24
SECTION 4.09. Notice of Adjustment ..................................... 25
SECTION 4.10. Notice of Certain Transactions ........................... 25
SECTION 4.11. Adjustment to Warrant Certificate ........................ 26
ARTICLE 5 Registration Rights .............................................. 29
SECTION 5.01. Effectiveness of Registration Statement .................. 27
SECTION 5.02. Suspension ............................................... 28
SECTION 5.03. Blue Sky ................................................. 29
SECTION 5.04. Accuracy of Disclosure ................................... 29
SECTION 5.05. Indemnification .......................................... 30
SECTION 5.06. Additional Acts .......................................... 34
SECTION 5.07. Expenses ................................................. 34
ARTICLE 6 Warrant Agent .................................................... 37
SECTION 6.01. Appointment of Warrant Agent ............................. 35
SECTION 6.02. Rights and Duties of Warrant Agent ....................... 35
SECTION 6.03. Individual Rights of Warrant Agent ....................... 36
SECTION 6.04. Warrant Agent's Disclaimer ............................... 36
SECTION 6.05. Compensation and Indemnity ............................... 37
SECTION 6.06. Successor Warrant Agent .................................. 37
ARTICLE 7 Miscellaneous .................................................... 42
SECTION 7.01. SEC Reports and Other Information ........................ 39
SECTION 7.02. Persons Benefitting ...................................... 39
SECTION 7.03. Rights of Holders ........................................ 40
SECTION 7.04. Amendment ................................................ 40
SECTION 7.05. Notices .................................................. 41
SECTION 7.06. Governing Law ............................................ 41
SECTION 7.07. Successors ............................................... 41
SECTION 7.08. Multiple Originals ....................................... 42
SECTION 7.09. Table of Contents ........................................ 42
SECTION 7.10. Severability ............................................. 42
EXHIBIT A Form of Face of Warrant Certificate
EXHIBIT B Form of Transfer Certificate re: Transfers of Interests in
the IAI Global Warrant
EXHIBIT C Form of Transfer Certificate re: Transfers to Non-U.S.
Persons at Any Time
<PAGE>
WARRANT AGREEMENT dated as of March 12, 1998 (this
"Agreement"), between NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED,
a company incorporated under the laws of Thailand (the "Company"),
and UNITED STATES TRUST COMPANY OF NEW YORK, as Warrant Agent (the
"Warrant Agent").
The Company desires to issue the warrants (the "Warrants") described
herein. The Warrants will initially entitle the holders thereof (the "Holders")
to purchase in the aggregate 128,834,356 ordinary shares, par value 10 Baht per
share, of the Company (the "Ordinary Shares") in connection with an offering
(the "Units Offering") by NSM Steel (Delaware), Inc. and NSM Steel Company, Ltd.
(the "Note Issuers") and the Company (collectively, the "Issuers") of 203,500
units (the "Units"). Each Unit will consist of (i) one 12 1/4% Senior
Subordinated Mortgage Note Due 2008 of the Note Issuers in a principal amount at
maturity of U.S. $1,000(collectively, the "Notes") and (ii) 633.09266 Warrants.
Each Warrant will entitle the Holder to purchase one Ordinary Share, subject to
adjustment as provided herein.
The Warrants will not trade separately from the Notes until June 10,
1998, or such earlier date as Natwest Capital Markets Limited shall determine
(the "Separation Date").
The Company further desires the Warrant Agent to act on behalf of
the Company in connection with the issuance of the Warrants as provided herein
and the Warrant Agent is willing to so act.
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the holders of Warrants:
ARTICLE 1
Definitions
SECTION 1.01. Definitions.
"Affiliate" of any Person means (i) any other
<PAGE>
Person which, directly or indirectly, is in control of, is controlled by or is
under common control with such Person, or (ii) any other Person who is a
director or executive officer (A) of such Person, (B) of any subsidiary of such
Person or (C) of any Person described in clause (i) above. For purposes hereof,
(a) "control" of a Person means the power, direct or indirect, to direct or
cause the direction of the management and policies of such Person whether by
contract or otherwise and (b) beneficial ownership of 5% or more of the voting
common equity (on a fully diluted basis) or warrants to purchase such equity
(whether or not currently exercisable) of a Person shall be deemed to be in
control of such Person; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Baht" means Thai Baht.
"Board" means the Board of Directors of the Company or any committee
thereof duly authorized to act on behalf of such Board of Directors.
"Business Day" means each day that is not a Saturday, a Sunday or a
day on which banking institutions are not required to be open in the State of
New York and Thailand.
"Combination" means an event in which the Company consolidates with,
merges with or into, or sells all or substantially all of its assets to another
Person.
"Current Market Value" per Ordinary Share at any Trading Date means
the average trading price for the Ordinary Shares on that date, or if no
transaction takes place on such day, the average of the closing bid and offered
prices on such day, in either case as reported by the Stock Exchange of Thailand
on the foreign board.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exercise Date" means, for a given Warrant, the day on which such
Warrant is exercised pursuant to Section 3.04.
"Extraordinary Cash Dividend" means that portion, if any, of the
aggregate amount of all dividends paid by the Company on its Ordinary Shares in
any fiscal year that
<PAGE>
exceeds Baht 450 million.
"Indenture" means the Indenture dated as of March 1, 1998, among the
Issuers and the Trustee, with respect to the Notes, as it may be amended or
supplemented from time to time. "Issue Date" means the date on which Warrants
are initially issued.
"Non-U.S. Person" means a Person outside the United States.
"Note Depositary Agreement" means the Note Depositary Agreement
dated March 1, 1998, among the Issuers and The Chase Manhattan Bank, as
Book-Entry Depositary.
"Officer" means the Chairman of the Board, the President or any Vice
President of the Company.
"Ordinary Shares" means ordinary shares of the Company with a
nominal value of 10 baht or shares of any class or classes resulting from any
subdivision, consolidation or reclassification of those shares, which as between
themselves have no preference in respect of dividends or of amounts payable in
the event of liquidation or dissolution of the Company.
"Person" means any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"SEC" means the Securities and Exchange Commission, or any successor
agency or body performing substantially similar functions.
"Securities Act" means the Securities Act of 1933, as amended.
"Trading Date" means a date on which the Ordinary Shares trade
publicly on the Stock Exchange of Thailand in Bangkok.
"Trustee" means The Chase Manhattan Bank, or any successor trustee
under the Indenture.
<PAGE>
"Warrant Certificates" mean the registered certificates (including
without limitation, the global certificates) issued by the Company under this
Agreement representing the Warrants.
"Warrant Shares" mean the Ordinary Shares (and other securities)
issuable upon the exercise of the Warrants.
SECTION 1.02. Other Definitions.
Defined in
Term Section
---- -------
"ADR".................................. 3.09(g)
"Agent Members"........................ 2.10
"Agreement"............................ Recitals
"Cash Amount".......................... 3.09(c)
"Cashless Exercise".................... 3.04
"Certificate Register"................. 2.04
"Common Shelf Registration
Statement".......................... 5.01
"Company".............................. Recitals
"Designated Purchaser.................. 3.09(a)
"Exercise Price"....................... 3.01
"Expiration Date"...................... 3.02(b)
"Foreign Ownership Percentage"......... 3.09(b)
"Global Warrants"...................... 2.04
"Holders".............................. Recitals
"IAI".................................. 2.11(b)
"IAI Global Warrant"................... 2.04
"Indemnified Parties".................. 5.05
"Market Price"......................... 3.09(b)
"Note Issuers"......................... Recitals
"Notes"................................ Recitals
"QIB".................................. 2.04
"Registrar"............................ 3.07
"Registration Statements".............. 5.01
"Regulation S Global Warrant........... 2.04
"Rule 144A Global Warrant.............. 2.04
"Separability Legend".................. 2.02(b)
"Separation Date"...................... Recitals
"SET".................................. 3.09(c)
"Successor Company".................... 4.05(a)
"Transfer Agent"....................... 3.05
<PAGE>
"Units"................................ Recitals
"Units Offering"....................... Recitals
"Warrant Agent"........................ Recitals
"Warrants"............................. Recitals
"Warrant Shelf Registration
Statement".......................... 5.01
SECTION 1.03. Rules of Construction. Unless the text otherwise
requires:
(i) a defined term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles
as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation; and
(v) words in the singular include the plural and words in the plural
include the singular.
ARTICLE 2
Warrant Certificates
SECTION 2.01. Form and Dating. Each Warrant Certificate shall be
substantially in the form of Exhibit A, which is hereby incorporated in and
expressly made a part of this Agreement. The Warrant Certificates may have
notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company is subject, if any, or usage (provided that any
such notation, legend or endorsement is in a form acceptable to the Company) and
shall bear the legends required by Section 2.02. Each Warrant Certificate shall
be dated the date of its countersignature. The terms of the Warrant Certificate
set forth in Exhibit A are part of the terms of this Agreement.
SECTION 2.02. Legends. (a) Each Warrant Certificate shall bear the
following legend:
<PAGE>
THE ORDINARY SHARES, PAR VALUE 10 BAHT PER SHARE, OF THE COMPANY FOR
WHICH THIS WARRANT IS EXERCISABLE MAY NOT BE OFFERED OR SOLD IN THE
UNITED STATES ABSENT REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND ANY APPLICABLE STATE
SECURITIES LAWS OR AN APPLICABLE EXEMPTION FROM SUCH REGISTRATION
REQUIREMENTS. ACCORDINGLY, NO HOLDER SHALL BE ENTITLED TO EXERCISE
SUCH HOLDER'S WARRANTS AT ANY TIME UNLESS, AT THE TIME OF EXERCISE,
(i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT RELATING TO
THE ORDINARY SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAS
BEEN FILED WITH, AND DECLARED EFFECTIVE BY, THE SECURITIES AND
EXCHANGE COMMISSION (THE "SEC"), AND NO STOP ORDER SUSPENDING THE
EFFECTIVENESS OF SUCH REGISTRATION STATEMENT HAS BEEN ISSUED BY THE
SEC, OR (ii) THE ISSUANCE OF SUCH SHARES IS PERMITTED PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND ANY APPLICABLE STATE SECURITIES LAWS.
(b) Each Warrant Certificate issued prior to the Separation Date
shall bear the following legend (the "Separability Legend"):
THE WARRANTS REPRESENTED BY THIS CERTIFICATE WERE INITIALLY ISSUED
AS PART OF AN ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF ONE 12
1/4% SENIOR SUBORDINATED MORTGAGE NOTE DUE 2008 OF THE NOTE ISSUERS
(COLLECTIVELY, THE "NOTES") AND 633.09266 WARRANTS. PRIOR TO 5:00
P.M., NEW YORK CITY TIME, ON JUNE 10, 1998 OR SUCH EARLIER DATE AS
NATWEST CAPITAL MARKETS LIMITED MAY, IN ITS DISCRETION, DEEM
APPROPRIATE, THE WARRANTS REPRESENTED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED OR EXCHANGED SEPARATELY FROM, BUT MAY BE TRANSFERRED OR
EXCHANGED ONLY TOGETHER WITH, THE NOTES.
(c) Each Warrant Certificate, unless the Company otherwise instructs
the Warrant Agent in writing, shall bear the following legend:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD
<PAGE>
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR
(B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
"INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS
ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT WITHIN
THE TIME PERIOD REFERRED TO IN RULE 144(K) UNDER THE SECURITIES ACT AS IN
EFFECT WITH RESPECT TO SUCH TRANSFER, RESELL OR OTHERWISE TRANSFER THIS
SECURITY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) INSIDE
THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES
TO THE TRANSFER AGENT A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS
AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY
(THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE WARRANT AGENT) AND, IF
REQUESTED BY THE WARRANT AGENT, AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D)
OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE)
OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM
THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND; PROVIDED THAT AN INITIAL INVESTOR THAT IS AN INSTITUTIONAL
ACCREDITED INVESTOR, PURCHASING AS DESCRIBED IN CLAUSE (1)(B) ABOVE SHALL
NOT BE PERMITTED TO TRANSFER THIS SECURITY TO AN INSTITUTIONAL ACCREDITED
INVESTOR."
SECTION 2.03. Execution and Countersignature. One or more Officers
shall sign the Warrant Certificates for the Company by manual or facsimile
signature. If an Officer whose signature is on a Warrant Certificate no longer
holds that office at the time the Warrant Agent countersigns the Warrant
Certificate, the Warrant Certificate shall
<PAGE>
nevertheless be valid. A Warrant Certificate shall not be valid until an
authorized signatory of the Warrant Agent manually countersigns the Warrant
Certificate. Such authorized signature shall be conclusive evidence that the
Warrant Certificate has been countersigned under this Agreement.
The Warrant Agent shall initially countersign and deliver Warrant
Certificates entitling the Holders thereof to purchase in the aggregate not more
than 128,834,356 Warrant Shares upon a written order of the Company signed by
one or more Officers of the Company.
The Warrant Agent may appoint an agent reasonably acceptable to the
Company to countersign the Warrant Certificates. Unless limited by the terms of
such appointment, such agent may countersign Warrant Certificates whenever the
Warrant Agent may do so. Each reference in this Agreement to countersignature by
the Warrant Agent includes countersignature by such agent. Such agent will have
the same rights as the Warrant Agent for service of notices and demands.
SECTION 2.04. Global Warrants. Warrants offered and sold to a
"qualified institutional buyer" ("QIB") in reliance on Rule 144A under the
Securities Act shall be issued initially in the form of a single, permanent
global Warrant Certificate in definitive, fully registered form, substantially
in the form set forth in Exhibit A (the "Rule 144A Global Warrant"), deposited
with the Warrant Agent, as custodian for the Depository, duly executed by the
Company and countersigned by the Warrant Agent. The aggregate number of Warrants
represented by the Rule 144A Global Warrant may from time to time be increased
or decreased by adjustments made on the records of the Warrant Agent, as
custodian for the Depository, or its nominee, as hereinafter provided.
Warrants offered and sold to institutional accredited investors
shall be issued initially in the form of a single, permanent global Warrant
Certificate in definitive, fully registered form, substantially in the form set
forth in Exhibit A (the "IAI Global Warrant"), deposited with the Warrant Agent,
as custodian for the Depository, duly executed by the Company and countersigned
by the Warrant Agent. The aggregate number of Warrants represented by the IAI
Global Warrant may from time to time be increased
<PAGE>
or decreased by adjustments made on the records of the Warrant Agent, as
custodian for the Depository, or its nominee, as hereinafter provided.
Warrants offered and sold in offshore transactions in reliance on
Regulation S shall be issued initially in the form of a single, permanent global
Warrant Certificate in definitive, fully registered form, substantially in the
form set forth in Exhibit A (the "Regulation S Global Warrant"), deposited with
the Warrant Agent. The aggregate number of Warrants represented by the
Regulation S Global Warrant may from time to time be increased or decreased by
adjustments made on the records of the Warrant Agent, as custodian for the
Depository, as hereinafter provided. The Rule 144A Global Warrant and the
Regulation S Global Warrant are sometimes collectively referred to herein as the
"Global Warrants".
SECTION 2.05. Separation of Warrants and Notes. (a) Prior to the
Separation Date, no Warrant may be sold, assigned or otherwise transferred to
any Person unless, simultaneously with such transfer, the Warrant Agent receives
written confirmation from the Trustee for the Notes that the Holder thereof has
requested a transfer of the related Notes to the same transferee.
(b) On or after the Separation Date, the Holder of a Warrant
Certificate containing a Separability Legend may surrender such Warrant
Certificate accompanied by a written application to the Warrant Agent, duly
executed by the Holder thereof, for a new Warrant Certificate or certificates
not containing the Separability Legend.
SECTION 2.06. Transfer and Exchange. The Warrant Certificates shall
be issued in registered form only and shall be transferable only upon the
surrender of such Warrant Certificate for registration of transfer. When a
Warrant Certificate is presented to the Warrant Agent with a request to register
a transfer, the Warrant Agent shall, subject to Section 2.11, register the
transfer as requested if the reasonable requirements of the Warrant Agent and of
Section 8-401(1) of the Uniform Commercial Code as in effect in the State of New
York are met; provided, however, that prior to the Separation Date the Warrant
Agent shall not register a transfer of a Warrant Certificate and such transfer
will be void and of no effect unless the Notes that are a part of the same Unit
as the Warrants represented by
<PAGE>
the Warrant Certificate to be transferred are simultaneously transferred to the
same transferee. To permit the registration of transfers and exchanges, the
Company shall execute and the Warrant Agent shall countersign Warrant
Certificates at the Warrant Agent's request. All Warrant Certificates issued
upon any registration of transfer or exchange of Warrant Certificates shall be
valid obligations of the Company, entitled to the same benefits under this
Agreement as the Warrant Certificates surrendered upon such registration of
transfer or exchange. No service charge will be made to a Holder for any
registration of transfer or exchange upon surrender of any Warrant Certificate
at the office of the Warrant Agent maintained for that purpose. However, the
Company may require payment of a sum sufficient to cover any tax, assessment or
other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Warrant Certificates but not for any
exchange or original issuance (not involving a transfer) pursuant to Section
2.08, 3.04 or 3.05.
SECTION 2.07. Replacement Certificates. If a mutilated Warrant
Certificate is surrendered to the Warrant Agent or if the Holder of a Warrant
Certificate claims that the Warrant Certificate has been lost, destroyed or
wrongfully taken, the Company shall issue and the Warrant Agent shall
countersign a replacement Warrant Certificate if the reasonable requirements of
the Warrant Agent and of Section 8-405 of the Uniform Commercial Code as in
effect in the State of New York are met. If required by the Warrant Agent or the
Company, such Holder shall furnish an indemnity bond sufficient in the judgment
of the Company and the Warrant Agent to protect the Company and the Warrant
Agent from any loss which either of them may suffer if a Warrant Certificate is
replaced. The Company and the Warrant Agent may charge the Holder for their
expenses in replacing a Warrant Certificate. Every replacement Warrant
Certificate is an additional obligation of the Company.
SECTION 2.08. Temporary Certificates. Until definitive Warrant
Certificates are ready for delivery, the Company may prepare and the Warrant
Agent shall countersign temporary Warrant Certificates. Temporary Warrant
Certificates shall be substantially in the form of definitive Warrant
Certificates but may have variations that the Company considers appropriate for
temporary Warrant Certificates. Without unreasonable delay, the Company shall
prepare and the Warrant Agent shall countersign definitive
<PAGE>
Warrant Certificates and deliver them in exchange for temporary Warrant
Certificates.
SECTION 2.09. Cancelation. (a) In the event the Company shall
purchase or otherwise acquire Warrant Certificates, the same shall thereupon be
delivered to the Warrant Agent for cancelation.
(b) The Warrant Agent and no one else shall cancel and destroy all
Warrant Certificates surrendered for transfer, exchange, replacement, exercise
or cancelation and deliver a certificate of such destruction to the Company
unless the Company directs the Warrant Agent to deliver canceled Warrant
Certificates to the Company. The Company may not issue new Warrant Certificates
to replace Warrant Certificates to the extent they represent Warrants which have
been exercised or Warrants which the Company has purchased or otherwise
acquired.
SECTION 2.10. Book-Entry Provisions for the Rule 144A Global
Warrant, the IAI Global Warrant and the Regulation S Global Warrant. (a) The
Rule 144A Global Warrant, the IAI Global Warrant and the Regulation S Global
Warrant initially shall (i) be registered in the name of the Depository or the
nominee of the Depository, (ii) be delivered by the Warrant Agent to the
Depository or pursuant to the Depository's instructions or held by the Warrant
Agent as custodian for the Depository and (iii) bear legends as set forth in
Section 2.02 hereof. Members of, or participants in, the Depository ("Agent
Members") shall have no rights under this Agreement with respect to the Rule
144A Global Warrant, the IAI Global Warrant or the Regulation S Global Warrant,
as the case may be, held on their behalf by the Depository or by the Warrant
Agent as its custodian, or under the Rule 144A Global Warrant, the IAI Global
Warrant or the Regulation S Global Warrant, as the case may be, and the
Depository may be treated by the Company, the Warrant Agent and any agent of the
Company or the Warrant Agent as the absolute owner of such Rule 144A Global
Warrant, IAI Global Warrant or Regulation S Global Warrant, as the case may be,
for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Warrant Agent or any agent of the Company or the
Warrant Agent from giving effect to any written certification, proxy or other
authorization furnished by the Depository or impair, as between the Depository
and its Agent Members, the operation of customary practices of the Depository
governing
<PAGE>
the exercise of the rights of a holder of a beneficial interest in any Rule 144A
Global Warrant, IAI Global Warrant or Regulation S Global Warrant.
(b) Transfers of the Rule 144A Global Warrant, the IAI Global
Warrant and Regulation S Global Warrant shall be limited to transfers of such
Rule 144A Global Warrant, IAI Global Warrant or Regulation S Global Warrant in
whole, but not in part, to the Depository. Interests of beneficial owners in the
Rule 144A Global Warrant, the IAI Global Warrant and the Regulation S Global
Warrant may be transferred in accordance with the rules and procedures of the
Depository and the provisions of Section 2.11 hereof. Certificated Warrants
shall be transferred to all beneficial owners in exchange for their beneficial
interests in the Rule 144A Global Warrant, the IAI Global Warrant or the
Regulation S Global Warrant, if the Depository notifies the Company that it is
unwilling or unable to continue as Depositary for the Rule 144A Global Warrant,
the IAI Global Warrant or the Regulation S Global Warrant, as the case may be,
or the Depository ceases to be a "clearing agency" registered under the Exchange
Act and a successor depositary is not appointed by the Company within 90 days.
(c) Any beneficial interest in one of the Global Warrants that is
transferred to a Person who takes delivery in the form of an interest in the
other Global Warrant will, upon transfer, cease to be an interest in such Global
Warrant and become an interest in the other Global Warrant and, accordingly,
will thereafter be subject to all transfer restrictions, if any, and other
procedures applicable to beneficial interests in such other Global Warrant for
as long as it remains such in interest.
(d) In connection with the transfer of the entire Rule 144A Global
Warrant, IAI Global Warrant or Regulation S Global Warrant to beneficial owners
pursuant to paragraph (b) of this Section, the Rule 144A Global Warrant, the IAI
Global Warrant or the Regulation S Global Warrant, as the case may be, shall be
deemed to be surrendered to the Warrant Agent for cancelation, and the Company
shall execute, and the Warrant Agent shall countersign and deliver, to each
beneficial owner identified by the Depository in exchange for its beneficial
interest in the Rule 144A Global Warrant, the IAI Global Warrant or the
Regulation S Global Warrant, as the case may be, Certificated Warrants of
authorized denominations
<PAGE>
representing, in the aggregate, the number of Warrants theretofore represented
by the Rule 144A Global Warrant, the IAI Global Warrant or the Regulation S
Global Warrant, as the case may be.
(e) The registered holder of the Rule 144A Global Warrant, the IAI
Global Warrant and the Regulation S Global Warrant may grant proxies and
otherwise authorize any Person, including Agent Members and persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Agreement or the Warrants.
SECTION 2.11. Special Transfer Provisions. Unless and until a
registration statement is declared effective by the SEC that includes all
outstanding Warrants and Warrant Shares (as certified to the Warrant Agent by
the Company) or an opinion of counsel reasonably acceptable to the Warrant Agent
is delivered to the Warrant Agent to the effect that the transfer restriction
provisions set forth in this Section 2.11 are no longer applicable to the
Warrants, the following provisions shall apply:
(a) Transfers to QIBs. With respect to the registration of any
proposed transfer of Warrants to a QIB (excluding Non-U.S. Persons), the
transfer of an interest in the Rule 144A Global Warrant may be effected only
through the book-entry system maintained by the Depository.
(b) Transfers of Interests in the IAI Global Warrant. If the holder
of a beneficial interest in a Global Warrant wishes to transfer such interest to
an institutional "accredited investor" within the meaning of Rule 501(a)(1),
(2), (3) or (7) under the Securities Act (an "IAI"), such transfer may be
effected, subject to certain procedures, only upon receipt by the Depository of
a certificate in substantially the form set forth in Exhibit B given by the
transferor; provided, however, that an IAI that purchased Warrants from the
Initial Purchasers (as defined in the Indenture) in the Units Offering cannot
resell such initial interest in the Warrants to another IAI.
(c) Transfers of Interest in the Regulation S Global Warrant or
Certificated Warrants to U.S. Persons. With respect to any transfer of interests
in the Regulation S Global Warrant or Certificated Warrants to U.S. Persons:
<PAGE>
(i) on or prior to the date that is 40 calendar days after the Issue
Date, the Warrant Agent shall refuse to register such transfer; and
(ii) after such date, the Warrant Agent shall register such transfer
without requiring additional certification and shall deliver Warrant
Certificates that do not bear the legend in Section 2.02(c).
(d) Transfers to Non-U.S. Persons at Any Time. The following
provisions shall apply with respect to any transfer of Warrants to a Non-U.S.
Person:
(i) the Warrant Agent shall register any proposed transfer of
Warrants to a Non-U.S. Person only upon receipt of a certificate
substantially in the form of Exhibit C from the proposed transferor.
(ii) (x) If the proposed transferor is an Agent Member holding a
beneficial interest in the Rule 144A Global Warrant or the IAI Global
Warrant, upon receipt by the Warrant Agent of (A) the documents required
by paragraph (i) and (B) instructions in accordance with the Depository's
and the Warrant Agent's procedures, the Warrant Agent shall reflect on its
books and records the date and a decrease in the number of Warrants
represented by the Rule 144A Global Warrant or the IAI Global Warrant, as
the case may be, to be transferred, and (y) if the proposed transferee is
an Agent Member, upon receipt by the Warrant Agent of instructions given
in accordance with the Depository's and the Warrant Agent's procedures,
the Warrant Agent shall reflect on its books and records the date and an
increase in the number of Warrants represented by the Regulation S Global
Warrant in an amount equal to the number of Warrants represented by the
Rule 144A Global Warrant of the IAI Global Warrant, as the case may be, to
be transferred, and the Warrant Agent shall decrease the number of
Warrants represented by the Rule 144A Global Warrant or the IAI Global
Warrant, as the case may be.
(e) General. By its acceptance of any Warrants represented by a
Warrant Certificate bearing the legend in Section 2.02, each Holder of such
Warrants acknowledges the restrictions on transfer of such Warrants set forth in
this
<PAGE>
Agreement and in the legend and agrees that it will transfer such Warrants only
as provided in this Agreement. The Warrant Agent shall not register a transfer
of any Warrants unless such transfer complies with the requirements of this
Section 2.11. In connection with any transfer of Warrants, each Holder agrees by
its acceptance of Warrants to furnish the Warrant Agent or the Company such
certifications, legal opinions or other information as either of them may
reasonably require to confirm that such transfer is being made pursuant to an
exemption from, or a transaction not subject to, the registration requirements
of the Securities Act; provided, however, that the Warrant Agent shall not be
required to determine (but may rely on a determination made by the Company with
respect to) the sufficiency of any such certifications, legal opinions or other
information. The Warrant Agent's only obligation to enforce the transfer
restrictions of this Agreement shall be to require the certifications and
opinions specifically required by this Section 2.11 as a condition to a
transfer.
(f) Records. The Warrant Agent shall retain in accordance with its
customary procedures copies of all letters, notices and other written
communications received pursuant to Section 2.10 hereof or this Section 2.11.
The Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable written notice to the Warrant Agent.
ARTICLE 3
Exercise Terms
SECTION 3.01. Exercise Price. Each Warrant shall initially entitle
the Holder thereof, subject to adjustment pursuant to the terms of this
Agreement, to purchase one Ordinary Shares for a per share exercise price (the
"Exercise Price") of 10 Baht.
SECTION 3.02. Exercise Periods. (a) Subject to the terms and
conditions set forth herein, the Warrants shall be exercisable at any time or
from time to time on or after March 12, 1999; provided, however, that Holders of
Warrants will be able to exercise their Warrants only if (i) the Common Shelf
Registration Statement relating to the Warrant Shares is effective, or (ii) the
exercise of such
<PAGE>
Warrants is exempt from the registration requirements of the Securities Act, and
the Warrant Shares are qualified for sale or exempt from qualification under the
applicable securities laws of the states or other jurisdictions in which such
holders reside.
(b) No Warrant shall be exercisable after February 1, 2008 (the
"Expiration Date").
SECTION 3.03. Expiration. Each Warrant shall, subject to the rights
of Holders to receive cash payments pursuant to Section 3.09, terminate and
become void as of the earlier of (i) the close of business on the Expiration
Date or (ii) the date such Warrant is exercised. The Company shall give notice
not less than 90 and not more than 120 days prior to the Expiration Date to the
Holders of all then outstanding Warrants to the effect that the Warrants will
terminate and become void as of the close of business on the Expiration Date;
provided, however, that if the Company fails to give notice as provided in this
Section 3.03, the Warrants will nevertheless expire and become void on the
Expiration Date.
SECTION 3.04. Manner of Exercise. Warrants may be exercised upon (i)
surrender to the Warrant Agent at the office of the Warrant Agent of the related
Warrant Certificate, together with the form of election to purchase Ordinary
Shares on the reverse thereof duly filled in and signed by the Holder thereof,
and (ii) payment to the Company of the Exercise Price for each Warrant Share
issuable upon the exercise of such Warrants then exercised. Such payment shall
be made in cash or by certified or official bank check payable to the order of
the Company or by wire transfer of funds to an account designated by the Company
for such purpose. Subject to Section 3.02, the rights represented by the
Warrants shall be exercisable at the election of the Holders thereof either in
full at any time or from time to time in part and in the event that a Warrant
Certificate is surrendered for exercise of less than all the Warrants
represented by such Warrant Certificate at any time prior to the Expiration
Date, a new Warrant Certificate representing the remaining Warrants shall be
issued. The Warrant Agent shall countersign and deliver the required new Warrant
Certificates, and the Company, at the Warrant Agent's request, shall supply the
Warrant Agent with Warrant Certificates duly signed on behalf of the Company for
such purpose.
<PAGE>
SECTION 3.05. Issuance of Warrant Shares. Subject to Section 2.07,
upon the surrender of Warrant Certificates and payment of the per share Exercise
Price, as set forth in Section 3.04, the Company shall issue and cause the
Warrant Agent or, if appointed, a transfer agent for the Ordinary Shares
("Transfer Agent") to countersign and deliver to or upon the written order of
the Holder and in such name or names as the Holder may designate a certificate
or certificates for the number of full Warrant Shares so purchased upon the
exercise of such Warrants or other securities or property to which it is
entitled, registered or otherwise, to the Person or Persons entitled to receive
the same, together with cash as provided in Section 3.06 in respect of any
fractional Warrant Shares otherwise issuable upon such exercise. Such
certificate or certificates shall be deemed to have been issued and any Person
so designated to be named therein shall be deemed to have become a holder of
record of such Warrant Shares as of the date of the surrender of such Warrant
Certificates and payment of the per share Exercise Price, as aforesaid;
provided, however, that if, at such date, the transfer books for the Warrant
Shares shall be closed, the certificates for the Warrant Shares in respect of
which such Warrants are then exercised shall be issuable as of the date on which
such books shall next be opened and until such date the Company shall be under
no duty to deliver any certificates for such Warrant Shares; provided further,
however, that such transfer books, unless otherwise required by law, shall not
be closed at any one time for a period longer than 20 calendar days.
SECTION 3.06. Fractional Warrant Shares. The Company shall not be
required to issue fractional Warrant Shares on the exercise of Warrants (or
specified portions thereof). If more than one Warrant shall be exercised in full
at the same time by the same Holder, the number of full Warrant Shares which
shall be issuable upon such exercise shall be computed on the basis of the
aggregate number of Warrant Shares purchasable pursuant thereto. If any fraction
of a Warrant Share would, except for the provisions of this Section 3.06, be
issuable on the exercise of any Warrant (or specified portion thereof), the
Company shall pay an amount in cash equal to the Current Market Value per
Warrant Share, as determined on the day immediately preceding the date the
Warrant is exercised, multiplied by such fraction, computed to the nearest whole
cent.
<PAGE>
SECTION 3.07. Reservation of Warrant Shares. The Company shall at
all times keep reserved out of its authorized shares a number of Ordinary Shares
sufficient to provide for the exercise of all outstanding Warrants. The Transfer
Agent shall at all times until the Expiration Date reserve such number of
authorized shares as shall be required for such purpose. The Company will keep a
copy of this Agreement on file with the Transfer Agent. All Warrant Shares which
may be issued upon exercise of Warrants shall, upon issue, be fully paid,
nonassessable, free of preemptive rights and free from all taxes, liens, charges
and security interests with respect to the issue thereof. The Company will
supply such Transfer Agent with duly executed share certificates for such
purpose and will itself provide or otherwise make available any cash which may
be payable as provided in Section 3.06. The Company will furnish to such
Transfer Agent a copy of all notices of adjustments (and certificates related
thereto) transmitted to each Holder.
Before taking any action which would cause an adjustment pursuant to
Article 4 to reduce the Exercise Price below the then par value (if any) of the
Ordinary Shares, the Company shall take any and all corporate action which may,
in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable Ordinary Shares at the
Exercise Price as so adjusted.
The Company covenants that all Ordinary Shares which may be issued
upon exercise of Warrants will, upon issue, be fully paid, nonassessable, free
of preemptive rights, free from all taxes and free from all liens, charges and
security interests, created by or through the Company, with respect to the issue
thereof.
SECTION 3.08. Compliance with Law. Notwithstanding anything in this
Agreement to the contrary, in no event shall a Holder be entitled to exercise a
Warrant unless (i) the Company notifies the Warrant Agent in writing that a
registration statement filed under the Securities Act in respect of the issuance
of the Warrant Shares is then effective or (ii) in the opinion of counsel to the
Company addressed to the Warrant Agent, the exercise of such Warrants is exempt
from the registration requirements of the Securities Act and such securities are
qualified for sale or exempt from qualification under the applicable securities
laws of the States or other jurisdictions in which such
<PAGE>
Holder resides.
SECTION 3.09. Foreign Shareholders. (a) A Holder of Warrants that
requests that the Warrant Shares be issued in the name of a natural person who
is not a citizen of Thailand or is a company the majority of whose share capital
is owned by Persons who are not citizens of Thailand or is any other legal or
natural person not entitled under prevailing Thai laws and regulations to
acquire Ordinary Shares on the same basis as natural persons who are citizens of
Thailand (together, "non-Thai persons") may, but need not, also designate a
Person who is not a non-Thai person (the "Designated Purchaser") to whom some or
all of the Holder's entitlement to Warrant Shares can be transferred (for such
consideration as may be agreed between the transferor and the Designated
Purchaser) and to whom the relevant Warrant Shares may be issued in the
circumstances set out below.
(b) The Company shall issue Warrant Shares issuable on exercise of a
Warrant in the name of the Designated Purchaser except to the extent that as a
result of such issuance more than 49 percent of the outstanding Ordinary Shares
(or such other percentage of outstanding Ordinary Shares as the Company is from
time to time permitted pursuant to Thai law to register in the name of non-Thai
persons and whether higher or lower (such applicable percentage, the "Foreign
Ownership Percentage")) would be held by non-Thai persons, in which event the
Company shall issue the excess Warrant Shares in the name of the Designated
Purchaser or, if no such Designated Purchaser is so designated, shall pay the
Cash Amount (as defined below).
(c) If the Company is unable (or reasonably believes that it is
unable, in accordance with the conditions set forth in paragraph (b)) to issue
or deliver any of the Warrant Shares issuable upon exercise of any Warrant and
(unless a Designated Purchaser has been registered in the name of a non-Thai
person in accordance with such conditions), it shall issue such Warrant Shares
as it is so able to issue and register and shall, no later than the 45th
Business Day after the relevant Exercise Date, pay to the relevant Holder of
Warrants an amount (the "Cash Amount") equal to (i) the aggregate Market Price
(as hereinafter defined) of the number of remaining Warrant Shares to which the
holder of Warrants would have been
<PAGE>
entitled on the second trading day preceding the Exercise Date (converted into
U.S. Dollars at the middle rate quoted by the Bank of Thailand for the purchase
of U.S. Dollars with Baht on such date) less (ii) the per share Exercise Price
multiplied by the number of such remaining Warrant Shares. If a Market Price
based on the foreign board of the Stock Exchange of Thailand ("SET") is not
available on that second trading day, the latest available Market Price based on
the foreign board for the next three preceding trading days shall be taken, or
if none is available the Market Price based on the domestic board of the SET on
the second trading day preceding the Exercise Date shall be taken, failing which
the Market Price shall be taken for the most recent trading day before then for
which a Market Price is available. The Cash Amount shall be paid in accordance
with instructions specified in writing to the Warrant Agent.
The term "Market Price" for any trading day means the average
transaction price for the Company's Ordinary Shares on that day, or, if no
transaction takes place on such day, the average of the closing bid and offered
prices on such day, in either case as reported by the SET on the foreign board
or, as the case may be, the domestic board of the SET.
(d) If with respect to any Exercise Date more than one Holder of
Warrants has exercised its Warrants and the Company is not able to issue and
deliver any Warrant Shares as provided above, the Company shall treat all such
Holders of Warrants on a pro-rata basis to their respective entitlements and
shall issue such Warrant Shares as it is able (rounded down, if necessary, to
the nearest whole share) and pay the relevant Cash Amounts on a proportionate
basis among such Holders of Warrants.
(e) Notwithstanding the foregoing, the Company shall not pay the
Cash Amount in accordance with the foregoing provisions (but shall instead issue
the relevant Warrant Shares) if the Warrants may be converted into Warrant
Shares which may be issued to a Person or entity for the benefit of non-Thai
persons (provided that such benefit need not include voting rights), all in
accordance with any relevant Thai law and the Articles of Association of the
Company; provided that this paragraph shall not apply with respect to any Holder
of Warrants which specifies in writing to the Warrant Agent that such Warrant
Shares are not to be issued to such Person.
<PAGE>
(f) The Company hereby agrees that the Company shall not issue any
Ordinary Shares or other equity interests (other than Warrant Shares pursuant to
the exercise of Warrants) to any Holders if the Company is aware (taking into
account its ability to access relevant information) that the effect of such
issuance would be, assuming the immediate exercise of all then outstanding
Warrants by non-Thai persons, to cause the Company to exceed the Foreign
Ownership Percentage.
(g) The Company hereby agrees that, in the event the Company
establishes a facility for the deposit of Ordinary Shares and the issuance of
American Depositary Receipts ("ADRs"), the Company shall, subject to applicable
law, take all reasonable steps in connection with establishing such facility to
provide for the deposit of Warrant Shares therein and shall take such action as
is required pursuant to Section 7.04 to amend this Warrant Agreement to provide
Holders of Warrants with the right, at their election, to exercise their
Warrants for ADRs.
ARTICLE 4
Antidilution Provisions
SECTION 4.01. Changes in Ordinary Shares. In the event that at any
time or from time to time the Company shall (i) pay a dividend or make a
distribution on its Ordinary Shares in Ordinary Shares or other shares of its
authorized share capital, (ii) subdivide or split its outstanding Ordinary
Shares into a larger number of Ordinary Shares, (iii) combine its outstanding
Ordinary Shares into a smaller number of Ordinary Shares or (iv) increase or
decrease the number of Ordinary Shares outstanding by reclassification of its
Ordinary Shares, then the number of Ordinary Shares issuable upon exercise of
each Warrant immediately after the happening of such event shall be adjusted to
a number determined by multiplying the number of Ordinary Shares that such
Holder would have owned or have been entitled to receive upon exercise had such
Warrants been exercised immediately prior to the happening of the events
described above (or, in the case of a dividend or distribution of Ordinary
Shares or other shares, immediately prior to the record date therefor) by a
fraction, the numerator of which shall be the total number of Ordinary
<PAGE>
Shares outstanding immediately after the happening of the events described above
and the denominator of which shall be the total number of Ordinary Shares
outstanding immediately prior to the happening of the events described above;
and subject to Section 4.08, the Exercise Price for each Warrant shall be
adjusted to a number determined by dividing the Exercise Price immediately prior
to such event by such fraction. An adjustment made pursuant to this Section 4.01
shall become effective immediately after the effective date of such event,
retroactive to the record date therefor in the case of a dividend or
distribution in Ordinary Shares or other shares of the Company's authorized
share capital.
SECTION 4.02. Cash Dividends and Other Distributions. In the event
that at any time or from time to time the Company shall distribute to holders of
Ordinary Shares (i) any dividend or other distribution of cash, evidences of its
indebtedness, shares of its capital stock or any other properties or securities
or (ii) any options, warrants or other rights to subscribe for or purchase any
of the foregoing (other than, in each case, (w) the issuance of any rights under
a shareholder rights plan, (x) any dividend or distribution described in Section
4.01, (y) any rights, options, warrants or securities described in Section 4.03
and (z) any cash dividends or other cash distributions from current or retained
earnings other than Extraordinary Cash Dividends), then the number of Ordinary
Shares purchasable upon the exercise of each Warrant shall be increased to a
number determined by multiplying the number of Ordinary Shares issuable upon the
exercise of such Warrant immediately prior to the record date for any such
dividend or distribution by a fraction, the numerator of which shall be the
Current Market Value per Ordinary Share on the record date for such dividend or
distribution and the denominator of which shall be such Current Market Value per
Ordinary Share on the record date for such dividend or distribution less the sum
of (x) the amount of cash, if any, distributed per Ordinary Share and (y) the
fair value (as determined in good faith by the Board, whose determination shall
be evidenced by a board resolution filed with the Warrant Agent, a copy of which
will be sent to Holders upon request) of the portion, if any, of the
distribution applicable to one Ordinary Share consisting of evidences of
indebtedness, shares, securities, other property, warrants, options or
subscription or purchase rights; and subject to Section 4.08, the Exercise Price
shall be adjusted to a number determined by dividing the Exercise Price
immediately
<PAGE>
prior to such record date by the above fraction. Such adjustments shall be made
whenever any distribution is made and shall become effective as of the date of
distribution, retroactive to the record date for any such distribution. No
adjustment shall be made pursuant to this Section 4.02 which shall have the
effect of decreasing the number of Ordinary Shares issuable upon exercise of
each Warrant or increasing the Exercise Price.
SECTION 4.03. Rights Issue. In the event that at any time or from
time to time the Company shall issue rights, options or warrants entitling the
holders thereof to subscribe for Ordinary Shares, or securities convertible into
or exchangeable or exercisable for Ordinary Shares to all holders of Ordinary
Shares without any charge, entitling such holders to subscribe for or purchase
Ordinary Shares at a price per share that is lower at the record date for such
issuance than the then Current Market Value per Ordinary Share, the number of
Ordinary Shares purchasable upon the exercise of each Warrant shall be increased
to a number determined by multiplying the number of Ordinary Shares theretofore
issuable upon exercise of each Warrant by a fraction, the numerator of which
shall be the number of Ordinary Shares outstanding on the date of issuance of
such rights, options, warrants or securities plus the number of additional
Ordinary Shares offered for subscription or purchase or into or for which such
securities that are issued are convertible, exchangeable or exercisable, and the
denominator of which shall be the number of Ordinary Shares outstanding on the
date of issuance of such rights, options, warrants or securities plus the total
number of Ordinary Shares which the aggregate consideration expected to be
received by the Company (assuming the exercise or conversion of all such rights,
options, warrants or securities) would purchase at the then Current Market Value
per Ordinary Share. Subject to Section 4.08, in the event of any such
adjustment, the Exercise Price shall be adjusted to a number determined by
dividing the Exercise Price immediately prior to such date of issuance by the
aforementioned fraction. Such adjustment shall be made immediately after such
rights, options or warrants are issued and shall become effective, retroactive
to the record date for the determination of stockholders entitled to receive
such rights, options, warrants or securities. No adjustment shall be made
pursuant to this Section 4.03 which shall have the effect of decreasing the
number of Ordinary Shares purchasable upon exercise of each Warrant or of
increasing the Exercise
<PAGE>
Price.
SECTION 4.04 Issuance of Ordinary Shares or Rights. In the event
that at any time or from time to time the Company shall issue Ordinary Shares at
a price per share at the record date of such issuance that is less than the then
Current Market Value per Ordinary Share, the number of Ordinary Shares
purchasable upon the exercise of each Warrant shall be increased to a number
determined by multiplying the number of Ordinary Shares theretofore issuable
upon exercise of each Warrant by a fraction, the numerator of which shall be the
number of Ordinary Shares outstanding immediately after such sale or issuance
plus the number of additional Ordinary Shares offered for subscription or
purchase or into or for which such securities that are issued are convertible,
exchangeable or exercisable, and the denominator of which shall be the number of
Ordinary Shares outstanding immediately prior to such sale or issuance plus the
total number of Ordinary Shares which the aggregate consideration expected to be
received by the Company (assuming the exercise or conversion of all such rights,
options, warrants or securities, if any) would purchase at the then Current
Market Value per Ordinary Share; and subject to Section 4.08 the Exercise Price
shall be adjusted to a number determined by dividing the Exercise Price
immediately prior to such date of issuance by the aforementioned fraction. Such
adjustments shall be made whenever such rights, options or warrants or
convertible securities are issued. No adjustment shall be made pursuant to this
Section 4.04 which shall have the effect of decreasing the number of Ordinary
Shares issuable upon exercise of each warrant or of increasing the Exercise
Price.
SECTION 4.05. Combination; Liquidation. (a) Except as provided in
Section 4.05(b), in the event of a Combination, each Holder shall have the right
to receive upon exercise of the Warrants the kind and amount of Ordinary Shares
or other securities or property which such Holder would have been entitled to
receive upon or as a result of such Combination had such Warrant been exercised
immediately prior to such event. Unless paragraph (b) is applicable to a
Combination, the Company shall provide that the surviving or acquiring Person
(the "Successor Company") in such Combination will enter into an agreement with
the Warrant Agent confirming the Holders' rights pursuant to this Section
4.05(a) and providing for adjustments, which shall be as nearly equivalent as
may be practicable to the
<PAGE>
adjustments provided for in this Article 4. The provisions of this Section
4.05(a) shall similarly apply to successive Combinations involving any Successor
Company.
(b) In the event of (i) a Combination where consideration to the
holders of Ordinary Shares in exchange for their shares is payable solely in
cash or (ii) the dissolution, liquidation or winding-up of the Company, then the
holders of the Warrants shall be entitled to receive, upon surrender of their
Warrant Certificates, distributions on an equal basis with the holders of
Ordinary Shares or other securities issuable upon exercise of the Warrants, as
if the Warrants had been exercised immediately prior to such event, less the
Exercise Price.
In case of any Combination described in this Section 4.05(b), the
surviving or acquiring Person and, in the event of any dissolution, liquidation
or winding-up of the Company, the Company, shall deposit promptly with the
Warrant Agent the funds, if any, necessary to pay to the holders of the Warrants
the amounts to which they are entitled as described above. After such funds and
the surrendered Warrant Certificates are received, the Warrant Agent is required
to deliver a check in such amount as is appropriate (or, in the case of
consideration other than cash, such other consideration as is appropriate) to
such Person or Persons as it may be directed in writing by the Holders
surrendering such Warrants.
SECTION 4.06. Other Events. If any event occurs as to which the
foregoing provisions of this Article 4 are not strictly applicable or, if
strictly applicable, would not, in the good faith judgment of the Board, fairly
and adequately protect the purchase rights of the Warrants in accordance with
the essential intent and principles of such provisions, then such Board shall
make such adjustments in the application of such provisions, in accordance with
such essential intent and principles, as shall be reasonably necessary, in the
good faith opinion of such Board, to protect such purchase rights as aforesaid,
but in no event shall any such adjustment have the effect of increasing the
Exercise Price or decreasing the number of Ordinary Shares issuable upon
exercise of any Warrant.
SECTION 4.07. Superseding Adjustment. Upon the expiration of any
rights, options, warrants or conversion or exchange privileges which resulted in
adjustments pursuant
<PAGE>
to this Article 4, if any thereof shall not have been exercised, the number of
Warrant Shares issuable upon the exercise of each Warrant shall be readjusted
pursuant to the applicable section of Article 4 as if (A) the only Ordinary
Shares issuable upon exercise of such rights, options, warrants, conversion or
exchange privileges were the Ordinary Shares, if any, actually issued upon the
exercise of such rights, options, warrants or conversion or exchange privileges
and (B) Ordinary Shares actually issued, if any, were issuable for the
consideration actually received by the Company upon such exercise plus the
aggregate consideration, if any, actually received by the Company for the
issuance, sale or grant of all such rights, options, warrants or conversion or
exchange privileges whether or not exercised and the Exercise Price shall be
readjusted inversely; provided, however, that no such readjustment shall (except
by reason of an intervening adjustment under Section 4.01) have the effect of
decreasing the number of Warrant Shares purchasable upon the exercise of each
Warrant or increase the Exercise Price by an amount in excess of the amount of
the adjustment initially made in respect of the issuance, sale or grant of such
rights, options, warrants or conversion or exchange privileges.
SECTION 4.08. Minimum Adjustment. The adjustments required by the
preceding Sections of this Article 4 shall be made whenever and as often as any
specified event requiring an adjustment shall occur, except that no adjustment
of the Exercise Price or the number of Ordinary Shares issuable upon exercise of
Warrants that would otherwise be required shall be made unless and until such
adjustment either by itself or with other adjustments not previously made
increases or decreases by at least 1% the Exercise Price or the number of
Ordinary Shares issuable upon exercise of Warrants immediately prior to the
making of such adjustment. Any adjustment representing a change of less than
such minimum amount shall be carried forward and made as soon as such
adjustment, together with other adjustments required by this Article 4 and not
previously made, would result in a minimum adjustment. For the purpose of any
adjustment, any specified event shall be deemed to have occurred at the close of
business on the date of its occurrence. In computing adjustments under this
Article 4, fractional interests in Ordinary Shares shall be taken into account
to the nearest one-hundredth of a share.
SECTION 4.09. Notice of Adjustment. Whenever the
<PAGE>
Exercise Price or the number of Ordinary Shares and other property, if any,
issuable upon exercise of the Warrants is adjusted, as herein provided, the
Company shall deliver to the Warrant Agent a certificate of a firm of
independent accountants selected by the Board (who may be the regular
accountants employed by the Company) setting forth, in reasonable detail, the
event requiring the adjustment and the method by which such adjustment was
calculated (including a description of the basis on which (i) the Board
determined the fair value of any evidences of indebtedness, other securities or
property or warrants, options or other subscription or purchase rights and (ii)
the Current Market Value of the Ordinary Shares was determined, if either of
such determinations were required), and specifying the Exercise Price and the
number of Ordinary Shares issuable upon exercise of Warrants after giving effect
to such adjustment. The Company shall promptly cause the Warrant Agent to mail a
copy of such certificate to each Holder in accordance with Section 7.06. The
Warrant Agent shall be entitled to rely on such certificate and shall be under
no duty or responsibility with respect to any such certificate, except to
exhibit the same from time to time, to any Holder desiring an inspection thereof
during reasonable business hours. The Warrant Agent shall not at any time be
under any duty or responsibility to any Holder to determine whether any facts
exist which may require any adjustment of the Exercise Price or the number of
Ordinary Shares or other stock or property issuable on exercise of the Warrants,
or with respect to the nature or extent of any such adjustment when made, or
with respect to the method employed in making such adjustment or the validity or
value of any Ordinary Shares, evidences of indebtedness, warrants, options, or
other securities or property.
SECTION 4.10. Notice of Certain Transactions. In the event that the
Company shall propose to (a) pay any dividend payable in securities of any class
to the holders of its Ordinary Shares or to make any other non-cash dividend or
distribution to the holders of its Ordinary Shares, (b) offer the holders of its
Ordinary Shares rights to subscribe for or to purchase any securities
convertible into Ordinary Shares or shares of any class or any other securities,
rights or options, (c) issue any (i) Ordinary Shares, (ii) rights, options or
warrants entitling the holders thereof to subscribe for Ordinary Shares, or
(iii) securities convertible into or exchangeable or exercisable for Ordinary
Shares (in the case of (i),
<PAGE>
(ii) and (iii), if such issuance or adjustment would result in an adjustment
hereunder), (d) effect any capital reorganization, reclassification,
consolidation or merger, (e) effect the voluntary or involuntary dissolution,
liquidation or winding-up of the Company or (f) make a tender offer or exchange
offer with respect to the Ordinary Shares, the Company shall within 5 days send
to the Warrant Agent and the Warrant Agent shall within 5 days send the Holders
a notice (in such form as shall be furnished to the Warrant Agent by the
Company) of such proposed action or offer. Such notice shall be mailed by the
Warrant Agent to the Holders at their addresses as they appear in the
Certificate Register, which shall specify the record date for the purposes of
such dividend, distribution or rights, or the date such issuance or event is to
take place and the date of participation therein by the holders of Ordinary
Shares, if any such date is to be fixed, and shall briefly indicate the effect
of such action on the Ordinary Shares and on the number and kind of any other
shares and on other property, if any, and the number of shares of Ordinary
Shares and other property, if any, issuable upon exercise of each Warrant and
the Exercise Price after giving effect to any adjustment pursuant to Article 4
which will be required as a result of such action. Such notice shall be given as
promptly as possible and (x) in the case of any action covered by clause (a) or
(b) above, at least 10 days prior to the record date for determining holders of
the Ordinary Shares for purposes of such action or (y) in the case of any other
such action, at least 20 days prior to the date of the taking of such proposed
action or the date of participation therein by the holders of Ordinary Shares,
whichever shall be the earlier.
SECTION 4.11. Adjustment to Warrant Certificate. The form of Warrant
Certificate need not be changed because of any adjustment made pursuant to this
Article 4, and Warrant Certificates issued after such adjustment may state the
same Exercise Price and the same number of Ordinary Shares issuable upon
exercise of the Warrants as are stated in the Warrant Certificates initially
issued pursuant to this Agreement. The Company, however, may at any time in its
sole discretion make any change in the form of Warrant Certificate that it may
deem appropriate to give effect to such adjustments and that does not affect the
substance of the Warrant Certificate, and any Warrant Certificate thereafter
issued or countersigned, whether in exchange or substitution for an outstanding
Warrant Certificate or
<PAGE>
otherwise, may be in the form as so changed.
ARTICLE 5
Registration Rights
SECTION 5.01. Effectiveness of Registration Statement. Subject to
Section 5.02, the Company shall cause to be filed pursuant to Rule 415 (or any
successor provision) of the Securities Act not later than 90 days after the
Issue Date, a shelf registration statement relating to the offer and sale of the
Warrants by the Holders from time to time in accordance with the methods of
distribution elected by such holders and set forth in such registration
statement (the "Warrant Shelf Registration Statement"), and shall use its
reasonable best efforts to cause the Warrant Shelf Registration Statement to be
declared effective on or before 180 days after the Issue Date and a shelf
registration statement covering the issuance of Warrant Shares to the Holders
upon exercise of the Warrants by the Holders thereof (the "Common Shelf
Registration Statement", and together with the Warrant Shelf Registration
Statement, the "Registration Statements") and shall use its reasonable best
efforts to cause the Common Shelf Registration Statement to be declared
effective on or before 365 days after the Issue Date, and to cause each of the
Registration Statements to remain effective until the earliest of (i) such time
as all Warrants have been sold or exercised, as the case may be, (ii) the
Expiration Date and (iii) in the case of the Warrant Shelf Registration
Statement, until all Warrants can be sold without restriction under the
Securities Act. In connection with any Registration Statement, (i) the Company
shall furnish to the Warrant Agent, prior to the filing with the Commission, a
copy of any Registration Statement, and each amendment thereof and each
amendment or supplement, if any, to the prospectus included therein and shall
use its reasonable best efforts to reflect in each such document, when filed
with the Commission, such comments as the Warrant Agent may reasonably propose,
(ii) the Company shall furnish to each Holder, without charge, at least one copy
of any Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, and, if the Holder so requests in
writing, all exhibits thereto (including those incorporated by reference), (iii)
the Company shall, for so long as any Registration Statement is
<PAGE>
effective, deliver to each Holder, without charge, as many copies of the
prospectus (including each preliminary prospectus) included in such Registration
Statement and any amendment or supplement thereto as such Holder may reasonably
request, and the Company consents to the proper use of the prospectus therein
and any amendment or supplement thereto by each of the selling Holders in
connection with the offering and sale of the Warrants or the Warrant Shares, as
the case may be, covered by such prospectus and any amendment or supplement
thereto, (iv) the Company may require each Holder of Warrants to be sold
pursuant to the Warrant Shelf Registration Statement or to be exercised in
connection with the Common Shelf Registration Statement to furnish to the
Company such information regarding the Holder and the distribution of such
Warrants or Warrant Shares as the Company may from time to time reasonably
request for inclusion in such Registration Statement, (v) the Company shall, if
requested, promptly incorporate in a prospectus supplement or post-effective
amendment to such Registration Statement such information as a majority in
interest of the Holders reasonably agree should be included therein and shall
make all required filings of such prospectus supplement or post-effective
amendment as soon as notified of the matters to be incorporated in such
prospectus supplement or post-effective amendment, (vi) the Company shall enter
into such agreements (including underwriting agreements) as are appropriate,
customary and reasonably necessary in connection with any such Registration
Statement and (vii) the Company shall (A) make available all material customary
for reasonable due diligence examinations in connection with such Registration
Statements, (B) make such representations and warranties to the Holders of
Warrants and the underwriters, if any, as are customary and reasonable in
connection with such Registration Statements, (C) obtain such opinions of
counsel to the Company addressed to and reasonably satisfactory to the Holders
as are customary and reasonable in connection with such Registration Statements
and (D) obtain such "comfort" letters and updates thereof from the independent
certified public accountants of the Company addressed to the Holders as are
customary and reasonable in connection with such Registration Statements. The
Company will furnish the Warrant Agent with current prospectuses meeting the
requirements of the Securities Act in sufficient quantity to permit the Warrant
Agent to deliver, at the Company's expense, a prospectus to each Holder of a
Warrant upon the exercise thereof. The Company shall promptly inform the Warrant
<PAGE>
Agent in writing of any change in the status of the effectiveness or
availability of any Registration Statement.
SECTION 5.02. Suspension. During any consecutive 365-day period, the
Company shall be entitled to suspend the availability of each of the Warrant
Shelf Registration Statement and the Common Shelf Registration Statement for up
to two 45 consecutive-day periods (except during the 45 consecutive-day period
immediately prior to the Expiration Date) if the Company's Board determines in
the exercise of its reasonable judgment that there is a valid business purpose
for such suspension and provides written notice that such determination was made
by the Company's board and of the suspension of such Registration Statement to
the Warrant Agent and the Holders of the Warrants; provided, however, that in no
event shall the Company be required to disclose the business purpose for such
suspension if the Company determines in good faith that such business purpose
must remain confidential.
SECTION 5.03. Blue Sky. The Company shall use its reasonable best
efforts to register or qualify the Warrants and the Warrant Shares under all
applicable securities laws, blue sky laws or similar laws of all jurisdictions
in the United States and Canada in which any Holder of Warrants may or may be
deemed to purchase Warrants or Warrant Shares upon the exercise of Warrants and
shall use its reasonable best efforts to maintain such registration or
qualification through the earliest of (i) such time as all Warrants have been
exercised, (ii) the Expiration Date and (iii) in the case of the Warrant Shelf
Registration Statement, until all Warrants can be sold without restriction under
the Securities Act; provided, however, that the Company shall not be required to
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 5.03 or to take any action
which would subject it to general service of process or to taxation in any such
jurisdiction where it is not then so subject.
SECTION 5.04. Accuracy of Disclosure. The Company represents and
warrants to each Holder and agrees for the benefit of each Holder that (i) each
of the Warrant Shelf Registration Statement and the Common Shelf Registration
Statement and any amendment thereto will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to
<PAGE>
make the statements contained therein not misleading; and (ii) each of the
prospectus furnished to such Holder for delivery in connection with the sale of
Warrants and the prospectus delivered to such Holder upon the exercise of
Warrants and the documents incorporated by reference therein will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the Company shall have no liability under
clauses (i) or (ii) of this Section 5.04 with respect to any such untrue
statement or omission made in any Registration Statement in reliance upon and in
conformity with information furnished to the Company by or on behalf of the
Holders specifically for inclusion therein.
SECTION 5.05. Indemnification. (a) In connection with any
Registration Statement, the Company agrees to indemnify and hold harmless each
Holder of the Warrants and each person, if any, who controls such Holder within
the meaning of the Securities Act or the Exchange Act (each Holder and such
controlling persons being referred to collectively as the "Indemnified Parties")
from and against any losses, claims, damages or liabilities, joint or several,
or any actions in respect thereof (including but not limited to any losses,
claims, damages, liabilities or actions relating to purchases and sales of the
Warrants or the Warrant Shares) to which each Indemnified Party may become
subject under the Securities Act, the Exchange Act or otherwise, insofar as such
losses, claims, damages, liabilities or actions arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
such Registration Statement or prospectus or in any amendment or supplement
thereto, or arise out of, or are based upon, the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, and shall reimburse, as incurred, the Indemnified Parties
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action in
respect thereof; provided, however, that (i) the Company shall not be liable in
any such case to the extent that such loss, claim, damage or liability arises
out of or is based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in such Registration Statement or any
<PAGE>
preliminary or final prospectus or in any amendment or supplement thereto in
reliance upon and in conformity with written information pertaining to such
Holder and furnished to the Company by or on behalf of such Holder specifically
for inclusion therein, (ii) with respect to any untrue statement or omission or
alleged untrue statement or omission made in any prospectus relating to such
Registration Statement, the indemnity agreement contained in this subsection (a)
shall not inure to the benefit of any Person as to which there is a prospectus
delivery requirement (a "Delivering Seller") that sold the Securities to the
Person asserting any such losses, claims, damages or liabilities to the extent
that any such loss, claim, damage or liability of such Delivering Seller results
from the fact that there was not sent or given to such Person, on or prior to
the written confirmation of such sale, a copy of the relevant prospectus, as
amended and supplemented, provided that (I) the Company shall have previously
furnished copies thereof to such Delivering Seller in accordance with this
Agreement and (II) such furnished prospectus, as amended and supplemented, would
have corrected any such untrue statement or omission or alleged untrue statement
or omission, and (iii) this indemnity agreement will be in addition to any
liability which the Company may otherwise have to such Indemnified Party. The
Company shall also indemnify underwriters, selling brokers, dealer-managers and
similar securities industry professionals participating in the distribution (in
each case as described in such Registration Statement), their officers and
directors and each Person who controls such Persons within the meaning of the
Securities Act or the Exchange Act to the same extent as provided above with
respect to the indemnification of the Holders of the Securities if requested by
such Holders.
(b) In connection with any Registration Statement, each Holder of
the Warrants, severally and not jointly, will indemnify and hold harmless the
Company and each Person, if any, who controls the Company within the meaning of
the Securities Act or the Exchange Act from and against any losses, claims,
damages or liabilities or any actions in respect thereof to which the Company or
any such controlling person may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities
or actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in such Registration Statement or
preliminary or final prospectus or in any amendment or
<PAGE>
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information pertaining to such Holder and
furnished to the Company by or on behalf of such Holder specifically for
inclusion therein; and, subject to the limitation set forth immediately
preceding this clause, shall reimburse, as incurred, the Company for any legal
or other expenses reasonably incurred by the Company or any such controlling
person in connection with investigating or defending any loss, claim, damage,
liability or action in respect thereof. This indemnity agreement will be in
addition to any liability which such Holder may otherwise have to the Company or
any of its controlling persons.
(c) Promptly after receipt by an indemnified party under this
section of notice of the commencement of any action or proceeding (including a
governmental investigation), such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this section, notify
the indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party will not, in any event, relieve the indemnifying
party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above, except to the
extent that it is prejudiced or harmed in any material respect by failure to
give such prompt notice. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with one counsel (and local counsel as
necessary) reasonably satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof the indemnifying party will not
be liable to such indemnified party under this section for any legal or other
expenses, other than reasonable costs of investigation, subsequently incurred by
such indemnified party in connection with the defense thereof. No indem-
<PAGE>
nifying party shall, without the prior written consent of the indemnified party,
not to be unreasonably withheld, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action. No indemnifying party shall be liable for any amounts paid in
settlement of any action or claim without its written consent, which consent
shall not be unreasonably withheld.
(d) If the indemnification provided for in this section is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a) or (b) above for any reason other than as provided in subsection
(c) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to in subsection (a) or (b)
above (i) in such proportion as is appropriate to reflect the relative benefits
received by the indemnifying party or parties on the one hand and the
indemnified party on the other or (ii) if the allocation provided by the
foregoing clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the indemnifying party or parties on
the one hand and the indemnified party on the other in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof) as well as any other relevant
equitable considerations. The relative fault of the parties shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company on the one hand or
such Holder or such other indemnified person, as the case may be, on the other,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid by
an indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or
<PAGE>
claim which is the subject of this subsection (d). Notwithstanding any other
provision of this Section 5(d), the Holders shall not be required to contribute
any amount in excess of the amount by which the net proceeds received by such
Holders from the sale of the Warrants pursuant to the Warrant Shelf Registration
Statement or the Warrant Shares pursuant to the Common Shelf Registration
Statement exceeds the amount of damages which such Holders would have otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. For purposes of this paragraph (d), each officer, director,
employee, representative and agent of an indemnified party and each Person, if
any, who controls such indemnified party within the meaning of the Securities
Act or the Exchange Act shall have the same rights to contribution as such
indemnified party, and each officer, director, employee, representative and
agent of the Company and each person, if any, who controls the Company within
the meaning of the Securities Act or the Exchange Act shall have the same rights
to contribution as the Company.
(e) The agreements contained in this section shall survive the sale
of the Warrants pursuant to the Warrant Shelf Registration Statement and the
sale of the Warrant Shares pursuant to the Common Shelf Registration Statement,
as the case may be, and shall remain in full force and effect, regardless of any
termination or cancelation of this Agreement or any investigation made by or on
behalf of any indemnified party.
SECTION 5.06. Additional Acts. If the sale of Warrants or the
issuance or sale of any Ordinary Shares or other securities issuable upon the
exercise of the Warrants requires registration or approval of any governmental
authority (other than the registration requirements under the Securities Act),
or the taking of any other action under the laws of the United States of America
or any political subdivision thereof before such securities may be validly
offered or sold in compliance with such laws, then the Company covenants that it
will, in good faith and as expeditiously as reasonably possible, endeavor to
secure and maintain such registration or approval or to take such other action,
as the case may be. In that connection, the Company
<PAGE>
represents that the Warrants have been issued by the Company in reliance on a
private placement exemption according to which sales to certain qualified
institution investors provide an exemption from the requirement to file a
registration statement with the Securities and Exchange Commission of Thailand.
The Company covenants that, in the event the Company loses its eligibility for
such private placement exemption, it will, in good faith and as expeditiously as
reasonably possible, endeavor to file such a registration statement with the
Securities and Exchange Commission of Thailand.
SECTION 5.07. Expenses. All expenses incident to the Company's
performance of or compliance with its obligations under this Article 5 will be
borne by the Company, including without limitation: (i) all SEC, stock exchange
or National Association of Securities Dealers, Inc. registration and filing
fees, (ii) all reasonable fees and expenses incurred in connection with
compliance with state securities or blue sky laws, (iii) all expenses of any
Persons incurred by or on behalf of the Company in preparing or assisting in
preparing, printing and distributing the Warrant Shelf Registration Statement,
the Common Shelf Registration Statement or any other registration statement,
prospectus, any amendments or supplements thereto and other documents relating
to the performance of and compliance with this Article 5, (iv) the fees and
disbursements of the Warrant Agent, (v) the fees and disbursements of counsel
for the Company and the Warrant Agent and (vi) the fees and disbursements of the
independent public accountants of the Company, including the expenses of any
special audits or comfort letters required by or incident to such performance
and compliance.
ARTICLE 6
Warrant Agent
SECTION 6.01. Appointment of Warrant Agent. The Company hereby
appoints the Warrant Agent to act as agent for the Company in accordance with
the provisions of this Agreement and the Warrant Agent hereby accepts such
appointment.
SECTION 6.02. Rights and Duties of Warrant Agent.
(a) Agent for the Company. In acting under this Warrant
<PAGE>
Agreement and in connection with the Warrant Certificates, the Warrant Agent is
acting solely as agent of the Company and does not assume any obligation or
relationship or agency or trust for or with any of the Holders of Warrant
Certificates or beneficial owners of Warrants.
(b) Counsel. The Warrant Agent may consult with counsel satisfactory
to it (who may be counsel to the Company), and the advice of such counsel shall
be full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in accordance with
the advice of such counsel.
(c) Documents. The Warrant Agent shall be protected and shall incur
no liability for or in respect of any action taken or thing suffered by it in
reliance upon any Warrant Certificate, notice, direction, consent, certificate,
affidavit, statement or other paper or document reasonably believed by it to be
genuine and to have been presented or signed by the proper parties.
(d) No Implied Obligations. The Warrant Agent shall be obligated to
perform only such duties as are specifically set forth herein and in the Warrant
Certificates, and no implied duties or obligations of the Warrant Agent shall be
read into this Agreement or the Warrant Certificates. The Warrant Agent shall
not be under any obligation to take any action hereunder which may tend to
involve it in any expense or liability for which it does not receive indemnity
if such indemnity is reasonably requested. The Warrant Agent shall not be
accountable or under any duty or responsibility for the use by the Company of
any of the Warrant Certificates countersigned by the Warrant Agent and delivered
by it to the Holders or on behalf of the Holders pursuant to this Agreement or
for the application by the Company of the proceeds of the Warrants. The Warrant
Agent shall have no duty or responsibility in case of any default by the Company
in the performance of its covenants or agreements contained herein or in the
Warrant Certificates or in the case of the receipt of any written demand from a
Holder with respect to such default, including any duty or responsibility to
initiate or attempt to initiate any proceedings at law or otherwise.
(e) Not Responsible for Adjustments or Validity of Shares. The
Warrant Agent shall not at any time be under any duty or responsibility to any
Holder to determine
<PAGE>
whether any facts exist that may require an adjustment of the number of Ordinary
Shares issuable upon exercise of each Warrant or the Exercise Price, or with
respect to the nature or extent of any adjustment when made or with respect to
the method employed or provided to be employed herein or in any supplemental
agreement in making the same. The Warrant Agent shall not be accountable with
respect to the validity or value of any Warrant, any Ordinary Shares or of any
securities or property which may at any time be issued or delivered upon the
exercise of any Warrant or upon any adjustment pursuant to Article 4, and it
makes no representation with respect thereto. The Warrant Agent shall not be
responsible for any failure of the Company to make any cash payment or to issue,
transfer or deliver any Ordinary Shares or share certificates upon the surrender
of any Warrant Certificate for the purpose of exercise or upon any adjustment
pursuant to Article 4, or to comply with any of the covenants of the Company
contained in this Agreement or the Warrants.
SECTION 6.03. Individual Rights of Warrant Agent. The Warrant Agent
and any shareholder, director, officer or employee of the Warrant Agent may buy,
sell or deal in any of the Warrants or other securities of the Company or its
affiliates or become pecuniarily interested in transactions in which the Company
or its affiliates may be interested, or contract with or lend money to the
Company or its affiliates or otherwise act as fully and freely as though it were
not the Warrant Agent under this Agreement. Nothing herein shall preclude the
Warrant Agent from acting in any other capacity for the Company or for any other
legal entity.
SECTION 6.04. Warrant Agent's Disclaimer. The Warrant Agent shall
not be responsible for and makes no representation as to the validity or
adequacy of this Agreement or the Warrant Certificates and it shall not be
responsible for any statement in this Agreement or the Warrant Certificates
other than its countersignature thereon.
SECTION 6.05. Compensation and Indemnity. The Company and the
Warrant Agent have entered into an agreement pursuant to which the Company
agrees to pay the Warrant Agent from time to time reasonable compensation for
its services and to reimburse the Warrant Agent upon request for all reasonable
out-of-pocket expenses incurred by it, including the reasonable compensation and
expenses of the
<PAGE>
Warrant Agent's agents and counsel. The Company shall indemnify the Warrant
Agent against any loss, liability or expense (including agents' and attorneys'
fees and expenses) incurred by it without negligence or bad faith on its part
arising out of or in connection with the acceptance or performance of its duties
under this Agreement. The Warrant Agent shall notify the Company promptly of any
claim for which it may seek indemnity. The Company need not reimburse any
expense or indemnify against any loss or liability incurred by the Warrant Agent
through wilful misconduct, negligence or bad faith. The Company's payment
obligations pursuant to this Section 6.05 shall survive the resignation or
removal of the Warrant Agent or the termination of this Agreement.
To secure the Company's payment obligations under this Agreement,
the Warrant Agent shall have a lien prior to the Holders on all money or
property held or collected by the Warrant Agent.
SECTION 6.06. Successor Warrant Agent. (a) The Company to Provide
Warrant Agent. The Company agrees for the benefit of the Holders that there
shall at all times be a Warrant Agent hereunder until all the Warrants have been
exercised or are no longer exercisable.
(b) Resignation and Removal. The Warrant Agent may at any time
resign by giving written notice to the Company of such intention on its part,
specifying the date on which its desired resignation shall become effective;
provided, however, that such date shall not be less than 60 days after the date
on which such notice is given unless the Company otherwise agrees. The Warrant
Agent hereunder may be removed at any time by the filing with it of an
instrument in writing signed by or on behalf of the Company and specifying such
removal and the date when it shall become effective, which date shall not be
less than 60 days after such notice is given unless the Warrant Agent otherwise
agrees. Any removal under this Section 6.06 shall take effect upon the
appointment by the Company as hereinafter provided of a successor Warrant Agent
(which shall be a bank or trust company authorized under the laws of the
jurisdiction of its organization to exercise corporate trust powers) and the
acceptance of such appointment by such successor Warrant Agent.
(c) The Company to Appoint Successor. In the
<PAGE>
event that at any time the Warrant Agent shall resign, or shall be removed, or
shall become incapable of acting, or shall be adjudged a bankrupt or insolvent,
or shall commence a voluntary case under Federal bankruptcy laws, as now or
hereafter constituted, or under any other applicable Federal or state
bankruptcy, insolvency or similar law, or shall consent to the appointment of or
taking possession by a receiver, custodian, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Warrant Agent or its property or
affairs, or shall make an assignment for the benefit of creditors, or shall
admit in writing its inability to pay its debts generally as they become due, or
shall take corporate action in furtherance of any such action, or a decree or
order for relief by a court having jurisdiction in the premises shall have been
entered in respect of the Warrant Agent in an involuntary case under the Federal
bankruptcy laws, as now or hereafter constituted, or any other applicable
Federal or State bankruptcy, insolvency or similar law, or a decree order by a
court having jurisdiction in the premises shall have been entered for the
appointment of a receiver, custodian, liquidator, assignee, trustee,
sequestrator (or similar official) of the Warrant Agent or of its property or
affairs, or any public officer shall take charge or control of the Warrant Agent
or of its property or affairs for the purpose of rehabilitation, conservation,
winding up or liquidation, a successor Warrant Agent, qualified as aforesaid,
shall be appointed by the Company by an instrument in writing filed with the
successor Warrant Agent. Upon the appointment as aforesaid of a successor
Warrant Agent and acceptance by the successor Warrant Agent of such appointment,
the Warrant Agent shall cease to be the Warrant Agent hereunder; provided,
however, that in the event of the resignation of the Warrant Agent hereunder,
such resignation shall be effective on the earlier of (i) the date specified in
the Warrant Agent's notice of resignation and (ii) the appointment and
acceptance of a successor Warrant Agent hereunder.
(d) Successor To Expressly Assume Duties. Any successor Warrant
Agent appointed hereunder shall execute, acknowledge and deliver to its
predecessor and to the Company an instrument accepting such appointment
hereunder, and thereupon such successor Warrant Agent, without any further act,
deed or conveyance, shall become vested with all the rights and obligations of
such predecessor with like effect as if originally named as Warrant Agent
hereunder, and such predecessor, upon payment of its charges and
<PAGE>
disbursements then unpaid, shall thereupon become obligated to transfer, deliver
and pay over, and such successor Warrant Agent shall be entitled to receive, all
monies, securities and other property on deposit with or held by such
predecessor, as Warrant Agent hereunder.
(e) Successor by Merger. Any corporation into which the Warrant
Agent hereunder may be merged or consolidated, or any corporation resulting from
any merger or consolidation to which the Warrant Agent shall be a party, or any
corporation to which the Warrant Agent shall sell or otherwise transfer all or
substantially all the assets and business of the Warrant Agent, provided that it
shall be qualified as aforesaid, shall be the successor Warrant Agent under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto.
ARTICLE 7
Miscellaneous
SECTION 7.01. SEC Reports and Other Information. Notwithstanding
that the Company may not be subject to the reporting requirements of Section 13
or 15(d) of the Exchange Act, the Company shall file with the SEC and thereupon
provide the Warrant Agent and Holders with such annual reports and such
information, documents and other reports as are specified in Sections 13 and
15(d) of the Exchange Act and applicable to a U.S. corporation subject to such
Sections, such information, documents and other reports to be so filed and
provided at the times specified for the filing of such information, documents
and reports under such Sections.
SECTION 7.02. Persons Benefitting. Nothing in this Agreement is
intended or shall be construed to confer upon any Person other than the Company,
the Warrant Agent and the Holders any right, remedy or claim under or by reason
of this Agreement or any part hereof.
SECTION 7.03. Rights of Holders. Except as otherwise required by
law, Holders of unexercised Warrants are not entitled to (i) receive dividends
or other distributions, (ii) receive notice of or vote at any meeting of the
shareholders, (iii) consent to any action of the shareholders, (iv) receive
notice as shareholders of any
<PAGE>
other proceedings of the Company, (v) exercise any preemptive rights or (vi)
exercise any other rights whatsoever as shareholders of the Company.
SECTION 7.04. Amendment. This Agreement may be amended by the
parties hereto without the consent of any Holder for the purpose of curing any
ambiguity, or of curing, correcting or supplementing any defective provision
contained herein or adding or changing any other provisions with respect to
matters or questions arising under this Agreement as the Company and the Warrant
Agent may deem necessary or desirable (including without limitation any addition
or modification to provide for compliance with the transfer restrictions set
forth herein) or to provide holders of Warrants the right to exercise their
Warrants for ADRs; provided, however, that such action shall not adversely
affect the rights of any of the Holders. Any amendment or supplement to this
Agreement that has an adverse effect on the interests of the Holders shall
require the written consent of the Holders of a majority of the then outstanding
Warrants. The consent of each Holder affected shall be required for any
amendment pursuant to which the Exercise Price would be increased or the number
of Warrant Shares issuable upon exercise of Warrants would be decreased (other
than pursuant to adjustments provided herein). In determining whether the
Holders of the required number of Warrants have concurred in any direction,
waiver or consent, Warrants owned by the Company or by any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company shall be disregarded and deemed not to be outstanding,
except that, for the purpose of determining whether the Warrant Agent shall be
protected in relying on any such direction, waiver or consent, only Warrants
which the Warrant Agent knows are so owned shall be so disregarded. Also,
subject to the foregoing, only Warrants outstanding at the time shall be
considered in any such determination.
SECTION 7.05. Notices. Any notice or communication shall be in
writing and delivered in Person or mailed by first-class mail addressed as
follows:
if to the Company:
Nakornthai Strip Mill Public Company Limited
Chonburi Industrial Estate (Bowin)
358 M006, Highway 331, Sriarcha
<PAGE>
Chonburi 20230 Thailand
Attention: John W. Schultes
with a copy to:
White & Case L.L.P.
1155 Avenue of the Americas
New York, NY 10036
Attention: Timothy Goodell, Esq.
if to the Warrant Agent:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attention: Corporate Trust Department
The Company or the Warrant Agent by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Holder shall be mailed to
the Holder at the Holder's address as it appears on the Certificate Register and
shall be sufficiently given if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any defect
in it shall not affect its sufficiency with respect to other Holders. If a
notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 7.06. Governing Law. The laws of the State of New York shall
govern this Agreement and the Warrant Certificates.
SECTION 7.07. Successors. All agreements of the Company in this
Agreement and the Warrant Certificates shall bind its successors. All agreements
of the Warrant Agent in this Agreement shall bind its successors.
SECTION 7.08. Multiple Originals. The parties may sign any number of
copies of this Agreement. Each signed copy shall be an original, but all of them
together represent the same agreement. One signed copy is enough to prove this
Agreement.
<PAGE>
SECTION 7.09. Table of Contents. The table of contents and headings
of the Articles and Sections of this Agreement have been inserted for
convenience of reference only, are not intended to be considered a part hereof
and shall not modify or restrict any of the terms or provisions hereof.
SECTION 7.10. Severability. The provisions of this Agreement are
severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Agreement in any jurisdiction.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the date first written above.
NAKORNTHAI STRIP MILL
PUBLIC COMPANY LIMITED,
by : /s/ John W. Shultes
Title: President/CEO
UNITED STATES TRUST COMPANY OF
NEW YORK, as Warrant Agent,
by : /s/ James Nesci
Title: Assistant Vice President
<PAGE>
EXHIBIT A
[FORM OF FACE OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE WERE INITIALLY ISSUED AS PART OF AN
ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF $1,000 PRINCIPAL AMOUNT AT MATURITY
OF 12 1/4% SENIOR SUBORDINATED MORTGAGE NOTES DUE 2008 OF THE NOTE ISSUERS (THE
"NOTES") AND 633.09266 WARRANTS. PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON JUNE
10, 1998 OR SUCH EARLIER DATE AS NATWEST CAPITAL MARKETS LIMITED MAY, IN ITS
DISCRETION, DEEM APPROPRIATE, THE WARRANTS REPRESENTED BY THIS CERTIFICATE MAY
NOT BE TRANSFERRED OR EXCHANGED SEPARATELY FROM, BUT MAY BE TRANSFERRED OR
EXCHANGED ONLY TOGETHER WITH, THE NOTES.
THE ORDINARY SHARES, PAR VALUE 10 BAHT PER SHARE, OF THE COMPANY FOR WHICH THIS
WARRANT IS EXERCISABLE MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND ANY APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION FROM
SUCH REGISTRATION REQUIREMENTS. ACCORDINGLY, NO HOLDER SHALL BE ENTITLED TO
EXERCISE SUCH HOLDER'S WARRANTS AT ANY TIME UNLESS, AT THE TIME OF EXERCISE, (i)
A REGISTRATION STATEMENT UNDER THE SECURITIES ACT RELATING TO THE ORDINARY
SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAS BEEN FILED WITH, AND
DECLARED EFFECTIVE BY, THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC"), AND
NO STOP ORDER SUSPENDING THE EFFECTIVENESS OF SUCH REGISTRATION STATEMENT HAS
BEEN ISSUED BY THE SEC, OR (ii) THE ISSUANCE OF SUCH SHARES IS PERMITTED
PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
[UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR WARRANTS
IN DEFINITIVE FORM, THIS WARRANT MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO
THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITORY. THE DEPOSITORY TRUST COMPANY ("DTC") (55 WATER STREET, NEW YORK, NEW
YORK) SHALL ACT AS THE DEPOSITORY UNTIL A SUCCESSOR SHALL BE APPOINTED BY THE
COMPANY AND THE WARRANT AGENT. UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
<PAGE>
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]1
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR")
OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (2) AGREES
THAT IT WILL NOT WITHIN THE TIME PERIOD REFERRED TO IN RULE 144(K) UNDER THE
SECURITIES ACT AS IN EFFECT WITH RESPECT TO SUCH TRANSFER, RESELL OR OTHERWISE
TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B)
INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
TRANSFER AGENT A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM THE WARRANT AGENT) AND IF REQUESTED BY THE WARRANT
AGENT, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT
TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND;
PROVIDED THAT AN INITIAL INVESTOR
- -------------------------------
1. To be included only if the Warrant is in global form.
<PAGE>
THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR, PURCHASING AS DESCRIBED IN CLAUSE
(1)(B) ABOVE SHALL NOT BE PERMITTED TO TRANSFER THIS SECURITY TO AN
INSTITUTIONAL ACCREDITED INVESTOR.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND
TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT
MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS.
No. [ ] Certificate for Warrants
-------
WARRANTS TO PURCHASE ORDINARY SHARES OF
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
THIS CERTIFIES THAT [ ], or its registered assigns,
is the registered holder of the number of Warrants set forth above (the
"Warrants"). Each Warrant entitles the holder thereof (the "Holder"), at its
option and subject to the provisions contained herein and in the Warrant
Agreement referred to below, to purchase from Nakornthai Strip Mill Public
Company Limited, a company incorporated under the laws of Thailand (the
"Company"), one ordinary share, par value 10 Baht per share, of the Company (the
"Ordinary Shares") at the per share exercise price of 10 Baht (the "Exercise
Price"). This Warrant Certificate shall terminate and become void as of the
close of business on February 1, 2008 (the "Expiration Date") or upon the
exercise hereof as to all the Ordinary Shares subject hereto. The number of
shares issuable upon exercise of the Warrants and the Exercise Price per share
shall be subject to adjustment from time to time as set forth in the Warrant
Agreement.
This Warrant Certificate is issued under and in accordance with a
Warrant Agreement dated as of March 12, 1998 (the "Warrant Agreement"), between
the Company and United States Trust Company of New York (the "Warrant Agent",
which term includes any successor Warrant Agent under the Warrant Agreement),
and is subject to the terms and provisions contained in the Warrant Agreement,
to all of which terms and provisions the Holder of this Warrant Certificate
consents by acceptance hereof. The Warrant
<PAGE>
Agreement is hereby incorporated herein by reference and made a part hereof.
Reference is hereby made to the Warrant Agreement for a full statement of the
respective rights, limitations of rights, duties and obligations of the Company,
the Warrant Agent and the Holders of the Warrants. Capitalized terms used but
not defined herein shall have the meanings ascribed thereto in the Warrant
Agreement. A copy of the Warrant Agreement may be obtained for inspection by the
Holder hereof upon written request to the Warrant Agent at United States Trust
Company of New York, 114 West 47th Street, New York, New York 10036, attention
of Corporate Trust Department.
Subject to the terms of the Warrant Agreement, the Warrants may be
exercised in whole or in part by presentation of this Warrant Certificate to the
Warrant Agent with the Election to Purchase attached hereto duly executed and
with the simultaneous payment of the Exercise Price in cash (subject to
adjustment) to the Company.
As provided in the Warrant Agreement and subject to the terms and
conditions therein set forth, the Warrants shall be exercisable at any time on
or after March 12, 1999; provided, however, that Holders of Warrants will be
able to exercise their Warrants only if a Common Shelf Registration Statement
relating to the Ordinary Shares underlying the Warrant is effective or the
exercise of such Warrants is exempt from the registration requirements of the
Securities Act of 1933 and such securities are qualified for sale or exempt from
qualification under the applicable securities laws of the states or other
jurisdictions in which such Holders reside; provided further, however, that no
Warrant shall be exercisable after February 1, 2008.
In the event the Company enters into a Combination, the Holder
hereof will be entitled to receive upon exercise of the Warrants the kind and
amount of shares or other securities or other property of such surviving entity
as the Holder would have been entitled to receive upon or as a result of the
combination had the Holder exercised its Warrants immediately prior to such
Combination; provided, however, that in the event that, in connection with such
Combination, consideration to holders of Ordinary Shares in exchange for their
shares is payable solely in cash or in the event of the dissolution, liquidation
or winding-up of the Company, the Holder hereof will be entitled to receive such
cash distributions as the
<PAGE>
Holder would have received had the Holder exercised its Warrants immediately
prior to such Combination, less the Exercise Price.
As provided in the Warrant Agreement, the number of Ordinary Shares
issuable upon the exercise of the Warrants and the Exercise Price are subject to
adjustment upon the happening of certain events.
The Company may require payment of a sum sufficient to pay all
taxes, assessments or other governmental charges in connection with the transfer
or exchange of the Warrant Certificates pursuant to Section 2.06 of the Warrant
Agreement, but not for any exchange or original issuance (not involving a
transfer) with respect to temporary Warrant Certificates, the exercise of the
Warrants or the Warrant Shares.
Upon any partial exercise of the Warrants, there shall be
countersigned and issued to the Holder hereof a new Warrant Certificate
representing those Warrants which were not exercised. This Warrant Certificate
may be exchanged at the office of the Warrant Agent by presenting this Warrant
Certificate properly endorsed with a request to exchange this Warrant
Certificate for other Warrant Certificates evidencing an equal number of
Warrants. No fractional Warrant Shares will be issued upon the exercise of the
Warrants, but the Company shall pay an amount in cash equal to the Current
Market Value per Warrant Share on the day immediately preceding the date the
Warrant is exercised, multiplied by the fraction of a Warrant Share that would
be issuable on the exercise of any Warrant.
All Ordinary Shares issuable by the Company upon the exercise of the
Warrants shall, upon such issue, be duly and validly issued and fully paid and
non-assessable.
The Holder in whose name the Warrant Certificate is registered may
be deemed and treated by the Company and the Warrant Agent as the absolute owner
of the Warrant Certificate for all purposes whatsoever and neither the Company
nor the Warrant Agent shall be affected by notice to the contrary.
The Warrants do not entitle any Holder hereof to any of the rights
of a shareholder of the Company.
<PAGE>
This Warrant Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Warrant Agent.
NAKORNTHAI STRIP MILL
PUBLIC COMPANY LIMITED,
by
-------------------------------
Attest:
-------------------------------
Secretary
DATED:
Countersigned:
UNITED STATES TRUST COMPANY OF NEW YORK
as Warrant Agent,
by
Authorized Signatory
<PAGE>
FORM OF ELECTION TO PURCHASE ORDINARY SHARES
(to be executed only upon exercise of Warrants)
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
The undersigned hereby irrevocably elects to exercise [ ]
Warrants at an exercise price per Warrant (subject to adjustment) of 10 Baht to
acquire [ ] Ordinary Shares, par value 10 Baht per share, of
Nakornthai Strip Mill Public Company Limited on the terms and conditions
specified within the Warrant Certificate and the Warrant Agreement therein
referred to, surrenders this Warrant Certificate and all right, title and
interest therein to Nakornthai Strip Mill Public Company Limited and directs
that the Ordinary Shares deliverable upon the exercise of such Warrants be
registered or placed in the name and at the address specified below and
delivered thereto.
Date: , 19
-------------- --
2
----------------------------------
(Signature of Owner)
----------------------------------
(Street Address)
----------------------------------
(City) (State) (Zip Code)
- ------------------------
2. The signature must correspond with the name as written upon the face of the
within Warrant Certificate in every particular, without alteration or
enlargement or any change whatsoever, and must be guaranteed by a national bank
or trust company or by a member firm of any national securities exchange.
<PAGE>
----------------------------------
Signature Guaranteed by:
<PAGE>
Securities and/or check to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
Any unexercised Warrants represented by the Warrant Certificate to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
<PAGE>
EXHIBIT B
FORM OF TRANSFER CERTIFICATE
(Transfers pursuant to Section 2.11(b)
of the Warrant Agreement)
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attention: Corporate Trust Department
Re: Warrants (the "Warrants") for Ordinary Shares of Nakornthai
Strip Mill Public Company Limited (the "Company")
Reference is hereby made to the Warrant Agreement dated as of March
12, 1998 (the "Warrant Agreement"), between the Company and United States Trust
Company of New York, as Warrant Agent. Capitalized terms used but not defined
herein shall have the meanings given to them in the Indenture.
This letter relates to _______ Warrants which are evidenced by the
IAI Global Warrant (CUSIP No. ) and held by you on behalf of The Depository
Trust Company who in turn is holding an interest therein on behalf of [insert
name of transferor] (the "Transferor"). The Transferor has requested a transfer
of such beneficial interest in the Warrants to another Person.
In connection with such request and in respect of such Warrants, as
the Beneficial Owner we acknowledge (or if we are acting for the account of
another Person, such Person has confirmed to us in writing that it acknowledges)
that the Warrants have not been and will not be registered under the Securities
Act of 1933, as amended (the "Securities Act"). We certify that we are (or it
is) the beneficial owner of the Warrants and that we are (or it is) a "qualified
institutional buyer": (as defined in Rule 144A under the Securities Act) acting
for our own account or for the account of one or more qualified institutional
buyers, and, accordingly, we agree (or if we were acting for the account of one
or more qualified institutional buyers, each
<PAGE>
such qualified institutional buyer [an Institutional Accredited Investor acting
for our own account or on the account of an Institutional Accredited Investor,
have (or it has) furnished the Depositary a signed letter substantially in the
form set forth in Annex A hereto, and accordingly, we agree (or if we are acting
on behalf of an Institutional Accredited Investor, such Institutional Accredited
Investor]*** has confirmed to us that it agrees) that we (or it) will not offer,
sell, pledge or otherwise transfer the Warrants except in accordance with the
legends set forth in the Warrants which limit sales, among other things, (i) (A)
to a Person whom we and anyone acting on our behalf reasonably believe (or it
and anyone acting on its behalf reasonably believes) is a qualified
institutional buyer in a transaction meeting the requirements of Rule 144A, (B)
pursuant to the exemption from registration under the Act provided by Rule 144
(if available) or (C) to an Institutional Accredited Investor purchasing for its
own account or for the account of an Institutional Accredited Investor, that
delivers a letter to the Depositary in the form required by the Indenture, in
each case in accordance with any applicable securities laws of the states of the
United States or (ii) in an offshore transaction meeting the requirements of
Rule 903 or Rule 904 of Regulation S, in each case subject to the requirements
of the Indenture.
This certificate and the statements contained herein are made for
the benefit of the Company and the Initial Purchasers.
Dated:
[Insert Name of Transferor]
By:
---------------------------------
Name:
Title:
(If the transferor is a corporation, partnership or
fiduciary, the title of the Person signing on behalf of
such transferor must be stated.)
<PAGE>
ANNEX A
to
EXHIBIT B
ACCREDITED INVESTOR LETTER
Ladies and Gentlemen:
In connection with our proposed purchase of 12% Senior Mortgage
Notes Due 2006 (the "Senior Notes") of NSM Steel (Delaware), Inc., a Delaware
corporation, and NSM Steel Company, Ltd., a Cayman Islands company, as
co-issuers (the "Note Issuers") and 203,500 Units (the "Units"), each consisting
of one 12 1/4% Senior Subordinated Mortgage Note Due 2008 (the "Senior
Subordinated Note") of the Note Issuers and 633.09266 warrants (collectively,
the "Warrants") to purchase one ordinary share, par value 10 Baht per share
(collectively, the "Ordinary Shares") of Nakornthai Strip Mill Public Company
Limited (the "Company"), all as described in the Offering Memorandum relating to
the offerings, we confirm that:
1. We have received a copy of the Offering Memorandum (the "Offering
Memorandum"), dated March 2, 1998, relating to the Senior Notes, Units, Senior
Subordinated Notes and Warrants (collectively, the "Securities") and such other
information as we deem necessary in order to make an investment decision with
respect thereto. We acknowledge that we have read and agreed to the matters
stated on pages 1, 2 and 3 of the Offering Memorandum and in the section
entitled "Transfer Restrictions" of the Offering Memorandum, including the
restrictions on duplication and circulation of the Offering Memorandum.
2. We understand that any subsequent transfer of the
<PAGE>
Securities is subject to certain restrictions and conditions set forth in the
Indentures relating to the Notes and the Senior Subordinated Mortgage Notes
(collectively, the "Notes") and the Warrant Agreement (as described in the
Offering Memorandum) and we agree to be bound by, and not to resell, pledge or
otherwise transfer the Securities except in compliance with, such restrictions
and conditions and the Securities Act of 1933, as amended (the "Securities
Act").
3. We understand that the offer and sale of the Securities have not been
registered under the Securities Act, and that the Securities may not be offered
or sold except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we or they Should sell or otherwise transfer any Securities
prior to the date which is two years after the original issuance of the
Securities, we will do so in accordance with the provisions of any applicable
state securities ("blue sky") laws and only (i) to the Note Issuers, (ii) inside
the United States in accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined in Rule 144A under the Securities
Act), (iii) inside the United States to an institutional "accredited investor"
(as defined below) that, prior to such transfer, furnishes (or has furnished on
its behalf by a United States broker-dealer) to the Trustee (as defined in the
Indentures relating to the Notes) or the Warrant Agent (as defined in the
Warrant Agreement relating to the Warrants), a signed letter containing certain
representations and agreements relating to the restrictions on transfer of' the
Securities (the form of which letter can be obtained from the Trustee or the
Warrant Agent) and, if such transfer is in respect of an aggregate principal
amount of Securities of less than U.S.$250,000, an opinion of counsel acceptable
to the Note Issuers that such transfer is in compliance with the registration
requirements of the Securities Act, (iv) outside the United States in accordance
with Rule 904 of Regulation S under the Securities Act, (v) pursuant to an
exemption from registration provided by Rule 144 under the Securities Act (if
available), or (vi) pursuant to an effective registration statement under the
Securities Act, and we further agree to provide to any person purchasing any of
the Securities from us a notice advising such purchaser that resales of the
Securities are restricted as stated herein.
<PAGE>
4. We are not acquiring the Securities for or on behalf of, and will not
transfer the Securities to, any pension or welfare plan (as defined in Section 3
of the Employee Retirement Income Security Act of 1974), except as permitted in
the section entitled "Transfer Restrictions" of the Offering Memorandum.
5. We understand that, on any proposed resale or other transfer of any
Securities, we will be required to furnish to the Trustee and the Note Issuers
such certification, legal opinions and other information as the Trustee and the
Note Issuers may reasonably require to confirm that the proposed sale complies
with the foregoing restrictions. We further understand that the Securities
purchased by us will bear a legend to the foregoing effect.
6. We are an institutional "accredited investor" (as defined in Rule 501
(a)(1), (a)(2), (a)(3) or (a)(7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Securities,
and we and any accounts for which we are acting are each able to bear the
economic risk of our or their investment, as the case may be.
7. We are acquiring the Securities purchased by us for our account or for
one or more accounts (each of which is an institutional "accredited investor" or
"qualified institutional buyer") as to each of which we exercise sole investment
discretion.
You, the Note Issuers, the Trustee and the Warrant Agent are entitled to
rely upon this letter and are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative or legal proceeding or
official inquiry with respect to the matters covered hereby.
Very truly yours,
By
----------------------------------
Name:
<PAGE>
EXHIBIT C
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER OF WARRANTS
Re: Warrants to Purchase Ordinary Shares (the "Warrants") of Nakornthai Strip
Mill Public Company Limited (the "Company")
This Certificate relates to Warrants held in definitive
form by _______________ (the "Transferor").
The Transferor has requested the Warrant Agent by written order to
exchange or register the transfer of a Warrant or Warrants. In connection with
such request and in respect of each such Warrant, the Transferor does hereby
certify that the Transferor is familiar with the Warrant Agreement relating to
the above captioned Warrants and that the transfer of this Warrant does not
require registration under the Securities Act of 1933 (the "Securities Act")
because 3/:
|_| Such Warrant is being acquired for the Transferor's own account
without transfer.
|_| Such Warrant is being transferred to the Company.
|_| Such Warrant is being transferred pursuant to an effective
registration statement pursuant to the Securities Act.
|_| Such Warrant is being transferred to a qualified institutional buyer
(as defined in Rule 144A under the Securities Act), in reliance on
Rule 144A.
|_| Such Warrant is being transferred pursuant to an offshore
transaction in accordance with Rule 904 under the Securities Act.
|_| Such Warrant is being transferred in a transaction meeting the
requirements of Rule 144 under the Securities Act.
If such transfer is being made pursuant to an offshore transaction
in accordance with Rule 904 under the Securities Act, the Transferor further
certifies that:
(i) the offer of the Warrants was not made to a Person in the
United States;
(ii) at the time the buy order was originated, the transferee
was outside the United States or we and any Person acting on our
behalf reasonably believed that the transferee was outside the
United States;
(iii) no directed selling efforts have been made by us in the
United States in contravention of the requirements of Rule 903(b) or
Rule 904(b) of Regulation S under the Securities Act, as
- -------------------------
3 / Please check applicable box.
- ---
<PAGE>
applicable;
(iv) the transaction is not part of a plan or scheme by us to
evade the registration requirements of the Securities Act; and
(v) if applicable, the transfer has been made in accordance
with Rule 903(c)(3) or Rule 904(c)(1), as the case may be. Terms
used in this paragraph have the meanings set forth in Regulation S.
,
--------------------------
[INSERT NAME OF TRANSFEROR]
by
Date:
--------------------------- --------------------------------
<PAGE>
Exhibit 4.05
EXECUTION COPY
NSM STEEL (DELAWARE), INC.
NSM STEEL COMPANY, LTD.
$225,594,000 12% Senior Mortgage Notes Due 2006
12 1/4% Senior Subordinated Mortgage Notes Due 2008
REGISTRATION RIGHTS AGREEMENT
Dated as of
March 12, 1998
NatWest Capital Markets Limited
McDonald & Company Securities, Inc.
PaineWebber Incorporated
ECT Securities Corp.
c/o Gleacher NatWest Inc.
660 Madison Avenue
New York, NY 10021
Dear Sirs:
NSM Steel (Delaware) Inc. and NSM Steel Company, Ltd. (collectively,
the "Note Issuers"), propose to issue and sell to NatWest Capital Markets
Limited ("NatWest"), McDonald & Company Securities, Inc. ("McDonald"),
PaineWebber Incorporated ("PaineWebber") and ECT Securities Corp ("ECT" and,
together with NatWest, McDonald and ECT, the "Initial Purchasers"), upon the
terms set forth in a purchase agreement of even date herewith (the "Purchase
Agreement"), among the Note Issuers, the Company (as defined below) and the
Initial Purchasers, $225,594,000 principal amount at maturity of 12% Senior
Mortgage Notes Due 2006 (the "Senior Notes") and $175,010,000 (Gross Proceeds)
Representing 203,500 Units (the "Units" and, together with the Senior Notes, the
"Offered Securities") consisting of 12 1/4% Senior Subordinated Mortgage Notes
Due 2008 (collectively, the "Senior Subordinated Notes" and, together with the
Senior Notes, the "Notes") with warrants to purchase 128,834,356 ordinary
shares, par value 10 Baht per share, of Nakornthai Strip Mill Public Company
Limited (the "Company" and, together with the Note Issuers, the "Issuers"). In
connection with, and concurrently with the consummation of, the issuance and
sale of the Offered Securities, the Issuers propose to consummate (i) a private
placement consisting
<PAGE>
2
of U.S. $53,133,016 aggregate principal amount at maturity of 12 3/4%
Subordinated Second Mortgage Debentures Due 2009 (the "Debentures") and (ii)
private placements of Ordinary Shares in the aggregate.
The Senior Notes will be irrevocably and unconditionally guaranteed
as to principal, premium, interest and Additional Amounts (as defined in the
Offering Document), if any, by the Company. The Senior Subordinated Notes will
be irrevocably and unconditionally guaranteed as to principal, premium, interest
and Additional Amounts, if any, by the Company. The Senior Notes will be issued
under an indenture dated as of February 15, 1998 (the "Senior Note Indenture"),
among the Note Issuers, the Company and The Chase Manhattan Bank ("Chase"), as
trustee (the "Senior Notes Trustee"). The Senior Subordinated Notes will be
issued pursuant to an indenture, to be dated as of February 15, 1998 (the
"Senior Subordinated Note Indenture" and, together with the Senior Note
Indenture, the "Indentures"), among the Note Issuers, the Company, and Chase, as
trustee (the "Senior Subordinated Notes Trustee", and together with the Senior
Notes Trustee, the "Trustees"). Payment of principal or interest and other
amounts due, if any, on the Debentures will be irrevocably and unconditionally
guaranteed on a subordinated secured basis by the Company. As an inducement to
the Initial Purchasers to purchase the Offered Securities pursuant to the
Purchase Agreement, the Company agrees with the Initial Purchasers, for the
benefit of the holders of the Notes (including the Initial Purchasers), the
Exchange Securities (as defined below) and the Private Exchange Securities (as
defined below) (collectively, the "Holders"), as follows:
1. Registered Exchange Offer. The Company shall, at its cost,
prepare and, not later than 90 days after (or if the 90th day is not a business
day, the first business day thereafter) the date of original issue of the Notes
(the "Issue Date"), file with the Securities and Exchange Commission (the
"Commission") a registration statement or statements (the "Exchange Offer
Registration Statement") on an appropriate form under the Securities Act of 1933
(the "Securities Act"), with respect to a proposed offer (each, a "Registered
Exchange Offer" and, collectively, the "Registered Exchange Offers") to the
Holders of the Senior Notes and the Senior Subordinated Notes, as the case may
be, who are not prohibited by any law or policy of the Commission from
participating in the relevant Registered Exchange Offer, to issue and deliver to
such Holders, in exchange for the Notes, a like aggregate principal amount of
debt securities of the Note Issuers (the "Exchange Securities") held by such
Holders issued under the relevant Indenture and identical in all material
respects to the Senior Notes or the Senior Subordinated Notes (except for the
transfer restrictions relating to such Notes), as the case may be, that would be
registered under the Securities Act. The Company shall use reasonable efforts to
cause the Exchange Offer Registration Statement to become effective under the
Securities Act within 180 days (or if the 180th day is not a business day, the
first business day thereafter) after the Issue Date of the Notes and shall keep
the Exchange Offer Registration Statement effective for not less than 20 days
(or longer, if required by applicable law) after the date notice of the
Registered Exchange Offers is mailed to the Holders (such period being called
the "Exchange Offer Registration Period").
If the Company effects the Registered Exchange Offers, the Company
will
<PAGE>
3
be entitled to close the Registered Exchange Offers 30 days after the
commencement thereof provided that the Company has accepted all the Notes
theretofore validly tendered in accordance with the terms of the relevant
Registered Exchange Offer.
Following the declaration of the effectiveness of the Exchange Offer
Registration Statement, the Company shall promptly commence the Registered
Exchange Offers, it being the objective of such Registered Exchange Offers to
enable each Holder of the Notes electing to exchange such Notes for Exchange
Securities (assuming that such Holder is not an affiliate of the Company within
the meaning of the Securities Act, acquires the Exchange Securities in the
ordinary course of such Holder's business and has no arrangements with any
person to participate in the distribution of the Exchange Securities and is not
prohibited by any law or policy of the Commission from participating in the
Registered Exchange Offers) to trade such Exchange Securities from and after
their receipt without any limitations or restrictions under the Securities Act
and without material restrictions under the securities laws of the several
states of the United States.
The Company acknowledges that, pursuant to current interpretations
by the Commission's staff of Section 5 of the Securities Act, in the absence of
an applicable exemption therefrom, (i) each Holder that is a broker-dealer
electing to exchange Notes acquired for its own account as a result of
market-making activities or other trading activities for Exchange Securities (an
"Exchanging Dealer") is required to deliver a prospectus containing the
information set forth in Annex A hereto on the cover, in Annex B hereto in the
"Exchange Offer Procedures" section and the "Purpose of the Exchange Offer"
section, and in Annex C hereto in the "Plan of Distribution" section of such
prospectus in connection with a sale of any such Exchange Securities received by
such Exchanging Dealer pursuant to a Registered Exchange Offer and (ii) an
Initial Purchaser that elects to sell Exchange Securities acquired in exchange
for Notes constituting any portion of an unsold allotment is required to deliver
a prospectus containing the information required by Items 507 or 508 of
Regulation S-K under the Securities Act, as applicable, in connection with such
sale.
The Company shall use reasonable efforts to keep the Exchange Offer
Registration Statement effective and to amend and supplement the prospectus
contained therein, in order to permit such prospectus to be lawfully delivered
by all persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as such persons must comply with such requirements
in order to resell the Exchange Securities; provided, however, that (i) in the
case where such prospectus and any amendment or supplement thereto must be
delivered by an Exchanging Dealer or an Initial Purchaser, such period shall be
the lesser of 180 days and the date on which all Exchanging Dealers and the
Initial Purchasers have sold all Exchange Securities held by them (unless such
period is extended pursuant to Section 3(j) below) and (ii) the Company shall
make such prospectus and any amendment or supplement thereto, available to any
<PAGE>
4
broker-dealer for use in connection with any resale of any Exchange Securities
for a period not less than 90 days after the consummation of the Registered
Exchange Offers.
If, upon consummation of the Registered Exchange Offer, any Initial
Purchaser holds Senior Notes or Senior Subordinated Notes acquired by it as part
of its initial distribution, the Company, simultaneously with the delivery of
the Exchange Securities pursuant to the Registered Exchange Offer, shall issue
and deliver to such Initial Purchaser upon the written request of such Initial
Purchaser, in exchange (each, a "Private Exchange" and, collectively, the
"Private Exchanges") for the Notes held by such Initial Purchaser, a like
principal amount of debt securities of the Company issued under the relevant
Indenture and identical in all material respects (including the existence of
restrictions on transfer under the Securities Act and the securities laws of the
several states of the United States) to the Senior Notes or the Senior
Subordinated Notes (collectively, the "Private Exchange Securities"), as the
case may be. The Notes, the Exchange Securities and the Private Exchange
Securities are hereinafter collectively called the "Securities".
In connection with each Registered Exchange Offer, the Company
shall:
(a) mail to each Holder a copy of the prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less than 20
days (or longer, if required by applicable law) after the date notice
thereof is mailed to the Holders;
(c) utilize the services of a depositary for the Registered Exchange
Offer with an address in the Borough of Manhattan, The City of New York,
which may be one of the Trustees or an affiliate of such Trustee;
(d) permit Holders to withdraw tendered Notes at any time prior to
the close of business, New York time, on the last business day on which
the Registered Exchange Offer shall remain open; and
(e) otherwise comply with all applicable laws.
As soon as practicable after the close of the Registered Exchange
Offer or the Private Exchange, as the case may be, the Company shall:
(x) accept for exchange all the Notes validly tendered and
not withdrawn pursuant to the Registered Exchange Offer or the
Private Exchange, as the case may be;
<PAGE>
5
(y) deliver to the relevant Trustee for cancelation all
the Notes so accepted for exchange; and
(z) cause the relevant Trustee to authenticate and deliver promptly,
to each Holder that validly tendered the Notes, Exchange Securities or
Private Exchange Securities, as the case may be, equal in principal amount
to the Notes of such Holder so accepted for exchange.
Each Indenture will provide that the Exchange Securities delivered in
exchange for the relevant validly tendered Notes will not be subject to the
transfer restrictions set forth in such Indenture. Each Indenture will also
provide that all Securities outstanding under such Indenture will vote and
consent together on all matters as one class and that none of the Securities
subject to such Indenture will have the right to vote or consent as a separate
class on any matter.
Interest on each Exchange Security or Private Exchange Security issued
pursuant to the Registered Exchange Offer or in the Private Exchange will accrue
from the last interest payment date on which interest was paid on the Notes
surrendered in exchange therefor or, if no interest has been paid on such Notes,
from the date of original issue of such Notes.
Each Holder participating in a Registered Exchange Offer shall be
required to represent to the Company that at the time of the consummation of the
Registered Exchange Offer (i) any Exchange Securities received by such Holder
will be acquired in the ordinary course of business, (ii) such Holder will have
no arrangements or understanding with any person to participate in the
distribution of the Notes or the Exchange Securities within the meaning of the
Securities Act, (iii) such Holder is not an "affiliate," as defined in Rule 405
of the Securities Act, of the Company or if it is an affiliate, such Holder will
comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable, (iv) if such Holder is not a
broker-dealer, that it is not engaged in, and does not intend to engage in, the
distribution of the Exchange Securities and (v) if such Holder is a
broker-dealer, that it will receive Exchange Securities for its own account in
exchange for Notes that were acquired as a result of market-making activities or
other trading activities and that it will be required to acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange
Securities.
Notwithstanding any other provisions hereof, the Company will ensure
that (i) any Exchange Offer Registration Statement and any amendment thereto and
any prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations
thereunder, (ii) any
<PAGE>
6
Exchange Offer Registration Statement and any amendment thereto does not, when
it becomes effective, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading and (iii) any prospectus forming part of any
Exchange Offer Registration Statement, and any supplement to such prospectus,
does not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
2. Shelf Registration. If, (i) because of any change in law or in
applicable interpretations thereof by the staff of the Commission, the Company
is not permitted to effect the Registered Exchange Offers, as contemplated by
Section 1 hereof, (ii) the Registered Exchange Offers are not consummated within
210 days of the Issue Date, (iii) any Initial Purchaser so requests with respect
to the Notes not eligible to be exchanged for Exchange Securities in the
Registered Exchange Offer or with respect to the Private Exchange Securities
and, in each case, held by it following consummation of the Registered Exchange
Offer or (iv) any Holder (other than an Exchanging Dealer) is not eligible to
participate in the Registered Exchange Offer or, in the case of any Holder
(other than an Exchanging Dealer) that participates in the Registered Exchange
Offer, such Holder does not receive freely tradeable Exchange Securities on the
date of the exchange, the Company shall take the following actions:
(a) The Company shall, at its cost, as promptly as practicable (but
in no event more than 45 days after so required or requested pursuant to
this Section 2) file with the Commission and thereafter shall use
reasonable efforts to cause to be declared effective, by the 245th day
after the Issue Date, a registration statement or statements (the "Shelf
Registration Statement" and, together with the Exchange Offer Registration
Statement, the "Registration Statements") on an appropriate form under the
Securities Act relating to the offer and sale of the Transfer Restricted
Securities (as defined in Section 6 hereof) by the Holders thereof from
time to time in accordance with the methods of distribution set forth in
the Shelf Registration Statement and Rule 415 under the Securities Act
(hereinafter, the "Shelf Registration"); provided, however, that no Holder
(other than an Initial Purchaser) shall be entitled to have the Securities
held by it covered by such Shelf Registration Statement unless such Holder
agrees in writing to be bound by all the provisions of this Agreement
applicable to such Holder.
(b) The Company shall use reasonable efforts to keep the Shelf
Registration Statement continuously effective in order to permit the
prospectus included therein to be lawfully delivered by the Holders of the
relevant Securities, for a period of two years (or for such longer period
if extended pursuant to Section 3(j) below) from the date of its
effectiveness or such shorter period that will terminate when all the
<PAGE>
7
Securities covered by the Shelf Registration Statement (i) have been sold
pursuant thereto or (ii) are eligible for sale under Rule 144(k) (or any
successor provision) under the Securities Act. The Company shall be deemed
not to have used its best efforts to keep the Shelf Registration Statement
effective during the requisite period if it voluntarily takes any action
that would result in Holders of Securities covered thereby not being able
to offer and sell such Securities during that period, unless such action
is required by applicable law.
(c) Notwithstanding any other provisions of this Agreement to the
contrary, the Company shall cause the Shelf Registration Statement and the
related prospectus and any amendment or supplement thereto, as of the
effective date of the Shelf Registration Statement, amendment or
supplement, (i) to comply in all material respects with the applicable
requirements of the Securities Act and the rules and regulations of the
Commission and (ii) not to contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(d) No Holder may include any of its Notes in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder
furnishes to the Company in writing, within 30 days after receipt of a
request therefor, such information as the Company may reasonably request
for use in connection with any Shelf Registration Statement or final
prospectus or preliminary prospectus included therein. Each Holder of
Notes as to which any Shelf Registration Statement is being effected
agrees to furnish promptly to the Company all information required to be
disclosed in order to make the information previously furnished to the
Company by such Holder not materially misleading.
3. Registration Procedures. In connection with any Shelf Registration
contemplated by Section 2 hereof and, to the extent applicable, any Registered
Exchange Offer contemplated by Section 1 hereof, the following provisions shall
apply:
(a) The Company shall (i) furnish to each Initial Purchaser, prior
to the filing thereof with the Commission, a copy of the Registration
Statement and each amendment thereto and each supplement, if any, to the
prospectus included therein and, in the event that an Initial Purchaser
(with respect to any portion of an unsold allotment from the original
offering) is participating in the Registered Exchange Offer or the Shelf
Registration, shall use reasonable efforts to reflect in each such
document, when so filed with the Commission, such comments as such Initial
Purchaser reasonably may propose; (ii) include the information set forth
in Annex A hereto on the cover, in Annex B hereto in the "Exchange Offer
Procedures" section and the "Purpose of the Exchange Offer" section and in
Annex C hereto in the "Plan of
<PAGE>
8
Distribution" section of the prospectus forming a part of the Exchange
Offer Registration Statement and include the information set forth in
Annex D hereto in the Letter of Transmittal delivered pursuant to the
Registered Exchange Offer; (iii) if requested by an Initial Purchaser,
include the information required by Items 507 or 508 of Regulation S-K
under the Securities Act, as applicable, in the prospectus forming a part
of the Exchange Offer Registration Statement; (iv) include within the
prospectus contained in the Exchange Offer Registration Statement a
section entitled "Plan of Distribution," reasonably acceptable to the
Initial Purchasers, which shall contain a summary statement of the
positions taken or policies made by the staff of the Commission with
respect to the potential "underwriter" status of any broker-dealer that is
the beneficial owner (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) of Exchange
Securities received by such broker-dealer in such Registered Exchange
Offer (a "Participating Broker-Dealer"), whether such positions or
policies have been publicly disseminated by the staff of the Commission or
such positions or policies, in the reasonable judgment of the Initial
Purchasers based upon advice of counsel (which may be in-house counsel),
represent the prevailing views of the staff of the Commission; and (v) in
the case of a Shelf Registration Statement, include the names of the
Holders who propose to sell Securities pursuant to the Shelf Registration
Statement as selling securityholders.
(b) The Company shall give written notice to the Initial Purchasers,
the Holders of the Securities and any Participating Broker-Dealer from
whom the Company has received prior written notice that it will be a
Participating Broker-Dealer in the Registered Exchange Offers (which
notice pursuant to clauses (ii)-(v) hereof shall be accompanied by an
instruction to suspend the use of the prospectus until the requisite
changes have been made):
(i) when the Registration Statement or any amendment thereto
has been filed with the Commission and when the Registration
Statement or any post-effective amendment thereto has become
effective;
(ii) of any request by the Commission for amendments or
supplements to the Registration Statement or the prospectus included
therein or for additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose;
(iv) of the receipt by the Company or its legal counsel of any
notification with respect to the suspension of the qualification of
the Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for
<PAGE>
9
such purpose; and
(v) of the happening of any event that requires the Company to
make changes in the Registration Statement or the prospectus in
order that the Registration Statement or the prospectus does not
contain an untrue statement of a material fact nor omit to state a
material fact required to be stated therein or necessary to make the
statements therein (in the case of the prospectus, in light of the
circumstances under which they were made) not misleading.
(c) The Company shall make every reasonable effort to obtain the
withdrawal at the earliest possible time, of any order suspending the
effectiveness of the Registration Statement.
(d) The Company shall furnish to each Holder of Securities included
within the coverage of the Shelf Registration, without charge, at least
one copy of the Shelf Registration Statement and any post-effective
amendment thereto, including financial statements and schedules, and, if
the Holder so requests in writing, all exhibits thereto (including those,
if any, incorporated by reference).
(e) The Company shall deliver to each Exchanging Dealer and each
Initial Purchaser, and to any other Holder who so requests, without
charge, at least one copy of the Exchange Offer Registration Statement and
any post-effective amendment thereto, including financial statements and
schedules, and, if any Initial Purchaser or any such Holder requests, all
exhibits thereto (including those incorporated by reference, if any).
(f) The Company shall, during the Shelf Registration Period, deliver
to each Holder of Securities included within the coverage of the Shelf
Registration, without charge, as many copies of the prospectus (including
each preliminary prospectus) included in the Shelf Registration Statement
and any amendment or supplement thereto as such person may reasonably
request. The Company consents, subject to the provisions of this
Agreement, to the use of the prospectus or any amendment or supplement
thereto by each of the selling Holders of the Securities in connection
with the offering and sale of the Securities covered by the prospectus, or
any amendment or supplement thereto, included in the Shelf Registration
Statement.
(g) The Company shall deliver to each Initial Purchaser, any
Exchanging Dealer, any Participating Broker-Dealer and such other persons
required to deliver a prospectus following the Registered Exchange Offer,
without charge, as many copies of the final prospectus included in the
Exchange Offer Registration Statement and any amendment or supplement
thereto as such persons may reasonably request. The Company consents,
subject to the provisions of this Agreement, to the use of the
<PAGE>
10
prospectus or any amendment or supplement thereto by any Initial
Purchaser, if necessary, any Participating Broker-Dealer and such other
persons required to deliver a prospectus following the Registered Exchange
Offer in connection with the offering and sale of the Exchange Securities
covered by the prospectus, or any amendment or supplement thereto,
included in such Exchange Offer Registration Statement.
(h) Prior to any public offering of the Securities pursuant to any
Registration Statement, the Company shall use reasonable efforts to
register or qualify or cooperate with the Holders of the Securities
included therein and their respective counsel in connection with the
registration or qualification of the Securities for offer and sale under
the securities or "blue sky" laws of such states of the United States as
any Holder of the Securities reasonably requests in writing and do any and
all other acts or things necessary or advisable to enable the offer and
sale in such jurisdictions of the Securities covered by such Registration
Statement; provided, however, that the Company shall not be required to
(i) qualify generally to do business in any jurisdiction where it is not
then so qualified or (ii) take any action which would subject it to
general service of process or to taxation in any jurisdiction where it is
not then so subject.
(i) The Company shall cooperate with the Holders of the Securities
to facilitate the timely preparation and delivery of certificates
representing the Securities to be sold pursuant to any Registration
Statement free of any restrictive legends and in such denominations and
registered in such names as the Holders may request a reasonable period of
time prior to sales of the Securities pursuant to such Registration
Statement.
(j) Upon the occurrence of any event contemplated by paragraphs (ii)
through (v) of Section 3(b) above during the period for which the Company
is required to maintain an effective Registration Statement, the Company
shall promptly prepare and file a post-effective amendment to the
Registration Statement or a supplement to the related prospectus and any
other required document so that, as thereafter delivered to Holders of the
Securities or purchasers of Securities, the prospectus will not contain an
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
If the Company notifies the Initial Purchasers, the Holders of the
Securities and any known Participating Broker-Dealer in accordance with
paragraphs (ii) through (v) of Section 3(b) above to suspend the use of
the prospectus until the requisite changes to the prospectus have been
made, then the Initial Purchasers, the Holders of the Securities and any
such Participating Broker-Dealers shall suspend use of such prospectus,
and the period of effectiveness of the Shelf Registration Statement
provided for in Section 2(b) above and the Exchange Offer Registration
Statement provided for in Section 1 above, as the
<PAGE>
11
case may be, shall be extended by the number of days from and including
the date of the giving of such notice to and including the date when the
Initial Purchasers, the Holders of the Securities and any known
Participating Broker-Dealer shall have received such amended or
supplemented prospectus pursuant to this Section 3(j).
(k) Not later than the effective date of the applicable Registration
Statement, the Company will provide CUSIP numbers for the Notes, the
Exchange Securities or the Private Exchange Securities, as the case may
be, and provide the applicable Trustee with printed certificates for the
Notes, the Exchange Securities or the Private Exchange Securities, as the
case may be, in forms eligible for deposit with The Depository Trust
Company.
(l) The Company will comply with all rules and regulations of the
Commission to the extent and so long as they are applicable to the
Registered Exchange Offer or the Shelf Registration and will make
generally available to its security holders (or otherwise provide in
accordance with Section 11(a) of the Securities Act) an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act, no later
than 45 days after the end of a 12-month period (or 90 days, if such
period is a fiscal year) beginning with the first month of Holdings' first
fiscal quarter commencing after the effective date of the Registration
Statement, which statement shall cover such 12-month period.
(m) The Company shall cause the Indentures to be qualified under the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), in a
timely manner and containing such changes, if any, as shall be reasonably
necessary for such qualification. In the event that such qualification
would require the appointment of a new trustee under either or both of the
Indentures, the Company shall appoint a new trustee thereunder pursuant to
the applicable provisions of the relevant Indenture or Indentures.
(n) The Company may require each Holder of Securities to be sold
pursuant to the Shelf Registration Statement to furnish to the Company
such information regarding the Holder and the distribution of the
Securities as the Company may from time to time reasonably require for
inclusion in the Shelf Registration Statement, and the Company may exclude
from such registration the Securities of any Holder that unreasonably
fails to furnish or update such information within a reasonable time after
receiving such request.
(o) The Company shall enter into such customary agreements and take
all such other action, if any, as any Holder of the Securities shall
reasonably request in order to facilitate the disposition of the
Securities pursuant to any Shelf Registration.
<PAGE>
12
(p) In the case of any Shelf Registration, the Company shall (i)
make reasonably available for inspection by the Holders of the Securities,
any underwriter participating in any disposition pursuant to the Shelf
Registration Statement and any attorney, accountant or other agent
retained by the Holders of the Securities or any such underwriter all
relevant financial and other records, pertinent corporate documents and
properties of the Company and (ii) cause the Company's officers,
directors, employees, accountants and auditors to supply all relevant
information reasonably requested by the Holders of the Securities or any
such underwriter, attorney, accountant or agent in connection with the
Shelf Registration Statement, in each case, as shall be reasonably
necessary to enable such persons to conduct a reasonable investigation
within the meaning of Section 11 of the Securities Act; provided, however,
that such persons shall first agree in writing with the Company that any
information that is reasonably and in good faith designated by the Company
in writing as confidential at the time of delivery of such information
shall be kept confidential by such persons, unless and to the extent that
(i) disclosure of such information is required by court or administrative
order or is necessary to respond to inquiries of regulatory authorities,
(ii) disclosure of such information is required by law (including any
disclosure requirements pursuant to Federal securities laws in connection
with the filing of the Shelf Registration Statement or the use of any
prospectus) or (ii) such information becomes generally available to the
public other than as a result of a disclosure or failure to safeguard such
information by such person; provided further, however, that the foregoing
inspection and information gathering shall be coordinated on behalf of the
Initial Purchasers by you and on behalf of the other parties, by one
counsel designated by and on behalf of such other parties as described in
Section 4 hereof.
(q) In the case of any Shelf Registration, the Company, if requested
by any Holder of Securities covered thereby, shall cause (i) its counsel
to deliver an opinion and updates thereof relating to the Securities in
customary form addressed to such Holders and the managing underwriters, if
any, thereof and dated, in the case of the initial opinion, the effective
date of such Shelf Registration Statement; (ii) its officers to execute
and deliver all customary documents and certificates and updates thereof
requested by any underwriters of the applicable Securities; and (iii) its
independent public accountants to provide to the selling Holders of the
applicable Securities and any underwriter therefor a comfort letter in
customary form and covering matters of the type customarily covered in
comfort letters in connection with primary underwritten offerings, subject
to receipt of appropriate documentation as contemplated, and only if
permitted, by Statement of Auditing Standards No. 72.
(r) If a Registered Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Notes by Holders to the Note Issuers (or
to such other Person as directed by the Company) in exchange for the
Exchange Securities or
<PAGE>
13
the Private Exchange Securities, as the case may be, the Note Issuers
shall mark or cause to be marked on the Notes so exchanged that such Notes
are being canceled in exchange for the Exchange Securities or the Private
Exchange Securities, as the case may be; in no event shall the Notes be
marked as paid or otherwise satisfied.
(s) The Company shall use reasonable efforts to confirm that the
ratings assigned to the initial sale of the Notes will apply to the
Securities covered by a Registration Statement.
(t) In the event that any broker-dealer registered under the
Exchange Act shall underwrite any Securities or participate as a member of
an underwriting syndicate or selling group or "assist in the distribution"
(within the meaning of the Conduct Rules of the National Association of
Securities Dealers, Inc. ("NASD")) thereof, whether as a Holder of such
Securities or as an underwriter, a placement or sales agent or a broker or
dealer in respect thereof, or otherwise, the Company shall assist such
broker-dealer in complying with the requirements of such Conduct Rules,
including by (i) if Rule 2720 thereto shall so require, engaging a
"qualified independent underwriter" (as defined in Rule 2720) to
participate in the preparation of the Registration Statement relating to
such Securities, to exercise usual standards of due diligence in respect
thereto and, if any portion of the offering contemplated by such
Registration Statement is an underwritten offering or is made through a
placement or sales agent, to recommend the yield of such Securities, (ii)
indemnifying any such qualified independent underwriter to the extent of
the indemnification of underwriters provided in Section 5 hereof and (iii)
providing such information to such broker-dealer as may be required in
order for such broker-dealer to comply with the requirements of the
Conduct Rules of the NASD.
(u) The Company shall use reasonable efforts to take all other steps
necessary to effect the registration of the Securities covered by a
Registration Statement contemplated hereby.
(v) The Company may require a Holder of Securities to be included in
a Registration Statement to furnish to the Company such information
concerning the Holder and the distribution of such Securities as the
Company may from time to time reasonably require for inclusion in such
Registration Statement, and the Company may exclude from such Registration
Statement and the Securities of any Holder who unreasonably fails to
furnish such information within a reasonable time after receiving such
request.
(w) In the case of a Shelf Registration pursuant to Section 2
hereof, each Holder of Securities agrees by acquisition of such Securities
that, upon receipt of any notice of the Company pursuant to Section
3(b)(ii) through (v) hereof, such holder
<PAGE>
14
will forthwith discontinue disposition of such Securities covered by such
Registration Statement until such Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(j) hereof, or
until it is advised in writing by the Company that the use of the
applicable Registration Statement may be resumed, and, in either case, has
received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such
Registration Statement.
4. Registration Expenses. The Company shall bear all fees and expenses
incurred in connection with the performance by the Company of its obligations
under Sections 1 through 3 hereof (including the reasonable fees and expenses,
if any, of Cravath, Swaine & Moore, counsel for the Initial Purchasers, incurred
in connection with the Registered Exchange Offers), whether or not a Registered
Exchange Offer or a Shelf Registration is filed or becomes effective, and, in
the event of a Shelf Registration, shall bear or reimburse the Holders of the
Securities covered thereby for the reasonable fees and disbursements of one firm
of counsel designated by the Holders of a majority in principal amount of the
Securities covered thereby to act as counsel for the Holders of the Securities
in connection therewith, provided that such Holders shall be responsible for any
and all underwriting discounts and commissions.
5. Indemnification. (a) The Note Issuers and the Company severally and
jointly agree to indemnify and hold harmless each Holder of the Securities, any
Participating Broker-Dealer and each person, if any, who controls such Holder or
such Participating Broker-Dealer within the meaning of the Securities Act or the
Exchange Act (each Holder, any Participating Broker-Dealer and such controlling
persons are referred to collectively as the "Indemnified Parties") from and
against any losses, claims, damages or liabilities, joint or several, or any
actions in respect thereof (including any losses, claims, damages, liabilities
or actions relating to purchases and sales of the Securities) to which a given
Indemnified Party may become subject under the Securities Act, the Exchange Act
or otherwise, insofar as such losses, claims, damages, liabilities or actions
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement or prospectus or in any
amendment or supplement thereto or in any preliminary prospectus relating to a
Shelf Registration, or arise out of, or are based upon, the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and shall reimburse, as
incurred, the Indemnified Parties for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action in respect thereof; provided, however, that
(i) the Company and the Note Issuers shall not be liable in any such case to the
extent that such loss, claim, damage or liability arises out of or is based upon
any untrue statement or alleged untrue statement or omission or alleged omission
made in a Registration Statement or prospectus or in any amendment or supplement
thereto or in any preliminary prospectus relating to a
<PAGE>
15
Shelf Registration in reliance upon and in conformity with written information
pertaining to such Holder and furnished to the Company or the Note Issuers by or
on behalf of such Holder specifically for inclusion therein, (ii) with respect
to any untrue statement or omission or alleged untrue statement or omission made
in any preliminary prospectus relating to a Shelf Registration Statement, the
indemnity agreement contained in this subsection (a) shall not inure to the
benefit of any Holder or Participating Broker-Dealer from whom the person
asserting any such losses, claims, damages or liabilities purchased the
Securities concerned, to the extent that a prospectus relating to such
Securities was required to be delivered by such Holder or Participating
Broker-Dealer under the Securities Act in connection with such purchase and any
such loss, claim, damage or liability of such Holder or Participating
Broker-Dealer results from the fact that there was not sent or given to such
person, at or prior to the written confirmation of the sale of such Securities
to such person, a copy of the final prospectus if the Company or the Note
Issuers had previously furnished copies thereof to such Holder or Participating
Broker-Dealer and (iii) the foregoing indemnity with respect to any preliminary
prospectus shall not inure to the benefit of any Indemnified Party from whom the
person asserting such losses, claims, damages, liabilities and judgments
purchased securities if such untrue statement or omission or alleged untrue
statement or omission made in such preliminary prospectus is eliminated or
remedied in the final prospectus and a copy of the final prospectus shall not
have been furnished to such person in a timely manner due to the wrongful action
or wrongful inaction of such Indemnified Party unless, in either case, such
failure to deliver a final prospectus was a result of non-compliance by the
Company with Section 3(d), 3(e), 3(f) or 3(g); provided further, however, that
this indemnity agreement will be in addition to any liability which the Company
or the Note Issuers may otherwise have to such Indemnified Party. The Note
Issuers and the Company shall also indemnify underwriters, their officers and
directors and each person who controls such underwriters within the meaning of
the Securities Act or the Exchange Act to the same extent as provided above with
respect to the indemnification of the Holders of the Securities if requested by
such Holders.
(b) Each Holder of the Securities, severally and not jointly, will
indemnify and hold harmless the Company and the Note Issuers and each person, if
any, who controls the Company and/or the Note Issuers within the meaning of the
Securities Act or the Exchange Act from and against any losses, claims, damages
or liabilities or any actions in respect thereof, to which the Company or any
such controlling person may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities
or actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in a Registration Statement or prospectus
or in any amendment or supplement thereto or in any preliminary prospectus
relating to a Shelf Registration, or arise out of or are based upon the omission
or
<PAGE>
16
alleged omission to state therein a material fact necessary to make the
statements therein not misleading, but in each case only to the extent that the
untrue statement or omission or alleged untrue statement or omission was made in
reliance upon and in conformity with written information pertaining to such
Holder and furnished to the Company and/or the Note Issuers by or on behalf of
such Holder specifically for inclusion therein; and, subject to the limitation
set forth immediately preceding this clause, shall reimburse, as incurred, the
Company and/or the Note Issuers for any legal or other expenses reasonably
incurred by the Company and/or the Note Issuers or any such controlling person
in connection with investigating or defending any loss, claim, damage, liability
or action in respect thereof. This indemnity agreement will be in addition to
any liability which such Holder may otherwise have to the Company or the Note
Issuers or any of their controlling persons.
(c) Promptly after receipt by an indemnified party under this Section 5
of notice of the commencement of any action or proceeding (including a
governmental investigation), such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section 5,
notify the indemnifying party of the commencement thereof; but the omission so
to notify the indemnifying party will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above. In case any
such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof the
indemnifying party will not be liable to such indemnified party under this
Section 5 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action.
(d) If the indemnification provided for in this Section 5 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to in
subsections (a) or (b) above (i) in such proportion as is appropriate to reflect
the relative benefits received by the indemnifying party or parties on the one
hand and the indemnified party on the other from the exchange of the relevant
Notes, pursuant to the relevant Registered Exchange Offer, or (ii) if the
allocation provided by the foregoing clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but
<PAGE>
17
also the relative fault of the indemnifying party or parties on the one hand and
the indemnified party on the other in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof) as well as any other relevant equitable
considerations. The relative fault of the parties shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or such Holder or
such other indemnified party, as the case may be, on the other, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in the first
sentence of this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any action or claim which is the subject of this
subsection (d). Notwithstanding any other provision of this Section 5(d), the
Holders of the Securities shall not be required to contribute any amount in
excess of the amount by which the net proceeds received by such Holders from the
sale of the Securities pursuant to a Registration Statement exceeds the amount
of damages which such Holders have otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
subsection (d), each person, if any, who controls such indemnified party within
the meaning of the Securities Act or the Exchange Act shall have the same rights
to contribution as such indemnified party and each person, if any, who controls
the Company within the meaning of the Securities Act or the Exchange Act shall
have the same rights to contribution as the Company.
(e) The agreements contained in this Section 5 shall survive the sale
of the Securities pursuant to a Registration Statement and shall remain in full
force and effect, regardless of any termination or cancelation of this Agreement
or any investigation made by or on behalf of any indemnified party.
6. Additional Interest Under Certain Circumstances. (a) Additional
interest (the "Additional Interest") with respect to the Securities shall be
assessed as follows if any of the following events occur (each such event in
clauses (i) through (iv) below, a "Registration Default"):
(i) If by the 91st day after the Issue Date, neither the Exchange
Offer Registration Statement nor the Shelf Registration Statement, each
with respect to a series of Notes, has been filed with the Commission;
(ii) If by the 181st day after the Issue Date the Exchange Offer
Registration
<PAGE>
18
Statement is not declared effective, or if applicable, the Shelf
Registration Statement is not declared effective within 245 days following
the Issue Date, each with respect to a series of Notes;
(iii) If by the 211th day after the Issue Date, the relevant
Registered Exchange Offer is not consummated and, if required in lieu
thereof, the Shelf Registration Statement is not declared effective by the
Commission, each with respect to a series of Notes; or
(iv) If after either the Exchange Offer Registration Statement or
the Shelf Registration Statement, each with respect to a series of Notes,
is declared effective (A) such Registration Statement thereafter ceases to
be effective (except as permitted in paragraph (b)); or (B) such
Registration Statement or the related prospectus ceases to be usable
(except as permitted in paragraph (b)) in connection with resales of
Transfer Restricted Securities during the periods specified herein because
either (1) any event occurs as a result of which the related prospectus
forming part of such Registration Statement would include any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein in the light of the circumstances under
which they were made not misleading, or (2) it shall be necessary to amend
such Registration Statement or supplement the related prospectus to comply
with the Securities Act or the Exchange Act or the respective rules
thereunder.
Additional Interest shall accrue on the applicable Notes and any Private
Exchange Securities exchanged therefor with respect to the first 90-day period
immediately following the occurrence of such Registration Default, by 0.50% per
annum and will increase by an additional 0.50% per annum with respect to each
subsequent 90-day period until such Registration Default has been cured, up to a
maximum amount of 1.5% per annum with respect to all Registration Defaults.
Following the cure of a Registration Default, the accrual of Additional Interest
with respect to such Registration Default will cease and upon the cure of all
Registration Defaults the interest rate will revert to the original rate.
(b) A Registration Default referred to in Section 6(a)(iii)(B) shall
be deemed not to have occurred and be continuing in relation to a Shelf
Registration Statement or the related prospectus if (i) such purported
Registration Default has occurred solely as a result of (x) the filing of a
post-effective amendment to such Shelf Registration Statement to incorporate
annual audited financial information with respect to the Company where such
post-effective amendment is not yet effective and needs to be declared effective
to permit Holders to use the related prospectus or (y) the occurrence of other
material events, with respect to the Company that would need to be described in
such Shelf Registration
<PAGE>
19
Statement or the related prospectus and (ii) in the case of clause (y), the
Company is proceeding promptly and in good faith to amend or supplement such
Shelf Registration Statement and related prospectus to describe such events;
provided, however, that if such purported Registration Default occurs in any
case for a continuous period in excess of 30 days, Additional Interest shall be
payable in accordance with the above paragraph from the day such Registration
Default occurs until such Registration Default is cured or until the Company is
no longer required pursuant to this Agreement to keep such Registration
Statement effective or such Registration Statement or related prospectus usable.
(c) Any amounts of Additional Interest due pursuant to clause
(a)(i), (a)(ii) or (a)(iii) of Section 6 above will be payable in cash on the
regular interest payment dates with respect to the Securities. The amount of
Additional Interest will be determined by multiplying the Additional Interest
Rate by the principal amount of the Securities, multiplied by a fraction, the
numerator of which is the number of days the Additional Interest Rate was
applicable during such period (determined on the basis of a 360-day year
comprised of twelve 30-day months), and the denominator of which is 360.
(d) "Transfer Restricted Securities" means each Security until (i)
the date on which such Security has been exchanged by a person other than a
broker-dealer for a freely transferrable Exchange Security in the Registered
Exchange Offer, (ii) following the exchange by a broker-dealer in the Registered
Exchange Offer of such Security for an Exchange Security, the date on which such
Exchange Security is sold to a purchaser who receives from such broker-dealer on
or prior to the date of such sale a copy of the prospectus contained in the
Exchange Offer Registration Statement, (iii) the date on which such Security has
been effectively registered under the Securities Act and disposed of in
accordance with the Shelf Registration Statement or (iv) the date on which such
Security is distributed to the public pursuant to Rule 144 under the Securities
Act or is saleable pursuant to Rule 144(k) under the Securities Act.
7. Rules 144 and 144A. The Company shall use its best efforts to
file the reports required to be filed by it under the Securities Act and the
Exchange Act in a timely manner and, if at any time the Company is not required
to file such reports, it will, upon the request of any Holder of Transfer
Restricted Securities, make publicly available other information so long as
necessary to permit sales of their securities pursuant to Rules 144 and 144A.
The Company covenants that it will take such further action as any Holder of
Transfer Restricted Securities may reasonably request, all to the extent
required from time to time to enable such Holder to sell Transfer Restricted
Securities without registration under the Securities Act within the limitation
of the exemptions provided by Rules 144 and 144A (including the requirements of
Rule 144A(d)(4)). The Company will provide a copy of this Agreement to
prospective purchasers of Notes or Private Exchange Securities identified to the
Company by the Initial Purchasers upon request. Upon the request of any Holder
of Transfer Restricted Securities, the Company shall deliver to such Holder a
written statement as to whether it has complied with such requirements.
Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to
require the Company to
<PAGE>
20
register any of its securities pursuant to the Exchange Act.
8. Underwritten Registrations. If any of the Transfer Restricted
Securities covered by any Shelf Registration are to be sold in an underwritten
offering, the investment banker or investment bankers and manager or managers
that will administer the offering ("Managing Underwriters") will be selected by
the Holders of a majority in aggregate principal amount of such Transfer
Restricted Securities to be included in such offering, subject to the consent of
the Company (which will not be unreasonably withheld or delayed).
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
9. Miscellaneous.
(a) Amendments and Waivers. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, except by the Company, the Initial
Purchasers (if affected by such amendment, modification, supplement, waiver or
consents) and the written consent of the Holders of a majority in principal
amount of the Securities (taken as a class) affected by such amendment,
modification, supplement, waivers or consents.
(b) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, first-class mail,
facsimile transmission, or air courier which guarantees overnight delivery:
(1) if to a Holder of the Securities, at the most current address
given by such Holder to the Company in accordance with the provisions of this
Section 9(b), which address initially is, with respect to each Holder, the
address of such Holder to which confirmation of the sale of the Securities to
such Holder was first sent by the Initial Purchasers.
(2) if to the Initial Purchasers, at the following address:
NatWest Capital Markets Limited
135 Bishopsgate London
EC2M3UR UK
Telephone:
Fax:
<PAGE>
21
Attention: Alton Irby, Director
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7475
Telephone: (212) 474-1000
Fax: (212) 474-3700
Attention: Stephen L. Burns, Esq.
