<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended September 30, 1999 Commission File No. 1-4368
THE LTV CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 75-1070950
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
200 Public Square 44114-2308
Cleveland, Ohio (Zip Code)
Registrant's telephone number, including area code: (216) 622-5000
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter periods that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes |X| No | |
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
99,960,745 shares of common stock
(as of October 31, 1999)
<PAGE> 2
ITEM 1. FINANCIAL STATEMENTS
THE LTV CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(in millions, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
1999 1998 1999 1998
--------- -------- --------- ---------
<S> <C> <C> <C> <C>
SALES $ 983 $ 1,064 $ 2,985 $ 3,284
Costs and expenses:
Cost of products sold 918 927 2,722 2,889
Depreciation and amortization 66 67 197 193
Selling, general and administrative 46 45 137 136
Results of affiliates' operations 6 14 28 32
Net interest and other (income) expense 3 (4) 1 (19)
Special charges - - 39 -
------- ------- ------- -------
Total 1,039 1,049 3,124 3,231
------- ------- ------- -------
INCOME (LOSS) BEFORE INCOME TAXES (56) 15 (139) 53
Income tax provision:
Taxes payable 2 2 6 4
Taxes not payable in cash - 2 - 15
------- ------- ------- -------
Total 2 4 6 19
------- ------- ------- -------
NET INCOME (LOSS) $ (58) $ 11 $ (145) $ 34
======= ======= ======= =======
Earnings (loss) per share:
Basic and Diluted $ (0.58) $ 0.11 $ (1.46) $ 0.33
======= ======= ======= =======
Cash dividends per common share $ 0.03 $ 0.03 $ 0.09 $ 0.09
======= ======= ======= =======
</TABLE>
- -------------
See notes to consolidated financial statements.
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<PAGE> 3
THE LTV CORPORATION
CONSOLIDATED BALANCE SHEET
(in millions, except per share data)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 167 $ 101
Marketable securities - 210
------- -------
Total cash and marketable securities 167 311
Receivables, less allowance for doubtful accounts 484 375
Inventories:
Products 591 571
Materials, purchased parts and supplies 260 283
------- -------
Total inventories 851 854
Prepaid expenses, deposits and other 19 15
------- -------
Total current assets 1,521 1,555
------- -------
INVESTMENTS IN AFFILIATES 382 314
OTHER NONCURRENT ASSETS 233 190
PROPERTY, PLANT AND EQUIPMENT 4,285 4,325
Allowance for depreciation (1,186) (1,060)
------- -------
Total property, plant and equipment 3,099 3,265
------- -------
$ 5,235 $ 5,324
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 354 $ 321
Accrued employee compensation and benefits 312 328
Other accrued liabilities 205 190
------- -------
Total current liabilities 871 839
------- -------
NONCURRENT LIABILITIES
Long-term debt 402 302
Postemployment health care and other insurance benefits 1,523 1,552
Pension benefits 561 565
Other 407 438
------- -------
Total noncurrent liabilities 2,893 2,857
------- -------
SHAREHOLDERS' EQUITY
Convertible preferred stock (aggregate liquidation value $50) 1 1
Common stock (par value $0.50 per share) 53 53
Additional paid-in capital 1,031 1,032
Retained earnings 466 621
Treasury stock (5 million shares at cost) (67) (68)
Accumulated other comprehensive loss and other (13) (11)
------- -------
Total shareholders' equity 1,471 1,628
------- -------
$ 5,235 $ 5,324
======= =======
</TABLE>
See notes to consolidated financial statements.
I-2
<PAGE> 4
THE LTV CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
---------------------
1999 1998
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ (145) $ 34
Adjustments to reconcile income (loss) to net cash
(used in) provided by operating activities:
Special charges 39 -
Noncash losses of affiliates 28 32
Depreciation and amortization 197 193
Income tax provision not payable in cash - 15
Defined benefit pension expense 2 3
Postemployment benefit payments more than related expense (18) (21)
Changes in assets, liabilities and other (118) (70)
------- -------
Net cash (used in) provided by operating activities (15) 186
------- -------
INVESTING ACTIVITIES
Capital expenditures (156) (290)
Investments in steel-related businesses (91) (57)
Net sales of marketable securities 210 102
Proceeds from sale/leaseback and other dispositions 35 4
Other (4) (5)
------- -------
Net cash used in investing activities (6) (246)
------- -------
FINANCING ACTIVITIES
Borrowings 100 3
Dividends paid and other (13) (12)
------- -------
Net cash provided by (used in) financing activities 87 (9)
------- -------
Net increase (decrease) in cash and cash equivalents 66 (69)
Cash and cash equivalents at beginning of period 101 160
------- -------
Cash and cash equivalents at end of period $ 167 $ 91
======= =======
Supplemental cash flow information is presented as follows:
Interest payments $ 27 $ 2
Income tax payments 2 6
Capitalized interest 12 24
Purchases of marketable securities 134 2,209
Sales and maturities of marketable securities 344 2,311
</TABLE>
- ----------------
See notes to consolidated financial statements.
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<PAGE> 5
THE LTV CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1999
NOTE (1) - The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and disclosures required by generally accepted accounting principles for
complete financial statements. All adjustments that are, in the opinion of
management, necessary for a fair presentation have been made and are of a
recurring nature unless otherwise disclosed herein. Certain prior period amounts
have been reclassified to conform with the current period presentation. The
results of operations for the interim periods are not necessarily indicative of
results of operations for a full year. For further information, refer to the
consolidated financial statements and the notes thereto for the year ended
December 31, 1998 included in the LTV Annual Report to Shareholders incorporated
by reference in the 1998 Annual Report on Form 10-K filed with the Securities
and Exchange Commission.
NOTE (2) - At September 30, 1999, accumulated other comprehensive loss included
in the balance sheet amounted to $12 million with no material changes since
December 31, 1998. The accumulated other comprehensive loss at September 30,
1998 was $1 million, with no material changes since December 31, 1997.
NOTE (3) - The Company leases certain manufacturing facilities and equipment,
office space and computer equipment under cancelable and noncancelable leases
that expire at various dates. Minimum future operating lease obligations in
effect at September 30, 1999 are as follows (in millions):
2000 $ 38
2001 32
2002 25
2003 23
2004 22
Later years 120
-----
Total obligations $ 260
=====
NOTE (4) - On October 1, 1999, LTV completed the acquisition of Welded Tube
Company of America ("Welded Tube") for $113.5 million subject to working capital
adjustments. Welded Tube is believed to be the second largest structural tube
manufacturer in North America and produces the broadest range of structural
tubing, used primarily for construction and for the industrial, transportation
and agricultural equipment markets.
On November 10, 1999, LTV acquired Copperweld Corporation and Copperweld Canada,
Inc., ("Copperweld") for an aggregate cash purchase price of approximately $650
million, subject to shareholder equity adjustments. Based on 1998 shipments,
Copperweld is believed to be the largest
I-4
<PAGE> 6
North American manufacturer of mechanical and structural steel tubing and the
world's largest producer of bimetallic wire products. Both transactions will be
accounted for under the purchase method of accounting; and, accordingly, the
results of operations of the acquired companies will be included in the
consolidated financial statements from the respective dates of acquisition.
The following unaudited pro forma financial information for the Company gives
effect to the Welded Tube and Copperweld acquisitions (together the
"Acquisitions") as if they had occurred on January 1, 1999, with comparable pro
forma information for 1998. These pro forma results have been prepared for
comparative purposes only and are not necessarily representative of the results
of operations that would have resulted if the Acquisitions occurred at the
beginning of the year or that may result in the future.
<TABLE>
<CAPTION>
Nine Months Ended
------------------------
September 30,
------------------------
1999 1998
---- ----
<S> <C> <C>
Sales $ 3,609 $ 3,921
Income (loss) before income taxes and special charges $ (118) $ 54
Income (loss) before income taxes $ (157) $ 54
Net income (loss) $ (170) $ 29
Earnings (loss) per share
Basic and diluted $ (1.77) $ 0.22
Average shares outstanding
Basic 100,016 99,840
Diluted 100,016 100,015
</TABLE>
NOTE (5) - In November 1999, the Company issued $275 million of 11.750% Senior
Notes ("Notes") maturing on November 15, 2009 with interest payable
semi-annually. These notes will be senior unsecured obligations of The LTV
Corporation. The Notes are fully and unconditionally guaranteed on a senior
basis by all existing and future domestic wholly owned subsidiaries of LTV
(other than certain unrestricted subsidiaries and special purpose subsidiaries
established to facilitate working capital facilities), and on a subordinated
basis by the Acquisitions. The Notes are redeemable at the option of the Company
in whole or in part, at any time after November 15, 2004 at a price of 105.875%
declining to 100% on or after November 15, 2007. At any time prior to November
15, 2002, the Company may redeem in the aggregate up to 35% of the original
principal amount at a price of 111.750% with proceeds from any public equity
offerings. There are no sinking fund requirements. Upon any change of control,
the Note holders have the right to require the Company to repurchase all or any
part of the Notes at a purchase price equal to 101% of the principal amount plus
accrued and unpaid interest. The terms of the Notes will contain various
covenants similar to the existing 8.20% Senior Notes due 2007, which limit LTV's
ability to incur additional debt; make dividend or other
I-5
<PAGE> 7
distributions of capital stock; purchase, redeem or retire capital stock of the
Company; create liens; consolidate, merge or transfer assets among subsidiaries;
sell assets; and transact business with our subsidiaries. Certain of these
covenants will be eliminated if LTV achieves investment grade rating, as
defined, on these Notes.
LTV has entered into a five-year secured credit facility of $225 million
("Secured Facility") with banks that will be fully and unconditionally
guaranteed on a senior basis by the same guarantors as the Notes. Substantially
all of the assets of the Acquisitions, other than accounts receivable and the
real property and associated fixtures at Welded Tube's Portland, Oregon tubing
plant, including a secured intercompany note between Copperweld Corporation and
Copperweld Canada, Inc., will also secure the new credit facility. Interest will
be reset periodically and is based on LIBOR plus a margin of 3.375% to 4.125%
depending on the ratings that Standard & Poor's and Moody's assign the loans. At
LTV's option, it may borrow at an alternate base rate plus a margin ranging from
2.375% to 3.125% based on similar ratings. The base rate is the higher of the
prime rate or the Federal Funds effective rate plus 1/2 of 1%. Principal
payments in the first four years after issuance will be de minimus, with equal
scheduled payments of $54 million during 2004 at the end of February, May,
August and October 31, 2004. Prepayments are required for proceeds of certain
asset sales, insurance awards, excess cash flow and net cash proceeds of certain
debt or equity issuances if certain financial ratios are not met. The Secured
Facility will contain certain covenants that will limit LTV's ability to incur
additional debt and liens; make dividend payments; enter into agreements to
restrict a subsidiaries' ability to make distributions to the Company; make new
investments, capital expenditures or enter into sale leaseback transactions;
enter into mergers or sell assets; and comply with certain financial ratios.
LTV also issued $80 million aggregate liquidation preference of 8.25% Series A
Cumulative Convertible Preferred Stock (1,600,000 shares), $1.00 par value per
share ("Series A Preferred"). Holders of the Series A Preferred will be entitled
to receive cumulative cash dividends at an annual rate of 8.25% of the
liquidation preference, payable quarterly in arrears on each February 15, May
15, August 15 and November 15 commencing on February 15, 2000. LTV may redeem
all shares of the Series A Preferred, in whole or in part, at any time after
November 18, 2004, at a price equal to 104.13% of the aggregate liquidation
preference of the Series A Preferred declining to 100% in 2009. Upon any such
provisional redemption, LTV will also pay holders of the Series A Preferred an
amount equal to all of the accrued and unpaid dividends to the date of
redemption. The Series A Preferred may be converted at any time in whole or in
part into the number of shares of LTV common stock equal to $50.00 divided by
the conversion price then applicable. The initial conversion price is $3.675 per
share and is subject to adjustment upon the occurrence of certain events. The
Series A Preferred will have no voting rights, except as required by law. Upon
accumulation of accrued and unpaid dividends in an amount equal to six quarterly
dividends (whether or not consecutive), holders of a majority of the outstanding
shares of Series A Preferred will be entitled to appoint at least one but not
more than two members to the Board of Directors.
NOTE (6) - The Company has a 50% interest, accounted for under the equity
method, in an unconsolidated joint venture, Trico Steel Company, L.L.C. ("Trico
Steel"). Included in LTV's consolidated results are pretax losses of $5 million
and $14 million for the three months ended September 30, 1999 and 1998,
respectively, and pretax losses of $25 million and $33 million for the nine
months ended September 30, 1999 and 1998, respectively, representing the
Company's share of
I-6
<PAGE> 8
Trico Steel operating results. The following is a summary of the financial
information related to Trico Steel (in millions):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
-------------------------- -----------------------
Results of operations: 1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 86 $ 61 $203 $214
Costs and expenses 96 89 254 280
---- ---- ---- ----
Pretax loss $(10) $(28) $(51) $(66)
==== ==== ==== ====
Financial Position: September 30, 1999 December 31, 1998
-------------------------- -----------------------
Current assets $ 91 $ 54
Noncurrent assets 514 531
Current liabilities (58) (27)
Noncurrent liabilities (336) (296)
---- ----
Net assets $211 $262
==== ====
</TABLE>
NOTE (7) - The Company operates in three reportable segments consisting of
Integrated Steel, Metal Fabrication and Corporate and Other. Integrated Steel
manufactures and sells a diversified line of carbon steel products consisting of
hot rolled and cold rolled sheet, galvanized and tin mill products for the
domestic transportation, appliance, container and electrical equipment markets.
Metal Fabrication produces pipe, conduit and tubular products for use in
transportation, agriculture, oil and gas and construction industries. The
segment also engineers and manufactures pre-engineered, low-rise steel building
systems for manufacturing, warehousing and commercial applications. Corporate
and Other consists of steel-related joint ventures, primarily Trico Steel and
Cliffs and Associates Limited ("CAL"), which are accounted for using the equity
method, and corporate investments and related income and expense.
LTV's reportable segments are strategic business units grouped by similar
products, technologies and manufacturing processes. They are managed separately
because each segment serves a different market and group of customers. Segment
performance is measured on pretax profit or loss from operations before special
items. Intersegment sales are accounted for at current market prices as if
transactions had taken place with third parties.
<TABLE>
<CAPTION>
1999 1998
------------------------------------------ ---------------------------------------------
Integrated Metal Corporate Integrated Metal Corporate
For the three months ended September 30: Steel Fabrication & Other Total Steel Fabrication & Other Total
----- ----------- ------- ----- ----- ----------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Trade sales $ 803 $180 $ - $983 $886 $178 $ - $1,064
Intersegment sales 20 - - 20 26 - - 26
Segment income (loss) before
special charges and income taxes (57) 14 (13) (56) 13 15 (13) 15
</TABLE>
<TABLE>
<CAPTION>
1999 1998
------------------------------------------ ---------------------------------------------
Integrated Metal Corporate Integrated Metal Corporate
For the nine months ended September 30: Steel Fabrication & Other Total Steel Fabrication & Other Total
----- ----------- ------- ----- ----- ----------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Trade sales $2,490 $495 $ - $2,985 $2,770 $514 $ - $3,284
Intersegment sales 64 - - 64 67 - - 67
Segment income (loss) before
special charges and income taxes (94) 35 (41) (100) 34 45 (26) 53
Special charges (39) - - (39) - - - -
</TABLE>
I-7
<PAGE> 9
NOTE (8) - LTV's wholly owned subsidiary, LTV Steel Company, Inc., has fully and
unconditionally guaranteed the Company's obligation to pay principal, premium,
if any, and interest with respect to the 8.20% Senior Notes due September 2007.
The following supplemental condensed consolidating financial statements of The
LTV Corporation present the balance sheets as of September 30, 1999 and December
31, 1998; statements of operations for the three months and nine months ended
September 30, 1999 and 1998; and statements of cash flows for the nine months
ended September 30, 1999 and 1998. The LTV Corporation (Parent), LTV Steel
Company, Inc. (Guarantor), and the combined Non-Guarantor Subsidiaries'
investments in subsidiaries are accounted for using the equity method. Necessary
elimination entries have been made to consolidate the Parent and all of its
subsidiaries.
Condensed Consolidating Balance Sheet (in millions):
<TABLE>
<CAPTION>
September 30, 1999
-------------------------------------------------------------------
Non-Guarantor
Parent Guarantor Subsidiaries Eliminations Consolidated
------ --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash, cash equivalents and marketable securities $ 134 $ (19) $ 52 $ - $ 167
Receivables - - 484 - 484
Notes receivable/(payable) - 771 (771) - -
Inventories - - 851 - 851
Other current assets 3 11 5 - 19
------- ------- ------- ------- -------
Total current assets 137 763 621 - 1,521
Intercompany, net 409 168 (577) - -
Investments and other noncurrent assets 1,256 245 512 (1,398) 615
Property, plant and equipment, net - 2,881 218 - 3,099
------- ------- ------- ------- -------
Total assets $ 1,802 $ 4,057 $ 774 $(1,398) $ 5,235
======= ======= ======= ======= =======
Total current liabilities $ 15 $ 744 $ 112 $ - $ 871
Long-term debt 299 - 103 - 402
Postemployment health care and other insurance benefits - 1,399 124 - 1,523
Pension benefits - 556 5 - 561
Other 17 365 25 - 407
Shareholders' equity 1,471 993 405 (1,398) 1,471
------- ------- ------- ------- -------
Total liabilities and shareholders' equity $ 1,802 $ 4,057 $ 774 $(1,398) $ 5,235
======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
December 31, 1998
-------------------------------------------------------------------
Non-Guarantor
Parent Guarantor Subsidiaries Eliminations Consolidated
------ --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash, cash equivalents and marketable securities $ 276 $ (22) $ 57 $ - $ 311
Receivables 3 - 372 - 375
Notes receivable/(payable) - 891 (891) - -
Inventories - - 854 - 854
Other current assets 3 8 4 - 15
------- ------- ------- ------- -------
Total current assets 282 877 396 - 1,555
Intercompany, net 282 125 (407) - -
Investments and other noncurrent assets 1,405 189 447 (1,537) 504
Property, plant and equipment, net - 3,039 226 - 3,265
------- ------- ------- ------- -------
Total assets $ 1,969 $ 4,230 $ 662 $(1,537) $ 5,324
======= ======= ======= ======= =======
Total current liabilities $ 25 $ 700 $ 114 $ - $ 839
Long-term debt 298 - 4 - 302
Postemployment health care and other insurance benefits - 1,432 120 - 1,552
Pension benefits - 560 5 - 565
Other 18 400 20 - 438
Shareholders' equity 1,628 1,138 399 (1,537) 1,628
------- ------- ------- ------- -------
Total liabilities and shareholders' equity $ 1,969 $ 4,230 $ 662 $(1,537) $ 5,324
======= ======= ======= ======= =======
</TABLE>
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<PAGE> 10
Condensed Consolidating Statement of Operations (in millions):
<TABLE>
<CAPTION>
Three Months Ended September 30, 1999
---------------------------------------------------------------
Non-Guarantor
Parent Guarantor Subsidiaries Eliminations Consolidated
------ --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales $ - $ 891 $ 1,077 $ (985) $ 983
Costs and expenses:
Cost of products sold - 824 1,079 (985) 918
Depreciation and amortization - 59 7 - 66
Selling, general and administrative 3 33 10 - 46
Results of affiliates' operations 52 54 6 (106) 6
Net interest and other (income) expense 1 (17) 19 - 3
------- ------- ------- ------- -------
Total 56 953 1,121 (1,091) 1,039
------- ------- ------- ------- -------
Income (loss) before income taxes (56) (62) (44) 106 (56)
Income tax provision (2) - - - (2)
------- ------- ------- ------- -------
Net income (loss) $ (58) $ (62) $ (44) $ 106 $ (58)
======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended September 30, 1999
---------------------------------------------------------------
Non-Guarantor
Parent Guarantor Subsidiaries Eliminations Consolidated
------ --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales $ - $ 921 $ 1,210 $(1,067) $ 1,064
Costs and expenses:
Cost of products sold - 833 1,161 (1,067) 927
Depreciation and amortization - 59 8 - 67
Selling, general and administrative 2 33 10 - 45
Results of affiliates' operations (14) 1 14 13 14
Net interest and other (income) expense (3) (20) 19 - (4)
------- ------- ------- ------- -------
Total (15) 906 1,212 (1,054) 1,049
------- ------- ------- ------- -------
Income (loss) before income taxes 15 15 (2) (13) 15
Income tax provision (4) (4) 1 3 (4)
------- ------- ------- ------- -------
Extraordinary loss - - - - -
Net income (loss) $ 11 $ 11 $ (1) $ (10) $ 11
======= ======= ======= ======= =======
</TABLE>
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<PAGE> 11
Condensed Consolidating Statement of Operations (Continued)
(in millions):
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1999
---------------------------------------------------------------
Non-Guarantor
Parent Guarantor Subsidiaries Eliminations Consolidated
------ --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales $ - $ 2,684 $ 3,339 $(3,038) $ 2,985
Costs and expenses:
Cost of products sold - 2,468 3,292 (3,038) 2,722
Depreciation and amortization - 176 21 - 197
Selling, general and administrative 9 97 31 - 137
Results of affiliates' operations 132 95 28 (227) 28
Net interest and other (income) expense (2) (51) 54 - 1
Special charges - 39 - - 39
------- ------- ------- ------- -------
Total 139 2,824 3,426 (3,265) 3,124
------- ------- ------- ------- -------
Income (loss) before income taxes (139) (140) (87) 227 (139)
Income tax provision (6) - - - (6)
------- ------- ------- ------- -------
Net income (loss) $ (145) $ (140) $ (87) $ 227 $ (145)
======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1998
---------------------------------------------------------------
Non-Guarantor
Parent Guarantor Subsidiaries Eliminations Consolidated
------ --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales $ - $ 2,911 $ 3,060 $(2,687) $ 3,284
Costs and expenses:
Cost of products sold - 2,643 2,933 (2,687) 2,889
Depreciation and amortization - 172 21 - 193
Selling, general and administrative 9 98 29 - 136
Results of affiliates' operations (46) 1 32 45 32
Net interest and other (income) expense (16) (49) 46 - (19)
------- ------- ------- ------- -------
Total (53) 2,865 3,061 (2,642) 3,231
------- ------- ------- ------- -------
Income before income taxes 53 46 (1) (45) 53
Income tax provision (19) (16) - 16 (19)
------- ------- ------- ------- -------
Net income (loss) $ 34 $ 30 $ (1) $ (29) $ 34
======= ======= ======= ======= =======
</TABLE>
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<PAGE> 12
Condensed Consolidating Cash Flows Statement (in millions):
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1999
---------------------------------------------------------------
Non-Guarantor
Parent Guarantor Subsidiaries Eliminations Consolidated
------ --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net cash (used in) provided by operating activities $(131) $ 113 $ 3 $ - $ (15)
Investing activities:
Capital expenditures - (143) (13) - (156)
Investments in steel-related businesses - - (91) - (91)
Net sales of marketable securities 210 - - - 210
Proceeds from sale/leaseback and other 1 34 (4) - 31
----- ----- ----- --- -----
Net cash provided by (used in) investing activities 211 (109) (108) - (6)
----- ----- ----- --- -----
Financing activities:
Borrowings - - 100 - 100
Dividends paid and other (12) (1) - - (13)
----- ----- ----- --- -----
Net cash (used in) provided by financing activities (12) (1) 100 - 87
----- ----- ----- --- -----
Net increase (decrease) in cash and cash equivalents 68 3 (5) - 66
Cash and cash equivalents at beginning of year 66 (22) 57 - 101
===== ===== ===== === =====
Cash and cash equivalents at end of period $ 134 $ (19) $ 52 $ - $ 167
===== ===== ===== === =====
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1999
---------------------------------------------------------------
Non-Guarantor
Parent Guarantor Subsidiaries Eliminations Consolidated
------ --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net cash (used in) provided by operating activities $(140) $ 259 $ 67 $ - $ 186
Investing activities:
Capital expenditures - (270) (20) - (290)
Investments in steel-related businesses - - (57) - (57)
Net sales of marketable securities 102 - - - 102
Other 2 4 (7) - (1)
----- ----- ----- --- -----
Net cash provided by (used in) investing activities 104 (266) (84) - (246)
----- ----- ----- --- -----
Financing activities:
Borrowings - - 3 - 3
Dividends paid and other (10) (2) - - (12)
----- ----- ----- --- -----
Net cash (used in) provided by financing activities (10) (2) 3 - (9)
----- ----- ----- --- -----
Net increase (decrease) in cash and cash equivalents (46) (9) (14) - (69)
Cash and cash equivalents at beginning of year 108 (16) 68 - 160
----- ----- ----- --- -----
Cash and cash equivalents at end of period $ 62 $ (25) $ 54 $ - $ 91
===== ===== ===== === =====
</TABLE>
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<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Summary results for the three months and nine months ended September 30, 1999
and 1998 for each segment are listed below ($ in millions):
<TABLE>
<CAPTION>
Three Months Ended September 30,
-----------------------------------------------------------------------------
Integrated Steel Metal Fabrication Corporate and Other
---------------------- ------------------------ ------------------------
1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Sales - Trade $ 803 $ 886 $ 180 $ 178 $ - $ -
Intersegment 20 26 - - - -
Cost of products sold 788 805 150 148 - -
Selling, general and administrative 30 30 13 13 3 2
Results of affiliates' operations - - (1) (2) 7 16
Net interest and other (income) expense - - - - 3 (4)
Income (loss) before income taxes (57) 13 14 15 (13) (13)
Tons in thousands
Steel shipments
Trade 1,771 1,811 114 112
Intersegment 62 78 - -
Raw steel production 2,076 2,203 - -
Operating rate 95% 102%
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended September 30,
-----------------------------------------------------------------------------
Integrated Steel Metal Fabrication Corporate and Other
---------------------- ------------------------ ------------------------
1999 1998 1999 1998 1999 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Sales - Trade $ 2,490 $ 2,770 $ 495 $ 514 $ - $ -
Intersegment 64 67 - - - -
Cost of products sold 2,374 2,531 412 425 - -
Selling, general and administrative 88 89 40 38 9 9
Results of affiliates' operations - - (2) (4) 30 36
Net interest and other (income) expense (1) (1) - - 2 (18)
Special charges 39 - - - - -
Income (loss) before income taxes (133) 34 35 45 (41) (26)
Tons in thousands
Steel shipments
Trade 5,400 5,587 334 360
Intersegment 217 196
Raw steel production 6,365 6,200
Operating rate 98% 97%
</TABLE>
I-12
<PAGE> 14
Integrated Steel
- ----------------
Sales in 1999 decreased due to lower average steel selling prices as a result of
the continuing impact of high imports that flooded the market in the last half
of 1998 and lower shipments in the first and third quarters of 1999. Shipments
in the second quarter were equal to the prior year quarter.
Cost of products sold as a percentage of sales increased in 1999 from 1998
primarily as a result of lower average selling prices. During the third quarter
of 1999, costs were impacted by $15 million incurred since August 1, 1999 for
the new USWA labor agreement, $8 million due to the blast furnace reline at the
Cleveland Works that began in September 1999 and $4 million for unplanned power
curtailments and the resulting higher energy costs during the summer months.
These were partially offset by cost reductions including lower purchased
materials for both the third quarter and first nine months of 1999.
Raw steel production at the Company's steelmaking facilities decreased in the
third quarter of 1999 due to the blast furnace reline at the Cleveland Works.
For the nine months ended, raw steel production was lower in 1998 primarily due
to the reduced operating levels in 1998 during the H-4 blast furnace reline at
the Indiana Harbor Works. The Company follows American Iron and Steel Institute
("AISI") standards in calculating its maximum operating rate based on 95% of
blast furnace capacity, which recognizes the average effect of blast furnace
relines. Steel production may be supplemented with purchases of semifinished
steel when demand for the Company's products exceeds production capability.
In the second quarter of 1999, a special charge of $37 million was recorded upon
the suspension of a pilot business systems project being installed at the
Hennepin, Illinois plant. The decision to suspend the implementation does not
affect the implementation of LTV's other new business systems that are providing
higher levels of performance in materials management, plant maintenance,
purchasing, human resources and financial management. LTV also recognized a
special charge of $2 million related to a salaried workforce reduction already
implemented.
Metal Fabrication
- -----------------
Sales in the third quarter of 1999 increased over the third quarter of 1998
primarily due to higher metal buildings sales. For the nine months ended, lower
average tubular selling prices and shipments in 1999 were partially offset by
higher metal buildings sales.
Cost of products sold as a percentage of sales increased in 1999 as a result of
lower average tubular product selling prices and the startup costs of the new
tubing facility in Marion, Ohio.
Corporate and Other
- -------------------
Results of affiliates' operations includes steel-related joint ventures such as
Trico Steel and CAL. The transformer failure that occurred in late January 1999
continued to impact Trico Steel's results into the
I-13
<PAGE> 15
third quarter. With the installation of a final replacement transformer in
September 1999, Trico Steel had access to full power capability for the first
time since December 1998. This permitted Trico Steel to generate its highest
monthly production level and highest monthly shipments in September. Third
quarter 1999 results improved over both the first and second quarters of 1999
and the third quarter of 1998.
Also included in this segment are the start-up costs of CAL, a direct reduced
iron joint venture located in the Republic of Trinidad and Tobago in which LTV
has a 46.5% interest. CAL is progressing but with typical mechanical delays for
a new start-up facility. Global market conditions for scrap substitute have
improved in recent months and will provide an opportunity to increase production
levels as full production capability is achieved.
Lower interest and other income resulted from decreased interest income on lower
levels of investments and lower capitalized interest.
Income Taxes
- ------------
The 1999 and 1998 cash taxes consist of state and federal taxes including a less
than 80% owned subsidiary. The Company continues to maintain a full valuation
allowance to offset the non-cash tax benefit arising from the current year loss.
In the three months and nine months ended September 30, 1998, the Company
recorded $2 million and $15 million, respectively, of non-cash taxes. Under
fresh-start financial statement reporting rules, tax benefits associated with
pre-reorganization net deductible temporary differences and net operating loss
carryforwards cannot be recognized as a reduction to the tax provision but
increase additional paid-in capital.
The Company's ability to reduce future income tax payments through the use of
net operating loss carryforwards could be significantly limited on an annual
basis if the Company were to undergo an "ownership change" within the meaning of
Section 382 of the Internal Revenue Code of 1986. For the purpose of preserving
LTV's ability to utilize its net operating loss carryforwards, Article Ninth of
LTV's Restated Certificate of Incorporation prohibits, with certain limited
exceptions, any unapproved acquisition of common stock that would cause the
ownership interest percentage of the acquirer or any other person to increase to
4.5% or above.
LIQUIDITY AND FINANCIAL RESOURCES
The Company's sources of liquidity include cash and cash equivalents, marketable
securities, cash from operations, long-term borrowings, amounts available under
credit facilities and other external sources of funds. In 1999, total cash, cash
equivalents and marketable securities decreased by $144 million to $167 million
as of September 30, 1999. During 1999, cash used by operating activities
amounted to $15 million. Major uses of cash during 1999 included $156 million in
capital expenditures and $91 million for investments in steel-related
businesses, which includes a 50% owned joint venture with Bethlehem Steel to
convert an existing electrogalvanizing facility in
I-14
<PAGE> 16
Columbus, Ohio to hot-dip galvanizing using state of the art technology. LTV
also acquired 16.5% of an existing electrogalvanizing line in northwestern Ohio.
LTV and Bethlehem Steel also formed a 50% - 50% joint venture to acquire an
automotive steel processing facility.
The Company has two credit facilities with banks, a "Receivables Facility" and
an "Inventory Facility" with substantially all of the Company's receivables and
inventories pledged as collateral under these credit facility agreements. In
September 1999, LTV borrowed $100 million against these credit facility
agreements to finance the October 1, 1999 acquisition of Welded Tube and in
November 1999, borrowed an additional $115 million to complete the Copperweld
acquisition. After giving effect to the borrowings, these facilities provide the
Company with up to an additional $240 million of financing resources at
prevailing market rates. Along with the acquisition of Copperweld, LTV issued
$275 million 11.750% Senior Notes due 2009, entered into a $225 million five-
year secured credit facility and issued $80 million of 8.25% Series A Cumulative
Convertible Preferred Stock. See Note (5) for further discussion of these
issues.
Management believes that cash provided by operations, along with its credit
facilities, are sufficient to fund the current requirements of working capital,
capital expenditures, investments in businesses and joint ventures and other
postemployment benefits. Due to the low production levels experienced by Trico
Steel, LTV and its other two partners entered into credit commitments in 1998 to
lend additional funds to Trico Steel. In the first nine months of 1999, LTV
advanced Trico Steel $23 million against these commitments, with an additional
$5 million commitment remaining from LTV.
The Company's 8.20% Senior Notes due 2007 and the 11.750% Senior Notes due 2009
contain various covenants. These agreements place restrictions on payments of
dividends, share repurchases, capital expenditures, investments in subsidiaries
and borrowings. At September 30, 1999, amounts available for future dividends
and stock repurchases totaled $40 million and is not limited by earnings. The
Company does not believe that the restrictions contained in these covenants will
cause significant limitations on its financial flexibility.
COMPETITION AND PRICES
Domestic steel producers face significant competition from foreign producers
affecting both prices and volume. For the full year 1998, imports of flat rolled
product from all foreign countries totaled approximately 20 million tons or 25%
of domestic steel consumption, an increase of 43% from 1997 levels. A
significant amount of the 1998 increase occurred after July 1998 as the last
half of 1998 had imports totaling 30% of domestic steel consumption. Although
imports for the first nine months of 1999 were 18% of domestic steel consumption
based on preliminary reports by the AISI, the effects of the higher 1998 levels
have led to the reduced prices in 1999. The intensity of foreign competition is
substantially affected by the relative strength of foreign economies and
fluctuations in the value of the U.S. dollar against foreign currencies.
Decisions by some foreign producers with respect to production and sales may be
influenced to a greater degree by political and economic policy considerations
of their governments than by prevailing market conditions. Currency fluctuations
and reduced consumption by Asian markets resulted in a significant increase in
imports in 1998.
I-15
<PAGE> 17
In September 1998, LTV Steel, along with other domestic integrated producers,
filed hot rolled trade cases against dumped and subsidized imports from Japan,
Russia and Brazil. In early 1999, the Department of Commerce ("DOC") issued
final dumping determinations against Japan setting margins ranging from 20% to
67%, against Brazil setting margins ranging from 42% to 43% and countervailing
duty margins ranging from 6% to 10%, and against Russia setting margins ranging
from 74% to 185%.
Despite the DOC's issuance of substantial final dumping determinations against
the three countries and additional countervailing duty determinations against
Brazil, the DOC entered into suspension agreements with Brazil and Russia.
Additionally, the DOC entered into a comprehensive agreement with Russia
covering substantially all imports of Russian steel mill products into the U.S.
Under the terms of the Brazilian suspension agreement, Brazilian producers are
prohibited from exporting any hot rolled steel products into the U.S. until
October 1, 1999. Thereafter such imports are limited to 295,000 metric tons per
twelve-month period. The agreement establishes a reference price of $327 per
metric ton, below which Brazilian producers are prohibited from selling. In
addition, because the reference price is set in U.S. dollars, at the U.S. market
rate, it will not be affected by exchange rate fluctuations.
The Russian suspension agreement includes a moratorium on shipments for the
first year, a quota for four subsequent years and a price provision. Russian
producers are prohibited from exporting any steel to the U. S. covered by the
agreement until January 1, 2000. Thereafter such imports would be limited by the
following quotas: 325,000 metric tons in 2000; 500,000 metric tons in 2001;
675,000 metric tons in 2002; and 725,000 metric tons in 2003. The agreement
establishes minimum prices ranging from $255 to $280 per metric ton FOB, above
which Russian steel must be sold in the U.S.
The Russian comprehensive agreement restricts exports of Russian steel to the
U.S. in major product areas not already covered by other agreements or
antidumping orders. The comprehensive agreement, combined with the hot-rolled
suspension agreement, and the suspension agreement on carbon steel plate signed
in 1997, covers substantially all imports of Russian steel mill products into
the U.S.
On June 21, 1999, LTV Steel, along with other domestic integrated producers,
filed cold rolled trade cases against dumped and subsidized imports from
Argentina, Brazil, China, Indonesia, Japan, Russia, Slovakia, South Africa,
Taiwan, Thailand, Turkey and Venezuela. Antidumping complaints with margins
ranging from 17% to 122% were filed against the twelve countries. Countervailing
duty complaints with margins ranging from 12% to 101% were filed against Brazil,
Indonesia, Thailand and Venezuela. In July 1999, the U. S. International Trade
Commission ("ITC") made preliminary determination that dumped cold rolled steel
imports from Japan, Russia, Brazil, China, Argentina, Indonesia, Taiwan,
Thailand, Slovakia, Turkey, South Africa and Venezuela caused or threatened
I -16
<PAGE> 18
material injury to domestic producers. The ITC also made a preliminary
determination that subsidies on imports from Brazil only caused or threatened
material injury to domestic producers, allowing the countervailing duty
subsidies against Brazil to proceed. Subsequently, the DOC set preliminary
countervailing duties of 7% to 12% against Brazil.