(3) if to the Company, at its address as follows:
Nakornthai Strip Mill Public Company Limited
Chonburi Industrial Estate (Bowin)
358 M006, Highway 331, Sriarcha
Chonburi 20230 Thailand
Telephone: 6638-345950-84 Ext. 260
Fax: 6638-345985
Attention: John W. Schultes
with a copy to:
White & Case LLP
1155 Avenue of the Americas
New York, NY 10036
Telephone: (212) 819-8200
Fax: (212) 354-8113
Attention: Timothy Goodell, Esq.
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; three
business days after being deposited in the mail, postage prepaid, if mailed;
when receipt is acknowledged by recipient's facsimile machine operator, if sent
by facsimile transmission; and on the day delivered, if sent by overnight air
courier guaranteeing next day delivery.
(c) No Inconsistent Agreements. The Company has not, as of the date
hereof, entered into, nor shall it, on or after the date hereof, enter into, any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders herein or otherwise conflicts with the provisions hereof.
<PAGE>
22
(d) Successors and Assigns. This Agreement shall be binding upon the
Company and its successors and assigns.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAWS.
(h) Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
(i) Securities Held by the Company. Whenever the consent or approval
of Holders of a specified percentage of principal amount of Securities is
required hereunder, Securities held by the Company or its affiliates (other than
subsequent Holders of Securities if such subsequent Holders are deemed to be
affiliates solely by reason of their holdings of such Securities) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.
(j) Agent for Service; Submission to Jurisdiction; Waiver of
Immunities. By the execution and delivery of this Agreement, the Company (i)
acknowledges that it has, by separate written instrument, irrevocably designated
and appointed CT Corporation of New York ("CT Corporation") (and any successor
entity), as its authorized agent upon which process may be served in any suit or
proceeding arising out of or relating to this Agreement that may be instituted
in any Federal or state court in the State of New York or brought under Federal
or state securities laws, and acknowledges that CT Corporation has accepted such
designation, (ii) submits to the nonexclusive jurisdiction of any such court in
any such suit or proceeding, and (iii) agrees that service of process upon CT
Corporation and written notice of said service to the Company, as the case may
be, shall be deemed in every respect effective service of process upon it in any
such suit or proceeding. The Company further agrees to take any and all action,
including the execution and filing of any and all such documents and
instruments, as may be necessary to continue such designation and appointment of
CT Corporation in full force and effect
<PAGE>
23
for 10 years from the date of this Agreement. To the extent that the Company may
acquire any immunity from jurisdiction of any court or from any legal process
(whether through service of notice, attachment prior to judgment, attachment in
aid of execution, execution or otherwise) with respect to itself or its
property, it hereby irrevocably waives such immunity in respect of this
Agreement, to the fullest extent permitted by law.
<PAGE>
24
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the several Initial Purchasers and the Company in accordance with its
terms.
Very truly yours,
NSM STEEL (DELAWARE) INC.
By: /s/ John W. Shultes
--------------------------------
Title: President/CEO
NSM STEEL COMPANY, LTD.
By: /s/ John W. Shultes
--------------------------------
Title: President/CEO
NAKORNTHAI STRIP MILL PUBLIC
COMPANY LIMITED
By: /s/ John W. Shultes
--------------------------------
Title: President/CEO
<PAGE>
25
The foregoing Registration Rights Agreement is hereby confirmed and accepted as
of the date first above written.
NATWEST CAPITAL MARKETS LIMITED
MCDONALD & COMPANY SECURITIES, INC.
PAINEWEBBER INCORPORATED
ECT SECURITIES CORP.
By: NatWest Capital Markets Limited
By: /s/ A.R. Irby
--------------------------------
Title: Director
<PAGE>
ANNEX A
Each broker-dealer that receives Exchange Securities for its own
account pursuant to a Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Securities.
The Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of Exchange Securities received in exchange for Notes
where such Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date (as defined herein), it
will make this Prospectus available to any broker-dealer for use in connection
with any such resale. See "Plan of Distribution."
<PAGE>
ANNEX B
Each broker-dealer that receives Exchange Securities for its own
account in exchange for Notes, where such Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See Annex C, "Plan of
Distribution."
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Securities.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of Exchange Securities
received in exchange for Notes where such Notes were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date, it will make this
Prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale. In addition, until , 199 , all dealers
effecting transactions in the Exchange Securities may be required to deliver a
prospectus.1
The Company will not receive any proceeds from any sale of Exchange
Securities by broker-dealers. Exchange Securities received by broker-dealers for
their own account pursuant to a Registered Exchange Offer may be sold from time
to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange
Securities or a combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such prevailing market
prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer or the
purchasers of any such Exchange Securities. Any broker-dealer that resells
Exchange Securities that were received by it for its own account pursuant to the
Exchange Offer and any broker or dealer that participates in a distribution of
such Exchange Securities may be deemed to be an "underwriter" within the meaning
of the Securities Act and any profit on any such resale of Exchange Securities
and any commission or concessions received by any such persons may be deemed to
be underwriting compensation under the Securities Act. The Letter of Transmittal
states that, by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incidental to the Exchange Offer (including
- ----------
(1) In addition, the legend required by Item 502(e) of Regulation S-K will
appear on the back cover page of the Exchange Offer Prospectus.
<PAGE>
the expenses of one counsel for the Holders of the Securities) other than
commissions or concessions of any brokers or dealers and will indemnify the
Holders of the Securities (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act.
<PAGE>
ANNEX D
|_| CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
------------------------------------------------
Address:
---------------------------------------------
---------------------------------------------
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Notes that were acquired as a
result of market-making activities or other trading activities, it acknowledges
that it will deliver a prospectus in connection with any resale of such Exchange
Securities; however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
<PAGE>
Exhibit 4.07
EXECUTION COPY
SECURITY SHARING AGREEMENT
THIS AGREEMENT is made this 12th day of March 1998
BETWEEN:
(1) NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED, a public limited company
duly organized and validly existing under the laws of the Kingdom of
Thailand having its registered off ice at No. 9, UM Tower, 16th Floor,
Kwaeng Suanluang, Khet Suanluang, Bangkok, Thailand (the "Company");
(2) NSM STEEL COMPANY LTD., a company incorporated under the laws of the
Cayman Islands and a wholly owned subsidiary of the Company ("SM Cayman")
and NSM STEEL (DELAWARE) INC., a company incorporated under the laws of
the State of Delaware, United States, and a wholly owned subsidiary of NSM
Cayman ("SM (Delaware)" and, together with NSM Cayman, the "Issuers");
(3) The financial institutions whose names appear on the signature pages
hereto (the "Thai Lenders"), represented by THE INDUSTRIAL FINANCE
CORPORATION OF THAILAND, a corporation duly organized and validly existing
under the laws of the Kingdom of Thailand having its registered office at
No. 1770 New Petchburi Road, Bangkok 10320, as Facility Agent for the Thai
Lenders (the "Thai Facility Agent");
(4) THE CHASE MANHATTAN BANK, a company duly organized and validly existing
under the laws of the State of New York, having its registered office at
450 West 33rd Street, 15th Floor, New York, NY 10001, having its branch
office in Bangkok, Thailand, located at 20 North Sathorn Road, Silom,
Bangrak, Bangkok 10500, acting (a) in its capacity as the Book-Entry
Depositary (the "Notes Depositary") pursuant to a Note Depositary
Agreement (the "Note Depositary Agreement"), and acting as a
representative of the holders of the Senior Mortgage Notes (the "Senior
Note Trustee"), and acting as a representative of the holders of the
Senior Subordinated Mortgage Notes (the "Senior Subordinated Note Trustee"
and, together with the Senior Note Trustee, the "Notes Trustees") and (b)
in its capacity as the Book-Entry Depositary (the "Debenture Depositary")
pursuant to a Debenture Depositary Agreement (the "Debenture Depositary
Agreement"), and acting as a representative of the holders of the
Debentures (the "Debenture Trustee" or the "Debenture Representative");
AND
(5) THE CHASE MANHATTAN BANK, as collateral agent (the "Collateral Agent").
<PAGE>
2
WHEREAS:
A. The Company and the Thai Lenders entered into a credit facility agreement
dated 27th September 1995 (the "CFA"), whereunder credit facilities of
Baht 3,300,000,000 (Thirty Three Thousand Million Baht) and
U.S.$308,000,000 (Three Hundred and Eight Million United States Dollars)
have been granted to the Company by the Thai Lenders and the Company has
provided and/or agreed to provide the Shared Collateral (as defined
hereunder) as a security for such facilities;
B. The Company intends to procure financing from abroad by (i) having the
Issuers issue U.S.$452,500,000 of indebtedness comprised of (a)
U.S.$249,000,000 principal amount at maturity (U.S.$225,594,000 gross
proceeds) of 12% Senior Mortgage Notes Due 2006 (the "Senior Mortgage
Notes"), (b) U.S.$203,500,000 principal amount at maturity
(U.S.$175,000,000 gross proceeds) of 121/4% Senior Subordinated Mortgage
Notes Due 2008, with warrants to purchase 128,834,356 (One Hundred Twenty
Eight Million, Eight Hundred Thirty Four Thousand, Three Hundred Fifty
Six) ordinary shares of the Company (excluding the warrants, the "Senior
Subordinated Mortgage Notes"); and (c) U.S.$53,133,016 principal amount at
maturity (U.S.$43,500,000 gross proceeds) of 123/4% Subordinated Second
Mortgage Debentures Due 2009 (the "Debentures") and (ii) increasing the
aggregate number of ordinary shares for the value of Baht 1,847,680,900
(Baht One Thousand Eight Hundred Forty Seven Million Six Hundred Eighty
Thousand and Nine Hundred) to be offered to specific foreign investors
(the "Capital Increase"). The Senior Mortgage Notes, the Senior
Subordinated Mortgage Notes, the Debentures and the Capital Increase shall
be collectively referred to as the "Additional Financing");
C. The Company has entered into an amendment to the CFA (the "CFA Amendment")
with the Thai Lenders on this 12th day of March 1998 for the amendment of
certain terms and provisions to facilitate the Company's Additional
Financing, including but not limited to, the right of the holders of the
Notes and the Debentures and the Thai Lenders to share the Shared
Collateral (the CFA and the CFA Amendment, collectively, the "Bank Credit
Facility");
D. The Company and the Secured Creditors have agreed to cause the Shared
Collateral to be shared to secure the Secured Indebtedness; and
E. The Parties hereto wish to enter into this Agreement providing for the
creation of security and the sharing of security among the Secured
Creditors and certain consultation procedures between and among them and
the Collateral Agent.
<PAGE>
3
IT IS AGREED as follows:
1. DEFINITIONS
Except as otherwise provided herein, words and expressions in this
Agreement shall have the respective meanings as defined in the Indentures
(as defined below):
"Actionable Default" means (i) any Event of Default for the Notes under
and as defined in the Indentures, (ii) any event of default under and as
defined in the Bank Credit Facility or (iii) any event of default in the
Debenture Indenture; provided that only those events which give the
applicable secured creditor the right to accelerate indebtedness or result
in the automatic acceleration of indebtedness, including after notice or
passage of time or both, shall be an Actionable Default.
"Closing Date" means the date on which the proceeds from the Additional
Financing, have been deposited with the Collateral Agent and all required
prepayments are made by the Company to the Thai Lenders in accordance with
the CFA Amendment.
"Credit Documents" means this Security Sharing Agreement, the Bank Credit
Facility, the Indentures, the Notes, the Debentures and the Security
Documents.
"Debenture Indenture" means the indenture for the Debentures.
"First Priority Secured Creditors" means any or all of the Thai Lenders
(including the Thai Facility Agent) and any or all of the holders of the
Notes (including the Notes Depositary and the Notes Trustees).
"Indentures" means the Notes Indentures and the Debenture Indenture.
"Land Mortgages" means the mortgages over all of the land, buildings and
structures owned by the Company granted to the Secured Creditors as
security for the Secured Indebtedness.
"Machinery Mortgages" means the mortgages over all of the machinery and
equipment owned by the Company granted to the Secured Creditors as
security for the Secured Indebtedness.
"Mortgaged Amounts" means the principal amount, expressed in Thai Baht, of
each of the Mortgages. At the Closing Date, the Mortgaged Amounts will be
set at an amount equal to the sum of the Secured Indebtedness secured
thereby expressed in US$ converted to Baht at a rate of Baht 75 to $1.00.
"Mortgaged Amounts Adjustment" means the obligation of the Company under
the Mortgages to cause the Mortgaged Amounts to be increased from time to
time at its own expense in order to maintain at all applicable times a
Mortgaged Amount based on an
<PAGE>
4
exchange rate of Baht to US$ that is no less than Baht 15 per US$1.00
higher than the actual exchange rate quoted at the close of business on
any business day by the Bank of Thailand (by way of example, if the actual
exchange rate quoted by the Bank of Thailand is Baht 65 per U.S.$1.00, the
Company would be obliged, subject to the proviso below, to cause the
Mortgaged Amounts to be increased to an amount equal to the Secured
Indebtedness secured thereby expressed in US$ converted to Baht at an
exchange rate of Baht 80 to US$1.00); provided, however, that the Company
need not undertake the adjustment described herein until such time as the
exchange rate of Baht to US$ upon which the Mortgaged Amount is then based
does not exceed the actual exchange rate quoted by the Bank of Thailand by
at least Baht 10 per US$1.00.
"Mortgages" means the Land Mortgages and the Machinery Mortgages.
"Notes" means the Senior Mortgage Notes and the Senior Subordinated
Mortgage Notes.
"Notes Indentures" means the indenture for the Senior Mortgage Notes dated
as of March 1, 1998, among the Company, the Issuers and the Senior Note
Trustee and the indenture for the Senior Subordinated Mortgage Notes dated
as of March 1, 1998, among the Company, the Issuers and the Senior
Subordinated Note Trustee.
"Notes Trustees" means the Senior Note Trustee and the Senior Subordinated
Note Trustee.
"Notice of Actionable Default" means a notice delivered to the Collateral
Agent stating that an Actionable Default has occurred, which describes
with reasonable particularity the nature of the Actionable Default and is
delivered to the Collateral Agent by (i) the Notes Trustees for the
holders of the Notes, acting pursuant to the Notes Indentures, (ii) the
Debenture Trustee for the holders of the Debentures (including the
Debenture Depositary), acting pursuant to the Debenture Indenture or (iii)
the Thai Facility Agent, acting upon the instructions of the holders of a
majority of the Outstanding Existing Indebtedness Obligations under the
Bank Credit Facility. A Notice of Actionable Default shall be deemed to
have been given when the notice referred to in the preceding sentence has
actually been received by a Responsible Officer of the Collateral Agent. A
notice of Actionable Default shall be deemed to be outstanding at all
times after such notice was given until the earlier of such time, if any,
as (x) the Collateral Agent has been notified by either Note Trustee, the
Debenture Representative or the Thai Facility Agent, as the case may be,
which delivered such notice, that such notice has been rescinded or waived
or (y) the Notes Trustees, the Debenture Trustee and the Thai Facility
Agent, if any, have determined, in accordance with the provisions
described under Section 4 hereof to rescind or waive such notice.
"Outstanding Debentures Obligations" means, at the time of any
determination, the sum of (i) the aggregate principal amount owed to the
holders of Debentures at such time and the aggregate amount of accrued and
unpaid interest thereon at such time and (ii) the
<PAGE>
5
aggregate amount of all other monetary obligations of the Company and the
Issuers that are accrued and owing at such time to the holders of
Debentures, including compensation, indemnification and expense
reimbursement obligations and premium and Additional Amounts, if any. From
and after the delivery of a Notice of Actionable Default that is
outstanding pursuant to this Agreement, such amounts shall be calculated
with respect to amounts due and owing under the Company's guarantee of the
Debentures pursuant to the Debenture Indenture, if greater than amounts
due and owing under the Debentures, from and after the delivery of a
Notice of Actionable Default.
"Outstanding Existing Indebtedness Obligations" means, at the time of any
determination, (i) the aggregate principal amount owed to the holders of
the Bank Credit Facility at such time and the aggregate amount of accrued
and unpaid interest thereon at such time and (ii) the aggregate amount of
all other monetary obligations of the Company and the Issuers that are
accrued and owing at such time to the holders of the Bank Credit Facility,
including compensation, indemnification and expense reimbursement
obligations and premium and Additional Amounts, if any.
"Outstanding Notes Obligations" means, at the time of any determination,
the sum of (i) the aggregate principal amount owed to the holders of Notes
at such time and the aggregate amount of accrued and unpaid interest
thereon at such time and (ii) the aggregate amount of all other monetary
obligations of the Company and the Issuers that are accrued and owing at
such time to the Trustees or the holders of Notes, including compensation,
indemnification and expense reimbursement obligations and premium and
Additional Amounts, if any. From and after the delivery of a Notice of
Actionable Default that is outstanding pursuant to this Agreement, such
amounts shall be calculated with respect to amounts due and owing under
the Guaranties, if greater than amounts due and owing under the Notes,
from and after the delivery of a Notice of Actionable Default.
"Responsible Officer," when used with respect to the Collateral Agent,
means any officer of the Collateral Agent with direct responsibility for
the administration of this Agreement.
"Second Priority Secured Creditors" means any or all of the holders of the
Debentures (including the Debenture Depositary).
"Secured Creditor(s)" means any or all of the Thai Lenders (including the
Thai Facility Agent), any or all of the holders of the Notes (including
the Notes Depositary and the Notes Trustees), and any or all of the
holders of the Debentures (including the Debenture Depositary and the
Debenture Trustee).
"Secured Creditors' Representatives" means the Thai Facility Agent for the
Thai Lenders, the Notes Depositary and the Trustees for the holders of the
Notes, and the Debenture Depositary and Debenture Trustee for the holders
of the Debentures.
<PAGE>
6
"Secured Indebtedness" means the Outstanding Notes Obligations, the
Outstanding Existing Indebtedness Obligations and the Outstanding
Debentures Obligations.
"Security Documents" means all the agreements, charges, documents and
instruments governing or creating the security interest in the Shared
Collateral for the benefit of the Secured Parties and shall in any event
include, without being limited to (i) this Agreement; (ii) Land and
Building Mortgage Agreement; (iii) the Machinery Pledge Agreement; (iv)
the Machinery Mortgage Agreement; (v) the Assignment of Insurance
Proceeds; (vi) the Conditional Assignment of Project Documents; (vii) the
Assignment of Operating Account, Note Sinking Fund Account and Revenue
Account; (viii) the Pledge of Operating Account and Revenue Account; (ix)
the Pledge of Permitted Investments; (x) the Assignment of Performance
Bonds; (xi) the Security Agreement governed by New York law with respect
to the offshore sub-account of the Revenue Account and the Notes Sinking
Fund Account; and (xii) any other documents relating to the Shared
Collateral and executed in connection with the foregoing; provided,
however, that, for purposes of this Agreement, the term "Security
Documents" shall not be construed to include any documents purporting to
create a security interest in the Notes DSR Account, the Offshore Reserve
Account or the outstanding ordinary or common shares of the Issuers.
"Shared Collateral" means all collateral previously granted and currently
held by the Thai Lenders and all other collateral of the Company that the
Thai Lenders shall have an interest in pursuant to the terms of the Bank
Credit Facility and the Security Documents and which shall, in no case,
include (i) the Co-Gen Facility, (ii) the Notes DSR Account, (iii) the
Offshore Reserve Account, (iv) the ordinary or common shares of the
Issuers, (v) receivables of the Company, (vi) inventory of the Company o
(vii) raw materials and work in progress of the Company.
"Total Secured Indebtedness" means without duplication, at any time of
determination, the sum of (i) the Outstanding Notes Obligations at such
time, (ii) the Outstanding Existing Indebtedness Obligations at such time
and (iii) the Outstanding Debentures Obligations at such time.
"Trustees" means collectively the Senior Note Trustee, the Senior
Subordinated Note Trustee and the Debenture Trustee.
1.2. Any reference in this Agreement to:
(a) any agreement or document shall be read and construed as a reference
to such agreement or document as the same may have been or may from time
to time be, amended, varied, novated or supplemented; and
(b) any party shall be construed so as to include its respective
successors, permitted assigns and transferees in accordance with its
respective interests.
<PAGE>
7
1.3. Words denominating the singular include the plural and vice versa.
1.4. Section headings are for reference only.
2. CREATION OF SECURITY
2.1. To secure the due and punctual payment by the Company of the Secured
Indebtedness, on or before the Closing Date, (i) the Thai Lenders hereby
agree to release the existing mortgage, pledge and/or any other rights
over the Shared Collateral currently held by them or their
representatives, and (ii) the Company hereby agrees to cause a security
interest in the Shared Collateral to be perfected for the benefit of the
Secured Creditors pursuant to the Security Documents.
2.2. All the parties hereto shall enter into the Security Documents
substantially in the forms attached to this Agreement as Exhibit 1, as
security for the Secured Indebtedness. Subject to Section 3.4(h) and the
terms of the Indentures, the Note Depositary Agreement and the Debenture
Depositary Agreement, the parties hereto shall arrange for all necessary
acts, including but not limited to the execution and delivery of
agreements and documents, submission and registration of same with the
competen authorities, to effect the creation and perfection of such
security by the Company.
3. THE COLLATERAL AGENT
3.1. Appointment.
Each of the Secured Creditors hereby irrevocably appoints and authorizes
the Collateral Agent as the Collateral Agent for and on its behalf:
(a) to execute and deliver all the Security Documents and any other
documents or notices related thereto which are provided for therein;
(b) to act as its Collateral Agent in connection with this Agreement and
the Security Documents;
(c) to exercise such rights, powers and discretions as are specifically
delegated to the Collateral Agent by the terms hereof and thereof
together with all such rights, powers and discretions as are
reasonably incidental hereto and thereto, provided that no implied
covenants or obligations shall be read into this Agreement or any
Security Document against the Collateral Agent; and
(d) to hold on their behalf monies from time to time deposited in the
Revenue Account, the Operating Account and the Notes Sinking Fund
Account.
3.2. Performance of the Collateral Agent.
<PAGE>
8
Subject to the provisions hereof, the Collateral Agent shall:
(a) cooperate with the Secured Creditors' Representatives and the
Company in the preparation, execution, and registration of the
Shared Collateral and Security Documents and accept and keep in
custody any or all of the Security Documents;
(b) promptly furnish each of the Secured Creditors copies of any notice
sent or document received by it to or from the Company or any third
parties under any of the Credit Documents to the extent not
furnished by the Company directly to any such Secured Creditors;
(c) promptly notify each of the Secured Creditors in writing of the
occurrence of any Event of Default or any default by the Company
under the Credit Documents which occurrence (a) is conveyed by
written notice of any of the Secured Creditors or the Company to a
Responsible Officer of the Collateral Agent, or (b) is actually
known to a Responsible Officer of the Collateral Agent;
(d) (i) subject to any contrary provisions of the Security Documents,
be authorized, but not obligated, to do such things as it may
from time to time consider necessary or desirable to preserve
its rights, and the rights of the Secured Creditors, under the
Security Documents; and
(ii) apply all amounts from time to time received by it in
accordance with this Agreement;
(e) refrain from acting in accordance with any instruction of any
Secured Creditor to institute or defend any judicial proceedings
arising out of or in connection with the Security Documents or any
other guarantee or security held from time to time for or on behalf
of the Secured Creditors in relation to the Security Documents, or
taking any other action until it has been indemnified and/or secured
to its satisfaction against any and all costs, claims, expenses
(including legal fees) and liabilities which it may expend or incur
in complying with the instructions;
(f) if it is unable to obtain instructions from or communicate with the
Secured Creditors after making reasonable attempts to do so, either
refrain from acting as Collateral Agent on behalf of them or take
such action on behalf of them as it in its absolute discretion deems
appropriate and shall not be liable to them as a result of any such
action or inaction; and
(g) refrain from acting in accordance with any instructions of any
Secured Creditor if, in its opinion, such instructions are contrary
to applicable laws or would involve it in personal liability against
which the indemnity or security referred to below would not provide
adequate protection.
<PAGE>
9
In any case, the Collateral Agent shall be entitled, in its sole discretion, to
refrain from taking any action in accordance with any instruction of any Secured
Creditor unless and until it is fully satisfied that such instruction is
legitimate, and until it has been indemnified to its satisfaction against any
and all costs, claims, expenses (including legal fees), losses, damages and
liabilities which it may expend, incur or suffer in complying with such
instruction.
3.3. Reliance.
In performing its duties hereunder, the Collateral Agent shall be entitled
(but not required) to:
(a) assume that (i) any representation made by the Company in connection
with this Agreement and the Security Documents is true; (ii) no
event which is or may become an event of default or a potential
event of default has occurred; and (iii) none of the parties to this
Agreement is in breach or default of their obligations thereunder or
under any security taken pursuant thereto unless a Responsible
Officer of the Collateral Agent directly responsible for the
administration of this Agreement has actual knowledge or actual
notice from any of the Secured Creditors or the Company to the
contrary;
(b) rely upon any written notice, certificate, opinion, telefax, order,
or other document (including, without limitation, any payment or
disbursement instruction) believed by it to be genuine concerning
all matters pertaining to this Agreement or any Security Documents
and its duties hereunder or thereunder (including as to the truth
and correctness of the statements and opinions contained therein)
and shall not be liable to any of the other parties hereto or the
holders of any Secured Indebtedness for any of the consequences of
such reliance (other than in the case of its gross negligence or
willful misconduct); and
(c) engage and pay and be reimbursed by the Issuers and the Company for
the advice or services of any lawyers, accountants, surveyors or
other experts whose advice or services its reliance upon it deems
necessary, expedient or desirable and may rely upon any advice so
obtained.
3.4. Liability.
The Collateral Agent shall not:
(a) be bound to inquire as to the occurrence of any event of default or
potential event of default or any breach of or default under this
Agreement or any of the Security Documents;
(b) be bound to disclose to any person any information relating to the
Company or any other person if such disclosure would or might in its
opinion constitute any breach
<PAGE>
10
of any contractual obligations or a violation of any applicable laws
or be grounds on which any person may bring legal action against
them;
(c) be responsible for the accuracy, genuineness or completeness of any
information, exhibit, representation, warranty, certificate or
report furnished hereunder or in connection with this Agreement
and/or any of the Security Documents;
(d) be bound to ascertain or ensure full compliance and observation of
any of the terms, conditions and covenants hereunder and/or under
this Agreement and/or any of the other Security Documents or to
inspect or verify any financial statements of the Company;
(e) be responsible for the due execution, delivery, legality, validity,
enforceability, adequacy or admissibility in evidence of this
Agreement and/or any of the Security Documents;
(f) be liable to the Company, the Secured Creditors or any other person
for any cost, charges, losses, liabilities or expenses arising from
or in connection with the enforcement of the Shared Collateral or
from any exercise or non-exercise by the Collateral Agent of any
right exercisable by it under this Agreement or the Security
Documents or from the performance or non-performance by the
Collateral Agent of any duty or obligation imposed upon it by this
Agreement or the Security Documents unless they shall be caused by
the Collateral Agent's own gross negligence or willful misconduct;
(g) be under any obligation to exercise any right, power or privilege
assigned or pledged to it or otherwise conferred on it by or
pursuant hereto or by any law or to make any inquiry as to the
nature or sufficiency of any payment received by it or to make any
claim or to take any other action to enforce any such right, power
or privilege or any amount which may become payable thereunder;
(h) be responsible for perfecting or maintaining the perfection of any
security interest or for preserving against third parties any
security interest or lien granted to it hereunder or under any
Security Document or for filing, recording, registering, refiling,
rerecording or reregistering any notice, instrument or document in
any public office at any time or times;
(i) be liable for any error of judgment made in good faith by an officer
of the Collateral Agent who is directly responsible for the
administration of this Agreement, unless it shall be proved that the
Collateral Agent was grossly negligent in ascertaining the pertinent
facts; or
(j) be liable with respect to any action taken or omitted to be taken by
it in good faith in accordance with the instructions of Secured
Creditors authorized to be given to
<PAGE>
11
it hereby or by any Security Document, provided that, nothing in
this Agreement shall exempt the Collateral Agent from or indemnify
it against any liability which results from any gross negligence or
willful misconduct in relation to the exercise of its rights or any
performance of its duties under this Agreement;
3.5. Permitted Actions.
It is expressly declared as follows:
(a) the Collateral Agent may in relation to any of the Credit Documents
act on the advice or opinion of or any information obtained from any
lawyer, accountant, consultant, banker or any other expert with
relevant experience, whether obtained by the Company, the Collateral
Agent, any Secured Creditor or otherwise, and shall not be
responsible for any loss resulting from so acting;
(b) the Collateral Agent shall be at liberty to accept as sufficient
evidence of any act or matter a certificate signed by any authorized
directors of the Company and the Collateral Agent shall not be bound
in any such case to call for further evidence or be responsible for
any loss that may result from the Collateral Agent acting on such
certificate, unless it ought reasonably in the circumstances to have
known that the certificate of the Company was incorrect;
(c) the Collateral Agent shall be at liberty to hold or to place this
Agreement, any Security Documents, any relevant document of title to
any Shared Collateral and any other documents relating thereto with
any bank or company whose business includes undertaking the safe
custody of documents or any firm of lawyers considered by the
Collateral Agent to be of good reputation;
(d) the Collateral Agent shall not be bound to take any steps to
ascertain whether any event has occurred as a result of which the
Shared Collateral may become enforceable and, until a Responsible
Officer of the Collateral Agent has actual knowledge or actual
notice from any of the Secured Creditors or the Company to the
contrary, the Collateral Agent shall be entitled to assume that no
such event has occurred and that each of Secured Creditors and the
Company are observing and performing al the obligations on their
part contained in the Credit Documents;
(e) without prejudice to their right of indemnity given by law, the
Collateral Agent and every attorney, manager, agent, delegate or
other person properly appointed by them hereunder is hereby
indemnified by the Company against all liabilities and expenses
properly and reasonably incurred by them in the exercise or
enforcement of any rights, powers, authorities, or discretion vested
in them under or pursuant to this Agreement and against all actions,
proceedings, costs, claims and demands in respect to any matter or
thing done or omitted in any way relating to the Credit Documents
except for liabilities and expenses resulting from the gross
negligence
<PAGE>
12
or willful misconduct of the Collateral Agent. The Collateral Agent
may, in priority to any payment to the Secured Creditors, retain and
pay out of any moneys of the Company in its hands pursuant to the
Credit Documents the amount of any such liabilities and expenses.
The obligations of the Company under this Subsection shall survive
the termination of this Agreement and the resignation and removal of
the Collateral Agent;
(f) no provision of this Agreement or any Security Document shall
require the Collateral Agent to expend or risk its own funds or
otherwise incur any 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 it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it; and
(g) the Collateral Agent may, for purposes of determining Total Secured
Indebtedness and the amount of Indebtedness held by each Secured
Party, rely on certificates presented to the Collateral Agent by the
Thai Facility Agent, as to the indebtedness owed to the Thai
Lenders, the Trustees, as to indebtedness owed to the Senior
Mortgage Note Holders, the Senior Subordinated Mortgage Note Holders
and the holders of Debentures, respectively.
3.6. Litigation.
The Collateral Agent may, whenever it thinks fit, delegate by power of
attorney or otherwise to any person with relevant qualifications and
experience all or any of the rights, powers, authorities and discretions
vested in the Collateral Agent by this Agreement and the Security
Documents. The Collateral Agent shall not be responsible for any loss
incurred by any such delegate or sub-delegate appointed with due care by
it hereunder. The Collateral Agent will notify the Secured Creditors
promptly after making any such delegation.
3.7. Waiver.
The Collateral Agent may, but only if and in so far as, in its opinion,
the interest of the Secured Creditors shall not be materially prejudiced
thereby, waive or authorize on such terms and conditions as it shall deem
fit and proper, any breach or proposed breach of a minor or technical
nature by the Company, provided that the Collateral Agent shall not
exercise any powers conferred on it by this Sub-clause in contravention of
any express direction given by the Secured Creditors in accordance with
the provisions hereof. Any such waiver or authorization shall be binding
on the Secured Creditors and shall be notified to the Secured Creditors as
soon as practicable thereunder.
3.8. The Secured Creditors agree, ratably in accordance with their respective
Secured Indebtedness, to reimburse and indemnify the Collateral Agent to
the extent not actually
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13
reimbursed by the Company, and only after the Collateral Agent has
exhausted all reasonable efforts (including judicial action) to collect
from the Company, from and against all liabilities, obligations, losses,
damages, penalties, claims, actions, judgments, suits, costs,
disbursements and expenses of any kind whatsoever whic may be incurred or
sustained by or imposed on or asserted against the Collateral Agent in
connection with this Agreement and/or the Security Documents and/or any
enforcement or preservation of the Secured Creditors' rights hereunder or
thereunder; provided that no Secured Creditors shall be liable for any
such liabilities resulting from the gross negligence or willful misconduct
of the Collateral Agent; provided further, that the Notes Depositary, the
Debenture Depositary and the Trustees shall have no liability under this
Section 3.8, other than to pay over to the Collateral Agent funds received
by them from their respective Noteholders or Debenture holders for
purposes of this Section 3.8.
3.9. (a) The Collateral Agent may resign its appointment hereunder at any
time without assigning any reason therefor by giving the Secured
Creditors and the Company not less than 90 days' prior written
notice of its intention to do so, provided that no such resignation
shall be effective until a successor for such Collateral Agent is
appointed in accordance with the succeeding provisions of this
Clause.
(b) If the Collateral Agent gives notice of its resignation pursuant to
(a) above, the Secured Creditors whose then outstanding Secured
Indebtedness in the aggregate exceeds sixty percent (60%) of the
then Total Secured Indebtedness, may appoint a reputable and
experienced bank or other financial institution as successor with
the approval of the Company, which will not be unreasonably withheld
so long as the proposed successor is administratively capable of
performing the role of such Collateral Agent. If no such successor
is appointed during the 90 day period of such notice, the retiring
Collateral Agent may appoint a reputable and experienced bank or
other financial institution as its successor. Any such appointment
shall take effect only upon notice thereof (which notice shall
specify the bank to which payments to such Collateral Agent shall be
made thereafter) being given to the Thai Lenders, the Thai Facility
Agent, the Trustees and the Company. The retiring Collateral Agent
shall do all such acts and things, subject to the payment of its
fees and charges, and execute and deliver all such documents as the
Company, any Secured Creditor or the successor Collateral Agent may
request to effect and perfect such assignment, delivery and transfer
to, as soon as practicable, the Collateral Agent.
(c) If a successor to a Collateral Agent is appointed under the
provisions of (b) above, then (i) the retiring Collateral Agent
shall be discharged from any obligation as such Collateral Agent but
shall remain liable for any obligations or liabilities to the
Secured Creditors incurred up to the date on which appointment of
its successor takes effect and (ii) its successor and each of the
other parties hereto shall have the
<PAGE>
14
same rights and obligations among themselves as they would have had
if such successor had been an original party hereto.
3.10. Collateral Agent Fees and Expenses.
In consideration of the Collateral Agent's performances under this
Agreement and the Security Documents, the Company hereby agrees to pay to
the Collateral Agent reasonable compensation for its services rendered
hereunder and under the Security Documents as set forth in a separate fee
letter. The Company further agrees to pay and/or reimburse any actual
expenses incurred by the Collateral Agent in its performance of its duties
hereunder and under the Security Documents. The Company also agrees to
indemnify the Collateral Agent for, and to hold it harmless against, any
loss, liability or expense incurred without gross negligence or bad faith
on its part, arising out of or in connection with the acceptance or
administration of its duties hereunder and under the Security Documents,
including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its
powers or duties hereunder or thereunder.
4. ENFORCEMENT AND OTHER ACTIONS
4.1. Notice of Actionable Default. The Collateral Agent shall promptly notify
in writing the Company, the Issuers and each Secured Creditors'
Representative that did not send such notice or certificate in the event
it shall receive any Notice of Actionable Default or certificate
rescinding or waiving a Notice of Actionable Default and shall promptly
notify the Secured Creditors' Representatives of any request by the
Company or the Issuers for any consent, waiver or amendment with respect
to any of this Agreement or any Security Document.
4.2. Actions Under Security Documents.
(a) The Collateral Agent shall not be obligated to take any action under
this Agreement or any of the Security Documents except for the
performance of such duties as are specifically set forth herein or
therein, it being the intention of the parties hereto that the
obligations of the Collateral Agent under this Agreement and the
Security Documents are ministerial in nature and that the Collateral
Agent shall not be required to exercise any discretion hereunder or
thereunder. Prior to taking any action hereunder or under any
Security Document that would otherwise require the Collateral Agent
to exercise any discretion, the Collateral Agent shall be entitled
to seek the direction of the Secured Creditors' Representatives and
shall be fully protected in acting in accordance with such
direction, except to the extent this Agreement or the Security
Documents authorize or require the Collateral Agent to act on the
basis of the direction of any other Person or Persons. Subject to
the provisions of Section 3 and this Section 4, (i) the Collateral
Agent shall take any action under or with respect to the Security
<PAGE>
15
Documents that is requested by the Secured Creditors'
Representatives in accordance with the provisions of Section 4.3 and
which is not inconsistent with, or contrary to, the provisions of
this Agreement, the Indentures, the Notes, the Debentures, the Bank
Credit Facility or any Security Document and (ii) the Collateral
Agent may take, but shall have no obligation to take, any and all
such actions under the Security Documents or any of them or
otherwise as it shall deem to be in the best interests of the
Secured Creditors in order to maintain the Shared Collateral and
protect and preserve the Shared Collateral and the rights of the
Secured Creditors; provided, however, that, except as provided in
paragraph (b) below, the Collateral Agent shall not foreclose any
Lien on the Shared Collateral or exercise any other remedies
available to it under any Security Document with respect to the
Shared Collateral or any part thereof.
(b) The Collateral Agent shall proceed to foreclose upon the Liens of
the Security Documents, and any Secured Creditor shall otherwise
exercise any other remedies available to it under the Security
Documents with respect to the Shared Collateral or any part thereof
only if (i) the Collateral Agent has received a Notice of Actionable
Default that is outstanding pursuant hereto and has delivered such
notice to the Company, the Issuers and each other Secured Creditor's
Representative as specified in Section 4.1 and (ii) the Secured
Creditors' Representatives have agreed, in accordance with a meeting
held in accordance with Section 4.3, that the Collateral Agent or
such Secured Creditor should take such action and shall have,
pursuant to the resolution or resolutions adopted at such meeting,
given directions to the Collateral Agent or such Secured Creditor,
as the case may be, as to the precise actions to be taken in
connection with the foreclosure of such Liens. At the time the
Collateral Agent or such Secured Creditor, as the case may be, may
proceed to foreclose and enforce the Liens of the Security Documents
and the Indenture pursuant to the previous sentence, such event is
referred to as a "Foreclosure Event."
4.3. Meetings; Voting.
(a) After notification by the Collateral Agent of the receipt of a
Notice of Actionable Default pursuant to Section 4.1, upon the
request of any Secured Creditor's Representative within five
Business Days after delivery of such notice, the Collateral Agent
shall schedule a meeting of all Secured Creditors' Representatives
and the Collateral Agent to be held at the offices of the Collateral
Agent in Bangkok or another mutually convenient place; provided that
any Secured Creditor's Representative and the Collateral Agent may
participate at such meeting by telephone. At such meeting the
Secured Creditors' Representatives shall consult with one another in
an attempt to determine the course of conduct to be taken regarding
the Company, the Issuers, the collection of the Total Secured
Indebtedness and the exercise of rights and remedies under the
Security
<PAGE>
16
Documents (including the rescission or waiver of any Notice of
Actionable Default and any action to be taken by the Collateral
Agent pursuant to Section 4.2). The Collateral Agent shall give, in
accordance with Section 12, the Secured Creditors' Representatives
at least five Business Days' notice of any such meeting, which
notice may be waived by the Secured Creditors' Representatives.
(b) Whenever it is necessary to make any decision of the Secured
Creditors whether at any meeting scheduled pursuant to Section
4.3(a) or otherwise, the Collateral Agent shall notify each Secured
Creditors' Representative entitled to participate therein of the
proposed decision, shall seek instructions from the applicable
Secured Creditors' Representatives regarding such decision and shall
notify all Secured Creditors' Representatives entitled to
participate in such decision of the results thereof. All decisions
shall be taken by Secured Creditors' Representatives on the vote of
the holders of more than 50%; of the Total Secured Indebtedness (the
"Required Holders"), where the number of votes to which each Secured
Creditor's Representative is entitled is, subject to the provisions
of Sections 6.1 and 6.2, equal to the percentage that the
Outstanding Debenture Obligations, the Outstanding Existing
Indebtedness Obligations or the Outstanding Notes Obligations, as
applicable to such Secured Creditor's Representative, at such time
bears to the Total Secured Indebtedness; provided that if an
Actionable Default exists and 60 days have elapsed since the
delivery of the Notice of Actionable Default relating to such
Actionable Default with any such default remaining unremedied or
unwaived, then the Required Holders shall consist of those holders
with more than 33 1/3% of the Total Secured Indebtedness, with the
33 1/3% number to be reduced to 10% if any such default remain
unremedied or unwaived for another 30 days after such 60 day period,
and the 10% number to be further reduced to 5% if any such default
remains unremedied or unwaived for another 60 days after such 30 day
period; provided further, that, for purposes of such calculation,
Outstanding Debenture Obligations shall be deemed to equal zero
during any period where an Actionable Default exists under any of
the Senior Note Indenture, the Senior Subordinated Note Indenture or
the Bank Credit Facility. Nothing herein shall prevent the holders
of the Debentures or the Notes from taking any action or pursuing
any rights or remedies available (in each case, other than in
respect of the Shared Collateral) under the related Indenture.
(c) No action shall be taken by any Secured Creditor with respect to the
Shared Collateral except actions taken in compliance with this
Section 4.3.
4.4. Records. The Collateral Agent shall maintain records in the English
language and in reasonable detail regarding matters decided under Section
4.3, determinations of the amounts of the outstanding obligations, the
allocation of deposits to the Collateral Accounts and any distributions
therefrom. The information contained in such records shall be made
available to any Secured Creditors' Representatives upon request.
<PAGE>
17
4.5. Acts of the Secured Creditors.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action permitted or required by this Agreement to be
given or taken by the Secured Creditors' Representatives may be and,
at the request of the Collateral Agent, shall be embodied in and
evidenced by one or more instruments reasonably satisfactory in form
to the Collateral Agent and signed by or on behalf of such persons
and, except as otherwise expressly provided in any such instrument,
any such action shall become effective when such instrument or
instruments shall have been delivered to the Collateral Agent. The
instrument or instruments evidencing any action (and the action
embodied therein and evidenced thereby) are sometimes referred to
herein as an "Act" of the Person signing such instrument or
instruments. The Collateral Agent shall be entitled to rely
absolutely upon an Act of any Secured Creditor's Representative if
such Act purports to be taken by or on behalf of such person, and
nothing in this Section 4.5 or elsewhere in this Agreement shall be
construed to require any Secured Creditor's Representative to
demonstrate that it has been authorized to take any action that it
purports to be taking, the Collateral Agent being entitled to rely
conclusively, and being fully protected in so relying, on any Act of
such Secured Creditor's Representative.
(b) Upon the occurrence of an Actionable Default under the Notes, the
Debentures or the Bank Credit Facility, the applicable Trustee, or
the Thai Facility Agent, as applicable, shall be permitted, but not
required, to deliver a Notice of Actionable Default to the
Collateral Agent. Nothing in this Agreement or any Security Document
shall be construed or interpreted by any party hereto as requiring
the Trustees, the Debenture Representative or the Thai Facility
Agent, as the case may be, to deliver a Notice of Actionable Default
to the Collateral Agent upon the occurrence of an Actionable
Default.
4.6. Determination of Amounts of Obligations; Actionable Defaults.
Whenever the Collateral Agent is required to determine the existence or
amount of any of the Secured Indebtedness or any portion thereof or the
existence of any Actionable Default for any purposes of this Agreement, it
shall be entitled to make such determination on the basis of one or more
certificates of the applicable Trustee or the Thai Facility Agent, as the
case may be; provided, however, that if, notwithstanding the request of
the Collateral Agent, the applicable Trustee or the Thai Facility Agent,
as the case may be, shall fail or refuse within 14 days of such request to
certify as to the existence or amount of any Outstanding Obligations or
any portion thereof or the existence of any Actionable Default, the
Collateral Agent shall be entitled to determine such existence or amount
by such method as the Collateral Agent may, in its sole discretion,
determine, including by reliance upon a certificate of the Company or the
Issuers; provided further, however, that, promptly following any such
determination, the Collateral Agent shall notify the Trustees or the Thai
Facility Agent, as the case may be, of such determination and thereafter
shall
<PAGE>
17
correct any error that the Trustees or the Thai Facility Agent, as the
case may be, brings to the attention of the Collateral Agent. The
Collateral Agent may rely conclusively, and shall be fully protected in so
relying, on any determination made by it in accordance with the provisions
of the preceding sentence (or as otherwise directed by a court of
competent jurisdiction) and, subject to Sections 3.3 and 3.4 hereof, shall
have no liability to the Company or the Issuer, the Trustees, the Thai
Facility Agent or any other Person as a result of any action taken by the
Collateral Agent based upon such determination prior to receipt of notice
of any error in such determination.
4.7. Transfer Notices. Notwithstanding anything herein or in any Security
Document to the contrary, the Collateral Agent shall have no obligation to
assume the obligations of the Company or Issuers under the Project
Documents upon delivery of a Transfer Notice (as defined in the
Conditional Assignment of Project Documents) but shall have the
unconditional right to require the appointment of a Designee (as defined
in the Conditional Assignment of Project Documents) for such purpose.
5. ACCOUNTS
The Company shall establish and maintain, as set forth in and pursuant to
the terms of Annex A, the accounts described in Annex A (the "Project
Accounts") into which shall (except as otherwise explicitly provided in
any Security Document) be deposited amounts received by the Company, in
each case pursuant to the terms and provisions set forth in Annex A
hereto.
6. PRIORITY OF RIGHTS; PROCEEDS OF ENFORCEMENT
6.1. Second Priority Creditors. Each holder of any Debenture agrees that (i)
the interests of the holders of Senior Notes, the holders of Senior
Subordinated Notes and the creditors under the Bank Credit Facility,
including their interests in any payments to be made from the proceeds of
any sale or other perfection or creation of any security interests or
Liens in the Shared Collateral on behalf of any Secured Creditor or the
incurrence of any such Notes or Indebtedness, shall be prior to the
interests of the holders of the Debentures in the Shared Collateral,
including their interests in any such payments, to the extent and in the
manner provided in Section 6.3 (and from time to time shall execute and
deliver any instruments or agreements as may be reasonably necessary or
desirable to confirm the same), (ii) at all times that a Default under the
Senior Notes or Senior Note Indenture, Senior Subordinated Notes or Senior
Subordinated Note Indenture or Bank Credit Facility has occurred and is
continuing, the holders of the Debentures shall refrain from taking any
action to foreclose upon, acquire title to (by bidding in at foreclosure
or otherwise), take possession of, liquidate or otherwise proceed against
any of the Shared Collateral, and (iii) in the event that the Company is
required to effect the Mortgage Amounts Adjustment, the interests of the
holders of the Senior Notes, the Senior Subordinated Notes and the
creditors under the Bank Credit Facility in the Mortgaged Amount,
including, without limitation, in any increase resulting from such
Mortgage Amounts Adjustment, shall
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19
remain and be prior to the second priority interests of the holders of the
Debentures in any such increase and increased Mortgaged Amount (and from
time to time shall execute and deliver any instruments or agreements as
may be reasonably necessary or desirable to confirm the same).
6.2. Senior Subordinated Noteholders. Each holder of any Senior Subordinated
Note agrees that at all times that a Default has occurred and is
continuing under the Senior Notes or Senior Note Indenture, the holders of
the Senior Subordinated Notes shall (a) absent the consent of the holders
of a majority of the aggregate principal amount of Senior Notes
outstanding, refrain from taking any action toward collection of or
enforcement or otherwise exercise any rights of such holders of Senior
Subordinated Notes with respect to the Shared Collateral, whether pursuant
to applicable law, contract or otherwise, including any and all rights
concerning foreclosure upon the Shared Collateral and (b) shall (i) with
respect to any bankruptcy, insolvency, or similar proceeding, not be
entitled to vote with respect to the Shared Collateral or their rights
with respect thereto, whether pursuant to applicable law (including
applicable bankruptcy or insolvency law), contract (including the Senior
Subordinated Indenture), or otherwise, and (ii) in connection with any
vote in respect of the Shared Collateral (including in any bankruptcy,
insolvency or similar proceeding or otherwise), be deemed to have voted in
the same manner and to the same effect as the holders of a majority of the
aggregate principal amount of Senior Notes then outstanding, and the
holders of the Senior Subordinated Notes shall assign pursuant to this
Agreement such rights to vote to the holders of the Senior Notes for the
duration of any such Default for the purposes of effecting any such vote;
provided, that the foregoing provisions (A) will only apply to the holders
of the Senior Subordinated Notes so long as the amount owed to the holders
of the Senior Notes exceeds U.S.$50 million and (B) will not create any
contractual obligation on holders of the Senior Notes to take or refrain
from taking any action with respect to the Shared Collateral.
6.3. Distribution. The proceeds of any enforcement, collection or other
realization of all or any part of the Shared Collateral pursuant hereto
shall be paid to the Collateral Agent. Except as permitted herein, the
Collateral Agent shall deposit these proceeds into accounts it will
establish and maintain at its principal banking office in Bangkok for the
benefit of the Secured Creditors (the "Collateral Accounts"). The
Collateral Agent may appropriate and apply sums received by it in
connection with the enforceability of all outstanding Secured Indebtedness
to the credit of any of the accounts which have been established in the
name of the Collateral Agent, or over which the Collateral Agent holds a
security interest (provided that this provision shall apply only to
accounts that constitute Shared Collateral), on behalf of the Secured
Creditors or other sums the disposition of which it has the power to
control, in relation to this Agreement, the Bank Credit Facility, the
Indentures, the purchase agreement for the Debentures or any Security
Documents. Such proceeds shall be applied to the following order of
priority:
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20
(a) first, in payment of all costs, charges, fees, expenses and
liabilities incurred and payments made by and indemnities owed to
(collectively, "costs") the Collateral Agent and any receiver,
attorney, agent, delegate, subdelegate or other person (each a
"receiver") appointed by the Collateral Agent in accordance with the
terms of this Agreement, any of the Bank Credit Facility, the
Indentures or any Security Document in connection with the
performance of its obligations hereunder or thereunder or the
execution or purported execution of any powers, authorities or
discretions vested in it or him pursuant hereto or thereto including
(without limitation to the foregoing) the remuneration of the
Collateral Agent;
(b) second, pro rata to each of the following: (i) the Notes Depositary
and the Notes Trustees, in payment for all Outstanding Notes
Obligations that consist of costs incurred in connection with the
administration of the Note Depositary Agreement and the Indentures
and (ii) the Thai Facility Agent, in payment for all Outstanding
Existing Indebtedness Obligations that consist of costs incurred in
connection with the administration of the Bank Credit Facility; and,
in each case, of every such receiver or other person payable
pursuant to the terms thereof;
(c) third, in payment of the following under the Bank Credit Facility,
the Note Indentures and the Notes, ratably to the respective
entitlements of the applicable Secured Creditors (as the case may
be) mentioned in the relevant subparagraph in the proportion that
the Secured Indebtedness owed to a Secured Creditor bears to the sum
of the Outstanding Notes Obligations and Outstanding Existing
Indebtedness Obligations:
(i) first, in payment of accrued fees, commissions and interest
(including default interest but, in the cases of default
interest accruing in relation to any unpaid sum denominated in
Baht, only that amount of default interest which would have
accrued had the rate of interest been no greater than the sum
of one per cent (1%) and the relevant interest rate payable to
the relevant First Priority Secured Creditor under the
relevant agreement) in respect thereof;
(ii) second, in payment of outstanding principal of the Secured
Indebtedness owed to the First Priority Secured Creditors;
(iii) third, the default interest charged on unpaid sums in excess
of the limit specified in clause 6.3(b)(i) above;
(d) fourth, to the Debenture Depositary and the Debenture Trustee, in
payment for all Outstanding Debentures Obligations consisting of
costs incurred in connection with the administration of the
Debenture Depositary Agreement and the Debenture Indenture;
<PAGE>
21
(e) fifth, payment of accrued fees, commissions, interest (including
default interest) and principal to the Second Priority Secured
Creditors in respect of the Outstanding Debentures Obligations; and
(f) sixth, to the extent that any funds remain, to the Company.
(b) Except as otherwise explicitly set forth herein or in any Security
Document, the Collateral Agent shall deposit into the Collateral Accounts
all amounts received by it in its capacity as Collateral Agent (and not in
any other capacity) in respect of the Shared Collateral or the Security
Documents (including all monies received on account of any sale of or
other realization upon any of the Shared Collateral pursuant to any
Security Document or upon any Collateral Disposition or otherwise).
6.4. Conversion of Currencies.
For the purposes of Clause 6.3 conversion of amounts in U.S. Dollars or
Baht at any time shall be effected by applying the then average selling
rate of The Industrial Finance Corporation of Thailand and Thai Farmers
Bank Public Company Limited on the second business day prior to the day
that such relevant obligation becomes due.
7. DISTRIBUTION OF EXCESS PAYMENTS.
7.1. Subject to such payments being permissible under Thai law, if at any time
any one Secured Creditor (a "Recovering Creditor") obtains proceeds of any
of the Shared Collateral (whether by payment, the exercise of a right of
set-off or combination of accounts or otherwise but other than in
accordance with (i) the terms of subordination contained in the Senior
Subordinated Note Indenture or (ii) Section 6.1 above) resulting in such
Recovering Creditor's receipt of a greater proportion in respect o its pro
rata share (based on its Outstanding Note Obligations or Outstanding
Existing Indebtedness Obligations, as applicable) of the Total Secured
Indebtedness (the portion of such receipt or recovery giving rise to such
excess portion being herein called the "Excess Amount") than the
proportion thereof so received or recovered by any other Secured Creditor;
then,
(a) such Recovering Creditor shall pay to the Collateral Agent an amount
equal to such Excess Amount;
(b) there shall thereupon fall due from the Company to such Recovering
Creditor an amount equal to the amount paid out by such Recovering
Creditor pursuant to paragraph (a) above the amount so due being for
the purposes hereof treated as if it were an unpaid part of such
Creditor's portion of the relevant payment; and
(c) the Collateral Agent shall treat the amount received by it from such
Recovering Creditor pursuant to paragraph (a) above as if such
amount had been received by it from the Company in respect of the
relevant payment and shall pay the same to the
<PAGE>
22
Secured Creditors (including such Recovering Creditor) pro rata to
their respective entitlements thereto.
7.2. If any sum (a "relevant sum") received or recovered by a Recovering
Creditor in respect of any amount owing to it by the Company becomes
repayable and is repaid by such Recovering Creditor then:
(a) each Secured Creditor which has received a share of such relevant
sum by reason of the implementation of Clause 7.1 shall pay to the
Collateral Agent for the account of such Recovering Creditor an
amount equal to its share of such relevant sum together with its
proportionate share of any interest or other sums paid to the
Company by the Recovering Creditor in respect of such relevant sum;
and
(b) there shall thereupon fall due from the Company to each Secured
Creditor an amount equal to the amount paid out by it pursuant to
paragraph (a) above, the amount so due being for the purposes
hereof, treated as if it were the sum payable to such Secured
Creditor against which such Secured Creditor's share of such
relevant sum was applied.
7.3. If any Secured Creditor exercises any right of set-off or similar right in
respect of any credit balance of any account in respect of amounts then
owing to such Secured Creditor under this Agreement, any other Security
Document or any other credit agreement, such Secured Creditor shall pay to
each of the other Secured Creditors an amount equal to the amount to which
those Secured Creditors would have been entitled had such credit balance
been applied in accordance with clause 7.1; provided tha the preceding
sentence shall not apply to amounts in the Notes DSR Account or the
Offshore Reserve Account. The Company shall indemnify the Secured
Creditors against any such payment and each loss, cost or expense incurred
or sustained by the Secured Creditors in relation thereto. The proceeds of
such indemnification shall also be treated as amounts received by such
Secured Creditor by application of rights of set-off to which this clause
applies. The other Secured Creditors shall be under no obligation to
exercise any right they may have to set off.
8. EXPENSES AND STAMP DUTY
8.1. The Company shall on demand of a Secured Creditor pay to such Secured
Creditor all reasonable costs, charges, losses, liabilities and expenses
expended, paid or incurred by such Secured Creditor (whether before or
after the Shared Collateral has became enforceable), including any tax
thereon and professional fees, in connection with this Agreement, any of
the Security Documents or the Shared Collateral or the exercise of any
rights exercisable under this Agreement with respect to the Shared
Collateral by the Thai Facility Agent, the Trustees, the Depositaries or
the Collateral Agent, as the case may be, including, without limitation,
all reasonable costs, charges, losses, liabilities and expenses
<PAGE>
23
connected with the amendment, protection, realization, enforcement, waiver
or release of any provision of this Agreement, any of the Security
Documents or the Shared Collateral.
8.2. The Company shall pay promptly, and in any event before any penalty could
become payable, any stamp, documentary, registration or similar tax
payable in connection with the entry into, registration, performance or
enforcement of this Agreement or any of the Security Documents or in order
to render any of them admissible in evidence and shall indemnify the
Secured Creditors against any liability with respect to or resulting from
any delay in paying or omission to pay any such tax.
9. POWER OF ATTORNEY
9.1. Appointment. Each of the Secured Creditors hereby undertakes with the
Collateral Agent that it will, upon the request of the Collateral Agent at
any time, appoint the Collateral Agent as its attorney, on its behalf and
in its name or otherwise, at such time and in such manner as the
Collateral Agent may think fit (a) to do any of the things which it is
authorized to do under the Credit Documents in relation to the creation,
perfection, preservation or enforcement of the Shared Collateral and which
the Company fails duly to do, (b) to exercise all or any of the rights
conferred on it under this Agreement.
9.2. Ratification. Each of the Company, the Secured Creditors and the
Collateral Agent hereby ratifies and confirms and agrees to ratify and
confirm whatever the attorney so appointed shall do or purport to do in
the exercise or purported exercise of the power of attorney given pursuant
to Clause 9.1.
10. SECURITY UNAFFECTED
Neither the Shared Collateral nor the Secured Indebtedness thereby secured
shall be affected in any way by:
(a) any other encumbrance, guarantee or indemnity now or hereafter held
by the Collateral Agent or any other person in respect of the
Secured Indebtedness;
(b) any release of, amendment to, or enforcement or absence of
enforcement of any encumbrance, guarantee or indemnity, including
the Shared Collateral;
(c) the making or absence of any demand for payment of any liabilities
made on the Company or any other person whether by the Collateral
Agent, any other Secured Creditor or any other person;
(d) the commencement of the winding-up of the Company or any other
person;
(e) the illegality, invalidity or unenforceability of or any defect in
any provision of any document related to the Secured Indebtedness,
or any of the rights or obligations,
<PAGE>
24
whether on the grounds of ultra vires, not being in the interests of
the Company or for any other reason whatsoever; or
(f) any agreement, guarantee, indemnity, payment or other transaction
which is capable of being avoided under or affected by any law
relating to bankruptcy, insolvency or winding-up or any release,
settlement or discharge given or made by the Collateral Agent on the
faith of any such transaction, and any such release, settlement or
discharge shall be deemed to be limited accordingly.
11. RELEASE AND REASSIGNMENT
Immediately after the Company and the Issuers have finally paid and
satisfied to a Secured Creditor in full any of the Secured Indebtedness,
the Collateral Agent shall, at the cost of the Company, release and
reassign to the remaining Secured Creditors and the Secured Creditors'
Representatives, the Collateral so released, unless all Secured
Indebtedness under the terms of this Agreement have been fully discharged,
in which event the Collateral Agent shall, at the request and cost of the
Company, promptly release and reassign, without warranty, to the Company
the rights, title and interest assigned to it under this Agreement or such
part of it as then remains assigned in favor of the respective Secured
Creditor and/or release the related encumbrances created pursuant hereto,
provided that any release, settlement, discharge or termination of this
Agreement and/or any such reassignment shall, unless otherwise agreed in
writing by the Thai Lenders or the Trustees as the case may be, be made
upo the express condition that such release, settlement, discharge,
termination and/or reassignment shall become void and of no effect if any
security or payment on the faith of which such release, settlement,
discharge, termination and/or reassignment is given or made shall at any
time thereafter be nullified or subject to an order or judgment. Prior to
executing any release or reassignment pursuant to this Section, the
Collateral Agent shall receive a certificate from the applicable Secured
Creditor stating that all Secured Indebtedness owing to such Secured
Creditor has been paid in full. Any release and reassignment delivered
pursuant to this Section shall be prepared by the Company.
To the extent that any Collateral is sold or otherwise transferred and
such sale or other transfer does not constitute a default or event of
default under the Bank Credit Facility, the Indentures, the Security
Documents, the Notes or the Debentures, such Collateral shall be sold or
otherwise transferred free and clear of the lien of the Security Documents
and the Collateral Agent shall be and hereby is authorized to take any
actions deemed appropriate in order to effect the foregoing.
12. NOTICES
Any notice or communication under or in connection with this Agreement to
the parties hereto shall be in writing and addressed as follows until
another address is filed with each of the parties hereto:
<PAGE>
25
The Company
Nakornthai Strip Mill Public Company Limited
9, UM Tower, 16th Floor
Kwaeng Suanluang
Khet Suanluang
Bangkok, Thailand
Attn:
NSM Steel Company Ltd.
c/o NSM Thailand
Attn:
NSM Steel (Delaware) Inc.
c/o NSM Thailand
Attn:
The Thai Lenders via the Thai Facility Agent or at the address that appears
below their signature
The Thai Facility Agent
The Industrial Finance Corporation of Thailand
1770 New Petchburi Road,
Bangkok 10320
Attn:
The Collateral Agent
The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, NY 10001
Attn: Valerie Dunbar, Global Trust Services
The Notes Depositary, the Debenture Depositary and the Trustees
The Chase Manhattan Bank
450 West 33rd Street, 15th floor
New York, NY 10001
Attn: Valerie Dunbar, Global Trust Services
<PAGE>
26
13. SEVERABILITY
If at any time any one or more of the provisions of this Agreement becomes
invalid, illegal or unenforceable in any respect under any law, the
validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby.
14. EFFECTIVENESS.
This Agreement will become effective on the Closing Date upon the
occurrence of the following:
(a) upon the Closing of the Additional Financing; and
(b) the Company has received the proceeds from the offering of the
Notes, the Debentures and the Capital Increase and such proceeds
have been deposited in the Project Accounts; and
(c) the Thai Lenders have received the prepayment in the amount of US$50
million plus past due interest of approximately US$8 million from
the offering of such Notes and Debentures; and
(d) the arrangement for the Notes Depositary and the Debenture
Depositary, as representative of the holders of the Notes and
Debentures, to share the Shared Collateral with the Thai Lenders in
accordance with this Agreement.
15. GOVERNING LAW
(a) This Agreement shall be governed and construed in accordance with
the laws of Thailand, except with respect to the Collateral Agent's
immunities and standard of care which shall be governed and
construed in accordance with the laws of the State of New York.
(b) Each of the parties hereto irrevocably agrees that the court in
Thailand shall have jurisdiction to hear and determine any suit,
action or proceeding, and to settle any disputes, which may arise
out of or in connection with this Agreement and, for such purposes,
irrevocably submits to the jurisdiction of such court. The Company
irrevocably waives any objection which it might now or hereafter
have to such court being nominated as such forum and agrees not to
claim that any such court is not a convenient or appropriate forum.
(c) The submission to the jurisdiction of the courts referred to in
subparagraph (b) shall not (and shall not be construed so as to)
limit the right of the Secured Creditors or any of them to take
proceedings against the Company in any other court of competent
jurisdiction, nor shall the taking of proceedings in any one or
<PAGE>
27
more jurisdictions preclude the taking of proceedings in any other
jurisdiction (whether concurrently or not) if and to the extent
permitted by applicable law.
(d) The Company hereby consents generally, in respect of any legal
action or proceeding arising out of or in connection with this
Agreement, to the giving of any relief or the issue of any process
in connection with such action or proceeding, including, without
limitation, the making, enforcement or execution against any
property whatsoever (irrespective of its use or intended use) of any
order or judgment which may be made or given in such action or
proceeding.
(e) To the extent that the Company may in any jurisdiction claim for
itself or its assets immunity from suit, execution, attachment
(whether in aid of execution, before judgment or otherwise) or other
legal process, and to the extent that in any such jurisdiction there
may be attributed to itself or its assets such immunity (whether or
not claimed), the Company hereby irrevocably agrees not to claim and
hereby irrevocably waives such immunity to the full extent permitted
by laws of such jurisdiction.
16. SUCCESSOR COLLATERAL AGENT
A Successor Collateral Agent may be appointed at any time, upon the
written approval of the Company, the Trustees and the Thai Facility Agent,
such approval not to be unreasonably withheld; provided, however, that
such Successor Collateral Agent shall be a bank with an office in New
York, New York and Bangkok, Thailand, having combined Capital and surplus
equivalent to at least U.S. $500 million and authorized to perform the
functions of the Collateral Agent under this Agreement; and provided
furthe that, in the event a Thai court were not to recognize the standing
of the Collateral Agent to bring an enforcement action in respect of the
Shared Collateral on behalf of all the Secured Creditors, such approval
shall be deemed obtained for the appointment of the Notes Depositary as
Successor Collateral Agents; and provided still further that in such event
such approval shall be deemed obtained for the appointment, solely with
respect to the Debenture Trustee and the holders of the Debentures, of the
Debenture Depositary as Successor Collateral Agent.
17. AMENDMENTS
No modifications, waiver or amendment of any provision of this Agreement
or any Security Document shall in any event be effective unless the same
shall be in writing and signed by the Issuers, the Company and each
Secured Creditor's Representative, provided, however, that (i) no such
modification, waiver or amendment shall adversely affect any of the
Collateral Agent's right, immunities or rights to indemnification under
this Agreement or expand its duties or obligations under this Agreement
without the prior written consent of the Collateral Agent and (ii) no such
modification, waiver or amendment shall, except as set forth in the
Security Documents, (A) create any Lien on the Shared Collateral or
<PAGE>
28
any part thereof or terminate any part of the security interest of the
Collateral Agent in all or substantially all of the Shared Collateral or
(B) deprive the holders of the Secured Indebtedness of any part of the
security afforded by the liens of the Security Documents, in each case
without the consent of (x) the Thai Facility Agent and the Note Trustees
(in each case acting at the direction of a majority of holders of the
Outstanding Existing Indebtedness Obligations or Outstanding Notes
Obligations, as the case may be) unless the Note Holders and the Lenders
shall have released the Issuers and the Company of their obligations under
the Security Documents and hereunder, and (y) the consent of the Debenture
Trustee (acting at the direction of a majority of the holders of the
outstanding Debenture Obligations); provided further, however, that, in
any event, no such modification, waiver or amendment shall deprive the
holders of the Debentures of their rights under the Security Documents
without the consent of the Debenture Trustee, acting at the direction of a
majority of the holders of outstanding Debentures Obligations.
18. BENEFIT OF THE AGREEMENT
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective successors and assigns of the parties
hereto; provided, however, that no Secured Creditor shall, without the
written consent of the other Secured Creditors, assign or otherwise
transfer any rights, interests, duties or obligations under the Credit
Documents unless (i) each assignee or transferee shall have agreed in
writing (which writing shall be reasonably satisfactory to each Secured
Creditor) to be bound by and comply with the terms of this Agreement to
the same extent as the assignor or transferor hereunder and (ii) such
writing shall have been delivered to each Secured Creditor.
19. COUNTERPARTS
This Agreement may be executed by the parties hereto in as many
counterparts as may be deemed necessary or convenient, and each such
counterpart, when so executed, shall be deemed an original and all such
counterparts shall constitute but one and the same agreement.
20. INCONSISTENCY
Notwithstanding any provision of this Agreement or the Security Documents
to the contrary, each of the parties hereto acknowledges and agrees solely
for the benefit of the parties hereto that in the event of any conflict
between the terms of this Agreement and the terms of any Security Document
with respect to the application of monies
21. NO WAIVER
No failure or delay on the part of any of the parties hereto in exercising
any right, power or privilege under this Agreement shall impair such
right, power or privilege or be construed to be a waiver of any default or
acquiescence therein, nor shall any single or
<PAGE>
29
partial exercise of any such right, power or privilege preclude other or
further exercise thereof or of any other right, power or privilege.
22. NO CONTRAVENTION
Each Secured Creditor hereby agrees not to act, or to refrain from acting,
in any manner in respect of the Bank Credit Facility, the Notes, the
Debentures or the Indentures that would be reasonably likely to contravene
the intercreditor arrangements established hereby or adversely affect the
practical realization by any of the Secured Creditors of the benefits
thereof.
<PAGE>
30
IN WITNESS WHEREOF, the duly authorized representatives of the
parties hereto have executed this Agreement on the day and year first before
written.
THE INDUSTRIAL FINANCE CORPORATION OF
THAILAND,
By: /s/ [ILLEGIBLE]
-----------------------------------
Name:
Title:
Address:
THAI FARMERS BANK PUBLIC COMPANY
LIMITED,
By: /s/ [ILLEGIBLE]
-----------------------------------
Name:
Title:
Address:
SIAM CITIBANK PUBLIC COMPANY LIMITED,
By: /s/ [ILLEGIBLE]
-----------------------------------
Name:
Title:
NAKORNTHAI STRIP MILL PUBLIC COMPANY
LIMITED,
By: /s/ Sawasdi Horrungruang
-----------------------------------
Title: President/CEO
Address:
<PAGE>
31
SIAM CITY CREDIT FINANCE AND
SECURITIES PUBLIC COMPANY LIMITED,
By: /s/ [ILLEGIBLE]
-----------------------------------
Name:
Title:
Address:
FIRST CITY INVESTMENT FINANCE COMPANY
LIMITED,
By: /s/ [ILLEGIBLE]
-----------------------------------
Name:
Title:
Address:
IFCT FINANCE AND SECURITIES PUBLIC
COMPANY LIMITED,
By: /s/ [ILLEGIBLE]
-----------------------------------
Name:
Title:
Address:
THE CHASE MANHATTAN BANK,
By: /s/ [ILLEGIBLE]
-----------------------------------
Name:
Title:
Address:
<PAGE>
32
THE GOVERNMENT SAVINGS BANK,
By: /s/ [ILLEGIBLE]
-----------------------------------
Name:
Title:
Address:
FIRST BANGKOK CITY BANK PUBLIC COMPANY
LIMITED,
By: /s/ [ILLEGIBLE]
-----------------------------------
Name:
Title:
Address:
NAKORNTHON BANK PUBLIC COMPANY
LIMITED,
By: /s/ [ILLEGIBLE]
-----------------------------------
Name:
Title:
Address:
SCF FINANCE AND SECURITIES PUBLIC
COMPANY LIMITED,
By: /s/ [ILLEGIBLE]
-----------------------------------
Name:
Title:
Address:
<PAGE>
33
NSM STEEL COMPANY LTD..
By: /s/ Sawasdi Horrungruang
-----------------------------------
Title: President/CEO
Address:
THE CHASE MANHATTAN BANK, as Notes
Depositary, Senior Note Trustee and
Senior Subordinated Note Trustee,
By: /s/ Valerie Dunbar
-----------------------------------
Title:
Address:
THE CHASE MANHATTAN BANK, as Debenture
Depositary and Debenture Trustee,
By: /s/ Valerie Dunbar
-----------------------------------
Title:
Address:
<PAGE>
EXHIBIT 1
Form of Security Documents
<PAGE>
EXHIBIT A
PROJECT ACCOUNTS
ARTICLE I
Definitions
SECTION 1.1. Definitions. Capitalized terms used but not otherwise
defined herein shall have the meanings assigned to such terms in the Security
Sharing Agreement and the Indentures.
SECTION 1.2. Incorporation by Reference. Unless otherwise indicated
herein, each provision of the Security Sharing Agreement is specifically
incorporated by reference herein as if repeated in this Annex.
ARTICLE II
Protect Accounts
SECTION 2.1. Accounts. (a) There is hereby established and, at all
times hereafter until the trust created by the Security Sharing Agreement and
this Annex is terminated, there shall be maintained with the Collateral Agent at
the New York, New York corporate trust office of the Collateral Agent, a trust
account (the "Notes DSR Account") in the name of the Company and the Collateral
Agent under the control of the Collateral Agent for the benefit of the holders
of the Notes and the Debentures (the "Note Secured Creditors") into which there
shall be deposited by the Company, and the Company agrees to deposit (i)
$________ Issue Date, representing the sum of (a) the aggregate interest to be
payable on the Senior Notes on the first three Interest Payment Dates, (b) the
aggregate interest to be payable on the Senior Subordinated Notes on the first
two Interest Payment Dates and (c) the aggregate interest to be payable on the
Debentures on the first two interest payment dates, and (ii) from time to time
after the first three Interest Payment Dates, any amounts necessary cure any
deficiency in the required level of the Notes DSR Account as set forth in
Section 2.3(a). Income earned on Permitted Foreign Investments from amounts on
deposit in the Notes DSR Account shall accrue to the Revenue Account on the
first day of each calendar month. Amounts on deposit in the Notes DSR Account
shall at all times be maintained in U.S.$ at a Qualifying Financial Institution,
may only be invested in Permitted Foreign Investments and shall be disbursed by
the Collateral Agent in accordance with Section 2.3(a).
(b) There is hereby established and, at all times hereafter until
the trust created by the Security Sharing Agreement and this Annex is
terminated, there shall be maintained with
<PAGE>
Annex A
Page 2
the Collateral Agent at the New York, New York corporate trust office of the
Collateral Agent, a trust account (the "Offshore Reserve Account") in the name
of the Company and the Collateral Agent under the control of the Collateral
Agent for the benefit of the holders of the Notes and the Debentures (the "Note
Secured Creditors") into which there shall be deposited by the Company, and the
Company agrees to deposit, (i) $_____ on the Issue Date, representing the
balance (not otherwise deposited in the Notes DSR Account or the Transaction
Expenses and Fees Account (as defined below)) of the Notes Net Proceeds,
together with the balance of the proceeds of the Debenture Offering and any
Equity Investment Proceeds, and (ii), from time to time, income earned on
Permitted Foreign Investments from amounts on deposit in the Offshore Reserve
Account. Amounts on deposit in the Offshore Reserve Account shall at all times
be maintained in U.S.$ at a Qualifying Financial Institution, may only be
invested in Permitted Foreign Investments and shall be disbursed by the
Collateral Agent in accordance with Section 2.3(b).
(c) There is hereby established and, at all times hereafter until
the trust created by the Security Sharing Agreement and this Annex is
terminated, there shall be maintained with the Collateral Agent at the New York,
New York corporate trust office of the Collateral Agent, a trust account (the
"Notes Sinking Fund Account") in the name of the Company and the Collateral
Agent under the control of the Collateral Agent for the benefit of the Secured
Creditors into which there shall be deposited by the Company, and the Company
agrees to deposit, (i) no later than the fifteenth day following the last day of
each fiscal quarter of the Company (based on the Company's fiscal year in effect
on the Issue Date), an amount equal to the Cash Flow Sweep Amount (such amount
to be simultaneously certified by the Company to the Collateral Agent), and
(ii), from time to time, income earned on Permitted Foreign Investments from
amounts on deposit in the Notes Sinking Fund Account. Amounts on deposit in the
Notes Sinking Fund Account shall at all times be maintained in U.S.$ at a
Qualifying Financial Institution, may only be invested in Permitted Foreign
Investments and shall be disbursed by the Collateral Agent in accordance with
Section 2.3(c).
(d) There is hereby established and, at all times hereafter until
the trust created by the Security Sharing Agreement and this Annex are
terminated, there shall be maintained with the Collateral Agent at the Bangkok,
Thailand office of the Collateral Agent, a trust account (the "US$ Revenue
Account") in the name of the Collateral Agent under the control of the
Collateral Agent for the benefit of the Secured Creditors into which there shall
be deposited by the Company, and the Company agrees to deposit, (i) (directly or
through an intermediate fund as described in Section 2.1(f) below) all revenues
with respect to products sold or services performed by the Company, all proceeds
with respect to insurance policies held by the Company for the benefit of the
Company and all other amounts received by the Company that are denominated in
US$ and are not otherwise required to be deposited in the Offshore Reserve
Account, and (ii), from time to time, income denominated in US$ earned on
Permitted Foreign Investments from amounts on deposit in the US$ Revenue
Account. Amounts on deposit in the US$ Revenue Account must be maintained in US$
at a Qualifying Domestic Financial Institution, may only be invested in
Permitted Foreign Investments (subject to applicable exchange controls) and
shall be disbursed by the Collateral Agent in accordance with Section 2.3(d).
<PAGE>
Annex A
Page 3
(e) There is hereby established and, at all times hereafter until
the trust created by the Security Sharing Agreement and this Annex are
terminated, there shall be maintained with the Collateral Agent at the Bangkok,
Thailand office of the Collateral Agent, a trust account (the "Baht Revenue
Account") in the name of the Collateral Agent under the control of the
Collateral Agent for the benefit of the Secured Creditors into which there shall
be deposited by the Company, and the Company agrees to deposit, (i) (directly or
through an intermediate fund as described in Section 2.1(f) below) all revenues
with respect to products sold and services performed by the Company, all
proceeds with respect to insurance policies held by the Company for the benefit
of the Company and all other amounts received by the Company, in each case that
are denominated in Baht, and (ii), from time to time, income denominated in Baht
earned on Permitted Foreign Investments from amounts on deposit in the Baht
Revenue Account. Amounts on deposit in the Baht Revenue Account shall be
maintained at a Qualifying Domestic Financial Institution, may only be invested
in Permitted Foreign Investments (subject to applicable exchange controls) and
shall be disbursed by the Collateral Agent in accordance with Section 2.3(d).
(f) There is hereby established and, at all times hereafter until
the trust created by the Security Sharing Agreement and this Annex are
terminated, there shall be maintained with the Collateral Agent at the New York,
New York corporate trust office of the Collateral Agent, a trust account (the
"Offshore Sub-account" and, together with the US$ Revenue Account and the Baht
Revenue Account, the "Revenue Accounts") in the name of the Company and the
Collateral Agent under the control of the Collateral Agent for the benefit of
the Secured Creditors into which there shall be deposited by the Company, and
the Company agrees to deposit, (i) subject to any applicable exchange control
regulations, on or before the next Interest Payment Date an amount equal to the
sum of (a) the aggregate interest payable on the Notes on the such Interest
Payment Date and (b) the aggregate interest payable on the Debentures on the
such interest payment date, (c) on or before the fifteenth day following the
last day of each fiscal quarter of the Company (based on the Company's fiscal
year in effect on the Issue Date) any amount required to be deposited into the
Notes Sinking Fund Account applicable to the then current fiscal quarter, as
estimated in advance in good faith by the Company and certified to the
Collateral Agent; provided, however, that, notwithstanding the foregoing
provision, any sales proceeds denominated in Baht in the ordinary course of the
Company's business consistent with past practice need not be converted into
U.S.$ prior to the date such deposited proceeds may be used to pay U.S.$
denominated obligations or are otherwise deposited into the Notes Sinking Fund
Account, and (ii), from time to time, income earned on Permitted Foreign
Investments from amounts on deposit in the Offshore Sub-account. Amounts
deposited in the Offshore Sub-account must at all times be maintained in U.S.$
at a Qualifying Financial Institution, may only be invested in Permitted Foreign
Investments and shall be disbursed b the Collateral Agent in accordance with
Sections 2.3(d) and (e).
(g) There is hereby established and, at all times hereafter until
the trust created by the Security Sharing Agreement and this Annex are
terminated, there shall be maintained with the Collateral Agent at the Bangkok,
Thailand office of the Collateral Agent, a trust account (the "US$ Operating
Account") in the name of the Company under the control of the Company into which
there shall be deposited by the Company, and the Company agrees to deposit, on
the first day of each calendar month an amount such that, immediately after
giving effect to such deposit,
<PAGE>
Annex A
Page 4
the balance of such account shall be equal to the sum of (i) the US$ denominated
capital expenditures and Working Capital Requirements of the Company during that
calendar month as estimated in advance in good faith by the Company and
certified to the Collateral Agent and (ii) any amount required to be paid during
such calendar month in connection with the US$ denominated portion of the Bank
Credit Facility. The US$ Operating Account shall be maintained at a Qualifying
Domestic Financial Institution and disbursed by the Company in accordance with
Section 2.3(e).
(h) There is hereby established and, at all times hereafter until
the trust created by the Security Sharing Agreement and this Annex are
terminated, there shall be maintained with the Collateral Agent at the Bangkok,
Thailand office of the Collateral Agent, a trust account (the "Baht Operating
Account" and, together with the US$ Operating Account, the "Operating Accounts")
in the name of the Company under the control of the Company into which there
shall be deposited by the Company, and the Company agrees to deposit, on the
first day of each calendar month an amount such that, immediately after giving
effect to such deposit, the balance of such account shall be equal to the sum of
(i) the Baht denominated capital expenditures and Working Capital Requirements
of the Company during that calendar month as estimated in advance in good faith
by the Company and certified to the Collateral Agent and (ii) any amount
required to be paid during such calendar month in connection with the Baht
denominated portion of the Bank Credit Facility. The Baht Operating Account
shall be maintained at a Qualifying Domestic Financial Institution and disbursed
by the Company in accordance with Section 2.3(e).
(i) There is hereby established and, at all times hereafter until
the date that is 60 days after the Issue Date, there shall be maintained with
the Collateral Agent at the New York, New York corporate trust office of the
Collateral Agent, a trust account (the "Transaction Expenses and Fees Account")
in the name of the Collateral Agent under the control of the Collateral Agent
for the benefit of the Note Secured Creditors into which there shall be
deposited by the Company, and the Company agrees to deposit, $35 million on the
Issue Date, representing the Company's best estimate of the expenses and fees
that it will be required to pay in connection with the Additional Financing.
Amounts on deposit in the Transaction Expenses and Fees Account must be
maintained in US$ and shall be disbursed by the Collateral Agent in accordance
with Section 2.3(f).
SECTION 2.2. Investment of Funds Deposited in Project Accounts.
Amounts on deposit in the Project Accounts shall be invested and reinvested from
time to time in such Permitted Foreign Investments as the Company shall direct
by written instruction to the Collateral Agent, which Permitted Foreign
Investments shall be held in the name and be under the control of the Collateral
Agent or a successor Collateral Agent as provided in Section 3.9 of the Sharing
Agreement. If the amounts on deposit in any of the Project Accounts are invested
in Cash Equivalents described in clause (v), (vii) or (viii) of the definition
thereof and the ratings thereof fall below the ratings that are indicated in
such clause, either the Company or a majority of the holders of Outstanding
Notes Obligations, in the case of amounts on deposit in the Notes DSR Account or
the Offshore Reserve Account, or a majority of the holders of the Total Secured
Indebtedness, in the case of any other Account, shall direct the Collateral
Agent in writing to reinvest such amounts in another Permitted Foreign
Investment. In order to provide the Collateral Agent, for the benefit of the
Note Secured Creditors or the Secured Creditors, as the
<PAGE>
Annex A
Page 5
case may be, with a perfected security interest in any Permitted Foreign
Investment, each Permitted Foreign Investment shall be either:
(A) evidenced by negotiable certificates or instruments, or if
nonnegotiable then issued in the name of the Collateral Agent, which
(together with any appropriate instrument of transfer) are delivered to,
and held by, the Collateral Agent or any agent thereof in the State of New
York, United States; or
(B) in book-entry form and issued by the United States or any agency
thereof and backed by the full faith and credit of the United States, and
subject to pledge under applicable national or state law and Treasury
regulations and as to which appropriate measures shall have been taken for
perfection of the security interest; or
(C) in the case of a guaranteed investment contract, issued in the
name of the Collateral Agent (or any agent) and delivered to and held by
the Collateral Agent (or such agent).
Provided, however, that the provisions of the foregoing Sections 2.2(A), (B) and
(C) will not apply in the case of Permitted Foreign Investments in investment
funds when such Permitted Foreign Investments are (i) held by the Collateral
Agent and (ii) in the name of the Collateral Agent. In the absence of negligence
or willful misconduct, the Collateral Agent shall not be responsible for any
loss resulting from any such Permitted Foreign Investment. In addition, the
Collateral Agent has no obligation (i) to select or approve the terms
(including, without limitation, the rate of return or maturity) of any Permitted
Foreign Investment specified by the Company or determine whether its security
interest therein is perfected, (ii) to account to any person in connection with
those terms or the interest or other return in relation to those Permitted
Foreign Investments or amounts; or (iii) for anything done or omitted in
connection with the selection of those terms or renewal of those Permitted
Foreign Investments or amounts including, without limitation, any withdrawals or
realizations made before the maturity date of the Permitted Foreign Investments
or amounts, any failure to invest or reinvest any Permitted Investments or
amounts or any delays in doing so; provided, however, that nothing in this
paragraph will be taken to permit investment of funds in the Project Accounts
other than in Permitted Foreign Investments or to permit dealings with amounts
in the Project Accounts or with Permitted Foreign Investments otherwise than in
accordance with this Annex. Any investment direction by the Company shall be
accompanied by a certification that the requested investment constitutes a
Permitted Foreign Investment.
SECTION 2.3. Payments and Withdrawals from Project Accounts. (a) The Collateral
Agent shall withdraw funds from the Notes DSR Account and apply such amounts to
pay to the Paying Agent under the Indentures the interest due on the Notes and
the Debentures on the first two Interest Payment Dates after the Issue Date.
Thereafter, the balance in the Notes DSR Account shall at all times be at least
equal to the next interest payment on the Senior Notes. Notwithstanding the
preceding sentence, the Company shal have the right, assuming no other Event of
Default then exists, to cause amounts held in the Notes DSR Account to be
withdrawn to pay interest on the Notes and the Debentures even though such
withdrawal would reduce the amounts remaining in
<PAGE>
Annex A
Page 6
the Notes DSR Account below the minimum level indicated above; provided,
however, that any withdrawal that would reduce such amounts below the required
level may only be made to the extent sufficient funds are not then available in
the Revenue Accounts to pay such interest; provided further that the minimum
required level for the Notes DSR Account must be replenished in full by the
Company within 30 days following any such withdrawal; provided further that the
Collateral Agent has received a written request for such payment at least three
business days prior to the requested date of such payment. If after a period of
30 days the Company shall have failed to replenish any deficiency in the Notes
DSR Account, the Collateral Agent shall so notify the Trustees. All withdrawals
from the Notes DSR Account must be paid directly to the Paying Agent under the
Indentures to apply to interest payments on the Notes or the Debentures, as the
case may be. At the time the Company delivers a request to the Collateral Agent
for a payment from the Notes DSR Account, it must also deliver a certificate
signed by the Paying Agent under the Indentures stating the amount of interest
payable by the Company on the relevant Interest Payment Date. In the event that
the Company fails to provide a certificate to the Collateral Agent in accordance
with the preceding sentence, the Collateral Agent may refuse to authorize the
payment from the Notes DSR Account until such a certificate is provided.
(b) The amounts held in the Offshore Reserve Account may be
withdrawn by the Company only to (i) fund Phase II Construction Costs that are
required to be paid by the Company; provided that amounts may only be withdrawn
to fund such costs payable to vendors domiciled in Thailand to the extent
sufficient funds are not then available in the Operating Accounts to fund such
costs and (ii) fund general corporate purposes, including operating expenses,
debt service and the Cogen Investment (hereinafter, "Working Capital
Requirements") to the extent sufficient funds are not then available in the
Revenue Account to fund such requirements; provided further that the Company may
only withdraw funds from the Offshore Reserve Account to fund Working Capital
Requirements up to a maximum of U.S.$70 million in the aggregate. If the
aggregate amount withdrawn from the Offshore Reserve Account since the Issue
Date for Working Capital Requirements exceeds U.S.$50 million, or if after
giving effect to any proposed withdrawal the aggregate amount withdrawn from the
Offshore Reserve Account for such purpose would exceed $50 million, then amounts
in excess of such U.S.$50 million may only be withdrawn to fund Working Capital
Requirements upon a request by the Company accompanied by a certificate to the
Collateral Agent from the Independent Engineer or another independent
engineering firm of suitably similar international reputation and experience
which is reasonably satisfactory to the Collateral Agent (a "Substitute
Independent Engineer") stating that the funds available to the Company in the
Offshore Reserve Account (after giving effect to the proposed withdrawal) are
sufficient to satisfy all of the Company's remaining required Phase II
Construction Costs through Phase II Completion. At Phase II Completion, any
remaining amounts in the Offshore Reserve Account (except to the extent then
required to replenish the Notes DSR Account) may, at the Company's option
demonstrated by a written request to the Collateral Agent (which shall certify
that Phase II Completion has occurred), be applied to (x) tender for a portion
of the Notes and Debentures then outstanding at 100% of Accreted Value or (y)
repay principal amounts outstanding under the Bank Credit Facility; provided
that if the Company achieves Profitable Operations as of any date prior to and
including December 31, 2001, the Company will as of such date have the further
option, demonstrated by a written request to the Collateral Agent, to apply any
amounts then remaining in the Offshore Reserve
<PAGE>
Annex A
Page 7
Account (except to the extent then required to replenish the Notes DSR Account)
to the payment of Phase III Construction Costs. Notwithstanding the foregoing,
if the Company fails to achieve Profitable Operations prior to December 31,
2001, any remaining amounts in the Offshore Reserve Account must be used by the
Company to tender for the Notes and the Debentures at a price equal to 100% of
the Accreted Value thereof on the date of purchase (a "Stage III Tender"). Any
amounts remaining in the Offshore Reserve Account after a Stage III Tender will
be applied by the Company (x) first to replenish the Notes DSR Account (if
necessary) and (y) second to pay overdue interest, if any, and principal amounts
outstanding under the Bank Credit Facility. All requests by the Company for
withdrawals from the Offshore Reserve Account must be in writing and received by
the Collateral Agent at least three business days prior to the requested date of
such withdrawal. An such request shall set forth the purpose of such withdrawal,
shall certify, to the extent applicable, that the funds are to be used for Phase
III Construction Costs, Working Capital Requirements, repayment of amounts due
under the Bank Credit Facility, a Stage III Tender, to replenish the Notes DSR
Account or for any other purpose set forth herein, shall certify that such
withdrawal is for a purpose, for an amount and is to be paid to a payee
permitted hereby and that all conditions set forth herein to such withdrawal
have been complied with. The Company may not make any withdrawals from the
Offshore Reserve Account if, at the time it delivers a notice to the Collateral
Agent requesting such a withdrawal (i) there exists an Actionable Default
notified to the Collateral Agent by means of a Notice of Actionable Default or
(ii) the Company fails to provide to the Collateral Agent a certificate (a) from
the Independent Engineer dated no more than five days before the date of the
proposed withdrawal stating that the withdrawal is for the purpose of paying
Phase II Construction Costs required to be paid by the Company (if such is the
case) or (b) if the proposed withdrawal is for the purpose of funding Working
Capital Requirements, stating (i) how the funds are to be applied and (ii) that
the aggregate amount withdrawn from the Offshore Reserve Account since the Issue
Date to fund Working Capital Requirement, after giving effect to the proposed
withdrawal (1) does not exceed $50 million or (2) exceeds $50 million, in which
case the Company must also provide to the Collateral Agent a certificate of the
Independent Engineer stating that the funds available to the Company in the
Offshore Reserve Account (after giving effect to the proposed withdrawal) are
sufficient to satisfy all of the Company's Phase II Construction Costs through
Phase II Completion.
(c) The amounts held in the Notes Sinking Fund Account shall be used
to retire Notes and Debentures at maturity or to satisfy repurchase obligations
in respect of the Notes and the Debentures arising from the offers to repurchase
described under Sections 4.06, 4.07 or 4.10 of the Indentures. Notwithstanding
the foregoing, the Company or the Issuers may use amounts held in the Notes
Sinking Fund Account (i) during the period prior to the second anniversary of
the Issue Date and during any period where Profitable Operations have been
achieved and are continuing, to make payments of Phase III Construction Costs,
to fund working capital shortfalls, to invest in or acquire Additional Assets or
to purchase, redeem or otherwise acquire for value Secured Indebtedness of the
Company or the Issuers and (ii) at all other times, solely to purchase, redeem
or otherwise acquire for value Notes and Debentures or to make scheduled
principal or interest payments on Secured Indebtedness of the Company or the
Issuers. To make withdrawals from the Notes Sinking Fund Account, the Company
must provide to the Collateral Agent (i) if the requested date of the withdrawal
is within two years of the Issue Date
<PAGE>
Annex A
Page 8
and the withdrawal is for a purpose other than the repurchase of outstanding
Notes or Debentures, a written request for withdrawal at least three Business
Days prior to the date of the proposed withdrawal, (ii) if the requested date of
the withdrawal is two years or more after the Issue Date and the withdrawal is
not for the purpose of repurchasing Notes or Debentures, the notice provided in
the preceding clause (i) accompanied by a certificate of the Chief Executive
Officer of the Company certifying that the Company has achieved Profitable
Operations, or (iii) if the purpose of the withdrawal is to repurchase
outstanding Notes or Debentures, the notice provided in clause (i) accompanied
by a certificate of the Chief Executive Officer stating the reasons therefore.
No withdrawals may be made by the Company from the Notes Sinking Fund Account
if, at the time the request for a withdrawal is delivered to the Collateral
Agent, there exists an Actionable Default notified to the Collateral Agent by
means of a Notice of Actionable Default.
(d) Amounts on deposit in the Revenue Accounts may be withdrawn by
the Company (i) to fund the Operating Accounts on the first day of each month as
provided in Section 2.1(g) and (h) above, (ii) to fund the Notes Sinking Fund
Account on or before the fifteenth day following the last day of each of the
Company's fiscal quarters (based on the fiscal year of the Company in effect on
the Issue Date), (iii) to fund Working Capital Requirements, (iv) at all times
after the first two Interest Payment Dates, to pay interest when due on the
Notes and the Debentures and, if necessary, to fund required amounts in the
Notes DSR Account, and (v) at all times after the attainment by the Company of
Profitable Operations, to fund cash dividends and distributions that may be made
by the Company as provided in the Indentures. All withdrawals by the Company
from the Revenue Accounts must be in writing to the Collateral Agent on three
Business Days notice stating (i) in all instances, the purpose of the withdrawal
and that such withdrawal is in accordance with the terms of this Annex, and (ii)
if for the purpose of funding the Operating Accounts, that the amount requested
is the Company's best estimate of the amounts required to be paid by the Company
in the calendar month immediately following the request, which estimate shall be
certified as such by the Chief Executive Officer and shall take account of any
funds remaining in the Operating Accounts at the end of the preceding calendar
month. All amount requested by the Company to be paid in respect of the Notes
Sinking Fund Account or as interest on the Notes or Debentures shall be paid
directly by the Collateral Agent to the Notes Sinking Fund Account or to the
Paying Agent under the Indentures. No withdrawals from the Revenue Accounts may
be made if, at the time the request for withdrawal is delivered to the
Collateral Agent, there exists an Actionable Default notified to the Collateral
Agent by means of a Notice of Actionable Default.
(e) The Collateral Agent shall on the first day of each calendar
month deposit into the Operating Accounts by withdrawal from the Revenue
Accounts an amount such that, immediately after giving effect to such deposits,
the combined balance of such accounts shall be equal to the sum of (i) the US$
and Baht denominated capital expenditures (including, in the case of the latter,
Phase II Construction Costs to be paid by the Company to vendors in Thailand)
and Working Capital Requirements of the Company during that calendar month as
estimated in advance in good faith by the Company and certified to the
Collateral Agent and (ii), in the case of the Baht Operating Account, any amount
required to be paid during such calendar month in connection with the Bank
Credit Facility. The Company shall be responsible for providing to the
<PAGE>
Annex A
Page 9
Collateral Agent its request for withdrawal of amounts to be deposited in the
Operating Accounts from the Revenue Accounts as provided above. As long as no
Actionable Default exists and has been noticed to the Collateral Agent by means
of a Notice of Actionable Default, no request or notice need be provided to the
Collateral Agent in respect of withdrawals from the Operating Accounts;
provided, however, that the Collateral Agent shall have the right at any time to
request and accounting of the Company of actual expenditures by the Company from
the Operating Accounts in any calendar month.
(f) The amounts in the Transaction Expenses and Fees Account shall
be disbursed by the Collateral Agent at the written direction of the Company to
pay all expenses and fees incurred by the Company in connection with the
Additional Financing, including but not limited to advisory fees and
disbursements and the fees and disbursements of counsel. Any amounts remaining
in the Transaction Expenses and Fees Account at the close of business in New
York, New York on the day that is 60 days after th Issue Date shall be credited
by the Collateral Agent to the Offshore Reserve Account.
SECTION 2.4. Distribution to the Company. Except as specifically set
forth in Section 2.3, so long as any amounts or obligations under the Secured
Indebtedness remain outstanding, the Collateral Agent shall not distribute any
amounts held in the Project Accounts to the Company.
SECTION 2.5. Certain Procedures. (a) Promptly after receipt from the
Company of a timely and substantively complete request for a payment or
withdrawal from an account, the Collateral Agent shall notify the Secured
Creditors' Representatives of its contents and of the amount of the withdrawal
requested.
(b) If a request for payment or withdrawal from an account is
received by the Collateral Agent after 4:00 p.m. New York time on any Business
Day, the Collateral Agent is not obliged to notify the Secured Creditors'
Representatives under clause 2.5(a) until the next Business Day.
(c) A request for payment or withdrawal from an Account is
irrevocable.
(d) A request for payment or withdrawal from a Project Account may
be delivered to the Collateral Agent by facsimile, in which case the Company
must deliver the original of such request to the Collateral Agent by posting it
within one Business Day of the date of the facsimile transmission. The Company
hereby acknowledges that the Collateral Agent is not bound to enquire whether
the facsimile transmission has been inaccurately transmitted or received, or
been sent by an unauthorized person.
(e) All withdrawal requests shall certify that the requested
withdrawal is for a purpose, for an amount and is to be paid to a payee
permitted hereby and that all conditions set forth herein for such withdrawal
have been complied with.
SECTION 2.6. Acknowledgment. The Company acknowledges that the
Collateral Agent (i) may refuse (but shall not be obligated to) to permit any
withdrawal from any Account
<PAGE>
Annex A
Page 10
where it reasonably considers that the relevant withdrawal is not or may not be
authorized or permitted by this Annex or the relevant Credit Document and the
Collateral Agent will not be liable on any grounds to the Company or the Issuers
or any other person in consequence of that refusal, and (ii) is not liable for
loss or expense that may result from falsity, inaccuracy, insufficiency,
illegality or forgery of a request for a payment or withdrawal from an Account.
SECTION 2.7. General Operation of the Project Accounts. (a) The
Company irrevocably authorizes the Collateral Agent at any time and from time to
time including, if applicable, before the maturity of any of the amounts
standing to the credit of any Account, to withdraw any amounts from any Account,
to deposit or redeposit any amounts in any Account and to do all other things in
connection with the amounts standing to the credit of any Account to give effect
to the provisions of this Annex.
(b) The Company will promptly do all things which the Collateral
Agent may request, including the execution and delivery of any authorizations or
other documents, to enable the Collateral Agent to deal with the amounts
standing to the Credit of any Account or to deal with any Permitted Foreign
Investments in accordance with this Annex.
(c) The Collateral Agent has no obligation to ensure that the
Company applies withdrawals from any Account for the purposes permitted under
this Annex, but this does not derogate from any provision in this Annex or the
Security Sharing Agreement in relation to dealing with the Project Accounts.
(d) The Collateral Agent must ensure that no payment or transfer
from any of the Project Accounts is made if, as a result of that payment or
transfer, there would be a debit balance in the relevant Account.
(e) The Collateral Agent may rely on any certificate, statement or
notice provided under this Annex and which is signed or given by the persons
authorized to sign the same (including, without limitation, the Paying Agent,
any of the Secured Creditors' Representatives, the Independent Engineer or an
Officer or employee of any of those companies) as conclusive evidence of the
correctness of the matters contained in that certificate, statement or notice,
without any further enquiry as to its correctness.
(f) Notwithstanding any other provision herein to the contrary, the
Collateral Agent shall have a lien on the Project Accounts prior to that of any
other Person for payment of its fees, reimbursement of its expenses and payment
of its indemnities and in furtherance thereof, shall be entitled to withdraw
from any Project Account at any time any amounts necessary to pay such sums.
<PAGE>
Exhibit 4.08
ATTACHMENT TO FIRST PRIORITY
LAND MORTGAGE AGREEMENT
THIS ATTACHMENT to the Land Mortgage Agreement is made on 12 March 1998,
between:
(1) NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED, a public limited company
duly organized and validly existing under the laws of the Kingdom of
Thailand having its registered office at No. 9, UM Tower, 16th Floor,
Kwaeng Suanluang, Khet Suanluang, Bangkok, Thailand (the "Mortgagor");
(2) The financial institutions whose names are listed in Exhibit 1 (the "Thai
Lenders") represented by THE INDUSTRIAL FINANCE CORPORATION OF THAILAND, a
corporation duly organized and validly existing under the laws of the
Kingdom of Thailand having its registered office at No. 1770 New Petchburi
Road, Bangkok 10320, as Facility Agent for the Thai Lenders (the "Thai
Facility Agent");
(3) THE CHASE MANHATTAN BANK, a company duly organized and validly existing
under the laws of the State of New York, having its registered office at
450 West 33rd Street, New York, New York, U.S.A., having its branch office
in Bangkok, Thailand, located at 20 North Sathorn Road, Silom, Bangrak,
Bangkok 10500, acting as the Book-Entry Depositary for the Notes referred
to below (the "Depositary");
AND
(4) THE CHASE MANHATTAN BANK as collateral agent (the "Collateral Agent").
(the Thai Lenders and the Depositary are hereinafter collectively referred to as
the "Mortgagees").
WHEREAS:
A. The Mortgagor and the Thai Lenders entered into a credit facility
agreement dated 27 September 1995, (the "CFA") whereunder credit
facilities of Baht 3,300,000,000 and US$ 308,000,000 have been granted;
B. The Mortgagor intends to procure financing from abroad by having NSM Steel
Company, Ltd. ("NSM Cayman"), a company incorporated under the laws of the
Cayman Islands and in which the Mortgagor holds 100 percent of its shares,
and NSM Steel (Delaware) Inc., a company incorporated under the laws of
the State of Delaware, the United States, a wholly owned subsidiary of NSM
Cayman (hereinafter collectively referred to as the "Note Issuers"),
acting as agent of NSM Cayman pursuant to an agency agreement, issue
US$452,500,000 of indebtedness comprised of (a) US$249,000,000 (aggregate
principal amount at maturity) of 12% Senior Mortgage Notes Due 2006 (the
"Senior Notes") which will be issued pursuant to an indenture dated as of
1 March 1998 (the "Senior Note Indenture"), among the Note Issuers, the
Mortgagor and The Chase Manhattan Bank ("Chase"), as trustee (the "Senior
Notes Trustee"), (b) the US$203,500,000 (aggregate
<PAGE>
principal amount at maturity) 12 1/4 Senior Subordinated Mortgage Notes
Due 2008 (the "Senior Subordinated Notes" and together with the Senior
Notes, the "Notes"), which will be issued pursuant to an indenture dated
as of 1 March 1998 (the "Senior Subordinated Note Indenture", and together
with the Senior Note Indenture, the "Indentures") among the Note Issuers
and Chase, as trustee (the "Senior Subordinated Notes Trustee" and
together with the Senior Notes Trustee, the "Trustees"), with warrants to
purchase 74,476,809 ordinary shares of the Mortgagor, and (c) a private
placement consisting of US$53,133,016 (aggregate principal amount at
maturity) of 12 3/4% Subordinated Second Mortgage Debentures Due 2009 (t
"Debentures") which will be issued pursuant to an indenture dated as of 1
March 1998 (the "Debenture Indenture"), among the Note Issuers, the
Mortgagor and Chase, as trustee (the "Debenture Trustee") and 64,417,180
ordinary shares of the Mortgagor;
C. The Mortgagor has entered into an amendment to the CFA (the "CFA
Amendment") with the Thai Lenders dated 12 March 1998 for the amendment of
certain terms and provisions to facilitate the Mortgagor's additional
financing (the CFA and the CFA Amendment, collectively, the "Bank Credit
Facility"), including but not limited to, an agreement the Mortgagor
entered into with the Thai Lenders, the Trustees and the Debenture Trustee
dated 12 March 1998 to set forth arrangements for the Thai Lenders and
holders of the Notes and the Debentures to share certain collateral (the
"Security Sharing Agreement").
D. Pursuant to the terms of the Security Sharing Agreement, the Mortgagor,
the Thai Lenders, the Thai Facility Agent, the Depositary and the
Collateral Agent agree to enter into this Attachment as security for the
Obligations (as defined hereunder).
IT IS AGREED as follows:
1. DEFINITIONS
1.1 Capitalized terms used in this Attachment have the respective meanings
assigned below unless the context otherwise requires:
1.2 In this Attachment:
"Attachment" means this Attachment to Land Mortgage Agreement between the
Mortgagor and the Mortgagees dated 12 March 1998, including all schedules,
exhibits and other supplements and as modified or amended from time to
time;
"Land" means the plots of land as described in Exhibit 2 together with all
buildings and structures located now or at anytime hereafter therein;
"Land Mortgage Agreement" means the official land mortgage agreement to
which this Attachment is attached;
-2-
<PAGE>
"Land Title Deeds" means such deeds of title to land as have been issued
by the Land Department of Thailand for the registration of the Land and
the other particulars related thereto;
"Mortgage" means the Land Mortgage Agreement, this Attachment to the Land
Mortgage Agreement and any schedules, exhibits or other supplements
hereto, and the encumbrances thereby constituted; and
"Mortgaged Amount" means the principal amount of the Mortgage expressed in
Thai Baht which equals Baht 59,033,000,000. At the Closing Date, the
Mortgaged Amount will be set at an amount equal to the sum of the
outstanding Senior Note and Senior Subordinated Note Obligations and the
outstanding Bank Credit Facility Obligations expressed in US$ converted to
Baht at a rate of Baht 75 to $1.00.
"Mortgage Amount Adjustment" means the obligation of the Mortgagor to
cause the Mortgaged Amount to be increased from time to time at its own
expense in order to maintain at all applicable times a Mortgaged Amount
based on an exchange rate of Baht to US$ that is no less than Baht 15 per
US$ 1.00 higher than the actual exchange rate quoted at the close of
business on any business day by the Bank of Thailand (by way of example,
if the actual exchange rate quoted by the Bank of Thailand is Baht 65 per
US$ 1.00, the Mortgagor would be obliged, subject to the provision set
forth in Clause 3, to cause the Mortgaged Amounts to be increased to an
amount equal to the sum of the then outstanding Senior Note and Senior
Subordinated Note Obligations and the then outstanding Bank Credit
Facility Obligations expressed in US$ converted to Baht at rate of Baht 80
to US$ 1.00).
"Obligations" means all present and future obligations and liabilities of
Mortgagor under the Bank Credit Facility, the Notes, the Indentures and
the Security Sharing Agreement.
1.3 Any reference in this Attachment to:
(i) any agreement or document shall be read and construed as a reference
to such agreement or document as the same may have been, or may from
time to time be, amended, varied, novated or supplemented; and
(ii) any party shall be construed so as to include its respective
successors, permitted assigns and transferees in accordance with its
respective interests;
1.4 Words denominating the singular include the plural and vice versa.
1.5 Section headings are for reference only.
2. MORTGAGE AND GRANT OF SECURITY INTEREST
2.1 As security for the Obligations, the Mortgagor hereby grants to the
Mortgagees a first priority mortgage and continuing security interest in:
-3-
<PAGE>
(a) the Land; and
(b) all of the property, rights, title and interest in respect of any
and all of the Land (the "Mortgaged Property").
The Mortgagees hereby accept such Mortgage.
2.2 The Mortgagor agrees that if a novation or assignment of any of the
Obligations occurs, the Mortgage shall continue to be held as security for
such novated or assigned obligations and for any such new creditor.
2.3 The Mortgage shall be in addition to, independent of and without prejudice
to, and shall not be in substitution for, any other rights, security,
guarantee or indemnity now held or which may hereafter be held by the
Mortgagees.
2.4 The Mortgage shall be a continuing security and shall remain in force,
notwithstanding the bankruptcy or other incapacity of the Mortgagor or any
intermediate satisfaction of the whole or any part of the Obligations
until such time as the Obligations shall have been fully and finally paid
and discharged.
2.5 Upon the payment, discharge and performance in full of the Obligations,
the Collateral Agent will, at the request and at the cost and expense of
the Mortgagor, discharge the Mortgage and return to the Mortgagor the Land
Title Deeds.
3. ADJUSTMENT TO MORTGAGED AMOUNT
The Mortgagor hereby agrees to undertake the Mortgage Amount Adjustment
within two business days of any date on which the exchange rate of Baht to
US$ upon which the Mortgaged Amount is then based does not exceed the
actual exchange rate quoted by the Bank of Thailand by at least Baht 10
per US$ 1.00.
4. INTEREST
The Mortgagor agrees to pay interest to the Mortgagees as may accrue on
any debts incurred to the Mortgagees at the following interest rate:
(a) each of the Thai Lenders are entitled to charge interest at rates
specified in the CFA Amendment;
(b) the interest on the Senior Notes shall be charged at 12% per annum;
and
(c) the interest on the Senior Subordinated Notes shall be charged at 12
1/4% per annum.
5. OBLIGATIONS
The Mortgage constitutes a continuing security for all of the following
whether now existing or hereafter incurred:
-4-
<PAGE>
(1) the prompt payment by the Mortgagor when due and payable of the
Obligations; and
(2) the prompt payment by the Mortgagor when due and payable, of all
interest, compensation, indemnities, penalties, and all other
accessory debts from time to time owing by it in respect of the
Obligations.
6. DELIVERY OF CERTIFICATES
The Land Title Deeds shall be delivered to and retained by the Collateral
Agent upon execution of the Mortgage. All other certificates and
instruments relating to the Mortgage coming into existence from time to
time shall be delivered to the Collateral Agent promptly upon the receipt
thereof by the Mortgagor.
7. ENFORCEMENT OF MORTGAGE
7.1 The enforcement of the Mortgage and the distribution of proceeds realized
thereon shall be in accordance with the procedures set forth in the
Security Sharing Agreement.
7.2 As per the Security Sharing Agreement, the Mortgagees will act to enforce
the Mortgage upon receipt of (i) a Notice of Actionable Default (as
defined in the Security Sharing Agreement) and (ii) written instruction
from the Required Holders (as defined in the Security Sharing Agreement).
Upon receipt of the above, the Mortgagees may proceed to seek a court
order declaring the Mortgagor in default of its Obligations and that the
Mortgaged Property shall be sold at public auction or take any other
action permitted by law or as mutually agreed by the parties.
7.3 The Mortgagees may select to sell any or all of the Land to be enforced as
they deems appropriate.
7.4 As per the Security Sharing Agreement, the net proceeds derived from a
sale of any or all of the Mortgaged Property shall be applied towards
settlement of the Obligations. If such proceeds or the value of the Land
in case of foreclosure are insufficient to pay or set off all amounts to
which the Mortgagees are entitled, the Mortgagor shall remain liable for
the deficiency. All such proceeds shall be distributed in accordance with
the Security Sharing Agreement.
7.5 If the Mortgage is enforced, the Mortgage Amount stated herein shall not
prejudice the right of the Mortgagees to apply all of the net proceeds
derived from a sale of any or all of the Mortgaged Property, whether or
not such proceeds or value exceeds the Maximum Amount, towards settlement
of the Obligations.
7.6 If the Mortgagees enforce the mortgage or forecloses the Mortgaged
Property and tax liabilities of any kind (including but not limited to
customs duty, value added tax and transfer fees) related to the Mortgaged
Property arise for which the Mortgagees are liable, the Mortgagor shall
immediately pay such tax liabilities and all related penalties and
expenses and/or reimburse the Mortgagees for said amounts if paid by the
Mortgagees.
-5-
<PAGE>
8. COVENANTS
The Mortgagor hereby further covenants and agrees with the Mortgagees as
follows:
(1) To comply with all applicable laws, announcements, decrees, and
regulations of the Government of Thailand and all the subdivisions
thereof for the time being in force except where such failure to
comply would not have a material effect on the business or general
condition of the Mortgagor and with all further laws, announcements,
decrees or regulations subsequently issued from time to time which
may affect the Mortgaged Property except where such failure to
comply would not have a material effect on the business or general
condition of the Mortgagor.
(2) Not to do or permit or consent to be done or omit anything with the
knowledge that the consequence thereof may in any material way cause
the Mortgaged Property to deteriorate or lessen in value in any
material respect or cause any policy of insurance effected in
pursuance of the provisions of the mortgage or the Land Mortgage
Agreement to be cancelled or the amount of any premium payable for
any such policy of insurance to be materially increased.
(3) Not to grant any rights to any person, such as to let, give
habitation or allow a third party to construct or do any act on the
Mortgaged Property, except as otherwise agreed with the Mortgagees
or except as to any such right as would not in the good faith
judgment of the Mortgagee have a material adverse affect on the
value of the Mortgaged Property.
(4) Not to make or permit to be made without the written consent of the
Mortgagees any material structural alteration or addition to the
buildings and improvements for the time being forming part of the
Mortgaged Property, the consent for which shall not be unreasonably
withheld, except for the Phase II Construction and the Phase III
Construction (as defined in the Offering Memorandum) or such other
structural alteration or addition as would not, in the good faith
judgment of the Mortgagor, have a material adverse affect on the
value of the Mortgaged Property.
(5) To notify the Mortgagees in writing immediately on receipt of any
written notice, order or similar matter materially and adversely
affecting or likely so to affect the Mortgaged Property, sent to the
Mortgagor by a competent governmental authority and send the same or
a copy thereof to the Mortgagees, and on demand by the Mortgagees to
supply to the Mortgagee all material information within the
possession of the Mortgagor relating to the matters mentioned or
dealt with in such notice, order or other similar matter and upon
the grant or issue of any material permission, consent, license or
other document affecting the Mortgaged Property granted by any
competent governmental authority, to hand such document to the
Mortgagees to be kept with the deeds and documents of title relating
to the Mortgaged Property.
-6-
<PAGE>
(6) To use the Mortgaged Property only for the purposes of the
Mortgagor's business.
(7) To keep the Mortgaged Property in good repair and permit the
Mortgagees or their representatives upon 24 hours notice and during
normal working hours to enter the Mortgaged Property to examine the
condition thereof.
9. MORTGAGEES' RIGHTS
9.1 Any act performed by the Mortgagor in violation of this Attachment shall
not bind the Mortgagees and the Mortgagees shall have the right to deny
such act of the Mortgagor and the Mortgagees shall also have the right to
immediately enforce the Mortgaged Property in case the Mortgagor has
defaulted under this Attachment.
9.2 No delay in exercising or omission to exercise any right, power or remedy
available to the Mortgagees, upon any failure by the Mortgagor to observe
or perform any of its obligations under the Land Mortgage Agreement and
this Attachment shall impair such right, power or remedy or be construed
as a waiver thereof or as acquiescence in respect of any such failure nor
shall any acquiescence in any such failure affect or impair any right,
power or remedy of the Mortgagees in respect of any other or later failure
by the Mortgagor to observe or perform any of the Mortgagor's obligations
hereunder and under the Land Mortgage Agreement.
9.3 All rights herein shall be in addition to and without prejudice to all and
any rights granted by law.
10. EXPENSES
All fees, costs and all reasonable expenses related to the Mortgage, the
registration of the Mortgage and the removal thereof and the enforcement
of the Mortgage shall be borne by the Mortgagor.
11. LAW
This Attachment shall be governed by and construed in accordance with the
laws of the Kingdom of Thailand.
12. AMENDMENTS
The terms of this Attachment may be waived, altered or amended only by an
instrument in writing duly executed by the Mortgagor and the Collateral
Agent in accordance with Section 17 of the Security Sharing Agreement.
IN WITNESS WHEREOF, the parties have executed this Attachment in 16 copies by
their duly authorized representatives in the presence of witnesses on the date
first above written with 14 copies to be kept by the Land Department, one copy
for the Mortgagor and one copy for each of the Mortgagees.
-7-
<PAGE>
Mortgagor:
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
By: /s/ Sawasdi Horrungruang
--------------------------
Under power of attorney
dated _______________
Mortgagees:
as Thai Facility Agent for the Thai Lenders
THE INDUSTRIAL FINANCE CORPORATION OF THAILAND
By: /s/ [ILLEGIBLE]
----------------------------
Under power of attorney
dated _______________
THE CHASE MANHATTAN BANK
as Depositary
By: /s/ [ILLEGIBLE]
----------------------------
Under power of attorney
dated _______________
-8-
<PAGE>
THE CHASE MANHATTAN BANK
as Collateral Agent
By: /s/ [ILLEGIBLE]
----------------------------
Under power of attorney
dated _______________
Witnesses
- ----------------------------
Witnesses
- ----------------------------
-9-
<PAGE>
EXHIBIT 2
Description of Land and Buildings
- ---------------------------------------------------------------------------
No. Title Deed No. Land No. Survey Page No. Area
-----------------------
Rai Ngan Wah
- ---------------------------------------------------------------------------
1. 68083 129 1682 82 1 69
- ---------------------------------------------------------------------------
2. 72240 18 1826 52 1 13
- ---------------------------------------------------------------------------
3. 72242 15 1825 36 1 31
- ---------------------------------------------------------------------------
4. 72243 16 1830 11 2 87
- ---------------------------------------------------------------------------
5. 72246 14 1824 26 3 57
- ---------------------------------------------------------------------------
6. 77402 123 1676 18 1 55
- ---------------------------------------------------------------------------
7. 77403 125 1677 37 -- 16
- ---------------------------------------------------------------------------
8. 77404 124 1678 19 1 48
- ---------------------------------------------------------------------------
9. 77405 126 1679 32 -- 74
- ---------------------------------------------------------------------------
10. 77406 127 1680 51 1 93
- ---------------------------------------------------------------------------
11. 77407 128 1681 9 2 15
- ---------------------------------------------------------------------------
12. 78239 122 1675 22 -- 49
- ---------------------------------------------------------------------------
13. 78240 13 1683 16 2 13
- ---------------------------------------------------------------------------
14. 78241 12 1684 16 2 17
- ---------------------------------------------------------------------------
- ------------------------------------------------------------------------------
No. Nor.Sor. 3 Kor Land No. Survey Page No. Area
-----------------------
No. Rai Ngan Wah
- ------------------------------------------------------------------------------
1. 255 97 5 46 3 76
- ------------------------------------------------------------------------------
2. 125 (737) 40 (37) 25 11 -- 90
- ------------------------------------------------------------------------------
All plots of Land and Buildings above are located at Tambol Bowin, Amphur
Sriracha Chonburi Province.
-10-
<PAGE>
Exhibit 4.09
ATTACHMENT TO SECOND PRIORITY
LAND MORTGAGE AGREEMENT
THIS ATTACHMENT to the Land Mortgage Agreement is made on 12 March 1998,
between:
(1) NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED, a public limited company
duly organized and validly existing under the laws of the Kingdom of
Thailand having its registered office at No. 9, UM Tower, 16th Floor,
Kwaeng Suanluang, Khet Suanluang, Bangkok, Thailand (the "Mortgagor");
(2) THE CHASE MANHATTAN BANK, a company duly organized and validly existing
under the laws of the State of New York, having its registered office at
450 West 33rd Street, New York, New York, U.S.A., having its branch office
in Bangkok, Thailand, located at 20 North Sathorn Road, Silom, Bangrak,
Bangkok 10500, acting as the Book-Entry Depositary for the Debentures
referred to below (the "Mortgagee");
AND
(3) THE CHASE MANHATTAN BANK as collateral agent (the "Collateral Agent").
WHEREAS:
A. The Mortgagor and the Thai Lenders entered into a credit facility
agreement dated 27 September 1995, (the "CFA") whereunder credit
facilities of Baht 3,300,000,000 and US$ 308,000,000 have been granted;
B. The Mortgagor intends to procure financing from abroad by having NSM Steel
Company, Ltd. ("NSM Cayman"), a company incorporated under the laws of the
Cayman Islands and in which the Mortgagor holds 100 percent of its shares,
and NSM Steel (Delaware) Inc., a company incorporated under the laws of
the State of Delaware, the United States, a wholly owned subsidiary of NSM
Cayman (hereinafter collectively referred to as the "Note Issuers"),
acting as agent of NSM Cayman pursuant to an agency agreement, issue
US$452,500,000 of indebtedness comprised of (a) US$249,000,000 (aggregate
principal amount at maturity) of 12% Senior Mortgage Notes Due 2006 (the
"Senior Notes") which will be issued pursuant to an indenture dated as of
1 March 1998 (the "Senior Note Indenture", among the Note Issuers, the
Mortgagor and The Chase Manhattan Bank ("Chase"), as trustee (the "Senior
Notes Trustee"), (b) the US$203,500,000 (aggregate principal amount at
maturity) of 12 1/4 Senior Subordinated Mortgage Notes Due 2008 (the
"Senior Subordinated Notes" and together with the Senior Notes, the
"Notes"), which will be issued pursuant to an indenture dated as of 1
March 1998 (the "Senior Subordinated Note Indenture", and together with
the Senior Note Indenture, the "Indentures") among the Note Issuers and
Chase, as trustee (the "Senior Subordinated Notes Trustee" and together
with the Senior Notes Trustee, the "Trustees"), with warrants to purchase
74,476,809 ordinary shares of the Mortgagor, and (c) a private placement
consisting of US$53,133,016 (aggregate principal amount at maturity) of 12
3/4% Subordinated Second Mortgage Debentures Due 2009 (the "Debentures")
which
<PAGE>
will be issued pursuant to an indenture dated as of 1 March 1998 (the
"Debenture Indenture"), among the Note Issuers, the Mortgagor and Chase,
as trustee (the "Debenture Trustee") and 64,417,180 ordinary shares of the
Mortgagor;
C. The Mortgagor has entered into an amendment to the CFA (the "CFA
Amendment") with the Thai Lenders dated 12 March 1998 for the amendment of
certain terms and provisions to facilitate the Mortgagor's additional
financing (the CFA and the CFA Amendment, collectively, the "Bank Credit
Facility"), including but not limited to, an agreement the Mortgagor
entered into with the Thai Lenders, the Trustees and the Debenture Trustee
dated 12 March 1998 to set forth arrangements for the Thai Lenders and
holders of the Notes and the Debentures to share certain collateral (the
"Security Sharing Agreement"); and
D. Pursuant to the terms of the Security Sharing Agreement, the Mortgagor,
the Mortgagee and the Collateral Agent agree to enter into this Attachment
as security for the Obligations (as defined hereunder).
IT IS AGREED as follows:
1. DEFINITIONS
1.1 Capitalized terms used in this Attachment have the respective meanings
assigned below unless the context otherwise requires:
1.2 In this Attachment:
"Attachment" means this Attachment to Land Mortgage Agreement between the
Mortgagor and the Mortgagee dated 12 March 1998, including all schedules,
exhibits and other supplements and as modified or amended from time to
time;
"Land" means the plots of land as described in Exhibit 1 together with all
buildings and structures located now or at anytime hereafter therein;
"Land Mortgage Agreement" means the official land mortgage agreement to
which this Attachment is attached;
"Land Title Deeds" means such deeds of title to land as have been issued
by the Land Department of Thailand for the registration of the Land and
the other particulars related thereto;
"Mortgaged Amount" means the principal amount of the Mortgage expressed in
Thai Baht which equals Baht 3,984,976,200. At the Closing Date, the
Mortgaged Amount will be set at an amount equal to the sum of the
outstanding Debenture Obligations expressed in US$ converted to Baht at a
rate of Baht 75 to $1.00.
"Mortgage Amount Adjustment" means the obligation of the Mortgagor to
cause the Mortgaged Amount to be increased from time to time at its own
expense in order to
-2-
<PAGE>
maintain at all applicable times a Mortgaged Amount based on an exchange
rate of Baht to US$ that is no less than Baht 15 per US$ 1.00 higher than
the actual exchange rate quoted at the close of business on any business
day by the Bank of Thailand (by way of example, if the actual exchange
rate quoted by the Bank of Thailand is Baht 65 per US$ 1.00, the Mortgagor
would be obliged, subject to the provision set forth in Clause 3, to cause
the Mortgaged Amounts to be increased to an amount equal to the then
outstanding Debenture Obligations expressed in US$ converted to Baht at
rate of Baht 80 to US$ 1.00).
"Mortgage" means the Land Mortgage Agreement, this Attachment to the Land
Mortgage Agreement and any schedules, exhibits or other supplements
hereto, and the encumbrances thereby constituted; and
"Obligations" means all present and future obligations and liabilities of
the Mortgagor to the Debenture holders under the Debentures, Debenture
Indenture and the Security Sharing Agreement.
1.3 Any reference in this Attachment to:
(i) any agreement or document shall be read and construed as a reference
to such agreement or document as the same may have been, or may from
time to time be, amended, varied, novated or supplemented; and
(ii) any party shall be construed so as to include its respective
successors, permitted assigns and transferees in accordance with its
respective interests;
1.4 Words denominating the singular include the plural and vice versa.
1.5 Section headings are for reference only.
2. MORTGAGE AND GRANT OF SECURITY INTEREST
2.1 As security for the Obligations, the Mortgagor hereby grants to the
Mortgagee a second priority mortgage and continuing security interest in:
(a) the Land; and
(b) all of the property, rights, title and interest in respect of any
and all of the Land (the "Mortgaged Property").
The Mortgagee hereby accept such Mortgage.
2.2 The Mortgagor agrees that if a novation or assignment of any of the
Obligations occurs, the Mortgage shall continue to be held as security for
such novated or assigned obligations and for any such new creditor.
-3-
<PAGE>
2.3 The Mortgage shall be in addition to, independent of and without prejudice
to, and shall not be in substitution for, any other rights, security,
guarantee or indemnity now held or which may hereafter be held by the
Mortgagee.
2.4 The Mortgage shall be a continuing security and shall remain in force,
notwithstanding the bankruptcy or other incapacity of the Mortgagor or any
intermediate satisfaction of the whole or any part of the Obligations
until such time as the Obligations shall have been fully and finally paid
and discharged.
2.5 Upon the payment, discharge and performance in full of the Obligations,
the Mortgagee will, at the request and at the cost and expense of the
Mortgagor, discharge the Mortgage and return to the Mortgagor the Land
Title Deeds.
3. ADJUSTMENT TO MORTGAGED AMOUNT
The Mortgagor hereby agrees to undertake the Mortgage Amount Adjustment
within two business days of any date on which the exchange rate of Baht to
US$ upon which the Mortgaged Amount is then based does not exceed the
actual exchange rate quoted by the Bank of Thailand by at least Baht 10
per US$ 1.00.
4. INTEREST
The Mortgagor agrees to pay interest to the Mortgagee as may accrue on any
debts incurred to the Mortgagee pursuant to this Attachment at an interest
rate of 12 3/4% per annum.
5. OBLIGATIONS The Mortgage constitutes a continuing security for all of the
following whether now existing or hereafter incurred:
(1) the prompt payment by the Mortgagor when due and payable of the
Obligations; and
(2) the prompt payment by the Mortgagor when due and payable, of all
interest, compensation, indemnities, penalties, and all other
accessory debts from time to time owing by it in respect of the
Obligations.
6. DELIVERY OF CERTIFICATES
The Land Title Deeds shall be delivered to and retained by the Collateral
Agent upon execution of the Mortgage. All other certificates and
instruments relating to the Mortgage coming into existence from time to
time shall be delivered to the Mortgagee promptly upon the receipt thereof
by the Mortgagor.
-4-
<PAGE>
7. ENFORCEMENT OF MORTGAGE
7.1 The enforcement of the Mortgage and the distribution of proceeds realized
thereon shall be in accordance with the procedures set forth in the
Security Sharing Agreement.
7.2 As per the Security Sharing Agreement, the Mortgagee will act to enforce
the Mortgage on behalf of the Mortgagee upon receipt of (i) a Notice of
Actionable Default (as defined in the Security Sharing Agreement) and (ii)
written instruction from the Required Holders (as defined in the Security
Sharing Agreement). Upon receipt of the above, the Mortgagee may proceed
to seek a court order declaring the Mortgagor in default of its
Obligations and that the Mortgaged Property shall be sold at public
auction or take any other action permitted by law or as mutually agreed by
the parties.
7.3 The Mortgagee may select to sell any or all of the Land to be enforced as
it deems appropriate.
7.4 As per the Security Sharing Agreement, the net proceeds derived from a
sale of any or all of the Mortgaged Property shall be applied towards
settlement of the Obligations. If such proceeds or the value of the Land
in case of foreclosure are insufficient to pay or set off all amounts to
which the Mortgagee are entitled, the Mortgagor shall remain liable for
the deficiency. All such proceeds shall be distributed in accordance with
the Security Sharing Agreement.
7.5 If the Mortgage is enforced, the Mortgaged Amount stated herein shall not
prejudice the right of the Mortgagee to apply all of the net proceeds
derived from a sale of any or all of the Mortgaged Property, whether or
not such proceeds or value exceeds the Maximum Amount, towards settlement
of the Obligations.
7.6 If the Mortgagee enforces the mortgage or forecloses the Mortgaged
Property and tax liabilities of any kind (including but not limited to
customs duty, value added tax and transfer fees) related to the Mortgaged
Property arise for which the Mortgagee are liable, the Mortgagor shall
immediately pay such tax liabilities and all related penalties and
expenses and/or reimburse the Mortgagee for said amounts if paid by the
Mortgagee.
8. COVENANTS
The Mortgagor hereby further covenants and agrees with the Mortgagee as
follows:
(1) To comply with all applicable laws, announcements, decrees, and
regulations of the Government of Thailand and all the subdivisions
thereof for the time being in force except where such failure to
comply would not have a material effect on the business or general
condition of the Mortgagor and with all further laws, announcements,
decrees or regulations subsequently issued from time to time which
may affect the Mortgaged Property except where such failure to
comply would not have a material effect on the business or general
condition of the Mortgagor.
-5-
<PAGE>
(2) Not to do or permit or consent to be done or omit anything with the
knowledge that the consequence thereof may in any material way cause
the Mortgaged Property to deteriorate or lessen in value in any
material respect or cause any policy of insurance effected in
pursuance of the provisions of the mortgage or the Land Mortgage
Agreement to be cancelled or the amount of any premium payable for
any such policy of insurance to be materially increased.
(3) Not to grant any rights to any person, such as to let, give
habitation or allow a third party to construct or do any act on the
Mortgaged Property, except as otherwise agreed with the Mortgagee or
except as to any such right as would not in the good faith judgment
of the Mortgagee have a material adverse affect on the value of the
Mortgaged Property.
(4) Not to make or permit to be made without the written consent of the
Mortgagee any material structural alteration or addition to the
buildings and improvements for the time being forming part of the
Mortgaged Property, the consent for which shall not be unreasonably
withheld except for the Phase II Construction and the Phase III
Construction (as defined in the Offering Memorandum) or such other
structural alteration or addition as would not, in the good faith
judgment of the Mortgagor, have a material adverse affect on the
value of the Mortgaged Property.
(5) To notify the Mortgagee in writing immediately on receipt of any
written notice, order or similar matter materially and adversely
affecting or likely so to affect the Mortgaged Property, sent to the
Mortgagor by a competent governmental authority and send the same or
a copy thereof to the Mortgagees, and on demand by the Mortgagee to
supply to the Mortgagee all material information within the
possession of the Mortgagor relating to the matters mentioned or
dealt with in such notice, order or other similar matter and upon
the grant or issue of any material permission, consent, license or
other document affecting the Mortgaged Property granted by any
competent governmental authority, to hand such document to the
Mortgagee to be kept with the deeds and documents of title relating
to the Mortgaged Property.
(6) To use the Mortgaged Property only for the purposes of the
Mortgagor's business.
(7) To keep the Mortgaged Property in good repair and permit the
Mortgagees or their representatives upon 24 hours notice and during
normal working hours to enter the Mortgaged Property to examine the
condition thereof.
9. MORTGAGEE'S RIGHTS
9.1 Any act performed by the Mortgagor in violation of this Attachment shall
not bind the Mortgagee shall have the right to deny such act of the
Mortgagor and the Mortgagee shall also have the right to immediately
enforce the Mortgaged Property in case the Mortgagor has defaulted under
this Attachment.
-6-
<PAGE>
9.2 No delay in exercising or omission to exercise any right, power or remedy
available to the Mortgagee, upon any failure by the Mortgagor to observe
or perform any of its obligations under the Land Mortgage Agreement and
this Attachment shall impair such right, power or remedy or be construed
as a waiver thereof or as acquiescence in respect of any such failure nor
shall any acquiescence in any such failure affect or impair any right,
power or remedy of the Mortgagee in respect of any other or later failure
by the Mortgagor to observe or perform any of the Mortgagor's obligations
hereunder and under the Land Mortgage Agreement.
9.3 All rights herein shall be in addition to and without prejudice to all and
any rights granted by law.
10. EXPENSES
All fees, costs and all reasonable expenses related to the Mortgage, the
registration of the Mortgage and the removal thereof and the enforcement
of the Mortgage shall be borne by the Mortgagor.
11. LAW
This Attachment shall be governed by and construed in accordance with the
laws of the Kingdom of Thailand.
12. AMENDMENTS
The terms of this Attachment may be waived, altered or amended only by an
instrument in writing duly executed by the Mortgagor and the Mortgagee in
accordance with Section 17 of the Security Sharing Agreement.
-7-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Attachment in triplicate by
their duly authorized representatives in the presence of witnesses on the date
first above written with one copy to be kept by the Land Department, one copy
for the Mortgagor and one copy for the Mortgagee.
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
as Mortgagor
By:/s/ Sawasdi Horrungruang
----------------------------
Under Power of Attorney
dated _______________
THE CHASE MANHATTAN BANK
as Depositary
By: /s/ [ILLEGIBLE]
----------------------------
Under Power of Attorney
dated ________________
THE CHASE MANHATTAN BANK
as Collateral Agent
By: /s/ [ILLEGIBLE]
----------------------------
Under Power of Attorney
dated ________________
Witness
- -------------------------------
Witness
- -------------------------------
-8-
<PAGE>
EXHIBIT I
Description of Land and Buildings
- -------------------------------------------------------------------------------
No. Title Deed No. Land No. Survey Page No. Area
-------------------------
Rai Ngan Wah
- -------------------------------------------------------------------------------
1. 68083 129 1682 82 1 69
2. 72240 18 1826 52 1 13
3. 72242 15 1825 36 1 31
4. 72243 16 1830 11 2 87
5. 72246 14 1824 26 3 57
6. 77402 123 1676 18 1 55
7. 77403 125 1677 37 - 16
8. 77404 124 1678 19 1 48
9. 77405 126 1679 32 - 74
10. 77406 127 1680 51 1 93
11. 77407 128 1681 9 2 15
12. 78239 122 1675 22 - 49
13. 78240 13 1683 16 2 13
14. 78241 12 1684 16 2 17
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
No. Nor.Sor. 3 Kor Land No. Survey Page No. Area
-------------------------
No. Rai Ngan Wah
- -------------------------------------------------------------------------------
1. 255 97 5 46 3 76
2. 125 (737) 40 (37) 25 11 - 90
- -------------------------------------------------------------------------------
All plots of Land and Buildings above are located at Tambol Bowin, Amphur
Sriracha Chonburi Province.
-9-
<PAGE>
Exhibit 4.10
MACHINERY PLEDGE AGREEMENT
THIS AGREEMENT is made on 12 March 1998
BETWEEN:
(1) NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED, a public limited company
duly organized and validly existing under the laws of the Kingdom of
Thailand having its registered office at No. 9, UM Tower, 16th Floor,
Kwaeng Suanluang, Khet Suanluang, Bangkok, Thailand (the "Pledgor");
(2) THE FINANCIAL INSTITUTIONS LISTED IN EXHIBIT 1 (the "Pledgees");
(3) THE CHASE MANHATTAN BANK a company duly organized and validly existing
under the laws of the State of New York, having its registered office at
450 West 33rd Street, New York, New York, U.S.A., having its branch office
in Bangkok, Thailand, located at 20 North Sathorn Road, Silom, Bangrak,
Bangkok 10500, acting as collateral agent (the "Collateral Agent");
AND
(4) NSM MANAGEMENT COMPANY having its registered office at No. 9, UM Tower,
16th Floor, Kwaeng Suanluang, Khet Suanluang, Bangkok, Thailand as the
custodian (the "Custodian").
WHEREAS:
A. The Pledgor and the Thai Lenders entered into a credit facility agreement
dated 27 September 1995 (the "CFA") whereunder credit facilities of Baht
3,300,000,000 and US$308,000,000 were granted;
B. The Pledgor has procured financing from abroad by having NSM Steel
Company, Ltd. ("NSM Cayman"), a company incorporated under the laws of the
Cayman Islands and in which the Pledgor holds 100 percent of its shares,
and NSM Steel (Delaware) Inc., a company incorporated under the laws of
the State of Delaware, the United States, a wholly owned subsidiary of NSM
Cayman (hereinafter collectively referred to as the "Note Issuers"),
acting as agent of NSM Cayman pursuant to an agency agreement, issue
US$452,500,000 of indebtedness comprised of (a) US$249,000,000 (aggregate
principal amount at maturity) of 12% Senior Mortgage Notes Due 2006 (the
"Senior Notes") which will be issued pursuant to an indenture dated as of
1 March 1998 (the "Senior Note Indenture"), among the Note Issuers, the
Pledgor and The Chase Manhattan Bank ("Chase"), as trustee (the "Senior
Notes Trustee"), (b) US$203,500,000 (aggregate principal amount at
maturity) of 12 1/4Senior Subordinated Mortgage Notes Due 2008 (the
"Senior Subordinated Notes" and together with the Senior Notes, the
"Notes"), which will be issued pursuant to an indenture dated as of 1
March 1998 (the "Senior Subordinated Note Indenture", and together with
the Senior Note Indenture, the
<PAGE>
"Indentures") among the Note Issuers and Chase, as trustee (the "Senior
Subordinated Notes Trustee" and together with the Senior Notes Trustee,
the "Trustees"), with warrants to purchase 128,834,356 ordinary shares of
the Pledgor and (c) a private placement consisting of US$53,133,016
(aggregate principal amount at maturity) of 12 3/4% Subordinated Second
Mortgage Debentures Due 2009 (the "Debentures") which will be issued
pursuant to an indenture dated as of 1 March 1998 (the "Debenture
Indenture"), among the Note Issuers, the Pledgor and Chase, as trustee
(the "Debenture Trustee") and 64,417,180 ordinary shares of the Pledgor;
C. The Pledgor has entered into an amendment to the CFA (the "CFA Amendment")
with the Thai Lenders dated 12 March 1998 for the amendment of certain
terms and provisions to facilitate the Pledgor's additional financing (the
CFA and the CFA Amendment, collectively, the "Bank Credit Facility"),
including but not limited to, an agreement the Pledgor entered into with
the Thai Lenders, the Trustees and the Debenture Trustee and dated 12
March 1998 to set forth arrangements for the Thai Lenders, the holders of
the Notes and the holders of the Debentures to share certain collateral
(the "Security Sharing Agreement"); and
D. Pursuant to the terms of the Security Sharing Agreement, the Pledgor, the
Pledgees, the Collateral Agent and the Custodian agree to enter into this
Agreement as security for the Obligations (as defined hereunder).
IT IS AGREED as follows:
1. DEFINITIONS
1.1 Except as otherwise provided herein, words and expressions in this
Agreement shall have the same respective meanings in the Bank Credit
Facility, the Indentures, the Debenture Indenture and the Security Sharing
Agreement:
"Enforcement Notice" means a notice of an Event of Default under the Bank
Credit Facility, the Indentures or, as the case may be, the Debenture
Indentures in the form attached as Exhibit 4;
"Machinery Registration Act" means the Thai Machinery Registration Act
B.E. 2514;
"Obligations" means all present and future obligations and liabilities of
the Pledgor under the Bank Credit Facility Agreement, the Notes, the
Indentures, the Debentures, the Debenture Indenture and the Security
Sharing Agreement;
"Pledge" means a pledge under this Agreement and any subsequent pledge
substantially in the form of the Exhibit 3 hereto;
"Pledgeable Property" means any additional machinery and equipment
together with any and all accessories, tools, and fixtures thereof
acquired by the Company;
-2-
<PAGE>
"Pledged Property" means all machinery set forth in Exhibit 2 together
with equipment, accessories, tools and fixtures attached thereto and all
Pledgeable Property and all Substitute Items which will be delivered to
the Site;
"Registerable Machinery" means all machinery imported by the Pledgor which
is eligible for registration pursuant to the Thai Machinery Registration
Act;
"Site" means the Pledgor's mill located in the Chonburi Industrial Estate
(Bo Win), Chonburi Province, Thailand; and
"Substitute Item" means an item of Pledged Property of substantially
similar value and utility to the item of Pledged Property it is intended
to replace.
1.2 Any reference in this Agreement to:
(i) any agreement or document shall be read and construed as a reference
to such agreement or document as the same may have been, or may from
time to time be, amended, varied, novated or supplemented; and
(ii) any party shall be construed so as to include its respective
successors, permitted assigns and transferees in accordance with its
respective interests.
1.3 Words denominating the singular include the plural and vice versa.
1.4 Section headings are for reference only.
2. PLEDGE
2.1 To secure the due and punctual payment and performance by the Pledgor of
the Obligations, the Pledgor hereby pledges (x) to the Pledgees (other
than the holders of the Debentures) on a first priority basis and (y) to
the holders of the Debentures on a second priority basis, all the Pledged
Property on the terms and conditions set out in this Agreement, and the
Pledgees agree to accept the pledge of all the Pledged Property on the
terms and conditions set out in this Agreement. This Agreement shall serve
as a general agreement on the pledge of the Pledged Property between the
parties hereto and any Pledge made following the date of this Agreement
shall be governed by, and shall incorporate the terms of, this Agreement.
2.2 The Pledged Property has been delivered into the possession of the
Custodian acting on behalf of the Pledgees.
2.3 It is agreed that:
(a) the Pledge of any item of Pledged Property which becomes damaged,
worn out or obsolete and is replaced by a Substitute Item shall be
released from the Pledge upon a Pledge of such Substitute Item being
effected; and
-3-
<PAGE>
(b) the Pledge of any item of Pledged Property which is removed from the
Site to its manufacturer, supplier or other party from which it was
acquired due to the failure of that item to comply with its required
specifications or for the purpose of any claim for a breach of a
warranty given in respect of such item, shall be released from the
Pledge.