On November 2, 1999, the DOC issued its preliminary determination of appropriate
antidumping margins, setting preliminary margins ranging from 16% to 177% for
the countries of Argentina, Brazil, Japan, Russia, South Africa, Thailand and
Venezuela. On December 8, 1999 the DOC is scheduled to make its preliminary
determination regarding appropriate antidumping margins for Turkey, Indonesia,
China, Taiwan and Slovakia. If the investigations proceed normally, the DOC is
scheduled to make its final antidumping duty determinations no later than 75
days after the date of its preliminary determinations. In December 1999, the DOC
is scheduled to hold countervailing duty hearings and make its final
countervailing duty determinations. In January 2000, the ITC is scheduled to
make its final countervailing injury determinations. Sometime before February
17, 2000, the ITC is scheduled to make its final antidumping injury
determination.
In September 1999, we joined several other petitioners before the ITC seeking
relief on line pipe product imports pursuant to Section 201 of the Trade Act of
1974, as amended. In November 1999, the ITC found that serious injury has
occurred to the domestic industry because of unfairly traded imports.
Petitioners are seeking a quota on import of line pipe of approximately 16% of
domestic consumption. Furthermore, within that general quota petitioners are
seeking specific-country quotas for Korea, Japan and other countries and have
asked the ITC to recommend to the President of the United States that he
initiate negotiations with the exporting countries to secure their agreement to
such quotas.
LTV also competes with other domestic integrated producers, some of which have
greater resources than the Company, and with minimills, which are relatively
efficient, low-cost producers that generally produce steel from scrap in
electric furnaces, have lower employment and environmental costs and generally
target regional markets. Recently developed thin slab casting technologies have
allowed some minimill producers to enter certain sectors of the flat rolled
market that have traditionally been supplied by integrated producers, and other
producers have announced their intention to do the same. Industry experts
estimate that current domestic raw steel production capacity will be increased
by 2% by the end of 2000 as new minimills now under construction engage in
start-up operations or begin operation.
Many steel products face substantial competition from manufacturers of other
products, including plastics, aluminum, ceramics, glass, wood and concrete.
I -17
<PAGE> 19
Joint ventures have been one of the Company's primary means for expanding its
operations, and the Company expects to continue to make investments in joint
ventures. Many of the joint venture opportunities that the Company is pursuing
are start-up operations and require significant investments before becoming
operational. The development, construction and start-up of such operations are
themselves subject to numerous risks. After start-up, further investments may be
required and significant losses could be incurred before any profits are
realized.
On February 28, 1998, the Company ceased operations at the Pittsburgh coke plant
and began the closure process. LTV established reserves for the cost of the
closure and clean-up in the third quarter of 1997. Spending charged against this
reserve in the first nine months of 1999 totaled $14 million. In April 1999, the
Company completed the closure of the cold rolled finishing operations in the
Number 2 finishing department at the Cleveland Works. The expense of this
closure was included as part of the special charges recorded in the fourth
quarter of 1998. There has been $2 million of spending against this reserve in
1999.
ENVIRONMENTAL LIABILITIES AND RELATED COSTS
LTV is subject to changing and increasingly stringent environmental laws and
regulations concerning air emissions, water discharges and waste disposal, as
well as remediation activities that involve the clean-up of environmental media
such as soils and groundwater. As a consequence, the Company has incurred, and
will continue to incur, substantial capital expenditures and operating and
maintenance expenses in order to comply with such requirements. Additionally, if
any of the Company's facilities are unable to meet required environmental
standards or laws, those operations could be temporarily or permanently closed.
If, in the future, the Company were required to investigate and remediate any
contamination at plant sites where hazardous wastes have been used pursuant to
the Resource Conservation Recovery Act, the Company could be required to record
additional liabilities. The Company cannot estimate the cost of these potential
liabilities at this time, but they could be substantial. In addition, certain
environmental laws such as Superfund, can impose liability for the entire cost
of cleanup of contaminated sites upon any of the current and former site owners
or operators or parties who sent waste to these sites, regardless of fault or
the lawfulness of the original disposal activity. Permits and environmental
controls are also required at LTV's facilities to reduce air and water pollution
from certain operations, and these permits are subject to modification, renewal
and revocation by issuing authorities. Additional permits may be required, or
more onerous conditions may be imposed in our existing permits as a result of
increases in production or modifications to certain of our facilities.
During the first nine months of 1999, the Company spent approximately $15
million for environmental clean-up and related matter demolition costs at
operating and idled facilities, and at September 30, 1999 has a recorded
liability of $123 million for known and identifiable environmental and related
matter demolition costs. As the Company becomes aware of additional matters or
obtains more information, it may be required to record additional liabilities
for environmental remediation
I-18
<PAGE> 20
investigation and clean-up of contamination. The Company also spent
approximately $11 million in 1999 for environmental compliance-related capital
expenditures for environmental projects and expects it will be required to spend
an average of approximately $23 million annually in capital expenditures during
the next five years to meet environmental standards.
YEAR 2000 READINESS
Although LTV does not currently manufacture any products containing embedded
chips or any computerized products, LTV (like most companies) has been faced
with the task of addressing the Year 2000 issue, which is the result of computer
programs being written using two digits rather than four to define the
applicable year. Any of the Company's computer programs or any hardware that
have date-sensitive software or embedded chips may recognize a date using "00"
as the year 1900 rather than the year 2000.
Since the commencement of its Year 2000 readiness effort in late 1996, LTV has
been engaged in a company-wide effort to achieve Year 2000 readiness for both
information technology ("IT") and non-information technology ("non-IT") systems
for its consolidated operations. LTV has a Steering Committee for Year 2000
issues, which meets regularly and is comprised of high-level executives and
other management personnel and Year 2000 consultants. The Company is primarily
using its own employees to achieve readiness in most of its manufacturing and
operations systems, augmented by outside expertise related to specific systems.
The Company has contracted with its principal Year 2000 outside contractor (the
"Outside Contractor") to achieve Year 2000 readiness with respect to its steel
business and related information technology infrastructure systems ("Business
Systems").
LTV's Year 2000 readiness program involves several stages, including (1) an
inventory stage to locate programs and devices that may have date sensitivities,
(2) a risk assessment and prioritization stage to determine the degree of
noncompliance and the potential impact on LTV's business, (3) a remediation
stage for affected systems and devices, (4) a test stage to determine if the
repaired program or device is ready, and (5) an implementation stage to return
the program or device back into operation.
The following table shows the Company's estimates of the stages of readiness of
the Business Systems within its consolidated operations as well as its
manufacturing and operations systems which include non-IT systems such as smart
sensors, logic controllers, distributed control systems and embedded
microprocessors.
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<PAGE> 21
As of September 30, 1999
------------------------
Y2K
Readiness
Y2K Y2K Impact of Overall
Inventory Assessment Inventory(1) Completed
--------- ---------- ------------ ---------
Business Systems(2)
- - Integrated Steel 100% 100% 90%
- - Metal Fabrication 100% 100% 100%
Manufacturing Systems(2)
- - Integrated Steel 100% 100% 100%
- - Metal Fabrication 100% 100% 100%
Infrastructure(2)
- - Integrated Steel 100% 100% 100%
- - Metal Fabrication 100% 100% 100%
Supply Chain(2)
- - Integrated Steel NA NA NA 100%
- - Metal Fabrication NA NA NA 100%
Contingency Plans(2)
- - Integrated Steel NA NA NA 100%
- - Metal Fabrication NA NA NA 100%
(1) LTV considers inventory "Y2K ready" only after testing to confirm that
remediation, replacement and/or work around has resolved any material Y2K
problem and such inventory is returned to production. All Integrated Steel
systems are scheduled for completion by the end of 1999.
(2) Excluded from the table are unconsolidated operations accounted for by the
equity method such as Trico Steel and various foreign joint ventures.
Because LTV's IT and non-IT systems are subject to continuous updating, the
Company will continue to monitor any new or modified systems placed in service
prior to the Year 2000 rollover date.
In addition to the Company's Year 2000 program described above, LTV has
implemented a business systems project, which includes new purchasing, accounts
payable, spare parts inventory, human resource and maintenance planning systems
throughout its steel operations. All of the above systems are excluded from the
Year 2000 readiness program costs, which are disclosed below.
New outsourced benefit and payroll systems originally scheduled for
implementation during 1999 will not be completed as expected. As a consequence,
the existing benefit and payroll and related systems
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<PAGE> 22
will be remediated for Year 2000 issues prior to the end of 1999. The
remediation of the existing benefit and payroll and related systems is reflected
in the "Y2K Readiness of Overall Inventory" reported above.
LTV continues to address the additional potential consequences that may result
from unresolved Year 2000 issues and has queried material third parties,
including suppliers, utility and other resource providers and customers to
assess their Year 2000 readiness efforts. The Company has implemented a supply
chain plan for most sole source and mission critical suppliers and customers.
LTV has also developed contingency plans for its steel and steel-related plants,
which assume the loss of electricity, gas and water. These plans include
provisions for alternate sources of power and plans to manage the steel and
steel-related plants to a safe condition followed by a staged recovery to help
ensure employee safety and continued environmental compliance on the Year 2000
rollover date. The Company is taking action to prepare for the implementation of
our contingency plans such as securing generators or otherwise providing for
alternative sources of power and the establishment of command centers for
communication and coordination on the Year 2000 rollover date.
In the event LTV and material third parties such as critical suppliers and/or
customers fail to become Year 2000 compliant, a most reasonably likely worst
case scenario could result in a system failure or miscalculation causing
disruptions of operations, including, among other things, production
difficulties, a temporary inability to process transactions, send invoices, or
engage in similar normal business activities which could result in a material
adverse effect on the Company's business and results of operations.
LTV expects to spend approximately $63 million for its Year 2000 readiness
efforts, with $8 million designated for remediation of manufacturing and
operations systems and $55 million allocated for Business Systems. These
expenses include replacing some outdated, noncompliant hardware and noncompliant
software as well as identifying and remediating known Year 2000 problems. The
Company expensed $14 million in the first nine months of 1999, $35 million and
$8 million of these costs in the years 1998 and 1997, respectively. The funds
expensed for Year 2000 are outside of the normal information technology budget.
Because the readiness program is not yet fully implemented and is subject to
certain risks and uncertainties, including the readiness efforts of material
third parties, there can be no assurance that LTV will not incur material costs
beyond the anticipated costs described above.
The cost of the Year 2000 project and the dates by which the Company believes it
will be Year 2000 ready are based on its current best estimates, which were
derived based on numerous assumptions of future events, including the timely
remediation of the existing benefit, payroll and related systems, the continued
availability of certain resources, third party modification plans and other
factors. There can be no guarantee; however, that these estimates will be
achieved; and actual results could differ materially from those anticipated.
Specific factors that might cause such differences include, but are not limited
to, the availability and cost of personnel trained in this area, the ability to
locate and correct all relevant computer codes and imbedded computer technology
in a timely manner and the ability of the Company's suppliers and customers to
become Year 2000 compliant in a timely manner.
I-21
<PAGE> 23
OTHER MATTERS
On September 2, 1999, United Steelworkers of America ("USWA") represented LTV
employees ratified a five-year labor agreement with LTV covering approximately
9,500 active employees. LTV believes this agreement is competitive with other
USWA integrated steel labor agreements. It provides for, among other things an
aggregate of $2.00 in hourly wage increases, substantial pension improvements,
increased sickness and accident benefits and a revised "neutrality" provision
making it easier for the USWA to organize employees at LTV's non-union plants in
any steel-related operation. This five-year labor agreement includes a "no
strike" clause and puts in place a mechanism for resolving a long-standing
dispute with the USWA relating to the Company's Trico Steel minimill.
As a result of the new labor agreement with the USWA, projected pension benefit
obligations as of January 1, 1999 would have increased by approximately $300
million assuming the discount rate utilized at January 1, 1999. Pension
expenses, on an annualized basis, would increase by approximately $65 million.
No significant funding requirements for the pension liability are anticipated
before the year 2002.
OUTLOOK
Although demand for the Integrated Steel segment's products remains strong and
efforts to increase prices to appropriate levels continue, the recent price
increases will not be sufficient to increase average selling prices to 1998
levels. In addition to the impact of lower selling prices, the Company will also
be affected by the reline of the C-6 blast furnace at the Cleveland Works, which
began in the third quarter and will extend into the fourth quarter.
The Metal Fabrication segment shows continued strong sales of metal buildings
systems and tubular products in a robust construction market, while some pipe
products are being negatively affected by reduced demand in the energy market
and by imports. The Metal Fabrication segment results will continue to reflect
the start-up operating losses from its new Marion, Ohio tubing facility in the
fourth quarter of 1999. Results of Welded Tube and Copperweld and the related
interest expense on the new debt will be reflected in the fourth quarter since
the date of acquisition.
The Corporate and Other segment will be affected by the startup losses of CAL
until sustainable production levels are achieved. Trico Steel has experienced
substantial equipment problems, including but not limited to transformer outages
that have prevented it from reaching satisfactory levels of performance.
Although permanent transformer replacements were completed in the third quarter
of 1999, it is not certain that this will result in Trico Steel becoming
profitable. In addition, interest income will be reduced as compared to prior
periods due to lower cash balances.
This report includes forward-looking statements. Our use of the words "outlook,"
"anticipate," "believes," "estimate," "expect" and similar words is intended to
identify these statements as forward-looking. These statements represent our
current judgment on what the future holds. While the Company believes them to be
reasonable, a number of important factors could cause actual results to
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<PAGE> 24
differ materially from those projected. These factors include relatively small
changes in market price or market demand; changes in domestic capacity; changes
in raw material costs; increased operating costs; loss of business from major
customers, especially for high value-added product; unanticipated expenses;
substantial changes in financial markets; labor unrest; unfair foreign
competition; major equipment failure; unanticipated results in pending legal
proceedings; or difficulties in implementing information technology, including
Year 2000 compliant systems. In this regard, we also direct your attention to
factors discussed above in the Management's Discussion and Analysis.
I-23
<PAGE> 25
PART II
ITEM 1. LEGAL PROCEEDINGS
In September 1999, LTV filed an action in the U.S. Bankruptcy Court for the
Southern District of New York seeking a declaratory judgment that the claims
that the City of Buffalo has asserted against LTV Steel in connection with the
proposed clean up of certain property sold in 1992 by LTV Steel and Hanna
Furnace Corporation, a joint venture partner, to the Buffalo Renewal Authority,
an agency of the City of Buffalo, have been discharged or otherwise dealt with
by LTV's Chapter 11 reorganization. Also, LTV and Hanna Furnace have filed an
action in the U.S. District Court for the Western District of New York claiming
unspecified damages and seeking injunctive relief in connection with the City
of Buffalo's placement of more than 100,000 cubic yards of contaminated soil on
property owned by LTV Steel and property owned jointly by LTV Steel and Hanna
Furnace.
In July 1999, the U.S. EPA issued two violations to Copperweld Corporation
concerning air emissions at its Shelby, Ohio facility. Copperweld received a
"Finding of Violation" alleging that it (i) failed to conduct a timely initial
performance test with respect to air emissions from its chrome plating operation
and (ii) failed to notify the EPA of such test. Copperweld also received a NOV
from the U.S. EPA alleging that emissions from the Shelby facility's rotary
hearth furnace exceeded permit limits. The purchase agreement governing LTV's
acquisition of Copperweld provides for full indemnification by the seller
for these NOVs.
Since August 1, 1999, more than 775 asbestosis Ohio workers' compensation
claims have been filed with LTV Steel, the majority of which were filed on
behalf of retired employees who worked at facilities that were closed in the
early 1980s. All of the asbestosis workers' compensation claims were filed by
the same Cleveland law firm.
In September 1999, the Patent Office Board of Appeals affirmed the findings
of the U.S. Patent Office in the Inland Steel Company patent litigation against
LTV Steel described in LTV's Report on 10-K for the year ended December 31,
1998. (The U.S. Patent Office had found Inland's patents to be invalid.)
In October 1999, the partial settlement with the U.S. EPA in the
environmental proceeding involving the Cleveland Works and the Warren coke plant
described in LTV's 10-K Report was entered with the U.S. District Court for the
Northern District of Ohio. In accordance with the terms of the settlement, LTV
Steel paid a civil penalty of $85,000 and all the counts in the complaint
relating to the Warren coke plant were dismissed.
II-1
<PAGE> 26
ITEM 5. OTHER INFORMATION
BY-LAW AMENDMENTS:
ADVANCE STOCKHOLDER NOTICE REQUIREMENTS AND OTHER PROVISIONS
LTV has provisions in its By-Laws intended to promote the efficient
functioning of its annual meetings. The provisions describe LTV's right to
determine the time, place and conduct of stockholder meetings, require advance
notice by mail or delivery to LTV of stockholder proposals or director
nominations for annual meetings and require persons wishing to conduct a
solicitation of written consents of stockholders or to call a special meeting of
stockholders to apply to the Board of Directors to set a record date for the
consent solicitation or to determine whether the requisite number of
stockholders desire to call a special meeting.
Under the By-Laws, stockholders must provide LTV with at least 60 days, but
no more than 90 days, notice prior to the announced Tentative Meeting Date of
(i) business the stockholder is proposing for consideration at that meeting and
(ii) persons the stockholder intends to nominate for election as directors at
that meeting.
LTV has selected April 28, 2000 as the Tentative Meeting Date for the next
Annual Meeting of Stockholders. Accordingly, stockholders who intend to propose
business for consideration, or to nominate persons for election as directors at
the 2000 Annual Meeting, are required to provide notice and the required
information to the Company no earlier than January 29, 2000 and no later than
February 28, 2000.
REQUIRED APPROVAL FOR CERTAIN PURCHASES OF
COMMON STOCK
For the purpose of preserving LTV's ability to utilize certain favorable
tax attributes, Article Ninth of LTV's Restated Certificate of Incorporation
prohibits, with certain limited exceptions, any unapproved acquisition of Common
Stock that would cause the ownership interest percentage of the acquirer or any
other person to increase to 4.5% or above. A person's ownership interest
percentage for purposes of Article Ninth is determined by reference to specified
federal income tax principles, including attribution of shares from certain
related parties, deemed exercise of rights to acquire stock and aggregation of
shares purchased by persons acting in concert. PURCHASES OF COMMON STOCK FROM
ANY PERSON OTHER THAN THE COMPANY ARE SUBJECT TO THE LIMITATIONS IMPOSED BY
ARTICLE NINTH, AND ANY UNAPPROVED PURCHASE IN EXCESS OF THE AMOUNTS PERMITTED BY
ARTICLE NINTH WILL BE VOID AB INITIO. A PROSPECTIVE PURCHASER OF COMMON STOCK
WHO BELIEVES THAT IT MAY BE SUBJECT TO THE LIMITATIONS IMPOSED BY ARTICLE NINTH
SHOULD CONSULT WITH THEIR ADVISORS OR LTV IN ADVANCE OF ACQUIRING SUCH
SECURITIES TO DETERMINE IF ADVANCE APPROVAL MUST BE OBTAINED FROM LTV'S BOARD OF
DIRECTORS.
LTV's Board of Directors was required by Article Ninth of LTV's Restated
Certificate of Incorporation to consider during 1996 whether to waive the
transfer restrictions in Article
II-2
<PAGE> 27
Ninth with respect to all future transfers of securities. At its October 1996
meeting, the Board of Directors, after considering all relevant factors,
determined not to waive Article Ninth at that time.
ITEM 6. EXHIBITS AND REPORTS ON 8-K
(a) Exhibits
Certain of the exhibits to this Report are hereby incorporated by
reference, as specified below, to other documents filed with the Commission by
LTV. Exhibit designations below correspond to the numbers assigned to exhibit
classifications in Regulation S-K.
(2)-(1) - The LTV Second Modified Joint Plan of Reorganization
(incorporated herein by reference to Exhibit (28)(a)-(3) to LTV's
Annual Report on Form 10-K for the Fiscal Year ended December 31,
1992, filed with the Commission (File No. 1-4368) on March 31,
1993)
(2)-(2) - Confirmation Order of the United States Bankruptcy Court for the
Southern District of New York entered on May 27, 1993, confirming
the LTV Second Modified Joint Plan of Reorganization (which
includes, as Exhibit C to the Confirmation Order, amendments to
the LTV Second Modified Joint Plan of Reorganization)
(incorporated herein by reference to Exhibit 2(2) to LTV's
Current Report on Form 8-K, filed with the Commission (File No.
1-4368) on June 7, 1993)
(3)-(1) - Restated Certificate of Incorporation of LTV dated June 28, 1993
(incorporated herein by reference to Exhibit 3.1 to LTV's
Registration Statement on Form S-1 [Registration No. 33-50217])
(3)-(2) - Certificate of Designations for Series B Preferred
Stock (incorporated herein by reference to Exhibit 4 to SMI
America, Inc.'s 13D Filing)
(3)-(3) - LTV's Restated By-Laws adopted on September 1, 1998 (incorporated
herein by reference to Exhibit (3)-(3) to LTV's Report on Form
10-Q for the quarter ended September 30, 1998)
II-3
<PAGE> 28
(10)-(1) - LTV Executive Benefit Plan as amended and restated effective
January 1, 1985 (incorporated herein by reference to Exhibit
(10)(c)-(2) to LTV's Report on Form 10-K for the year ended
December 31, 1985)
(10)-(2) - Amendment to LTV Executive Benefit Plan adopted November 20,
1987 (incorporated herein by reference to Exhibit (10)(c)-(3) to
LTV's Report on Form 10-K for the year ended December 31, 1987)
(10)-(3) - LTV Excess Benefit Plan dated as of January 1, 1985
(incorporated herein by reference to Exhibit (10)(c)-(5) to
LTV's Report on Form 10-K for the year ended December 31, 1984)
(10)-(4) - Securities Purchase Agreement dated as of May 26, 1993 by and
among LTV, LTV Steel Company, Inc. and SMI America, Inc.
(incorporated herein by reference to Exhibit 2 to SMI America,
Inc.'s 13D Filing)
(10)-(5) - Common Stock Registration Rights Agreement dated as of June 28,
1993 by and between LTV and SMI America, Inc. (incorporated
herein by reference to Exhibit 5 to SMI America, Inc.'s 13D
Filing)
(10)-(6) - Consultation and Management Participation Agreement dated as of
June 28, 1993 between LTV and Sumitomo Metal Industries, Ltd.
(incorporated herein by reference to Exhibit 6 to SMI America,
Inc.'s 13D Filing)
(10)-(7) - L-S Exchange Right and Security Agreement dated as of June 28,
1993 by and among LTV/EGL Holding Company, Sumikin EGL Corp.,
LTV, SMI America Inc., and Sumitomo Metal USA Corporation
(incorporated herein by reference to Exhibit 7 to SMI America,
Inc.'s 13D Filing)
(10)-(8) - Amendments Nos. 1 and 2 to the Securities Purchase Agreement
dated as of May 26, 1993 among LTV, LTV Steel Company, Inc. and
SMI America, Inc. (incorporated herein by reference to Exhibit
(10)-(20) to LTV's Report on Form 10-Q for the quarter ended
September 30, 1994)
II-4
<PAGE> 29
(10)-(9) - Revolving Credit Agreement dated as of October 12, 1994 among
LTV Sales Finance Company, the financial institutions parties
thereto as banks, the issuing banks, the facility agent and
collateral agent (incorporated herein by reference to Exhibit
(10)-(22) to LTV's Report on Form 10-Q for the quarter ended
September 30, 1994)
(10)-(10) - Receivables Purchase and Sale Agreement dated as of October 12,
1994 among LTV, LTV Steel Company, Inc., Continental Emsco
Company, LTV Steel Tubular Products Company, Georgia Tubing
Corporation and LTV Sales Finance Company (incorporated herein
by reference to Exhibit (10)-(23) to LTV's Report on Form 10-Q
for the quarter ended September 30, 1994)
(10)-(11) - Accession Agreement dated as of October 12, 1994 among LTV
Sales Finance Company, the financial institutions listed on the
signature pages thereof, the issuing bank named thereon, and
Bankers Trust Company as facility agent and collateral agent
(incorporated herein by reference to Exhibit (10)-(24) to LTV's
Report on Form 10-Q for the quarter ended September 30, 1994)
(10)-(12) - Trust Termination Acknowledgment and Agreement, dated October
12, 1994, between LTV Sales Finance Company and Wilmington
Trust Company (incorporated herein by reference to Exhibit
(10)-(25) to LTV's Report on Form 10-Q for the quarter ended
September 30, 1994)
(10)-(13) - Assignment and Transfer Agreement, dated as of October 12,
1994, by and between LTV Master Receivables Trust and LTV Sales
Finance Company (incorporated herein by reference to Exhibit
(10)-(26) to LTV's Report on Form 10-Q for the quarter ended
September 30, 1994)
(10)-(14) - Collateral Trust Agreement dated as of May 25, 1993 among LTV,
LTV Steel Company, Inc., United Steelworkers of America and
Bank One Ohio Trust Company, NA, as Collateral Trustee
(incorporated herein by reference to Exhibit 10.33 to LTV's
Report on Form 10-Q for the quarter ended June 30, 1993)
II-5
<PAGE> 30
(10)-(15) - Open-End Mortgage, Security Agreement and Fixture Filing dated
as of June 28, 1993 by LTV Steel Company, Inc. to Bank One Ohio
Trust Company, N.A. (incorporated herein by reference to
Exhibit 10.34 to LTV's Report on Form 10-Q for the quarter
ended June 30, 1993)
(10)-(16) - License Agreement dated as of June 28, 1993 between LTV Steel
Company, Inc. and Bank One Ohio Trust Company, N.A.
(incorporated herein by reference to Exhibit 10.35 to LTV's
Report on Form 10-Q for the quarter ended June 30, 1993)
(10)-(17) - Settlement Agreement and Stipulated Order on behalf of the
United States of America on behalf of the United States
Environmental Protection Agency approved by the United States
Bankruptcy Court for the Southern District of New York (the
"Court") on April 15, 1993 and supplemented by Exhibit 10.38
below (incorporated herein by reference to Exhibit 10.38 to
LTV's Report on Form 10-Q for the quarter ended June 30, 1993)
(10)-(18) - Second Settlement Agreement and Stipulated Order supplementing
10.36 above and approved by the Court on May 19, 1993
(incorporated by reference to Exhibit 10.39 to LTV's
Registration Statement on Form S-1 [Registration No. 33-50217])
(10)-(19) - Settlement Agreement and Stipulated Order on behalf
of the State of Minnesota approved by the Court on May 19, 1993
(incorporated herein by reference to Exhibit 10.39 to LTV's
Report on Form 10-Q for the quarter ended June 30, 1993)
(10)-(20) - Settlement Agreement and Stipulated Order on behalf of the
State of Indiana on behalf of the Indiana Department of
Environmental Management approved by the Court on May 24, 1993
(incorporated herein by reference to Exhibit 10.40 to LTV's
Report on Form 10-Q for the quarter ended June 30, 1993)
(10)-(21) - Settlement Agreement and Stipulated Order on behalf of the
State of New York and approved by the Court on May 24, 1993
(incorporated herein by reference to Exhibit 10.42 to LTV's
Report on Form 10-Q for the quarter ended June 30, 1993)
II-6
<PAGE> 31
(10)-(22) - Settlement Agreement and Stipulated Order on behalf of the
State of Connecticut and approved by the Court on May 19, 1993
(incorporated herein by reference to Exhibit 10.43 to LTV's
Report on Form 10-Q for the quarter ended June 30, 1993)
(10)-(23) - Settlement Agreement and Stipulated Order on behalf of the
Commonwealth of Pennsylvania and approved by the Court on May
24, 1993 (incorporated herein by reference to Exhibit 10.44 to
LTV's Report on Form 10-Q for the quarter ended June 30, 1993)
(10)-(24) - Settlement Agreement and Stipulated Order on behalf of the
State of Ohio on behalf of the Ohio Environmental Protection
Agency and approved by the Court on May 24, 1993 (incorporated
herein by reference to Exhibit 10.45 to LTV's Report on Form
10-Q for the quarter ended June 30, 1993)
(10)-(25) - Settlement Agreement and Stipulated Order on behalf of the
State of Georgia and approved by the Court on May 24, 1993
(incorporated herein by reference to Exhibit 10.46 to LTV's
Report on Form 10-Q for the quarter ended June 30, 1993)
(10)-(26) - Closing Agreement Between LTV, its subsidiaries and the
Commissioner of Internal Revenue as filed with the United
States Bankruptcy Court for the Southern District of New York
on May 14, 1993 (incorporated herein by reference to Exhibit
10.47 to LTV's Report on Form 10-Q for the quarter ended June
30, 1993)
(10)-(27) - The LTV Corporation Non-Employee Directors Stock Option Plan
adopted on October 22, 1993 (incorporated herein by reference
to Exhibit 10.49 to Amendment No. 2 to LTV's Registration
Statement on Form S-1 [Registration No. 33-50217])
(10)-(28) - Amendment to LTV Executive Benefit Plan adopted October 22,
1993 (incorporated herein by reference to Exhibit 10.50 to
Amendment No. 2 to LTV's Registration Statement on Form S-1
[Registration No. 33-50217])
(10)-(29) - LTV Executive Benefit Trust Agreement approved on October 22,
1993 (incorporated herein by reference to Exhibit 10.51 to
Amendment No. 2 to LTV's Registration Statement on Form S-1
[Registration No. 33-50217])
II-7
<PAGE> 32
(10)-(30) - The LTV Corporation Supplemental Management Retirement Plan
adopted on October 22, 1993 (incorporated herein by reference
to Exhibit 10.52 to Amendment No. 2 to LTV's Registration
Statement on Form S-1 [Registration No. 33-50217])
(10)-(31) - The LTV Corporation Supplemental Management Retirement Trust
Agreement approved on October 22, 1993 (incorporated herein by
reference to Exhibit 10.53 to Amendment No. 2 to LTV's
Registration Statement on Form S-1 [Registration No. 33-50217])
(10)-(32) - The LTV Corporation Management Incentive Program as amended on
January 28, 1994 (incorporated by reference to Exhibit
(10)-(53) to LTV's Report on Form 10-K for the year ended
December 31, 1993)
(10)-(33) - Amendment to The LTV Corporation Supplemental Management
Retirement Plan adopted on January 28, 1994 (incorporated by
reference to Exhibit (10)-(54) to LTV's Report on Form 10-K for
the year ended December 31, 1993)
(10)-(34) - Amendment to LTV Executive Benefit Plan adopted October 28,
1994 (incorporated herein by reference to Exhibit (10)-(48) to
LTV's Report on Form 10-K for the quarter ended September 30,
1994)
(10)-(35) - Amendment to The LTV Corporation Management Incentive Program
adopted October 28, 1994 (incorporated herein by reference to
Exhibit (10)-(49) to LTV's Report on Form 10-Q for the quarter
ended September 30, 1994)
(10)-(36) - Amendment to The LTV Corporation Supplemental Management
Retirement Plan adopted on October 28, 1994 (incorporated
herein by reference to Exhibit (10)-(51) to LTV's Report on
Form 10-Q for the quarter ended September 30, 1994)
(10)-(37) - The Hourly Employee Stock Payment Alternative Plan
(incorporated herein by reference to Exhibit 4.3 to LTV's
Registration Statement on Form S-8 [Registration No. 33-56861])
II-8
<PAGE> 33
(10)-(38) - Amendment No. 1 to the Receivables Purchase and Sale Agreement
dated as of October 12, 1994 among LTV, LTV Steel Company,
Inc., Continental Emsco Company, LTV Steel Tubular Products
Company, Georgia Tubing Corporation and LTV Sales Finance
Company (incorporated herein by reference to Exhibit (10)-(57)
to LTV's Report on Form 10-Q for the quarter ended September
30, 1995)
(10)-(39) - The LTV Corporation Amended and Restated Non-Employee
Directors' Equity Compensation Plan adopted on November 22,
1996 (incorporated herein by reference to Exhibit (10)-(58) to
LTV's Report on Form 10-K for the year ended December 31, 1996)
(10)-(40) - The LTV Corporation Amended and Restated Non-Employee
Directors' Deferred Compensation Plan adopted on November 22,
1996 (incorporated herein by reference to Exhibit (10)-(59) to
LTV's Report on Form 10-K for the year ended December 31, 1996)
(10)-(41) - The LTV Corporation Amended and Restated Executive Deferred
Compensation Plan adopted on October 25, 1996 (incorporated
herein by reference to Exhibit (10)-(60) to LTV's Report on
Form 10-K for the year ended December 31, 1996)
(10)-(42) - Indenture between LTV and The Chase Manhattan Bank, as Trustee,
(incorporated by reference to Exhibit 4.1 to LTV's Registration
Statement on Form S-4 [Registration No. 333-40425])
(10)-(43) - The LTV Change in Control and Severance Pay Plan I (filed as
Exhibit 10.1 to Amendment No. 1 to LTV's Registration Statement
on Form S-4 [Registration No. 333-40425])
(10)-(44) - Note Purchase and Letter of Credit Agreement dated as of
February 26, 1998 among LTV Steel Company, Inc., various
financial institutions (as defined therein), Chase Securities,
Inc., as placement agent, The Chase Manhattan Bank, as
administrative agent and The Chase Manhattan Bank, as
collateral agent (incorporated by reference to Exhibit
(10)-(52) to LTV's Report on Form 10-Q for the quarter ended
June 30, 1998)
II-9
<PAGE> 34
(10)-(45) - Guaranty made as of February 26, 1998 by LTV Steel Products,
LLC given in connection with the Note Purchase and Letter of
Credit Agreement dated as of February 26, 1998 among LTV Steel
Company, Inc., various financial institutions (as defined
therein), Chase Securities, Inc., as placement agent, The Chase
Manhattan Bank, as administrative agent and The Chase Manhattan
Bank, as collateral agent (incorporated by reference to Exhibit
(10)-(53) to LTV's Report on Form 10-Q for the quarter ended
June 30, 1998)
(10)-(46) - Contribution and Sale Agreement dated as of February 26, 1998
among LTV Steel Products, LLC, as purchaser, LTV Steel Company,
Inc., as servicer, and LTV Steel Company, Inc. and Georgia
Tubing Corporation, as initial sellers (incorporated by
reference to Exhibit (10)-(54) to LTV's Report on Form 10-Q for
the quarter ended June 30, 1998)
(10)-(47) - Inventory Processing and Servicing Agreement dated as of
February 26, 1998 by and among LTV Steel Products, LLC, LTV
Steel Company, Inc., as processor and servicer, and The Chase
Manhattan Bank, as collateral agent (incorporated by reference
to Exhibit (10)-(55) to LTV's Report on Form 10-Q for the
quarter ended June 30, 1998)
(10)-(48) - Trust Agreement dated as of February 26, 1998 among LTV Steel
Products, LLC, as issuer, and The Chase Manhattan Bank as
collateral agent (incorporated by reference to Exhibit
(10)-(56) to LTV's Report on Form 10-Q for the quarter ended
June 30, 1998)
(10)-(49) - Amendment No. 2 dated as of March 1, 1998 to the Receivables
Purchase and Sale Agreement dated as of October 12, 1994 among
LTV, LTV Steel Company, Inc., Continental Emsco Company, LTV
Steel Tubular Products Company, Georgia Tubing Corporation and
LTV Sales Finance Company and Amendment No. 1 to Revolving
Credit Agreement dated as of October 12, 1994 among LTV Sales
Finance Company, the financial institutions parties thereto as
banks, the issuing banks, the facility agent and collateral
agent, both dated as of March 1, 1998 (incorporated by
reference to Exhibit (10)-(57) to LTV's Report on Form 10-Q for
the quarter ended June 30, 1998)
II-10
<PAGE> 35
(10)-(50) - Agreement dated as of December 2, 1998 between LTV, the PBGC,
the Initial LTV Group (as defined in the Agreement) and LTV, as
Administrator of the Restored Plans (incorporated by reference
to Exhibit (10)-(50) to LTV's Report on Form 10-K for the year
ended December 31, 1998)
(10)-(51) - Employment, Retirement and Non-Competition Agreement dated as
of December 28, 1998 between LTV and David H. Hoag
(incorporated by reference to Exhibit (10)-(51) to LTV's Report
on Form 10-K for the year ended December 31, 1998)
(10)-(52) - Indenture dated as of November 5, 1999 among LTV, certain
guarantors named therein, and U.S. Bank Trust, N.A., as Trustee
(filed herewith)
(10)-(53) - Certificate of Designations for Series A Convertible Preferred
Stock (filed herewith)
(10)-(54) - Credit Agreement dated as of November 10, 1999 among LTV, the
lenders named therein, Morgan Stanley Senior Funding, Inc.,
syndication agent and Credit Suisse First Boston, as
Administrative Agent, together with certain exhibits thereto
(Security Agreement, Guarantee Agreement and Indemnity,
Subrogation and Contribution Agreement) (filed herewith)
(11) - Statement re Computation of Per Share Earnings (filed herewith)
(27) - Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K
No report on Form 8-K was filed by the registrant for the relevant
period.