2.4 The parties agree that the Pledged Property shall be security for any
present or future Obligations plus any accessories thereof, such as
interest, fees, damages, compensation in case of non-performance and costs
and expenses related to the enforcement of the Pledge.
3. ENFORCEMENT OF PLEDGE
3.1 The enforcement of Pledges shall be in accordance with the Security
Sharing Agreement.
3.2 In accordance with the Security Sharing Agreement, following the receipt
of a Notice of Actionable Default (as defined therein) and in compliance
with Section 4 of the Security Sharing Agreement, the issuance of an
Enforcement Notice shall cause each Pledge constituted by or pursuant to
this Agreement to become immediately enforceable by any means in
accordance with applicable law.
3.3 The proceeds derived from the enforcement of any Pledge shall be applied
towards settlement of the Obligations in accordance with the Security
Sharing Agreement, the Bank Credit Facility, the Indentures and the
Debenture Indenture. In the event that such proceeds are insufficient to
pay or set off all amounts to which the Thai Lenders, the Trustees, or the
Debenture Trustees are entitled, the Pledgor shall be liable for the
deficiency.
4. COVENANTS
4.1 The Pledgor shall promptly cause all Registerable Machinery to be
registered with the relevant Thai authorities in accordance with the
Machinery Registration Act. Promptly upon receiving notice of registration
of any such Registerable Machinery, the Pledgor covenants to register a
machinery mortgage thereon in favor of the Pledgees.
4.2 The Pledgor shall promptly, after each item of Pledged Property is
delivered to the Site (and in any event within 7 days of the date of
delivery thereof), execute and deliver to the Collateral Agent and the
Custodian a Pledge in respect of such items of Pledged Property and
deliver such Pledged Property into the possession of the Custodian. All
items of Pledged Property delivered to the Site shall be deemed to have
been delivered into the possession of the Custodian without any act on the
part of any of the parties to this Agreement.
5. APPOINTMENT OF CUSTODIAN
5.1 The Collateral Agent has appointed the Custodian as the Custodian of the
Pledgeable Property according to the Custodian Agreement dated 12 March
1998, and the Pledgor hereby acknowledges and agrees to such appointment.
-4-
<PAGE>
5.2 It is acknowledged and agreed that so long as the Custodian remains in its
position as the Custodian for the purpose of this Agreement, its duties
shall be to receive and possess the Pledged Property, and that it shall
not be entitled to any fee charged for such duties, provided that any and
all expenses or costs reasonably incurred by the Custodian in relation to
the execution, delivery and performance of this Agreement and the
Custodian Agreement shall be promptly reimbursed to the Custodian by the
Pledgor upon demand.
5.3 The parties hereto agree that the Collateral Agent may, at any time,
appoint a new custodian in relation to the performance of this Agreement
and shall notify the Pledgor of the name and identity of such custodian
within 14 calendar days of such appointment. Additionally, the parties
hereto agree that the Collateral Agent may, at any time, appoint a new
custodian to replace any existing custodian; provided that the Collateral
Agent shall notify the Pledgor of the termination of the appointment of
such existing custodian and the name and identity of the new custodian at
least one month prior thereto. In this event, the new custodian shall
immediately assume all duties of the replaced Custodian upon the
termination date as mentioned above. All costs and expenses incurred by
the new custodian as a consequence of its performance as a custodian shall
be solely borne by the Pledgor.
6. CONTINUING SECURITY
6.1 This Agreement and each Pledge created by or pursuant hereto shall be in
addition to, independent of, without prejudice to, and shall not be in
substitution for or merge with any other rights, security, guarantee,
indemnity or suretyship now held or which may hereafter be held by the
Pledgees for the due payment and performance by the Pledgor of the
Obligations.
6.2 This Agreement and each Pledge created by or pursuant hereto shall be a
continuing security and shall remain in full force and effect
notwithstanding the liquidation, bankruptcy or other incapacity of the
Pledgor or any amalgamation or reconstruction of the Pledgor or any change
in the constitution thereof or any settlement of account, intervening
payment or the extinction of any or all indebtedness by whatever reason
(other than by full performance and discharge of the Obligations) or other
matter or thing whatever.
6.3 If after the date of this Agreement:
(a) any settlement or discharge of any or all of the Obligations of the
Pledgor is nullified for any reason whatsoever, and/or
(b) an order or judgment is made against any of the Pledgees under
Section 237 of the Civil and Commercial Code of Thailand (or any
modification or reenactment thereof) or under any of Section 113,
114 and 115 of the Bankruptcy Act of Thailand (or any modification
or re-enactment thereof) directing it to pay any sum received or
held by them from the Pledgor or any other person to settle all or
part of the debt of the Pledgor to an official receiver, a
liquidator or a creditor of the Pledgor.
-5-
<PAGE>
then the returned monies, losses, damages, costs and expenses of the
Pledgees arising as a result of such nullified settlement or discharge,
and/or (as the case may be) the sum paid by it pursuant to such order or
judgment shall be recoverable from the Pledgor on demand.
7. FURTHER ASSURANCE
7.1 The Pledgor shall, at anytime at the request of the Collateral Agent and
at the cost and expense of the Pledgor, promptly sign, seal, execute and
deliver such deeds, instruments, notices and documents, and do such acts
and things as may be required by the Collateral Agent for the purpose of
maintaining, perfecting, protecting, defending, enforcing or securing the
obligations of the Pledgor under this Agreement and the encumbrances
arising under or constituted by or pursuant to this Agreement or for
facilitating the exercise or, as the case may be, realization thereof and
the exercise of all other powers, authorities and discretion vested in the
Collateral Agent.
7.2 The Collateral Agent shall, without prejudice to other rights, powers and
privileges under this Agreement, be entitled (but shall be under no
obligation), at any time and as often as may be necessary, to take any
such action and/or demand additional documents and instruments from any
other party (in which case the Pledgor undertakes to use its best
endeavors to procure such documents or instruments from such party) for
the purpose of protecting the rights constituted by this Agreement.
7.3 The Pledgor hereby agrees to indemnify the Collateral Agent and the
Pledgees on demand against any and all costs, losses, expenses or
liabilities incurred by or imposed on the Collateral Agent or the Pledgees
in or about the perfection and/or protection of the rights and/or security
interest referred to in this Clause 6.
8. FILINGS, RECORDS, INSPECTION
Except as otherwise permitted hereunder, the Pledgor shall not file or
suffer to be on file, or authorize or permit to be filed or to be on file,
in any jurisdiction, any other encumbrance with respect to the Pledged
Property and/or Pledgeable Property in which the Collateral Agent is not
named as the sole secured party for the benefit of the Pledgees. The
Pledgor shall permit representatives of the Collateral Agent and the
Pledgees upon reasonable notice, at any time during normal business hours
to inspect and make abstracts from its books and records pertaining to the
Pledged Property and/or the Pledgeable Property.
9. APPLICATION OF PROCEEDS
The proceeds derived from the enforcement of any Pledge constituted by or
pursuant to this Agreement shall be applied towards settlement of the
Obligations in accordance with the terms of the Security Sharing
Agreement. In the event that such proceeds are insufficient to pay or
set-off all amounts to which the Collateral Agent and Pledgees are
entitled, the Pledgor shall be liable for the deficiency.
-6-
<PAGE>
10. REMEDIES AND WAIVERS
10.1 Any receipt, release or discharge of the Pledges provided by, or of any
liability arising under this Agreement may be given by the Collateral
Agent alone and shall not release or discharge the Pledgor from any
liability for any other monies which may exist independently of this
Agreement. Where such receipt, release or discharge relates only to part
of the Pledged Property such receipt, release or discharge shall not
prejudice or affect the Pledges hereby created in relation to the
remainder of the Pledged Property.
10.2 The Collateral Agent may in its discretion grant time or other
indulgences, or make any other arrangements, variations or releases, with
the Pledgor or any other person (whether or not party hereto and whether
or not jointly liable with the Pledgor) in respect of any or all of the
Obligations or of any other security therefor or guarantee in respect
thereof without prejudice either to the pledge constituted by or pursuant
to this Agreement or to the liability of the Pledgor for the Obligations.
10.3 The rights, powers and remedies provided in this Agreement are cumulative
and are not, nor are they to be construed as, exclusive of any rights,
powers and remedies provided by law.
10.4 No failure on the part of the Collateral Agent to exercise, or delay on
its part in exercising any of the rights, powers and remedies provided for
by this Agreement or by law shall operate as a waiver thereof, nor shall
any single or partial waiver of any such rights, powers or remedies
preclude any further or other exercise of such rights, powers or remedies
or the exercise of any other of such rights, powers or remedies.
11. SUCCESSORS AND ASSIGNS
This Agreement shall be binding on and shall inure to the benefit of the
parties hereto and their respective successors, assignees and transferees,
provided that the Pledgor may not assign or transfer all or any part of
its rights or obligations under this Agreement.
12. RELEASE AND DISCHARGE
This Agreement shall remain in effect until the Pledgor has paid and
satisfied all of the Obligations or the Pledged Property is, to the extent
applicable, duly mortgaged to the Pledgees, whichever occurs earlier, at
which time the Collateral Agent shall, at the request and cost of the
Pledgor, promptly release and discharge the encumbrances created pursuant
to this Agreement and each Pledge and, for this purpose, shall sign such
documents and do all necessary acts required to give effect to such
release or discharge. Such release or discharge shall be made in
accordance with Section 11 of the Security Sharing Agreement.
13. SEVERABILITY
If at any time any one or more of the provisions of this Agreement or any
Pledge becomes invalid, illegal or unenforceable in any respect under any
law, the validity, legality and enforceability of the remaining provisions
of this Agreement and such Pledge shall not in any way be affected or
impaired thereby.
-7-
<PAGE>
14. NOTICES
Any notice or communication under or in connection with this Agreement
shall be in writing and shall be delivered personally, by post or fax to
the addresses given below in this Agreement, or at such other address as
the recipient may have notified to the other parties in writing.
15. LAW
This Agreement and each Pledge shall be governed by and construed in
accordance with the laws of Thailand.
16. AMENDMENTS
The terms of this Attachment may be waived, altered or amended only by an
instrument in writing duly executed as required by Section 17 of the
Security Sharing Agreement.
-8-
<PAGE>
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed.
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
as Pledgor
By: /s/ Sawasdi Horrungruang
----------------------------------
Title: Chairman
Address: No. 9, UM Tower
16th Floor, Kwaeng Suanluang
Khet Suanluang Bangkok
THE INDUSTRIAL FINANCE CORPORATION OF THAILAND
as Facility Agent for the Thai Lenders
By: /s/ [ILLEGIBLE]
----------------------------------
Name:
Title:
Address: 1770 New Petchburi Road
Bangkok
THE CHASE MANHATTAN BANK
as Book-Entry Depositary for the Notes
and Debenture holders
By: /s/ [ILLEGIBLE]
----------------------------------
Name:
Title:
Address: 20 North Sathorn Road
Silom, Bangrak
Bangkok 10500
-9-
<PAGE>
THE CHASE MANHATTAN BANK
as Collateral Agent
By: /s/ [ILLEGIBLE]
----------------------------------
Name:
Title:
Address: 20 North Sathorn Road Silom, Bangrak
Bangkok 10500
NSM MANAGEMENT COMPANY
as Custodian
By: /s/ [ILLEGIBLE]
---------------------------------
Name:
Title:
Address: No. 9, UM Tower, 16th Floor,
Kwaeng Suanluang, Khet Suanluang, Bangkok
-10-
<PAGE>
EXHIBIT 1
The Pledgees
1. The Industrial Finance Corporation of Thailand
2. Thai Farmers Bank Public Company Limited
3. Siam City Bank Public Company Limited
4. The Government Savings Bank
5. First Bangkok City Bank Public Company Limited
6. Nakornthon Bank Public Company Limited
7. SCF Finance and Securities Public Company Limited
8. Siam City Credit Finance and Securities Public Company Limited
9. The Chase Manhattan Bank as Book-Entry Depositary for the holders of the
Notes and the Debentures
-11-
<PAGE>
EXHIBIT 2
List of Machinery
-12-
<PAGE>
Nakornthai Strip Mill Public Company Limited
Equipment for Registration
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Item Area Sub Equipment Details
Item
- ------------------------------------------------------------------------------------------------------------------------------------
<S><C> <C> <C> <C>
1 Scrap Preparation 1.1 Scrap Basket
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
2 Consteel Conveyor 2.1 Charge Conveyor No. 1
- ------------------------------------------------------------------------------------------------------------------------------------
2.2 Charge Conveyor No. 2
- ------------------------------------------------------------------------------------------------------------------------------------
2.3 Preheat Conveyor
- ------------------------------------------------------------------------------------------------------------------------------------
2.4 Dynamic Seal
- ------------------------------------------------------------------------------------------------------------------------------------
2.5 Combustion Equipment
- ------------------------------------------------------------------------------------------------------------------------------------
2.6 Connecting Gas Quick-Charge Mechanism
- ------------------------------------------------------------------------------------------------------------------------------------
2.7 Automation Equipment
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
3 Material Handling 3.1 Material Handling Ferro alloys for Handling
- ------------------------------------------------------------------------------------------------------------------------------------
Weighing discharge system
- ------------------------------------------------------------------------------------------------------------------------------------
Feeding system to EAF/Ladla
- ------------------------------------------------------------------------------------------------------------------------------------
Feeding system to LHF
- ------------------------------------------------------------------------------------------------------------------------------------
Feeding system to VD-Plant
- ------------------------------------------------------------------------------------------------------------------------------------
Lime handling
- ------------------------------------------------------------------------------------------------------------------------------------
Lime feeding to EAF
- ------------------------------------------------------------------------------------------------------------------------------------
Dual collecting system for material
handling
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
4 Electric Arc Furnace 4.1 EAF Hydraulic System
- ------------------------------------------------------------------------------------------------------------------------------------
4.2 EAF Oxygen Lance for Scuff Buring
- ------------------------------------------------------------------------------------------------------------------------------------
4.3 EAF Oxygen Supper Sonic Lance
- ------------------------------------------------------------------------------------------------------------------------------------
4.4 EAF Carbon Lance Manipulator
- ------------------------------------------------------------------------------------------------------------------------------------
4.5 EAF Carbon Injection
- ------------------------------------------------------------------------------------------------------------------------------------
4.6 Furnace Substructure
- ------------------------------------------------------------------------------------------------------------------------------------
4.7 Furnace Sheet - Split Type Design
- ------------------------------------------------------------------------------------------------------------------------------------
4.8 Tilting Mechanism
- ------------------------------------------------------------------------------------------------------------------------------------
4.9 Furnace Roof
- ------------------------------------------------------------------------------------------------------------------------------------
4.10 Gantry Assembly for Roof and Electric Mast
- ------------------------------------------------------------------------------------------------------------------------------------
4.11 Electrode Support System
- ------------------------------------------------------------------------------------------------------------------------------------
4.12 Lubrication System
- ------------------------------------------------------------------------------------------------------------------------------------
4.13 EAF Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
4.14 EAF Transfer Car
- ------------------------------------------------------------------------------------------------------------------------------------
4.15 Ladle Preheat Vertical
- ------------------------------------------------------------------------------------------------------------------------------------
4.16 Korf Arc
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
5 Ladle Heating Furnace 5.1 Ladle Roof
- ------------------------------------------------------------------------------------------------------------------------------------
5.2 Electrode Support System
- ------------------------------------------------------------------------------------------------------------------------------------
5.3 Gantry Assembly for Electrode Support
- ------------------------------------------------------------------------------------------------------------------------------------
5.4 LHF Hydraulic System
- ------------------------------------------------------------------------------------------------------------------------------------
5.5 LHF Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
5.6 Ladle Transfer Car
- ------------------------------------------------------------------------------------------------------------------------------------
5.7 Wire Feeding Machine for LHF
- ------------------------------------------------------------------------------------------------------------------------------------
5.8 Wire Drum
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
6 Vacuum Degassing 6.1
- ------------------------------------------------------------------------------------------------------------------------------------
6.2
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Item Area Sub Qty. Vendor County Serial Type Capacity
Item No.
- ------------------------------------------------------------------------------------------------------------------------------------
<S><C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Scrap Preparation 1.1 2 CIS Via Pancana 50001
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
2 Consteel Conveyor 2.1 1 Intersteel U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
2.2 1 Intersteel U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
2.3 2 Intersteel U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
2.4 1 Intersteel U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
2.5 1 Intersteel U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
2.6 1 Intersteel U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
2.7 1 Siemens U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
3 Material Handling 3.1 1 Scanduzzi Damag
- ------------------------------------------------------------------------------------------------------------------------------------
1 Scanduzzi Damag
- ------------------------------------------------------------------------------------------------------------------------------------
1 Scanduzzi Damag
- ------------------------------------------------------------------------------------------------------------------------------------
1 Scanduzzi Damag
- ------------------------------------------------------------------------------------------------------------------------------------
1 Scanduzzi Damag
- ------------------------------------------------------------------------------------------------------------------------------------
1 Scanduzzi Damag
- ------------------------------------------------------------------------------------------------------------------------------------
1 Scanduzzi Damag
- ------------------------------------------------------------------------------------------------------------------------------------
1 Scanduzzi Damag
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
4 Electric Arc Furnace 4.1 1 Mannesmann Damag Germany
- ------------------------------------------------------------------------------------------------------------------------------------
4.2 1 Mannesmann Damag Germany
- ------------------------------------------------------------------------------------------------------------------------------------
4.3 1 Mannesmann Damag Germany
- ------------------------------------------------------------------------------------------------------------------------------------
4.4 1 Mannesmann Damag Germany 55731230
- ------------------------------------------------------------------------------------------------------------------------------------
4.5 1 Mannesmann Damag Germany 55729830 EKS K 2.5
- ------------------------------------------------------------------------------------------------------------------------------------
4.6 1 Mannesmann Damag Germany
- ------------------------------------------------------------------------------------------------------------------------------------
4.7 1 Mannesmann Damag Germany
- ------------------------------------------------------------------------------------------------------------------------------------
4.8 1 Mannesmann Damag Germany
- ------------------------------------------------------------------------------------------------------------------------------------
4.9 1 Mannesmann Damag Germany
- ------------------------------------------------------------------------------------------------------------------------------------
4.10 1 Mannesmann Damag Germany
- ------------------------------------------------------------------------------------------------------------------------------------
4.11 1 Mannesmann Damag Germany
- ------------------------------------------------------------------------------------------------------------------------------------
4.12 1 Mannesmann Damag Germany
- ------------------------------------------------------------------------------------------------------------------------------------
4.13 1 Mannesmann Damag Germany
- ------------------------------------------------------------------------------------------------------------------------------------
4.14 2 Mannesmann Damag Germany
- ------------------------------------------------------------------------------------------------------------------------------------
4.15 1 Mannesmann Damag Germany
- ------------------------------------------------------------------------------------------------------------------------------------
4.16 1 Korf Engineering Damag Germany
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
5 Ladle Heating Furnace 5.1 1 Mannesmann Damag Germany
- ------------------------------------------------------------------------------------------------------------------------------------
5.2 1 Mannesmann Damag Germany
- ------------------------------------------------------------------------------------------------------------------------------------
5.3 1 Mannesmann Damag Germany
- ------------------------------------------------------------------------------------------------------------------------------------
5.4 1 Mannesmann Damag Germany
- ------------------------------------------------------------------------------------------------------------------------------------
5.5 1 Mannesmann Damag Germany
- ------------------------------------------------------------------------------------------------------------------------------------
5.6 1 Mannesmann Damag Germany
- ------------------------------------------------------------------------------------------------------------------------------------
5.7 1 Mannesmann Damag Germany
- ------------------------------------------------------------------------------------------------------------------------------------
5.8 1 Mannesmann Damag Germany
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
6 Vacuum Degassing 6.1 2 Messo Germany
- ------------------------------------------------------------------------------------------------------------------------------------
6.2 2 Messo Germany
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-13-
<PAGE>
Nakornthai Strip Mill Public Company Limited
Equipment for Registration
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Item Area Sub Equipment Details
Item
- ------------------------------------------------------------------------------------------------------------------------------------
<S><C> <C> <C> <C>
6.3
- ------------------------------------------------------------------------------------------------------------------------------------
6.4
- ------------------------------------------------------------------------------------------------------------------------------------
6.5
- ------------------------------------------------------------------------------------------------------------------------------------
6.6
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
7 CSP Center 7.1 Mould
- ------------------------------------------------------------------------------------------------------------------------------------
7.2 Mould Oscillator
- ------------------------------------------------------------------------------------------------------------------------------------
7.3 Mould Oscillator Hydraulic Unit
- ------------------------------------------------------------------------------------------------------------------------------------
7.4 Segment 1
- ------------------------------------------------------------------------------------------------------------------------------------
7.5 Segment 2
- ------------------------------------------------------------------------------------------------------------------------------------
7.6 Segment 3
- ------------------------------------------------------------------------------------------------------------------------------------
7.7 Dummy Bar
- ------------------------------------------------------------------------------------------------------------------------------------
7.8 Castar Main Hydraulic Unit
- ------------------------------------------------------------------------------------------------------------------------------------
7.9 Ladle Slide Gate Hydraulic Unit
- ------------------------------------------------------------------------------------------------------------------------------------
7.10 Hydraulic Accumulator
- ------------------------------------------------------------------------------------------------------------------------------------
7.11 Mould Fume Fan
- ------------------------------------------------------------------------------------------------------------------------------------
7.12 Spary Chamber Blower
- ------------------------------------------------------------------------------------------------------------------------------------
7.13 Pinch Roll
- ------------------------------------------------------------------------------------------------------------------------------------
7.14 Withdraw & Straightening Unit
- ------------------------------------------------------------------------------------------------------------------------------------
7.15 Central Grease System
- ------------------------------------------------------------------------------------------------------------------------------------
7.16 Tundish Preheater
- ------------------------------------------------------------------------------------------------------------------------------------
7.17 Tundish Car
- ------------------------------------------------------------------------------------------------------------------------------------
7.18 Tundish Stopper Rod Hydraulic Unit
- ------------------------------------------------------------------------------------------------------------------------------------
7.19 Shear
- ------------------------------------------------------------------------------------------------------------------------------------
7.20 Shear Lubrication Unit
- ------------------------------------------------------------------------------------------------------------------------------------
7.21 Shear Hydraulic Unit
- ------------------------------------------------------------------------------------------------------------------------------------
7.22 Bending Unit
- ------------------------------------------------------------------------------------------------------------------------------------
7.23 Ladle Turret
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
8 Ladle 8.1 Ladle
- ------------------------------------------------------------------------------------------------------------------------------------
8.2 Preheater Horizontal
- ------------------------------------------------------------------------------------------------------------------------------------
8.3 Preheater Gantry Type
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
9 Ladle Shop/Tundish Shop 9.1 Ladle Car
- ------------------------------------------------------------------------------------------------------------------------------------
9.2 Dryer Equipment
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
10 Baghouse Air System 10.1 Hot Gas Cooling Water Cooled Duct
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
10.2 Hot Gas Fans Fans
- ------------------------------------------------------------------------------------------------------------------------------------
Drive Motors
- ------------------------------------------------------------------------------------------------------------------------------------
Auxiliary Motors
- ------------------------------------------------------------------------------------------------------------------------------------
Dampers
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
10.3 Main Air Fans Fans
- ------------------------------------------------------------------------------------------------------------------------------------
Drive Motors
- ------------------------------------------------------------------------------------------------------------------------------------
Dampers
- ------------------------------------------------------------------------------------------------------------------------------------
Seal Air Fans
- ------------------------------------------------------------------------------------------------------------------------------------
10.4 Reverse Air Fans Fans
- ------------------------------------------------------------------------------------------------------------------------------------
Drive Motors
- ------------------------------------------------------------------------------------------------------------------------------------
Dampers
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
11 Dust Handling System 11.1 Filter system Fabric Filters
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Item Area Sub Qty. Vendor County Serial Type Capacity
Item No.
- ------------------------------------------------------------------------------------------------------------------------------------
<S><C> <C> <C> <C> <C> <C> <C> <C> <C>
6.3 2 Messo Germany
- ------------------------------------------------------------------------------------------------------------------------------------
6.4 2 Messo Germany
- ------------------------------------------------------------------------------------------------------------------------------------
6.5 1 Messo Germany
- ------------------------------------------------------------------------------------------------------------------------------------
6.6 2 Messo Germany
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
7 CSP Center 7.1 1 MS Schoemann-Siemag In Germany
- ------------------------------------------------------------------------------------------------------------------------------------
7.2 1 MS Schoemann-Siemag In Germany
- ------------------------------------------------------------------------------------------------------------------------------------
7.3 1 MS Schoemann-Siemag In Germany
- ------------------------------------------------------------------------------------------------------------------------------------
7.4 1 MS Schoemann-Siemag In Germany
- ------------------------------------------------------------------------------------------------------------------------------------
7.5 1 MS Schoemann-Siemag In Germany
- ------------------------------------------------------------------------------------------------------------------------------------
7.6 1 MS Schoemann-Siemag In Germany
- ------------------------------------------------------------------------------------------------------------------------------------
7.7 1 MS Schoemann-Siemag In Germany
- ------------------------------------------------------------------------------------------------------------------------------------
7.8 1 MS Schoemann-Siemag In Germany
- ------------------------------------------------------------------------------------------------------------------------------------
7.9 1 MS Schoemann-Siemag In Germany
- ------------------------------------------------------------------------------------------------------------------------------------
7.10 1 MS Schoemann-Siemag In Germany
- ------------------------------------------------------------------------------------------------------------------------------------
7.11 1 MS Schoemann-Siemag In Germany
- ------------------------------------------------------------------------------------------------------------------------------------
7.12 1 MS Schoemann-Siemag In Germany
- ------------------------------------------------------------------------------------------------------------------------------------
7.13 1 MS Schoemann-Siemag In Germany
- ------------------------------------------------------------------------------------------------------------------------------------
7.14 1 MS Schoemann-Siemag In Germany
- ------------------------------------------------------------------------------------------------------------------------------------
7.15 1
- ------------------------------------------------------------------------------------------------------------------------------------
7.16 2 SMS Concast U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
7.17 2 SMS Concast U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
7.18 1 MS Schoemann-Siemag In Germany
- ------------------------------------------------------------------------------------------------------------------------------------
7.19 1 SMS Concast U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
7.20 1 SMS Concast U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
7.21 1 SMS Concast U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
7.22 1 MS Schoemann-Siemag In Germany
- ------------------------------------------------------------------------------------------------------------------------------------
7.23 1 SMS Concast U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Mannesmann
8 Ladle 8.1 10 Damag Germany
- ------------------------------------------------------------------------------------------------------------------------------------
Mannesmann
8.2 2 Damag Germany
- ------------------------------------------------------------------------------------------------------------------------------------
Mannesmann
8.3 1 Damag Germany
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Mannesmann
9 Ladle Shop/Tundish Shop 9.1 2 Damag Germany
- ------------------------------------------------------------------------------------------------------------------------------------
Mannesmann
9.2 2 Damag Germany
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Superior
Madrine Co.
10 Baghouse Air System 10.1 8 of S. U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Phelps Fan,
10.2 3 Inc. U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
Phelps Fan,
3 Inc. U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
Phelps Fan,
3 Inc. U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
8 ACDC, Inc. U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Phelps Fan,
10.3 5 Inc. U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
Phelps Fan,
5 Inc. U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
10 ACDC, Inc. U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
Phelps Fan,
5 Inc. U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
Phelps Fan,
10.4 2 Inc. U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
Phelps Fan,
2 Inc. U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
4 ACDC, Inc. U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
11 Dust Handling System 11.1 Midwesco U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-14-
<PAGE>
Nakornthai Strip Mill Public Company Limited
Equipment for Registration
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Item Area Sub Equipment Details
Item
- ------------------------------------------------------------------------------------------------------------------------------------
<S><C> <C> <C> <C>
Poppal Valves
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
11.2 Dual System Screw Conveyors
- ------------------------------------------------------------------------------------------------------------------------------------
Rotary Air Lock
- ------------------------------------------------------------------------------------------------------------------------------------
Surge Hoppers
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
11.3 Bulk Dust Handling system Vacuum Blower
- ------------------------------------------------------------------------------------------------------------------------------------
Vacuum Blower Motor
- ------------------------------------------------------------------------------------------------------------------------------------
Heat Exchanger
- ------------------------------------------------------------------------------------------------------------------------------------
Knife Gate Valves
- ------------------------------------------------------------------------------------------------------------------------------------
Vacuum Breaker
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
12 Baghouse Control system 12.1 Motor Control Center & Starters Hot Gas Fan Motor
- ------------------------------------------------------------------------------------------------------------------------------------
Main Air Fan Motor Control
- ------------------------------------------------------------------------------------------------------------------------------------
Reverse Air Fan Motor Control
- ------------------------------------------------------------------------------------------------------------------------------------
Vacuum Blower Motor Control
- ------------------------------------------------------------------------------------------------------------------------------------
Emergency Motor Control
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
12.2 PLC Program
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
13 Tunnel Furnace 13.1 Reheating Furnace
- ------------------------------------------------------------------------------------------------------------------------------------
13.2 Dilution Air Fan
- ------------------------------------------------------------------------------------------------------------------------------------
13.3 Stack
- ------------------------------------------------------------------------------------------------------------------------------------
13.4 Motor Control Center
- ------------------------------------------------------------------------------------------------------------------------------------
13.5 Furnace Control
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
14 Rolling Mill 14.1 Roller Table and Entry Side Guides
- ------------------------------------------------------------------------------------------------------------------------------------
14.2 Emergency Shear with Scraps Chute and Bucket
- ------------------------------------------------------------------------------------------------------------------------------------
14.3 Descaling Unit
- ------------------------------------------------------------------------------------------------------------------------------------
14.4 Main Drive
- ------------------------------------------------------------------------------------------------------------------------------------
14.5 Cooling Water for Mill Stands
- ------------------------------------------------------------------------------------------------------------------------------------
14.6 Hydraulic Roll Gap Setting System
- ------------------------------------------------------------------------------------------------------------------------------------
14.7 Thrust Block Retracting Device
- ------------------------------------------------------------------------------------------------------------------------------------
14.8 Upper Backup Roll Balancing Mechanism
- ------------------------------------------------------------------------------------------------------------------------------------
14.9 CVC work Roll Shifting and Bending Systems
- ------------------------------------------------------------------------------------------------------------------------------------
14.10 Drive Spindle Supports
- ------------------------------------------------------------------------------------------------------------------------------------
14.11 Main Motors
- ------------------------------------------------------------------------------------------------------------------------------------
14.12 Lifting Rails
- ------------------------------------------------------------------------------------------------------------------------------------
Entry and Exit Guides and Strippers with Roll
14.13 Cooling
- ------------------------------------------------------------------------------------------------------------------------------------
14.14 Roll Cooling
- ------------------------------------------------------------------------------------------------------------------------------------
14.15 Loopers
- ------------------------------------------------------------------------------------------------------------------------------------
14.16 Backup roll Changing Sleds
- ------------------------------------------------------------------------------------------------------------------------------------
14.17 Work Roll Changing Device
- ------------------------------------------------------------------------------------------------------------------------------------
14.18 Backup Roll Changing Device
- ------------------------------------------------------------------------------------------------------------------------------------
14.19 Run Out Roller Table
- ------------------------------------------------------------------------------------------------------------------------------------
14.20 Stower and Air Duct Channel
- ------------------------------------------------------------------------------------------------------------------------------------
14.21 Measuring House
- ------------------------------------------------------------------------------------------------------------------------------------
14.22 Lminar Cooling System
- ------------------------------------------------------------------------------------------------------------------------------------
14.23 Grease Lubrication System
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Item Area Sub Qty. Vendor County Serial Type Capacity
Item No.
- ------------------------------------------------------------------------------------------------------------------------------------
<S><C> <C> <C> <C> <C> <C> <C> <C> <C>
Custom
48 Collectors U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Inter-Rotor
11.2 24 Engineering U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
Inter-Rotor
24 Engineering U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
Inter-Rotor
24 Engineering U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
System
Engineering
11.3 1 & Con U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
System
Engineering
1 & Con U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
System
Engineering
1 & Con U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
System
Engineering
4 & Con U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
System
Engineering
1 & Con U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
12 Baghouse Control system 12.1 3 Siemens U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
5 Siemens U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
2 Siemens U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
1 Siemens U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
2 Siemens U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Bachelor
Controls,
12.2 1 Inc. U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
13 Tunnel Furnace 13.1 1 Briemont U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
13.2 2 Briemont U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
13.3 2 Briemont U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
13.4 1 Briemont U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
13.5 2 Briemont U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
14 Rolling Mill 14.1 1 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
14.2 1 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
14.3 1 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
14.4 6 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
14.5 6 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
14.6 6 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
14.7 6 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
14.8 6 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
14.9 24 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
14.10 12 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
14.11 6 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
14.12 12 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
14.13 6 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
14.14 1 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
14.15 6 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
14.16 6 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
14.17 6 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
14.18 6 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
14.19 1 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
14.20 1 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
14.21 1 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
14.22 1 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
14.23 5 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-15-
<PAGE>
Nakornthai Strip Mill Public Company Limited
Equipment for Registration
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Item Area Sub Equipment Details
Item
- ------------------------------------------------------------------------------------------------------------------------------------
<S><C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
15 Downcollars 15.1 Entry Side Guide in Front of Down Collar
- ------------------------------------------------------------------------------------------------------------------------------------
15.2 Pinch Roll Unit
- ------------------------------------------------------------------------------------------------------------------------------------
15.3 Table Roller Bridge
- ------------------------------------------------------------------------------------------------------------------------------------
15.4 Down Collar
- ------------------------------------------------------------------------------------------------------------------------------------
15.5 Coll Stripper Cars
- ------------------------------------------------------------------------------------------------------------------------------------
15.6 Coll Cars
- ------------------------------------------------------------------------------------------------------------------------------------
15.7 Pinch Roll Motors Drive
- ------------------------------------------------------------------------------------------------------------------------------------
15.8 Mandrel Motors Drive
- ------------------------------------------------------------------------------------------------------------------------------------
15.9 Wrapper Rolls motor Drive
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
16 Roll Mechanic & Shop 16.1 Roll Grinder # 1
- ------------------------------------------------------------------------------------------------------------------------------------
16.2 Roll Grinder # 2
- ------------------------------------------------------------------------------------------------------------------------------------
16.3 Work Roll Check Extractor Rack
- ------------------------------------------------------------------------------------------------------------------------------------
16.4 Check Tiller
- ------------------------------------------------------------------------------------------------------------------------------------
16.5 Backup Roll Check Extractor
- ------------------------------------------------------------------------------------------------------------------------------------
16.6 Work Roll Checks Diameter 800 mm.
- ------------------------------------------------------------------------------------------------------------------------------------
16.7 Work Roll Checks Diameter 600 mm
- ------------------------------------------------------------------------------------------------------------------------------------
16.8 Backup Roll Checks
- ------------------------------------------------------------------------------------------------------------------------------------
16.9 Work Roll Lifting Tongs Work Roll Lifting Tongs (Single Roll)
- ------------------------------------------------------------------------------------------------------------------------------------
16.10 Work Roll Lifting Beam
- ------------------------------------------------------------------------------------------------------------------------------------
16.11 Work Roll Lifting Tongs Work Roll Lifting Tongs (Roll Pair)
- ------------------------------------------------------------------------------------------------------------------------------------
16.12 Work Roll Lifting Beam
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
17 Refractory Repair 17.1 Refractory Gunning Machine for EAF
- ------------------------------------------------------------------------------------------------------------------------------------
17.2 Refractory Fitting Machine for EAF
- ------------------------------------------------------------------------------------------------------------------------------------
17.3 Ladle Dryer Movable Gantry Type
- ------------------------------------------------------------------------------------------------------------------------------------
17.4 Ladle Preheater (Horizontal type)
- ------------------------------------------------------------------------------------------------------------------------------------
17.5 Ladle Preheater (Vertical type)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
18 Water Treatment Plant 18.1 Solid Thickener Tank No. 302
- ------------------------------------------------------------------------------------------------------------------------------------
18.2 Deep End Sand Filter No. 402
- ------------------------------------------------------------------------------------------------------------------------------------
18.3 Bell Press Machine No. 403
- ------------------------------------------------------------------------------------------------------------------------------------
18.4 Make-up Water Filter No. 405
- ------------------------------------------------------------------------------------------------------------------------------------
18.5 Cooling Tower 805 Side Stream Filter No. 405
- ------------------------------------------------------------------------------------------------------------------------------------
18.6 Cooling Tower 806 Side Stream Filter No. 406
- ------------------------------------------------------------------------------------------------------------------------------------
18.7 Softener Package with Brine Tank No. 405
- ------------------------------------------------------------------------------------------------------------------------------------
18.8 Cooling Tower 807 Side Stream Filter No. 407
- ------------------------------------------------------------------------------------------------------------------------------------
18.9 Cooling Tower 801 Side Stream Filter No. 408
- ------------------------------------------------------------------------------------------------------------------------------------
18.10 Cooling Tower 803 Side Stream Filter No. 400
- ------------------------------------------------------------------------------------------------------------------------------------
18.11 Meltshop Pump No. 601
- ------------------------------------------------------------------------------------------------------------------------------------
18.12 Mold Water H.E. Pump No. 602
- ------------------------------------------------------------------------------------------------------------------------------------
18.13 Tunnel Furnace Pump No. 603
- ------------------------------------------------------------------------------------------------------------------------------------
18.14 EAF & Tunnel Furnace Emergency Pump No. D603
- ------------------------------------------------------------------------------------------------------------------------------------
18.15 Hot Mill Closed M/C Cooling Pump No. 604
- ------------------------------------------------------------------------------------------------------------------------------------
18.16 Hot Well # 2 Pump No. 605
- ------------------------------------------------------------------------------------------------------------------------------------
18.17 Cold Water Cooling Pump No. 606
- ------------------------------------------------------------------------------------------------------------------------------------
18.18 Collar Sump Pump No. 607
- ------------------------------------------------------------------------------------------------------------------------------------
18.19 Interceptor Pit Pump No. 608
- ------------------------------------------------------------------------------------------------------------------------------------
18.20 Castor Closed M/C Cooling Pump No. 609
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Item Area Sub Qty. Vendor County Serial Type Capacity
Item No.
- ------------------------------------------------------------------------------------------------------------------------------------
<S><C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
15 Downcollars 15.1 2 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
15.2 2 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
15.3 1 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
15.4 2 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
15.5 2 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
15.6 4 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
15.7 2 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
15.8 2 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
15.9 6 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
HO
16 Roll Mechanic & Shop 16.1 1 Pomini S.P.A. Italy 272 402/425x6100
- ------------------------------------------------------------------------------------------------------------------------------------
16.2 1 Pomini S.P.A. Italy
- ------------------------------------------------------------------------------------------------------------------------------------
16.3 1 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
16.4 2 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
16.5 1 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
16.6 54 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
16.7 40 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
16.8 48 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
16.9 1 J.B. Sales U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
J.B. Sales &
16.10 2 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
16.11 1 J.B. Sales U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
J.B. Sales &
16.12 2 SMS Germany
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
17 Refractory Repair 17.1 1 Velco Germany
- ------------------------------------------------------------------------------------------------------------------------------------
17.2 1 Velco Germany
- ------------------------------------------------------------------------------------------------------------------------------------
17.3 1 Auto/Gega Germany
- ------------------------------------------------------------------------------------------------------------------------------------
17.4 2 Auto/Gega Germany
- ------------------------------------------------------------------------------------------------------------------------------------
17.5 1 Auto/Gega Germany
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
18 Water Treatment Plant 18.1 1 Eimco U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.2 18 Eimco U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.3 1 Eimco U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.4 2 Eimco U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.5 1 Eimco U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.6 2 Eimco U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.7 3 Duffen U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.8 1 Eimco U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.9 1 Eimco U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.10 1 Eimco U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.11 5 Paco U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.12 2 Paco U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.13 2 Paco U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.14 2 Paco U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.15 2 Paco U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.16 3 Johnston
- ------------------------------------------------------------------------------------------------------------------------------------
18.17 3 Paco U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.18 4 Harleton
- ------------------------------------------------------------------------------------------------------------------------------------
18.19 4 Harleton
- ------------------------------------------------------------------------------------------------------------------------------------
18.20 3 Paco U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-16-
<PAGE>
Nakornthai Strip Mill Public Company Limited
Equipment for Registration
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Item Area Sub Equipment Details
Item
- ------------------------------------------------------------------------------------------------------------------------------------
<S><C> <C> <C> <C>
18.21 Hot Well # 1 Pump No. 610
- ------------------------------------------------------------------------------------------------------------------------------------
18.22 Scale Pit Pump No. 611
- ------------------------------------------------------------------------------------------------------------------------------------
18.23 DRI Pump No. 612
- ------------------------------------------------------------------------------------------------------------------------------------
18.24 Caster Flume Flushing Pump No. 613
- ------------------------------------------------------------------------------------------------------------------------------------
18.25 Caster Spray Pump No. 614
- ------------------------------------------------------------------------------------------------------------------------------------
18.26 Hot Mill 4.5 Bar Pump No. 615
- ------------------------------------------------------------------------------------------------------------------------------------
18.27 Hot Mill 12.5 Bar Pump No. 616
- ------------------------------------------------------------------------------------------------------------------------------------
18.28 Filler Backwash Pump No. 617
- ------------------------------------------------------------------------------------------------------------------------------------
18.29 Castor Flume Sump Pump No. 618
- ------------------------------------------------------------------------------------------------------------------------------------
18.30 Sludge Dewatering Feed Pump No. 619
- ------------------------------------------------------------------------------------------------------------------------------------
18.31 Backwash Surge Transfer Pump No. 620
- ------------------------------------------------------------------------------------------------------------------------------------
18.32 Laminar Water Hot Well Pump No. 524
- ------------------------------------------------------------------------------------------------------------------------------------
18.33 Hot Coll Cold Water Pump No. 525
- ------------------------------------------------------------------------------------------------------------------------------------
18.34 T-807 Backwash Sump Pump No. 626
- ------------------------------------------------------------------------------------------------------------------------------------
18.35 T-808 Cold Well Pump No. 628
- ------------------------------------------------------------------------------------------------------------------------------------
18.36 T-808 Back Wash Water Sump Pump No. 629
- ------------------------------------------------------------------------------------------------------------------------------------
18.37 Johnston Vertical Pump No. 530
- ------------------------------------------------------------------------------------------------------------------------------------
18.38 T-804 Backwash Sump Pump No. 531
- ------------------------------------------------------------------------------------------------------------------------------------
18.39 Utility Pump No. 636
- ------------------------------------------------------------------------------------------------------------------------------------
18.40 Scale Transfer Pump No. 650
- ------------------------------------------------------------------------------------------------------------------------------------
18.41 NTS Pond Water Supply Pump No. 651
- ------------------------------------------------------------------------------------------------------------------------------------
18.42 Make-up Water Sump Pump No. 653
- ------------------------------------------------------------------------------------------------------------------------------------
18.43 Make-up Water Pump No. 565
- ------------------------------------------------------------------------------------------------------------------------------------
18.44 Portable Water & Boiler Feed Pump No. 556
- ------------------------------------------------------------------------------------------------------------------------------------
18.45 Portable Water Pump No. 567
- ------------------------------------------------------------------------------------------------------------------------------------
18.46 Filler Backwash Sump Pump No. 583
- ------------------------------------------------------------------------------------------------------------------------------------
18.47 Hot Well # 1 Overflow Sump Bump No. 568
- ------------------------------------------------------------------------------------------------------------------------------------
18.48 Filter Backwash Surge Tank No. 712
- ------------------------------------------------------------------------------------------------------------------------------------
18.49 Oil & Grease Storage Tank No. 713
- ------------------------------------------------------------------------------------------------------------------------------------
18.50 Oil & Grease Storage Tank No. 740
- ------------------------------------------------------------------------------------------------------------------------------------
18.51 Waste Oil Storage Tank No. 741
- ------------------------------------------------------------------------------------------------------------------------------------
18.52 Laminar Waste Oil Storage Tank No. 742
- ------------------------------------------------------------------------------------------------------------------------------------
18.53 Portable Water Cooling Tower No. 755
- ------------------------------------------------------------------------------------------------------------------------------------
18.54 System #1 Cooling Tower No. 801
- ------------------------------------------------------------------------------------------------------------------------------------
18.55 System #3 Cooling Tower No. 803
- ------------------------------------------------------------------------------------------------------------------------------------
18.56 System #4 Cooling Tower No. 804
- ------------------------------------------------------------------------------------------------------------------------------------
18.57 Laminar Water Cooling Tower No. 805
- ------------------------------------------------------------------------------------------------------------------------------------
18.58 Condenser Cooling Tower No. 806
- ------------------------------------------------------------------------------------------------------------------------------------
18.59 Hot Coll Rapid Cooling Tower No. 807
- ------------------------------------------------------------------------------------------------------------------------------------
18.60 Laminar Pit Oil Skimmer
- ------------------------------------------------------------------------------------------------------------------------------------
18.61 Stale Pit Oil Skimmer
- ------------------------------------------------------------------------------------------------------------------------------------
18.62 Air Scout Blower
- ------------------------------------------------------------------------------------------------------------------------------------
18.63 Sodium Hypochloride Storage Tank
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
19 SSKV Main Substation 19.1 ABB Switch Gear Circuit Breaker
- ------------------------------------------------------------------------------------------------------------------------------------
19.2 ABB Switch Gear Operator Device
- ------------------------------------------------------------------------------------------------------------------------------------
19.3 Current Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
19.4 Current Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
19.5 Current Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
19.6 Disconnector
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Item Area Sub Qty. Vendor County Serial Type Capacity
Item No.
- ------------------------------------------------------------------------------------------------------------------------------------
<S><C> <C> <C> <C> <C> <C> <C> <C> <C>
18.21 4 Paco U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.22 5 Harleton
- ------------------------------------------------------------------------------------------------------------------------------------
18.23 2 Paco U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.24 2 Harleton
- ------------------------------------------------------------------------------------------------------------------------------------
18.25 2 Paco U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.26 3 Paco U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.27 4 Paco U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.28 2 Paco U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.29 2 Harleton
- ------------------------------------------------------------------------------------------------------------------------------------
18.30 2
- ------------------------------------------------------------------------------------------------------------------------------------
18.31 2 Paco U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.32 4 Harleton
- ------------------------------------------------------------------------------------------------------------------------------------
18.33 4 Harleton
- ------------------------------------------------------------------------------------------------------------------------------------
18.34 2 Harleton
- ------------------------------------------------------------------------------------------------------------------------------------
18.35 3 Harleton
- ------------------------------------------------------------------------------------------------------------------------------------
18.36 2 Harleton
- ------------------------------------------------------------------------------------------------------------------------------------
18.37 2 Actrasion
- ------------------------------------------------------------------------------------------------------------------------------------
18.38 2 Harleton
- ------------------------------------------------------------------------------------------------------------------------------------
18.39 3 Paco U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.40 2
- ------------------------------------------------------------------------------------------------------------------------------------
18.41 3 Harleton
- ------------------------------------------------------------------------------------------------------------------------------------
18.42 2 Actrasion
- ------------------------------------------------------------------------------------------------------------------------------------
18.43 2 Paco U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.44 2 Paco U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.45 2 Paco U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.46 2 Harleton
- ------------------------------------------------------------------------------------------------------------------------------------
18.47 2 Harleton
- ------------------------------------------------------------------------------------------------------------------------------------
18.48 1 Eimco U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.49 STP&I
- ------------------------------------------------------------------------------------------------------------------------------------
18.50 STP&I
- ------------------------------------------------------------------------------------------------------------------------------------
18.51 1 STP&I
- ------------------------------------------------------------------------------------------------------------------------------------
18.52 1 STP&I
- ------------------------------------------------------------------------------------------------------------------------------------
18.53 EMCO
- ------------------------------------------------------------------------------------------------------------------------------------
18.54 1 Marley U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.55 1 Marley U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.56 1 Marley U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.57 1 Marley U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.58 1 Marley U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.59 1 Marley U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.60 1 OJ Skimmer U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.61 1 OJ Skimmer U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.62 3 Eimco U.S.A.
- ------------------------------------------------------------------------------------------------------------------------------------
18.63 1 Botz
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
ABB 145kV, 50HZ,
19 SSKV Main Substation 19.1 6 Substation Sweden 8263743 LTB 145D-1 3150A
- ------------------------------------------------------------------------------------------------------------------------------------
ABB Breaking
19.2 1 Substation Sweden 8363748 BLK 152 Circuit 40kA
- ------------------------------------------------------------------------------------------------------------------------------------
ABB
19.3 3 Substation Sweden 8172347 IMB 123 800A, ____
- ------------------------------------------------------------------------------------------------------------------------------------
ABB
19.4 6 Substation Sweden - IMB 123 1000A, ____
- ------------------------------------------------------------------------------------------------------------------------------------
ABB 123kV,
19.5 6 Substation Sweden 0172340 IMB 123 A4 _____, 50HZ
- ------------------------------------------------------------------------------------------------------------------------------------
ABB E-96 0569,
19.6 2 Substation Sweden 0571 SGC-123/2089 123kV ____
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-17-
<PAGE>
Nakornthai Strip Mill Public Company Limited
Equipment for Registration
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Item Area Sub Equipment Details
Item
- ------------------------------------------------------------------------------------------------------------------------------------
<S><C> <C> <C> <C>
19.7 Disconnector
- ------------------------------------------------------------------------------------------------------------------------------------
19.8 Earthing Switch
- ------------------------------------------------------------------------------------------------------------------------------------
19.9 Surge Arrestor
- ------------------------------------------------------------------------------------------------------------------------------------
19.10 Voltage Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
19.11 Voltage Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
20 SSKV Main Substation 20.1 Circuit Breaker
- ------------------------------------------------------------------------------------------------------------------------------------
20.2 Circuit Breaker
- ------------------------------------------------------------------------------------------------------------------------------------
20.3 Circuit Breaker
- ------------------------------------------------------------------------------------------------------------------------------------
20.4 Current Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
20.5 Current Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
20.6 Current Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
20.7 Current Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
20.8 Current Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
20.9 Current Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
20.10 Current Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
20.11 Current Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
20.12 Current Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
20.13 Current Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
20.14 Disconnector
- ------------------------------------------------------------------------------------------------------------------------------------
20.15 Disconnector
- ------------------------------------------------------------------------------------------------------------------------------------
20.16 Disconnector
- ------------------------------------------------------------------------------------------------------------------------------------
20.17 Disconnector
- ------------------------------------------------------------------------------------------------------------------------------------
20.18 Disconnector
- ------------------------------------------------------------------------------------------------------------------------------------
20.19 Neutral Point Earthing Resistor
- ------------------------------------------------------------------------------------------------------------------------------------
20.20 Surge Arrestor
- ------------------------------------------------------------------------------------------------------------------------------------
20.21 Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
20.22 Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
20.23 Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
20.24 Voltage Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
21 SVC - Hot Mill 21.1 Control & Protection System
- ------------------------------------------------------------------------------------------------------------------------------------
21.2 Thyristor Control Reactor - Thyristor Valve
- ------------------------------------------------------------------------------------------------------------------------------------
21.3 Thyristor Control Reactor - Air Core Reactor
- ------------------------------------------------------------------------------------------------------------------------------------
21.4 Thyristor Control Reactor - Current Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
21.5 3rd Harmonic Filter - Air Core Reactor
- ------------------------------------------------------------------------------------------------------------------------------------
21.6 3rd Harmonic Filter - Capacitor Ban K
- ------------------------------------------------------------------------------------------------------------------------------------
21.7 3rd Harmonic Filter - Damping Resistor
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Item Area Sub Qty. Vendor County Serial Type Capacity
Item No.
- ------------------------------------------------------------------------------------------------------------------------------------
<S><C> <C> <C> <C> <C> <C> <C> <C> <C>
ABB
19.7 6 Substation Sweden E 96-0651 SGC-123/1250 123kV ____
- ------------------------------------------------------------------------------------------------------------------------------------
ABB ITH 25A, IEC
19.8 1 Substation Sweden - SGC-123/2000 ___
- ------------------------------------------------------------------------------------------------------------------------------------
ABB
19.9 15 Substation Sweden Batch 7082 IB 910007-A 123kV
- ------------------------------------------------------------------------------------------------------------------------------------
ABB
19.10 6 Substation Sweden 8172372 EMFC 145 145kV _____
- ------------------------------------------------------------------------------------------------------------------------------------
ABB
19.11 1 Substation Sweden 8172375 EMFC 145 145kV _____
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
826161-164,
166-7,
ABB 174-179, 2500A, 50Hz,
20 SSKV Main Substation 20.1 19 Substation Sweden 186, 191, 195 EDF SK1-1 Volt 52kV
- ------------------------------------------------------------------------------------------------------------------------------------
ABB
20.2 2 Substation Sweden 82632723 - 4000A
- ------------------------------------------------------------------------------------------------------------------------------------
ABB
20.3 1 Substation Sweden 8263937 - 3150A
- ------------------------------------------------------------------------------------------------------------------------------------
ABB
20.4 8 Substation Sweden 817235058 MB 72 2500/5/5/5A
- ------------------------------------------------------------------------------------------------------------------------------------
ABB
20.5 3 Substation Sweden 961006/1-3 CXE-52 500/5/5A
- ------------------------------------------------------------------------------------------------------------------------------------
ABB
20.6 3 Substation Sweden 961617/1-3 CXH-52 1500/5/5A
- ------------------------------------------------------------------------------------------------------------------------------------
ABB
20.7 6 Substation Sweden 961027/1-1 CKG-52 750/5/5/5A
- ------------------------------------------------------------------------------------------------------------------------------------
ABB
20.8 6 Substation Sweden 961828/1-6 CKG-52 1000/5/5A
- ------------------------------------------------------------------------------------------------------------------------------------
ABB 961023/1-12,
20.9 15 Substation Sweden 96031/1-3 CKE-52 600/5/5A
- ------------------------------------------------------------------------------------------------------------------------------------
ABB
20.10 9 Substation Sweden 961002/1-8 CXE-52 300/5/5A
- ------------------------------------------------------------------------------------------------------------------------------------
ABB
20.11 3 Substation Sweden 961829/1-3 CXG-52 750/5/5A
- ------------------------------------------------------------------------------------------------------------------------------------
ABB
20.12 3 Substation Sweden 961034/1-3 CXH-52 750/5/5/5A
- ------------------------------------------------------------------------------------------------------------------------------------
ABB
20.13 9 Substation Sweden 8172359-67 - 3500/5/5/5A
- ------------------------------------------------------------------------------------------------------------------------------------
ABB 520510001-3,
20.14 12 Substation Sweden 007-15 SSBU 725 72.5KV, 4000A
- ------------------------------------------------------------------------------------------------------------------------------------
ABB ____,
20.15 15 Substation Sweden E95-060062 SGC-52/1250 52kV, 4000A
- ------------------------------------------------------------------------------------------------------------------------------------
ABB
20.16 2 Substation Sweden E96 0668, 668 SGC-52/2750 62kV, 2750A
- ------------------------------------------------------------------------------------------------------------------------------------
ABB E96 0670,
20.17 3 Substation Sweden 671,672 HGC-52/2750 52kV, 2750A
- ------------------------------------------------------------------------------------------------------------------------------------
ABB 92051000-16,
20.18 6 Substation Sweden 620510010-1 - 725kV, 1000A
- ------------------------------------------------------------------------------------------------------------------------------------
ABB
20.19 3 Substation Sweden CH92287 - 24kV
- ------------------------------------------------------------------------------------------------------------------------------------
ABB EXLIMPOB3- 33kV, __
20.20 6 Substation Sweden 6262060-65 AV035 current SSkA
- ------------------------------------------------------------------------------------------------------------------------------------
500kVA,
33000, 400
Volt, 8,
ABB 75/7621.7
20.21 1 Substation Sweden 2166 - Amp.
- ------------------------------------------------------------------------------------------------------------------------------------
125 +/- x
ABB 125%/3kV,
20.22 2 Substation Sweden 55014-15 - 160/190MVA
- ------------------------------------------------------------------------------------------------------------------------------------
115 +/- x
ABB 125% /33kv,
20.23 1 Substation Sweden 55016 - 160/150MVA
- ------------------------------------------------------------------------------------------------------------------------------------
ABB 52kV,
20.24 6 Substation Sweden 8172376-81 EMFC 52 33/3/0.1/3/
0.11/0kV
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
ABB Power
21 SVC - Hot Mill 21.1 1 System Sweden L64143310-001 - -
- ------------------------------------------------------------------------------------------------------------------------------------
ABB Power Veristack 33kV, 3Pa,
21.2 1 System Sweden HI204304-852/1 TCR3/15L 50Hz, 556A
- ------------------------------------------------------------------------------------------------------------------------------------
ABB Power 33kV, 50Hz,
21.3 3 System Sweden 37919-37921 TCR250639/146 146mH, 556A
- ------------------------------------------------------------------------------------------------------------------------------------
33VA, 36AV,
ABB Power 750/5/5/5,
21.4 3 System Sweden 96/906309-311 G00-53 50Hz
- ------------------------------------------------------------------------------------------------------------------------------------
ABB Power 33kV, ___,
21.5 3 System Sweden 37922-37924 FVR250/796/338 262A
- ------------------------------------------------------------------------------------------------------------------------------------
ABB Power 764M,
21.6 3 System Sweden 5458-05 QBANK-A 25,2kV, 50Hz
- ------------------------------------------------------------------------------------------------------------------------------------
ABB Power 30kV, 50z,
21.7 3 System Sweden 001 G951111220 __ Phase 7.1A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-18-
<PAGE>
Nakornthai Strip Mill Public Company Limited
Equipment for Registration
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Item Area Sub Equipment Details
Item
- ------------------------------------------------------------------------------------------------------------------------------------
<S><C> <C> <C> <C>
21.8 3rd Harmonic Filter - Current Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
21.9 3rd Harmonic Filter - Current Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
21.10 5th Harmonic Filter - Air Core Reactor
- ------------------------------------------------------------------------------------------------------------------------------------
21.11 5th Harmonic Filter - Capacitor Ban K
- ------------------------------------------------------------------------------------------------------------------------------------
21.12 5th Harmonic Filter - Damping Resistor
- ------------------------------------------------------------------------------------------------------------------------------------
21.13 5th Harmonic Filter - Current Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
21.14 5th Harmonic Filter - Current Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
21.15 7th Harmonic Filter - Air Core Reactor
- ------------------------------------------------------------------------------------------------------------------------------------
21.16 7th Harmonic Filter - Capacitor Ban K
- ------------------------------------------------------------------------------------------------------------------------------------
21.17 7th Harmonic Filter - Damping Resistor
- ------------------------------------------------------------------------------------------------------------------------------------
21.18 7th Harmonic Filter - Current Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
21.19 7th Harmonic Filter - Current Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
21.20 Cooling System
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
22 SVC - Millshop 22.1 Control & Protection System
- ------------------------------------------------------------------------------------------------------------------------------------
22.2 Thyristor Control Reactor -Thyristor Valve
- ------------------------------------------------------------------------------------------------------------------------------------
22.3 Thyristor Control Reactor - Air Core Reactor
- ------------------------------------------------------------------------------------------------------------------------------------
22.4 Thyristor Control Reactor - Current Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
22.5 3rd Harmonic Filter - Air Core Reactor
- ------------------------------------------------------------------------------------------------------------------------------------
22.6 3rd Harmonic Filter - Capacitor Ban K
- ------------------------------------------------------------------------------------------------------------------------------------
22.7 3rd Harmonic Filter - Damping Resistor
- ------------------------------------------------------------------------------------------------------------------------------------
22.8 3rd Harmonic Filter - Current Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
22.9 3rd Harmonic Filter - Current Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
22.10 3rd Harmonic Filter - Air Core Reactor
- ------------------------------------------------------------------------------------------------------------------------------------
22.11 3rd Harmonic Filter - Capacitor Ban K
- ------------------------------------------------------------------------------------------------------------------------------------
22.12 3rd Harmonic Filter - Current Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
22.13 3rd Harmonic Filter - Current Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
22.14 4th Harmonic Filter - Air Core Reactor
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Item Area Sub Qty. Vendor County Serial Type Capacity
Item No.
- ------------------------------------------------------------------------------------------------------------------------------------
<S><C> <C> <C> <C> <C> <C> <C> <C> <C>
30VA, 35kV,
ABB Power 750/5/5A,
21.8 3 System Sweden 96/906285-287 GF 35-68 50Hz
- ------------------------------------------------------------------------------------------------------------------------------------
ABB Power 30VA, 36kV,
21.9 4 System Sweden 96/906288-291 GF 36-70 50-100, 50Hz
- ------------------------------------------------------------------------------------------------------------------------------------
ABB Power 33kV, 50Hz,
21.10 3 System Sweden 37925-927 FVH250/446/ 7.77mH, 354A
7.77
- ------------------------------------------------------------------------------------------------------------------------------------
ABB Power 9.4Mver,
21.11 3 System Sweden 5458-06 QBANK-A 23kV, 50Hz
- ------------------------------------------------------------------------------------------------------------------------------------
250W, 50Hz,
ABB Power 237ohms
21.12 3 System Sweden 001 G551111233 Phase 10.3A
- ------------------------------------------------------------------------------------------------------------------------------------
30VA, 35kV,
ABB Power 750/5/5A,
21.13 3 System Sweden 96/906292-294 GIF 36-68 50Hz
- ------------------------------------------------------------------------------------------------------------------------------------
ABB Power 10VA, 36KV,
21.14 4 System Sweden 96/906295-298 GIF 36-70 50-100S, 50HZ
- ------------------------------------------------------------------------------------------------------------------------------------
ABB Power 33kV, 50Hz,
21.15 3 System Sweden 37928-930 FVR250/403/ 376mH, 345A
376
- ------------------------------------------------------------------------------------------------------------------------------------
ABB Power
21.16 3 System Sweden 5458-07 QBANK-A _23kV, 50Hz
- ------------------------------------------------------------------------------------------------------------------------------------
ABB Power 15kW,50Hz,
21.17 3 System Sweden 001 G95111240 121 ohms/
Phase 11.1A
- ------------------------------------------------------------------------------------------------------------------------------------
ABB Power 30VA 36kV
21.18 3 System Sweden 96/906299-301 GF 36-68 750/5A 50Hz
- ------------------------------------------------------------------------------------------------------------------------------------
10VA 36kV,
ABB Power 96/906302, 50-100/5,
21.19 4 System Sweden 914992-4 GF 36-70 50Hz
- ------------------------------------------------------------------------------------------------------------------------------------
175kW, 400V,
Swede Water 50Hx, 270M
21.20 1 AB Sweden 6192 - in, 60C
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
ABB Power
22 SVC - Millshop 22.1 1 System Sweden L6414331D-001 - -
- ------------------------------------------------------------------------------------------------------------------------------------
ABB Power Varislack 3kV,3P,
22.2 1 System Sweden H204804-852/2 TCR4/1/L 50Hz,1616A
- ------------------------------------------------------------------------------------------------------------------------------------
ABB Power 33kV, 50Hz,
22.3 3 System Sweden 97904-906 TCR250/ 51mH, 1620A
1612/51
- ------------------------------------------------------------------------------------------------------------------------------------
ABB Power
22.4 3 System Sweden 96/906325-327 G130-53 ____
- ------------------------------------------------------------------------------------------------------------------------------------
ABB Power 3kV, 50Hz,
22.5 3 System Sweden 37007-909 FVP____ 53.2mH,440A
- ------------------------------------------------------------------------------------------------------------------------------------
4.6/12.3Mvar,
ABB Power 8.9/23.2kV,
22.6 3 System Sweden 5458-01 QBANK-A 50Hz
- ------------------------------------------------------------------------------------------------------------------------------------
54kW, 50Hz,
ABB Power 344ohms/
22.7 3 System Sweden 001 G961111210 Phase 12.5A
- ------------------------------------------------------------------------------------------------------------------------------------
ABB Power 30VA, 36kV,
22.8 3 System Sweden 06/905890-892 GIF 36-68 50/5/5a, 50Hz
- ------------------------------------------------------------------------------------------------------------------------------------
96,905312-13, 10VA, 35hV,
ABB Power 906315, 50-100SA,
22.9 7 System Sweden 906303-305 GIF 26-70 50Hz
- ------------------------------------------------------------------------------------------------------------------------------------
ABB Power FVR250/1152/ 33kV, 50Hz,
22.10 3 System Sweden 37910-912 8.18 8.18mH, 965A
- ------------------------------------------------------------------------------------------------------------------------------------
ABB Power 32.4Mvar,
22.11 3 System Sweden 5458-02 QBANK-A 26.9kV, 50Hz
- ------------------------------------------------------------------------------------------------------------------------------------
30VA, 35kV,
ABB Power 2500/5/5A,
22.12 3 System Sweden 96/906328-330 GIF 36-68 50Hz
- ------------------------------------------------------------------------------------------------------------------------------------
10VA, 36kV,
ABB Power 50-100/5,
22.13 1 System Sweden 96/906319 GIF 36-70 50Hz
- ------------------------------------------------------------------------------------------------------------------------------------
33kV, 50Hz,
ABB Power FVR250G27/ 7.91mH,
22.14 3 System Sweden 3/913-915 7.91 52-25A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-19-
<PAGE>
Nakornthai Strip Mill Public Company Limited
Equipment for Registration
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Item Area Sub Equipment Details
Item
- ------------------------------------------------------------------------------------------------------------------------------------
<S><C> <C> <C> <C>
22.15 4th Harmonic Filter - Capacitor Ban K
- ------------------------------------------------------------------------------------------------------------------------------------
22.16 4th Harmonic Filter - Current Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
22.17 4th Harmonic Filter - Current Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
22.18 5th Harmonic Filter - Air Core Reactor
- ------------------------------------------------------------------------------------------------------------------------------------
22.19 5th Harmonic Filter - Capacitor Ban K
- ------------------------------------------------------------------------------------------------------------------------------------
22.20 5th Harmonic Filter - Current Transformer
- ------------------------------------------------------------------------------------------------------------------------------------
22.21 Cooling System
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
23 Cranes 23.1 Crane No. 501 Hot Metal Cranes
- ------------------------------------------------------------------------------------------------------------------------------------
23.2 Crane No. 601A Hot Metal Cranes A
- ------------------------------------------------------------------------------------------------------------------------------------
23.3 Crane No. 602 Castor Maintenance/Tundish Repair
- ------------------------------------------------------------------------------------------------------------------------------------
23.4 Crane No. 604 Hot Mill Motor Room
- ------------------------------------------------------------------------------------------------------------------------------------
23.5 Crane No. 605 Roller Hearth Semi Gantry
- ------------------------------------------------------------------------------------------------------------------------------------
23.6 Crane No. 606 Hot Mill Laminar Cooling
- ------------------------------------------------------------------------------------------------------------------------------------
23.7 Crane No. 607 Roll Shop
- ------------------------------------------------------------------------------------------------------------------------------------
26.8 Crane No. 609 Mold Maintenance
- ------------------------------------------------------------------------------------------------------------------------------------
23.9 Crane No. 610 Consteel Conveyor
- ------------------------------------------------------------------------------------------------------------------------------------
23.10 Crane No. 611 Scrap Handling System # 1
- ------------------------------------------------------------------------------------------------------------------------------------
23.11 Crane No. 612 Scrap Handling System # 2
- ------------------------------------------------------------------------------------------------------------------------------------
23.12 Crane No. 613 LMF Maintenance & Coll Storage
- ------------------------------------------------------------------------------------------------------------------------------------
23.13 Crane No. 614 Indexing Control
- ------------------------------------------------------------------------------------------------------------------------------------
23.14 Crane No. 618 Alby Maintenance
- ------------------------------------------------------------------------------------------------------------------------------------
23.15 Crane No. 625 Receiving & Storage
- ------------------------------------------------------------------------------------------------------------------------------------
23.16 Crane No. 624 Interceptor PV Scale Removal
- ------------------------------------------------------------------------------------------------------------------------------------
23.17 Crane No. 601-01 Mill Shop Trolley Repair
- ------------------------------------------------------------------------------------------------------------------------------------
23.18 Crane No. 606-02 Hot Mill Trolley Repair
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
24 Hot Mill Laboratory 24.1 Dynamic Testing Machine Set
- ------------------------------------------------------------------------------------------------------------------------------------
24.2 Universal Testing Machine Set
- ------------------------------------------------------------------------------------------------------------------------------------
24.3 Digital Hardness Tester Set
- ------------------------------------------------------------------------------------------------------------------------------------
24.4 Vicker Hardness Tester Set
- ------------------------------------------------------------------------------------------------------------------------------------
24.5 Inverted Metallurgical Microscope Set
- ------------------------------------------------------------------------------------------------------------------------------------
24.6 Grinding & Polishing Machine-Head I
- ------------------------------------------------------------------------------------------------------------------------------------
24.7 Grinding & Polishing Machine-Head II
- ------------------------------------------------------------------------------------------------------------------------------------
24.8 Mounting Presser
- ------------------------------------------------------------------------------------------------------------------------------------
24.9 Tensilout Machine
- ------------------------------------------------------------------------------------------------------------------------------------
24.10 Cutoff Machine
- ------------------------------------------------------------------------------------------------------------------------------------
24.11 Dual belt grinding machine
- ------------------------------------------------------------------------------------------------------------------------------------
24.12 Hydraulic Sheer
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
25 Millshop Laboratory 25.1 Spectro Lab
- ------------------------------------------------------------------------------------------------------------------------------------
25.2 Spectro Robotic
- ------------------------------------------------------------------------------------------------------------------------------------
25.3 Herzog Receiving
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Item Area Sub Qty. Vendor County Serial Type Capacity
Item No.
- ------------------------------------------------------------------------------------------------------------------------------------
<S><C> <C> <C> <C> <C> <C> <C> <C> <C>
ABB Power 15.9Mvar,
22.15 3 System Sweden 5458-03 QBANK-A 24.8kV, 50Hz
- ------------------------------------------------------------------------------------------------------------------------------------
30VA, 36kV,
ABB Power 750/5/5A,
22.16 3 System Sweden 96/906320-322 GIF 35-68 50Hz
- ------------------------------------------------------------------------------------------------------------------------------------
ABB Power 10VA, 36kV,
22.17 1 System Sweden 96/906373 GIF 36-70 50-100/5A50Hz
- ------------------------------------------------------------------------------------------------------------------------------------
ABB Power 933kV, 50Hz,
22.18 3 System Sweden 37916-918 FVR250/1044/2. 2.95mH, 675A
- ------------------------------------------------------------------------------------------------------------------------------------
ABB Power 26.5Mvar,
22.19 3 System Sweden 5658-04 QBANK-A 24.5kV, 50Hz
- ------------------------------------------------------------------------------------------------------------------------------------
10VA, 36kV,
ABB Power 50-100/5A,
22.20 1 System Sweden 96/906324 GIF 36-70 50Hz
- ------------------------------------------------------------------------------------------------------------------------------------
295kV, 400V,
Swede Water 50Hz,
22.21 1 AB Sweden 6192 - 510vmin 60C
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
23 Cranes 23.1 1 P & H U.S.A. 30806 75/315/74 T
- ------------------------------------------------------------------------------------------------------------------------------------
23.2 1 P & H U.S.A. 30807 75/315/75 T
- ------------------------------------------------------------------------------------------------------------------------------------
23.3 1 P & H U.S.A. 30808 75/10 T
- ------------------------------------------------------------------------------------------------------------------------------------
23.4 1 P & H U.S.A. 30809 80 T
- ------------------------------------------------------------------------------------------------------------------------------------
23.5 1 P & H U.S.A. 30810 20 T
- ------------------------------------------------------------------------------------------------------------------------------------
23.6 1 P & H U.S.A. 30811 100/40 T
- ------------------------------------------------------------------------------------------------------------------------------------
23.7 1 P & H U.S.A. 30812 100/40 T
- ------------------------------------------------------------------------------------------------------------------------------------
26.8 1 P & H U.S.A. 30813 20/5 T
- ------------------------------------------------------------------------------------------------------------------------------------
23.9 1 P & H U.S.A. 30814 40 T
- ------------------------------------------------------------------------------------------------------------------------------------
23.10 1 P & H U.S.A. 30815 40 T
- ------------------------------------------------------------------------------------------------------------------------------------
23.11 1 P & H U.S.A. 30816 40 T
- ------------------------------------------------------------------------------------------------------------------------------------
23.12 1 P & H U.S.A. 30817 20/5 T
- ------------------------------------------------------------------------------------------------------------------------------------
23.13 1 P & H U.S.A. 30818 50 T
- ------------------------------------------------------------------------------------------------------------------------------------
23.14 1 P & H U.S.A. 30820 10 T
- ------------------------------------------------------------------------------------------------------------------------------------
23.15 1 P & H U.S.A. 30821 20 T
- ------------------------------------------------------------------------------------------------------------------------------------
23.16 1 P & H U.S.A. 30822 15 T
- ------------------------------------------------------------------------------------------------------------------------------------
23.17 1 P & H U.S.A. 30823 25 T
- ------------------------------------------------------------------------------------------------------------------------------------
23.18 1 P & H U.S.A. 30824 20 T
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
24 Hot Mill Laboratory 24.1 1 Inton H 1789 0516 10 MT
- ------------------------------------------------------------------------------------------------------------------------------------
24.2 1 Inton H 2262 4493 60 MT
- ------------------------------------------------------------------------------------------------------------------------------------
24.3 1 Leco U.S.A. 130410 RT-21DO -
- ------------------------------------------------------------------------------------------------------------------------------------
24.4 1 Leco U.S.A. 170552 V-100-C -
- ------------------------------------------------------------------------------------------------------------------------------------
24.5 1 Olympus 701006 PME3 -
- ------------------------------------------------------------------------------------------------------------------------------------
24.6 1 Leco U.S.A. 3062 825-200-230 -
- ------------------------------------------------------------------------------------------------------------------------------------
24.7 1 Leco U.S.A. 3100 825-200-231 -
- ------------------------------------------------------------------------------------------------------------------------------------
24.8 1 Leco U.S.A. 3307 805-700 -
- ------------------------------------------------------------------------------------------------------------------------------------
24.9 1 Tensilout 446097 10-49 -
- ------------------------------------------------------------------------------------------------------------------------------------
24.10 1 Leco U.S.A. 3250 811-400-000 -
- ------------------------------------------------------------------------------------------------------------------------------------
24.11 1 Leco U.S.A. 3090 802-500-200 -
- ------------------------------------------------------------------------------------------------------------------------------------
24.12 1 MS 1000x12 -
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
25 Millshop Laboratory 25.1 1 Spectro - LAVME808A
- ------------------------------------------------------------------------------------------------------------------------------------
25.2 1 Spectro - -
- ------------------------------------------------------------------------------------------------------------------------------------
25.3 1 Herzog U.S.A. 3-700-121 HR-LD4
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-20-
<PAGE>
Nakornthai Strip Mill Public Company Limited
Equipment for Registration
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Item Area Sub Equipment Details
Item
- ------------------------------------------------------------------------------------------------------------------------------------
<S><C> <C> <C> <C>
25.4 Nitrogen/Oxygen Determinator TC436DR Analyzer
- ------------------------------------------------------------------------------------------------------------------------------------
25.5 Nitrogen/Oxygen Determinator EF-400 Furnace
- ------------------------------------------------------------------------------------------------------------------------------------
25.6 Hydrogen Determinator RH-404 Analyzer
- ------------------------------------------------------------------------------------------------------------------------------------
25.7 Hydrogen Determinator EF-400 Furnace
- ------------------------------------------------------------------------------------------------------------------------------------
25.8 Carbon/Sulfur Determinator CS-400 Analyzer
- ------------------------------------------------------------------------------------------------------------------------------------
25.9 Carbon/Sulfur Determinator CF-19 Gas ___
- ------------------------------------------------------------------------------------------------------------------------------------
25.10 MRS 4000 Multi Channel X-ray Spectrometer
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Item Area Sub Qty. Vendor County Serial Type Capacity
Item No.
- ------------------------------------------------------------------------------------------------------------------------------------
<S><C> <C> <C> <C> <C> <C> <C> <C> <C>
25.4 1 Leco U.S.A. 3626 TC-436DR
- ------------------------------------------------------------------------------------------------------------------------------------
25.5 1 Leco U.S.A. 3656 EF-400
- ------------------------------------------------------------------------------------------------------------------------------------
25.6 1 Leco U.S.A. 3150 RH-404
- ------------------------------------------------------------------------------------------------------------------------------------
25.7 1 Leco U.S.A. 3655 EF-400
- ------------------------------------------------------------------------------------------------------------------------------------
25.8 1 Leco U.S.A. 3189 CS-400
- ------------------------------------------------------------------------------------------------------------------------------------
25.9 1 Leco U.S.A. 3072 CF-10
- ------------------------------------------------------------------------------------------------------------------------------------
25.10 1 Siemens U.S.A. HX-12-013 AARS-4000
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-21-
<PAGE>
EXHIBIT 3
Form of Pledge Agreement
To: THE CHASE MANHATTAN BANK
as Collateral Agent for the Pledgees
Date:_______
Dear Sirs:
Nakornthai Strip Mill Public Company Limited (the "Pledgor"), being the owner of
the property listed below (the "Pledged Property"), hereby pledges as security
for the due and punctual payment and performance of the Obligations in
accordance with the Machinery Pledge Agreement dated 12 March 1998 among the
Pledgor, the Pledgees, the Collateral Agent and the Custodian (the "Pledge
Agreement"), the Pledged Property (listed in Attachment 1 hereto) to the
Collateral Agent, for the benefit of the Pledgees, and, in order to perfect the
Pledge under this Agreement, delivers the Pledged Property to the Custodian.
All definitions, terms and conditions set out in the Pledge Agreement shall
apply to this Pledge. All of the provisions of the Pledge Agreement are deemed
to be incorporated herein as if set out in full herein.
This Pledge shall be governed by the laws of Thailand.
The details of the Pledged Property are attached hereto.
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
By:
--------------------------------
Name:
Title:
AGREED AND ACCEPTED BY THE CUSTODIAN
By:
--------------------------------
Name:
Title:
-22-
<PAGE>
ATTACHMENT 1
Details of Pledged Property
-23-
<PAGE>
EXHIBIT 4
Form of Enforcement Notice
To: NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
No. 9, UM Tower, 16th Floor
Kwaeng Suanluang, Khet Suanluang
Bangkok
[date]
Dear Sirs,
We refer to:
(a) the following machinery as listed in the attached (the "Pledged
Property"); and
(b) the Machinery Pledge Agreement dated 12 March 1998 (the "Machinery
Pledge") between Nakomthai Strip Mill Public Company Limited (the
"Pledgor"), the Thai Lenders, the Custodian, the Trustees, the
Debenture Trustee and the Collateral Agent (as therein defined).
Words and expressions defined in the Machinery Pledge (whether expressly therein
or by cross-reference to another document) and used herein shall, unless the
context otherwise requires, have the same meanings when used herein.
We hereby notify you that we have received a Notice of an Actionable Default and
that we have been directed to deliver this Enforcement Notice in accordance with
the provisions of Section 4 of the Sharing Agreement.
We hereby confirm that this Enforcement Notice is delivered pursuant to and for
the purposes of Clause 3.2 of the Machinery Pledge and in accordance with the
terms thereof each Pledge constituted by or pursuant to the Machinery Pledge is
immediately enforceable by any means in accordance with applicable law.
This Enforcement Notice and the rights and obligations of the parties hereunder
shall be governed by and construed in accordance with the laws of Thailand.
Your faithfully,
THE CHASE MANHATTAN BANK
As Collateral Agent, for and on behalf of
the Thai Lenders, the Trustees and the Debenture Trustees
[o]
By:
---------------------
-24-
<PAGE>
Exhibit 4.11
CONDITIONAL ASSIGNMENT OF ACCOUNTS
THIS AGREEMENT is made on 12 March 1998
BETWEEN:
(1) NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED, a public limited company
duly organized and validly existing under the laws of the Kingdom of
Thailand having its registered office at No. 9, UM Tower, 16th Floor,
Kwaeng Suanluang, Khet Suanluang, Bangkok, Thailand (the "Assignor");
(2) The financial institutions whose names are listed in Exhibit 1 (the "Thai
Lenders") represented by THE INDUSTRIAL FINANCE CORPORATION OF THAILAND, a
corporation duly organized and validly existing under the laws of the
Kingdom of Thailand having its registered office at No. 1770 New Petchburi
Road, Bangkok 10320, as Facility Agent for the Thai Lenders (the "Thai
Facility Agent");
(3) THE CHASE MANHATTAN BANK, a company duly organized and validly existing
under the laws of the State of New York, having its registered office at
450 West 33rd Street, New York, New York, U.S.A., having its branch office
in Bangkok, Thailand, located at 20 North Sathorn Road, Silom, Bangrak,
Bangkok 10500, acting as the Trustees and the Debenture Trustee (as
defined below);
AND
(4) THE CHASE MANHATTAN BANK as collateral agent (the "Collateral Agent").
WHEREAS:
A. The Assignor and the Thai Lenders entered into a credit facility agreement
dated 27 September 1995 (the "CFA") whereunder credit facilities of Baht
3,300,000,000 and US$308,000,000 have been granted;
B. The Assignor intends to procure financing from abroad by having NSM Steel
Company, Ltd. ("NSM Cayman"), a company incorporated under the laws of the
Cayman Islands and in which the Assignor holds 100 percent of its shares,
and NSM Steel (Delaware) Inc., a company incorporated under the laws of
the State of Delaware, the United States, a wholly owned subsidiary of NSM
Cayman (hereinafter collectively referred to as the "Note Issuers"),
acting as agent of NSM Cayman pursuant to an agency agreement, issue
US$452,500,000 of indebtedness comprised of (a) US$249,000,000 (aggregate
principal amount at maturity) of 12% Senior Mortgage Notes Due 2006 (the
"Senior Notes") which will be issued pursuant to an indenture dated as of
1 March 1998 (the "Senior Note Indenture"), among the Note Issuers, the
Assignor and The Chase Manhattan Bank ("Chase"), as trustee (the "Senior
Notes Trustee"), (b) the US$203,500,000 (aggregate principal amount at
maturity) of 12 1/4 Senior Subordinated Mortgage Notes Due 2008 (the
<PAGE>
"Senior Subordinated Notes" and together with the Senior Notes, the
"Notes"), which will be issued pursuant to an indenture dated as of 1
March 1998 (the "Senior Subordinated Note Indenture", and together with
the Senior Note Indenture, the "Indentures") among the Note Issuers and
Chase, as trustee (the "Senior Subordinated Notes Trustee" and together
with the Senior Notes Trustee, the "Trustees"), with warrants to purchase
74,476,809 (Seventy Four Million Four Hundred Seventy Six Thousand Eight
Hundred and Nine) ordinary shares of the Assignor, and (c) a private
placement consisting of US$53,133,016 (aggregate principal amount at
maturity) of 12 3/4% Subordinated Second Mortgage Debentures Due 2009 (the
"Debentures") which will be issued pursuant to an indenture dated as of 1
March 1998 (the "Debenture Indenture"), among the Note Issuers, the
Assignor and Chase, as trustee (the "Debenture Trustee") and 64,417,180
ordinary shares of the Assignor;
C. The Assignor has entered into an amendment to the CFA (the "CFA
Amendment") with the Thai Lenders dated 12 March 1998 for the amendment of
certain terms and provisions to facilitate the Assignor's additional
financing (the CFA and the CFA Amendment, collectively, the "Bank Credit
Facility"), including but not limited to, an agreement the Assignor
entered into with the Thai Lenders, the Trustee and the Debenture Trustee
dated 12 March 1998 to set forth arrangements for the Thai Lenders and
holders of the Notes and the Debentures to share certain collateral (the
"Security Sharing Agreement"); and
D. Pursuant to the terms of the Security Sharing Agreement, the Assignor, the
Thai Lenders, the Thai Facility Agent, the Trustees, the Debenture
Trustee, and the Collateral Agent agree to enter into this Agreement as
security for the Obligations (as defined hereunder).
IT IS AGREED as follows:
1. DEFINITIONS
1.1 Except as otherwise provided herein, words and expressions in this
Agreement shall have the same respective meanings as defined in the Bank
Credit Facility, the Indentures, the Debenture Indenture, and the Security
Sharing Agreement:
"Accounts" means those accounts set forth in Exhibit 4 and all rights
relating thereto, together with any substitute account or accounts opened
from time to time;
"Account Banks" means each of the commercial banks or financial
institutions listed in Exhibit 4 and/or such other bank at which the
Accounts or any of them are maintained, and any assignor or successor
thereof;
"Obligations" means all present and future obligation and liabilities of
the Assignor under the Bank Credit Facility, the Notes, the Indentures,
the Debentures, the Debenture Indenture and the Security Sharing
Agreement; and
Page 2
<PAGE>
1.2 Any reference in this Agreement to:
(i) any agreement or document shall be read and construed as a reference
to such agreement or document as the same may have been, or may from
time to time be, amended, varied, novated or supplemented; and
(ii) any party shall be construed so as to include its respective
successors, permitted assigns and transferees in accordance with its
respective interests;
1.3 Words denominating the singular include the plural and vice versa.
1.4 Section headings are for reference only.
2. ASSIGNMENT
2.1 To secure the due and punctual payment and performance by the Assignor of
the Obligations, the Assignor hereby conditionally assigns to the
Collateral Agent for the benefit of the Thai Lenders, the holders of the
Notes and the Debenture holders (as a second priority lien), the Accounts,
and the Collateral Agent hereby accepts all such rights, title and
interest provided that such assignment is conditional and shall become
effective if and only if, after an enforcement notice in the form attached
as Exhibit 3 (an "Enforcement Notice") confirming that the assignment has
become effective and enforceable in accordance with the terms of this
Agreement is delivered to the Account Banks and the Assignor. The right to
cause such assignment to become effective is an absolute discretionary
right of the Thai Lenders, the holders of the Notes, and as the case may
be, the Debenture holders (as a second priority lien), who shall have no
obligation to cause such assignment to become effective and who shall have
the option within their absolute discretion to decide at any time after
the occurrence of an Event of Default (as defined in the Bank Credit
Facility, the Indentures and the Debenture Indenture, as the case may be)
whether or not to cause the assignment under this Clause 2.1 to become
effective, provided that no such Enforcement Notice shall be delivered by
the Collateral Agent unless it has received a Notice of Actionable Default
(as defined in the Security Sharing Agreement) and the provision of
Section 4 of the Security Sharing Agreement have been complied with
(including, without limitation, Section 4.2(b) thereof).
2.2 Notwithstanding the conditional assignment contained in Clause 2.1, the
Assignor shall at all times remain liable to perform all of its
obligations under the Bank Credit Facility, the Indenture, and the
Debenture Indenture, and to comply with the terms and conditions of
operation of and its obligations in relation to the Accounts until the
conditional assignment under Clause 2.1 comes into effect by delivery of
an Enforcement Notice.
2.3 Nothing herein contained shall constitute or be deemed to constitute a
novation or settlement of any obligations (including, without limitation,
the Obligations) or indebtedness, nor shall it be construed as an
assumption or acceptance by the Thai Lenders, the Trustees or, as the case
may be, the Debenture Trustee (as a second priority lien), of any
obligations of the Assignor in respect of the Accounts.
Page 3
<PAGE>
3. PERFECTION OF ASSIGNMENT
3.1 Immediately upon the execution of this Agreement, the Assignor shall give
notice to the Account Banks in the form set out in Part A of Exhibit 2,
and shall use its reasonable efforts to procure that as soon as
practicable the Account Banks acknowledge receipt thereof in the form set
out in Part B of Exhibit 2 hereto or, in such case, in such other form as
may be reasonably acceptable to the Collateral Agent.
3.2 The Assignor shall comply with the terms of each of the notices given
pursuant to Clause 3.1 and shall not take or omit to take any action, the
taking or omission of which might otherwise result in the alteration or
impairment of any of the rights assigned hereunder or any of its
obligations or the rights of the Thai Lenders, the Trustees or, as the
case may be, the Debenture Trustee (as a second priority lien) under this
Agreement.
4. ENFORCEMENT
In accordance with the Security Sharing Agreement, at any time following
the service of an Enforcement Notice (which may only be served pursuant to
Clause 2.1 of this Agreement), the Collateral Agent may:
(a) exercise any rights acquired by it in respect of the Accounts
pursuant to this Agreement in all respects as though originally
named as the holder of the relevant Accounts assigned pursuant to
this Agreement in place of the Assignor; and
(b) otherwise put into force and effect all rights, powers and remedies
available to it at law or otherwise as assignee of all or part of
the rights and interests which are assigned pursuant to this
Agreement.
5. CONTINUING SECURITY
5.1 This Agreement and the assignment created by or pursuant hereto shall be
in addition to, independent of, without prejudice to, and shall not be in
substitution for or merge with, any other rights, security, guarantee,
indemnity or suretyship now held or which may hereafter be held by the
Thai Lenders, the Trustees or, as the case may be, the Debenture Trustee
(as a second priority lien), for the due payment and performance by the
Assignor of the Obligations.
5.2 This Agreement and the assignments and transfer herein contained shall be
a continuing security and shall remain in full force and effect
notwithstanding the liquidation, bankruptcy or other incapacity of the
Assignor or any amalgamation or reconstruction of the Assignor or any
change in the constitution thereof or any settlement of account,
intervening payment or the extinction of any or all indebtedness by
whatever reason (other than by full performance and discharge of the
Obligations) or other matter or thing whatever.
Page 4
<PAGE>
5.3 If after the date of this Agreement:
(a) any settlement or discharge of any or all of the Obligations of the
Assignor is nullified for any reason whatsoever; and/or
(b) an order or judgment is made against the Thai Lenders, the Trustees
or, as the case may be, the Debenture Trustee or the Debenture
holders, under Section 237 of the Civil and Commercial Code of
Thailand (or any modification or re-enactment thereof) or under any
of Sections 113, 114 and 115 of the Bankruptcy Act of Thailand (or
any modification or re-enactment thereof) directing the Thai
Lenders, the Trustees or, as the case may be, the Debenture Trustee
or the Debenture holders, to pay any sum received or held by them
from the Assignor or any other person to settle all or part of the
debt of the Assignor to an official receiver, a liquidator or a
creditor of the Assignor;
then the returned moneys, losses, damages, costs and expenses of the Thai
Lenders, the Trustees or, as the case may be, the Debenture Trustee or the
Debenture holders, arising as a result of such nullified settlement or
discharge, and/or (as the case may be) the sum paid by it pursuant to such
order or judgement shall be recoverable from the Assignor on demand.
6. FURTHER ASSURANCES
6.1 The Assignor shall at any time at the reasonable request of the Collateral
Agent and at the cost and expense of the Assignor, promptly sign, seal,
execute and deliver such deeds, instruments, notices and documents
(including, further legal or other transfers or assignments) and do such
acts and things as may reasonably be required by the Collateral Agent for
the purpose of maintaining, perfecting, protecting, defending, enforcing
or securing the obligations of the Assignor hereunder and the encumbrances
arising under or constituted by or pursuant to this Agreement (or
purported to be created by or constituted by or pursuant to this
Agreement) or for facilitating the exercise or, as the case may be,
realization thereof and the exercise of all other powers, authorities and
discretion vested in the Collateral Agent.
6.2 The Collateral Agent shall, without prejudice to other rights, powers and
privileges under this Agreement, be entitled (but shall be under no
obligation), at any time and as often as it may reasonably consider to be
necessary, to take any such action and/or demand additional documents and
instruments from the other party (in which case the Assignor undertakes to
use its best endeavors to procure such documents or instruments from such
person) for the purpose of protecting the rights constituted by this
Agreement.
6.3 The Assignor hereby agrees to indemnify the Collateral Agent on demand
against any and all costs, losses, expenses or liabilities incurred by or
imposed on the Thai Facility Agent, the Thai Lenders, the Trustees, the
Debenture Trustee or the Collateral Agent in connection with actions taken
concerning the perfection and/or protection of the rights and/or security
interest referred to in this Clause 6.
Page 5
<PAGE>
7. FILINGS, RECORDS, INSPECTION
Except as otherwise permitted hereunder, the Assignor shall not file or
suffer to be on file, or authorize or permit to be filed or to be on file,
in any jurisdiction, any other encumbrance with respect to the Assigned
Assets in which the Collateral Agent are not named as the sole first
secured party for the benefit of the Thai Lenders and the Trustees and the
sole second secured party for the benefit of the Debenture Trustee or
Debenture holders. The Assignor shall permit representatives of the
Collateral Agent upon reasonable notice, at any time during normal
business hours to inspect and make abstracts from its books and records
pertaining to the Accounts.
8. REMEDIES AND WAIVERS
8.1 Any receipt, release or discharge of the assignment provided by, or of any
liability arising under, the Accounts may be given by the Collateral Agent
alone and shall not release or discharge the Assignor from any liability
for the same or any other moneys which may exist independently of this
Agreement. Where such receipt, release or discharge relates only to part
of the Accounts, such receipt, release or discharge shall not prejudice or
affect the assignment hereby created in relation to the remainder of the
Accounts.
8.2 The Collateral Agent may in its discretion grant time or other indulgence,
or make any other arrangement variation or release, with the Assignor or
any other person (whether or not party hereto and whether or not jointly
liable with the Assignor) in respect of all the obligations or of any
other security therefor or guarantee in respect thereof without prejudice
either to the assignment constituted by or pursuant to this Agreement or
to the liability of the Assignor for the Obligations.
8.3 The rights, powers and remedies provided in this Agreement are cumulative
and are not, nor are they to be construed as, exclusive of any rights,
powers and remedies provided by law.
8.4 No failure on the part of the Collateral Agent to exercise, or delay on
its part in exercising any of the rights, powers and remedies provided for
by this Agreement or by law shall operate as a waiver thereof, nor shall
any single or partial waiver of any such rights, powers or remedies
preclude any further or other exercise of such rights, power or remedies
or the exercise of any other of such rights, powers or remedies.
9. SUCCESSORS AND ASSIGNS
This Agreement shall be binding on and shall inure to the benefit of the
parties hereto and their respective successors, and transferees, provided
that the Assignor may not assign or transfer all or any part of its rights
or obligations under this Agreement.
Page 6
<PAGE>
10. RELEASE AND REASSIGNMENT
Immediately after the Assignor has finally paid and satisfied to the Thai
Lenders, the Trustees and the Debenture Trustee in full the Obligations,
the Collateral Agent shall, at the request and cost of the Assignor,
promptly reassign, without warranty, to the Assignor the rights, assigned
to it hereunder or such part of it as then remains assigned in favour of
the Collateral Agent and/or release the encumbrances created pursuant
hereto, provided that any release, settlement, discharge or termination of
this Agreement and/or any such reassignment shall, unless otherwise agreed
in writing by the Thai Lenders, Trustees or, as the case may be, the
Debenture Trustee (in connection with its second priority lien), be upon
the express condition that such release, settlement, discharge,
termination and/or reassignment shall become void and of no effect and
Clause 5.3 shall apply if any security or payment on the faith of which
such release, settlement, discharge, termination and/or reassignment is
given or made shall at any time thereafter be nullified or subject to an
order or judgment described in Clause 5.3.
11. SEVERABILITY
If at any time any one or more of the provisions of this Agreement becomes
invalid, illegal or unenforceable in any respect under any law, the
validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby.
12. NOTICES
Any notice or communication under or in connection with this Agreement
shall be given in accordance with Section 12 of the Security Sharing
Agreement and the provisions of such agreement shall apply hereto mutatis
mutandis.
13. LAW
This Agreement shall be governed by and construed in accordance with the
laws of Thailand.
14. AMENDMENTS
The terms of this Attachment may be waived, altered or amended only by an
instrument in writing duly executed by the Assignor and the Collateral
Agent in accordance with Section 17 of the Security Sharing Agreement.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed.
Page 7
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
as the Assignor
By: /s/ Sawasdi Horrungruang
-----------------------------------
Title: Chairman
THE INDUSTRIAL FINANCE CORPORATION OF THAILAND
as Thai Facility Agent for the Thai Lenders
By: /s/ [ILLEGIBLE]
----------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK
as Trustees and Debenture Trustee
By: /s/ [ILLEGIBLE]
----------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK
as Collateral Agent
By: /s/ [ILLEGIBLE]
----------------------------------
Name:
Title:
Page 8
<PAGE>
EXHIBIT 1
The Thai Lenders
1. The Industrial Finance Corporation of Thailand
2. Thai Farmers Bank Public Company Limited
3. Siam City Bank Public Company Limited
4. The Government Savings Bank
5. First Bangkok City Bank Public Company Limited
6. Nakornthon Bank Public Company Limited
7. SCF Finance and Securities Public Company Limited
8. Siam City Credit Finance and Securities Public Company Limited
Page 9
<PAGE>
EXHIBIT 2
Part A
Notice of Conditional Assignment
Date: 12 March 1998
To: The Chase Manhattan Bank
20 North Sathorn Road
Silom, Bangrak
Bangkok 10500
Dear Sirs,
We refer to the Revenue Account and the Operating Account opened with you, by,
and in the name of, Nakornthai Strip Mill Public Company Limited (the
"Assignor"), (the "Accounts", which expression includes any substitute account
opened therefor).
We hereby give you notice that pursuant to a Conditional Assignment of Accounts
dated 12 March 1998 (the "Assignment") between the Assignor, the Thai Lenders,
the Trustees, the Debenture Trustee and the Collateral Agent (as defined
therein), the Assignor has assigned to the Collateral Agent for the benefit of
the Thai Lenders and the holders of the Notes and the Debentures, the Accounts
and all of the Assignor's rights, entitlements and benefits in respect of the
Accounts (including its rights to withdraw and receive monies therefrom). Words
and expressions defined or referred to in the Assignment shall, unless the
context requires otherwise, have the same meanings when used herein.
The conditional assignment shall become effective and binding upon giving an
Enforcement Notice to you confirming that the conditional assignment has become
effective at which time the Thai Lenders and the holders of the Notes and the
Debentures shall acquire all rights, title and interest in the Accounts
identical to those of the Assignor.
This Notice shall not be revocable without the Collateral Agent's prior consent.
This Notice is governed by and construed in accordance with the laws of
Thailand.
Please acknowledge receipt of this Notice and your agreement to the Assignment
in the form of acknowledgement attached hereto (the "Acknowledgement") by
signing and returning one copy of the Acknowledgement to the Collateral Agent at
and another copy to the Assignor.
Page 10
<PAGE>
Yours faithfully,
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
By: /s/
----------------------------------
Name:
Title:
We confirm our agreement with the foregoing.
THE CHASE MANHATTAN BANK
By: /s/
----------------------------------
Name:
Title:
Attachment: Acknowledgement of the Account Bank
Page 11
<PAGE>
Part B
Acknowledgement
To: THE CHASE MANHATTAN BANK
20 North Sathorn Road
Silom, Bangrak
Bangkok 10500
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
No. 9, UM Tower, 16th Floor
Kwaeng Suanluang, Khet Suanluang
Bangkok,
We hereby acknowledge receipt of a notice of assignment of which this is a copy
and consent and agree, for ourselves and our successors and assigns, to the
terms thereof and of the Assignment. Words and expressions defined or referred
to in the Assignment shall, unless the context requires otherwise, have the same
meanings when used herein. We now undertake and confirm to you that:
(i) we agree to the Assignment and will give to the Collateral Agent notice of
any breach of any agreement governing the Accounts by the Assignor as soon
as we become aware of it;
(ii) we will upon receipt of an Enforcement Notice pay all amounts outstanding
in the Accounts to such person or account as the Collateral Agent may
nominate from time to time;
(iii) we have not received any other notice of assignment nor consented to any
other assignment of rights to the Accounts;
(iv) we agree (in the event the conditional assignment in Clause 2.1 of the
Assignment becomes effective) to the assignment of all rights of the
Assignor to the Collateral Agent for the benefit of the Thai Lenders and
the holders of the Notes and the Debentures pursuant to the Assignment and
agree to sign such documents as may be reasonably requested to record the
said assignment;
(v) the Thai Lenders, the Trustees, the Debenture Trustee and/or the
Collateral Agent are not liable to perform any of the obligations assumed
by the Assignor under such Accounts nor liable for the consequences of
non-performance;
(vi) we agree to abide by all the terms and conditions of the Assignment and to
act accordingly upon our receipt of a written notice and/or instruction
from the Collateral Agent or any successor of the Collateral Agent; and
Page 12
<PAGE>
(vii) this Acknowledgement is governed by and construed in accordance with the
laws of Thailand.
Page 13
<PAGE>
Yours faithfully,
- ----------------------
For and on behalf of
The Chase Manhattan Bank
As Account Bank
[Date]
Page 14
<PAGE>
EXHIBIT 3
Form of Enforcement Notice
To: (1) NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
No. 9, UM Tower, 16th Floor
Kwaeng Suanluang, Khet Suanluang
Bangkok
(2) THE CHASE MANHATTAN BANK
20 North Sathorn Road
Silom, Bangrak
Bangkok 10500
[date]
Dear Sirs,
We refer to:
(a) the following Accounts as listed in the attached:
(b) the Conditional Assignment of Accounts dated 12 March 1998 (the
"Conditional Assignment") between Nakomthai Strip Mill Public Company
Limited (the "Assignor"), the Thai Lenders, the Trustees, the Debenture
Trustee and the Collateral Agent (as therein defined):
(c) the notice of conditional assignment dated [o] given to you by the
Assignor and confirmed by the Collateral Agent in respect of the
Conditional Assignment.
Words and expressions defined in the Conditional Assignment (whether expressly
therein or by cross-reference to another document) and used herein shall, unless
the context otherwise requires, have the same meanings when used herein.
We hereby notify you that we have received Notice of an Actionable Default and
that we have been directed to deliver this Enforcement Notice in accordance with
the provisions of Section 4 of the Sharing Agreement.
We hereby confirm that this Enforcement Notice is delivered pursuant to and for
the purposes of Clause 2.1 of the Conditional Assignment so as to take effect in
accordance with the terms thereof such that with effect from the date hereof the
assignment by the Assignor to the Thai Lenders and the holders of the Notes and
the Debentures has taken effect in relation to all of the rights and interests
in and to the Account(s) expressed to be assigned to the Thai Lenders and the
holders of the Notes and the Debentures pursuant to Clause 2.1 of the
Conditional Assignment.
Page 15
<PAGE>
This Enforcement Notice and the rights and obligations of the parties hereunder
shall be governed by and construed in accordance with the laws of Thailand.
Your faithfully,
THE CHASE MANHATTAN BANK
As Collateral Agent, for and on behalf of
the Thai Lenders, the Trustees and the Debenture Trustees
[o]
By:
----------------------
Page 16
<PAGE>
EXHIBIT 4
Details of Accounts
The Chase Manhattan Bank, Bangkok Branch
1) Type: corporate savings A/C - Baht, non-interest bearing
A/C Name: Nakornthai Strip Mill Public Co., Ltd. - Onshore Baht Revenue
Account
A/C No. 6580116868
2) Type: corporate savings A/C - US$, non-interest bearing
A/C Name: Nakornthai Strip Mill Public Co., Ltd. - Onshore USD Revenue
Account
A/C No. 6581115463
3) Type: corporate savings A/C - Baht, non-interest bearing (with check book)
A/C Name: Nakornthai Strip Mill Public Co., Ltd. - Baht Operating Account
A/C No. 6580116876
4) Type: corporate savings A/C - US$, interest bearing
A/C Name: Nakornthai Strip Mill Public Co., Ltd. - USD Operating Account
A/C No. 6581115471
<PAGE>
Exhibit 4.12
PLEDGE OF ACCOUNTS
THIS AGREEMENT is made on 12 March 1998
BETWEEN:
(1) NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED, a public limited company
duly organized and validly existing under the laws of the Kingdom of
Thailand having its registered office at No. 9, UM Tower, 16th Floor,
Kwaeng Suanluang, Khet Suanluang, Bangkok, Thailand (the "Pledgor");
(2) The financial institutions whose names are listed in Exhibit I (the "Thai
Lenders") represented by THE INDUSTRIAL FINANCE CORPORATION OF THAILAND, a
corporation duly organized and validly existing under the laws of the
Kingdom of Thailand having its registered office at No. 1770 New Petchburi
Road, Bangkok 10320, as Facility Agent for the Thai Lenders (the "Thai
Facility Agent");
(3) THE CHASE MANHATTAN BANK, a company duly organized and validly existing
under the laws of the State of New York, having its registered office at
450 West 33rd Street, New York, New York, U.S.A., having its branch office
in Bangkok, Thailand, located at 20 North Sathorn Road, Silom, Bangrak,
Bangkok 10500, acting as the Trustees and the Debenture Trustee (as
defined below).
AND
(4) THE CHASE MANHATTAN BANK as collateral agent (the "Pledgee").
WHEREAS:
A. The Pledgor and the Thai Lenders entered into a credit facility agreement
dated 27 September 1995, (the "CFA") whereunder credit facilities of Baht
3,300,000,000 and US$308,000,000 have been granted;
B. The Pledgor intends to procure financing from abroad by having NSM Steel
Company, Ltd. ("NSM Cayman"), a company incorporated under the laws of the
Cayman Islands and in which the Pledgor holds 100 percent of its shares,
and NSM Steel (Delaware) Inc., a company incorporated under the laws of
the State of Delaware, the United States, a wholly owned subsidiary of NSM
Cayman (hereinafter collectively referred to as the "Note Issuers"),
acting as agent of NSM Cayman pursuant to an agency agreement, issue
US$452,500,000 of indebtedness comprised of (a) US$249,000,000 (aggregate
principal amount at maturity) of 12% Senior Mortgage Notes Due 2006 (the
"Senior Notes") which will be issued pursuant to an indenture dated as of
1 March 1998 (the "Senior Note Indenture", among the Note Issuers, the
Pledgor and The Chase Manhattan Bank ("Chase"), as trustee (the "Senior
Notes Trustee"), (b) the US$203,500,000 (aggregate
<PAGE>
principal amount at maturity) 12 1/4 Senior Subordinated Mortgage Notes
Due 2008 (the "Senior Subordinated Notes" and together with the Senior
Notes, the "Notes"), which will be issued pursuant to an indenture dated
as of 1 March 1998 (the "Senior Subordinated Note Indenture", and together
with the Senior Note Indenture, the "Indentures") among the Note Issuers
and Chase, as trustee (the "Senior Subordinated Notes Trustee" and
together with the Senior Notes Trustee, the "Trustees"), with warrants to
purchase 74,476,809 (Seventy Four Million Four Hundred Seventy Six
Thousand Eight Hundred and Nine) ordinary shares of the Pledgor, and (c) a
private placement consisting of US$53,133,016 (aggregate principal amount
at maturity of) 12 3/4% Subordinated Second Mortgage Debentures Due 2009
(the "Debentures") which will be issued pursuant to an indenture dated as
of 1 March 1998 (the "Debenture Indenture"), among the Note Issuers, the
Pledgor and Chase, as trustee (the "Debenture Trustee") and 64,417,180
ordinary shares of the Pledgor;
C. The Pledgor has entered into an amendment to the CFA (the "CFA Amendment")
with the Thai Lenders dated 12 March 1998 for the amendment of certain
terms and provisions to facilitate the Pledgor's additional financing (the
CFA and the CFA Amendment, collectively, the "Bank Credit Facility"),
including but not limited to, an agreement the Pledgor entered into with
the Thai Lenders, the Trustees and the Debenture Trustee dated 12 March
1998 to set forth arrangements for the Thai Lenders, the holders of the
Notes and the holders of the Debentures to share certain collateral (the
"Security Sharing Agreement"); and
D. Pursuant to the terms of the Security Sharing Agreement, the Pledgor, the
Thai Lenders, the Thai Facility Agent, the Trustees, the Debenture Trustee
and the Pledgee agree to enter into this Agreement as security for the
Obligations (as defined hereunder).
IT IS AGREED as follows:
1. DEFINITIONS
1.1 Except as otherwise provided herein, words and expressions in this
Agreement shall have the same respective meanings as described in the Bank
Credit Facility, the Indentures, the Debenture Indenture and the Security
Sharing Agreement:
"Accounts" means those accounts set forth in Exhibit 4 and all rights
relating thereto, together with any substitute account or accounts opened
from time to time;
"Account Bank" means each of the commercial banks as financial
institutions set out in Exhibit 4, or such other bank at which the
Accounts or any of them are maintained and any assignor or successor
thereof,
"Collateral" means (i) the Accounts, (ii) all the Evidence, (iii) all the
Deposits, and (iv) all other rights, entitlements, benefits and proceeds
in, to and of the Accounts that may now or hereafter be, or required to
be, pledged in favor of the Pledgee pursuant to this Agreement;
-2-
<PAGE>
"Deposits" means, in respect of each Account, all monies now or at anytime
hereafter standing to the credit thereof and all entitlement to interest
(without prejudice to the provisions of Section 761 of the Civil and
Commercial Code) and all other rights and benefits accruing to or arising
from such monies and "Deposit" shall be construed accordingly;
"Enforcement Notice" means a notice of an Event of Default under the Bank
Credit Facility, the Indentures or, as the case may be, the Debenture
Indentures in the form attached as Exhibit 3;
"Evidence" means the passbook or other documents of title in relation to
any Deposit or evidencing rights to any Deposit;
"Pledge" means, in respect of each Account, the pledge of that Account
created by or pursuant to this Agreement; and
"Obligations" means all present and future obligations and liabilities of
the Pledgor under the Bank Credit Facility Agreement, the Notes, the
Indentures, the Debentures, the Debenture Indenture, and the Security
Sharing Agreement.
1.2 Any reference in this Agreement to:
(i) any agreement or document shall be read and construed as a reference
to such agreement or document as the same may have been, or may from
time to time be, amended, varied, novated or supplemented; and
(ii) any party shall be construed so as to include its respective
successors, permitted assigns and transferees in accordance with its
respective interests;
1.3 Words denominating the singular include the plural and vice versa.
1.4 Section headings are for reference only.
2. PLEDGE
2.1 To secure the due and punctual payment and performance by the Pledgor of
the Obligations, the Pledgor hereby:
(a) pledges the Accounts to the Pledgee as a first security interest for
the benefit of the Thai Lenders and the holders of the Notes and as
a second security interest for the benefit of the holders of the
Debentures, on the terms and conditions set out in this Agreement
and the Pledgee agrees to accept the pledge of such Accounts on the
terms and conditions set out in this Agreement.
(b) undertakes at each time when any Evidence is issued to immediately:
(i) deliver such Evidence to the Pledgee;
-3-
<PAGE>
(ii) endorse on such Evidence the following: "This Account is
pledged pursuant to the Pledge of Accounts dated 12 March 1998
between the Pledgor, the Thai Facility Agent, the Trustees,
the Debenture Trustee and the Pledgee named therein and the
terms and conditions thereof shall apply to this Account"; and
execute such endorsement;
(iii) give notice to the Account Banks in the form set out in Part A
of Exhibit 2 hereto and procure that as soon as practicable
the Account Banks acknowledges such notice in the form set out
in Part B of Exhibit 2, or in such other form as may be
reasonably acceptable to the Pledgee; and
(iv) complete all other actions and deliver any other document
which the Pledgee may reasonably require to perfect the
pledging by the Pledgor under this Agreement and each Pledge;
and
(c) in the event that the Pledgor opens any Account the details of which
are not listed in Exhibit 4 , the Pledgor agrees, if requested by
the Thai Lenders, the Trustees or the Debenture Trustee to promptly
execute and deliver to the Pledgee an agreement substantially in the
form of this Agreement pledging such Account to the Pledgee for the
benefit of the Thai Lenders, the holders of the Notes and the
holders of the Debentures (as a second priority lien).
3. ENFORCEMENT OF PLEDGE
3.1 The enforcement of the Pledge shall be in accordance with the Security
Sharing Agreement.
3.2 In accordance with the Security Sharing Agreement, following the receipt
of a Notice of Actionable Default (as defined therein) and in compliance
with Section 4 of the Security Sharing Agreement, the serving on the
Pledgor of an Enforcement Notice shall cause each Pledge constituted by or
pursuant to this Agreement to become immediately enforceable by any means
in accordance with applicable laws.
3.3 In the enforcement of the Pledge created pursuant to the provisions of
this Agreement, the Pledgee may select any or all of the Collateral as it
deems appropriate, subject only to limitations imposed by applicable law.
3.4 The proceeds derived from the enforcement of any Pledge shall be applied
towards settlement of the Obligations in accordance with the first
security interests of the Thai Lenders and holders of the Notes under the
Bank Credit Facility, the Indentures and the Security Sharing Agreement
and the second security interests of the holders of Debentures under the
Debenture Indenture and the Security Sharing Agreement. In the event that
such proceeds are insufficient to pay or set off all amounts to which the
Thai Lenders, The Thai Facility Agent, the Trustees and the Debenture
Trustee and the Pledgee are entitled, the Pledgor shall be liable for the
deficiency.
-4-
<PAGE>
4. CONTINUING SECURITY
4.1 This Agreement and each Pledge created by or pursuant hereto shall be in
addition to, independent of, without prejudice to, and shall not be in
substitution for or merge with any other rights, security, guarantee,
indemnity or suretyship now held or which may hereafter be held by the
Thai Lenders, the Trustees or, as the case may be, the Debenture Trustee
(as a second priority lien) for the due payment and performance by the
Pledgor of the Obligations.
4.2 This Agreement and each Pledge created by or pursuant hereto shall be a
continuing security and shall remain in full force and effect
notwithstanding the liquidation, bankruptcy or other incapacity of the
Pledgor or any amalgamation or reconstruction of the Pledgor or any change
in the constitution thereof or any settlement of account, intervening
payment or the extinction of any or all indebtedness by whatever reason
(other than by full performance and discharge of the Obligations) or other
matter or thing whatsoever.
4.3 If after the date of this Agreement:
(a) any settlement or discharge of any or all of the Obligations of the
Pledgor is nullified for any reason whatsoever, and/or
(b) an order or judgement is made against the Thai Lenders, the
Trustees, the Debenture Trustee, the holders of the Notes or the
holders of the Debentures under Section 237 of the Civil and
Commercial Code of Thailand (or any modification or re-enactment
thereof) or under any of Section 113, 114 and 115 of the Bankruptcy
Act of Thailand (or any modification or re-enactment thereof)
directing the Thai Lenders, the Trustees, the Debenture Trustee, the
holders of the Notes or the holders of the Debentures to pay any sum
received or held by it from the Pledgor or any other person to
settle all or part of the debt of the Pledgor to an official
receiver, a liquidator or a creditor of the Pledgor;
then the returned moneys, losses, damages, costs and expenses of the Thai
Lenders, the Trustees, the Debenture Trustee, the holders of the Notes or
the holders of the Debentures arising as a result of such nullified
settlement or discharge, and/or (as the case may be) the sum paid by it
pursuant to such order or judgement shall be recoverable from the Pledgor
on demand.
5. FURTHER ASSURANCES
5.1 The Pledgor shall, at anytime at the reasonably request of the Pledgee and
at the cost and expense of the Pledgor, promptly sign, seal, execute and
deliver such deeds, instruments, notices and documents, (including further
legal or other transfers or assignments) and do such acts and things as
may reasonably be required by the Pledgee for the purpose of maintaining,
perfecting, protecting, defending, enforcing or securing the obligations
of the Pledgor under this Agreement and the encumbrances arising under or
constituted by or
-5-
<PAGE>
pursuant to this Agreement (or purported to be created by or constituted
by or pursuant to this Agreement) or in respect of each Account (whether
in existence at the date hereof or acquired after the date hereof) or for
facilitating the exercise or, as the case may be, realization thereof and
the exercise of all other powers, authorities and discretion vested in the
Pledgee.
5.2 The Pledgee shall, without prejudice to other rights, powers and
privileges under this Agreement, be entitled (but shall be under no
obligation), at any time and as often as it may reasonably consider to be
necessary, to take any such action and/or demand additional documents and
instruments from the other party (in which case the Pledgor undertakes to
use its best endeavors to procure such documents or instruments from such
person) for the purpose of protecting the rights constituted by this
Agreement.
5.3 The Pledgor hereby agrees to indemnify the Pledgee on demand against any
and all costs, losses, expenses or liabilities incurred by or imposed on
the Thai Facility Agent, the Thai Lenders, the Trustees, the Debenture
Trustee or the Pledgee in connection with actions taken concerning the
perfection and/or protection of the rights and/or security interest
referred to in this Clause 5.3.
6. INVESTMENT DECISIONS
Unless otherwise provided in the Indentures or the Debenture Indenture and
as described more fully in the Pledge of Permitted Investments, the
Pledgor is authorized to continue to control investment decisions with
respect to the funds in the Accounts until a Notice of Actionable Default
(as defined in the Security Sharing Agreement) has been issued by the
Trustees under the Indentures, the Thai Facility Agent under the Bank
Credit Facility, or, as the case may be, the Debenture Trustee under the
Debenture Indenture (as a second priority lien). At such time, the Pledgee
shall control investment decisions with respect to funds in Accounts and
realize upon its security interest.
7. FILINGS, RECORDS, INSPECTION
Except as otherwise permitted hereunder, the Pledgor shall not file or
suffer to be on file, or authorise or permit to be filed or to be on file,
in any jurisdiction, any other encumbrance with respect to the Accounts in
which the Pledgee is not named as the sole first secured party for the
benefit of the Thai Lenders and the Trustees or as the sole second secured
party for the benefit of the Debenture Trustee. The Pledgor shall permit
representatives of the Pledgee upon reasonable notice, at any time during
normal business hours to inspect and make abstracts from its books and
records pertaining to the Accounts.
8. REMEDIES AND WAIVERS
8.1 Any receipt, release or discharge of the pledge provided by, or of any
liability arising under this Agreement may be given by the Pledgee alone
and shall not release or discharge the Pledgor from any liability for the
same or any other moneys which may exist
-6-
<PAGE>
independently of this Agreement. Where such receipt, release or discharge
relates only to part of the Accounts, such receipt, release or discharge
shall not prejudice or affect the pledge hereby created in relation to the
remainder of the Accounts.
8.2 The Pledgee may in its or their discretion grant time or other indulgence,
or make any other arrangement variation or release, with the Pledgor or
any other person (whether or not party hereto and whether or not jointly
liable with the Pledgor) in respect of all the obligations or of any other
security therefor or guarantee in respect thereof without prejudice either
to the pledge constituted by or pursuant to this Agreement or to the
liability of the Pledgor for the Obligations.
8.3 The rights, powers and remedies provided in this Agreement are cumulative
and are not, nor are they to be construed as, exclusive of any rights,
powers and remedies provided by law.
8.4 No failure on the part of the Pledgee to exercise, or delay on its or
their part in exercising any of the rights, powers and rei-nedies provided
for by this Agreement or by law shall operate as a waiver thereof, nor
shall any single or partial waiver of any such rights, powers or remedies
preclude any further or other exercise of such rights, power or remedies
or the exercise of any other of such rights, powers or remedies.
9. SUCCESSORS AND ASSIGNS
This Agreement shall be binding on and inure to the benefit of the parties
hereto and their respective successors, assignees and transferees provided
that the Pledgor may not assign any of its rights or obligations under
this Agreement.
10. RELEASE AND DISCHARGE
The Pledgee shall, at the request and cost of the Pledgor, at any time
after the Pledgor's Obligations have been repaid in full, promptly release
and discharge the Pledgor from its obligations under this Agreement and
any Pledge and shall deliver any Accounts in its possession at such time
to the possession of the Pledgor.
11. SEVERABILITY
If at any time any one or more of the provisions of this Agreement or any
Pledge becomes invalid, illegal or unenforceable in any respect under any
law, the validity, legality and enforceability of the remaining provisions
of this Agreement and such Pledge shall not in any way be affected or
impaired thereby.
12. NOTICES
Any notice or communication under or in connection with Section 12 of the
Security Sharing Agreement and the provisions of such agreement shall
apply hereto mutatis mutandis.
-7-
<PAGE>
13. LAW
This Agreement and each Pledge shall be governed by and construed in
accordance with the laws of Thailand.
14. AMENDMENTS
The terms of this Agreement may be waived, altered or amended only by an
instrument in writing duly executed by the Pledgor and the Pledgee in
accordance with Section 17 of the Security Sharing Agreement.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed.
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
as Pledgor
By: /s/ Sawasdi Horrungruang
-----------------------------------------
Title:
THE INDUSTRIAL FINANCE CORPORATION OF THAILAND
as Facility Agent for the Thai Lenders
By: /s/ [ILLEGIBLE]
-----------------------------------------
Title:
THE CHASE MANHATTAN BANK
as Trustees and Debenture Trustee
By: /s/ [ILLEGIBLE]
-----------------------------------------
Title:
THE CHASE MANHATTAN BANK
as Pledgee
By: /s/ [ILLEGIBLE]
-----------------------------------------
Title:
-8-
<PAGE>
EXHIBIT 1
The Thai Lenders
1. The Industrial Finance Corporation of Thailand
2. Thai Farmers Bank Public Company Limited
3. Siam City Bank Public Company Limited
4. The Government Bank
5. First Bangkok City Bank Public Company Limited
6. Nakornthon Bank Public Company Limited
7. SCF Finance and Securities Public Company Limited
8. Siam City Credit Finance and Securities Public Company Limited
-9-
<PAGE>
EXHIBIT 2
Part A
Notice of Pledge
12 March 1998
To: The Chase Manhattan Bank
20 North Sathorn Road
Bangkok 10500
Dear Sirs,
We refer to the passbooks (the "Instrument(s)") representing the accounts as
listed in the attachment hereto (the "Accounts").
We hereby give you notice that pursuant to the Pledge of Accounts Agreement
dated 12 March 1998, (the "Pledge of Accounts") between Nakornthai Strip Mill
Public Company Limited (the "Pledgor"), the Thai Lenders, the Trustees and the
Pledgee named therein, the Pledgor has pledged to the Pledgee the Instruments
and all rights of the Pledgor arising from the Instruments, including its right
to withdraw monies.
Terms and expressions defined in the Pledge of Accounts shall have the same
meaning when used herein.
Please acknowledge receipt of this notice by signing and retuming a copy to the
Collateral Agent and another copy to the Pledgor.
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
as Pledgor
By:
----------------------------------
Name:
Title:
Attachment: Acknowledgment of notice of pledge
-10-
<PAGE>
Part B
Acknowledgment of Pledge of Accounts
To: THE CHASE MANHATTAN BANK
as Collateral Agent
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
No. 9, UM Tower, 16th Floor
Kwaeng Suanluang, Khet Suanluang
Bangkok
We hereby acknowledge receipt of a notice of pledge of which this is a copy.
Yours sincerely,
THE CHASE MANHATTAN BANK
By:
---------------------------
Name:
Title:
-11-
<PAGE>
EXHIBIT 3
Form of Enforcement Notice
To: NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
No. 9, UM Tower, 16"' Floor
Kwaeng Suanluang, Khet Suanluang
Bangkok
[date]
Dear Sirs,
We refer to:
(a) the following accounts as listed in the attached (the "Accounts"):
(b) the Pledge of Accounts dated 12 March 1998 (the "Pledge of
Accounts") between Nakornthai Strip Mill Public Company Limited (the
"Pledgor"), the Thai Lenders, the Trustees, the Debenture Trustee
and the Collateral Agent (as therein defined); and
(c) the notice of pledge dated [ ] given to the Account Banks by the
Pledgor and confirmed by the Account Banks in respect of the Pledge
of Accounts.
Words and expressions defined in the Pledge of Accounts (whether expressly
therein or by cross-reference to another document) and used herein shall, unless
the context otherwise requires, have the same meanings when used herein.
We hereby notify you that we have received a Notice of an Actionable Default and
that we have been directed to deliver this Enforcement Notice in accordance with
the provisions of Section 4 of the Sharing Agreement.
We hereby confirm that this Enforcement Notice is delivered pursuant to and for
the purposes of Clause 3.2 of the Pledge of Accounts and in accordance with the
terms thereof, each pledge constituted by or pursuant to the Pledge of Accounts
is immediately enforceable by any means in accordance with applicable law.
-12-
<PAGE>
This Enforcement Notice and the rights and obligations of the parties hereunder
shall be governed by and construed in accordance with the laws of Thailand.
Your faithfully,
THE CHASE MANHATTAN BANK
As Collateral Agent, for and on behalf of the Thai Lenders, the Trustees and the
Debenture Trustees [o]
By:
---------------------
-13-
<PAGE>
EXHIBIT 4
Details of Accounts
The Chase Manhattan Bank - Bangkok Branch
1) Type: corporate savings A/C - Baht, non-interest bearing
A/C Name: Nakornthai Strip Mill Public Co., Ltd. - Onshore Baht Revenue
Account
A/C No. 6580116868
2) Type: corporate savings A/C - US$, non-interest bearing
A/C Name: Nakornthai Strip Mill Public Co., Ltd. - Onshore USD Revenue
Account
A/C No. 6581115463
3) Type: corporate savings A/C - Baht, non-interest bearing (with check
book)
A/C Name: Nakornthai Strip Mill Public Co., Ltd. - Baht Operating Account
A/C No. 6580116876
4) Type: corporate savings A/C - US$, interest bearing
A/C Name: Strip Mill Public Co., Ltd. - USD Operating Account
A/C No. 6581115471
<PAGE>
Exhibit 4.13
ASSIGNMENT OF INSURANCE
THIS AGREEMENT is made on 12 March 1998
BETWEEN:
(1) NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED, a public limited company
duly organized and validly existing under the laws of the Kingdom of
Thailand having its registered office at No. 9, UM Tower, 16th Floor,
Kwaeng Suanluang, Khet Suanluang, Bangkok, Thailand (the "Assignor");
(2) The financial institutions whose names are listed in Exhibit 1 (the "Thai
Lenders") represented by THE INDUSTRIAL FINANCE CORPORATION OF THAILAND, a
corporation duly organized and validly existing under the laws of the
Kingdom of Thailand having its registered office at No. 1770 New Petchburi
Road, Bangkok 10320, as Facility Agent for the Thai Lenders (the "Thai
Facility Agent");
(3) THE CHASE MANHATTAN BANK, a company duly organized and validly existing
under the laws of the State of New York, having its registered office at
450 West 33d Street, New York, New York, U.S.A., having its branch office
in Bangkok, Thailand, located at 20 North Sathom Road, Silom, Bangrak,
Bangkok 10500, acting as the Trustees and the Debenture Trustee (as
defined below);
AND
(4) THE CHASE MANHATTAN BANK as collateral agent (the "Collateral Agent").
WHEREAS:
A. The Assignor and the Thai Lenders entered into a credit facility agreement
dated 27 September 1995, (the "CFA") whereunder credit facilities of Baht
3,300,000,000 and US$308,000,000 have been granted;
B. The Assignor intends to procure financing from abroad by having NSM Steel
Company, Ltd. ("NSM Cayman"), a company incorporated under the laws of the
Cayman Islands and in which the Assignor holds 100 percent of its shares,
and NSM Steel (Delaware) Inc., a company incorporated under the laws of
the State of Delaware, the United States, a wholly owned subsidiary of NSM
Cayman (hereinafter collectively referred to as the "Note Issuers"),
acting as agent of NSM Cayman pursuant to an agency agreement, issue
US$452,500,000 of indebtedness comprised of (a) US$249,000,000 (aggregate
principal amount at maturity) of 12% Senior Mortgage Notes Due 2006 (the
"Senior Notes") which will be issued pursuant to an indenture dated as of
1 March 1998 (the "Senior Note Indenture", among the Note Issuers, the
Assignor and The Chase Manhattan Bank
<PAGE>
("Chase"), as trustee (the "Senior Notes Trustee"), (b) the US$203,500,000
(aggregate principal amount at maturity) 12 1/4 Senior Subordinated
Mortgage Notes Due 2008 (the "Senior Subordinated Notes" and together with
the Senior Notes, the ("Notes"), which will be issued pursuant to an
indenture dated as of 1 March 1998 (the "Senior Subordinated Note
Indenture", and together with the Senior Note Indenture, the "Indentures")
among the Note Issuers and Chase, -as trustee (the "Senior Subordinated
Notes Trustee" and together with the Senior Notes Trustee, the "Trustee"),
with warrants to purchase 74,476,809 (Seventy Four Million Four Hundred
Seventy Six Thousand Eight Hundred and Nine) ordinary shares of the
Assignor, and (c) a private placement consisting of US$53,133,016
(aggregate principal amount at maturity) of 12 3/4% Subordinated Second
Mortgage Debentures Due 2009 (the "Debentures") which will be issued
pursuant to an indenture dated as of 1 March 1998 (the "Debenture
Indenture") among the Note Issuers, the Assignor and Chase, as trustee
(the "Debenture Trustee") and 64,417,180 ordinary shares of the Assignor;
C. The Assignor has entered into an amendment to the CFA (the "CFA
Amendment") with the Thai Lenders dated 12 March 1998 for the amendment of
certain terms and provisions to facilitate the Assignor's additional
financing (the CFA and the CFA Amendment, collectively, the "Bank Credit
Facility"), including but not limited to, an agreement the Assignor
entered into with the Thai Lenders, the Trustees and the Debenture Trustee
dated 12 March 1998 to set forth arrangements for the Thai Lenders and
holders of the Notes and the Debentures to share certain collateral (the
"Security Sharing Agreement").
D. Pursuant to the terms of the Security Sharing Agreement, the Assignor, the
Thai Facility Agent, the Trustees, the Debenture Trustee and the
Collateral Agent agree to enter into this Agreement as security for the
Obligations (as defined hereunder).
IT IS AGREED as follows:
1. DEFINITIONS
1.1 Except as otherwise provided herein, words and expressions in this
Agreement shall have the same respective meanings as described in the Bank
Credit Facility, the Indentures, the Debenture Indenture and the Security
Sharing Agreement:
"Additional Insurance" has the meaning ascribed to it in Clause 3.3;
"Assignment of Additional Insurance" means an assignment agreement
substantially in the form of this Agreement in relation to any Additional
Insurance;
"Insurance" means the insurance policies the details of which are set out in
Exhibit 2 and all Additional Insurance; and
Page 2
<PAGE>
"Obligations" means all present and future obligations and liabilities of the
Assignor under the Bank Credit Facility, the Notes, the Indentures, the
Debentures, the Debenture Indenture, and the Security Sharing Agreement.
1.2 Any reference in this Agreement to:
(i) any agreement or document shall be read and construed as a reference
to such agreement or document as the same may have been or may from
time to time be, amended, varied. novated or supplemented; and
(ii) any party shall be construed so as to include its respective
successors, permitted assigns and transferees in accordance with its
respective interests;
1.3 Words denominating the singular include the plural and vice versa.
1.4 Section headings are for reference only.
2. ASSIGNMENT
2.1 To secure the due and punctual payment and performance by the Assignor of
the Obligations, the Assignor hereby assigns to the Collateral Agent for
the benefit of the Thai Lenders and the Trustees and the holders of the
Notes and the Debenture Trustee and the Debenture holders (as a second
priority lien):
(a) all of its rights, title, interest, in all proceeds of the
Insurance;
(b) all claims arising of any breach thereof; and
(c) all rights to terminate or suspend any Insurance.
2.2 Notwithstanding the assignment contained in Clause 2.1, the Assignor
shall at all times:
(a) remain liable to perform all of its obligations under the Bank
Credit Facility and, the Indentures and the Debenture Indenture; and
(b) remain liable to perform all of its obligations under and in
relation to the Insurance,
and nothing herein contained shall constitute or be deemed to constitute a
novation or settlement of any obligations (including, without limitation,
the Obligations) or indebtedness, nor shall it be construed as an
assumption or acceptance by the Thai Lenders, the Trustees or, as the case
may be, the Debenture Trustee (as a second priority lien) of any
obligation of the Assignor under the Insurance.
3. PERFECTION OF ASSIGNMENT
3.1 Immediately upon the execution of this Agreement, the Assignor shall give
notice to the issuer of each Insurance substantially in the form set out
in Part A of Exhibit 3 and shall
Page 3
<PAGE>
use its reasonable efforts to procure that as soon as practicable each
issuer of an Insurance consents to the assignment and acknowledges receipt
of notice to the Collateral Agent in the form set out in Part B of Exhibit
3, or in such other form that may be reasonably acceptable to the
Collateral Agent.
3.2 Within two weeks upon the execution of this Agreement, the Assignor shall
submit to the Collateral Agent the original of each Insurance listed
herein.
3.3 Immediately upon the issue in favor of the Assignor of any other policy
replacing an insurance policy set out in Exhibit 2 following the date
hereof (each, an "Additional Insurance"), the Assignor irrevocably
undertakes to:
(a) notify the Collateral Agent that the Additional Insurance has been
issued and deliver to the Collateral Agent such number of certified
copies of the Additional Insurance as the Collateral Agent may
reasonably request;
(b) if requested by the Collateral Agent:
(i) enter into with the Thai Lenders, the Trustees, the Debenture
Trustees and the Collateral Agent an Assignment of Additional
Insurance in respect of the Additional Insurance of the same
and of the agreements contained in Clause 2.1 thereof, and use
reasonable efforts to procure that as soon as practicable such
Assignor acknowledges the same and consents to the assignment
contained therein in the form referred to in Clause 2.1 or
such other form as may be reasonably acceptable to the
Collateral Agent; and
(ii) submit to the Collateral Agent the original Additional
Insurance.
3.4 The Assignor shall comply with the terms set out in each of the notices
given pursuant to this Clause 3 and shall not take or omit to take any
action the taking or omission of which might otherwise result in the
material alteration or impairment of any of its obligations or the rights
of the Thai Lenders or, as the case may be, the Trustees, the Debenture
Trustee, the holders of the Debentures or the Collateral Agent, under or
pursuant to this Agreement.
3.5 Upon the occurrence of any event or circumstance whereby (but for this
Agreement) the Assignor would be entitled to make any claim under any
Insurance in respect of the rights, title and interests assigned pursuant
to this Agreement, the Assignor shall immediately notify the Collateral
Agent in writing of the details thereof and comply with the instructions of
the Collateral Agent with regard to such claim. The Collateral Agent shall,
if notified by the Assignor at any time prior to the issue of a Notice of
Actionable Default, cooperate with the Assignor to make such claim before
the expiry date of such Insurance.
Page 4
<PAGE>
4. ENFORCEMENT
In accordance with the Security Sharing Agreement, at any time following the
receipt of a Notice of Actionable Default by the Collateral Agent and the
compliance with the provisions of Section 4 of the Security Sharing Agreement
(including, without limitation, Section 4.2(b) thereof), the Collateral Agent
may to the extent permitted by the relevant Insurance;
(a) exercise fully any rights assigned to or acquired by each of them pursuant
to this Agreement in all respects as though originally named as the
Assignor in the relevant Insurance;
(b) otherwise put into force and effect all rights, powers and remedies
available to it by law or otherwise as transferee of all or part of the
Assignor's rights, title and interest in and obligations under each
Insurance, which are transferred pursuant to this Agreement.
5. CONTINUING SECURITY
5.1 This Agreement and the assignment created by or pursuant hereto shall be
in addition to, independent of and without prejudice to, and shall not be
in substitution for or merge with any other rights, security, guarantee,
indemnity or suretyship now held or which may hereafter be held by the
Thai Lenders, the Trustees, the Debenture Trustee or, as the case may be,
the holders of the Notes or the Debentures, for the due payment and
performance by the Assignor of the Obligations.
5.2 This Agreement and the assignment is a continuing security and shall
remain in full force and effect notwithstanding the liquidation,
bankruptcy or other incapacity of the Assignor or any amalgamation or
reconstruction of the Assignor or any change in the constitution thereof
or any settlement of account, intervening payment or the extinction of any
or all indebtedness by whatever reason (other than by full performance and
discharge of the Obligations) or other matter or thing whatever.
5.3 If after the date of this Agreement:
(a) any settlement or discharge of any or all of the Obligations of the
Assignor is nullified for any reason whatsoever; and/or
(b) an order or judgment is made against the Thai Lenders, the Trustees,
the holders of the Notes, or, as the case may be, the Debenture
Trustee or the holders of the Debentures under Section 237 of the
Civil and Commercial Code of Thailand (or any modification or
re-enactment thereof) or under any of Sections 113, 114 and 115 of
the Bankruptcy Act of Thailand (or any modification or re-enactment
thereof) directing the Thai Lenders, the Trustees, the holders of
the Notes, or, as the case may be, the Debenture Trustee or the
holders of the Debentures, to pay any sum received or held by it
from the Assignor or any other person to settle all or part of the
debt of the Assignor to an official receiver, a liquidator or a
creditor of the Assignor,
Page 5
<PAGE>
then the returned monies, losses, damages, costs and expenses of the Thai
Lenders, the Trustees, the holders of the Notes, or, as the case may be,
the Debenture Trustee or the Debenture holders arising as a result of such
nullified settlement or discharge, and/or (as the case may be) the sum
paid by it pursuant to such order or judgment shall be recoverable from
the Assignor on demand.
6. FURTHER ASSURANCE
6.1 The Assignor shall, whenever reasonably requested by the Collateral Agent
and at the cost and expense of the Assignor, promptly sign, seal, execute
and deliver such deeds, instruments, notices and documents, (including,
further legal or other transfers or assignments) and do such acts and
things as may be reasonably required by the Collateral Agent for the
purpose of maintaining, perfecting, protecting, defending, enforcing or
securing the obligations of the Assignor under this Agreement and the
encumbrances arising under or constituted by or pursuant to this Agreement
(or purported to be created by or constituted by or pursuant to this
Agreement) or for facilitating the exercise or, as the case may be,
realization thereof and the exercise of all other powers, authorities and
discretion vested in the Collateral Agent.
6.2 The Collateral Agent shall, without prejudice to other rights, powers and
privileges under this Agreement, be entitled (but shall be under no
obligation), at any time and as often as it may reasonably consider to be
necessary, to take any such action and/or demand additional documents and
instruments from the other party (in which case the Assignor undertakes to
use its best endeavors to procure such documents or instruments from such
person) for the purpose of protecting the rights constituted by this
Agreement.
6.3 The Assignor hereby agrees to indemnify the Thai Lenders, the Thai
Facility Agent, the Trustees, the Debenture Trustee and the Collateral
Agent against any and all costs, losses, expenses or liabilities incurred
by or imposed on Thai Lenders, the Trustees, the Debenture Trustee, the
Thai Facility Agent, and the Collateral Agent in or about the perfection
and/or protection of the rights and/or security interest referred to in
this Clause 6.
7. FILINGS, RECORDS, INSPECTION
Except as otherwise permitted hereunder, the Assignor shall not file -or
suffer to be on file, or authorize or permit to be filed or to be on file,
in any jurisdiction, any other encumbrance with respect to the Insurance
in which the Collateral Agent is not named as the sole first secured party
for the benefit of the Thai Lenders and the Trustees and the sole second
secured party for the benefit of the Debenture holders. The Assignor shall
permit representatives of the Collateral Agent upon reasonable notice, at
any time during normal business hours to inspect and make abstracts from
its books and records pertaining to the Bonds.
Page 6
<PAGE>
8. APPLICATION OF PROCEEDS
8.1 The proceeds derived from the enforcement of any Insurance constituted by
or pursuant to this Agreement shall be applied towards settlement of the
Obligations in accordance with the terms of the Security Sharing
Agreement, the Bank Credit Facility and the Indentures. In the event that
such proceeds are insufficient to pay or set off all amounts to which the
Thai Lenders, the Trustees and the Debenture Trustee are entitled, the
Assignor shall be liable for the deficiency.
8.2 The proceeds of any collection or other realization of all or any part of
the Insurance pursuant hereto shall be applied by the Thai Lenders and/or
the Trustees and the Debenture Trustee in accordance with the provisions
of Section 6.3 of the Security Sharing Agreement.
9. REMEDIES AND WAIVERS
9.1 Any receipt, release or discharge of the assignment provided by, or of any
liability arising under, this Agreement may be given by the Collateral
Agent alone and shall not release or discharge the Assignor from any
liability for the same or any other moneys which may exist independently
of this Agreement. Where such receipt, release or discharge relates only
to part of the Insurance, such receipt, release or discharge shall not
prejudice or affect the assignment hereby created in relation to the
remainder of the Insurance.
9.2 The Collateral Agent may in its discretion grant time or other indulgence,
or make any other arrangement variation or release, with the Assignor or
any other person (whether or not party hereto and whether or not jointly
liable with the Assignor) in respect of all the obligations or of any
other security therefor or guarantee in respect thereof without prejudice
either to the assignment constituted by or pursuant to this Agreement or
to the liability of the Assignor for the Obligations.
9.3 The rights, powers and remedies provided in this Agreement are cumulative
and are not, nor are they to be construed as, exclusive of any rights,
powers and remedies provided by law.
9.4 No failure on the part of the Collateral Agent to exercise, or delay on
its or their part in exercising any of the rights, powers and remedies
provided for by this Agreement or by law shall operate as a waiver
thereof, nor shall. any single or partial waiver of any such rights,
powers or remedies preclude any further or other exercise of such rights,
power or remedies or the exercise of any other of such rights, powers or
remedies.
10. SUCCESSORS AND ASSIGNS
This Agreement shall be binding on and shall inure to the benefit of the
parties hereto and their respective successors, assignees and transferees,
provided that the Assignor may not assign or transfer all or any part of
its rights or obligations under this Agreement.
Page 7
<PAGE>
11. RELEASE AND REASSIGNMENT
Immediately after the Assignor has finally paid and satisfied to the Thai
Lenders and the Trustees and the Debenture Trustee in full the
Obligations, the Collateral Agent shall, at the request and cost of the
Assignor, promptly reassign, without warranty, to the Assignor the rights,
title and interest assigned to it under this Agreement or such part of it
as then remains assigned in favour of the Thai Lenders, the Trustees and
the Debenture Trustee and/or release the encumbrances created pursuant
hereto, provided that any release, settlement, discharge or termination of
this Agreement and/or any such reassignment shall, unless otherwise agreed
in writing by the Collateral Agent in accordance with Section 17 of the
Security Sharing Agreement be upon the express condition that such
release, settlement, discharge, termination and/or reassignment shall
become void and of no effect and Clause 5.3 shall apply if any security or
payment on the faith of which such release, settlement, discharge,
termination and/or reassignment is given or made shall at any time
thereafter be nullified or subject to an order or judgement described in
Clause 5.3.
12. SEVERABILITY
If at any time any one or more of the provisions of this Agreement becomes
invalid, illegal or unenforceable in any respect under any law, the
validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby.
13. NOTICES
Any notice or communication under or in connection with this Agreement
shall be given in accordance with Section 12 of the Security Sharing
Agreement and the provisions of such agreement shall apply hereto mutatis
mutandis.
14. LAW
This Agreement shall be governed by and construed in accordance with the
laws of the Kingdom of Thailand.
15. AMENDMENTS
The terms of this Agreement may be waived, altered or amended only by an
instrument in writing duly executed by the Assignor and the Collateral
Agent in accordance with Section 17 of the Security Sharing Agreement.
Page 8
<PAGE>
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed.
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
By: /s/ Sawasdi Horrungruag By: /s/ Chamni Janchai
------------------------------- ----------------------------
Title: Chairman Title:
THE INDUSTRIAL FINANCE CORPORATION OF HAILAND
as Facility Agent for the Thai Lenders
By: /s/ [ILLEGIBLE]
-------------------------------
Title:
THE CHASE MANHATTAN BANK
as Trustees
By: /s/ [ILLEGIBLE]
-------------------------------
Title:
THE CHASE MANHATTAN BANK
as Collateral Agent
By: /s/ [ILLEGIBLE]
-------------------------------
Title:
Page 9
<PAGE>
EXHIBIT I
The Thai Lenders
1. The Industrial Finance Corporation of Thailand
2. Thai Farmers Bank Public Company Limited
3. Siam City Bank Public Company Limited
4. The Government Savings Bank
5. First Bangkok City Bank Public Company Limited
6. Nakornthon Bank Public Company Limited
7. SCF Finance and Securities Public Company Limited
8. Siam City Credit Finance and Securities Public Company Limited
Page 10
<PAGE>
EXHIBIT 2
Details of Insurance
1. Construction All Risks Third Party Liability & Delay In Start-up (with
Dhipaya Insurance PCL, Policy no. CWI. 0096/000032 and Nam Seng Insurance
PCL, Policy no. 002/5CWOO2/961);
2. Marine Cargo & Marine Consequential Loss / Attachment to and Forming Part
of Policy no. CWI. 0096/000032 [Endorsement no. CW. 0097/000150];
3. Attachment to and Forming Part of (the Marine Cargo) Open Cover no. 338/96
[Endorsement no. 004] (with Dhipaya Insurance PCL, End. No. 004 and Nam
Seng Insurance PCL, End. No. AM. 22/96); and
4. Attachment to and Forming Part of Policy no. CWI. 0096/000032 [Endorsement
no. CW. 0097/000128].
Page 11
<PAGE>
EXHIBIT 3
Part A
Notice of Assignment
Date: 12 March 1998
To: Dhipaya Insurance Public Company Limited
65/1 Rama 9 Road
Huay Kwang, Bangkok 10320
Nam Seng Insurance Public Company Limited
[address]
Re: 1. Construction All Risks Third Party Liability & Delay In Start-up
(with Dhipaya Insurance PCL, Policy no. CWI. 0096/000032 and Nam
Seng Insurance PCL, Policy no. 002/5CWOO2/961);
2. Marine Cargo & Marine Consequential Loss / Attachment to and Forming
Part of Policy no. CWI. 0096/000032 [Endorsement no. CW.
0097/000150];
3. Attachment and Forming Part of (the Marine Cargo) Open Cover no.
338/96 [Endorsement no. 004] (with Dhipaya Insurance PCL, End. No.
004 and Nam Seng Insurance PCL, End. No. AM. 22/96); and
4. Attachment to and Forming Part of Policy no. CWI. 0096/000032
[Endorsement no. CW. 0097/000128].
Dear Sirs:
We hereby give you notice that pursuant to the Assignment of Insurance made
between Nakornthai Strip Mill Public Company (the "Assignor"), the Thai Lenders,
the Trustees, the Debenture Trustee and the Collateral Agent (as defined
therein) dated 12 March 1998 (the "Assignment"), a copy of which is attached,
the Assignor assigned on the date of the Assignment to the Collateral Agent on
behalf of the Thai Lenders, the holders of the Notes and the holders of the
Debentures (i) all of its rights, title and interest in all proceeds of the
Insurance; (ii) all claims arising of any breach thereof; and (iii) all rights
to terminate or suspend any Insurance. Words and expressions defined or referred
to in the Assignment shall have the same meanings when used herein, unless the
context requires otherwise.
Page 12
<PAGE>
The assignment shall become effective and binding upon receipt of this Notice,
whereupon, the Collateral Agent shall acquire all rights, title and interest in
the Insurance identical to those of the Assignor.
This Notice shall not be revocable without the Collateral Agent's prior consent.
This Notice is governed by and construed in accordance with the laws of
Thailand.
Please acknowledge receipt of this Notice and confirm your agreement to the
Assignment in the form of acknowledgement attached hereto (the
"Acknowledgement") by signing and returning one copy of the Acknowledgment to
the Collateral Agent at The Chase Manhattan Bank, located at 20 North Sathorn
Road, Bangkok 10500 and another copy to the Assignor.
Yours faithfully,
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
as Assignor
By:
----------------------------------
Name:
Title:
We confirm our agreement with the foregoing.
THE CHASE MANHATTAN BANK
As Collateral Agent, for an on behalf of the
Thai Lenders, the Trustees and the Debenture Trustees
By:
----------------------------------
Name:
Title:
Attachment: Acknowledgment of the Issuer of Insurance
Page 13
<PAGE>
Part B
Acknowledgment
To: THE CHASE MANHATTAN BANK
20 North Sathorn Road
Bangkok 10500
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
No. 9, UM Tower, 16' Floor
Kwaeng Suanluang, Khet Suanluang
Bangkok,
We hereby acknowledge receipt of a notice of assignment of which this is a copy
and consent and agree, for ourselves and our successors and assigns, to the
terms thereof and of the Assignment. Words and expressions defined or referred
to in the Assignment shall have the same meanings when used herein, unless the
context requires otherwise. We now undertake and confirm to you that:
(i) we agree to the Assignment and will give to the Collateral Agent notice of
any I breach of any agreement governing the Insurance by the Assignor as
soon as we become aware of it;
(ii) we will, upon our receipt of the Enforcement Notice, pay all amounts
payable by us in respect of the Insurance to such person or account as the
Collateral Agent may nominate from time to time;
(iii) we have not received any other notice of assignment nor consented to any
other assignment of rights to the Insurance;
(iv) we agree (in the event the assignment in Clause 2.1 of the Assignment
becomes effective) to the assignment of all rights of the Assignor to the
Collateral Agent pursuant to the Assignment and agree to sign such
documents as may be reasonably requested to record the said assignment;
(v) the Thai Lenders, the Trustees, the Debenture Trustee and the Collateral
Agent are not liable to perform any of the obligations assumed by the
Assignor under such Insurance nor liable for the consequences of
non-performance;
(vi) we agree to abide by all the terms and conditions of the Assignment and to
act accordingly upon our receipt of a written notice and/or instruction
from the Collateral Agent or any successor of the Collateral Agent;
(vii) we shall rely without enquiry on any notice given by the Collateral Agent
that the security created by the Assignment has become enforceable; and
Page 14
<PAGE>
(ix) this Acknowledgement is governed by and construed in accordance with the
laws of Thailand.
Yours faithfully,
- --------------------------------
For and on behalf of
[o]
As Issuer of the Insurance
[Date]
Page 15
<PAGE>
Exhibit 4.14
ASSIGNMENT OF BONDS
THIS AGREEMENT is made on 12 March 1998
BETWEEN:
(1) NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED, a public limited company
duly organized and validly existing under the laws of the Kingdom of
Thailand having its registered office at No. 9, UM Tower, 16th Floor,
Kwaeng Suanluang, Khet Suanluang, Bangkok, Thailand (the "Assignor");
(2) The financial institutions whose names are listed in Exhibit 1 (the "Thai
Lenders") represented by THE INDUSTRIAL FINANCE CORPORATION OF THAILAND, a
corporation duly organized and validly existing under the laws of the
Kingdom of Thailand having its registered office at No. 1770 New Petchburi
Road, Bangkok 10320, as Facility Agent for the Thai Lenders (the "Thai
Facility Agent");
(3) THE CHASE MANHATTAN BANK, a company duly organized and validly existing
under the laws of the State of New York, having its registered office at
450 West 33rd Street, New York, New York, U.S.A., having its branch office
in Bangkok, Thailand, located at 20 North Sathorn Road, Silom, Bangrak,
Bangkok 10500, acting as the Trustees and the Debenture Trustee (as
defined below);
AND
(4) THE CHASE MANHATTAN BANK as collateral agent (the "Collateral Agent").
WHEREAS:
A. The Assignor and the Thai Lenders entered into a credit facility agreement
dated 27 September 1995, (the "CFA") whereunder credit facilities of Baht
3,300,000,000 and US$308,000,000 have been granted;
B. The Assignor intends to procure financing from abroad by having NSM Steel
Company, Ltd. ("NSM Cayman"), a company incorporated under the laws of the
Cayman Islands and in which the Assignor holds 100 percent of its shares,
and NSM Steel (Delaware) Inc., a company incorporated under the laws of
the State of Delaware, the United States, a wholly owned subsidiary of NSM
Cayman (hereinafter collectively referred to as the "Note Issuers"),
acting as agent of NSM Cayman pursuant to an agency agreement, issue
US$452,500,000 of indebtedness comprised of (a) US$249,000,000 (aggregate
principal amount at maturity) of 12% Senior Mortgage Notes Due 2006 (the
"Senior Notes") which will be issued pursuant to an indenture dated as of
1 March 1998 (the "Senior Note Indenture", among the Note Issuers, the
Assignor and The Chase Manhattan Bank ("Chase"), as trustee (the "Senior
Notes Trustee"), (b) the US$203,500,000 (aggregate principal amount at
maturity) 12 1/4 Senior Subordinated Mortgage Notes Due 2008 (the "Senior
Subordinated Notes" and together with the Senior Notes, the "Notes"),
which will be issued pursuant to an indenture dated as of 1 March 1998
(the "Senior
<PAGE>
Subordinated Note Indenture", and together with the Senior Note Indenture,
the "Indentures") among the Note Issuers and Chase, as trustee (the
"Senior Subordinated Notes Trustee" and together with the Senior Notes
Trustee, the "Trustees"), with warrants to purchase 74,476,809 (Seventy
Four Million Four Hundred Seventy Six Thousand Eight Hundred and Nine)
ordinary shares of the Assignor, and (c) a private placement consisting of
US$53,133,016 (aggregate principal amount at maturity) of 12 3/4%
Subordinated Second Mortgage Debentures Due 2009 (the "Debentures") which
will be issued pursuant to an indenture dated as of 1 March 1998 (the
"Debenture Indenture") among the Note Issuers, the Assignor and Chase, as
trustee (the "Debenture Trustee") and 64,417,180 ordinary shares of the
Assignor;
C. The Assignor has entered into an amendment to the CFA (the "CFA
Amendment") with the Thai Lenders dated 12 March 1998 for the amendment of
certain terms and provisions to facilitate the Assignor's additional
financing (the CFA and the CFA Amendment, collectively, the "Bank Credit
Facility"), including but not limited to, an agreement the Assignor
entered into with the Thai Lenders, the Trustees and the Debenture Trustee
dated 12 March 1998 to set forth arrangements for the Thai Lenders and
holders of the Notes and the Debentures to share certain collateral (the
"Security Sharing Agreement").
D. Pursuant to the terms of the Security Sharing Agreement, the Assignor, the
Thai Facility Agent, the Trustees, the Debenture Trustee and the
Collateral Agent agree to enter into this Agreement as security for the
Obligations (as defined hereunder).
IT IS AGREED as follows:
1. DEFINITIONS
1.1. Except as otherwise provided herein, words and expressions in this
Agreement shall have the same respective meanings as described in the Bank
Credit Facility, the Indentures, the Debenture Indenture and Security
Sharing Agreement:
"Additional Bonds" has the meaning ascribed to it in Clause 3.3;
"Assignment of Additional Bonds" means an assignment agreement substantially in
the form of this Agreement in relation to any Additional Bond;
"Bonds" means any refund bonds, advance payment bonds, performance bonds,
retention bonds or other bond or like obligation issued in favor of the Assignor
the details of which are set out in Exhibit 2 and all Additional Bonds; and
"Obligations" means all present and future obligations and liabilities of the
Assignor under the Bank Credit Facility, the Notes, the Indentures, the
Debentures, the Debenture Indenture and the Security Sharing Agreement.
Page 2
<PAGE>
1.2. Any reference in this Agreement to:
(i) any agreement or document shall be read and construed as a reference
to such agreement or document as the same may have been, or may from
time to time be, amended, varied, novated or supplemented; and
(ii) any party shall be construed so as to include its respective
successors, permitted assigns and transferees in accordance with its
respective interests;
1.3. Words denominating the singular include the plural and vice versa.
1.4. Section headings are for reference only.
2. ASSIGNMENT
2.1. To secure the due and punctual payment and performance by the Assignor of
the Obligations, the Assignor hereby assigns and transfers to the
Collateral Agent for the benefit of the Thai Lenders and the Trustees and
the holders of the Notes and the Debenture Trustee and the Debenture
holders (as a second priority lien), all of its rights, title and interest
in and to be derived from all of the Bonds and the Collateral Agent hereby
accept all of such rights, title and interest.
2.2. Notwithstanding the assignment contained in Clause 2.1, the Assignor shall
at all times:
(a) remain liable to perform all of its Obligations under the Bank
Credit Facility, the Notes, Indentures, the Debentures and the
Debenture Indenture; and
(b) remain liable to perform all of its obligations under and in
relation to the Bonds,
and nothing herein contained shall constitute or be deemed to constitute a
novation or settlement of any obligations (including, without limitation,
the Obligations) or indebtedness, nor shall it be construed as an
assumption or acceptance by the Thai Lenders, the Trustees or, as the case
may be, the Debenture Trustee (as a second priority lien), of any
obligation of the Assignor under the Bonds.
3. PERFECTION OF ASSIGNMENT
3.1. Immediately upon the execution of this Agreement, the Assignor shall give
notice to the issuer of each Bond substantially in the form set out in
Part A of Exhibit 3 and shall use reasonable efforts to procure that as
soon as practicable but no later than 30 days of the date hereof each
issuer of a Bond consents to the assignment and acknowledges receipt of
notice to the Collateral Agent in the form set out in Part B of Exhibit 3,
or in such other form that may be acceptable to the Collateral Agent.
Page 3
<PAGE>
3.2. Immediately upon the execution of this Agreement, the Assignor shall
submit to the Collateral Agent the original of each Bond listed herein for
its retention for the benefit of the Thai Lenders, the Trustees, the
holders of the Notes or, as the case may be, the Debenture Trustee and the
holders of the Debentures.
3.3. Immediately upon the issue in favor of the Assignor of any refund bond,
advance payment bond, performance bond, retention bond or other bond or
like obligation issued in favor of the Assignor following the date hereof
in respect of the Assignor's steel mill which replaces a Bond (each, an
"Additional Bond") the Assignor irrevocably and unconditionally undertakes
to:
(a) notify the Collateral Agent that the Additional Bond has been issued
and deliver to the Collateral Agent such number of certified copies
of the Additional Bond as the Collateral Agent may reasonably
request;
(b) if requested by the Collateral Agent:
(i) enter into with the Thai Lenders, the Trustees, the Debenture
Trustee and the Collateral Agent an Assignment of Additional
Bond in respect of the Additional Bond, notify the relevant
issuer of Additional Bond of the same and of the agreements
contained in Clause 2.1 thereof, and use reasonable efforts to
procure that as soon as practicable such issuer of Additional
Bond acknowledges the same and consents to the assignment
contained therein in the form referred to in Clause 3.1 or
such other form as may be acceptable to the Collateral Agent;
and
(ii) submit to the Collateral Agent the original Additional Bond.
3.4. The Assignor shall comply with the terms set out in each of the notices
given pursuant to this Clause 3 and shall not take or omit to take any
action the taking or omission of which might otherwise result in the
material alteration or impairment of any of its obligations or the rights
of the Thai Lenders, the Trustees, the Debenture Trustee, the holders of
the Notes, the holders of the Debentures or the Collateral Agent under or
pursuant to this Agreement.
3.5. Upon the occurrence of any event or circumstance whereby (but for this
Agreement) the Assignor would be entitled to make any claim under any Bond
in respect of the rights, title and interests assigned pursuant to this
Agreement, the Assignor shall immediately notify the Collateral Agent in
writing of the details thereof and comply with the instructions of the
Collateral Agent with regard to such claim. The Collateral Agent shall, if
notified by the Assignor at any time prior to the issue of a Notice of
Actionable Default, cooperate with the Assignor to make such claim before
the expiry date of such Bond.
Page 4
<PAGE>
3.6. As long as no Notice of Actionable Default has been delivered pursuant to
the Security Sharing Agreement, the Collateral Agent may:
(a) where a Bond or Additional Bond is required to be delivered to the
issuer for amendment or replacement; or
(b) where the conditions of return specified in a relevant agreement
pursuant to which the Bond is issued have been fully satisfied,
upon a written request from the Assignor (which shall certify that all
conditions to such return set forth herein have been complied with),
return the Bond to the Assignor within 7 days, provided that, in the case
of (a) above, the Collateral Agent is fully satisfied with the
arrangements put in place by the Assignor for the return of the amended or
replaced Bond to the Collateral Agent. The Assignor undertakes to return
any such amended or replaced Bond to the Collateral Agent on the same day
as such is received by it from the issuer of the Bond.
4. ENFORCEMENT
In accordance with the Security Sharing Agreement, at any time following
the receipt of a Notice of Actionable Default by the Collateral Agent and
the compliance with the provision of Section 4 of the Security Sharing
Agreement (including, without limitation, Section 4.2 (b) thereof), the
Collateral Agent may to the extent permitted by the relevant Bond:
(a) exercise fully any rights assigned to or acquired by it pursuant to
this Agreement in all respects as though originally named as the
Assignor in the relevant Bonds; and
(b) otherwise put into force and effect all rights, powers and remedies
available to it by law or otherwise as transferee of all or part of
the Assignor's rights, title and interest in and obligations under
each Bond, which are transferred pursuant to this Agreement.
5. CONTINUING SECURITY
5.1. This Agreement and the assignment created by or pursuant hereto shall be
in addition to, independent of and without prejudice to, and shall not be
in substitution for, any other rights, security, guarantee, indemnity or
suretyship now held or which may hereafter be held by the Thai Lenders,
the Trustees, or, as the case may be, the Debenture Trustee, the Debenture
holders (as a second priority lien), for the due payment and performance
by the Assignor of the Obligations.
5.2. This Agreement and the assignment is a continuing security and shall
remain in full force and effect notwithstanding the liquidation,
bankruptcy or other incapacity of the Assignor or any amalgamation or
reconstruction of the Assignor or any change in the constitution thereof
or any settlement of account, intervening payment or the extinction of any
or all
Page 5
<PAGE>
indebtedness by whatever reason (other than by full performance and
discharge of the Obligations) or other matter or thing whatever.
5.3. If after the date of this Agreement:
(a) any settlement or discharge of any or all of the Obligations of the
Assignor is nullified for any reason whatsoever; and/or
(b) an order or judgment is made against the Thai Lenders, the Trustees,
the holders of the Notes or, as the case may be, the Debenture
Trustee or the Debenture holders under Section 237 of the Civil and
Commercial Code of Thailand (or any modification or re-enactment
thereof) or under any of Sections 113, 114 and 115 of the Bankruptcy
Act of Thailand (or any modification or re-enactment thereof)
directing the Thai Lenders, the Trustees, the holders of the Notes
or, as the case may be, the Debenture Trustee or the Debenture
holders, to pay any sum received or held by it from the Assignor or
any other person to settle all or part of the debt of the Assignor
to an official receiver, a liquidator or a creditor of the Assignor,
then the returned monies, losses, damages, costs and expenses of the Thai
Lenders, the Trustees, the holders of the Notes or, as the case may be,
the Debenture Trustee or the Debenture holders arising as a result of such
nullified settlement or discharge, and/or (as the case may be) the sum
paid by it pursuant to such order or judgement shall be recoverable from
the Assignor on demand.
6. FURTHER ASSURANCE
6.1. The Assignor shall, whenever reasonably requested by the Collateral Agent
and at the cost and expense of the Assignor, promptly sign, seal, execute
and deliver such deeds, instruments, notices and documents, (including,
further legal or other transfers or assignments) and do such acts and
things as may be reasonably required by the Collateral Agent for the
purpose of maintaining, perfecting, protecting, defending, enforcing or
securing the obligations of the Assignor under this Agreement and the
encumbrances arising under or constituted by or pursuant to this Agreement
(or purported to be created by or constituted by or pursuant to this
Agreement) or for facilitating the exercise or, as the case may be,
realization thereof and the exercise of all other powers, authorities and
discretion vested in the Collateral Agent.
6.2. The Collateral Agent shall, without prejudice to other rights, powers and
privileges under this Agreement, be entitled (but shall be under no
obligation), at any time and as often as it may reasonably consider to be
necessary, to take any such action and/or demand additional documents and
instruments from the other party (in which case the Assignor undertakes to
use its best endeavors to procure such documents or instruments from such
person) for the purpose of protecting the rights constituted by this
Agreement.
6.3. The Assignor hereby agrees to indemnify the Thai Lenders, the Thai
Facility Agent, the Trustees, the Debenture Trustee and the Collateral
Agent on demand against any and all
Page 6
<PAGE>
costs, losses, expenses or liabilities incurred by or imposed on the Thai
Facility Agent, the Thai Lenders, the Trustees, the Debenture Trustee, or
the Collateral Agent in connection with actions taken concerning the
perfection and/or protection of the rights and/or security interest
referred to in this Clause 6.
7. FILINGS, RECORDS, INSPECTION
Except as otherwise permitted hereunder, the Assignor shall not file or
suffer to be on file, or authorize or permit to be filed or to be on file,
in any jurisdiction, any other encumbrance with respect to any Bonds in
which the Collateral Agent is not named as the sole first secured party
for the benefit of the Thai Lenders and the Trustees and the sole second
secured party for the benefit of the Debenture Trustee. The Assignor shall
permit representatives of the Collateral Agent upon reasonable notice, at
any time during normal business hours to inspect and make abstracts from
its books and records pertaining to the Bonds.
8. REMEDIES AND WAIVERS
8.1. Any receipt, release or discharge of the assignment provided by, or of any
liability arising under, the Bonds may be given by the Collateral Agent
alone and shall not release or discharge the Assignor from any liability
for the same or any other moneys which may exist independently of this
Agreement. Where such receipt, release or discharge relates only to part
of the Bonds, such receipt, release or discharge shall not prejudice or
affect the assignment hereby created in relation to the remainder of the
Bonds.
8.2. The Collateral Agent may in its or their discretion grant time or other
indulgence, or make any other arrangement variation or release, with
the Assignor or any other person (whether or not party hereto and
whether or not jointly liable with the Assignor) in respect of all the
obligations or of any other security therefor or guarantee in respect
thereof without prejudice either to the assignment constituted by or
pursuant to this Agreement or to the liability of the Assignor for the
Obligations.
8.3. The rights, powers and remedies provided in this Agreement are cumulative
and are not, nor are they to be construed as, exclusive of any rights,
powers and remedies provided by law.
8.4. No failure on the part of the Collateral Agent to exercise, or delay on
its or their part in exercising any of the rights, powers and remedies
provided for by this Agreement or by law shall operate as a waiver
thereof, nor shall any single or partial waiver of any such rights, powers
or remedies preclude any further or other exercise of such rights, power
or remedies or the exercise of any other of such rights, powers or
remedies.
9. SUCCESSORS AND ASSIGNS
Page 7
<PAGE>
This Agreement shall be binding on and shall inure to the benefit of the
parties hereto and their respective successors, assignees and transferees,
provided that the Assignor may not assign or transfer all or any part of
its rights or obligations under this Agreement.
10. RELEASE AND REASSIGNMENT
Immediately after the Assignor has finally paid and satisfied the
Obligations in full to the Thai Lenders, the Trustees and the Debenture
Trustee, the Collateral Agent shall, at the request and cost of the
Assignor, promptly reassign, without warranty, to the Assignor the rights,
title and interest assigned to it under this Agreement or such part of it
as then remains assigned in favor of the Thai Lenders, the Trustees and
the Debenture Trustee and/or release the encumbrances created pursuant
hereto, provided that any release, settlement, discharge or termination of
this Agreement and/or any such reassignment shall, unless otherwise agreed
in writing by the Thai Lenders, the Trustees, or, as the case may be, the
Debenture Trustee (in connection with its second priority lien) be upon
the express condition that such release, settlement, discharge,
termination and/or reassignment shall become void and of no effect and
Clause 5.3 shall apply if any security or payment on the faith of which
such release, settlement, discharge, termination and/or reassignment is
given or made shall at any time thereafter be nullified or subject to an
order or judgement described in Clause 5.3.
11. SEVERABILITY
If at any time any one or more of the provisions of this Agreement becomes
invalid, illegal or unenforceable in any respect under any law, the
validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby.
12. NOTICES
Any notice or communication under or in connection with this Agreement
shall be given in accordance with Clause 12 of the Security Sharing
Agreement and the provisions of such agreement shall apply hereto mutatis
mutandis.
13. LAW
This Agreement shall be governed by and construed in accordance with the
laws of the Kingdom of Thailand.
14. AMENDMENTS
The terms of this Attachment may be waived, altered or amended only by an
instrument in writing duly executed by the Assignor and the Collateral
Agent in accordance with Section 17 of the Security Sharing Agreement.
Page 8
<PAGE>
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed.
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
By: /s/ Sawasdi Horrungruang By: /s/ Chamni Janchai
-------------------------------- -----------------------------
Title: Chairman Title:
THE INDUSTRIAL FINANCE CORPORATION OF THAILAND
as Facility Agent for the Thai Lenders
By: /s/ [ILLEGIBLE]
-------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK
as Trustees
By: /s/ [ILLEGIBLE]
-------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK
as Collateral Agent
By: /s/ [ILLEGIBLE]
-------------------------------
Name:
Title:
Page 9
<PAGE>
EXHIBIT 1
The Thai Lenders
1. The Industrial Finance Corporation of Thailand
2. Thai Farmers Bank Public Company Limited
3. Siam City Bank Public Company Limited
4. The Government Savings Bank
5. First Bangkok City Bank Public Company Limited
6. Nakornthon Bank Public Company Limited
7. SCF Finance and Securities Public Company Limited
8. Siam City Credit Finance and Securities Public Company Limited
Page 10
<PAGE>
EXHIBIT 2
Details of Bonds
1. Letter of Guarantee No. 40-42-0098-4 dated 3 September 1997 issued by Thai
Farmers Bank Public Company Limited pursuant to the Contract No.95-190-1900
-4807 dated 8 April 1996 between Assignor and EIMCO Process Equipment
Company
Page 11
<PAGE>
EXHIBIT 3
Part A
Notice of Assignment
Date: 12 March 1998
To: Thai Farmers Bank Public Company Limited
One Thai Farmers Lane
Ratburana Road
Bangkok 10140
Re: Letter of Guarantee No. 40-42-0098-4 dated 3 September 1997 issued by Thai
Farmers Bank Public Company Limited pursuant to the Contract No.
95-190-1900-4807 dated 8 April 1996 between the Assignor and EIMCO Process
Equipment Company (the "Bonds").
Dear Sirs:
We hereby give you notice that pursuant to the Assignment of Bonds made between
Nakornthai Strip Mill Public Company (the "Assignor"), the Thai Lenders, the
Trustees, the Debenture Trustee and the Collateral Agent (as defined therein)
dated 12 March 1998 (the "Assignment"), a copy of which is attached, the Company
assigned on the date of the Assignment to the Collateral Agent for the benefit
of the Thai Lenders and the holders of the Notes and the holders of the
Debentures all of its rights, title and interest in the Bonds. Words and
expressions defined or referred to in the Assignment shall, unless the context
requires otherwise, have the same meanings when used herein.
The Assignment shall become effective and binding upon receipt of this Notice,
whereupon, the Collateral Agent shall acquire all rights, title and interest in
the Bonds identical to those of the Assignor.
This Notice shall not be revocable without the Collateral Agent's prior consent.
This Notice is governed by and construed in accordance with the laws of
Thailand.
Please acknowledge receipt of this Notice and confirm your agreement to the
Assignment in the form of acknowledgement attached hereto (the "Acknowledgment")
by signing and returning one copy of the Acknowledgement to the Collateral Agent
at The Chase Manhattan Bank, Bubhajit Building, 20 North Sathorn Road, Bangkok
10500, and another copy to the Assignor.
Yours faithfully,
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
By:
--------------------------------
Name:
Title:
Page 12
<PAGE>
We confirm our agreement with foregoing.
THE CHASE MANHATTAN BANK
As Collateral Agent, and for and on behalf of
the Thai Lenders, the Trustees and the Debenture Trustee
By:
--------------------------------
Name:
Title:
Attachment: Acknowledgement of the Issuer of the Bonds
Page 13
<PAGE>
Part B
Acknowledgment of Assignment
To: THE CHASE MANHATTAN BANK
20 North Sathorn Road
Silom, Bangrak
Bangkok 10500
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
No. 9, UM Tower, 16th Floor,
Kwaeng Suanluang, Khet Suanluang,
Bangkok, Thailand
We hereby acknowledge receipt of a notice of assignment of which this is a copy
and consent and agree, for ourselves and our successors and assigns, to the
terms thereof and of the Assignment. Words and expressions defined or referred
to in the Assignment shall, unless the context requires otherwise, have the same
meanings when used herein. We now undertake and confirm to you that:
(i) we agree to the Assignment and will give to the Collateral Agent notice of
any breach of any agreement governing the Bonds by the Assignor as soon as
we become aware of it;
(ii) we do not have, and will not make or exercise, any claims or demands, any
rights of counterclaim, rights of set-off or any other rights against the
Assignor in respect of the Bonds;
(iii) we will pay all amounts payable by us in respect of the Bonds to such
person or account as the Collateral Agent may nominate from time to time;
(iv) we have not received any other notice of assignment nor consented to any
other assignment of rights to the Bonds;
(v) we agree to the assignment of all rights of the Assignor to the Collateral
Agent for the benefit of the Thai Lenders, the Trustee and the Debenture
Trustee pursuant to the Assignment and agree to sign such documents as may
be reasonably requested to record the said assignment;
(vi) the Thai Lenders, the Trustees, the Debenture Trustee and the Collateral
Agent are not liable to perform any of the obligations assumed by the
Assignor under such Bonds nor liable for the consequences of
non-performance;
(vii) we agree to abide by all the terms and conditions of the Assignment and to
act accordingly upon our receipt of a written notice and/or instruction
from the Collateral Agent or any successor of the Collateral Agent;
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(viii) this Acknowledgment is governed by and construed in accordance with the
laws of Thailand.
Yours faithfully,
Thai Farmers Bank Public Company Limited
By:
----------------------------------------
Name:
Title:
Date:
Page 15
<PAGE>
Exhibit 4.15
CONDITIONAL ASSIGNMENT
OF PROJECT DOCUMENTS
THIS AGREEMENT is made on the 12th March 1998,
BETWEEN:
(1) NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED, a public limited company
duly organized and validly existing under the laws of the Kingdom of
Thailand having its registered office at No. 9, UM Tower, 16th Floor,
Kwaeng Suanluang, Khet Suanluang, Bangkok, Thailand (the "Assignor");
(2) The financial institutions whose names are listed in Exhibit 1 (the "Thai
Lenders") represented by THE INDUSTRIAL FINANCE CORPORATION OF THAILAND, a
corporation duly organized and validly existing under the laws of the
Kingdom of Thailand having its registered office at No. 1770 New Petchburi
Road, Bangkok 10320, as Facility Agent for the Thai Lenders (the "Thai
Facility Agent");
(3) THE CHASE MANHATTAN BANK, a company duly organized and validly existing
under the laws of the State of New York, having its registered office at
450 West 33rd Street, New York, New York, U.S.A., having its branch office
in Bangkok, Thailand, located at 20 North Sathorn Road, Silom, Bangrak,
Bangkok 10500, acting as the Trustees and the Debenture Trustee (as
defined below);
AND
(4) THE CHASE MANHATTAN BANK as collateral agent (the "Collateral Agent").
WHEREAS:
A. The Assignor and the Thai Lenders entered into a credit facility agreement
dated 27 September 1995, (the "CFA") whereunder credit facilities of Baht
3,300,000,000 (Three Thousand and Three Hundred Million Baht) and
US$308,000,000 (Three Hundred and Eight Million United States Dollars)
have been granted;
B. The Assignor intends to procure financing from abroad by having NSM Steel
Company, Ltd. ("NSM Cayman"), a company incorporated under the laws of the
Cayman Islands and in which the Assignor holds 100 percent of its shares,
and NSM Steel (Delaware) Inc., a company incorporated under the laws of
the State of Delaware, the United States, a wholly owned subsidiary of NSM
Cayman (hereinafter collectively referred to as the "Note Issuers"),
acting as agent of NSM Cayman pursuant to an agency agreement, issue
US$452,500,000 of indebtedness comprised of (a) US$249,000,000 (aggregate
principal amount at maturity) of 12% Senior Mortgage Notes Due 2006 (the
"Senior Notes") which will be issued pursuant to an indenture dated as of
1 March 1998 (the "Senior Note Indenture", among the Note Issuers, the
Assignor and The Chase Manhattan Bank ("Chase"), as trustee (the "Senior
Notes Trustee"), (b) the US$203,500,000 (aggregate
<PAGE>
principal amount at maturity) of 12 1/4 Senior Subordinated Mortgage Notes
Due 2008 (the "Senior Subordinated Notes" and together with the Senior
Notes, the "Notes"), which will be issued pursuant to an indenture dated
as of 1 March 1998 (the "Senior Subordinated Note Indenture", and together
with the Senior Note Indenture, the "Indentures") among the Note Issuers
and Chase, as trustee (the "Senior Subordinated Notes Trustee" and
together with the Senior Notes Trustee, the "Trustees"), with warrants to
purchase 74,476,809 (Seventy Four Million Four Hundred Seventy Six
Thousand Eight Hundred and Nine) ordinary shares of the Assignor, and (c)
a private placement consisting of US$53,133,016 (aggregate principal
amount at maturity) of 12 3/4% Subordinated Second Mortgage Debentures Due
2009 (the "Debentures") which will be issued pursuant to an indenture
dated as of 1 March 1998 (the "Debenture Indenture"), among the Note
Issuers, the Assignor and Chase, as trustee (the "Debenture Trustee") and
64,417,180 ordinary shares of the Assignor;
C. The Assignor has entered into an amendment to the CFA (the "CFA
Amendment") with the Thai Lenders dated 12 March 1998 for the amendment of
certain terms and provisions to facilitate the Assignor's additional
financing (the CFA and the CFA Amendment, collectively, the "Bank Credit
Facility"), including but not limited to, an agreement the Assignor
entered into with the Thai Lenders, the Trustees and the Debenture Trustee
dated 12 March 1998 to set forth arrangements for the Thai Lenders and
holders of the Notes and the holders of the Debentures to share certain
collateral (the "Security Sharing Agreement").
D. Pursuant to the terms of the Security Sharing Agreement, the Assignor, the
Thai Lenders, the Thai Facility Agent, the Trustees, the Debenture
Trustee, and the Collateral Agent agree to enter into this Agreement as
security for the Obligations (as defined hereunder).
IT IS AGREED as follows:
1. DEFINITIONS
1.1 Except as otherwise provided herein, words and expressions in this
Agreement shall have the same respective meanings as described in the Bank
Credit Facility, the Indentures, the Debenture Indenture, and the Security
Sharing Agreement:
"Additional Project Document" has the meaning ascribed to it in Clause
3.3;
"Conditional Assignment of Additional Project Document" means a
conditional assignment agreement substantially in the form of this
Agreement in relation to any Additional Project Document;
"Counterparty" means any person other than the Assignor who is a party to
any Project Document or Additional Project Document;
"Designee" means, in relation to any Project Document, any person who the
Collateral Agent has designated as a substitute party to such Project
Document under the terms and
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subject to the conditions of this Agreement (and all references herein to
the Collateral Agent shall be deemed to include the Designee unless the
context requires otherwise);
"Obligations" means all present and future obligations and all other
liabilities of the Assignor under the Bank Credit Facility, the Notes, the
Indentures, the Debentures, the Debenture Indenture and the Security
Sharing Agreement;
"Project Documents" means each of the contracts, agreements and documents
listed in Exhibit 4 and all Additional Project Documents;
"Relevant Agreement" means any of the Project Documents which is the
subject of a Transfer Notice; and
"Transfer Notice" means a notice of transfer and novation pursuant to
Clause 2 substantially in the form set out in Exhibit 3 duly completed and
signed by the Collateral Agent or the Designee.
1.2 Any reference in this Agreement to:
(i) any agreement or document shall be read and construed as a reference
to such agreement or document as the same may have been or may from
time to time be, amended, varied, novated or supplemented; and
(ii) any party shall be construed so as to include its respective
successors, permitted assigns and transferees in accordance with its
respective interests.
1.3 Words denominating the singular include the plural and vice versa.
1.4 Section headings are for reference only.
2. ASSIGNMENT
2.1 To secure the due and punctual payment and performance by the Assignor of
the Obligations, the Assignor hereby assigns and transfers by way of
novation to the Collateral Agent for the benefit of the Thai Lenders, the
holders of the Notes and the Debenture holders (as a second priority
lien), all of its rights, title, interest and obligations (subject to
Clause 4.2) in and to the Project Documents as listed in Exhibit 4 and the
Collateral Agent hereby accepts all such rights, title, interests and
obligations provided that such assignment and transfer is conditional and
shall only become effective with respect to any Project Document upon the
delivery of a Transfer Notice to the Assignor and the relevant
Counterparty, specifying that such assignment and transfer (by way of
novation) has become effective and enforceable with respect to such
Project Document in accordance with the terms of this Agreement provided
further that no such Transfer Notice shall be delivered by the Collateral
Agent unless it has received a Notice of Actionable Default (as defined in
the Security Sharing Agreement) and the provisions of Section 4 of the
Security Sharing Agreement have been complied with (including without
limitation, Section 4.2(b) thereof).
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2.2 Notwithstanding the conditional assignment contained in Clause 2.1, the
Assignor shall at all times remain liable to perform all of its
obligations under the Bank Credit Facility, the Indentures and the
Debenture Indenture, and in respect of each Project Document and
Additional Project Document, remain liable to perform all of its
obligations under that Project Document or Additional Project Document, as
the case may be.
2.3 Nothing herein contained shall constitute or be deemed to constitute a
novation or settlement of any obligations (including, without limitation,
the Obligations) or indebtedness, nor shall it be construed as an
assumption or acceptance by the Thai Lenders, the Trustees or, as the case
may be, the Debenture Trustee (as a second priority lien) of any
obligation of the Assignor under the Project Documents and Additional
Project Documents other than as specifically assumed following delivery of
a Transfer Notice in accordance with the terms hereof.
3. PERFECTION OF ASSIGNMENT
3.1 Immediately upon the execution of this Agreement, the Assignor shall give
notice to all Counterparties to each Project Document substantially in the
form set out in Part A Exhibit 2 and shall use its reasonable efforts to
procure that as soon as practicable the Counterparties' consent to the
assignments and the right to substitution by way of transfer and novation
contained herein and acknowledge receipt of notice to the Collateral Agent
in the form set out in part B of Exhibit 2, or in such other form as may
be reasonably acceptable to the Collateral Agent.
3.2 Immediately upon the execution of this Agreement the Assignor shall submit
to the Collateral Agent a certified copy of each Project Document listed
herein (and upon reasonable request from the Collateral Agent provide a
certified copy of any other documents relating to such Project Documents).
3.3 Immediately upon the execution of any contract, agreement or document
entered into by the Assignor following the date of this Agreement in
respect of the Assignor's mill project which replaces a Project Document
(each, an "Additional Project Document") the Assignor irrevocably and
unconditionally undertakes to:
(a) notify the Collateral Agent that an Additional Project Document has
been executed and deliver to the Collateral Agent such number of
certified copies of the Additional Project Document as the
Collateral Agent may reasonably request; and
(b) enter into with the Thai Lenders, the Trustees, the Debenture
Trustee and the Collateral Agent a Conditional Assignment of
Additional Project Document in respect of the Additional Project
Document, notify the relevant Counterparty of the same and of the
agreements contained in Clause 2.1 thereof, and use its reasonable
efforts to procure that as soon as practicable such Counterparty
acknowledges the same and consents to the assignments and the right
to substitution by way of transfer and novation contained therein in
the form referred into in Clause 3.1 or such other form as may be
reasonably acceptable to the Collateral Agent.
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3.4 The Assignor shall comply with the terms set out in each of the notices
given pursuant to this Clause 3 and shall not take or omit to take any
action the taking or omission of which might otherwise result in the
material alteration or impairment of any of its Obligations or the rights
of the Thai Lenders, the Trustees or, as the case may be, the Debenture
Trustee (as a second priority lien) under this Agreement.
3.5 If the Assignor defaults in duly performing its obligations under any
Project Document, the Thai Lenders, the Trustees or the Debenture Trustee
may in its or their discretion, and without any obligation to do so,
without prejudice to its or their other rights, do all things and pay all
monies necessary or expedient in the opinion of the Thai Lenders, the
Trustees or the Debenture Trustee to make good or in attempting to make
good such default to the satisfaction of the Thai Lenders, the Trustees or
the Debenture Trustee and, as a separate and independent obligation, the
Assignor shall indemnify the Thai Lenders, the Trustees or the Debenture
Trustee on demand against all losses, claims, costs and expenses
(including, without limitation, legal expenses) of any kind incurred or to
be incurred by it or them in connection with, or arising out of or
relating to any such default of the Assignor and any action taken by it or
them pursuant to this Clause.
4. TRANSFER NOTICE AND ENFORCEMENT
4.1 By the delivery of a Transfer Notice to a Counterparty and to the Assignor
with respect to a Project Document, either the Collateral Agent (subject
to the terms of the Security Sharing Agreement) or a Designee may be
substituted as a party to that Project Document in place of the Assignor
by the assignment under this Agreement to either of them of the rights,
title, interest and obligations of the Assignor under the relevant Project
Document. The substitution of the Collateral Agent or a Designee shall
immediately become effective and binding upon the parties to the Project
Document upon the date of the Transfer Notice.
4.2 Upon the delivery of a Transfer Notice with respect to any particular
Project Document, the Collateral Agent or the Designee, as the case may
be, shall acquire all rights, title and interest in the relevant Project
Document identical to those of the Assignor and shall assume all of the
Assignor's obligations to the Counterparty under the relevant Project
Document. Following the delivery of a Transfer Notice, the Assignor shall
cease to be entitled to exercise or enjoy such rights, title and interest
but shall remain, jointly and severally with the Collateral Agent or the
Designee, as the case may be, liable to perform such obligations and give
all assistance to the Collateral Agent or the Designee, as the case may
be, to facilitate the performance of its obligations under the Project
Documents and its operation of the project on an ongoing basis. Following
the delivery of a Transfer Notice, all references in the relevant Project
Document to the Assignor shall be deemed as references to the Collateral
Agent or the Designee, as the case may be.
4.3 At any time following the delivery of a Transfer Notice (which may only be
done pursuant to Clause 2.1 of this Agreement) (and until such time as
such Transfer Notice is rescinded in accordance with the terms of the
Security Sharing Agreement), the Collateral Agent or, as the case may be,
any Designee, may, with respect to any Project Document:
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<PAGE>
(a) exercise fully any rights and/or perform any obligations of the
Assignor under such Project Document in all respects as though
originally named as a party in the relevant Project Document; and
(b) otherwise put into force and effect all rights, powers and remedies
available to it by law or otherwise as transferee of all or part of
the Assignor's rights, and obligations under each Project Document,
which are transferred pursuant to this Agreement and the Transfer
Notice.
5. CONTINUING SECURITY
5.1 This Agreement and the assignments and transfer herein contained shall be
in addition to, independent of and without prejudice to, and shall not be
in substitution for, any other rights, security, guarantee, indemnity or
suretyship now held or which may hereafter be held by the Thai Lenders,
the Trustees, or, as the case may be, the Debenture Trustee (as a second
priority lien) for the due payment, performance and discharge by the
Assignor of the Obligations.
5.2 This Agreement and the assignments and transfer herein contained is a
continuing security and shall remain in full force and effect
notwithstanding the liquidation, bankruptcy or other incapacity of the
Assignor or any amalgamation or reconstruction of the Assignor or any
change in the constitution thereof or any or all indebtedness by whatever
reason (other than by full performance and discharge of the Obligations)
or other matter or thing whatever.
5.3 If after the date of this Agreement:
(a) any settlement or discharge of any or all of the Obligations of the
Assignor is nullified for any reason whatsoever; and/or
(b) an order or judgment is made against the Thai Lenders, the Trustees
or, as the case may be, the Debenture Trustee or the holders of the
Notes or the Debentures under Section 237 of the Civil and
Commercial Code of Thailand (or any modification or re-enactment
thereof) or under any of Sections 113, 114 and 115 of the Bankruptcy
Act of Thailand (or any modification or re-enactment thereof)
directing Thai Lenders, the Trustee or, as the case may be, the
Debenture Trustee, to pay any sum received or held by it from the
Assignor or any other person to settle all or part of the debt of
the Assignor to an official receiver, a liquidator or a creditor of
the Assignor;
then the returned monies, losses, damages, costs and expenses of the Thai
Lenders, the Trustees or, as the case may be, the Debenture Trustee,
arising as a result of such nullified settlement or discharge, and/or (as
the case may be) the sum paid by it pursuant to such order or judgment
shall be recoverable from the Assignor on demand.
6. FURTHER ASSURANCES
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6.1 The Assignor shall, whenever reasonably requested by the Collateral Agent
and at the cost and expense of the Assignor, duly and promptly sign, seal,
execute and deliver such deeds, instruments, notices and documents,
(including, further legal or other transfers or assignments) and do such
acts and things as may reasonably be required by the Collateral Agent for
the purpose of maintaining, perfecting, protecting, defending, enforcing
or securing the obligations of the Assignor hereunder and the
encumbrances, including the right to substitution by way of transfer and
novation, arising under or constituted by or pursuant to this Agreement
(or purported to be created by or constituted by or pursuant to this
Agreement) or for facilitating the exercise, or, as the case may be,
realization thereof and the exercise of all other powers, authorities and
discretion vested in the Collateral Agent.
6.2 The Collateral Agent shall, without prejudice to other rights, powers and
privileges under this Agreement, be entitled (but shall be under no
obligation), at any time and as often as it may reasonably consider to be
necessary, to take any such action and/or demand additional documents and
instruments from the other party (in which case the Assignor undertakes to
use its best endeavors to procure such documents or instruments from such
person) for the purpose of protecting the rights constituted by this
Agreement.
6.3 The Assignor hereby agrees to indemnify the Collateral Agent on demand
against any and all costs, losses, expenses or liabilities incurred by or
imposed on Thai Lenders, the Thai Facility Agent, the Trustees, the
Debenture Trustee or the Collateral Agent in or about the perfection
and/or protection of the rights and/or security interest referred to in
this Clause 6.
7. FILINGS, RECORDS, INSPECTION
Except as otherwise permitted hereunder, the Assignor shall not file or
suffer to be on file, or authorize or permit to be filed or to be on file,
in any jurisdiction, any other encumbrance with respect to the Project
Documents in which the Collateral Agent is not named as the sole first
secured party for the benefit of the Thai Lenders and the Trustees and the
sole second secured party for the benefit of the Debenture Trustee. The
Assignor shall permit representatives of the Collateral Agent upon
reasonable notice, at any time during normal business hours to inspect and
make abstracts from its books and records pertaining to the Project
Documents.
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8. REMEDIES AND WAIVERS
8.1 Any receipt, release or discharge of the assignment provided by, or of any
liability arising under, the Project Document may be given by the
Collateral Agent alone and shall not release or discharge the Assignor
from any liability for the same or any other moneys which may exist
independently of this Agreement. Where such receipt, release or discharge
relates only to part of the Project Documents, such receipt, release or
discharge shall not prejudice or affect the assignment hereby created in
relation to the remainder of the Project Documents.
8.2 The Collateral Agent may in its discretion grant time or other indulgence,
or make any other arrangement variation or release, with the Assignor or
any other person (whether or not party hereto and whether or not jointly
liable with the Assignor) in respect of all the obligations or of any
other security therefor or guarantee in respect thereof without prejudice
either to the assignment constituted by or pursuant to this Agreement or
to the liability of the Assignor for the Obligations.
8.3 The rights, powers and remedies provided in this Agreement are cumulative
and are not, nor are they to be construed as, exclusive of any rights,
powers and remedies provided by law.
8.4 No failure on the part of the Collateral Agent to exercise, or delay on
its or their part in exercising any of the rights, powers and remedies
provided for by this Agreement or by law shall operate as a waiver
thereof, nor shall any single or partial waiver of any such rights, powers
or remedies preclude any further or other exercise of such rights, power
or remedies or the exercise of any other of such rights, powers or
remedies.
9. SUCCESSOR AND ASSIGNS
This Agreement shall be binding on and shall inure to the benefit of the
parties hereto and their respective successors, assignees and transferees,
provided that the Assignor may not assign or transfer all or any part of
its rights or obligations under this Agreement.
10. RELEASE AND REASSIGNMENT
Immediately after the Assignor has finally paid and satisfied in full the
Obligations to the Thai Lenders, the Trustees, and the Debenture Trustee,
the Collateral Agent shall, at the request and cost of the Assignor,
promptly reassign, without warranty, to the Assignor the rights, title and
interest assigned to it under this Agreement or such part of it as then
remains assigned in favor of it and/or release the encumbrances created
pursuant hereto, provided that any release, settlement, discharge or
termination of this Agreement and/or any such reassignment shall, unless
otherwise agreed in writing by the Thai Lenders, the Trustees or, as the
case may be, the Debenture Trustee (in connection with its second priority
lien), be upon the express condition that such release, settlement,
discharge, termination and/or reassignment shall become void and of no
effect and Clause 5.3 shall apply if any security or payment on the faith
of which such release, settlement, discharge, termi-
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nation and/or reassignment is given or made shall at any time thereafter
be nullified or subject to an order or judgment described in Clause 5.3.
11. SEVERABILITY
If at any time any one or more of the provisions of this Agreement becomes
invalid, illegal or unenforceable in any respect under any law, the
validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby.
12. NOTICES
Any notice or communication under or in connection with this Agreement
shall be given in accordance with Section 12 of the Security Sharing
Agreement and the provisions of such agreement shall apply hereto mutatis
mutandis.
13. LAW
This Agreement shall be governed by and construed in accordance with the
laws of Thailand.
14. AMENDMENTS
The terms of this Attachment may be waived, altered or amended only by an
instrument in writing duly executed by the Assignor and the Collateral
Agent in accordance with Section 17 of the Security Sharing Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed.
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NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
as the Assignor
By: /s/ Sawasdi Horrungruang
-----------------------------
Title: Chairman
THE INDUSTRIAL FINANCE CORPORATION OF THAILAND
as Thai Facility Agent for the Thai Lenders
By: /s/ [ILLEGIBLE]
-----------------------------
Name:
Title:
THE CHASE MANHATTAN BANK
as Trustees and Debenture Trustee
By: /s/ [ILLEGIBLE]
-----------------------------
Name:
Title:
THE CHASE MANHATTAN BANK
as Collateral Agent
By: /s/ [ILLEGIBLE]
-----------------------------
Name:
Title:
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EXHIBIT 1
The Thai Lenders
1. The Industrial Finance Corporation of Thailand
2. Thai Farmers Bank Public Company Limited
3. Siam City Bank Public Company Limited
4. The Government Savings Bank
5. First Bangkok City Bank Public Company Limited
6. Nakornthon Bank Public Company Limited
7. SCF Finance and Securities Public Company Limited
8. Siam City Credit Finance and Securities Public Company Limited
Page 11
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EXHIBIT 2
Part A
Notice of Conditional Assignment
12 March 1998
To: STEEL DYNAMICS, INC.
4500 County Road 59
Butler IN 46721
Attention: Tracy Shellabarger
Dear Sirs:
We refer to the Shareholders' Agreement dated 12 March 1998 between Nakornthai
Strip Mill Public Company Limited (the "Assignor") and yourselves (the "Project
Document").
We hereby give you notice that pursuant to the Conditional Assignment of Project
Documents made between the Assignor, the Thai Lenders, the Trustees, the
Debenture Trustee and the Collateral Agent (each as defined therein) dated 12
March 1998 (the "Conditional Assignment") the Assignor conditionally assigned
all rights, title and interest in and to the Project Document and conditionally
transferred all of its obligations under the Project Document to the Collateral
Agent for the benefit of the Thai Lenders, holders of the Notes and the holders
of Debentures, and agreed that when such conditional assignment becomes
effective, the Thai Lenders, the holders of the Notes and the holders of
Debentures may substitute the Collateral Agent or its Designee as a party to the
Project Document in the place of the Assignor.
This substitution shall become effective and binding upon giving a Transfer
Notice (and until such time as such Transfer Notice is rescinded in accordance
with the terms of the Security Sharing Agreement) to you confirming that the
conditional assignment and transfer by way of novation has become effective (the
"Transfer and Novation").
Upon the Transfer and Novation the Collateral Agent or the Designee, as the case
may be, shall acquire all rights, title and interest in the Project Document
identical to those of the Assignor and shall assume obligations toward you
identical to those obligations owed by the Assignor to you under the Project
Document. Upon the Transfer and Novation, the Assignor shall cease to be
entitled to exercise such rights, title and interest but shall undertake to
remain, jointly and severally with the Collateral Agent or the Designee, liable
to perform such obligations. After delivery of such Transfer Notice all
references in the Project Document to the Assignor shall be deemed as references
to the Collateral Agent or the Designee, as the case may be.
We hereby confirm that you may rely conclusively upon any Transfer Notice, when
duty issued and delivered to you and that you shall not be concerned to inquire
whether any Event of Default (as defined in the Bank Credit Facility, the
Indentures and the Debenture Indenture, as the case
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may be) has happened upon which any of the powers, authority and discretion
conferred upon the Collateral Agent by or pursuant to the Conditional Assignment
in relation to the rights, title and interests under and in respect of the
Project Document or any part thereof is or may be exercisable by the Collateral
Agent or otherwise as to the appropriateness of acts purporting or intended to
be in exercise of any such powers.
This notice may not be revoked without the consent of the Thai Lenders, the
Trustees and the Debenture Trustee.
For the avoidance of doubt, references in this notice to the Project Document
shall be construed as references to the Project Document as the same may have
been or may from time to time be amended, novated or supplemented and shall
include any document which is supplemental to, is expressed to be related to or
is entered into pursuant to or in accordance with the terms of the Project
Document. Except as otherwise provided herein, all words and expressions in this
notice shall have the same respective meanings as described in the Conditional
Assignment.
Please acknowledge receipt of this notice and confirm your agreement to the
terms hereof and to the Conditional Assignment in the form of Acknowledgment
attached hereto (the "Acknowledgment") by duly executing and returning one copy
of the Acknowledgment to the Collateral Agent at The Chase Manhattan Bank,
Bubhajit Building, 20 North Sathorn Road, Bangkok 10500 and another copy to the
Assignor.
This notice and the Acknowledgment shall be governed by and construed in
accordance with the laws of the Kingdom of Thailand.
Yours faithfully,
NAKORNTHAI STRIP MILL
PUBLIC COMPANY LIMITED
as Assignor
By: /s/ Sawasdi Horrungruang
------------------------------
Title: Chairman
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We confirm our agreement with the foregoing.
THE CHASE MANHATTAN BANK
as Collateral Agent
By:
-----------------------------
Name:
Title:
Attachment: Acknowledgement of the Counterparty
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Part B
Acknowledgment and Agreement
To: THE CHASE MANHATTAN BANK
20 North Sathorn Road
Silom, Bangrak
Bangkok 10500
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
No. 9, LUM Tower, 16th Floor
Kwaeng Suanluang, Khet Suanluang
Bangkok,
We hereby acknowledge receipt of a notice of conditional assignment dated 12
March 1998, ("Notice of Conditional Assignment"), attaching a form of
Acknowledgment and Agreement. We now undertake and confirm to you that:
(i) we agree and consent to the terms of the Notice of Conditional Assignment;
(ii) we do not have, and will not make or exercise, any claims or demands, any
rights of counterclaim, rights of set-off or any other rights against the
Assignor in respect of the Project Documents;
(iii) we will give the Collateral Agent notice of any breach of the Project
Document by the Assignor as soon as we become aware of the same;
(iv) we have not received any other notice of assignment nor consented to any
other assignment of any rights or the transfer of obligations under the
Project Document;
(v) until the conditional assignment and transfer by way of novation of the
Project Document becomes effective, we regard the Assignor as liable to
perform all its obligations under the Project Document;
(vi) where a right to suspend our performance has arisen under the Project
Document, we will not exercise such right without first giving notice to
the Collateral Agent and allowing the Collateral Agent at least thirty
(30) days to remedy the situation, and we agree that if the Collateral
Agent remedies such situation within such period, we will continue to
perform our obligations under the Project Document;
(vii) where a right to terminate the Project Document has arisen thereunder, we
will not exercise such right without first giving notice to the Collateral
Agent and allowing the Collateral Agent at least thirty (30) days to
remedy the situation, and we agree that if the Collateral Agent remedies
such situation with such period, we will continue to perform our
obligations under the Project Document;
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(viii)we shall not, without the Collateral Agent's written consent, agree to or
concur in any action of the Assignor which would contravene any terms of
the Project Document or the Conditional Assignment; and
(ix) we agree to the Collateral Agent or the Designee being substituted as a
party to the Project Document in the place of the Assignor, and that such
the substitution shall become effective and binding upon the Collateral
Agent and/or the Designee giving a Transfer Notice to us confirming that
the conditional assignment and transfer has become effective, as provided
in the Notice of Conditional Assignment.
Yours faithfully
- ----------------------------------
STEEL DYNAMICS, INC.
12 March 1998
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<PAGE>
Part A
Notice of Conditional Assignment
12 March 1998
To: ECT THAILAND INVESTMENTS, INC.
c/o Enron Capital & Trade Resources Corporation
1400 Smith St.
Houston, TX 77002
Attention: Donna W. Lowry
Dear Sirs:
We refer to the Shareholders' Agreement dated 12 March 1998 between Nakornthai
Strip Mill Public Company Limited (the "Assignor") and yourselves (the "Project
Document").
We hereby give you notice that pursuant to the Conditional Assignment of Project
Documents made between the Assignor, the Thai Lenders, the Trustees, the
Debenture Trustee and the Collateral Agent (each as defined therein) dated 12
March 1998 (the "Conditional Assignment") the Assignor conditionally assigned
all rights, title and interest in and to the Project Document and conditionally
transferred all of its obligations under the Project Document to the Collateral
Agent for the benefit of the Thai Lenders, holders of the Notes and the holders
of Debentures, and agreed that when such conditional assignment becomes
effective, the Thai Lenders, the holders of the Notes and the holders of
Debentures may substitute the Collateral Agent or its Designee as a party to the
Project Document in the place of the Assignor.
This substitution shall become effective and binding upon giving a Transfer
Notice (and until such time as such Transfer Notice is rescinded in accordance
with the terms of the Security Sharing Agreement) to you confirming that the
conditional assignment and transfer by way of novation has become effective (the
"Transfer and Novation").
Upon the Transfer and Novation the Collateral Agent or the Designee, as the case
may be, shall acquire all rights, title and interest in the Project Document
identical to those of the Assignor and shall assume obligations toward you
identical to those obligations owed by the Assignor to you under the Project
Document. Upon the Transfer and Novation, the Assignor shall cease to be
entitled to exercise such rights, title and interest but shall undertake to
remain, jointly and severally with the Collateral Agent or the Designee, liable
to perform such obligations. After delivery of such Transfer Notice all
references in the Project Document to the Assignor shall be deemed as references
to the Collateral Agent or the Designee, as the case may be.
We hereby confirm that you may rely conclusively upon any Transfer Notice, when
duly issued and delivered to you and that you shall not be concerned to inquire
whether any Event of Default (as defined in the Bank Credit Facility, the
Indentures and the Debenture Indenture, as the case may be) has happened upon
which any of the powers, authority and discretion conferred upon the
Page 17
<PAGE>
Collateral Agent by or pursuant to the Conditional Assignment in relation to the
rights, title and interests under and in respect of the Project Document or any
part thereof is or may be exercisable by the Collateral Agent or otherwise as to
the appropriateness of acts purporting or intended to be in exercise of any such
powers.
This notice may not be revoked without the consent of the Thai Lenders, the
Trustees and the Debenture Trustee.
For the avoidance of doubt, references in this notice to the Project Document
shall be construed as references to the Project Document as the same may have
been or may from time to time be amended, novated or supplemented and shall
include any document which is supplemental to, is expressed to be related to or
is entered into pursuant to or in accordance with the terms of the Project
Document. Except as otherwise provided herein, all words and expressions in this
notice shall have the same respective meanings as described in the Conditional
Assignment.
Please acknowledge receipt of this notice and confirm your agreement to the
terms hereof and to the Conditional Assignment in the form of Acknowledgment
attached hereto (the "Acknowledgment") by duly executing and returning one copy
of the Acknowledgment to the Collateral Agent at The Chase Manhattan Bank,
Bubhajit Building, 20 North Sathorn Road, Bangkok 10500 and another copy to the
Assignor.
This notice and the Acknowledgment shall be governed by and construed in
accordance with the laws of the Kingdom of Thailand.
Yours faithfully,
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
as Assignor
By: /s/ Sawasdi Horrungruang
------------------------------
Title: Chairman
Page 18
<PAGE>
We confirm our agreement with the foregoing.
THE CHASE MANHATTAN BANK
as Collateral Agent
By:
-----------------------------
Name:
Title:
Attachment: Acknowledgement of the Counterparty
Page 19
<PAGE>
Part B
Acknowledgment and Agreement
To: THE CHASE MANHATTAN BANK
20 North Sathorn Road
Silom, Bangrak
Bangkok 10500
NAKORNTHAI STRIP MILL PUBLIC LIMITED
No. 9, UM Tower, 16th Floor
Kwaeng Suanluang, Khet Suanluang
Bangkok
We hereby acknowledge receipt of a notice of conditional assignment dated 12
March 1998, ("Notice of Conditional Assignment"), attaching a form of
Acknowledgment and Agreement. We now undertake and confirm to you that:
(i) we agree and consent to the terms of the Notice of Conditional Assignment;
(ii) we do not have, and will not make or exercise, any claims or demands, any
rights of counterclaim, rights of set-off or any other rights against the
Assignor in respect of the Project Documents;
(iii) we will give the Collateral Agent notice of any breach of the Project
Document by the Assignor as soon as we become aware of the same;
(iv) we have not received any other notice of assignment nor consented to any
other assignment of any rights or the transfer of obligations under the
Project Document;
(v) until the conditional assignment and transfer by way of novation of the
Project Document becomes effective, we regard the Assignor as liable to
perform all its obligations under the Project Document;
(vi) where a right to suspend our performance has arisen under the Project
Document, we will not exercise such right without first giving notice to
the Collateral Agent and allowing the Collateral Agent at least thirty
(30) days to remedy the situation, and we agree that if the Collateral
Agent remedies such situation within such period, we will continue to
perform our obligations under the Project Document;
(vii) where a right to terminate the Project Document has arisen thereunder, we
will not exercise such right without first giving notice to the Collateral
Agent and allowing the Collateral Agent at least thirty (30) days to
remedy the situation, and we agree that if the Collateral Agent remedies
such situation with such period, we will continue to perform our
obligations under the Project Document;
Page 20
<PAGE>
(vii) we shall not, without the Collateral Agent's written consent, agree to or
concur in any action of the Assignor which would contravene any terms of
the Project Document or the Conditional Assignment; and
(viii)we agree to the Collateral Agent or the Designee being substituted as a
party to the Project Document in the place of the Assignor, and that such
the substitution shall become effective and binding upon the Collateral
Agent and/or the Designee giving a Transfer Notice to us confirming that
the conditional assignment and transfer has become effective, as provided
in the Notice of Conditional Assignment.
Yours faithfully
- -------------------------------
ECT THAILAND INVESTMENTS, INC.
12 March 1998
Page 21
<PAGE>
Part A
Notice of Conditional Assignment
12 March 1998
To: NSM McDONALD PARTNERSHIP
c/o McDonald & Company Securities, Inc.
McDonald Investment Center
800 Superior Avenue
Cleveland, Ohio 44114-2603
U.S.A.
Attention: David Stickler
Dear Sirs:
We refer to the Management Agreement dated 12 March 1998 between Nakornthai
Strip Mill Public Company Limited (the "Assignor") and yourselves on behalf of
NSM Management Co. LLC (the "Project Document").
We hereby give you notice that pursuant to the Conditional Assignment of Project
Documents made between the Assignor, the Thai Lenders, the Trustees, the
Debenture Trustee and the Collateral Agent (each as defined therein) dated 12
March 1998 (the "Conditional Assignment") the Assignor conditionally assigned
all rights, title and interest in and to the Project Document and conditionally
transferred all of its obligations under the Project Document to the Collateral
Agent for the benefit of the Thai Lenders, holders of the Notes and the holders
of the Debentures, and agreed that when such conditional assignment becomes
effective, the Thai Lenders, the holders of the Notes and the holders of the
Debentures may substitute the Collateral Agent or its Designee as a party to the
Project Document in the place of the Assignor.
This substitution shall become effective and binding upon giving a Transfer
Notice (and until such time as such Transfer Notice is rescinded in accordance
with the terms of the Security Sharing Agreement) to you confirming that the
conditional assignment and transfer by way of novation has become effective (the
"Transfer and Novation").
Upon the Transfer and Novation the Collateral Agent or the Designee, as the case
may be, shall acquire all rights, title and interest in the Project Document
identical to those of the Assignor and shall assume obligations toward you
identical to those obligations owed by the Assignor to you under the Project
Document. Upon the Transfer and Novation, the Assignor shall cease to be
entitled to exercise such rights, title and interest but shall undertake to
remain, jointly and severally with the Collateral Agent or the Designee, liable
to perform such obligations. After delivery of such Transfer Notice all
references in the Project Document to the Assignor shall be deemed as references
to the Collateral Agent or the Designee, as the case may be.
Page 22
<PAGE>
We hereby confirm that you may rely conclusively upon any Transfer Notice, when
duly issued and delivered to you and that you shall not be concerned to inquire
whether any Event of Default (as defined in the Bank Credit Facility, the
Indentures and the Debenture Indenture, as the case may be) has happened upon
which any of the powers, authority and discretion conferred upon the Collateral
Agent by or pursuant to the Conditional Assignment in relation to the rights,
title and interests under and in respect of the Project Document or any part
thereof is or may be exercisable by the Collateral Agent or otherwise as to the
appropriateness of acts purporting or intended to be in exercise of any such
powers.
This notice may not be revoked without the consent of the Thai Lenders, the
Trustees and the Debenture Trustee.
For the avoidance of doubt, references in this notice to the Project Document
shall be construed as references to the Project Document as the same may have
been or may from time to time be amended, novated or supplemented and shall
include any document which is supplemental to, is expressed to be related to or
is entered into pursuant to or in accordance with the terms of the Project
Document. Except as otherwise provided herein, all words and expressions in this
notice shall have the same respective meanings as described in the Conditional
Assignment.
Please acknowledge receipt of this notice and confirm your agreement to the
terms hereof and to the Conditional Assignment in the form of Acknowledgment
attached hereto (the "Acknowledgment") by duly executing and returning one copy
of the Acknowledgment to the Collateral Agent at The Chase Manhattan Bank,
Bubhajit Building, 20 North Sathorn Road, Bangkok 10500 and another copy to the
Assignor.
This notice and the Acknowledgment shall be governed by and construed in
accordance with the laws of the Kingdom of Thailand.
Yours faithfully,
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
as Assignor
By: /s/ Sawasdi Horrungruang
------------------------------
Title: Chairman
Page 23
<PAGE>
We confirm our agreement with the foregoing.
THE CHASE MANHATTAN BANK
as Collateral Agent
By:
-----------------------------
Name:
Title:
Attachment: Acknowledgement of the Counterparty
Page 24
<PAGE>
Part B
Acknowledgment and Agreement
To: THE CHASE MANHATTAN BANK
20 North Sathorn Road
Silom, Bangrak
Bangkok 10500
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
No. 9, UM Tower, 16th Floor
Kwaeng Suanluang, Khet Suanluang
Bangkok
We hereby acknowledge receipt of a notice of conditional assignment dated 12
March 1998, ("Notice of Conditional Assignment"), attaching a form of
Acknowledgment and Agreement. We now undertake and confirm to you that:
(i) we agree and consent to the terms of the Notice of Conditional Assignment;
(ii) we do not have, and will not make or exercise, any claims or demands, any
rights of counterclaim, rights of set-off or any other rights against the
Assignor in respect of the Project Documents;
(iii) we will give the Collateral Agent notice of any breach of the Project
Document by the Assignor as soon as we become aware of the same;
(iv) we have not received any other notice of assignment nor consented to any
other assignment of any rights or the transfer of obligations under the
Project Document;
(v) until the conditional assignment and transfer by way of novation of the
Project Document becomes effective, we regard the Assignor as liable to
perform all its obligations under the Project Document;
(vi) where a right to suspend our performance has arisen under the Project
Document, we will not exercise such right without first giving notice to
the Collateral Agent and allowing the Collateral Agent at least thirty
(30) days to remedy the situation, and we agree that if the Collateral
Agent remedies such situation within such period, we will continue to
perform our obligations under the Project Document;
(vii) where a right to terminate the Project Document has arisen thereunder, we
will not exercise such right without first giving notice to the Collateral
Agent and allowing the Collateral Agent at least thirty (30) days to
remedy the situation, and we agree that if the Collateral Agent remedies
such situation with such period, we will continue to perform our
obligations under the Project Document;
Page 25
<PAGE>
(viii) we shall not, without the Collateral Agent's written consent, agree to
or concur in any action of the Assignor which would contravene any terms
of the Project Document or the Conditional Assignment; and
(ix) we agree to the Collateral Agent or the Designee being substituted as a
party to the Project Document in the place of the Assignor, and that
such the substitution shall become effective and binding upon the
Collateral Agent and/or the Designee giving a Transfer Notice to us
confirming that the conditional assignment and transfer has become
effective, as provided in the Notice of Conditional Assignment.
Yours faithfully
- ---------------------------------
NSM McDONALD PARTNERSHIP
on behalf of NSM Management Co. LLC
12 March 1998
Page 26
<PAGE>
Part A
Notice of Conditional Assignment
12 March 1998
To: N.T.S. Group Public Company Limited
19th Floor, LUM Tower
9 Ramkhamhaeng Road
Suanluang
Bangkok 10250
Attention: Mr. Chamni Janchai
Dear Sirs:
We refer to the Shareholders' Agreement dated 12 March 1998 between Nakornthai
Strip Mill Public Company Limited (the "Assignor") and yourselves (the "Project
Document").
We hereby give you notice that pursuant to the Conditional Assignment of Project
Documents made between the Assignor, the Thai Lenders, the Trustees, the
Debenture Trustee and the Collateral Agent (each as defined therein) dated 12
March 1998 (the "Conditional Assignment") the Assignor conditionally assigned
all rights, title and interest in and to the Project Document and conditionally
transferred all of its obligations under the Project Document to the Collateral
Agent for the benefit of the Thai Lenders, holders of the Notes and the holders
of Debentures, and agreed that when such conditional assignment becomes
effective, the Thai Lenders, the holders of the Notes and the holders of
Debentures may substitute the Collateral Agent or its Designee as a party to the
Project Document in the place of the Assignor.
This substitution shall become effective and binding upon giving a Transfer
Notice (and until such time as such Transfer Notice is rescinded in accordance
with the terms of the Security Sharing Agreement) to you confirming that the
conditional assignment and transfer by way of novation has become effective (the
"Transfer and Novation").
Upon the Transfer and Novation the Collateral Agent or the Designee, as the case
may be, shall acquire all rights, title and interest in the Project Document
identical to those of the Assignor and shall assume obligations toward you
identical to those obligations owed by the Assignor to you under the Project
Document. Upon the Transfer and Novation, the Assignor shall cease to be
entitled to exercise such rights, title and interest but shall undertake to
remain, jointly and severally with the Collateral Agent or the Designee, liable
to perform such obligations. After delivery of such Transfer Notice all
references in the Project Document to the Assignor shall be deemed as references
to the Collateral Agent or the Designee, as the case may be. We hereby confirm
that you may rely conclusively upon any Transfer Notice, when duly issued and
delivered to you and that you shall not be concerned to inquire whether any
Event of Default (as defined in the Bank Credit Facility, the Indentures and the
Debenture Indenture, as the case may be) has happened upon which any of the
powers, authority and discretion conferred upon the Collateral Agent by or
Page 27
<PAGE>
pursuant to the Conditional Assignment in relation to the rights, title and
interests under and in respect of the Project Document or any part thereof is or
may be exercisable by the Collateral Agent or otherwise as to the
appropriateness of acts purporting or intended to be in exercise of any such
powers.
This notice may not be revoked without the consent of the Thai Lenders, the
Trustees and the Debenture Trustee.
For the avoidance of doubt, references in this notice to the Project Document
shall be construed as references to the Project Document as the same may have
been or may from time to time be amended, novated or supplemented and shall
include any document which is supplemental to, is expressed to be related to or
is entered into pursuant to or in accordance with the terms of the Project
Document. Except as otherwise provided herein, all words and expressions in this
notice shall have the same respective meanings as described in the Conditional
Assignment.
Please acknowledge receipt of this notice and confirm your agreement to the
terms hereof and to the Conditional Assignment in the form of Acknowledgment
attached hereto (the "Acknowledgment") by duly executing and returning one copy
of the Acknowledgment to the Collateral Agent at The Chase Manhattan Bank,
Bubhajit Building, 20 North Sathorn Road, Bangkok 10500 and another copy to the
Assignor.
This notice and the Acknowledgment shall be governed by and construed in
accordance with the laws of the Kingdom of Thailand.
Yours faithfully,
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
as Assignor
By: /s/ Sawasdi Horrungruang
--------------------------------
Title: Chairman
Page 28
<PAGE>
We confirm our agreement with the foregoing.
THE CHASE MANHATTAN BANK
as Collateral Agent
By:
-----------------------------
Name:
Title:
Attachment: Acknowledgement of the Counterparty
Page 29
<PAGE>
Part B
Acknowledgment and Agreement
To: THE CHASE MANHATTAN BANK
20 North Sathorn Road
Silom, Bangrak
Bangkok 10500
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
No. 9, UM Tower, 16th Floor
Kwaeng Suanluang, Khet Suanluang
Bangkok
We hereby acknowledge receipt of a notice of conditional assignment dated 12
March 1998, ("Notice of Conditional Assignment"), attaching a form of
Acknowledgment and Agreement. We now undertake and confirm to you that:
(i) we agree and consent to the terms of the Notice of Conditional Assignment;
(ii) we do not have, and will not make or exercise, any claims or demands, any
rights of counterclaim, rights of set-off or any other rights against the
Assignor in respect of the Project Documents;
(iii) we will give the Collateral Agent notice of any breach of the Project
Document by the Assignor as soon as we become aware of the same;
(iv) we have not received any other notice of assignment nor consented to any
other assignment of any rights or the transfer of obligations under the
Project Document;
(v) until the conditional assignment and transfer by way of novation of the
Project Document becomes effective, we regard the Assignor as liable to
perform all its obligations under the Project Document;
(vi) where a right to suspend our performance has arisen under the Project
Document, we will not exercise such right without first giving notice to
the Collateral Agent and allowing the Collateral Agent at least thirty
(30) days to remedy the situation, and we agree that if the Collateral
Agent remedies such situation within such period, we will continue to
perform our obligations under the Project Document;
(vii) where a right to terminate the Project Document has arisen thereunder, we
will not exercise such right without first giving notice to the Collateral
Agent and allowing the Collateral Agent at least thirty (30) days to
remedy the situation, and we agree that if the Collateral Agent remedies
such situation with such period, we will continue to perform our
obligations under the Project Document;
Page 30
<PAGE>
(viii)we shall not, without the Collateral Agent's written consent, agree to or
concur in any action of the Assignor which would contravene any terms of
the Project Document or the Conditional Assignment; and
(ix) we agree to the Collateral Agent or the Designee being substituted as a
party to the Project Document in the place of the Assignor, and that such
the substitution shall become effective and binding upon the Collateral
Agent and/or the Designee giving a Transfer Notice to us confirming that
the conditional assignment and transfer has become effective, as provided
in the Notice of Conditional Assignment.
Yours faithfully
- ----------------------------------
N.T.S. Group Public Company Limited
Page 31
<PAGE>
Part A
Notice of Conditional Assignment
12 March 1998
To: Khun Sawasdi Horrungruang
19th Floor, UM Tower
9 Ramkhamhaeng Road
Suanluang
Bangkok 10250
Dear Sirs:
We refer to the Shareholders' Agreement dated 12 March 1998 between Nakornthai
Strip Mill Public Company Limited (the "Assignor") and yourselves (the "Project
Document").
We hereby give you notice that pursuant to the Conditional Assignment of Project
Documents made between the Assignor, the Thai Lenders, the Trustees, the
Debenture Trustee and the Collateral Agent (each as defined therein) dated 12
March 1998 (the "Conditional Assignment") the Assignor conditionally assigned
all rights, title and interest in and to the Project Document and conditionally
transferred all of its obligations under the Project Document to the Collateral
Agent for the benefit of the Thai Lenders, holders of the Notes and the holders
of Debentures, and agreed that when such conditional assignment becomes
effective, the Thai Lenders, the holders of the Notes and the holders of
Debentures may substitute the Collateral Agent or its Designee as a party to the
Project Document in the place of the Assignor.
This substitution shall become effective and binding upon giving a Transfer
Notice (and until such time as such Transfer Notice is rescinded in accordance
with the terms of the Security Sharing Agreement) to you confirming that the
conditional assignment and transfer by way of novation has become effective (the
"Transfer and Novation").
Upon the Transfer and Novation the Collateral Agent or the Designee, as the case
may be, shall acquire all rights, title and interest in the Project Document
identical to those of the Assignor and shall assume obligations toward you
identical to those obligations owed by the Assignor to you under the Project
Document. Upon the Transfer and Novation, the Assignor shall cease to be
entitled to exercise such rights, title and interest but shall undertake to
remain, jointly and severally with the Collateral Agent or the Designee, liable
to perform such obligations. After delivery of such Transfer Notice all
references in the Project Document to the Assignor shall be deemed as references
to the Collateral Agent or the Designee, as the case may be.
We hereby confirm that you may rely conclusively upon any Transfer Notice, when
duly issued and delivered to you and that you shall not be concerned to inquire
whether any Event of Default (as defined in the Bank Credit Facility, the
Indentures and the Debenture Indenture, as the case may be) has happened upon
which any of the powers, authority and discretion conferred upon the Collateral
Agent by or pursuant to the Conditional Assignment in relation to the rights,
title and
Page 32
<PAGE>
interests under and in respect of the Project Document or any part thereof is or
may be exercisable by the Collateral Agent or otherwise as to the
appropriateness of acts purporting or intended to be in exercise of any such
powers.
This notice may not be revoked without the consent of the Thai Lenders, the
Trustees and the Debenture Trustee.
For the avoidance of doubt, references in this notice to the Project Document
shall be construed as references to the Project Document as the same may have
been or may from time to time be amended, novated or supplemented and shall
include any document which is supplemental to, is expressed to be related to or
is entered into pursuant to or in accordance with the terms of the Project
Document. Except as otherwise provided herein, all words and expressions in this
notice shall have the same respective meanings as described in the Conditional
Assignment.
Please acknowledge receipt of this notice and confirm your agreement to the
terms hereof and to the Conditional Assignment in the form of Acknowledgment
attached hereto (the "Acknowledgment") by duly executing and returning one copy
of the Acknowledgment to the Collateral Agent at The Chase Manhattan Bank,
Bubhajit Building, 20 North Sathorn Road, Bangkok 10500 and another copy to the
Assignor.
This notice and the Acknowledgment shall be governed by and construed in
accordance with the laws of the Kingdom of Thailand.
Yours faithfully,
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
as Assignor
By: /s/ Sawasdi Horrungruang
-------------------------------
Title: Chairman
Page 33
<PAGE>
We confirm our agreement with the foregoing.
THE CHASE MANHATTAN BANK
as Collateral Agent
By:
-----------------------------
Name:
Title:
Attachment: Acknowledgement of the Counterparty
Page 34
<PAGE>
Part B
Acknowledgment and Agreement
To: THE CHASE MANHATTAN BANK
20 North Sathorn Road
Silom, Bangrak
Bangkok 10500
NAKORNTRAI STRIP MILL PUBLIC COMPANY LIMITED
No. 9, UM Tower, 16th Floor
Kwaeng Suanluang, Khet Suanluang
Bangkok
We hereby acknowledge receipt of a notice of conditional assignment dated 12
March 1998, ("Notice of Conditional Assignment"), attaching a form of
Acknowledgment and Agreement. We now undertake and confirm to you that:
(i) we agree and consent to the terms of the Notice of Conditional Assignment;
(ii) we do not have, and will not make or exercise, any claims or demands, any
rights of counterclaim, rights of set-off or any other rights against the
Assignor in respect of the Project Documents;
(iii) we will give the Collateral Agent notice of any breach of the Project
Document by the Assignor as soon as we become aware of the same;
(iv) we have not received any other notice of assignment nor consented to any
other assignment of any rights or the transfer of obligations under the
Project Document;
(v) until the conditional assignment and transfer by way of novation of the
Project Document becomes effective, we regard the Assignor as liable to
perform all its obligations under the Project Document;
(vi) where a right to suspend our performance has arisen under the Project
Document, we will not exercise such right without first giving notice to
the Collateral Agent and allowing the Collateral Agent at least thirty
(30) days to remedy the situation, and we agree that if the Collateral
Agent remedies such situation within such period, we will continue to
perform our obligations under the Project Document;
(vii) where a right to terminate the Project Document has arisen thereunder, we
will not exercise such right without first giving notice to the Collateral
Agent and allowing the Collateral Agent at least thirty (30) days to
remedy the situation, and we agree that if the Collateral Agent remedies
such situation with such period, we will continue to perform our
obligations under the Project Document;
Page 35
<PAGE>
(viii)we shall not, without the Collateral Agent's written consent, agree to or
concur in any action of the Assignor which would contravene any terms of
the Project Document or the Conditional Assignment; and
(ix) we agree to the Collateral Agent or the Designee being substituted as a
party to the Project Document in the place of the Assignor, and that such
the substitution shall become effective and binding upon the Collateral
Agent and/or the Designee giving a Transfer Notice to us confirming that
the conditional assignment and transfer has become effective, as provided
in the Notice of Conditional Assignment.
Yours faithfully
- -------------------------------
Khun Sawasdi Horrungruang
12 March 1998
Page 36
<PAGE>
Part A
Notice of Conditional Assignment
12 March 1998
To: Steel Dynamics, Inc.
4500 Country Road 59
Butler, IN 46721
Attention: Mr. Keith E. Busse
President
Dear Sirs:
We refer to the SDI Management Agreement dated 12 March 1998 between Nakornthai
Strip Mill Public Company Limited (the "Assignor") and yourselves (the "Project
Document").
We hereby give you notice that pursuant to the Conditional Assignment of Project
Documents made between the Assignor, the Thai Lenders, the Trustees, the
Debenture Trustee and the Collateral Agent (each as defined therein) dated 12
March 1998 (the "Conditional Assignment") the Assignor conditionally assigned
all rights, title and interest in and to the Project Document and conditionally
transferred all of its obligations under the Project Document to the Collateral
Agent for the benefit of the Thai Lenders, holders of the Notes and the holders
of Debentures, and agreed that when such conditional assignment becomes
effective, the Thai Lenders, the holders of the Notes and the holders of
Debentures may substitute the Collateral Agent or its Designee as a party to the
Project Document in the place of the Assignor.
This substitution shall become effective and binding upon giving a Transfer
Notice (and until such time as such Transfer Notice is rescinded in accordance
with the terms of the Security Sharing Agreement) to you confirming that the
conditional assignment and transfer by way of novation has become effective (the
"Transfer and Novation").
Upon the Transfer and Novation the Collateral Agent or the Designee, as the case
may be, shall acquire all rights, title and interest in the Project Document
identical to those of the Assignor and shall assume obligations toward you
identical to those obligations owed by the Assignor to you under the Project
Document. Upon the Transfer and Novation, the Assignor shall cease to be
entitled to exercise such rights, title and interest but shall undertake to
remain, jointly and severally with the Collateral Agent or the Designee, liable
to perform such obligations. After delivery of such Transfer Notice all
references in the Project Document to the Assignor shall be deemed as references
to the Collateral Agent or the Designee, as the case may be.
We hereby confirm that you may rely conclusively upon any Transfer Notice, when
duly issued and delivered to you and that you shall not be concerned to inquire
whether any Event of Default (as defined in the Bank Credit Facility, the
Indentures and the Debenture Indenture, as the case may be) has happened upon
which any of the powers, authority and discretion conferred upon the
Page 37
<PAGE>
Collateral Agent by or pursuant to the Conditional Assignment in relation to the
rights, title and interests under and in respect of the Project Document or any
part thereof is or may be exercisable by the Collateral Agent or otherwise as to
the appropriateness of acts purporting or intended to be in exercise of any such
powers.
This notice may not be revoked without the consent of the Thai Lenders, the
Trustees and the Debenture Trustee.
For the avoidance of doubt, references in this notice to the Project Document
shall be construed as references to the Project Document as the same may have
been or may from time to time be amended, novated or supplemented and shall
include any document which is supplemental to, is expressed to be related to or
is entered into pursuant to or in accordance with the terms of the Project
Document. Except as otherwise provided herein, all words and expressions in this
notice shall have the same respective meanings as described in the Conditional
Assignment.
Please acknowledge receipt of this notice and confirm your agreement to the
terms hereof and to the Conditional Assignment in the form of Acknowledgment
attached hereto (the "Acknowledgment") by duly executing and returning one copy
of the Acknowledgment to the Collateral Agent at The Chase Manhattan Bank,
Bubhajit Building, 20 North Sathorn Road, Bangkok 10500 and another copy to the
Assignor.
This notice and the Acknowledgment shall be governed by and construed in
accordance with the laws of the Kingdom of Thailand.
Yours faithfully,
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
as Assignor
By: /s/ Sawasdi Horrungruang
------------------------------
Title: Chairman
Page 38
<PAGE>
We confirm our agreement with the foregoing.
THE CHASE MANHATTAN BANK
as Collateral Agent
By:
-----------------------------
Name:
Title:
Attachment: Acknowledgement of the Counterparty
Page 39
<PAGE>
Part B
Acknowledgment and Agreement
To: THE CHASE MANHATTAN BANK
20 North Sathorn Road
Silom, Bangrak
Bangkok 10500
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
No. 9, UM Tower, 16th Floor
Kwaeng Suanluang, Khet Suanluang
Bangkok,
We hereby acknowledge receipt of a notice of conditional assignment dated 12
March 1998, ("Notice of Conditional Assignment"), attaching a form of
Acknowledgment and Agreement. We now undertake and confirm to you that:
(i) we agree and consent to the terms of the Notice of Conditional Assignment;
(ii) we do not have, and will not make or exercise, any claims or demands, any
rights of counterclaim, rights of set-off or any other rights against the
Assignor in respect of the Project Documents;
(iii) we will give the Collateral Agent notice of any breach of the Project
Document by the Assignor as soon as we become aware of the same;
(iv) we have not received any other notice of assignment nor consented to any
other assignment of any rights or the transfer of obligations under the
Project Document;
(v) until the conditional assignment and transfer by way of novation of the
Project Document becomes effective, we regard the Assignor as liable to
perform all its obligations under the Project Document;
(vi) where a right to suspend our performance has arisen under the Project
Document, we will not exercise such right without first giving notice to
the Collateral Agent and allowing the Collateral Agent at least thirty
(30) days to remedy the situation, and we agree that if the Collateral
Agent remedies such situation within such period, we will continue to
perform our obligations under the Project Document;
(vii) where a right to terminate the Project Document has arisen thereunder, we
will not exercise such right without first giving notice to the Collateral
Agent and allowing the Collateral Agent at least thirty (30) days to
remedy the situation, and we agree that if the Collateral Agent remedies
such situation with such period, we will continue to perform our
obligations under the Project Document;
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(viii)we shall not, without the Collateral Agent's written consent, agree to or
concur in any action of the Assignor which would contravene any terms of
the Project Document or the Conditional Assignment; and
(ix) we agree to the Collateral Agent or the Designee being substituted as a
party to the Project Document in the place of the Assignor, and that such
the substitution shall become effective and binding upon the Collateral
Agent and/or the Designee giving a Transfer Notice to us confirming that
the conditional assignment and transfer has become effective, as provided
in the Notice of Conditional Assignment.
Yours faithfully
- -----------------------------
Steel Dynamics, Inc.
12 March 1998
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EXHIBIT 3
Form of Transfer Notice
To: (1) Nakornthai Strip Mill Public Company Limited
No. 9, UM Tower, 16th Floor
Kwaeng Suanluang, Khet Suanluang
Bangkok, Thailand
(2) Steel Dynamics, Inc.
4500 Country Road 59
Butler, IN 46721
Attention: Mr. Keith E. Busse
President
Dear Sirs,
We refer to:
(a) the SDI Management Agreement dated [12 March 1998] (the "Relevant
Agreement") between Nakornthai Strip Mill Public Company Limited (the
"Assignor") and Steel Dynamics, Inc. in respect of [.];
(b) the Conditional Assignment of Project Document dated 12 March 1998 between
the Assignor and the Thai Lenders, the Trustees, the Debenture Trustee and
the Collateral Agent (the "Conditional Assignment of Project Documents");
and
(c) the Notice of Conditional Assignment dated 12 March 1998 given by the
Assignor to Steel Dynamics, Inc. in respect of the Conditional Assignment
of Project Document and Steel Dynamics, Inc. acknowledgment thereof
dated[.]
Words and expressions defined or referred to in the Conditional Assignment of
Project Document shall, unless the context otherwise requires, have the same
meanings when used herein.
We have received a Notice of an Actionable Default (as defined in the Security
Sharing Agreement) and we have been directed to deliver this Transfer Notice in
accordance with the provisions of Section 4 of the Security Sharing Agreement.
We hereby give you notice confirming that the conditional assignment and
transfer by way of novation of the Relevant Agreement became effective on the
date hereof.
We confirm that this Transfer Notice is delivered pursuant to Clause 2.1 of the
Conditional Assignment of Project Documents. In accordance with terms thereof,
we hereby are substituted as the party to the Relevant Agreement in place of the
Assignor and we hereby acquire rights and title under and interests in the
Relevant Agreement identical to those of the Assignor at the date hereof under
the Relevant Agreement. We hereby assume all obligations towards Steel Dynamics,
Inc. identical to the obligations owed by Assignor as of the date hereof to
Steel Dynamics,
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Inc. under the Relevant Agreement and the Assignor will cease to be entitled to
exercise such rights, but shall undertake to remain, jointly and severally with
us, liable to perform all obligations under the Relevant Agreement. With effect
from the date hereof all references in the Relevant Agreement to the Assignor
shall be deemed as references to us.
This Transfer Notice and the rights and obligation of the parties hereunder
shall be governed by and construed in accordance with the law of the Kingdom of
Thailand.
Yours faithfully,
[Collateral Agent/Designee]
for and on behalf of the Thai Lenders,
the Trustees and the Debenture Trustee
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Part A
Notice of Conditional Assignment
12 March 1998
To: McDonald & Company Securities, Inc.
800 Superior Avenue
Cleveland, OH 44114
Attention: Mr. David Stickler Managing Director
Dear Sirs:
We refer to the SDI Management Agreement dated 12 March 1998 between Nakornthai
Strip Mill Public Company Limited (the "Assignor") and yourselves
(the "Project Document").
We hereby give you notice that pursuant to the Conditional Assignment of Project
Documents made between the Assignor, the Thai Lenders, the Trustees, the
Debenture Trustee and the Collateral Agent (each as defined therein) dated 12
March 1998 (the "Conditional Assignment") the Assignor conditionally assigned
all rights, title and interest in and to the Project Document and conditionally
transferred all of its obligations under the Project Document to the Collateral
Agent for the benefit of the Thai Lenders, holders of the Notes and the holders
of Debentures, and agreed that when such conditional assignment becomes
effective, the Thai Lenders, the holders of the Notes and the holders of
Debentures may substitute the Collateral Agent or its Designee as a party to the
Project Document in the place of the Assignor.
This substitution shall become effective and binding upon giving a Transfer
Notice (and until such time as such Transfer Notice is rescinded in accordance
with the terms of the Security Sharing Agreement) to you confirming that the
conditional assignment and transfer by way of novation has become effective (the
"Transfer and Novation").
Upon the Transfer and Novation the Collateral Agent or the Designee, as the case
may be, shall acquire all rights, title and interest in the Project Document
identical to those of the Assignor and shall assume obligations toward you
identical to those obligations owed by the Assignor to you under the Project
Document. Upon the Transfer and Novation, the Assignor shall cease to be
entitled to exercise such rights, title and interest but shall undertake to
remain, jointly and severally with the Collateral Agent or the Designee, liable
to perform such obligations. After delivery of such Transfer Notice all
references in the Project Document to the Assignor shall be deemed as references
to the Collateral Agent or the Designee, as the case may be.
We hereby confirm that you may rely conclusively upon any Transfer Notice, when
duly issued and delivered to you and that you shall not be concerned to inquire
whether any Event of Default (as defined in the Bank Credit Facility, the
Indentures and the Debenture Indenture, as the case may be) has happened upon
which any of the powers, authority and discretion conferred upon the Collateral
Agent by or pursuant to the Conditional Assignment in relation to the rights,
title and
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interests under and in respect of the Project Document or any part thereof is or
may be exercisable by the Collateral Agent or otherwise as to the
appropriateness of acts purporting or intended to be in exercise of any such
powers.
This notice may not be revoked without the consent of the Thai Lenders, the
Trustees and the Debenture Trustee.
For the avoidance of doubt, references in this notice to the Project Document
shall be construed as references to the Project Document as the same may have
been or may from time to time be amended, novated or supplemented and shall
include any document which is supplemental to, is expressed to be related to or
is entered into pursuant to or in accordance with the terms of the Project
Document, Except as otherwise provided herein, all words and expressions in this
notice shall have the same respective meanings as described in the Conditional
Assignment.
Please acknowledge receipt of this notice and confirm agreement to the terms
hereof and to the Conditional Assignment in the form of Acknowledgment attached
hereto (the "Acknowledgment") by duly executing and returning one copy of the
Acknowledgment to the Collateral Agent at The Chase Manhattan Bank, Bubhajit
Building, 20 North Sathorn Road, Bangkok 10500 and another copy to the Assignor.
This notice and the Acknowledgment shall be governed by and construed in
accordance with the laws of the Kingdom of Thailand.
Yours faithfully,
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMTED
as Assignor
By: /s/ Sawasdi Horrungruang
------------------------------
Title: Chairman
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We confirm our agreement with the foregoing.
THE CHASE MANHATTAN BANK
as Collateral Agent
By:
----------------------------
Name:
Title:
Attachment: Acknowledgement of the Counterparty
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Part B
Acknowledgment and Agreement
To: THE CHASE MANHATTAN BANK
20 North Sathorn Road
Silom, Bangrak
Bangkok 10500
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
No. 9, UM Tower, 16th Floor
Kwaeng Suanluang, Khet Suanluang
Bangkok
We hereby acknowledge receipt of a notice of conditional assignment dated 12
March 1998, ("Notice of Conditional Assignment"), attaching a form of
Acknowledgment and Agreement. We now undertake and confirm to you that:
(i) we agree and consent to the terms of the Notice of Conditional Assignment;
(ii) we do not have, and will not make or exercise, any claims or demands, any
rights of counterclaim, rights of set-off or any other rights against the
Assignor in respect of the Project Documents;
(iii) we will give the Collateral Agent notice of any breach of the Project
Document by the Assignor as soon as we become aware of the same;
(iv) we have not received any other notice of assignment nor consented to any
other assignment of any rights or the transfer of obligations under the
Project Document;
(v) until the conditional assignment and transfer by way of novation of the
Project Document becomes effective, we regard the Assignor as liable to
perform all its obligations under the Project Document;
(vi) where a right to suspend our performance has arisen under the Project
Document, we will not exercise such right without first giving notice to
the Collateral Agent and allowing the Collateral Agent at least thirty
(30) days to remedy the situation, and we agree that if the Collateral
Agent remedies such situation within such period, we will continue to
perform our obligations under the Project Document;
(vii) where a right to terminate the Project Document has arisen thereunder, we
will not exercise such right without first giving notice to the Collateral
Agent and allowing the Collateral Agent at least thirty (30) days to
remedy the situation, and we agree that if the Collateral Agent remedies
such situation with such period, we will continue to perform our
obligations under the Project Document.
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(viii)we shall not, without the Collateral Agent's written consent, agree to or
concur in any action of the Assignor which would contravene any terms of
the Project Document or the Conditional Assignment; and
(ix) we agree to the Collateral Agent or the Designee being substituted as a
party to the Project Document in the place of the Assignor, and that such
the substitution shall become effective and binding upon the Collateral
Agent and/or the Designee giving a Transfer Notice to us confirming that
the conditional assignment and transfer has become effective, as provided
in the Notice of Conditional Assignment.
Yours faithfully
- -----------------------------------
McDonald & Company Securities, Inc.
12 March 1998
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EXHIBIT 3
Form of Transfer Notice
To: (1) Nakornthai Strip Mill Public Company Limited
No. 9, UM Tower, 16th Floor
Kwaeng Suanluang, Khet Suanluang
Bangkok, Thailand
(2) McDonald & Company Securities, Inc.
800 Superior Avenue
Cleveland, OH 44114
Attention: Mr. David Stickler
Managing Director
Dear Sirs,
We refer to:
(a) the SDI Management Agreement dated [12 March 1998] (the "Relevant
Agreement") between Nakornthai Strip Mill Public Company Limited (the
"Assignor") and McDonald & Company Securities, Inc. in respect of [.];
(b) the Conditional Assignment of Project Document dated 12 March 1998 between
the Assignor and the Thai Lenders, the Trustees, the Debenture Trustee and
the Collateral Agent (the "Conditional Assignment of Project Documents");
and
(c) the Notice of Conditional Assignment dated 12 March 1998 given by the
Assignor to McDonald & Company Securities, Inc. in respect of the
Conditional Assignment of Project Document and McDonald & Company
Securities, Inc. acknowledgment thereof dated [.].
Words and expressions defined or referred to in the Conditional Assignment of
Project Document shall, unless the context otherwise requires, have the same
meanings when used herein.
We have received a Notice of an Actionable Default (as defined in the Security
Sharing Agreement) and we have been directed to deliver this Transfer Notice in
accordance with the provisions of Section 4 of the Security Sharing Agreement.
We hereby give you notice confirming that the conditional assignment and
transfer by way of novation of the Relevant Agreement became effective on the
date hereof.
We confirm that this Transfer Notice is delivered pursuant to Clause 2.1 of the
Conditional Assignment of Project Documents. In accordance with terms thereof,
we hereby are substituted as the party to the Relevant Agreement in place of the
Assignor and we hereby acquire rights and title under and interests in the
Relevant Agreement identical to those of Assignor at the date hereof under the
Relevant Agreement. We hereby assume all obligations towards McDonald &
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Company Securities, Inc. identical to the obligations owned by Assignor as of
the date hereof to McDonald & Company Securities, Inc. under the Relevant
Agreement and the Assignor will cease to be entitled to exercise such rights,
but shall undertake remain, jointly and severally with us, liable to perform all
obligations under the Relevant Agreement. With effect from the date hereof all
references in the Relevant Agreement to Assignor shall be deemed as references
to us.
This Transfer Notice and the rights and obligation of the parties hereunder
shall be by and construed in accordance with the law of the Kingdom of Thailand.
Yours faithfully
[Collateral Agent/Designee]
for and on behalf of the Thai Lenders
the Trustees and the Debenture Trustee
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Part A
Notice of Conditional Assignment
12 March 1998
To: Klockner Stahl-Und Metallhandel Gmbh
Neudorter Str. 3-5
D-47057 Dulsburg
Attention: Mr. R. Reinckel/
Mr. D. Frenzel
Dear Sirs:
We refer to the Klockner Off-Take Agreement dated 12 March 1998 between
Nakornthai Strip Mill Public Company Limited (the "Assignor") and yourselves
(the "Project Document").
We hereby give you notice that pursuant to the Conditional Assignment of Project
Documents made between the Assignor, the Thai Lenders, the Trustees, the
Debenture Trustee and the Collateral Agent (each as defined therein) dated 12
March 1998 (the "Conditional Assignment") the Assignor conditionally assigned
all rights, title and interest in and to the Project Document and conditionally
transferred all of its obligations under the Project Document to the Collateral
Agent for the benefit of the Thai Lenders, holders of the Notes and the holders
of Debentures, and agreed that when such conditional assignment becomes
effective, the Thai Lenders, the holders of the Notes and the holders of
Debentures may substitute the Collateral Agent or its Designee as a party to the
Project Document in the place of the Assignor.
This substitution shall become effective and binding upon giving a Transfer
Notice (and until such time as such Transfer Notice is rescinded in accordance
with the terms of the Security Sharing Agreement) to you confirming that the
conditional assignment and transfer by way of novation has become effective (the
"Transfer and Novation").
Upon the Transfer and Novation the Collateral Agent or the Designee, as the case
may be, shall acquire all rights, title and interest in the Project Document
identical to those of the Assignor and shall assume obligations toward you
identical to those obligations owed by the Assignor to you under the Project
Document. Upon the Transfer and Novation, the Assignor shall cease to be
entitled to exercise such rights, title and interest but shall undertake to
remain, jointly and severally with the Collateral Agent or the Designee, liable
to perform such obligations. After delivery of such Transfer Notice all
references in the Project Document to the Assignor shall be deemed as references
to the Collateral Agent or the Designee, as the case may be.
We hereby confirm that you may rely conclusively upon any Transfer Notice, when
duly issued and delivered to you and that you shall not be concerned to inquire
whether any Event of Default (as defined in the Bank Credit Facility, the
Indentures and the Debenture Indenture, as the case may be) has happened upon
which any of the powers, authority and discretion conferred upon
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the Collateral Agent by or pursuant to the Conditional Assignment in relation to
the rights, title and interests under and in respect of the Project Document or
any part thereof is or may be exercisable by the Collateral Agent or otherwise
as to the appropriateness of acts purporting or intended to be in exercise of
any such powers.
This notice may not be revoked without the consent of the Thai Lenders, the
Trustees and the Debenture Trustee.
For the avoidance of doubt, references in this notice to the Project Document
shall be construed as references to the Project Document as the same may have
been or may from time to time be amended, novated or supplemented and shall
include any, document which is supplemental to, is expressed to be related to or
is entered into pursuant to or in accordance with the terms of the Project
Document. Except as otherwise provided herein, all words and expressions in this
notice shall have the same respective meanings as described in the Conditional
Assignment.
Please acknowledge receipt of this notice and confirm your agreement to the
terms hereof and to the Conditional Assignment in the form of Acknowledgment
attached hereto (the "Acknowledgment") by duly executing and returning one copy
of the Acknowledgment to the Collateral Agent at The Chase Manhattan Bank,
Bubhajit Building, 20 North Sathorn Road, Bangkok 10500 and another copy to the
Assignor.
This notice and the Acknowledgment shall be governed by and construed in
accordance with the laws of the Kingdom of Thailand.
Yours faithfully,
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
as Assignor
By: /s/ Sawasdi Horrungruang
-----------------------------
Title: Chairman
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We confirm our agreement with the foregoing.
THE CHASE MANHATTAN BANK
as Collateral Agent
By:
----------------------------
Name:
Title:
Attachment: Acknowledgment of the Counterparty
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Part B
Acknowledgment and Agreement
To: THE CHASE MANHATTAN BANK
20 North Sathorn Road
Silom, Bangrak
Bangkok 10500
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
No. 9, UM Tower, 16TH Floor
Kwaeng Suanluang, Khet Suanluang
Bangkok
We hereby acknowledge receipt of a notice of conditional assignment dated 12
March 1998, ("Notice of Conditional Assignment"), attaching a form of
Acknowledgment and Agreement. We now undertake and confirm to you that:
(i) we agree and consent to the terms of the Notice of Conditional Assignment;
(ii) we do not have, and will not make or exercise, any claims or demands, any
rights of counterclaim, rights of set-off or any other rights against the
Assignor in respect of the Project Documents;
(iii) we will give the Collateral Agent notice of any breach of the Project
Document by the Assignor as soon as we become aware of the same;
(iv) we have not received any other notice of assignment nor consented to any
other assignment of any rights or the transfer of obligations under the
Project Document;
(v) until the conditional assignment and transfer by way of novation of the
Project Document becomes effective, we regard the Assignor as liable to
perform all its obligations under the Project Document;
(vi) where a right to suspend our performance has arisen under the Project
Document, we will not exercise such right without first giving notice to
the Collateral Agent and allowing the Collateral Agent at least thirty
(30) days to remedy the situation, and we agree that if the Collateral
Agent remedies such situation within such period, we will continue to
perform our obligations under the Project Document;
(vii) where a right to terminate the Project Document has arisen thereunder, we
will not exercise such right without first giving notice to the Collateral
Agent and allowing the Collateral Agent at least thirty (30) days to
remedy the situation, and we agree that if the Collateral Agent remedies
such situation within such period, we will continue to perform our
obligations under the Project Document;
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(viii)we shall not, without the Collateral Agent's written consent, agree to or
concur in any action of the Assignor which would contravene any terms of
the Project Document or the Conditional Assignment; and
(ix) we agree to the Collateral Agent or the Designee being substituted as a
party to the Project Document in the place of the Assignor, and that such
the substitution shall become effective and, binding upon the Collateral
Agent and/or the Designee giving a Transfer Notice to us confirming that
the conditional assignment and transfer has become effective, as provided
in the Notice of Conditional Assignment.
Yours faithfully
- -------------------------------------
Klockner Stahl-Und Metallhandel Gmbh
12 March 1998
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EXHIBIT 3
Form of Transfer Notice
To: (1) Nakornthai Strip Mill Public Company Limited
No. 9, UM Tower, 16th Floor
Kwaeng Suanluang, Khet Suanluang
Bangkok, Thailand
(2) Klocklner Stahl-Und Metallhandel Gmbh
Neudorter Str. 3-5
D-47057 Dulsburg
Attention: Mr. R. Reinckel/
Mr. D. Frenzel
Dear Sirs,
We refer to:
(a) the Klockner Off-Take Agreement dated [12 March 1998] (the "Relevant
Agreement") between Nakornthai Strip Mill Public Company Limited (the
"Assignor") and Klockner Stahl-Und Metallhandel Gmbh in respect of [.];
(b) the Conditional Assignment of Project Document dated 12 March 1998 between
the Assignor and the Thai Lenders, the Trustees, the Debenture Trustee and
the Collateral Agent (the "Conditional Assignment of Project Documents");
and
(c) the Notice of Conditional Assignment dated 12 March 1998 given by the
Assignor to Klockner Stahl-Und Metallhandel Gmbh in respect of the
Conditional Assignment of Project Document and Klockner Stahl-Und
Metallhandel Gmbh acknowledgment thereof dated [.].
Words and expressions defined or referred to in the Conditional Assignment of
Project Document shall, unless the context otherwise requires, have the same
meanings when used herein.
We have received a Notice of an Actionable Default (as defined in the Security
Sharing Agreement) and we have been directed to deliver this Transfer Notice in
accordance with the provisions of Section 4 of the Security Sharing Agreement.
We hereby give you notice confirming that the conditional assignment and
transfer by way of novation of the Relevant Agreement became effective on the
date hereof.
We confirm that this Transfer Notice is delivered pursuant to Clause 2.1 of the
Conditional Assignment of Project Documents. In accordance with terms thereof,
we hereby are substituted as the party to the Relevant Agreement in place of the
Assignor and we hereby acquire rights and title under and interests in the
Relevant Agreement identical to those of the Assignor at the date
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hereof under the Relevant Agreement. We hereby assume all obligations towards
Klockner Stahl-Und Metallhandel Gmbh identical to the obligations owned by
Assignor as of the date hereof to Klockner Stahl-Und Metallhandel Gmbh under the
Relevant Agreement and the Assignor will cease to be entitled to exercise such
rights, but shall undertake to remain, jointly and severally with us, liable to
perform all obligations under the Relevant Agreement. With effect from the date
hereof all references in the Relevant Agreement to the Assignor shall be deemed
as references to us.
This Transfer Notice and the rights and obligation of the parties hereunder
shall be governed by and construed in accordance with the law of the Kingdom of
Thailand.
Yours faithfully,
[Collateral Agent/Designee]
for and on behalf of the Thai Lenders,
the Trustees and the Debenture Trustee
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Part A
Notice of Conditional Assignment
12 March 1998
To: Preussag Handel Gmbh
Schwannstr. 12 D-40476
Dusseldorf Germany
Attention: Mr. K. Thomas/
Mr. S. Muller
Dear Sirs:
We refer to the Preussag Off-Take Agreement dated 12 March 1998 between
Nakornthai Strip Mill Public Company Limited (the "Assignor") and yourselves
(the "Project Document").
We hereby give you notice that pursuant to the Conditional Assignment of Project
Documents made between the Assignor, the Thai Lenders, the Trustees, the
Debenture Trustee and the Collateral Agent (each as defined therein) dated 12
March 1998 (the "Conditional Assignment") the Assignor conditionally assigned
all rights, title and interest in and to the Project Document and conditionally
transferred all of its obligations under the Project Document to the Collateral
Agent for the benefit of the Thai Lenders, holders of the Notes and the holders
of Debentures, and agreed that when such conditional assignment becomes
effective, the Thai Lenders, the holders of the Notes and the holders of
Debentures may substitute the Collateral Agent or its Designee as a party to the
Project Document in the place of the Assignor.
This substitution shall become effective and binding upon giving a Transfer
Notice (and until such time as such Transfer Notice is rescinded in accordance
with the terms of the Security Sharing Agreement) to you confirming that the
conditional assignment and transfer by way of novation has become effective (the
"Transfer and Novation").
Upon the Transfer and Novation the Collateral Agent or the Designee, as the case
may be, shall acquire all rights, title and interest in the Project Document
identical to those of the Assignor and shall assume obligations toward you
identical to those obligations owed by the Assignor to you under the Project
Document. Upon the Transfer and Novation, the Assignor shall cease to be
entitled to exercise such rights, title and interest but shall undertake to
remain, jointly and severally with the Collateral Agent or the Designee, liable
to perform such obligations. After delivery of such Transfer Notice all
references in the Project Document to the Assignor shall be deemed as references
to the Collateral Agent or the Designee, as the case may be.
We hereby confirm that you may rely conclusively upon any Transfer Notice, when
daily issued and delivered to you and that you shall not be concerned to inquire
whether any Event of Default (as defined in the Bank Credit Facility, the
Indentures and the Debenture Indenture, as the case
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<PAGE>
may be) has happened upon which any of the powers, authority and discretion
conferred upon the Collateral Agent by or pursuant to the Conditional Assignment
in relation to the rights, title and interests under and in respect of the
Project Document or any part thereof is or may be exercisable by the Collateral
Agent or otherwise as to the appropriateness of acts purporting or intended to
be in exercise of any such powers.
This notice may not be revoked without the consent of the Thai Lenders, the
Trustees and the Debenture Trustee.
For the avoidance of doubt, references in this notice to the Project Document
shall be construed as references to the Project Document as the same may have
been or may from time to time be amended, novated or supplemented and shall
include any document which is supplemental to, is expressed to be related to or
is entered into pursuant to or in accordance with the terms of the Project
Document. Except as otherwise provided herein, all words and expressions in this
notice shall have the same respective meanings as described in the Conditional
Assignment.
Please acknowledge receipt of this notice and confirm your agreement to the term
hereof and to the Conditional Assignment in the form of Acknowledgment attached
hereto (the "Acknowledgment") by duly executing and returning one copy of the
Acknowledgment to the Collateral Agent at The Chase Manhattan Bank, Bubhajit
Building, 20 North Sathorn Road, Bangkok 10500 and another copy, to the
Assignor.
This notice and the Acknowledgment shall be governed by and construed in
accordance with the laws of the Kingdom of Thailand.
Yours faithfully,
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
as Assignor
By: /s/ Sawasdi Horrungruang
-----------------------------
Title: Chairman
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We confirm our agreement with the foregoing.
THE CHASE MANHATTAN BANK
as Collateral Agent
By:
----------------------------
Name:
Title:
Attachment: Acknowledgement of the Counterparty
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Part B
Acknowledgment and Agreement
To: THE CHASE MANHATTAN BANK
20 North Sathorn Road
Silom, Bangrak
Bangkok 10500
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
No. 9, UM Tower, 16th Floor
Kwaeng Suanluang, Khet Suanluang
Bangkok
We hereby acknowledge receipt of a notice of conditional assignment dated 12
March 1998, ("Notice of Conditional Assignment"), attaching a form of
Acknowledgment and Agreement. We now undertake and confirm to you that:
(i) we agree and consent to the terms of the Notice of Conditional Assignment;
(ii) we do not have, and will not make or exercise, any claims or demands, any
rights of counterclaim, rights of set-off or any other rights against the
Assignor in respect of the Project Documents;
(iii) we will give the Collateral Agent notice of any breach of the Project
Document by the Assignor as soon as we become aware of the same;
(iv) we have not received any other notice of assignment nor consented to any
other assignment of any rights or the transfer of obligations under the
Project Document;
(v) until the conditional assignment and transfer by way of novation of the
Project Document becomes effective, we regard the Assignor as liable to
perform all its obligations under the Project Document;
(vi) where a right to suspend our performance has arisen under the Project
Document, we will not exercise such right without first giving notice to
the Collateral Agent and allowing the Collateral Agent at least thirty
(30) days to remedy the situation, and we agree that if the Collateral
Agent remedies such situation within such period, we will continue to
perform our obligations under the Project Document;
(vii) where a right to terminate the Project Document has arisen thereunder, we
will not exercise such right without first giving notice to the Collateral
Agent and allowing the Collateral Agent at least thirty (30) days to
remedy the situation, and we agree that if the
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<PAGE>
Collateral Agent remedies such situation within such period, we will
continue to perform our obligations under the Project Document;
(viii)we shall not, without the Collateral Agent's written consent, agree to or
concur in any action of the Assignor which would contravene any terms of
the Project Document or the Conditional Assignment; and
(ix) we agree to the Collateral Agent or the Designee being substituted as a
party to the Project Document in the place of the Assignor, and that such
the substitution shall become effective and binding upon the Collateral
Agent and/or the Designee giving a Transfer Notice to us confirming that
the conditional assignment and transfer has become effective, as provided
in the Notice of Conditional Assignment.
Yours faithfully
- ------------------------------
Preussag Handel Gmbh
12 March 1998
Page 62
<PAGE>
EXHIBIT 3
Form of Transfer Notice
To: (1) Nakornthai Strip Mill Public Company Limited
No. 9, UM Tower, 16th Floor
Kwaeng Suanluang, Khet Suanluang
Bangkok, Thailand
(2) Preussag Handel Gmbh
Schwannstr. 12
D-40476 Dusseldorf Germany
Attention: Mr. K. Thomas/
Mr. S. Muller
Dear Sirs,
We refer to:
(a) the Klockner Off-Take Agreement dated [12 March 1998] (the "Relevant
Agreement") between Nakornthai Strip Mill Public Company Limited (the
"Assignor") and Preussag Handel Gmbh in respect of [.]-
(b) the Conditional Assignment of Project Document dated 12 March 1998 between
the Assignor and the Thai Lenders, the Trustees, the Debenture Trustee and
the Collateral Agent (the "Conditional Assignment of Project Documents");
and
(c) the Notice of Conditional Assignment dated 12 March 1998 given by the
Assignor to Preussag Handel Gmbh in respect of the Conditional Assignment
of Project Document and Preussag Handel Gmbh acknowledgment thereof dated
[.].
Words and expressions defined or referred to in the Conditional Assignment of
Project Document shall, unless the context otherwise requires, have the same
meanings when used herein.
We have received a Notice of an Actionable Default (as defined in the Security
Sharing Agreement) and we have been directed to deliver this Transfer Notice in
accordance with the provisions of Section 4 of the Security Sharing Agreement.
We hereby give you notice confirming that the conditional assignment and
transfer by way of novation of the Relevant Agreement became effective on the
date hereof.
We confirm that this Transfer Notice is delivered pursuant to Clause 2.1 of the
Conditional Assignment of Project Documents. In accordance with terms thereof,
we hereby are substituted
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<PAGE>
as the party to the Relevant Agreement in place of the Assignor and we hereby
acquire rights and title under and interests in the Relevant Agreement identical
to those of the Assignor at the date hereof tinder the Relevant Agreement. We
hereby assume all obligations towards Preussag Handel Gmbh identical to the
obligations owed by Assignor as of the date hereof to Preussag Handel Gmbh under
the Relevant Agreement and the Assignor will cease to be entitled to exercise
such rights, but shall undertake to remain, jointly and severally with us,
liable to perform all obligations under the Relevant Agreement. With effect from
the date hereof all references in the Relevant Agreement to the Assignor shall
be deemed as references to us.
This Transfer Notice and the rights and obligation of the parties hereunder
shall be governed by and construed in accordance with the law of the Kingdom of
Thailand.
Yours faithfully,
[Collateral Agent/Designee]
for and on behalf of the Thai Lenders,
the Trustees and the Debenture Trustee
Page 64
<PAGE>
EXHIBIT 4
Project Documents
1. The SDI Agreement
2. The SDI License Agreement
3. The Shareholders Agreement
4. The Management Agreement
5. The Sriracha Harbor Lease
6. The Hylsa Agreement
7. The Off-take Agreements
8. The Employment Agreement
9. The Coal Supply Agreement
10. The Iron Ore Fines Agreement
11. The Sriracha Harbor Acknowledgment Letter
Page 65
<PAGE>
Exhibit 4.16
PLEDGE OF THAI PERMITTED INVESTMENTS
THIS AGRIEEMENT is made on 12 March 1998
BETWEEN:
(1) NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED, a public limited company
duly organized and validly existing under the laws of the Kingdom of
Thailand having its registered office at No. 9, UM Tower, 16th Floor,
Kwaeng Suanluang, Khet Suanluang, Bangkok, Thailand (the "Pledgor");
(2) The financial institutions whose names are listed in Exhibit 1 (the "Thai
Lenders") represented by THE INDUSTRIAL FINANCE CORPORATION OF THAILAND, a
corporation duly organized and validly existing under the laws of the
Kingdom of Thailand having its registered office at No. 1770 New Petchburi
Road, Bangkok 10320, as Facility Agent for the Thai Lenders (the "Thai
Facility Agent");
(3) THE CHASE MANHATTAN BANK, a company duly organized and validly existing
under the laws of the State of New York, having its registered office at
450 West 33d Street, New York, New York, U.S.A., having its branch office
in Bangkok, Thailand, located at 20 North Sathom Road, Silom, Bangrak,
Bangkok 10500, acting as the Trustee and the Debenture Trustee (as defined
below);
AND
THE CHASE MANHATTAN BANK as collateral agent (the "Pledgee")
WHEREAS:
(4) The Pledgor and the Thai Lenders entered into a credit facility agreement
dated 27 September 1995, (the "CFA") whereunder credit facilities of Baht
3,300,000,000 and US$ 308,000,000 have been granted;
A. The Pledgor intends to procure financing from abroad by having NSM Steel
Company, Ltd. ("NSM Cayman"), a company incorporated under the laws of the
Cayman Islands and in which the Pledgor holds 100 percent of its shares,
and NSM Steel (Delaware) Inc., a company incorporated under the laws of
the State of Delaware, the United States, a wholly owned subsidiary of NSM
Cayman (hereinafter collectively referred to as the "Note Issuers"),
acting as agent of NSM Cayman pursuant to an agency agreement, issue
US$452,500,000 of indebtedness comprised of (a) US$249,000,000 (aggregate
principal amount at maturity) of 12% Senior Mortgage Notes Due 2006 (the
"Senior Notes") which will be issued pursuant to an indenture dated as of
1 March 1998 (the "Senior Note Indenture", among the Note Issuers, the
Pledgor and The Chase Manhattan Bank ("Chase"), as trustee (the "Senior
Notes Trustee"), (b) the US$203,500,000 (aggregate principal amount at
maturity) 12 1/4% Senior Subordinated Mortgage Notes Due 2008 (the
<PAGE>
"Senior Subordinated Notes" and together with the Senior Notes, the
"Notes"), which will be issued pursuant to an indenture dated as of 1
March 1998 (the "Senior Subordinated Note Indenture", and together with
the Senior Note Indenture, the "Indentures") among the Note Issuers and
Chase, as trustee (the "Senior Subordinated Notes Trustee" and together
with the Senior Notes Trustee, the "Trustees"), with warrants to purchase
74,476,809 (Seventy Four Million Four Hundred Seventy Six Thousand Eight
Hundred and Nine) ordinary shares of the Pledgor, and (c) a private
placement consisting of US$53,133,016 (aggregate principal amount at
maturity) 12 3/4% Subordinated Second Mortgage Debentures Due 2009 (the
"Debentures") which will be issued pursuant to an indenture dated as of 1
March 1998 (the "Debenture Indenture"), among the Note Issuers, the
Pledgor and Chase, as trustee (the "Debenture Trustee") and 64,417,180
ordinary shares of the Pledgor;
C. The Pledgor has entered into an amendment to the CFA (the " CFA
Amendment") with the Thai Lenders dated 12 March 1998 for the amendment of
certain terms and provisions to facilitate the Pledgor's additional
financing (the CFA and the CFA Amendment, collectively, the "Bank Credit
Facility"), including but not limited to, an agreement the Pledgor entered
into with the Thai Lenders, the Trustees and the Indenture dated 12 March
1998 to set forth arrangements for the Thai Lenders and holders of the
Notes and the Debentures to share certain collateral (the " Security
Sharing Agreement"); and
D. Pursuant to the terms of the Security Sharing Agreement, the Pledgor, the
Thai Lenders, the Thai Facility Agent, the Trustee, the Debenture Trustee
and the Pledgee agree to enter into this Agreement as security for the
Obligations (as defined hereunder).
IT IS AGREED as follows:
1. DEFINITIONS
1.1. Except as otherwise provided herein, words and expressions in this
Agreement shall have the same respective meanings as described in the Bank
Credit Facility, the Indentures, the Debenture Indenture and the Security
Sharing Agreement:
"Collateral" means the Instruments and all rights, entitlements, benefits
and proceeds that may now or hereafter be, or required to be, pledged in
favor of the Pledgee for the benefit of the Thai Lenders, the Trustees and
the Debenture Trustee pursuant to this Agreement;
" Enforcement Notice" means notice of an Event of Default as defined under
the Bank Credit Facility, the Indentures and Debenture Indenture in the
form attached as Exhibit 3;
"Instrument" means any instrument representing, or document of title to, a
Permitted Investment;
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<PAGE>
"Obligations" means all present and future obligations and liabilities of
the Pledgor under the Bank Credit Facility, the Notes, the Indentures, the
Debentures, the Debenture Indenture and the Security Sharing Agreement.
"Pledge" means, in respect of each Instrument, the pledge of that
Instrument created by or pursuant to this Agreement; and
1.2. Any reference in this Agreement to:
(i) any agreement or document shall be read and construed as a
reference to such agreement or document as the same may have
been or may from time to time be, amended, varied, novated or
supplemented; and
(ii) any party shall be construed so as to include its respective
successors, permitted assigns and transferees in accordance
with its respective interests;
1.3. Words denominating the singular include the plural and vice versa.
1.4. Section headings are for reference only.
2. PLEDGE
2.1. To secure the due and punctual payment and performance by the Pledgor of
the Obligations, the Pledgor hereby:
(a) pledges to the Pledgee as a first security interest for the benefit
of the Thai Lenders and the holders of the Notes and a second
security interest for the benefit of the holders of the Debentures
(i) all Instruments, (ii) all rights, entitlements and benefits of
the Pledgor in respect of such Instruments, (iii) all rights of the
Pledgor to withdraw monies from the Permitted Investments and (iv)
all proceeds of such Instruments and Permitted Investments; and
(b) undertakes at each time when any Instruments and permitted
Investments are issued to immediately:
(i) deliver the Instrument to the Collateral Agent;
(ii) endorse on such Instrument the following: "This Instrument is
pledged pursuant to the Pledge of Thai Permitted Investments
dated 12 March 1998 between the Pledgor, the Thai Facility
Agent, the Trustee, the Debenture Trustee and the Pledgee
named therein and the terms and conditions thereof shall apply
to this Instrument", and execute such endorsement;
(iii) give notice to the issuer of such Instrument in the form set
out in Part A of Exhibit 2 hereto and use reasonable efforts
to procure that as soon as practicable the issuer of such
Instrument acknowledge such notice in the
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<PAGE>
form set out in Part B of Exhibit 2, or in such other form as
may be reasonably acceptable to the Pledgee; and
(iv) complete all other actions and deliver any other document
which the Pledgee may reasonably require to perfect the
pledging by the Pledgor under this Agreement and each Pledge;
and
(c) in the event that the Pledgor invests in any instrument which does
not qualify as a Permitted Investment (as defined in the Indentures
and the Debenture Indenture), the Pledgor agrees, if requested by
the Thai Lenders, the Trustees, the Debenture Trustees or the
Pledgee, as the case may be, to promptly execute and deliver to the
Pledgee an agreement substantially in the form of this Agreement
pledging such instrument to the Pledgee.
3. ENFORCEMENT OF PLEDGE
3.1. The enforcement of Pledges shall be in accordance with the Security
Sharing Agreement.
3.2. In accordance with the Security Sharing Agreement, following the receipt
of a Notice of Actionable Default (as defined therein) and in compliance
with Section 4 of the Security Sharing Agreement, the issuance of an
Enforcement Notice shall cause each Pledge constituted by or pursuant to
this Agreement to become immediately enforceable by any means in
accordance with applicable law.
3.3. The proceeds derived from the enforcement of any Pledge shall be applied
towards settlement of the Obligations in accordance with the Security
Sharing Agreement, the Bank Credit Facility, the Indentures and the
Debenture Indenture. In the event that such proceeds are insufficient to
pay or set off all amounts to which the Thai Lenders, the Trustees, or the
Debenture Trustees are entitled, the Pledgor shall be liable for the
deficiency.
4. CONTINUING SECURITY
4.1. This Agreement and each Pledge created by or pursuant hereto shall be in
addition to, independent of, without prejudice to, and shall not be in
substitution for or merge with any other rights, security, guarantee,
indemnity or suretyship now held or which may hereafter be held by the
Thai Lenders, the Trustees or, as the case may be, the Debenture Trustee
(as a second priority lien) for the due payment and performance by the
Pledgor of the Obligations.
4.2. This Agreement and each Pledge created by or pursuant hereto shall be a
continuing security and shall remain in full force and effect
notwithstanding the liquidation, bankruptcy or other incapacity of the
Pledgor or any amalgamation or reconstruction of the Pledgor or any change
in the constitution thereof or any settlement of account, intervening
payment or the extinction of any or all indebtedness by whatever reason
(other than by full performance and discharge of the Obligations) or other
matter or thing whatsoever.
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<PAGE>
4.3. If after the date of this Agreement:
(a) any settlement or discharge of any or all of the Obligations of the
Pledgor is nullified for any reason whatsoever, and/or
(b) an order or judgment is made against the Thai Lenders, the Trustees,
the Debenture Trustee, the holders of the Notes or the holders of
the Debentures, under Section 237 of the Civil and Commercial Code
of Thailand (or any modification or re-enactment thereof) or under
any of Section 113, 114 and 115 of the Bankruptcy Act of Thailand
(or any modification or re-enactment thereof) directing the Thai
Lenders, the Trustees, the Debenture Trustee, the holders the Notes
or the holders of the Debentures to pay any sum received or held by
it from the Pledgor or any other person to settle all or part of the
debt of the Pledgor to an official receiver, a liquidator or a
creditor of the Pledgor.
then the returned moneys, losses, damages, costs and expenses of the Thai
Lenders, the Trustees, the Debenture Trustee, the holders of the Notes or the
holders of the Debentures arising as a result of such nullified settlement or
discharge, and/or (as the case may be) the sum paid by it pursuant to such order
or judgment shall be recoverable from the Pledgor on demand.
5. INVESTMENT DECISIONS
As provided in the Indentures and the Debenture Indenture, as the case may
be, the Pledgor is authorized to continue to control investment decisions
with respect to Permitted Investments until an Enforcement Notice has been
issued. At such time, the Pledgee shall control investment decisions with
respect to Permitted Investments and realize upon its security interest.
6. FURTHER ASSURANCES
6.1. The Pledgor shall, at any time at the reasonable request of the Pledgee
and at the cost and expense of the Pledgor, promptly sign, seal, execute
and deliver such deeds, instruments, notices and documents, (including
further legal or other transfers or assignments) and do such acts and
things as may reasonably be required by the Pledgee for the purpose of
maintaining, perfecting, protecting, defending, enforcing or securing the
obligations of the Pledgor under this Agreement and the encumbrances
arising under or constituted by or pursuant to this Agreement (or
purported to be created by or constituted by or pursuant to this
Agreement) or in respect of each Instrument (whether in existence at the
date hereof or acquired after the date hereof) or for facilitating the
exercise or, as the case may be, realization thereof and the exercise of
all other powers, authorities and discretion vested in the Pledgee.
6.2. Pledgee shall, without prejudice to other rights, powers and privileges
under this Agreement, be entitled (but shall be under no obligation), at
any time and as often as it may reasonably consider to be necessary, to
take any such action and/or to demand additional documents and instruments
from a third party (in which case,
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<PAGE>
the Pledgor undertakes to use its best endeavors to procure such documents
or instruments from such third party) for the purpose of protecting the
rights constituted by this Agreement.
6.3. The Pledgor hereby agrees to indemnify the Pledgee on demand against any
and all costs, losses, expenses or liabilities incurred by or imposed on
the Thai Facility Agent, the Thai Lenders, the Trustees, the Debenture
Trustee or the Pledgee in connection with actions taken concerning the
perfection and/or protection of the rights and/or security interest
referred to in this Clause 6.3.
7. FILINGS, RECORDS, INSPECTION
Except as otherwise permitted hereunder, the Pledgor shall not file or
suffer to be on file, or authorize or permit to be filed or to be on file,
in any jurisdiction, any other encumbrance with respect to the Permitted
Investment in which the Pledgee is not named as the sole first secured
party for the benefit of the Thai Lenders and the Trustees or as the sole
second secured party for the benefit of the Debenture Trustee. The Pledgor
shall permit representatives of the Pledgee upon reasonable notice, at any
time during normal business hours to inspect and make abstracts from its
books and records pertaining to the Permitted Investments.
8. REMEDIES AND WAIVERS
8.1. Any receipt, release or discharge of the assignment provided by, or of any
liability arising under, Permitted Investments may be given by the Pledgee
alone and shall not release or discharge the Pledgor from any liability
for the same or any other moneys which may exist independently of this
Agreement. Where such receipt, release or discharge relates only to part
of the Permitted Investment, such receipt, release or discharge shall not
prejudice or affect the pledge hereby created in relation to the remainder
of the Permitted Investment.
8.2. The Pledgee may in its discretion grant time or other indulgence, or make
any other arrangement variation or release, with the Pledgor or any other
person (whether or not party hereto and whether or not jointly liable with
the Pledgor) in respect of all the obligations or of any other security
therefor or guarantee in respect thereof without prejudice either to the
assignment constituted by or pursuant to this Agreement or to the
liability of the Pledgor for the Obligations.
8.3. The rights, powers and remedies provided in this Agreement are cumulative
and are not, nor are they to be construed as, exclusive of any rights,
powers and remedies provided by law.
8.4. No failure on the part of the Pledgee to exercise, or delay on its or
their part in exercising any of the rights, powers and remedies provided
for by this Agreement or by law shall operate as a waiver thereof, nor
shall any single or partial waiver of any such rights, powers or remedies
preclude any further or other exercise of such rights, power or
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<PAGE>
9. RELEASE AND DISCHARGE
The Pledgee shall, at the request and cost of the Pledgor, at any, time
after the Pledgor's Obligations have been repaid in promptly release and
discharge the Pledgor from its obligations under this Agreement and any
Pledge and shall deliver any Instrument in its possession at such time to
the possession of the Pledgor.
10. SUCCESSORS AND ASSIGNS
T958249741his Agreement shall be binding on and shall inure to the benefit
of the parties hereto and their respective successors, assignees and
transferees, provided that the Pledgor may not assign or transfer all or
any part of its rights or obligations under this Agreement.
11. SEVERABILITY
If at any time any one or more of the provisions of this Agreement or any
Pledge becomes invalid, illegal or unenforceable in any respect under any
law, the validity, legality and enforceability of the remaining provisions
of this Agreement and such Pledge shall not in any way be affected or
impaired thereby.
12. NOTICES
Any notice or communication under or in connection with this Agreement
shall be given in accordance with Clause 12 of the Security Sharing
Agreement and the provisions of such agreement shall apply hereto mutatis
mutandis.
13. LAW
This Agreement and each Pledge shall be governed by and construed in
accordance with the laws of Thailand.
14. AMENDMENTS
The terms of this Attachment may be waived, altered or amended only by an
instrument in writing duly executed by the Pledgor and the Pledgee in
accordance with Section 17 of the Security Sharing Agreement.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed.
Page 7
<PAGE>
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
as Pledgor
By /s/ Sawasdi Horrungruang
-----------------------------------
Title: Chairman
THE INDUSTRIAL FINANCE CORPORATION OF THAILAND
as Thai Facility Agent for the Thai Lenders
By /s/ [ILLEGIBLE]
-----------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK
as the Trustees and Debenture Trustee
By /s/ [ILLEGIBLE]
-----------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK
as Pledgee
By /s/ [ILLEGIBLE]
-----------------------------------
Name:
Title:
Page 8
<PAGE>
EXHIBIT I
The Thai Lenders
1. The Industrial Finance Corporation of Thailand
2. Thai Farmers Bank Public Company Limited
3. Siam City Bank Public Company Limited
4. The Government Savings Bank
5. First Bangkok City Bank Public Company Limited
6. Nakornthon Bank Public Company Limited
7. SCF Finance and Securities Public Company Limited
8. Siam City Credit Finance and Securities Public Company Limited
Page 9
<PAGE>
EXHIBIT 2
Part A
Notice of Pledge
To: [Issuer of the Instruments]
Dear Sirs,
We refer to the instruments as listed in the attached (the "Instrument(s)").
We hereby give you notice that pursuant to the Pledge of permitted Investments
dated 12 March 1998 (the "Pledge of Permitted Investments") between Nakomthai
Strip Mill Public Company Limited (the "Pledgor"), the Thai Lenders, the
Trustees, the Debenture Trustee and the Collateral Agent, as Pledgee, the
Pledgor has pledged to the Pledgee for the benefit of the Thai Lenders, the
Trustees and the Debenture Trustee, the Instruments and all rights, entitlements
and benefits of the Pledgor in respect of such Instrument, including its right
to withdraw monies.
Terms and expressions defined in the Pledge of Permitted Investments shall have
the same meaning when used herein.
Please acknowledge receipt of this notice in the form-n of acknowledgment
attached hereto (the "Acknowledgment") by signing and returning a copy of the
Acknowledgment to the Collateral Agent at The Chase Manhattan Bank, Bubhajit
Building, 20 North Sathom Road, Silom, Bangrak, Bangkok 10500 and another copy
to the Pledgor.
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
By: _______________________________________________
Name:
Title:
Page 10
<PAGE>
We confirm our agreement with the foregoing.
THE CHASE MANHATTAN BANK
As Collateral Agent, and for on behalf of the
Thai Lenders, the Trustees and the Debenture Trustee
By: _____________________________________
Name-
Title:
Attachment: Acknowledgment of notice of pledge
Page 11
<PAGE>
Part B
Acknowledgment of Pledge of Permitted Investments
To: THE CHASE MANHATTAN BANK 20 North Sathom Road
Silom, Bangrak
Bangkok 10500
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
No. 9, UM Tower, 16 th Floor
Kwaeng Suanluang, Khet Suanluang
Bangkok
We hereby acknowledge receipt of a notice of pledge of which this is a copy.
Yours sincerely,
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<PAGE>
EXHIBIT 3
Form of Enforcement Notice
To: NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
No. 9, UM Tower, 16th Floor
Kwaeng Suanluang, Khet Suanluang
Bangkok
[date]
Dear Sirs,
We refer to:
(a) the instruments as listed in the attached (the "Instruments");
(b) the Pledge of Pennitted Investments Agreement dated 12 March 1998
(the "Pledge of Permitted Investments") between Nakomthai Strip Mill
Public Company Limited (the " Pledgor"), the Thai Lenders, Trustees,
the Debenture Trustee and the Collateral Agent (as therein defined);
(c) the notice of pledge dated [*] given to the issuers of the
Instruments by the Pledgor and confirmed by the Collateral Agent in
respect of the Pledge of Permitted Investors.
Words and expressions defined in the Pledge of Permitted Investments (whether
expressly therein or by cross-reference to another document) and used herein
shall, unless the context otherwise requires, have the same meanings when used
herein.
We hereby notify you that we have received Notice of an Actionable Default and
that we have been directed to deliver this Enforcement Notice in accordance with
the provisions of Section 4 of the Sharing Agreement.
We hereby confirm that this Enforcement Notice is delivered pursuant to and for
the purposes of Clause 3.2 of the Pledge of Permitted Investments and in
accordance with the terms thereof, each pledge constituted by or pursuant to the
Pledge of Permitted Investments is immediately enforceable in accordance with
applicable law.
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<PAGE>
This Enforcement Notice and the rights and obligations of the parties hereunder
shall be governed by and construed in accordance with the laws of Thailand.
Your faithfully,
THE CHASE MANHATTAN BANK
As Collateral Agent, for and on behalf of
the Thai Lenders, the Trustees and the Debenture Trustees
By: ________________________________
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<PAGE>
Exhibit 4.17
EXECUTION COPY
DATED AS OF 12TH MARCH, 1998
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
and
THE CHASE MANHATTAN BANK
--------------------------------------------------
CHARGE OVER SHARES
in
NSM STEEL COMPANY, LTD
--------------------------------------------------
MAPLES and CALDER
Asia
<PAGE>
-2-
THIS DEED OF CHARGE is made as of the 12th day of March, 1998.
BETWEEN:
1. NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED, a company incorporated under
the laws of Thailand and whose registered office is at 16th Floor, UM
Tower Building, 9 Ramkhamhaeng Road, Khet Suanluang, Bangkok 10250,
Thailand (the "Shareholder"); and
2. THE CHASE MANHATTAN BANK whose registered office is at 450 West 33rd
Street, New York, New York 10001, USA as trustee (in such capacities, the
"Trustee") under each of the Indentures referred to below and as
collateral agent (in such capacity, the "Collateral Agent") hereunder.
WHEREAS:
(A) NSM Steel Company, Ltd ("NSM Cayman") and NSM Steel (Delaware), Inc. ("NSM
Delaware") have, pursuant to a purchase agreement (the "Purchase
Agreement") dated 2nd March, 1998 between NSM Cayman, NSM Delaware, the
Shareholder and the purchasers named therein (the "Purchasers"), agreed to
issue up to $249,000,000 principal amount at maturity of 12% Senior
Mortgage Notes Due 2006 (the "Senior Notes") and US$175,010,000 (Gross
Proceeds) Representing 203,500 Units (the "Units" and together with the
Senior Notes, the "Offered Securities"), each Unit consisting of one 12
1/4% Senior Subordinated Mortgage Note Due 2008 with a principal amount at
maturity of US$1,000 (the "Senior Subordinated Notes" and together with
the Senior Notes, the "Notes") and 633.09266 warrants, each to purchase
one ordinary share, par value 10 Baht per share, of the Shareholder. In
connection with, and concurrently with the consummation of, the issuance
of the Offered Securities, NSM Cayman and NSM Delaware propose to
consummate a private placement consisting of US$53,133,016 aggregate
principal amount at maturity of 12 3/4% Subordinated Second Mortgage
Debentures Due 2009 (the "Debentures").
(B) The Senior Notes will be constituted by a senior note indenture (the
"Senior Note Indenture") to be dated as of 1st March, 1998 between the
Shareholder, the Trustee, NSM Cayman and NSM Delaware. The Senior
Subordinated Notes will be constituted by a senior subordinated note
indenture (the "Senior Subordinated Note Indenture") to be dated as of 1st
March, 1998 between the Shareholder, the Trustee, NSM Cayman and NSM
Delaware. The obligations of NSM Cayman and NSM Delaware under the Notes,
the Senior Note Indenture and the Senior Subordinated Note Indenture are
referred to herein as the "Note Obligations". The Debentures will be
constituted by a debenture indenture (the "Debenture Indenture" and
together with the Senior Note Indenture and the Senior Subordinated Note
Indenture, the "Indentures") to be dated as of 1st March, 1998 between the
Shareholder, the Trustee, NSM Cayman and NSM Delaware. The obligations of
NSM Cayman and NSM Delaware under the Debentures and the Debenture
Indenture are referred to herein as the "Debenture Obligations".
<PAGE>
-3-
(C) Under the terms of the Indentures, the Shareholder has irrevocably and
unconditionally guaranteed the due and punctual payment of the principal
of, premium, if any, and interest on, and all other amounts payable under,
the Notes and the Debentures.
(D) The Shareholder is the legal and beneficial owner of the entire issued
share capital of NSM Cayman.
(E) One of the conditions precedent to the Purchase Agreement is that the
Shareholder enters into this Deed in favour of the Trustee and the
Collateral Agent for their benefit and the benefit of the holders of the
Notes and the Debentures, including any Depository therefor, (and each of
their respective successors or assigns) (such holders, the "Secured
Parties").
NOW THIS DEED WITNESSETH AS FOLLOWS:
1. INTERPRETATION
(1) Defined expressions
Words and expressions defined in the Indentures shall, unless the context
otherwise requires, have the same meanings when used in this Deed.
(2) Definitions
In this Deed, unless the context otherwise requires:
"Collateral Agent" includes the successors and permitted assigns of the
Collateral Agent.
"Encumbrance" has the same meaning as that ascribed to "Lien" in the
Indentures.
"Event of Default" has the meaning ascribed to it in the Indentures.
"Majority Noteholders" means the holders of a majority in principal amount
of the outstanding Senior Notes (the "Majority Senior Noteholders") or, as
the case may be, the Senior Subordinated Notes (the "Majority Senior
Subordinated Noteholders") or, as the case may be, the Debentures (the
"Majority Debenture Holders").
"Notes DSR Account" has the meaning ascribed to it in Annex A of the
Security Sharing Agreement.
"Offshore Revenue Account" has the meaning ascribed to it in Annex A of
the Security Sharing Agreement.