II-11
<PAGE> 36
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE LTV CORPORATION
-----------------------------
(Registrant)
By /s/ George T. Henning
--------------------------
George T. Henning
Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
Date: November 12, 1999
- -----------------------
II-12
<PAGE> 1
EXECUTION COPY
Exhibit 10.52
================================================================================
THE LTV CORPORATION
11 3/4% Senior Notes Due 2009
--------------------------------------------
INDENTURE
Dated as of November 5, 1999
--------------------------------------------
U.S. BANK TRUST
NATIONAL ASSOCIATION
Trustee
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
------------------------------------------
<S> <C> <C>
SECTION 1.01. Definitions...............................................................................1
SECTION 1.02. Other Definitions........................................................................23
SECTION 1.03. Incorporation by Reference of Trust Indenture Act........................................23
SECTION 1.04. Rules of Construction....................................................................24
ARTICLE 2
THE SECURITIES
--------------
SECTION 2.01. Amount of Securities; Issuable in Series.................................................24
SECTION 2.02. Form and Dating..........................................................................25
SECTION 2.03. Execution and Authentication.............................................................25
SECTION 2.04. Registrar and Paying Agent...............................................................26
SECTION 2.05. Paying Agent To Hold Money in Trust......................................................26
SECTION 2.06. Securityholder Lists.....................................................................27
SECTION 2.07. Replacement Securities...................................................................27
SECTION 2.08. Outstanding Securities...................................................................27
SECTION 2.09. Temporary Securities.....................................................................27
SECTION 2.10. Cancellation.............................................................................28
SECTION 2.11. Defaulted Interest.......................................................................28
SECTION 2.12. CUSIP Numbers............................................................................28
ARTICLE 3
REDEMPTION
----------
SECTION 3.01. Notices to Trustee.......................................................................28
SECTION 3.02. Selection of Securities To Be Redeemed...................................................28
SECTION 3.03. Notice of Redemption.....................................................................29
SECTION 3.04. Effect of Notice of Redemption...........................................................29
SECTION 3.05. Deposit of Redemption Price..............................................................30
SECTION 3.06. Securities Redeemed in Part..............................................................30
ARTICLE 4
COVENANTS
---------
SECTION 4.01. Payment of Securities....................................................................30
SECTION 4.02. SEC Reports..............................................................................30
SECTION 4.03. Intentionally Deleted....................................................................30
SECTION 4.04. Covenant Termination.....................................................................31
SECTION 4.05. Limitation on Debt and Restricted Subsidiary
Preferred Stock..............................................................31
SECTION 4.06. Limitation on Restricted Payments........................................................31
SECTION 4.07. Limitation on Liens......................................................................33
SECTION 4.08. Limitation on Issuance or Sale of Capital Stock
of Restricted Subsidiaries...................................................33
SECTION 4.09. Change of Control........................................................................33
SECTION 4.10. Limitation on Asset Sales................................................................35
SECTION 4.11. Limitation on Restrictions on Distributions from
Restricted Subsidiaries......................................................37
SECTION 4.12. Limitation on Transactions with Affiliates...............................................38
SECTION 4.13. Limitation on Sale and Leaseback Transactions............................................39
SECTION 4.14. Designation of Restricted and Unrestricted
Subsidiaries.................................................................39
</TABLE>
<PAGE> 3
2
<TABLE>
<S> <C> <C>
SECTION 4.15. Limitation on Layered Debt...............................................................40
SECTION 4.16. Future Subsidiary Guarantors.............................................................40
SECTION 4.17. Compliance Certificate...................................................................40
SECTION 4.18. Further Instruments and Acts.............................................................41
ARTICLE 5
SUCCESSOR COMPANY
-----------------
SECTION 5.01. When Company May Merge or Transfer Assets................................................41
SECTION 5.02. When LTV Steel or the Tubular Business May Merge
or Transfer Assets...........................................................41
ARTICLE 6
DEFAULTS AND REMEDIES
---------------------
SECTION 6.01. Events of Default........................................................................42
SECTION 6.02. Acceleration.............................................................................44
SECTION 6.03. Other Remedies...........................................................................44
SECTION 6.04. Waiver of Past Defaults..................................................................45
SECTION 6.05. Control by Majority......................................................................45
SECTION 6.06. Limitation on Suits......................................................................45
SECTION 6.07. Rights of Holders to Receive Payment.....................................................45
SECTION 6.08. Collection Suit by Trustee...............................................................46
SECTION 6.09. Trustee May File Proofs of Claim.........................................................46
SECTION 6.10. Priorities...............................................................................46
SECTION 6.11. Undertaking for Costs....................................................................46
SECTION 6.12. Waiver of Stay or Extension Laws.........................................................47
ARTICLE 7
TRUSTEE
-------
SECTION 7.01. Duties of Trustee........................................................................47
SECTION 7.02. Rights of Trustee........................................................................48
SECTION 7.03. Individual Rights of Trustee.............................................................48
SECTION 7.04. Trustee's Disclaimer.....................................................................48
SECTION 7.05. Notice of Defaults.......................................................................49
SECTION 7.06. Reports by Trustee to Holders............................................................49
SECTION 7.07. Compensation and Indemnity...............................................................49
SECTION 7.08. Replacement of Trustee...................................................................50
SECTION 7.09. Successor Trustee by Merger..............................................................50
SECTION 7.10. Eligibility; Disqualification............................................................51
SECTION 7.11. Preferential Collection of Claims Against Company........................................51
ARTICLE 8
DISCHARGE OF INDENTURE; DEFEASANCE
----------------------------------
SECTION 8.01. Discharge of Liability on Securities; Defeasance.........................................51
SECTION 8.02. Conditions to Defeasance.................................................................52
SECTION 8.03. Application of Trust Money...............................................................53
SECTION 8.04. Repayment to Company.....................................................................53
SECTION 8.05. Indemnity for Government Obligations.....................................................53
SECTION 8.06. Reinstatement............................................................................53
ARTICLE 9
AMENDMENTS
----------
SECTION 9.01. Without Consent of Holders...............................................................54
</TABLE>
<PAGE> 4
3
<TABLE>
<S> <C> <C>
SECTION 9.02. With Consent of Holders..................................................................54
SECTION 9.03. Compliance with Trust Indenture Act......................................................55
SECTION 9.04. Revocation and Effect of Consents and Waivers............................................56
SECTION 9.05. Notation on or Exchange of Securities....................................................56
SECTION 9.06. Trustee To Sign Amendments...............................................................56
SECTION 9.07. Payment for Consent......................................................................56
ARTICLE 10
SUBSIDIARY GUARANTIES
---------------------
SECTION 10.01. Guarantees..............................................................................56
SECTION 10.02. Contribution............................................................................58
SECTION 10.03. Successors and Assigns..................................................................58
SECTION 10.04. No Waiver...............................................................................58
SECTION 10.05. Modification............................................................................58
SECTION 10.06. Execution of Supplemental Indenture for Future
Subsidiary Guarantors........................................................59
ARTICLE 11
SUBORDINATION OF ACQUIRED SUBSIDIARY GUARANTIES
-----------------------------------------------
SECTION 11.01. Agreement To Subordinate................................................................59
SECTION 11.02. Liquidation, Dissolution, Bankruptcy....................................................59
SECTION 11.03. Default on Designated Senior Debt.......................................................60
SECTION 11.04. Demand for Payment......................................................................60
SECTION 11.05. When Distribution Must Be Paid Over.....................................................60
SECTION 11.06. Subrogation.............................................................................60
SECTION 11.07. Relative Rights.........................................................................61
SECTION 11.09. Rights of Trustee and Paying Agent......................................................61
SECTION 11.10. Distribution or Notice to Representative................................................61
SECTION 11.11. Article 11 Not To Prevent Events of Default Under
an Acquired Subsidiary Guaranty or Limit
Right To Demand Payment......................................................61
SECTION 11.12. Trustee Entitled To Rely................................................................62
SECTION 11.13. Trustee To Effectuate Subordination.....................................................62
SECTION 11.14. Trustee Not Fiduciary for Holders of Designated
Senior Debt..................................................................62
SECTION 11.15. Reliance by Holders of Designated Senior Debt on Subordination Provisions...............62
ARTICLE 12
MISCELLANEOUS
-------------
SECTION 12.01. Trust Indenture Act Controls............................................................63
SECTION 12.02. Notices.................................................................................63
SECTION 12.03. Communication by Holders with Other Holders.............................................63
SECTION 12.04. Certificate and Opinion as to Conditions Precedent......................................63
SECTION 12.05. Statements Required in Certificate or Opinion...........................................64
SECTION 12.06. When Securities Disregarded.............................................................64
</TABLE>
<PAGE> 5
4
<TABLE>
<S> <C> <C>
SECTION 12.07. Rules by Trustee, Paying Agent and Registrar............................................64
SECTION 12.08. Legal Holidays..........................................................................64
SECTION 12.09. Governing Law...........................................................................64
SECTION 12.10. No Recourse Against Others..............................................................64
SECTION 12.11. Successors..............................................................................65
SECTION 12.12. Multiple Originals......................................................................65
SECTION 12.13. Table of Contents; Headings.............................................................65
</TABLE>
Schedule I Initial Subsidiary Guarantors
Appendix A Provisions Relating to Initial
Securities and Exchange Securities
Exhibit 1 to
Appendix A Form of Initial Security
Exhibit A Form of Exchange Security
Exhibit B Form of Supplemental Indenture
<PAGE> 6
INDENTURE dated as of November 5, 1999,
among THE LTV CORPORATION, a Delaware corporation
(the "Company"), each Subsidiary listed on Schedule I
hereto (collectively, the "Subsidiary Guarantors")
and U.S. BANK TRUST NATIONAL ASSOCIATION, 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 Company's 11
3/4% Senior Notes Due 2009, to be issued from time to time in one or more series
as in this Indenture provided (the "Initial Securities") and, if and when issued
pursuant to a registered exchange offer for the Initial Securities, the
Company's 11 3/4% Senior Notes Due 2009 (the "Exchange Securities" and, together
with the Initial Securities, the "Securities"):
ARTICLE 1
Definitions and Incorporation by Reference
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SECTION 1.01. DEFINITIONS.
"ACQUIRED SUBSIDIARY GUARANTORS" means each of Copperweld
Corporation and Welded Tube Company of America and each of their respective
Domestic Wholly Owned Subsidiaries (other than a Securitization Subsidiary or an
Inactive Subsidiary).
"ADDITIONAL ASSETS" means (a) any Property (other than cash,
cash equivalents or securities) to be owned by the Company or any Restricted
Subsidiary; or (b) Capital Stock of a Person that becomes a Restricted
Subsidiary as a result of the acquisition of such Capital Stock by the Company
or another Restricted Subsidiary from any Person other than the Company or an
Affiliate of the Company.
"AFFILIATE" of any specified Person means (a) any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person or (b) any other Person who is a
director or officer of (i) such specified Person, (ii) any Subsidiary of such
specified Person or (iii) any Person described in clause (a) above. 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. For purposes of the covenants contained in Section
4.10, Section 4.12 and the definition of the term "Additional Assets" only,
"Affiliate" shall also mean any beneficial owner of shares representing 5% or
more of the total voting power of the Voting Stock (on a fully diluted basis) of
the Company or of rights or warrants to purchase such Voting Stock (whether or
not currently exercisable) and any Person who would be an Affiliate of any such
beneficial owner pursuant to the first sentence hereof.
"ASSET SALE" means any sale, lease, transfer, issuance or
other disposition (or series of related sales, leases, transfers, issuances or
dispositions) by the Company or any Restricted Subsidiary, including any
disposition by means of a merger, consolidation or similar transaction or by
means of a disposition of Capital Stock permitted by clause (iii) of Section
4.08 (each referred to for the purposes of this
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definition as a "disposition"), of (a) any shares of Capital Stock of a
Restricted Subsidiary (other than directors' qualifying shares), (b) all or
substantially all the assets of any division or line of business of the Company
or any Restricted Subsidiary (other than LTV Steel or the Tubular Business) or
(c) any other assets of the Company or any Restricted Subsidiary outside of the
ordinary course of business of the Company or such Restricted Subsidiary (other
than (i) in the case of clauses (a), (b) and (c) above, any disposition by a
Restricted Subsidiary to the Company or by the Company or a Restricted
Subsidiary to a Wholly Owned Subsidiary, (ii) in the case of clauses (b) and (c)
above, (x) any disposition of accounts receivable or inventory by or to the
Company or any Restricted Subsidiary to or from any Securitization Subsidiary in
connection with the Incurrence of Debt by such Subsidiary under Credit
Facilities or (y) any disposition of Property having, together with other
Property disposed of pursuant to such clauses during the same fiscal year, an
aggregate Fair Market Value of less than $25,000,000 and (iii) in the case of
clauses (a), (b) and (c) above, any disposition subject to Article 5.
"ATTRIBUTABLE DEBT" in respect of a Sale and Leaseback
Transaction means, at any date of determination, (a) if such Sale and Leaseback
Transaction is a Capital Lease Obligation, the amount of Debt represented
thereby according to the definition of the term "Capital Lease Obligation" and
(b) in all other instances, the present value (discounted at the actual rate of
interest implicit in such transaction, compounded annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale and Leaseback Transaction (including any period for
which such lease has been extended).
"AVERAGE LIFE" means, as of any date of determination, with
respect to any Debt or Preferred Stock, the quotient obtained by dividing (a)
the sum of the product of the numbers of years (rounded to the nearest
one-twelfth of one year) from the date of determination to the dates of each
successive scheduled principal payment of such Debt or redemption or similar
payment with respect to such Preferred Stock multiplied by the amount of such
payment by (b) the sum of all such payments.
"BOARD OF DIRECTORS" means the Board of Directors of the
Company or any committee thereof duly authorized to act on behalf 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 the Board of Directors and to be in full force and effect on the date of such
certification.
"BUSINESS DAY" means each day which is not a Legal Holiday.
"CAPITAL EXPENDITURE DEBT" means Debt Incurred by any Person
to finance a capital expenditure so long as (a) such capital expenditure is or
should be included as an addition to "Property, Plant and Equipment" in
accordance with GAAP (including in any event an addition to Property as a result
of the purchase or other acquisition of Capital Stock of a Person that becomes a
Subsidiary Guarantor as a result of such purchase or acquisition by the Company
or another Subsidiary Guarantor from any Person other than the Company or an
Affiliate of the Company) and (b) such Debt is Incurred within 180 days of the
date such capital expenditure is made.
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"CAPITAL LEASE OBLIGATIONS" means any obligation under a lease
that is required to be capitalized for financial reporting purposes in
accordance with GAAP; and the amount of Debt represented by such obligation
shall be the capitalized amount of such obligations determined in accordance
with 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 upon
which such lease may be terminated by the lessee without payment of a penalty.
For purposes of Section 4.07, a Capital Lease Obligation shall be deemed secured
by a Lien on the Property being leased.
"CAPITAL STOCK" means, with respect to any Person, any shares
or other equivalents (however designated) of corporate stock, partnership
interests or any other participations, rights, warrants, options or other
interests in the nature of an equity interest in such Person, including
Preferred Stock, but excluding any debt security convertible or exchangeable
into such equity interest.
"CAPITAL STOCK SALE PROCEEDS" means the aggregate Net Cash
Proceeds received by the Company from the issuance or sale (other than to a
Subsidiary of the Company or an employee stock ownership plan or trust
established by the Company or any of its Subsidiaries for the benefit of their
employees) by the Company of any class of its Capital Stock (other than
Disqualified Stock) after the Issue Date of the Company's 8.20% Senior Notes due
2007.
"CASH EQUIVALENTS" means any of the following: (a) direct
obligations of the United States of America or any agency thereof or obligations
fully and unconditionally guaranteed by the United States of America or any
agency thereof; (b) direct obligations of Canada or any agency thereof or
obligations fully and unconditionally guaranteed by Canada or any agency
thereof; (c) time deposit accounts, certificates of deposit and money market
deposits maturing within 270 days of the date of acquisition thereof issued by a
bank or trust company which is organized under the laws of the United States of
America or any state thereof, and which bank or trust company has capital,
surplus and undivided profits aggregating in excess of $500,000,000 and has
outstanding Debt which is rated "A" (or such similar equivalent rating) or
higher by at least one nationally recognized statistical rating organization (as
defined in Rule 436 under the Securities Act) or any money-market fund having
assets in excess of $500,000,000 all of which consist of other obligations
described in (a), (b), (c), (d), (e) or (f) sponsored by a registered broker
dealer or mutual fund distributor; (d) repurchase and reverse repurchase
obligations with a term of not more than 30 days for underlying securities of
the types described in clause (a) above entered into with a bank meeting the
qualifications described in clause (c) above; (e) commercial paper, maturing not
more than 180 days after the date of acquisition, issued by a corporation (other
than an Affiliate of the Company) organized and in existence under the laws of
the United States of America or any state thereof with a rating at the time as
of which any investment therein is made of "P-2" (or higher) according to
Moody's or "A-2" (or higher) according to S&P; and (f) securities with
maturities of one year or less from the date of acquisition issued or fully and
unconditionally guaranteed by any state, commonwealth or territory of the United
States of America or by any political division or taxing authority thereof, and
rated at least "A" by Moody's or S&P; PROVIDED, that all Cash Equivalents
purchased or otherwise acquired by the Escrow Agent as contemplated under the
Escrow Agreement shall mature at least two Business Days prior to the Assumed
Redemption Date (as defined in the Escrow Agreement).
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"CHANGE OF CONTROL" means the occurrence of any of the
following events:
(a) if any "Person" or "group" (as such terms are used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act or any successor
provisions to either of the foregoing), including any group acting for
the purpose of acquiring, holding, voting or disposing of securities
within the meaning of Rule 13d-5(b)(1) under the Exchange Act, becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act, except that a Person will be deemed to have "beneficial ownership"
of all shares that any such Person has the right to acquire, whether
such right is exercisable immediately or only after the passage of
time), directly or indirectly, of 50% or more of the total voting power
of all classes of the Voting Stock of the Company (for purposes of this
clause (a), such other Person or group shall be deemed to beneficially
own any Voting Stock of a corporation (the "specified corporation")
held by any other corporation (the "parent corporation") so long as
such other Person or group beneficially owns, directly or indirectly,
in the aggregate a majority of the voting power of all classes of the
Voting Stock of such parent corporation); or
(b) the sale, transfer, assignment, lease, conveyance or other
disposition, directly or indirectly, of all or substantially all the
assets of the Company and the Restricted Subsidiaries, considered as a
whole (other than a disposition of such assets as an entirety or
virtually as an entirety to a Wholly Owned Subsidiary) shall have
occurred, or the Company merges, consolidates or amalgamates with or
into any other Person or any other Person merges, consolidates or
amalgamates with or into the Company, in any such event pursuant to a
transaction in which the outstanding Voting Stock of the Company is
reclassified into or exchanged for cash, securities or other Property,
other than any such transaction where (i) the outstanding Voting Stock
of the Company is reclassified into or exchanged for Voting Stock of
the surviving corporation and (ii) the Holders of the Voting Stock of
the Company immediately prior to such transaction own, directly or
indirectly, not less than a majority of the Voting Stock of the
surviving corporation immediately after such transaction and in
substantially the same proportion as before the transaction; or
(c) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors
(together with any new directors whose election or appointment by such
Board or whose nomination for election by the shareholders of the
Company was approved by a vote of 66 2/3% of the directors then still
in office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the Board of Directors
then in office; or
(d) the shareholders of the Company shall have approved any
plan of liquidation or dissolution of the Company.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL TRUST AGREEMENT" means the Collateral Trust
Agreement dated as of May 15, 1993, as amended through the Issue Date, among the
Company, LTV Steel, the USWA and Bank One Ohio Trust Company, N.A., as
collateral trustee.
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"COMMODITY PRICE PROTECTION AGREEMENT" means, in respect of a
Person, any forward contract, commodity swap agreement, commodity option
agreement or other similar agreement or arrangement designed to protect such
Person against fluctuations in commodity prices.
"COMPANY" means the party named as such in this Indenture
until a successor replaces it pursuant to the applicable provisions hereof and,
thereafter, means the successor and, for purposes of any provision contained
herein and required by the TIA, each other obligor on the indenture securities.
"CONSOLIDATED CURRENT LIABILITIES" means, as of any date of
determination, the aggregate amount of liabilities of the Company and its
consolidated Restricted Subsidiaries which may properly be classified as current
liabilities (including taxes accrued as estimated), after eliminating (a) all
intercompany items between the Company and any Restricted Subsidiary or between
Restricted Subsidiaries and (b) all current maturities of long-term Debt.
"CONSOLIDATED INTEREST COVERAGE RATIO" means, as of any date
of determination, the ratio of (a) the aggregate amount of EBITDA for the period
of the most recent four consecutive fiscal quarters ending at least 45 days
prior to such determination date to (b) Consolidated Interest Expense for such
four fiscal quarters; PROVIDED, HOWEVER, that (i) if the Company or any
Restricted Subsidiary has Incurred any Debt since the beginning of such period
that remains outstanding or if the transaction giving rise to the need to
calculate the Consolidated Interest Coverage Ratio is an Incurrence of Debt, or
both, Consolidated Interest Expense for such period shall be calculated after
giving effect on a pro forma basis to such Debt as if such Debt had been
Incurred on the first day of such period and the discharge of any other Debt
repaid, repurchased, defeased or otherwise discharged with the proceeds of such
new Debt as if such discharge had occurred on the first day of such period, (ii)
if since the beginning of such period the Company or any Restricted Subsidiary
shall have made any Asset Sale or if the transaction giving rise to the need to
calculate the Consolidated Interest Coverage Ratio is an Asset Sale, or both,
EBITDA for such period shall be reduced by an amount equal to the EBITDA (if
positive) directly attributable to the assets which are the subject of such
Asset Sale for such period, or increased by an amount equal to the EBITDA (if
negative) directly attributable thereto for such period, in either case as if
such Asset Sale had occurred on the first day of such period and Consolidated
Interest Expense for such period shall be reduced by an amount equal to the
Consolidated Interest Expense directly attributable to any Debt of the Company
or any Restricted Subsidiary repaid, repurchased, defeased or otherwise
discharged with respect to the Company and its continuing Restricted
Subsidiaries in connection with such Asset Sale for such period, as if such
Asset Sale had occurred on the first day of such period (or, if the Capital
Stock of any Restricted Subsidiary is sold, by an amount equal to the
Consolidated Interest Expense for such period directly attributable to the Debt
of such Restricted Subsidiary to the extent the Company and its continuing
Restricted Subsidiaries are no longer liable for such Debt after such sale),
(iii) if since the beginning of such period the Company or any Restricted
Subsidiary (by merger or otherwise) shall have made an Investment in any
Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary) or
an acquisition of Property, including any acquisition of Property occurring in
connection with a transaction causing a calculation to be made hereunder, which
constitutes all or substantially all of an operating unit of a business, EBITDA
and Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto (including the Incurrence of any Debt)
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as if such Investment or acquisition occurred on the first day of such period
and (iv) if since the beginning of such period any Person (that subsequently
became a Restricted Subsidiary or was merged with or into the Company or any
Restricted Subsidiary since the beginning of such period) shall have made any
Asset Sale, Investment or acquisition of Property that would have required an
adjustment pursuant to clause (ii) or (iii) above if made by the Company or a
Restricted Subsidiary during such period, EBITDA and Consolidated Interest
Expense for such period shall be calculated after giving pro forma effect
thereto as if such Asset Sale, Investment or acquisition occurred on the first
day of such period. For purposes of this definition, whenever pro forma effect
is to be given to an acquisition of Property, the amount of income or earnings
relating thereto and the amount of Consolidated Interest Expense associated with
any Debt incurred in connection therewith, the pro forma calculations shall be
determined in good faith by a responsible financial or accounting Officer and as
further contemplated by the definition of the term "pro forma". If any Debt
bears a floating rate of interest and is being given pro forma effect, the
interest expense on such Debt shall be calculated as if the rate in effect on
the date of determination had been the applicable rate for the entire period
(taking into account any Interest Rate Agreement applicable to such Debt if such
Interest Rate Agreement has a remaining term in excess of 12 months).
"CONSOLIDATED INTEREST EXPENSE" means, for any period, the
total interest expense of the Company and its consolidated Restricted
Subsidiaries, plus, to the extent not included in such total interest expense,
and to the extent Incurred by the Company or its Restricted Subsidiaries, (a)
interest expense attributable to capital leases, (b) amortization of debt
discount and debt issuance cost, (c) capitalized interest, (d) non-cash interest
expenses, (e) commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing, (f) net costs
associated with Hedging Obligations (including amortization of fees), (g)
Redeemable Dividends, (h) Preferred Stock dividends in respect of all Preferred
Stock of Restricted Subsidiaries held by Persons other than the Company or a
Wholly Owned Subsidiary, (i) interest incurred in connection with Investments in
discontinued operations, (j) interest accruing on any Debt of any other Person
to the extent such Debt is Guaranteed by the Company or any Restricted
Subsidiary (such amount included, if such Debt is also Guaranteed by a venture
partner or other equity owner of such Person that is capable of satisfying its
obligation under such Guarantee (as determined by an Officer in good faith at
the time of any relevant determination), only to the extent of the Company's
direct or indirect equity ownership of such Person) and (k) the cash
contributions to any employee stock ownership plan or similar trust to the
extent such contributions are used by such plan or trust to pay interest or fees
to any Person (other than the Company) in connection with Debt Incurred by such
plan or trust.
"CONSOLIDATED NET INCOME" means, for any period, the net
income (loss) of the Company and its consolidated Subsidiaries; PROVIDED,
HOWEVER, that there shall not be included in such Consolidated Net Income (a)
any net income (loss) of any Person (other than the Company) if such Person is
not a Restricted Subsidiary, except that (i) subject to the exclusion contained
in clause (d) below, the Company's equity in the net income of any such Person
for such period shall be included in such Consolidated Net Income up to the
aggregate amount of cash distributed by such Person during such period to the
Company or a Restricted Subsidiary as a dividend or other distribution (subject,
in the case of a dividend or other distribution to a Restricted Subsidiary, to
the limitations contained in clause (c) below)
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and (ii) the Company's equity in a net loss of any such Person (other than an
Unrestricted Subsidiary) for such period shall be included in determining such
Consolidated Net Income, (b) any net income (loss) of any Person acquired by the
Company or any of its consolidated Subsidiaries in a pooling of interests
transaction for any period prior to the date of such acquisition, (c) any net
income (loss) of any Restricted Subsidiary to the extent that such Restricted
Subsidiary is subject to restrictions, directly or indirectly, on the payment of
dividends or the making of distributions, directly or indirectly, to the
Company, except that (i) subject to the exclusion contained in clause (d) below,
the Company's equity in the net income of any such Restricted Subsidiary for
such period shall be included in such Consolidated Net Income up to the
aggregate amount of cash distributed by such Restricted Subsidiary during such
period to the Company or another Restricted Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other distribution to
another Restricted Subsidiary, to the limitation contained in this clause) and
(ii) the Company's equity in a net loss of any such Restricted Subsidiary for
such period shall be included in determining such Consolidated Net Income, (d)
any gain (but not loss) realized upon the sale or other disposition of any
Property of the Company or any of its consolidated Subsidiaries (including
pursuant to any Sale and Leaseback Transaction) which is not sold or otherwise
disposed of in the ordinary course of business, (e) any extraordinary gain or
loss, (f) any unusual or nonrecurring non-cash charge or credit separately
identified on the Company's consolidated income statement for such period,
PROVIDED that (i) to the extent any such charge represents an accrual of or
reserve for cash expenditures in any future period, such cash expenditure shall
be included in Consolidated Net Income for such future period or (ii) for
purposes of Section 4.06 only, to the extent any such credit will result in the
receipt of cash payments in any future period, such cash payment shall be
included in Consolidated Net Income for such future period, (g) the cumulative
effect of a change in accounting principles and (h) any non-cash compensation
expense realized for grants of performance shares, stock options or other stock
awards to officers, directors and employees of the Company or any Restricted
Subsidiary; PROVIDED FURTHER, HOWEVER, that there shall be added to such
Consolidated Net Income any provision for taxes not payable in cash.
"CONSOLIDATED NET TANGIBLE ASSETS" means, as of any date of
determination, the sum of the amounts that would appear on a consolidated
balance sheet of the Company and its consolidated Restricted Subsidiaries as the
total assets (less accumulated depreciation, depletion and amortization,
allowances for doubtful receivables, adjustments for pension liabilities, other
applicable reserves and other properly deductible items) of the Company and its
Restricted Subsidiaries, after giving effect to purchase accounting and after
deducting therefrom Consolidated Current Liabilities and, to the extent
otherwise included, the amounts of (without duplication): (a) the excess of cost
over fair market value of assets or businesses acquired; (b) any revaluation or
other write-up in book value of assets subsequent to the last day of the fiscal
quarter of the Company immediately preceding the Issue Date as a result of a
change in the method of valuation in accordance with GAAP; (c) unamortized debt
discount and expenses and other unamortized deferred charges, goodwill, patents,
trademarks, service marks, trade names, copyrights, licenses, organization or
developmental expenses and other intangible items; (d) minority interests in
consolidated Subsidiaries held by Persons other than the Company or any
Restricted Subsidiary; (e) treasury stock; (f) cash or securities set aside and
held in a sinking or other analogous fund established for the purpose of
redemption or other retirement of Capital Stock to the extent such obligation is
not
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reflected in Consolidated Current Liabilities; and (g) Investments in and assets
of Unrestricted Subsidiaries.
"CONSOLIDATED NET WORTH" means the total of the amounts shown
on the consolidated balance sheet of the Company and its Restricted Subsidiaries
as of the end of the most recent fiscal quarter of the Company ending at least
45 days prior to the taking of any action for the purpose of which the
determination is being made, as (a) the par or stated value of all outstanding
Capital Stock of the Company plus (b) paid-in capital or capital surplus
relating to such Capital Stock plus (c) any retained earnings or earned surplus
less (i) any accumulated deficit, (ii) any amounts attributable to Disqualified
Stock and (iii) any adjustments for pension liabilities.
"COPPERWELD ACQUISITION" means the proposed acquisition by the
Company of Copperweld Corporation and Copperweld Canada Inc. pursuant to
the Copperweld Acquisition Agreement.
"COPPERWELD ACQUISITION AGREEMENT" means the Stock Purchase
Agreement by and between Imetal SA and the Company dated as of September 8,
1999, as amended, waived or otherwise modified through the Issue Date.
"CREDIT FACILITIES" means, with respect to the Company or any
Restricted Subsidiary, one or more credit facilities or securitization
facilities with banks or other institutional lenders providing for revolving
credit loans, term loans, receivables or inventory financing (including the
Existing Securitization Facilities) or trade letters of credit, in each case
together with any extensions, revisions, refinancings or replacements thereof.
"CURRENCY EXCHANGE PROTECTION AGREEMENT" means, in respect of
a Person, any foreign exchange contract, currency swap agreement, currency
option or other similar agreement or arrangement designed to protect such Person
against fluctuations in currency exchange rates.
"DEBT" means, with respect to any Person on any date of
determination (without duplication), (a) the principal in respect of (i) debt of
such Person for money borrowed and (ii) debt evidenced by notes, debentures,
bonds or other similar instruments for the payment of which such Person is
responsible or liable; (b) all Capital Lease Obligations of such Person and all
Attributable Debt in respect of Sale and Leaseback Transactions entered into by
such Person; (c) all obligations of such Person issued or assumed as the
deferred purchase price of Property, all conditional sale obligations of such
Person and all obligations of such Person under any title retention agreement
(but excluding Trade Accounts Payable arising in the ordinary course of
business); (d) all obligations of such Person for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction (other than obligations with respect to letters of credit securing
obligations (other than obligations described in (a) through (c) above) entered
into in the ordinary course of business of such Person to the extent such
letters of credit are not drawn upon or, if and to the extent drawn upon, such
drawing is reimbursed no later than the tenth Business Day following receipt by
such Person of a demand for reimbursement following payment on the letter of
credit); (e) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Disqualified Stock or, with
respect to any Subsidiary of such Person, any Preferred Stock (but excluding, in
each case, any accrued dividends); (f) all obligations of the type referred to
in clauses (a) through (e) of other Persons and all dividends of other Persons
for the payment of which, in either case,
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such Person is responsible or liable, directly or indirectly, as obligor,
guarantor or otherwise, including by means of any Guarantee; (g) all obligations
of the type referred to in clauses (a) through (f) of other Persons secured by
any Lien on any Property or asset of such Person (whether or not such obligation
is assumed by such Person), the amount of such obligation being deemed to be the
lesser of the value of such Property or assets or the amount of the obligation
so secured; (h) to the extent not otherwise included in this definition, Hedging
Obligations of such Person; and (i) to the extent not otherwise included in this
definition, any financing of accounts receivable or inventory of such Person
(whether or not treated as a sale or debt for accounting purposes); PROVIDED
that such accounts receivable or inventory shall be deemed to be on the
consolidated balance sheet of the Company for purposes of clause (b)(ii) of the
definition of "Permitted Debt". The amount of Debt of any Person at any date
shall be the outstanding balance at such date of all unconditional obligations
as described above and the maximum liability, upon the occurrence of the
contingency giving rise to the obligation, of any contingent obligations at such
date.
"DEFAULT" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"DESIGNATED SENIOR DEBT" means, with respect to each Acquired
Subsidiary Guarantor, all Debt and other obligations of such Acquired Subsidiary
Guarantor under the New Bank Financing and any Permitted Refinancing Debt in
respect thereof, whether outstanding on the Issue Date or thereafter created.
"DISQUALIFIED STOCK" means, with respect to any Person,
Redeemable Stock of such Person as to which the maturity, mandatory redemption,
redemption at the option of the holder thereof, conversion or exchange occurs,
or may occur, on or prior to the first anniversary of the Stated Maturity of the
Securities; PROVIDED, HOWEVER, that Redeemable Stock of such Person that would
not otherwise be characterized as Disqualified Stock under this definition shall
not constitute Disqualified Stock if such Redeemable Stock is convertible or
exchangeable into Debt solely at the option of the issuer thereof.
"DOMESTIC" means, with respect to any Subsidiary, any
Subsidiary that is organized under the laws of the United States of America or
any state thereof or the District of Columbia.
"EBITDA" means, for any period, an amount equal to, for the
Company and its consolidated Restricted Subsidiaries, (a) the sum of
Consolidated Net Income for such period, plus the following to the extent
reducing Consolidated Net Income for such period: (i) the provision for taxes
for such period based on income or profits or utilized in computing net loss,
(ii) Consolidated Interest Expense, (iii) depreciation and amortization of fixed
and intangible assets and (iv) any other non-cash items (other than any such
non-cash item to the extent that it represents an accrual of or reserve for cash
expenditures in any future period), minus (b) all non-cash items increasing
Consolidated Net Income for such period (other than any such non-cash item to
the extent that it will result in the receipt of cash payments in any future
period). Notwithstanding the foregoing, the provision for taxes based on the
income or profits of, and the depreciation and amortization of, a Restricted
Subsidiary shall be added to Consolidated Net Income to compute EBITDA only to
the extent (and in the same proportion) that the net income of such Restricted
Subsidiary was included in calculating Consolidated Net Income and only if a
corresponding amount would be permitted at the date of determination to be
dividended to the Company by such Restricted Subsidiary without prior
<PAGE> 15
10
approval (that has not been obtained), pursuant to the terms of its charter and
all agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to such Restricted Subsidiary or its
stockholders.
"ESCROW AGREEMENT" means the Escrow Agreement dated
November 5, 1999 among the Company, The Chase Manhattan Bank, as Escrow Agent,
and the Trustee.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXISTING SECURITIZATION FACILITIES" means the Receivables
Credit Agreement and the Inventory Facility.
"FAIR MARKET VALUE" means, with respect to any Property, the
price (or, in the case of a lease, the rent) which could be negotiated in an
arm's-length free market transaction, for cash, between a willing seller (or
lessor) and a willing buyer (or lessee), neither of whom is under undue pressure
or compulsion to complete the transaction. Fair Market Value will be determined,
except as otherwise provided, (a) if such Property has a Fair Market Value equal
to or less than $25,000,000, by any Officer of the Company or (b) if such
Property has a Fair Market Value in excess of $25,000,000, by a majority of the
Board of Directors and evidenced by a Board Resolution, dated within 30 days of
the relevant transaction, delivered to the Trustee.
"GAAP" means United States generally accepted accounting
principles as in effect on the Issue Date, including those set forth (a) in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants, (b) in the statements and
pronouncements of the Financial Accounting Standards Board, (c) in such other
statements by such other entity as approved by a significant segment of the
accounting profession and (d) the rules and regulations of the SEC governing the
inclusion of financial statements (including pro forma financial statements) in
periodic reports required to be filed pursuant to Section 13 of the Exchange
Act, including opinions and pronouncements in staff accounting bulletins and
similar written statements from the accounting staff of the SEC.
"GUARANTEE" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Debt of any other Person and
any obligation, direct or indirect, contingent or otherwise, of such Person (a)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Debt of such other Person (whether arising by virtue of partnership
arrangements, or by agreements to keep-well, to purchase assets, goods,
securities or services, to take-or-pay or to maintain financial statement
conditions or otherwise) or (b) entered into for the purpose of assuring in any
other manner the 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. The term "Guarantor" shall mean any
Person Guaranteeing any obligation.
"HEDGING OBLIGATION" of any Person means any obligation of
such Person pursuant to any Interest Rate Agreement, Currency Exchange
Protection Agreement, Commodity Price Protection Agreement or any other similar
agreement or arrangement.
"HOLDER" or "SECURITYHOLDER" means the Person in whose name a
Security is registered on the Security Register.
<PAGE> 16
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"INACTIVE SUBSIDIARY" means, at any time, any Subsidiary of
the Company that (a) has assets with a total book value not in excess of $1
million, (b) has not conducted any business or other operation during the prior
12 month period and (c) is not an obligor with respect to any Debt.
"INCUR" means, with respect to any Debt or other obligation of
any Person, to create, issue, incur (by merger, conversion, exchange or
otherwise), extend, assume, Guarantee or become liable in respect of such Debt
or other obligation or the recording, as required pursuant to GAAP or otherwise,
of any such Debt or obligation on the balance sheet of such Person (and
"Incurrence" and "Incurred" shall have meanings correlative to the foregoing);
PROVIDED, HOWEVER, that a change in GAAP that results in an obligation of such
Person that exists at such time, and is not theretofore classified as Debt,
becoming Debt shall not be deemed an Incurrence of such Debt; PROVIDED FURTHER,
HOWEVER, that solely for purposes of determining compliance with Section 4.05,
amortization of debt discount shall not be deemed to be the Incurrence of Debt,
provided that in the case of Debt sold at a discount, the amount of such Debt
Incurred shall at all times be the aggregate principal amount at Stated
Maturity.
"INDENTURE" means this Indenture as amended or supplemented
from time to time.
"INDEPENDENT APPRAISER" means an investment banking firm of
national standing or any third party appraiser of national standing, provided
that such firm or appraiser is not an Affiliate of the Company.
"INTEREST RATE AGREEMENT" means, for any Person, any interest
rate swap agreement, interest rate cap agreement, interest rate collar agreement
or other similar agreement designed to protect against fluctuations in interest
rates.
"INVENTORY FACILITY" means the Note Purchase and Letter of
Credit Agreement dated as of February 26, 1998 among LTV Steel, as a party and
as agent on behalf of certain affiliates, the financial institutions party
thereto, Chase Securities Inc., as Placement Agent, and The Chase Manhattan
Bank, as Agent and Collateral Agent, as amended from time to time.
"INVESTMENT" by any Person means any direct or indirect loan
(other than advances to customers in the ordinary course of business that are
recorded as accounts receivable on the balance sheet of such Person), advance or
other extension of credit or capital contribution (by means of transfers of cash
or other Property to others or payments for Property or services for the account
or use of others, or otherwise) to, or Incurrence of a Guarantee of any
obligation of, or purchase or acquisition of Capital Stock, bonds, notes,
debentures or other securities or evidence of Debt issued by, any other Person.
In determining the amount of any Investment made by transfer of any Property
other than cash, such Property shall be valued at its Fair Market Value at the
time of such Investment.
"INVESTMENT GRADE RATING" means a rating equal to or higher
than Baa3 (or the equivalent) by Moody's and BBB- (or the equivalent) by S&P.
"INVESTMENT GRADE STATUS" shall be deemed to have been reached
on the date that the Securities have an Investment Grade Rating from both Rating
Agencies.
<PAGE> 17
12
"ISSUE DATE" means the date on which the Original Securities
first were issued under this Indenture.
"ISSUE DATE OF THE COMPANY'S 8.20% SENIOR NOTES DUE 2007"
means September 17, 1997, the date the Company originally issued its existing
8.20% Senior Notes due 2007.
"LIEN" means, with respect to any Property of any Person, any
mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement, security interest, lien, charge, easement (other than any easement
not materially impairing usefulness or marketability), encumbrance, preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such Property (including any Capital
Lease Obligation, conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing or any Sale and
Leaseback Transaction, but excluding any operating lease (except Sale and
Leaseback Transactions) entered into in the ordinary course of such Person's
business).
"LIMITED RECOURSE GUARANTY" means (a) any pledge of the
Capital Stock of an Unrestricted Subsidiary securing Debt of such Unrestricted
Subsidiary that is non-recourse in all respects to the Company and its
Restricted Subsidiaries except with respect to foreclosure on any Capital Stock
of such Unrestricted Subsidiary held by the Company or any Restricted Subsidiary
and (b) any Guarantee by a Venture Holding Company of Debt of a Person, other
than a Restricted Subsidiary, in which such Venture Holding Company holds an
Investment, including through a pledge of such Investment, which Guarantee is
non-recourse in all respects to the Company and its other Restricted
Subsidiaries.
"LIQUID SECURITIES" means securities (a) of an issuer
organized under the laws of the United States or any State thereof or the laws
of any member nation of the European Union in each case that is not an Affiliate
of the Company, (b) that are publicly traded on the New York Stock Exchange, the
American Stock Exchange, the Nasdaq National Market, the London Stock Exchange,
the Bourse de Paris or the Frankfurt Stock Exchange and (c) as to which the
Company is not subject to any restrictions on sale or transfer (including any
volume restrictions under Rule 144 under the Securities Act or any other
restrictions imposed by the Securities Act) or as to which a registration
statement under the Securities Act covering the resale thereof is in effect for
as long as the securities are held, provided, that securities meeting the
requirements of clauses (a), (b) and (c) above shall be treated as Liquid
Securities from the date of receipt thereof until and only until the earlier of
(i) the date on which such securities are sold or exchanged for cash or Cash
Equivalents or (ii) 90 days following the date of receipt of such securities. In
the event such securities are not sold or exchanged for cash or Cash Equivalents
within 90 days of receipt thereof, for purposes of determining whether the
transaction pursuant to which the Company or a Restricted Subsidiary received
the securities was in compliance with Section 4.10, such securities shall be
deemed not to have been Liquid Securities at any time.
"LTV STEEL" means LTV Steel Company, Inc., a wholly owned
subsidiary of the Company, and, for purposes of Section 5.02(a), the aggregate
business as conducted on the Issue Date by LTV Steel and any of its
subsidiaries.
<PAGE> 18
13
"MOODY'S" means Moody's Investors Service, Inc. or any
successor to the rating agency business thereof.
"NET AVAILABLE CASH" from any Asset Sale means cash payments
received therefrom (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, but excluding any other consideration received in
the form of assumption by the acquiring Person of Debt or other obligations
relating to the Property that is the subject of such Asset Sale or received in
any other non-cash form), in each case net of (a) all legal, title and recording
tax expenses, commissions and other fees and expenses incurred, and all Federal,
state, provincial, foreign and local taxes required to be accrued as a liability
under GAAP, as a consequence of such Asset Sale, (b) all payments made on any
Debt which is secured by any Property subject to such Asset Sale, in accordance
with the terms of any Lien upon or other security agreements of any kind with
respect to such Property, or which must by its terms, or in order to obtain a
necessary consent to such Asset Sale, or by applicable law, be repaid out of the
proceeds from such Asset Sale, (c) all distributions and other payments required
to be made to minority interest holders in Subsidiaries or joint ventures as a
result of such Asset Sale and (d) the deduction of appropriate amounts provided
by the seller as a reserve, in accordance with GAAP, against any liabilities
associated with the Property disposed in such Asset Sale and retained by the
Company or any Restricted Subsidiary after such Asset Sale.
"NET CASH PROCEEDS" means, with respect to any issuance or
sale of Capital Stock, 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 thereof.
"NEW BANK FINANCING" means the credit agreement dated on or
about the Issue Date among the Company, the subsidiary guarantors party thereto,
the lenders party thereto, Credit Suisse First Boston, as administrative agent,
and Morgan Stanley Senior Funding, Inc., as syndication agent, together with any
related documents (including any security documents and guaranty agreements), as
any of the foregoing may be amended, supplemented or otherwise modified from
time to time.
"NEW PREFERRED STOCK" means the Company's 8 1/4% Series A
Cumulative Convertible Preferred Stock, par value $1.00 per share.
"1997 NOTES INDENTURE" means the Indenture dated September 17,
1997 relating to the Company's 8.20% Senior Notes due 2007.
"OFFICER" means the President and Chief Executive Officer, the
Chief Financial Officer, any Vice President, the Secretary or any Assistant
Secretary of the Company.
"OFFICERS' CERTIFICATE" means a certificate signed by two
Officers of the Company, at least one of whom shall be the principal executive
officer or principal financial officer of the Company, and delivered to the
Trustee.
"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 Company or the Trustee.
<PAGE> 19
14
"PERMITTED DEBT" means:
(a) Debt of the Company evidenced by the Original Securities
and of the Subsidiary Guarantors evidenced by the Subsidiary Guaranties
relating to the Original Securities.
(b) Debt under the Credit Facilities; PROVIDED that the
aggregate principal amount of all such Debt under the Credit
Facilities, together with all Permitted Refinancing Debt Incurred in
respect of Debt previously Incurred pursuant to this clause (b), at any
one time outstanding shall not exceed the greater of (i) $470,000,000
less the sum of the aggregate amount of all prepayments and required
payments of principal applied to reduce the aggregate amount available
to be borrowed under the Credit Facilities or such Permitted
Refinancing Debt, including pursuant to Section 4.10, and (ii) the sum
of the amounts equal to (x) 60% of the book value of the inventory of
the Company and the Restricted Subsidiaries and (y) 85% of the book
value of the accounts receivable of the Company and the Restricted
Subsidiaries, in each case as of the most recently ended quarter of the
Company for which financial statements of the Company have been
provided to the Holders of Securities;
(c) Capital Expenditure Debt; PROVIDED that (i) the aggregate
principal amount of such Debt does not exceed the Fair Market Value (on
the date of the Incurrence thereof) of the Property acquired,
constructed or leased and (ii) the aggregate principal amount of all
Debt Incurred and then outstanding pursuant to this clause (c),
together with all Permitted Refinancing Debt Incurred and then
outstanding in respect of Debt previously Incurred pursuant to this
clause (c), does not exceed $300,000,000;
(d) Debt of the Company owing to and held by any Wholly Owned
Subsidiary and Debt of a Restricted Subsidiary owing to and held by the
Company or any Wholly Owned Subsidiary; PROVIDED, HOWEVER, that any
subsequent issue or transfer of Capital Stock or other event that
results in any such Wholly Owned Subsidiary ceasing to be a Wholly
Owned Subsidiary or any subsequent transfer of any such Debt (except to
the Company or a Wholly Owned Subsidiary) shall be deemed, in each
case, to constitute the Incurrence of such Debt by the issuer thereof;
(e) Debt of a Restricted Subsidiary Incurred and outstanding
on or prior to the date on which such Restricted Subsidiary was
acquired by the Company or otherwise became a Restricted Subsidiary
(other than Debt Incurred as consideration in, or to provide all or any
portion of the funds or credit support utilized to consummate, the
transaction or series of transactions pursuant to which such Restricted
Subsidiary became a Subsidiary of the Company or was otherwise acquired
by the Company), PROVIDED that at the time such Restricted Subsidiary
was acquired by the Company or otherwise became a Restricted Subsidiary
and after giving pro forma effect to the Incurrence of such Debt, the
Company would have been able to Incur $1.00 of additional Debt pursuant
to Section 4.05(a);
(f) Debt under Interest Rate Agreements entered into by the
Company or a Restricted Subsidiary for the purpose of limiting interest
rate risk in the ordinary course of the financial management of the
Company or such Restricted Subsidiary and not for speculative purposes;
PROVIDED that the obligations under such
<PAGE> 20
15
agreements are directly related to payment obligations on Debt
otherwise permitted by Section 4.05;
(g) Debt under Commodity Price Protection Agreements entered
into by the Company or a Restricted Subsidiary in the ordinary course
of the financial management (including cost control) of the Company or
such Restricted Subsidiary and not for speculative purposes;
(h) Debt under Currency Exchange Protection Agreements entered
into by the Company or a Restricted Subsidiary for the purpose of
limiting currency exchange rate risks directly related to transactions
entered into by the Company or such Restricted Subsidiary in the
ordinary course of business (which, for purposes of this clause (h),
shall include payment obligations on Debt otherwise permitted by
Section 4.05) and not for speculative purposes;
(i) Debt in connection with one or more standby letters of
credit or performance bonds issued by the Company or a Restricted
Subsidiary in the ordinary course of business or pursuant to
self-insurance obligations and not in connection with the borrowing of
money or the obtaining of advances or credit;
(j) Debt outstanding on the Issue Date not otherwise described
in clauses (a) through (i) above and any additional Debt Incurred after
the Issue Date representing interest paid in-kind on Debt outstanding
pursuant to this clause (j);
(k) Debt of the Company or any Restricted Subsidiary (other
than Debt permitted by Section 4.05(a) or the other clauses of this
definition) in an aggregate principal amount outstanding at any one
time not to exceed $100,000,000;
(l) Attributable Debt under any Sale and Leaseback Transaction
with respect to the Company's Portland tubing facility in an aggregate
amount, together with all Permitted Refinancing Debt Incurred and then
outstanding in respect of Debt previously Incurred pursuant to this
clause (l), not to exceed $60,000,000;
(m) Debt of the Company in the form of a Guarantee of the
obligations of the Company's Columbus Coating joint venture with
respect to (i) a construction facility in an aggregate amount, together
with all Permitted Refinancing Debt Incurred and then outstanding in
respect of Debt previously Incurred pursuant to this clause (m), not to
exceed $145,000,000 or (ii) following the completion of construction,
Attributable Debt under a Sale and Leaseback Transaction involving such
joint venture in an aggregate amount, together with all Permitted
Refinancing Debt Incurred and then outstanding in respect of Debt
previously Incurred pursuant to this clause (m) and all Debt of the
Company remaining outstanding pursuant to the preceding clause (i), not
to exceed $250,000,000; and
(n) Permitted Refinancing Debt Incurred in respect of Debt
Incurred pursuant to Section 4.05(a) and clauses (a), (b), (c), (e),
(j), (l) and (m) above, subject, in the case of clauses (b), (c), (l)
and (m) above, to the limitations set forth in the respective provisos
thereto.
<PAGE> 21
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"PERMITTED LIENS" means:
(a) Liens to secure Debt permitted to be Incurred under clause
(b) of the definition of "Permitted Debt," PROVIDED that any such Lien
is limited to the accounts receivable and inventory (and insurance
proceeds and other Property similarly incidental thereto) of the
Company and the Restricted Subsidiaries and any securities issued by a
Securitization Subsidiary that purchases such accounts receivable or
inventory in connection with the Incurrence of such Debt;
(b) Liens on assets of the Acquired Subsidiary Guarantors to
secure Debt permitted to be Incurred under the New Bank Financing,
PROVIDED that the outstanding principal amount of the Debt secured by
Liens permitted by this clause (b) shall not exceed $225,000,000;
(c) Liens to secure Debt permitted to be Incurred under clause
(c) of the definition of "Permitted Debt," PROVIDED, that any such Lien
may not extend to any Property of the Company or any Restricted
Subsidiary other than (i) the Property purchased, acquired, constructed
or leased with the proceeds of such Debt, (ii) all improvements and
accessions to such Property and (iii) in the case of personal Property,
any real Property underlying such personal Property;
(d) Liens for taxes, assessments or governmental charges or
levies on the Property of the Company or any Restricted Subsidiary if
the same shall not at the time be delinquent or thereafter can be paid
without penalty, or are being contested in good faith and by
appropriate proceedings promptly instituted and diligently concluded,
provided that any reserve or other appropriate provision that shall be
required in conformity with GAAP shall have been made therefor;
(e) Liens imposed by law, such as carriers', warehousemen's
and mechanics' Liens on the Property of the Company or any Restricted
Subsidiary arising in the ordinary course of business and securing
payment of obligations which are not more than 60 days past due or are
being contested in good faith and by appropriate proceedings;
(f) Liens on the Property of the Company or any Restricted
Subsidiary Incurred in the ordinary course of business to secure
performance of obligations with respect to statutory or regulatory
requirements, performance or return-of-money bonds, surety bonds or
other obligations of a like nature and Incurred in a manner consistent
with industry practice, in each case which are not Incurred in
connection with the borrowing of money, the obtaining of advances or
credit or the payment of the deferred purchase price of Property and
which do not in the aggregate impair in any material respect the use of
Property in the operation of the business of the Company and the
Restricted Subsidiaries taken as a whole;
(g) Liens on Property at the time the Company or any
Restricted Subsidiary acquired such Property, including any acquisition
by means of a merger or consolidation with or into the Company or any
Restricted Subsidiary; PROVIDED, HOWEVER, that any such Lien may not
extend to any other Property of the Company or any Restricted
Subsidiary; PROVIDED FURTHER, HOWEVER, that such Liens shall not have
been Incurred in anticipation of or in
<PAGE> 22
17
connection with the transaction or series of transactions pursuant to
which such Property was acquired by the Company or any Restricted
Subsidiary;
(h) Liens on the Property of a Person at the time such Person
becomes a Restricted Subsidiary; PROVIDED, HOWEVER, that any such Lien
may not extend to any other Property of the Company or any other
Restricted Subsidiary which is not a direct Subsidiary of such Person;
PROVIDED FURTHER, HOWEVER, that any such Lien was not Incurred in
anticipation of or in connection with the transaction or series of
transactions pursuant to which such Person became a Restricted
Subsidiary;
(i) pledges or deposits by the Company or any Restricted
Subsidiary under workmen's compensation laws, unemployment insurance
laws or similar legislation, or good faith deposits in connection with
bids, tenders, contracts (other than for the payment of Debt) or leases
to which the Company or any Restricted Subsidiary is party, or deposits
to secure public or statutory obligations of the Company, or deposits
for the payment of rent, in each case Incurred in the ordinary course
of business;
(j) utility easements, building restrictions and such other
encumbrances or charges against real Property as are of a nature
generally existing with respect to properties of a similar character;
(k) Liens to secure industrial revenue or pollution control
bonds issued by the Company, PROVIDED, that (i) the aggregate principal
amount outstanding of the Debt secured by Liens permitted by this
clause (k) shall not at any time exceed the higher of the cost or the
Fair Market Value of the Property financed by such Debt (together with
improvements and accessions to such Property) and (ii) such Liens shall
not extend to any other Property of the Company or any Restricted
Subsidiaries;
(l) Liens arising out of judgments or decrees which involve
uninsured amounts not exceeding $20,000,000 and which are being
contested in good faith by appropriate proceedings promptly instituted
and diligently concluded, PROVIDED that any reserve or other
appropriate provision that shall be required in conformity with GAAP
shall have been made therefor;
(m) Liens securing or constituting a Limited Recourse
Guaranty;
(n) Liens existing on the Issue Date not otherwise described
in clauses (a) through (m) above, including the Lien securing the USWA
Secured Obligations, provided that such Lien may be extended from time
to time to Property of the Company or any Restricted Subsidiary not
subject thereto on the Issue Date to the extent any such extension is
required by the terms of the Collateral Trust Agreement as in effect on
the Issue Date;
(o) Liens on the Property of the Company or any Restricted
Subsidiary to secure any Refinancing, in whole or in part, of any Debt
secured by Liens referred to in clause (a), (b), (c), (g) (h), (k),
(n), (q) or (r) of this definition; PROVIDED, HOWEVER, that any such
Lien shall be limited to all or part of the same Property that secured
the original Lien (together with improvements and accessions to such
Property) and the aggregate principal amount of Debt that is secured by
such Lien shall not be
<PAGE> 23
18
increased to an amount greater than the sum of (i) the outstanding
principal amount, or, if greater, the committed amount, of the Debt
secured by Liens described under clause (a), (b), (c), (g) (h), (k),
(n), (q) or (r) of this definition, as the case may be, at the time the
original Lien became a Permitted Lien under the Indenture and (ii) an
amount necessary to pay any premiums, fees and other expenses incurred
by the Company or such Restricted Subsidiary in connection with such
Refinancing;
(p) Liens to secure Debt permitted to be Incurred under clause
(l) of the definition of Permitted Debt, PROVIDED that any such Lien
shall be limited to the Property (together with improvements and
accessions to such Property) subject to the applicable Sale and
Leaseback Transaction;
(q) Liens to secure Debt permitted to be Incurred under clause
(m)(ii) of the definition of Permitted Debt, PROVIDED that any such
Lien shall be limited to the Property (together with improvements and
accessions to such Property) subject to the applicable Sale and
Leaseback Transaction; and
(r) Liens securing Debt not otherwise described in clauses (a)
through (q) above, PROVIDED that at the time any such Lien is Incurred
the sum of (i) the aggregate principal amount (in the case of Debt sold
at a discount, at Stated Maturity) of all Secured Debt outstanding at
such time (other than the USWA Secured Obligations and any Permitted
Refinancing Debt in respect thereof to the extent not exceeding
$250,000,000 in the aggregate and any Limited Recourse Guaranty) and
(ii) the aggregate amount of Attributable Debt outstanding at such time
with respect to Sale and Leaseback Transactions entered into by the
Company or any Restricted Subsidiary, does not exceed 10% of
Consolidated Net Tangible Assets, as determined based on the
consolidated balance sheet of the Company as of the end of the most
recent fiscal quarter, after giving pro forma effect to the
transactions giving rise to the need for such calculation.
"PERMITTED REFINANCING DEBT" means any Debt that Refinances
any other Debt, including any successive Refinancings, so long as (a) such Debt
is in an aggregate principal amount (or if Incurred with original issue
discount, an aggregate issue price) not in excess of the sum of (i) the
aggregate principal amount (or if Incurred with original issue discount, the
aggregate accreted value) then outstanding of the Debt being Refinanced and (ii)
an amount necessary to pay any fees and expenses, including premiums and
defeasance costs, related to such Refinancing, (b) the Average Life of such Debt
is equal to or greater than the Average Life of the Debt being Refinanced, (c)
the Stated Maturity of such Debt is no earlier than the earlier of (i) the
Stated Maturity of the Debt being Refinanced and (ii) the date that is at least
one year and one day after the Stated Maturity of the Securities and (d) the new
Debt shall not be senior in right of payment to the Debt that is being
Refinanced; PROVIDED, HOWEVER, that Permitted Refinancing Debt shall not include
(a) Debt of a Subsidiary that Refinances Debt of the Company or (b) Debt of the
Company or a Restricted Subsidiary that Refinances Debt of an Unrestricted
Subsidiary.
"PERSON" means any individual, corporation, company (including
any limited liability or joint-stock company), partnership, joint venture,
association, trust, unincorporated organization, government or any agency or
political subdivision thereof or any other entity.
<PAGE> 24
19
"PREFERRED STOCK" means any Capital Stock of a Person, however
designated, which entitles the Holder thereof to a preference with respect to
the payment of dividends, or as to the distribution of assets upon any voluntary
or involuntary liquidation or dissolution of such Person, over shares of any
other class of Capital Stock issued by such Person.
"PRINCIPAL" of any Debt (including the Securities) means the
principal amount of such Debt plus the premium, if any, on such Debt.
"PRO FORMA" means, with respect to any calculation made or
required to be made pursuant to the terms hereof, a calculation performed in
accordance with Article 11 of Regulation S-X promulgated under the Securities
Act, as interpreted in good faith by the Board of Directors after consultation
with the independent certified public accountants of the Company, or otherwise a
calculation made in good faith by the Board of Directors after consultation with
the independent certified public accountants of the Company, as the case may be.
"PROPERTY" means, with respect to any Person, any interest of
such Person in any kind of property or asset, whether real, personal or mixed,
or tangible or intangible, including Capital Stock in, and other securities of,
any other Person. For purposes of any calculation required pursuant to the
Indenture, the value of any Property shall be its Fair Market Value.
"PUBLIC EQUITY OFFERING" means an underwritten public offering
of common stock of the Company pursuant to an effective registration statement
under the Securities Act.
"RATING AGENCIES" mean Moody's and S&P.
"RECEIVABLES CREDIT AGREEMENT" means the agreement dated as of
October 12, 1994 among LTV Sales Finance Company, the lenders party thereto and
Bankers Trust Company, as collateral agent and facility agent, as amended from
time to time.
"REDEEMABLE DIVIDEND" means, for any dividend with respect to
Redeemable Stock, the quotient of the dividend divided by the difference between
one and the maximum statutory federal income tax rate (expressed as a decimal
number between 1 and 0) then applicable to the issuer of such Redeemable Stock.
"REDEEMABLE STOCK" means, with respect to any Person, any
Capital Stock that by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable) or otherwise (a) matures or is
mandatorily redeemable pursuant to a sinking fund obligation or otherwise, (b)
is or may become redeemable or repurchaseable at the option of the holder
thereof, in whole or in part, or (c) is convertible or exchangeable for Debt or
Disqualified Stock.
"REFINANCE" means, in respect of any Debt, to refinance,
extend, renew, refund, repay, prepay, redeem, defease or retire, or to
issue other Debt, in exchange or replacement for, such Debt. "Refinanced"
and "Refinancing" shall have correlative meanings.
"REPRESENTATIVE" means the trustee, agent or representative
expressly authorized to act in such capacity, if any, for the Designated Senior
Debt.
"RESTRICTED PAYMENT" means (a) any dividend or distribution
(whether made in cash, securities or other Property) declared or paid on
<PAGE> 25
20
or with respect to any shares of Capital Stock of the Company or any Restricted
Subsidiary (including any payment in connection with any merger or consolidation
with or into the Company or any Restricted Subsidiary), except for any dividend
or distribution which is made solely to the Company or a Restricted Subsidiary
(and, if such Restricted Subsidiary is not a Wholly Owned Subsidiary, to the
other shareholders of such Restricted Subsidiary on a PRO RATA basis) or any
dividend or distribution payable solely in shares of Capital Stock (other than
Redeemable Stock) of the Company; (b) any payment made by the Company or any
Restricted Subsidiary to purchase, redeem, repurchase, acquire or retire for
value any Capital Stock of the Company or any Affiliate of the Company (other
than a Restricted Subsidiary); or (c) any payment made by the Company or any
Restricted Subsidiary to purchase, redeem, repurchase, defease or otherwise
acquire or retire for value, prior to any scheduled maturity, scheduled sinking
fund or mandatory redemption payment, any Subordinated Obligation (other than
the purchase, repurchase, or other acquisition of any Subordinated Obligation
purchased in anticipation of satisfying a sinking fund obligation, principal
installment or final maturity, in each case due within one year of the date of
acquisition).
"RESTRICTED SUBSIDIARY" means any Subsidiary of the Company
other than an Unrestricted Subsidiary.
"S&P" means Standard & Poor's Ratings Service or any successor
to the rating agency business thereof.
"SALE AND LEASEBACK TRANSACTION" means any arrangement
relating to Property now owned or hereafter acquired whereby the Company or a
Restricted Subsidiary transfers such Property to another Person and the Company
or a Restricted Subsidiary leases it from such Person, other than any such
arrangement with respect to Property acquired or placed into service by the
Company or any Restricted Subsidiary after the Issue Date to the extent entered
into within 365 days after the date of such acquisition or placement into
service and not constituting a Capital Lease Obligation.
"SEC" means the Securities and Exchange Commission or any
successor thereto.
"SECURED DEBT" means any Debt of the Company or any Restricted
Subsidiary secured by a Lien.
"SECURITIZATION SUBSIDIARY" means any bankruptcy-remote
special-purpose Subsidiary of the Company or any Restricted Subsidiary
established for the purpose of arranging financing of accounts receivable and
inventory, including by selling or selling interests in such accounts receivable
and inventory and related Property or through borrowing money or obtaining
credit secured by such Property, and including LTV Sales Finance Company, a
Delaware corporation, and LTV Steel Products, L.L.C., a Delaware limited
liability corporation.
"SENIOR DEBT" of the Company means (a) all obligations
consisting of the principal, and accrued and unpaid interest in respect of (i)
Debt of the Company for borrowed money and (ii) Debt of the Company evidenced by
notes, debentures, bonds or other similar instruments permitted under the
Indenture for the payment of which the Company is responsible or liable; (b) all
Capital Expenditure Debt of the Company; (c) all obligations of the Company (i)
for the reimbursement of any obligor on any letter of credit, bankers'
acceptance or similar credit transaction or (ii) under Hedging Obligations; and
(d) all obligations of other Persons of the type referred to in clauses (a) and
(b) for the payment of which the Company
<PAGE> 26
21
is responsible or liable as Guarantor; PROVIDED, HOWEVER, that Senior Debt of
the Company shall not include (A) Debt of the Company that is by its terms
subordinate in right of payment to the Securities; (B) any Debt Incurred in
violation of the provisions of the Indenture; (C) accounts payable or any other
obligations of the Company to trade creditors created or assumed by the Company
in the ordinary course of business in connection with the obtaining of materials
or services (including Guarantees thereof or instruments evidencing such
liabilities); (D) any liability for Federal, state, local or other taxes owed or
owing by the Company; (E) any obligation of the Company to any Subsidiary; or
(F) any obligations with respect to any Capital Stock. "Senior Debt" of any
Subsidiary Guarantor has a correlative meaning, provided that clause (E) above
shall be deemed to refer to any obligation of such Subsidiary Guarantor to the
Company or any Subsidiary of the Company.
"SIGNIFICANT SUBSIDIARY" means any Restricted Subsidiary that
would be a "Significant Subsidiary" of the Company within the meaning of Rule
1-02 under Regulation S-X promulgated by the SEC.
"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 (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency beyond the control of the issuer unless such
contingency has occurred and, in the case of the Securities, excluding the
Special Mandatory Redemption provisions set forth in paragraph 5 of the
Securities).
"SUBORDINATED OBLIGATION" means any Debt of the Company or any
Subsidiary Guarantor (whether outstanding on the Issue Date or thereafter
Incurred) which is subordinate or junior in right of payment to the Securities
or the applicable Subsidiary Guaranty pursuant to a written agreement to that
effect.
"SUBSIDIARY" means, in respect of any specified Person, any
corporation, company, partnership, joint venture, association 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.
"SUBSIDIARY GUARANTOR" means each Domestic Wholly Owned
Subsidiary (other than any Securitization Subsidiary or Inactive Subsidiary) and
any other Person that becomes a Subsidiary Guarantor pursuant to Section 4.16.
"SUBSIDIARY GUARANTY" means, (a) with respect to each
Subsidiary Guarantor that is not an Acquired Subsidiary Guarantor, the senior
unsecured Guarantee of the Obligations by such Subsidiary Guarantor and (b) with
respect to each Acquired Subsidiary Guarantor, the senior subordinated Guarantee
of the Obligations by such Acquired Subsidiary Guarantor, in each case on the
terms set forth in this Indenture.
"SUMITOMO SECURITIES PURCHASE AGREEMENT" means the Securities
Purchase Agreement dated as of May 26, 1993, as amended
<PAGE> 27
22
through the Issue Date, by and among the Company, LTV Steel and SMI America,
Inc.
"TEMPORARY CASH INVESTMENTS" means any of the following: (a)
Investments in Government Obligations, (b) Investments in time deposit accounts,
certificates of deposit and money market deposits maturing within 180 days of
the date of acquisition thereof issued by a bank or trust company which is
organized under the laws of the United States of America or any state thereof or
any foreign country recognized by the United States of America, which bank or
trust company has capital, surplus and undivided profits aggregating in excess
of $500 million or its foreign currency equivalent and a long-term debt rating
of "A-3" or "A-" or higher according to Moody's Investors Service, Inc. or
Standard & Poor's Ratings Service (or such similar equivalent rating by at least
one "nationally recognized statistical rating organization" (as defined in Rule
436 under the Securities Act)), (c) repurchase obligations with a term of not
more than 30 days for underlying securities of the types described in clause (a)
entered into with a bank meeting the qualifications described in clause (b)
above, (d) Investments in commercial paper, maturing not more than 90 days after
the date of acquisition, issued by a corporation (other than an Affiliate of the
Company) organized and in existence under the laws of the United States of
America with a rating at the time as of which any Investment therein is made of
"P-1" (or higher) according to Moody's Investors Service, Inc. or "A-1" (or
higher) according to Standard & Poor's Ratings Service (or such similar
equivalent rating by at least one "nationally recognized statistical rating
organization" (as defined in Rule 436 under the Securities Act)) and (e)
Investments in money market funds all of whose assets are comprised of
securities of the types described in clauses (a) through (d) above.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. section
section 77aaa-77bbbb) as in effect on the date of this Indenture except As
required by Section 9.03 hereof; PROVIDED that in the event the Trust Indenture
Act of 1939 is amended after such date, "TRUST INDENTURE ACT" means, to the
extent required by any such amendment, the Trust Indenture Act of 1939, as so
amended.
"TRADE ACCOUNTS PAYABLE" means accounts payable or other
obligations of the Company or any Restricted Subsidiary to trade creditors
created or assumed by the Company or such Restricted Subsidiary in the ordinary
course of business in connection with the obtaining of goods or services.
"TRUSTEE" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor.
"TRUST OFFICER" means the Chairman of the Board, the President
or any other officer or assistant officer of the Trustee assigned by the Trustee
to administer its corporate trust matters.
"TUBULAR BUSINESS" means the aggregate business as conducted
on the Issue Date (or, if the Copperweld Acquisition has not been completed as
of the Issue Date, the date immediately following the closing of the Copperweld
Acquisition) of Copperweld, Welded Tube Company of America and LTV Steel Tubular
Products Company, together with any other Subsidiaries formed or acquired after
the Issue Date primarily involved in the manufacture and sale of tubular steel
products.
"UNRESTRICTED SUBSIDIARY" means (a) any Subsidiary of an
Unrestricted Subsidiary; (b) any Subsidiary of the Company that is
<PAGE> 28
23
designated after the Issue Date as an Unrestricted Subsidiary as permitted
pursuant to Section 4.14 and not thereafter redesignated as a Restricted
Subsidiary as permitted pursuant thereto; and (c) Presque Isle Corporation, L-S
Electro-Galvanizing Company, LTV-Trico, Inc., LTV-Escrow, Inc., Cayman Mineracao
do Brasil Ltda and L.A.S. Resources, Inc.
"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.
"USWA" means the United Steelworkers of America.
"USWA SECURED OBLIGATIONS" means the retiree health benefit,
plan contribution and other obligations of the Company and its Subsidiaries
secured by a Lien granted to the USWA pursuant to the Collateral Trust
Agreement.
"VENTURE HOLDING COMPANY" means (a) LTV Columbus Processing,
Inc., LTV EGL Holding Company, Dearborn Leasing, Inc., Alcite I, Inc., LTV
Blanking Corporation, LTV Steel de Mexico, Ltd. and LTV Walbridge, Inc. and (b)
any other Subsidiary of the Company formed or acquired after the Issue Date
whose activities are limited to making and owning equity interests and other
Investments in one or more joint ventures and activities incidental thereto,
including participation in financing arrangements of such joint ventures (but in
each case only for so long as its activities are so limited), PROVIDED that (i)
in the case of clauses (a) and (b), the equity interests in any such joint
ventures are owned by at least one other Person (other than the Company or any
Affiliate of the Company) and (ii) in the case of clause (b), the applicable
assets are acquired by such Subsidiary in connection with the formation of such
joint venture.
"VOTING STOCK" of a corporation means all classes of Capital
Stock of such corporation then outstanding and normally entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof.
"WHOLLY OWNED SUBSIDIARY" means, at any time, a Restricted
Subsidiary all the Voting Stock of which (except directors' qualifying shares)
is at such time owned, directly or indirectly, by the Company and its other
Wholly Owned Subsidiaries.
SECTION 1.02. OTHER DEFINITIONS.
<TABLE>
<CAPTION>
Defined in
Term Section
---- ----------
<S> <C>
"Affiliate Transaction" ...................................... 4.12
"Bankruptcy Law" ............................................. 6.01
"Change of Control Offer" .................................... 4.09(a)
"Change of Control Purchase Price" ........................... 4.09(a)
"Change of Control Payment Date" ............................. 4.09(b)
"covenant defeasance option" ................................. 8.01(b)
"Custodian" .................................................. 6.01
"Event of Default" ........................................... 6.01
"Excess Proceeds" ............................................ 4.10(b)
</TABLE>
<PAGE> 29
24
<TABLE>
Defined in
Term Section
---- ----------
<S> <C>
"legal defeasance option" .................................... 8.01(b)
"Legal Holiday" .............................................. 12.08
"Obligations" ................................................ 10.01
"Offer Amount" ............................................... 4.10(d)(2)
"Offer Period" ............................................... 4.10(d)(2)
"Original Securities" ........................................ 2.01
"Paying Agent" ............................................... 2.04
"Payment Blockage Notice" .................................... 11.03
"Payment Blockage Period" .................................... 11.03
"Prepayment Offer" ........................................... 4.10(c)
"Prepayment Offer Notice" .................................... 4.10(d)(1)
"Purchase Date" .............................................. 4.10(d)(1)
"Registrar" .................................................. 2.04
"Required Filing Times" ...................................... 4.02
"Surviving Person" ........................................... 5.01(a)
"Tubular Subsidiary" ......................................... 5.02(a)
</TABLE>
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:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company, the
Subsidiary Guarantors 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 GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
<PAGE> 30
25
(5) words in the singular include the plural and words in the
plural include the singular;
(6) unsecured Debt shall not be deemed to be subordinate or
junior to secured Debt merely by virtue of its nature as unsecured
Debt;
(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 issuer dated such date
prepared in accordance with GAAP; and
(8) the principal amount of any Preferred Stock shall be the
greater of (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.