"Outstanding Indebtedness" means the aggregate outstanding indebtedness
under the Notes and the Debentures and all interest and other amounts from
time to time owing to the Trustee and/or the holders of the Notes and/or
the holders of the Debentures, under the Notes, the Debentures or each of
the Indentures.
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"Permitted Encumbrance" means this Deed or any other Encumbrance created
or expressly permitted to be created under the Indentures.
"Relevant Jurisdiction" means any jurisdiction in which or where the
Shareholder is incorporated, residents, domiciled, has a permanent
establishment, carries on or has a place of business or is otherwise
effectively connected.
"Secured Property" means the Shares and all stock, shares, warrants,
securities, rights, moneys or property (including the dividends, interest
or income thereon or therefrom) accruing or acquired at any time and from
time to time by way of redemption, purchase, bonus, preference, option, or
otherwise to or in respect of or derived from all or any of the Shares or
any derivatives thereof, including the proceeds of any sale of any of the
Shares.
"Security Sharing Agreement" has the meaning ascribed to it in the
Indentures.
"Shares" means the shares in the capital of NSM Cayman registered in the
name of the Shareholder and beneficially owned by the Shareholder details
of which are set out in Schedule 1 and shall include any other shares in
the capital of NSM Cayman which may hereafter be registered in the name
of, or beneficially owned by, the Shareholder and/or its nominees.
"Shareholder" includes the successors and permitted assigns of the
Shareholder.
"Trustee" includes the successors and permitted assigns of the Trustee.
(3) Headings
Clause headings are inserted for convenience of reference only and shall
not be taken into account in the interpretation of this Deed.
(4) Construction of certain terms
In this Deed, unless the context otherwise requires:
(a) References to clauses and schedules are to be construed as
references to clauses of, and schedules to, this Deed and references
to this Deed and its schedules.
(b) References to (or to any specified provision of) this Deed or any
other documents shall be construed as references to this Deed, that
provision or that document as in force for the time being as amended
in accordance with the terms thereof or, as the case may be, with
the agreement of the relevant parties, and where such consent is by
the terms of this Deed or the relevant document required to be
obtained as a condition to such amendment being permitted, the prior
written consent of the Trustee.
(c) References to a "regulation" include any present or future
regulation, rule, directive, requirement, request, guideline
(whether or not having the force of law)
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of any agency, authority, central bank or government department or
any self regulatory or other national or supra-national authority.
(d) Words importing the plural shall include the singular and vice
versa.
(e) References to a person shall be construed as references to an
individual, firm, corporation, unincorporated body of persons or any
government entity.
(f) References to any enactment shall be construed as references to such
enactment as re-enacted, amended or extended.
2. COVENANT TO PAY AND CHARGE
(1) Covenant to pay
The Shareholder hereby covenants and undertakes with the Trustee as
trustee under the Indentures that it will duly and punctually pay and
discharge to or to the order of the Trustee all of the Outstanding
Indebtedness whether as principal or surety and whether or not jointly
with another person, or in connection with the enforcement of this deed
all at the times and in the manner provided for in the Indentures.
(2) Charge
By way of security for the discharge and payment of the Outstanding
Indebtedness, the Shareholder as beneficial owner hereby charges and
agrees to charge to the Collateral Agent and as a continuing security for
the payment of all moneys and the discharge of all obligations and
liabilities hereby covenanted to be paid, by way of a first fixed charge,
all of its right, title and interest in and to all of the Secured
Property.
(3) Collateral Agent
The Trustee hereby irrevocably appoints and authorizes the Collateral
Agent to act as collateral agent for and on its behalf in respect of the
Secured Property on the same terms and conditions as provided under
Articles 3 and 4 of the Security Sharing Agreement and the Shareholder
hereby acknowledges, accepts and confirms the terms of such appointment;
provided, however, that for purpose of this Deed references in such
Articles 3 and 4 (i) to the "Secured Creditors" shall be deemed to be
references to the Secured Parties, (ii) to the "Security Documents" shall
be deemed to be references to this Deed, (iii) to the "Secured Creditors'
Representative" shall be deemed to be references to the Trustee, (iv) to
the "Shared Collateral" shall be deemed to be references to the Secured
Property (as defined herein), (v) to the "Collateral" shall be deemed to
be references to the Secured Property, (vi) to the "Credit Documents"
shall be deemed to be references to the Indentures, the Notes, the
Debentures and this Deed, (vii) to "Secured Indebtedness" and "Total
Secured Indebtedness" shall be deemed to be references to the Outstanding
Indebtedness, (viii) to the "Revenue Account, the Operating Account and
the Notes Sinking Fund Account" shall be deemed to be references to the
Notes DSR Account and
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the Offshore Revenue Account, (ix) to the "Issuers and the Company" shall
be deemed to be references to the Shareholder, (x) to "this Agreement"
when used alone and not in conjunction with the term "Security Documents"
shall be deemed to be references to this Deed, (xi) to "this Agreement"
when used in conjunction with the term "Security Documents" shall be
deemed to have been deleted; and all references to the "Thai Lenders", the
"Thai Facility Agent" and the "Bank Credit Facility" in such Articles 3
and 4 shall be deemed to have been deleted.
3. REPRESENTATIONS AND WARRANTIES
(1) Representations and warranties
The Shareholder hereby represents and warrants to the Collateral Agent
that:
(a) The Shareholder is the registered holder of the Shares and the
beneficial owner of and has full right and title to, and has hereby
charged, the Secured Property and the Shares are free from any
Encumbrance of any kind (other than the Encumbrances hereby created)
and are not, nor shall they be, subject to any option.
(b) The Shares are fully paid (or credited as fully paid) and
non-assessable, no calls have been, or can be, made in respect of
the Shares and the Shares constitute 100 per cent. of the issued
share capital of NSM Cayman.
(c) The Shareholder is duly incorporated and validly existing under the
laws of Thailand and has power and authority to carry on its
business as it is now being conducted and to own its property and
other assets.
(d) The Shareholder has the power and authority to execute, deliver and
perform its obligations under this Deed and all necessary corporate,
shareholder and other action has been taken to authorize the
execution, delivery and performance of the same.
(e) This Deed constitutes legal, valid and binding obligations of the
Shareholder enforceable in accordance with its terms.
(f) The execution and delivery of, the performance of its obligations
under, and the compliance by the Shareholder with the provisions of
this Deed will not (i) contravene any existing applicable law,
statute, rule, or regulation or any judgment, decree or permit to
which the Shareholder is subject, (ii) conflict with, or result in
any breach of any of the terms of, or constitute a default under,
any agreement or other instrument to which the Shareholder is a
party or is subject or by which it or any of its properties is
bound, (iii) contravene or conflict with any provision of the
Shareholder's constitutional documents, or (iv) result in the
creation or imposition of or oblige the Shareholder to create any
Encumbrance
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(other than a Permitted Encumbrance) on the Shareholder's
undertaking or on the Shareholder's assets, rights or revenues.
(g) No litigation, arbitration or administrative proceeding is taking
place, pending or, to the knowledge of the officers of the
Shareholder, threatened against the Shareholder which could have a
material adverse effect on the business, assets or financial
condition of the Shareholder.
(h) The choice by the Shareholder of Cayman Islands law to govern this
Deed and the submission by the Shareholder to the non-exclusive
jurisdiction of the Cayman Islands courts is legal, valid and
binding on the Shareholder.
(i) Every consent, authorization, license or approval of, or
registration with or declaration to, governmental or public bodies
or authorities or courts required by the Shareholder to authorize,
or required by the Shareholder in connection with, the execution,
delivery, validity, enforceability or admissibility in evidence of
this Deed or the performance by the Shareholder of its obligations
hereunder or thereunder has been obtained or made and is in full
force and effect and there has been no default in the observance of
any of the conditions or restrictions imposed in or in connection
with any of the same.
(j) The obligations of the Shareholder under this Deed are direct,
general and unconditional obligations of the Shareholder.
(k) The Shareholder has not taken or received any security or lien from
NSM Cayman in respect of any liability hereunder or in respect of
any other liability of NSM Cayman to the Shareholder.
(l) It is not necessary to ensure the legality, validity, enforceability
or admissibility in evidence of this Deed that it or any other
instrument be notarized, filed, recorded, registered or enrolled in
any court, public office or elsewhere in any Relevant Jurisdiction
on or in relation to this Deed and this Deed is in proper form for
its enforcement in the courts of any Relevant Jurisdiction.
(m) Neither the Shareholder nor any of its assets is entitled to
immunity on the grounds of sovereignty or otherwise from any legal
action or proceeding (which shall include, without limitation, suit,
attachment prior to judgment, execution or other enforcement).
(n) By virtue of the execution and delivery by the Shareholder of this
Deed, the Collateral Agent will obtain a valid and perfected first
fixed charge upon and security interest in all of the Secured
Property as security for the payment and discharge of the
Outstanding Indebtedness.
(o) All information set forth herein relating to the Secured Property is
accurate and complete in all material respects as of the date
hereof.
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(2) Repetition
Each of the representations and warranties contained in clause 3(l) shall
be deemed to be repeated by the Shareholder on each Interest Payment Date
until all moneys due or owing by NSM Cayman or NSM Delaware under the
Notes, the Debentures or the Indentures have been repaid in full as if
made with reference to the facts and circumstances existing on each such
day.
4. COVENANTS
(1) Supporting documents
The Shareholder hereby covenants with the Collateral Agent that during the
continuance of this Deed the Shareholder will at all times deposit with
the Collateral Agent and permit the Collateral Agent during the
continuance of this security to hold and retain:
(a) Certificates
all stock and share certificates and documents of title relating to
the Shares together with any other documents of title relating to
the Secured Property;
(b) Transfers
transfers of all Shares duly completed in favour of the Collateral
Agent or its nominees or otherwise as the Collateral Agent may
direct in the form set out in Schedule 2 together with letters of
authority in respect of such transfers in the form set out in
Schedule 3;
(c) Irrevocable proxies
an irrevocable proxy in respect of the Shares executed by the
Shareholder in favour of the Collateral Agent in the form set out in
Schedule 4 entitling the Collateral Agent to exercise, subject to
clause 5(l), all voting rights in respect of the Shares;
(d) Directors' resignation letters
executed but undated resignation letters from each director of NSM
Cayman in the form set out in Schedule 5 together with letters of
authority from each director of NSM Cayman in the form set out in
Schedule 6;
(e) Dividend mandate
an executed but undated dividend mandate in favour of the Collateral
Agent in the form set out in Schedule 7 together with a letter of
authority in respect of such mandate in the form set out in Schedule
8; and
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(f) Further documents
all such other documents as the Collateral Agent may from time to
time require for perfecting its title to the Shares and/or the
Secured Property or for vesting or enabling it to vest the same in
itself or its nominees or in any purchaser to the intent that the
Collateral Agent may at any time without notice present them for
registration.
(2) Continuing covenants
The Shareholder hereby further covenants with the Collateral Agent that
during the continuance of this Deed the Shareholder will at all times:
(a) Prompt payment
Duly and promptly pay all calls, installments or other payments
which from time to time become due in respect of any of the Shares.
(b) Negative undertakings
Not (without the prior written consent of the Collateral Agent):
(i) create or permit to subsist any Encumbrance (other than a
Permitted Encumbrance) on or over the Secured Property or any
part thereof or interest therein;
(ii) sell, transfer or otherwise dispose of the Secured Property or
any part thereof or interest therein or attempt or agree to do
so;
(iii) suffer or permit NSM Cayman to cancel, increase, create or
issue or agree to issue or put under option or agree to put
under option any share or loan capital or obligation now or
hereafter convertible into any class of share or loan capital
of or in NSM Cayman;
(iv) suffer or permit NSM Cayman to make any alteration to, grant
any rights in relation to or otherwise re-organize or purchase
or reduce share capital or reserves of NSM Cayman in any way
or enter into any composition or arrangement with its
creditors or any class of creditors of NSM Cayman;
(v) convene any meeting with a view either to the alteration of
any of the provisions of NSM Cayman's memorandum and articles
of association or to passing a resolution that NSM Cayman be
wound up; or
(vi) suffer or permit NSM Cayman to permit any person other than
the Shareholder to be registered as holders of Shares or any
part thereof.
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(c) Appointment of further directors
Duly and promptly notify the Collateral Agent of the appointment of
any further directors of NSM Cayman and thereafter duly and promptly
deliver to the Collateral Agent the letter or letters of resignation
and letter or letters of authority referred to in clause 4(l) duly
signed by such additional directors.
(d) Maintenance of value of security
Not do or cause to be done anything which in any way depreciates,
jeopardises or otherwise prejudices the value to the Secured Parties
of the security created by this Deed.
(e) Indebtedness due from NSM Cayman
Except pursuant to any of the Indentures, not demand or accept
repayment in whole or in part of any Indebtedness now or hereafter
due to the Shareholder from NSM Cayman or any other person liable or
demand or accept any security in respect of the same or assign or
charge the same as security.
(f) No set-off or counterclaim
Not claim any set-off or counterclaim against NSM Cayman or any
other person liable or claim or prove in the liquidation of NSM
Cayman or any other person liable or have the benefit of, or share
in, any payment from or composition with, NSM Cayman or any other
person liable for any Indebtedness of NSM Cayman or any other person
liable but so that, if so directed by the Collateral Agent, it will
prove for the whole or any part of its claim in the liquidation or
bankruptcy of NSM Cayman on terms that the benefit of such proof and
of all money received by it in respect thereof shall be held on
trust for each of the Secured Parties and applied in or towards
discharge of the liabilities and obligations of the Shareholder to
the Secured Parties under this Deed in such manner as the Collateral
Agent shall deem appropriate.
(g) No subrogation
Not exercise its rights of subrogation, reimbursement and indemnity
against NSM Cayman.
(h) Payments and compositions
Not have the benefit of any share in any payment or composition from
NSM Cayman or any other person or in any other guarantee or security
now or hereafter held by any agent of the holders of the Notes or
the Debentures.
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(i) No encumbrance
Not take or receive any Encumbrance from NSM Cayman in respect of
the liability of the Shareholder under this Deed.
(j) Reports and notices
Promptly send to the Collateral Agent a copy of every report or
other notice, statement or circular sent or delivered to the
Shareholder by NSM Cayman.
(3) Further covenants
The Shareholder hereby further covenants and agrees with the Collateral
Agent:
(a) Powers on default
The Collateral Agent and its nominees, at the discretion of the
Collateral Agent, may following the occurrence of any Event of
Default, exercise in the name of the Shareholder or otherwise at any
time whether pursuant to the powers conferred upon the Collateral
Agent under the irrevocable proxy referred to in clause 4(l)(c) and
whether before or after demand for payment and without any further
consent or authority on the part of the Shareholder in respect of
the Shares any voting rights.
(b) New registrations
Following an Event of Default, the Shareholder shall duly register
or procure that the directors of NSM Cayman duly register all
transfers of Shares from time to time lodged with them by or on
behalf of the Collateral Agent or its nominees and issue, and
deliver to the Collateral Agent, a new certificate or certificates
for the Shares in the name of the Collateral Agent or its nominees
as soon as possible following receipt of such transfers from the
Collateral Agent.
5. DIVIDENDS AND VOTING RIGHTS
(1) Voting rights
Unless and until an Event of Default has occurred and is continuing or the
Shareholder is in breach of any term of this Deed, the Shareholder shall
be entitled to exercise all voting and other rights vested in the holder
of the Shares provided that the Shareholder shall not exercise such rights
in a manner which would or might derogate from the security created by
this Deed or conflict with any provision of any of the Indentures.
(2) Dividend rights
If an Event of Default has occurred and is continuing or the Shareholder
is in breach of any term of this Deed, the Collateral Agent may (and shall
if the Trustee on behalf of and
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acting at the direction of the relevant Majority Noteholders so requires),
in accordance with clause 5(3), require that any dividends, interest or
other moneys which may be paid or payable in respect of the Secured
Property shall be paid to the Collateral Agent and shall be applied by the
Collateral Agent in accordance with clause 7(5) of this Deed. So long as
no Event of Default has occurred and is continuing and the Shareholder is
not in breach of any term of this Deed and so long as the payment of any
dividends does not constitute or give rise to a breach of any provision of
the Indentures, any such dividends shall be paid to the Shareholder.
(3) Delivery of dividend mandate
Upon the occurrence of an Event of Default or other breach referred to in
clause 5(2), the Collateral Agent may complete, date and deliver to NSM
Cayman the dividend mandate referred to in clause 4(l)(e).
(4) Payment of dividends and interest
Any dividends, interest or other moneys or property hereby charged which
may be received by the Shareholder after the power of sale under clause
7(l) has arisen shall be held in trust for the Collateral Agent and paid
or delivered to the Collateral Agent on demand in writing for application
in accordance with clause 7(5) of this Deed.
6. FURTHER ASSURANCE
(1) Execution of further charges
The Shareholder shall, at its own expense at any time if and when required
by the Collateral Agent, execute such further legal or other charges or
assignments in favour of the Collateral Agent as the Collateral Agent
shall from time to time reasonably require over all or any of the Secured
Property and all rights relating thereto both present and future
(including any substituted securities) and any other transfers or
documents the Collateral Agent may from time to time require for
perfecting its title to the same or for vesting or enabling it to vest the
same in itself or its nominees or in any purchaser to secure all moneys,
obligations and liabilities hereby covenanted to be paid or otherwise
hereby secured or to facilitate realisation of the Secured Property or the
exercise of the powers conferred on the Collateral Agent, such further
charges or assignments to be prepared by or on behalf of the Collateral
Agent at the cost of the Shareholder and to contain an immediate power of
sale without notice and such other clauses for the benefit of the Secured
Parties as the Collateral Agent may reasonably require.
(2) Registration
The Shareholder also undertakes at its own expense from time to time to
execute, sign, perfect, do and (if required) register every such further
assurance, document, act or thing as in the reasonable opinion of the
Collateral Agent may be necessary or desirable for the
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purpose of more effectually charging the Secured Property or perfecting
the security constituted or intended to be constituted by this Deed.
7. POWERS OF THE COLLATERAL AGENT
(1) Enforcement
At any time after the occurrence of an Event of Default or breach of the
terms of this Deed:
(a) Completion of transfers
the Collateral Agent and any nominee of the Collateral Agent
wheresoever situated may (and shall if the Trustee on behalf of and
at the direction of the relevant Majority Noteholders so requires)
complete the instruments of transfer in respect of the Shares
deposited with the Collateral Agent in accordance with clause
4(1)(b) by dating the same and may submit all or any of the said
instruments of transfer together with any stock or share
certificates in respect thereof for registration in the name of the
Collateral Agent or any nominee of the Collateral Agent and
thereafter the Collateral Agent and any nominee of the Collateral
Agent may exercise without further notice all the powers or rights
which may be exercisable by the registered holder of the Shares; and
(b) Application of dividends and interest
any dividends, interest or other payments which may be received or
receivable by the Collateral Agent or by any nominee of the
Collateral Agent in respect of any other Secured Property may be
applied by the Collateral Agent as though they were proceeds of
sale.
(2) Sale or disposal
In exercising the powers referred to in clause 7(l), the Collateral Agent
may Sell or dispose of the Secured Property or any part thereof at such
times in such manner for such consideration and generally on such terms
and conditions as the Collateral Agent may think fit. Any such sale or
disposition may be for cash, debentures or other obligations, shares,
stock, securities or other valuable consideration and be payable
immediately or by installments spread over such period as the Collateral
Agent shall think fit.
(3) No inquiry by purchaser
No purchaser or other person shall be bound or concerned to see or inquire
whether the security hereby constituted has become enforceable or whether
any power exercised or purported to be exercised by the Collateral Agent
has become exercisable nor be concerned with notice to the contrary or
with the propriety or regularity of the exercise or purported exercise of
such powers.
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(4) Receipt
Upon any sale of any of the Secured Property, the receipt of the
Collateral Agent for the purchase money shall effectually discharge the
purchaser or person paying the same therefrom and from being concerned to
see to the application or being answerable for the loss or misapplication
thereof.
(5) Application of proceeds
The proceeds of enforcement, collection or other realisation of all or any
part of the Secured Property pursuant hereto shall be paid to the
Collateral Agent. All such sums received by the Collateral Agent from any
sale of any of the Secured Property under the power hereby conferred shall
be applied as follows:
First: in or towards payment or satisfaction of an costs, charges,
fees, expenses and liabilities incurred and payments made by
and indemnities owed to (collectively "costs") the Collateral
Agent and any receiver, attorney, agent, delegate,
sub-delegate or other person (each a "receiver") appointed by
the Collateral Agent in accordance with the terms of this Deed
or the Indentures in connection with the performance of its
obligations hereunder or thereunder or the execution or
purported execution of any powers, authorities or discretions
vested in it or him pursuant hereto or thereto including
(without limitation to the generality of the foregoing) any
remuneration of the Collateral Agent;
Second: Pro-rata to: the Notes Depositary and the Notes Trustees in
payment for all Note Obligations that consist of costs
incurred in connection with the administration of the Note
Depositary Agreement and the applicable Indentures;
Third: To the payment in full of the Note Obligations (the amounts so
applied to be distributed among the Secured Parties ratably to
their respective entitlements of the applicable Secured
Parties (as the case may be) in accordance with the amounts of
the Note Obligations owed to them on the date of any such
distribution);
Fourth: To the Debenture Depositary and the Debenture Trustee in
payment for all Debenture Obligations that consist of costs
incurred in connection with the administration of the
Debenture Depositary Agreement and the Debenture Indenture;
Fifth: To the payment in full of the Debenture Obligations; and
Six: To the extent that any funds remain, to the Shareholder, to
such other person as the Shareholder may direct or as a court
of competent jurisdiction may otherwise direct.
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(6) Indemnity
The Shareholder hereby agrees and undertakes to indemnify the Collateral
Agent against all losses, actions, claims, expenses, demands, obligations
and liabilities whatsoever and whenever arising which may now or hereafter
be incurred by it or by any of its agents, officers or employees for whose
liability, act or omission it or they, or any of them may be answerable
(other than as may arise as a result of the negligence, wilful default or
fraud of the Collateral Agent or any of its agents, officers or employees)
in respect of, in relation to or in connection with anything done or
omitted to be done in the exercise or purported exercise of the powers
contained in this Deed or otherwise in connection therewith or with any
part of the Secured Property.
(7) Liability of Collateral Agent
The Collateral Agent shall not be liable to account as mortgagee in
possession in respect of all or any of the Secured Property and shall not
be liable for any loss upon realisation or for any neglect or default to
present any coupon, bond or stock drawn for repayment or for any failure
to pay any call or instalment or to accept any offer or to notify the
Shareholder of any such matter or for any other loss of any nature
whatsoever in connection with the Secured Property.
8. ATTORNEY
(1) Power of attorney
The Shareholder hereby irrevocably and by way of security appoints the
Collateral Agent and any person nominated for the purpose by the
Collateral Agent in writing under hand of an officer of the Collateral
Agent, with full power of substitution, to be its attorney and in its name
and on its behalf and as its act and deed or otherwise to sign, execute,
seal, deliver and complete any transfers of other documents which the
Collateral Agent may reasonably require for perfecting its title to or for
vesting the Secured Property in the Collateral Agent or its nominees or in
any purchaser and to make any alteration or addition to the Secured
Property comprised therein or any other alteration or addition and to
re-deliver the same thereafter and otherwise generally to sign, seal,
deliver and otherwise perfect any such transfers or other documents and
any legal or other charges or assignments over the Secured Property
referred to in clause 6 and to do all deeds, instruments, acts and things
as may be required for the full exercise of any rights or powers hereby
conferred including, for the avoidance of doubt, any sale or other
disposition, realisation or getting in of the Secured Property and the
shareholder hereby agrees forthwith on the request of the Collateral Agent
to ratify and confirm all that the attorney shall lawfully do or cause to
be done by virtue of these presents provided that the power of attorney
contained herein shall not be exercisable unless and until an Event of
Default has occurred.
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(2) Dealings with attorneys
The exercise of such power by or on behalf of the Collateral Agent shall
not put any person dealing with the Collateral Agent upon any enquiry as
to whether an Event of Default has occurred, nor shall any such person be
in any way affected by notice that no such event has occurred, and the
exercise by the Collateral Agent of such power shall be conclusive
evidence of its right to exercise the same.
(3) Filings
The Shareholder hereby irrevocably appoints the Collateral Agent to be its
attorney in its name and on its behalf and as its act and deed or
otherwise to agree the form of and to do and execute all deeds,
instruments, acts and things to file, record, register, or enroll this
Deed which the Collateral Agent may in its reasonable discretion consider
necessary or advisable, now or in the future, in order to ensure the
legality, validity, enforceability or admissibility in evidence of this
Deed.
9. CONTINUING SECURITY AND OTHER MATTERS
(1) Continuing security
It is agreed that the security created by this Deed and the obligations
and liabilities of the Shareholder and the rights, remedies and powers of
the Collateral Agent hereunder:
(a) shall be held by the Collateral Agent as a continuing security for
the payment in full of the Outstanding Indebtedness and the
performance and observance of and compliance with all of the
covenants, terms and conditions contained in this Deed or the
Indentures;
(b) shall be in addition to and shall not prejudice or affect, and may
be enforced by the Collateral Agent without prior recourse to any
other right or remedy held by or available to the Collateral Agent;
(c) may be enforced by the Collateral Agent without prior recourse to
any such security as is referred to in clause 9(l)(b) and the
Shareholder waives all rights it may have of first requiring the
Collateral Agent to enforce any such security or guarantee or to
proceed against or claim payment from NSM Cayman or any other
person;
(d) shall not be satisfied by any intermediate payment or satisfaction
of any part of the Outstanding Indebtedness or by any settlement of
accounts between NSM Cayman, the Shareholder or any other person who
may be liable to the Collateral Agent or the holders of the Notes or
the Debentures in respect of the Outstanding Indebtedness or any
part thereof;
(e) shall not in any way be prejudiced or affected by any time,
indulgence or relief being given by the Collateral Agent to NSM
Cayman or any other person, by any
<PAGE>
-17-
amendment or supplement to the Indentures or the terms and
conditions of the Notes, or any other document, by the taking,
variation, compromise, renewal or release of or refusal or neglect
or perfection or enforcement of any right, remedy or security
against NSM Cayman or any Other person or by anything done or
omitted which but for this provision might operate to exonerate the
Shareholder;
(f) shall not in any way be prejudiced or affected by any change in the
constitution of, or any amalgamation or reconstruction of NSM Cayman
or any other person or by any legal limitation, disability,
incapacity or other circumstances relating to NSM Cayman or any
other person, whether or not known to any of the Secured Parties, by
any invalidity or irregularity or unenforceability of the
obligations of NSM Cayman or any other person under the Indentures
or otherwise and so that in the event that any obligation or
purported obligation of NSM Cayman or any other person which, if
enforceable or valid or continuing, would be secured by this Deed is
or becomes wholly or in part unenforceable or invalid or terminated
for any reason whatsoever, the Shareholder will keep the Secured
Parties fully indemnified against any loss suffered by it or them as
a result of any failure by NSM Cayman or such other party to perform
any such obligation or purported obligation; and
(g) shall remain in full force and effect as to all Outstanding
Indebtedness remaining unpaid, notwithstanding the discharge and
payment in full of any of the Note Obligations or the Debenture
Obligations, it being understood and agreed that upon any such
discharge of any of the Note Obligations or the Debenture
Obligations, the Shareholder, the Trustee and the Collateral Agent
shall enter into such conforming changes hereto as shall be
reasonably satisfactory to the Trustee confirming the rights
provided hereunder in respect of the remaining Outstanding
Indebtedness.
(2) Rights additional
All the rights, remedies and powers vested in the Collateral Agent
hereunder shall be in addition to and not a limitation of any and every
other right, power or remedy vested in the Collateral Agent under this
Deed, the Indentures or at law and all the powers so vested in the
Collateral Agent may be exercised from time to time and as often as the
Collateral Agent may deem expedient.
(3) No enquiry
The Collateral Agent shall not be obliged to make any enquiry as to the
nature or sufficiency of any payment received by it under this Deed or to
make any claim or take any action to collect any moneys receivable by the
Collateral Agent in the exercise of any powers conferred by this Deed or
to enforce any rights or benefits hereby assigned to the Collateral Agent
or to which the Collateral Agent may at any time be entitled under this
Deed.
<PAGE>
-18-
(4) Suspense account
Any money received by virtue of or in connection with the security created
by this Deed may be placed to the credit of a suspense account with a view
to preserving the rights of the Collateral Agent to prove for the whole of
the Outstanding Indebtedness against NSM Cayman in the event of any
proceedings in, or analogous to, liquidation, composition or arrangement.
(5) Settlements conditional
Any release, discharge or settlement between the Shareholder and the
Collateral Agent shall be conditional upon no security, disposition or
payment to any of the Secured Parties by NSM Cayman, the Shareholder or
any other person liable being void or set aside or ordered to be refunded
pursuant to any provisions or enactments relating to bankruptcy,
liquidation, administration or insolvency or for any other reason
whatsoever and if such condition shall not be fulfilled, the Collateral
Agent shall be entitled to enforce the security created by this Deed as if
such release, settlement or discharge had not occurred and any such
payment had not been made.
(6) No responsibility for loss
The Collateral Agent shall not be responsible for any loss occasioned by
the timing of the exercise of its powers under this Deed.
10. DISCHARGE OF SECURITY
Upon payment to the Collateral Agent of the Outstanding Indebtedness in
full, the security hereby constituted shall terminate and the Collateral
Agent shall, at the request and cost of the Shareholder, deliver, transfer
or cause to be released to the Shareholder or to such person or persons as
it shall direct the documents and other articles referred to in clause
4(l) and release and retransfer the Secured Property to the Shareholder or
to such person or persons as it shall direct, free and discharged from the
security hereby constituted such release to be without recourse to, or
warranty of, the Collateral Agent.
11. CERTIFICATES
Any certificates or determinations of the Collateral Agent as to the
amount owing by the Shareholder to any of the Secured Parties, or secured
by, this Deed shall, in the absence of manifest error, be conclusive and
binding on and against the Shareholder.
<PAGE>
-19-
12. PAYMENTS
(1) No deductions
All payments to be made by the Shareholder under this Deed shall be made
in full without any set-off or counterclaim whatsoever and, subject as
provided in clause 12(2), free and clear of any deductions or withholdings
in US dollars on the due date to such account as the Collateral Agent
shall from time to time notify to the Shareholder.
(2) Gross-up taxation
If at any time the Shareholder is required to make any deduction or
withholding in respect of any taxes from any payment due under this Deed
for the account of the Collateral Agent, the sum due from the Shareholder
in respect of such payment shall be increased to the extent necessary to
ensure that, after the making of such deduction or withholding, the
Collateral Agent receives on the due date for such payment (and retains,
free from any liability in respect of such deduction or withholding) a net
sum equal to the sum which it would have received had no such deduction or
withholding been required to be made and the Shareholder shall indemnify
the Collateral Agent against any losses or costs incurred by reason of any
increased payment not being made on the due date for such payment. The
Shareholder shall promptly deliver to the Collateral Agent any receipts,
certificates or other proof evidencing the amounts (if any) paid or
payable in respect of any deduction or withholding as aforesaid.
(3) Currency indemnity
If any sum due from the Shareholder under this Deed has to be converted
from the currency (the "first currency") in which the same is payable
under this Deed into another currency (the "second currency") for the
purpose of (a) making or filing a claim or proof against the Shareholder
or (b) obtaining an order or judgment in any court or other tribunal, the
Shareholder shall indemnify and hold harmless the Collateral Agent from
and against any loss suffered as a result of any difference between (i)
the rate of exchange used for such purpose to convert the sum in question
from the first currency into the second currency and (ii) the rate or
rates of exchange at which the Collateral Agent may in the ordinary course
of business purchase the first currency with the second currency upon
receipt of a sum paid to it in satisfaction, in whole or in part, of any
such order, judgment, claim or proof. The term "rate of exchange" includes
any premium and costs of exchange payable in connection with the purchase
of the first currency with the second currency,
<PAGE>
-20-
13. NOTICES AND OTHER MATTERS
(1) Notices
Each notice or other communication under this Deed shall be sent by fax or
letter to:
(a) the Shareholder at 16th Floor, UM Tower Building, 9 Ramkhamhaeng Road,
Khet Suanluang, Bangkok 10250, Thailand, fax no. +66 2 719 9828/9 (marked
for the attention of the Managing Director);
(b) the Collateral Agent at 450 West 33rd Street, New York, New York
10001, USA, fax no. + 1 212 946 8177 (ranked for the attention of
Corporate Trust Department),
or to such other fax number or address or marked for such other attention
as the relevant party may from time to time in writing notify the other
for the purposes of this Deed. Any such notice or communication shall be
deemed received at the opening of business on the next business day (if
sent by fax), or five business days after posting (if sent by airmail) or
when delivered (if sent by hand or courier) and, in the event that there
has been a change in such contact details which has not been notified to
the other party, it shall nonetheless be deemed received notwithstanding
such change in contact details. Any notice or other communication shall be
irrevocable.
(2) No waiver
No failure or delay by the Collateral Agent in exercising any right, power
or remedy vested in it under this Deed shall operate as a waiver thereof
nor shall any single or partial exercise or waiver of any right, power or
remedy. The remedies provided in this Deed are cumulative and are not
exclusive of any remedies provided by law.
(3) Severability
Each of the provisions of this Deed is severable and distinct from the
others and if at any time one or more of such provisions is or becomes
invalid, illegal or unenforceable the validity, legality and
enforceability of the remaining provisions hereof shall not in any way be
affected or impaired thereby.
(4) Delegation of powers
The Collateral Agent shall be entitled, at any time and as often as may be
expedient, to delegate all or any of the powers and discretions vested in
it by this Deed (including the power vested in it by virtue of clause 8)
in such manner, upon such terms and to such person as the Collateral Agent
in its absolute discretion may think fit.
<PAGE>
-21-
(5) Benefit of this Deed
This Deed shall be binding on, and inure for the benefit of, the
Shareholder, the holders of the Notes and the Debentures, the Trustee and
the Collateral Agent and their respective permitted successors and
assigns.
(6) Assignment by Shareholder
The Shareholder may not assign or transfer any of its respective rights or
obligations under this Deed without the prior written consent of the
Collateral Agent.
(7) Amendments
No modifications, waiver or agreement of any provision of this Deed shall
in any event be effective unless the same shall be in writing and signed
by the Shareholder, the Trustee and the Collateral Agent, provided,
however, that (i) no such modification, waiver or amendment shall
adversely affect any of the Collateral Agent's rights, indemnities or
rights to indemnification under this Deed or expand its duties or
obligations under this Deed without the prior written consent of the
Collateral Agent, and (ii) no such modification, waiver or amendment shall
(A) create any lien on the Secured Property or any part thereof or
terminate any part of the security interest of the Collateral Agent in all
or substantially all of the Secured Property or (B) deprive the holders of
the Notes or Debentures of any part of the security afforded hereunder, in
each case without the consent of (x) the Trustee on behalf of and acting
at the direction of the Majority Senior Noteholders and the Majority
Senior Subordinated Noteholders (unless the holders of the Senior Notes
and the Senior Subordinated Notes shall have released the Shareholder of
its obligations hereunder) and (y) the Trustee on behalf of and acting at
the direction of the Majority Debenture Holders.
14. GOVFRNING LAW AND JURISDICTION
(1) Governing law
This Deed is governed by, and shall be construed in accordance with the
laws of the Cayman Islands.
(2) Submission to jurisdiction
For the benefit of each of the Trustee, the Collateral Agent, the holders
of the Notes and the holders of the Debentures, the Shareholder hereto
irrevocably agrees that any legal action or proceedings arising out of or
in connection with this Deed against it or its assets may be brought in
the courts of the Cayman Islands and the Shareholder hereby submits to the
jurisdiction of such courts. The Shareholder agrees to appoint and empower
NSM Cayman at its registered office for the time being (currently Ugland
House, South Church Street, PO Box 309, George Town, Grand Cayman, Cayman
Islands) to receive, for and on its behalf, service of process issued out
of the courts of the Cayman Islands in any
<PAGE>
-22-
such legal action or proceedings. The submission to such jurisdiction
shall not (and shall not be construed so as to) limit the right of the
Collateral Agent or the holders of the Notes or the Debentures to take
proceedings against the Shareholder in any other jurisdiction, whether
concurrently or not.
IN WITNESS whereof the parties have caused this Deed to be duly executed on the
day and year first above written.
EXECUTED as a deed by )
Mr. Sawasdi Horrungruang )
for and on behalf of )
NAKORNTHAI STRIP )
MILL PUBLIC ) /s/ Sawasdi Horrungruang
COMPANY LIMITED ) --------------------------
in the presence of: )
Witness's signature:
Name:
Address:
SIGNED for and )
on behalf of )
THE CHASE ) /s/ Valerie Dunbar
MANHATTAN BANK ) --------------------------
as Trustee )
SIGNED for and )
on behalf of )
THE CHASE ) /s/ Valerie Dunbar
MANHATTAN BANK ) --------------------------
as Collateral Agent )
<PAGE>
-23-
SCHEDULE 1
The Shares
Name of shareholder: Nakornthai Strip Mill Public Company Limited
Number of shares: 1,000
Par value of each share: US$10.00
Share certificate no.: 001
<PAGE>
-24-
SCHEDULE 2
Form of instrument of transfer
Instrument of transfer
We, Nakornthai Strip Mill Public Company Limited (the "Transferor"), for value
received DO HEREBY transfer to (the "Transferee") the 1,000 shares
standing in our name in the undertaking called
NSM STEEL COMPANY, LTD
to hold the same unto the Transferee subject to the memorandum and articles of
association thereof.
SIGNED for and on behalf )
of the Transferor )
NAKORNTHAI STRIP )
MILL PUBLIC ) --------------------------
COMPANY LIMITED )
in the presence of: )
Signature:
--------------------------
Name:
--------------------------
Address:
--------------------------
Date:
<PAGE>
-25-
SCHEDULE 3
Form of shareholders' letter of authority
Date: 12th March, 1998
To: The Chase Manhattan Bank
450 West 33rd Street,
New York, New York 10001
USA
Dear Sirs,
NSM Steel Company, Ltd
We hereby unconditionally and irrevocably authorize you to date and otherwise
complete the instrument of transfer in respect of our shares in NSM Steel
Company, Ltd deposited by ourselves with you pursuant to the deed of charge (the
"Charge") dated 12th March, 1998 between ourselves and yourselves, as and when
you become entitled to date and complete the same pursuant to the terms of the
Charge.
Yours faithfully,
- --------------------------
For and on behalf of
Nakornthai Strip Mill
Public Company Limited
<PAGE>
-26-
SCHEDULE 4
Form of irrevocable proxy
Date: 12th March, 1998
We, Nakornthai Strip Mill Public Company Limited, hereby appoint The Chase
Manhattan Bank as our proxy to vote at meetings of the shareholders of NSM Steel
Company, Ltd (the "Company") in respect of any existing or further shares in the
Company which may have been or may from time to time be issued to, us and/or
registered in our name. This proxy is irrevocable by reason of being coupled
with the interest of The Chase Manhattan Bank as chargee of the aforesaid
shares.
- --------------------------
For and on behalf of
Nakornthai Strip Mill
Public Company Limited
<PAGE>
-27-
SCHEDULE 5
Form of directors' resignation letter
Date:
To: NSM Steel Company, Ltd
Ugland House
South Church Street
George Town
Grand Cayman
Cayman Islands
Dear Sirs,
NSM Steel Company, Ltd
I hereby resign as a director/officer of the Company and confirm that I have no
right to compensation or claims against the Company for loss of office, arrears
of pay or otherwise.
Yours faithfully,
- --------------------------
Director
<PAGE>
-28-
SCHEDULE 6
Form of directors' letter of authority
Date: 12th March, 1998
To: The Chase Manhattan Bank
450 West 33rd Street,
New York, New York 10001
USA
Dear Sirs.
NSM Steel Company, Ltd
I hereby unconditionally and irrevocably authorize you to date and otherwise
complete the resignation letter in respect of NSM Steel Company, Ltd deposited
by me with you. pursuant to the deed of charge (the "Charge") dated 12th March,
1998 between Nakornthai Strip Mill Public Company Limited and yourselves, as and
when you become entitled to date and complete the same pursuant to the terms of
the Charge.
Yours faithfully,
- --------------------------
Director
<PAGE>
-29-
SCHEDULE 7
Form of dividend mandate
Date:
To: NSM Steel Company, Ltd
Ugland House
South Church Street
George Town
Grand Cayman
Cayman Islands
Dear Sirs,
NSM Steel Company, Ltd - Dividend mandate
With effect from today's date and pending receipt by you of instructions from
ourselves and The Chase Manhattan Bank to the contrary we, Nakornthai Strip Mill
Public Company Limited, hereby authorize you to pay any dividends, interest or
other moneys paid or payable on the shares in NSM Steel Company, Ltd registered
in our name to or to the order of The Chase Manhattan Bank of 450 West 33rd
Street, New York, New York 10001, USA.
Yours faithfully,
- --------------------------
For and on behalf of
Nakornthai Strip Mill
Public Company Limited
<PAGE>
-30-
SCHEDULE 8
Form of dividend mandate letter of authority
Date: 12th March, 1998
To: The Chase Manhattan Bank
450 West 33rd Street,
New York, New York 10001
USA
Dear Sirs,
NSM Steel Company, Ltd
We hereby unconditionally and irrevocably authorize you to date and otherwise
complete the dividend mandate in respect of our shares in NSM Steel Company, Ltd
deposited by ourselves with you pursuant to the deed of charge (the "Charge")
dated 12th March, 1998 between ourselves and yourselves, as and when you become
entitled to date and complete the same pursuant to the terms of the Charge.
Yours faithfully,
- --------------------------
For and on behalf of
Nakornthai Strip Mill
Public Company Limited
<PAGE>
Exhibit 4.18
EXECUTION COPY
STOCK PLEDGE AGREEMENT dated as of March 12, 1998,
among NSM Steel Company, Ltd., a Cayman Islands company
("NSM Cayman"), and The Chase Manhattan Bank, a New York
banking corporation ("Chase"), as trustee (in such
capacities, the "Trustee") under each of the Indentures
(as defined below) and Chase, as collateral agent (in
such capacity, the "Collateral Agent") hereunder.
NSM Steel (Delaware) Inc. ("NSM (Del)") and NSM Cayman
(collectively, the "Note Issuers"), propose to issue and sell to NatWest Capital
Markets Limited ("NatWest"), McDonald & Company Securities, Inc. ("McDonald"),
PaineWebber Incorporated ("PaineWebber") and ECT Securities Corp ("ECT" and,
together with NatWest, McDonald and ECT, the "Initial Purchasers"), upon the
terms set forth in a purchase agreement dated March 2, 1998 (the "Purchase
Agreement"), among the Note Issuers, Nakornthai Strip Mill Public Company
Limited ("NSM" or the "Company" and, together with the Note Issuers, the
"Issuers") and the Initial Purchasers, $249,000,000 principal amount at maturity
of 12% Senior Mortgage Notes Due 2006 (the "Senior Notes") and $175,0 10,000
(Gross Proceeds) Representing 203,500 Units (the "Units" and, together with the
Senior Notes, the "Offered Securities"), each unit consisting of one 12 1/4%
Senior Subordinated Mortgage Note Due 2008 with a principal amount at maturity
of $ 1,000 (collectively, the "Senior Subordinated Notes" and, together with the
Senior Notes, the "Notes") and 633.09266 warrants, each to purchase one ordinary
share par value l0 Baht per share (the "Ordinary Shares"), of NSM. In connection
with, and concurrently with the consummation of, the issuance and sale of the
Offered Securities, the Issuers propose to consummate a private placement
consisting of $53,133,016 aggregate principal amount at maturity of 12 3/4%
Subordinated Second Mortgage Debentures Due 2009 (the "Debentures").
The Senior Notes will be irrevocably and unconditionally guaranteed
as to principal, premium, interest and Additional Amounts, if any, by NSM. The
Senior Subordinated Notes will be irrevocably and unconditionally guaranteed as
to principal, premium, interest and Additional Amounts, if any, by NSM. The
Debentures will be irrevocably and unconditionally guaranteed as to principal,
premium, interest and Additional Amounts, if any, by NSM. The Senior Notes will
be issued under an indenture dated as of March 1, 1998 (the "Senior Note
Indenture"), among the Note Issuers, NSM and the Trustee. The Senior
Subordinated Notes will be issued pursuant to an indenture dated as of March 1,
1998 (the "Senior Subordinated Note Indenture"), among the Note Issuers, NSM,
and the Trustee. The Debentures will be issued pursuant to an Indenture dated as
of March 1, 1998 among the Note Issuers, NSM and the Trustee (the "Debenture
Indenture" and, together with the Senior Note Indenture and the Senior
Subordinated Note Indenture, the "Indentures"). Capitalized terms used herein
and not defined herein shall have meanings assigned to such terms in the
Indentures.
Pursuant to the terms of the Indentures, NSM Cayman (the "Stock
Pledgor") has agreed to pledge all of the issued and outstanding shares of
capital stock in NSM (Del) to the Collateral Agent as security for all
obligations of the Note Issuers under the Notes and the
<PAGE>
Indentures governing the Notes (the "Note Obligations") and all obligations of
the Note Issuers under the Debentures and the Debenture Indenture (the
"Debenture Obligations" and, together with the Note Obligations, the
"Note/Debenture Obligations").
Accordingly, the Stock Pledgor, the Trustee and the Collateral Agent
on behalf of the holders of the Notes and the Debentures, including any
Depository therefor (and each of their respective successors or assigns) (such
holders, the "Secured Parties"), hereby agree as follows:
ARTICLE I
Stock Pledge
SECTION 1.1. Stock Pledge. As security for the payment and
performance, as the case may be, in full of the Note/Debenture Obligations, the
Stock Pledgor hereby transfers, grants, bargains, sells, conveys, hypothecates,
pledges, sets over and delivers unto the Collateral Agent, its successors and
assigns, and hereby grants to the Collateral Agent, its successors and assigns,
for the benefit of the Secured Parties, a security interest in all of the Stock
Pledgor's right, title and interest in, to and under (a) the shares of capital
stock owned by it and listed on Schedule I hereto and any shares of capital
stock of NSM(Del) obtained in the future by the Stock Pledgor and the
certificates representing all such shares (the "Pledged Stock"); (b) all other
property that may be delivered to and held by the Collateral Agent pursuant to
the terms hereof in respect of the Pledged Stock; (c) subject to Section 1.5,
all dividends, cash, instruments and other property from time to time received,
receivable or otherwise distributed, in respect of, in exchange for or upon the
conversion of the Pledged Stock; (d) subject to Section 1.5, all rights and
privileges of the Stock Pledgor with respect to the Pledged Stock and other
property referred to in clauses (a), (b) and (c) above; and (e) all proceeds of
any of the foregoing (the items referred to in clauses (a) through (e) above
being collectively referred to as the "Note/Debenture Collateral"). Upon
delivery to the Collateral Agent, (a) any stock certificates or other securities
now or hereafter included in the Note/Debenture Collateral (the "Pledged
Securities') shall be accompanied by stock powers duly executed in blank or
other instruments of transfer in form satisfactory to the Collateral Agent and
by such other instruments and documents as the Collateral Agent may reasonably
request and (b) all other property comprising part of the Note/Debenture
Collateral shall be accompanied by proper instruments of assignment duly
executed by the Stock Pledgor and such other instruments or documents as the
Collateral Agent may reasonably request. Each delivery of Pledged Securities
shall be accompanied by a schedule describing the securities theretofore and
then being pledged hereunder, which schedule shall be attached hereto as
Schedule I and made a part hereof. Each schedule so delivered shall supersede
any prior schedules so delivered.
TO HAVE AND TO HOLD the Note/Debenture Collateral, together with all
right, title, interest, powers, privileges and preferences pertaining or
incidental thereto, unto the Collateral Agent its successors and assigns, for
the ratable benefit of the Secured Parties, forever; subject, however, to the
terms, covenants and conditions hereinafter set forth and to the Indentures.
-2-
<PAGE>
SECTION 1.2. Delivery of the Note/Debenture Collateral. The Stock
Pledgor agrees promptly to deliver or cause to be delivered to the Collateral
Agent any and all Pledged Securities, and any and all certificates or other
instruments or documents representing the Note/Debenture Collateral.
SECTION 1.3. Representations, Warranties and Covenants. The Stock
Pledgor hereby represents, warrants and covenants, as to itself and the
Note/Debenture Collateral pledged by it hereunder, to and with the Collateral
Agent that:
(a) the Pledged Stock represents that percentage as set forth
on Schedule I of the issued and outstanding shares of each class of
the capital stock of the issuer with respect thereto;
(b) except for the security interest granted hereunder, the
Stock Pledgor (i) is and will at all times continue to be the direct
owner, beneficially and of record, of the Pledged Securities
indicated on Schedule 1, (ii) holds the same free and clear of all
Liens, (iii) will make no assignment, pledge, hypothecation or
transfer of, or create or permit to exist any security interest in
or other Lien on, the Note/Debenture Collateral, other than pursuant
hereto, and (iv) subject to Section 1.5, will cause any and all
Note/Debenture Collateral, whether for value paid by the Stock
Pledgor or otherwise, to be forthwith deposited with the Collateral
Agent and pledged or assigned hereunder;
(c) the Stock Pledgor (i) has the power and authority to
pledge the Note/Debenture Collateral in the manner hereby done or
contemplated and (ii) will defend its title or interest thereto or
therein against any and all liens (other than the lien created by
this Agreement), however arising, of all persons whomsoever;
(d) no consent of any other person (including shareholders or
creditors of any Stock Pledgor) and no consent or approval of any
governmental authority or any securities exchange was or is
necessary to the validity of the pledge effected hereby;
(e) by virtue of the execution and delivery by the Stock
Pledgor of this Agreement, when the Pledged Securities, certificates
or other documents representing or evidencing the Note/Debenture
Collateral are delivered to the Collateral Agent in accordance with
this Agreement the Collateral Agent will obtain a valid and
perfected first lien upon and security interest in such Pledged
Securities as security for the payment and performance of the
Note/Debenture Obligations;
(f) the pledge effected hereby is effective to vest in the
Collateral Agent, on behalf of the Secured Parties, the rights of
the Collateral Agent in the Note/Debenture Collateral as set forth
herein;
-3-
<PAGE>
(g) all of the Pledged Stock has been duly authorized and
validly issued and is fully paid and nonassessable;
(h) all information set forth herein relating to the Pledged
Securities is accurate and complete in all material respects as of
the date hereof, and
(i) the pledge of the Pledged Stock pursuant to this Agreement
does not violate Regulation G, T, U or X of the Federal Reserve
Board or any successor thereto as of the date hereof.
SECTION 1.4. Registration in Nominee Name; Denominations. The
Collateral Agent, on behalf of the Secured Parties, shall have the right (in its
sole and absolute discretion) to hold the Pledged Securities in its own name as
pledgee, the name of its nominee (as pledgee or as sub-agent) or the name of the
Stock Pledgor, endorsed or assigned in blank or in favor of the Collateral
Agent. The Stock Pledgor will promptly give to the Collateral Agent copies of
any notices or other communications received by it with respect to Pledged
Securities registered in the name of the Stock Pledgor. The Collateral Agent
shall at all times have the right to exchange the certificates representing
Pledged Securities for certificates of smaller or larger denominations for any
purpose consistent with this Agreement.
SECTION 1.5. Voting Rights; Dividends and Interest, etc. (a) Unless
and until an Event of Default under any of the Indentures shall have occurred
and be continuing:
(i) The Stock Pledgor shall be entitled to exercise any and
all voting and/or other consensual rights and powers inuring to an
owner of Pledged Securities or any part thereof for any purpose
consistent with the terms of this Agreement and the Indentures;
provided, however, that the Stock Pledgor will not be entitled to
exercise any such right if the result thereof could materially and
adversely affect the rights inuring to a holder of the Pledged
Securities or the rights and remedies of any of the Secured Parties
under this Agreement or the Indentures or the ability of the Secured
Parties to exercise the same.
(ii) The Collateral Agent shall execute and deliver to the
Stock Pledgor, or cause to be executed and delivered to the Stock
Pledgor, all such proxies, powers of attorney and other instruments
as the Stock Pledgor may reasonably request for the purpose of
enabling the Stock Pledgor to exercise the voting and/or consensual
rights and powers it is entitled to exercise pursuant to
subparagraph (i) above and to receive the cash dividends it is
entitled to receive pursuant to subparagraph (iii) below.
(iii) The Stock Pledgor shall be entitled to receive and
retain any and all cash dividends paid on the Pledged Securities to
the extent and only to the extent that such cash dividends are
permitted by, and otherwise paid in accordance with, the terms and
conditions of the Indentures and applicable laws. All noncash
dividends and all dividends paid or payable in cash or otherwise in
connection with a partial or total liquidation or dissolution,
return of capital, capital surplus or paid-
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in surplus, and all other distributions (other than distributions
referred to in the preceding sentence) made on or in respect of the
Pledged Securities, whether paid or payable in cash or otherwise,
whether resulting from a subdivision, combination or
reclassification of the outstanding capital stock of the issuer of
any Pledged Securities or received in exchange for Pledged
Securities or any part thereof, or as a result of any merger,
consolidation, acquisition or other exchange of assets to which such
issuer may be a party or otherwise, shall be and become part of the
Note/Debenture Collateral, and, if received by any Stock Pledgor,
shall not be commingled by such Stock Pledgor with any of its other
funds or property but shall be held separate and apart therefrom,
shall be held in trust for the benefit of the Collateral Agent and
shall be forthwith delivered to the Collateral Agent in the same
form as so received (with any necessary endorsement).
(b) Upon the occurrence and during the continuance of an Event of
Default, all rights of any Stock Pledgor to dividends that the Stock Pledgor is
authorized to receive pursuant to paragraph (a)(iii) above shall cease, and all
such rights shall thereupon become vested in the Collateral Agent, which shall
have the sole and exclusive right and authority to receive and retain such
dividends. All dividends received by the Stock Pledgor contrary to the
provisions of this Section 5 shall be held in trust for the benefit of the
Collateral Agent, shall be segregated from other property or funds of the Stock
Pledgor and shall be forthwith delivered to the Collateral Agent in the same
form as so received (with any necessary endorsement). Any and all money and
other property paid over to or received by the Collateral Agent pursuant to the
provisions of this paragraph (b) shall be retained by the Collateral Agent in an
account to be established by the Collateral Agent upon receipt of such money or
other property and shall be applied in accordance with the provisions of Section
1.7. After all Events of Default have been cured or waived, the Collateral Agent
shall, within five Business Days after all such Events of Default have been
cured or waived, repay to the Stock Pledgor all cash dividends (without
interest), that the Stock Pledgor would otherwise be permitted to retain
pursuant to the terms of paragraph (a)(iii) above and which remain in such
account.
(c) Upon the occurrence and during the continuance of an Event of
Default, all rights of any Stock Pledgor to exercise the voting and consensual
rights and powers it is entitled to exercise pursuant to paragraph (a)(i) of
this Section 1.5, and the obligations of the Collateral Agent under paragraph
(a)(ii) of this Section 1.5, shall cease, and all such rights shall thereupon
become vested in the Collateral Agent, which shall have the sole and exclusive
right and authority to exercise such voting and consensual rights and powers,
provided that, unless otherwise directed by the holders of the Notes and the
Debentures, the Collateral Agent shall have the right from time to time
following and during the continuance of an Event of Default to permit the Stock
Pledgor to exercise such rights. After all Events of Default have been cured or
waived, the Stock Pledgor will have the right to exercise the voting and
consensual rights and powers that it would otherwise be entitled to exercise
pursuant to the terms of paragraph (a)(i) above.
SECTION 1.6. Remedies upon Default. Upon the occurrence and during
the continuance of an Event of Default subject to applicable regulatory and
legal requirements, the Collateral Agent may sell the Note/Debenture Collateral,
or any part thereof, at public or private sale or at any broker's board or on
any securities exchange, for cash, upon credit or for future
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delivery as the Collateral Agent shall deem appropriate. The Collateral Agent
shall be authorized at any such sale (if it deems it advisable to do so) to
restrict the prospective bidders or purchasers to persons who will represent and
agree that they are purchasing the Note/Debenture Collateral for their own
account for investment and not with a view to the distribution or sale thereof,
and upon consummation of any such sale the Collateral Agent shall have the right
to assign, transfer and deliver to the purchaser or purchasers thereof the
Note/Debenture Collateral so sold. Each such purchaser at any such sale shall
hold the property sold absolutely free from any claim or right on the part of
any Stock Pledgor, and, to the extent permitted by applicable law, the Stock
Pledgor hereby waives all rights of redemption, stay, valuation and appraisal
that the Stock Pledgor now has or may at any time in the future have under any
rule of law or statute now existing or hereafter enacted.
The Collateral Agent shall give a Stock Pledgor 10 days' prior
written notice (which the Stock Pledgor agrees is reasonable notice within the
meaning of Section 9-504(3) of the Uniform Commercial Code as in effect in the
State of New York or its equivalent in other jurisdictions) of the Collateral
Agent's intention to make any sale of the Stock Pledgor's Note/Debenture
Collateral. Such notice, in the case of a public sale, shall state the time and
place for such sale and, in the case of a sale at a broker's board or on a
securities exchange, shall state the board or exchange at which such sale is to
be made and the day on which the Note/Debenture Collateral, or portion thereof,
will first be offered for sale at such board or exchange. Any such public sale
shall be held at such time or times within ordinary business hours and at such
place or places as the Collateral Agent may fix and state in the notice of such
sale. At any such sale, the Note/Debenture Collateral, or portion thereof, to be
sold may be sold in one lot as an entirety or in separate parcels, as the
Collateral Agent may (in its sole and absolute discretion) determine. The
Collateral Agent shall not be obligated to make any sale of any Note/Debenture
Collateral if it shall determine not to do so, regardless of the fact that
notice of sale of such Note/Debenture Collateral shall have been given. The
Collateral Agent may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by announcement
at the time and place fixed for sale, and such sale may, without further notice,
be made at the time and place to which the same was so adjourned. In case any
sale of all or any part of the Note/Debenture Collateral is made on credit or
for future delivery, the Note/Debenture Collateral so sold may be retained by
the Collateral Agent until the sale price is paid in full by the purchaser or
purchasers thereof but the Collateral Agent shall not incur any liability in
case any such purchaser or purchasers shall fail to take up and pay for the
Note/Debenture Collateral so sold and, in case of any such failure, such
Note/Debenture Collateral may be sold again upon like notice. At any public (or,
to the extent permitted by applicable law, private) sale made pursuant to this
Section 1.6, any Secured Party may bid for or purchase, free from any right of
redemption, stay or appraisal on the part of any Stock Pledgor (all said rights
being also hereby waived and released), the Note/Debenture Collateral or any
part thereof offered for sale and may make payment on account thereof by using
any claim then due and payable to it from the Stock Pledgor as a credit against
the purchase price, and it may, upon compliance with the terms of sale, hold,
retain and dispose of such property without further accountability to such
Pledgor therefor. For purposes hereof, (a) a written agreement to purchase the
Note/Debenture Collateral or any portion thereof shall be treated as a sale
thereof, (b) the Collateral Agent shall be free to carry out such sale pursuant
to such agreement and (c) the Stock Pledgor shall not be entitled to the return
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of the Note/Debenture Collateral or any portion thereof subject thereto,
notwithstanding the fact that after the Collateral Agent shall have entered into
such an agreement all Events of Default shall have been remedied and the
Note/Debenture Obligations paid in full. As an alternative to exercising the
power of sale herein conferred upon it, the Collateral Agent may proceed by a
suit or suits at law or in equity to foreclose upon the Note/Debenture
Collateral and to sell the Note/Debenture Collateral or any portion thereof
pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court-appointed receiver. Any sale
pursuant to the provisions of this Section 1.6 shall be deemed to conform to the
commercially reasonable standards as provided in Section 9-504(3) of the Uniform
Commercial Code as in effect in the State of New York or its equivalent in other
jurisdictions.
SECTION 1.7. Reimbursement of Collateral Agent. (a) The Stock
Pledgor agrees to pay upon demand to the Collateral Agent the amount of any and
all reasonable expenses, including the reasonable fees, other charges and
disbursements of its counsel and of any experts or agents, that the Collateral
Agent may incur in connection with (i) the administration of this Agreement,
(ii) the custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Note/Debenture Collateral, (iii) the exercise or
enforcement of any of the rights of the Collateral Agent hereunder or (iv) the
failure by the Stock Pledgor to perform or observe any of the provisions hereof.
(b) The Stock Pledgor agrees to indemnify the Collateral Agent
against, and hold the Collateral Agent harmless from, any and all losses,
claims, damages, liabilities and related expenses, including reasonable counsel
fees, other charges and disbursements, incurred by or asserted against the
Collateral Agent arising out of, in any way connected with, or as a result of
(i) the execution or delivery of this Agreement or any agreement or instrument
contemplated hereby, the performance by the parties hereto of their respective
obligations hereunder or the consummation of the Transactions (as defined in the
Purchase Agreement) and the other transactions contemplated hereby or (ii) any
claim, litigation, investigation or proceeding relating to any of the foregoing,
whether or not the Collateral Agent is a party thereto, provided that such
indemnity shall not, as to the Collateral Agent, be available to the extent that
such losses, claims, damages, liabilities or related expenses are determined by
a court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Collateral
Agent.
(c) Any amounts payable as provided hereunder shall be additional
Note/Debenture Obligations secured hereby and by the Indentures. The provisions
of this Section 1.7 shall remain operative and in full force and effect
regardless of the termination of this Agreement, the consummation of the
transactions contemplated hereby, the repayment of any of the Note/Debenture
Obligations, the invalidity or unenforceability of any term or provision of this
Agreement or any investigation made by or on behalf of the Collateral Agent or
any other Secured Party. All amounts due under this Section 1.7 shall be payable
on written demand therefor and shall bear interest at the rate specified
therefor in the Notes and the Debentures, as relevant.
SECTION 1.8. Collateral Agent Appointed Attorney-in-Fact. The Stock
Pledgor hereby appoints the Collateral Agent the attorney-in-fact of the Stock
Pledgor for the purpose of carrying out the provisions of this Agreement and
taking any action and executing any instrument
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that the Collateral Agent may deem necessary or advisable to accomplish the
purposes hereof, which appointment is irrevocable and coupled with an interest.
Without limiting the generality of the foregoing, the Collateral Agent shall
have the right, upon the occurrence and during the continuance of an Event of
Default, with full power of substitution either in the Collateral Agent's name
or in the name of the Stock Pledgor, to ask for, demand, sue for, collect,
receive and give acquittance for any and all moneys due or to become due under
and by virtue of any Note/Debenture Collateral, to endorse checks, drafts,
orders and other instruments for the payment of money payable to the Stock
Pledgor representing any interest or dividend or other distribution payable in
respect of the Note/Debenture Collateral or any part thereof or on account
thereof and to give full discharge for the same, to settle, compromise,
prosecute or defend any action, claim or proceeding with respect thereto, and to
sell, assign, endorse, pledge, transfer and to make any agreement respecting, or
otherwise deal with, the same; provided, however, that nothing herein contained
shall be construed as requiring or obligating the Collateral Agent to make any
commitment or to make any inquiry as to the nature or sufficiency of any payment
received by the Collateral Agent, or to present or file any claim or notice, or
to take any action with respect to the Note/Debenture Collateral or any part
thereof or the moneys due or to become due in respect thereof or any property
covered thereby. The Collateral Agent and the other Secured Parties shall be
accountable only for amounts actually received as a result of the exercise of
the powers granted to them herein, and neither they nor their officers,
directors, employees or agents shall be responsible to the Stock Pledgor for any
act or failure to act hereunder, except for their own gross negligence or
willful misconduct.
SECTION 1.9. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
are cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provisions of this Agreement or consent to any
departure by the Stock Pledgor therefrom shall in any event be effective unless
the same shall be permitted by paragraph (b) below, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. No notice or demand on the Stock Pledgor in any case shall entitle
the Stock Pledgor to any other or further notice or demand in similar or other
circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified unless the conditions specified in Sections 9.01 and 9.02 of
the Indentures have been satisfied and a written agreement is entered into
between the Collateral Agent and the Stock Pledgor with respect to which such
waiver, amendment or modification is to apply.
SECTION 1.10. Securities Act, etc. In view of the position of the
Stock Pledgor in relation to the Pledged Securities, or because of other current
or future circumstances, a question may arise under the Securities Act of 1933,
as now or hereafter in effect, or any similar statute hereafter enacted
analogous in purpose or effect (such Act and any such similar statute as from
time to time in effect being called the "Federal Securities Laws") with respect
to any disposition of the Pledged Securities permitted hereunder. The Stock
Pledgor understands that compliance with the Federal Securities Laws might very
strictly limit the course of conduct of the
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Collateral Agent if the Collateral Agent were to attempt to dispose of all or
any part of the Pledged Securities, and might also limit the extent to which or
the manner in which any subsequent transferee of any Pledged Securities could
dispose of the same. Similarly, there may be other legal restrictions or
limitations affecting the Collateral Agent in any attempt to dispose of all or
part of the Pledged Securities under applicable Blue Sky or other state
securities laws or similar laws analogous in purpose or effect. The Stock
Pledgor recognizes that in light of such restrictions and limitations the
Collateral Agent may, with respect to any sale of the Pledged Securities, limit
the purchasers to those who will agree, among other things, to acquire such
Pledged Securities for their own account, for investment, and not with a view to
the distribution or resale thereof. The Stock Pledgor acknowledges and agrees
that in light of such restrictions and limitations, the Collateral Agent, in its
sole and absolute discretion, (a) may proceed to make such a sale whether or not
a registration statement for the purpose of registering such Pledged Securities
or part thereof shall have been filed under the Federal Securities Laws and (b)
may approach and negotiate with a single potential purchaser to effect such
sale. The Stock Pledgor acknowledges and agrees that any such sale might result
in prices and other terms less favorable to the seller than if such sale were a
public sale without such restrictions. In the event of any such sale, the
Collateral Agent shall incur no responsibility or liability for selling all or
any part of the Pledged Securities at a price that the Collateral Agent, in its
sole and absolute discretion, may in good faith deem reasonable under the
circumstances, notwithstanding the possibility that a substantially higher price
might have been realized if the sale were deferred until after registration as
aforesaid or if more than a single purchaser were approached. The provisions of
this Section 1.10 will apply notwithstanding the existence of a public or
private market upon which the quotations or sales prices may exceed
substantially the price at which the Collateral Agent sells.
SECTION 1.11. Registration, etc. The Stock Pledgor agrees that, upon
the occurrence and during the continuance of an Event of Default hereunder, if
for any reason the Collateral Agent desires to sell any of the Pledged
Securities at a public sale, it will, at any time and from time to time, upon
the written request of the Collateral Agent, use its best efforts to take or to
cause the issuer of such Pledged Securities to take such action and prepare,
distribute and/or file such documents, as are required or advisable in the
reasonable opinion of counsel for the Collateral Agent to permit the public sale
of such Pledged Securities. The Stock Pledgor further agrees to indemnify,
defend and hold harmless the Collateral Agent, each other Secured Party, any
underwriter and their respective officers, directors, affiliates and controlling
persons from and against all loss, liability, expenses, costs of counsel
(including, without limitation, reasonable fees and expenses to the Collateral
Agent of legal counsel), and claims (including the costs of investigation) that
they may incur insofar as such loss, liability, expense or claim arises out of
or is based upon any alleged untrue statement of a material fact contained in
any prospectus (or any amendment or supplement thereto) or in any notification
or offering circular, or arises out of or is based upon any alleged omission to
state a material fact required to be stated therein or necessary to make the
statements in any thereof not misleading, except insofar as the same may have
been caused by any untrue statement or omission based upon information furnished
in writing to the Stock Pledgor or the issuer of such Pledged Securities by the
Collateral Agent or any other Secured Party expressly for use therein. The Stock
Pledgor further agrees, upon such written request referred to above, to use its
best efforts to qualify, file or register, or cause the issuer of such Pledged
Securities to qualify, file or register, any of the Pledged Securities under the
Blue
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Sky or other securities laws of such states as may be requested by the
Collateral Agent and keep effective, or cause to be kept effective, all such
qualifications, filings or registrations. The Stock Pledgor will bear all costs
and expenses of carrying out its obligations under this Section 1. 1 1. The
Stock Pledgor acknowledges that there is no adequate remedy at law for failure
by it to comply with the provisions of this Section 1.11 and that such failure
would not be adequately compensable in damages, and therefore agrees that its
agreements contained in this Section 1. 1 1 may be specifically enforced.
SECTION 1.12. Security Interest Absolute. All rights of the
Collateral Agent hereunder, the grant of a security interest in the
Note/Debenture Collateral and all obligations of the Stock Pledgor hereunder,
shall be absolute and unconditional irrespective of (a) any lack of validity or
enforceability of the Indentures, the Notes or the Debentures with respect to
any of the Note/Debenture Obligations or any other agreement or instrument
relating to any of the foregoing, (b) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Note/Debenture
Obligations, or any other amendment or waiver of or any consent to any departure
from the Indentures, the Notes or the Debentures relating to any of the
foregoing, (c) any exchange, release or nonperfection of any other collateral,
or any release or amendment or waiver of or consent to or departure from any
guaranty, for all or any of the Note/Debentures Obligations or (d) any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, the Stock Pledgor in respect of the Note/Debenture Obligations or
in respect of this Agreement (other than the indefeasible payment in full of all
the Note/Debenture Obligations).
SECTION 1.13. Termination or Release. (a) This Agreement (except for
Section 1.7) and the security interests granted hereby shall terminate when all
the Note/Debenture Obligations have been indefeasibly paid in full.
(b) In connection with any termination pursuant to paragraph (a),
the Collateral Agent shall execute and deliver to the Stock Pledgor, at the
Stock Pledgor's expense, all documents that the Stock Pledgor shall reasonably
request to evidence such termination. Any execution and delivery of documents
pursuant to this Section 1. 14 shall be without recourse to or warranty by the
Collateral Agent.
ARTICLE II
Priority of Rights
SECTION 2.1. Second Priority Creditors. Each holder of any Debenture
agrees that (i) the interests of the holders of Senior Notes and the holders of
Senior Subordinated Notes, including their interests in any payments to be made
from the proceeds of any sale or other perfection or creation of any security
interests or liens in the Note/Debenture Collateral on behalf of any Secured
Party shall be prior to the interests of the holders of the Debentures in the
Note/Debenture Collateral, including their interests in any such payments, to
the extent and in the manner provided in Section 2.3, (and from time to time
shall execute and deliver any instruments or agreements as may be reasonably
necessary or desirable to confirm the same) and (ii) at all times that a Default
under the Senior Notes or Senior Note Indenture or Senior Subordinated
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Notes or Senior Subordinated Note Indenture has occurred and is continuing,
absent the consent of the holders of a majority of the aggregate principal
amount of each of the Senior Notes outstanding and the Senior Subordinated Notes
outstanding, the holders of the Debentures shall refrain from taking any action
to foreclose upon, acquire title to (by bidding in at foreclosure or otherwise),
take possession of, liquidate or otherwise proceed against any of the
Note/Debenture Collateral.
SECTION 2.2. Senior Subordinated Noteholders. Each holder of any
Senior Subordinated Note agrees that at all times that a Default has occurred
and is continuing under the Senior Notes or Senior Note Indenture, the holders
of the Senior Subordinated Notes shall (a) absent the consent of the holders of
a majority of the aggregate principal amount of Senior Notes outstanding,
refrain from taking any action toward collection of or enforcement or otherwise
exercise any rights of such holders of Senior Subordinated Notes with respect to
the Note/Debenture Collateral, whether pursuant to applicable law, contract or
otherwise, including any and all rights concerning foreclosure upon the
Note/Debenture Collateral and (b) shall (i) with respect to any bankruptcy,
insolvency, or similar proceeding, not be entitled to vote with respect to the
Note/Debenture Collateral or their rights with respect thereto, whether pursuant
to applicable law (including applicable bankruptcy or insolvency law), contract
(including the Senior Subordinated Indenture), or otherwise, and (ii) in
connection with any vote in respect of the Note/Debenture Collateral (including
in any bankruptcy, insolvency or similar proceeding or otherwise), be deemed to
have voted in the same manner and to the same effect as the holders of a
majority of the aggregate principal amount of Senior Notes then outstanding, and
the holders of the Senior Subordinated Notes hereby assign pursuant to the
Security Sharing Agreement such rights to vote to the holders of the Senior
Notes for the duration of any such Default for the purposes of effecting any
such vote; provided, that the foregoing provisions (A) shall only apply to the
holders of the Senior Subordinated Notes so long as the amount owed by the Note
Issuers or the Company to the holders of the Senior Notes in respect of the
Senior Notes and the Senior Note Indenture exceeds U.S.$50 million and (B) shall
not create any contractual obligation on holders of the Senior Notes to take or
refrain from taking any action with respect to the Note/Debenture Collateral.
SECTION 2.3. Distribution. The proceeds of any enforcement,
collection or other realization of all or any part of the Note/Debenture
Collateral pursuant hereto shall be paid to the Collateral Agent. The Collateral
Agent shall deposit these proceeds into accounts it will establish and maintain
at its principal corporate trust office in New York, New York for the benefit of
the Secured Parties (the "Collateral Accounts"). The Collateral Agent may
appropriate and apply sums received by it in connection with the enforcement of
all outstanding Note/Debenture Obligations to the credit of any of the accounts
which have been established in the name of the Collateral Agent, or over which
the Collateral Agent holds a security interest on behalf of the Secured Parties
or other sums the disposition of which it has the power to control, in relation
to this Agreement or the Indentures. Such sums shall be applied to the following
order of priority:
(a) first, in payment of all costs, charges, fees, expenses and
liabilities incurred and payments made by and indemnities owed
to (collectively, "costs") the Collateral Agent and any
receiver, attorney, agent, delegate, subdelegate or
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other person (each a "receiver") appointed by the Collateral
Agent in accordance with the terms of this Agreement or the
Indentures in connection with the performance of its
obligations hereunder or thereunder or the execution or
purported execution of any powers, authorities or discretions
vested in it or him pursuant hereto or thereto including
(without limitation to the foregoing) the remuneration of the
Collateral Agent;
(b) second, pro rata to: the Notes Depositary and the Notes
Trustees, in payment for all Notes Obligations that consist of
costs incurred in connection with the administration of the
Note Depositary Agreement and the applicable Indentures;
(c) third, to the payment in full of the Note Obligations (the
amounts so applied to be distributed among the Secured Parties
ratably to the respective entitlements of the applicable
Secured Parties (as the case may be) in accordance with the
amounts of the Note Obligations owed to them on the date of
any such distribution);
(d) fourth, to the Debenture Depositary and the Debenture Trustee,
in payment for all Debentures Obligations consisting of costs
incurred in connection with the administration of the
Debenture Depositary Agreement and the Debenture Indenture;
(e) fifth, to the payment in full of the Debenture Obligations;
and
(f) sixth, to the extent that any funds remain, to the Stock
Pledgor, its successors or assigns, or as a court of competent
jurisdiction may otherwise direct.
ARTICLE III
Appointment of Collateral Agent
Each of the Secured Parties hereby irrevocably appoints and
authorizes the Collateral Agent to act as the Collateral Agent for and on its
behalf in respect of the Notes/Debenture Collateral on the same terms and
conditions as provided under Articles 3 and 4 of the Security Sharing Agreement;
provided, however, that, for purposes of this Agreement, references in such
Articles 3 and 4: (i) to the "Secured Creditors" shall be deemed to be
references to the Secured Parties, (ii) to the "Revenue Account, the Operating
Account and the Notes Sinking Fund Account" shall be deemed to be references to
the Notes DSR Account and the Offshore Revenue Account, (iii) to the "Security
Documents" shall be deemed to be references to this Agreement, (iv) to "this
Agreement", when used alone and not in conjunction with the term "Security
Documents," shall be deemed to be references to this Agreement, (v) to "this
Agreement", when used in conjunction with the term "Security Documents," shall
be deemed to have been deleted, (vi) to the "Secured Creditors' Representative"
shall be deemed to be references to the Trustee, (vii) to the "Shared
Collateral" shall be deemed to be references to the Notes/Debenture Collateral,
(viii) to the "Collateral" shall be deemed to be references to the
Notes/Debenture Collateral, (ix) to the "Credit Documents" shall be deemed to be
references to the Indentures, the Notes, the Debentures and this Agreement, (x)
to "Secured Indebtedness" and "Total Secured Indebtedness" shall be deemed to be
references to
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the Notes/Debenture Obligations and (xi) to the "Issuers and the Company" shall
be deemed to be references to the Stock Pledgor; and all references in such
Article 3 and 4 to the "Thai Lenders", the "Thai Facility Agent" and the "Bank
Credit Facility" shall be deemed to have been deleted.
ARTICLE IV
Miscellaneous
SECTION 4.1. Notices. All communications and notices hereunder shall
be in writing and given as provided in Section 14.02 of the Indentures.
SECTION 4.2. Further Assurances. The Stock Pledgor agrees to do such
further acts and things, and to execute and deliver such additional conveyances,
assignments, agreements and instruments, as the Collateral Agent may at any time
reasonably request in connection with the administration and enforcement of this
Agreement or with respect to the Note/Debenture Collateral or any part thereof
or in order better to assure and confirm unto the Collateral Agent its rights
and remedies hereunder.
SECTION 4.3. Binding Effect; Several Agreement; Assignments.
Whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns of such party;
and all covenants, promises and agreements by or on behalf of the Stock Pledgor
that are contained in this Agreement shall bind and inure to the benefit of its
successors and assigns. This Agreement shall become effective as to the Stock
Pledgor when a counterpart hereof executed on behalf of such Stock Pledgor shall
have been delivered to the Collateral Agent and a counterpart hereof shall have
been executed on behalf of the Collateral Agent and thereafter shall be binding
upon such Stock Pledgor and the Collateral Agent and their respective successors
and assigns, and shall inure to the benefit of such Stock Pledgor, the
Collateral Agent, the Trustee and the other Secured Parties, and their
respective successors and assigns, except that Stock Pledgor shall not have the
right to assign its rights hereunder or any interest herein or in the
Note/Debenture Collateral (and any such attempted assignment shall be void),
except as expressly contemplated by this Agreement or the Indentures.
SECTION 4.4. Survival of Agreement; Severability. (a) All covenants,
agreements, representations and warranties made by the Stock Pledgor herein and
in the certificates or other instruments prepared or delivered in connection
with or pursuant to this Agreement shall be considered to have been relied upon
by the Collateral Agent, the Trustee and the other Secured Parties and shall
survive the issuance of the Notes by the Note Issuers and the sale of the
Debentures by the Issuers, regardless of any investigation made by the Secured
Parties or on their behalf, and shall continue in full force and effect as long
as the principal of or any accrued interest on or any other fee or amount
payable under this Agreement is outstanding and unpaid.
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(b) In the event any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby (it being understood
that the invalidity of a particular provision in a particular jurisdiction shall
not in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in goodfaith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
(c) This Agreement shall remain in full force and effect as to all
Note/Debenture Obligations remaining unpaid, not withstanding the discharge and
payment in full of any and all Note/Debenture Obligations owned under any one or
more of the Indentures. Upon any such discharge of any one or more of the
Indentures, the Stock Pledgor hereby agrees to enter into such conforming
changes hereto as shall be reasonably satisfactory to the Trustee confirming the
rights provided hereunder in respect of the remaining Note/Debenture Obligations
outstanding.
SECTION 4.5. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 4.6. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute a single contract, and shall become
effective as provided in Section 3.3. Delivery of an executed counterpart of a
signature page to this Agreement by facsimile transmission shall be as effective
as delivery of a manually executed counterpart of this Agreement.
SECTION 4.7. Rules of Interpretation. The rules of interpretation
specified in Section 1.04 of the Indentures shall be applicable to this
Agreement. Section headings used herein are for convenience of reference only,
are not part of this Agreement and are not to affect the construction of, or to
be taken into consideration in interpreting this Agreement.
SECTION 4.7. Jurisdiction; Consent to Service of Process. (a) The
Stock Pledgor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that, to the extent permitted by applicable law, all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that the Collateral Agent, the Trustee or any other Secured Party may
otherwise have to bring any action or proceeding relating to this Agreement
against the Stock Pledgor or its properties in the courts of any jurisdiction.
-14-
<PAGE>
(b) The Stock Pledgor hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection that
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any New York State or
Federal court. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 3.1. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 4.8. Waiver Of Jury Trial. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 4.9. Execution of Financing Statements. Pursuant to Section
9-402 of the Uniform Commercial Code as in effect in the State of New York or
its equivalent in other jurisdictions, the Stock Pledgor authorizes the
Collateral Agent to file financing statements with respect to the Pledged Stock
owned by it without the signature of the Stock Pledgor in such form and in such
filing offices as the Collateral Agent reasonably determines appropriate to
perfect the security interests of the Collateral Agent under this Agreement. A
carbon, photographic or other reproduction of this Agreement shall be sufficient
as a financing statement for filing in any jurisdiction.
SECTION 4.10. Amendments. No modifications, waiver or amendment of
any provision of this Agreement shall in any event be effective unless the same
shall be in writing and signed by the Stock Pledgor, the Trustee and the
Collateral Agent; provided, however, that (i) no such modification, waiver or
amendment shall adversely effect any of the Collateral Agent's rights,
immunities or rights to indemnification under this Agreement or expand its
duties or obligations under this Agreement without the prior written consent of
the Collateral Agent and (ii) no such modification, waiver or amendment shall
(A) create any lien on the Collateral, or any part thereof or terminate any part
of the security interest of the Collateral Agent in all or substantially all of
the Collateral or (B) deprive the holders of the Notes or Debentures of any part
of the security afforded hereunder, in each case without the consent of (x) the
Trustee on behalf of the Senior Notes and Senior Subordinated Notes, acting at
the direction of a majority of the holders of outstanding Note Obligations
(unless the holders of the Senior Notes and Senior Subordinated Notes shall have
released the Stock Pledgor of its obligations hereunder) and (y) the Trustee on
-15-
<PAGE>
behalf of the holders of the Debentures, acting at the direction of a majority
of the holders of outstanding Debenture Obligations.
SECTION 4.11. No Waiver. No failure or delay on the part of any of
the parties hereto in exercising any right, power or privilege under this
Agreement shall impair such right, power or privilege or be construed to be a
waiver of any default or acquiescence therein, nor shall any single or partial
exercise of any such right, power or privilege preclude other or further
exercise thereof or of any other right, power or privilege.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
NSM STEEL COMPANY LTD.,
By : /s/ John W. Shultes
--------------------------
Title: President/CEO
THE CHASE MANHATTAN BANK, as Trustee,
By : /s/ Valerie Dunbar
--------------------------
Title: Vice President
THE CHASE MANHATTAN BANK, as Collateral Agent,
By : /s/ Valerie Dunbar
--------------------------
Title: Vice President
-16-
<PAGE>
Schedule I to the
Pledge Agreement
<TABLE>
<CAPTION>
Number and
Number of Class of Percentage
Issuer Certificate Registered Owner Shares of Shares
- ------ ----------- ---------------- ------ ---------
<S> <C> <C> <C> <C>
NSM Steel (Delaware), Inc. NSM Steel Company Ltd. 10,000 shares 100
of common
stock,
U.S.$1.00 par
value
</TABLE>
<PAGE>
Exhibit 4.19
EXECUTION COPY
SECURITY AGREEMENT dated as of March 12, 1998, among Nakomthai Strip Mill
Public Company Limited ("NSM" or the "Company"), a public limited company duly
organized and validly existing under laws of the Kingdom of Thailand, NSM Steel
(Delaware) Inc. ("NSM (Del)"), a Delaware corporation, NSM Steel Company, Ltd.,
a Cayman Islands company ("NSM Cayman" and, together with the Company and NSM
(Del), the "Grantors"), The Chase Manhattan Bank, a New York banking corporation
("Chase"), as trustee (in such capacities, the "Trustee") under each of the
Indentures (as defined below), Chase, as collateral agent (in such capacity, the
"Collateral Agent") hereunder, and Chase, as deposit bank (in such capacity, the
"Deposit Bank").
NSM (Del) and NSM Cayman (collectively, the "Note Issuers"), propose to
issue and sell to NatWest Capital Markets Limited ("NatWest"), McDonald &
Company Securities, Inc. ("McDonald"), Paine Webber Incorporated ("Paine
Webber") and ECT Securities Corp ("ECT" and, together with NatWest, McDonald and
ECT, the "Initial Purchasers"), upon the terms set forth in a purchase agreement
dated March 2, 1998 (the "Purchase Agreement"), among the Note Issuers, NSM and
the Initial Purchasers, $249,000,000 principal amount at maturity of 12% Senior
Mortgage Notes Due 2006 (the "Senior Notes") and $175,010,000 (Gross Proceeds)
Representing 203,500 Units (the "Units" and, together with the Senior Notes, the
"Offered Securities"), each unit consisting of one 12 1/4% Senior Subordinated
Mortgage Note Due 2008 with a principal amount at maturity of $ 1,000
(collectively, the "Senior Subordinated Notes" and, together with the Senior
Notes, the "Notes") and 633.09266 warrants, each to purchase one ordinary share,
par value 10 Baht per share (the "Ordinary Shares"), of NSM. In connection with,
and concurrently with the consummation of, the issuance and sale of the Offered
Securities, the Grantors propose to consummate a private placement consisting of
$53,133,016 aggregate principal amount at maturity of 12 3/4% Subordinated
Second Mortgage Debentures Due 2009 (the "Debentures").
The Senior Notes will be irrevocably and unconditionally guaranteed
as to principal, premium, interest and Additional Amounts, if any, by NSM. The
Senior Subordinated Notes will be irrevocably and unconditionally guaranteed as
to principal, premium, interest and Additional Amounts, if any, by NSM. The
Debentures will be irrevocably and unconditionally guaranteed as to principal,
premium, interest and Additional Amounts, if any, by NSM. The Senior Notes will
be issued under an indenture dated as of March 1, 1998 (the "Senior Note
Indenture"), among the Note Issuers, NSM and the Trustee. The Senior
Subordinated Notes will be issued pursuant to an indenture dated as of March 1,
1998 (the "Senior Subordinated Note Indenture"), among the Note Issuers, NSM,
and the Trustee. The Debentures will be issued pursuant to an Indenture dated as
of March 1, 1998 (the "Debenture Indenture" and, together with the Senior Note
Indenture and the Senior Subordinated Note Indenture, the "Indentures"), among
the Note Issuers, NSM and the Trustee.
Pursuant to the terms of the Indentures, the Grantors have agreed to
execute and deliver an agreement in the form hereof to secure all obligations of
the Note Issuers and the Company under the Notes and the Indentures goveming the
Notes (the "Note Obligations") and all obligations of the Note Issuers and the
Company under the Debentures and the Debenture Indenture (the "Debenture
Obligations" and, together with the Note Obligations, the "Obligations").
Accordingly, the Grantors and the Collateral Agent on behalf of each
of the holders of the Notes and the Debentures, including any Depository (as
defined in the Security Sharing Agreement) therefor (the "Secured Parties"),
hereby agree as follows:
<PAGE>
2
ARTICLE I
Definitions
SECTION 1.01. Definition of Terms Used Herein. Unless the context
otherwise requires, all capitalized terms used but not defined herein shall have
the meanings set forth in the Indentures and all references to the Uniform
Commercial Code shall mean the Uniform Commercial Code in effect in the State of
New York as of the date hereof.
SECTION 1.02. Definition of Certain Terms Used Herein. As used herein, the
following terms shall have the following meanings:
"Accounts" shall mean the Notes DSR Account and the Offshore Reserve
Account.
"Collateral" shall mean (a) the Notes DSR Account, (b) the Offshore
Reserve Account, (c) any Investment Property or Financial Assets held or owned
in or through either of (a) or (b) and (d) any and all Proceeds of the
foregoing.
"Entitlement Holder" shall mean a person identified in the records of a
Securities Intermediary as the person having a Security Entitlement against the
Securities Intermediary. If a person acquires a Security Entitlement by virtue
of Section 8-501(b)(2) or (3) of the Uniform Commercial Code, such person is the
Entitlement Holder.
"Entitlement Order" shall mean a notification communicated to a Securities
Intermediary (including without limitation the Deposit Bank) directing transfer
or redemption of a Financial Asset to which the Entitlement Holder (including
but not limited to the Grantor) has a Security Entitlement.
"Financial Asset" shall mean (a) a Security, (b) an obligation of a person
or a share, participation or other interest in a person or in property or an
enterprise of a person, which is, or is of a type, dealt with in or traded on
financial markets, or which is recognized in any area in which it is issued or
dealt in as a medium for investment or (c) any property that is held by a
Securities Intermediary for another person in a Securities Account if the
Securities Intermediary has expressly agreed with the other person that the
property is to be treated as a Financial Asset under Article 8 of the Uniform
Commercial Code. As the context requires, the term Financial Asset shall mean
either the interest itself or the means by which a person's claim to it is
evidenced, including a certificate or uncertificated Security, a certificate
representing a Security or a Security Entitlement.
"Investment Property' shall mean all Securities (whether certificated or
uncertificated), Security Entitlements and Securities Accounts of any Grantor
held by the Collateral Agent, under its exclusive dominion and control, in or
through the Accounts whether now owned or hereafter acquired by the Collateral
Agent.
"Notes DSR Account " shall have the meaning assigned to such term in the
Security Sharing Agreement.
'Offshore Reserve Account' shall have the meaning assigned to such term in
the Security Sharing Agreement.
"Person" shall mean any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
<PAGE>
3
"Proceeds " shall mean any consideration received from the sale, exchange,
license, lease or other disposition of Collateral, any value received as a
consequence of the possession of any Collateral and any payment received from
any insurer or other person or entity as a result of the destruction, loss,
theft, damage or other involuntary conversion of whatever nature of any asset or
property which constitutes Collateral, and shall include (a) all cash and
negotiable instruments received by or held on behalf of the Collateral Agent and
(b) any and all other amounts from time to time paid or payable under or in
connection with any of the Collateral.
"Secured Parties" shall have the meaning assigned to such term in the
introduction to this Agreement.
"Securities " shall mean any obligations of an issuer or any shares,
participation's or other interests in an issuer or in property or an enterprise
of an issuer which (a) are represented by a certificate representing a security
in bearer or registered form, or the transfer of which may be registered upon
books maintained for that purpose by or on behalf of the issuer, (b) are one of
a class or series or by its terms is divisible into a class or series of shares,
participation's, interests or obligations and (c)(i) are, or are of a type,
dealt with or trade on securities exchanges or securities markets or (ii) are a
medium for investment and by their terms expressly provide that they are a
security governed by Article 8 of the Uniform Commercial Code.
"Securities Account' shall mean an account to which a Financial Asset is
or may be credited in accordance with an agreement under which the person
maintaining the account undertakes to treat the person for whom the account is
maintained as entitled to exercise rights that comprise the Financial Asset.
"Security Entitlements" shall mean the rights and property interests of an
Entitlement Holder with respect to a Financial Asset.
"Security Interest" shall have the meaning assigned to such term in
Section 2.01.
"Securities Intermediary" shall mean (a) a clearing corporation or (b) a
person, including a bank or broker, that in the ordinary course of its business
maintains securities accounts for others and is acting in that capacity.
ARTICLE II
Security Interest
SECTION 2.01 Security Interest. As security for the payment or
performance, as the case may be, in full of the Obligations, each Grantor hereby
bargains, sells, conveys, assigns, sets over, mortgages, pledges, hypothecates
and transfers to the Collateral Agent, its successors and assigns, for the
ratable benefit of the Secured Parties, and hereby grants to the Collateral
Agent, its successors and assigns, for the ratable benefit of the Secured
Parties, a security interest in, all of such Grantor's right, title and interest
in, to and under the Collateral (the "Security Interest"). Without limiting the
foregone, the Collateral Agent is hereby authorized to file one or more
financing statements, continuation statements or other documents for the purpose
of perfecting, confirming, continuing, enforcing or protecting the Security
Interest granted by each Grantor, without the signature of any Grantor, and
naming any Grantor or the Grantors as debtors and the Collateral Agent as
secured party.
<PAGE>
4
SECTION 2.02 No Assumption Liability. The Security Interest is granted as
security only and shall not subject the Collateral Agent or any other Secured
Party to, or in any way alter or modify, any obligation or liability of any
Grantor with respect to or arising out of the Collateral.
ARTICLE III
Representations and Warranties of the Grantors
The Grantors jointly and severally represent and warrant to the Collateral
Agent and the Secured Parties that:
SECTION 3.01. Title and Authority. Each Grantor has good and valid rights
in the Collateral with respect to which it has purported to grant a Security
Interest hereunder and has full power and authority to grant to the Collateral
Agent the Security Interest in such Collateral pursuant hereto and to execute,
deliver and perform its obligations in accordance with the terms of this
Agreement, without the consent or approval of any other person other than any
consent or approval which has been obtained.
SECTION 3.02. Filings. Fully executed Uniform Commercial Code financing
statements or other appropriate filings, recordings or registrations containing
a description of the Collateral with evidence of filing thereon will, as soon as
practicable after the date hereof, be delivered to the Collateral Agent which
are all the filings, recordings and registrations that are necessary to publish
notice of and protect the validity of and to establish a legal, valid and
perfected security interest in favor of the Collateral Agent (for the ratable
benefit of the Secured Parties) in respect of all Collateral in which the
Security Interest may be perfected by filing, recording or registration in the
United States (or any political subdivision thereof) and its territories and
possessions, and no further or subsequent filing-, refiling, recording,
recording, registration or registration is necessary in any such jurisdiction,
except as provided under applicable law with respect to the filing of
continuation statements.
SECTION 3.03 Validity of Security Interest. The Security Interest
constitutes (a) a legal and valid security interest in all the Collateral
securing the payment and performance of the Obligations and (b) subject to the
filings described in Section 3.02 above, a perfected security interest in all
Collateral in which a security interest may be perfected by filing, recording or
registering a financing statement or analogous document in the United States (or
any political subdivision thereof) and its territories and possessions pursuant
to the Uniform Commercial Code or other applicable law in such jurisdictions.
The Security Interest is and shall be prior to any other Lien on any of the
Collateral.
SECTION 3.04 Absence of Other Liens. The Collateral is owned by the
Grantors free and clear of any Lien. The Grantor has not filed or consented to
the filing of (a) any financing statement or analogous document under the
Uniform Commercial Code or any other applicable laws covering any Collateral,
(b) any assignment in which any Grantor assigns any Collateral or any security
agreement or similar instrument covering, any Collateral with any foreign
governmental, municipal or other office, which financing statement or analogous
document, assignment, security agreement or similar instrument is still in
effect or (c) entered into any agreement that purports to give any Person other
than the Collateral Agent any rights in or control over any Collateral.
<PAGE>
5
ARTICLE IV
Covenants
SECTION 4.01 Change of Name, Location of Collateral, Records; Place of
Business. Each Grantor agrees promptly to notify the Collateral Agent in writing
of any change (a) in its corporate name or in any trade name used to identify it
in the conduct of its business or in the ownership of its properties, (b) in the
location of its chief executive office, its principal place of business, any
office in which it maintains books or records relating to Collateral owned by it
or any office or facility at which Collateral owned by it is located (including
the establishment of any such new office or facility), (c) in its identity or
corporate structure or (d) in its Federal Taxpayer Identification Number. Each
Grantor agrees not to effect or permit any change referred to in the preceding
sentence unless all filings have been made under the Uniform Commercial Code or
otherwise that are required in order for the Collateral Agent to continue at all
times following such change to have a valid, legal and perfected first priority
security interest in all the Collateral.
SECTION 4.02 Control Agreement. Each Grantor agrees not to enter into any
agreements that purport to give any Person other than the Collateral Agent any
rights in or any control over the Accounts.
SECTION 4.03 Further Assurances. Each Grantor agrees, at its own expense,
to execute, acknowledge, deliver and cause to be duly filed all such further
instruments and documents and take all such actions as the Collateral Agent may
from time to time request to better assure, preserve, protect and perfect the
Security Interest and the rights and remedies created hereby, including the
payment of any fees and taxes required in connection with the execution and
delivery of this Agreement, the granting of the Security Interest and the filing
of any financing statements or other documents in connection herewith or
therewith.
ARTICLE V
The Accounts
SECTION 5.01 Sole Dominion and Control The Grantors acknowledge that the
Collateral shall be under the sole dominion and control of the Collateral Agent,
and that all of the right, title and interest of any Grantor in and to each and
every item of the Collateral shall be subject to the security interest and
control of the Collateral Agent. This Agreement shall constitute a control
agreement within the meaning set forth in Article 8 of the Union Commercial Code
and Chase, as Deposit Bank, shall follow only those directions and Entitlement
Orders in respect of the Collateral as are delivered by the Collateral Agent.
SECTION 5.02 Withdrawals and Investments. The Grantors acknowledge that
(a) the Collateral Agent is the sole signatory for the Accounts, (b) any payment
or withdrawal from or investment of funds deposited in either of the Accounts
shall be made solely at the direction of the Collateral Agent and (c) any
indispensable instruments that govern or evidence either of the Accounts have
been delivered to the Collateral Agent and not to the Grantors. The Grantors
agree that if any indispensable instruments that govern or evidence either of
the Accounts are delivered to any Grantor, such Grantor will immediately deliver
such instrument to the Collateral Agent.
SECTION 5.03. "Financial Assets" Election. The Collateral Agent and the
Deposit Bank hereby agree that each item of property (whether Investment
Property, Financial Assets, Securities, instruments or cash) credited to the
Collateral shall be treated as a "financial asset" within the meaning of Section
8-102(a)(9) of the Uniform Commercial Code.
<PAGE>
6
ARTICLE VI
Priority of rights
SECTION 6.01 Second Priority Creditors. Each holder of any Debenture
agrees that (i) the interests of the holders of Senior Notes and the holders of
Senior Subordinated Notes, including their interests in any payments to be made
from the proceeds of any sale or other perfection or creation of any security
interests or Liens in the Collateral on behalf of any Secured Party shall be
prior to the interests of the holders of the Debentures in the Collateral,
including their interests in any such payments, to the extent and in the manner
provided in Section 6.03 (and from time to time shall execute and deliver any
instruments or agreements as may be reasonably necessary or desirable to confirm
the same), and (ii) at all times that a Default under the Senior Notes or Senior
Note Indenture and Senior Subordinated Notes or Senior Subordinated Note
Indenture has occurred and is continuing, absent the consent of the holders of a
majority of the aggregate principal amount of each of the Senior Notes
outstanding and the Senior Subordinated Notes outstanding, the holders of the
Debentures shall refrain from taking any action to foreclose upon, acquire title
to (by bidding in at foreclosure or otherwise), take possession of, liquidate or
otherwise proceed against any of the Collateral.
SECTION 6.02 Senior Subordinated Noteholders. Each holder of any
Senior Subordinated Note agrees that at all times that a Default has occurred
and is continuing under the Senior Notes or Senior Note Indenture, the holders
of the Senior Subordinated Notes shall (a) absent the consent of the holders of
a majority of the aggregate principal amount of Senior Notes outstanding,
refrain from taking any action toward collection of or enforcement or otherwise
exercise any rights of such holders of Senior Subordinated Notes with respect to
the Collateral, whether pursuant to applicable law, contract or otherwise,
including any and all rights concerning foreclosure upon the Collateral and (b)
shall (i) with respect to any bankruptcy, insolvency, or similar proceeding, not
be entitled to vote with respect to the Collateral or their rights with respect
thereto, whether pursuant to applicable law (including applicable bankruptcy or
insolvency law), contract (including the Senior Subordinated Indenture), or
otherwise, and (ii) in connection with any vote in respect of the Collateral
(including in any bankruptcy, insolvency or similar proceeding or otherwise), be
deemed to have voted in the same manner and to the same effect as the holders of
a majority of the aggregate principal amount of Senior Notes then outstanding,
and the holders of the Senior Subordinated Notes hereby assign such rights to
vote to the holders of the Senior Notes for the duration of any such Default for
the purposes of effecting any such vote; provided, that the foregoing provisions
(A) shall only apply to the holders of the Senior Subordinated Notes so long as
the amount owed by the Note Issuers or the Company to the holders of the Senior
Notes in respect of the Senior Notes and the Senior Note Indenture exceeds
U.S.$50 million and (B) shall not create any contractual obligation on holders
of the Senior Notes to take or refrain from taking any action with respect to
the Collateral.
SECTION 6.03 Distribution. The proceeds of any enforcement,
collection or other realization of all or any part of the Collateral pursuant
hereto shall be paid to the Collateral Agent. The Collateral Agent shall deposit
these proceeds into accounts it will establish and maintain at its principal
corporate trust office in New York, New York for the benefit of the Secured
Parties (the "Collateral Accounts"). The Collateral Agent may appropriate and
apply sums received by it in connection with the enforcement of all outstanding
Obligations to the credit of any of the accounts which have been established in
the name of the Collateral Agent, or over which the Collateral Agent holds a
security interest on behalf of the Secured Parties or other sums the disposition
of which it has
<PAGE>
7
the power to control, in relation to this Agreement or the Indentures. Such sums
shall be applied to the following order of priority:
(a) first, in payment of all costs, charges, fees, expenses and
liabilities incurred and payments made by and indemnities owed to
(collectively, "costs") the Collateral Agent and any receiver,
attorney, agent, delegate, subdelegate or other person (each a
"receiver") appointed by the Collateral Agent in accordance with the
terms of this Agreement or the Indentures in connection with the
performance of its obligations hereunder or thereunder or the
execution or purported execution of any powers, authorities or
discretions vested in it or him pursuant hereto or thereto including
(without limitation to the foregoing) the remuneration of the
Collateral Agent;
(b) second, pro rata to: the Notes Depositary and the Notes Trustees, in
payment for all Notes Obligations that consist of costs incurred in
connection with the administration of the Note Depositary Agreement
and the applicable Indentures;
(c) third, to the payment in full of the Note Obligations (the amounts
so applied to be distributed among the Secured Parties ratably to
the respective entitlements of the applicable Secured Parties (as
the case may be) in accordance with the amounts of the Note
Obligations owed to them on the date of any such distribution);
(d) fourth, to the Debenture Depositary and the Debenture Trustee, in
payment for all Debentures Obligations consisting of costs incurred
in connection with the administration of the Debenture Depositary
Agreement and the Debenture Indenture;
(e) fifth, to the payment in full of the Debenture Obligations; and
(f) sixth, to the extent that any funds remain, to the Grantors, their
successors or assigns, or as a court of competent jurisdiction may
otherwise direct.
ARTICLE VII
Deposit Bank
SECTION 7.01 Appointment of deposit Bank. The Collateral Agent
hereby appoints the Deposit Bank as its sub-agent under this Security Agreement
and authorizes the Deposit Bank, on the terms and subject to the conditions set
forth herein, to receive payments in respect of the Collateral. The Deposit Bank
shall be the Collateral Agent's agent for the purpose of holding and investing
the Collateral.
SECTION 7.02 Instructions. The Grantors and the Deposit Bank
acknowledge that the Collateral Agent is the only Person who may give
instructions to the Deposit Bank in respect of the Collateral. Neither the
Grantors nor any person or entity claiming by, through or under the Grantors
shall have any right, title or interest in, or control over the use of, or any
right to withdraw any amount from, the Collateral, except that the Collateral
Agent shall have the right to withdraw amounts from the Accounts. The Deposit
Bank shall be entitled to rely on, and shall act in accordance with, all
instructions given to it by the Collateral Agent with respect to the Collateral.
SECTION 7.03 Consent of Grantors. The Grantors consent to the
appointment of the Deposit Bank and agree that the Deposit Bank shall incur no
liability to any Grantor as a result of any action taken pursuant to an
instrument given by the Collateral Agent in accordance with the
<PAGE>
8
provisions of this Agreement. The Grantors agree to indemnify and defend the
Deposit Bank against any loss, liability, claim or expense (including reasonable
attorneys" fees) arising from the Deposit Bank's entry into this Agreement and
actions taken hereunder, except to the extent resulting from Deposit Bank's
gross negligence or willful misconduct.; provided, however, that the Grantors
will not indemnify the Deposit Bank against any consequential damages or loss of
profits or loss of business.
SECTION 7.04 Transfer of rights. The Deposit Bank will not assign or
transfer any of its rights or obligations hereunder (other than to the
Collateral Agent) without the prior written consent of the other parties hereto,
and any such attempted assignment or transfer shall be void.
SECTION 7.05 Right of Setoff. The Deposit Bank hereby irrevocably
waives any right to set off against, or otherwise deduct from, any funds held in
the Accounts and all Investment Property or Financial Assets (and Proceeds
thereof) that come into its possession in connection with the Accounts any
indebtedness or other claim owed by any Grantor or any affiliate thereof to the
Deposit Bank.
SECTION 7.06 Subordination of the Deposit Bank. The Deposit Bank
hereby irrevocably subordinates to the Security Interest any security interest
in or lien on any of the Collateral that the Deposit Bank may have from time to
time by operation of law or by agreement.
SECTION 7.07 Representation, Warranties and Covenants of the Deposit
Bank. The Deposit Bank represents, warrants and covenants to the Grantors, the
Collateral Agent and the Secured Creditors that:
(a) the Deposit Bank is a Securities Intermediary and is acting in that
capacity;
(b) each Account is a Security Account;
(c) the Deposit Bank will treat each item of property (including without
limitation each Security Entitlement) credited to any Account, other than cash,
as a Financial Asset;
(d) each Account is maintained in the name of the respective Grantor, and
the security interest of the Collateral Agent in each Account is indicated on
the books of the Deposit Bank;
(e) the Deposit Bank has not and will not enter into any agreement under
which the Deposit Bank agrees to comply with any directions or Entitlement
Orders regarding any of the Collateral originated by any person other than the
Collateral Agent; and
(f) the Deposit Bank will promptly notify the Grantors and the Collateral
Agent upon the Deposit Bank's obtaining any notice of an adverse claim in
respect of any of the Collateral.
<PAGE>
9
ARTICLE VIII
Appointment of Collateral Agent
Each of the Secured Parties hereby irrevocably appoints and
authorizes the Collateral Agent to act as the Collateral Agent for and on its
behalf in respect of the Collateral on the same terms and conditions as provided
under Articles 3 and 4 of the Security Sharing Agreement; provided, however,
that for purposes of this Agreement references in such Article 3 and 4: (i) to
the "Secured Creditors" shall be deemed to be references to the Secured Parties,
(ii) to the "Revenue Account, the Operating Account and the Notes Sinking Fund
Account" shall be deemed to be references to the Notes DSR Account and the
Offshore Reserve Account, (iii) to the "Security Documents" shall be deemed to
be references to this Agreement (iv) to "this Agreement", when used alone and
not in conjunction with the term "Security Documents," shall be deemed to be
references to this Agreement (v) to "this Agreement", when used in conjunction
with the term "Security Documents," shall be deemed to have been deleted, (vi)
to the "Secured Creditors' Representative" shall be deemed to be references to
the Trustee, (vii) to the "Shared Collateral" shall be deemed references to the
Collateral, (viii) to the "Collateral" shall be deemed to be references to the
Collateral (ix) to the "Credit Documents" shall be deemed to be references to
the Indentures, the Notes, the Debentures and this Agreement (x) to "Secured
Indebtedness" and "Total Secured Indebtedness" shall be deemed to be references
to the Obligations; and (xi) to the "Issuers and the Company" shall be deemed to
be references to the Grantors; and all references in such Article 3 and 4 to the
"Thai Lenders", the "Thai Facility Agent" and the "Bank Credit Facility" shall
be deemed to have been deleted.
ARTICLE IX
Miscellaneous
SECTION 9.01 Notices. All communications and notices hereunder shall be in
writing and given as provided in Section 12 of the Security Sharing Agreement.
SECTION 9.02 Binding Effect; Several Agreement; Assignments. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Grantors that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns. This Agreement shall become effective as to any Grantor
when a counterpart hereof executed on behalf of such Grantor shall have been
delivered to the Collateral Agent and a counterpart hereof shall have been
executed on behalf of the Collateral Agent and thereafter shall be binding upon
such Grantor and the Collateral Agent and their respective successors and
assigns, and shall inure to the benefit of such Grantor, the Collateral Agent,
the Trustee and the other Secured Parties, and their respective successors and
assigns, except that such Grantor shall not have the right to assign its rights
hereunder or any interest herein or in the Collateral (and any such attempted
assignment shall be void), except as expressly contemplated by this Agreement or
the Indentures.
SECTION 9.03 Survival of agreement; Severabilty . (a) All covenants,
agreements, representations and warranties made by any Grantor herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement shall be considered to have been relied upon by the
Collateral Agent, the Trustee and the other Secured Parties and shall survive
the issuance of the Notes by the Note Issuers and the sale of the Debentures by
the Issuers, regardless of any investigation made by the Secured Parties or on
their behalf, and shall continue in full force and effect as long as the
principal of or any accrued interest on or any other fee or amount payable under
this Agreement is outstanding and unpaid.
<PAGE>
10
(b) In the event any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby (it being understood
that the invalidity of a particular provision in a particular jurisdiction shall
not in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
(c) This Agreement shall remain in full force and effect as to all
Obligations remaining unpaid, notwithstanding the discharge and payment in full
of any and all Obligations owed under any one or more of the Indentures. Upon
any such discharge of any one or more of the Indentures, the Grantors hereby
agree to enter into such conforming changes hereto as shall be reasonably
satisfactory to the Trustee confirming the rights provided hereunder in respect
of the remaining Obligations outstanding.
SECTION 9.04 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. THE
JURISDICTION OF THE DEPOSIT BANK, WITHIN THE MEANING OF SECTION 8-1 10(e) OF THE
UNIFORM COMMERCIAL CODE, IS THE STATE OF NEW YORK.
SECTION 9.05 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute a single contract, and shall become effective
as provided in Section 9.02. Delivery of an executed counterpart of a signature
page to this Agreement by facsimile transmission shall be as effective as
delivery of a manually executed counterpart of this Agreement.
SECTION 9.06 Rules of Interpretation. The rules of interpretation
specified in Section 1.04 of the Indentures shall be applicable to this
Agreement. Section headings used herein are for convenience of reference only,
are not part of this Agreement and are not to affect the construction of, or to
be taken into consideration in interpreting this Agreement.
SECTION 9.07 Jurisdiction; Consent to Service of Process. (a) Each Grantor
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any New York State court or Federal court of
the United States of America sitting in New York City, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that, to the extent
permitted by applicable law, all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Collateral Agent, the Trustee or any other Secured Party may otherwise have to
bring any action or proceeding relating to this Agreement against any Grantor or
its properties in the courts of any jurisdiction.
(a) Each Grantor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in any New York State or Federal
court. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.
<PAGE>
11
(b) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 9.08 Waiver Of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 9.09 Amendments. No modifications, waiver or amendment of any
provision of this Security Agreement shall in any event be effective unless the
same shall be in writing and signed by the Grantors, the Trustee, the Collateral
Agent and the Deposit Bank; provided, however, that (i) no such modification,
waiver or amendment shall adversely effect any of the Collateral Agent's rights,
immunities or rights to indemnification under this Agreement or expand its
duties or obligations under this Agreement without the prior written consent of
the Collateral Agent and (ii) no such modification, waiver or amendment shall
(A) create any lien on the Collateral or any part thereof or terminate any part
of the security interest of the Collateral Agent in all or substantially all of
the Collateral or (B) deprive the holders of the Notes or Debentures of any part
of the security afforded hereunder, in each case without the consent of (x) the
Trustee on behalf of the Senior Notes and Senior Subordinated Notes, acting at
the direction of a majority of the holders of outstanding Note Obligations
(unless the holders of the Senior Notes and Senior Subordinated Notes shall have
released the Company of its obligations hereunder) and (y) the Trustee on behalf
of the holders of the Debentures, acing at the direction of a majority of the
holders of outstanding Debenture Obligations.
SECTION 9.10. No. Waiver. No failure or delay on the part of any of the
parties hereto in exercising any right, power or privilege under this Agreement
shall impair such right, power or privilege or be construed to be a waiver of
any default or acquiescence therein, nor shall any single or partial exercise of
any such right, power or privilege preclude other or further exercise thereof or
any other right, power or privilege.
<PAGE>
12
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
NAKORNTHAI STRIP MILL PUBLIC COMPANY
LIMITED,
by
/s/ John W. Schultes
----------------------------
Title: President/CEO
NSM STEEL (DELAWARE) INC.,
by
/s/ John W. Schultes
----------------------------
Title: President/CEO
NSM STEEL COMPANY LTD.,
by
/s/ John W. Schultes
----------------------------
Title: President/CEO
THE CHASE MANHATTAN BANK, as Trustee under
each of the Indentures,
by
/s/ Valerie Dunbar
----------------------------
Title: Vice President
THE CHASE MANHATTAN BANK, as Collateral Agent,
by
/s/ Valerie Dunbar
----------------------------
Title: Vice President
THE CHASE MANHATTAN BANK, as Deposit Bank
by
/s/ Valerie Dunbar
----------------------------
Title: Vice President
<PAGE>
Exhibit 4.20
2
Outstanding Debentures Obligations, collectively, the "Obligations") and (b)
each of the Secured Creditors has appointed the Collateral Agent as the
Collateral Agent for and on its behalf, including in respect of the Security
Sharing Agreement.
Accordingly, the Grantors and the Collateral Agent on behalf of each of the
Secured Creditors, hereby agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definition of Terms Used Herein. Unless the context
otherwise requires, all capitalized ten-as used but not defined herein shall
have the meanings set forth in the Indentures and the Security Sharing Agreement
and all references to the Uniform Commercial Code shall mean the Uniform
Commercial Code in effect in the State of New York as of the date hereof.
SECTION 1.02 Definition of Certain Term Used Herein. As used herein,
the following terms shall have the following meanings-
"Accounts" shall mean the Notes Sinking Fund Account and the
Offshore Revenue Sub-Account.
"Collateral" shall mean (a) the Notes Sinking Fund Account, (b) the
Offshore Revenue SubAccount, (c) any Investment Property or Financial Assets
held or owned in or through either of (a) or (b), and (d) any and all Proceeds
of the foregoing.
"Entitlement Holder' shall mean a person identified in the records
of a Securities Intermediary as the person having a Security Entitlement against
the Securities Intermediary. If a person acquires a Security Entitlement by
virtue of Section 8-501(b)(2) or (3) of the Uniform Commercial Code, such person
is the Entitlement Holder.
'Entitlement Order' shall mean a notification communicated to a
Securities Intermediary (including without limitation the Deposit Bank)
directing transfer or redemption of a Financial Asset to which the Entitlement
Holder (including but not limited to the Grantor) has a Security Entitlement.
"Financial Asset" shall mean (a) a Security, (b) an obligation of a
person or a share, participation or other interest in a person or in property or
an enterprise of a person, which is, or is of a type, dealt with in or traded on
financial markets, or which is recognized in any area in which it is issued or
dealt in as a medium for investment or (c) any property that is held by a
Securities Intermediary for another person in a Securities Account if the
Securities Intermediary has expressly agreed with the other person that the
property is to be treated as a Financial Asset under Article 8 of the Uniform
Commercial Code. As the context requires, the term Financial Asset shall mean
either the interest itself or the means by which a person's claim to it is
evidenced, including a certificated or uncertificated Security, a certificate
representing a Security or a Security Entitlement.
"Investment Property' shall mean all Securities (whether
certificated or uncertificated), Security Entitlements and Securities Accounts
of any Grantor held by the Collateral Agent, under its exclusive dominion and
control, or through the Accounts whether now owned or hereafter acquired by the
Collateral Agent.
"Notes Sinking Fund Account' shall have the meaning, assigned to
such term in the Security Sharing Agreement.
'Offshore Revenue Sub-Accouter' shall have the meaning assigned to
such term in the Security Sharing Agreement.
<PAGE>
3
Person " shall mean any natural person, corporation, limited
liability company, trust, joint venture, association, company, partnership,
Governmental Authority or other entity.
"Proceeds' shall mean any consideration received from the sale,
exchange, license, lease or other disposition of Collateral, any value received
as a consequence of the possession of any Collateral and any payment received
from any insurer or other person or entity as a result of the destruction, loss,
theft, damage or other involuntary conversion of whatever nature of any asset or
property which constitutes Collateral, and shall include (a) all cash and
negotiable instruments received by or held on behalf of the Collateral Agent and
(b) any and all other amounts from time to time paid or payable under or in
connection with any of the Collateral.
"Secured Creditors" shall have the meaning assigned to such term in
the Security Sharing Agreement.
'Securities " shall mean any obligations of an issuer or any shares,
participation's or other interests in an issuer or in property or an enterprise
of an issuer which (a) are represented by a certificate representing a security
in bearer or registered form, or the transfer of which may be registered upon
books maintained for that purpose by or on behalf of the issuer, (b) are one of
a class or series or by its terms is divisible into a class or series of shares,
participations interests or obligations and (c)(i) are, or are of a type, dealt
with or trade on securities exchanges or securities markets or (ii) are a medium
for investment and by their terms expressly provide that they are a security
governed by Article 8 of the Uniform Commercial Code.
"Securities Account' shall mean an account to which a Financial
Asset is or may be credited in accordance with an agreement under which the
person maintaining the account undertakes to treat the person for whom the
account is maintained as entitled to exercise rights that comprise the Financial
Asset.
"Security Entitlements' shall mean the rights and property interests
of an Entitlement Holder with respect to a Financial Asset.
"Security Interest" shall have the meaning assigned to such term in
Section 2.01.
"Securities Intermediary" shall mean (a) a clearing corporation or
(b) a person, including a bank or broker, that in the ordinary course of its
business maintains securities accounts for others and is acting in that
capacity.
ARTICLE II
Security Interest
SECTION 2.01 Security Interest. As security for the payment or
performance, as the case may be, in full of the Obligations, each Grantor hereby
bargains, sells, conveys, assigns, sets over, mortgages, pledges, hypothecates
and transfers to the Collateral Agent, its successors and assigns, for the
ratable benefit of the Secured Creditors, and hereby grants to the Collateral
Agent, its successors and assigns, for the ratable benefit of the Secured
Creditors, a security interest in, all of such Grantor's right, tide and
interest in, to and under the Collateral (the "Security Interest"). Without
limiting the foregoing, the Collateral Agent is hereby authorized to file one or
more financing statements, continuation statements or other documents for the
purpose of perfecting, confirming, continuing, enforcing or protecting the
Security Interest granted by each Grantor, without the signature of any Grantor,
and naming any Grantor or the Grantors as debtors and the Collateral Agent as
secured party.
<PAGE>
4
SECTION 2.02 No Assumption of Liability. The Security Interest is
granted as security only and shall not subject the Collateral Agent or any other
Secured Party to, or in any way alter or modify, any obligation or liability of
any Grantor with respect to or arising out of the Collateral.
ARTICLE III
Representations and Warranties of the Grantors
The Grantors jointly and severally represent and warrant to the Collateral Agent
and the Secured Creditors that:
SECTION 3.01. Title and Authority. Each Grantor has good and valid
rights in the Collateral with respect to which it has purported to grant a
Security Interest hereunder and has full power and authority to grant to the
Collateral Agent the Security Interest in such Collateral pursuant hereto and to
execute, deliver and perform its obligations in accordance with the terms of
this Agreement, without the consent or approval of any other person other than
any consent or approval which has been obtained.
SECTION 3.02. Filings. Fully executed Uniform Commercial Code
financing statements or other appropriate filings, recordings or registrations
containing a description of the Collateral with evidence of filing thereon will,
as soon as practicable after the date hereof, be delivered to the Collateral
Agent which are all the filings, recordings and registrations that are necessary
to publish notice of and protect the validity of and to establish a legal, valid
and perfected security interest in favor of the Collateral Agent (for the
ratable benefit of the Secured Creditors) in respect of all Collateral in which
the Security Interest may be perfected by filing, recording or registration in
the United States (or any political subdivision thereof) and its territories and
possessions, and no further or subsequent filing, refiling, recording,
rerecording, registration or registration is necessary in any such jurisdiction,
except as provided under applicable law with respect to the filing of
continuation statements.
SECTION 3.03. Validity of Security Interest. The Security Interest
constitutes (a) a legal and valid security interest in all the Collateral
securing the payment and performance of the Obligations and (b) subject to the
filings described in Section 3.02 above, a perfected security interest in all
Collateral in which a security interest may be perfected by filing, recording or
registering a financing statement or analogous document in the United States (or
any political subdivision thereof) and its territories and possessions pursuant
to the Uniform Commercial Code or other applicable law in such jurisdictions.
The Security Interest is and shall be prior to any other Lien on any of the
Collateral.
SECTION 3.04 Absence of Other Liens. The Collateral is owned by the
Grantors free and clear of any Lien. The Grantor has not filed or consented to
the filing of (a) any financing statement or analogous document under the
Uniform Commercial Code or any other applicable laws covering any Collateral,
(b) any assignment in which any Grantor assigns any Collateral or any security
agreement or similar instrument covering any Collateral with any foreign
governmental, municipal or other office, which financing statement or analogous
document, assignment, security agreement or similar instrument is still in
effect or (c) entered into any agreement that purports to give any Person other
than the Collateral Agent any rights in or control over any Collateral.
<PAGE>
5
ARTICLE IV
Covenants
SECTION 4.01 Change of Name, Location of Collateral, Records; Place
of Business. Each Grantor agrees promptly to notify the Collateral Agent in
writing of any change (a) in its corporate name or in any trade name used to
identify it in the conduct of its business or in the ownership of its
properties, (b) in the location of its chief executive office, its principal
place of business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by it
is located (including the establishment of any such new office or facility), (c)
in its identity or corporate structure or (d) in its Federal Taxpayer
Identification Number. Each Grantor agrees not to effect or permit any change
referred to in the preceding sentence unless all filings have been made under
the Uniform Commercial Code or otherwise that are required in order for the
Collateral Agent to continue at all times following such change to have a valid,
legal and perfected first priority security interest in all the Collateral.
SECTION 4.02 Control Agreement. Each Grantor agrees not to enter
into any agreements that purport to give any Person other than the Collateral
Agent any rights in or any control over the Accounts.
SECTION 4.03 Further Assurances. Each Grantor agrees, at its own
expense, to execute, acknowledge, deliver and cause to be duly filed all such
further instruments and documents and take all such actions as the Collateral
Agent may from time to time request to better assure, preserve, protect and
perfect the Security Interest and the rights and remedies created hereby,
including the payment of any fees and taxes required in connection with the
execution and delivery of this Agreement, the granting of the Security Interest
and the filing of any financing statements or other documents in connection
herewith or therewith.
ARTICLE V
The Notes Sinking Fund Account and
the Offshore Revenue Sub-Account
SECTION 5.01. Sole Dominion and Control The Grantors acknowledge
that the Collateral shall be under the sole dominion and control of the
Collateral Agent, and that all of the right, title and interest of any Grantor
in and to each and every item of the Collateral shall be subject to the security
interest and control of the Collateral Agent. This Agreement shall constitute a
control agreement within the meaning set forth in Article 8 of the Uniform
Commercial Code and Chase, as Deposit Bank, shall follow only those directions
and Entitlement Orders in respect of the Collateral as are delivered by the
Collateral Agent.
SECTION 5.02. Withdrawals and Investments. The Grantors acknowledge
that (a) the Collateral Agent is the sole signatory for the Accounts, (b) any
payment or withdrawal from or investment of funds deposited in either of the
Accounts shall be made solely at the direction of the Collateral Agent and (c)
any indispensable instruments that govern or evidence either of the Accounts
have been delivered to the Collateral Agent and not to the Grantors. The
Grantors agree that if any indispensable instruments that govern or evidence
either of the Accounts are delivered to any Grantor, such Grantor will
immediately deliver such instrument to the Collateral Agent.
SECTION 5.03 "Financial Assets "Election. The Collateral Agent and
the Deposit Bank hereby agree that each item of property (whether Investment
Property, Financial Assets, Securities, instruments or cash) credited to the
Collateral shall be treated as a "financial asset" within the meaning of Section
8-102(a)(9) of the Uniform Commercial Code.
<PAGE>
6
ARTICLE VI
Administration; Priority of rights
The Collateral Agent agrees, for itself and for each other Secured
Creditor, that it and each other Secured Creditor shall be bound by the terms of
the Security Sharing Agreement in connection with the administration (including
amendments) of this Agreement, including the provisions of Section 6. 1, Section
6.2 and Section 6.3 thereof.
ARTICLE VII
Deposit Bank
SECTION 7.01. Appointment of deposit Bank. The Collateral Agent
hereby appoints the Deposit Bank as its sub-agent under this Security Agreement
and authorizes the Deposit Bank, on the terms and subject to the conditions set
forth herein, to receive payments in respect of the Collateral. The Deposit Bank
shall be the Collateral Agent's agent for the purpose of holding and investing
the Collateral.
SECTION 7.02 Instructions The Grantors and the Deposit Bank
acknowledge that the Collateral Agent is the only Person who may give
instructions to the Deposit Bank in respect of the Collateral. Neither the
Grantors nor any person or entity claiming by, through or under the Grantors
shall have any right, title or interest in, or control over the use of, or any
right to withdraw any amount from, the Collateral, except that the Collateral
Agent shall have the right to withdraw amounts from the Accounts. The Deposit
Bank shall be entitled to rely on, and shall act in accordance with, all
instructions given to it by the Collateral Agent with respect to the Collateral.
SECTION 7.03 Consent of Grantors. The Grantors consent to the
appointment of the Deposit Bank and agree that the Deposit Bank shall incur no
liability to any Grantor as a result of any action taken pursuant to an
instrument given by the Collateral Agent in accordance with the provisions of
this Agreement. The Grantors agree to indemnify and defend the Deposit Bank
against any loss, liability, claim or expense (including reasonable attomeys'
fees) arising from the Deposit Bank's entry into this Agreement and actions
taken hereunder, except to the extent resulting from Deposit Bank's gross
negligence or willful misconduct; provided, however, that the Grantors will not
indemnify the Deposit Bank against any consequential damages or loss of profits
or loss of business.
SECTION7.04 Transfer of Rights. The Deposit Bank will not assign or
transfer any of its rights or obligations hereunder (other than to the
Collateral Agent) without the prior written consent of the other parties hereto,
and any such attempted assignment or transfer shall be void.
SECTION 7.05 Right to Setoff The Deposit Bank hereby irrevocably
waives any right to set off against, or otherwise deduct from, any funds held in
the Accounts and all Investment Property or Financial Assets (and Proceeds
thereof) that come into its possession in connection with the Accounts any
indebtedness or other claim owed by any Grantor or any affiliate thereof to the
Deposit Bank.
SECTION 7.06 Subordination of the Deposit Bank. The Deposit Bank
hereby irrevocably subordinates to the Security Interest any security interest
in or lien on any of the Collateral that the Deposit Bank may have from time to
time by operation of law or by agreement.
<PAGE>
7
SECTION 7.07 Representation, Warranties and Covenants of the Deposit
Bank. The Deposit Bank represents, warrants and covenants to the Grantors, the
Collateral Agent and the Secured Creditors that:
(a) the Deposit Bank is a Securities Interrnediary and is acting in that
capacity;
(b) each Account is a Security Account;
(c) the Deposit Bank will treat each item of property (including without
limitation each Security Entitlement) credited to any Account, other than cash,
as a Financial Asset;
(d) each Account is maintained in the name of the respective Grantor, and
the security interest of the Collateral Agent in each Account is indicated on
the books of the Deposit Bank;
(e) the Deposit Bank has not and will not enter into any agreement under
which the Deposit Bank agrees to comply with any directions or Entitlement
Orders regarding any of the Collateral originated by any person other than the
Collateral Agent; and
(f) the Deposit Bank will promptly notify the Grantors and the Collateral
Agent upon the Deposit Bank's obtaining any notice of an adverse claim in
respect of any of the Collateral.
ARTICLE VIII
Miscellaneous
SECTION 8.01 Notices. All communications and notices hereunder shall
be in writing and given as provided in Section 12 of the Security Sharing
Agreement.
SECTION8.02 Binding Effect; Several Agreement; Assignments. Whenever
in this Agreement any of the parties hereto is referred to, such reference shall
be deemed to include the successors and assigns of such party; and all
covenants, promises and agreements by or on behalf of the Grantors that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns. This Agreement shall become effective as to
any Grantor when a counterpart hereof executed on behalf of such Grantor shall
have been delivered to the Collateral Agent and a counterpart hereof shall have
been executed on behalf of the Collateral Agent and thereafter shall be binding
upon such Grantor and the Collateral Agent and their respective successors and
assigns, and shall inure to the benefit of such Grantor, the Collateral Agent
and the Secured Creditors, and their respective successors and assigns, except
that such Grantor shall not have the right to assign its rights hereunder or any
interest herein or in the Collateral (and any such attempted assignment shall be
void), except as expressly contemplated by this Agreement or the Indentures.
SECTION 8.03 Survival of agreement; Severability.(a) All covenants,
agreements, representations and warranties made by any Grantor herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement shall be considered to have been relied upon by the
Collateral Agent, and the Secured Creditors and shall survive the issuance of
the Notes by the Note Issuers and the sale of the Debentures by the Note
Issuers, regardless of any investigation made by the Secured Creditors or on
their behalf, and shall continue in full force and effect as long as the
principal of or any accrued interest on or any other fee or amount payable under
this Agreement is outstanding and unpaid.
(b) In the event any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby (it
<PAGE>
8
being understood that the invalidity of a particular provision in a particular
jurisdiction shall not in and of itself affect the validity of such provision in
any other jurisdiction). The parties shall endeavor in good-faith negotiations
to replace the invalid, illegal or unenforceable provisions with valid
provisions the economic effect of which comes as close as possible to that of
the invalid, illegal or unenforceable provisions.
(c) This Agreement shall remain in full force and effect as to all
Obligations remaining unpaid, notwithstanding the discharge and payment in full
of any and all Obligations owed under any one or more of the Indentures. Upon
any such discharge of any one or more of the Indentures, the Grantors hereby
agree to enter into such conforming changes hereto as shall be reasonably
satisfactory to the Trustee confirming the rights provided hereunder in respect
of the remaining Obligations outstanding.
SECTION 8.04 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. THE
JURISDICTION OF THE DEPOSIT BANK, WITHIN THE MEANING OF SECTION 8-110(e) OF THE
UNIFORM COMMERCIAL CODE, IS THE STATE OF NEW YORK.
SECTION 8.05 Counterrparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute a single contract, and shall become
effective as provided in Section 7.02. Delivery of an executed counterpart of a
signature page to this Agreement by facsimile transmission shall be as effective
as delivery of a manually executed counterpart of this Agreement.
SECTION8.06. Rules of Interpretation. The rules of interpretation
specified in Section 1.04 of the Indentures shall be applicable to this
Agreement. Section headings used herein are for convenience of reference only,
are not part of this Agreement and are not to affect the construction of, or to
be taken into consideration in interpreting this Agreement.
SECTION 8.07 Jurisdiction; Consent to Service of Process. (a) Each
Grantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that, to the extent permitted by applicable law, all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that the Collateral Agent or any Secured Creditor may otherwise have to
bring any action or proceeding relating to this Agreement against any Grantor or
its properties in the courts of any jurisdiction.
(a) Each Grantor hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any New York State or
Federal court. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(b) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 7.0 1. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
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9
SECTION8.08 Waiver Of Jury Trial. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION8.09. No Waiver. No failure or delay on the part of any of
the parties hereto in exercising any right, power or privilege under this
Agreement shall impair such right, power or privilege or be construed to be a
waiver of any default or acquiescence therein, nor shall any single or partial
exercise of any such right power or privilege preclude other or further exercise
thereof or of any other right, power or privilege.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.
NAKORNTHAI STRIP MILL PUBLIC COMPANY
LIMITED,
by
/s/ John W. Schultes
-----------------------------------
Title: President/CEO
NSM STEEL (DELAWARE) INC.,
by
/s/ John W. Schultes
-----------------------------------
Title: President/CEO
NSM STEEL COMPANY LTD.,
by
/s/ John W. Schultes
-----------------------------------
Title: President/CEO
THE CHASE MANHATTAN BANK, as Trustee under
each of the Indentures,
by
/s/ Valerie Dunbar
-----------------------------------
Title:
THE CHASE MANHATTAN BANK, as Collateral Agent,
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10
by
/s/ Valerie Dunbar
-----------------------------------
Title:
THE CHASE MANHATTAN BANK, as Deposit Bank
by
/s/ Valerie Dunbar
-----------------------------------
Title:
THE INDUSTRIAL FINANCE CORPORATION OF
THAILAND, as Facility Agent for the Thai Lenders,
by /s/ [illegible]
-----------------------------------
Name:
Title:
<PAGE>
Exhibit 4.21
White & Case
08/01/98
(Translation)
CREDIT FACILITIES AGREEMENT DATED SEPTEMBER 27, 1995
(AMENDMENT NO. I)
between
Nakornthai Strip Mill Public Company Limited The Borrower
and
The Industrial Finance Corporation of Thailand The Lender/
The Facility Agent
Thai Farmers Bank Public Company Limited The Lender
Siam City Bank Public Company Limited The Lender
The Government Savings Bank The Lender
First Bangkok City Bank Public Company Limited The Lender
Nakornthon Bank Public Company Limited The Lender
SCF Finance and Securities Public Company Limited The Lender
First City Investment Finance and Securities Public The Lender
Company Limited
IFCT Finance and Securities Public Company Limited The Lender
Dated March 12, 1998
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Appendix
(Attached to the Agreement)
Exhibit I Copy of Letter of the Industrial Finance Corporation of
Thailand, as the Facility Agent, dated October 30, 1997 re:
the Approval and Consent from the Lenders to Procure the
Additional Financing
Exhibit II Copy of Letter of the Industrial Finance Corporation of
Thailand dated December 12, 1997 re: the Extension of the
Period for the Approval and Consent to Procure the Additional
Financing
Exhibit III Security Sharing Agreement
Exhibit IV Copy of the Agreement to Transfer Credit between SCF Finance
and Securities Public Company Limited and Siam City Credit
Finance and Securities Public Company Limited dated July 2,
1997
Exhibit V Copy of the Agreement to Transfer Credit among IFCT Finance
and Securities Public Company Limited, First City Investment
Finance and Securities Public Company Limited and the
Industrial Finance Corporation of Thailand dated December 29,
1997
Exhibit VI The Sample of Calculation of Principal Amount according to the
Notes terms (Accreted Value)
Exhibit VI Copy of Letter of Siam City Bank Public Company Limited dated
January 7, 1998 re: the Conversion of the US Dollars
Obligations to Baht Obligations
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Schedule
Schedule A The schedule of credit drawn by the Borrower
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CREDIT FACILITIES AGREEMENT DATED SEPTEMBER 27, 1995
(FIRST AMENDMENT)
THIS AGREEMENT (the "CFA Amendment") is made on this 12th day of March 1998
BETWEEN
(1) NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED, a public limited company
duly organized and existing under the laws of Thailand, having its
registered office located at No. 9, UM Tower, 16th Floor, Ramkhamhaeng
Road, Kwaeng Suanluang, Khet Suanluang, Bangkok, Thailand (hereinafter
referred to as the "Borrower"), and
(2) THE INDUSTRIAL FINANCE CORPORATION OF THAILAND of No. 1770 New Petchburi
Road, Kwaeng Bangkapi, Khet Huaykwang, Bangkok Metropolis, (hereinafter
referred to as "IFCT");
THAI FARMERS BANK PUBLIC COMPANY LIMITED of No. 1 Soi Kasikornthai,
Ratburana Road, Bangkok Metropolis, (hereinafter referred as "Thai
Farmers");
SIAM CITY BANK PUBLIC COMPANY LIMITED of No. 1101 New Petchburi Road,
Kwaeng Makkasan, Khet Rajthevi, Bangkok Metropolis, (hereinafter referred
to as "SCIB");
THE GOVERNMENT SAVINGS BANK of No. 470 Phaholyothin Road, Kwaeng
Samsennai, Khet Phayathai, Bangkok Metropolis, (hereinafter referred to as
"the Government Savings Bank");
FIRST BANGKOK CITY BANK PUBLIC COMPANY LIMITED of No. 20 Yukon 2 Road,
Kwaeng Debhsirin, Khet Pomprap Sattruphai, Bangkok Metropolis,
(hereinafter referred to as "First Bangkok City Bank");
NAKORNTHON BANK PUBLIC COMPANY LIMITED of No. 90 North Sathorn Road,
Kwaeng Silom, Khet Bangrak, Bangkok Metropolis, (hereinafter referred to
as "Nakornthon");
SCF FINANCE AND SECURITIES PUBLIC COMPANY LIMITED of No. 2922/209 Charn
Issara Building 2, 16th Floor, New Petchburi Road, Kwaeng Bangkapi, Khet
Huaykwang, Bangkok Metropolis, (hereinafter referred to as "SCF");
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SIAM CITY CREDIT FINANCE AND SECURITY PUBLIC COMPANY LIMITED of No. 2
Ploenchit Center Building, 8th - 16th Floor, Sukhumvit Soi 2, Sukhumvit
Road, Kwaeng Klongtoey, Khet Klongtoey, Bangkok Metropolis, (hereinafter
referred to as "SCF");
FIRST CITY INVESTMENT FINANCE AND SECURITIES PUBLIC COMPANY LIMITED of No.
2884 New Petchburi Road, Kwaeng Bangkapi, Khet Huaykwang, Bangkok
Metropolis, (hereinafter referred to as "First City");
IFCT FINANCE AND SECURITIES PUBLIC COMPANY LIMITED of No. 1770 Building 2,
Industrial Finance Corporation of Thailand, 10th - 13th Floor, New
Petchburi Road, Kwaeng Bangkapi, Khet Huaykwang, Bangkok Metropolis,
(hereinafter referred to as "IFCTF"),
(hereinafter, if not specifically called, collectively referred to as the
"Lenders"; when specifically called "any Lender"; and when referred to as
Thai Farmers, SCIB, First Bangkok City Bank and Nakornthon, they shall
also include their International Banking Facilities under the
notifications of the Ministry of Finance); and
(3) THE INDUSTRIAL FINANCE CORPORATION OF THAILAND, in the capacity as the
lead manager (hereinafter referred to as the "Facility Agent").
WITNESSETH:
A. The Borrower has received credit facilities from the Lenders, pursuant to
Credit Facilities Agreement dated September 27, 1995 (hereinafter referred
to as the "CFA") for the credit, in Baht and foreign currency (equivalent
to Thai Baht), for an amount of approximately 11,000,000,000 Baht (Eleven
Billion Baht), for the purposes of the construction, equipment and
machinery expenses and operation of the hot-rolled coil project (the "Hot
Mill"). As of December 31, 1997, the Borrower has drawn the facilities
from the Lenders which includes the facilities in the forms of Letter of
Credit and Bank Guarantee for Letter of Credit opening for an amount of
306,813,904.95 (Three Hundred and Six Million Eight Hundred and Thirteen
Thousand Nine Hundred and Four point Ninety Five) US Dollars. The credit
facilities of 1,186,095.05 (One Million One Hundred and Eighty Six
Thousand and Ninety Five point Zero Five) US Dollars is provided by the
Lenders for the case that the value of the Deutch Mark is relatively high
when compared to US Dollars and Baht for the amount of 3,300,000,000
(Three Billion and Three Hundred Million) Baht as shown in Schedule A of
this Agreement;
B. The Borrower has studied and is confident that the production of the
direct reduced iron and co-generation power (the "DRI Facility") and the
downstream processing facilities for the production of high-quality
pickled and oiled, cold-rolled, galvanized, and other value-added steel
products (the "Finishing Mill") (collectively together with the Hot Mill,
the "Mill") in addition to the production of __________________________
will maximize the
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benefit to the Borrower. The Borrower therefore would like to procure
financing from abroad to be used in the construction and the operation of
the Mill, by (i) having NSM Steel Co., Ltd., a company incorporated under
the laws of the Cayman Islands and in which the Borrower holds 100 percent
of shares and NSM Steel (Delaware) Inc., a limited liability company
incorporated under the laws of the State of Delaware, the United States of
America, a wholly-owned subsidiary of NSM Steel Co., Ltd., acting as an
agent of NSM Steel Co., Ltd., under the Agency Agreement (hereinafter
referred to as "Note Issuer") issue secured notes and secured private
placement notes (hereinafter collectively referred to as the "Notes"),
(ii) issuing warrants to purchase ordinary shares concurrently with partly
issuing the Notes and issuing warrants for a foreign company in
consideration of technology know-how provided to the Borrower by them,
(iii) issuing newly issued ordinary shares of the Borrower, and (iv)
obtaining financing in the form of a revolving working capital facility
(collectively, the "Additional Financing"). The proceeds from the
Additional Financing will be used for the business of the Borrower.
C. The Lenders agree to continue their financial support under the CFA.
D. The Borrower received approval and consent from the Lenders to procure the
Additional Financing under the letters of the Facility Agent dated October
30, and December 12, 1997 which are shown as Exhibit I and Exhibit II,
respectively. In addition, as required by the CFA, certain terms and
conditions under the CFA must be amended in order to comply with the
Additional Financing.
NOW THEREFORE, the Parties heretofore agree to enter into this Agreement in
accordance with the terms and conditions as follows:
1. Definitions
1.1 Unless it is specified otherwise in this Agreement, any term shall
have the meaning ascribed to it pursuant to the CFA and the Security
Sharing Agreement, which are shown as Exhibit III, which shall be
deemed a part hereof.
1.2 "Closing Date" means the date of which (a) the Note Issuer has
received the proceeds from the offering of the Notes and maintained
such proceeds so received in the Borrower's account(s) with bank(s)
outside Thailand and (b) the holders of the Notes have accepted the
mortgage of collateral jointly with the Lenders and (c) the Borrower
has received the proceeds from the offering of newly issued ordinary
shares and (d) the Lenders have been prepaid for the principal
amount and interests remaining unpaid for an amount of 58,000,000
(Fifty Eight Million) US Dollars at the date of closing together
with the mortgage registration pursuant to (b) mentioned above.
1.3 The provision in Section 1.1(l) of the CFA shall be repealed and
replaced by the following:
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"(l) 'Majority Vote of the Lenders': A resolution of at least 4
(four) lenders, granting the facilities in aggregate of not less
than sixty (60) percent of the total credit facilities under this
Agreement."
1.4 Headings are for convenience only and shall be ignored in construing
this Agreement.
2. Consent to Additional Financing
2.1 Offering of the Notes, Warrant to Purchase Ordinary Shares and Newly
Issued Ordinary Shares for the investors in the Notes
The Lenders hereby allow the Note Issuer to issue the Notes to
wholly sell to the investors abroad. The Notes shall be
unconditionally and irrevocably guaranteed in the whole amount of
obligations and provided with the collateral for the Noteholders by
the Borrower. The gross proceeds received by the Note Issuer on the
Closing Date prior to the deduction of expenses used in the
Additional Financing is approximately 444,204,000 (Four Hundred
Forty Four Million Two Hundred and Four Thousand) US Dollars and the
principal amount of the Notes (including discount amount) is
approximately 506,500,000 (Five Hundred and Six Million and Five
Hundred Thousand US Dollars) as follows:
2.1.1 Senior Mortgage Notes ("Portion A Notes"), having the
principal amount of 249,000,000 (Two Hundred and Forty Nine
Million) US Dollars and the gross proceeds the Note Issuer
will receive on the Closing Day of 225,594,000 (Two Hundred
Twenty Five Million Five Hundred and Ninety Four Thousand) US
Dollars at the interest rate of 12 (twelve) percent per annum
to be due on February 1, 2006. The Noteholders will share the
collateral in first priority jointly with the Lenders in
proportion to their debts and under the conditions of the
security sharing under Article 6 of this Agreement.
2.1.2 Senior Subordinated Mortgage Notes (Senior Mortgage Notes
together with the Lenders and the holders of Portion A Notes,
entitled to be repaid following the holders of Portion A Notes
in the case of the collateral being enforced) ("Portion B
Notes") having the principal amount of 203,500,000 (Two
Hundred and Three Million and Five Hundred Thousand) US
Dollars and the gross proceeds the Note Issuer will receive on
the Closing Date of approximately 175,010,000 (One Hundred and
Seventy Five Million and Ten Thousand) US Dollars at the
interest rate of 12.25 (Twelve Point Twenty Five) percent per
annum to be due on February 1, 2008. The Noteholder will
receive the warrants to purchase ordinary shares of not less
than 128,834,361 (One Hundred and Twenty Eight Million Eight
Hundred and Thirty Four Thousand and Three Hundred and Sixty
One) units for the holders of Portion B Notes.
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2.1.3 Private Placement Notes ("Portion C Notes") having the
principal amount of approximately 54,000,000 (Fifty Four
Million ) US Dollars and the gross proceeds the Note Issuer
will receive on the Closing Date of approximately 43,600,000
(Forty Three Million and Six Hundred Thousand) US Dollars at
the interest rate of 12.75 (Twelve Point Seventy Five) percent
per annum to be due on February 1, 2009. The holders of
Portion C Notes will receive the collateral ranked after the
Lenders and the holders of Portion A Notes and the holders of
Portion B Notes. In addition, the newly issued ordinary shares
of the Borrower of 64,417,180 (Sixty Four Million Four Hundred
and Seventeen Thousand and One Hundred and Eighty) shares in
aggregate at the par value of 10 (ten) Baht each shall be
allocated to the holders of Portion C Notes.
2.2 Increase of Share Capital of the Borrower and the Issuance of the
Warrants to Purchase the Ordinary Shares
The Lenders hereby allow the Borrower and consent to issue
additional ordinary shares of 300,000,000 (Three Hundred Million)
shares, representing 34.8 (Twenty Four Point Eight) percent of fully
diluted issued shares of the Borrower (the amount of existing and
newly issued shares) as well as to amend the Memorandum of
Association and/or the Articles of Association of the Borrower
related thereto as follows:
2.2.1 Private Placement of Newly Issued Ordinary Shares
Newly issued ordinary shares of 158,639,864 (One Hundred and
Fifty Eight Million Six Hundred and Thirty Nine Thousand and
Eight Hundred and Sixty Four) shares of 10 (Ten) Baht per
share for the value of 1,586,398,640 (One Billion Five Hundred
and Eighty Six Million Three Hundred and Ninety Eight Thousand
and Six Hundred and Forty) Baht shall be offered to specific
foreign investors. A portion of the newly issued shares,
totaling to 74,468,090 (Seventy Four Million Four Hundred and
Sixty Eight Thousand and Ninety) shares for the value of
744,680,900 (Seven Hundred and Forty Four Million Six Hundred
and Eighty Thousand and Nine Hundred) Baht will be allocated
by the Borrower as if they were fully paid to Steel Dynamics
Inc. ("SDI") that will grant the Borrower the right to use
technology and know-how in the production and operation of the
Mill, the secret information related to the production and the
administration of the Mill.
The remaining 84,171,774 (Eighty Four Million One Hundred and
Seventy One Thousand and Seven Hundred and Seventy Four)
shares shall be paid in cash in US Dollars currency equivalent
to the amount of 841,717,740 (Eight Hundred and Forty One
Million Seven Hundred and Seventeen Thousand and Seven Hundred
and Forty) Baht.
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2.2.2 Private Placement of the Warrants
The warrants to purchase ordinary shares of not exceeding
128,834,361 (One Hundred and Twenty Eight Million Eight
Hundred and Thirty Four Thousand and Three Hundred and Sixty
One) units for the investors in Portion B Notes with the
exercised price of 10 (Ten) Baht per share. The exercise of
right shall be made after the period of not less than 1 (One)
year from the date of warrant issuance but not later than 10
(Ten) years from the date of warrant issuance. Additionally,
to approve the reservation of ordinary shares, totaling to
128,834,361 (One Hundred and Twenty Eight Million Eight
Hundred and Thirty Four Thousand and Three Hundred and Sixty
One) shares so reserved for the aforesaid exercise.
The warrants to purchase the newly issued ordinary shares of
the Borrower in the amount of 11,421,480 (Eleven Million Four
Hundred and Twenty One Thousand and Four Hundred and Forty)
units to SDI for the consideration of the technology of _____
and cold-rolled production. In this regard, SDI shall be
entitled to exercise its right to purchase the newly issued
ordinary shares at the price of 10 (Ten) Baht after a period
of not less than 1 (One) year from the date of warrant
issuance but not later than 10 (Ten) years from the date of
warrant issuance, provided that SDI shall be entitled to
exercise its right exclusively in the proportion of the
exercise of right of the holders of Portion B Notes.
2.3 Obtaining Revolving Working Capital Facilities
The Lenders hereby allow the Borrower to obtain the revolving
working capital facility from The Banque National De Paris ("BNP")
for the sum of approximately 125,000,000 (One Hundred and 'Twenty
Five Million) US Dollars of which the Borrower granted the right
from BNP for the credit facilities of not exceeding 150,000,000 (One
Hundred and Fifty Million) US Dollars, to be used as working capital
of the Borrower. In the business operation of the Borrower, BNP
shall not be entitled to share any collateral with the Lenders and
the holders of the Notes (the "Noteholders"), with the exception of
receivables under the offtake agreements between the Borrower and
Preusseg Handel GmbH dated November 19, 1997, and between the
Borrower and Klockner Stahl-und Metall Handel GmbH entered into as
of the same date and/or any obligations under the mentioned
agreements.
The proceeds the Borrower derived from the Additional Financing
shall be used for the construction and operation of the Mill, the
repayment of a portion of the Borrower's obligations to the Lenders
hereunder, and the use in the business of the Borrower. The Borrower
must submit reports and/or documents relating to the issuances of
Notes and newly issued ordinary shares, such as minutes of the board
of directors and/or of shareholders, trust indenture, offering
memorandum, agreements or other documents relating to the Additional
Financing to the Facility
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Agent to satisfy the Lenders that such Additional Financing is in
compliance with the terms and conditions hereunder.
3. The Lenders' Support
The Lenders hereby confirm to continue their financial support of the
Borrower pursuant to the CFA under the terms and conditions of the CFA and
this Agreement.
4. Prepayment of Principal and Outstanding Interests to the Lenders
In consideration for the Lenders' consent for the Additional Financing,
the Borrower agrees to use the proceeds derived from the offering of the
Notes under Article 2.1 and/or from the offering of the newly issued
ordinary shares under Article 2.2 above, concurrently with the release of
the first priority collateral of the joint collateral by the Lenders on
the Closing Date and arrange for the Noteholders entitled to jointly share
collateral with the Lenders, the Borrower shall prepay the amount of
50,000,000 (Fifty Million) US Dollars and the interests outstanding due on
December 1, 1997 of 8,000,000 (Eight Million) US Dollars to the Lenders.
In addition, within 5 (Five) business days from the Closing Date, the
Borrower will pay to the Lenders the interest outstanding to be due on
March 5, 1998 of 8,650,229.30 (Eight Million Six Hundred and Fifty
Thousand Two Hundred and Twenty Nine Point Three Zero) US Dollars together
with the late fee of 337,581.88 (Three Hundred and Thirty Seven Thousand
Five Hundred and Eighty One Point Eighty Eight) US Dollars (excluding any
other outstanding debts remaining unpaid to the Lenders, such as fees,
advances and expenses incurred by the Borrower from seeking other sources
of funds to be paid to the Lenders). The said prepayment shall be made by
the Borrower to the Lenders pro rata it obliged to any Lender in
accordance with the ratio of the commitment of any Lender of which any
Lender is obliged to under the CFA. Failure to completely pay such
proceeds within the time fixed shall be considered a default of the
Borrower. The calculation of the amount of interest outstanding to be
payable under this paragraph, the Lenders used the approximate exchange
rate equal to 43 (Forty Three) Baht against 1 (One) US Dollar. Therefore,
the payment of such interest may be adjusted according to the exchange
rate of the date of actual payment. Prepayment of the outstanding amount
after deducting the principal amount shall be made in 12 (twelve)
installments of which the amount payable in each installment shall be
decreased pro rata. The principal previously required to be paid in the
thirteenth installment (after pro rata deducting the prepaid principal)
pursuant to Article 7 attached to the CFA shall be pro rata averaged with
the first twelve installments. The Borrower agrees to repay the principal
of the twelfth installment at the same date as the eleventh installment.
The calculation of such ratio of the commitment of any Lender obligated
shall convert the debts from US Dollars into Thai Baht based upon the
average selling rates of US Dollars of IFCT and Thai Farmers Bank at 11:00
a.m. 2 (two) business days before the prepayment date. Provided that, the
prepayment made to Thai Farmers Bank, Siam City Bank, First Bangkok City
Bank and Nakornthon Bank shall be, applied toward the Baht
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Facility first. If there is still a remaining sum, then it can be applied
toward the US Dollars Facility for such four lenders.
In prepaying the principal amount and interest outstanding to the Lenders
as mentioned in the first paragraph, the Borrower shall arrange for the
proceeds derived from the offering of the Notes of the Note Issuer and/or
from the offering of newly issued ordinary shares of the Borrower to pay
the Lenders through the account of Thai Farmers Bank, New York Branch, USA
maintained with The Chase Manhattan Bank and Thai Farmers Bank, New York
Branch, USA will further transfer to any Lenders according to the schedule
specified by such Lenders.
5. Covenants of the Borrower
Due to the fact that to provide for the Additional Financing caused the
changes of certain covenants of the Borrower, the Lenders have agreed to
waive and amend the following covenants in the CFA as follows:
5.1 Affirmative covenants under Article 11.1 (a) paragraph two and (d)
of the CFA shall be repealed and the conditions provided that the
Borrower has to maintain the debt and equity ratio of which the
Lenders specifying for approving the bridge financing from First
Bangkok City Bank under Article 9 hereunder.
The non-specification of debt and equity ratio under the first
paragraph shall be limited to only the debt establishment in this
Additional Financing.
5.2 The following provision shall be added as paragraph two of Article
11.2 of the CFA.
"The provisions of (d) through to (h) above shall not apply to any
acts of the Borrower in relation to the Additional Financing under
the principles set forth in this CFA Amendment, the Security Sharing
Agreement".
5.3 The Lenders hereby allow the Borrower to unconditionally and
irrevocably guarantee the whole indebtedness of the Notes for the
payment and/or repayment of the principal amount, interests,
advances, fees and other expenses which currently have or shall have
in respect of the Notes.
6. Security and Security Sharing
6.1 The provisions of Articles 12, 13, 18.3 and any provisions of the
CFA in relation to security and security sharing shall be repealed
and replaced with the Security Sharing Agreement among the Borrower,
the Lenders, the Trustee and the Collateral Agent, and the Security
Documents, in the form of Exhibit III.
6.2 The Lenders allow the Noteholders to share with Lenders all
collateral which the Lenders currently have or shall have pursuant
to the CFA and for the Security
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Sharing Agreement (as defined below), including but not limited to
the following agreements:
(1) pledge of accounts;
(2) pledge of permitted investments;
(3) pledge of machinery;
(4) assignment of performance bonds;
(5) assignment of insurance (and/or the conditions providing for
the Lenders and the Noteholders to be co-beneficiaries under
the Insurance Agreement);
(6) conditional assignment of accounts;
(7) conditional assignment of project agreements;
(8) mortgage of land and buildings;
(9) mortgage of machinery; and
(10) security interest over Offshore Accounts (except the account
of the proceeds derived from the offering of Notes).
(hereinafter referred to as the "Joint Collateral"). The Lenders and the
holders of Portion A Notes and Portion B Notes ("Senior Secured
Creditors") will share equally and ratably the Joint Collateral to the
obligated amount of which the Borrower is required to pay to the Lenders
and the holders of Portion A and Portion B Notes under the CFA and terms
of the Notes, respectively (hereinafter the debts of the Lenders and the
debts of the Portion A and Portion B Notes collectively referred to as "
Senior Secured Obligations"). The Lenders allow the holders of Portion C
Notes to the security following from the Senior Secured Creditors in the
Joint Collateral ("Second Secured Creditors"), at any time there is a
default causing the enforcement of the collateral. However, the
obligations of which the Noteholders entitled to jointly share with the
Lenders shall be in accordance with the calculation of accreted value of
obligations, past due interest of the Notes and tax liability related to
such portion of Notes (if any) after deducting by the proceeds maintained
in the offshore account(s) of the Borrower solely derived from the
offering of Notes of the Note Issuer ("Collateral of Notes") at any time
there is the enforcement of Joint Collateral.
The Lenders and/or the Facility Agent acting as the agent of the Lenders
and the Borrower, agrees to enter into a security sharing agreement (the
"Security Sharing Agreement") with The Chase Manhattan Bank acting as the
Noteholders' representative (the "Trustee") which was registered in the
global note certificate and also acting as the collateral agent
("Collateral Agent") having the obligations and responsibilities under the
Security Sharing Agreement as shown in Exhibit III as well as any relevant
agreements or documents.
6.3 On the Closing Date, the Lenders shall arrange for the Senior
Secured Creditors to be secured creditors in the Joint Collateral by
being jointly the first Co-Mortgages of land and buildings of the
Borrower, being co-pledgees and co-assignee of relevant rights and
benefits under any agreements of which the Borrower may be
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entitled to for being the security of the Borrower's obligations
under the CFA and the Notes, respectively and in order that the
Lenders and the Noteholders receive equally and ratably security
sharing of Senior Secured Obligations. The Lender must be pre-paid
with the principal amount and interests outstanding under Article 4
at the same time of such process. The holders of Portion C Notes
shall be arranged for being the Second Secured Creditors in the
Joint Collateral.
6.3.1 The Borrower shall provide the secured property to be pledged,
mortgaged with the Lenders and the Trustee in accordance with
the forms and conditions jointly specified by the Facility
Agent and the Collateral Agent under the Security Sharing
Agreement as follows:
(a) The Borrower shall register the mortgage of immovable
property to secure the obligations including interests
and fees under the CFA and under three portions of
Notes;
(b) The Borrower shall pledge all of its machinery including
the machinery in DRI Project and Finishing Mill to
secure the obligations to the Lenders and the
Noteholders.
If the aforesaid pledged machinery may be registered, the
Borrower must arrange for the ownership registration according
to the laws with the machinery Registrar as soon as possible.
After such registration, the Borrower shall immediately
arrange for the mortgage registration to the Lenders and
Noteholders in place of pledge. For machinery promoted under
the Investment Promotion Act, the Borrower shall arrange for
the prior approval to mortgage such machinery from the Board
of Investment.
In the event there is a request from the Collateral Agent, the
Borrower shall assign the Collateral Agent to arrange for the
registrations of machinery ownership and/or machinery
mortgage. In this regard, the Borrower shall deliver and sign
any documents in order that the Collateral Agent will be able
to arrange for the aforesaid registrations on behalf of the
Borrower for the benefit of the Lenders and the Noteholders.
Other than the immovable property and machinery so mortgaged
or pledged by the Borrower to the Lenders and the Noteholders
to secure the Secured Obligations, the machinery of which any
Lender holds ownership during the trust receipt transaction
shall be deemed as the holding of ownership for the benefits
of the Lenders and the Noteholders.
6.3.2 The Borrower shall provide risk insurance for the construction
buildings and machinery of the project during the construction
and the installation of machinery according to the progress of
the project with the insurance company approved by the
Collateral Agent for an insured amount as the Collateral Agent
deems appropriate. It must be specified in the insurance
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policy that the Lenders and the Collateral Agent are the
beneficiaries. Such policy shall be delivered to the
Collateral Agent for safe keeping. The policy shall be in
effect until the Lenders are totally repaid the obligations
under the Agreement. In this regard, the Borrower shall be
responsible for the premiums and other expenses.
6.3.3 The Borrower shall assign any rights and benefits it entitled
to receive under the terms of the sale of machinery and/or
construction agreements, including but not limited to the
assignment of refund bond, down payment guarantee/bond or the
assignment of performance guarantee/bond, and/or assign any
other rights and benefits the Borrower entitled to receive
under all other agreements with any persons to the Collateral
Agent.
6.3.4 The Borrower shall arrange for the pledge of onshore accounts
of which the Borrower has to open a savings account and/or any
other account with The Chase Manhattan Bank, Bangkok Branch,
and/or the pledge of promissory notes or other instruments
issued by the aforesaid bank or other bank to be further
agreed among the Borrower, the Lenders and the Collateral
Agent for the investment of the Borrower for being the
additional security. Furthermore, the Borrower shall make the
conditional assignment of such accounts to the Collateral
Agent.
6.3.5 If there is the loss, deterioration or depreciation of the
secured property under Article 6.3.1, the Facility Agent
and/or the Collateral Agent is entitled to request the
Borrower to provide additional property be mortgaged, pledged
or additionally secured with a value of not less than the
security lost, deteriorated or depreciated within the time
fixed by the Facility Agent and/or the Collateral Agent.
6.3.6 The Borrower agrees to pay fees, stamp duties, taxes, expenses
and other costs used in arranging for the security hereof
including all fees, stamp duties, taxes, expenses and other
costs necessary for the enforcement of pledge and mortgage and
the enforcement of obligations or any other security
respectively. The Borrower shall indemnify any Lenders,
Trustee and/or the Collateral Agent for all taxes under the
law of Investment Promotion incurred by them in the
enforcement of the mortgage of machinery so promoted.
6.3.7 The Borrower and the Lenders agree that, for the benefit of
the Lenders and the Noteholders, the Collateral Agent shall be
a receiver and keep evidence of ownership or other rights over
the secured property, including but not limited to the
original of land title deeds, the registration showing the
construction, the ownership registration of machinery, the
mortgage, the pledge as well as the guarantees, policies, any
assignment of rights agreements and all other agreements and
documents relevant to the security under this Agreement. The
Borrower shall arrange for the
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Borrower and/or the Collateral Agent to inform, deliver,
notify or arrange for any actions to the Collateral Agent in
order that it will receive information and copies of
correspondence and/or other documents relevant to the
security.
6.4 Notwithstanding any provisions of this Article 6, the Joint
Collateral shall exclude the co-generation facility (the "Co-Gen
Facility") to be constructed on the Borrower's land (of which such
land is still the Joint Collateral under Article 6.3.1 above) and
co-generation facility (hereinafter referred to as "Co-Gen
Facility"). The Co-Gen Facility shall be funded by Enron Corporation
for the amount of 20,000,000 (Twenty Million) US Dollars and the
Borrower shall allocate a sum of 15,500,000 (Fifteen Million and
Five Hundred Thousand) US Dollars of the proceeds derived from the
Note Offering to lend to Enron Corporation at the interest rate to
be further agreed between the parties for using in the construction
and the operation of the Co-Gen Facility. The Borrower is in the
process of consideration and negotiation with Enron Corporation
regarding details and conditions of the agreement and shall further
inform the Lenders and shall receive approval from the Lenders.
"Enron Corporations" shall include the group companies and/or
related companies of Enron Corporation.
6.5 Any payment and/or any withdrawal of funds from the Offshore
Accounts of the Borrower, whether the account is for proceeds
derived from Additional Financing, Notes Debt Reserve Service
Account, Offshore Reserve Account and Offshore Sub-account, subject
to the laws and regulations relevant to the control of currency
exchange of Thailand may be made only for the following purposes:
(a) to prepay a principal amount and the interests outstanding to
the Lenders under Article 4 of this Agreement;
(b) to pay for expenses relating to the Additional Financing,
including but not limited to, financial advisory fees, fees
payable to underwriters, legal and other professional fees,
traveling expenses and others;
(c) to pay for supplies, materials, equipment and machinery and/or
fees to suppliers and/or contractors outside Thailand and/or
those payable in foreign currencies;
(d) to pay interests on the Notes to Noteholders under the terms
of the Notes when they become due including the additional
amount for taxes (if any) to the government agencies;
(e) to pay the management fee under the Management Agreement;
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(f) for loan for the construction of the Co-Gen Facility under
Article 6.4 above;
(g) to repay principal amounts and/or past due interests to
Noteholders pursuant to the terms of the Notes;
(h) to deposit the amount equal to the outstanding under the
bridge facility to the First Bangkok City Bank under Article 9
of this Agreement;
(i) to deposit as a security and/or to purchase promissory notes
and pledge them with IFCT and/or any Lenders jointly grants
the facilities with IFCT equal to the outstanding amount under
the letters of credit pursuant to packing credit under Article
10 of this Agreement; and
(j) to transfer funds to onshore accounts to be used as working
capital for the Mill on an as-needed basis including bringing
proceeds to repay a principal amounts and/or interests to the
Lenders under the CFA and this Agreement.
7. Priority of Payments
In making payment of the obligations under the CFA, this Agreement and the
conditions of the Notes which become due. the Company shall allocate the
proceeds to be repaid at each installment to the Lenders and Noteholders
according to the following:
First Payment of interests which become due and outstanding in such
respective installment under the CFA to the Lenders;
Second Payment of Fifty (50) percent of the principal amount due under the
CFA to the Lenders;
Third Payment of interest which becomes due on the Notes to Noteholders;
Fourth If there is still a sum remaining, such sum will be used for the
payment of principal amount due under the CFA (the balance from the second
payment) to the Lenders.
Such priority of payments shall not change the events of default of the
Borrower as specified under the CFA, except for the case that the Borrower
is unable to pay the fourth priority due to the lack of sufficient funds,
it shall not constitute a default under the CFA. Any principal amount in
this fourth priority of any installments that has not been paid will be
averaged over the remaining repayment installments pro rata to the
outstanding principal in each installment. Nevertheless, the Borrower must
repay the entire principal amount within the twelfth repayment
installment, otherwise, it shall constitute a default. Any events other
than the above mentioned shall be considered an event of default pursuant
to the provisions of the CFA in all respects.
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However, this Article 7 shall not apply to the case of an enforcement of
obligations and of the collateral which shall be in compliance with
Article 6 above and Security Sharing Agreement.
8. Use of Cash Flow Sweep for Prepayment
The Borrower shall provide for the use of Cash Flow Sweep as prepayment
under the CFA to any Lenders pro rata to the outstanding principal in each
installment for the remaining installments on the date of such payment.
The term "Cash Flow Sweep" shall mean a sum equal to Fifty (50) percent of
the EBITDA which derives from each related financial year of the Borrower
after deduction of interest expenses, plus debt mandatory amortization,
taxation and maintenance capital expenditures in such financial year,
beginning after December 31, 1999.
In addition "EBITDA" means net profits of the Borrower before deducting of
interest expenses, taxation, depreciation and amortization of such
financial year.
The Lenders agree to waive prepayment fees under Article 7.5 of the CFA in
the case that the prepayment is made from (a) proceeds derived from the
offering of the Notes and/or increase of the Borrower's share capital
under Article 2, or (b) Cash Flow Sweep under this Article 8 of this
Agreement.
9. Bridge Finance Granted by First Bangkok City Bank
The Lenders hereby consent and ratify the Borrower's receipt of a bridge
financing from First Bangkok City Bank in the form of letters of credit,
trust receipts, the letter of guarantee and an aval of notes in Baht and
foreign currencies calculated based on the exchange rate as of October 11,
1997 for the amount of 400,000,000 Baht (Four Hundred Million Baht). On
the Closing Date, First Bangkok City Bank shall release a second mortgage
of land and buildings, machinery and equipment of which the Borrower has
registered a second mortgage provided that the proceeds derived from the
offering of Notes shall be repaid for such obligations by allocating an
amount equal to the outstanding amount of the unpaid obligations of a
bridge financing to be maintained and pledged with First Bangkok City Bank
to secure any obligations under this bridge financing, In this regard,
First Bangkok City shall release the personal guarantees of Mr. Sawasdi
Horrungruang and Mr. Chamni Janchai in relation to this credit and release
the pledge of inventories and raw materials.
10. Packing Credit Facility Granted by IFCT
The Lenders hereby consent to the Borrower's receipt of credit facility
from IFCT, the facility which export and Import Bank of Thailand ("Thai
Exim Bank") derived from Commerce Bank, Germany in the form of packing
credit for the amount of 10,000,000 US Dollars (Ten Million US Dollars).
The credit has been granted to finance the import and export activities.
The financing period shall not exceed 180 days for each letter of credit.
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IFCT will prescribe the interest rate and shall later inform the Borrower.
Upon the subsidiary of the Borrower or the agent of such subsidiary's
receipt of the proceeds from the Offering of the Notes, under Article 2.1.
On the Closing Date, IFCT agrees to release a second mortgage of land and
buildings for the Borrower concurrently with the proceeds the Borrower
derived from the Offering of Notes by the Note Issuer is repaid for such
obligation to IFCT and/or the Borrower has allocated an amount equal to
the outstanding of the letter of credit used and charge fee in the case
there is a default with IFCT and/or Thai Exim Bank at the rate of 5.5
(Five Point Five) percent per annum of such amount by depositing and/or
purchasing promissory notes and pledging them with IFCT to guarantee the
repayment of obligations under the packing credit and release the pledge
of inventories and raw materials, provided that the Borrower shall comply
with the conditions specified by Thai Exim Bank and/or Commerce Bank.
On the Closing Date and upon the allocation of amount to guarantee the
obligations to IFCT, IFCT shall release the personal guarantees by Mr.
Sawasdi Horrungruang and Mr. Chamni Janchai and/or any other person who is
the guarantor of such credit.
In addition, the Parties of this Agreement acknowledge and agree that IFCT
may allocate the packing credit to the other Lenders and/or request such
lender to guarantee the obligations hereof. In this case, such lender
shall have the rights and obligations as IFCT in all respects.
11. Transfer of Rights and Obligations of SCF and Siam City Credit to Siam
City Bank
SCF and Siam City Credit transferred all their rights and obligations
under the CFA to Siam City Bank in respect of the commitment to extend
credit of 137,151,480 (One Hundred Thirty Seven Million One Hundred Fifty
One Thousand Four Hundred and Eighty) Baht each to the Borrower and such
respective amount has already been drawn by the Borrower as of the date of
this Agreement. The two lenders., Siam City Bank and the Borrower entered
into an agreement dated as of July 2, 1997, as per Exhibit IV to this
Agreement, to effect such transfer of rights and obligations, including
the right over the relevant Onshore Collateral, under the CFA and the
Borrower had acknowledged and agreed with such transfer of rights and
obligations.
12. Transfer of Rights and Obligation of FCI and IFCTF to IFCT
FCI and IFCTF transferred all of their rights and obligations under the
CFA pursuant to the Agreement to Transfer Credit dated December 29, 1997
as per Exhibit V to this Agreement. The transferred rights and obligations
include, but are not limited to, the right to the repayment of all
obligations of the Borrower under the CFA and the right over the Onshore
Collateral under the terms of the CFA and CFA Amendment. FCI and IFCTF are
thus no longer creditors of the Borrower. Except the obligations relevant
and necessary to provide the security for IFCT for such transferees'
obligations. When this Agreement becomes effective, the terms "the
Lenders" or "Each of Lenders" or "Group of Lenders" under the CFA, this
Agreement and Security Sharing Agreement shall not include FCC and IFCTF.
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13. Changes in the Conditions of the Undrawn Portion of Siam City Bank
The Lenders hereby provide consent for Siam City Bank to change certain
terms in respect of the undrawn facility of 10,334,976.57 (Ten Million
Three Hundred Thirty Four Thousand Nine Hundred Seventy Six Point Fifty
Seven) US Dollars, as follows:
13.1 The amount of 2,629,050.00 US Dollars (Two Million Six Hundred
Twenty Nine Thousand and Fifty US Dollars) shall be drawn in Thai
Baht for the amount equivalent to 105,963,847.55 Baht (One Hundred
Five Million Nine Hundred Sixty Three Thousand Eight Hundred Forty
Seven Point Fifty Five Baht) under the following basis of
calculation:
(1) For obligations under letters of credit, the exchange rate of
Thai Farmers Bank on the date Thai Farmers Bank converts the
obligations thereunder which become due from the foreign
currency into Baht.
(2) In case the obligations are not under the letters of credit,
the average exchange rate of Siam City Bank of 2 business days
before the date the Borrower requests in writing for the
drawdown.
13.2 The undrawn amount of 7,705,926.57 (Seven Million Seven Hundred Five
Thousand Nine Hundred Twenty Six Point Fifty Seven) US Dollars, SCIB
may make available to the Borrower the amount in US Dollars and/or
Bhat. In case Siam City Bank provides the loan in Baht, the basis
for calculating the equivalent amount in Baht shall be as follows:
(1) In case the amount is granted according to the Drawdown
Schedule, Siam City Bank shall use its average exchange rate
of 2 business days before the date of drawdown.
(2) In case the amount is granted after the Drawdown Schedule, the
exchange rate shall be in accordance with Article 13.1 above.
(3) The Lenders grant a consent and the Borrower agrees to let the
Thai Farmers Bank, First Bangkok City Bank and IFCT allow the
Borrower to drawdown in US Dollars and/or Baht.
14. Schedule of Principal Repayment
The schedule of principal repayment under the CFA shall be repealed. The
Facility Agent shall prepare, from time to time, the new schedule of
principal repayment if there are changes caused by (1) the principal
repayment before the due date as specified under Article 4, (2) the fourth
sharing of principal under Article 7, (3) the principal repayment before
the due date under Article 8, (4) the transfer of credit facility under
Article 11 and (5) the transfer of all rights and obligations between some
of the Lenders under Article 12. The schedule newly prepared deems a part
hereof.
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15. Defaults
Before the Effective Date of this CFA Amendment and the Security Sharing
Agreement under Article 16, the Lenders covenant that:
(1) the Lenders will waive any and all defaults under Article 14.1
and/or Article 18.3 of the CFA that occurred before the effective
date of the CFA Amendment, including but not limited to notify an
event of default, to certain litigation against the Borrower who is
in default under Article 14 of the CFA, including but not limited to
(a) the Borrower's use of Facilities drawn under the CFA, in the DRI
Facility and the Finishing Mill and (b) certain litigation against
Mr. Sawasdi Horrungruang, in his personal capacity as guarantor;
The provision in the first paragraph shall not apply if this
Agreement and Security Sharing Agreement are null and void and even
though this Agreement and the Security Sharing Agreement are in
effect but a default is constituted under the CFA and/or this
Agreement, the Lenders reserve the right to undertake with the
Borrower under the CFA or this Agreement.
(2) the increased value added tax rate imposed by Thai governmental
authorities is not considered a material change under the CFA;
(3) any events occurring prior to the effective date of the CFA
Amendment and the Security Sharing Agreement shall not be used to
preclude the drawdown of the loan;
(4) the Lenders shall give consent for the amendment to the Memorandum
and Articles of Association to the extent required to effect or
facilitate the Additional Financing of the Borrower and give consent
to the Borrower for (a) providing collateral to Noteholders pursuant
to the terms and conditions of the Security Sharing Agreement as
specified under Article 2 of this Agreement, (b) providing a
guarantee for the Offering of the Notes and (c) changing of the
executive officers of the Borrower to be in compliance with the
agreement of the Additional Financing.
16. Effective Date of this Agreement
The Parties agree to execute the CFA Amendment, Security Sharing Agreement
and the Security Documents prior to the Closing Date. As a condition
precedent, these two Agreements shall come into effect only upon:
(i) the Subsidiary of the Borrower receiving the proceeds from the
Offering of the Notes and the Borrower receiving the proceeds from
the increase of share capital; and
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(ii) the Borrower's arrangement for the Noteholders to share the Onshore
Collateral with the Lenders under the laws and/or regulations of the
governmental agencies concurrently with the prepayment of the
principal before the Repayment Schedule and the interests remaining
unpaid under the CFA, Article 4.
17. Resolution of the Lenders
Article 14.2(a)(3) of the CFA shall be repealed and be replaced by the
following:
"Article 14.2
(a)
(3) In taking any legal action and/or enforcing the pledge and/or
enforcing the mortgage and/or other rights under the CFA, the
Security Sharing Agreement and the Security Documents and/or
enforcing the other property of the Borrower and/or institution of
claims or a court case against the Borrower, the majority vote of
the Lenders pursuant to the CFA is required. The enforcement of
collateral shall be in accordance with the agreement under the
Security Sharing Agreement as per Exhibit III"
18. Others
18.1 This Agreement shall be deemed a part of the CFA. Should there be
any conflicts or differences of the terms between the two
agreements, the terms of this Agreement shall prevail. The
provisions other than those so amended shall be in accordance with
the CFA.
This Agreement is made in 10 (Ten) copies with the same contents. All parties
have read the contents of this Agreement thoroughly and found them complete and
correct according to their intention and therefore affixed their signatures as
evidence. Each party retains one copy of the Agreement.
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Nakornthai Strip Mill Public Company Limited Borrower
Chairman of the Board
Sign /s/ Sawasdi Horrungruang
-----------------------------------------
(Mr. Sawasdi Horrungruang)
Sign /s/ Chamni Janchai Managing Director
-----------------------------------------
(Mr. Chamni Janchai)
The Industrial Finance Corporation of Thailand Lender
Sign /s/ Anothai Taechamontri
-----------------------------------------
(Mr. Anothai Taechamontri)
Thai Farmers Bank Public Company Limited Lender
Sign /s/ Siripong Kalayaruj Position: Director
-----------------------------------------
(Mr. Siripong Kalayaruj)
Siam City Bank Public Company Limited Lender
Sign /s/ [ILLEGIBLE] Position:
-----------------------------------------
( )
The Government Savings Bank Lender
Sign /s/ [ILLEGIBLE]
-----------------------------------------
( )
First Bangkok City Bank Public Company Limited Lender
Sign /s/ [ILLEGIBLE]
-----------------------------------------
( )
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Nakornthon Bank Public Company Limited Lender
Sign /s/ [ILLEGIBLE]
-----------------------------------------
( )
SCF Finance and Securities Public Company Limited Lender
Sign /s/ [ILLEGIBLE]
-----------------------------------------
( )
Siam City Credit Finance and Lender
Security Public Company Limited
Sign /s/ [ILLEGIBLE]
-----------------------------------------
( )
First City Investment Finance Public Company Limited Lender
Sign /s/ [ILLEGIBLE]
-----------------------------------------
( )
IFCT Finance and Securities Public Company Limited Lender
Sign /s/ [ILLEGIBLE]
-----------------------------------------
( )
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Exhibit 10.03
RECIPROCAL LICENSE AND
TECHNOLOGY SHARING AGREEMENT
BETWEEN
STEEL DYNAMICS, INC.
AND
NAKORNTHAI STRIP MILL
PUBLIC COMPANY LIMITED
<PAGE>
RECIPROCAL LICENSE AND TECHNOLOGY SHARING AGREEMENT
THIS RECIPROCAL LICENSE AND TECHNOLOGY SHARING AGREEMENT(the "SDI License
Agreement") is entered into as of the _______ day of March, 1998, by and between
Steel Dynamics, Inc. ("SDI"), an Indiana corporation with its principal office
and place of business in Butler, Indiana USA, and Nakornthai Strip Mill Public
Company Limited ("NSM"), a public limited company organized under the laws of
Thailand, and is intended to describe the Parties' reciprocal rights of access
to and to the use of the SDI Technology and NSM Technology, all related to their
respectively owned and operated thin-slab/flat-rolled steel mini-mills and
certain additional ancillary facilities as described herein.
WHEREAS, SDI has accumulated certain know-how and technical expertise in
connection with the planning, construction, and operation of the SDI Facilities;
WHEREAS, NSM is developing certain technical expertise and know-how in
connection with the construction and impending operation of the NSM Facilities;
WHEREAS, NSM desires to obtain, and SDI is willing to grant to NSM, access
to and the right and license to use its know-how and technical expertise,
relating to SDI Technology, to the extent that SDI possesses the rights to
provide such access and licenses, all in accordance with the terms and
conditions hereinafter set forth; and
WHEREAS, SDI desires to obtain, and NSM is willing to grant to SDI access
to and the right and license to use its know-how and technical expertise,
relating to NSM Technology, to the extent that NSM possesses the rights to
provide such access and licenses, all in accordance with the terms and
- -conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and undertakings
of the Parties set forth herein, the Parties agree as follows:
ARTICLE I
Definitions
Defined terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Definitions and Rules of Usage (March _,
1998), which is incorporated herein by reference as though fully set forth
herein, and the related Rules of Usage shall be applicable hereto.
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ARTICLE II
License
2.1 Grant by SDI. Subject to the terms and conditions of this Agreement,
SDI hereby grants to NSM, subject to Management Co.'s control, supervision, and
direction, a non-exclusive, non-transferable, non-divisible and non-assignable
license and right, without the right to grant sublicenses hereunder, during the
term of this Agreement, to have access to and to use SDI Technology, in
connection with NSM's Mill or with NSM's other mill facilities, if any, in
Thailand, Malaysia, and the Philippines, to manufacture the Products.
SDI does not know whether, and has made no representations to NSM,
express or implied, to the effect that SDI Technology is appropriate for or is
best suited to NSM's needs. SDI's undertaking herein is solely to make SDI
Technology available to NSM, for Management Co.'s and/or NSM's use, rejection,
modification, or adaptation as Management Co. and/or NSM deems appropriate. The
Parties likewise agree that SDI shall have no prospective ongoing monitoring or
oversight functions over NSM's Mill operations.
2.2 Grant by NSM. Subject to the terms and conditions of this Agreement,
NSM hereby grants to SDI and/or to IDI, a non-exclusive, non-transferable,
non-divisible, and non-assignable license and right, without the right to grant
sub-licenses hereunder, during the term of this Agreement, to have access to and
to use NSM Technology in connection with its mill facilities in the United
States, Mexico, and Canada, to manufacture the Products.
2.3 Each party hereby grants to the other Party a license to use any
Technical Information provided by the Providing Party to the Requesting Party
for any purpose, including manufacturing, using, selling or otherwise disposing
of its Products. Unless otherwise agreed between the Parties, the additional
license rights granted hereunder to SDI shall be for SDI's plants in the United
States, Mexico, and Canada, and the license rights granted hereunder to NSM
shall be for NSM's Mill or for NSM's other mill facilities, if any, in Thailand,
Malaysia, and the Philippines. The licenses granted hereby are nonexclusive,
nontransferable and paid-up, and do not include the right to sublicense to any
third party.
ARTICLE III
Confidentiality
3.1 All Technical Information, technical trade secrets, know-how,
proprietary information, and data furnished or made available by either Party
hereunder (hereinafter "Confidential Information"), will be deemed to be and
will be received by the Requesting Party as confidential and proprietary, so
long as it is identified as such when furnished, and such Confidential
Information is for the Requesting Party's own use as limited herein and is to be
kept confidential, in accordance with the standards set forth in the next
paragraph, by the Requesting Party during and following the expiration or
termination of this Agreement. This Article shall survive expiration or
termination of this Agreement.
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Confidential Information shall not be made available, given, sold or
disclosed by the Requesting Party to any other person without the prior written
consent of the Providing Party. Each Party agrees to use its best efforts to
maintain the confidentiality of the Confidential Information disclosed to it and
each shall use no less than the same safeguards as it uses to protect its own
Confidential Information of a similar nature. A Requesting Party shall disclose
Confidential Information received from the Providing Party only to the
Requesting Party's officers, agents, employees, consultants and advisors whose
duties reasonably require familiarity with such information, provided that the
Requesting Party shall first obtain from such Persons legally enforceable
undertakings, in form and substance satisfactory to the Providing Party, not to
personally use Confidential Information, or knowledge derived therefrom, not to
disclose it to or for the benefit of any third party and containing such other
protections as the Providing Party shall reasonably request. Copies of all such
undertakings shall be delivered to the Providing Party, with evidence of its
proper adoption and legality. Except as otherwise agreed by the Parties, the
Requesting Party shall be required at its own expense to take such legal actions
as may be reasonably necessary to enforce such undertakings.
3.2 The confidentiality obligation of the Requesting Party under Section
3.1 above shall not apply to Confidential Information which:
3.2.1. is or becomes publicly known through no wrongful act of the
Requesting Party or its employees;
3.2.2. is received by the Requesting Party without restriction from
a third party without breach of any obligation of nondisclosure;
3.2.3. is or has been independently developed by the Requesting
Party;
3.2.4. is contained in any published patent or published patent
application or which becomes otherwise published or generally known to
Requesting Party through no wrongful act of Requesting Party, from and
after the date it becomes published or generally known; or
3.2.5. is disclosed pursuant to Applicable Law.
ARTICLE IV
License to Improvements Made by Requesting Party
A Requesting Party shall make available to a Providing Party on a fully-paid,
nonexclusive, non-assignable, non-sublicensable, and as is basis, a license to
use any information,invention (whether or not patentable), improvements and
innovations developed and owned by the Requesting Party substantially through
the use of Technical Information provided by the Providing Party pursuant to
this Agreement. Such right is to manufacture, assemble, use, sell, or otherwise
dispose of products during the term of this Agreement using the information,
inventions, improvements, innovations developed and owned by the Requesting
Party.
ARTICLE V
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Obtaining Rights to Patents and Technical Information From Third Parties
5.1 Neither Party represents that by virtue of its use of certain
machinery, equipment, processes or technology, it necessarily possesses the
legal right to disclose the trade secrets, know-how, or proprietary information
involved in such activity, or that such Party has the legal right to authorize
and license others to use or employ such machinery, equipment, processes or
technology.
5.2 Notwithstanding Section 5.1, and subject to Section 5.3, each Party,
upon receipt of a written request from the other Party for disclosure of and/or
the right to use any trade secrets, know-how and proprietary information which,
if solely owned and licensable by the Providing Party, would constitute
Technical Information, shall use its best efforts to ascertain whether it has
the legal right to make the disclosure and/or whether the Requesting Party may
need to obtain third party approvals, consents, licenses (with or without
royalties), or other rights in advance of disclosure or in connection with the
matter of use. In the event that the Providing Party does not have such rights,
the Providing Party shall so advise the Requesting Party, together with the
name(s) of the person(s) to contact regarding such rights, if known, and the
Providing Party shall use its best efforts to cooperate with the Requesting
Party in obtaining any such necessary permission, but subject to such terms,
conditions, and restrictions as the third party may impose. These provisions
shall also apply to any patents which relate to SDI Technology or to NSM
Technology. In the event that the Providing Party, after using its best efforts,
is unable to obtain the necessary legal rights or licenses, the Providing Party
shall be under no further obligation hereunder nor to violate the terms of any
license or other agreements it may have with such third party.
5.3 To the extent that any obligation for compensation, for indemnity, for
performance, or otherwise to a third party is required to be undertaken in
connection with the disclosures or rights to use described in Section 5.2, any
such obligations shall be direct obligations between the Requesting Party and
the third party; and the Providing Party shall not be required to incur any
primary or secondary obligations, as guarantor or otherwise, to any such third
party, nor to place its own rights with such party in jeopardy by reason of such
disclosures and/or use.
5.4 In the event that either Party shall, during the term of this
Agreement, obtain Acquired Technology from a third party (including from its
employees), such Acquired Technology shall come within the scope of this
Agreement; provided, however, that, except as to Acquired Technology acquired
from the Party possessing such Acquired Technology, a Party may, as a condition
to including such Acquired Technology within the license granted to the other
Party under Section 2.3, require the Requesting Party to contribute a fair
proportion of the cost incurred in acquiring the Acquired Technology. In such
event, the Parties shall determine by mutual agreement the amount of such
compensation by the Requesting Party to the Providing Party. If the Parties do
not so agree, the Acquired Technology shall not be included within the scope of
this Agreement, and the Requesting Party shall incur no financial obligation or
liability regarding such Acquired Technology.
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5.5 In the event that either Party has or acquires one or more patents, or
files for one or more patent applications, relating to a process or a product
that would otherwise be includable as Technical Information within a request for
Technical Assistance, or within the broad definition of SDI or, if applicable,
IDI Technology, or of NSM Technology, as the case may be, such patent rights
shall not be deemed automatically includable within the scope of the license
rights contemplated by this SDI License Agreement but may be included, at the
option of the holder of such rights and unless otherwise prohibited, upon the
negotiation and agreement of a specific license for each such process or
product, with a royalty rate and other terms that are fair and reasonable for
the type of process or product involved.
ARTICLE VI
Compensation
6.1 Solely in consideration of SDI's grant of the license rights described
in Article IV, shall issue to SDI, contemporaneously with the execution of this
License Agreement, (i) 74,468,090 Shares of NSM and (ii) Warrants to purchase
11,421,480 Shares of NSM. Pursuant to the SDI Warrant Agreement, the Warrants
shall become exercisable at the time, and in the proportion, that the Warrants
issued to the Senior Subordinated Notes are exercised. To the extent that the
Warrants shall not become exercisable on or prior to the 10th anniversary or the
Closing Date, or to the extent such Warrants shall have become exercisable but
shall not have been exercised on or before such date, such Warrants shall
expire. Concurrently with each exercise of Warrants by SDI, NSM shall pay to SDI
an amount which, after taking into account the net amount, after application of
all foreign tax credits to which SDI shall be entitled as a result thereof, of
all Thai and U.S. withholding and income taxes payable in respect of the receipt
thereof, shall be equal to Baht 10 for each Warrant which shall have been
exercised at such time. After giving effect to the exercise of all Warrants
which shall become exercisable in accordance herewith and with the Warrant
Agreement, SDI shall hold Shares equal to 10% of the total number of Shares
issued on the Closing Date and in connection with all such Warrants.
Such shares shall be deemed fully earned and paid for upon issuance, the
consideration from SDI therefor being SDI's grant of license rights to NSM
hereunder, without regard to any actual use thereof by NSM. No portion of the
value of such shares is attributable to any future services to be rendered by
SDI hereunder or under any other agreement. The value of this license grant has
been determined by NSM's Board of Directors, by Management Company, and by the
New Equity Investors (excluding SDI) and other shareholder signatories to the
Shareholder Agreement to be fair and adequate for the NSM common shares to be
issued to SDI.
6.2 The foregoing compensation shall be payable to SDI in addition to any
expense reimbursements required to be paid hereunder.
6.3 Subject to the provisions of Section 6.1, SDI shall be responsible for
all U.S. taxes on any shares issuable or amounts payable to SDI hereunder.
6.4 Except for the amount of any Thai withholding tax payable in respect
of the receipt by SDI of the NSM common shares described in Section 6.1(i), and
of the NSM common shares
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issuable upon exercise of the Warrants described in Section 6.1(ii), which NSM
agrees to bear and to pay, in SDI's name (the same as if paid directly by SDI),
if NSM shall be required under the laws of Thailand to deduct from any payment
made to SDI any other income tax which may be levied against SDI for or in
respect of this Agreement, then NSM shall pay or deduct such amounts from the
payments due to SDI, and NSM shall promptly remit to the relevant tax
authorities such income tax. NSM shall promptly furnish to SDI such necessary
tax receipts or other documentary evidence issued by the competent Thai tax
authorities, relating to any such payments made by NSM and showing the payment
made in the name of SDI, so that SDI may obtain a tax credit in the United
States. The burden of obtaining any such tax credits, and the risk of
disallowance, shall be borne by SDI.
ARTICLE VII
Term of Agreement
7.1 Unless sooner terminated hereunder, this Agreement shall continue in
effect for a term of ten (10) years.
7.2 In the event that either Party fails to perform any material
obligation or undertaking to be performed by it under this Agreement, and such
failure shall not be cured within sixty (60) days after written notice thereof
from the other Party, then a default shall have occurred. In such event, the
non-defaulting Party's sole and exclusive remedy shall be the right to terminate
this Agreement forthwith, by giving written notice of termination to the
defaulting Party; provided, however, that a majority of the interest in
Management Co. or a majority of the Board of Directors of NSM, including a
majority of the Directors nominated by the New Equity Investors, shall have
approved the delivery of the foregoing notice. No claim for monetary damages
shall exist against the defaulting Party, nor, in the case of a default by SDI,
shall any recovery, cancellation, or recoupment of any of the NSM Common Stock
or Warrants conveyed or required to be conveyed to SDI pursuant to Section 6. 1,
or in respect of any of the payments required to be paid to SDI hereunder shall
exist or be asserted; provided, however, that no termination, regardless of
cause, shall be deemed to diminish the defaulting party's rights to continue to
use any Technical Information theretofore teamed, communicated, or conveyed to
that Party.
7.3 Upon expiration or termination of this Agreement, as provided for in
this Article VII, by operation of law or otherwise, all rights granted to, and
obligations undertaken by, the Parties hereunder shall terminate, except the
following, all of which shall survive expiration. or termination of this
Agreement:
7.3.1. Each Party's rights to continue to use any Technical
Information theretofore learned, communicated or conveyed to that Party;
7.3.2. Each Party's obligation to pay all amounts accrued hereunder
upon or prior to expiration or termination of this Agreement; and
7.3.3. Each Party's confidentiality obligations under Article III
hereof;
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ARTICLE VIII
Force Majeure
8.1 In the event that performance of obligations hereunder by either Party
hereto is legally excusable because of an event of Force Majeure, the following
provisions shall apply:
8.1.1. Either Party who believes that his performance is excused by
such event of Force Majeure shall give written notice to the other as soon
as possible and with sufficient detail to permit the other to minimize
inconvenience and expense.
8.1.2. Both Parties will cooperate to minimize the financial
consequences of such event of Force Majeure.
8.1.3. Either Party hereto shall have the right to request the
termination of this Agreement if such event of Force Majeure continues for
a period greater than 180 days.
ARTICLE IX
Notice
Any notice required or contemplated hereunder shall be in English and shall be
deemed to be given when received by mail or facsimile (with follow-on hard copy
by mail), properly addressed as follows:
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If to SDI: Keith E. Busse, President
Steel Dynamics, Inc.
4500 County Road 59
Butler, IN 46721
Fax: 1-219-868-8951
Phone: 1-219-868-8108
with a copy to: Robert S. Walters, Esq.
Barrett & McNagny
215 East Berry Street
Fort Wayne, IN 46802
Fax: 1-219-423-8924
Phone: 1-219-423-8905
If to NSM: Mr. John Schultes
Nakornthai Strip Mill Public Company Limited
Chonburi Industrial Estate
(Bowin) 358 Moo 6
Highway 331, Bowin
Sri Racha, Chonburi 20230
Thailand
Fax: (66-38) 345-693, 345375
Phone: (66-38) 345-950-84, Ext. 255
with a copy to: Mr. Chamni Janchai
Nakornthai Strip Mill Public Company Limited
16th Floor UM Tower
9 Ramkhamhaeng Road
Suanluang
Bangkok 10250, Thailand
Fax: (662) 719-9828-9
or to such other addresses either party shall from time to time furnish in
writing to the other for such purpose. Such notice shall be deemed given when
actually received, or ten (10) days after the date mailed if sent by certified
or registered mail.
ARTICLE X
Governing Law
This Agreement is executed in English as the controlling text, and the
rights and obligations of the Parties hereunder shall be governed by and
construed in accordance with the laws
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of the State of New York. The Parties agree that their rights and obligations
under this Agreement shall not be governed by either the provisions of the 1980
U.N. Convention for the International Sale of Goods nor by the laws of any
jurisdiction other than as specified herein.
ARTICLE XI
Arbitration
11.1 In the event of any disputes, controversies or differences which may
arise among the Parties, out of or in relation to or in connection with this
Agreement, or for the breach thereof, the Parties hereto shall exert their
utmost to settle the same by means of good faith negotiations.
11.2 The disputes, controversies or differences arising in connection with
this Agreement shall be finally settled under the Rules of Conciliation and
Arbitration of the ICC by three arbitrators appointed in accordance with said
Rules, but no such award shall produce a result inconsistent with the provisions
of Sections 7.2 and 7.3 regarding termination and damages. The place of
arbitration shall be London, England and the proceedings shall be conducted in
the English language.
11.3 Judgment upon the award rendered may be entered in any court having
competent jurisdiction thereof, or application may be made to such court for a
judicial acceptance of the award and an order of enforcement, as the case may
be.
ARTICLE XII
Negation of Agency and Other Relationships
Nothing contained in this Agreement, nor anything done by either
party in the discharge of its obligations hereunder, shall be deemed to
constitute either party the agent, employee, joint venturer, or partner of the
other.
ARTICLE XIII
Miscellaneous
13.1 The relationship between SDI and NSM and/or Management Co. shall be
that of independent contractors, and nothing contained in this Agreement shall
be construed to (i) give either Party the power to direct and control the
day-to-day activities of the other, (ii) constitute the Parties as partners,
joint venturers, co-owners or otherwise as participants in a joint or common
undertaking, or (iii) constitute either Party, its agents or employees, as the
agents or employees of the other Party, or to grant to them any power or
authority to act for, bind or otherwise create or assume any obligation on
behalf of the other Party for any purpose whatsoever.
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13.2 Neither Party shall attempt to patent or otherwise register any right
to exclude other Persons from using the Technical Information that it receives
from the other Party pursuant to this Agreement. Neither Party shall attempt to
patent in another country the subject matter of any Patent for which it has
received a license from the other Party under this Agreement.
13.3 This Agreement constitutes the entire agreement of the Parties with
respect to the matters addressed herein and supersedes any prior understandings.
Except as noted herein, no changes to this Agreement shall be binding unless in
writing and signed by each Party.
13.4 The headings and captions used in this Agreement are for reference
purposes only and shall not limit or otherwise affect the meaning,
interpretation or application of this Agreement.
13.5 Neither Party may assign its rights or obligations under this
Agreement and this agreement shall not inure to the benefit of any trustee in
bankruptcy, receiver, or other successor of either Party, without the express
written approval of the other Party.
13.6 In the event that any one or more of the provisions of this Agreement
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect in any jurisdiction such part shall be deemed severed from this
Agreement, and the remainder of this Agreement shall continue in full force and
effect. The Parties shall consult as to the manner in which their original
intention can be fulfilled as closely as possible, and if appropriate, shall
amend this Agreement accordingly.
13.7 No delay or failure of any Party in exercising any right hereunder
and no partial or single waiver shall be deemed to constitute a waiver of any
subsequent delay or failure. No waiver of any one duty, agreement, condition or
breach of this Agreement shall constitute a waiver of any other duty, agreement,
condition or breach.
13.8 NSM and Management Co. agree to deliver to SDI, as promptly as
possible following the NSM Closing, two (2) complete sets of all equity and debt
closing documents, as executed, with all schedules and exhibits attached, and
NSM further agrees that SDI shall be deemed entitled to the same rights
thereunder as any other shareholder purchasing common stock for value in
connection therewith.
13.9 This Agreement may be executed in one or more counterparts, each of
which shall constitute an original version of the Agreement.
IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be
executed as of the date first above written by its duly authorized officer or
representative.
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NAKORNTHAI STRIP MILL PUBLIC COMPANY
LIMITED
By: /s/ John W. Schultes
-------------------------------------
Title: President/CEO
STEEL DYNAMICS, INC
By: /s/ Tracy Shellabarger
-------------------------------------
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Exhibit 10.04
MANAGEMENT ADVISORY AND
TECHNICAL ASSISTANCE AGREEMENT
BETWEEN
STEEL DYNAMICS, INC.
AND
NSM MANAGEMENT COMPANY
<PAGE>
MANAGEMENT ADVISORY AND
TECHNICAL ASSISTANCE AGREEMENT
THIS MANAGEMENT ADVISORY AND TECHNICAL ASSISTANCE AGREEMENT is made
and entered into as of the ____ day of March, 1998, by and between STEEL
DYNAMICS, INC., a corporation duly organized and existing under the laws of
Indiana, USA, with its principal office at Butler, Indiana,
and
NSM MANAGEMENT CO., a Delaware limited liability company with its principal
office in Singapore, Republic of Singapore.
WITNESSETH THAT,
WHEREAS, NSM is the owner and developer of a new mill, which
combines a minimal steel manufacturing plant with contiguous DRI and finishing
facilities for the production of the Products;
WHEREAS, NSM and Management Co. have entered into a Management
Agreement, pursuant to which Management Co. is to have control over the
operation and management of NSM, as more fully set forth therein;
WHEREAS, SDI has designed, built, started-up, and is currently
operating a thin-slab flat-rolled mini-mill in Butler, Indiana, as well as a
cold mill facility and a DRI facility on or contiguous to the same site, and has
accumulated know-how and experience particular to its U.S. Midwestern operations
in connection therewith;
WHEREAS, Management Co. believes that it can better discharge its
duties and obligations to NSM under the Management Agreement if it can obtain
the benefit of SDI's experience and operational and management techniques, so
that it could adapt such experience and techniques to NSM's particular needs, as
Management Co. deems appropriate, and, accordingly, has asked SDI to provide it
with technical and operational consulting services, under the terms and
conditions described herein;
NOW, THEREFORE, in consideration Of the premises and covenants
hereinafter contained and to be faithfully performed, SDI and Management Co.
hereby agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
Defined terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Definitions and Rules of Usage
(March 12, 1998), which is incorporated herein by reference as though fully set
forth herein, and the related Rules of Usage shall be applicable hereto.
ARTICLE II
AGREEMENT REGARDING MANAGEMENT ADVICE
AND CONSULTATION BY SDI
2.1 Subject to the provisions of Section 2.2, SDI hereby agrees to:
(a) provide Management Co. with advice and counsel regarding SDI's
management techniques, methodologies, and culture, including employee
relations and incentivization;
(b) advise Management Co., to the best of its knowledge, experience,
and ability, in relation to all problems, studies, evaluations, questions,
issues, inquiries, investigations and matters relating to the actual
operation of the Mill, and to the manufacture of the Products, which
Management Co. may from time to time refer to SDI for its opinion and
advice during the term of this Agreement;
(c) provide Management Co. with reasonable assistance in relation to
the business and practical applications of SDI Technology; and
(d) Upon Management Co.'s request from time to time, provide
Management Co. with such additional assistance as it is entitled to make
available hereunder, as may be reasonably necessary or desirable for the
effective performance of its duties and obligations hereunder;
2.2 It is understood that, in performing its services hereunder, SDI
will:
(a) in general, periodically draw upon its own personnel who are
from time to time available for short-term projects or assignments, and
who are professionally qualified to render advice in relation to the
subject matter of the consultation; and
(b) primarily provide training-type advice and consultation to
Management Co., and, subject to Management Co.'s control, supervision, and
direction, to NSM's
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supervisory and managerial personnel, as well as, during start-up of the
Mill and from time to time thereafter on an incidental basis regarding the
Mill, to a reasonable number of NSM operating personnel in connection with
the foregoing matters, such that the persons so trained will be able to
then train their own people.
2.3 The parties agree that SDI has undertaken no independent study
or analysis of NSM's proposed operations, or of its Mill, its proposed Products,
its technology and equipment, its management structure, the nature of its work
force, its labor relations, the sources and nature of its raw materials, its
markets, its transportation system, or the impact of its Thai culture, legal
system, or tax laws upon its proposed business or upon Mill operations. SDI does
not know whether, and has made no representations to NSM, express or implied, to
the effect that SDI Technology or SDI's techniques and culture are appropriate
for or best suited to NSM's needs. SDI's undertaking herein, is solely to make
available to Management Co., and, through Management Co. to NSM, its own
understandings, experience, and know-how, based upon its own operations, for
Management Co.'s and/or NSM's use, rejection, modification, or adaptation as
Management Co. and/or NSM deems appropriate. The parties likewise agree that SDI
shall have no ongoing monitoring or oversight functions over NSM's Mill
operations.
2.4 The parties further acknowledge and agree that, with regard to
the discharge of SDI's duties and obligations hereunder, SDI has been granted no
power or authority, does not intend to exercise any such power or authority, and
is undertaking no obligations to directly or indirectly manage, control, or
supervise any of NSM's management or operating personnel or any of NSM's
policies, practices, or procedures, to be responsible for achieving
profitability of NSM's Mill or to profitably operate at any particular level, or
to be able to solve any and all problems that may arise or that may be referred
to SDI by Management Co. from time to time for consultation and advice.
Management Co. shall in all instances have total discretion on whether and, if
so, how to implement any SDI advice that it may receive, and shall derive all of
its authority and take all of its directives from, and shall be solely
answerable to, NSM.
ARTICLE III
Additional Services
3.1 Reciprocal Right of Access to Technical Information
3.1.1 Upon the written request of the Requesting Party, made from
time to time during the term of this Agreement, and subject to the
execution by the Requesting Party of commercially reasonable
confidentiality and non-disclosure agreements, as contemplated by Article
V, with reasonable safeguards to insure that the Providing Party's
Technology is neither disclosed to nor used for the benefit of persons who
are not themselves authorized to receive such disclosure or to use such
Technology, nor used for purposes other than as specifically contemplated
hereunder, the Providing Party, on a non-exclusive basis, during
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reasonable business hours, and when such Technical Assistance will not
unreasonably disrupt the Providing Party's business or production
activities, shall provide the Requesting Party, for use either by NSM at
its Mill, or at any of its other mill sites in Thailand, Malaysia, or the
Philippines, or by SDI at its plants in the U.S., Canada, or Mexico, as
the case may be, access to such Technical Information, including the
right, subject to the Providing Party's judgment regarding the
identification of and the number of persons necessary to provide the
Technical Information (i) to interview certain operating, engineering, or
administrative personnel, (ii) subject to reasonable safeguards and
limitations, to observe processes, procedures or applications, (iii) to
videotape, photograph, draw, diagram, or record such processes, procedures
or applications, (iv) to make photocopies of any pertinent non-copyrighted
materials with respect to such Technical Information, and (v) to copy
digitally stored data, if not copyrighted, relating to the specific
request.
Nothing herein however, or in Sections 2.1 or 3.2, shall be
construed to require SDI to provide NSM with management advice, Technical
Information or Technical Assistance with respect to any person who is not
an employee of the Mill, or at any facility other than the Mill, or to
require NSM to provide SDI with Technical Assistance with respect to any
person who is not an employee of SDI's Butler, Indiana mill, or at any
facility other than its Butler, Indiana facility.
3.1.2 The Providing Party shall be under no continuing obligation to
the Requesting Party, but shall make a good faith effort to update or
revise any Technical Information that has previously been made available
to the Requesting Party.
3.1.3 A Providing Party makes no representation or warranty for any
purpose with respect to Technical Information furnished hereunder, except
that the Providing Party shall use its best efforts to verify that such
Technical Information is the same information and data as is used by it at
the time of access.
3.1.4 The Requesting Party shall reimburse the Providing Party for
all reasonable out-of-pocket expenses, including economy class air
transportation, and reasonable lodging and food costs, incurred by the
Providing Party in complying with a request for Technical Information
under this Agreement. The Requesting Party shall not be responsible for
paying any salaries, benefits or per them charges for employees of the
Providing Party involved in providing the Technical Information.
3.2 Reciprocal Right to Technical Assistance
3.2.1 In order to assist the Requesting Party in understanding
Technical Information furnished under Section 3.1 and to assist the
Requesting Party in the manufacture of the Products to which such
Technical Information relates, and subject to the execution by the
Requesting Party of commercially reasonable confidentiality and
non-
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disclosure agreements, as contemplated by Article V, with reasonable
safeguards to insure that the Providing Party's Technology is neither
disclosed to nor used for the benefit of persons who are not themselves
authorized to receive such disclosure or to use such Technology, nor used
for purposes other than as specifically contemplated hereunder, the
Providing Party shall, upon receipt of a request of the Requesting Party
made from time to time during the term of this Agreement, provide
reasonable Technical Assistance to personnel employed and specifically
designated by the Requesting Party, subject to the availability of
qualified personnel within the employ of the Providing Party.
3.2.2 In the event the Requesting Party asks the Providing Party to
make its personnel available to provide Technical Assistance at the
Requesting Party's facilities either at the Mill or at SDI's Butler,
Indiana facility, as the case may be, the following terms and conditions
shall apply:
(a) The Parties shall agree upon a mutually acceptable time
schedule for the provision of such services. In the case of an
urgent or emergency situation, the Requesting Party shall so
indicate and shall submit its request for Technical Assistance to
the Providing Party as soon as possible. While the Providing Party
is expected to attempt in good faith to accommodate the Requesting
Party's schedule, the Providing Party shall not be required to
disrupt its operations or incur additional expense in order to do
so.
(b) It is understood that, with respect to the level of the
Providing Party's involvement at the Requesting Party's facility
(including the number of staff, the nature of the expertise
required, and the frequency of perceived need), the main purpose is
for the Providing Party to provide the Requesting Party with a
reasonable amount of initial on-site or other training, primarily
directed to the Requesting Party's supervisory and managerial
personnel (with a focus on "training the trainer"), but that
ultimately the Requesting Party is expected to be able to provide
its own ongoing training and support for its own staff and not to
depend upon the Providing Party on a continuous basis.
(c) The Requesting Party shall receive and make necessary
arrangements for the Providing Party's personnel being sent to the
Requesting Party's facilities and shall reimburse the Providing
Party for all reasonable business class air travel and other living
expenses incurred by such personnel. The Requesting Party shall not
be responsible for salaries, benefits or per them expenses of the
Providing Party's personnel providing Technical Assistance. The
Requesting Party shall bear all of its own expenses related to such
Technical Assistance.
(d) The personnel of the Providing Party sent to the
Requesting Party's facility to provide Technical Assistance
hereunder, to provide Technical
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<PAGE>
Information pursuant to Section 3.1, or to provide management advice
pursuant to Section 2.1, shall not be considered for any purpose to
be employees, agents or representatives of the Requesting Party, nor
shall they assume any responsibility for the Requesting Party's
manufacture of products. Such personnel shall not be placed on the
Requesting Party's payroll and the Providing Party shall be required
to insure that such personnel are covered under applicable Workmen's
Compensation or comparable laws, including health and accident
insurance policies, for any injury that may occur to such personnel.
3.2.3 In the event the Requesting Party asks that the Providing
Party accept the Requesting Party's personnel at the facilities of the
Providing Party for the purpose of receiving Technical Assistance, such
assistance shall be made available under the following conditions:
(a) The Parties shall agree upon a mutually acceptable time
schedule for the provision of such services. In the case of an
urgent or emergency situation, the Requesting Party shall so
indicate and shall submit its request for Technical Assistance to
the Providing Party as soon as possible. While the Providing Party
is expected to attempt in good faith to accommodate the Requesting
Party's schedule, the Providing Party shall not be required to
disrupt its operations or incur additional expense in order to do
so.
(b) The Requesting Party shall bear all expenses (including
travel and living expenses as previously described) incurred by the
Requesting Party's personnel assigned to receive Technical
Assistance under this Article, plus all other reasonable
out-of-pocket training costs incurred by the Providing Party. The
Requesting Party shall not be responsible for salaries, benefits or
per diem expenses of the Providing Party's personnel providing
Technical Assistance.
(c) Technical Assistance shall be provided in such manner as
the Providing Party may allow (a) in accordance with safety
requirements, (b) with due consideration to prevention of
unreasonable disturbance of its manufacturing operations or
production scheduling, and (c) under the guidance of the Providing
Party's personnel.
(d) The personnel of the Requesting Party sent to the
Providing Party's facility to receive Technical Assistance shall not
be considered for any purpose to be employees, agents or
representatives of the Providing Party, nor shall they assume any
responsibility for the Providing Party's manufacture of products.
Such personnel shall not be placed on the Providing Party's payroll,
and the Requesting Party shall be required to insure that such
personnel are covered under its own applicable Workmen's
Compensation or comparable laws, including health and accident
insurance policies, for any injury that may occur to such personnel.
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3.2.4 The Providing Party represents and warrants that its personnel
assigned to provide Technical Assistance to the Requesting Party shall be
reasonably qualified to provide such assistance, in accordance with good
professional practice, and shall use their best efforts for said purpose,
but no other warranty with respect to Technical Assistance is or shall be
deemed to be given to the Requesting Party by the Providing Party.
3.3 Upon the request of Management Co., SDI will permit a reasonable
number of representatives of Management Co. and/or of NSM, who have executed
confidentiality agreements (in form and substance mutually agreeable to the
parties), with safeguards to insure that SDI Technology, or, if applicable, IDI
Technology, is neither disclosed to nor used for the benefit of persons who are
not themselves authorized to receive such disclosures or to use such technology,
nor used for purposes other than as specifically contemplated hereunder, to
visit such of SDI's plants or operations, in the United States or elsewhere, as
SDI deems appropriate, at such times and for such reasonable periods during the
term of this Agreement as may be mutually agreed upon, in order for such
representatives to attend training sessions, to learn how to train their own
people, and to study SDI's and/or, if applicable, IDI's manufacturing processes
and management techniques and other technical information relating to the
Products and to the operation of such plants.
3.4 SDI will fumish a mutually agreed upon number of its, or, if
applicable, IDI's experienced and qualified staff, on short-term assignments to
the Mill, at such times and for such periods as may be mutually agreed upon in
order to render management advice, provide Technical Information, or to render
Technical Assistance within the scope of this Agreement. SDI shall have the
right to assign, reassign, recall, rotate or change any of its staff, at
reasonable intervals, it being understood that the parties' primary objective
hereunder is to train Management Co.'s and/or NSM's people to be trainers, so
that they will be able to train NSM's actual operating personnel on an ongoing
basis. Nothing herein shall be interpreted to mean that SDI is required to
maintain, nor does SDI intend to maintain, any regular staff presence or any
other permanent or semi-permanent presence or establishment at NSM's plant in
Thailand, or elsewhere, nor any presence for Thai tax purposes.
Management Co. shall, at no cost to SDI or its Subsidiaries, cause
NSM to provide said trainers and technical experts with (i) all necessary office
space and equipment, communication facilities such as telex, telephone or
facsimile between Thailand and the United States, and any similar support, and
(ii) necessary facilities for the conduct of such technical experts.
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<PAGE>
ARTICLE IV
PAYMENTS BY Management Co. OR NSM
4.1 In consideration of the services to be performed by SDI and/or,
if applicable, by IDI hereunder, Management Co. shall pay or shall cause NSM to
make the following payments to SDI:
(a) An annual fee of Two Million Dollars (US $2,000,000) per year,
payable in advance, the first $2,000,000 of which shall be paid
concurrently with the Closing Date, and succeeding annual payments of
$2,000,000 each payable on each anniversary of the Closing Date, so long
as this Agreement remains in effect; provided that in no event shall
aggregate fees be payable pursuant to this Section 4.1(a) in excess of
Twenty Million Dollars (US $20,000,000) over the ten year term of this
Agreement. In the event that this Agreement is terminated pursuant to the
provisions of Article VIII and such termination occurs subsequent to the
payment of the annual fee hereunder on the anniversary date, any uneamed
portion of such fee shall be refunded to NSM (pro rated by the number of
days remaining in the year of termination).
(b) A payment of One Million Three Hundred Thousand Dollars (U.S.
$1,300,000.00), payable upon the start-up of the Finishing Facilities, but
no later than March 12, 1999.
(c) Management Co. shall cause NSM to pay for all costs and expenses
for its representatives, including, but not limited to, economy air
travel, lodging and meal expenses, incurred in connection with each
visitation to an SDI or, if applicable, an IDI plant, as well as in
connection with any of the other training contemplated herein. SDI shall
not be responsible for any property damage or bodily injury which any
representatives of Management Co. and/or NSM may sustain during their stay
in the United States, or at such other locations designated by SDI, unless
such damage or injury will have been caused by gross negligence or willful
misconduct of SDI or its personnel. SDI shall assist Management Co. in
acquiring accommodations for the said representatives, but with no
obligation to bear expense for such accommodation.
(d) In connection with the services to be rendered to Management Co.
and/or to NSM in Thailand, Management Co. shall cause NSM to pay to or
reimburse SDI, with respect to each of said trainers and technical
experts, the expenses of air travel from the United States to Bangkok
and/or to NSM's plant in Thailand, and return, at economy class rates,
together with all out of pocket expenses for food, transportation, and
lodging during each such staff person's stay in Thailand.
(e) All amounts payable under Sections 4.1(c) or (d), shall be due
and payable by NSM to SDI within thirty (30) days after the transmittal by
SDI to Management Co. of
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<PAGE>
invoices with respect thereto. Fees payable pursuant to Section 4.1(a) or
(b) shall be payable in full in advance on or before the date indicated,
and shall be in default if not fully paid within fifteen (15) days of the
due date. Any payment not made when due shall accrue interest at an annual
interest rate of ten percent (10%) from the date such payment is due until
the date such payment is made.
4.2 Except as otherwise agreed upon, all financial obligations
hereunder are Dollar obligations, and Management Co. shall cause all payments
under this Agreement to be made by NSM in that currency via electronic transfer
to SDI's account as specified by SDI, any bank charges inside Thailand to be
borne by NSM.
4.3 Subject only to the following paragraph, SDI shall be
responsible for all U.S. taxes and charges on any payments due and payable under
this Agreement.
If NSM shall be required under the laws of Thailand to deduct from
any payment made to SDI hereunder any income tax which may be levied against
SDI, then Management Co. shall cause NSM to deduct such amounts from the
payments due to SDI hereunder, and Management Co. shall cause NSM to remit to
the relevant tax authorities such income tax; provided, however, that NSM and
Management Co. shall promptly fumish to SDI appropriate tax receipts or other
documentary evidence issued by the competent tax authorities relating to such
payment made by NSM, and showing payment in the name of SDI, so that SDI may
obtain a tax credit in the United States. Recovery of such tax credit shall be
the sole risk and responsibility of SDI. Management Co. agrees that any value
added tax in Thailand on any payments hereunder shall be borne by NSM.
ARTICLE V
CONFIDENTIALITY
5.1 All Technical Information, technical trade secrets, know-how,
proprietary information, and data furnished or made available by either Party
hereunder (hereinafter "Confidential Information"), will be deemed to be and
will be received by the Requesting Party as confidential and proprietary, so
long as it is identified as such when furnished, and such Confidential
Information is for the Requesting Party's own use as limited herein and is to be
kept confidential, in accordance with the standards set forth in the next
paragraph, by the Requesting Party during and following the expiration or
termination of this Agreement. This Article shall survive expiration or
termination of this Agreement.
Confidential Information shall not be made available, given, sold or
disclosed by the Requesting Party to any other person without the prior written
consent of the Providing Party. Each Party agrees to use its best efforts to
maintain the confidentiality of the Confidential Information disclosed to it and
each shall use no less than the same safeguards as it uses to protect
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<PAGE>
its own Confidential Information of a similar nature. A Requesting Party shall
disclose Confidential Information received from the Providing Party only to the
Requesting Party's officers, agents, employees, consultants and advisors whose
duties reasonably require familiarity with such information, provided that the
Requesting Party shall first obtain from such persons legally enforceable
undertakings, in form and substance satisfactory to the Providing Party, not to
personally use Confidential Information, or knowledge derived therefrom, not to
disclose it to or for the benefit of any third party and containing such other
protections as the Providing Party shall reasonably request. Copies of all such
undertakings shall be delivered to the Providing Party, with evidence of its
proper adoption and legality. Except as otherwise agreed by the Parties, the
Requesting Party shall be required at its own expense to take such legal actions
as may be reasonably necessary to enforce such undertakings.
5.2 The confidentiality obligation of the Requesting Party under
Section 3.1 above shall not apply to Confidential Information which:
5.2.1 is or becomes publicly known through no wrongful act of the
Requesting Party or its employees;
5.2.2 is received by the Requesting Party without restriction from a
third party without breach of any obligation of nondisclosure;
5.2.3 is or has been independently developed by the Requesting
Party;
5.2.4 is contained in any published patent or published patent
application or which becomes otherwise published or generally known to
Requesting Party through no wrongful act of Requesting Party, from and
after the date it becomes published or generally known; or
5.2.5 is disclosed pursuant to Applicable Law.
ARTICLE VI
OPERATING METHODOLOGIES AND PRODUCT QUALITY
6.1 To the extent that Management Co. determines that such
application or adaptation is appropriate, Management Co. will cause NSM to model
its manufacturing operations after SDI's techniques and methodologies, with such
adaptations thereof and modifications therein as Management Co. shall deem
appropriate, and will endeavor to manufacture NSM's Products to a quality
comparable with similar products manufactured by SDI in accordance with SDI
Technology. Such determinations shall be made by Management Co., based solely
upon its own assessment of whether and to what extent SDI's techniques and
methodologies, and SDI Technology (or, if applicable, IDI Technology), with or
without
-10-
<PAGE>
adaptation or modification, is properly applicable to meet NSM's particular
needs and circumstances.
6.2 Management Co. shall permit SDI, at SDI's request from time to
time, to have access to NSM's plant for inspection, testing, and/or review of
NSM's operations and of its quality control. It is acknowledged and agreed,
however, that SDI shall have no continuing or ongoing obligation to approve,
evaluate, monitor, verify, warrant, or vouch for NSM's operating technique and
methodologies, or of its Product quality, nor to monitor or report on NSM's
manufacturing operations, or its compliance with SDI operating procedures or SDI
Technology.
6.3 It is further acknowledged and agreed that neither Management
Co. nor NSM, nor anyone active on its behalf, whether in the spoken or written
word and whether in securities offerings or filings or in the sale and marketing
of its Products, shall misrepresent nor make any untrue statement of a material
fact, or omit to state a material fact necessary in order to make the statements
made, in the light of the circumstances under which they were made, not
misleading, regarding the relationship between SDI and NSM, or state, suggest or
imply that SDI manages NSM, exerts management influence or control over NSM,
supervises the operations of NSM or approves or certifies NSM's quality
standards or its compliance with SDI operating procedures or SDI Technology.
6.4 Neither Management Co. nor NSM shall have any right, power, or
authority, by reason of any right granted hereunder or otherwise, to use or
employ SDI's name, any SDI trademark (whether statutory or common law), or any
other trade dress or reference to SDI, in any testimonial, advertisement,
publication, electronic medium, or any other format, without SDI's prior written
approval.
ARTICLE VII
EFFECTIVE DATE
Although this Agreement has been executed by the Parties on the date
first above written, it shall become effective on and as of the Closing Date.
ARTICLE VIII
DURATION AND TERMINATION; DEFAULT
8.1 Unless sooner terminated as otherwise provided in this
Agreement, this Agreement shall remain in effect and continue for a period of
ten (10) years from the Closing Date.
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<PAGE>
8.2 Notwithstanding the provisions of Paragraph 8.1 and without
prejudice to any other right and remedy that one Party may have against the
other Party for material breach or nonperformance of this Agreement, this
Agreement may be terminated:
(a) by either Party upon sixty (60) days' written notice if the
other Party shall violate any of the provisions or conditions of this
Agreement and shall fail to discontinue or remedy such violation within
said period of sixty (60) days of the date of such notice;
(b) by either Party immediately if the other Party shall become
bankrupt pursuant to the judgment of a court of competent jurisdiction.
8.3 In the event that either Party fails to perform any material
obligation or undertaking to be performed by it under this Agreement, and such
failure shall not be cured within sixty (60) days after written notice thereof
from the other Party, then a default shall have occurred hereunder and, in
addition to the right to terminate described in Section 8.2, and subject to the
provisions of Section 4.1(a) regarding the abatement of management fees for the
year of default, the non-defaulting Party shall have no right to assert any
claim for monetary damages, either in contract or in tort for ordinary
negligence. NSM, however, shall be entitled to assert a claim for monetary
damages in the event of SDI's gross negligence or willful misconduct,
notwithstanding NSM's termination of this Agreement pursuant to Section 8.2,
limited, however, to a claim for actual damages not exceeding the amount of the
annual fee payable pursuant to Section 4.1(a) during the year of default.
8.4 Expiration or termination of this Agreement for any reason shall
not in any case operate to relieve either Party from its responsibility to
fulfill any obligations under the provisions of this Agreement which shall have
accrued to such party prior to the time of such expiration or termination.
ARTICLE IX
ASSIGNMENT
Neither this Agreement nor any rights or benefits hereunder shall be
assignable or transferable to any third party, in whole or in part, by either
Party, without the prior written consent of the other Party. In the event of
assignment by operation of law, absent consent by the other Party, this
Agreement shall thereupon automatically terminate without notice.
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<PAGE>
ARTICLE X
WAIVER OF COMPLIANCE
Any failure by either Party to enforce, at any time or for any
period of time, any of the provisions of this Agreement shall not constitute or
be construed as a waiver of that party's right thereafter to enforce each and
every provision of this Agreement.
ARTICLE XI
GOVERNMENTAL REGULATIONS AND FORCE MAJEURE
11.1 Any obligation of either Party hereunder shall be subject to
Applicable Law, respecting the export, import or disclosure of materials,
products, SDI Technology, or NSM Technology.
11.2 Upon the occurrence of an event of Force Majeure, the following
provisions shall apply:
(a) The Party who believes that his performance is excused by such
event of Force Majeure shall give written notice to the other as soon as
possible and with sufficient detail to permit the other to minimize
inconvenience and expense.
(b) Both Parties will cooperate to minimize the financial
consequences of such event of Force Majeure.
(c) Either Party hereto shall have the right to request the
termination of this Agreement if such event of Force Majeure continues for
a period greater than 180 days.
ARTICLE XII
ARBITRATION
12.1 In the event of any disputes, controversies or differences
which may arise among the parties, out of or in relation to or in connection
with this Agreement, or for the breach thereof, the parties hereto shall exert
their utmost to settle the same by means of good faith negotiations.
12.2 The disputes, controversies or differences arising out of this
Agreement shall be finally settled under the Rules of Conciliation and
Arbitration of the ICC by three arbitrators appointed in accordance with said
Rules, but no such award shall produce a result
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<PAGE>
inconsistent with the provisions of Section 8.3 hereof. The place of arbitration
shall be London, England and the proceedings shall be conducted in the English
language.
12.3 Judgement upon the award rendered may be entered into any court
having competent jurisdiction thereof, or application may be made to such court
for a judicial acceptance of the award and an order of enforcement, as the case
may be.
ARTICLE XIII
NEGATION OF AGENCY AND OTHER RELATIONSHIPS
Nothing contained in this Agreement, nor anything done by either
Party in the discharge of its obligations hereunder, shall be deemed to
constitute either Party the agent, employee, joint venturer, or partner of the
other Party.
ARTICLE IV
NOTICE
Any notice required or contemplated hereunder shall be in English
and shall be deemed to be given when received by mail or facsimile (with
follow-on hard copy by mail), properly addressed as follows:
If to SDI: Keith E. Busse, President
Steel Dynamics, Inc.
4500 County Road 59 Butler, IN 46721
Fax: 1-219-868-8951
Phone: 1-219-868-8108
with a copy to:
Robert S. Walters, Esq.
Barrett & McNagny
215 East Berry Street
Fort Wayne, IN 46802
Fax: 1-219-423-8924
Phone: 1-219-423-8905
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<PAGE>
If to Management Co.:
Mr. David Stickler
McDonald & Company Securities, Inc.
800 Superior Avenue
Cleveland, OH 44114
Fax: 1-216-443-3980
Phone: 1-216-443-2790
If to NSM:
Mr. John Schultes
Nakomthai Strip Mill Public Company Limited Chonburi
Industrial Estate (Bowin) 358 Moo 6
Highway 331, Bowin
Sri Racha, Chonburi 20230
Thailand
Fax: (66-38) 345-693, 345375
Phone: (66-38) 345-950-84, Ext. 255
with a copy to:
Mr. Chamni Janchai
Nakomthai Strip Mill Public Company Limited
16th Floor UM Tower
9 Ramkhamhaeng Road
Suanluang, Bangkok 10250, Thailand
Fax: (662) 719-9828-9
or to such other addresses either Party shall from time to time fumish in
writing to the other Party for such purpose. Such notice shall be deemed given
when actually received, or ten (10) days after the date mailed if sent by
certified or registered mail.
ARTICLE XV
GOVERNING LANGUAGE AND LAW
This Agreement is executed in English as the control text, and it
shall be governed by and noted in accordance with the laws of the State of New
York. The Parties their rights and obligations under this Agreement shall not be
governed by either the provisions of the 1980 U.N.
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Convention for the International Sale of Goods nor by the laws of any
jurisdiction other than as specified herein.
ARTICLE XVI
ENTIRE AGREEMEENT AND VARIATONS
This Agreement, together with the Exhibits attached hereto, or other
documents referenced herein, including the License Agreement, constitutes the
entire and only agreements between the Parties relative to the subject matter
hereof and supersedes and cancels all previous agreements, negotiations,
commitments and writings relative to the subject trial hereof, and may not be
changed or modified in any manner unless in writing signed by the authorized
officer or representative, on behalf of each of the Parties on or after the date
of execution of this Agreement.
ARTICLE XVII
SEVERABILITY OF PROVISIONS
If any of the provisions of this Agreement shall be declared to be
invalid or unenforceable by judicial or administrative decision, any such
provisions be deemed deleted and shall not in any way affect the validity of any
other provision of this Agreement.
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<PAGE>
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the day and year
first above written.
Date: NSM MANAGEMENT CO.
-------------
By /s/ [ILLEGIBLE]
---------------------------------------
Title
------------------------------------
Date: 03/12/98 NAKORNTHAI STRIP MILL PUBLIC
------------- COMPANY LIMITED
By /s/ John W. Schultes
--------------------------------------
Title President/CEO
-----------------------------------
Date: 03/12/98 STEEL DYNAMICS, INC.
-------------
By /s/ Tracy Shellabarger
--------------------------------------
Title Vice President
-----------------------------------
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Exhibit 10.05
US$15,000,000 and
Baht 400,000,000
ONSHORE BILL DISCOUNT FACILITY
Dated March 12, 1998
Between
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
(the Company)
and
BANQUE NATIONALE DE PARIS
(the Agent and Arranger)
and
THE BANKS herein referred to
SHEARMAN & STERLING
SINGAPORE
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01 Defined Terms.............................................. 1
SECTION 1.02 Construction.............................................. 9
SECTION 1.03 Computation of Time Periods...............................10
ARTICLE II
THE FACILITY AND CONDITIONS PRECEDENT TO
GRANT OF FINANCIAL ACCOMMODATION
SECTION 2.01 Grant of Facility..........................................10
SECTION 2.02. Condition Precedent Documents.............................10
ARTICLE III
FUNDING PROVISIONS
SECTION 3.01 Request for Payments.......................................10
SECTION 3.02 Making Payments...........................................11
SECTION 3.03 Maximum Amount............................................11
SECTION 3.04 Notices Irrevocable.......................................11
SECTION 3.05 Termination or Reduction of the Commitments...............12
SECTION 3.06 Banks' Obligations Several................................12
SECTION 3.07 Each Bank's Participation.................................12
SECTION 3.08 Payment by Thai Offtakers.................................12
SECTION 4.01 Computations..............................................12
SECTION 4.02 Discount Period...........................................12
SECTION 4.03 Payments to the Agent.....................................13
SECTION 4.04 Payments by the Agent.....................................13
SECTION 4.05 Notice to Banks...........................................13
SECTION 4.06 Clawback..................................................13
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01 On Signing................................................14
ARTICLE VI
INDEMNITY
SECTION 6.01 Indemnity.................................................15
SECTION 6.02 Costs and Expenses........................................16
SECTION 6.03 Banks' Liabilities for Costs..............................17
(i)
<PAGE>
Page
----
SECTION 6.04 Survival..................................................17
ARTICLE VII
COVENANTS
SECTION 7.01 Further Assurances........................................17
SECTION 7.02 Affirmative Covenants.....................................17
SECTION 7.03 Negative Covenants........................................18
SECTION 7.04 Reporting Requirements....................................18
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.02 Notice....................................................21
ARTICLE IX
SHARING
SECTION 9.01 Redistribution of Payments................................21
SECTION 9.02 Repayable Recoveries......................................22
ARTICLE X
FEES
SECTION 10.01 Fees.....................................................22
ARTICLE XI
INCREASED COSTS
SECTION 11.01 Increased Costs, Etc.....................................22
SECTION 11.02 Taxes....................................................23
SECTION 11.03 Certificates.............................................23
ARTICLE XII
AGENCY PROVISIONS
SECTION 12.01 Appointment of the Agent.................................24
SECTION 12.02 Agent's Discretions......................................24
SECTION 12.03 Agent's Obligations......................................25
SECTION 12.05 Indemnification..........................................25
SECTION 12.06 Exclusion of Liabilities.................................25
SECTION 12.07 No Actions...............................................26
SECTION 12.08 Business with any Transaction Party......................26
SECTION 12.09 Resignation..............................................26
SECTION 12.10 Successor Agent..........................................26
SECTION 12.11 Rights and Obligations...................................26
SECTION 12.12 Own Responsibility.......................................26
SECTION 12.13 Agency Division Separate.................................27
SECTION 12.14 Confidential Information.................................27
SECTION 12.15 Safe Custody.............................................27
(ii)
<PAGE>
SECTION 12.16 Delegation...............................................27
ARTICLE XIII
ASSIGNMENTS AND TRANSFERS
SECTION 13.01 Binding Agreement........................................28
SECTION 13.02 No Assignments and Transfers by the Company..............28
SECTION 13.03 Assignments and Transfers by Banks.......................28
SECTION 13.04 Assignments by Banks.....................................28
SECTION 13.05 Transfers by Banks.......................................28
SECTION 13.06 Transfer Fees............................................29
SECTION 13.07 Disclosure of Information................................29
SECTION 14.01 Amendment Procedures.....................................29
SECTION 14.02 Amendment Costs..........................................30
ARTICLE XV
MISCELLANEOUS
SECTION 15.01 Amendments, Etc..........................................30
SECTION 15.02 Notices, Etc.............................................30
SECTION 15.03 No Waiver, Remedies......................................30
SECTION 15.04 Right of Set-off.........................................31
SECTION 15.05 Execution in Counterparts................................31
SECTION 15.06 Jurisdiction, Etc........................................31
SECTION 15.07 Governing Law............................................31
SECTION 15.08 Service of Process.......................................31
(iii)
<PAGE>
Page 1
ON SHORE BILL DISCOUNT FACILITY AGREEMENT
This ONSHORE BILL DISCOUNT FACILITY AGREEMENT dated March 12, 1998
is made between Nakornthai Strip Mill Public Company Limited (the "Company"),
Banque Nationale de Paris as agent (the "Agent") and as arranger (the
"Arranger"), and each of the banks and financial institutions listed in Appendix
2 (the "Banks")
WHEREAS:
(1) The Company proposes to enter into certain offtake agreements
pursuant to which the Thai counterparty will purchase steel products from and
make payment in respect thereof to the Company;
(2) The Company has arranged with the Thai Offtakers to draw Bills
of Exchange (the Face Amount of which will correspond to an amount due under an
Offtake Agreement) upon the Thai Offtakers, in favour of the Banks as payee;
(3) Upon acceptance of such Bills of Exchange by the Thai Offtakers
and delivery thereof to the Agent, the Banks will advance the Discounted Amount
of such Bills of Exchange to the Company.
NOW, IT IS HEREBY AGREED as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01 Defined Terms. Unless the context otherwise requires,
the following terms shall have the following meanings when used in this
Agreement:
"Agent" means Banque Nationale de Paris, acting through its Bangkok
branch or any successor as agent of the Banks hereunder.
"Agent Bangkok Account" means the account so designated by the Agent
in a written notice to the Company.
"Applicable Margin" means the percentage per annum as set forth
below:
(i) in respect of Tranche A Payments, 2.50%; and
(ii) in respect of Tranche B Payments, 1.50%;
provided always that so long as any Event of Default attributable to
the Company, an Offtaker accepting a Bill of Exchange or a
Satisfactory Thai Guarantor guaranteeing a Bill of Exchange is
continuing the Applicable Margin applying to the relevant Bill of
Exchange shall be the sum of 2.00% and the percentage identified in
(i) and (ii) above, respectively.
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"Arranger" means Banque Nationale de Paris, acting through its New
York branch.
"Authorised Director" means in relation to the Company, a director
of the Company who has been duly authorised, whether alone or jointly with
one or more Authorised Directors, to bind the Company and who has been
duly registered as such by the Commercial Registration Department,
Ministry of Commerce, Thailand, including any person duly authorised to
bind the Company under a power of attorney duly executed by the Authorised
Directors.
"Baht" means the lawful currency of Thailand.
"Bank" means any of those banks listed in Appendix 2 and their
respective successors and any permitted transferees or assignees and
"Banks" shall be construed accordingly.
"Bill of Exchange" means a bill of exchange in the form of Exhibit 2
drawn by the Company and accepted by a Thai Offtaker naming the Agent in
its capacity as agent for and on behalf of itself and the Banks as payee.
"Business Day" means a day of the year on which banks are not
required or authorised by law to close in New York City, London, Singapore
or Bangkok.
"Change in Control" means (i) any sale or transfer or other
disposition by any US Investor of 20% or more of its shareholding in the
Company (excluding transfers between the US Investors); or (ii) the US
Investors ceasing in the reasonable opinion of the Agent to maintain
operational control of or to manage the Company pursuant to the Management
Agreement or otherwise or the Management Agreement ceasing to be in full
force and effect with the parties thereto as at the date of execution
thereof.
"Commitment" means a Tranche A Commitment or a Tranche B Commitment,
as the case may be, as the same may be reduced or terminated in accordance
with the provisions hereof.
"Cost of Funds" means the rate determined by the Agent in respect of
any Discount Period as the Banks' cost of funds in Baht for the same
period as that Discount Period including such additional interest
necessary to compensate the Banks for any additional amounts required to
be paid by the Banks as a result of any withholding taxes required under
Thai law or any special business tax payable by the Banks.
"Discounted Amount" means in relation to any Bill of Exchange, the
net present value on the Payment Date of the Face Amount of the Bill of
Exchange as calculated by the Agent applying the applicable Discount Rate
for the applicable Discount Period.
"Discount Period" means, in respect of a Bill of Exchange, the
period commencing on the Payment Date proposed in respect of such Bill of
Exchange and ending on the Maturity Date of such Bill of Exchange.
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"Discount Rate" means
(i) in respect of a Tranche A Payment the sum of (a) the
Banks' Cost of Funds; and (b) the Applicable Margin; and
(ii) in respect of a Tranche B Payment, the sum of (a) SIBOR;
and (b) the Applicable Margin,
in each case after taking into account any adjustment required
pursuant to the terms of Sections 11.01 and 11.02.
"Encumbrance" means any mortgage, charge, pledge, lien, encumbrance,
right of set off, assignment by way of security, retention of title or any
security interest whatsoever or any agreement or arrangement having the
effect of conferring security or a preferential arrangement howsoever
created or arising.
"Equity Investors" means Steel Dynamics, Inc, Enron Capital and
Trade Resources, McDonald & Company Securities, Inc., Quantum Emerging
Group Fund, the State of Wisconsin Investment Board and John Hancock
Mutual Life Insurance Company.
"Event of Default" means any of the events described in Section
8.01.
"Face Amount" means in respect of a Bill of Exchange, the amount
specified therein as being payable on the Maturity Date.
"Facility" means the Tranche A Facility or the Tranche B
Facility, as the case may be.
"Facility Office" means, in relation to the Agent or any Bank, the
office identified with its signature below (or, in the case of a
Transferee, at the end of the Transfer Certificate to which it is a party
as Transferee) or such other office as it may from time to time select.
"Final Maturity Date" means 31 December 2000.
"Guarantee" means a guarantee from a Satisfactory Thai Guarantor in
favour of the Agent acting for and on behalf of itself and the Banks
guaranteeing the obligations of a Thai Offtaker substantially in the form
of Exhibit 3 hereto.
"Initial Payment" means the first Payment made by the Banks to
the Company hereunder.
"Insolvency Event" means
(i) in relation to any person, in any jurisdiction, the passing of
any resolution by its directors (or an equivalent executive body) or by
its shareholders, the taking of any irrevocable proceedings by such person
for, or the convening of a meeting by such person
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Page 4
to consider, or the advertising of a petition, or the giving of any
judgment, the making of any order or direction by any judicial,
governmental or official authority or agency or any kind in any
jurisdiction for, or in respect of:
(a) the bankruptcy, liquidation or dissolution of such person
or any termination of its independent corporate existence (whether
by merger or otherwise);
(b) the appointment of any liquidator, trustee, administrator,
administrative receiver, receiver or similar officer in respect of
such person;
(c) the vesting, taking possession or assumption of all or
substantially all of the assets, or the control management or
supervision of the affairs, of such person by any such authority or
agency, any officer of, or any person appointed by or representing,
any such authority or agency, or any of the creditors of such person
or any person appointed by, or representing, any such creditor;
(d) any moratorium, composition, re-scheduling,
re-organisation, scheme or other arrangement with, or involving, or
assignment for the benefit of, the creditors of such person or any
class of them;
(e) the subjecting of such person to, or the obtaining of any
relief for such person under, any laws relating to insolvency;
(f) any formal admission by or on behalf of such person or any
judgement, order, declaration or finding by or on behalf of any such
authority or agency that such person is insolvent or is unable, or
has ceased, to pay its debts as they become due; or
(g) any other event the occurrence of which has the same or a
substantially similar effect in any jurisdiction to any of the
foregoing; or
(ii) any Thai Offtaker or Guarantor communicating to the Company, in
writing signed by a duly authorised individual (a certified true copy
having been delivered to the Agent), that such Thai Offtaker or Guarantor
is financially unable to pay a Bill of Exchange.
"Majority Banks" means at any time, Banks whose Commitments then
total more than 662/3% of the Commitments of all the Banks.
"Management Agreement" has the meaning ascribed to it in the
Offering Memorandum.
"Material Adverse Change" means any material adverse change in the
business, condition (financial or otherwise), operations, performance,
properties or prospects of any Transaction Party.
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"Material Adverse Effect" means a material adverse effect on (a) the
business, condition (financial or otherwise), operations, performance,
properties or prospects of any Transaction Party, (b) the rights and
remedies of the Agent and/or the Banks under any Transaction Document or
(c) the ability of any Transaction Party to perform its obligations under
any Transaction Document to which it is or is to be a party.
"Maturity Date" means, in respect of a Bill of Exchange, the date on
which the relevant Bill of Exchange becomes payable as specified therein.
"Offering Memorandum" means the Offering Memorandum dated March 2,
1998 distributed in connection with the offering of the Senior Notes and
Senior Subordinated Notes.
"Offshore Banks" means those banks which are party to the Offshore
Facility Agreement.
"Offshore Commitments" means at any time the aggregate of the
commitments at that time of the Offshore Banks under the Offshore Facility
Agreement.
"Offshore Facility" means the offshore bill discount facility
provided to the Company under the Offshore Facility Agreement.
"Offshore Facility Agreement" means the syndicated offshore bill
discount facility agreement of even date herewith entered into by the
Company, Banque Nationale de Paris as agent and the banks identified
therein.
"Offshore Outstanding Payments" means the Outstanding Payments (as
defined in the Offshore Facility Agreement) under the Offshore Facility.
"Offtake Agreement" means any agreement for the purchase of steel
products between the Company and a Thai Offtaker and "Offtake Agreements"
shall be construed accordingly.
"Other Taxes" has the meaning ascribed to it in Section 11.02(b).
"Outstanding Payment" means any Payment in respect of which the
corresponding Bill of Exchange has not been fully satisfied and discharged
(and the amount paid in respect of such satisfaction and discharge has not
been returned).
"Payment" means a Tranche A Payment or a Tranche B Payment, as
the case may be.
"Payment Date" means the Business Day on which a Payment is made by
the Banks to the Company in accordance with Article III hereof.
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"Potential Event of Default" means an event which with the passage
of time, the giving of notice, the making of a determination or any
combination thereof shall constitute an Event of Default.
"Private Placement" has the meaning ascribed to it in the
Offering Memorandum.
"Project" means the development, construction, operation,
management, maintenance and financing of a thin-slab cold flat-rolled
steel mini-mill located in Chonburi, Thailand.
"Related Documents" means the Offering Memorandum, the Senior Notes,
the Senior Guaranty, the Senior Subordinated Notes, the Senior
Subordinated Guaranty, the New Credit Facility, the Bank Credit Facility,
the Indentures, the Security Documents and each Project Document, in each
case as defined in the Offering Memorandum.
"Request for Payment" means a request for a Payment submitted in
accordance with Article II and substantially in the form of Exhibit 1
hereto.
"Revenue Account" means the account of the Company maintained with
The Chase Manhattan Bank, Bangkok, or such other account as the Company
and the Agent may from time to time designate as the "Revenue Account".
"Satisfactory Thai Guarantor" means any Thai bank or financial
institution designated as such by the Agent from time to time in its sole
discretion provided that on notice to the Company, the Agent may at any
time designate an additional Thai bank or financial institution as a
Satisfactory Thai Guarantor or designate any Satisfactory Thai Guarantor
as no longer constituting a Satisfactory Thai Guarantor.
"Senior Notes" has the meaning ascribed to it in the Offering
Memorandum.
"Senior Subordinated Notes" has the meaning ascribed to it in the
Offering Memorandum.
"SIBOR" means in relation to any Payment , on any day during any
period by reference to which the Discount Rate is to be calculated
thereon, the rate per annum determined by the Agent to be equal to the
arithmetic mean (rounded upwards, if necessary to the nearest whole
multiple of one-sixteenth of one per cent.) of the respective rates of
each of the banks whose rates appear on the screen page designated "SIBO"
(or the equivalent successor to such page) published or reported by
Reuters Limited on the Reuters monitor screen as the rate at which it is
offering deposits in US Dollars for a period comparable to that for which
such rate is to be determined in the Singapore interbank market at or
about 11.00 a.m. on the second Business Day before the proposed Payment
Date provided that if (a) for any such period only one or no banks have a
quotation of SIBOR appearing on such screen or (b) the rate determined as
SIBOR as aforesaid is, in the opinion of the Agent, manifestly incorrect,
then SIBOR, in relation to any such period, shall be the rate quoted by
the Agent for deposits in dollars in an amount
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Page 7
comparable to the amount of the Payment for such period at or about 11.00
a.m. on the second Business Day prior to the proposed Payment Date.
"Solvent" means with respect to any person on a particular date,
that on such date (a) the fair value of the property of such person is
greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such person, (b) the present fair
saleable value of the assets of such person is not less than the amount
that will be required to pay the probable liability of such person on its
debts as they become absolute and matured, (c) such person does not intend
to, and does not believe that it will, incur debts or liabilities beyond
such person's ability to pay such debts and liabilities as they mature and
(d) such person is not engaged in business or a transaction, and is not
about to engage in business or a transaction, for which such person's
property would constitute an unreasonably small capital. The amount of
contingent liabilities at any time shall be computed as the amount that,
in the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual
or matured liability.
"Subsidiary" means in relation to a company or corporation, any
company or corporation:
(a) which is controlled, directly or indirectly, by the
first-mentioned company or corporation;
(b) more than half the issued share capital of which is beneficially
owned, directly or indirectly, by the first-mentioned company or
corporation; or
(c) which is a Subsidiary of another Subsidiary of the
first-mentioned company or corporation
and, for these purposes, a company or corporation shall be treated
as being controlled by another if that other company or corporation is
able to direct its affairs and/or to control the composition of its board
of directors or equivalent body.
"Taxes" has the meaning ascribed to it in Section 11.02(a).
"Thailand" means the Kingdom of Thailand and any relevant political
sub-division of it or in it, including any relevant government agency
thereof.
"Thai Offtaker" means a purchaser of steel from NSM located in and
organised and existing pursuant to the laws of Thailand, whose obligations
as an acceptor under a Bill of Exchange are guaranteed by a Satisfactory
Thai Guarantor.
"Total Commitments" at any time means the sum of the Commitments
of each of the Banks at that time.
"Tranche A Commitment" means in relation to a Bank, the amount in
Thai Baht set opposite its name in Appendix 2 for the Tranche A Facility,
or as applicable, the
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amount set out in a Transfer Certificate for such Bank, in any case to the
extent not reduced or cancelled hereunder.
"Tranche B Commitment" means in relation to a Bank, the amount in
USDollars set opposite its name in Appendix 2 for the Tranche B Facility,
or as applicable, the amount set out in a Transfer Certificate for such
Bank, in any case to the extent not reduced or cancelled hereunder.
"Tranche A Facility" means the facility provided by the Banks to the
Company and described in Section 2.01(a).
"Tranche B Facility" means the facility provided by the Banks to the
Company and described in Section 2.01(b).
"Tranche A Payment" means the Baht Discounted Amount of a Baht
denominated Bill of Exchange that has been accepted by a Thai Offtaker,
advanced in accordance with Article III.
"Tranche B Payment" means the US Dollar Discounted Amount of a US
Dollar denominated Bill of Exchange accepted by a Thai Offtaker, advanced
in accordance with Article III.
"Transaction Documents" means (i) this Agreement; (ii) each Bill of
Exchange; (iii) (for so long as any Satisfactory Thai Guarantor is a
Transaction Party) the relevant Guarantee; (iv) any agreement entered into
between the Company and the Agent including with respect to the payment of
fees or other amounts relating to the Facility including the fee letter
contemplated by Section 10.01(b).
"Transaction Party" means the Company any Thai Offtaker and any
Satisfactory Thai Guarantor, provided that where any such party other than
the Company has no outstanding obligations under any Bill of Exchange and
no actual or contingent obligations under a Guarantee, the Company may by
written notice to the Agent remove such party as a Transaction Party for
the purposes hereof, whereupon such party shall be deemed not to be a
Transaction Party.
"Transfer Certificate" means a certificate substantially in the form
set out in Exhibit 4 signed by a Bank and a Transferee whereby:
(a) such Bank seeks to procure the transfer to such Transferee of
all or a part of such Bank's rights, benefits and obligations hereunder as
contemplated in Section 13.03; and
(b) such Transferee undertakes to perform the obligations it will
assume as a result of delivery of such certificate to the Agent as is
contemplated in Section 13.05.
"Transfer Date" means, in relation to any Transfer Certificate, the
date for the making of the transfer as specified in the schedule to such
Transfer Certificate.
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"Transferee" means a bank or other financial institution to which a
Bank seeks to transfer all or part of such Bank's rights, benefits and
obligations hereunder.
"US Dollar or US$" means the lawful currency of the United States.
"US Investor" means Steel Dynamics, Inc., Enron Capital and Trade
Resources and McDonald & Company Securities, Inc.
SECTION 1.02 Construction.
(a) Each reference to any contract or agreement is to the relevant
contract or agreement and any schedules and annexes to the relevant contract or
agreement as the same may be amended, varied, supplemented or novated from time
to time;
(b) Headings are for ease of reference only and are to be ignored in
construing this Agreement; and
(c) A reference:
(i) to a person shall, as the context requires, include
an individual, partnership, body corporate, unincorporated
association or state, governmental or quasi-governmental entity or
agency;
(ii) in one gender shall, as the context requires,
include the other genders;
(iii) to a "month" is a reference to a period starting
on one day in a calendar month and ending on the numerically
corresponding day in the next calendar month, except that, if such
period starts on the last day in a calendar month or there is no
numerically corresponding day in the month in which that period
ends, that period shall end on the last Business Day in such later
calendar month;
(iv) to "assets" includes properties, revenues and
rights of every description present, future and contingent;
(v) to a statute shall be construed as a reference to
such statute as the same may have been, or from time to time be,
amended or re-enacted; and
(vi) to a word importing the singular shall include the
plural and vice versa.
(vii) the "equivalent" on any given date in one currency
(the "first currency") of an amount denominated in another currency
(the "second currency") is a reference to the amount of the first
currency which could be purchased with the amount of the second
currency at the spot rate of exchange quoted by the Agent at or
about 11.00 a.m. on such date for the purchase of the first currency
with the second currency;
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(viii) to "including" shall be construed as a reference
to "including without limitation"; and
(ix) to a "law" includes common or customary law and any
constitution, decree, judgment, legislation, order, ordinance,
regulation, statute, treaty or other legislative measure in any
jurisdiction or any present or future directive, regulation, request
or requirement (in each case, whether or not having the force of law
but, if not having the force of law, the compliance with which is in
accordance with the general practice of persons to whom the
directive, regulation, request or requirement is addressed);
(x) "VAT" shall be construed as a reference to value
added tax including any goods and services or similar tax which may
be imposed from time to time.
SECTION 1.03 Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding".
ARTICLE II
THE FACILITY AND CONDITIONS PRECEDENT TO
GRANT OF FINANCIAL ACCOMMODATION
SECTION 2.01 Grant of Facility. The Banks grant to the Company, upon
the terms and subject to the conditions hereof, an onshore bills of exchange
discount facility in the following aggregate amounts:
(a) in respect of the Tranche A Facility, Thai Baht 400,000,000
(b) in respect of the Tranche B Facility, US$15,000,000.
SECTION 2.02. Condition Precedent Documents. Save as the Agent
(acting on the instructions of the Majority Banks) may otherwise agree, the
Company may not deliver any Request for Payment hereunder unless the Agent has
confirmed to the Company that it has received all of the documents referred to
in Part 1 of Appendix 1 and that each is, in form and substance, satisfactory to
the Agent and that all other conditions referred to therein have been met, to
the satisfaction of the Agent.
ARTICLE III
FUNDING PROVISIONS
SECTION 3.01 Request for Payments. A Payment will be made by the
Banks to the Company in respect of a Bill of Exchange if:
(a) four Business Days before the proposed date for the making of
such Payment, the Agent has received from the Company a Request for
Payment;
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(b) the proposed date for the making of such Payment is a Business
Day which falls on or before the day which is 60 days prior to the Final
Maturity Date;
(c) the proposed date for the making of such Payment is not less
than five Business Days after the date upon which the previous Payment (if
any) was made hereunder;
(d) the proposed amount of such Payment is less than or equal to the
amount of the Total Commitments less the Outstanding Payments;
(e) (i) the Event of Default described in Section 8.01 (a) shall not
have occurred and be continuing; and (ii) no other Event of Default or
Potential Event of Default has occurred on and as of the proposed date for
the making of such Payment and is attributable to the Thai Offtaker
accepting the Bill of Exchange to which such Payment relates or a
Satisfactory Thai Guarantor guaranteeing payment of such Bill of Exchange;
and
(f) four Business Days before the proposed Payment Date, the Agent
has received all of the documents referred to in Part 2 Appendix 1 and
each is, in form and substance, satisfactory to the Agent and all other
conditions referred to therein have been met, to the satisfaction of the
Agent. The Company may furnish such documents to the Agent in facsimile
form provided that the originals shall have been furnished no later than
two Business Days before the proposed Payment Date.
SECTION 3.02 Making Payments. Subject to Section 3.01 the Banks
shall, on the .Payment Date, advance the Discounted Amount of the relevant Bill
of Exchange to the Company by crediting the Discounted Amount to the Revenue
Account.
SECTION 3.03 Maximum Amount. (a) The sum of the US Dollar equivalent
of all Outstanding Payments plus all Offshore Outstanding Payments made under
both Facilities and the Offshore Facility shall at no time exceed the Offshore
Commitments;
(b) the sum of all Outstanding Payments made under the Tranche A
Facility shall at no time exceed the sum of all Bank Commitments for the Tranche
A Facility;
(c) the sum of all Outstanding Payments made under the Tranche B
Facility shall at no time exceed the sum of all Bank Commitments under the
Tranche B Facility; and the Company shall not be entitled to make a Request for
Payment either hereunder or under the Offshore Facility Agreement, and the Banks
and the Offshore Banks shall have no obligation to make a Payment, that would
result in any of the above limits being exceeded.
SECTION 3.04 Notices Irrevocable. Each Request for Payment shall be
irrevocable and binding on the Company. The Company shall indemnify the Agent
and the Banks against any loss, cost or expense incurred by the Agent or the
Banks as a result of any failure to fulfill on or before the date specified in
such Request for Payment the applicable conditions referred to in Section 2.02
and Section 3.01(f), including, without limitation, any loss (not
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including loss of anticipated profits), cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by the Banks
to fund the Payment to be made by the Banks when such Payment, as a result of
such failure, is not made on such date.
SECTION 3.05 Termination or Reduction of the Commitments. The
Company may, upon at least five business Days' notice to the Agent, terminate in
whole or reduce in part the unused portions of the Commitments in respect of a
Facility provided, however, that each partial reduction of such Facility shall
be in a minimum amount of $5,000,000 (or the Baht equivalent) and an integral
multiple thereof. Any such termination shall be irrevocable and no such
Commitment terminated or reduced may be reinstated. Any such reduction in part
of the Total Commitments shall reduce each Bank's commitment in the proportion
borne by the amount of the reduction to the sum of all Bank commitments
immediately prior thereto.
SECTION 3.06 Banks' Obligations Several. The obligations of each
Bank hereunder are several and the failure by any Bank to perform its
obligations hereunder shall not affect the obligations of the Company towards
any other party hereto nor shall any other party be liable for the failure by
such Bank to perform its obligations hereunder. The failure of any Bank (the
"Failing Bank") to make its portion of a Payment available shall not relieve the
other Banks of the obligation to make their portion of the Payment. The
aggregate of the amounts due to each Bank at any time is a separate and
independent debt and each Bank shall have the right to protect and enforce its
rights hereunder and it shall not be necessary (except as otherwise provided
herein) for any other Bank or the Agent to be joined as an additional party to
any proceedings to this end.
SECTION 3.07 Each Bank's Participation. Each Bank will participate
through its Facility Office in each Payment made pursuant to this Agreement in
the proportion borne by its Commitment in respect of the relevant Facility to
the aggregate of all Commitments for that Facility immediately prior to the
making of that Payment.
SECTION 3.08 Payment by Thai Offtakers. Each Bill of Exchange shall
require that the Face Amount thereof be paid in full to the Agent Bangkok
Account or such other account as may be designated by the Agent for such purpose
in accordance with the terms of the relevant Bill of Exchange on the Maturity
Date as specified therein. Such Payment shall be for value in the relevant
currency without withholding, set-off or counterclaim. ARTICLE IV COMPUTATIONS
AND PAYMENTS
SECTION 4.01 Computations. The computation by the Agent of any
Discounted Amount shall be on the basis of a year of 360 days, and the actual
number of days occurring in the relevant Discount Period. Each determination by
the Agent in the context of the calculation of a Discounted Amount (including
any Discount Rate) shall be conclusive and binding for all purposes, absent
manifest error.
SECTION 4.02 Discount Period. The duration of each Discount Period
shall be as specified in the Request for Payment being either 30 days or 60 days
and equal to the period to
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maturity of the Bill of Exchange in consideration for which the Payment is made,
provided that no Discount Period shall end on a date which falls after the Final
Maturity Date. Where any Discount Period would otherwise end on a day other than
a Business Day, the Discount Period shall end on the next preceding Business Day
and the calculation of the Discounted Amount shall be made accordingly.
SECTION 4.03 Payments to the Agent. On each date on which this
Agreement requires an amount to be paid by any of the Banks hereunder, such Bank
shall make the same available to the Agent:
(a) where such amount is denominated in US Dollars, by payment in US
Dollars and in same day funds (or in such other funds as may for the time
being be customary in Bangkok for the settlement in Bangkok of
international banking transactions in US Dollars) to the Agent Bangkok
Account (or such other account or bank as the Agent may have specified for
this purpose); or
(b) where such amount is denominated in Thai Baht, by payment in
such currency and in immediately available, freely transferable, cleared
funds to the Agent Bangkok Account (or such other account or bank as the
Agent may have specified for this purpose).
SECTION 4.04 Payments by the Agent. Save as otherwise provided
herein, each payment received by the Agent for the account of another person
pursuant to Section 4.03, a Bill of Exchange or a Guarantee shall be made
available by the Agent to such other person (in the case of a Bank, for the
account of its Facility Office) for value the same day by transfer to such
account of such person with such bank in the principal financial centre of the
country of the currency of such payment as such person shall have previously
notified to the Agent.
SECTION 4.05 Notice to Banks. When the Agent receives a Request for
a Payment, it shall promptly (and in no event later than two Business Days prior
to the proposed Payment date) notify each of the Banks of the amount of the
proposed Payment, the applicable Discount Rate, its participation in the Payment
and the proposed Payment Date. Each Bank shall, subject to the provisions of
this Agreement, make available to the Agent on the Payment Date its
participation in the Payment pursuant to the provisions of Section 4.03.
SECTION 4.06 Clawback. Where a sum is to be paid hereunder to the
Agent for account of another person, the Agent shall not be obliged to make the
same available to that other person or to enter into or perform any exchange
contract in connection therewith until it has been able to establish to its
satisfaction that it has actually received such sum, but if it does so and it
proves to be the case that it had not actually received such sum, then the
person to whom such sum or the proceeds of such exchange contract was so made
available shall on request refund the same to the Agent together with an amount
sufficient to indemnify the Agent against any cost or loss it may have suffered
or incurred by reason of its having paid out such sum or the proceeds of such
exchange contract prior to its having received such sum.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01 On Signing. The Company represents and warrants so as
to induce each of the Agent and the Banks to enter into this Agreement that, on
the date hereof and thereafter during the currency of this Agreement:
(a) That the Company(i) is a corporation duly organised, and validly
existing under the laws of the jurisdiction of its incorporation, (ii) is
duly qualified and licensed as a foreign corporation in each other
jurisdiction in which it owns or has an interest in property or in which
the conduct of its business requires it to so qualify or be licensed
except where the failure to so qualify or be licensed could not have a
Material Adverse Effect and (iii) has all requisite corporate power and
authority (including, without limitation, all material governmental
licenses, permits and other approvals) to own or lease and operate its
properties and to carry on its business substantially as now conducted and
as proposed to be conducted. All of the outstanding share capital of the
Company has been validly issued.
(b) The execution, delivery and performance by the Company of this
Agreement, each other Transaction Document and each Related Document to
which it is or is to be a party, are within its corporate powers, have
been duly authorised by all necessary corporate action, and do not (i)
contravene its constitutive documents, (ii) violate any applicable law, or
(iii) conflict with or result in the breach of, or constitute a default
under, any agreement binding on or affecting the Company. The Company is
not in violation of any applicable law or in breach of any such agreement,
the violation or breach of which could have a Material Adverse Effect.
(c) No authorisation or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body or any
other third party is required for (i) the due execution, delivery,
recordation, filing or performance by the Company of this Agreement, any
other Transaction Document or any Related Document to which it is or is to
be a party, or (ii) the exercise by the Agent or the Banks of their rights
under any Transaction Document except as have been obtained and are in
force and effect.
(d) This Agreement has been, and each other Transaction Document and
each Related Document to which the Company is a party when delivered
hereunder will have been, duly executed and delivered by it. This
Agreement is, and each other Transaction Document and each Related
Document to which the Company is a party when delivered will be, the
legal, valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms.
(e) The balance sheet of the Company as at 31 December, 1996 and the
related statements of income and cash flows of the Company for the fiscal
year then ended, accompanied by an opinion of KPMG Peat Marwick Suthee
Limited, independent public accountants, and the balance sheet of the
Company as at 30 September 1997 and the related statements of income and
cash flows of the Company for nine months then ended,
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duly certified by the chief financial officer of the Company, copies of
which have been furnished to the Agent, fairly present the financial
condition of the Company as at such dates and the results of the
operations of the Company for the periods ended on such dates, all in
accordance with Thai generally accepted accounting principles applied on a
consistent basis, and since 30 September, 1997 there has been no Material
Adverse Change.
(f) All information (other than the financial projections referred
to in paragraph (g) below) that has been or will hereafter be made
available by the Company or any of its representatives in connection with
this Agreement or the transactions contemplated thereby to the Agent
and/or the Banks is and will be complete and correct in all material
respects and does not and will not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements contained therein not misleading in light of the
circumstances under which such statements were or are made. No
information, exhibit or report (excluding any financial projections)
furnished by the Company to the Agent and/or the Banks in connection with
the negotiation of the Transaction Documents or pursuant to the terms of
the Transaction Documents contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements made
therein not misleading.
(g) All financial projections, if any, that have been or will be
prepared by the Company or any of its representatives and made available
to the Agent and/or the Banks in connection with this Agreement or the
transactions contemplated thereby have been or will be prepared in good
faith based upon reasonable assumptions.
(h) There is no action, suit, investigation, litigation or
proceeding affecting the Company, pending or threatened before any court,
governmental agency or arbitrator that (i) could have a Material Adverse
Effect or (ii) purports to affect the legality, validity or enforceability
of this Agreement, any other Transaction Document or any Related Document
or the consummation of the transactions contemplated hereby.
(i) The Company is not a party to any agreement or instrument or
subject to any charter or corporate restriction that could have a Material
Adverse Effect.
(j) The Company has filed, has caused to be filed or has been
included in all tax returns (federal, state, local and foreign) required
to be filed and has paid all taxes shown thereon to be due, together with
applicable interest and penalties.
(k) The Company is, individually and together with its Subsidiaries,
Solvent.
ARTICLE VI
INDEMNITY
SECTION 6.01 Indemnity. (a) The Company agrees to indemnify and hold
harmless the Agent and each of the Banks and each of their respective affiliates
and officers, directors, employees, agents, advisors and other representatives
(each, an "Indemnified Party")
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Page 16
from and against any and all claims, damages, losses, liabilities and expenses
(including, without limitation, fees and expenses of counsel) that may be
incurred by or asserted or awarded against any Indemnified Party, in each case
arising out of or in connection with or by reason of, or the preparation for a
defence of, any investigation, litigation or proceeding arising out of, related
to or in connection with any Transaction Document or the transactions
contemplated thereby, or any use made or proposed to be made with the proceeds
thereof, whether or not such investigation, litigation or proceeding is brought
by a Transaction Party, its shareholders or creditors or an Indemnified Party is
otherwise a party thereto and whether or not the transactions contemplated
hereby are consummated, except to the extent such claim, damage, loss, liability
or expense is found in a final, non-appealable judgment by a court of competent
- -jurisdiction to have resulted from such Indemnified Party's negligence or
willful misconduct. The Company also agrees that no Indemnified Party shall have
any liability (whether direct or indirect, in contract or tort or otherwise) to
the Company or its Subsidiaries or Affiliates or to the Company or its
respective security holders or creditors arising out of, related to or in
connection with this Agreement or the transactions contemplated thereby, except
for direct, as opposed to consequential, damages determined in a final
non-appealable judgment by a court of competent jurisdiction to have resulted
from such Indemnified Party's negligence, willful misconduct or failure to
perform its obligations hereunder; and
(b) the Company agrees to indemnify and hold harmless the Agent and
each of the Banks from and against, and shall pay on demand, any and all losses,
liabilities, damages, costs, expenses and charges (including the fees and
disbursements of legal counsel to the Agent and each of the Banks) suffered or
incurred by the Agent and the Banks or any of them as a result of any failure of
any Transaction Document to be the legal, valid and binding obligation of the
parties thereto enforceable in accordance with its terms, or any failure by any
Transaction Party to perform its obligations in accordance with the terms of
each Transaction Document to which it is a party.
SECTION 6.02 Costs and Expenses. The Company agrees to pay on demand
(i) all costs and expenses of the Agent and the Banks in connection with the
preparation, execution, delivery, administration, modification and amendment of
the Transaction Documents including, without limitation, (A) all due diligence,
collateral review, syndication, transportation, computer, duplication,
appraisal, audit, insurance, consultant, search, filing and recording fees and
expenses and (B) the fees and expenses of counsel for the Agent and the Banks
with respect thereto, with respect to advising the Agent and the Banks as to its
rights and responsibilities, or the perfection, protection or preservation of
rights or interests, under the Transaction Documents, with respect to
negotiations with any Transaction Party or with other creditors of any
Transaction Party or any of its Subsidiaries arising out of 'any Event of
Default or any events or circumstances that may give rise to an Event of Default
and with respect to presenting claims in or otherwise participating in or
monitoring any bankruptcy, insolvency or other similar proceeding involving
creditors' rights generally and any proceeding ancillary thereto) and (ii) all
costs and expenses of the Agent and the Banks in connection with the enforcement
of the Transaction Documents, whether in any action, suit or litigation, any
bankruptcy, insolvency or other similar proceeding affecting creditors' rights
generally (including, without limitation, the reasonable fees and expenses of
counsel for the Agent and the Banks with respect thereto).
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SECTION 6.03 Banks' Liabilities for Costs. If the Company fails to
perform any of its obligations under this Article VI, each Bank shall, in the
proportion borne by its Commitment to the aggregate of all Commitments indemnify
the Agent against any loss incurred by the Agent as a result of such failure and
the Company shall forthwith reimburse each Bank for any payment made by it
pursuant to this Section 6.03.
SECTION 6.04 Survival. Without prejudice to the survival of any
other agreement of ..any Transaction Party hereunder or under any other
Transaction Document, the agreements and obligations of the Company contained in
Article XI and this Article VI shall survive the payment in full of all amounts
payable hereunder and under any of the other Transaction Documents.
ARTICLE VII
COVENANTS
SECTION 7.01 Further Assurances. The Company unconditionally and
irrevocably covenants with the Agent and each of the Banks that it shall,
immediately on demand for such by the Agent, execute in favour of and deliver to
the Agent and each of the Banks such further or other agreements, instruments,
deeds or documents, and do such other things, as the Agent shall require to give
effect to the provisions of this Agreement.
SECTION 7.02 Affirmative Covenants. So long as any Bill of Exchange
shall remain unpaid or any Bank shall have any Commitment hereunder, the Company
will:
(a) Compliance with Laws, Etc. Comply in all material respects with
all applicable laws, rules, regulations and orders including environmental
laws and permits;
(b) Payment of Taxes, Etc. Pay and discharge before the same shall
become delinquent, (i) all taxes, assessments and governmental charges or
levies imposed upon it or upon its property and (ii) all lawful claims
that, if unpaid, would by law become a encumbrance upon its property which
is not otherwise permitted hereunder;
(c) Maintenance of Insurance. Maintain insurance with responsible
and reputable insurance companies or associations in such amounts and
covering such risks as is usually carried by companies engaged in similar
businesses and owning similar properties in the same general areas in
which the Company operates;
(d) Preservation of Corporate Existence, Etc. Preserve and maintain
its corporate existence and all material rights (charter and statutory),
permits, licenses, approvals, privileges and franchises;
(e) Visitation Rights. At any reasonable time and from time to time,
upon reasonable prior notice, permit the Agent to examine and make
abstracts from the records and books of account of, and visit the
properties of, the Company, and to discuss the affairs, finances and
accounts of the Company with any of its officers or directors and with its
independent certified public accountants;
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(f) Keeping of Books. Keep proper books of record and account, in
which full and correct entries shall be made of all financial transactions
and the assets and business of the Company in accordance with generally
accepted accounting principles in Thailand, quarterly reconciled with US
GAAP;
(g) Maintenance of Properties, Etc. Maintain and preserve all of its
properties that are reasonably required in the conduct of its business in
good working order and condition, ordinary wear and tear excepted;
(h) Transactions with Affiliates. Conduct all transactions otherwise
permitted under the Transaction Documents with any of its Affiliates on
terms that are fair and reasonable and no less favorable to the Company
than it would obtain in a comparable arm's-length transaction with a
person not an Affiliate.
SECTION 7.03 Negative Covenants. The Company unconditionally and
irrevocably covenants with the Agent and each of the Banks that it shall not,
without the prior written consent of the Majority Banks, change the nature of
its business.
SECTION 7.04 Reporting Requirements. So long as any Bill of Exchange
shall remain unpaid or any Bank shall have any Commitment hereunder, the Company
will furnish to the Agent:
(a) Default Notice. As soon as possible and in any event within two
days after the occurrence of any Event of Default, Potential Event of
Default or any default in payment under the Senior Notes and the Senior
Subordinated Notes or any event, development or occurrence reasonably
likely to have a Material Adverse Effect continuing on the date of such
statement, a statement of the chief financial officer of the Company
setting forth details of such Event of Default or Potential Event of
Default and the action that the Company has taken and proposes to take
with respect thereto.
(b) Quarterly Financials. As soon as available and in any event
within 45 days after the end of each quarter of each fiscal year,
consolidated and consolidating balance sheets of the Company and its
Subsidiaries as of the end of such quarter and consolidated and
consolidating statements of income and a consolidated and consolidating
statement of cash flows of the Company and its Subsidiaries for the period
commencing at the end of the previous fiscal quarter and ending with the
end of such fiscal quarter and consolidated and consolidating statements
of income and a consolidated and consolidating statement of cash flows of
the Company and its Subsidiaries for the period commencing at the end of
the previous fiscal year and ending with the end of such quarter, setting
forth in each case in comparative form the corresponding figures for the
corresponding period of the preceding fiscal year, all in reasonable
detail and duly certified (subject to year-end audit adjustments) by the
chief financial officer of the Company as having been prepared in
accordance with generally accepted accounting principles consistent with
those applied in the most recent annual audit together with (i) a
certificate of the chief financial officer of the Company stating that no
Event of Default or Potential Event of Default has occurred and
<PAGE>
Page 19
is continuing or if an Event of Default or Potential Event of Default has
occurred and is continuing, a statement as to the nature thereof and the
action that the Company has taken and proposes to take with respect
thereto, and (ii) copies of any management discussion distributed to any
of the shareholders.
(c) Annual Financials. As soon as available and in any event within
90 days after the end of each fiscal year, a copy of the annual audit
report for such year for the Company and its Subsidiaries, including
therein consolidated and consolidating balance sheets of the Company and
its Subsidiaries as of the end of such fiscal year and consolidated and
consolidating statements of income and a consolidated and consolidating
statement of cash flows of the Company and its Subsidiaries for such
fiscal year, accompanied as to such consolidated statements, by an opinion
acceptable to the Agent of a firm of independent public accountants of
recognised international standing acceptable to the Agent together with
(A) a certificate of such accounting firm stating that, in the course of
the regular audit of the business, such accounting firm has obtained no
knowledge that a default has occurred and is continuing, (B) a certificate
of the chief financial officer of the Company stating that no Event of
Default or Potential Event of Default has occurred and is continuing or if
an Event of Default or Potential Event of Default has occurred and is
continuing, a statement as to the nature thereof and the action that the
Company has taken and proposes to take with respect thereto, and (C)
copies of any management discussion distributed to any of the
shareholders; and no later than 15 days before the end of each fiscal
year, forecasts, in form satisfactory to the Agent, on a monthly basis for
the fiscal year following such fiscal year then ended and on an annual
basis for each fiscal year thereafter until the Final Maturity Date.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.01 Events of Default. If any of the following events shall
occur and be continuing:
(a) any Thai Offtaker shall fail to make any payment under any Bill
of Exchange, in each case when the same becomes due and payable and the
Satisfactory Thai Guarantor shall fail to satisfy its obligations under
the Guarantee issued by it in respect of such Bill of Exchange; or
(b) any representation or warranty made by any Transaction Party (or
any of its officers) under or in connection with any Transaction Document
shall prove to have been incorrect in any material respect when made or if
repeated at any time with reference to the facts and circumstances
subsisting at such time would not be accurate in all material respects; or
(c) any Transaction Party shall fail to perform any other term,
covenant or agreement contained in any Transaction Document on its part to
be performed or observed if such failure shall remain unremedied for 10
days after the date on which a responsible officer of the Company becomes
aware of such failure; or
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(d) any indebtedness of any Transaction Party becomes due or capable
of being declared due before its stated maturity or is not paid on
maturity or on demand (if so payable), any guarantee or similar obligation
of any Transaction Party is not discharged at maturity or when called or
any Transaction Party goes into default under or commits a breach of any
instrument or agreement relating to any such indebtedness or guarantee in
the case of any Transaction Party other than the Company, in an amount in
excess of US$1,000,000 individually or in the aggregate; or
(e) any judgment or order for the payment of money in excess of
$1,000,000 or its equivalent (to the extent not fully paid or discharged)
shall be rendered against any Transaction Party and either (i) enforcement
proceedings shall have been commenced by any creditor upon such judgment
or order or (ii) there shall be any period of 15 consecutive days during
which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; or
(f) any non-monetary judgment or order shall be rendered against any
Transaction Party that could have a Material Adverse Effect, and there
shall be any period of 10 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
(g) any provision of any Transaction Document shall for any reason
cease to be legal, valid and binding on or enforceable against any
Transaction Party being party to it, or any such Transaction Party shall
so state in writing; or
(h) the Company ceases to carry on its business or disposes of all
or any substantial part of its business or assets or all or any
substantial part of its assets is condemned, attached, seized or
appropriated by any governmental authority or any action by any
governmental authority is instituted to dissolve the Company or suspend
its operations; or
(i) there shall occur any Material Adverse Change; or
(j) there shall occur a Change in Control; or
(k) there shall occur any Insolvency Event affecting any Transaction
Party; or
(1) any step is taken by any person with a view to the seizure,
compulsory acquisition, expropriation or nationalisation of all or a
material part of the assets of the Company or its share capital; or
(m) the Government of Thailand or any competent authority thereof
declares a moratorium on the payment of indebtedness by Thailand, any
government agency or authority thereof or any Thai entity, or any
moratorium occurs de facto, or Thailand ceases to be a member in good
standing of the International Monetary Fund under the Articles of
Agreement thereof, or the international monetary reserve of Thailand
becomes subject to any encumbrance not created by operation of law and the
effect of which
<PAGE>
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materially impairs in any manner whatsoever, the ability of any
Transaction Party to perform any of its obligations under any of the
Transaction Documents,
Then at once, or at any time thereafter, while such event is
continuing and remains unremedied, the Agent may, and upon the request of
the Majority Banks shall, by notice to the Company:
(i) to the extent such event is attributable to the Company cancel
the Commitments; or
(ii) to the extent such event is attributable to a Thai Offtaker
accepting a Bill of Exchange or a Satisfactory Thai Guarantor guaranteeing
payment of such Bill of Exchange decline to make the Payment relating to
such Bill of Exchange, and take any other action as is provided for in the
Transaction Documents.
SECTION 8.02 Notice. The Agent shall promptly thereafter notify the
Company of the conclusive determination of the Majority Banks that an Event of
Default has occurred which is attributable to a Thai Offtaker or a Satisfactory
Thai Guarantor.
ARTICLE IX
SHARING
SECTION 9.01 Redistribution of Payments. If, at any time, the
proportion which any Bank (a "Recovering Bank") has received or recovered
(whether by payment, the exercise of a right of set-off or combination of
accounts or otherwise) in respect of its portion of any payment (a "relevant
payment") to be made under this Agreement [or any Bill of Exchange] by any
Transaction Party for account of such Recovering Bank and one or more other
Banks is greater (the portion of such receipt or recovery giving rise to such
excess proportion being herein called an "excess amount") than the proportion
thereof so received or recovered by the Bank or Banks so receiving or recovering
the smallest proportion thereof, then:
(a) such Recovering Bank shall inform the Agent of such receipt or
recovery and pay to the Agent an amount equal to such excess amount;
(b) [(in the case of a relevant payment made under this Agreement)]
there shall thereupon fall due from the relevant Transaction Party to such
Recovering Bank an amount equal to the amount paid out by such Recovering
Bank pursuant to paragraph (a) above, the amount so due being, for the
purposes hereof, treated as if it were an unpaid part of such Recovering
Bank's portion of such relevant payment; and
(c) the Agent shall treat the amount received by it from such
Recovering Bank pursuant to paragraph (a) above as if such amount had been
received by it from the relevant Transaction Party in respect of such
relevant payment and shall pay the same to the persons entitled thereto
(including such Recovering Bank) pro rata to their respective entitlements
thereto.
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SECTION 9.02 Repayable Recoveries. If any sum (a "relevant sum")
received or recovered by a Recovering Bank in respect of any amount owing to it
by any Transaction Party becomes repayable and is repaid by such Recovering
Bank, then:
(a) each Bank which has received a share of such relevant sum by
reason of the implementation of Section 9.01 shall, upon request of the
Agent, pay to the Agent for account of such Recovering Bank an amount
equal to its share of such relevant sum; and
(b) there shall thereupon fall due from the relevant Transaction
Party to each such Bank an amount equal to the amount paid out by it
pursuant to paragraph (a) above, the amount so due being, for the purposes
hereof, treated as if it were the sum payable to such Bank against which
such Bank's share of such relevant sum was applied.
ARTICLE X
FEES
SECTION 10.01 Fees. (a) Commitment Fee. The Company shall pay to the
Agent for the account of each Bank a commitment fee from the date hereof, in
each case until the Final Maturity Date, payable in arrears quarterly on March
31, June 30, September 30 and December 31, commencing March 31, 1998, and on the
Final Maturity Date, at the following rates per annum on the average daily
unused portion of each Bank's Commitment:
(i) Tranche A Facility - 1. 875 %; and
(ii) Tranche B Facility - 1. 125 %.
(b) Arrangement, Facility, Agency and other Fees. The Company shall
pay to the Agent for its own account the arrangement, facility, agency and other
fees specified in the -letter of even date herewith from the Agent to the
Company at the times, and in the amounts specified in such letter.
ARTICLE XI
INCREASED COSTS
SECTION 11.01 Increased Costs, Etc. (a) If, due to either (i) the
introduction of or any change in or in the interpretation of any law or
regulation after the date hereof or (ii) the compliance with any guideline or
request from any central bank or other governmental authority (whether or not
having the force of law) first imposed after the date hereof, there shall be any
increase in the cost to any Bank of agreeing to make or of making, funding or
maintaining Payments, then the Discount Rate shall be increased accordingly to
compensate such Bank for such increased cost.
(b) If any Bank determines that compliance with any law or
regulation or any guideline or request from any central bank or other
governmental authority (whether or not having the force of law) first imposed
after the date hereof affects or would affect the amount of capital required or
expected to be maintained by such Bank or any corporation controlling such
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Page 23
Bank and that the amount of such capital is increased by or based upon the
existence of such Bank's Commitments hereunder then, the Discount Rate shall be
increased accordingly to compensate such Bank for such increased cost.
(c) Notwithstanding any other provision of this Agreement, if the
introduction of or any change in or in the interpretation of any law or
regulation after the date hereof shall make it unlawful, or any central bank or
other governmental authority shall assert after the date hereof that it is
unlawful, for the Agent or any Bank to perform its obligations hereunder, then,
on notice thereof and demand therefor by the Agent or any Bank to the Company
the obligation of the Agent or such Bank to make Payments shall be suspended
until the Agent or such Bank shall notify the Company that it has determined
that the circumstances causing such suspension no longer exist.
SECTION 11.02 Taxes. (a) Any and all payments by the Company
hereunder shall be made free and clear of and without deduction for any and all
present or future taxes, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto ("Taxes"). If the Company shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder (i) the sum payable shall be increased as may be necessary so that
after making all required deductions the Agent and/or each of the Banks receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) the Company shall make such deductions and (iii) the Company shall
pay the full amount deducted to the relevant taxation authority or other
governmental authority in accordance with applicable law.
(b) In addition, the Company shall pay any present or future stamp,
documentary, excise, property, VAT, goods and service tax or similar taxes,
charges or levies that arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise -with respect to this
Agreement (hereinafter referred to as "Other Taxes").
(c) The Company shall indemnify the Agent and each of the Banks for
the full amount of Taxes and Other Taxes paid by the Agent and/or the Banks and
any liability (including penalties, additions to tax, interest and expenses)
arising therefrom or with respect thereto. This indemnification shall be made
within 14 days from the date of written demand therefor made by the Agent or any
Bank or such shorter period as may be required by applicable law.
(d) Within 14 days after the date of any payment of Taxes or Other
Taxes, the Company shall furnish to the Agent the original receipt of payment
thereof or a certified copy of such receipt.
SECTION 11.03 Certificates. A certificate of the Agent or the
relevant Bank as to (a) the amount by which a the Discount Rate is to be
increased under Section 11.01 or (b) the amount for the time being required to
be paid by the Company under Section 11.02 shall, in the absence of manifest
error, be conclusive evidence of the existence and amounts of the specified
obligations of the Company.
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ARTICLE XII
AGENCY PROVISIONS
SECTION 12.01 Appointment of the Agent. Each Bank hereby appoints
the Agent to act as its agent in connection herewith and authorises the Agent to
execute and deliver any and all certificates and other documents contemplated by
any of the Transaction Documents and to exercise such rights, powers,
authorities and discretions as are specifically delegated to the Agent by the
terms hereof together with all such rights, powers, authorities and discretions
as are reasonably incidental thereto.
SECTION 12.02 Agent's Discretions. The Agent may:
(a) assume, unless it has, in its capacity as agent for the Banks,
received notice to the contrary from any other party hereto, that (i) any
representation made by any Transaction Party in connection herewith is
true, (ii) no Event of Default or Potential Event of Default has occurred,
(iii) no Transaction Party is in breach of or default under its
obligations under the Transaction Documents and (iv) any right, power,
authority or discretion vested herein upon the Majority Banks, the Banks
or any other person or group of persons has not been exercised;
(b) assume that the Facility Office of each Bank is that identified
with its signature below (or, in the case of a Transferee, at the end of
the Transfer Certificate to which it is a party as Transferee) until it
has received from such Bank a notice designating some other office of such
Bank to replace its Facility Office and act upon any such notice until the
same is superseded by a further such notice;
(c) engage and pay for the advice or services of any lawyers,
accountants, surveyors or other experts whose advice or services may to it
seem necessary, expedient or desirable and rely upon any advice so
obtained;
(d) rely as to any matters of fact which might reasonably be
expected to be within the knowledge of any Transaction Party upon a
certificate signed by or on behalf of any Transaction Party;
(e) rely upon any communication or document believed by it to be
genuine;
(f) refrain from exercising any right, power or discretion vested in
it as agent hereunder unless and until instructed by the Majority Banks as
to whether or not such right, power or discretion is to be exercised and,
if it is to be exercised, as to the manner in which it should be
exercised; and
(g) refrain from acting in accordance with any instructions of the
Majority Banks to begin any legal action or proceeding arising out of or
in connection with this Agreement or any other Transaction Party until it
shall have received such security as it may require (whether by way of
payment in advance or otherwise) for all costs, claims, losses, expenses
(including legal fees) and liabilities together with any VAT thereon which
it will or may expend or incur in complying with such instructions.