ARTICLE 2
THE SECURITIES
--------------
SECTION 2.01. AMOUNT OF SECURITIES; ISSUABLE IN SERIES. The
aggregate principal amount of Securities that may be authenticated and delivered
under this Indenture is unlimited. All such Securities shall be substantially
identical in all respects other than issue prices and issuance dates. The
Securities may be issued in one or more series. All Securities of any one series
shall be substantially identical except as to denomination.
Subject to Section 2.03, the Trustee shall authenticate
Securities for original issue on the Issue Date in the aggregate principal
amount of $275,000,000 (the "Original Securities"). With respect to any
Securities issued after the Issue Date (except for Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or in lieu of,
other Securities pursuant to Section 2.07, 2.08, 2.09 or 3.06 or Appendix A),
there shall be established in or pursuant to a resolution of the Board of
Directors, and subject to Section 2.03, set forth, or determined in the manner
provided in an Officers' Certificate, or established in one or more indentures
supplemental hereto, prior to the issuance of such Securities:
(1) whether such Securities shall be issued as part of a new
or existing series of Securities and the title of such Securities
(which shall distinguish the Securities of the series from Securities
of any other series);
(2) the aggregate principal amount of such Securities that may
be authenticated and delivered under this Indenture;
(3) the issue price and issuance date of such Securities,
including the date from which interest on such Securities shall accrue;
(4) if applicable, that such Securities shall be issuable in
whole or in part in the form of one or more Global Securities and, in
such case, the respective depositories for such Global Securities, the
form of any legend or legends that shall be borne by any such Global
Security in addition
<PAGE> 31
26
to or in lieu of that set forth in Exhibit 1 to Appendix A and any
circumstances in addition to or in lieu of those set forth in Section
2.3 or 2.4 of Appendix A in which any such Global Security may be
exchanged in whole or in part for Securities registered, or any
transfer of such Global Security in whole or in part may be registered,
in the name or names of Persons other than the depository for such
Global Security or a nominee thereof; and
(5) if applicable, that such Securities shall not be issued in
the form of Initial Securities subject to Appendix A, but shall be
issued in the form of Private Exchange Securities or Exchange
Securities as set forth in Exhibit A.
If any of the terms of any series are established by action
taken pursuant to a resolution of the Board of Directors, a copy of an
appropriate record of such action shall be certified by the Secretary or any
Assistant Secretary of the Company and delivered to the Trustee at or prior to
the delivery of the Officers' Certificate or the trust indenture supplemental
hereto setting forth the terms of the series.
SECTION 2.02. FORM AND DATING. Provisions relating to the
Initial Securities of each series and the Exchange Securities are set forth in
Appendix A, which is hereby incorporated in and expressly made part of this
Indenture. The Initial Securities of each series and the Trustee's certificate
of authentication shall be substantially in the form of Exhibit 1 to Appendix A
which is hereby incorporated in and expressly made a part of this Indenture. The
Exchange 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. The Securities of each series 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 reasonably acceptable to the
Company. Each Security shall be dated the date of its authentication. The terms
of the Securities of each series set forth in Exhibit 1 to Appendix A and
Exhibit A are part of the terms of this Indenture.
SECTION 2.03. EXECUTION AND AUTHENTICATION. Two Officers shall
sign the Securities for the Company by manual or facsimile signature. The
Company's seal shall be impressed, affixed, imprinted or reproduced on the
Securities and may be in facsimile form.
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.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities of any series
executed by the Company to the Trustee for authentication, together with a
written order of the Company for the authentication and delivery of such
Securities signed by two Officers or by an Officer and either an Assistant
Treasurer or an Assistant Secretary of the Company, and the Trustee in
accordance with such written order of the Company shall authenticate and deliver
such Securities.
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 may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Securities. Unless
<PAGE> 32
27
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 2.04. REGISTRAR AND PAYING AGENT. The Company 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") and an office or
agency where notices and demands to or upon the Company or any Subsidiary
Guarantor in respect of the Securities and this Indenture may be served (the
"Notice Agent"). The Registrar shall keep a register of the Securities and of
their transfer and exchange. The Company may have one or more co-registrars and
one or more additional paying agents. The term "Paying Agent" includes any
additional paying agent.
The Company shall enter into an appropriate agency agreement
with any Registrar, Paying Agent, co-registrar or Notice Agent 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
Company shall notify the Trustee of the name and address of any such agent. If
the Company fails to maintain a Registrar or Paying Agent or Notice Agent, the
Trustee shall act as such and shall be entitled to appropriate compensation
therefor pursuant to Section 7.07. The Company or any of its domestically
incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar,
co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar,
Paying Agent and Notice Agent in connection with the Securities.
SECTION 2.05. PAYING AGENT TO HOLD MONEY IN TRUST. Prior to
each due date of the principal and interest on any Security, the Company shall
deposit with the Paying Agent a sum sufficient to pay such principal and
interest when so becoming due. If it fails to do so, it will notify the Trustee.
The Company 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, shall notify the Trustee
of any default by the Company in making any such payment and at any time during
the continuance of any such default, upon the written request of the Trustee, it
shall forthwith pay to the Trustee all sums so held in trust by such Paying
Agent. If the Company or a Wholly Owned Subsidiary acts as Paying Agent, it
shall segregate the money held by it as Paying Agent and hold it as a separate
trust fund. If it fails to do so, it will notify the Trustee. The Company at any
time may require a Paying Agent to pay all money held by it to the Trustee and
to account for any funds disbursed by the Paying Agent. Upon complying with this
Section, the Paying Agent shall have no further liability for the money
delivered to the Trustee.
SECTION 2.06. 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. If the Trustee is not the
Registrar, the Company shall 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
<PAGE> 33
28
Trustee may reasonably require of the names and addresses of Securityholders.
SECTION 2.07. REPLACEMENT SECURITIES. If a mutilated Security
is surrendered to the Registrar or if the Holder of a Security claims that such
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the Holder
satisfies any reasonable requirements of the Trustee. If required by the Trustee
or the Company, such Holder shall furnish an indemnity bond sufficient in the
judgment of the Company and the Trustee to protect the Company, the Trustee, the
Paying Agent, the Registrar and any co-registrar from any loss which any of them
may suffer if a Security is replaced. The Company and the Trustee may charge the
Holder for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Company.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement 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 Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases
to be outstanding unless the Trustee and the Company receive proof satisfactory
to them that the 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 that date such Securities (or portions thereof) cease to be
outstanding and interest on them ceases to accrue.
SECTION 2.09. TEMPORARY SECURITIES. Until definitive
Securities are ready for delivery, the Company may prepare and the Trustee shall
authenticate temporary Securities. Temporary Securities shall be substantially
in the form of definitive Securities but may have variations that the Company
considers appropriate for temporary Securities. Without unreasonable delay, the
Company shall prepare and the Trustee shall authenticate definitive Securities
and deliver them in exchange for temporary Securities.
SECTION 2.10. CANCELLATION. The Company 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
them for registration of transfer, exchange or payment. The Trustee and no
one else shall cancel and dispose of (subject to the record retention
requirements of the Exchange Act) all Securities surrendered for
registration of transfer, exchange, payment or cancellation and deliver a
certificate of such disposition to the Company unless the
<PAGE> 34
29
Company directs the Trustee to deliver cancelled Securities to the Company. The
Company may not issue new Securities to replace Securities it has redeemed, paid
or delivered to the Trustee for cancellation.
SECTION 2.11. DEFAULTED INTEREST. If the Company defaults in a
payment of interest on the Securities, the Company shall pay defaulted interest
(plus interest on such defaulted interest to the extent lawful) in any lawful
manner. The Company may pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date. The Company 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 to each
Securityholder a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid.
SECTION 2.12. CUSIP NUMBERS. The Company in issuing the
Securities may use "CUSIP" numbers (if then generally in use) and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; PROVIDED, HOWEVER, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers.
ARTICLE 3
Redemption
----------
SECTION 3.01. NOTICES TO TRUSTEE. If the Company elects to
redeem Securities pursuant to paragraph 5(a) of the Securities or is required to
redeem Securities pursuant to paragraph 5(b) of the Original Securities, it
shall notify the Trustee in writing of the redemption date, the principal amount
of Securities to be redeemed and that such redemption is being made pursuant to
paragraph 5(a) of the Securities or paragraph 5(b) of the Original Securities,
as applicable.
The Company shall give each notice to the Trustee provided for
in this Section at least 45 days before the redemption date, unless the Trustee
consents to a shorter period, or if the Company is required to redeem Securities
pursuant to paragraph 5(b) of the Original Securities, promptly after the
occurrence of the event requiring such redemption. Such notice shall be
accompanied by an Officers' Certificate and an Opinion of Counsel from the
Company to the effect that such redemption will comply with the conditions
herein.
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 pro rata or by lot or by a method the Trustee
considers fair and appropriate. 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
Company promptly of the Securities or portions of Securities to be redeemed.
<PAGE> 35
30
SECTION 3.03. NOTICE OF REDEMPTION. At least 30 days but not
more than 60 days before the date for redemption of Securities, or, in the event
the Company is required to redeem Securities pursuant to paragraph 5(b) of the
Original Securities, promptly after the occurrence of the event requiring such
redemption, the Company 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 (which, in the case of a redemption
required by paragraph 5(b) of the Original Securities shall not be
later than the Mandatory 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 identification and principal amounts of the particular
Securities to be redeemed;
(6) that, unless the Company defaults in making such
redemption payment or the Paying Agent is prohibited from making such
payment pursuant to the terms of this Indenture, interest on Securities
(or portion thereof) called for redemption ceases to accrue on and
after the redemption date; and
(7) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed
on the Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section at least 45 days before the redemption date, or if the Company is
required to redeem Securities pursuant to paragraph 5(b) of the Securities,
promptly after the occurrence of the event requiring such redemption.
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 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 that is on or prior to
the date of redemption). 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. (a) On or prior to
the redemption date with respect to a redemption pursuant to paragraph 5(a) of
the Securities, the Company shall deposit with the Paying Agent (or, if the
Company or a Wholly Owned Subsidiary is the Paying Agent, shall segregate and
hold in trust) money sufficient to pay the redemption price of and accrued
interest (subject to the right of Holders of record on the relevant record date
to receive interest due on the related interest payment date that is on or prior
to the date of
<PAGE> 36
31
redemption) on all Securities to be redeemed on that date other than Securities
or portions of Securities called for redemption which have been delivered by the
Company to the Trustee for cancellation.
(b) Prior to the redemption date with respect to a redemption
pursuant to paragraph 5(b) of the Original Securities, the Company shall
confirm that the Escrow Agent has deposited with the Paying Agent the Mandatory
Redemption Price (as defined in the Escrow Agreement).
SECTION 3.06. SECURITIES REDEEMED IN PART. Upon surrender of a
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
equal in principal amount to the unredeemed portion of the Security
surrendered.
ARTICLE 4
Covenants
---------
SECTION 4.01. PAYMENT OF SECURITIES. The Company 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 Company 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. SEC REPORTS. Notwithstanding that the Company
may not be required to remain subject to the reporting requirements of Section
13 or 15(d) of the Exchange Act, the Company shall file with, or furnish to, the
SEC 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 reports to
be so filed at the times specified for the filing of such information, documents
and reports under such Sections (the "Required Filing Times"); PROVIDED,
HOWEVER, that the Company shall not be so obligated to file such information,
documents and reports with the SEC if the SEC does not permit such filings. The
Company shall also in any event (a) within 15 days of each Required Filing Time,
provide the Trustee and the Holders of Securities with copies of such
information, documents and reports and (b) if the SEC does not permit the filing
of such information, documents and reports, promptly upon written request by a
prospective Holder of Securities supply copies of such information, documents
and reports to such prospective Holder of Securities.
SECTION 4.03. Intentionally Deleted.
SECTION 4.04. COVENANT TERMINATION. After the Company has
reached Investment Grade Status, and notwithstanding that the Company may later
cease to have an Investment Grade Rating from either or both of the Rating
Agencies, the Company and the Restricted Subsidiaries shall be released from
their obligations to comply with Sections 4.05, 4.06, 4.08, 4.10, 4.11, 4.12,
4.16, 5.01(a)(v) and
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(vi), 5.02(a)(v) and (vi) and clause (x) of the second paragraph (and such
clause (x) as referred to in the first paragraph) of Section 4.14. The Company
shall notify the Trustee when it reaches Investment Grade Status.
SECTION 4.05. LIMITATION ON DEBT AND RESTRICTED SUBSIDIARY
PREFERRED STOCK. The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, Incur any Debt (which includes, in the
case of Restricted Subsidiaries, Preferred Stock) unless, after giving pro forma
effect to the application of the proceeds thereof, no Default or Event of
Default would occur as a consequence of such Incurrence or be continuing
following such Incurrence and either (a) after giving pro forma effect to the
Incurrence of such Debt and the application of the proceeds thereof, the
Consolidated Interest Coverage Ratio would be greater than 2.00 to 1.00 or (b)
such Debt is Permitted Debt.
SECTION 4.06. LIMITATION ON RESTRICTED PAYMENTS. (a) The
Company shall not make, and shall not permit any Restricted Subsidiary to make,
directly or indirectly, any Restricted Payment if at the time of, and after
giving pro forma effect to, such proposed Restricted Payment:
(i) a Default or Event of Default shall have occurred and be
continuing;
(ii) the Company could not Incur at least $1.00 of additional
Debt pursuant to Section 4.05(a); or
(iii) the aggregate amount of such Restricted Payment and all
other Restricted Payments declared or made since the Issue Date of the
Company's 8.20% Senior Notes due 2007 (the amount of any Restricted
Payment, if made other than in cash, to be based upon Fair Market
Value) would exceed an amount equal to the sum of:
(A) 50% of the aggregate amount of Consolidated Net
Income accrued during the period (treated as one accounting
period) from and after the first day of the fiscal quarter
following the end of the most recent fiscal quarter ended
immediately prior to the Issue Date of the Company's 8.20%
Senior Notes due 2007 to the end of the most recent fiscal
quarter ending at least 45 days prior to the date of such
Restricted Payment (or if the aggregate amount of Consolidated
Net Income for such period shall be a deficit, minus 100% of
such deficit);
(B) Capital Stock Sale Proceeds; and
(C) the amount by which Debt (other than Subordinated
Obligations issued or sold prior to the Issue Date of the
Company's 8.20% Senior Notes due 2007) of the Company or any
Restricted Subsidiary is reduced on the Company's consolidated
balance sheet upon the conversion or exchange (other than by a
Subsidiary of the Company) subsequent to the Issue Date of any
Debt of the Company or any Restricted Subsidiary convertible
or exchangeable for Capital Stock (other than Disqualified
Stock) of the Company or Debt issued or sold to the Company or
a Subsidiary of the Company or an employee stock ownership
plan or trust established by the Company or any of its
Subsidiaries for the benefit of their employees (less the
amount of any cash or other Property distributed by the
Company or any Restricted Subsidiary upon such conversion or
exchange).
<PAGE> 38
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(b) Notwithstanding the foregoing limitation, the Company
may:
(i) pay dividends on its Capital Stock within 60 days of the
declaration thereof if, on said declaration date, such dividends could
have been paid in compliance with this Indenture; PROVIDED, HOWEVER,
that at the time of such payment of such dividend, no other Default or
Event of Default shall have occurred and be continuing (or would result
therefrom); PROVIDED FURTHER, HOWEVER, that such dividend shall be
included in the calculation of the amount of Restricted Payments;
(ii) purchase, repurchase, redeem, legally defease, acquire or
retire for value Capital Stock of the Company or Subordinated
Obligations in exchange for, or out of the proceeds of the
substantially concurrent sale of, Capital Stock of the Company (other
than Disqualified Stock and other than Capital Stock issued or sold to
a Subsidiary of the Company or an employee stock ownership plan or
trust established by the Company or any of its Subsidiaries for the
benefit of their employees); PROVIDED, HOWEVER, that (A) such purchase,
repurchase, redemption, legal defeasance, acquisition or retirement
shall be excluded in the calculation of the amount of Restricted
Payments and (B) the Net Cash Proceeds from such exchange or sale shall
be excluded from the calculation of the amount of Capital Stock Sale
Proceeds;
(iii) purchase, repurchase, redeem, legally defease, acquire
or retire for value any Subordinated Obligations in exchange for, or
out of the proceeds of the substantially concurrent sale of, Permitted
Refinancing Debt; PROVIDED, HOWEVER, that such purchase, repurchase,
redemption, legal defeasance, acquisition or retirement shall be
excluded in the calculation of the amount of Restricted Payments;
(iv) pay dividends on the New Preferred Stock in accordance
with the terms thereof as in effect on the Issue Date, without regard
to any amendment, waiver or other modification thereto; PROVIDED,
HOWEVER, that at the time of such payment of such dividend, no Default
or Event of Default shall have occurred and be continuing or would
result therefrom; PROVIDED FURTHER, HOWEVER, that such dividends shall
be included in the calculation of the amount of Restricted Payments;
(v) expend up to $5,000,000 in any fiscal year of the Company
to repurchase common stock of the Company (i) to distribute to current
or former employees, officers and directors of the Company and its
Subsidiaries, (ii) from such current or former employees, officers or
directors or (iii) otherwise in order to distribute as employee
compensation; PROVIDED, HOWEVER, that at the time of, and after giving
pro forma effect to, any such expenditure, no Default or Event of
Default shall have occurred and be continuing; PROVIDED FURTHER,
HOWEVER, that such repurchase shall be excluded in the calculation of
the amount of Restricted Payments; and
(vi) expend up to $40,000,000 for Restricted Payments in
addition to amounts permitted pursuant to clauses (i) through (v)
above; PROVIDED, HOWEVER, that at the time of, and after giving pro
forma effect to, any such expenditure, no Default or Event of Default
shall have occurred and be continuing; PROVIDED FURTHER, HOWEVER, that
such expenditures shall be excluded in the calculation of the amount of
Restricted Payments.
<PAGE> 39
34
(c) Payments made pursuant to (and, in the case of clause
(a)(iii)(B), Capital Stock Sale Proceeds received from) transactions described
in paragraph (b) above from and after the Issue Date of the Company's 8.20%
Senior Notes due 2007 and prior to the Issue Date shall be included or excluded,
as the case may be, in the calculation of the amount of Restricted Payments and
Capital Stock Sale Proceeds in the same manner and to the same extent as such
transactions would be included or excluded, as the case may be, from and after
the Issue Date. In addition, amounts expended pursuant to Section 4.06(b)(iv) of
the 1997 Notes Indenture shall be excluded in the calculation of the amount of
Restricted Payments.
SECTION 4.07. LIMITATION ON LIENS. The Company shall not,
and shall not permit any Subsidiary Guarantor to, directly or indirectly,
Incur or suffer to exist, any Lien (other than Permitted Liens) upon any of its
Property (including Capital Stock of a Subsidiary Guarantor), whether owned at
the Issue Date or thereafter acquired, or any interest therein or any income or
profits therefrom, unless it has made or will make effective provision whereby
the Securities or the applicable Subsidiary Guaranty will be secured by such
Lien equally and ratably with (or prior to) all other Debt of the Company or
such Subsidiary Guarantor secured by such Lien, PROVIDED that any Lien securing
Subordinated Obligations must be subordinated and junior to the Lien securing
the Securities or relevant Subsidiary Guaranty and have the same or lesser
relative priority as the Subordinated Obligations shall have with respect to the
Securities or such Subsidiary Guaranty.
SECTION 4.08. LIMITATION ON ISSUANCE OR SALE OF CAPITAL STOCK
OF RESTRICTED SUBSIDIARIES. The Company shall not (a) sell, pledge, hypothecate
or otherwise dispose of any shares of Capital Stock of a Restricted Subsidiary
or (b) permit any Restricted Subsidiary to, directly or indirectly, issue or
sell or otherwise dispose of any shares of its Capital Stock other than (i)
directors' qualifying shares, (ii) to the Company or a Wholly Owned Subsidiary
or (iii) if, immediately after giving effect to such disposition, such
Restricted Subsidiary would no longer constitute a Restricted Subsidiary;
PROVIDED, HOWEVER, that, in the case of this clause (iii), (x) such disposition
is effected in compliance with Section 4.10 and (y) upon consummation of such
disposition and execution and delivery of a supplemental indenture in form
satisfactory to the Trustee, such Restricted Subsidiary shall be released from
any Subsidiary Guaranty previously made by such Restricted Subsidiary.
SECTION 4.09. CHANGE OF CONTROL. (a) Upon the occurrence of a
Change of Control, each Holder of Securities shall have the right to require the
Company to repurchase all or any part of such Holder's Securities pursuant to
the offer described below (the "Change of Control Offer") at a purchase price
(the "Change of Control Purchase Price") equal to 101% of the principal amount
thereof, plus accrued and unpaid interest thereon, if any, to the purchase date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date that is on or prior
to the purchase date).
(b) Within 30 days following any Change of Control, the
Company shall (a) cause a notice of the Change of Control Offer to be sent at
least once to the Dow Jones News Service or similar business news service in the
United States and (b) send, by first-class mail, with a copy to the Trustee, to
each Holder of Securities, at such Holder's address appearing in the Security
Register, a notice stating: (i) that a Change of Control has occurred and a
Change of Control Offer is being made pursuant to this Section 4.09 and that all
<PAGE> 40
35
Securities timely tendered will be accepted for payment; (ii) the Change of
Control Purchase Price and the purchase date, which shall be, subject to any
contrary requirements of applicable law, a Business Day no earlier than 30 days
nor later than 60 days from the date such notice is mailed (the "Change of
Control Payment Date"); (iii) that any Securities (or portion thereof) accepted
for payment (and duly paid on the Change of Control Payment Date) pursuant to
the Change of Control Offer shall cease to accrue interest after the Change of
Control Payment Date; (iv) that any Securities (or portions thereof) not
tendered will continue to accrue interest; (v) the circumstances and relevant
facts regarding such Change of Control (including information with respect to
pro forma historical income, cash flow and capitalization after giving effect to
the Change of Control); and (vi) the procedures that Holders of Securities must
follow in order to tender their Securities (or portions thereof) for payment,
and the procedures that Holders of Securities must follow in order to withdraw
an election to tender Securities (or portions thereof) for payment.
(c) Holders electing to have a Security purchased will be
required to surrender the Security, with an appropriate form (which may include
the form on the reverse thereof) duly completed, to the Company or its agent at
the address specified in the notice at least three Business Days prior to the
Change of Control Payment Date. Holders will be entitled to withdraw their
election if the Trustee or the Company receives not later than one Business Day
prior to the Change of Control Payment 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. Holders whose Securities are purchased only in part shall be issued
new Securities equal in principal amount to the unpurchased portion of the
Securities surrendered.
(d) On or prior to the Change of Control Payment Date, the
Company shall irrevocably deposit with the Trustee or with the Paying Agent (or,
if the Company or any of its Wholly Owned Subsidiaries is acting as the Paying
Agent, segregate and hold in trust) in cash an amount equal to the Change of
Control Purchase Price payable to the Holders entitled thereto, to be held for
payment in accordance with the provisions of this Section. On the Change of
Control Payment Date, the Company shall deliver to the Trustee the Securities or
portions thereof which have been properly tendered to and are to be accepted by
the Company for payment. The Trustee or the Paying Agent shall, on the Change of
Control Payment Date, mail or deliver payment to each tendering Holder of the
Change of Control Purchase Price. In the event that the aggregate Change of
Control Purchase Price is less than the amount delivered by the Company to the
Trustee or the Paying Agent, the Trustee or the Paying Agent, as the case may
be, shall deliver the excess to the Company immediately after the Change of
Control Payment Date.
(e) At the time the Company delivers Securities to the Trustee
which are to be accepted for purchase, the Company shall also deliver an
Officers' Certificate stating that such Securities are to be accepted by the
Company 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 or
the Paying Agent mails or delivers payment therefor to the surrendering Holder.
(f) The Company 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
<PAGE> 41
36
Securities pursuant to a Change of Control Offer. To the extent that the
provisions of any securities laws or regulations conflict with the provisions of
this Section, the Company will comply with the applicable securities laws and
regulations and will not be deemed to have breached its obligations under this
Section by virtue of such compliance.
SECTION 4.10. LIMITATION ON ASSET SALES. (a) The Company shall
not, and shall not permit any Restricted Subsidiary to, directly or indirectly,
consummate any Asset Sale unless (i) the Company or such Restricted Subsidiary
receives consideration at the time of such Asset Sale (or, in the case of a
lease that is an Asset Sale, the Company or such Restricted Subsidiary is to
receive over the term of such lease consideration) at least equal to the Fair
Market Value of the Property subject to such Asset Sale; (ii) at least 75% of
the consideration paid to the Company or such Restricted Subsidiary in
connection with such Asset Sale is in the form of cash, Cash Equivalents,
Additional Assets, Liquid Securities or the assumption by the purchaser of
liabilities of the Company or any applicable Subsidiary Guarantor (other than
liabilities that are by their terms subordinated to the Securities or any
applicable Subsidiary Guaranty) as a result of which the Company and the
Restricted Subsidiaries are no longer obligated with respect to such
liabilities; and (iii) the Company delivers an Officers' Certificate to the
Trustee certifying that such Asset Sale complies with the foregoing clauses (i)
and (ii).
(b) The Net Available Cash (or any portion thereof) from Asset
Sales may be applied by the Company or a Restricted Subsidiary, to the extent
the Company or such Restricted Subsidiary elects (or is required by the terms of
any Debt): (i) to prepay, repay, legally defease or purchase Senior Debt of the
Company or any Subsidiary Guarantor or Debt of any other Restricted Subsidiary
(excluding, in any such case, Debt owed to the Company or an Affiliate of the
Company); or (ii) to reinvest in Additional Assets (including by means of an
Investment in Additional Assets by a Restricted Subsidiary with Net Available
Cash received by the Company or another Restricted Subsidiary); PROVIDED,
HOWEVER, that in connection with any prepayment, repayment, legal defeasance or
purchase of Debt pursuant to clause (i) above, the Company or such Subsidiary
Guarantor or other Restricted Subsidiary shall retire such Debt and shall cause
the related loan commitment (if any) to be permanently reduced by an amount
equal to the principal amount so prepaid, repaid, legally defeased or purchased.
(c) Any Net Available Cash from an Asset Sale not applied in
accordance with the preceding paragraph within twelve months from the date of
the receipt of such Net Available Cash shall constitute "Excess Proceeds."
When the aggregate amount of Excess Proceeds exceeds
$5,000,000 (taking into account income earned on such Excess Proceeds, if any),
the Company will be required to make an offer to purchase with such Excess
Proceeds, on a pro rata basis according to principal amount (x) the Securities,
which offer (the "Prepayment Offer") shall be at a purchase price equal to 100%
of the principal amount thereof plus accrued and unpaid interest thereon, if
any, to the purchase date (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date that is on or prior to the purchase date) in accordance with the procedures
(including prorating in the event of oversubscription) set forth in this
Indenture and (y) any other Debt of the Company or any Subsidiary Guarantor that
is pari passu with the Securities at a purchase price no greater than 100% of
the principal amount thereof plus accrued and unpaid interest thereon, if any,
to the purchase date, to the extent, in
<PAGE> 42
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the case of this clause (y), required under the terms thereof (other than Debt
owed to the Company or any Affiliate of the Company). To the extent that any
portion of the amount of Net Available Cash remains after compliance with the
preceding sentence and provided that all Holders of Securities have been given
the opportunity to tender their Securities for purchase as described in Section
4.10(d), the Company or such Restricted Subsidiary may use such remaining amount
for any purpose permitted by this Indenture and the amount of Excess Proceeds
will be reset to zero.
(d) (1) Within five Business Days after the Company is
obligated to make a Prepayment Offer as described in Section 4.10(c), the
Company will send a written notice, by first-class mail, to the Trustee and the
Holders of Securities (the "Prepayment Offer Notice"), accompanied by such
information regarding the Company and its Subsidiaries as the Company in good
faith believes will enable such Holders to make an informed decision with
respect to such Prepayment Offer (which at a minimum shall include (i) the most
recently filed Annual Report on Form 10-K (including audited consolidated
financial statements) of the Company, the most recent subsequently filed
Quarterly Report on Form 10-Q of the Company and any Current Report on Form 8-K
of the Company filed subsequent to such Quarterly Report, other than Current
Reports describing Asset Sales otherwise described in the offering materials, or
corresponding successor reports (or, during any time that the Company is not
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, corresponding reports prepared pursuant to Section 4.02), (ii) a
description of material developments in the Company's business subsequent to the
date of the latest of such reports and (iii) if material, appropriate pro forma
financial information). The Prepayment Offer Notice shall state, (A) that a
Prepayment Offer is being made pursuant to this Section 4.10 and that all
Securities timely tendered will be accepted for payment (subject to proration),
(B) that any Securities (or any portion thereof) accepted for payment (and duly
paid on the Purchase Date) pursuant to the Prepayment Offer shall cease to
accrue interest after the Purchase Date, (C) the purchase price and purchase
date, which shall be a Business Day no earlier than 30 days nor later than 60
days from the date the Prepayment Offer Notice is mailed (the "Purchase Date"),
(D) the aggregate principal amount of Securities (or portions thereof) to be
purchased, (E) that any Securities (or portions thereof) not tendered will
continue to accrue interest and (F) the procedures that Holders of Securities
must follow in order to tender their Securities (or portions thereof) for
payment and the procedures that Holders of Securities must follow in order to
withdraw an election to tender Securities (or portions thereof) for payment.
(2) Not later than the date upon which written notice of a
Prepayment Offer is delivered to the Trustee as provided above, the Company
shall deliver to the Trustee an Officers' Certificate as to (i) the amount of
the Prepayment Offer (the "Offer Amount"), (ii) the allocation of the Net
Available Cash from the Asset Sales pursuant to which such Prepayment Offer is
being made and (iii) the compliance of such allocation with the provisions of
Section 4.10(b). On such date, the Company shall also irrevocably deposit with
the Trustee or with the Paying Agent (or, if the Company or a Wholly Owned
Subsidiary is the Paying Agent, shall segregate and hold in trust) in Temporary
Cash Investments, maturing on the last day prior to the Purchase Date or on the
Purchase Date if funds are immediately available by open of business, an amount
equal to the Offer Amount to be held for payment in accordance with the
provisions of this Section. Upon the expiration of the period for which the
Prepayment Offer remains open (the "Offer Period"), the Company shall deliver to
the Trustee for cancelation the
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Securities or portions thereof which have been properly tendered to and are to
be accepted by the Company. The Trustee or the Paying Agent 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 Company to the Trustee is less than the Offer
Amount, the Trustee or the Paying Agent shall deliver the excess to the Company
immediately 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 (which may include
the form on the reverse thereof) duly completed, to the Company or its agent 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. If at the expiration of the Offer
Period the aggregate principal amount of Securities surrendered by Holders
exceeds the Offer Amount, the Company shall select the Securities to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Securities in denominations of $1,000,
or integral multiples thereof, shall be purchased). Holders whose Securities are
purchased only in part shall be issued new Securities equal in principal amount
to the unpurchased portion of the Securities surrendered.
(4) At the time the Company delivers Securities to the Trustee
which are to be accepted for purchase, the Company shall also deliver an
Officers' Certificate stating that such Securities are to be accepted by the
Company pursuant to and in accordance with the terms of this Section. A Security
shall be deemed to have been accepted for pur chase at the time the Trustee or
the Paying Agent mails or delivers payment therefor to the surrendering Holder.
(e) The Company 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 Section. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section, the Company will comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations under this Section by virtue thereof.
SECTION 4.11. LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM
RESTRICTED SUBSIDIARIES. The Company shall not, and shall not permit any
Restricted Subsidiary to, directly or indirectly, create or otherwise cause or
suffer to exist any consensual restriction on the right of any Restricted
Subsidiary to (a) pay dividends, in cash or otherwise, or make any other
distributions on or in respect of its Capital Stock, or pay any Debt or other
obligation owed, to the Company or any other Restricted Subsidiary, (b) make any
loans or advances to the Company or any other Restricted Subsidiary or (c)
except for restrictions described in Section 4.08(ii), transfer any of its
Property to the Company or any other Restricted Subsidiary. The foregoing
limitations will not apply (i) with respect to clauses (a), (b) and (c), to
restrictions (A) in effect on the Issue Date, (B) relating to Debt of a
Restricted Subsidiary and existing at the time it became a Restricted Subsidiary
if such restriction was not created in connection with or in
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anticipation of the transaction or series of transactions pursuant to which such
Restricted Subsidiary became a Restricted Subsidiary or was acquired by the
Company, (C) which result from the Refinancing of Debt Incurred pursuant to an
agreement referred to in the immediately preceding clause (i)(A) or (B) above or
in clause (ii)(A) or (B) below, provided that such restriction is no less
favorable to the Holders of Securities than those under the agreement evidencing
the Debt so Refinanced, or (D) on any Securitization Subsidiary and (ii) with
respect to clause (c) only, to restrictions (A) relating to Debt that is
permitted to be Incurred and secured pursuant to Section 4.05 and Section 4.07
that limit the right of the debtor to dispose of the Property securing such
Debt, (B) encumbrances on Property at the time such Property was acquired by the
Company or any Restricted Subsidiary, so long as such restriction relates solely
to the Property so acquired and was not created in connection with or in
anticipation of such acquisition, (C) resulting from customary provisions
restricting subletting or assignment of leases or customary provisions in other
agreements that restrict assignment of such agreements or rights thereunder or
(D) customary restrictions contained in asset sale agreements limiting the
transfer of such Property pending the closing of such sale.
SECTION 4.12. LIMITATION ON TRANSACTIONS WITH AFFILIATES. (a)
The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, conduct any business or enter into or suffer to exist
any transaction or series of transactions (including the purchase, sale,
transfer, assignment, lease, conveyance 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 (i) the terms of such Affiliate
Transaction are (A) set forth in writing and (B) no less favorable to the
Company or such Restricted Subsidiary, as the case may be, than those that could
be obtained in a comparable arm's-length transaction with a Person that is not
an Affiliate of the Company, (ii) if such Affiliate Transaction involves
aggregate payments or value in excess of $10,000,000, the Board of Directors
(including a majority of the disinterested members of the Board of Directors)
approves such Affiliate Transaction and, in its good faith judgment, believes
that such Affiliate Transaction complies with clause (i) of this paragraph as
evidenced by a Board Resolution promptly delivered to the Trustee and (iii) if
such Affiliate Transaction involves aggregate payments or value in excess of
$25,000,000, the Company obtains a written opinion from an Independent Appraiser
to the effect that the consideration to be paid or received in connection with
such Affiliate Transaction is fair, from a financial point of view, to the
Company or such Restricted Subsidiary, as the case may be.
(b) Notwithstanding the foregoing limitation, the Company or
any Restricted Subsidiary may enter into or suffer to exist the following:
(i) any transaction or series of transactions between the
Company and one or more Restricted Subsidiaries or between two or more
Restricted Subsidiaries; PROVIDED that no more than 5% of the total
voting power of the Voting Stock (on a fully diluted basis) of any such
Restricted Subsidiary is owned by an Affiliate of the Company (other
than a Restricted Subsidiary);
(ii) any Restricted Payment permitted to be made pursuant to
Section 4.06;
(iii) any issuance of securities, or other payments, awards or
grants in securities or otherwise pursuant to, or the funding of,
<PAGE> 45
40
employment arrangements, pension plans, stock options and stock
ownership plans approved by the Board of Directors;
(iv) the payment of reasonable fees to directors of the
Company or such Restricted Subsidiary who are not employees of the
Company or any Restricted Subsidiary;
(v) loans and advances to employees made in the ordinary
course of business and consistent with the past practices of the
Company or such Restricted Subsidiary, as the case may be, PROVIDED
that such loans and advances do not exceed $5,000,000 in the aggregate
at any one time outstanding;
(vi) any transaction or series of transactions between the
Company or any Restricted Subsidiary and any of their joint ventures,
PROVIDED that (x) such transaction or series of transactions is in the
ordinary course of business between the Company or such Restricted
Subsidiary and such joint venture and is consistent with the past
practices of the Company and the Restricted Subsidiaries with respect
to their joint ventures and (y) if such transaction or series of
transactions constitutes an Investment by the Company, such Restricted
Subsidiary or such joint venture, the other equity investors in such
joint venture (A) participate in such Investment on the same basis as
the Company or such Restricted Subsidiary, (B) have their interests in
such joint venture diluted to the extent such investors elect not to so
participate in such Investment or (C) individually beneficially own 10%
or less of the equity interests in such joint venture; and
(vii) any transaction or series of transactions between the
Company or any Restricted Subsidiary and SMI America, Inc. or any of
its affiliates pursuant to the terms of the Sumitomo Securities
Purchase Agreement and any documents relating thereto, as such
Agreement and documents are in effect on the Issue Date, without regard
to any amendment, waiver or other modification thereto.