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SECTION 12.03 Agent's Obligations. The Agent shall:
(a) promptly inform each Bank of the contents of any notice or
document received by it in its capacity as Agent from any Transaction
Party hereunder;
(b) promptly notify each Bank of the occurrence of any Event of
Default or any default by any Transaction Party in the due performance of
or compliance with its obligations under this Agreement of which the Agent
has notice from any other party hereto;
(c) save as otherwise provided herein, act as agent hereunder in
accordance with any instructions given to it by the Majority Banks, which
instructions shall be binding on all of the Banks; and
(d) if so instructed by the Majority Banks, refrain from exercising
any right, power or discretion vested in it as Agent hereunder.
SECTION 12.04 Excluded Obligations. Notwithstanding anything to the
contrary expressed or implied herein, the Agent shall not:
(a) be bound to enquire as to (i) whether or not any representation
made by any Transaction Party in connection herewith is true, (ii) the
occurrence or otherwise of any Event of Default or Potential Event of
Default, (iii) the performance by any Transaction Party of its obligations
under any Transaction Document or (iv) any breach of or default by any
Transaction Party of its obligations under any Transaction Document;
(b) be bound to account to any Bank for any sum or the profit
element of any sum received by it for its own account;
(c) be bound to disclose to any other person any information
relating to any Transaction Party or any of its agencies if such
disclosure would or might in its opinion constitute a breach of any law or
regulation or be otherwise actionable at the suit of any person; or
(d) be under any obligations other than those for which express
provision is made herein.
SECTION 12.05 Indemnification. Each Bank shall, from time to time on
demand by the Agent or the Arranger, indemnify the Agent and the Arranger, in
the proportion its Commitment bears to the Total Commitments at the time of such
demand against any and all costs, claims, losses, expenses (including legal
fees) and liabilities together with any VAT thereon which the Agent or the
Arranger may incur, otherwise than by reason of its own gross negligence or
willful misconduct, in acting in its capacity as Agent or Arranger hereunder.
SECTION 12.06 Exclusion of Liabilities. Neither the Agent nor the
Arranger accepts any responsibility for the accuracy and/or completeness of
information supplied by any Transaction Party in connection herewith or for the
legality, validity, effectiveness, adequacy or
<PAGE>
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enforceability of this Agreement and save in the case of its gross negligence or
willful misconduct, neither Agent nor the Arranger shall be under any liability
as a result of taking or omitting to take any action in relation to this
Agreement.
SECTION 12.07 No Actions. Each of the Banks agrees that it will not
assert or seek to assert against any director, officer or employee of the Agent
or the Arranger any claim it might have against any of them in respect of the
matters referred to in Section 12.06.
SECTION 12.08 Business with any Transaction Party. The Agent may
accept deposits from, lend money to and generally engage in any kind of banking
or other business with any Transaction Party.
SECTION 12.09 Resignation. The Agent may resign its appointment
hereunder at any time without assigning any reason therefor by giving not less
than thirty days' prior written notice to that effect to each of the other
parties hereto, provided that no such resignation shall be effective until a
successor for the Agent is appointed in accordance with -the succeeding
provisions of this Article XII.
SECTION 12.10 Successor Agent. If the Agent gives notice of its
resignation pursuant to Clause 12.09, then any reputable and experienced bank or
other financial institution may be appointed as a successor to the Agent by the
Majority Banks during the period of such notice but, if no such successor is so
appointed, the Agent may appoint such a successor itself, provided that at all
times the Agent under this Facility Agreement shall also be the Agent under the
Offshore Facility Agreement.
SECTION 12.11 Rights and Obligations. If a successor to the Agent is
appointed under the provisions of Section 12.10, then (a) the retiring Agent
shall be discharged from any further obligation hereunder but shall remain
entitled to the benefit of the provisions of this Article XII and (b) its
successor and each of the other parties hereto shall have the same rights and
obligations amongst themselves as they would have had if such successor had been
a party hereto.
SECTION 12.12 Own Responsibility. It is understood and agreed by
each Bank that it has itself been, and will continue to be, solely responsible
for making its own independent appraisal of and investigations into the
financial condition, creditworthiness, condition, affairs, status and nature of
any Transaction Party and, accordingly, each Bank warrants to the Agent and the
Arranger that it has not relied on and will not hereafter rely on the Agent or
the Arranger:
(a) to check or enquire on its behalf into the adequacy, accuracy or
completeness of any information provided by any Transaction Party in
connection with this Agreement or the transactions herein contemplated
(whether or not such information has been or is hereafter circulated to
such Bank by the Agent or the Arranger); or
(b) to check or enquire on its behalf into the adequacy, accuracy or
completeness of any communication delivered to it under any of the
Transaction Documents, any legal or other opinions, reports, valuations,
certificates, appraisals or other documents delivered or made or required
to be delivered or made at any time in
<PAGE>
Page 27
connection with any of the Transaction Documents, any security to be
constituted thereby on an other report or other document, statement or
information circulated, delivered or made, whether orally or otherwise and
whether before, on or after the date of this Agreement; or
(c) to check or enquire on its behalf into the due execution,
delivery, validity, legality, adequacy, suitability, performance,
enforceability or admissibility in evidence of any of the Transaction
Documents or any other document referred to in paragraph (b) above or of
any guarantee, indemnity or security given or created thereby or any
obligations imposed thereby or assumed thereunder; or
(d) to assess or keep under review on its behalf the financial
condition, creditworthiness, condition, affairs, status or nature of any
Transaction Party.
SECTION 12.13 Agency Division Separate. In acting as Agent hereunder
for the Banks, the Agent shall be regarded as acting through its agency division
which shall be treated as a separate entity from any other of its divisions or
departments and, notwithstanding the foregoing provisions of this Article XII,
any information received by some other division or department of the Agent may
be treated as confidential and shall not be regarded as having been given to the
Agent's agency division.
SECTION 12.14 Confidential Information. Notwithstanding anything to
the contrary expressed or implied herein and without prejudice to the provisions
of Section 12.13, the Agent shall not as between itself and the Banks be bound
to disclose to any Bank or other person any information which is supplied by any
Transaction Party to the Agent in its capacity as agent hereunder for the Banks
and which is identified by any Transaction Party at the time it is so supplied
as being confidential information, provided that the consent of the Company to
such disclosure is hereby expressly given in relation to any information which
in the opinion of the Agent relates to an Event of Default or Potential Event of
Default or in respect of which the Banks have given a confidentiality
undertaking in a form satisfactory to the Agent and the Company.
SECTION 12.15 Safe Custody. The Agent shall be at liberty to place
any of the Transaction Documents and any other instruments, documents or deeds
delivered to it pursuant to or in connection with any of the Transaction
Documents for the time being in its possession in any safe deposit, safe or
receptacle selected by it or with any bank, any company whose business includes
undertaking the safe custody of documents or any firm of lawyers of good repute
and shall not be responsible for any loss thereby incurred.
SECTION 12.16 Delegation. The Agent may, whenever it thinks fit,
delegate by power of attorney or otherwise to any person or persons, or
fluctuating body of persons, all or any of the rights, powers, authorities and
discretions vested in it by any of the Transaction Documents and such delegation
may be made upon such terms (including the power to sub-delegate) and subject to
such conditions and to such regulations as the Agent may think fit and it shall
not be bound to supervise, or be in any way responsible for any loss incurred by
reason of any misconduct or default on the part of, any such delegate or sub-
delegate.
<PAGE>
Page 28
ARTICLE XIII
ASSIGNMENTS AND TRANSFERS
SECTION 13.01 Binding Agreement. This Agreement shall be binding
upon and enure to the benefit of each party hereto and its or any subsequent
successors, Transferees and assigns.
SECTION 13.02 No Assignments and Transfers by the Company. The
Company shall not be entitled to assign or transfer all or any of its rights,
benefits and obligations hereunder.
SECTION 13.03 Assignments and Transfers by Banks. Any Bank may, at
any time, assign all or any of its rights and benefits hereunder or transfer in
accordance with Section 13.05 all or any of its rights, benefits and obligations
hereunder subject, in either case, to the consent of the Company such consent
not to be unreasonably withheld which consent shall be deemed to have been given
if no objection is made by the Company to any proposed assignment or transfer
within 10 Business Days of the Company having notice thereof.
SECTION 13.04 Assignments by Banks. If any Bank assigns all or any
of its rights and benefits hereunder in accordance with Section 13.05, then,
unless and until the assignee has agreed with the Agent and the other Banks that
it shall be under the same obligations towards each of them as it would have
been under if it had been an original party hereto as a Bank (whereupon such
assignee shall become a party hereto as a "Bank"), the Agent and the other Banks
shall not be obliged to recognise such assignee as having the rights against
each of them which it would have had if it had been such a party hereto.
SECTION 13.05 Transfers by Banks. If any Bank wishes to transfer all
or any of its rights, benefits and/or obligations hereunder as contemplated in
Section 13.03, then such transfer may be effected by the delivery to the Agent
of a duly completed and duly executed Transfer Certificate in which event, on
the later of the Transfer Date specified in such Transfer Certificate and the
fifth Business Day after (or such earlier business day endorsed by the Agent on
such Transfer Certificate falling on or after) the date of delivery of such
Transfer Certificate to the Agent:
(a) to the extent that in such Transfer Certificate the Bank party
thereto seeks to transfer its rights, benefits and obligations hereunder,
the Company and such Bank shall be released from further obligations
towards one another hereunder and their respective rights against one
another shall be cancelled (such rights and obligations being referred to
in this Section 13.05 as "discharged rights and obligations");
(b) the Company and the Transferee party thereto shall assume
obligations towards one another and/or acquire rights against one another
which differ from such discharged rights and obligations only insofar as
the Company and such Transferee have assumed and/or acquired the same in
place of the Company and such Bank;
(c) the Agent, such Transferee and the other Banks shall acquire the
same rights and benefits and assume the same obligations between
themselves as they would
<PAGE>
Page 29
have acquired and assumed had such Transferee been an original party
hereto as a Bank with the rights, benefits and/or obligations acquired or
assumed by it as a result of such transfer; and
(d) such Transferee shall become a party hereto as a "Bank"
SECTION 13.06 Transfer Fees. On the date upon which a transfer takes
effect pursuant to Section 13.05 the Transferee in respect of such transfer
shall pay to the Agent for its own account a transfer fee of US$3,000.
SECTION 13.07 Disclosure of Information. Any Bank may disclose to
any actual or potential assignee or Transferee or to any person who may
otherwise enter into contractual relations with such Bank in relation to this
Agreement or to its head office, other branches, regional offices and affiliated
companies such information about the Company and any of its agencies as such
Bank shall consider appropriate and the Company expressly consents to such
disclosure.
ARTICLE XIV
AMENDMENTS
SECTION 14.01 Amendment Procedures. The Agent, if it has the prior
written consent of the Majority Banks, and the Company may from time to time
agree in writing to amend this Agreement or to waive, prospectively or
retrospectively, any of the requirements of this Agreement and any amendments or
waivers so agreed shall be binding on all the Banks and the Company. Provided
that:
(a) no such waiver or amendment shall subject any party hereto to
any new or additional obligations without the consent of such party;
(b) without the prior written consent of all the Banks, no such
amendment or waiver shall:
(i) amend or waive any provision of Article IX or this Article
XIV;
(ii) reduce the proportion of any amount received or recovered
(whether by way of set-off, combination of accounts or otherwise) in
respect of any amount due from any Transaction Party hereunder to
which any Bank is entitled;
(iii) change the principal amount of or currency of any
Payment, or defer the Maturity Date of any Bill of Exchange;
(iv) change the Applicable Margin, change the Discount Rate,
commitment fees or any other amount payable hereunder to all or any
of the Agent and the Banks;
(v) defer the Final Maturity Date;
<PAGE>
Page 30
(vi) amend the definition of Majority Banks; or
(vii) amend any provision which contemplates the need for the
consent or approval of all the Banks; and
(c) notwithstanding any other provisions hereof, the Agent shall not
be obliged to agree to any such amendment or waiver if the same would:
(i) amend or waive any provision of this Article XIV, Article
VI or Article XII; or
(ii) otherwise amend or waive any of the Agent's rights
hereunder or subject the Agent to any additional obligations
hereunder.
SECTION 14.02 Amendment Costs. If the Company requests any amendment
or waiver in accordance with Section 14.01 then the Company shall, on demand of
the Agent, reimburse the Agent and the Banks for all costs and expenses
(including legal fees) together with any VAT thereon incurred by the Agent and
the Banks in responding to or complying with such request.
ARTICLE XV
MISCELLANEOUS
SECTION 15.01 Amendments, Etc. No amendment or waiver of any
provision of this Agreement or any other Transaction Document, nor consent to
any departure by the Company therefrom, shall in any event be effective unless
the same shall be in writing and signed by the Agent, and such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
SECTION 15.02 Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including facsimile or telex
communication) in the English language and mailed, faxed, telexed or delivered
by an overnight courier of nationally recognised standing, if to the Company at
the address of the Company at Chonburi Industrial Estate (Bowin) 358 Moo 6,
Highway 331, Bowin, Sriracha, Chonburi 20230, Thailand, Attention: Chief
Financial Officer, facsimile number (6638) 345375; if to the Agent at its
address or at such other address as shall be designated by the Agent in a
written notice to the other party. All such notices and communications shall,
when mailed, faxed, telexed or sent by courier, be effective when deposited in
the mails, transmitted by facsimile, confirmed by telex answer back or delivered
to the overnight courier, respectively, except that notices and communications
to the Agent pursuant to Article II or III shall not be effective until received
by the Agent. Delivery by facsimile of an executed counterpart of any amendment
or waiver of any provision of this Agreement to be executed and delivered
hereunder shall be effective as delivery of a manually executed counterpart
thereof.
SECTION 15.03 No Waiver; Remedies. No failure on the part of the
Agent or the Banks to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver
<PAGE>
Page 31
thereof; nor shall any single or partial exercise of any such right preclude any
other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
SECTION 15.04 Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default the Agent and each Bank is hereby authorised
at any time and from time to time, to the fullest extent permitted by law, to
set off and otherwise apply any and all deposits (general or special, time or
demand, provisional or final) at any time held or at any branch and other
indebtedness at any time owing by the Agent, such Bank to or for the credit or
the account of the any Transaction Party against any and all of the obligations
of the that Transaction Party now or hereafter existing under this Agreement
held by the Agent or such Bank irrespective of whether the Agent or such Bank
shall have made any demand under this Agreement. The Agent and the Banks agree
promptly to notify the Company after any such set-off and application; provided,
however, that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of the Agent and the Banks under this
Section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) that the Agent and the Banks may have.
SECTION 15.05 Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 15.06 Jurisdiction, Etc. (a) Each of the parties hereto
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of the English courts. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and, subject to applicable laws, may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Each of the parties hereby consents generally in respect of any proceeding to
the giving of relief in connection with such proceeding including the making,
enforcement or execution of any order or judgement which may be made or given in
such proceeding. Nothing in this Agreement shall affect any right that the Agent
or any of the Banks may otherwise have to bring any action or proceeding
relating to this Agreement or any of the other Transaction Documents in the
courts of any other jurisdiction.
(b) Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have on the ground of venue or forum non
coveniens or any similar grounds.
SECTION 15.07 Governing Law. This Agreement is governed by, and
shall be construed in accordance with, the laws of England.
SECTION 15.08 Service of Process. The Company shall at all times
maintain an agent for service of process in England. Such agent shall be Law
Debenture Trust Corporation p.l.c. of Princes House, 95 Gresham Street, London
EC2V 7CY and any writ, judgement or other
<PAGE>
Page 32
notice of legal process shall be sufficiently served on the Company if delivered
to such agent at its address for the time being. The Company undertakes not to
revoke the authority of the above agent and if, for any reason, such agent no
longer serves as agent for the Company to receive service of process, the
Company shall promptly appoint another such agent and advise the Agent thereof
and, failing such appointment within 15 days, the Agent shall be entitled to
appoint such a person by notice to the Company. Nothing contained herein shall
affect the right to serve process in any other manner permitted by law.
<PAGE>
Page 34
ONSHORE BILL DISCOUNT FACILITY AGREEMENT
EXECUTION PAGES
THE COMPANY
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
By: /s/ John Schultes
-------------------------------------
Title: President/CEO
THE AGENT
BANQUE NATIONAL DE PARIS, LONDON BRANCH
By: /s/ Francois Van Den Baserl
-------------------------------------
Title: Country Manager
THE ARRANGER
BANQUE NATIONAL DE PAPJS, NEW YORK BRANCH
By: /s/ David A. Barcos
-------------------------------------
Title: Vice President
THE BANKS
BANQUE NATIONALE DE PARIS, SINGAPORE BRANCH
By: /s/ Peter Labrie By: /s/ Lim Beng Kooi
------------------------------- --------------------------------------
Title: Deputy General Manager Title: Senior Executive Vice President
<PAGE>
Page 34
CONDITIONS PRECEDENT
Part 1. Conditions Precedent to Initial Payment
(a) The Related Documents shall be in full force and effect;
(b) the amount of committed equity and debt financing shall be sufficient to
meet the financing requirements of the Project and the other transactions
contemplated by the Related Documents;
(c) the Agent is satisfied with the terms and conditions of the Related
Documents; and
(d) the Agent is satisfied with the corporate and legal structure and
capitalisation of the Company including the terms and conditions of the
memorandum and articles of association and each class of share capital of the
Company and of each agreement or instrument relating to such structure or
capitalisation;
(e) the Agent is satisfied with the management of the Company;
(f) the Company shall have received at least US$440,000,000 in gross cash
proceeds from the sale of the Senior Notes, the Senior Subordinated Notes and
the Private Placement;
(g) the Equity Investors shall own not less than 24.8% of the issued and
outstanding share capital of the Company;
(h) the Company and its existing lenders shall have executed an amendment, on
terms acceptable to the Agent, to The Agreement of Financial Supporting dated
September 27, 1996, between the Company and the ten lenders identified therein,
waiving all defaults or Events of Default (as therein defined) which may have
occurred or be continuing under such agreement or any defaults which may occur
as a result of the transactions contemplated herein;
(i) the Company, the Agent and the Banks shall have received the approval of all
local and national regulatory authorities which have jurisdiction as regards the
ability of the Company, the Agent and the Banks to enter into this Agreement;
0) there shall exist no action, suit, investigation, litigation or proceeding
affecting the Company pending or threatened before any court, governmental
agency or arbitrator that (i) could have a Material Adverse Effect or (ii)
purports to affect the legality, validity or enforceability of this Agreement,
any other Transaction Document, or the consummation of the transactions
contemplated hereby and thereby;
(k) all accrued fees and expenses of the Agent (including the accrued fees and
expenses of counsel to the Agent and of local counsel to Agent and those
contemplated by the letters dated 21 December 1997 and 26 February, 1998 between
the Company and the Agent) shall have been paid;
<PAGE>
Page 35
(1) the Agent shall have received at least four Business Days before the day of
the Initial Payment the following, each dated such day (unless otherwise
specified) and in form and substance satisfactory to the Agent (unless otherwise
specified):
(i) certified copies of the resolutions of the Board of Directors of the
Company, approving the execution, delivery and performance of this
Agreement and each other Transaction Document which it is or is to be a
party, and of all documents evidencing other necessary corporate action
and governmental approvals, if any, with respect to this Agreement and
each other Transaction Document;
(ii) a power of attorney duly executed by the Authorised Directors on
behalf of the Company appointing SDI Management Co. the duly authorised
attorney of the Company for the purposes of this Agreement;
(iii) a certificate of the Company, signed on behalf of the Company by two
Authorised Directors, dated the date of the Initial Payment (the
statements made in which certificate shall be true on and as of the date
of the Initial Payment), certifying:
(A) a true and correct copy of the memorandum and articles of
association of the Company as in effect on the date of the Initial
Payment;
(B) that the Company is duly established and validly existing under
the laws of Thailand and there is no outstanding proceeding for the
dissolution or liquidation of the Company;
(C) the completeness and accuracy of the representations and
warranties contained in this Agreement as though made on and as of
the date of the Initial Payment; and
(D) the absence of any event occurring and continuing, or resulting
from the Initial Payment, that constitutes an Event of Default or
Potential Event of Default.
(iv) an affidavit ("Nangsu Raprong") issued by the Partnerships and
Companies Registration Office in Bangkok, Commercial Registration
Department, Ministry of Commerce in Bangkok in respect of the Company
certifying the Authorised Directors empowered to bind the Company;
(v) a certificate of the Secretary of the Company and each other
Transaction Party certifying the names and true signatures of the officers
of such persons authorised to sign this Agreement and each other
Transaction Document to which they are or are to be parties and the other
documents to be delivered hereunder and thereunder;
(vi) such financial, business and other information regarding the Company
and each Transaction Party as the Agent shall have requested, including,
without limitation, information as to possible contingent liabilities, tax
matters, environmental matters, audited annual financial statements,
interim financial statements, the pro forma balance sheet as to the
Company and forecasts prepared by management, in form and substance
<PAGE>
Page 36
satisfactory to the Agent, of balance sheets, income statements and cash
flow statements on a monthly basis for the first year following the day of
the Initial Payment and on an annual basis for each year thereafter until
the Final Maturity Date;
(vii) a letter, in form and substance satisfactory to the Agent, from the
Company to its independent certified public accountants, advising such
accountants that the Agent has been authorised to exercise all rights of
the Company to require such accountants to disclose any and all financial
statements and any other information of any kind that they may have with
respect to the Company and directing such accountants to comply with any
reasonable request of the agent for such information;
(viii) a certified copy of the acceptance by an agent in England of its
appointment as agent of the Company for the purpose of accepting service
of process;
(ix) the legal opinion of Chandler & Thong-Ek, Thai counsel to the Agent;
(x) the legal opinion of Shearman & Sterling, counsel to the Agent;
(xi) the legal opinion of White & Case, counsel to the Company;
(xii) the legal opinion of White & Case, Thai counsel to the Company;
(xiii) the written approval of the Bank of Thailand of the Transaction
Documents and the transactions contemplated thereby. (xiv) evidence that
the Company shall have appointed an agent for service of process in
accordance with Section 15.08.
Part 2. Conditions Precedent to All Payments
(a) The following statements shall be true (and each of the giving of the
applicable Request for Payment and the acceptance by the Company of the proceeds
of such Payment shall constitute a representation and warranty by the Company
that both on the date of such notice and on the Payment Date or issuance such
statements are true):
(i) the representations and warranties contained in this Agreement are
true and correct on and as of such date, before and after giving effect to such
Payment, as though made on and as of such date other than any such
representations or warranties that, by their terms, refer to a specific date
other than such Payment, in which case as of such specific date;
(ii) no event has occurred and is continuing, or would result from such
Payment, that constitutes (a) an Event of Default under Section 8.01(a); or (b)
any other Event of Default or Potential- Event of Default that is attributable
to the Thai Offtaker accepting the Bill of Exchange to which the proposed
Payment relates or a Satisfactory Thai Guarantor guaranteeing payment of such
Bill of Exchange;
<PAGE>
Page 37
(iii) there has been no Material Adverse Change affecting the Company on a
consolidated basis since September 30, 1997; and
(iv) the making of the proposed Payment would not require the Agent or any
Bank to exceed any lending limits imposed under applicable law.
(b) the Agent shall have received the following documents:
(i) a certificate of the Secretary/Authorised Director of the Company:
(x), attesting to the fact that the Company is Solvent in the form of
Exhibit 6; and (y) indicating that the Company shall have requested that a
Thai bank provide funding in respect of the relevant Bill of Exchange and
that such Thai bank shall have declined to do so;
(ii) a certificate of the relevant Thai Offtaker in the form of Exhibit 5
accepted and agreed to by the Agent; and
(iii) an accepted Bill of Exchange from the relevant Thai Offtaker or Thai
Offtakers (which Thai Offtaker or Thai Offtakers shall each at that time
be a Transaction Party and shall not have been removed by the Company in
accordance herewith) together with the documents referred to in paragraph
(1) of Part 1 above with each reference to the Company being construed as
a reference to the relevant Thai Offtaker or Thai Offtakers;
(iv) a Guarantee together with the documents referred to in paragraph (1)
of Part 1 above with each reference to the Company being construed as a
reference to the relevant Satisfactory Thai Guarantor; and
(v) a legal opinion of Thai Counsel to the relevant Thai Offtaker and the
Satisfactory Thai Guarantor.
(c) that the Management Agreement is in full force and effect on substantially
the same terms and conditions as at the date hereof; and
(d) such other approvals, opinions or documents as the Agent may reasonably
request.
<PAGE>
Page 38
Appendix 2
COMMITMENTS
Tranche B
Bank Tranche A Facility Facility
- ---- ------------------ --------
Banque Nationale de Paris US$15,000,000
<PAGE>
Page 39
Exhibit 1
FORM OF REQUEST FOR PAYMENT
From: Nakornthai Strip Mill Public Company Limited
To: [The Agent]
Dated:
Dear Sirs
1. We refer to the agreement (as from time to time amended, varied, novated or
supplemented, the "Onshore Bill Discount Facility Agreement") dated March
12,1998 and made between the Company, the Agent and the Banks. Terms defined in
the Onshore Bill Discount Facility Agreement shall have the same meaning in this
notice.
2. We hereby give you notice that, pursuant to the Onshore Bill Discount
Facility Agreement and on [date of proposed Payment], we wish to obtain a
Payment [identify Tranche] upon the terms and subject to the conditions
contained therein representing the Discounted Amount of a Bill of Exchange
bearing identification no. [ ] with a Face Amount of [ I drawn upon and accepted
by [ ] and payable [30/60 days after drawing].
3. We confirm that, at the date hereof; (i) the representations set out in
Article V of the Facility Agreement are true; (ii) no Event of Default under
Section 8.01(a) has occurred; and (iii) no other Event of Default or Potential
Event of Default has occurred and is attributable to a Thai Offtaker accepting
the Bill of Exchange to which such Payment relates or a Satisfactory Thai
Guarantor guaranteeing the payment of such Bill of Exchange.
4. The proceeds of this Payment should be credited to the Revenue Account.
Yours faithfully
...................
for and on behalf of
Nakornthai Strip Mill Public
Company Limited
<PAGE>
Page 40
Exhibit 2
FORM OF BILL OF EXCHANGE
NSM ("Drawer")
Bangkok
Date: [ ]
To: [Thai Offtaker] ("Acceptor")
You are directed to pay to [the Agent] (on behalf of and for the account of the
Banks) ("Payee") or is order on the date ("Maturity Date") which is [30/601
[adjust for non-Business Days] days after the above date the sum of [ ], value
received.
Such amount shall be paid to the account of the Agent maintained at [Bangkok] in
same day .funds on the Maturity Date.
Any and all payments by the Acceptor hereunder shall be made free and clear of
and without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto
("Taxes"). If the Acceptor shall be required by law to deduct any Taxes from or
in respect of any sum payable hereunder to the Payee (i) the sum payable shall
be increased as may be necessary so that after making all required deductions
the Payee receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Acceptor shall make such deductions and (iii) the
Acceptor shall pay the full amount deducted to the relevant taxation authority
or other governmental authority in accordance with applicable law.
This Bill of Exchange is governed by and shall be construed in accordance with
the laws of England.
<PAGE>
Page 41
Signed (Drawer)
- ------
Accepted payable (Acceptor)
<PAGE>
Page 42
Exhibit 3
FORM OF GUARANTEE AND INDEMNITY
THIS DEED OF GUARANTEE is made the [ I day of [ ], 199[ 1
BETWEEN:
(1) [Satisfactory Thai Guarantor] (the "Guarantor"); and
(2) [ - ] (the "Agent" for and on behalf of itself and the Banks (as defined
in the Agreement).
W H E R E A S
(A) Nakornthai Strip Mill Public Company Limited (the "Company") has entered
into an onshore bill discount facility agreement (the "Agreement") with
Banque Nationale de Paris as agent and arranger and the banks identified
therein (the "Banks").
(B) On the terms and subject to the conditions of the Agreement the Banks have
agreed to make payments to the Company upon receipt by the Agent of bills
of exchange accepted by a Thai Offtaker (the "Principal").
(C) It is a condition precedent to the obligation of the Banks to make such
payments that a Satisfactory Thai Guarantor shall have executed this
Guarantee.
(D) The Company has presented to the Agent a Bill of Exchange dated _________
with a Face Amount of ________ accepted by the Principal (the "Accepted
Bill of Exchange").
NOW THEREFORE it is agreed:
1. Interpretation
Terms defined (or used) in the Agreement shall have the same meaning where used
herein. The rules of construction contained in Section 1.02 of the Agreement
shall apply hereto.
2. Guarantee
The Guarantor:
(i) guarantees to the Agent and the Banks as a primary obligation the
due and punctual observance and performance by the Principal of its
obligations under the
<PAGE>
Page 43
Accepted Bill of Exchange and promises to pay to the Agent from time
to time on demand all sums from time to time due and payable (but
unpaid) by the Principal to the Agent and the Banks or any of them
under or pursuant to the Accepted Bill of Exchange or on account of
any breach thereof; and
(ii) agrees as a primary obligation to indemnify the Agent and the Banks
from time to time on demand from and against any loss incurred by
the Agent and the Banks or any of them as a result of any of the
obligations of the Principal under the Accepted Bill of Exchange
being or becoming void, voidable, unenforceable or ineffective for
any reason whatsoever, whether or not known to the Agent and the
Banks or any of them, the amount of such loss being the amount which
the Agent and the Banks would otherwise have been entitled to
recover from the Principal.
3 Preservation of Rights
3.1 The obligations of the Guarantor herein contained shall be in addition to
and independent of every other security which the Agent and the Banks or any of
them may at any time hold in respect of any of the Principal's obligations under
the Accepted Bill of Exchange.
3.2 Neither the obligations of the Guarantor herein contained nor the rights,
powers and remedies conferred in respect of the Guarantor upon the Agent and the
Banks or any of them by the Accepted Bill of Exchange or by law shall be
discharged, impaired or otherwise affected by:
(i) the winding-up, dissolution, administration or reorganisation
of the Principal or any change in its status, function,
control or ownership;
(ii) any of the obligations of the Principal under the Accepted
Bill of Exchange or under any other security relating to the
Accepted Bill of Exchange being or becoming illegal, invalid,
unenforceable or ineffective in any respect;
(iii) time or other indulgence being granted or agreed to be granted
to the Principal in respect of its obligations under the
Accepted Bill of Exchange, the Agreement or under any other
document;
(iv) any amendment to, or any variation, waiver or release of any
obligation of the Principal under the Accepted Bill of
Exchange, the Agreement or under any other document;
(v) any failure to take, or fully to take, any security
contemplated by the Accepted Bill of Exchange or otherwise
agreed to be taken ' in respect of the Principal's obligations
under the Accepted Bill of Exchange;
(vi) any failure to realise or fully to realise the value of, or
any release, discharge, exchange or substitution of, any such
security or taken in respect of the Principal's obligations
under the Accepted Bill of Exchange; or
<PAGE>
Page 44
(vii) any other act, event or omission which, but for this Clause
3.2, might operate to discharge, impair or otherwise affect
any of the obligations of the Guarantor herein contained or
any of the rights, powers or remedies conferred upon the
Agents and the Banks or any of them by the Accepted Bill of
Exchange or by law.
3.3 Any settlement or discharge given by the Agent and the Banks or any of them
to the Guarantor in respect of the Guarantor's obligations hereunder or any
other agreement reached between the Agent and the Banks or any of them and the
Guarantor in relation thereto shall be, and be deemed always to have been, void
if any act on the faith of which the Agent or the -Banks or any of them gave the
Guarantor that settlement or discharge or entered into that Agreement is
subsequently avoided by or in pursuance of any provision of law.
3.4 Neither the Agent nor the Banks nor any of them shall be obliged before
exercising any of the rights, powers or remedies conferred upon it in respect of
the Guarantor hereby or by law:
(i) to make any demand of the Principal;
(ii) to take any action or obtain judgment in any court against the
Principal;
(iii) to make or file any claim or proof in a winding-up or
dissolution of the Principal; or
(iv) to enforce or seek to enforce any security taken in respect of
any of the obligations of the Principal under the Accepted
Bill of Exchange.
3.5 The Guarantor agrees that, so long as any amounts are or may be owed by the
Principal under the Accepted Bill of Exchange or the Principal is under any
actual or contingent obligations under the Accepted Bill of Exchange, the
Guarantor shall not exercise any rights which the Guarantor may at any time have
by reason of performance by it of its obligations hereunder:
(i) to be indemnified by the Principal;
(ii) to claim any contribution from any other guarantor of the
Principal's obligations under the Accepted Bill of Exchange;
and/or
(iii) to take the benefit (in whole or in part and whether by way of
subrogation or otherwise) of any rights of the Agent or the
Banks or any of them under the Accepted Bill of Exchange or of
any other security taken pursuant to, or in connection with,
the Accepted Bill of Exchange by the Agent and the Banks or
any of them.
<PAGE>
Page 45
4. Representations and Warranties
The Guarantor represents that:
(i) it is duly incorporated in Thailand and has power to enter into and
perform this Guarantee and has taken all necessary corporate action
to authorise the execution, delivery and performance of this
Guarantee;
(ii) the execution, delivery and performance of this Guarantee will not
contravene any law or regulation to which this Guarantor is subject
or any provision of the Guarantor's memorandum and articles of
association and all governmental or other consents requisite for
such execution, delivery and performance are in full force and
effect;
(iii) no obligation of the Guarantor is secured by, and the execution,
delivery and performance of this Guarantee will not result in the
existence of or oblige the Guarantor to create, any mortgage,
charge, pledge, encumbrance or other encumbrance over any present or
future revenues or assets of the Guarantor;
(iv) the execution, delivery and performance of this Guarantee will not
cause the Guarantor to be in breach of or default under any
agreement binding on it or any of its assets and no material
litigation or administrative proceeding before, by or of any court
or governmental authority is pending or (so far as the Guarantor
knows) threatened against it or any of its assets;
(v) no Event of Default or Potential Event of Default has occurred and
is continuing; and
(vi) in any proceedings taken in relation to this Guarantee, it will not
be entitled to claim for itself or any of its assets immunity from
suit, execution, attachment or other legal process.
5. Payments
5.1 Any and all payments by the Guarantor hereunder shall be made free and clear
of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto ("Taxes"). If the Guarantor shall be required by law to deduct any Taxes
from or in respect of any sum payable hereunder (i) the sum payable shall be
increased as may be necessary so that after making all required deductions the
Agent and/or each of the Banks receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Guarantor shall make such
deductions and (iii) the Guarantor shall pay the full amount deducted to the
relevant taxation authority or other governmental authority in accordance with
applicable law.
5.2 The Guarantor shall indemnify the Agent and each of the Banks for the full
amount of Taxes paid by the Agent and/or the Banks and any liability (including
penalties, additions to tax, interest and expenses) arising therefrom or with
respect thereto. This indemnification shall be
<PAGE>
Page 46
made within 14 days from the date of written demand therefor made by the Agent
or any Bank or such shorter period as may be required by applicable law.
5.3 Within 14 days after the date of any payment of Taxes, the Guarantor shall
furnish to the Agent the original receipt of payment thereof or a certified copy
of such receipt.
6. Reporting
The Guarantor will furnish to the Agent as soon as they become available copies
of its audited financial statements and such additional financial or other
information as the Agent may from time to time reasonably request.
7. Currency of Account
Moneys received or recovered by the Agent or the Banks or any of them from the
Guarantor in a currency other than that in which the said sums are due and
payable under or pursuant to the Accepted Bill of Exchange or under Clause 2(ii)
hereof shall be converted into the latter currency at the rate at which the
recipient would have sold the latter currency for the former at the opening of
business on the latest day before the receipt or recovery on which the recipient
quoted generally a rate of exchange for such a sale.
8. Continuing Security
The obligations of the Guarantor herein contained shall constitute and be
continuing obligations notwithstanding any settlement of account or other matter
or thing whatsoever, and in particular but without limitation, shall not be
considered satisfied by any intermediate payment or satisfaction of all or any
of the obligations of the Principal under the Accepted Bill of Exchange and
shall continue in full force and effect until final payment in full of all
amounts owing by the Principal thereunder and total satisfaction of all the
Principal's actual and contingent obligations thereunder.
9. Set-Off
The Agent and the Banks or any of them may at any time combine any account in
their books in the name of the Guarantor (at whatever branch and in whatever
currency denominated) with any other such account.
10. Notices
Any demand to be made by the Agent hereunder may be made at the principal place
of business of the Guarantor for the time being.
11. No Assignment
The Guarantor shall not be entitled to assign or transfer all or any of its
rights or obligations hereunder.
<PAGE>
Page 47
12. Governing Law
This Guarantee shall be governed by and construed in accordance with English law
and the Guarantor hereby irrevocably submits to the jurisdiction of the English
Courts.
IN WITNESS WHEREOF this Guarantee has been duly executed as a deed and is
intended to be and is hereby delivered on the date the day and year first above
written.
THE COMMON SEAL OF
[Satisfactory Thai Guarantor]
[Common Seal]
was hereunto affixed in
the presence of
....................... Director
....................... Director
<PAGE>
Page 48
Exhibit 4
FORM OF TRANSFER CERTIFICATE
To:[ ]
TRANSFER CERTIFICATE
relating to the agreement (as from time to time amended, varied, novated or
supplemented, the "Agreement") dated [ ] 199[ ] whereby an onshore bill discount
facility was made available to [ ] by a group of banks on whose behalf [Banque
Nationale de Paris] acted as agent in connection therewith.
1. Terms defined in the Agreement shall, subject to any contrary indication,
have the same meanings herein. The terms Bank, Transferee, Bank's Participation
and Amount Transferred are defined in the schedule hereto.
2. The Bank confirms that the Bank's Participation is an accurate summary of its
participation in the Agreement and requests the Transferee to accept and procure
the transfer to the Transferee of a percentage of the Bank's Participation
(equal to the percentage that the Amount Transferred is of the aggregate of the
component amounts (as set out in the schedule hereto) of the Bank's
Participation) by counter-signing and delivering this Transfer Certificate to
the Agent at its address for the service of notices specified in the Agreement.
3. The Transferee hereby requests the Agent to accept this Transfer Certificate
as being delivered to the Agent pursuant to and for the purposes of Section
13.05 of the Agreement so as to take effect in accordance with the terms thereof
on the Transfer Date or on such later date as may be determined in accordance
with the terms thereof.
4. The Transferee confirms that it has received a copy of the Agreement together
with such other information as it has required in connection with this
transaction and that it has not relied and will not hereafter rely on the Bank
to check or enquire on its behalf into the legality, validity, effectiveness,
adequacy, accuracy or completeness of any such information and further agrees
that it has not relied and will not rely on the Bank to assess or keep under
review on its behalf the financial condition, creditworthiness, condition,
affairs, status or nature of the Company.
5. The Transferee hereby undertakes with the Bank and each of the other parties
to the Agreement that it will perform in accordance with their terms all those
obligations which by the terms of the Agreement will be assumed by it after
delivery of this Transfer Certificate to the Agent and satisfaction of the
conditions (if any) subject to which this Transfer Certificate is expressed to
take effect.
<PAGE>
Page 49
6. The Bank makes no representation or warranty and assumes no responsibility
with respect to the legality, validity, effectiveness, adequacy or
enforceability of the Agreement or any document relating thereto and assumes no
responsibility for the financial condition of the Company or for the performance
and observance by the Company of any of its obligations under the Agreement or
any document relating thereto and any and all such conditions and warranties,
whether express or implied by law or otherwise, are hereby excluded.
7. The Bank hereby gives notice that nothing herein or in the Agreement (or any
document relating thereto) shall oblige the Bank to (a) accept a re-transfer
from the Transferee of the whole or any part of its rights, benefits and/or
obligations under the Agreement transferred pursuant hereto or (b) support any
losses directly or indirectly sustained or incurred by the Transferee for any
reason whatsoever including the non-performance by the Company or any other
party to the Agreement (or any document relating thereto) of its obligations
under any such document. The Transferee hereby acknowledges the absence of any
such obligation as is referred to in (a) or (b) above.
8. This Transfer Certificate and the rights, benefits and obligations of the
parties hereunder shall be governed by and construed in accordance with English
law.
THE SCHEDULE
1. Bank:
2. Transferee:
3. Transfer Date:
4. Bank's Participation:
5. Amount Transferred: Currencies
[Transferor Bank] [Transferee Bank]
By: By:
Date: Date:
<PAGE>
Page 50
Administrative Details of Transferee
Address:
Contact Name:
Account for Payments:
Telex:
[Fax:]
Telephone:
<PAGE>
Page 51
Exhibit 5
CERTIFICATE OF THAI OFFTAKER
To: [Agent] Date: [ ]
[Address]
Re: Onshore Bill Discount Facility Agreement (the "Agreement") dated [ ], 1998
and entered into between Nakornthai Strip Mill Public Company Limited
("the Company"), Banque Nationale de Paris (the "Agent") and the Banks
identified therein
We understand that it is a condition that is a condition precedent to the
obligation of the Banks under the Agreement to make a Payment that this
confirmation be given by us to the Agent. Terms defined in the Agreement have
the same meaning where used herein.
We confirm that, at the date hereof, the representations and warranties set out
below are true .and acknowledge that the Agent and the Banks shall be making a
Payment to the Company in reliance on these representations and warranties:
1. Status and Due Authorisation. We have power to accept the Bill of Exchange in
respect of which the confirmation is given and to exercise its rights and
perform its obligations thereunder and all action required to authorise its
acceptance of the Bill of Exchange and its performance of its obligations
hereunder has been duly taken.
2. No Deductions or Withholding. Under the laws of Thailand in force at the date
hereof, we will not be required to make any deduction or withholding from any
payment it may make hereunder.
3 Claims Pari Passu. Under the laws of Thailand in force at the date hereof, the
claims of the Agent and the Banks against us under the Bill of Exchange will
rank at least pari passu with the claims of all our other unsecured creditors.
4. No Immunity. In any proceedings taken in Thailand in relation to the Bill of
Exchange, we will not be entitled to claim for ourselves or any of our assets
immunity from suit, execution, attachment or other legal process.
5. Governing Law and Judgments. In any proceedings taken in Thailand in relation
to the Bill of Exchange, the choice of English law as the governing law of the
Bill of Exchange and any judgment obtained in England will, subject to
applicable laws, be recognised and enforced.
6. Validity and Admissibility in Evidence. All acts, conditions and things
required to be done, fulfilled and performed in order (a) to enable us lawfully
to enter into, exercise our rights
<PAGE>
Page 52
under and perform and comply with the obligations expressed to be assumed by us
in the Bill of Exchange, (b) to ensure that the obligations expressed to be
assumed by us in the Bill of Exchange are legal, valid and binding and (c) to
make the Bill of Exchange admissible in evidence in Thailand have been done,
fulfilled and performed.
7. No filing or Stamp Taxes. Under the laws of Thailand in force at the date
hereof, it is not necessary that the Bill of Exchange be filed, recorded or
enrolled with any court or other authority in [ ] or that any stamp,
registration or similar tax be paid on or in relation to the Bill of Exchange.
8. Binding Obligations. The obligations expressed to be assumed by us in the
Bill of Exchange are legal and valid obligations binding on it in accordance
with the terms hereof.
Any and all payments under the relevant Bill of Exchange shall be made free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto ("Taxes"). If we are required by law to -deduct any Taxes from or in
respect of any sum payable thereunder to the Payee (i) the sum payable shall be
increased as may be necessary so that after making all required deductions the
Payee receives an amount equal to the sum it would have received had no such
deductions been made, (ii) we shall make such deductions and (iii) we shall pay
the full amount deducted to the relevant taxation authority or other
governmental authority in accordance with applicable law.
- ----------------------------------
for and on behalf of
[Thai Offtaker]
Name:
Title:
- ----------------------------------
agreed and accepted by [the Agent]
for and on behalf of
itself, the Arranger and the Banks
<PAGE>
Page 53
Exhibit 6
CERTIFICATE OF COMPANY
To: [Agent] Date: [ [Address]
Re: Onshore Bill Discount Facility Agreement (the "Agreement") dated [ ], 1998
and entered into between Nakornthai Strip Mill Public Company Limited
("the Company"), Banque Nationale de Paris (the "Agent") and the Banks
identified therein
We understand that it is a condition precedent to the obligations of the Banks
under the Agreement to make a Payment that this confirmation be given by us to
the Agent.
Terms defined in the Agreement have the same meanings where used herein.
We confirm that, as of the date hereof, the Company is, individually and
together with its Subsidiaries, Solvent.
We confirm that we have requested the following Thai banks to provide funding in
respect of Bill(s) of Exchange dated _________ with Face Amount __________ and
that such banks have declined to provide such funding [details of Thai banks].
We attach a copy of the relevant correspondence with such banks.
- ----------------------------------
Authorised Director
for and on behalf of
Nakornthai Strip Mill
Public Company Limited
<PAGE>
EXHIBITS
Exhibit 1 Form of Request for Payment
Exhibit 2 Form of Bill of Exchange 4
Exhibit 3 Form of Guarantee and Indemnity
Exhibit 4 Form of Transfer Certificate
Exhibit 5 Certificate of Thai Offtaker
Exhibit 6 Certificate of Company
<PAGE>
Exhibit 10.06
US$150,000,000
SYNDICATED OFFSHORE BILL DISCOUNT FACILITY
Dated March 12, 1998
Between
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
(the Company)
and
BANQUE NATIONALE DE PARIS
(the Agent and Arranger)
and
THE BANKS herein referred to
SHEARMAN & STERLING
SINGAPORE
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Defined Terms.............................................1
SECTION 1.02. Construction..............................................8
SECTION 1.03. Computation of Time Periods...............................9
ARTICLE II
THE FACILITY AND CONDITIONS PRECEDENT
TO GRANT OF FINANCIAL ACCOMMODATION
SECTION 2.01. Grant of Facility.........................................9
SECTION 2.02. Condition Precedent Documents.............................9
ARTICLE III
FUNDING PROVISIONS
SECTION 3.01. Request for Payments......................................9
SECTION 3.02. Making Payments..........................................10
SECTION 3.03. Maximum Amount...........................................10
SECTION 3.04. Notices Irrevocable......................................10
SECTION 3.05. Termination or Reduction of the Commitments..............11
SECTION 3.06. Banks Obligations Several................................11
SECTION 3.07. Each Banks Participation.................................11
SECTION 3.08. Payment by Offtakers.....................................11
ARTICLE IV
COMPUTATIONS AND PAYMENTS
SECTION 4.01. Computations.............................................11
SECTION 4.02. Discount Period..........................................12
SECTION 4.03. Payments to the Agent....................................12
SECTION 4.04. Payments by the Agent....................................12
SECTION 4.05. Notice to Banks..........................................12
SECTION 4.06. Clawback.................................................12
ARTICLE V
INDEMNITY
SECTION 5.01. Indemnity................................................12
SECTION 5.02. Costs and Expenses.......................................13
(i)
<PAGE>
Page
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SECTION 5.03. Banks' Liabilities for Costs.............................14
SECTION 5.04. Survival.................................................14
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default........................................14
SECTION 6.02. Notice...................................................16
ARTICLE VII
SHARING
SECTION 7.01. Redistribution of Payments...............................16
SECTION 7.02. Repayable Recoveries.....................................16
ARTICLE VIII
FEES
SECTION 8.01. Fees.....................................................17
ARTICLE IX
INCREASED COSTS
SECTION 9.01. Increased Costs, Etc.....................................17
SECTION 9.02. Taxes....................................................17
SECTION 9.03. Certificates.............................................18
ARTICLE X
AGENCY PROVISIONS
SECTION 10.01. Appointment of the Agent................................18
SECTION 10.02. Agent's Discretions.....................................18
SECTION 10.03. Agent's Obligations.....................................19
SECTION 10.04. Excluded Obligations....................................20
SECTION 10.05. Indemnification.........................................20
SECTION 10.06. Exclusion of Liabilities................................20
SECTION 10.07. No Actions..............................................20
SECTION 10.08. Business with any Transaction Party.....................20
SECTION 10.09. Resignation.............................................20
SECTION 10.10. Successor Agent.........................................21
SECTION 10.11. Rights and Obligations..................................21
SECTION 10.12. Own Responsibility......................................21
SECTION 10.13. Agency Division Separate................................21
SECTION 10.14. Confidential Information................................22
SECTION 10.15. Safe Custody............................................22
SECTION 10.16. Delegation..............................................22
(ii)
<PAGE>
Page
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ARTICLE XI
ASSIGNMENTS AND TRANSFERS
SECTION 11.01. Binding Agreement.......................................22
SECTION 11.02. No Assignments and Transfers by the Company.............22
SECTION 11.03. Assignments and Transfers by Banks......................22
SECTION 11.04. Assignments by Banks....................................23
SECTION 11.05. Transfers by Banks......................................23
SECTION 11.06. Transfer Fees...........................................23
SECTION 11.07 Disclosure of Information................................23
ARTICLE XII
AMENDMENTS
SECTION 12.01. Amendment Procedures....................................24
SECTION 12.02. Amendment Costs..........................................25
ARTICLE XIII
MISCELLANEOUS
SECTION 13.01. Amendments, Etc..........................................25
SECTION 13.02. Notices, Etc.............................................25
SECTION 13.03. No Waiver-, Remedies.....................................25
SECTION 13.04. Right of Set-off.........................................25
SECTION 13.05. Execution in Counterparts................................26
SECTION 13.06. Jurisdiction, Etc........................................26
SECTION 13.07. Governing Law............................................26
SECTION 13.08. Service of Process.......................................26
Appendix 1 Conditions Precedent
Appendix 2 Commitments
Exhibit 1 Form of Request for Payment
Exhibit 2 Form of Bill of Exchange
Exhibit 3 Form of Guarantee and Indemnity
Exhibit 4 Form of Transfer Certificate
Exhibit 5 Certificate of Offtaker
Exhibit 6 Certificate of Company
Exhibit 7 Certificate of Offtaker
(iii)
<PAGE>
Page 1
SYNDICATED OFFSHORE BILL DISCOUNT FACILITY AGREEMENT
This SYNDICATED OFFSHORE BILL DISCOUNT FACILITY AGREEMENT dated
March 12, 1998 is made between Nakornthai Strip Mill Public Company Limited (the
"Company"), Banque Nationale de Paris as agent (the "Agent") and arranger (the
"Arranger"), and each of the banks and financial institutions listed in Appendix
2 (the "Banks")
WHEREAS:
(1) The Company has entered into certain offtake agreements with
Klockner Steel Trading GmbH ("KST") and Preussag Handel GmbH ("Preussag")
pursuant to which KST and Preussag will purchase steel products from and make
payment in respect thereof to the Company;
(2) The Company has arranged with the Offtakers to draw Bills of
Exchange (the Face Amount of which will correspond to an amount due under an
Offtake Agreement) upon the Offtakers, in favour of the Banks as payee;
(3) Upon acceptance of such Bills of Exchange by the Offtakers and
delivery thereof to the Agent, the Banks will advance the Discounted Amount of
such Bills of Exchange to the Company.
NOW, IT IS HEREBY AGREED as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Defined Terms. Unless the context otherwise requires,
the following terms shall have the following meanings when used in this
Agreement:
"Agent" means Banque Nationale de Paris, acting through its London
branch or any successor as agent of the Banks hereunder.
"Agent Offshore Account" means the account so designated by the
Agent in a written notice to the Company.
"Applicable Margin" means 0.40% per annum provided always that so
long as any Event of Default attributable to the Company, an Offtaker
accepting a Bill of Exchange or a Guarantor guaranteeing a Bill of
Exchange is continuing the Applicable Margin applying to the relevant Bill
of Exchange shall be 2.40%.
"Arranger" means Banque Nationale de Paris, acting through its New
York branch.
<PAGE>
Page 2
"Authorised Director" means in relation to the Company, a director
of the Company who has been duly authorised, whether alone or jointly with
one or more Authorised Directors, to bind the Company and who has been
duly registered as such by the Commercial Registration Department,
Ministry of Commerce, Thailand, including any person duly authorised to
bind the Company under a power of attorney duly executed by the Authorised
Directors.
"Bank" means any of those banks listed in Appendix 2 and their
respective successors and any permitted transferees or assignees and
"Banks" shall be construed accordingly.
"Bill of Exchange" means a bill of exchange in the form of Exhibit 2
drawn by the Company and accepted by an Offtaker naming the Agent in its
capacity as agent for and on behalf of itself and the Banks as payee.
"Business Day" means a day of the year on which banks are not
required or authorised by law to close in New York City, London, Singapore
or Bangkok.
"Change in Control" means (i) any sale or transfer or other
disposition by any US Investor of 20% or more of its shareholding in the
Company (excluding transfers between the US Investors); or (ii) the US
Investors ceasing in the reasonable opinion of the Agent to maintain
operational control of or to manage the Company pursuant to the Management
Agreement or otherwise or the Management Agreement ceasing to be in full
force and effect with the parties thereto as at the date of execution
thereof.
"Commitment" means in relation to a Bank, the amount in US Dollars
set opposite its name in Appendix 2, or as applicable, the amount set out
in a Transfer Certificate for such Bank, in any case to the extent not
reduced or cancelled hereunder.
"Discounted Amount" means in relation to any Bill of Exchange, the
net present value on the Payment Date of the Face Amount of the Bill of
Exchange as calculated by the Agent applying the Discount Rate for the
applicable Discount Period.
"Discount Period" means, in respect of a Bill of Exchange, the
period commencing on the Payment Date proposed in respect of such Bill of
Exchange and ending on the Maturity Date of such Bill of Exchange.
"Discount Rate" means the sum of (a) SIBOR; and (b) the Applicable
Margin after taking into account any adjustment required pursuant to the
terms of Sections 9.01 and 9.02.
"Encumbrance" means any mortgage, charge, pledge, lien, encumbrance,
right of set off, assignment by way of security, retention of title or any
security interest whatsoever or any agreement or arrangement having the
effect of conferring security or a preferential arrangement howsoever
created or arising.
<PAGE>
Page 3
"Equity Investors" means Steel Dynamics, Inc, Enron Capital and
Trade Resources, McDonald & Company Securities, Inc., Quantum Emerging
Group Fund, the State of Wisconsin Investment Board and John Hancock
Mutual Life Insurance Company.
"Event of Default" means any of the events described in Section
6.01.
"Face Amount" means in respect of a Bill of Exchange, the amount
specified therein as being payable on the Maturity Date.
"Facility" means the facility provided by the Banks to the
Company and described in Section 2.01.
"Facility Office" means, in relation to the Agent or any Bank, the
office identified with its signature below (or, in the case of a
Transferee, at the end of the Transfer Certificate to which it is a party
as Transferee) or such other office as it may from time to time select.
"Final Maturity Date" means 31 December 2000.
"Germany" means the Federal Republic of Germany and any relevant
political subdivision of it or in it, including any relevant government
agency thereof..
"Guarantee" means a guarantee from the Guarantor in favour of the
Agent for and on behalf of itself and the Banks guaranteeing the
obligations of KST substantially in the form of Exhibit 3 hereto.
"Guarantor" means Klockner & Co. AG.
"Initial Payment" means the first Payment made by the Banks to
the Company hereunder.
"Insolvency Event" means
(i) in relation to any person, in any jurisdiction, the passing of
any resolution by its directors (or an equivalent executive body) or by
its shareholders, the taking of any irrevocable proceedings by such person
for, or the convening of a meeting by such person to consider, or the
advertising of a petition, or the giving of any judgement, the making of
any order or direction by any judicial, governmental or official authority
or agency of any kind in any jurisdiction for, or in respect of:
(a) the bankruptcy, liquidation or dissolution of such person
or any termination of its independent corporate existence (whether
by merger or otherwise);
(b) the appointment of any liquidator, trustee, administrator,
administrative receiver, receiver or similar officer in respect of
such person;
<PAGE>
Page 4
(c) the vesting, taking possession or assumption of all or
substantially all of the assets, or the control, management or
supervision of the affairs, of such person by any such authority or
agency, any officer of, or any person appointed by or representing,
any such authority or agency, or any of the creditors of such person
or any person appointed by, or representing, any such creditor;
(d) any moratorium, composition, re-scheduling,
re-organisation, scheme or other arrangement with, or involving, or
assigm-nent for the benefit of, the creditors of such person or any
class of them;
(e) the subjecting of such person to, or the obtaining of any
relief for such person under, any laws relating to insolvency;
(f) any formal admission by or on behalf of such person or any
judgement, order, declaration or finding by or on behalf of any such
authority or agency that such person is insolvent or is unable, or
has ceased, to pay its debts as they become due; or
(g) any other event the occurrence of which has the same or a
substantially similar effect in any jurisdiction to any of the
foregoing; or
(ii) any Offtaker or the Guarantor communicating to the Company, in
writing signed by a duly authorised individual (a certified true copy
having been delivered to the Agent), that such Offtaker or the Guarantor
is financially unable to pay a Bill of Exchange.
"KST Offtake Agreement" means the agreement dated November 18, 1997
and made between KST and the Company on the terms and subject to the
conditions of which KST is obliged to purchase certain steel products
manufactured by the Company.
"Majority Banks" means at any time, Banks whose Commitments then
total more than 66 2/3% of the Total Commitments.
"Management Agreement" has the meaning ascribed to it in the
Offering Memorandum.
"Material Adverse Change" means any material adverse change in the
business, condition (financial or otherwise), operations, performance,
properties or prospects of any Transaction Party.
"Material Adverse Effect" means a material adverse effect on (a) the
business, condition (financial or otherwise), operations, performance,
properties or prospects of any Transaction Party, (b) the rights and
remedies of the Agent and/or the Banks under any Transaction Document or
(c) the ability of any Transaction Party to perform its obligations under
any Transaction Document to which it is or is to be a party.
"Maturity Date" means, in respect of a Bill of Exchange, the date on
which the relevant Bill of Exchange becomes payable as specified therein.
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"Offering Memorandum" means the Offering Memorandum dated March 2,
1998 distributed in connection with the offering of the Senior Notes and
Senior Subordinated Notes.
"Offtaker" means KST and/or Preussag, as the case may be.
"Offtake Agreements" means the KST Offtake Agreement and the
Preussag Offtake Agreement and "Offtake Agreement" shall be construed
accordingly.
"Onshore Facility Agreement" means the onshore bill discount
facility agreement of even date herewith entered into between the Company,
Banque Nationale de Paris as agent and arranger and the banks identified
therein.
"Other Taxes" has the meaning ascribed to it in Section 9.02(b).
"Outstanding Pavment" means any Payment in respect of which the
corresponding Bill of Exchange has not been fully satisfied and discharged
(and the amount paid in respect of such satisfaction and discharge has not
been returned).
"Payment" means the US Dollar Discounted Amount of a US Dollar
denominated Bill of Exchange that has been accepted by an Offtaker,
advanced in accordance with Article III.
"Payment Date" means the Business Day on which a Payment is made by
the Banks to the Company in accordance with Article III hereof.
"Potential Event of Default" means an event which with the passage
of time, the giving of notice, the making of a determination or any
combination thereof shall constitute an Event of Default.
"Preussag Offtake Apreement" means the agreement dated November 18,
1997 and made between Preussag and the Company on the terms and subject to
the conditions of which Preussag is obliged to purchase certain steel
products manufactured by the Company.
"Private Placement" has the meaning ascribed to it in the
Offering Memorandum.
"Project" means the development, construction, operation,
management, maintenance and financing of a thin-slab cold flat-rolled
steel mini-mill located in Chonburi, Thailand.
"Related Documents" means the Offering Memorandum, the Senior Notes,
the Senior Guaranty, the Senior Subordinated Notes, the Senior
Subordinated Guaranty, the New Credit Facility, the Bank Credit Facility,
the Indentures, the Security Documents and each Project Document, in each
case as defined in the Offering Memorandum.
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"Request for Payment" means a request for a Payment submitted in
accordance with Article II and substantially in the form of Exhibit 1
hereto.
"Revenue Account" means the account of the Company maintained with
The Chase Manhattan Bank, New York, or such other account as the Company
and the Agent may from time to time designate as the "Revenue Account".
"Senior Notes" has the meaning ascribed to it in the Offering
Memorandum.
"Senior Subordinated Notes" has the meaning ascribed to it in the
Offering Memorandum.
"SIBOR" means in relation to any Payment , on any day during any
period by reference to which the Discount Rate is to be calculated
thereon, the rate per annum determined by the Agent to be equal to the
arithmetic mean (rounded upwards, if necessary to the nearest whole
multiple of one-sixteenth of one per cent.) of the respective rates of
each of the banks whose rates appear on the screen page designated "SIBO"
(or the equivalent successor to such page) published or reported by
Reuters Limited on the Reuters monitor screen as the rate at which it is
offering deposits in US Dollars for a period comparable to that for which
such rate is to be determined in the Singapore interbank market at or
about 11.00 a.m. on the second Business Day before the proposed Payment
Date provided that if (a) for any such period only one or no banks have a
quotation of SIBOR appearing on such screen or (b) the rate determined as
SIBOR as aforesaid is, in the opinion of the Agent, manifestly incorrect,
then SIBOR, in relation to any such period, shall be the rate quoted by
the Agent for deposits in dollars in an amount comparable to the amount of
the Payment for such period at or about 11.00 a.m. on the second Business
Day prior to the proposed Payment Date.
"Solvent" means with respect to any person on a particular date,
that on such date (a) the fair value of the property of such person is
greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such person, (b) the present fair
saleable value of the assets of such person is not less than the amount
that will be required to pay the probable liability of such person on its
debts as they become absolute and matured, (c) such person does not intend
to, and does not believe that it will, incur debts or liabilities beyond
such person's ability to pay such debts and liabilities as they mature and
(d) such person is not engaged in business or a transaction, and is not
about to engage in business or a transaction, for which such person's
property would constitute an unreasonably small capital. The amount of
contingent liabilities at any time shall be computed as the amount that,
in the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual
or matured liability.
"Subsidiary" means in relation to a company or corporation, any
company or corporation:
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(a) which is controlled, directly or indirectly, by the
first-mentioned company or corporation;
(b) more than half the issued share capital of which is beneficially
owned, directly or indirectly, by the first-mentioned company or
corporation; or
(c) which is a Subsidiary of another Subsidiary of the
first-mentioned company or corporation
and, for these purposes, a company or corporation shall be treated
as being controlled by another if that other company or corporation is
able to direct its affairs and/or to control the composition of its board
of directors or equivalent body.
"Taxes" has the meaning ascribed to it in Section 9.02(a)
"Thailand" means the Kingdom of Thailand and any relevant political
sub-division of it or in it, including any relevant government agency
thereof.
"Total Commitments" at any time means the sum of the Commitments
of each of the Banks at that time.
"Transaction Documents" means (i) this Agreement; (ii) each Bill of
Exchange; (iii) (for so long as the Guarantor is a Transaction Party) the
Guarantee; (iv) any agreement entered into between the Company and the
Agent including with respect to the payment of fees or other amounts
relating to the Facility including the fee letter contemplated by Section
8.01(b).
"Transaction Party" means the Company any Offtaker and the Guarantor
provided that where any such party other than the Company has no
outstanding obligations under any Bill of Exchange and no contingent
obligations under the Guarantee, the Company may by written notice to the
Agent remove such party as a Transaction Party for the purposes hereof,
whereupon such party shall be deemed not to be a Transaction Party.
"Transfer Certificate" means a certificate substantially in the form
set out in Exhibit 4 signed by a Bank and a Transferee whereby:
(a) such Bank seeks to procure the transfer to such Transferee of
all or a part of such Bank's rights, benefits and obligations hereunder as
contemplated in Section 11.03; and
(b) such Transferee undertakes to perform the obligations it will
assume as a result of delivery of such certificate to the Agent as is
contemplated in Section 11.05.
"Transfer Date" means, in relation to any Transfer Certificate, the
date for the making of the transfer as specified in the schedule to such
Transfer Certificate.
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"Transferee" means a bank or other financial institution to which a
Bank seeks to transfer all or part of such Bank's rights, benefits and
obligations hereunder.
"US Dollar or US$" means the lawful currency of the United States.
"US Investor" means Steel Dynamics, Inc., Enron Capital and Trade
Resources and McDonald & Company Securities, Inc.
SECTION 1.02. Construction.
(a) Each reference to any contract or agreement is to the relevant
contract or agreement and any schedules and annexes to the relevant contract or
agreement as the same may be amended, varied, supplemented or novated from time
to time;
(b) Headings are for ease of reference only and are to be ignored in
construing this Agreement; and
(c) A reference:
(i) to a person shall, as the context requires, include an
individual, partnership, body corporate, unincorporated association
or state, governmental or quasi-governmental entity or agency;
(ii) in one gender shall, as the context requires, include the
other genders;
(iii) to a "month" is a reference to a period starting on one
day in a calendar month and ending on the numerically corresponding
day in the next calendar month, except that, if such period starts
on the last day in a calendar month or there is no numerically
corresponding day in the month in which that period ends, that
period shall end on the last Business Day in such later calendar
month;
(iv) to "assets" includes properties, revenues and rights of
every description present, future and contingent;
(v) to a statute shall be construed as a reference to such
statute as the same may have been, or from time to time be, amended
or re-enacted; and
(vi) to a word importing the singular shall include the plural
and vice versa.
(vii) the "equivalent" on any given date in one currency (the
"first currency") of an amount denominated in another currency (the
"second currency") is a reference to the amount of the first
currency which could be purchased with the amount of the second
currency at the spot rate of exchange
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quoted by the Agent at or about 11.00 a.m. on such date for the
purchase of the first currency with the second currency;
(viii) to "including" shall be construed as a reference to
"including without limitation"; and
(ix) to a "law" includes common or customary law and any
constitution, decree, judgment, legislation, order, ordinance,
regulation, statute, treaty or other legislative measure in any
jurisdiction or any present or future directive, regulation, request
or requirement (in each case, whether or not having the force of law
but, if not having the force of law, the compliance with which is in
accordance with the general practice of persons to whom the
directive, regulation, request or requirement is addressed);
(x) "VAT" shall be construed as a reference to value added tax
including any goods and services or similar tax which may be imposed
from time to time.
SECTION 1.03. Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding".
ARTICLE II
THE FACILITY AND CONDITIONS PRECEDENT TO
GRANT OF FINANCIAL ACCOMMODATION
SECTION 2.01. Grant of Facility. The Banks grant to the Company,
upon the terms and subject to the conditions hereof, a bills of exchange
discount facility in an aggregate total amount of US$150,000,000.
SECTION 2.02. Condition Precedent Documents. Save as the Agent
(acting on the instructions of the Majority Banks) may otherwise agree, the
Company may not deliver any Request for Payment hereunder unless the Agent has
confirmed to the Company that it has received all of the documents referred to
in Part I of Appendix 1 and that each is, in form and substance, satisfactory to
the Agent and that all other conditions referred to therein have been met, to
the satisfaction of the Agent.
ARTICLE III
FUNDING PROVISIONS
SECTION 3.01. Request for Payments. A Payment will be made by the
Banks to the Company in respect of a Bill of Exchange if:
(a) four Business Days before the proposed date for the making of
such Payment, the Agent has received from the Company a Request for
Payment;
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(b) the proposed date for the making of such Payment is a Business
Day which falls on or before the day which is 60 days prior to the Final
Maturity Date;
(c) the proposed date for the making of such Payment is not less
than five Business Days after the date upon which the previous Payment (if
any) was made hereunder;
(d) the proposed amount of such Payment is an amount which is less
than or equal to the amount of the Total Commitments less the Outstanding
Payments;
(e) (i) the Event of Default described in Section 6.01 (a) shall not
have occurred and be continuing; and (ii) no other Event of Default or
Potential Event of Default has occurred on and as of the proposed date for
the making of such Payment and is attributable to the Offtaker accepting
the Bill of Exchange to which such Payment relates or the Guarantor
guaranteeing payment of such Bill of Exchange; and
(f) four Business Days before the proposed Payment Date the Agent
has received all of the documents referred to in Part 2 of Appendix 1 and
each is in form and substance satisfactory to the Agent and all otber
conditions referred to therein have been met, to the satisfaction of the
Agent. The Company may furnish such documents to the Agent in facsimile
form, provided that the originals shall have been furnished no later than
two Business Days before the proposed Payment Date.
SECTION 3.02. Making Payments. Subject to Section 3.01 the Banks
shall, on the Payment Date, advance the Discounted Amount of the relevant Bill
of Exchange to the Company by crediting the Discounted Amount to the Revenue
Account.
SECTION 3.03. Maximum Amount. (a) The aggregate amount of all
Outstanding Payments made hereunder shall at no time exceed the Total
Commitments.
(b) The aggregate amount of all Outstanding Payments hereunder shall
at no time exceed:
(i) in respect of Bills of Exchange accepted by KST, the
greater of US$37.5 million and 25% of the Total Commitments;
(ii) in respect of Bills of Exchange accepted by Preussag, the
greater of US$112.5 million and 75% of the Total Commitments; or
(iii) the Total Commitments.
and the Company shall not be entitled to make a Request for Payment
and the Banks shall have no obligation to make a Payment, that would result in
any of the above limits being exceeded.
SECTION 3.04. Notices Irrevocable. Each Request for Payment shall be
irrevocable and binding on the Company. The Company shall indemnify the Agent
and the Banks against any loss, cost or expense incurred by the Agent or the
Banks as a result of any failure to
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fulfill on or before the date specified in such Request for Payment the
applicable conditions referred to in Section 2.02 and Section 3.01(f),
including, without limitation, any loss (not including loss of anticipated
profits), cost or expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by the Banks to fund the Payment to be made
by the Banks when such Payment, as a result of such failure, is not made on such
date.
SECTION 3.05. Termination or Reduction of the Commitments. The
Company may, upon at least five Business Days' notice to the Agent, terminate in
whole or reduce in part the unused portions of the Total Commitments provided,
however, that each partial reduction of the Facility shall be in a minimum
amount of $5,000,000 and an integral multiple thereof. Any such termination
shall be irrevocable and no such Commitment terminated or reduced may be
reinstated. Any such reduction in part of the Total Commitments shall reduce
each Bank's Commitment in the proportion borne by the amount of the reduction to
the Total Commitments immediately prior thereto.
SECTION 3.06. Banks' Obligations Several. The obligations of each
Bank hereunder are several and the failure by any Bank to perform its
obligations hereunder shall not affect the obligations of the Company towards
any other party hereto nor shall any other party be liable for the failure by
such Bank to perform its obligations hereunder. The failure of any Bank (the
"Failing Bank") to make its portion of a Payment available shall not relieve the
other Banks of the obligation to make their portion of the Payment. The
aggregate of the amounts due to each Bank at any time is a separate and
independent debt and each Bank shall have the right to protect and enforce its
rights hereunder and it shall not be necessary (except as otherwise provided
herein) for any other Bank or the Agent to be joined as an additional party to
any proceedings to this end.
SECTION 3.07. Each Bank's Participation. Each Bank will participate
through its Facility Office in each Payment made pursuant to this Agreement in
the proportion borne by its Commitment to the Total Commitments immediately
prior to the making of that Payment.
SECTION 3.08. Payment by Offtakers. Each Bill of Exchange shall
require that the Face Amount thereof be paid in full to the Agent Offshore
Account or such other .. account as may be designated by the Agent for such
purpose in accordance with the terms of the relevant Bill of Exchange on the
Maturity Date as specified therein. Such payment shall be for value in the
relevant currency without withholding, set-off or counterclaim.
ARTICLE IV
COMPUTATIONS AND PAYMENTS
SECTION 4.01. Computations. The computation by the Agent of any
Discounted Amount shall be on the basis of a year of 360 days, and the actual
number of days occurring in the relevant Discount Period. Each determination by
the Agent in the context of the calculation of a Discounted Amount (including
any Discount Rate) shall be conclusive and binding for all purposes, absent
manifest error.
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SECTION 4.02. Discount Period. The duration of each Discount Period
shall be as specified in the Request for Payment being either 30 days or 60 days
and equal to the period to maturity of the Bill of Exchange in consideration for
which the Payment is made, provided that no Discount Period shall end on a date
which falls after the Final Maturity Date. Where any Discount Period would
otherwise end on a day other than a Business Day, the Discount Period shall end
on the next preceding Business Day and the calculation of the Discounted Amount
shall be made accordingly.
SECTION 4.03. Payments to the Agent. On each date on which this
Agreement requires an amount to be paid by any of the Banks hereunder, such Bank
shall make the same available to the Agent by payment in US Dollars and in same
day funds (or in such other funds as may for the time being be customary in
London for the settlement in London of international banking transactions in US
Dollars) to the Agent Offshore Account (or such other account or bank as the
Agent may have specified for this purpose).
SECTION 4.04. Payments by the Agent. Save as otherwise provided
herein, each payment received by the Agent for the account of another person
pursuant to Section 4.03, or a Bill of Exchange or the Guarantee shall be made
available by the Agent to such other person (in the case of a Bank, for the
account of its Facility Office) for value the same day by transfer to such
account of such person with such bank in the principal financial centre of the
country of the currency of such payment as such person shall have previously
notified to the Agent.
SECTION 4.05. Notice to Banks. When the Agent receives a Request for
a Payment, it shall promptly (and in no event later than two Business Days prior
to the proposed Payment Date) notify each of the Banks of the amount of the
proposed Payment, the applicable Discount Rate, its participation in the Payment
and the proposed Payment Date. Each Bank shall, subject to the provisions of
this Agreement, make available to the Agent on the Payment Date its
participation in the Payment pursuant to the provisions of Section 4.03.
SECTION 4.06. Clawback. Where a sum is to be paid hereunder to the
Agent for account of another person, the Agent shall not be obliged to make the
same available to that other person or to enter into or perform any exchange
contract in connection therewith until it has been able to establish to its
satisfaction that it has actually received such sum, but if it does so and it
proves to be the case that it had not actually received such sum, then the
person to whom such sum or the proceeds of such exchange contract was so made
available shall on request refund the same to the Agent together with an amount
sufficient to indemnify the Agent against any cost or loss it may have suffered
or incurred by reason of its having paid out such sum or the proceeds of such
exchange contract prior to its having received such sum.
ARTICLE V
INDEMNITY
SECTION 5.01. Indemnity. (a) The Company agrees to indemnify and
hold harmless the Agent and each of the Banks and each of their respective
affiliates and officers, directors, employees, agents, advisors and other
representatives (each, an "Indemnified Party")
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from and against any and all claims, damages, losses, liabilities and expenses
(including, without limitation, fees and expenses of counsel) that may be
incurred by or asserted or awarded against any Indemnified Party, in each case
arising out of or in connection with or by reason of, or the preparation for a
defence of, any investigation, litigation or proceeding arising out of, related
to or in connection with any Transaction Document or the transactions
contemplated thereby, or any use made or proposed to be made with the proceeds
thereof, whether or not such investigation, litigation or proceeding is brought
by a Transaction Party, its shareholders or creditors or an Indemnified Party is
otherwise a party thereto and whether or not the transactions contemplated
hereby are consummated, except to the extent such claim, damage, loss, liability
or expense is found in a final, non-appealable-judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party's negligence or
willful misconduct. The Company also agrees that no Indemnified Party shall have
any liability (whether direct or indirect, in contract or tort or otherwise) to
the Company or its Subsidiaries or Affiliates or to the Company or its
respective security holders or creditors arising out of, related to or in
connection with this Agreement or the transactions contemplated thereby, except
for direct, as opposed to consequential, damages determined in a final
non-appealable judgment by a court of competent jurisdiction to have resulted
from such Indemnified Party's negligence, willful misconduct or failure to
perform its obligations hereunder; and
(b) the Company agrees to indemnify and hold harmless the Agent and
each of the Banks from and against, and shall pay on demand, any and all losses,
liabilities, damages, costs, expenses and charges (including the fees and
disbursements of legal counsel to the Agent and each of the Banks) suffered or
incurred by the Agent and the Banks or any of them as a result of any failure of
any Transaction Document to be the legal, valid and binding obligation of the
parties thereto enforceable in accordance with its terms, or any failure by any
Transaction Party to perform its obligations in accordance with the terms of
each Transaction Document to which it is a party.
SECTION 5.02. Costs and Expenses. The Company agrees to pay on
demand (i) all costs and expenses of the Agent and the Banks in connection with
the preparation, execution, delivery, administration, modification and amendment
of the Transaction Documents including, without limitation, (A) all due
diligence, collateral review, syndication, transportation, computer,
duplication, appraisal, audit, insurance, consultant, search, filing and
recording fees and expenses and (B) the fees and expenses of counsel for the
Agent and the Banks with respect thereto, with respect to advising the Agent and
the Banks as to its rights and responsibilities, or the perfection, protection
or preservation of rights or interests, under the Transaction Documents, with
respect to negotiations with any Transaction Party or with other creditors of
any Transaction Party or any of its Subsidiaries arising out of any Event of
Default or any events or circumstances that may give rise to an Event of Default
and with respect to presenting claims in or otherwise participating in or
monitoring any bankruptcy, insolvency or other similar proceeding involving
creditors' rights generally and any proceeding ancillary thereto) and (ii) all
costs and expenses of the Agent and the Banks in connection with the enforcement
of the Transaction Documents, whether in any action, suit or litigation, any
bankruptcy, insolvency or other similar proceeding affecting creditors' rights
generally (including, without limitation, the reasonable fees and expenses of
counsel for the Agent and the Banks with respect thereto).
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SECTION 5.03. Banks' Liabilities for Costs. If the Company fails to
perform any of its obligations under this Article V, each Bank shall, in the
proportion borne by its Commitment to the aggregate of all Commitments indemnify
the Agent against any loss incurred by the Agent as a result of such failure and
the Company shall forthwith reimburse each Bank for any payment made by it
pursuant to this Section 5.03.
SECTION 5.04. Survival. Without prejudice to the survival of any
other agreement of any Transaction Party hereunder or under any other
Transaction Document, the agreements and obligations of the Company contained in
Article IX and this Article V shall survive the payment in full of all amounts
payable hereunder and under any of the other Transaction Documents.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following events
shall occur and be continuing:
(a) any Transaction Party shall fail to make any payment under any
Transaction Document, in each case when the same becomes due and payable;
or
(b) any representation or warranty made by any Transaction Party (or
any of its officers) under or in connection with any Transaction Document
shall prove to have been incorrect in any material respect when made or if
repeated at any time with reference to the facts and circumstances
subsisting at such time would not be accurate in all material respects; or
(c) any Transaction Party shall fail to perform any other term,
covenant or agreement contained in any Transaction Document on its part to
be performed or observed if such failure shall remain unremedied for 10
days after the date on which a responsible officer of the Company becomes
aware of such failure; or
(d) any indebtedness of any Transaction Party becomes due or capable
of being declared due before its stated maturity or is not paid on
maturity or on demand (if so payable), any guarantee or similar obligation
of any Transaction Party is not discharged at maturity or when called or
any Transaction Party goes into default under or commits a breach of any
instrument or agreement relating to any such indebtedness or guarantee in
the case of any Transaction Party other than the Company, in an amount in
excess of US$5,000,000 individually or in the aggregate; or
(e) any judgment or order for the payment of money in excess of
US$5,000,000 or its equivalent (to the extent not fully paid or
discharged) shall be rendered against any Transaction Party and either (i)
enforcement proceedings shall have been commenced by any creditor upon
such judgment or order or (ii) there shall be any period of 15 consecutive
days during which a stay of enforcement of such judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect; or
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(f) any non-monetary judgrqent or order shall be rendered against
any Transaction Party that could have a Material Adverse Effect, and there
shall be any period of 10 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
(g) any provision of any Transaction Document shall for any reason
cease to be legal, valid and binding on or enforceable against any
Transaction Party being a party to it, or any such Transaction Party shall
so state in writing; or
(h) the Company ceases to carry on its business or disposes of all
or any substantial part of its business or assets or all or any
substantial part of its assets is condemned, attached, seized or
appropriated by any governmental authority or any action by any
governmental authority is instituted to dissolve the Company or suspend
its operations; or
(i) there shall occur any Material Adverse Change; or
(j) there shall occur a Change in Control; or
(k) there shall occur any Insolvency Event affecting any Transaction
Party; or
(l) any step is taken by any person with a view to the seizure,
compulsory acquisition, expropriation or nationalisation of all or a
material part of the assets of the Company or its share capital; or
(m) the Government of Thailand or any competent authority thereof
declares a moratorium on the payment of indebtedness by Thailand, any
government agency or authority thereof or any Thai entity, or any
moratorium occurs de facto, or Thailand ceases to be a member in good
standing of the International Monetary Fund under the Articles of
Agreement thereof, or the international monetary reserve of Thailand
becomes subject to any encumbrance not created by operation of law and the
effect of which materially impairs in any manner whatsoever, the ability
of any Transaction Party to perform any of its obligations under any of
the Transaction Documents,
Then at once, or at any time thereafter, while such event is
continuing and remains unremedied, the Agent may, and upon the request of
the Majority Banks shall, by notice to the Company:
(i) to the extent such event is attributable to the Company cancel
the Commitments; or
(ii) to the extent such event is attributable to an Offtaker
accepting a Bill of Exchange or the Guarantor guaranteeing payment of such
Bill of Exchange, decline to make the Payment relating to such Bill of
Exchange,
and take any other action as is provided for in the Transaction
Documents.
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SECTION 6.02. Notice. The Agent shall promptly thereafter notify the
Company of the conclusive determination of the Majority Banks that an Event of
Default has occurred which is attributable to an Offtaker or the Guarantor.
ARTICLE VII
SHARING
SECTION 7.01. Redistribution of Payments. If, at any time, the
proportion which any Bank (a "Recovering Bank") has received or recovered
(whether by payment, the exercise of a right of set-off or combination of
accounts or otherwise) in respect of its portion of any payment (a "relevant
payment") to be made under this Agreement [or any Bill of Exchange] by any
Transaction Party for account of such Recovering Bank and one or more other
Banks is greater (the portion of such receipt or recovery giving rise to such
excess proportion being herein called an "excess amount") than the proportion
thereof so received or recovered by the Bank or Banks so receiving or recovering
the smallest proportion thereof, then:
(a) such Recovering Bank shall inform the Agent of such receipt or
recovery and pay to the Agent an amount equal to such excess amount;
(b) [(in the case of a relevant payment made under this Agreement)]
there shall thereupon fall due from the relevant Transaction Party to such
Recovering Bank an amount equal to the amount paid out by such Recovering
Bank pursuant to paragraph (a) above, the amount so due being, for the
purposes hereof, treated as if it were an unpaid part of such Recovering
Bank's portion of such relevant payment; and
(c) the Agent shall treat the amount received by it from such
Recovering Bank pursuant to paragraph (a) above as if such amount had been
received by it from the relevant Transaction Party in respect of such
relevant payment and shall pay the same to the persons entitled thereto
(including such Recovering Bank) pro rata to their respective entitlements
thereto.
SECTION 7.02. Repayable Recoveries. If any sum (a "relevant sum")
received or recovered by a Recovering Bank in respect of any amount owing to it
by any Transaction Party becomes repayable and is repaid by such Recovering
Bank, then:
(a) each Bank which has received a share of such relevant sum by
reason of the implementation of Section 7.01 shall, upon request of the
Agent, pay to the Agent for account of such Recovering Bank an amount
equal to its share of such relevant sum; and
(b) there shall thereupon fall due from the relevant Transaction
Party to each such Bank an amount equal to the amount paid out by it
pursuant to paragraph (a) above, the amount so due being, for the purposes
hereof, treated as if it were the sum payable to such Bank against which
such Bank's share of such relevant sum was applied.
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ARTICLE VIII
FEES
SECTION 8.01. Fees. (a) Commitment Fee. The Company shall pay to the
Agent for the account of each Bank a commitment fee from the date hereof, in
each case until the Final Maturity Date, payable in arrear quarterly on March
31, June 30, September 30 and December 31, commencing March 31, 1998, and on the
Final Maturity Date, at the rate of 0.25% per annum on the average daily unused
portion of each Bank's Commitment.
(b) Arrangement, Facility, Agency and Other Fees. The Company shall
pay -to the Agent for its own account the arrangement, facility, agency fees and
other fees specified in the letter of even date herewith from the Agent to the
Company at the times, and in the amounts specified in such letter.
ARTICLE IX
INCREASED COSTS
SECTION 9.01. Increased Costs, Etc. (a) If, due to either (i) the
introduction of or any change in or in the interpretation of any law or
regulation after the date hereof or (ii) the compliance with any guideline or
request from any central bank or other governmental authority (whether or not
having the force of law) first imposed after the date hereof, there shall be any
increase in the cost to any Bank of agreeing to make or of making, funding or
maintaining Payments, then the Discount Rate shall be increased accordingly to
compensate such Bank for such increased cost.
(b) If any Bank determines that compliance with any law or
regulation or any guideline or request from any central bank or other
governmental authority (whether or not having the force of law) first imposed
after the date hereof affects or would affect the amount of capital required or
expected to be maintained by such Bank or any corporation controlling such Bank
and that the amount of such capital is increased by or based upon the existence
of such Bank's Commitments hereunder then, the Discount Rate shall be increased
accordingly to compensate such Bank for such increased cost.
(c) Notwithstanding any other provision of this Agreement, if the
introduction of or any change in or in the interpretation of any law or
regulation after the date hereof shall make it unlawful, or any central bank or
other governmental authority shall assert after the date hereof that it is
unlawful, for the Agent or any Bank to perform its. obligations hereunder, then,
on notice thereof and demand therefor by the Agent or any Bank to the Company
the obligation of the Agent or such Bank to make Payments shall be suspended
until the Agent or such Bank shall notify the Company that it has determined
that the circumstances causing such suspension no longer exist.
SECTION 9.02. Taxes. (a) Any and all payments by the Company
hereunder shall be made free and clear of and without deduction for any and all
present or future taxes, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto
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("Taxes"). If the Company shall be required by law to deduct any Taxes from or
in respect of any sum payable hereunder (i) the sum payable shall be increased
as may be necessary so that after making all required deductions the Agent
and/or each of the Banks receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Company shall make such
deductions and (iii) the Company shall pay the full amount deducted to the
relevant tax authority or other governmental authority in accordance with
applicable law.
(b) In addition, the Company shall pay any present or future stamp,
documentary, excise, property, VAT, goods and service tax or similar taxes,
charges or levies - that arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to this
Agreement (hereinafter referred to as "Other Taxes").
(c) The Company shall indemnify the Agent and each of the Banks for
the full amount of Taxes and Other Taxes paid by the Agent and/or the Banks and
any liability (including penalties, additions to tax, interest and expenses)
arising therefrom or with respect thereto. This indemnification shall be made
within 14 days from the date of written demand therefor made by the Agent or any
Bank or such shorter period as may be required by applicable law .
(d) Within 14 days after the date of any payment of Taxes or Other
Taxes, the Company shall furnish to the Agent the original receipt of payment
thereof or a certified copy of such receipt.
SECTION 9.03. Certificates. A certificate of the Agent or the
relevant Bank as to (a) the amount by which a the Discount Rate is to be
increased under Section 9.01 or (b) the amount for the time being required to be
paid by the Company under Section 9.02 shall, in the absence of manifest error,
be conclusive evidence of the existence and amounts of the specified obligations
of the Company.
ARTICLE X
AGENCY PROVISIONS
SECTION 10.01. Appointment of the Agent. Each Bank hereby appoints
the Agent to act as its agent in connection herewith and authorises the Agent to
execute and deliver any and all certificates and other documents contemplated by
any of the Transaction Documents and to exercise such rights, powers,
authorities and discretions as are specifically delegated to the Agent by the
terms hereof together with all such rights, powers, authorities and discretions
as are reasonably incidental thereto.
SECTION 10.02. Agent's Discretions. The Agent may:
(a) assume, unless it has, in its capacity as agent for the Banks,
received notice to the contrary from any other party hereto, that (i) any
representation made by any Transaction Party in connection herewith is
true, (ii) no Event of Default or Potential Event of Default has occurred,
(iii) no Transaction Party is in breach of or default under its
obligations under the Transaction Documents and (iv) any right, power,
authority or
<PAGE>
discretion vested herein upon the Majority Banks, the Banks or any other
person or group of persons has not been exercised;
(b) assume that the Facility Office of each Bank is that identified
with its signature below (or, in the case of a Transferee, at the end of
the Transfer Certificate to which it is a party as Transferee) until it
has received from such Bank a notice designating some other office of such
Bank to replace its Facility Office and act upon any such notice until the
same is superseded by a further such notice;
(c) engage and pay for the advice or services of any lawyers,
accountants, surveyors or other experts whose advice or services may to it
seem necessary, expedient or desirable and rely upon any advice so
obtained;
(d) rely as to any matters of fact which might reasonably be
expected to be within the knowledge of any Transaction Party upon a
certificate signed by or on behalf of any Transaction Party;
(e) rely upon any communication or document believed by it to be
genuine;
(f) refrain from exercising any right, power or discretion vested in
it as agent hereunder unless and until instructed by the Majority Banks as
to whether or not such right, power or discretion is to be exercised and,
if it is to be exercised, as to the manner in which it should be
exercised; and
(g) refrain from acting in accordance with any instructions of the
Majority Banks to begin any legal action or proceeding arising out of or
in connection with this Agreement or any other Transaction Party until it
shall have received such security as it may require (whether by way of
payment in advance or otherwise) for all costs, claims, losses, expenses
(including legal fees) and liabilities together with any VAT thereon which
it will or may expend or incur in complying with such instructions.
SECTION 10.03. Agent's Obligations. The Agent shall:
(a) promptly inform each Bank of the contents of any notice or
document received by it in its capacity as Agent from any Transaction
Party hereunder;
(b) promptly notify each Bank of the occurrence of any Event of
Default or any default by any Transaction Party in the due performance of
or compliance with its obligations under this Agreement of which the Agent
has notice from any other party hereto;
(c) save as otherwise provided herein, act as agent hereunder in
accordance with any instructions given to it by the Majority Banks, which
instructions shall be binding on all of the Banks; and
(d) if so instructed by the MajoritY Banks, refrain from exercising
any right, power or discretion vested in it as Agent hereunder.
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SECTION 10.04. Excluded Obligations. Notwithstanding anything to the
contrary expressed or implied herein, the Agent shall not:
(a) be bound to enquire as to (i) whether or not any representation
made by any Transaction Party in connection herewith is true, (ii) the
occurrence or otherwise of any Event of Default or Potential Event of
Default, (iii) the performance by any Transaction Party of its obligations
under any Transaction Document or (iv) any breach of or default by any
Transaction Party of its obligations under any Transaction Document;
(b) be bound to account to any Bank for any sum or the profit
element of any sum received by it for its own account;
(c) be bound to disclose to any other person any information
relating to any Transaction Party or any of its agencies if such
disclosure would or might in its opinion constitute a breach of any law or
regulation or be otherwise actionable at the suit of any person; or
(d) be under any obligations Other than those for which express
provision is made herein.
SECTION 10.05. Indemnification. Each Bank shall, from time to time
on demand by the Agent or the Arranger, indemnify the Agent and the Arranger, in
the proportion its Commitment bears to the Total Commitments at the time of such
demand against any and all costs, claims, losses, expenses (including legal
fees) and liabilities together with any VAT thereon which the Agent or the
Arranger may incur, otherwise than by reason of its own gross negligence or
wilful misconduct, in acting in its capacity as Agent or Arranger hereunder.
SECTION 10.06. Exclusion of Liabilities. Neither the Agent nor the
Arranger accepts any responsibility for the accuracy and/or completeness of
information supplied by any Transaction Party in connection herewith or for the
legality, validity, effectiveness, adequacy or enforceability of this Agreement
and save in the case of its gross negligence or wilful misconduct, neither the
Agent nor the Arranger shall be under any liability as a result of taking or
omitting to take any action in relation to this Agreement.
SECTION 10.07. No Actions. Each of the Banks agrees that it will not
assert or seek to assert against any director, officer or employee of the Agent
or the Arranger any claim it might have against any of them in respect of the
matters referred to in Section 10.06.
SECTION 10.08. Business with any Transaction Party. The Agent may
accept deposits from, lend money to and generally engage in any kind of banking
or other business with any Transaction Party.
SECTION 10.09. Resignation. The Agent may resign its appointment
hereunder at any time without assigning any reason therefor by giving not less
than thirty days' prior written notice to that effect to each of the other
parties hereto, provided that no such resignation shall be effective until a
successor for the Agent is appointed in accordance with the succeeding
provisions of this Article X.
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SECTION 10.10. Successor Agent. If the Agent gives notice of its
resignation pursuant to Clause 10.09, then any reputable and experienced bank or
other financial institution may be appointed as a successor to the Agent by the
Majority Banks during the period of such notice but, if no such successor is so
appointed, the Agent may appoint such a successor itself, provided that at all
times the Agent under this Facility Agreement shall also be the Agent under the
Onshore Facility Agreement.
SECTION 10.11. Rights and Obligations. If a successor to the Agent
is appointed under the provisions of Section 10.10, then (a) the retiring Agent
shall be discharged from any further obligation hereunder but shall remain
entitled to the benefit of the provisions of this Article X and (b) its
successor and each of the other parties hereto shall have the same rights and
obligations amongst themselves as they would have had if such successor had been
a party hereto.
SECTION 10.12. Own Responsibility. It is understood and agreed by
each Bank that it has itself been, and will continue to be, solely responsible
for making its own independent appraisal of and investigations into the
financial condition, creditworthiness, condition, affairs, status and nature of
any Transaction Party and, accordingly, each Bank warrants to the Agent and the
Arranger that it has not relied on and will not hereafter rely on the Agent or
the Arranger:
(a) to check or enquire on its behalf into the adequacy, accuracy or
completeness of any information provided by any Transaction Party in
connection with this Agreement or the transactions herein contemplated
(whether or not such information has been or is hereafter circulated to
such Bank by the Agent or the Arranger); or
(b) to check or enquire on its behalf into the adequacy, accuracy or
completeness of any communication delivered to it under any of the
Transaction Documents, any legal or other opinions, reports, valuations,
certificates, appraisals or other documents delivered or made or required
to be delivered or made at any time in connection with any of the
Transaction Documents, any security to be constituted thereby or any other
report or other document, statements or information circulated, delivered
or made, whether orally or otherwise and whether before, on or after the
date of this Agreement; or
(c) to check or enquire on its behalf into the due execution,
delivery, validity, legality, adequacy, suitability, performance,
enforceability or admissibility in evidence of any of the Transaction
Documents or any other document referred to in paragraph (b) above or any
guarantee, indemnity or security given or created thereby or any
obligations imposed thereby or assumed thereunder; or
(d) to assess or keep under review on its behalf the financial
condition, creditworthiness, condition, affairs, status or nature of any
Transaction Party.
SECTION 10.13. Agency Division Separate. In acting as Agent
hereunder for the Banks, the Agent shall be regarded as acting through its
agency division which shall be treated as a separate entity from any other of
its divisions or departments and, notwithstanding the foregoing
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Page 22
provisions of this Article X, any information received by some other division or
department of the Agent may be treated as confidential and shall not be regarded
as having been given to the Agent's agency division.
SECTION 10.14. Confidential Information. Notwithstanding anything to
the contrary expressed or implied herein and without prejudice to the provisions
of Section 10.13, the Agent shall not as between itself and the Banks be bound
to disclose to any Bank or other person any information which is supplied by any
Transaction Party to the Agent in its capacity as agent hereunder for the Banks
and which is identified by any Transaction Party at the time it is so supplied
as being confidential information, provided that the consent of the Company to
such disclosure is hereby expressly given in relation to any information which
in the opinion of the Agent relates to an Event of Default or Potential Event of
Default or in respect of which the Banks have given a confidentiality
undertaking in a form satisfactory to the Agent and the Company.
SECTION 10.15. Safe Custody. The Agent shall be at liberty to place
any of the Transaction Documents and any other instruments, documents or deeds
delivered to it pursuant to or in connection with any of the Transaction
Documents for the time being in its possession in any safe deposit, safe or
receptacle selected by it or with any bank, any company whose business includes
undertaking the safe custody of documents or any firm of lawyers of good repute
and shall not be responsible for any loss thereby incurred.
SECTION 10.16. Delegation. The Agent may, whenever it thinks fit,
delegate by power of attorney or otherwise to any person or persons, or
fluctuating body of persons, all or any of the rights, powers, authorities and
discretions vested in it by any of the Transaction Documents and such delegation
may be made upon such terms (including the power to sub-delegate) and subject to
such conditions and to such regulations as the Agent may think fit and it shall
not be bound to supervise, or be in any way responsible for any loss incurred by
reason of any misconduct or default on the part of, any such delegate or
sub-delegate.
ARTICLE XI
ASSIGNMENTS AND TRANSFERS
SECTION 11.01. Binding Agreement. This Agreement shall be binding
upon and enure to the benefit of each party hereto and its or any subsequent
successors, Transferees and assigns.
SECTION 11.02. No Assignments and Transfers by the Company. The
Company shall not be entitled to assign or transfer all or any of its rights,
benefits and obligations hereunder.
SECTION 11.03. Assignments and Transfers by Banks. Any Bank may, at
any time, assign all or any of its rights and benefits hereunder or transfer in
accordance with Section 11.05 all or any of its rights, benefits and obligations
hereunder subject in either case to the consent of the Company such consent not
to be unreasonably withheld which consent shall be
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Page 23
deemed to have been given if no objection is made by the Company to any proposed
assignment or transfer within 10 Business Days of the Company having notice
thereof.
SECTION 11.04. Assignments by Banks. If any Bank assigns all or any
of its rights and benefits hereunder in accordance with Section 11.05, then,
unless and until the assignee has agreed with the Agent and the other Banks that
it shall be under the same obligations towards each of them as it would have
been under if it had been an original party hereto as a Bank (whereupon such
assignee shall become a party hereto as a "Bank"), the Agent and the other Banks
shall not be obliged to recognise such assignee as having the rights against
each of them which it would have had if it had been such a party hereto.
SECTION 11.05. Transfers by Banks. If any Bank wishes to transfer
all or any of its rights, benefits and/or obligations hereunder as contemplated
in Section 11.03, then such transfer may be effected by the delivery to the
Agent of a duly completed and duly executed Transfer Certificate in which event,
on the later of the Transfer Date specified in such Transfer Certificate and the
fifth Business Day after (or such earlier business day endorsed by the Agent on
such Transfer Certificate falling on or after) the date of delivery of such
Transfer Certificate to the Agent:
(a) to the extent that in such Transfer Certificate the Bank party
thereto seeks to transfer its rights, benefits and obligations hereunder,
the Company and such Bank shall be released from further obligations
towards one another hereunder and their respective rights against one
another shall be cancelled (such rights and obligations being referred to
in this Section 11.05 as "discharged rights and obligations");
(b) the Company and the Transferee party thereto shall assume
obligations towards one another and/or acquire rights against one another
which differ from such discharged rights and obligations only insofar as
the Company and such Transferee have assumed and/or acquired the same in
place of the Company and such Bank;
(c) the Agent, such Transferee and the other Banks shall acquire the
same rights and benefits and assume the same obligations between
themselves as they would have acquired and assumed had such Transferee
been an original party hereto as a Bank with the rights, benefits and/or
obligations acquired or assumed by it as a result of such transfer; and
(d) such Transferee shall become a party hereto as a "Bank".
SECTION 11.06. Transfer Fees. On the date upon which a transfer
takes effect pursuant to Section 11.05 the Transferee in respect of such
transfer shall pay to the Agent for its own account a transfer fee of US$3,000.
SECTION 11.07 Disclosure of Information. Any Bank may disclose to
any actual or potential assignee or Transferee or to any person who may
otherwise enter into contractual relations with such Bank in relation to this
Agreement or to its head office, other branches, regional offices and affiliated
companies such information about the Company and any of its
<PAGE>
Page 24
agencies as such Bank shall consider appropriate and the Company expressly
consents to such disclosure.
ARTICLE XII
AMENDMENTS
SECTION 12.01. Amendment Procedures. The Agent, if it has the prior
written consent of the Majority Banks, and the Company may from time to time
agree in writing to amend this Agreement or to waive, prospectively or
retrospectively, any of the requirements of this Agreement and any amendments or
waivers so agreed shall be binding on all the Banks and the Company. Provided
that:
(a) no such waiver or amendment shall subject any party hereto to
any new or additional obligations without the consent of such party;
(b) without the prior written consent of all the Banks, no such
amendment or waiver shall:
(i) amend or waive any provision of Article VII or this
Article XII;
(ii) reduce the proportion of any amount received or recovered
(whether by way of set-off, combination of accounts or otherwise) in
respect of any amount due from any Transaction Party hereunder to
which any Bank is entitled;
(iii) change the principal amount of or currency of any
Payment, or defer the Maturity Date of any Bill of Exchange;
(iv) change the Applicable Margin, change the Discount Rate,
commitment fees or any other amount payable hereunder to all or any
of the Agent and the Banks;
(v) defer the Final Maturity Date;
(vi) amend the definition of Majority Banks; or
(vii) amend any provision which contemplates the need for the
consent or approval of all the Banks; and
(c) notwithstanding any other provisions hereof, the Agent shall not
be obliged to agree to any such amendment or waiver if the same would:
(i) amend or waive any provision of this Article XII, Article
V or Article X; or
(ii) otherwise amend or waive any of the Agent's rights
hereunder or subject the Agent to any additional obligations
hereunder.
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Page 25
SECTION 12.02. Amendment Costs. If the Company requests any
amendment or waiver in accordance with Section 12.01 then the Company shall, on
demand of the Agent, reimburse the Agent and the Banks for all costs and
expenses (including legal fees) together with any VAT thereon incurred by the
Agent and the Banks in responding to or complying with such request.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or any other Transaction Document, nor consent to
any departure by the Company therefrom, shall in any event be effective unless
the same shall be in writing and signed by the Agent, and such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
SECTION 13.02. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including facsimile or telex
communication) in the English language and mailed, faxed, telexed or delivered
by an overnight courier of nationally recognised standing, if to the Company at
the address of the Company at Chonburi Industrial Estate (Bowin) 358 Moo 6,
Highway 331, Bowin, Sriracha, Chonburi 20230, Thailand, Attention: Chief
Financial Officer, facsimile number (6638) 345375; if to the Agent at its
address or at such other address as shall be designated by the Agent in a
written notice to the other party. All such notices and communications shall,
when mailed, faxed, telexed or sent by courier, be effective when deposited in
the mails, transmitted by facsimile, confirmed by telex answer back or delivered
to the overnight courier, respectively, except that notices and communications
to the Agent pursuant to Article 11 or III shall not be effective until received
by the Agent. Delivery by facsimile of an executed counterpart of any amendment
or waiver of any provision of this Agreement to be executed and delivered
hereunder shall be effective as delivery of a manually executed counterpart
thereof.
SECTION 13.03. No Waiver-, Remedies. No failure on the part of the
Agent or the Banks to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right preclude any other or further exercise thereof or the exercise of
any other right. The remedies herein provided are cumulative and not exclusive
of any remedies provided by law.
SECTION 13.04. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default the Agent and each Bank is hereby authorised
at any time and from time to time, to the fullest extent permitted by law, to
set off and otherwise apply any and all deposits (general or special, time or
demand, provisional or final) at any time held or at any branch and other
indebtedness at any time owing by the Agent, such Bank to or for the credit or
the account of the any Transaction Party against any and all of the obligations
of the that Transaction Party now or hereafter existing under this Agreement
held by the Agent or such Bank irrespective of whether the Agent or such Bank
shall have made any demand under this Agreement. The Agent and the Banks agree
promptly to notify the Company after any such set-off and application; provided,
however, that the failure to give such notice shall not affect the
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Page 26
validity of such set-off and application. The rights of the Agent and the Banks
under this Section are in addition to other rights and remedies (including,
without limitation, other rights of set-off) that the Agent and the Banks may
have.
SECTION 13.05. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 13.06. Jurisdiction, Etc. (a) Each of the parties hereto
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of the English courts. Each of the parties hereby
consents generally in respect of any proceeding to the giving of relief in
connection with such proceeding including the making, enforcement or execution
of any order or judgement which may be made or given in such proceeding. Each of
the parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and, subject to applicable laws, may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Agent or any of the
Banks may otherwise have to bring any action or proceeding relating to this
Agreement or any of the other Transaction Documents in the courts of any other
jurisdiction.
(b) Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have on the ground of venue or forum non
coveniens or any similar grounds.
SECTION 13.07. Governing Law. This Agreement is governed by, and
shall be construed in accordance with, the laws of England.
SECTION 13.08. Service of Process. The Company shall at all times
maintain an agent for service of process in England. Such agent shall be Law
Debenture Trust Corporation p.l.c, 95 Gresham Street, London EC2V 7CY and any
writ, judgement or other notice of legal process shall be sufficiently served on
the Company if delivered to such agent at its address for the time being. The
Company undertakes not to revoke the authority of the above agent and if, for
any reason, such agent no longer serves as agent for the Company to receive
service of process, the Company shall promptly appoint another such agent and
advise the Agent thereof and, failing such appointment within 15 days, the Agent
shall be entitled to appoint such a person by notice to the Company. Nothing
contained herein shall affect the right to serve process in any other manner
permitted by law.
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CONDITIONS PRECEDENT
Part 1. Conditions Precedent to Initial Payment
(a) The Related Documents shall be in full force and effect;
(b) the amount of committed equity and debt financing shall be sufficient to
meet the financing requirements of the Project and the other transactions
contemplated by the Related Documents;
(c) the Agent is satisfied with the terms and conditions of the Related
Documents;
(d) the Agent is satisfied with the corporate and legal structure and
capitalisation of the Company including the terms and conditions of the
memorandum and articles of association and each class of share capital of the
Company and of each agreement or instrument relating 'to such structure or
capitalisation;
(e) the Agent is satisfied with the management of the Company;
(f) the Company shall have received at least US$440,000,000 in gross cash
proceeds from the sale of the Senior Notes, the Senior Subordinated Notes and
the Private Placement;
(g) the Equity Investors shall own not less than 24.8 % of the issued and
outstanding share capital of the Company;
(h) the Company and its existing lenders shall have executed an amendment, on
terms acceptable to the Agent, to The Agreement of Financial Supporting dated
September 27, 1996, between the Company and the ten lenders identified therein,
waiving all defaults or Events of Default (as therein defined) which may have
occurred or be continuing under such agreement or any defaults which may occur
as a result of the transactions contemplated herein;
(i) the Company, the Agent and the Banks shall have received the approval of all
local and national regulatory authorities which have jurisdiction as regards the
ability of the Company, the Agent and the Banks to enter into this Agreement;
0) there shall exist no action, suit, investigation, litigation or proceeding
affecting the Company pending or threatened before any court, governmental
agency or arbitrator that (i) could have a Material Adverse Effect or (ii)
purports to affect the legality, validity or enforceability of this Agreement,
any other Transaction Document, or the consummation of the transactions
contemplated hereby and thereby;
(k) all accrued fees and expenses of the Agent (including the accrued fees and
expenses of counsel to the Agent and of local counsel to Agent and those
contemplated by the letters dated 21 December 1997 and 26 February, 1998 between
the Company and the Agent) shall have been paid;
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Page 28
(1) the Agent shall have received at least four Business Days before the day of
the Initial Payment the following, each dated such day (unless otherwise
specified) and in form and substance satisfactory to the Agent (unless otherwise
specified):
(i) certified copies of the resolutions of the Board of Directors of the
Company, approving the execution, delivery and performance of this
Agreement and each other Transaction Document which it is or is to be a
party, and of all documents evidencing other necessary corporate action
and governmental approvals, if any, with respect to this Agreement and
each other Transaction Document;
(ii) a power of attorney duly executed by the Authorised Directors on
behalf of the Company appointing SDI Management Co. the duly authorised
attorney of the Company for the purposes of this Agreement;
(iii) a certificate of the Company, signed on behalf of the Company by two
Authorised Directors, dated the date of the Initial Payment (the
statements made in which certificate shall be true on and as of the date
of the Initial Payment), certifying:
(A) a true and correct copy of the memorandum and articles of
association of the Company as in effect on the date of the Initial
Payment;
(B) that the Company is duly established and validly existing under
the laws of Thailand and there is no outstanding proceeding for the
dissolution or liquidation of the Company;
(C) the completeness and accuracy of the representations and
warranties contained in this Agreement as though made on and as of the
date of the Initial Payment; and
(D) the absence of any event occurring and continuing, or resulting
from the Initial Payment, that constitutes an Event of Default or
Potential Event of Default.
(iv) an affidavit ("Nangsu Raprong") issued by the Partnerships and
Companies Registration Office in Bangkok, Commercial Registration
Department, ministry of Commerce in Bangkok in respect of the Company
certifying the Authorised Directors empowered to bind the Company;
(v) a certificate of the Secretary of the Company and each other
Transaction Party certifying the names and true signatures of the officers
of such persons authorised to sign this Agreement and each other
Transaction Document to which they are or are to be parties and the other
documents to be delivered hereunder and thereunder;
(vi) such financial, business and other information regarding the Company
and each Transaction Party as the Agent shall have requested, including,
without limitation, information as to possible contingent liabilities, tax
matters, environmental matters, audited annual financial statements,
interim financial statements, the pro forma balance sheet as to the
Company and forecasts prepared by management, in form and substance
<PAGE>
Page 29
satisfactory to the Agent, of balance sheets, income statements and cash
flow statements on a monthly basis for the first year following the day of
the Initial Payment and on an annual basis for each year thereafter until
the Final Maturity Date;
(vii) a letter, in form and substance satisfactory to the Agent, from the
Company to its independent certified public accountants, advising such
accountants that the Agent has been authorised to exercise all rights of
the Company to require such accountants to disclose any and all financial
statements and any other information of any kind that they may have with
respect to the Company and directing such accountants to comply with any
reasonable request of the agent for such information;
(viii) a certified copy of the acceptance by an agent in England of its
appointment as agent of the Company for the purpose of accepting service
of process;
(ix) the legal opinion of Chandler & Thong-Ek, Thai counsel to the Agent;
(x) the legal opinion of Shearman & Sterling, counsel to the Agent;
(xi) the legal opinion of White & Case, counsel to the Company;
(xii) the legal opinion of White & Case, Thai counsel to the Company;
(xiii) the legal opinions of German counsel to KST and to Preussag;
(xiv) the written approval of the Bank of Thailand of the Transaction
Documents and the transactions contemplated thereby; and
(xv) evidence that the Company shall have appointed an agent for service
of process in accordance with Section 13.08.
Part 2. Conditions Precedent to All Payments
(a) The following statements shall be true (and each of the giving of the
applicable Request for Payment and the acceptance by the Company of the proceeds
of such Payment shall constitute a representation and warranty by the Company
that both on the date of such notice and on the Payment Date or issuance such
statements are true):
(i) no event has occurred and is continuing, or would result from such
Payment, that constitutes (a) an Event of Default under Section 6.01(a); or (b)
any other Event of Default or Potential Event of Default and is attributable to
the Offtaker accepting the Bill of Exchange to which the proposed Payment
relates or the Guarantor guaranteeing payment of such Bill of Exchange; and
(ii) there has been no Material Adverse Change affecting the Company on a
consolidated basis since September 30, 1997.
(b) the Agent shall have received the following documents:
<PAGE>
Page 30
(i) a certificate of the Secretary/Authorised Director of the Company,
attesting to the fact that the Company is Solvent, in the form of Exhibit 6;
(ii) a certificate of the Chief Financial Officer of the relevant Offtaker
(and, in the case of KST, the Guarantor) accepting the Bill of Exchange in
respect of which the Payment is -being made, in the form of Exhibit 7.
(iii) a certificate of the relevant Offtaker in the form of Exhibit 5
accepted and agreed to by the Agent;
(iv) an accepted Bill of Exchange from the relevant Offtaker or Offtakers
(which Offtaker or Offtakers shall each at that time be a Transaction
Party and shall not have been removed by the Company in accordance
herewith) together with the documents referred to in paragraph (1) of Part
1 above with each reference to the Company being construed as a reference
to the relevant Offtaker or Offtakers; and
(v) in respect of a Bill of Exchange drawn upon KST, a Guarantee together
with the documents referred to in paragraph (1) of Part 1 above with each
reference to the Company being construed as a reference to the Guarantor;
(c) that the Management Agreement is in full force and effect on substantially
the same terms and conditions as at the date hereof; and
(d) such other approvals, opinions or documents as the Agent may reasonably
request.
<PAGE>
Page 31
Appendix 2
COMMITMENTS
Bank Commitment
---- ----------
Banque Nationale de Paris US$150,000,000
--------------------------------------------------
<PAGE>
Page 32
Exhibit 1
FORM OF REQUEST FOR PAYMENT
From: Nakornthai Strip Mill
Public Company Limited
To: [The Agent]
Dated:
Dear Sirs
1. We refer to the agreement (as from time to time amended, varied, novated or
supplemented, the "Offshore Bill Discount Facility Agreement") dated March
12,1998 and .made between the Company, the Agent and the Banks. Terms defined in
the Offshore Bill Discount Facility Agreement shall have the same meaning in
this notice.
2. We hereby give you notice that, pursuant to the Offshore Bill Discount
Facility Agreement and on [date of proposed Payment], we wish to obtain a
Payment upon the terms and subject to the conditions contained therein
representing the Discounted Amount of a Bill of Exchange bearing identification
no. [ ] with a Face Amount of [ ] drawn upon and accepted by [ I and payable
[30/60 days] after drawing.
3. We confirm that, at the date hereof; (i) no Event of Default under Section
6.01(a) has occurred; and (ii) no other Event of Default or Potential Event of
Default has occurred and is attributable to the Offtaker accepting the Bill of
Exchange to which such Payment relates or the Guarantor guaranteeing payment of
such Bill of Exchange.
4. The proceeds of this Payment should be credited to the Revenue Account.
Yours faithfully
............................
for and on behalf of
Nakornthai Strip Mill Public
Company Limited
<PAGE>
Page 33
Exhibit 2
FORM OF BILL OF EXCHANGE
NSM ("Drawer")
Bangkok
Date: [
To: [Klockner/Preussag] ("Acceptor")
You are directed to pay to the Agent (on behalf of and for the account of the
Banks) ("Payee") or its order on the date ("Maturity Date") which is [30/60]
[adjust for non-Business Days] days after the above date the sum of [ 1, value
received.
Such amount shall be paid to the account of the Agent maintained at [London] in
same day funds on the Maturity Date.
Any and all payments by the Acceptor hereunder shall be made free and clear of
and without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto
("Taxes"). If the Acceptor shall be required by law to deduct any Taxes from or
in respect of any sum payable hereunder to the Payee (i) the sum payable shall
be increased as may be necessary so that after making all required deductions
the Payee receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Acceptor shall make such deductions and (iii) the
Acceptor shall pay the full amount deducted to the relevant taxation authority
or other governmental authority in accordance with applicable law.
This Bill of Exchange is governed by and shall be construed in accordance with
the laws of England.
Signed (Drawer)
- ------
Accepted payable (Acceptor)
- ----------------
<PAGE>
Page 34
Exhibit 3
FORM OF GUARANTEE AND INDEMNITY
THIS DEED OF GUARANTEE is made the [ ] day of [ ], 199[ 1
BETWEEN:
(1) [Klockner & Co] (the "Guarantor"); and
(2) [ - ] (the "Agent" for and on behalf of itself and the Banks (as
defined in the Agreement).
WHEREAS:
(A) Nakornthai Strip Mill Public Company Limited (the "Company") has
entered into a syndicated offshore bill discount facility agreement
(the "Agreement") with Banque Nationale de Paris as agent and
arranger and the banks identified therein (the "Banks");
(B) On the terms and subject to the conditions of the Agreement the
Banks have agreed to make payments to the Company upon receipt of
Bills of Exchange accepted by, inter alia, KST (the "Principal");
and
(C) It is a condition precedent to the obligation of the Banks to make
such payments that the Guarantor shall have executed this Guarantee.
1. Interpretation
Terms defined (or used) in the Agreement shall have the same meaning where used
herein. The rules of construction contained in Section 1.02 of the Agreement
shall apply hereto.
2. Guarantee
The Guarantor:
(i) guarantees to the Agent and the Banks as a primary obligation the
due and punctual observance and performance by the Principal of its
obligations under each Bill of Exchange accepted by it (an "Accepted
Bill of Exchange") and promises to pay to the Agent from time to
time on demand all sums from time to time due and payable (but
unpaid) by the Principal to the Agent and the Banks or any of them
under or pursuant to any such Bill of Exchange or on
(ii) agrees as a primary obligation to indemnify the Agent and the Banks
from time to time on demand from and against any loss incurred by
the Agent and the Banks or any of them as a result of any of the
obligations of the Principal under an Accepted Bill of Exchange
being or becoming void, voidable, unenforceable or ineffective
<PAGE>
Page 35
for any reason whatsoever, whether or not known to the Agent and the
Banks or any of them, the amount of such loss being the amount which
the Agent and the Banks would otherwise have been entitled to
recover from the Principal.
3. Preservation of Rights
3.1 The obligations of the Guarantor herein contained shall be in addition to
and independent of every other security which the Agent and the Banks or any of
them may at any time hold in respect of any of the Principal's obligations under
an Accepted Bill of Exchange.
3.2 Neither the obligations of the Guarantor herein contained nor the rights,
powers and remedies conferred in respect of the Guarantor upon the Agent and the
Banks or any of them by an Accepted Bill of Exchange or by law shall be
discharged, impaired or otherwise affected by:
(i) the winding-up, dissolution, administration or reorganisation of the
Principal or any change in its status, function, control or
ownership;
(ii) any of the obligations of the Principal under an Accepted Bill of
Exchange or under any other security relating to an Accepted Bill of
Exchange being or becoming illegal, invalid, unenforceable or
ineffective in any respect;
(iii) time or other indulgence being granted or agreed to be granted to
the Principal in respect of its obligations under an Accepted Bill
of Exchange the Agreement or under any other document;
(iv) any amendment to, or any variation, waiver or release of any
obligation of the Principal under an Accepted Bill of Exchange, the
Agreement or under any other document;
(v) any failure to take, or fully to take, any security contemplated by
an Accepted Bill of Exchange or otherwise agreed to be taken in
respect of the Principal's obligations under an Accepted Bill of
Exchange;
(vi) any failure to realise or fully to realise the value of, or any
release, discharge, exchange or substitution of, any such security
or taken in respect of the Principal's obligations under an Accepted
Bill of Exchange; or
(vii) any other act, event or omission which, but for this Clause 3.2,
might operate to discharge, impair or otherwise affect any of the
obligations of the Guarantor herein contained or any of the rights,
powers or remedies conferred upon the Agents and the Banks or any of
them by an Accepted Bill of Exchange or by law.
3.3 Any settlement or discharge given by the Agent and the Banks or any of them
to the Guarantor in respect of the Guarantor's obligations hereunder or any
other agreement reached between the Agent and the Banks or any of them and the
Guarantor in relation thereto shall be, and be deemed always to have been, void
if any act on the faith of which the Agent or the Banks
<PAGE>
Page 36
or any of them gave the Guarantor that settlement or discharge or entered into
that Agreement is subsequently avoided by or in pursuance of any provision of
law.
3.4 Neither the Agent nor the Banks nor any of them shall not be obliged before
exercising - any of the rights, powers or remedies conferred upon it in respect
of the Guarantor hereby or by law:
(i) to make any demand of the Principal;
(ii) to take any action or obtain judgment in any court against the
Principal;
(iii) to make or file any claim or proof in a winding-up or dissolution of
the Principal; or
(iv) to enforce or seek to enforce any security taken in respect of any
of the obligations of the Principal under an Accepted Bill of
Exchange.
3.5 The Guarantor agrees that, so long as any amounts are or may be owed by the
Principal under any Accepted Bill of Exchange or the Principal is under any
actual or contingent obligations under the Bill of Exchange, the Guarantor shall
not exercise any rights which the Guarantor may at any time have by reason of
performance by it of its obligations hereunder:
(i) to be indemnified by the Principal;
(ii) to claim any contribution from any other guarantor of the
Principal's obligations under an Accepted Bill of Exchange; and/or
(iii) to take the benefit (in whole or in part and whether by way of
subrogation or otherwise) of any rights of the Agent or the Banks or
any of them under any Accepted Bill of Exchange or of any other
security taken pursuant to, or in connection with, any Accepted Bill
of Exchange by the Agent and the Banks or any of them.
4. Representations and Warranties
The Guarantor represents that:
(i) it is duly incorporated in Federal Republic of Germany and has power
to enter into and perform this Guarantee and has taken all necessary
corporate action to authorise the execution, delivery and
performance of this Guarantee;
(ii) the execution, delivery and performance of this Guarantee will not
contravene any law or regulation to which this Guarantor is subject
or any provision of the Guarantor's memorandum and articles of
association and all goverranental or other consents requisite for
such execution, delivery and performance are in full force and
effect;
<PAGE>
Page 37
(iii) no obligation of the Guarantor is secured by, and the execution,
delivery and performance of this Guarantee will not result in the
existence of or oblige the Guarantor to create, any mortgage,
charge, pledge, encumbrance or other encumbrance over any present or
future revenues or assets of the Guarantor;
(iv) the execution, delivery and performance of this Guarantee will not
cause the Guarantor to be in breach of or default under any
agreement binding on it or any of its assets and no material
litigation or administrative proceeding before, by or of any court
or governmental authority is pending or (so far as the Guarantor
knows) threatened against it or any of its assets;
(v) no Event of Default or Potential Event of Default has occurred and
is continuing; and
(vi) in any proceedings taken in relation to this Guarantee, it will not
be entitled to claim for itself or any of its assets immunity from
suit, execution, attachment or other legal process.
5. Payments
5.1 (a) Any and all payments by the Guarantor hereunder shall be made free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto ("Taxes"). If the Guarantor shall be required by law to deduct any Taxes
from or in respect of any sum payable hereunder (i) the sum payable shall be
increased as may be necessary so that after making all required deductions the
Agent and/or each of the Banks receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Guarantor shall make such
deductions and (iii) the Guarantor shall pay the full amount deducted to the
relevant taxation authority or other governmental authority in accordance with
applicable law.
5.2 The Guarantor shall indemnify the Agent and each of the Banks for the full
amount of Taxes paid by the Agent and/or the Banks and any liability (including
penalties, additions to tax, interest and expenses) arising therefrom or with
respect thereto. This indemnification shall be made within 14 days from the date
of written demand therefor made by the Agent or any Bank or such shorter period
as may be required by applicable law.
5.3 Within 14 days after the date of any payment of Taxes, the Guarantor shall
furnish to the Agent the original receipt of payment thereof or a certified copy
of such receipt.
6. Reporting
The Guarantor will furnish to the Agent as soon as they become available copies
of its audited financial statements and such additional financial or other
information as the Agent may from time to time reasonably request.
7. Currency of Account
<PAGE>
Page 38
Moneys received or recovered by the Agent or the Banks or any of them from the
Guarantor in a currency other than that in which the said sums are due and
payable under or pursuant to an Accepted Bill of Exchange or under Clause 2(ii)
hereof shall be converted into the latter currency at the rate at which the
recipient would have sold the latter currency for the former at the opening of
business on the latest day before the receipt or recovery on which the recipient
quoted generally a rate of exchange for such a sale.
8. Continuing Security
The obligations of the Guarantor herein contained shall constitute and be
continuing obligations notwithstanding any settlement of account or other matter
or thing whatsoever, and in particular but without limitation, shall not be
considered satisfied by any intermediate payment or satisfaction of all or any
of the obligations of the Principal under any Accepted Bill of Exchange and
shall continue in full force and effect until final payment in full of all
amounts owing by the Principal thereunder and total satisfaction of all the
Principal's actual and contingent obligations thereunder.
9. Set-Off
The Agent and the Banks or any of them may at any time combine any account in
their books in the name of the Guarantor (at whatever branch and in whatever
currency denominated) with any other such account.
10. Notices
Any demand to be made by the Agent hereunder may be made at the principal place
of business of the Guarantor for the time being.
11. No Assignment
The Guarantor shall not be entitled to assign or transfer all or any of its
rights or obligations hereunder.
12. Governing Law
This Guarantee shall be governed by and construed in accordance with English law
and the Guarantor hereby irrevocably submits to the jurisdiction of the English
Courts.
IN WITNESS WHEREOF this Guarantee has been duly executed as a deed and is
intended to be and is hereby delivered on the date first above written.
[Form of execution dependent on Klocknerl
<PAGE>
Page 39
Exhibit 4
FORM OF TRANSFER CERTIFICATE
To: [Agent]
TRANSFER CERTIFICATE
relating to the agreement (as from time to time amended, varied, novated or
supplemented, the "Agreement") dated [ ] 199[ ] whereby an offshore bill
discount facility was made available to [ ] by a group of banks on whose
behalf [Banque Nationale de Paris] acted as agent in connection therewith.
1. Terms defined in the Agreement shall, subject to any contrary indication,
have the same meanings herein. The terms Bank, Transferee, Bank's Participation
and Amount Transferred are defined in the schedule hereto.
2. The Bank confirms that the Bank's Participation is an accurate summary of its
participation in the Agreement and requests the Transferee to accept and procure
the transfer to the Transferee of a percentage of the Bank's Participation
(equal to the percentage that the Amount Transferred is of the aggregate of the
component amounts (as set out in the schedule hereto) of the Bank's
Participation) by counter-signing and delivering this Transfer Certificate to
the Agent at its address for the service of notices specified in the Agreement.
3. The Transferee hereby requests the Agent to accept this Transfer Certificate
as being delivered to the Agent pursuant to and for the purposes of Section
11.05 of the Agreement so as to take effect in accordance with the terms thereof
on the Transfer Date or on such later date as may be determined in accordance
with the terms thereof.
4. The Transferee confirms that it has received a copy of the Agreement together
with such other information as it has required in connection with this
transaction and that it has not relied and will not hereafter rely on the Bank
to check or enquire on its behalf into the legality, validity, effectiveness,
adequacy, accuracy or completeness of any such information and further agrees
that it has not relied and will not rely on the Bank to assess or keep under
review on its behalf the financial condition, creditworthiness, condition,
affairs, status or nature of the Company.
5. The Transferee hereby undertakes with the Bank and each of the other parties
to the Agreement that it will perform in accordance with their terms all those
obligations which by the terms of the Agreement will be assumed by it after
delivery of this Transfer Certificate to the Agent and satisfaction of the
conditions (if any) subject to which this Transfer Certificate is expressed to
take effect.
<PAGE>
Page 40
6. The Bank makes no representation or warranty and assumes no responsibility
with respect to the legality, validity, effectiveness, adequacy or
enforceability of the Agreement or any document relating thereto and assumes no
responsibility for the financial condition of the Company or for the performance
and observance by the Company of any of its obligations under the Agreement or
any document relating thereto and any and all such conditions and warranties,
whether express or implied by law or otherwise, are hereby excluded.
7. The Bank hereby gives notice that nothing herein or in the Agreement (or any
document relating thereto) shall oblige the Bank to (a) accept a re-transfer
from the Transferee of the whole or any part of its rights, benefits and/or
obligations under the Agreement transferred pursuant hereto or (b) support any
losses directly or indirectly sustained or incurred by the Transferee for any
reason whatsoever including the non-performance by the Company or any other
party to the Agreement (or any document relating thereto) of its obligations
under any such document. The Transferee hereby acknowledges the absence of any
such obligation as is referred to in (a) or (b) above.
8. This Transfer Certificate and the rights, benefits and obligations of the
parties hereunder shall be governed by and construed in accordance with English
law.
THE SCHEDULE
1. Bank:
2. Transferee:
3. Transfer Date:
4. Bank's Participation:
5. Amount Transferred:
[Transferor Bank] [Transferee Bank]
By: By:
Date: Date:
<PAGE>
Page 41
Administrative Details of Transferee
Address:
Contact Name:
Account for Payments:
Telex:
Fax:]
Telephone:
<PAGE>
Page 42
Exhibit 5
CERTIFICATE OF OFFTAKER
To: [Agent]
Date: [[Address]
Re: Offshore Bill Discount Facility Agreement (the "Agreement") dated [ ],
1998 and entered into between Nakornthai Strip Mill Public Company Limited
("the Company"), Banque Nationale de Paris (the "Agent") and the Banks
identified therein
We understand that it is a condition precedent to the obligation of the Banks
under the Agreement to make a Payment that this confirmation be given by us to
the Agent. Terms defined in the Agreement have the same meaning where used
herein.
We confirm that, at the date hereof, the representations and warranties set out
below are true ..and acknowledge that the Agent and the Banks shall be making a
Payment to the Company in reliance on these representations and warranties:
1. Status and Due Authorisation. We have power to accept the Bill of Exchange in
respect of which the confirmation is given and to exercise its rights and
perform its obligations thereunder and all action required to authorise its
acceptance of Bill of Exchange and its performance of its obligations hereunder
has been duly taken.
2. No Deductions or Withholding. Under the laws of Germany in force at the date
hereof, we will not be required to make any deduction or withholding from any
payment it may make hereunder.
3. Claims Pari Passu. Under the laws of Germany in force at the date hereof, the
claims of the Agent and the Banks against us under the Bill of Exchange will
rank at least pari passu with the claims of all our other unsecured creditors.
4. No Immunity. In any proceedings taken in Germany in relation to the Bill of
Exchange, we will not be entitled to claim for ourselves or any of our assets
immunity from suit, execution, attachment or other legal process.
5. Governing Law and Judgments. In any proceedings taken in Germany in relation
to the Bill of Exchange, the choice of English law as the governing law of the
Bill of Exchange and any judgment obtained in England will be recognised and
enforced.
6. Validity and Admissibility in Evidence. All acts, conditions and things
required to be done, fulfilled and performed in order (a) to enable us lawfully
to enter into, exercise our rights under and perform and comply with the
obligations expressed to be assumed by us in the Bill of Exchange, (b) to ensure
that the obligations expressed to be assumed by us in the Bill of Exchange are
legal, valid and binding and (c) to make the Bill of Exchange admissible in
evidence in Germany have been done, fulfilled and performed.
<PAGE>
Page 43
7. No filing or Stamp Taxes. Under the laws of Germany in force at the date
hereof, it is not necessary that the Bill of Exchange be filed, recorded or
enrolled with any court or other authority in Germany or that any stamp,
registration or similar tax be paid on or in relation to the Bill of Exchange.
8. Binding Obligations. The obligations expressed to be assumed by us in the
Bill of Exchange are legal and valid obligations binding on us in accordance
with the terms hereof.
9. Change in Control. At the date hereof [KST is a Subsidiary of the
Guarantor/all of the issued and outstanding shares of Preussag are owned by
Saltzgitter AG.]
Any and all payments under the relevant Bill of Exchange shall be made free and
clear of and -without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto ("Taxes"). If we are required by law to deduct any Taxes from or in
respect of any sum payable thereunder to the Payee (i) the sum payable shall be
increased as may be necessary so that after making all required deductions the
Payee receives an amount equal to the sum it would have received had no such
deductions been made, (ii) we shall make such deductions and (iii) we shall pay
the full amount deducted to the relevant taxation authority or other
governmental authority in accordance with applicable law.
_______________________________
for and on behalf of
[KST/Preussag]
Name:
Title:
_______________________________
agreed and accepted by
[the Agent] for
and on behalf of
itself, the
Arranger
and the Banks
<PAGE>
Page 44
Exhibit 6
CERTIFICATE OF COMPANY
Date: [ ]
To: [Agent]
[Address]
Re: Offshore Bill Discount Facility Agreement (the "Agreement") dated [ ],
1998 and entered into between Nakornthai Strip Mill Public Company Limited
("the Company"), Banque Nationale de Paris (the "Agent") and the Banks
identified therein.
We understand that it is a condition precedent to the obligations of the Banks
under the Agreement to make a Payment that this confirmation be given by us to
the Agent.
Terms defined in the Agreement have the same meanings where used herein.
We confirm that, as of the date hereof, the Company is, individually and
together with its Subsidiaries, Solvent.
____________________________
Authorised Director
for and on behalf of
Nakornthai Strip
Mill Public Company
Limited
<PAGE>
Page 45
Exhibit 7
CERTIFICATE OF OFFTAKER
To: [Agent]
[Address] Date: [ ]
Re: [Onshore Bill Discount Facility] [Offshore Bill Discount Facility]
Agreement (the "Agreement") dated [ ] 1998 and entered into between
Nakornthai Strip Mill Public Company Limited (the "Company"), Banque
Nationale de Paris (the "Agent" and the "Arranger") and the Banks
identified therein
We understand that it is, inter alia, a condition precedent to the obligation of
the Banks under the Agreement to make a Payment that this confirmation be given
by us to the Agent. Terms defined in the Agreement have the same meaning where
used herein.
We confirm at the date hereof, that the sum of:
(i) all accounts receivable of the [relevant Offtakerl (the "Offtaker") in the
period from the date hereof to and including the date that is [the number
of days until the maturity of the Bill of Exchange being financed] from
the date hereof (the "Maturity Date"); and
(ii) Available Cash; exceeds the sum of
(iii) all accounts payable by the Company in the period from the date hereof to
and including the Maturity Date;
(iv) all indebtedness of the Company failing due for payment from the date
hereof to and including the Maturity Date; and
(v) the sum of the Face Value of [all] Bills of Exchange accepted by
[KST/Preussag] including the Bill of Exchange in connection with the issue
of which this certificate is given
provided, however, that no amount shall be counted twice in the above
determination.
For the purposes of this certificate:
"indebtedness" shall be construed so as to include any obligation (whether
incurred as principal or as surety) for the payment of repayment of money,
whether present or future, actual or contingent.
"Available Cash" means on any date the aggregate (expressed in US Dollars or as
a US Dollar equivalent) of
<PAGE>
Page 46
(i) all amounts, which are legally and beneficially owned by the
Offtaker standing to the credit of current and deposit accounts with
banks and other deposit taking institutions.
(ii) the face value of all certificates of deposit legally and
beneficially owned by the Offlaker denominated in US Dollars or
Deutsche marks of any bank having a short-term issuer debt rating of
A-1 or better issued by Standard & Poor's Corporation or P-1 or
better by Moody's Investors Service, Inc;
(iii) the face value of all fully negotiable and marketable debt
securities legally and beneficially owned by the Offlaker and issued
by the government of a country being a member of the Organization
for Economic Cooperation and Development or a corporation having a
short term debt rating of A-1 or better by Standard & Poor's
Corporation or P-1 or better by Moody's Investors Service, Inc and a
long-term debt rating of BBB or better by Standard & Poor's
Corporation or Baa or better by Moody's Investors Service, Inc in
each case denominated in US Dollars or Deutschmarks maturing less
than [two] years from the date of acquisition and which constitute
direct and primary obligations; and
[(iv) all equity securities listed on a recognised stock exchange legally
and beneficially owned by the Offtaker and for the purposes of this
determination such security shall have the market value attributable
thereto on the date hereof;]
in each case excluding any such amount or security to which Or in respect of
which the right of access, use, alienation or any of the other rights of a legal
and beneficial owner are blocked or restricted (whether by a Encumbrance or
otherwise).
_________________________
Director
for and on behalf of
[Offtaker]
<PAGE>
Page 47
SYNDICATED OFFSHORE BILL DISCOUNT FACILITY AGREEMENT
EXECUTION PAGES
THE COMPANY
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
By: /s/ John W. Schultes
--------------------------
Title: President/CEO
THE AGENT
BANQUE NATIONALE DE PARIS, LONDON BRANCH
By: /s/ Francois Van Den Baserl
--------------------------
Title: Country Manager
THE ARRANGER
BANQUE NATIONALE DE PARIS, NEW YORK BRANCH
By: /s/ David A. Barcos
--------------------------
Title: Vice President
THE BANKS
BANQUE NATIONALE DE PARIS, SINGAPORE BRANCH
By: /s/ Peter Labrie
--------------------------
Title: Deputy General Manager
<PAGE>
Exhibit 10.09
THROUGHPUT AGREEMENT
THIS AGREEMENT is made on March 9, 1998 by and between:
SRIRACHA HARBOUR PUBLIC COMPANY LIMITED, a public limited company duly organized
and existing under the laws of Thailand, with the registered office at 17th
Floor, U.M. Tower, 9 Ramkamhaeng Road, Kwaeng Suanluang, Khet Suanluang, Bangkok
10250 (hereinafter referred to as "SHP") of one part; and
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED, a public limited company duly
organized and existing under the laws of Thailand, with the registered office at
16th Floor, U.M. Tower, 9 Ramkamhaeng Road, Kwaeng Suanluang, Khet Suanluang,
Bangkok 10250 (hereinafter referred to as "NSM") of the other part.
WHEREAS:
(A) SHP is the legal owner of the private-run harbour located at Sriracha
Harbour, 31/4 Moo 4 Surasak, Sriracha, Chonburi, Thailand (the "Harbour");
(B) NSM wishes to use the Harbour for the loading, unloading and any other
related or necessary services of, among other things, its equipment,
machinery, materials and products (the "Services").
IT IS AGREED as follows:
1. SHP agrees to allow NSM to use the Harbour for the Services for a period
of 10 (Ten) years from the date hereof.
2. NSM shall at all times have access to the Harbour and shall, upon giving a
reasonable advance notice of its schedule to SHP, have the right to
utilize the Harbour with priority over any other customers of SHP.
3. SHP shall charge NSM applicable service fees, tariffs and other charges
for the use of the Harbour at reasonable rates, comparable to those
charged by SHP to other customers and, if required by the applicable laws,
approved by the governmental authority of Thailand. In no event shall such
rates be higher than those of any port operated by the government.
4. If the offering of the U.S.$500 million debt financing issued by NSM's
subsidiary and offered to foreign investors is successful by February 28,
1998 (or such other date as may be extended), NSM agrees to pay SHP the
sum representing advance tariff to cover certain expenses of SHP during
the 270-day period commencing retroactively from December 30, 1997 in its
performance under this Agreement. SHP agrees to, upon receipt of such
advance tariff, use such a portion to pay SHP's lenders i.e., The
Industrial Finance Corporation of Thailand, Siam City Bank Public Company
Limited and Bangkok Bank Public Company Limited, including their
respective successors and assigns, taking into account the amount of
working capital necessary for SHP to operate the Harbour.
<PAGE>
IN WITNESS HEREOF, both parties have signed this Agreement in the presence of
witnesses.
SRIRACHA HARBOUR PUBLIC COMPANY LIMITED
By: /s/ Sawasdi Horrungruang
-----------------------------------
(Mr. Sawasdi Horrungruang)
By: /s/ Sunthorn Chailaemlak
-----------------------------------
(Mr. Sunthorn Chailaemlak)
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
By: /s/ Sawasdi Horrungruang
-----------------------------------
(Mr. Sawasdi Horrungruang)
By: /s/ Chamni Janchai
-----------------------------------
(Mr. Chamni Janchai)
Witness:
-------------------------------
Witness:
-------------------------------
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<PAGE>
Exhibit 10.10
DATE: OCTOBER 16,1996
CONTRACT FOR THE SALE AND PURCHASE OF ANTHRACITE COAL
BETWEEN
SSM COAL B.V., ROTTERDAM
(THE SELLER)
AND
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
(THE BUYER)
<PAGE>
WHEREAS both the Seller agrees to sell and deliver and the Buyer agrees to
purchase and take delivery of the quantity and type of Vietnamese Anthracite
Coal Grade No. 7 and Grade No. 8C as set forth in this Contract in accordance
with the terms and conditions of this Contract as follows:
1. DEFINITIONS
1.1 In this Contract the following words and phrases shall have the following
meanings ascribed to them:
"ASTM Standards" means the American Society for Testing and Materials
standard procedures for mineral analysis;
"CIF" means Cost, Insurance and Freight;
"Coal", "Anthracite Coal", "Grade No. 7", "Grade No. 8C", or "goods" means
Vietnamese Anthracite Coal with the specifications as mentioned in article 4;
"Commencement Date" means the start of the first Contract Year;
"Contract Year" means the period of 12 months starting on the Commencement
Date and each subsequent 12 months' period;
"NOR" mean Notice of Readiness to discharge vessel;
"WIBON" means Whether in Berth or Not;
"WECCON" means Whether Customs Cleared or Not;
"WIFPON" means Whether in Free Pratique or Not;
"WIPON" means Whether in Port or Not;
"Demurrage" means the amount payable by Buyer to Seller for all time lost
during discharge of the vessel at the discharge port. This amount will be
calculated based on the Statement of Facts at discharge port and the demurrage
rate mentioned in the governing Charter Party;
"Despatch" means the amount payable by Seller to Buyer for all time saved
during discharge of the vessel at the discharge port. This amount will be
calculated based on the Statement of Facts at discharge port and the despatch
rate mentioned in the governing Charter Party;
"Dollars", "Cents", or "$" means the lawful currency of the United States
of America. A fraction of a cent in any calculation shall be rounded up to a
cent if such fraction is one-half of a cent or more, and shall be rounded down
otherwise;
"Free Out" means that the vessel will be discharged by or on behalf of the
Buyer free of cost and responsibility to Seller, vessel owner or charterer;
"Holiday" means one or more of the following time periods, unless used for
discharging a vessel. Since the dates will vary subject to the lunar calendar,
Buyer will provide to Seller before December 1 of each year the Holiday dates
that will apply in the succeeding calendar year.
- - New Years Day (January 1) until 18.00h
- - Makha Bucha Day (March 3)
- - Chakri Day (April 6)
- - Songkran Day (April 13)
- - National Labour Day (May 1)
- - Coronation Day (May 6)
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<PAGE>
- - Visakha Bucha Day (May 31)
- - Khao Pansa Day (July 30)
- - H.M. the Queen's Birthday (August 12)
- - Chulalongkom Day (October 23)
- - H.M. the King's Birthday (December 5)
- - Constitution Day (December 10)
- - New Years Eve (December 31) as from 18.00h
"ISO Standards" means the International Standards Organization procedures
for mineral analysis;
"Laytime" means the time allowed which is used for discharging, expressed
as a number of days, fractions pro rata;
"Price" means the price per metric tonne of Coal CIF Free Out, Takeaway
basis as mentioned in or agreed on the basis of article 5;
"Quantity" means a number of Metric Tonnes of 1,000 kilograms; all
quantities mentioned in this Contract shall be plus or minus 10 per cent in
Sellers option;
"Statement of Facts" means a document signed by the Master of the vessel,
by the agents of the vessel and by cargointerested party/parties, stating the
sequence of events, with relevant time periods, during vessel's presence at the
discharge port.
"Takeaway Basis" means that the facilities in the discharge port must be
sufficient to allow the vessel to discharge at the rate guaranteed by the Buyer
without delay.
2. CONTRACT PERIOD AND SHIPPING PERIOD
2.1 The Contract period shall start at the date first written above and continue
in full force and effect until the end of the 10th consecutive Contract Year
after the Commencement Date.
2.2 The Commencement Date shall be April 1, 1997.
2.3 The Shipping Period shall be from May 1, 1997 through April 30, 2007.
Quantity delivered shall be made rateably during the Shipping Period.