SECTION 4.13. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS.
The Company shall not, and shall not permit any Restricted Subsidiary to, enter
into any Sale and Leaseback Transaction with respect to any Property unless (a)
the Company or such Restricted Subsidiary would be entitled to (i) Incur Debt in
an amount equal to the Attributable Debt with respect to such Sale and Leaseback
Transaction pursuant to Section 4.05 and (ii) create a Lien on such Property
securing such Attributable Debt without securing the Securities or any
applicable Subsidiary Guaranty pursuant to Section 4.07 and (b) such Sale and
Leaseback Transaction is effected in compliance with Section 4.10; PROVIDED,
HOWEVER, that the Company or any Restricted Subsidiary may at any time enter
into a Sale and Leaseback Transaction if the sum of (x) the aggregate amount of
Attributable Debt outstanding at such time with respect to such Sale and
Leaseback Transaction and all other Sale and Leaseback Transactions entered into
by the Company or any Restricted Subsidiary and (y) the aggregate principal
amount (in the case of Debt sold at a discount, at Stated Maturity) of all
Secured Debt outstanding at such time (other than the USWA Secured Obligations
and any Permitted Refinancing Debt in respect thereof to the extent not
exceeding $250,000,000 in the aggregate and any Limited Recourse Guaranty), does
not exceed 10% of Consolidated Net Tangible Assets as determined based on the
consolidated balance sheet of the Company as of the end of the most recent
fiscal quarter, after giving pro forma effect to such transaction.
<PAGE> 46
41
SECTION 4.14. DESIGNATION OF RESTRICTED AND UNRESTRICTED
SUBSIDIARIES. The Board of Directors may designate any Subsidiary of the Company
to be an Unrestricted Subsidiary if (a) the Subsidiary to be so designated does
not own any Capital Stock or Debt of, or own or hold any Lien on any Property
of, the Company or any other Restricted Subsidiary and (b) either (i) the
Subsidiary to be so designated has total assets of $1,000 or less or (ii) such
designation is effective immediately upon such entity becoming a Subsidiary of
the Company or any Restricted Subsidiary. Unless so designated as an
Unrestricted Subsidiary, any Person that becomes a Subsidiary of the Company or
of any Wholly Owned Subsidiary will be classified as a Restricted Subsidiary,
PROVIDED that the requirements set forth in clauses (x) and (y) of the
immediately following paragraph would be satisfied after giving pro forma effect
to such classification. Any Person not permitted by the terms of the immediately
preceding sentence to be classified as a Restricted Subsidiary shall be
automatically classified as an Unrestricted Subsidiary. Except as provided in
the first sentence of this paragraph, no Restricted Subsidiary may be
redesignated as an Unrestricted Subsidiary. In addition, neither the Company nor
any Restricted Subsidiary shall at any time be directly or indirectly liable for
any Debt that provides that the holder thereof may (with the passage of time or
notice or both) declare a default thereon or cause the payment thereof to be
accelerated or payable prior to its Stated Maturity upon the occurrence of a
default with respect to any Debt, Lien or other obligation of any Unrestricted
Subsidiary (including any right to take enforcement action against such
Unrestricted Subsidiary, but excluding any Limited Recourse Guaranty). Upon
designation of a Restricted Subsidiary as an Unrestricted Subsidiary in
compliance with this Section 4.14, such Restricted Subsidiary shall, by
execution and delivery of a supplemental indenture in form satisfactory to the
Trustee, be released from any Subsidiary Guaranty previously made by such
Restricted Subsidiary.
The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary if, immediately after giving pro forma
effect to such designation, (x) the Company could Incur at least $1.00 of
additional Debt pursuant to Section 4.05(a) and (y) no Default or Event of
Default shall have occurred and be continuing or would result therefrom.
Any such designation or redesignation by the Board of
Directors will be evidenced to the Trustee by filing with the Trustee a Board
Resolution giving effect to such designation or redesignation and an Officers'
Certificate (a) certifying that such designation or redesignation complies with
the foregoing provisions and (b) giving the effective date of such designation
or redesignation, such filing with the Trustee to occur within 45 days after the
end of the fiscal quarter of the Company in which such designation or
redesignation is made (or, in the case of a designation or redesignation made
during the last fiscal quarter of the Company's fiscal year, within 90 days
after the end of such fiscal year).
SECTION 4.15. LIMITATION ON LAYERED DEBT. The Company shall
not permit any Acquired Subsidiary Guarantor to Incur, directly or indirectly,
any Debt that is subordinate or junior in right of payment to any Senior Debt
unless such debt is expressly subordinated in right of payment to, or ranks pari
passu with, the Obligations under its Acquired Subsidiary Guaranty.
SECTION 4.16. FUTURE SUBSIDIARY GUARANTORS. The Company shall
cause each Person that (a) becomes a Domestic Wholly Owned Subsidiary following
the Issue Date (other than any Securitization
<PAGE> 47
42
Subsidiary or any Inactive Subsidiary) or (b) ceases to be an Inactive
Subsidiary following the Issue Date to become a Subsidiary Guarantor by
executing and delivering to the Trustee a supplemental indenture as provided in
Section 10.06 at the time such Person becomes a Domestic Wholly Owned Subsidiary
or ceases to be an Inactive Subsidiary, as applicable.
SECTION 4.17. COMPLIANCE CERTIFICATE. The Company shall
deliver to the Trustee within 120 days after the end of each fiscal year of the
Company an Officers' Certificate stating that in the course of the performance
by the signers of their duties as Officers of 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 and the Subsidiary Guarantors also shall
comply with TIA ss. 314(a)(4).
SECTION 4.18. FURTHER INSTRUMENTS AND ACTS. Upon request of
the Trustee, the Company will 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.
ARTICLE 5
Successor Company
-----------------
SECTION 5.01. WHEN COMPANY MAY MERGE OR TRANSFER ASSETS. (a)
The Company shall not merge, consolidate or amalgamate with or into any other
Person (other than a merger of a Wholly Owned Subsidiary into the Company) or
sell, transfer, assign, lease, convey or otherwise dispose of all or
substantially all its Property in any one transaction or series of transactions
unless: (i) the Company shall be the surviving Person (the "Surviving Person")
or the Surviving Person (if other than the Company) formed by such merger,
consolidation or amalgamation or to which such sale, transfer, assignment,
lease, conveyance or disposition is made shall be a corporation organized and
existing under the laws of the United States of America, any State thereof or
the District of Columbia; (ii) the Surviving Person (if other than the Company)
expressly assumes, by supplemental indenture in form satisfactory to the
Trustee, executed and delivered to the Trustee by such Surviving Person, the due
and punctual payment of the principal of and interest on all the Securities,
according to their tenor, and the due and punctual performance and observance of
all the covenants and conditions of this Indenture to be performed by the
Company; (iii) in the case of a sale, transfer, assignment, lease, conveyance or
other disposition of all or substantially all the Company's Property, such
Property shall have been transferred as an entirety or virtually as an entirety
to one Person; (iv) immediately before and after giving effect to such
transaction or series of transactions on a pro forma basis (and treating, for
purposes of this clause (iv) and clauses (v) and (vi) below, any Debt which
becomes, or is anticipated to become, an obligation of the Surviving Person or
any Restricted Subsidiary as a result of such transaction or series of
transactions as having been Incurred by the Surviving Person or such Restricted
Subsidiary at the time of such transaction or series of transactions), no
Default or Event of Default shall have occurred and be continuing; (v)
immediately after giving effect to such transaction or series of transactions on
a pro forma basis, the Company or the Surviving Person, as the case may be,
would be able to Incur at least $1.00 of additional Debt under Section 4.05(a);
(vi) immediately after giving effect to such transaction or series of
transactions on a pro forma basis, the
<PAGE> 48
43
Surviving Person shall have a Consolidated Net Worth in an amount which is not
less than the Consolidated Net Worth of the Company immediately prior to such
transaction or series of transactions; and (vii) the Company shall deliver, or
cause to be delivered, to the Trustee, in form reasonably satisfactory to the
Trustee, an Officers' Certificate and an Opinion of Counsel, each stating that
such transaction and any supplemental indenture in respect thereto comply with
this Section 5.01(a) and that all conditions precedent herein provided for
relating to such transaction have been satisfied.
(b) The Surviving Person will 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 sale, transfer, assignment, lease,
conveyance or other disposition, shall not be released from the obligations to
pay the principal of and interest on the Securities.
SECTION 5.02. WHEN LTV STEEL OR THE TUBULAR BUSINESS MAY MERGE
OR TRANSFER ASSETS. (a) The Company shall not permit LTV Steel or any Subsidiary
then conducting all or part of the Tubular Business (each, a "Tubular
Subsidiary") to merge, consolidate or amalgamate with or into any other Person
(other than a merger of a Wholly Owned Subsidiary into LTV Steel or a Subsidiary
Guarantor then conducting all or part of the Tubular Business, as applicable) or
sell, transfer, assign, lease, convey or otherwise dispose of all or
substantially all the Property of LTV Steel or of the Tubular Business, as
applicable, in any one transaction or series of transactions unless: (i) the
Surviving Person (if not LTV Steel or such Tubular Subsidiary) formed by such
merger, consolidation or amalgamation or to which such sale, transfer,
assignment, lease, conveyance or disposition is made shall be a corporation
organized and existing under the laws of the United States of America, any State
thereof or the District of Columbia; (ii) the Surviving Person (if other than
LTV Steel or such Tubular Subsidiary) expressly assumes, by supplemental
indenture in form satisfactory to the Trustee, executed and delivered to the
Trustee by such Surviving Person, the due and punctual performance and
observance of all the obligations of such entity under its Subsidiary Guaranty;
(iii) in the case of a sale, transfer, assignment, lease, conveyance or other
disposition of all or substantially all the Property of LTV Steel or the Tubular
Business, such Property shall have been transferred as an entirety or virtually
as an entirety to one Person; (iv) immediately before and after giving effect to
such transaction or series of transactions on a pro forma basis (and treating,
for purposes of this clause (iv) and clauses (v) and (vi) below, any Debt which
becomes, or is anticipated to become, an obligation of the Surviving Person, the
Company or any Restricted Subsidiary as a result of such transaction or series
of transactions as having been Incurred by the Surviving Person, the Company or
such Restricted Subsidiary at the time of such transaction or series of
transactions), no Default or Event of Default shall have occurred and be
continuing; (v) immediately after giving effect to such transaction or series of
transactions on a pro forma basis, the Company would be able to Incur at least
$1.00 of additional Debt under Section 4.05(a); (vi) immediately after giving
effect to such transaction or series of transactions on a pro forma basis, the
Company shall have a Consolidated Net Worth in an amount which is not less than
the Consolidated Net Worth of the Company immediately prior to such transaction
or series of transactions; and (vii) the Company shall deliver, or cause to be
delivered, to the Trustee, in form reasonably satisfactory to the Trustee, an
Officers' Certificate and an Opinion of Counsel, each stating that such
transaction and such supplemental indenture, if any, in respect thereto comply
with this covenant and that all conditions precedent herein provided for
relating to such
<PAGE> 49
44
transaction have been satisfied. The foregoing provisions shall not apply to any
sale of less than substantially all the Tubular Business by means of a merger,
consolidation or amalgamation.
(b) The Surviving Person will succeed to, and be substituted
for, and may exercise every right and power of the applicable Subsidiary
Guarantor under its Subsidiary Guaranty.
ARTICLE 6
Defaults and Remedies
---------------------
SECTION 6.01. EVENTS OF DEFAULT. The following events shall
be "Events of Default":
(1) the Company defaults in any payment of interest on any
Security when the same becomes due and payable, and such default
continues for a period of 30 days;
(2) the Company defaults in the payment of the principal of
any Security when the same becomes due and payable at its Stated
Maturity, upon optional redemption, upon mandatory redemption, upon
required repurchase, upon acceleration or otherwise;
(3) the Company, LTV Steel or any Tubular Subsidiary fails to
comply with Article 5;
(4) the Company fails to comply with any of its agreements or
covenants in the Securities or this Indenture (other than those
referred to in clause (1), (2) or (3) above) and such failure continues
for 30 days after notice is given to the Company as specified below;
(5) a default by the Company or any Restricted Subsidiary
under any Debt of the Company or any Restricted Subsidiary which
results in the acceleration of the maturity of such Debt, or failure to
pay any such Debt at maturity, in an aggregate amount greater than
$20,000,000 or its foreign currency equivalent at the time;
(6) the Company or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an involuntary case;
(C) consents to the appointment of a Custodian of it
or for any substantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
<PAGE> 50
45
(7) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any
Significant Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any
Significant Subsidiary or for any substantial part of its
property;
(C) orders the winding up or liquidation of the
Company or any Significant Subsidiary; or
(D) is for any similar relief granted under any
foreign laws;
and in each such case the order or decree remains unstayed and in
effect for 60 days;
(8) any judgment or judgements for the payment of money in an
aggregate amount in excess of $20,000,000 or its foreign currency
equivalent at the time is entered against the Company or any Restricted
Subsidiary, and shall not be waived, satisfied or discharged for any
period of 30 consecutive days during which a stay of enforcement shall
not be in effect; or
(9) any Subsidiary Guaranty ceases to be in full force and
effect (other than in accordance with the terms of this Indenture or
such Subsidiary Guaranty) or any Subsidiary Guarantor denies or
disaffirms its obligations under its Subsidiary Guaranty.
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body.
The term "Bankruptcy Law" means Title 11, UNITED STATES CODE,
or any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
A Default under clause (4) is not an Event of Default until
the Trustee or the Holders of at least 25% in aggregate principal amount of the
Securities of a series then outstanding notify the Company (and, in the case of
such notice by Holders, the Trustee) of the Default and the Company does not
cure such Default within the time specified after receipt of such notice. Such
notice must specify the Default, demand that it be remedied and state that such
notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
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 Company is taking or
proposes to take with respect thereto.
SECTION 6.02. ACCELERATION. If an Event of Default (other than
an Event of Default specified in Section 6.01(6) or (7)) occurs and is
continuing, the Trustee by notice to the Company, or the Holders of at least 25%
in aggregate principal amount of the Securities of a series then outstanding by
notice to the Company and the Trustee, may declare the principal amount of all
the Securities of such series then outstanding plus accrued but unpaid interest
to the date of acceleration
<PAGE> 51
46
to be immediately due and payable. In case an Event of Default specified in
Section 6.01(6) or (7) shall occur, such amount with respect to all the
Securities of such series shall be due and payable immediately without any
declaration or other act on the part of the Trustee or the Holders of the
Securities of such series. The Holders of a majority in aggregate principal
amount of the outstanding Securities of a series may by notice to the Trustee
and the Company rescind any declaration of acceleration if the rescission would
not conflict with any judgment or decree, and if all existing Events of Default
have been cured or waived except nonpayment of principal or interest that has
become due solely because of the acceleration. No such rescission shall affect
any subsequent Default or impair any right consequent thereto.
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 of such series 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, except as provided in the last paragraph of
Section 2.07. All available remedies are cumulative.
SECTION 6.04. WAIVER OF PAST DEFAULTS. The Holders of a
majority in aggregate principal amount of the Securities of a series 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 of such
series or (ii) a Default in respect of a provision that under Section 9.02
cannot be amended without the consent of each Securityholder of such series
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 aggregate principal amount of the Securities of a series 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 with
respect to the Securities of such series. 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 reasonable indemnity 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) such Holder shall have previously given to the Trustee
written notice of a continuing Event of Default;
(2) the Holders of at least 25% in aggregate principal amount
of the Securities of a series then outstanding shall have
<PAGE> 52
47
made a written request, and such Holder of or Holders shall have
offered reasonable indemnity, to the Trustee to pursue such proceeding
as trustee; and
(3) the Trustee has failed to institute such proceeding and
has not received from the Holders of at least a majority in aggregate
principal amount of the Securities of a series outstanding a direction
inconsistent with such request, within 60 days after such notice,
request and offer.
The foregoing limitations on the pursuit of remedies by a
Securityholder shall not apply to a suit instituted by a Holder of Securities
for the enforcement of payment of the principal of or interest on such Security
on or after the applicable due date specified in such Security. 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 interest on the Securities held by such
Holder, on or after the respective due dates expressed in this 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(1) or (2) 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 Company, its creditors or
its 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.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES. If the Trustee collects any money
or property pursuant to this Article 6 with respect to the Securities of
any series, it shall pay out the money or property in the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
<PAGE> 53
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SECOND: to Securityholders for amounts due and unpaid on the
Securities of that series for principal and interest, ratably,
without preference or priority of any kind, according to the amounts
due and payable on the Securities of such series for principal 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. At least 15 days before
such record date, the Company shall mail to each Securityholder of the
applicable series and the Trustee a notice that states the record date, the
payment date and amount to be paid.
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 aggregate principal amount of the Securities of a
series.
SECTION 6.12. WAIVER OF STAY OR EXTENSION LAWS. The Company
(to the extent it may lawfully do so) shall not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of this Indenture; and
the Company (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and shall not 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 had been enacted.
ARTICLE 7
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
<PAGE> 54
49
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.
(4) 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.
(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) 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.
(h) The Trustee shall not be charged with knowledge of any
Default or Event of Default or of the identity of any Significant Subsidiary
unless (i) a Trust Officer assigned to and working in the Trustee's Corporate
Trustee Administration Department shall have actual knowledge thereof or (ii)
the Trustee shall have received notice thereof in accordance with Section 12.02
from the Company, any Subsidiary Guarantor or any Holder.
SECTION 7.02. RIGHTS OF TRUSTEE. (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.
<PAGE> 55
50
(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) Unless otherwise provided herein, any request or direction
of the Company mentioned herein shall be sufficiently evidenced by a written
order signed by two Officers or by an Officer and either an Assistant Treasurer
or Assistant Secretary of the Company
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 Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar or
co-registrar 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 or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Company or any Subsidiary Guarantor 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 90 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 or interest on any Security, the Trustee
may withhold the notice if and so long as a committee of its Trust Officers in
good faith determines that withholding the notice is in the interests of
Securityholders.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS. As promptly as
practicable after each May 15 beginning with May 15, 2000, 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 each year that complies with TIA ss. 313(a), if
and to the extent required by said subsection. The Trustee also shall comply
with TIA ss. 313(b).
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 Company agrees 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 Company shall
pay to the Trustee from time to time reasonable compensation for its services.
The Trustee's compensation shall not be limited by any
<PAGE> 56
51
law on compensation of a trustee of an express trust. The Company shall
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 Company shall indemnify the Trustee
against any and all loss, liability or expense (including attorneys' fees)
incurred by it in connection with the acceptance and administration of this
trust and the performance of its duties hereunder. The Trustee shall notify the
Company promptly of any claim for which it may seek indemnity. Failure by the
Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and the Trustee may
have separate counsel and the Company shall pay the fees and expenses of such
counsel. The Company need not reimburse any expense or indemnify against any
loss, liability or expense incurred by the Trustee through the Trustee's own
wilful misconduct, negligence or bad faith. The Company need not pay for any
settlement made by the Trustee without the Company's consent, such consent not
to be unreasonably withheld.
To secure the Company's 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 on particular Securities.
The Company's payment obligations pursuant to this Section
shall survive the discharge of this Indenture. Without limiting any other rights
available to the Trustee under applicable law, when the Trustee incurs expenses
after the occurrence of a Default specified in Section 6.01(6) or (7) with
respect to the Company, 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 Company. The Holders of a majority in aggregate
principal amount of the Securities may remove the Trustee by so notifying the
Trustee and may appoint a successor Trustee. The Company shall remove the
Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(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 by the Company or by the
Holders of a majority in aggregate principal amount of the Securities and such
Holders do not reasonably promptly appoint a successor Trustee, 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 Company shall promptly appoint
a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring
<PAGE> 57
52
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 aggregate 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 who has been bona fide Holder of a Security for at least six
months 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 or banking
association 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 such 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
(or shall be a member of a bank holding company that 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), subject to the penultimate paragraph thereof (as in existence on the
date hereof); 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 Company 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
COMPANY. The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.
<PAGE> 58
53
ARTICLE 8
Discharge of Indenture; Defeasance
----------------------------------
SECTION 8.01. DISCHARGE OF LIABILITY ON SECURITIES;
DEFEASANCE. (a) When (i) the Company delivers 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 3 and the Company irrevocably deposits with the Trustee
funds 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 Company pays all other sums payable hereunder by the Company, then this
Indenture shall, subject to Sections 8.01(c), cease to be of further effect. The
Trustee shall acknowledge satisfaction and discharge of this Indenture on demand
of the Company accompanied by an Officers' Certificate and an Opinion of
Counsel, each stating that all conditions precedent herein provided for relating
to the satisfaction and discharge of this Indenture have been complied with, and
at the cost and expense of the Company.
(b) Subject to Sections 8.01(c) and 8.02, the Company at any
time may terminate (i) all its obligations under the Securities and this
Indenture ("legal defeasance option") or (ii) its obligations under Sections
4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16,
5.01(a)(v) and (vi) and 5.02 and the operation of Sections 6.01(5), 6.01(6),
6.01(7), 6.01(8) and 6.01(9) (but, in the case of Sections 6.01(6) and (7), with
respect only to Significant Subsidiaries) ("covenant defeasance option"). The
Company may exercise its legal defeasance option notwithstanding its prior
exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment
of the Securities may not be accelerated because of an Event of Default. If the
Company exercises its covenant defeasance option, payment of the Securities may
not be accelerated because of an Event of Default specified in Sections 6.01(4)
(with respect to the Sections of Article 4 identified in the immediately
preceding paragraph), 6.01(5), 6.01(6), 6.01(7), 6.01(8) and 6.01(9) (but, in
the case of Sections 6.01(6) and (7), with respect only to Significant
Subsidiaries) or because of the failure of the Company to comply with Section
5.01(a)(v) or (vi) or Section 5.02. If the Company exercises its legal
defeasance option or its covenant defeasance option, each Subsidiary Guarantor
shall be released from all its obligations under its Subsidiary Guaranty.
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.04, 2.05, 2.06, 2.07, 7.07, 7.08, 8.05 and 8.06 shall
survive until the Securities have been paid in full. Thereafter, the Company's
obligations in Sections 7.07, 8.05 and Sections 2.3 and 2.4 of Appendix A hereto
shall survive.
<PAGE> 59
54
SECTION 8.02. CONDITIONS TO DEFEASANCE. The Company may
exercise its legal defeasance option or its covenant defeasance option only
if:
(1) the Company irrevocably deposits in trust with the
Trustee money or U.S. Government Obligations for the payment of
principal of and interest on the Securities to maturity or
redemption, as the case may be;
(2) the Company delivers 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 on 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 pass after the deposit is made and during the
123-day period no Default specified in Section 6.01(6) or (7) with
respect to the Company 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 Company;
(5) the Company delivers 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 Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(i) the Company has 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
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 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 Company
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 tax purposes as a result of such covenant defeasance and
will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
covenant defeasance had not occurred; and
(8) the Company delivers 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 8 have been complied with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article 3.
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55
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 8. 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 COMPANY. The Trustee and the Paying
Agent shall promptly turn over to the Company upon request any excess money or
securities held by them at any time, the existence of such excess to be based on
a certificate from a nationally recognized firm of independent accountants
delivered to the Trustee, which may include the certificate referred to in
Section 8.02(2).
Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Company upon request any money held by
them for the payment of principal or interest that remains unclaimed for two
years, and, thereafter, all liability of the Trustee and the Paying Agent with
respect to such money shall cease and Securityholders entitled to the money must
look to the Company for payment as general creditors.
SECTION 8.05. INDEMNITY FOR GOVERNMENT OBLIGATIONS. The
Company 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 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article 8 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 8; PROVIDED, HOWEVER, that, if the
Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE 9
Amendments
----------
SECTION 9.01. WITHOUT CONSENT OF HOLDERS. The Company and
the Trustee may amend this Indenture or the Securities of a series without
notice to or consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5;
(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
<PAGE> 61
56
the uncertificated Securities are described in Section 163(f)(2)(B) of
the Code;
(4) to add additional Guarantees with respect to the Secur-
ities or to release any Subsidiary Guarantor from its Subsidiary
Guaranty when permitted by the terms hereof, or to secure the
Securities;
(5) to add to the covenants of the Company for the benefit of
the Holders or to surrender any right or power herein conferred upon
the Company;
(6) to make any change to the subordination provisions of
Article 11 that would limit or terminate the benefits available to
holders of Designated Senior Debt under such provisions;
(7) to comply with any requirements of the SEC in connection
with qualifying, or maintaining the qualification of, this Indenture
under the TIA; or
(8) to make any change that does not adversely affect the
rights of any Securityholder.
No amendment may be made to the subordination provisions of
Article 11 that adversely affects the rights of holders of Designated Senior
Debt unless the holders of such Designated Senior Debt (or their Representative)
consent to such change.
After an amendment under this Section becomes effective, the
Company 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 Company and the
Trustee may amend this Indenture with respect to any series or the
Securities of any series without notice to any Securityholder but with the
written consent of the Holders of at least a majority in aggregate principal
amount of the Securities of such series. However, without the consent of each
Securityholder affected thereby, an amendment may not:
(1) reduce the amount of Securities of any series whose
Holders must consent to an amendment or waiver;
(2) reduce the rate of or change the time for payment of
interest on any Security;
(3) reduce the principal of or extend the Stated Maturity of
any Security;
(4) reduce the amount payable upon the redemption or
repurchase of any Security under Article 3 or Section 4.09 or 4.10 or
change the time at which any Security may be redeemed in accordance
with Article 3;
(5) make any Security payable in a currency other than that
stated in the Security;
(6) subordinate the Securities or any Subsidiary Guaranty to
any other obligation of the Company or the applicable Subsidiary
Guarantor;
<PAGE> 62
57
(7) make any change in any Subsidiary Guaranty that would
adversely affect the Securityholders;
(8) impair the right of any Holder to institute suit for
enforcement of any payment on or with respect to such Holder's
Securities or any Subsidiary Guaranty;
(9) release any security that may have been granted in favor
of the Holders of the Securities other than pursuant to the terms of
such security interest, including the security interest under the
Escrow Agreement;
(10) at any time after a Change of Control or Asset Sale has
occurred, change the time at which the Change of Control Offer or
Prepayment Offer relating thereto must be made or at which the
Securities must be repurchased pursuant to such Change of Control Offer
or Prepayment Offer;
(11) make any change to the subordination provisions of
Article 11 that would adversely affect the Holders of the Securities;
(12) reduce the premium payable upon a Special Mandatory
Redemption or make any other change in the provisions relating to the
Special Mandatory Redemption set forth in paragraph 5(b) of the
Original Securities, including changing the time by which the
Securities must be redeemed;
(13) make any change in the Escrow Agreement that would
adversely affect the Holders of the Original Securities; or
(14) make any change in Section 6.04 or 6.07 or the second
sentence of this Section.
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
Company shall mail to Securityholders of each applicable series 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 upon the execution of such amendment or
waiver by the Trustee.
<PAGE> 63
58
The Company 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 Company or the Trustee so determines, the Company
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 9 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 that such amendment is authorized or permitted by this Indenture.
SECTION 9.07. PAYMENT FOR CONSENT. Neither the Company nor any
Affiliate of the Company 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 10
Subsidiary Guaranties
---------------------
SECTION 10.01. GUARANTEES. Each Subsidiary Guarantor hereby
unconditionally guarantees to each Holder and to the Trustee and its successors
and assigns (a) the full and punctual payment of principal of and interest on
the Securities when due, whether at maturity, by acceleration, by redemption or
otherwise, and all other monetary obligations of the Company under this
Indenture and the Securities and (b) the full and punctual performance within
applicable grace periods of all other obligations of the Company under this
Indenture and the Securities (all the foregoing being hereinafter collectively
called the "Obligations"). Each Subsidiary Guarantor further agrees that the
Obligations may be extended or renewed, in whole or in part, without notice or
further assent from such Subsidiary Guarantor and that such Subsidiary Guarantor
will remain bound under this Article 10 notwithstanding any extension or renewal
of any Obligation.
<PAGE> 64
59
Each Subsidiary Guarantor waives presentation to, demand of,
payment from and protest to the Company of any of the Obligations and also
waives notice of protest for nonpayment. Each Subsidiary Guarantor waives notice
of any default under the Securities or the Obligations. The obligations of each
Subsidiary Guarantor hereunder shall not be affected by (a) the failure of any
Holder or the Trustee to assert any claim or demand or to enforce any right or
remedy against the Company or any other Person under this Indenture, the
Securities or any other agreement or otherwise; (b) any extension or renewal of
any thereof; (c) any rescission, waiver, amendment or modification of any of the
terms or provisions of this Indenture, the Securities or any other agreement;
(d) the release of any security held by any Holder or the Trustee for the
Obligations or any of them; (e) the failure of any Holder or the Trustee to
exercise any right or remedy against any other guarantor of the Obligations; or
(f) any change in the ownership of such Subsidiary Guarantor.
Each Subsidiary Guarantor further agrees that the Subsidiary
Guaranty herein constitutes a guarantee of payment, performance and compliance
when due (and not a guarantee of collection) and waives any right to require
that any resort be had by any Holder or the Trustee to any security held for
payment of the Obligations.
Except as expressly set forth in Sections 4.08, 5.02 and
8.01(b), the obligations of each Subsidiary Guarantor hereunder shall not be
subject to any reduction, limitation, impairment or termination for any reason,
including any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to any defense of setoff, counterclaim, recoupment or
termination whatsoever or by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of each Subsidiary Guarantor herein
shall not be discharged or impaired or otherwise affected by the failure of any
Holder or the Trustee to assert any claim or demand or to enforce any remedy
under this Indenture, the Securities or any other agreement, by any waiver or
modification of any thereof, by any default, failure or delay, willful or
otherwise, in the performance of the obligations, or by any other act or thing
or omission or delay to do any other act or thing which may or might in any
manner or to any extent vary the risk of such Subsidiary Guarantor or would
otherwise operate as a discharge of such Subsidiary Guarantor as a matter of law
or equity.
Each Subsidiary Guarantor further agrees that the Guaranty
herein shall continue to be effective or be reinstated, as the case may be, if
at any time payment, or any part thereof, of principal of or interest on
any Obligation is rescinded or must otherwise be restored by any Holder or the
Trustee upon the bankruptcy or reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any
other right which any Holder or the Trustee has at law or in equity against any
Subsidiary Guarantor by virtue hereof, upon the failure of the Company to pay
the principal of or interest on any Obligation when and as the same shall become
due, whether at maturity, by acceleration, by redemption or otherwise, or to
perform or comply with any other Obligation, each Subsidiary Guarantor hereby
promises to and will, upon receipt of written demand by the Trustee, forthwith
pay, or cause to be paid, in cash, to the Holders or the Trustee an amount equal
to the sum of (i) the unpaid amount of such Obligations, (ii) accrued and unpaid
interest on such Obligations (but only to the extent not prohibited by law) and
(iii) all other monetary Obligations of the Company to the Holders and the
Trustee.
<PAGE> 65
60
Each Subsidiary Guarantor agrees that it shall not be entitled
to any right of subrogation in respect of any Obligations guaranteed hereby
until payment in full in cash of all Obligations. Each Subsidiary Guarantor
further agrees that, as between it, 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 6 for the purposes of each
Subsidiary Guarantor's Subsidiary Guaranty herein, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
Obligations guaranteed hereby, and (y) in the event of any declaration of
acceleration of such obligations as provided in Article 6, such Obligations
(whether or not due and payable) shall forthwith become due and payable by such
Subsidiary Guarantor for the purposes of this Section.
Each Subsidiary Guarantor also agrees to pay any and all costs
and expenses (including reasonable attorneys' fees) incurred by the Trustee or
any Holder in enforcing any rights under this Section.
SECTION 10.02. CONTRIBUTION. The Company agrees that, in the
event a payment shall be made by any Subsidiary Guarantor under its Subsidiary
Guaranty, the Company shall indemnify such Subsidiary Guarantor in an amount
equal to the amount of such payment multiplied by a fraction, the numerator of
which shall be the net worth of the Company on the date hereof and the
denominator of which shall be the aggregate net worth of the Company and such
Subsidiary Guarantor on the date hereof.
SECTION 10.03. SUCCESSORS AND ASSIGNS. This Article 10 shall
be binding upon each Subsidiary Guarantor and its successors and assigns and
shall enure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges conferred upon that party in this
Indenture and in the Securities shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions of this
Indenture.
SECTION 10.04. NO WAIVER. Neither a failure nor a delay on the
part of either the Trustee or the Holders in exercising any right, power or
privilege under this Article 10 shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise of any
right, power or privilege. The rights, remedies and benefits of the Trustee and
the Holders herein expressly specified are cumulative and not exclusive of any
other rights, remedies or benefits which either may have under this Article 10
at law, in equity, by statute or otherwise.
SECTION 10.05. MODIFICATION. No modification, amendment or
waiver of any provision of this Article 10, nor the consent to any departure by
any Subsidiary Guarantor therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Trustee, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. No notice to or demand on any Subsidiary Guarantor in any case
shall entitle such Subsidiary Guarantor to any other or further notice or demand
in the same, similar or other circumstances.
SECTION 10.06. EXECUTION OF SUPPLEMENTAL INDENTURE FOR FUTURE
SUBSIDIARY GUARANTORS. Each Subsidiary that is required to become a Subsidiary
Guarantor pursuant to Section 4.16 shall promptly execute and deliver to the
Trustee a supplemental indenture in the form
<PAGE> 66
61
of Exhibit B hereto pursuant to which such Subsidiary shall become a Subsidiary
Guarantor under this Article 10 and shall guarantee the Obligations.
Concurrently with the execution and delivery of such supplemental indenture, the
Company shall deliver to the Trustee an Opinion of Counsel to the effect that
such supplemental indenture has been duly authorized, executed and delivered by
such Subsidiary and that, subject to the application of bankruptcy, insolvency,
moratorium, fraudulent conveyance or transfer and other similar laws relating to
creditors' rights generally and to the principles of equity, whether considered
in a proceeding at law or in equity, the Subsidiary Guaranty of such Subsidiary
Guarantor is a legal, valid and binding obligation of such Subsidiary Guarantor,
enforceable against such Subsidiary Guarantor in accordance with its terms.
ARTICLE 11
Subordination of Acquired Subsidiary Guaranties
-----------------------------------------------
SECTION 11.01. AGREEMENT TO SUBORDINATE. Each Acquired
Subsidiary Guarantor agrees, and each Holder of Securities by accepting a
Security agrees, that the Obligations of such Acquired Subsidiary Guarantor are
subordinated in right of payment, to the extent and in the manner provided in
this Article 11, to the payment when due of all Designated Senior Debt and that
the subordination is for the benefit of and enforceable by the holders of such
Designated Senior Debt. Subject to the foregoing, the Obligations of each
Acquired Subsidiary Guarantor shall in all respects rank pari passu with all
existing and future senior Debt of such Acquired Subsidiary Guarantor and senior
to all existing and future subordinated Debt of such Acquired Subsidiary
Guarantor, and only Designated Senior Debt shall rank senior to the Obligations
of such Acquired Subsidiary Guarantor in accordance with the provisions set
forth herein.
SECTION 11.02. LIQUIDATION, DISSOLUTION, BANKRUPTCY. Upon any
payment or distribution of the assets of any Acquired Subsidiary Guarantor to
creditors upon a total or partial liquidation, dissolution or winding up of such
Acquired Subsidiary Guarantor or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to such Acquired Subsidiary
Guarantor or its property:
(1) holders of Designated Senior Debt shall be entitled to
receive payment in full in cash of such Designated Senior Debt before
Holders of Securities shall be entitled to receive any payment pursuant
to any Obligations of such Acquired Subsidiary Guarantor; and
(2) until the Designated Senior Debt is paid in full in cash,
any distribution made by or on behalf of such Acquired Subsidiary
Guarantor to which Holders of Securities would be entitled but for
this Article 11 shall be made to holders of the Designated Senior Debt
as their interests may appear, except that all Holders of Securities
may receive and retain shares of stock and any debt securities of such
Acquired Subsidiary Guarantor that are subordinated to the Designated
Senior Debt to at least the same extent as the Obligations of such
Acquired Subsidiary Guarantor are subordinated to the Designated Senior
Debt.