3. QUANTITY
Firm Optional
Quantity Quantity
(+/- 10%) (+/- 10%)
--------- ---------
3.1 First Contract Year: 81,000 MT 9,000 MT
Second Contract Year: 180,000 MT 20,000 MT
Third Contract Year: 205,000 MT 20,000 MT
Fourth Contract Year 285,000 MT 30,000 MT
Fifth Contract Year: 285,000 MT 40,000 MT
Sixth Contract Year: 405,000 MT 45,000 MT
Seventh Contract Year: 405,000 MT 45,000 MT
Eighth Contract Year: 405,000 MT 45,000 MT
Ninth Contract Year: 405,000 MT 45,000 MT
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<PAGE>
Tenth Contract Year: 405,000 MT 45,000 MT
3.2 The optional quantity of Grade No. 7 and/or Grade No. 8C can be declared by
the Buyer no later than 1 October of each Contract Year for shipments during
that Contract Year.
3.3 The combined total quantity of Grade No. 7 and Grade No. 8C in any Contract
Year shall not exceed the sum of the firm and the optional quantity mentioned in
article 3.1 for that year.
3.4 A quantity will be considered to be delivered in the Contract Year in which
the Bill of Lading date falls.
3.5 The provisional shipment schedule in each Contract Year shall be agreed to
no later than 30 days prior to the commencement of the Shipping Period.
3.6 Ultimately 30 days before each 3 month period starting from Commencement
Date, Buyer and Seller will agree on the intended shipment schedule for that 3
month period.
4. QUALITY
4.1 The Coal will have the following typical specifications, determined in
accordance with current ASTM or ISO Standards as agreed to by both parties:
TYPICAL SPECIFICATIONS OF ANTHRACITE COAL
-----------------------------------------
Grade Grade
No. 7 No. 8C
On As Received Basis:
Total Moisture 10.00% Max 10.00% Max
On Dry Basis:
Ash 10.00% Max 15.00% Max
Volatile matter 8.00% Max 8.00% Max
Sulphur 0.60% Max 0.60% Max
Fixed Carbon 82.00% Min 77.00% Min
Approximate Gross 7600kcal/kg 7200kcal/kg
Calorific Value
On Square Hole Sieve Basis:
Size Ox15 mm Oxl5 mm
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<PAGE>
5. PRICE AND DELIVERY TERMS
5.1 The Price shall be expressed in US Dollars per Metric Tonne CIF Sriracha
Pier and/or Kaosichang anchorage and/or Laem Chabang Port, Thailand, Free Out,
Takeaway Basis. A separate Price shall be determined for Grade No. 7 and Grade
No. 8C.
5.2 The Price for deliveries in each Contract Year and the quantity of each
Grade required in that Contract Year shall be determined as follows: not less
than 90 days prior to the commencement of each Contract Year, Buyer and Seller
shall meet to negotiate the Price and the quantity of each Grade during said
Contract Year. If Buyer and Seller fail to agree upon a Price and the quantity
of each Grade by 30 days prior to the commencement of the Contract Year, they
may extend negotiations for such period of time as may be mutually agreed upon
("Extension Period").
5.3 If the parties are unable to agree by the end of an Extension Period, then
this Contract will automatically be suspended during the Contract Year for which
no agreement could be reached. In such case, parties will determine in mutual
agreement whether or not the quantity of the said Contract Year will or will not
be made up at the end of the Contract Period.
5.4 If the parties are unable to agree on the Price for 3 consecutive Contract
Years, either party is entitled to terminate the Contract.
5.5 Until such time as the Price for each Contract Year has been determined,
deliveries within an Extension Period will be at the Price in effect during the
immediately preceding Contract Year.
6. QUALITY ADJUSTMENTS
All on basis of loadport analysis.
6.1 Moisture:
In case the moisture content for either Grade No. 7 or Grade No. 8C is greater
than 10.00 per cent, a penalty will apply of 1 per cent of the Price for every 1
per cent over 10.00 per cent, fractions pro rata.
6.2 Ash:
For Grade No. 7, in case the ash content is greater than 10.00 per cent, a
penalty will apply of 1 per cent of the Price for every 1 per cent over 10.00
per cent, fractions pro rata. The Buyer will have the right to reject the cargo
in case the ash is over 15.00 per cent.
For Grade No. 8C, in case the ash content is greater than 15.00 per cent, a
penalty will apply of 1 per cent of the Price for every 1 per cent over 15.00
per cent, fractions pro rata. The Buyer will have the right to reject the cargo
in case the ash is over 20.00 per cent.
7. QUALITY AND QUANTITY DETERMINATION
7.1 Quality determination in accordance with article 4 and quantity
determination as performed by vessel draft surey and hatch cleanliness
inspection at loadport will be performed by KCS Laboratory located at the port
of Cua Ong, Campha District, Quang Ninh Province, Vietnam and witnessed by
Seller's representative whose results at loadport will be final and binding on
both
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<PAGE>
parties. In the event KCS is unable to perform the quality and quantity
determination both parties shall agree to choose another internationally
recognized testing and survey laboratory. The laboratory will be appointed by
Seller on behalf of Buyer and Seller. The Seller shall be responsible for such
costs.
7.2 Buyer may, at his own expense, have a representative of his choice to
observe the sampling, quality and weight determination at loadport. If required
by Buyer, splits of the sample from each shipment may be retained for a period
of 60 days after the bill of lading date for that shipment.
7.3 If required by Buyer, a split of the sample will be provided by Seller
within 30 days after the bill of lading date for Buyees quality analysis.
7.4 Buyer may, at his own expense, have a draft survey and hatch inspection
performed at discharge port by an internationally recognized survey company
mutually agreeable to both Buyer and Seller. If the quantity established at
discharge port differs by more than plus or minus 1.50 percent from the loadport
survey quantity, the average of load and discharge quantity will be applicable.
If any contamination is visible on the top of the Coal which would affect the
handling and/or use of the Coal, it will be the responsibility of the Seller to
remove such contamination. Any demurrage caused by delay(s) in removing the
contamination will be the responsibility of the Seller.
8. QUALITY AND QUANTITY VARIATIONS
8.1 The Coal delivered will be subject to quality variations as per the current
applicable testing and sampling standards used (ASTM or ISO). Quantity
variations between loadport and discharge port draft surveys can differ by plus
or minus 1.50 percent.
8.2 If samples are provided to Buyer, Seller does not guarantee that the Coal
shall be in accordance with all characteristics of the sample. The sample should
be regarded as an average of the Coal and shows only the approximate
characteristics of the Coal.
9. PAYMENT TERMS
9.1 Payment will be at sight by means of an irrevocable confirmed letter of
credit, opened by a first class commercial bank acceptable to Seller's bank for
confirmation, payable/negotiable in full at the counters of Seller's bank. The
letter of credit will cover the maximum value of each shipment (i.e. maximum
tonnage x Price). Demurrage and despatch money payment will be settled outside
the letter of credit as per article 10.9. Validity and wording of the letter of
credit as well as advising/ confirming bank to be acceptable to Seller. Any
costs, expenses and/or fees in relation to the letter of credit charged within
Thailand shall be paid by the Buyer and any costs, expenses and/or fees in
relation to the letter of credit charged within The Netherlands shall be paid by
the Seller.
9.2 Failure to timely provide such letter of credit attributable to Buyer shall
immediately and completely excuse Seller from further performance under this
Contract, notwithstanding any other rights of Seller in relation to Buyers
default.
9.3 Buyer relinquishes any right to set off amounts charged by and between
parties. Claims of Buyer do not suspend the payment obligations of Buyer.
-5-
<PAGE>
9.4 If Buyer does not pay any amount he owes in a timely fashion and pursuant to
the foregoing, Buyer is in default and Seller shall notify Buyer in writing as
per article 20. As soon as Buyer is in default on any payment, all Sellees
remaining claims on Buyer are due, and Buyer is immediately in default without
notice with respect to those claims. As from the day on which Buyer is in
default, Buyer owes to Seller late interest of 1.5 per cent per month or part of
a month during which the default continues.
9.5 Seller shall be entitled to charge Buyer for all costs incidental to the
collection of any sums not yet paid and the interest payable thereon.
10. SHIPPING CONDITIONS
10.1 The vessel shall be a single deck bulk carrier with a maximum age of 20
years nominated by the Seller and confirmed by the Buyer. Seller shall advise
Buyer by telex or fax before expected time of shipment of the name and
nationality of the vessel, plus vessel's deadweight, draft, overall length,
number of hatches, expected laydays at the port of loading, the expected
quantity to be loaded and demurrage/despatch as specified in the Charter Party.
10.2 Buyer shall advise Seller of his acceptance or rejection of the vessel
within 24 hours after receipt of Sellees vessel nomination unless the nomination
is received by buyer after close of business Bangkok time on Friday or on the
day before a Holiday, in which case Buyer will inform Seller of his acceptance
or rejection upon opening of business in Thailand, by 12 Noon, Bangkok time, on
Monday or on the first working day after the Holiday.
10.3 At discharge port, Buyer guarantees:
One safe berth for vessels at Sriracha Port with following restrictions:
- - Maximum deadweight 50,000 metric tons
- - Maximum length overall 186 metres
- - Maximum beam 30.40 metres
- - Maximum draft 12 metres salt water
- AND/OR -
One safe anchorage at Kaosichang Anchorage with the following restrictions:
- - Maximum deadweight 70,000 metric tons
- - Maximum draft 20 metres salt water
- AND/OR -
One safe berth for vessels at Laem Chabang Port with following restrictions:
- - Maximum deadweight 50,000 metric tons
- - Maximum length overall 186 metres
- - Maximum beam 30.40 metres
- - Maximum draft 12 metres salt water
-6-
<PAGE>
10.4 Within 24 hours after vessel's departure from loadport, Seller shall give
Buyer the approximate estimated time of arrival at discharge port followed by a
2 day and 24 hour notice of expected arrival time at discharge port. These
notices shall be given as soon as practically possible for Seller, taking into
account Sellers office hours.
10.5 Vessel's cranes and grabs will be used for discharging. Buyer guarantees a
takeaway rate of 6,000 metric tonnes per day of 24 consecutive hours, weather
permitting, holidays excluded, unless used, by either truck, and/or barge and/or
conveyor regardless of discharge port. Buyer has the option to choose a takeaway
rate of 10,000 metric tonnes per day of 24 consecutive hours, weather
permitting, holidays excluded, unless used. Buyer shall have the right to
declare which takeaway rate will be guaranteed for each vessel upon Buyers
acceptance of each nominated vessel. For a period of two (2) years from the
Commencement Date, there will be a reduction in the Price of USD 0.65 per metric
tonne if Buyer chooses the takeaway rate of 10,000 metric tonnes per day in lieu
of the takeaway rate of 6,000 metric tonnes per day. Buyer and Seller shall meet
at least 60 days prior to the end of the second Contract Year to mutually agree
to revising the differential between the two aforementioned takeaway rates.
10.6 From time to time, Buyer and Seller agree to evaluate and discuss the
discharging rate guarantee and if necessary, change by mutual agreement. It is
understood by both parties that if the discharging rate guarantee increases,
there will be some reduction in the Price and if the discharging rate guarantee
decreases there will be some increase in the Price. Any change in the Price to
be agreed to by both parties.
10.7 The Master of the vessel to tender an NOR on arrival at discharge port. NOR
can be tendered between 9 a.m. and 5 p.m. Saturdays, Sundays and Holidays
included, WIBON, WECCON, WIFPON, WIPON. Laytime starts to count 12 hours after
presentation of NOR, unless discharge operations are sooner commenced, in which
case actual time is to count.
10.8 Demurrage is payable by Buyer to Seller or Despatch is payable by Seller to
Buyer at the rate as mentioned in the relevant Charter Party.
10.9 Demurrage money will be paid by Buyer and Despatch money will be paid by
Seller by telegraphic transfer with value latest 10 working days after receipt
by fax of a demurrage/ despatch invoice, a demurrage/despatch calculation and a
Statement of Facts. Failure by Buyer to make payment for demurrage or by Seller
to make payment for despatch within these 10 working days will immediately and
completely excuse the other party from further performance under this Contract,
notwithstanding any other rights of that party in relation to the the other
party's default, including but not limited to the right to put a lien on cargo
in the possession of or destined for the defaulting party.
10.10 All the above conditions are based upon unloading the vessel completely at
the berth. However, if all or part of the cargo is unloaded at anchorage due to
the request of Buyer, and the vessel requires grabs, the expenses for such grabs
will not be the responsibility of the Seller or the vessel owner. Time for
shifting from anchorage to berth or from berth to anchorage will be counted.
-7-
<PAGE>
11. DOCUMENTATION
11.1 The Bill of Lading will be made out to order of Nakornthai Strip Mill
Public Company Ltd in three originals of which one original Bill of Lading will
be placed on board to be handed over to the Buyers representative at discharge
port.
11.2 As soon as possible after vessel's loading Seller shall forward by
facsimile to Buyer copies of the following documents:
- Hatch cleanliness inspection report
- Clean on Board Bill of Lading
- Commercial invoice
- Certificate of weight
- Draft survey
- Sampling and analysis certificate
11.3 As soon as possible after vessel's loading Seller shall forward by courier
to Buyer non-negotiable duplicate originals of the following documents:
- Hatch cleanliness inspection report
- Clean on Board Bill of Lading
- Commercial invoice
- Certificate of weight
- Sampling and analysis certificate
12. RISK OF LOSS
12.1 Risk of loss or damage to the goods shall pass from Seller to Buyer when
goods pass ship's rail at the loading port as they are progressively loaded.
12.2 Ownership of the goods shall pass from Seller to Buyer upon full payment of
all money due by Buyer to Seller with respect to the delivery in question.
13. LIMITATIONS OF LIABILITY
13.1 BUYER ASSUMES ALL RISKS INVOLVED IN THE USE OF THE GOODS SOLD HEREUNDER. NO
WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE IS MADE BY SELLER. SELLER WARRANTS
ONLY THAT AT DELIVERY THE GOODS WILL CONFORM TO THE SPECIFICATIONS MENTIONED IN
THE CONTRACT AND THAT SELLER HAS THE RIGHT TO SELL AND DELIVER THE GOODS TO
BUYER FREE AND CLEAR OF ANY LIENS, ENCUMBRANCES AND OTHER CLAIMS OF THIRD
PARTIES. SELLER SHALL NOT BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES.
14. LIABILITY AND INDEMNIFICATION
14.1 Sellers liability in connection with any defects in the Quality and
Quantity of the goods he delivers is limited to the fulfilment of one of the
obligations described in article 15.1.
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<PAGE>
14.2 Seller is never obliged to pay damages except if and insofar as the damage
suffered was inflicted intentionally or by the gross negligence of Seller or his
own employees. Sellers liability for loss of profits, consequential or indirect
damages is, however, at all times excluded, except in the case of intention on
the part of Seller himself.
14.3 In all cases in which Seller is obliged to pay damages, these will never be
higher than, at Sellers option, either the invoice value of the delivery whereby
or in connection with which the damage was caused, or, if the damage is covered
by an insurance policy of Seller, the amount that is actually paid out by the
insurer with respect thereto.
14.4 Any claim toward Seller, except those recognized by Seller, lapses after a
period of 3 months from the time the claim arose.
14.5 Conditions which limit, exclude or determine liability, which Seller is
subjected to by Sellees suppliers in connection with the delivered goods, can be
imposed on Buyer by Seller.
14.6 Sellers employees, or third parties brought in by Seller for the
implementation of the Contract, can toward Buyer invoke all means of defence
afforded by the Contract as if they themselves were party to that Contract.
14.7 Buyer will hold harmless and indemnify Seller, his employees and others
brought in by Seller for the implementation of the Contract for each claim by
third parties in connection with the implementation by Seller of the Contract,
insofar as those claims are greater than or different from those to which Buyer
is entitled from Seller.
15. CLAIMS
15.1 During a period of three months after delivery Seller shall, with respect
to defects for which claims are submitted in a timely fashion pursuant to
article 15.3, either redeliver at no cost against restitution of the originally
delivered goods, or credit Buyer as far as reasonable in whole or in part for
the invoice value of the goods in question, all of this at Sellers option.
15.2 Buyer shall inspect the goods delivered by Seller immediately after
receipt.
15.3 Claims with respect to noticeable defects or quantity shall immediately, at
the latest 7 days from the moment the goods are available for inspection, be
lodged with Seller by telex, by facsimile or by registered mail, failing which
any claim in this respect shall cease to exist. Claims with respect to other
defects must be made in writing within 14 days after appearance of other
defects, on penalty of loss of any claim on Seller. Full particulars accompanied
by a report made by an independent, sworn surveyor shall be promptly, at the
latest 15 days after the date of lodging the claim with Seller, submitted to
Seller by registered mail, failing which any claim in this respect shall cease
to exist.
15.4 In case of a claim Buyer shall give due opportunity to Seller and/or a
surveyor appointed by Seller to investigate the goods in dispute. Buyer shall
forward to Seller without delay samples of the goods in dispute.
15.5 In proving the validity of a claim, in any case Buyer will have to prove
that already at the time that the goods were delivered to him, they had the
content and/or quality of which Buyer
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<PAGE>
complains. By handling or processing the goods delivered under this Contract,
Buyer will be deemed to have waived any claim.
16. FORCE MAJEURE
16.1 Neither party shall be considered to be in default of performance of his
obligations under the Contract if and to the extent that the performance of such
obligations is delayed or prevented by force majeure.
16.2 Force majeure is deemed to exist if the performance of a contractual
obligation (other than the payment of monies due in relation to deliveries
and/or services already made) of either Seller or Buyer will be wholly or partly
prevented or impeded by any cause beyond the reasonable control of that party
and in case of circumstances due to which that party cannot be reasonably
required to accomplish the performance of his contractual obligations
(regardless whether such causes or circumstances could have been foreseen at the
time when the agreement was entered into).
16.3 In any event, and without prejudice to the general clause defining force
majeure in article 16.2, parties shall be able to claim force majeure in case of
strike, lock-outs, labour disputes, sabotage, storm, floods and other natural
phenomena, explosion, accidents, fire, war or acts of war, international
conflicts, civil commotion, riot, insurrection, piracy, terrorism, blockade,
epidemic, quarantine, embargo, mobilization, distraints of whichever kind,
shortage of energy or raw materials, export or import restrictions or
prohibitions, institutions of quota and/or other measures or acts of any
government, international organization or agency thereof, on the understanding
that Seller, shall also be allowed to claim force majeure if similar
circumstances present themselves to Sellers Vietnamese supplier.
16.4 The provisions of this clause will apply notwithstanding any delay of
performance of either party at the time the force majeure becomes operative.
16.5 In the event of reduction of quantity or change in quality of the Coal
shipped by Sellers supplier, Seller may equitably allocate his available
supplies to all his commitments to all contracting parties and reduce the total
quantity of Coal to be supplied to Buyer without liability.
16.6 If an event of force majeure prevents either party from carrying out his
obligations under or in connection with the Contract, such party shall promptly
notify the other party in writing.
16.7 Each party, upon giving notice as above, may suspend his obligations to the
extent mutually agreed as necessitated by the occurrence of force majeure, and
relevant periods shall be extended commensurate with such suspension. Nothing
herein shall alter any obligations with respect to obligations not affected by
such force majeure.
16.8 The occurrence of force majeure shall not entitle either party to any
compensation whatsoever for any losses suffered as a result thereof.
16.9 If after 180 (one hundred and eighty) days from the date of giving the
aforesaid notice, the notifying party shall still be so prevented, for reasons
of force majeure, from performing his obligations under the contract, the
parties shall consult one another in good faith with a view to determining
equitable action appropriate under the circumstances.
-10-
<PAGE>
16.10 Notwithstanding the period specified under the preceeding paragraph, it is
hereby mutually agreed that at any time subsequent to the occurrence of force
majeure, either party may, upon his request, discuss amicably with the other
party in order to set the provisional arrangements to be adopted by both parties
for the purpose of minimizing or avoiding any losses, damages or expenses which
either party may incur in consequence of the suspension as provided hereunder.
17. DUTIES
17.1 All taxes, duties or other impositions of any nature whatsoever in the
country of origin as pertains to the Coal Contract will be for Seller's account.
All taxes, duties or other impositions of any nature whatsoever in the country
of destination as pertains to the Coal Contract will be for Buyers account.
18. DELAY, DEFAULT AND DISSOLUTION
18.1 If either party does not, not properly or not in due time fulfill any of
his obligations with respect to the Contract (except for delays in shipment, see
article 18.2), the injured party shall inform the other party in writing of the
nature of the default, and that party shall have a period of 30 days from
receipt of the said notice in which to rectify the said default. If the
offending party fails to rectify the said default within the said period, the
other party may suspend or dissolve the Contract in accordance with article
18.3.
18.2 If the shipment schedule as agreed on the basis of article 3.5 is delayed
and such delay is attributable to either party, that party is due to the other
party a penalty of 1 (one) percent of the Price per metric tonne so delayed for
each whole week of delay after a grace period of one week, in full and final
settlement of the offending party's liability for such delay. If the delay lasts
longer than 6 weeks, the injured party may suspend or dissolve the Contract in
accordance with article 18.3.
18.3 Without prejudice to the provisions laid down in this Contract, either
party, if not, not properly or not in due time fulfilling any of his obligations
with respect to this Contract, and also in the event of any act of bankruptcy,
winding up, moratorium, liquidation, insolvency, being placed under control,
administration or tutelage or offers of composition to his creditors, shall be
deemed to be in default by law, and the other Party shall have the right by
means of a written declaration, without any notice of default being given and
without court intervention, to suspend the performance of the Contract or to
dissolve the Contract wholly or partly. In these cases, any claim either Party
shall have or get against the other Party shall be due for payment at once and
in full.
19. SPECIAL CONDITIONS
19.1 This Contract contains the entire agreement between Buyer and Seller with
respect to the subject matter herein and supersedes all previous writings,
understandings, negotiations, representations or agreements with respect
thereto, except where provided otherwise. No general sales conditions of Seller
or general purchase conditions of Buyer are applicable.
19.2 This Contract shall only come into force after being signed by both Buyer
and Seller. Any amendments to this Contract shall be in the form of an Addendum
to the Contract and shall come
-11-
<PAGE>
into force only after both parties will have signed the Addendum, whereafter it
will form an integral part of this Contract.
19.3 If any provision of this Contract shall be invalid, illegal or
unenforceable to any extent, the validity, legality and enforceability of the
remaining provisions shall not be affected or impaired thereby. If the
invalidity, illegality or unenforceability of one or more provisions of this
Contract or any other circumstance concerning the performance under this
Contract reveals a situation not provided for in this Contract, Buyer and Seller
shall jointly seek an arrangement having a valid legal and economic effect which
will be as similar as possible to the ineffective provision and will cover the
scope of any missing provision in a manner reasonably directed to the purpose of
this Contract.
19.4 Failure of either party to require strict performance of any provision of
this Contract, or such party's forebearance to exercise any right, shall not be
deemed a waiver by such party of its right to require strict performance or
exercise such right in the future.
19.5 Except where provided otherwise herein, the provisions of INCOTERMS 1990
shall apply.
19.6 Neither this Contract nor the rights and duties arising out of it may be
assigned, delegated or otherwise transferred by either Buyer or Seller to any
third party without the other party's prior written consent.
19.7 This Contract is confidential and its contents will be kept strictly
confidential by both Buyer and Seller.
19.8 All communications between Buyer and Seller with regard to this Contract
shall be in the English language.
20. DOMICILLIUM
20.1 All communications and/or notices under this Contract shall be deemed to
have been duly given in terms of this Contract if they are sent by mail,
facsimile or telex transmission to either party at their following addresses:
THE BUYER: Nakornthai Strip Mill Public Company Limited
358 Moo, 6 Highway 331, T. Bowin
SRIRACHA, Chonburi, 20230
Thailand
Phone: (66) 38 345 691
Fax: (66) 38 345 696
THE SELLER: SSM Coal B.V.
Rochussenstraat 125
3015 EJ ROTTERDAM
The Netherlands
Phone: (31) 10 441 9200
Fax: (31) 10 436 0692
Telex: 21396 ssm nl
or at any such other addresses as either party may from time to time designate
in writing.
-12-
<PAGE>
21. APPLICABLE LAW AND JURISDICTION
21.1 This Contract will be governed by and construed in accordance with the laws
of England.
21.2 Any dispute arising out of or in connection with this Contract shall in the
first instance be decided by the competent Court in Rotterdam, The Netherlands.
22. HEADINGS
22.1 The headings in this Contract are for the sake of convenience only, and
shall not affect the construction and/or interpretation of the Contract.
23. EXECUTION
23.1 This Contract is executed in two originals, whereof each party will receive
one original.
-13-
<PAGE>
In witness whereof the parties declare to have duly agreed to the terms of this
Contract as of the day and year first written above.
SSM COAL B.V. NAKORNTHAI STRIP MILL
PUBLIC COMPANY LIMITED
/s/ Morgan J.D. Manley /s/ Chamni Janchai
- --------------------------------- -------------------------------------
Title: Managing Director Title: Managing Director
-14-
<PAGE>
DATE: 18 OCTOBER 1996
ADDENDUM NO. 1
TO THE
CONTRACT FOR THE SALE AND PURCHASE OF ANTHRACITE COAL
BETWEEN
SSM COAL B.V., ROTTERDAM
(THE SELLER)
AND
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
(THE BUYER)
DATED 16 OCTOBER, 1996
1
<PAGE>
THIS ADDENDUM IS ONLY VALID IF IT IS FULLY EXECUTED PRIOR TO NOVEMBER 5, 1996.
THE ADDENDUM FIXES THE FREIGHT PORTION OF THE CIF PRICE TO BE NEGOTIATED IN THE
CONTRACT FOR THE FIRST TWO CONTRACT YEARS AS FOLLOWS:
FOR ACCOUNT OF RECEIVERS:
"NAKORNTHAI STRIP MILL PUBLIC COMPANY LTD", BANGKOK, THAILAND
VESSELS
TO BE EMPLOYED ARE MAXIMUM 20 YEARS OF AGE AND ARE DESCRIBED AS FOLLOWS:
46000 MTS DWT ON 12.00 MTRS DRAFT SWAD L.O.A. ABT 190.MTRS BEAM ABT 31 MTRS
57000 CBM GRAIN IN 5 OR 6 HOLDS 4 OR 5 CRANES VARYING BETWEEN 15-30 TONS EACH
WITH GRABS ON BOARD EACH GRAB VARYING 8 - 10 CBM OR SIMILAR TYPE
FROM:
1SB PLUS 1 SA PORT CAMPHA/HONGAY, VIETNAM
TO:
1 SB SRIRACHA OR IN RECEIVERS OPTION 1SA KOSICHANG, THAILAND (RECEIVERS
GUARANTEE THAT AT SRIRACHA INNER BERTH THERE IS 12 MTRS SWAD)
CARGO QUANTITY:
1ST YEAR 81000 MT 10 PCT PLUS OPTIONAL QUANTITY 9000 MT 10 PCT MOLOO 2ND YEAR
180000 MT 10 PCT PLUS OPTIONAL QUANTITY 20000 MT 10 PCT MOLOO OF ANTHRACITE
FINES IN BULK
THIS IN EFFECT MEANS, 1ST YEAR MAXIMUM 99000 MT OF ANTHRACITE, 2ND YEAR MAX
220000 MT OF ANTHRACITE)
CARGO SIZE EACH LIFTING 40/42500 MT 10 PCT MOLOO WITH THE LAST CARGO UNDER EACH
CONTRACT YEAR TO BE A FULL AND COMPLETE CARGO WITHIN THE 40/42500 MT 10 PCT
MOLOO RANGE
2
<PAGE>
SHIPPING CONTRACT PERIOD:
FIRST YEAR : FROM MAY 1, 1997 UNTIL APRIL 30,1998
SECOND YEAR: FROM MAY 1, 1998 UNTIL APRIL 30,1999
TENTATIVE YEARLY SCHEDULE OF SHIPMENTS TO BE ADVISED BY RECEIVERS PRIOR TO THE
COMMENCEMENT OF THIS CONTRACT OF AFFREIGHTMENT.
AT SRIRACHA BERTH OR AT 1SA KOSICHANG VESSEL TO SELFDISCHARGE WITH VESSELS
GEAR/GRABS WITH SHORELABOUR TO OPERATE VESSELS DISCHARGING EQUIPMENT AT NO COSTS
TO OWNERS, RECEIVERS GUARANTEE A TAKEAWAY RATE OF 6000 MT SHINC WP PER DAY OF 24
CONSECUTIVE HRS, RECEIVERS OPTION TAKEAWAY OF 10000 MT SHINC WP PER 24
CONSECUTIVE HOURS BASIS 4 HOPPERS. THIS OPTION DECLARABLE UPON SAILING LOADPORT.
RECEIVERS OPTION FOR THE CREW OF THE VESSEL TO OPERATE VESSELS DISCHARGING
EQUIPMENT WHEN DISCHRATE 6000 MT AT A FREIGHT PREMIUM OF USD 0.75 PMT OVER THE
TOTAL CARGO, BASIS BILL OF LADING WEIGHT, THIS OPTION DECLARABLE UPON SAILING
FROM LOADPORT.
FREIGHT(S):
1ST YEAR: USD 8.70 PMT BASIS 6000 SC TAKEAWAY
USD 8.10 PMT BASIS 10000 SC TAKEAWAY
2ND YEAR: PREMIUM OF USD 0.60 PMT ON TOP OF ABOVE RATES
12HRS T.T. UNLESS SOONER COMMENCED UPON WHICH TIME COMMENCES TO COUNT.
VESSEL IS ALLOWED TO TENDER NOTICE OF READINESS 9AM-5PM SUNDAYS, HOLIDAYS
INCLUDED, WHETHER IN FREE PRATIQUE OR NOT, WHETHER IN PORT OR NOT, WHETHER IN
BERTH OR NOT, WHETHER CUSTOMS CLEARED OR NOT.
DEMURRAGE/HALF DESPATCH LAYTIME SAVED:
FREE DESPATCH, IN CASE CREW OPERATES VESSELS GEAR/GRABS.
1ST YEAR: USD 8500 PER DAY
2ND YEAR: USD 9500 PER DAY
NOMINATION CLAUSE:
FOR EACH CARGO, RECEIVERS TO ADVISE SSM COAL B.V. 30 DAYS PRIOR TO THE 1ST DAY
OF A 15 DAYS LAYCAN SPREAD, THEIR REQUIREMENT OF A CARGO. SSM THEN TO NOMINATE A
PERFORMING VESSEL OR SUB LATEST 10 DAYS PRIOR TO THE 1ST DAY OF THE LAYCAN
TOGETHER WITH A NARROWING OF THE LAYCAN TO A 10 DAYS LAYCAN SPREAD. RECEIVERS TO
CONFIRM AND ACCEPT A NOMINATION OF A PERFORMING VESSEL WITHIN 24 HRS. SAT SHEX
AFTER RECEIPT OF SUCH NOMINATION.
3
<PAGE>
IN ANY CASE RECEIVERS AND SSM RIGHT THROUGH THE RUNNING OF THIS CONTRACT OF
AFFREIGHTMENT TO REMAIN IN CLOSE CONTACT WITH REGARD TO THE SCHEDULE OF
SHIPMENTS.
TAXES/DUES, IF ANY AT DISCHARGINGPORT ON THE CARGO TO BE FOR RECEIVERS ACCOUNT
TAXES/DUES, IF ANY AT DISCHPORT, ON THE VESSEL AND/ OR FREIGHT TO BE FOR OWNERS
ACCOUNT
SSM AMWELSH CHARTER-PARTY TO GOVERN THIS CONTRACT OF AFFREIGHTMENT.
THIS ADDENDUM IS EXECUTED IN TWO ORIGINALS, WHEREOF EACH PARTY WILL RECEIVE ONE
ORIGINAL.
IN WITNESS WHEREOF THE PARTIES DECLARE TO HAVE DULY AGREED TO THE TERMS OF THIS
ADDENDUM AS OF THE DAY AND YEAR WRITTEN BELOW.
NAKORNTHAI STRIP MILL
SSM COAL. B.V. PUBLIC COMPANY LIMITED
- ------------------------------------ -----------------------------
Name: Jan Willem Slingeberg Name: Khun Chamni-Janchai
Title: Chartering Manager Title: Managing Director
Date: 18-10-96 Date: 29/10/96
----------------------------- -----------------------
- ------------------------------------
Name: Stuart B. Ehrenreich
Title: Director, Market Development
Date: 25-10-96
-----------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
NAKORTHAI STRIP MILL PUBLIC
Mr. J.W. Schultes
16 Fl. U.M. Tower Building
9 Ramkamhaeng Rd., Suanluang
BANGKOK 10250
Thailand
Dear Mr. Schultes, 13th May 1996
Thank you for your Letter of Intent covering your desire to purchase and our
wish to supply Vietnamese anthracite to your plant.
We appreciate your confidence in our company and assure you that SSM will prove
to be an excellent long-term supplier of your anthracite needs.
Mr. Ehrenreich has informed me that a number of points were discussed with Mr.
Hosick on May 8 which are not incorporated into this Letter of Intent. For good
order's sake, I would like to note these points and make them a part of the
attached Letter of Intent.
1. Under the topic of "Scope of Supply", we feel it would be in your best
interest not to limit yourself to only one particular specification. In
addition to the specification attached, other grades of Vietnamese
anthracite, such as No. 8, should be considered as alternatives.
2. Under the topic "Scope of Supply", you only mention a vessel size of
25,000 tonnes. In order to maximise freight savings, the vessel size
should be specified as a range of 25-40,000 tonnes.
3. Under the topic "Conditions of Agreement", you request a letter from a
Vietnamese ministry stating that SSM is authorised to sell coal in
Thailand. We have already provided this document to Mr. Hosick and
therefore believe this condition has already been satisfied.
I look forward to meeting you in the near future and am sure that events will
progress in a very satisfactory fashion culminating in a long-term contract.
Yours sincerely,
SSM COAL B.V.
/s/ Morgan J.D. Manley
M.J.D. Manley
Managing Director
<PAGE>
LETTER OF INTENT
This LETTER OF INTENT (LOI) is entered into by Nakornthai Strip Mill Public
Company Limited (NSM) and SSM Coal bv (SSM)
Whereas, NSM has determined that it will construct and operate a 500,000 tpy DRI
plant at its flat rolled steel facility in Chonburi, Thailand, with the nominal
capability of producing 1.5 million metric tonnes per annum of liquid steel; and
Whereas, SSM Coal has intended to supply to NSM some Vietnam anthracite, based
on the sample delivered to SGA on March 19, 1996 and the terms and conditions
described herein:
1. Scope of Supply
SSM Coal intends to supply Vietnam anthracite to NSM, with the typical
characteristics as analyzed by SGA (see Attachment No. 1). The initial shipment
has to be scheduled for July 1997 to Sriracha Harbour.
The expected yearly tonnage to be supplied are 100,000 tonnes in 1997 and
250,000 tonnes the following years. Cargo size should be 25,000 tonnes.
2. Supply Contract Duration
NSM is interested to consider a long-term (10 years or more) supply contract
with SSM Coal.
3. Conditions of Agreement
The LOI is conditional on SSM delivering to NSM a document signed by the
Vietnamese Ministry stating that SSM is authorized to sell Vietnam coal into
Thailand at prices similar to other customers of Vietnamese coal.
The Contract Terms and Conditions will be mutually agreed between NSM and SSM
Coal at a commercial meeting to be scheduled with both parties.
BANGKOK, THAILAND - 9 MAY, 1996
For /s/ John W. Schultes
-------------------------------
For /s/ Morgan J.D. Manley
-------------------------------
<PAGE>
Studiengesellschaft fur Eisenerzaufbereitung SGA
- ---------------------------------------------------------------------------
Material grade Vietnam anthracite Wyoming Bentonite
Designation < 0.2 mm
Deliverer KHD
Receiving date 21.03.96 05.04.88
SGA designation E 6267 E 4282
- --------------------------------------------------------------------------------
Sample moisture (%) -- --
Sample weight (kg) 15.0 15.0
Chemical
analysis
Feo (%) 0.4 2.4
FeO (%) 0.4
SiO (%) 3.29 62.0
Al203 (%) 1.75 20.4
Ca0 (%) 0.27 1.9
Mg0 (%) 0.07 2.8
P (%) 0.011 0.056
S (%) 0.450 0.260
Na20 (%) 0.025 2.400
K20 (%) 0.196 0.060
Mn (%) 0.010 0.050
TiO2 (%) 0.070 0.500
V (%) 0.010 0.005
C (%) 87.6 n.d.
L0I (%) 93.8 7.0
- --------------------------------------------------------------------------------
Size
Distribution
>0.315 mm (%/Cum.%) -- / -- -- / --
>0.2 mm (%/Cum.%) 0.9 / 0.9 -- / --
>0.1 mm (%/Cum.%) 47.2 / 48.1 0.8 / 0.8
>0.063 mm (%/Cum.%) 17.6 / 65.7 0.7 / 1.5
>0.04 mm (%/Cum.%) 12.0 / 77.7 2.0 / 3.5
>0.025 mm (%/Cum.%) 5.9 / 83.6 1.7 / 5.2
>0 mm (%/Cum.%) 16.4 / 00.0 94.8 / 100.0
- --------------------------------------------------------------------------------
HS - 50 Value (mm) 0.096 0.013
D - 80 Value (mm) 0.160 0.028
- --------------------------------------------------------------------------------
Blaine figures n.d. 3630
Enslin -- 780
- --------------------------------------------------------------------------------
App.: 1 Chemical analysis, size distribution and Blaine figures , Vietnam
anthracite < 0.2 mm and Wyoming Bentonite.
- --------------------------------------------------------------------------------
<PAGE>
ADDENDUM
TO THE CONTRACT FOR THE SALE AND PURCHASE OF ANTHRACITE COAL
(OCTOBER 16, 1996)
BETWEEN
SSM COAL B.V., (THE SELLER)
AND
NAKORNTHAI STRIP MILL PCL. (THE BUYER)
As per our Contract for the sale and purchase of anthracite coal signed on
October 25, 1996, article 5.2 "the Price for deliveries in each Contract Year
and the quantity of each Grade required in the Contract Year shall be determined
as follows: not less than 90 days prior to the commencement of each Contract
Year, Buyer and Seller should meet to negotiate the Price and the quantity of
each Grade during said Contract Year".
As per contract, the quantity for the first Contract Year (April 1, 1997 to
March 31, 1998) will be 81,000 MT + / -9000 MT. The first cargo should be Grade
#7 and should be delivered at very end of December 1997 or the beginning of
January 1998. The second cargo should be Grade #8 and should be delivered in
late February 1998.
On June 6, 1997, SSM Coal and NSM agreed upon the following prices:
Quality Grade Agreed Prices
------------- -------------
Grade #7 $US 48.000 PMT CIF
Grade #8 $US 43.125 PMT CIF
SSM COAL B.V. NAKORNTHAI STRIP MILL PCL.
/s/ Frans Schrner /s/ Chamni Janchai
- ------------------------------------- -----------------------------------
Title: Marketing Manager Vietnamese Coal Title: Managing Director
Date: June 6, 1997 Date: June 6, 1997
<PAGE>
- --------------------------------------------------------------------------------
NAKORTHAI STRIP MILL PUBLIC
Mr. J.W. Schultes
16 Fl. U.M. Tower Building
9 Ramkamhaeng Rd., Suanluang
BANGKOK 10250
Thailand
Dear Mr. Schultes, 13th May 1996
Thank you for your Letter of Intent covering your desire to purchase and our
wish to supply Vietnamese anthracite to your plant.
We appreciate your confidence in our company and assure you that SSM will prove
to be an excellent long-term supplier of your anthracite needs.
Mr. Ehrenreich has informed me that a number of points were discussed with Mr.
Hosick on May 8 which are not incorporated into this Letter of Intent. For good
order's sake, I would like to note these points and make them a part of the
attached Letter of Intent.
1. Under the topic of "Scope of Supply", we feel it would be in your best
interest not to limit yourself to only one particular specification. In
addition to the specification attached, other grades of Vietnamese
anthracite, such as No. 8, should be considered as alternatives.
2. Under the topic "Scope of Supply", you only mention a vessel size of
25,000 tonnes. In order to maximise freight savings, the vessel size
should be specified as a range of 25-40,000 tonnes.
3. Under the topic "Conditions of Agreement", you request a letter from a
Vietnamese ministry stating that SSM is authorised to sell coal in
Thailand. We have already provided this document to Mr. Hosick and
therefore believe this condition has already been satisfied.
I look forward to meeting you in the near future and am sure that events will
progress in a very satisfactory fashion culminating in a long-term contract.
Yours sincerely,
SSM COAL B.V.
/s/ Morgan J.D. Manley
M.J.D. Manley
Managing Director
<PAGE>
LETTER OF INTENT
This LETTER OF INTENT (LOI) is entered into by Nakornthai Strip Mill Public
Company Limited (NSM) and SSM Coal bv (SSM)
Whereas, NSM has determined that it will construct and operate a 500,000 tpy DRI
plant at its flat rolled steel facility in Chonburi, Thailand, with the nominal
capability of producing 1.5 million metric tonnes per annum of liquid steel; and
Whereas, SSM Coal has intended to supply to NSM some Vietnam anthracite, based
on the sample delivered to SGA on March 19, 1996 and the terms and conditions
described herein:
1. Scope of Supply
SSM Coal intends to supply Vietnam anthracite to NSM, with the typical
characteristics as analyzed by SGA (see Attachment No. 1). The initial shipment
has to be scheduled for July 1997 to Sriracha Harbour.
The expected yearly tonnage to be supplied are 100,000 tonnes in 1997 and
250,000 tonnes the following years. Cargo size should be 25,000 tonnes.
2. Supply Contract Duration
NSM is interested to consider a long-term (10 years or more) supply contract
with SSM Coal.
3. Conditions of Agreement
The LOI is conditional on SSM delivering to NSM a document signed by the
Vietnamese Ministry stating that SSM is authorized to sell Vietnam coal into
Thailand at prices similar to other customers of Vietnamese coal.
The Contract Terms and Conditions will be mutually agreed between NSM and SSM
Coal at a commercial meeting to be scheduled with both parties.
BANGKOK, THAILAND - 9 MAY, 1996
For /s/ John W. Schultes
-------------------------------
For /s/ Morgan J.D. Manley
-------------------------------
<PAGE>
Studiengesellschaft fur Eisenerzaufbereitung SGA
- ---------------------------------------------------------------------------
Material grade Vietnam anthracite Wyoming Bentonite
Designation < 0.2 mm
Deliverer KHD
Receiving date 21.03.96 05.04.88
SGA designation E 6267 E 4282
- --------------------------------------------------------------------------------
Sample moisture (%) -- --
Sample weight (kg) 15.0 15.0
Chemical
analysis
Feo (%) 0.4 2.4
FeO (%) 0.4
SiO (%) 3.29 62.0
Al203 (%) 1.75 20.4
Ca0 (%) 0.27 1.9
Mg0 (%) 0.07 2.8
P (%) 0.011 0.056
S (%) 0.450 0.260
Na20 (%) 0.025 2.400
K20 (%) 0.196 0.060
Mn (%) 0.010 0.050
TiO2 (%) 0.070 0.500
V (%) 0.010 0.005
C (%) 87.6 n.d.
L0I (%) 93.8 7.0
- --------------------------------------------------------------------------------
Size
Distribution
>0.315 mm (%/Cum.%) -- / -- -- / --
>0.2 mm (%/Cum.%) 0.9 / 0.9 -- / --
>0.1 mm (%/Cum.%) 47.2 / 48.1 0.8 / 0.8
>0.063 mm (%/Cum.%) 17.6 / 65.7 0.7 / 1.5
>0.04 mm (%/Cum.%) 12.0 / 77.7 2.0 / 3.5
>0.025 mm (%/Cum.%) 5.9 / 83.6 1.7 / 5.2
>0 mm (%/Cum.%) 16.4 / 00.0 94.8 / 100.0
- --------------------------------------------------------------------------------
HS - 50 Value (mm) 0.096 0.013
D - 80 Value (mm) 0.160 0.028
- --------------------------------------------------------------------------------
Blaine figures n.d. 3630
Enslin -- 780
- --------------------------------------------------------------------------------
App.: 1 Chemical analysis, size distribution and Blaine figures , Vietnam
anthracite < 0.2 mm and Wyoming Bentonite.
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 10.11
6 February, 1997
MEMORANDUM OF AGREEMENT
CONTRACT YEAR 1997
This MEMORANDUM OF AGREEMENT is made pursuant to the Memorandum dated 2nd August
1996, signed between the Nakornthai Strip Mill Public Company Limited, Thailand
(hereinafter called "Buyer") and MMTC Limited, New Delhi, India (hereinafter
called "Sellers").
Legend: "Contract Year" means the period of 12 months commencing on lst
January in any year and ending on 31st December of the same year. Buyers
and Sellers have mutually agreed to the following:
1. Price:
The FOB price and unit price applicable to Iron ore fines to be delivered in the
Contract Year 1997 shall be as follows:
Ex-Mormugao/Panjim Ex-Madras
Fe Basis 66% 66%
----- -----
FOB Price (US $ per DMT) : 17.45 17.87
----- -----
Unit price (USC per DMTU) : 26.44 27.08
----- -----
2. Quantity:
The quantity to be delivered during the Contract Year 1997 shall be 80,000
MT~100,000 MT between September 1997 to December 1997.
3. Delivery Schedule:
Seller will give a stem confirmation 2 months in advance before commencement of
each quarter. The exact shipment schedule would be confirmed by the Buyer, 45
days before commencement of each quarter.
4. Shipping:
Seller will, as far as possible, sell the cargo to Buyer on C&F basis making use
of Indian bottoms. In case sea freight offered by Seller is not competitive,
Buyer will be free to contract on FOB basis. Before finalisation of contract of
affreightment (C.O.A), Buyer shall give an opportunity to the Seller to match
the rates so that use of Indian bottoms is maximised. Occasionally, to
accommodate the Buyer, shipments could be effected from Madras Port, when
Mormugao Port is closed for fines shipments. Shipments during September to May
shall be effected from Mormugao / Panjim Port only.
5. OTHER TERMS & CONDITIONS:
Detailed terms and conditions shall be as per the Sale Contract MMTC/97/IOS/500
Dated 6th February 1997 between the Buyer and Seller.
/s/ [ILLEGIBLE]
For Nakornthai Strip Mill Public Co. Ltd.,
Thailand
<PAGE>
CONT.NO.MMTC/97/IOS/ 500
BUYER: M/s Nakornthai Strip Mill Public SELLER: MMTC LIMITED,
Company Limited. Core 1, Scope Complex,
Chonburi Industrial Estate (Bowin) 7, Institutional Area, Lodi
358 Moo 6, Highway 331, Bowin, Road,
Sriracha, Chonburi 20230 Thailand. New Delhi - 110 003 (India)
FAX # 6638 345696, 375 TLX: 3161045 MMTC IN
TEL # 6638 345689 -92 FAX: 4364106 / 4360365
TEL: 011-4362200
Whereas a Memorandum of Agreement (hereinafter called "MOA") dated 2nd August
1996 has been signed between the Nakornthai Strip Mill Public Company Limited,
Thailand (hereinafter called "Buyer") and MMTC Limited, New Delhi, India
(hereinafter called "Seller"), for supply of iron ore from India, with the
provision that the actual tonnage to be delivered shall be mutually agreed at
the time of price negotiation for each Contract Year between Buyer and Seller.
Legend: "Contract Year" means the period of 12 months commencing on
1st
January in any year and ending on 31st December of the same year.
Whereas, another Memorandum of Agreement dated 6 February 1997(hereinafter
called "MOA-CY97) has been signed between Buyer and Seller for supply of iron
ore for Contract Year 1997.
This contract is made by and between the Buyer and Seller, this 6th February
1997, whereby the Buyer agrees to buy and the Seller agrees to sell the
undermentioned goods for their use in Thailand on the terms and conditions
stated below:
CLAUSE 1 NAME OF COMMODITY : Iron Ore Fines
-----------------
COUNTRY OF ORIGIN : India
PORT (S) OF LOADING : Mormugao/Madras
PORT OF DESTINATION : SRIRACHA PORT, Thailand Or KaoSichang
CLAUSE 2 DELIVERY PERIOD AND QUANTITY
Seller shall deliver to Buyer and Buyer shall purchase from Seller, ore in the
annual tonnage which is mentioned in above said MOA, for each of the Contract
Years 1997 through 2001 both inclusive.
The actual tonnage to be delivered shall be mutually agreed at the time of price
negotiation for each year between Seller and Buyer.
CLAUSE 3 SPECIFICATIONS
CHEMICAL
Fe 66% Basis 65% Min.
A12o3 2% Max.
Sio2 3% Max.
P 0.06% Max.
S 0.02%
Pb Traces
Zn Traces
Cu Traces
-2-
<PAGE>
MOISTURE 10% Max
PHYSICAL SIZE :0-10mm
Above 10mm 5% Max.
Below 10mm 95% Min.
CLAUSE 4 PRICE
1.The prices per dry metric ton, F.O.B., stowed, sea worthy trimmed
in US Dollars shall be fixed each Contract Year through mutual
negotiation.
2.The prices to be applied to Ore to be delivered in each Contract
Year shall be discussed and determined by the commencement of each
contract year.
CLAUSE 5 BONUS AND PENALTY
A) For Fe Content
In respect of each shipment of iron ore which does not meet
the Fe specifications set forth in clause 3 the base price
referred to in clause 4 shall be adjusted in accordance with
Fe content as determined pursuant to the provisions of clause
9 as follows:
Bonus
The base price shall be increased by single prorata of the
price as per clause 4 for each 1% Fe above 66%, fraction
prorata.
Penalty
The base price shall be decreased by single prorata of the
price as per clause 4 for each 1% Fe below 66%, fraction
prorata up to 65%.
The base price shall be decreased by double prorata of the
price as per clause 4 for each 1 % Fe below 65%, fraction
prorata.
B) For Silica
Bonus
At the rate of 5(five) US Cents per dry metric tonne for each
1.0% Silica below 3%, fraction prorata.
Penalty
At the rate of 5(five) US Cents per dry metric tonne for each
1.0% Silica above 3%, fraction prorata.
C) For Alumina
Bonus
At the rate of 5 (five) US Cents per dry metric tonne
for each 1.0% Alumina below 2%, fraction prorata.
Penalty
At the rate of 5(five) US Cents per dry metric tonne for
each 1.0% Alumina above 2%, fraction prorata.
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D) For other elements
If the shipment does not meet any of the chemical
specifications other than Fe, Silica and Alumina, provided in
clause 3 as finally determined in accordance with the
provisions of the clause 9, the base price shall be
increased/decreased as follows fraction prorata.
i) For excess Phosphorus
At the rate of 5(five) US Cents per dry metric tonne for
each 0.01 % in excess of 0.06%.
ii) For excess Sulphur
At the rate of 5(five) US Cents per dry metric tonne for
each 0.01% in excess of 0.02%.
E) SIZE PENALTY
US$ 0.50 PER MT on natural basis fraction prorata shall be
applied to the quantities of fines above 10mm in excess of 5%.
F) MOISTURE
If free moisture loss at 105 degrees centigrade as finally
determined pursuant to the provisions of clause 9 exceed the
guaranteed maximum referred to in clause 3, seller shall pay
buyer; half of the actual freight attributable to moisture
content over 10% up to 11% including 11% and full actual
freight attributable to moisture over 11 % for fines.
CLAUSE 6 PAYMENT
An acceptable commercial letter of credit in US Currency will be opened by
the Buyer in favour of the Seller with the State Bank of India,
Vasco-da-gama, Post Box No.40, Cable: THISTLE GOA, TLX #.191233 SBI IN,
FAX #. 083451 (for shipments from Mormugao/Panjim) and State Bank of
India, Overseas Branch, 39, Rajaji Salai, Post Box No.5081, Madras-600001,
Cable:OSBRAN Tlx:041-7718 OSBR, 7759 OSOB, 6822 SBOM (for shipments from
Madras). Letter of Credit will be established covering 100% (with
tolerance of 10% more) of the goods of shipment with validity of 90 days
to be extended if necessary. The Letter of Credit would be unrestricted,
without recourse to drawer, confirmed, irrevocable, in favour of Seller
reimbursable through T.T. Charges attendant to the opening, amending and
extending the letter of credit and any other charges levied by the bank
outside India shall be to the account of the Buyers. All charges levied by
the Bank in India would be to Seller's account. No confirmation is
required if the L/C is opened from a first class International Bank like
Deutch Bank. In case L/C is not opened, Buyer can wire transfer 100% of
sale value four (4) weeks prior to commencement of laydays. Load port
results shall be final in all respects. Payment would not be stopped in
case of clerical errors, spelling mistakes and technical discrepancies in
the documents.
CLAUSE 7 DOCUMENTS
Seller shall provide buyer through negotiating and opening banks
after reimbursement of sale proceeds with the following documents:
A) Complete set of "Clean on Board" shipped Bill of Lading made
out to order, blank endorsed marked "freight payable as per
charter party" notifying at the port of destination.
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B) Five (5) copies of invoice covering 100% value of the goods
(One original and four copies) indicating the contract number,
UC number, name of carrying vessel.
C) Copy of telegram or telex advising shipment according to
clause 12 of this contract.
D) Certificate of Quality and Certificate of Weight of contracted
goods in five copies(One original and four copies) each issued
by qualified assayer at loading port. Certificate of quality
to show actual result of the test of chemical composition and
all other tests called for in this contract.
E) Weight Certificate (One original and four copies) for issued
by qualified surveyor at loading port
Above documents to be distributed as under:
To the negotiating bank (original), A.3 (original), B.3 (One
original and two copies), C.3 copies, D.3 copies(One original and
two copies), E.3 (One original and two copies).
To be sent to the Buyers at port of destination. A.2 non-negotiable
copies, B.2 copies, C.2 copies, D.2 copies, E.2 copies(all
nonnegotiable copies).
CLAUSE 8 WEIGHING
Upon completion of loading of the cargo a surveyor duly appointed by
the seller (in the presence of Captain of the vessel) would
ascertain by draft survey for the quantity of fines at loading port
in accordance with the international practice and will issue a
weight certificate which shall be final. The final dry weight shall
be calculated by deducting the moisture content determined as per
sampling and analysis certificate issued by the assayer at loading
port.
CLAUSE 9 SAMPLING AND ANALYSIS
A) A sample will be drawn according to International rules and
practices at the loading port at the time of loading by one of
the following analysts appointed by the Sellers and approved
by the Buyers.
i) M/s S.G.S. India Ltd.,
ii) M/s Mitra S. K. Pvt.Ltd.,
iii) M/s Itlab Pvt. Ltd.
B) One sample so drawn will be divided into four parts sealed
conjointly with the Buyer's representative if appointed. The
Buyers have the right to appoint their representative at their
own expense to supervise sampling.
C) The first sample will be used for analysis, the second and
third sample will be kept with the sellers and the buyers or
their representative respectively and the fourth sample will
be kept with the sampling firm. The certificates will also
contain a report on mechanical composition of the ore. Loading
port result would be final for all purposes.
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CLAUSE (10) SHIPPING PROGRAMME:
1. Seller shall furnish Buyer for approval thereof with a provisional
quarterly shipping programme for each Contract Year not later than
sixty (60) days before the commencement of the contract year.
2. Seller shall notify Buyer of a definite quarterly shipping programme
which includes provisional monthly programme not later than
forty-five (45) days before the commencement of each quarter.
Such definite quarterly shipping programme, however, shall not
deviate much from the provisional quarterly shipping programme
indicated in accordance with Paragraph (1) hereinabove.
3. Seller shall notify Buyer of a monthly shipping programme not later
than forty-five (45) days before the commencement of each month.
However, such monthly shipping programme shall be, in principle, on
even spread basis of a definite quarterly shipping programme
indicated in accordance with Paragraph (2) hereinabove.
CLAUSE (11) CHARTERING AND ALLOCATION OF VESSELS:
1. Vessels to carry ore under this contract shall be chartered and
allocated by Buyer (or Seller depending upon competitiveness).
2. The vessels' holds shall be clean and free of foreign materials
which might result in admixture and/or contamination of Ore.
3. Buyer shall advise Seller of the vessels' allocation programme for
each month of the quarter not later than forty-five (45) days before
the commencement of each quarter based on the definite shipping
programme notified by Seller in accordance with Paragraph (2) of
Clause (10). Such allocation programme shall include the number of
vessels, rough quantity to be loaded and approximate arrival
position, namely, early or mid or end of the month.
4. Buyer shall notify seller of monthly vessels' allocation programme
together with the name of vessel, the quantity to be loaded (ten) 10
percent more or less at ship's option, the Expected Time of Arrival
of each vessel at the loading port and estimated loaded draft not
later than thirty (30) days before the commencement of each month to
get Seller's confirmation to be given promptly. Buyer shall also
notify Seller of details of vessel including GA plan, air draft etc.
5. While furnishing allocation programme and nominations under
Paragraph (3) and (4) above, Buyer shall make best efforts to ensure
that vessels arrive at evenly spaced intervals.
6. Buyer shall declare to Seller laydays of 7 - 10 days spread for each
vessel not later than twenty (20) days prior to the ETA of each
vessel at the loading port.
7. Buyer shall arrange that the vessel's crew open and close the
hatches and remove and replace the hatch beams as necessary for the
loading at vessel's risk and expense.
8. In the event of any change being made in the vessel's allocation
programme, Buyer shall advise Seller for their confirmation each
time such change takes place at least fifteen (15) days prior to the
arrival of the vessel.
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9. Buyer shall arrange that the Master of the vessel gives to the
Regional Office, the MMTC Ltd., Goa/Madras, as the case may be,
three notices of the ETA of the vessel at the loading port; the
first notice to be given five (5) days prior to the ETA of the
vessel along with the stowage plan, the second to be given
forty-eight (48) hours prior to the ETA and the third to be given
twenty-four (24) hours prior to the ETA. In the last notice, the
Master shall advise the approximate quantity of ore required to be
loaded within the tolerance agreed for the vessel.
CLAUSE 12 LOADING TERMS
A) Seller shall deliver to Buyer in bulk, seaworthy trimmed,
alongside Seller's wharf vessel being always afloat to maximum
permissible draft, when fully loaded at the place of loading.
B) Seller shall load ore aboard the vessel at the following rates
per weather working day of twenty four (24) consecutive hours
Saturdays, Sundays and Holidays included.
Normally, the shipping or iron ore fines will be done from the
port of Mormugao/Panjim, but occasionally, ore fines could be
shipped from Madras, specially during the rainy seasons, to
accommodate the Buyer.
For Mormugao Port:
Loading at Berth No.9 or Transhipper Vessels will be at the option
of the Seller
(1) At Berth No.9: Marmugao Outer Harbour:
For vessels of or over 30000 DWT up to 35000 DWT 15,000 WMT
For vessels over 35,000 DWT 20,000 WMT
(II) Loading rate by Transhipper vessel
For vessel of or over 30000 DWT up to 35000 DWF 10,000 WMT
For vessels over 35000 DWT 12,000 WMT
Seller will have the option to load the vessels from Panjim Port
(Near Marmugao) using transhipper vessel (T.V)
For Madras Outer Harbour.
For vessels of or over 30000 DWT up to 35000 DWT 15,000 WMT
For vessels over 35,000 DWT up to 40000 DWT 20,000 WMT
For vessels over 40000 DWT up to 50,000 DWT 30,500 WMT
For vessels over 50000 DWT up to 80,000 DWT 35,600 WMT
C) Notice of readiness to load shall be tendered with clean
holds, hatch open and ready in all respect to load at any time
after vessel has arrived at loading port whether in berth or
not. If the vessel is not in free pratique on arrival at the
berth due to causes attributable to the vessel, then a new
notice of readiness shall be tendered.
Laytime for loading shall commence 12 running hours after
tendering of notice of readiness unless used, in which case,
actual time used to count. In case loading has to be
interrupted
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due to reasons of responsibility of the vessel, such time lost
shall not count as laytime. Stoppage of loading due to
breakdown of the ore loading plant shall not be counted as
laytime.
D) DEMURRAGE/DESPATCH
Demurrage/despatch at the loading port shall be calculated in
accordance with following schedule:
Size of vessel Demurrage per 24 hours day
-------------- (prorata or part)
Up to 35,000 DWT US$ 3,000
Over 35,000 DWT US$ 5,000
Despatch rate will be half of the demurrage rate. Any time
necessarily required by a vessel with draft, when fully loaded up to
permissible draft, at the place of loading, at the port of Mormugao
/ Panjim / Madras, after completion of loading, the wait for the
tide before sailing from seller's wharf shall be counted as time
used in calculating demurrage / despatch money.
CLAUSE 13 ADVISE OF SHIPMENT
Seller shall, upon completion of loading, advise Buyer within one
working day by cable/telex/fax of the contract number, name of
vessel, name of commodity, approximate invoice value, gross weight
and loading date.
CLAUSE 14 INSURANCE
To be covered by Buyer from the time ore is loaded on board the
vessel. For this purpose Seller shall advise buyer by
cable/telex/fax before the loading of the vessel starts and
immediately after completion of the loading of the particulars as
called for in Clause 13 of this contract.
CLAUSE 15 FORCE MAJEURE
If at any time during the existence of this contract either party is
unable to perform whole or in part any obligation under this
contract, because of war, hostility, military operation of any
character, civil commotions, sabotage, quarantine restriction, acts
of Government, fire, floods, explosions, epidemics, strikes or other
labour trouble affecting either or all aspects of mining,
transportation of ore, port/shipment operations etc, embargoes, then
the date of fulfillment of any obligation shall be postponed during
the time when such circumstances are operative.
Any waiver/extension of time in respect of the delivery of any
installment or part of the goods shall not be deemed to be
waiver/extension of time in respect of the remaining deliveries. If
operation of such circumstances exceeds three months, either party
will have the right to refuse further performance of the contract in
which case neither party shall have the right to claim eventual
damages. The party which is unable to fulfill its obligations under
the present contract must within 15 days of occurrence of any of the
causes mentioned in this clause shall inform the other party of the
existence of the termination of the circumstances preventing the
performance of the contract. Certificate issued by a Chamber of
Commerce or any other competent authority connected with the cause
in the country of the Seller or the Buyer shall be sufficient proof
of the
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existence of the above circumstances and their duration.
Non-availability of material will not be an excuse to the Sellers
for not performing their obligations under this contract.
CLAUSE 16 DISPUTES
Any dispute between Seller & Buyer which cannot be settled by mutual
accord shall be referred to arbitration.
Arbitration shall be conducted on the basis of the Rules of
Conciliation and Arbitration of the International Chamber of
Commerce, Paris. The court of Arbitration will consist of three
members, one appointee by each party within 1 (one) month and the
third selected by the two arbitrators so appointed within 2 (two)
weeks. If the party fails to name its arbitrator within the
designated time, or if the two arbitrators are unable within 2 (two)
weeks to agree on a third arbitrator, the arbitrator or arbitrators
in question shall be appointed in accordance with the Provisions of
the Rules of Conciliation and Arbitration of International Chamber
of Commerce.
The venue of the Court of Arbitration shall be Singapore.
The arbitration award shall be enforceable by the courts of the
country of India or Thailand, as the case may be.
The award shall indicate how to distribute arbitrators' fees and
arbitration expenses between the parties.
The Court of Arbitration shall make its award exclusively on the
basis of this Contract.
CLAUSE 17 SPECIAL CONDITION
It is expressly understood and agreed by and between the buyer and
MMTC that MMTC is entering into this agreement solely in its own
behalf and not on behalf of any other person or entity. In
particular it is expressly understood and agreed that the Government
of India is not a party to this agreement and has no liabilities,
obligations or rights hereunder. It is expressly understood and
agreed that MMTC is an independent legal entity with power and
authority to enter into contracts solely on its own behalf under the
applicable laws of India and general principles of contract law. The
Buyer expressly agrees, acknowledges and understands that MMTC is
not an agent, representative or delegate of the Government of India.
It is further understood and agreed that the Government of India is
not and shall not be liable for any acts, omissions, commissions,
breaches or other wrongs arising out of the contract.
Accordingly, (The parties) hereby expressly waives, releases and
foregoes any and all actions or claims including cross-claims,
impleader claims or counterclaims against the Government of India
arising out of this contract and convenants not to sue the
Government of India as to any manner, claim, cause of action or
thing whatsoever arising of or under this contract.
CLAUSE 18 TITLE AND RISK
The Title with respect to each shipment shall pass from Seller to
the Buyers when Seller receives reimbursement of the proceeds from
the opening bank through the negotiating bank against the relative
shipping documents as set forth in Clause 7 after completion of
loading on board the vessel at Mormugao/Panjim/Madras, with effect
retrospective to the time of delivery of ore. In
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case of advance wire transfer of 100% sale value, title for such
shipment shall pass from Seller to the Buyer on completion of
loading.
All Risk of loss, damage or destruction to the goods shall pass from
Seller to Buyer when goods pass ship's rail at the loading port, as
they are progressively loaded into the vessel.
CLAUSE 19 LOSS OF CARGO
In the event of partial loss of cargo, the Bill of Lading weight and
the analysis carried out by Buyer on the cargo discharged shall be
treated as final and shall form the basis of final invoicing and
payment. In the event of total loss of cargo, the analysis and the
weight as determined at the Loading port shall be treated as final
and shall be used for final invoicing and payment.
CLAUSE 20 AMENDMENT OF THE CONTRACT
Any amendment or modification to this contract shall be made in
writing and subject to confirmation by the contracting parties.
CLAUSE 21 NOTICES
All communications referred to in this contract shall be in writing
and will be sent by registered airmail and/or by telex, cable, fax,
on the address as follows:
MMTC LIMITED,
Core no.1, Scope Complex,
7, Institutional area, Lodi Road,
New Delhi-110 003.
CABLE : EMEMTICIORE NEW DELHI
TELEX : 031-61045 MMTC IN
FAX: 4364106/4360365
MMTC LIMITED
POST BOX # 37,
VASCO-DA-GAMA-403 802 FAX # 91 0834573283
TLX # 191 201 CABLE: EM2MT1CI
VASCO-DA-GAMA
IN witness whereof this contract is made in duplicate at
Thailand, on this 6th February 1997 and the duly authorised
representatives of the Seller and the Buyer having signed on
this day.
Retained one copy each.
BUYER /s/ [ILLEGIBLE] SELLER /s/ [ILLEGIBLE]
M/S NAKORNTHAI STRIP MILL PUBLIC CO., LTD. MMTC LIMITED
BANGKOK THAILAND. NEW DELHI
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Exhibit 10.12
PERSONNEL TRAINING,
TECHNICAL ASSISTANCE AND
CONSULTING SERVICES AGREEMENT
BETWEEN
HYLSA, S.A. DE C.V.
AND
NAKORNTHAI STRIP P.C. LTD.
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Agreement for Training of NSM Personnel.
<PAGE>
AGREEMENT FOR PERSONNEL TRAINING, TECHNICAL ASSISTANCE
AND CONSULTING SERVICES
THIS AGREEMENT, made an entered into at Monterrey, N. L. Mexico this day of June
6, 1996, by and between Nakornthai Strip Mill Public Co. Ltd., with an address
at 16 Fl.U.M. Tower Building, 9 Ramakamhaeng Rd, Suanluang, Bangkok 10250,
Thailand (hereinafter referred as NSM) of the first part and HYLSA, S.A. de C.V.
with address a Ave. Munich 101, San Nicolas de los Garza, N.L., Mexico 66452
(hereinafter referred as HYL), as the second part.
WHEREAS, HYL has in operation in Mexico, steelmaking facilities and recently it
has completed a remodelation of said facilities, which now includes a Continuous
Strip Plant (CSP), using a technology developed by SMS Schloemann-Siemag, A.G.
(SMS).
WHEREAS, HYL has developed training programs for its own personnel, in
conjunction with SMS, for the operation and maintenance of its CSP Plant, and
SMS has granted authorization to HYL to provide training services to third
parties that build CSP plants.
WHEREAS, HYL is also duly prepared to provide training, technical assistance and
consulting services in all the steelmaking areas, using its own technology and
know-how.
WHEREAS, NSM has an ongoing project for the erection of a steel making plant
located in Thailand (hereinafter the PROJECT) in which, among other
installations, are considered a CSP Plant and other facilities similar to those
installations of HYL and requires to be provided training to its personnel, as
well as technical assistance and consulting services, for the proper operation
and maintenance of its CSP Plant and other facilities of its steelmaking plant.
WHEREAS, HYL is willing to cooperate with NSM in the provision of the required
services and as a consequence it has presented to NSM a Technical and Commercial
proposal to provide said services.
WHEREAS, the parties hereto have discussed at length the terms and conditions of
the technical and commercial proposal presented by HYL, covering the services to
provided by HYL, which proposal has been accepted by NSM, subject to the terms
and conditions herein established.
NOW THEREFORE, in consideration of the mutual promises and covenants herein
stipulated, the parties hereto agree as follows, intending to be legally bound:
ARTICLE 1.
1.1. Upon the payment of the price agreed by the parties hereto in Article 2
hereunder, HYL shall have the following basic responsibilities:
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Agreement for Training of NSM Personnel. Page 2
<PAGE>
1.1.1. To supply training services.
1.1.2. To supply technical assistance services during the PROJECT stages.
1.1.3. To supply consulting services during the PROJECT development.
1.2. The detail of the scope of the Training, Technical Assistance and
Consulting that constitute the Object of this Agreement, is duly
established in Appendices "A" and "B", that signed by the parties hereto,
form an integral part of this Agreement.
It is understood that this scope is tentative and is subject to change per
NSM's requirements and NSM's cooperation with NUCOR. It is NSM's intention
to utilize HYL's services for other training and consulting requirements
which may replace some of the listed scope.
ARTICLE 2. PRICES AND CONDITIONS OF PAYMENT
2.1. As a consideration for the supply of Training, Technical Assistance and
Consulting Services, NSM shall pay to HYL the following fees and rates:
a) For Training in Thailand as described in paragraph 1.1 of the
Appendix "A", Stage 1:
Daily rate per calendar day per instructor.
US$ 660.00 (six hundred and sixty dollars 00/100).
b) For training in Mexico for the positions related to the Strip Caster
and Hot Mill, marked as Category A defined in paragraph 1.1 of the
Appendix "A": Daily rate per calendar day per trainee US$ 360.00
(three hundred and sixty dollars 00/1 00).
c) For Training in Mexico, for the positions marked as Category B,
defined in paragraph 1.1 of the Appendix "A":
Daily rate per calendar day per trainee.
US$ 260.00 (two hundred and sixty dollars 0/100).
d) For Technical Assistance and Consulting services as described in
paragraph 1.2 of the Appendix "A":
Monthly fee per man - month.
US$20,000.00 (Twenty thousand dollars 00/100) .
e) For Know How Transfer a fee of US$ 500,000.00 (five hundred thousand
dollars 00/100).
2.2. The prices, fees and rates established in this Article, are net for HYL;
consequently any tax, duty, levy, convertibility charges, etc. within
Thailand, shall be borne by NSM.
2.3. NSM agrees to pay to HYL the amounts corresponding to the training
services as follows:
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Agreement for Training of NSM Personnel. Page 3
<PAGE>
- A first payment corresponding to 20% of the total fees for training
in Thailand and 100% of the know-how transfer fee on July 1st, 1996.
- The remaining 80% of the total fees for training in Thailand shall
be paid on a monthly basis. The monthly payments shall be calculated
as 80% of the actual training services rendered during each month,
up to complete the total training fees. Any adjustment as may be
needed to match the total amount payable to HYL shall be made in the
last month of the training.
- The total fees for training in Mexico shall be paid on a monthly
basis, according to the services rendered.
- Reimbursable expenses made in behalf of NSM, will be paid against
the presentation of corresponding invoices issued by HYL for the
actual amounts spent, during each month.
2.4. NSM shall pay to HYL the prices, fees and rates herein established by
means of an irrevocable and confirmed Letter of Credit issued by a first
class Thai bank. All costs related to the letter of credit will be borne
by NSM.
2.5. The procedure established in the sub-paragraph 2.3 for the payments to HYL
should be completed, and the payment received by HYL within 30 (thirty)
calendar days; if for any reason what so ever attributable to NSM, HYL
does not receive the payment of any of the invoices related to the price
of the services, provided by HYL under this Agreement within the aforesaid
period of time, NSM shall pay to HYL moratoria interest at the rate LIBOR,
plus 4 (four) percent during all the time that an invoice remains unpaid,
without being this fact considered as an extension of the maturity date.
2.6. It is expressly agreed between the parties that the prices set forth in
this Article, shall be firm and not subject to escalation provided that
this Agreement becomes effective, on or before June 30, 1996 and the
services are completed within 24 months after the effective date of this
Agreement.
2.7. It is expressly acknowledged by the parties hereto, that the aforesaid
prices have been established, taking into consideration the total number
of trainees, instructors and personnel of HYL that shall provide the
Training, Technical Assistance and Consulting Services as set forth in the
Appendices "A" and "B" of this Agreement.
On the above basis, the parties agree that if the total amount of training
services actually provided by HYL exceeds 10% over the total value of said
services established in this Agreement (THE BASE VALUE), HYL will grant to
NSM a reduction of 20% in the trainees fees and instructors fees applied
to such marginal amount of services over THE BASE VALUE.
Similarly, if the total value of training services actually provided by
HYL is less than 10% below THE BASE VALUE, NSM agrees to pay to HYL an
increase of 20% in the
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Agreement for Training of NSM Personnel. Page 4
<PAGE>
trainees fees and instructor fees applied to such marginal amount of
services below THE BASE VALUE.
ARTICLE 3. GUARANTEE
3.1. HYL guarantees that the supply of training services provided by HYL,
derived of this Agreement, are in accordance to the specifications of the
Appendix "A".
In the case that an HYL instructor deployed at site proves not to comply
with the NSM requirements, HYL shall replace such instructor without any
charge to NSM.
ARTICLE 4. FORCE MAJEURE
4.1. Neither party shall be deemed to be in default of its contractual
obligations hereunder if and whilst performance thereof is prevented by
any act of force majeure as consequence of any Government regulations,
intervention or by circumstances arising out of Acts of God, war (declared
or not), riots, civil commotion, strikes or lockouts, fire, accident, or
by any other event or occurrence, which is outside the control of either
party and such other event or occurrence that substantially prevents the
performance of this Agreement.
4.2. Upon the occurrence of any such contingencies, the party suffering
therefrom shall give the other party, a notice in writing on the cause of
delay within 14 (fourteen) days after the occurrence of such contingency.
Such notice shall state the nature of the claimed occurrence and provide
as much detail of the impacts on its performance, as it is reasonable at
that time, as well as proof that said contingencies have occurred.
4.3. In case force majeure lasts continuously, for at least six months, after
the date of the notice referred to in the previous paragraph, the parties
shall meet to look for a solution to the problem and in case no agreement
is reached, any of the parties may terminate this Agreement, in which
case, NSM shall pay to HYL the proportional part of the services that HYL
has performed.
ARTICLE 5. NOTICES
5.1. All communications (notices) between the parties hereto in connection with
this Agreement, shall be legally made, if there are sent by facsimile,
confirmed by Registered Mail, to the following addresses and facsimile
numbers:
NAKORNTHAI STRIP MILL PUBLIC CO. LTD.
16 Fl. U.M. Tower Building
9 Ramakamhaeng Rd
Suanluang, Bangkok 10250
Thailand
Telefax No._____________
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Agreement for Training of NSM Personnel. Page 5
<PAGE>
Attn: _________________
HYLSA, S.A. DE C.V.
Ave. Munich 101
San Nicolas de los Garza, N.L.
Mexico 66452
Telefax N0. (8) 328-2810
Attn: Vice-President Operations and Projects HYL
5.2. Normal correspondence between the parties hereto, shall be addressed and
transmitted according to the procedure mutually agreed upon by the
parties.
ARTICLE 6. GENERAL PROVISIONS
6.1. This Agreement shall be altered, supplemented or modified only by mutual
consent in writing through the respective authorized representatives of
NSM and HYL.
6.2. This Agreement sets forth the full and complete understanding of the
parties hereto as at the date of signature, with regard to the subject
matter of this Agreement and supersedes any and all representations that
have been made and matters that have been agreed, before that date.
ARTICLE 7. EFFECTIVE DATE
7.1. This Agreement shall be effective (Effective Date), as and when the Letter
of Credit referred to in Article 11, paragraph 2.4 has been opened and the
issuing bank communicates to HYL in writing this fact.
ARTICLE 8. ARBITRATION AND GOVERNING LAW
8.1. If there shall be any dispute or difference of opinion between NSM and
HYL, as to the validity, interpretation or effect of this Agreement, or as
to any other matter in connection with the Agreement, the same shall be
resolved amicably if possible, but if this is not possible, the dispute
shall be referred to arbitration to be held in Zurich, Switzerland in
accordance with the Rules of Conciliation and Arbitration of the
International Chamber of Commerce of Paris, on the application of either
party.
8.2. The arbitration proceedings shall be conducted in the English language.
8.3. This Agreement, its administration and performance and all the rights,
obligations, liabilities and responsibilities of the parties hereto, shall
be governed by and interpreted in accordance with the laws of Switzerland.
- --------------------------------------------------------------------------------
Agreement for Training of NSM Personnel. Page 6
<PAGE>
ARTICLE 9. HEADING AND SEVERABILITY
9.1. Any headings preceding the text of any Articles, paragraphs or parts of
this Agreement, are inserted solely for convenience of reference and are
not to be considered a part of this Agreement.
9.2. This Agreement shall be severable, such that the invalidity or
unenforceability of any portion or provision of this Agreement, shall, in
no way, affect the validity or enforceability of any other portion or
provision. The balance of the Agreement shall be construed and enforced,
as if it did not contain such invalid or unenforceable portion or
provision.
ARTICLE 10. NON WAIVER
10.1. No failure or delay on the part of either party, in exercising any power
or right under this Agreement shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right or power, preclude any
other or further exercise thereof or the exercise of any other right or
power under this Agreement. Any modification or waiver of any provision of
this Agreement, shall be in writing and signed by the party against whom
enforcement is sought.
- --------------------------------------------------------------------------------
Agreement for Training of NSM Personnel. Page 7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, through
their duly authorized representatives on the date first above written.
NAKORNTHAI STRIP MILL HYLSA, S.A. DE C.V.
PUBLIC CO. LTD.
/s/ Chamni Janchai /s/ Dr. Raul Quintero
- ------------------------ -------------------------
Title: Manager Director Title: President Technology
Division
/s/ John W. Shultes /s/ [ILLEGIBLE]
- ------------------------ -------------------------
Witness Witness
- --------------------------------------------------------------------------------
Agreement for Training of NSM Personnel. Page 8
<PAGE>
APPENDIX "A"
SCOPE OF SERVICES
PERSONNEL TRAINING,
TECHNICAL ASSISTANCE AND
CONSULTING SERVICES AGREEMENT
BETWEEN
HYLSA, S.A. DE C.V.
AND
NAKORNTHAI STRIP MILL P.C. LTD.
- --------------------------------------------------------------------------------
Agreement for Training of NSM Personnel: Appendix A
<PAGE>
1. HYL SCOPE OF SERVICES
HYL shall supply to NSM, the following services, in which description is
included the scope of HYL's responsibilities.
1.1. HYL shall train NSM's personnel in a two stages program. The Stage 1, is a
Steelmaking and Process Fundamentals Training to be performed in Thailand
for 4 groups. The Stage 2, is the Specific Training to be performed in
Mexico for 3 groups.
The expected composition of the groups to be trained in Mexico (A, B, and
C ) is defined in the paragraph 1.1.3.
1.1.1. Stage 1: Steelmaking and Process Fundamentals
In this stage, HYL will send 8 instructors for two periods of four
(4) months each to perform the basic training to the NSM personnel.
NSM will provide the facilities required for this training, such as,
but not limited to, classrooms with air conditioned, board, slides
projector, stationery, safety equipment, etc.
The basic training consists of 8 general courses for all the
trainees, at the end of this stage, they will have a general
knowledge and fundamentals of a steelmaking plant.
The courses are:
Course: Content
------- -------
A Electric Arc Furnace
B Caster and Refractories
C Tunnel Furnace and Mill
D Pickling and Annealing
E Galvanizing and Finishing Lines
F Instruments and Electric
G Water Treatment/Chemical and Metalographic
Laboratories
H Maintenance
The trainees group will be divided in 8 sub-groups of about 10 to 17 persons.
- --------------------------------------------------------------------------------
Agreement for Training of NSM Personnel: Appendix A Page 2
<PAGE>
The expected schedule for this training is as follows:
- --------------------------------------------------------------------------------
COURSES
-------------------------------------------------------------------
WEEK
- --------------------------------------------------------------------------------
Subgroup 1 2 3 4 5 6 7 8
- --------------------------------------------------------------------------------
1 A H G F E D C B
- --------------------------------------------------------------------------------
2 B A H G F E D C
- --------------------------------------------------------------------------------
3 C B A H G F E D
- --------------------------------------------------------------------------------
4 D C B A H G F E
- --------------------------------------------------------------------------------
5 E D C B A H G F
- --------------------------------------------------------------------------------
6 F E D C B A H G
- --------------------------------------------------------------------------------
7 G F E D C B A H
- --------------------------------------------------------------------------------
8 H G F E D C B A
- --------------------------------------------------------------------------------
At this Stage 1, HYL will provide the teaching material to the trainees
containing information regarding the following themes:
AREA THEME
Scrap Preparation
Electric Furnace Fundamentals for steelmaking.
Melting Theory.
Main Equipment and auxiliaries.
Raw Materials and consumables.
Material Balances.
Energy Balances.
Melting operation.
Process variables.
Ladle Furnace Steel refining theory.
Main equipment and auxiliaries.
Additives and consumables.
Ladle heating and refining operation.
Vacuum degassing operation.
Process variables.
- --------------------------------------------------------------------------------
Agreement for Training of NSM Personnel: Appendix A Page 3
<PAGE>
Continuous Caster Steel solidification theory.
Heat transfer balances.
Main equipment and auxiliaries.
Primary/secondary cooling.
Additives and consumables.
Casting operation.
Slabs characteristics and defecats.
Process variables.
Refractory Materials Chemical and metallographic theory.
Characteristics and classification.
Refractories for melt shop.
Refractories for soaking furnace.
General construction practices.
General maintenance practices.
Tunnel Furnace Basic concepts.
Operation practices.
Adjustment.
Hot Strip Mill Basic concepts.
Mill specifications.
Mill main components.
Mill control.
Coiler control.
Operation practices.
Rolls grinding.
Metrology.
Rolls Grinding Shop Rolls assembly.
Adjustments and clearances.
Roll grinding practices.
Moulds shop Moulds assembly.
Moulds disassembly.
Adjustments and clearances.
Moulds machining.
Moulds testing lab.
Water Treatment Plant Direct contact circuit.
Non contact circuit.
Demineralization.
Operation practices.
Pickling Process basis.
Operation.
- --------------------------------------------------------------------------------
Agreement for Training of NSM Personnel: Appendix A Page 4
<PAGE>
Equipment description.
Acid regeneration plant.
Controls.
Welding machine.
Trimming equipment.
Dryer.
Annealing Process basis.
Equipment description.
Operation.
Inert gas system.
Process practices.
Controls.
Galvanizing Process basis.
Operation practices.
Controls.
Practice practices.
Product specifications.
Product finishing practices.
Instruments and Electric Equipment description.
Electric controls.
Control loops.
Maintenance practices.
Instruments set-up.
Field instruments.
Protections.
Chemical and Metallurgical Process basis.
Laboratories Equipment description.
Samples preparation.
Operation.
Physical properties testing.
Reports.
Maintenance Equipment description.
Equipment assembly.
Lubrication.
Vibration inspection.
Maintenance standards.
Tools.
Maintenance Planning and Maintenance administration.
Control System.
Planning.
- --------------------------------------------------------------------------------
Agreement for Training of NSM Personnel: Appendix A Page 5
<PAGE>
Programming.
Spare parts control.
Preventive Maintenance.
Maintenance practices.
Technical documentation center.
Managerial Knowledge Production coordination.
- Production planning.
- Refractory maintenance planning.
- Production scheduling.
- Raw material coordination.
- Ladles and tundishes coordination.
- Production follow-up.
Process analysis.
- Key variables.
- Statistical process control.
- Standard metallurgical practices.
- Standard procedures.
Practical aspects of meltshop management.
- Cost basics.
- Administrative control.
- Performance indexes.
- Management information system.
The amount of trainees in each position may vary to fulfill the NSM
requirements.
1.1.2. Stage 2: Specific Training in Mexico
In this Stage 2, NSM will deploy its trainees groups A, B and C to
Mexico for the practical training, in which the trainees will learn
directly in the HYL installations the operation and maintenance
aspects.
The expected composition of the groups A and B is specified in the
paragraph 1.1.3. The duration of the Specific Training in Mexico for
each position will be defined and confirmed later by NSM and HYL.
The composition of the third group C will be also defined later.
However, the positions for this group will be within those specified
in paragraph 1.1.3. The number of trainees for this group will be
about 40 persons.
During this stage, the trainee will observe and participate in the
execution of activities in accordance to the position for which he
is designated.
- --------------------------------------------------------------------------------
Agreement for Training of NSM Personnel: Appendix A Page 6
<PAGE>
At this stage, HYL will provide additional teaching material to
complete the whole set of, in accordance to the scope of each
position.
Periodically, HYL will evaluate the trainees performance and will
inform NSM of the observations and trainee notes.
The training will be performed in English.
The development of the training will be made following the
requirements of the training methodology described in paragraph 2.0
of this Appendix "A".
1.1.3. Typical Group Composition
In the following are indicated the positions of the personnel for
the common areas of work in a steelmaking plant. The duration shown
is the expected training time for each position for the Specific
Training. The categories A and B shown in the positions, corresponds
to the categories of training; A for the positions of CSP Plant and
B for the other positions.
a) Meltshop Services
Position Category No. of Trainees Duration
-------- -------- --------------- --------
(Months)
Services General foreman B 1 1.0
Materials coordinator B 1 0.5
Ladle & tundish coord. B 1 1.5
Refractory supervisor B 2 2.0
b) Meltshop
Position Category No. of Trainees Duration
-------- -------- --------------- --------
(Months)
Meltshop general foreman B 1 1.0
Furnaces supervisor B 1 1.0
EAF operator B 2 1.0
Ladle Furnace operator B 2 2.0
c) CSP Plant
Position Category No. of Trainees Duration
-------- -------- --------------- --------
(Months)
Casting Operation
- --------------------------------------------------------------------------------
Agreement for Training of NSM Personnel: Appendix A Page 7
<PAGE>
Caster general foreman A 1 2.0
Caster supervisor A 2 0.5
Mould Operator A 2 0.5
Main pulpit operator A 2 0.5
Ladle operator B 2 0.5
Process engineer A 1 2.5
Crane operator B 2 0.5
Mould & segments supervisor A 2 0.5
Tunnel Furnace
Operator B 2 1.5
Hot Strip Mill Operation
Supervisor A 1 2.0
Mill process engineer A 1 2.0
Mill operator A 2 2.0
Coiler operator A 2 2.0
Grinder operator A 1 1.0
Quality control A 1 2.0
Bearings assembly operator A 1 1.5
Water Treatment Plant
Operator B 1 1.5
d) Pickling line
Position Category No. of Trainees Duration
-------- -------- --------------- --------
(Months)
Inlet end operator B 2 2.0
Outlet end operator B 2 2.0
Acid treatment operator B 2 2.0
Welder operator B 2 2.0
- --------------------------------------------------------------------------------
Agreement for Training of NSM Personnel: Appendix A Page 8
<PAGE>
e) Annealing
Position Category No. of Trainees Duration
-------- -------- --------------- --------
(Months)
General operator B 2 2.0
Furnace operator B 2 2.0
f) Painting Line
Position Category No. of Trainees Duration
-------- -------- --------------- --------
(Months)
Inlet end operator B 2 2.0
Outlet end operator B 2 2.0
Furnace operator B 2 2.0
g) Maintenance
Position Category No. of Trainees Duration
-------- -------- --------------- --------
(Months)
Meltshop
Mechanical technician A 1 2.0
Hydraulics technician A 1 2.0
Electric technician A 1 2.0
Instruments A 2 2.0
CSP Plant
Mechanical technician A 2 2.0
Hydraulics technician A 1 2.0
Electric technician A 2 2.0
Instruments A 2 2.0
Mould and segment fitter A 3 2.0
Maintenance engineer A 1 2.0
Finishing Lines
Mechanical technician B 2 1.5
- --------------------------------------------------------------------------------
Agreement for Training of NSM Personnel: Appendix A Page 9
<PAGE>
Hydraulics technician B 1 1.0
Electric technician B 1 1.5
Instruments B 2 2.0
h) Maintenance planning & control
Position Category No. of Trainees Duration
-------- -------- --------------- --------
(Months)
Planner & Programmer B 2 2.0
Spare parts coordinator B 1 2.0
1.2. HYL shall supply to NSM Technical Assistance and Consulting services to
support, when written requested by NSM, in the following, but not limited
to, areas of participation:
1.2.1. Consulting
a) Organization definition.
b) Management information system design.
c) Personnel information system design.
d) Costs information system design.
e) Definition of operative system.
f) Product commercialization
g) Conceptual and Basic Engineering for Painting Line Facilities and
other finishing units as requested by NSM.
1.2.2. Technical Assistance
a) Commissioning and Start-up (hot and cold).
b) Support during the learning curve.
c) Quality control.
1.2.3. Services
a) Laboratories operation (raw materials, process control, finished
products).
b) Data base for maintenance planning and control.
c) Maintenance planning and control system operation.
- --------------------------------------------------------------------------------
Agreement for Training of NSM Personnel: Appendix A Page 10
<PAGE>
1.3. Other Services
HYL will provide as part of its scope of supply to the trainees in Mexico:
a) Lunch from Monday to Friday in theHYL cafeteria at no extra charge
for NSM.
b) Sport and recreational facilities.
HYL shall provide to the trainees, access to the sports center of
its associated NOVA de Monterrey, Recreation Center. The personal
sporting gear is not included and each trainee should have his own.
c) HYL shall provide a suitable office, air conditioned, with clerical,
fax and telephone services for the NSM personnel coordinator. All
charges resulting from long distance calls and facsimile will be
covered by NSM.
2. TRAINING METHODOLOGY
For the NSM's personnel training, HYL will follow the training methodology
normally used for its own personnel training.
This method is described in the Appendix B attached to this Agreement.
2.1. HYL shall develop and implement a comprehensive syllabus for training
NSM's personnel within the scope of this Agreement.
2.2. The training programs for each stage and area as specified in paragraph
1.1 of this Appendix, shall be worked out by HYL, in consultation and with
the approval of NSM, for each group of trainees.
2.3. The training shall be given both theoretical and practical, as per
approved programs. HYL will periodically evaluate the performance of the
trainees. At the end of each part of specialized training activities, HYL
shall send NSM a report containing all data regarding the progress of each
trainee and any comments thereof.
2.4. HYL shall prepare with NSM a training program based on their organization
chart, which shall be defined not later than June 30, 1996.
2.5. The official training language shall be English.
3. REGULATIONS FOR TRAINING IN MEXICO
3.1. All participants in this training program are required to take part from
the first day of training to the last one.
- --------------------------------------------------------------------------------
Agreement for Training of NSM Personnel: Appendix A Page 11
<PAGE>
3.2. Changes of schedules of programs and leave permissions of trainees should
have HYL's consent, previous to its occurrence.
3.3. HYL may, at any time, ask NSM to withdraw any person from HYL premises and
training program for justified reasons.
Any fault of a participant to abide by HYL regulations during the training
period will be sufficient reason for requesting NSM to withdraw such
participant. Of special importance are the safety and security rules.
3.4. In case of unjustified absence of a trainee of the training program,
either during the whole day or part thereof, HYL is entitled to charge for
its services as a trained day.
3.5. HYL will not be held responsible to NSM or any other institution or person
for any accident or sickness suffered by any trainee during its training
period, either inside or outside HYL's premises.
3.6. NSM will communicate the composition of the trainees groups before the
training period in Mexico starts, communicating to HYL the information as
per sub-article 5.2 of the Agreement.
HYL will not allow any substitutions once the training program of a given
group has started.
3.7. HYL shall supply NSM trainees in Mexico with all teaching materials.
All instruction material to be supplied to the trainees will be in English
language and shall only be used for activities related to the services
under this contract and can not be used for other purposes unless an
authorization in writing is granted by HYL.
- --------------------------------------------------------------------------------
Agreement for Training of NSM Personnel: Appendix A Page 12
<PAGE>
3.0 ESTIMATED SCHEDULE
According to the NSM requirements, the following chart shows an Estimated
Schedule for the training. In due time, the detailed schedules of work for
each position of the trainees will be prepared. The detailed programs will
be discussed and agreed upon with the NSM training coordinator at site.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
1996 1997
- -----------------------------------------------------------------------------------------------
NO
of
DESCRIPTION Trainees JULY AUG. SEP. OCT. NOV. DEC. JAN. FEB. MAR. APR. MAY JUNE JULY AUG. SEP.
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Group A
in
Thailand 8
- -----------------------------------------------------------------------------------------------
Group A
in Mexico 80
- -----------------------------------------------------------------------------------------------
Group B
in
Thailand 8
- -----------------------------------------------------------------------------------------------
Group B
in Mexico 80
- -----------------------------------------------------------------------------------------------
Group C
in [SHADING OMITTED]
Thailand 8
- -----------------------------------------------------------------------------------------------
Group C
in Mexico 40
- -----------------------------------------------------------------------------------------------
Commissioning
- -----------------------------------------------------------------------------------------------
Group D
in
Thailand 8
- -----------------------------------------------------------------------------------------------
First Heat
- -----------------------------------------------------------------------------------------------
First Slab
- -----------------------------------------------------------------------------------------------
First Coil
- -----------------------------------------------------------------------------------------------
First
Production
- -----------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Agreement for Training of NSM Personnel: Appendix A Page 13
<PAGE>
4. TERMS AND CONDITIONS
For the services to be rendered by HYL within the scope of supply
described in Paragraph 1 of this Appendix "A", and in addition to the fees
and rates specified in Article 2 of this Agreement, the following terms
and conditions shall apply.
4.1. Working Period
The rates and fees defined in Article 2 of this Agreement are based in a
normal working time of 45 hours per week in 5 days per week, and subject
to the site regulations.
4.1.1. Overtime
If for reasons connected with the execution of services at site, by
the HYL's personnel referred to under paragraph 1 of this Appendix
"A", overtime and/or holiday work, or night work, or work in excess
of the normal working time is required, the NSM shall pay for said
HYL's personnel, where applicable, in addition to the Daily Rates
and Fees specified in Article 2 of this Agreement and based on
Normal Hourly Rates and Fees as defined hereunder:
Normal Hourly Rate= Daily Rate
----------
8
Normal Hourly Fee= Daily Rate
----------
8
The following extras:
4.1.1.1. The Normal Hourly Rate and Fee plus 50% (fifty
percent) for overtime until 10 p.m. on working days.
4.1.1.2. The Normal Hourly Rate and Fee plus 100% (one hundred
percent) for overtime work from 10 p.m. to 6 a.m., on
working days.
The aforesaid 100% shall apply for all work performed on
holidays.
4.2. Holidays
Holidays are defined as all Thailand official labor holidays plus
Christmas day and Easter day.
- --------------------------------------------------------------------------------
Agreement for Training of NSM Personnel: Appendix A Page 14
<PAGE>
4.3. Vacations
4.3.1. The HYL personnel deployed at site is entitled to 2 days of
vacation for each month spent at site in performance of the
services. This vacation shall be charged to NSM as worked days.
4.3.2. The HYL personnel deployed at site shall be entitled to travel to
Monterrey, Mexico for an 8 day vacation period each 4 months of
stay in Thailand.
4.4. Traveling and Travel Expenses
For the services that HYL shall perform within Thailand during the
different stages of the PROJECT, NSM shall be responsible for the
following:
a) To bear the cost of Business Class round trip air ticket from
Monterrey, Mexico to Bangkok, Thailand, for each of the HYL's
personnel.
b) To pay HYL US$ 500.00 (five hundred dollars) per round trip per
person for traveling expenses.
c) To bear the cost of Business Class round trip air ticket from
Bangkok, Thailand to Monterrey, Mexico for each of the HYL's
personnel entitled for a vacation travel as per paragraph 4.3.2.
4.5. Accommodation
NSM will provide and bear the cost of individual living accommodations
(tourist class hotel or department) with adequate facilities, air
conditioning, baths, sufficiently furnished including bed clothing,
laundry service and three meals a day per person.
4.6. Local Transportation
NSM shall provide local transportation within Thailand.
4.7. Other NSM Responsibilities
a) To provide adequate first aid medical facilities.
b) Besides the aforesaid first medical aid, NSM shall provide, free of
charge to the HYL's personnel, medical assistance, medicines,
hospital treatment, etc. within Thailand; in case that the illness
or accident is such, that requires specialized medical treatment,
NSM shall be bound to send the HYL's personnel to the nearest First
Class hospital in order to obtain the best possible medical
treatment; in such case, HYL shall borne the cost of said
specialized medical treatment, including the transportation of the
patient.
- --------------------------------------------------------------------------------
Agreement for Training of NSM Personnel: Appendix A Page 15
<PAGE>
Notwithstanding the above responsibility, HYL shall indemnify and
hold NSM harmless from any and all claims, liabilities and causes of
action, for the death of any of the HYL's personnel arising out of,
or in connection with, the performance of the services in Thailand
under this Agreement.
c) To provide reasonable office facilities at the NSM's plant,
including adequate furnishing, air conditioning, secretarial
services and telephone and fax access for official communications.
4.8. Taxes
As established in paragraph 2.6 of this Agreement, all the fees and costs
payable to HYL and/or the HYL's personnel shall be net and therefore free
of any taxes, duties, levies, convertibility charges, etc. within
Thailand.
4.9. Sickness, Accident and Disability of HYL's Personnel
In case of temporary disability (i.e. up to 30 days) of the HYL's
personnel, involved in the implementation of the services as per paragraph
1 of Appendix A while rendering the services at Site, the Rates and Fees
provided for under Article 2 of the Agreement will be due throughout the
entire period of disability as above.
In the event that the disability is expected to last longer than thirty
days, the disabled person, if the medical authorities agree that
transportation is possible, may be sent to Mexico.
5.0 OTHER NSM RESPONSIBILITIES
NSM is responsible to provide, but not limited to, the following:
5.1. NSM shall have a major medical expenses insurance, covering all the
trainees in Mexico, or notify in writing to HYL, that NSM shall bear the
medical expenses incurred by the trainees not covered by the medical
service provided by HYL.
5.2. NSM shall provide in due time, the following information for each of the
trainees that will travel to Mexico. The purpose of this information is
for the entry visa arrangements.
Name:
Surname:
Nationality:
Date of birth:
Place of birth:
Passport No:
- --------------------------------------------------------------------------------
Agreement for Training of NSM Personnel: Appendix A Page 16
<PAGE>
Place of issue:
Date of issue:
Passport expiration date:
Education:
Hiring date:
Activity in the company:
Activity in Mexico: Training
Activity duration in Mexico: 4 months
City of residence in Mexico: Monterrey, N.L.
5.3. NSM will assist HYL in obtaining the Thailand visa for the personnel
deployed at site.
5.4. NSM will see to it that all its trainees sent to HYL's works or elsewhere
shall fully comply with the Laws, Rules, Regulations, Customs, etc., in
force at Mexico.
- --------------------------------------------------------------------------------
Agreement for Training of NSM Personnel: Appendix A Page 17
<PAGE>
APPENDIX "B"
TRAINING METHODOLOGY
PERSONNEL TRAINING,
TECHNICAL ASSISTANCE AND
CONSULTING SERVICES AGREEMENT
BETWEEN
HYLSA, S.A. DE C.V.
AND
NAKORNTHAI STRIP MILL P.C. LTD.
- ------------------------------------------------------------------------------
Agreement for Training of NSM Personnel: Appendix B
<PAGE>
TRAINING METHODOLOGY
In the following, it is described the method used for the training of personnel.
This method covers the necessary steps or stages of the training, starting from
the definition of training requirements up to Hands On training. In the
following are described the main aspects of the method.
TRAINING STRUCTURE
The general structure of the training, covers four main aspects:
1) Program definition in accordance to the training needs.
2) Basic training: this part covers the basic knowledge of equipment, process
and procedures.
3) Practical training: this part covers a direct contact of the trainee with
the equipment and the development of operative skills.
4) Control Process: this aspect controls the trainee progress and assures
that the Know-How is properly transferred.
This scheme is shown in Figure No. 1.
- --------------------------------------------------------------------------------
NSM Agreement: Appendix B Page 19
<PAGE>
TRAINING EXECUTION METHOD
To assure that the training is effective, the following method is used (Figure
No. 2):
o DESIGN STAGE
Initial Evaluation:
At this step, an evaluation is made to know what is the knowledge of the
trainee.
Program Definition:
With the information obtained of the initial evaluation, a program
containing the topics that require more attention is prepared.
In the scheme of the figure No. 3 is shown in detail this stage.
In the scheme of the figures No. 4 and 5, is shown in detail this stage.
o BASIC TRAINING STAGE
Classroom and homework:
General explanations of the topic are given in the classroom. Homework is
normally asked during this stage.
Field knowledge:
Combined with the classrooms, visits and explanations at site are carried
out.
Workshop:
For specific themes, frequently the workshop sessions are made for deep
analysis.
o CONTROL PROCESS
Instructor Evaluation:
At the end of the Basic Training, the instructor makes a final evaluation
of the trainee, and decides if he or she continues to the next training
stage.
- --------------------------------------------------------------------------------
NSM Agreement: Appendix B Page 20
<PAGE>
o PRACTICAL TRAINING STAGE
Cold simulation and/or shadow training:
The trainee directly observes the operation or maintenance activities
together with the operator of the equipment, and affirms his knowledge of
the matter. In some cases, simulators are run for the training.
Foreman evaluation:
At this stage, the foreman responsible for the activities in the plant
evaluates the trainee and makes a decision as to whether he is ready to
continue to the next stage.
Hands On training stage:
If the foreman evaluation is approved, then the trainee, under foreman and
operator supervision, executes the operation or maintenance activities of
the trainee position.
o CONTROL PROCESS
Final evaluation:
An evaluation of his performance and a written report and for each
trainee, is made is delivered to the customer training responsible.
- --------------------------------------------------------------------------------
NSM Agreement: Appendix B Page 21
<PAGE>
Training Structure..
Design
Program adequate to
specific needs.
Basic Training.
Essential knowledge of
Equipment, Process and Procedures
Control
Know-How transfer
assurance
Practical Process
- Direct contact with operations
- Development of operative skills
Figure No 1
- --------------------------------------------------------------------------------
NSM Agreement: Appendix B Page 22
<PAGE>
Execution Method
Design Control Process
Initial Instructor Foreman Final
Evaluation Evaluation Evaluation Evaluation
Program
Definition
Basic Training
Classroom
Homework Practical Process
Workshop Cold
Simulation
Field + Hands on
Knowledge Shade Training
Training
Figure No 2
- --------------------------------------------------------------------------------
NSM Agreement: Appendix B Page 23
<PAGE>
Design Elements...
Initial Training
Evaluation Program
of Definition
Trainees
Content
-Position
Concepts: -No. of Persons
-Metallurgical -Syllabus
-Process -Schedule
-Equipment
-Operation
-Safety
Not applied for personnel with
experience in similar equipment
Figure No 3
- --------------------------------------------------------------------------------
NSM Agreement: Appendix B Page 24
<PAGE>
Basic Training ...
Provides the fundamental requirements to reach
to Practical Training
Teaching Material
Classroom
and -Information document
Homework -Work books
-Evaluations
Teaching Material
Field and support information
Knowledge -Plant equipment
-Methods & operations procedures
-Man - Machine interface
Teaching Material
Workshop For each topic:
-Results analysis
-Events Discussions
Figure No.4
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NSM Agreement: Appendix B Page 25
<PAGE>
Exhibit 10.14
McD Draft 3/9/98
NSM
Nakornthai Strip Mill Public Co., Ltd.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated as of March 12,
1998, is between NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED (the "Company")
and JOHN W. SCHULTES, an individual ("Employee").
BACKGROUND INFORMATION
A. The Company desires to employ Employee as its President and Chief
Executive Officer,
B. Employee is willing to serve in such capacities and undertake the
responsibilities of such positions on the terms and conditions contained herein.
STATEMENT OF AGREEMENT
Section 1. Employment and Term. Subject to the terms and conditions
of this Agreement, the Company shall employ Employee as its Chief Executive
Officer and President during the Term (as hereinafter defined). Employee's
employment by the Company pursuant to this Agreement shall commence on the date
hereof and, subject to the terms and conditions of this Agreement, shall
continue until March 12, 2006 (the "Term). During the Term, Employee shall be
expected to perform such duties and carry out such responsibilities as may be
reasonably assigned to him from time to time by the Board of Directors of NSM
Management Company (the "Management Co.").
Section 2. Compensation and Benefits. Except as otherwise provided
herein, as compensation for his services to the Company, Employee shall receive
during the Term:
(a) A base salary payable in accordance with the Company's
usual pay practices (and in any event no less frequently than monthly) at the
initial rate of $240,000, or equivalent currencies at the Employee's option, per
annum, with increases of 5% per annum (calculated on a cumulative, compounded
basis) during the Term;
(b) At the discretion of the Management Co., an annual bonus
based on the Company's return on equity, profitability, operating efficiency and
adherence to capital expenditure budgets and construction timetables, payable in
such manner and in such amount as determined by the Management Co., with the
bonus formula designed to target bonuses of up to the higher of two times annual
base salary or one-half percent (0.5%) of net income (calculated assuming an
effective tax rate of 40% was paid by the Company), bonus payments shall be made
before April 1 of the year following the year for which the amend is made;
<PAGE>
(c) Reimbursement for all expense reasonably incurred on
behalf of the Company, and to such periods of sick leave allowance as are
reasonable and appropriate for all senior offices of the Company;
(d) Rights to participate in any insurance, employee
retirement, benefit or welfare plan that is generally available to senior
officers of the Company, with participation in and benefits under any such plan
shall be on the terms and subject to the conditions specified in the governing
documents of the particular plan;
(e) A car and a driver (or if not provided by the Company,
additional compensation to cover the cost of a car and driver) to be used for
transportation to and from the office during working hours and for business
activities and personal use outside working hours;
(f) First class coverage health, accident and life insurance
for Employee, his wife and children until the age of 21; and an annual health
check-up for Employee and his wife at a qualified provider in Asia or the United
States;
(g) One round trip business class air fare each year to the
USA or Europe for Employee, his wife and children until the age of 21;
(h) Tuition payment for the children of Employee until high
school graduation at the International School Eastern Seaboard (ISE) in Chonburi
or an equivalent school in the area;
(i) Four weeks paid vacation; and
(j) Housing. A single family house for Employee and his family
to be built by the Company outside burapha Golf Course as already planned and
partially purchased. The Employee has the right to purchase the house and
property of book value at anytime during the term of the Agreement. Operation
cost will be paid by the Company. If the Employee purchases house and property,
the base salary will be increased commensurate with the Company's cost
reduction.
(k) Relocation. Upon expiration of the Term of the Agreement,
the death of the Employee or Termination without Cause, the Company will pay
relocation expenses to the United States or Europe per the Employee's or his
estate's executors' discretion.
(l) Tax Planing. Personal tax counsel for the Employee during
and upon expiration of the Term and for the Employee's family in case of death
during the Term.
(m) Travel Costs. Reimbursement of travel cost for the
Employee' wife to accompany on up to four (4) business trips per year.
Section 3. Stock Options. It is the intent of the Company based on
the Management Co.'s decision to institute a stock option plan within twelve
months from the date hereof for the benefit of Employee (and perhaps other
selected employees), pursuant to which Employee will be granted options to
acquire capital stock in the Company for an aggregate price
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<PAGE>
such that Employee can reasonably except (based on assumptions, conditions and
circumstances selected by the Management Co. and existing at the time of the
grant of options) a $2,000,000 gain on such stock if the options are exercised
at the expiration of the Term. Such gain is predicated on substantially meeting
the financial projections of the high-yield bond transaction of March 1998.
Results exceeding these projections are intended to be rewarded with a
proportionally increased gain above $2,000,000 and/or additional incentive
compensation.
Section 4. Termination.
(a) Employee's employment with the Company may be terminated
at any time with or without Cause (as hereinafter defined) by the Company upon
notice. If the Employee's employment is terminated by the Management Co. for
Cause, then his compensation shall terminate on the effective date of
termination. "Cause" shall mean (i) a felony conviction of Employee involving
dishonesty or moral turpitude, or (ii) willful misconduct, fraud, embezzlement
or flagrant dereliction of duty in the performance or nonperformance of his
duties hereunder, provided, however, that the Management Co. shall provide
Employee with written notice of any of the events enumerated in the preceding
clause 4(a)(ii) and shall give Employee thirty (30) days from such notice to
effect a cure of any such event when and if such a cure is reasonably possible
in the Company's sole discretion. If the Management Co. terminates Employee's
employment without Cause, then the Company shall continue to pay Employee's base
salary as severance pay for the remainder of the Term. In addition, the Company
shall pay at the customary time for any bonus payments last paid to the Employee
during the Term pursuant to subsection 2(b), prorated on a per diem basis for
partial fiscal years. To the extent three annual bonus payments have not
previously been paid to the Employee, such continuation of Employee's salary and
bonus following termination without Cause, if any, shall not be interrupted or
cease as a result of his death or disability. If Employee terminates his
employment other than for the reasons provided in subsection 4(b) (which
termination must be upon at least thirty (30) days notice) then his right to any
and all compensation hereunder shall terminate on the day he terminates such
employment.
(b) If the Management Co., the Company, any Affiliate of the
Management Co., or the Company or any third party that purchases a controlling
interest in the Management Co. or any Affiliate of the Company (whether by
merger, consolidation sale of all or substantially all of its assets, or sale of
a majority of the capital stock of the Company or the capital stock of any
Affiliate), materially changes Employee's duties, responsibilities or authority
with the Company without his consent other than for Cause, Employee shall have
the right to terminate his employment with the Company upon notice, in which
event the Company shall continue to pay Employee's base salary as severance pay
for the remainder of the Term; in addition, the Company shall pay a one-time
severance bonus payment equal to the average of the annual bonus payments
previously paid to the Employee during the Term pursuant to subsection 2(b),
prorated on a per diem basis for partial fiscal years. Such continuation of
salary and payment of such one-time severance bonus, if any, shall not be
interrupted or cease as a result of Employee's death or disability.
(c) The continued payment of salary and the one-time severance
bonus pursuant, as the case may be, to subsections 4(a) and 4(b) shall be the
exclusive payment due Employee upon the termination of his employment with the
Company pursuant to this Agreement.
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<PAGE>
All other compensation, benefits and prerequisites shall cease as of the
effective date of such termination and no other payments or benefits shall be
due hereunder.
(d) If, due to physical or mental disability, the Employee
shall be unable to perform substantially all of his duties for a continuous
period of six (6) months, either the Employee or the Employer may by notice
terminate the Employee's employment under, equal to and in the same periodic
installments as his base salary, as provided in Section 2 less any amounts
payable to the Employee under any benefits paid by Workmen's Compensation, or
under any other state disability benefits, including the Employer's long-term
disability policy called for by Section 2(f), but only during the remaining
period of the original eight (8) year term hereof.
Section 5. Covenant Not to Compete.
(a) Definitions.
(i) The term "Affiliate" means any corporation, limited
liability company partnership, person or other entity which, directly or
indirectly, through one or more intermediaries, is controlled by or is under
common control with the Company, or with Employee, as the case may be;
(ii) The term "Compete" means to manage, operate, control
or participate in, or have any ownership interests in or make loans to, or aid
or advise as an employee, consultant or otherwise, whether directly or
indirectly, any business (whether an individual, sole proprietorship,
partnership, corporation, firm joint venture, trust or other entity) which is
engaged in directly or indirectly, the business of manufacturing, distributing
or selling scrap steel substitutes including, but not limited to, coal-based DRI
or flat-rolled steel products;
(iii) The term "Restricted Period" means the period
during which Employee is employed by the Company and for a period of one (1)
year thereafter and the period during which the Employee's base salary shall
continue to be paid by the Company under Section 4(b);
(iv) The term "DRI" means direct reduced iron; and
(v) The term "Restricted Area" means, with respect to
scrap substitutes and DRI, the entire world, and, with respect to flat-rolled
steel product, the countries that currently make up the ASEAN.
(b) General Covenant. During the Restricted Period neither Employee
nor any Affiliate of Employee shall Compete with the Company in the Restricted
Area, except if terminated without cause.
(c) Additional Covenants. During the Term of Employee's employment
with the Company and thereafter, neither Employee nor any Affiliate of Employee
shall, directly or indirectly (whether as owner, principal, employee, partner,
lender or venture with or consultant to any person, firm, partnership,
corporation or other entity): (i) cause or seek to cause any of the Company's
suppliers, purchasing agents or customers to cease transacting
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<PAGE>
business with the Company; (ii) cause or seek to cause any of the Company's
prospective suppliers, purchasing agents or customers, as identified in writing
by the Company at the time of termination purchasing agents or customers not to
transact business with the Company or (iii) cause or seek to cause any of the
Company's employees to terminate their employment with the Company.
(d) Permitted Activities. The foregoing shall not be deemed to
prohibit Employee or any Affiliate of Employee from owning shares of capital
stock of the Company, from owning investments in publicly traded or privately
held companies where Employee and his Affiliates own less than 1% of the
outstanding capital stock (provided that such investments do not violate any
policies of general application established from time to time by the Company),
from serving as a director, trustee or officer of or otherwise participating in
educational, welfare, professional, industry or trade, social, religious and
civic organizations which do not compete with the Company. Employee shall also
have the right to serve as a director of a corporation which does not Compete
with the Company.
(e) Suspension of Restricted Period. In the event Employee breaches
the restriction contained in subsection 5(b) hereof, such breach shall suspend
and toll the running of the Restricted Period from the date of such breach until
such time as such violation ceases.
Section 6. Confidential Information. Employee shall maintain in
strict confidence and shall not, directly or indirectly, divulge, transmit,
publish, release or otherwise use or cause to be used in any manner to Compete
with or that is contrary to the interests of the Company, any confidential or
proprietary information relating to Company's systems, operations, formulas,
processes, computer programs and databases, records, development data and
reports, quality control specifications, cost analysis, flow charts, know-how,
customer lists, supplier lists, marketing data, personnel data, or any
information relating to sales, financial structure or pricing, and other
information of like nature. The restriction expires thirty (30) months from
termination of employment. Employee acknowledges that all information regarding
the Company compiled or obtained by, or furnished to, Employee in connection
with his employment or association with the Company is confidential and
proprietary information and the Company's exclusive property. Upon demand by the
Company, Employee shall surrender to the Company all original and facsimile
records, documents and data in his possession pertaining to the company. The
Employee is allowed to keep all records and documents which were in his
possession before his initial employment with the Company on October 1, 1995.
Notwithstanding the foregoing, the Company permits and encourages
conference participation and participation and publication of Company
information designed to promote the image and recognition of the Company's
leadership in the steel and scrap substitute industries. The Company also
encourages continuing employee education and the use of Company information for
such purposes. The foregoing covenant of confidentiality has no temporal,
geographical or territorial limitation.
Notwithstanding the foregoing, this provision does not apply to the
extent, and only to the extent, such information: (a) is clearly obtainable in
the public domain, (b) becomes obtainable in the public domain through no fault
of Employee's, (c) was not acquired by
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<PAGE>
Employee in connection with his employment or affiliation with the Company, or
(d) is required to be disclosed by rule of law or by order of a court or
governmental body or agency, (e) is required to be disclosed under the
provisions of the high yield bond offering, private debt placement, equity
investment, and the associated contracts and agreements.
Section 7. Independent Significance. The restrictive covenants
contained herein shall be construed as independent of the other provisions of
this Agreement, and the existence of any claim or cause of action of Employee,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by the Company of any of the restrictive covenants
contained herein.
Section 8. Severability. All provisions of this Agreement are
intended to be severable. In the event any provision or restriction contained
herein is held to be invalid or unenforceable in any respect, in whole or in
part, such finding shall in no way affect the validity or enforceability or any
other provisions of this Agreement. The parties hereto further agree that any
such invalid or unenforceable provision shall be deemed modified so that it
shall be enforced to the greatest extent permissible under law.
Section 9. Nonwaiver. No failure or delay be either party in
exercising such party's rights hereunder shall operate as a waiver thereof and
no single or partial exercise thereof shall preclude any further exercise of any
right, power, or privilege by such party.
Section 10. Notices. All notices and other communications hereunder
shall be in writing and shall be either personally delivered or mailed by
certified mail, return receipt requested, addressed as follows:
if to the Company: Nakornthai Strip Mill Public Company Limited
9 Ramkhamhaeng Road
19th Floor, UM Tower
Suanluang, Bangkok 10250
Attention: Board of Directors
if to Employee: John W. Schultes
Burapha Golf
JHL Village 14 H
Bowin, Sriracha, Chonburi 20230
or such other address as either party notifies the other by certified mail or
personal delivery. Notice shall be deemed given when personally delivered or
when deposited in the United States mail.
Section 12. Expenses. In any legal action brought to enforce the
provisions of this Agreement, the non-prevailing party will, upon demand, pay to
the prevailing party the amount of any and all reasonable expenses, including
the reasonable fees and expenses of such prevailing party's counsel, which any
such prevailing may incur in connection with (a) the exercise
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<PAGE>
or enforcement of any of its rights hereunder, or (b) the failure by the
non-prevailing party to perform or observe any of the provision hereof.
Section 13. Miscellaneous.
(a) This Agreement is for personal services to be provided by
Employee and shall not be assigned or transferred by Employee to, and Employee's
obligations hereunder shall not be performed by, any other party.
(b) Employee represents and warrants that he is not under any
obligation, contractual or otherwise, to any person, firm, corporation or entity
which would prevent his entering into this agreement or performing his
obligations hereunder.
(c) This Agreement contains the entire agreement between the
parties hereto regarding the subject matter hereof and supersedes all prior ad
contemporaneous agreements, understandings, negotiations and discussions,
whether oral or written.
(d) Headings shall not be considered part of this Agreement.
They are included solely for convenience and are not intended to be full or
accurate descriptions of the contents hereof.
(e) This Agreement shall be governed by, and construed in
accordance with, the laws of Ohio.
(f) This Agreement shall inure to the benefit of Employee and
the Company and their respective representatives, successors and permitted
assigns and shall bind the Company and Employee and their respective
representatives, successors and permitted assigns. The Company shall have the
right, without Employees consent, to assign or transfer this Contract or the
benefits or obligations hereof or any part hereof to the Company's lenders.
(g) The Company represents and warrants to Employee as
follows:
(i) The Company is a corporation duly organized, validly
existing and in good standing under the laws of The Kingdom of Thailand and has
all requisite corporate power and authority to enter into, execute, and deliver
this Agreement, fulfill its obligations hereunder and consummate the
transactions contemplated hereby: and
(ii) The execution and delivery of, performance of
obligations under, and consummation of the transactions contemplated by this
Agreement have been duly authorized and approved by all requisite corporate
action by or in respect of the Company, and this Agreement constitutes a legally
valid and binding obligation of the Company enforceable against the Company by
Employee in accordance with its term.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
/s/ John W. Schultes
-----------------------------
JOHN W. SCHULTES
NAKORNTHAI STRIP MILL PUBLIC
COMPANY LIMITED
By: /s/ Sawasdi Horrangruang
-----------------------------
Its: Chairman
-----------------------------
<PAGE>
Exhibit 10.15
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (THIS "Agreement"), dated as of February 14,
1998, is between NAKORNTAI STRIP MILL PUBLIC COMPNAY LIMITED (the "Company") and
SAWASDI HORRUNGRUANG, an indidvidual or, subject to the Company's prior
approval, an assignee entity controlled by Sawasdi Horrungruang if, in the
Company's sole opinion, suc assignee entity is capable of rendering the same
services as Sawasdi Horrungruang ("Employee").
BACKGROUND INFORMATION
A. The Company desires to employ Employee as its Chairman
B. Employee is willing to serve in such capacities and undertake the
responsibilities of such positions on the terms and conditions contained herein.
Statement of Agreement
Section 1. Employment and Term. Subject to the terms and conditions
of this Agreement, the Company shall employ Employee as its Chairman during the
Term ( as hereinafter defined). Employee's employment by the Company pursuant to
this Agreement shall commence on February 28, 1996 and, subject to the terms and
conditions of this Agreement, shall continue until February 14, 12008, to the
terms and conditions of this Agreement, shall continue until February 14, 2006,
(the "Term"). During the Term, Employee shall be expected to perform such duties
and carry out such responsibilities as may be reasonably assigned to him from
time to time by the Board of Directors of NSM upon the recommendation of NSM
Management Company (the "Management Co.,").
Section 2. Compensation and Benefits. Except as otherwise provided
herein, as compensation for his services to the Company, Employee shall receive
during the Term:
(a) A base salary payable in accordance with the Company's usual pay
practices (and in any event no less frequently than monthly) at the rate
of US #350,000 per annum, with an increase of 5% per annum (calculated on
cumulative compounded basis) during the Term, plus expense reimbursement
of up to US$350,000 per annum, during the Term;
(b) At the discretion of the Management Co., an annual bonus based
on the Company's return on equity, profitability, operating efficiency and
adherence to capital expenditure budgets and construction timetables,
payable in such manner and in such amount as determined by the Management
Co.
(c) Rights to participate in any insurance, employee retirement,
benefit or welfare plan that is generally available to senior officers of
the Company, with participation in and benefits under any such plan shall
be on the terms and subject to the conditions specified in the governing
documents of the particular plan;
<PAGE>
(d) First class coverage health, accident and life insurance for
Employee, his wife and children until the age of 21;
(e) Four weeks paid vacation; and
(f) Such other fringe and employee benefits as may be provided from
time to time by the Management Co.
Section 3. Termination.
(a) Employee's employment with the Company may be terminated at any
time with or without Cause (as hereinafter defined) by the company upon notice.
If Employee's employment is terminated by the Management Co. for Cause, then his
compensation shall terminate on the effective date of termination. "Cause" shall
mean (i) a felony conviction of Employee involving dishonesty or moral
turpitude, or (ii) willful misconduct, fraud, embezzlement, or flagrant
dereliction of duty in the performance or nonperformance of his duties
hereunder; notice of any of events enumerated in the preceding clause 3 (a)(ii)
and shall give Employee thirty (30) days from such notice to effect a cure of
any such event when and if such a cure is reasonably possible in the company's
sole discretion. If the Management Co., upon the approval of the Board of
Directors of NSM, terminates Employee's employment without Cause, then the
company shall continue to pay Employee's employment without Cause, the Company
shall continue to pay Employee's base salary as severance pay for the remainder
of the Term. In addition, the Company shall pay at the customary time for any
bonus payment a bonus equal to the average of the annual bonus payments
previously paid to the employee during the Term pursuant to subsection 2(b),
prorated on a per diem basis for partial fiscal years. Such continuation of
Employee's salary and bonus following termination without Cause, if any, shall
not be interrupted or cease as a result of his death or disability. If Employee
terminates his employment other than for the reason provided in subsection 3(b)
(which termination must be upon at least 30 day's notice) or if Employee dies,
then his right to any all compensation hereunder shall terminate on the day he
terminates such employment or dies, as the case may be.
(b) If the Management Co., the Company, any Affiliate of the
Management Co. Or the company or any third party that purchases a controlling
interest in the Management Co. Or any Affiliate of the Company (whether by
merger, consolidation, sale of all or substantially all of its assets, or sale
of a majority of the capital stock of the Company or the capital stock of any
Affiliate), materially changes Employee's duties, responsibilities or authority
with the Company without his consent other than for Cause, Employee shall have
the right to terminate his employment with the Company upon notice, in which
event the Company shall continue to pay Employee's base salary as severance pay
for the remainder of the Term; in addition, the Company shall pay a one-time
severance bonus payment equal to the average of the annual bonus payments
previously paid to the Employee during the Term pursuant to subsection 2(b),
prorated on a per diem basis for partial fiscal years. Such continuation of
salary and payment of such one-time severance bonus, if any, shall not be
interrupted or cease as a result of Employee's death or disability.
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<PAGE>
(c) The continued payment of salary and bonus or salary and the
one-time severance bonus pursuant, as the case may be, to subsections 3(a) and
3(b) shall be the exclusive payment due Employee upon the termination of his
employment with the Company pursuant to this Agreement. All other compensation,
benefits and perquisites shall cease as of the effective date of such
termination and no other payments or benefits shall be due hereunder.
Section 4. Confidential Information. Employee shall maintain in
strict confidence and shall not, directly or indirectly, divulge, transmit,
publish, or release or otherwise use or cause to be used in any manner to
Compete with or that is contrary to the interests of the Company, any
confidential or proprietary information relation to the Company's systems,
operations, formulas, processes, computer programs and databases, records
development data and reports, quality control specifications, cost analysis,
flow charts, know-how, customer lists, supplier lists, marketing data, personnel
data, or any information relating to sales, financial structure or pricing, and
other information of like nature. Employee acknowledges that all information
regarding the Company compiled or obtained by, or furnished to, Employee in
connection with his employment or association with the Company is confidential
and proprietary information and the Company's exclusive property. Upon demand by
the company, Employee shall surrender to the Company all original and facsimile
records, documents and data in his possession pertaining to the Company. The
foregoing covenant of confidentiality has no temporal, geographical or
territorial limitation.
Notwithstanding the foregoing, this provision does not apply to the
extent, and only to the extent, such information: (a) is clearly obtainable in
the public domain, (b) becomes obtainable in the public domain through no fault
of Employee's, (c) was not acquired by Employee in connection with his company
or affiliation with the Company, or (d) is required to be disclosed by rule of
law or by order of a court or governmental body or agency.
Section 5. Independent Significance. The restrictive covenants
contained herein shall be construed as independent of the other provisions of
this Agreement, and the existence of any claim or cause of action of Employee,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by the company of any of the restrictive covenants
contained herein.
Section 6. Injunctive Relief and Specific Performance. If Employee
breaches any of his obligations contained in Section 4 of this Agreement the
injuries that shall be suffered by the Company shall be irreparable, and the
Company shall not have an adequate remedy at law. Employee therefore agrees
that, in the event of such a breach, the Company shall be entitled to injunctive
relief or specific performance in addition to all other rights that the Company
may have at law, in equity, or otherwise.
Section 7. Severability. All provisions of this Agreement are
intended to be severable. In the event any provision or restriction contained
herein is held to be invalid or unenforceable in any respect, in whole or in
part, such finding shall in no way affect the validity or enforceability of any
other provisions of this Agreement. The parties hereto further agree that nay
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<PAGE>
such invalid or unenforceable provision shall be deemed modified so that it
shall be enforced to the greatest extent permissible under law.
Section 8. Nonwaiver. No failure or delay by either party in
exercising such party's rights hereunder shall operate as a waiver thereof and
no single or partial exercise thereof shall preclude any further exercise of any
right, power, or privilege by such party.
Section 9. Notices. All notices and other communications hereunder
shall be in writing an shall be either personally delivered or mailed by
certified mail, return receipt requested, addressed as follows;
if to the Company: Nakornthai Strip Mill Public Company Limited
Chonburi Industiral Estate
358 Moo 6
Highway 331
Bowin, Sriracha, Chonburi 20230
if to Employee: Sawusdi Horrungruang
Nakornthai Strip Mill Public Company Limited
9 Ramkhamhaeng Road
19th Floor, UM Tower
Suanluang, Bangkok 10250
or such other address as either party notifies the other by certified mail or
personal delivery. Notice shall be deemed given when personally delivered.
Section 10 Expenses. In any legal action brought to enforce the
provisions of this Agreement, the non-prevailing party will, upon demand, pay to
the prevailing party the amount of any and all reasonable expenses, including
the reasonable fees and expenses of such prevailing party's counsel, which any
such prevailing party may incur in connection with (a) the exercise or
enforcement of any of its right hereunder, or (b) the failure by the
non-prevailing party to perform or observe any of the provisions hereof.
Section 11 Miscellaneous
(a) This Agreement is for personal services to be provided by
Employee and shall not be assigned or transferred by Employee to, and Employee's
obligations hereunder shall not be performed by, any other party.
(b) Employee represents and warrants that he is not under any
obligation, contractual or otherwise, to any person, firm, corporation or entity
which would prevent his entering into this Agreement or performing his
obligations hereunder.
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<PAGE>
(c) This Agreement contains the entire agreement between the parties
hereto regarding the subject matter hereof and supersedes all prior an
contemporaneous agreements, understandings, negotiations and discussions,
whether oral or written.
(d) Heading shall not considered part of this Agreement. They are
included solely for convenience and are not intended to be full or accurate
descriptions of the contents hereof.
(e) This Agreement shall be governed by, and construed in accordance
with, the laws of Thailand
(f) This Agreement shall inure to benefit of Employee and the
Company and their respective representatives, successors and permitted assigns
and shall bind the Company and Employee and their respective representatives,
successors and permitted assigns. The Company shall have the right, without
Employee's consent, to assign or transfer this Contract or the benefits or
obligations hereof or any part hereof to the Company's lenders.
(g) The Company represents and warrants to Employee as follows:
(h) The Company is a corporation duly organized, validly existing
and in good standing under the laws of The Kingdom of Thailand and has all
requisite corporate power and authority to enter into, execute, and deliver this
Agreement, fulfill its obligations hereunder and consummate the transactions
contemplated hereby; and
(i) The execution and delivery of, performance of obligations under,
and consummation of the transactions contemplated by this Agreement have been
duly authorized and approved by requisite corporate action by or in respect of
the Company, and this Agreement constitutes a legally valid and binding
obligation of the Company enforceable against the Company by Employee in
accordance with its terms.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
/s/ Sawasdi Horrungruang
-------------------------
SAWASDI HORRUNGRUANG
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
By: /s/ Sawasdi Horrungruang
----------------------------
Its: Chairman
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Exhibit 10.16
EMPLOYMENT AGREEMENT
This employment agreement (this "Agreement"), dated as of February 14,
1998, is between NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED (the "Company")
and CHAMNI JANCHAI, an individual ("Employee").
BACKGROUND INFORMATION
A. The Company desires to employ Employee as its Vice Chairman
B. Employee is willing to serve in such capacities and undertake the
responsibilities of such positions on the terms and conditions
contained herein.
Statement of Agreement
Section 1. Employment and Term. Subject to the terms and conditions
of this Agreement, the Company shall employ Employee as its Vice Chairman during
the Term (as hereinafter defined). Employee's employment by the Company pursuant
to this Agreement shall commence on the date hereof and, subject to the terms
and conditions of this Agreement, shall continue until February 14, 2008, (the
"Term"). During the Term, Employee shall be expected to perform such duties and
carry out such responsibilities as may be reasonably assigned to him from time
to time by the Board of Directors of NSM upon the recommendation of NSM
Management Company (the "Management Co.,").
Section 2. Compensation and Benefits. Except as otherwise provided
herein, as compensation for his services to the Company, Employee shall receive
during the Term:
(a) A base salary payable in accordance with the Company's
usual pay practices (and in any event no less frequently than monthly) at the
rate of 7,650,000 Baht per annum, with an increase of 5% per annum (calculated
on cumulative compounded basis) during the Term, plus expense reimbursement of
up to 3,150,000 Baht per annum, during the Term;
(b) At the discretion of the Management Co., an annual bonus
based on the Company's return on equity, profitability, operating efficiency and
adherence to capital expenditure budgets and construction timetables, payable in
such manner and in such amount as determined by the Management Co.;
(c) Rights to participate in any insurance, employee
retirement, benefit or welfare plan that is generally available to senior
officers of the Company, with participation in and benefits under any such plan
shall be on the terms and subject to the conditions specified in the governing
documents of the particular plan;
(d) First class coverage health, accident and life insurance
for Employee, his wife and children until the age of 21;
(e) Four weeks paid vacation; and
<PAGE>
(f) Such other fringe and employee benefits as may be provided
from time to time by the Management Co.
Section 3. Termination.
(a) Employee's employment with the Company may be terminated
at any time with or without Cause (as hereinafter defined) by the Company upon
notice. If Employee's employment is terminated by the Management Co. for Cause,
then his compensation shall terminate on the effective date of termination.
"Cause" shall mean (i) a felony conviction of Employee involving dishonesty or
moral turpitude, or (ii) willful misconduct, fraud, embezzlement, or flagrant
dereliction of duty in the performance or nonperformance of his duties
hereunder; provided, however, that the Management Co. shall provide Employee
with written notice of any of events enumerated in the preceding clause 3
(a)(ii) and shall give Employee thirty (30) days from such notice to effect a
cure of any such event when and if such a cure is reasonably possible in the
company's sole discretion. If the Management Co., upon the approval of the Board
of Directors of NSM, terminates Employee's employment without Cause, then the
Company shall continue to pay Employee's base salary as severance pay for the
remainder of the Term. In addition, the Company shall pay at the customary time
for any bonus payment a bonus equal to the average of the annual bonus payments
previously paid to the Employee during the Term pursuant to subsection 2(b),
prorated on a per diem basis for partial fiscal years. Such continuation of
Employee's salary and bonus following termination without Cause, if any, shall
not be interrupted or cease as a result of his death or disability. If Employee
terminates his employment other than for the reason provided in subsection 3(b)
(which termination must be upon at least 30 days' notice) or if Employee dies,
then his right to any all compensation hereunder shall terminate on the day he
terminates such employment or dies, as the case may be.
(b) If the Management Co., the Company, any Affiliate of the
Management Co. or the Company or any third party that purchases a controlling
interest in the Management Co. or any Affiliate of the Company (whether by
merger, consolidation, sale of all or substantially all of its assets, or sale
of a majority of the capital stock of the Company or the capital stock of any
Affiliate), materially changes Employee's duties, responsibilities or authority
with the Company without his consent other than for Cause, Employee shall have
the right to terminate his employment with the Company upon notice, in which
event the Company shall continue to pay Employee's base salary as severance pay
for the remainder of the Term; in addition, the Company shall pay a one-time
severance bonus payment equal to the average of the annual bonus payments
previously paid to the Employee during the Term pursuant to subsection 2(b),
prorated on a per diem basis for partial fiscal years. Such continuation of
salary and payment of such one-time severance bonus, if any, shall not be
interrupted or cease as a result of Employee's death or disability.
(c) The continued payment of salary and bonus or salary and
the one-time severance bonus pursuant, as the case may be, to subsections 3(a)
and 3(b) shall be the exclusive payment due Employee upon the termination of his
employment with the Company pursuant to this Agreement. All other compensation,
benefits and perquisites shall cease as of the effective date of such
termination and no other payments or benefits shall be due hereunder.
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<PAGE>
Section 4. Confidential Information. Employee shall maintain in
strict confidence and shall not, directly or indirectly, divulge, transmit,
publish, or release or otherwise use or cause to be used in any manner to
Compete with or that is contrary to the interests of the Company, any
confidential or proprietary information relating to the Company's systems,
operations, formulas, processes, computer programs and databases, records
development data and reports, quality control specifications, cost analysis,
flow charts, know-how, customer lists, supplier lists, marketing data, personnel
data, or any information relating to sales, financial structure or pricing, and
other information of like nature. Employee acknowledges that all information
regarding the Company compiled or obtained by, or furnished to, Employee in
connection with his employment or association with the Company is confidential
and proprietary information and the Company's exclusive property. Upon demand by
the Company, Employee shall surrender to the Company all original and facsimile
records, documents and data in his possession pertaining to the Company. The
foregoing covenant of confidentiality has no temporal, geographical or
territorial limitation.
Notwithstanding the foregoing, this provision does not apply to the
extent, and only to the extent, such information: (a) is clearly obtainable in
the public domain, (b) becomes obtainable in the public domain through no fault
of Employee's, (c) was not acquired by Employee in connection with his company
or affiliation with the Company, or (d) is required to be disclosed by rule of
law or by order of a court or governmental body or agency.
Section 5. Independent Significance The restrictive covenants
contained herein shall be construed as independent of the other provisions of
this Agreement, and the existence of any claim or cause of action of Employee,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by the company of any of the restrictive covenants
contained herein.
Section 6. Injunctive Relief and Specific Performance If Employee
breaches any of his obligations contained in Section 4 of this Agreement the
injuries that shall be suffered by the Company shall be irreparable, and the
Company shall not have an adequate remedy at law. Employee therefore agrees
that, in the event of such a breach, the Company shall be entitled to injunctive
relief or specific performance in addition to all other rights that the Company
may have at law, in equity, or otherwise.
Section 7. Severability All provisions of this Agreement are
intended to be severable. In the event any provision or restriction contained
herein is held to be invalid or unenforceable in any respect, in whole or in
part, such finding shall in no way affect the validity or enforceability of any
other provisions of this Agreement. The parties hereto further agree that any
such invalid or unenforceable provision shall be deemed modified so that it
shall be enforced to the greatest extent permissible under law.
Section 8. Nonwaiver. No failure or delay by either party in
exercising such party's rights hereunder shall operate as a waiver thereof and
no single or partial exercise thereof shall preclude any further exercise of any
right, power, or privilege by such party.
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<PAGE>
Section 9. Notices. All notices and other communications hereunder
shall be in writing an shall be either personally delivered or mailed by
certified mail, return receipt requested, addressed as follows;
if to the Company: Nakornthai Strip Mill Public Company
Limited
Chonburi Industiral Estate
358 Moo 6
Highway 331
Bowin, Sriracha, Chonburi 20230
Attention: Board of Directors
if to Employee: Chamni Janchai
Nakornthai Strip Mill Public Company
Limited
9 Ramkhamhaeng Road
19th Floor, UM Tower
Suanluang, Bangkok 10250
or such other address as either party notifies the other by certified mail or
personal delivery. Notice shall be deemed given when personally delivered.
Section 10. Expenses. In any legal action brought to enforce the
provisions of this Agreement, the non-prevailing party will, upon demand, pay to
the prevailing party the amount of any and all reasonable expenses, including
the reasonable fees and expenses of such prevailing party's counsel, which any
such prevailing party may incur in connection with (a) the exercise or
enforcement of any of its rights hereunder, or (b) the failure by the
non-prevailing party to perform or observe any of the provisions hereof.
Section 11. Miscellaneous
(a) This Agreement is for personal services to be provided by
Employee and shall not be assigned or transferred by Employee to, and Employee's
obligations hereunder shall not be performed by, any other party.
(b) Employee represents and warrants that he is not under any
obligation, contractual or otherwise, to any person, firm, corporation or entity
which would prevent his entering into this Agreement or performing his
obligations hereunder.
(c) This Agreement contains the entire agreement between the
parties hereto regarding the subject matter hereof and supersedes all prior and
contemporaneous agreements, understandings, negotiations and discussions,
whether oral or written.
(d) Heading shall not be considered part of this Agreement.
They are included solely for convenience and are not intended to be full or
accurate descriptions of the contents hereof.
(e) This Agreement shall be governed by, and construed in
accordance with, the laws of Thailand
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<PAGE>
(f) This Agreement shall inure to benefit of Employee and the
Company and their respective representatives, successors and permitted assigns
and shall bind the Company and Employee and their respective representatives,
successors and permitted assigns. The Company shall have the right, without
Employee's consent, to assign or transfer this Contract or the benefits or
obligations hereof or any part hereof to the Company's lenders.
(g) The Company represents and warrants to Employee as
follows:
(i) The Company is a corporation duly organized, validly
existing and in good standing under the laws of The Kingdom of Thailand and has
all requisite corporate power and authority to enter into, execute, and deliver
this Agreement, fulfill its obligations hereunder and consummate the
transactions contemplated hereby; and
(ii) The execution and delivery of, performance of
obligations under, and consummation of the transactions contemplated by this
Agreement have been duly authorized and approved by requisite corporate action
by or in respect of the Company, and this Agreement constitutes a legally valid
and binding obligation of the Company enforceable against the Company by
Employee in accordance with its terms.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
/s/ Chamni Janchai
-------------------
CHAMNI JANCHAI
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
By: /s/ Sawasdi Horrungruang
----------------------------
Its: Chairman
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<PAGE>
EXHIBIT 12
NAKORNTHAI STRIP MILL PUBLIC COMPANY LIMITED
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------
1994 1995 1996 1997
--------- --------- ---------- -----------
<S> <C> <C> <C> <C>
BAHT BAHT BAHT BAHT
Thai GAAP:
Net loss........................................................... -- -- -- (1,294,542)
Add fixed charges, excluding amounts capitalized................... -- -- -- --
--------- --------- ---------- -----------
Adjusted loss...................................................... -- -- -- (1,294,542)
--------- --------- ---------- -----------
--------- --------- ---------- -----------
Fixed Charges:
Interest capitalized............................................... -- 2,409 86,094 1,085,790
Interest portion of rentals capitalized(1)......................... -- -- 58 108
Interest portion of rentals expensed(1)............................ -- -- -- --
Amortization of debt issuance costs................................ -- -- -- --
--------- --------- ---------- -----------
Total fixed charges.............................................. -- 2,409 86,152 1,085,898
--------- --------- ---------- -----------
--------- --------- ---------- -----------
Deficiency of earnings to fixed charges.............................. -- 2,409 86,152 2,380,440
--------- --------- ---------- -----------
--------- --------- ---------- -----------
U.S. GAAP:
Net earnings (loss)................................................ 35,985 (166,494) (8,762,598)
Add fixed charges, excluding amounts capitalized................... -- 7,256 7,306
--------- ---------- -----------
Adjusted earnings (loss)........................................... 35,985 (159,238) (8,755,292)
--------- ---------- -----------
--------- ---------- -----------
Fixed charges:
Interest capitalized............................................... 2,409 86,094 1,085,790
Interest portion of rentals capitalized(1)......................... -- -- --
Interest portion of rentals expensed(1)............................ -- 58 108
Amortization of debt issuance costs................................ -- 7,198 7,198
--------- ---------- -----------
Total fixed charges.............................................. 2,409 93,350 1,093,096
--------- ---------- -----------
--------- ---------- -----------
Ratio of earnings to fixed charges................................... 14.9 -- --
--------- ---------- -----------
--------- ---------- -----------
Deficiency of earnings to fixed charges.............................. -- 252,588 9,848,388
--------- ---------- -----------
--------- ---------- -----------
</TABLE>
- ------------------------
(1) Management of the Company believes approximately one-third of rental and
lease expense is representative to the interest component of rent expense.
<PAGE>
EXHIBIT 23.03
The Board of Directors
Nakornthai Strip Mill Public Company Limited:
We consent to the use of our audit report dated February 14, 1998, except as
to Note 21, which is as of May 12, 1998, on the financial statements of
Nakornthai Strip Mill Public Company Limited as of December 31, 1995, 1996 and
1997, and for each of the years then ended, included herein, and to the
references to our firm under the headings "Summary Financial Information",
"Selected Financial Data" and "Experts" in the prospectus.
Peat Marwick Suthee Limited
Bangkok, Thailand
June 10, 1998