SECTION 11.03. DEFAULT ON DESIGNATED SENIOR DEBT. No Acquired
Subsidiary Guarantor may make any payment pursuant to any of its Obligations or
repurchase, redeem or otherwise retire or defease any Securities or other
Obligations (collectively, "make an Acquired
<PAGE> 67
62
Subsidiary Guarantor payment") if (a) any principal, premium or interest in
respect of the Designated Senior Debt is not paid when due (including at
maturity) or (b) any other default on the Designated Senior Debt occurs and the
maturity of the Designated Senior Debt is accelerated in accordance with its
terms unless, in either case, (i) the default has been cured or waived and any
such acceleration has been rescinded or (ii) the Designated Senior Debt has been
paid in full in cash; PROVIDED, HOWEVER, that any Acquired Subsidiary Guarantor
may make an Acquired Subsidiary Guarantor payment without regard to the
foregoing if such Acquired Subsidiary Guarantor and the Trustee receive written
notice approving such payment from the Representative of the Designated Senior
Debt. During the continuance of any default (other than a default described in
clause (a) or (b) of the preceding sentence) with respect to any Designated
Senior Debt pursuant to which the maturity thereof may be accelerated
immediately without further notice (except any notice required to effect the
acceleration) or the expiration of any applicable grace period, no Acquired
Subsidiary Guarantor may make an Acquired Subsidiary Guarantor payment for a
period (a "Payment Blockage Period") commending upon the receipt by such
Acquired Subsidiary Guarantor and the Trustee of written notice of such default
from the Representative of the holders of such Designated Senior Debt specifying
an election to effect a Payment Blockage Period (a "Payment Blockage Notice")
and ending 179 days thereafter (unless such Payment Blockage Notice is earlier
terminated (a) by written notice to the Trustee and such Acquired Subsidiary
Guarantor from the Representative that gave such Payment Blockage Notice, (b)
because such default is no longer continuing or (c) because such Designated
Senior Debt has been repaid in full in cash). Unless the holders of such
Designated Senior Debt or the Representative of such holders have accelerated
the maturity of such Designated Senior Debt and not rescinded such acceleration,
Acquired Subsidiary Guarantors may (unless otherwise prohibited as described in
the first sentence of this paragraph) resume making Acquired Subsidiary
Guarantor payments after the end of such Payment Blockage Period. Not more than
one Payment Blockage Notice may be given in any consecutive 360-day period,
irrespective of the number of defaults during such period.
SECTION 11.04. DEMAND FOR PAYMENT. If a demand for payment is
made on an Acquired Subsidiary Guarantor pursuant to Article 10, such Acquired
Subsidiary Guarantor may not make an Acquired Subsidiary Guarantor payment until
five Business Days after the Representative of the Designated Senior Debt
receives notice of such acceleration and, thereafter, may make an Acquired
Subsidiary Guarantor payment only if this Indenture otherwise permits payment at
that time.
SECTION 11.05. WHEN DISTRIBUTION MUST BE PAID OVER. If a
distribution is made to Holders of Securities that because of this Article 11
should not have been made to them, the Holders of Securities who receive the
distribution shall hold it in trust for holders of the Designated Senior Debt
and pay it over to them or their Representative as their interests may appear.
SECTION 11.06. SUBROGATION. After all the Designated Senior
Debt is paid in full and until the Securities are paid in full, Holders of
Securities shall be subrogated to the rights of holders of Designated Senior
Debt to receive distributions applicable to the Designated Senior Debt. A
distribution made under this Article 11 to holders of Designated Senior Debt
that otherwise would have been made to Holders of Securities is not, as between
the relevant Acquired Subsidiary Guarantor and Holders of Securities, a payment
by such Acquired Subsidiary Guarantor on the Designated Senior Debt.
<PAGE> 68
63
SECTION 11.07. RELATIVE RIGHTS. This Article 11 defines the
relative rights of Holders of Securities and holders of Designated Senior
Debt. Nothing in this Indenture shall:
(1) impair, as between an Acquired Subsidiary Guarantor and
Holders of Securities, the obligation of such Acquired Subsidiary
Guarantor, which is absolute and unconditional, to pay the Obligations
to the extent set forth in Article 10 or the relevant Acquired
Subsidiary Guaranty; or
(2) prevent the Trustee or any Holder of Securities from
exercising its available remedies upon a default by such Acquired
Subsidiary Guarantor under the Obligations, subject to the rights of
holders of Designated Senior Debt to receive distributions otherwise
payable to Holders of Securities.
SECTION 11.08. SUBORDINATION MAY NOT BE IMPAIRED BY ACQUIRED
SUBSIDIARY GUARANTOR. No right of any holder of Designated Senior Debt to
enforce the subordination of the Obligations of any Acquired Subsidiary
Guarantor shall be impaired by any act or failure to act by such Acquired
Subsidiary Guarantor 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 any Acquired Subsidiary 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 receives written notice satisfactory to it that
payments may not be made under this Article 11. The Company, the relevant
Acquired Subsidiary Guarantor, the Registrar or co-registrar, the Paying Agent,
the Representative or a holder of Designated Senior Debt may give the notice.
The Trustee in its individual or any other capacity may hold
Designated Senior Debt 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 11 with respect to Designated Senior Debt that may at any time be
held by it, to the same extent as any other holder of Designated Senior Debt;
and nothing in Article 7 shall deprive the Trustee of any of its rights as such
holder. Nothing in this Article 11 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 Designated
Senior Debt, the distribution may be made and the notice given to their
Representative (if any).
SECTION 11.11. ARTICLE 11 NOT TO PREVENT EVENTS OF DEFAULT
UNDER AN ACQUIRED SUBSIDIARY GUARANTY OR LIMIT RIGHT TO DEMAND PAYMENT. The
failure to make a payment pursuant to an Acquired Subsidiary Guaranty by reason
of any provision in this Article 11 shall not be construed as preventing the
occurrence of a default under such Acquired Subsidiary Guaranty. Nothing in this
Article 11 shall have any effect on the right of Holders of Securities or the
Trustee to make a demand for payment on any Acquired Subsidiary Guarantor
pursuant to Article 10 or the relevant Acquired Subsidiary Guaranty.
SECTION 11.12. TRUSTEE ENTITLED TO RELY. Upon any payment or
distribution pursuant to this Article 11, the Trustee and Holders of
<PAGE> 69
64
Securities 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
Holders of Securities or (iii) upon the Representative for the holders of
Designated Senior Debt for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of Designated Senior
Debt, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 11.
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 Designated
Senior Debt to participate in any payment or distribution pursuant to this
Article 11, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Designated Senior
Debt 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 11, 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 11.
SECTION 11.13. TRUSTEE TO EFFECTUATE SUBORDINATION. Each
Holder of Securities 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 Holders of Securities
and the holders of Designated Senior Debt as provided in this Article 11 and
appoints the Trustee as attorney-in-fact for any and all such purposes.
SECTION 11.14. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF DESIGNATED
SENIOR DEBT. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Designated Senior Debt and shall not be liable to any such holders if
it shall mistakenly pay over or distribute to Holders of Securities or the
Company or any other Person, money or assets to which any holders of such
Designated Senior Debt shall be entitled by virtue of this Article 11 or
otherwise.
SECTION 11.15. RELIANCE BY HOLDERS OF DESIGNATED SENIOR DEBT
ON SUBORDINATION PROVISIONS. Each Holder of Securities 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 Designated
Senior Debt, whether the Designated Senior Debt was created or acquired before
or after the issuance of the Securities, to acquire and continue to hold, or to
continue to hold, the Designated Senior Debt and such holder of Designated
Senior Debt shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold, the
Designated Senior Debt.
ARTICLE 12
Miscellaneous
-------------
SECTION 12.01. TRUST INDENTURE ACT CONTROLS. If any provision
of this Indenture limits, qualifies or conflicts with another provision of the
TIA which is required under said Act to be a part of and govern this Indenture,
the required provision shall control.
<PAGE> 70
65
SECTION 12.02. NOTICES. Any notice or communication shall be
in writing and delivered in person or mailed by first-class mail or sent by
facsimile (with a hard copy delivered in person or by mail promptly thereafter)
and addressed as follows:
if to the Company:
The LTV Corporation
200 Public Square
Cleveland, Ohio 44114
Facsimile No. (216) 622-4647
Attention: Hal C. Hedrick, Jr.
if to any Subsidiary Guarantor, to such Subsidiary Guarantor:
c/o The LTV Corporation
200 Public Square
Cleveland, Ohio 44114
Facsimile No. (216) 622-4647
Attention: Hal C. Hedrick, Jr.
if to the Trustee:
U.S. Bank Trust National Association
180 East 5th Avenue, Suite 200
St. Paul, Minnesota 55101
Facsimile No. (651) 244-0711
Attention: Corporate Trust Administration
The Company, any Subsidiary Guarantor 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 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 Company, 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 Company to the Trustee to take
or refrain from taking any action under this Indenture, 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.
<PAGE> 71
66
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;
(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 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 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, the Paying Agent and any co-registrar 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.
SECTION 12.10. NO RECOURSE AGAINST OTHERS. A director,
officer, employee or stockholder, as such, of the Company or any Subsidiary
Guarantor shall not have any liability for any obligations of the Company
or such Subsidiary Guarantor 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 12.11. SUCCESSORS. All agreements of the Company and
each Subsidiary Guarantor in this Indenture and the Securities shall
<PAGE> 72
67
bind their respective successors. All agreements of the Trustee in this
Indenture shall bind its successors.
SECTION 12.12. 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 12.13. 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.
<PAGE> 73
68
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
THE LTV CORPORATION,
by
------------------------------
Name:
Title:
EACH OF THE SUBSIDIARIES LISTED ON
SCHEDULE I HERETO,
by
------------------------------
Name:
Title:
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee,
by
------------------------------
Name:
Title:
<PAGE> 74
SCHEDULE I
INITIAL SUBSIDIARY GUARANTORS
-----------------------------
Georgia Tubing Corporation
Jalcite I, Inc.
LTV Blanking Corporation
LTV/EGL Holding Company
LTV Electro-Galvanizing, Inc.
LTVGT, Inc. (f/k/a Varco-Pruden, Inc.)
LTV International, Inc. (f/k/a LTV Holdings, Inc.)
LTV Steel Company, Inc.
LTV Steel Tubular Products Company (a division
of LTV Steel Company, Inc.)
Aliquippa and Southern Railroad Company
Chicago Short Line Railway Company
The Cuyahoga Valley Railway Company
The Mahoning Valley Railway Company
Dearborn Leasing Company
Erie B Corporation
Erie I Corporation
Fox Trail, Inc.
J&L Empire, Inc.
Jalcite II, Inc.
LTV-Columbus Processing, Inc.
LTV Pickle, Inc.
The Monongahela Connecting Railroad Company
Nemacolin Mines Corporation
Republic Technology Corporation
The River Terminal Railway Company
Youngstown Erie Corporation
LTV Steel de Mexico, Ltd.
LTV-Walbridge, Inc.
Trico Steel Company, Inc.
VP Buildings, Inc. (f/k/a VP Acquisition Company)
Varco-Pruden International, Inc. (f/k/a Buildings
International Company)
<PAGE> 75
2
United Panel, Inc.
LTV Steel Mining Company
Welded Tube Holdings, Inc. (f/k/a ANI America
Holdings Inc.)
(f/k/a Palmer Tube Mills, Inc.)
Welded Tube Co. of America
<PAGE> 76
APPENDIX A
FOR OFFERINGS TO QUALIFIED INSTITUTIONAL BUYERS PURSUANT
TO RULE 144A AND TO CERTAIN PERSONS IN OFFSHORE
TRANSACTIONS IN RELIANCE ON REGULATION S.
PROVISIONS RELATING TO INITIAL SECURITIES
-----------------------------------------
AND EXCHANGE SECURITIES
-----------------------
1. DEFINITIONS
1.1 DEFINITIONS
For the purposes of this Appendix A the following terms shall have the
meanings indicated below:
"Definitive Security" means a certificated Initial Security or Exchange
Security bearing, if required, the restricted securities legend set forth in
Section 2.3(d).
"Depository" means The Depository Trust Company, its nominees and their
respective successors.
"Exchange Securities" means the 11 3/4% Senior Notes Due 2009 to be
issued pursuant to this Indenture in connection with a Registered Exchange Offer
or a Private Exchange pursuant to a Registration Agreement.
"IAI" means an institutional "accredited investor" as described in Rule
501(a)(1), (2), (3) or (7) under the Securities Act.
"Placement Agents" means Morgan Stanley & Co. Incorporated and
Credit Suisse First Boston Corporation.
"Initial Securities" means the 11 3/4% Senior Notes Due 2009, to be
issued from time to time, in one or more series as provided for in this
Indenture.
"Original Securities" means Initial Securities in the aggregate
principal amount of $275,000,000 issued on November 5, 1999.
"Private Exchange" means the offer by the Company, pursuant to Section
2(c) of the Registration Agreement dated November 2, 1999, or pursuant to any
similar provision of any other Registration Agreement, to issue and deliver to
the Placement Agents, in exchange for the Initial Securities held by the
Placement Agents as part of their initial distribution, a like aggregate
principal amount of Private Exchange Securities.
"Private Exchange Securities" means the 11 3/4% Senior Notes Due 2009
to be issued pursuant to this Indenture in connection with a Private Exchange
pursuant to a Registration Agreement.
"Purchase Agreement" means the Purchase Agreement dated November 2,
1999, among the Company, the Subsidiary Guarantors named therein and the
Placement Agents relating to the Original Securities, or any similar agreement
relating to any future sale of Initial Securities by the Company.
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
<PAGE> 77
2
"Registered Exchange Offer" means the offer by the Company, pursuant
to a Registration Agreement, to certain Holders of Initial Securities, to
issue and deliver to such Holders, in exchange for the Initial Securities, a
like aggregate principal amount of Exchange Securities registered under the
Securities Act.
"Registration Agreement" means the Registration Rights Agreement dated
November 2, 1999, among the Company, the Subsidiary Guarantors named therein and
the Placement Agents relating to the Original Securities, or any similar
agreement relating to any additional Initial Securities.
"Securities" means the Initial Securities and the Exchange
Securities, treated as a single class.
"Securities Act" means the Securities Act of 1933.
"Securities Custodian" means the custodian with respect to a Global
Security (as appointed by the Depository), or any successor person thereto, who
shall initially be the Trustee.
"Shelf Registration Statement" means a registration statement issued by
the Company in connection with the offer and sale of Initial Securities pursuant
to a Registration Agreement.
"Transfer Restricted Securities" means Definitive Securities and any
other Securities that bear or are required to bear the legend set forth in
Section 2.3(d) hereto.
1.2 OTHER DEFINITIONS
DEFINED IN
TERM SECTION:
---- --------
"Agent Members".........................................................2.1(b)
"Global Security".......................................................2.1(a)
"Regulation S" .........................................................2.1
"Rule 144A".............................................................2.1
2. THE SECURITIES
2.1 FORM
The Initial Securities will be offered and sold by the Company, from
time to time, pursuant to one or more Purchase Agreements. The Initial
Securities will be resold initially only to QIBs in reliance on Rule 144A under
the Securities Act ("Rule 144A") or in reliance on Regulation S under the
Securities Act ("Regulation S"). Initial Securities may thereafter be
transferred to, among others, QIBs, IAIs and purchasers in reliance on
Regulation S.
(a) GLOBAL SECURITIES. Initial Securities shall be issued initially in
the form of one or more permanent global Securities in definitive, fully
registered form without interest coupons with the global securities legend and
restricted securities legend set forth in Exhibit 1 hereto (each, a "Global
Security"), which shall be deposited on behalf of the purchasers of the Initial
Securities represented thereby with Securities Custodian, and registered in the
name of the Depository or a nominee of the Depository, duly executed by the
Company and authenticated by the Trustee as provided in this Indenture. The
aggregate principal amount of the Global Securities may from time to time be
increased or decreased by adjustments made on the
<PAGE> 78
3
records of the Trustee and the Depository or its nominee as hereinafter
provided. Initial Securities, the beneficial interests in which are sold to
QIBs, will initially be represented by Global Securities bearing CUSIP number
502210 AY 3, and Initial Securities, the beneficial interests in which are sold
pursuant to Regulation S, will initially be represented by Global Securities
bearing CUSIP number U50221 AB 3. Initial Securities, beneficial interests in
which are sold to IAIs, will initially be represented by Global Securities
bearing the CUSIP number 502210 AZ 0.
(b) BOOK-ENTRY PROVISIONS. This Section 2.1(b) shall apply only to a
Global Security deposited with or on behalf of the Depository.
The Company shall execute and the Trustee shall, in accordance with
this Section 2.1(b) and pursuant to an order of the Company signed by two
Officers or by an Officer and either an Assistant Treasurer or an Assistant
Secretary of the Company, authenticate and deliver initially one or more Global
Securities that (a) shall be registered in the name of the Depository for such
Global Security or Global Securities or the nominee of such Depository and (b)
shall be delivered by the Trustee to such Depository or pursuant to such
Depository's instructions or held by the Trustee as Securities Custodian.
Members of, or participants in, the Depository ("Agent Members") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depository or by the Trustee as Securities Custodian or
under such Global Security, and the Depository may be treated by the Company,
the Trustee and any agent of the Company or the Trustee as the absolute owner of
such Global Security for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee or any agent of the
Company or the Trustee 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 such
Depository governing the exercise of the rights of a holder of a beneficial
interest in any Global Security.
(c) CERTIFICATED SECURITIES. Except as provided in Section 2.3 or 2.4,
owners of beneficial interests in Global Securities will not be entitled to
receive physical delivery of certificated Securities.
2.2 AUTHENTICATION. The Trustee shall authenticate and deliver: (1)
Original Securities for original issue in an aggregate principal amount of
$275,000,000, (2) additional Initial Securities, if and when issued, and (3)
Exchange Securities for issue only in a Registered Exchange Offer or a Private
Exchange pursuant to a Registration Agreement, for a like principal amount of
Initial Securities, upon a written order of the Company signed by two Officers
or by an Officer and either an Assistant Treasurer or an Assistant Secretary of
the Company. Such order shall specify the amount of the Securities to be
authenticated and the date on which the original issue of Securities is to be
authenticated and whether the Securities are to be Initial Securities or
Exchange Securities.
2.3 (a) TRANSFER AND EXCHANGE. When Definitive Securities are presented to
the Registrar or a co-registrar with a request:
(x) to register the transfer of such Definitive Securities; or
(y) to exchange such Definitive Securities for an equal principal
amount of Definitive Securities of other authorized denominations,
the Registrar or co-registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction
<PAGE> 79
4
are met; PROVIDED, HOWEVER, that the Definitive Securities surrendered for
transfer or exchange:
(i) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Registrar
or co-registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing; and
(ii) are being transferred or exchanged pursuant to an effective
registration statement under the Securities Act, pursuant to Section
2.3(b) or pursuant to clause (A), (B) or (C) below as applicable, and are
accompanied by the following additional information and documents, as
applicable:
(A) if such Definitive Securities are being delivered to the
Registrar by a Holder for registration in the name of such Holder,
without transfer, a certification from such Holder to that effect; or
(B) if such Definitive Securities are being transferred to the
Company, a certification to that effect (in the form set forth on the
reverse of the Security); or
(C) if such Definitive Securities are being transferred pursuant to
an exemption from registration in accordance with Rule 144 under the
Securities Act, (i) a certification to that effect (in the form set
forth on the reverse of the Security) and (ii) if the Company requests,
an opinion of counsel or other evidence reasonably satisfactory to it
as to the compliance with the restrictions set forth in the legend set
forth in Section 2.3(d)(i).
(b) RESTRICTIONS ON TRANSFER OF A DEFINITIVE SECURITY FOR A BENEFICIAL
INTEREST IN A GLOBAL SECURITY. A Definitive Security may not be exchanged for a
beneficial interest in a Global Security except upon satisfaction of the
requirements set forth below. Upon receipt by the Trustee of a Definitive
Security, duly endorsed or accompanied by appropriate instruments of transfer,
in form reasonably satisfactory to the Company and the Registrar or
co-registrar, together with:
(i) certification, in the form set forth on the reverse of the
Security, that such Definitive Security is being transferred (A) to a QIB
in accordance with Rule 144A, (B) to an IAI that has furnished to the
Trustee a signed letter containing certain representations and agreements
(the form of which has been approved by the Company) or (C) outside the
United States in an offshore transaction within the meaning of Regulation
S and in compliance with Rule 904 under the Securities Act; and
(ii) written instructions directing the Trustee to make, or to direct
the Securities Custodian to make, an adjustment on its books and records
with respect to such Global Security to reflect an increase in the
aggregate principal amount of the Securities represented by the Global
Security, such instructions to contain information regarding the
participant account of the Depository to be credited with such increase,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depository and the Securities Custodian, the
aggregate principal amount of Securities represented by the related Global
Security to be increased by the aggregate principal amount of the Definitive
Security to be exchanged and shall credit or cause to be credited to the account
of the Person specified in
<PAGE> 80
5
such instructions a beneficial interest in such Global Security equal to the
principal amount of the Definitive Security so canceled. If the related Global
Security is not then outstanding and such Global Security has not been
previously exchanged pursuant to Section 2.4, the Company shall issue and the
Trustee shall authenticate, upon written order of the Company in the form of an
Officers' Certificate, a new Global Security in the appropriate principal
amount.
(c) TRANSFER AND EXCHANGE OF GLOBAL SECURITIES. (i) The transfer and
exchange of Global Securities or beneficial interests therein shall be effected
through the Depository, in accordance with this Indenture (including applicable
restrictions on transfer set forth herein, if any) and the procedures of the
Depository therefor. A transferor of a beneficial interest in a Global Security
shall deliver a written order given in accordance with the Depository's
procedures containing information regarding the participant account of the
Depository to be credited with a beneficial interest in the Global Security and
such account shall be credited in accordance with such instructions with a
beneficial interest in the Global Security and the account of the Person making
the transfer shall be debited by an amount equal to the beneficial interest in
the Global Security being transferred. In the case of a transfer of a beneficial
interest in one Global Security to a beneficial interest in another Global
Security, the transferor and/or the transferee, as applicable, must furnish a
signed letter to the Trustee containing certain representations and agreements
as to compliance with the restrictions set forth in the legend set forth in
Section 2.3(d)(i) in connection with such transfer (the form of which letter
shall be obtained from the Company).
(ii) If the proposed transfer is a transfer of a beneficial interest in
one Global Security to a beneficial interest in another Global Security,
the Registrar shall reflect on its books and records the date of such
transfer and an increase in the principal amount of the Global Security to
which such interest is being transferred in an amount equal to the
principal amount of the interest to be so transferred, and the Registrar
shall reflect on its books and records the date and a corresponding
decrease in the principal amount of Global Security from which such
interest is being transferred.
(iii) Notwithstanding any other provisions of this Appendix A (other
than the provisions set forth in Section 2.4), a Global Security may not
be transferred as a whole except 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.
(iv) In the event that a Global Security is exchanged for Securities in
definitive registered form pursuant to Section 2.4 prior to the
consummation of a Registered Exchange Offer or the effectiveness of a
Shelf Registration Statement with respect to such Securities, such
Securities may be exchanged only in accordance with such procedures as are
substantially consistent with the provisions of this Section 2.3
(including the certification requirements set forth on the reverse of the
Initial Securities intended to ensure that such transfers comply with Rule
144A, Regulation S or such other applicable exemption from registration
under the Securities Act, as the case may be) and such other procedures as
may from time to time be adopted by the Company.
(d) LEGEND.
(i) Except as permitted by the following paragraphs (ii), (iii), (iv)
and (vi), each Security certificate evidencing the Global
<PAGE> 81
6
Securities and the Definitive Securities (and all Securities issued in
exchange therefor or in substitution thereof) shall bear a legend in
substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT
BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND
ANNIVERSARY OF THE ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO) OR
(Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING
THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER
THAN (1) TO THE COMPANY, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A
PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE
CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), (3) IN AN
OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES
ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE
OF TRANSFER ON THE REVERSE OF THIS SECURITY), (4) TO AN INSTITUTION THAT
IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7)
UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE
TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY)
THAT IS ACQUIRING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR
DISTRIBUTION, AND A LETTER WHICH MAY BE OBTAINED FROM THE COMPANY OR THE
TRUSTEE IS DELIVERED BY THE TRANSFEREE TO THE COMPANY AND THE TRUSTEE, (5)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT, OR (6)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT,
IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES. AN INSTITUTIONAL ACCREDITED INVESTOR HOLDING
THIS SECURITY AGREES IT WILL FURNISH TO THE COMPANY AND THE TRUSTEE SUCH
CERTIFICATES AND OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE TO
CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE
FOREGOING RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A OR (2) AN
INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT AND THAT IT IS HOLDING THIS
SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION OR (3) A NON-
U.S. PERSON OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT
SATISFYING THE REQUIREMENTS OF PARAGRAPH (k)(2) OF RULE 902 UNDER)
REGULATION S UNDER THE SECURITIES ACT."
Each Definitive Security will also bear the following additional
legend:
"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."
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a Global
Security) pursuant to Rule 144 under the Securities Act:
(A) in the case of any Transfer Restricted Security that is a
Definitive Security, the Registrar shall permit the Holder thereof to
<PAGE> 82
7
exchange such Transfer Restricted Security for a Definitive Security
that does not bear the legends set forth above and rescind any
restriction on the transfer of such Transfer Restricted Security; and
(B) in the case of any Transfer Restricted Security that is
represented by a Global Security, the Registrar shall permit the Holder
thereof to exchange such Transfer Restricted Security for a Definitive
Security that does not bear the legends set forth above and rescind any
restriction on the transfer of such Transfer Restricted Security,
in either case, if the Holder certifies in writing to the Registrar that its
request for such exchange was made in reliance on Rule 144 (such certification
to be in the form set forth on the reverse of the Initial Security).
(iii) After a transfer of any Initial Securities during the period of
the effectiveness of a Shelf Registration Statement with respect to such
Initial Securities, all requirements pertaining to legends on such Initial
Security will cease to apply, the requirements requiring that any such
Initial Security be issued in global form will cease to apply, and an
Initial Security in certificated or global form without legends will be
available to the transferee of the Holder of such Initial Securities upon
exchange of such transferring Holder's certificated Initial Security. Upon
the occurrence of any of the circumstances described in this paragraph,
the Company will deliver an Officers' Certificate to the Trustee
instructing the Trustee to issue Securities without legends.
(iv) Upon the consummation of a Registered Exchange Offer with respect
to the Initial Securities pursuant to which certain Holders of such
Initial Securities are offered Exchange Securities in exchange for their
Initial Securities, all requirements pertaining to such Initial Securities
that Initial Securities be issued in global form will cease to apply, and
certificated Initial Securities with the restricted securities legend set
forth in Exhibit 1 hereto will be available to Holders of such Initial
Securities that do not exchange their Initial Securities, and Exchange
Securities in certificated or global form will be available to Holders
that exchange such Initial Securities in such Registered Exchange Offer.
Upon the occurrence of any of the circumstances described in this
paragraph, the Company will deliver an Officers' Certificate to the
Trustee instructing the Trustee to issue Securities without legends.
(v) Upon the consummation of a Private Exchange with respect to the
Initial Securities pursuant to which Holders of such Initial Securities
are offered Private Exchange Securities in exchange for their Initial
Securities, all requirements pertaining to such Initial Securities that
Initial Securities issued to certain Holders be issued in global form will
continue to apply, and Private Exchange Securities in global form with the
Restricted Securities Legend set forth in Exhibit 1 hereto will be
available to Holders that exchange such Initial Securities in such Private
Exchange.
(vi) Upon a sale or transfer of any Initial Security acquired pursuant
to Regulation S, all requirements pertaining to legends on such Initial
Security will cease to apply, the requirements requiring any such Initial
Security be issued in global form will cease to apply, and an Initial
Security in certificated or global form without the Restricted Security
Legend will be available to the transferee of the Holder of such Initial
Securities.
<PAGE> 83
8
(e) CANCELATION OR ADJUSTMENT OF GLOBAL SECURITY. At such time as all
beneficial interests in a Global Security have either been exchanged for
certificated or Definitive Securities, redeemed, repurchased or canceled, such
Global Security shall be returned by the Depository to the Trustee for
cancelation or retained and canceled by the Trustee. At any time prior to such
cancelation, if any beneficial interest in a Global Security is exchanged for
certificated or Definitive Securities, redeemed, repurchased or canceled, the
principal amount of Securities represented by such Global Security shall be
reduced and an adjustment shall be made on the books and records of the Trustee
(if it is then the Securities Custodian for such Global Security) with respect
to such Global Security, by the Trustee or the Securities Custodian, to reflect
such reduction.
(f) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF SECURITIES.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate certificated Securities,
Definitive Securities and Global Securities at the Registrar's or
co-registrar's request.
(ii)No service charge shall be made for any registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover
any transfer tax, assessments, or similar governmental charge payable in
connection therewith (other than any such transfer taxes, assessments or
similar governmental charge payable upon exchange or transfer pursuant to
Section 3.06, 4.09, 4.10 or 9.05).
(iii) The Registrar or co-registrar shall not be required to register
the transfer of or exchange of any Security for a period beginning 15 days
before the mailing of a notice of redemption or an offer to repurchase
Securities.
(iv) Prior to the due presentation for registration of transfer of any
Security, 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 owner of such Security for the purpose of receiving
payment of principal of and (subject to paragraph 2 of the form of
Security) interest on such Security and for all other purposes whatsoever,
whether or not such Security is overdue, and none of the Company, the
Trustee, the Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the contrary.
(v) All Securities issued upon any transfer or exchange pursuant to the
terms of this Indenture shall evidence the same debt and shall be entitled
to the same benefits under this Indenture as the Securities surrendered
upon such transfer or exchange.
(g) NO OBLIGATION OF THE TRUSTEE.
(i) The Trustee shall have no responsibility or obligation to any
beneficial owner of a Global Security, a member of, or a participant in
the Depository or any other Person with respect to the accuracy of the
records of the Depository or its nominee or of any participant or member
thereof, with respect to any ownership interest in the Securities or with
respect to the delivery to any participant, member, beneficial owner or
other Person (other than the Depository) of any notice (including any
notice of redemption or repurchase) or the payment of any amount, under or
with respect to such Securities. All notices and communications to be
given to the Holders and all payments to be made to Holders under the
Securities shall be given or made only to the registered Holders (which
shall be the Depository or its nominee
<PAGE> 84
9
in the case of a Global Security). The rights of beneficial owners
in any Global Security shall be exercised only through the Depository
subject to the applicable rules and procedures of the Depository. The
Trustee may rely and shall be fully protected in relying upon information
furnished by the Depository with respect to its members, participants and
any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor, determine
or inquire as to compliance with any restrictions on transfer imposed
under this Indenture or under applicable law with respect to any transfer
of any interest in any Security (including any transfers between or among
Depository participants, members or beneficial owners in any Global
Security) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if
and when expressly required by, the terms of this Indenture, and to
examine the same to determine substantial compliance as to form with the
express requirements hereof.
2.4 CERTIFICATED SECURITIES
(a) A Global Security deposited with the Depository or with the Trustee
as Securities Custodian pursuant to Section 2.1 shall be transferred to the
beneficial owners thereof in the form of certificated Securities in an aggregate
principal amount equal to the principal amount of such Global Security, in
exchange for such Global Security, only if such transfer complies with Section
2.3 and (i) the Depository notifies the Company that it is unwilling or unable
to continue as a Depository for such Global Security or if at any time 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 of
such notice or after it becomes aware of such ineligibility, or (ii) an Event of
Default has occurred and is continuing or (iii) the Company, in its sole
discretion, notifies the Trustee in writing that it elects to cause the issuance
of certificated Securities under this Indenture.
(b) Any Global Security that is transferable to the beneficial owners
thereof pursuant to this Section 2.4 shall be surrendered by the Depository to
the Trustee, to be so transferred, in whole or from time to time in part,
without charge, and the Trustee shall authenticate and deliver, upon such
transfer of each portion of such Global Security, an equal aggregate principal
amount of certificated Securities of authorized denominations. Any portion of a
Global Security transferred pursuant to this Section shall be executed,
authenticated and delivered only in denominations of $1,000 and any integral
multiple thereof and registered in such names as the Depository shall direct.
Any certificated Initial Security delivered in exchange for an interest in the
Global Security shall, except as otherwise provided by Section 2.3(d), bear the
restricted securities legend set forth in Exhibit 1 hereto.
(c) Subject to the provisions of Section 2.4(b), 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.
(d) In the event of the occurrence of either of the events specified in
Section 2.4(a)(i), (ii) or (iii), the Company will promptly make available to
the Trustee a reasonable supply of certificated Securities in definitive, fully
registered form without interest coupons.
<PAGE> 85
EXHIBIT 1
to APPENDIX A
[FORM OF FACE OF INITIAL SECURITY]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO THE COMPANY OR ITS 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 IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO 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.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC, DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL
BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Securities Legend]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE
ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS
AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE
DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE COMPANY, (2) SO LONG
AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE
CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), (3) IN AN OFFSHORE
TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS
INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON
THE REVERSE OF THIS SECURITY), (4) TO AN INSTITUTION THAT IS AN "ACCREDITED
INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT
(AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF
TRANSFER ON THE REVERSE OF THIS SECURITY) THAT IS ACQUIRING THIS SECURITY FOR
INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, AND A LETTER WHICH MAY BE OBTAINED
FROM THE COMPANY OR THE TRUSTEE IS DELIVERED BY THE TRANSFEREE TO THE COMPANY
AND THE TRUSTEE, (5) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT OR
(6) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN
EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES. AN INSTITUTIONAL ACCREDITED INVESTOR HOLDING THIS SECURITY AGREES
IT WILL FURNISH TO THE COMPANY AND THE TRUSTEE SUCH CERTIFICATES AND OTHER
INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF
THIS SECURITY COMPLIES WITH THE FOREGOING RESTRICTIONS. THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY
THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
OR (2) AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT AND THAT IT IS HOLDING THIS
SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION OR (3) A NON-U.S.
PERSON OUTSIDE THE UNITED STATES WITHIN THE
<PAGE> 86
2
MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (k)(2) OF
RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT.
[Definitive Securities Legend]
[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.]
<PAGE> 87
[FORM OF FACE OF INITIAL SECURITY]
No. [UP TO] */ $__________
11 3/4% Senior Note Due 2009
CUSIP No. ______
The LTV Corporation, a Delaware corporation, promises to pay to, or
registered assigns, the principal sum [set forth in the attached Schedule of
Increases or Decreases in Global Security]* [of Dollars] **/ on
November 15, 2009.
Interest Payment Dates: May 15 and November 15.
Record Dates: May 1 and November 1.
Additional provisions of this Security are set forth on the other side
of this Security.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
THE LTV CORPORATION,
by
----------------------------------------------------
Name:
Title:
by
----------------------------------------------------
Name:
Title:
[CORPORATE SEAL]
- --------
* Insert for Global Securities.
** Insert for Definitive Securities.
<PAGE> 88
2
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
Dated:
U.S. BANK TRUST NATIONAL
ASSOCIATION, as Trustee, certifies
that this is one of
the Securities referred
to in the within-mentioned
Indenture.
By:
-----------------------------
Authorized Signatory
<PAGE> 89
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
11 3/4% Senior Note Due 2009
1. INTEREST
(a) The LTV Corporation, a Delaware corporation (such corporation, and
its successors and assigns under the Indenture hereinafter referred to, being
herein called the "Company"), promises to pay interest on the principal amount
of this Security at the rate per annum shown above. The Company will pay
interest semiannually on May 15 and November 15 of each year. Interest on the
Securities will accrue from the most recent date to which interest has been paid
or duly provided for, or, if no interest has been paid or duly provided for,
from November 5, 1999. Interest will be computed on the basis of a 360-day year
of twelve 30-day months. The Company shall pay interest on overdue principal at
the rate borne by the Securities plus 1% per annum, and it shall pay interest on
overdue installments of interest at the same rate to the extent lawful.
(b) SPECIAL INTEREST. The holder of this Security is entitled to the
benefits of a Registration Rights Agreement dated November 2, 1999 (the
"Registration Rights Agreement"), among the Company, the Subsidiary Guarantors
named therein and the Placement Agents named therein. Capitalized terms used in
this paragraph (b) but not defined herein have the meanings assigned to them in
the Registration Rights Agreement. In the event that (i) neither the Exchange
Offer Registration Statement nor the Shelf Registration Statement has been filed
with the SEC on or prior to the 60th day following the date of original issuance
of the Securities, (ii) neither the Exchange Offer Registration Statement nor
the Shelf Registration Statement has been declared effective on or prior to the
150th day following the date of the original issuance of the Securities, (iii)
neither the Registered Exchange Offer has been consummated nor the Shelf
Registration Statement has been declared effective on or prior to the 180th day
following the date of the original issuance of the Securities or (iv) after the
Shelf Registration Statement has been declared effective, such Registration
Statement thereafter ceases to be effective or usable in connection with resales
of the Securities at any time that the Company is obligated to maintain the
effectiveness thereof pursuant to the Registration Rights Agreement (each such
event referred to in clauses (i) through (iv) above being referred to herein as
a "Registration Default"), interest (the "Special Interest") shall accrue (in
addition to the stated interest on the Securities) from and including the date
on which the first such Registration Default shall occur to but excluding the
date on which all Registration Defaults have been cured, at a rate per annum
equal to 0.25% of the principal amount of the Securities; PROVIDED, HOWEVER,
that such rate per annum shall increase to 0.50% per annum from and including
the 91st day after the first such Registration Default unless and until all
Registration Defaults have been cured. The Special Interest will be payable in
cash semiannually in arrears each May 15 and November 15 in the same manner and
to the same Persons as regular interest.
2. METHOD OF PAYMENT
The Company 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 May 1 or November 1 next preceding the interest payment date
even if Securities are canceled after the record date
<PAGE> 90
2
and on or before the interest payment date. Holders must surrender Securities to
a Paying Agent to collect principal payments. The Company will pay principal and
interest in money of the United States of America that at the time of payment is
legal tender for payment of public and private debts. Payments in respect of the
Securities represented by a Global Security (including principal, premium and
interest) will be made by wire transfer of immediately available funds to the
accounts specified by The Depository Trust Company. The Company will make all
payments in respect of a certificated Security (including principal, premium and
interest), by mailing a check to the registered address of each Holder thereof;
PROVIDED, HOWEVER, that payments on the Securities may also be made, in the case
of a Holder of at least $1,000,000 aggregate principal amount of Securities, by
wire transfer to a U.S. dollar account maintained by the payee with a bank in
the United States if such Holder elects payment by wire transfer by giving
written notice to the Trustee or the Paying Agent to such effect designating
such account no later than 30 days immediately preceding the relevant due date
for payment (or such other date as the Trustee may accept in its discretion).
3. PAYING AGENT AND REGISTRAR
Initially, U.S. Bank Trust National Association (the "Trustee") will
act as Paying Agent and Registrar. The Company may appoint and change any Paying
Agent, Registrar or co-registrar without notice. The Company or any of its
domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent,
Registrar or co-registrar.
4. INDENTURE
The Company issued the Securities under an Indenture dated as of
November 5, 1999 (the "Indenture"), among the Company, the Subsidiary Guarantors
named therein 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. Section Section 77aaa-77bbbb) as in effect on
the date of the Indenture (the "TIA"). 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 TIA for a statement of those terms.
The Securities are senior unsecured obligations of the Company with an
unlimited aggregate principal amount at any one time outstanding (subject to
Sections 2.01 and 2.08 of the Indenture). [This Security is one of the Original
Securities referred to in the Indenture issued in an aggregate principal amount
of $275,000,000. The Securities include the Original Securities, any additional
Initial Securities that may be issued under the Indenture and any Exchange
Securities issued in exchange for Initial Securities. The Original Securities,
any such additional Initial Securities and the Exchange Securities are treated
as a single class of securities under the Indenture.] [This Security is one of
the additional Initial Securities that may be issued under the Indenture. The
Securities include such additional Securities, the Original Securities in an
aggregate principal amount of $275,000,000 previously issued under the Indenture
and any Exchange Securities issued in exchange for Initial Securities. The
additional Initial Securities, the Original Securities and the Exchange
Securities are treated as a single class of securities under the Indenture]. The
Indenture imposes certain limitations on the ability of the Company and its
Restricted Subsidiaries to, among other things, make certain Restricted
Payments, pay dividends and other distributions, incur Indebtedness, enter into
consensual restrictions upon the payment of certain dividends and distributions
by such Restricted Subsidiaries, issue or sell shares of capital stock of such
Restricted Subsidiaries, enter into
<PAGE> 91
3
or permit certain transactions with Affiliates, create or incur Liens and make
Asset Sales. The Indenture also imposes limitations on the ability of the
Company, LTV Steel or any Tubular Subsidiary to consolidate or merge with or
into any other Person, or sell, transfer, assign, lease, convey or otherwise
dispose of all or substantially all of the Property of the Company, LTV Steel or
the Tubular Business. Once the Company attains Investment Grade Status, certain
of the covenants in the Indenture will no longer be applicable to the Company
and its Restricted Subsidiaries, even if the Company ceases thereafter to have
an Investment Grade Rating.
Pursuant to the terms of the Indenture, the Subsidiary Guarantors have
unconditionally guaranteed the due and punctual payment of the principal and
interest on the Securities and all other amounts payable by the Company under
the Indenture and the Securities when and as the same shall be due and payable,
whether at maturity, by acceleration or otherwise, according to the terms of the
Securities and the Indenture.
5. OPTIONAL REDEMPTION; SPECIAL MANDATORY REDEMPTION
(a) Except as set forth in the next paragraph or in clause (b) below,
the Securities may not be redeemed prior to November 15, 2004. On and after that
date, the Company 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), plus accrued and unpaid 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 that is on or prior
to the date of redemption), if redeemed during the 12-month period beginning on
or after November 15 of the years set forth below:
Redemption
Period Price
- ------ -----
2004................................................................ 105.875%
2005................................................................ 103.917%
2006 ............................................................... 101.958%
2007 and thereafter................................................. 100.000%
Notwithstanding the foregoing, prior to November 15, 2002, the Company
may redeem, at any time or from time to time, up to a maximum of 35% of the
original aggregate principal amount of Securities, at a redemption price of
111.750% of the principal amount thereof plus accrued and unpaid 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 that is on or prior to the date of redemption), with the net proceeds of
one or more Public Equity Offerings; PROVIDED, HOWEVER, that after giving effect
to any such redemption, at least 65% of the original aggregate principal amount
of the Securities remains outstanding. Any such redemption shall be made within
60 days after the date of the closing of any such Public Equity Offering.
(b) Notwithstanding the foregoing, in the event that the Funding
Conditions (as described below) are not satisfied on or prior to January 15,
2000, or the Copperweld Acquisition Agreement is terminated or the Copperweld
Acquisition is otherwise abandoned prior to such date, then the Company will
redeem all the Securities at a redemption price in cash equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest, if any, to
the Mandatory Redemption Date.
The "Mandatory Redemption Date" means the earlier of (a) January 31,
2000, in the event that the Funding Conditions are not satisfied by January 15,
2000, and (b) the 15th day (or if such day is not a Business Day, the
<PAGE> 92
4
next following Business Day) following the termination of the Copperweld
Acquisition Agreement or the abandonment of the Copperweld Acquisition.
The "Funding Conditions" mean the occurrence of the following events:
(i) the consummation of the Copperweld Acquisition in accordance in all
material respects with the description of the Copperweld Acquisition
Agreement contained in the Memorandum dated November 2, 1999 relating to
the Securities; and
(ii) the execution of and funding under the New Bank Financing.
6. SINKING FUND
The Securities are not subject to any sinking fund.
7. NOTICE OF REDEMPTION
Notice of redemption will be mailed by first-class mail (a) in the case
of a redemption pursuant to paragraph 5(a) above, at least 30 days but not more
than 60 days before the redemption date and (b) in the case of a redemption
pursuant to paragraph 5(b) above, promptly after the occurrence of the event
requiring such redemption, to each Holder of Securities to be redeemed at his or
her registered address. Securities in denominations larger than $1,000 may be
redeemed in part but only in whole multiples of $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.
8. REPURCHASE OF SECURITIES AT THE OPTION OF HOLDERS UPON CHANGE OF CONTROL
Upon a Change of Control, any Holder of Securities will have the right,
subject to certain conditions specified in the Indenture, to cause the Company
to repurchase all or any part of the Securities of such Holder at a purchase
price equal to 101% of the principal amount of the Securities to be repurchased
plus accrued and unpaid interest, if any, to the date of purchase (subject to
the right of Holders of record on the relevant record date to receive interest
due on the relevant interest payment date that is on or prior to the date of
purchase) as provided in, and subject to the terms of, the Indenture.
9. DENOMINATIONS; TRANSFER; EXCHANGE
The Securities are in registered form without coupons in denominations
of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange
Securities in accordance with the Indenture. Upon any transfer or exchange, the
Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements or transfer documents and to pay any taxes 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 to transfer or exchange any Securities for a period of 15 days prior to a
selection of Securities to be redeemed or 15 days before an interest payment
date.
<PAGE> 93
5
10. PERSONS DEEMED OWNERS
Subject to paragraph 2 hereof, 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 Company
at its written request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment.
12. DISCHARGE AND DEFEASANCE
Subject to certain conditions, the Company at any time may terminate
some of or all its obligations under the Securities and the Indenture if the
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal 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 without prior notice to any
Securityholder but with the written consent of the Holders of at least a
majority in aggregate principal amount of the outstanding Securities of a series
and (ii) any default may be waived with the written consent of the Holders of at
least a majority in principal amount of the outstanding Securities of a series.
Subject to certain exceptions set forth in the Indenture, without the consent of
any Holder of Securities, the Company, the Subsidiary Guarantors and the Trustee
may amend the Indenture or the Securities (i) to cure any ambiguity, omission,
defect or inconsistency; (ii) to comply with Article 5 of the Indenture; (iii)
to provide for uncertificated Securities in addition to or in place of
certificated Securities; (iv) to add additional Guarantees with respect to the
Securities or to release any Subsidiary Guarantor from its Subsidiary Guaranty
as provided by the terms thereof, or to secure the Securities; (v) to add
additional covenants or to surrender rights and powers conferred on the Company;
(vi) to make any change to the subordination provisions relating to the Acquired
Subsidiary Guaranties that would limit or terminate benefits available to
holders of Designated Senior Debt; (vii) to comply with the requirements of the
SEC in order to effect or maintain the qualification of the Indenture under the
TIA; or (viii) to make any change that does not adversely affect the rights of
any Securityholder.
14. DEFAULTS AND REMEDIES
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Securities of a series,
subject to certain limitations, may declare all the Securities of such series to
be immediately due and payable. Certain events of bankruptcy or insolvency are
Events of Default and shall result in the Securities being immediately due and
payable upon the occurrence of such Events of Default without any further act of
the Trustee or any Holder.
Holders of Securities 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
<PAGE> 94
6
majority in principal amount of the Securities of a series may direct the
Trustee in its exercise of any trust or power under the Indenture. The Holders
of a majority in aggregate principal amount of the outstanding Securities of a
series may by written notice to the Company and the Trustee rescind any
declaration of acceleration if the rescission would not conflict with any
judgment or decree, and if all existing Events of Default have been cured or
waived except nonpayment of principal or interest that has become due solely
because of the acceleration.
15. TRUSTEE DEALINGS WITH THE COMPANY
Subject to certain limitations imposed by the TIA, 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 Company or its Affiliates and may otherwise deal with the
Company or its Affiliates with the same rights it would have if it were not
Trustee.
16. NO RECOURSE AGAINST OTHERS
A director, officer, employee or stockholder, as such, of the Company
or any Subsidiary Guarantors shall not have any liability for any obligations of
the Company 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.
<PAGE> 95
7
17. AUTHENTICATION
This Security shall not be valid until an authorized officer of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
18. 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).
19. GOVERNING LAW
THIS SECURITY 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.
20. CUSIP NUMBERS
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to 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 COMPANY WILL FURNISH TO ANY HOLDER OF SECURITIES UPON WRITTEN
REQUEST AND WITHOUT CHARGE TO THE HOLDER A COPY OF THE INDENTURE WHICH HAS IN IT
THE TEXT OF THIS SECURITY.
<PAGE> 96
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 Company. The agent may substitute another to act
for him.
____________________________________________________________
Date: ________________ Your Signature: _____________________
____________________________________________________________
Sign exactly as your name appears on the other side of this Security.
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 Company or any Affiliate of the Company, the undersigned confirms
that such Securities are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
(1) [ ] to the Company; 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) [ ] to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933)
that has furnished to the trustee a signed letter containing
certain representations and agreements (the form of which letter
to be obtained from the Company); or
<PAGE> 97
2
(6) [ ] pursuant to another available exemption from registration
provided by Rule 144 under the Securities Act of 1933.
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), (5) or (6) is checked, the Trustee may require, prior to
registering any such transfer of the Securities, such legal opinions,
certifications and other information as the Company has 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.
------------------------
Your Signature
Signature Guarantee:
Date:
------------------------- ---------------------------------
Signature must be guaranteed Signature of Signature Guarantee
by a participant in a
recognized signature guaranty
medallion program or other
signature guarantor acceptable
to the Trustee
- -----------------------------------------------------------------
<PAGE> 98
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 Company 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> 99
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The initial principal amount of this Global Security is $[ ]. The
following increases or decreases in this Global Security have been made:
<TABLE>
<S> <C> <C> <C> <C>
Date of Amount of decrease in Amount of increase in Principal amount of this Signature of authorized
Exchange Principal Amount of Principal Amount of this Global Security signatory of Trustee or
this Global Security this Global Security following such decrease Securities Custodian
or increase
</TABLE>
<PAGE> 100
OPTION OF HOLDER TO ELECT PURCHASE
IF YOU WANT TO ELECT TO HAVE THIS SECURITY PURCHASED BY THE COMPANY
PURSUANT TO SECTION 4.09 OR 4.10 OF THE INDENTURE, CHECK THE BOX:
---
/ /
IF YOU WANT TO ELECT TO HAVE ONLY PART OF THIS SECURITY PURCHASED BY
THE COMPANY PURSUANT TO SECTION 4.09 OR 4.10 OF THE INDENTURE, STATE THE AMOUNT:
($1,000 OR AN INTEGRAL MULTIPLE THEREOF)
DATE: __________________ YOUR SIGNATURE: __________________
(SIGN EXACTLY AS YOUR NAME APPEARS
ON THE OTHER SIDE OF THE SECURITY)
SIGNATURE GUARANTEE:_______________________________________
SIGNATURE MUST BE GUARANTEED BY A PARTICIPANT IN A RECOGNIZED
SIGNATURE GUARANTY MEDALLION PROGRAM OR OTHER SIGNATURE
GUARANTOR ACCEPTABLE TO THE TRUSTEE
<PAGE> 101
EXHIBIT A
[FORM OF FACE OF EXCHANGE SECURITY]
No. [UP TO] */ $__________
11 3/4% Senior Note Due 2009
CUSIP No. ______
The LTV Corporation, a Delaware corporation, promises to pay to
, or assigns, the principal sum [set forth
in the attached Schedule of Increases or Decreases in Global Security]*
[of Dollars] **/ on November 15, 2009.
Interest Payment Dates: May 15 and November 15.
Record Dates: May 1 and November 1.
Additional provisions of this Security are set forth on the other side
of this Security.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
THE LTV CORPORATION,
by
----------------------------------------------------
Name:
Title:
by
----------------------------------------------------
Name:
Title:
[CORPORATE SEAL]
- --------
* Insert for Global Securities.
** Insert for Definitive Securities.
<PAGE> 102
2
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
Dated:
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee, certifies
that this is one of
the Securities referred
to in the within-mentioned
Indenture.
by
-----------------------------
Authorized Signatory
- ----------
*/ If the Security is to be issued in global form, add the Global Securities
Legend from Exhibit 1 to Appendix A and the attachment from such Exhibit 1
captioned "TO BE ATTACHED TO GLOBAL SECURITIES - SCHEDULE OF INCREASES OR
DECREASES IN GLOBAL SECURITY".
<PAGE> 103
[FORM OF REVERSE SIDE OF EXCHANGE SECURITY]
11 3/4% Senior Note Due 2009
1. INTEREST.
The LTV Corporation, a Delaware corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay interest on the principal amount of this
Security at the rate per annum shown above. The Company will pay interest
semiannually on May 15 and November 15 of each year. Interest on the Securities
will accrue from the most recent date to which interest has been paid or duly
provided for or, if no interest has been paid or duly provided for, from
November 5, 1999. Interest will be computed on the basis of a 360-day year of
twelve 30-day months. The Company shall pay interest on overdue principal at the
rate borne by the Securities plus 1% per annum, and it shall pay interest on
overdue installments of interest at the same rate to the extent lawful.
2. METHOD OF PAYMENT
The Company 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 May 1 or November 1 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 Company will pay principal and interest in money
of the United States of America that at the time of payment is legal tender for
payment of public and private debts. Payments in respect of the Securities
represented by a Global Security (including principal, premium and interest)
will be made by wire transfer of immediately available funds to the accounts
specified by The Depository Trust Company. The Company will make all payments in
respect of a certificated Security (including principal, premium and interest),
by mailing a check to the registered address of each Holder thereof; PROVIDED,
HOWEVER, that payments on the Securities may also be made, in the case of a
Holder of at least $1,000,000 aggregate principal amount of Securities, by wire
transfer to a U.S. dollar account maintained by the payee with a bank in the
United States if such Holder elects payment by wire transfer by giving written
notice to the Trustee or the Paying Agent to such effect designating such
account no later than 30 days immediately preceding the relevant due date for
payment (or such other date as the Trustee may accept in its discretion).
3. PAYING AGENT AND REGISTRAR
Initially, U.S. Bank Trust National Association (the "Trustee") will
act as Paying Agent and Registrar. The Company may appoint and change any Paying
Agent, Registrar or co-registrar without notice. The Company or any of its
domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent,
Registrar or co-registrar.
4. INDENTURE
The Company issued the Securities under an Indenture dated as of
November 5, 1999 (the "Indenture"), among the Company, the Subsidiary Guarantors
named therein and the Trustee. The terms of the Securities
<PAGE> 104
2
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. Section Section
77aaa-77bbbb) as in effect on the date of the Indenture (the "TIA"). 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 TIA for a statement of
those terms.
The Securities are senior unsecured obligations of the Company with an
unlimited aggregate principal amount at any one time outstanding (subject to
Sections 2.01 and 2.08 of the Indenture). This Security is one of the Exchange
Securities referred to in the Indenture issued in exchange for Initial
Securities. The Securities include the Exchange Securities, the Original
Securities issued in an aggregate principal amount of $275,000,000 and any
additional Initial Securities that may be issued under the Indenture. The
Exchange Securities, the Original Securities and such additional Initial
Securities are treated as a single class of securities under the Indenture. The
Indenture imposes certain limitations on the ability of the Company and its
Restricted Subsidiaries to, among other things, make certain Restricted
Payments, pay dividends and other distributions, incur Indebtedness, enter into
consensual restrictions upon the payment of certain dividends and distributions
by such Restricted Subsidiaries, issue or sell shares of capital stock of such
Restricted Subsidiaries, enter into or permit certain transactions with
Affiliates, create or incur Liens and make Asset Sales. The Indenture also
imposes limitations on the ability of the Company, LTV Steel or any Tubular
Subsidiary to consolidate or merge with or into any other Person or sell,
transfer, assign, lease, convey or otherwise dispose of all or substantially all
of the Property of the Company, LTV Steel or the Tubular Business. Once the
Company attains Investment Grade Status, certain of the covenants in the
Indenture will no longer be applicable to the Company and its Restricted
Subsidiaries, even if the Company ceases thereafter to have an Investment Grade
Rating.
Pursuant to the terms of the Indenture, the Subsidiary Guarantors have
unconditionally guaranteed the due and punctual payment of the principal and
interest on the Securities and all other amounts payable by the Company under
the Indenture and the Securities when and as the same shall be due and payable,
whether at maturity, by acceleration or otherwise, according to the terms of the
Securities and the Indenture.
5. OPTIONAL REDEMPTION
(a) Except as set forth in the next paragraph, the Securities may not
be redeemed prior to November 15, 2004. On and after that date, the Company 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), plus
accrued and unpaid 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 that is on or prior to the date of
redemption), if redeemed during the 12-month period beginning on or after
November 15 of the years set forth below:
Redemption
Period Price
2004......................................................... 105.875%
2005......................................................... 103.917%
2006 ........................................................ 101.958%
2007 and thereafter.......................................... 100.000%
<PAGE> 105
3
Notwithstanding the foregoing, prior to November 15, 2002, the Company
may redeem, at any time or from time to time, up to a maximum of 35% of the
original aggregate principal amount of Securities, at a redemption price of
111.750% of the principal amount thereof plus accrued and unpaid 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 that is on or prior to the date of redemption), with the net proceeds of
one or more Public Equity Offerings; PROVIDED, HOWEVER, that after giving effect
to any such redemption, at least 65% of the original aggregate principal amount
of the Securities remains outstanding. Any such redemption shall be made within
60 days after the date of the closing of any such Public Equity Offering.
6. SINKING FUND
The Securities are not subject to any sinking fund.
7. NOTICE OF REDEMPTION
Notice of redemption will be mailed by first-class mail at least 30
days but not more than 60 days before the redemption date to each Holder of
Securities to be redeemed at his or her registered address. Securities in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $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.
8. REPURCHASE OF SECURITIES AT THE OPTION OF HOLDERS UPON CHANGE OF CONTROL
Upon a Change of Control, any Holder of Securities will have the right,
subject to certain conditions specified in the Indenture, to cause the Company
to repurchase all or any part of the Securities of such Holder at a purchase
price equal to 101% of the principal amount of the Securities to be repurchased
plus accrued and unpaid interest, if any, to the date of purchase (subject to
the right of Holders of record on the relevant record date to receive interest
due on the relevant interest payment date that is on or prior to the date of
purchase) as provided in, and subject to the terms of, the Indenture.
9. DENOMINATIONS; TRANSFER; EXCHANGE
The Securities are in registered form without coupons in denominations
of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange
Securities in accordance with the Indenture. Upon any transfer or exchange, the
Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements or transfer documents and to pay any taxes 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 to transfer or exchange any Securities for a period of 15 days prior to a
selection of Securities to be redeemed or 15 days before an interest payment
date.
<PAGE> 106
4
10. PERSONS DEEMED OWNERS
Subject to paragraph 2 hereof, 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 Company
at its written request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment.
12. DISCHARGE AND DEFEASANCE
Subject to certain conditions, the Company at any time may terminate
some of or all its obligations under the Securities and the Indenture if the
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal 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 without prior notice to any
Securityholder but with the written consent of the Holders of at least a
majority in aggregate principal amount of the outstanding Securities of a series
and (ii) any default may be waived with the written consent of the Holders of at
least a majority in principal amount of the outstanding Securities of a series.
Subject to certain exceptions set forth in the Indenture, without the consent of
any Holder of Securities, the Company, the Subsidiary Guarantors and the Trustee
may amend the Indenture or the Securities (i) to cure any ambiguity, omission,
defect or inconsistency; (ii) to comply with Article 5 of the Indenture; (iii)
to provide for uncertificated Securities in addition to or in place of
certificated Securities; (iv) to add additional Guarantees with respect to the
Securities or to release any Subsidiary Guarantor from its Subsidiary Guaranty
as provided by the terms thereof, or to secure the Securities; (v) to add
additional covenants or to surrender rights and powers conferred on the Company;
(vi) to make any change to the subordination provisions relating to the Acquired
Subsidiary Guaranties that would limit or terminate benefits available to
holders of Designated Senior Debt; (vii) to comply with the requirements of the
SEC in order to effect or maintain the qualification of the Indenture under the
TIA; or (viii) to make any change that does not adversely affect the rights of
any Securityholder.
14. DEFAULTS AND REMEDIES
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Securities of a series,
subject to certain limitations, may declare all the Securities of such series to
be immediately due and payable. Certain events of bankruptcy or insolvency are
Events of Default and shall result in the Securities being immediately due and
payable upon the occurrence of such Events of Default without any further act of
the Trustee or any Holder.
Holders of Securities 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 of a series may direct the Trustee in its exercise of any trust or
power under the Indenture. The Holders of a
<PAGE> 107
5
majority in aggregate principal amount of the outstanding Securities of a series
may by written notice to the Company and the Trustee rescind any declaration of
acceleration if the rescission would not conflict with any judgment or decree,
and if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of the
acceleration.
15. TRUSTEE DEALINGS WITH THE COMPANY
Subject to certain limitations imposed by the TIA, 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 Company or its Affiliates and may otherwise deal with the
Company or its Affiliates with the same rights it would have if it were not
Trustee.
16. NO RECOURSE AGAINST OTHERS
A director, officer, employee or stockholder, as such, of the Company
or any Subsidiary Guarantor shall not have any liability for any obligations of
the Company 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.
17. AUTHENTICATION
This Security shall not be valid until an authorized officer of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
18. 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).
19. GOVERNING LAW
THIS SECURITY 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.
20. CUSIP NUMBERS
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to 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 COMPANY WILL FURNISH TO ANY HOLDER OF SECURITIES UPON WRITTEN
REQUEST AND WITHOUT CHARGE TO THE HOLDER A COPY OF THE INDENTURE WHICH HAS IN IT
THE TEXT OF THIS SECURITY.
<PAGE> 108
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 Company. The agent may substitute another to act
for him.
- ------------------------------------------------------------
Date: Your Signature:
---------------- ---------------------
- ------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
Signature Guarantee:
Date:
---------------------- -----------------------------
Signature must be guaranteed Signature of Signature Guarantee
by a participant in a
recognized signature guaranty
medallion program or other
signature guarantor acceptable
to the Trustee
- ------------------------------------------------------------
<PAGE> 109
OPTION OF HOLDER TO ELECT PURCHASE
IF YOU WANT TO ELECT TO HAVE THIS SECURITY PURCHASED BY THE COMPANY
PURSUANT TO SECTION 4.09 OR 4.10 OF THE INDENTURE, CHECK THE BOX:
[ ]
IF YOU WANT TO ELECT TO HAVE ONLY PART OF THIS SECURITY PURCHASED BY
THE COMPANY PURSUANT TO SECTION 4.09 OR 4.10 OF THE INDENTURE, STATE THE AMOUNT:
($1,000 OR AN INTEGRAL MULTIPLE THEREOF)
DATE: YOUR SIGNATURE:
------------------ ------------------
(SIGN EXACTLY AS YOUR NAME APPEARS ON THE OTHER SIDE OF THE SECURITY)
SIGNATURE GUARANTEE:
---------------------------------------
SIGNATURE MUST BE GUARANTEED BY A PARTICIPANT IN A RECOGNIZED
SIGNATURE GUARANTY MEDALLION PROGRAM OR OTHER SIGNATURE
GUARANTOR ACCEPTABLE TO THE TRUSTEE.
<PAGE> 110
EXHIBIT B
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture") dated as
of , among [GUARANTOR] (the "New Subsidiary
Guarantor"), a subsidiary of The LTV Corporation (or its successor)
(the "Company"), the Company, on behalf of itself and the Subsidiary
Guarantors (the "Existing Subsidiary Guarantors") under the indenture
referred to below, and U.S. Bank Trust National Association, as
trustee under the indenture referred to below (the "Trustee").
W I T N E S S E T H :
WHEREAS the Company and the Existing Subsidiary Guarantors have
heretofore executed and delivered to the Trustee an Indenture (the "Indenture")
dated as of November 5, 1999, providing for the issuance on the date thereof of
an aggregate principal amount of $275,000,000 of 11 3/4% Senior Notes due 2009
(the "Securities");
WHEREAS Section 4.16 of the Indenture provides that under certain
circumstances the Company is required to cause the New Subsidiary Guarantor to
execute and deliver to the Trustee a supplemental indenture pursuant to which
the New Subsidiary Guarantor shall unconditionally guarantee all the Company's
obligations under the Securities pursuant to a Subsidiary Guaranty on the terms
and conditions set forth herein; and
WHEREAS pursuant to Section 9.01 of the Indenture, the Trustee, the
Company and the Existing Subsidiary Guarantors are authorized to execute and
deliver this Supplemental Indenture;
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the New
Subsidiary Guarantor, the Company, the Existing Subsidiary Guarantors and the
Trustee mutually covenant and agree for the equal and ratable benefit of the
holders of the Securities as follows:
1. AGREEMENT TO GUARANTEE. The New Subsidiary Guarantor hereby agrees,
jointly and severally with all other Subsidiary Guarantors, to unconditionally
guarantee the Company's obligations under the Securities on the terms and
subject to the conditions set forth in Article 10 and, if applicable, Article 11
of the Indenture and to be bound by all other applicable provisions of the
Indenture.
2. RATIFICATION OF INDENTURE; SUPPLEMENTAL INDENTURES PART OF
INDENTURE. Except as expressly amended hereby, the Indenture is in all respects
ratified and confirmed and all the terms, conditions and provisions thereof
shall remain in full force and effect. This Supplemental Indenture shall form a
part of the Indenture for all purposes, and every holder of Securities
heretofore or hereafter authenticated and delivered shall be bound hereby.
3. GOVERNING LAW. THIS SUPPLEMENTAL INDENTURE 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.
<PAGE> 111
2
4. TRUSTEE MAKES NO REPRESENTATION. The Trustee makes no
representation as to the validity or sufficiency of this Supplemental
Indenture.
5. COUNTERPARTS. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
6. EFFECT OF HEADINGS. The Section headings herein are for convenience
only and shall not effect the construction thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
[NEW SUBSIDIARY GUARANTOR],
by
----------------------------------
Name:
Title:
THE LTV CORPORATION, on behalf of itself
and the Existing Subsidiary Guarantors,
by
----------------------------------
Name:
Title:
U.S. BANK TRUST NATIONAL ASSOCIATION, as
Trustee,
by
----------------------------------
Name:
Title:
<PAGE> 1
Exhibit 10.53
THE LTV CORPORATION
-------------------
CERTIFICATE OF DESIGNATIONS
OF 8 1/4% SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK
SETTING FORTH THE POWERS, PREFERENCES,
RIGHTS, QUALIFICATIONS, LIMITATIONS AND
RESTRICTIONS OF SUCH PREFERRED STOCK
Pursuant to Section 151 of the Delaware General Corporation
Law, THE LTV CORPORATION, a Delaware corporation (the "COMPANY"), does hereby
certify that the Board of Directors of the Company and the Finance Committee of
the Board of Directors of the Company, pursuant to and in accordance with
authority validly delegated to the Finance Committee by resolutions duly adopted
by the Board of Directors of the Company, duly adopted the following resolution
and that such resolution has not been modified and is in full force and effect:
RESOLVED that, pursuant to the authority vested in the Board
of Directors of the Company (including as delegated to the Finance Committee of
the Board of Directors) in accordance with the provisions of the Restated
Certificate of Incorporation of the Company (the "CERTIFICATE OF
INCORPORATION"), a series of preferred stock of the Company is hereby created
and the designation and number of shares thereof and the voting powers,
preferences and relative, participating, optional and other special rights of
the shares of such series, and the qualifications, limitations and restrictions
thereof, are as follows:
Section 1. NUMBER AND DESIGNATION. (a) The shares of such
series shall be designated as "Series A Preferred Stock" (the "SERIES A
PREFERRED STOCK"). The number of shares constituting the Series A Preferred
Stock shall initially be 1,600,000.
(b) Capitalized terms used herein and not otherwise defined
shall have the meanings set forth in Section 16 below.
Section 2. ISSUANCE. The Company may issue Series A Preferred
Stock from time to time as may be determined by the Board of Directors (or any
committee thereof) of the Company.
Section 3. REGISTERED FORM; LIQUIDATION PREFERENCE; REGISTRAR.
Certificates for shares of Series A Preferred Stock shall be issuable only in
registered form and only with a liquidation preference of $50.00 per share. The
Company hereby appoints ChaseMellon Shareholder Services L.L.C. as its initial
Registrar and Transfer Agent (the "REGISTRAR") for the Series A Preferred Stock.
Section 4. REGISTRATION; TRANSFER. (a) The Series A Preferred
Stock has not been registered under the Securities Act of 1933 (the "SECURITIES
ACT") and may not be resold, pledged or otherwise transferred prior to the date
when they no longer constitute "restricted securities" for purposes of Rule
144(k) under the Securities Act other than (i) to the Company, (ii) to
"qualified institutional buyers" ("QIBs") pursuant to and in compliance with
Rule 144A ("RULE 144A") under the Securities Act, (iii) pursuant to and in
compliance with Rule 904 of Regulation S under the Securities Act ("REGULATION
S"), (iv) to an institution that is an "accredited investor" as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act, (v) pursuant to an
exemption from registration under the Securities Act provided by Rule 144 or
(vi) pursuant to an effective registration statement under
<PAGE> 2
2
the Securities Act, in each case in accordance with any applicable securities
laws of any state of the United States.
(b) Series A Preferred Stock sold to QIBs in reliance on Rule
144A or sold in reliance on Regulation S shall be issued in the form of one or
more permanent global shares of Series A Preferred Stock in definitive, fully
registered form with the global legend (the "GLOBAL SHARES LEGEND") and, until
such time as determined by the Company and the Registrar, the global restricted
shares legend (the "GLOBAL RESTRICTED SHARES LEGEND"), in each case as set forth
on the form of Series A Preferred Stock attached hereto as Exhibit A (each, a
"GLOBAL SERIES A PREFERRED SHARE"), which shall be deposited on behalf of the
holders of the Series A Preferred Stock represented thereby with the Registrar,
at its New York office, as custodian for The Depository Trust Company, New York,
New York ("DTC") or its nominee and their respective successors (the
"DEPOSITARY"), and registered in the name of the Depositary or a nominee of the
Depositary, duly executed by the Company and countersigned and registered by the
Registrar as hereinafter provided. The aggregate number of shares represented by
each Global Series A Preferred Share may from time to time be increased or
decreased by adjustments made on the records of the Registrar and the Depositary
or its nominee as hereinafter provided. Global Series A Preferred Shares, the
beneficial interests of which are sold to QIBs pursuant to Rule 144A, will
initially be represented by Global Series A Preferred Shares bearing CUSIP
number 501921 20 9 and Global Series A Preferred Shares, the beneficial
interests in which are sold pursuant to Regulation S, will initially be
represented by Global Series A Preferred Shares bearing CUSIP number U50221 20
6.
(c) This paragraph shall apply only to a Global Series A
Preferred Share deposited with or on behalf of the Depositary. The Company shall
execute and the Registrar shall, in accordance with this Section, countersign
and deliver initially one or more Global Series A Preferred Shares that (i)
shall be registered in the name of Cede & Co. or other nominee of the Depositary
and (ii) shall be delivered by the Registrar to Cede & Co. or pursuant to
instructions received from Cede & Co. or held by the Registrar as custodian for
the Depositary pursuant to an agreement between the Depositary and the
Registrar. Members of, or participants in, the Depositary ("AGENT MEMBERS")
shall have no rights under this Certificate of Designations with respect to any
Global Series A Preferred Share held on their behalf by the Depositary or by the
Registrar as the custodian of the Depositary or under such Global Series A
Preferred Share, and the Depositary may be treated by the Company, the Registrar
and any agent of the Company or the Registrar as the absolute owner of such
Global Series A Preferred Share for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Company, the Registrar or any agent
of the Company or the Registrar from giving effect to any written certification,
proxy or other authorization furnished by the Depositary or impair, as between
the Depositary and its Agent Members, the operation of customary practices of
the Depositary governing the exercise of the rights of a holder of a beneficial
interest in any Global Series A Preferred Share. Except as provided in Section
5(b), owners of beneficial interests in Global Series A Preferred Shares will
not be entitled to receive physical delivery of certificated Series A Preferred
Shares.
(d) Series A Preferred Stock sold to institutional "accredited
investors" as described in Rule 501(a)(1), (2), (3) or (7) of the Securities Act
shall be issued in the form of certificated Series A Preferred Stock bearing the
definitive restricted shares legend (the "DEFINITIVE RESTRICTED SHARES LEGEND")
set forth on the form of Series A Preferred Stock attached hereto as Exhibit A
(each a
<PAGE> 3
3
"DEFINITIVE SERIES A PREFERRED SHARE"). Definitive Series A Preferred Shares
will bear a Definitive Restricted Shares Legend unless removed in accordance
with Section 5 and may not be exchanged for a Global Series A Preferred Share,
or interest therein, at any time, except as set forth in clause (iv) of
paragraph (b) of Section 5. Definitive Series A Preferred Shares will initially
be represented by certificates bearing CUSIP number 501921 40 7.
(e) No certificate evidencing Series A Preferred Stock shall
be valid unless it bears the countersignature of the Registrar.
Section 5. PAYING AGENT AND CONVERSION AGENT. (a) The Company
shall maintain in the Borough of Manhattan, City of New York, State of New York
(i) an office or agency where Series A Preferred Stock may be presented for
payment (the "PAYING AGENT") and (ii) an office or agency where Series A
Preferred Stock may be presented for conversion (the "CONVERSION AGENT"). The
Company may appoint the Registrar, the Paying Agent and the Conversion Agent and
may appoint one or more additional paying agents and one or more additional
conversion agents in such other locations as it shall determine. The term
"Paying Agent" includes any additional paying agent and the term "Conversion
Agent" includes any additional conversion agent. The Company may change any
Paying Agent or Conversion Agent without prior notice to any holder. The Company
shall notify the Registrar of the name and address of any Paying Agent or
Conversion Agent appointed by the Company. If the Company fails to appoint or
maintain another entity as Paying Agent or Conversion Agent, the Registrar shall
act as such. The Company or any of its Affiliates may act as Paying Agent,
Registrar, coregistrar or Conversion Agent.
Neither the Company nor the Registrar shall be required (A) to
issue, countersign or register the transfer of or exchange any Series A
Preferred Stock during a period beginning at the opening of business 15 days
before the day of the mailing of a notice of redemption of Series A Preferred
Stock selected for redemption under Section 10 and ending at the close of
business on the day of such mailing or (B) to register the transfer of or
exchange any Series A Preferred Stock so selected for redemption in whole or in
part, except the unredeemed portion of any Series A Preferred Stock being
redeemed in part.
(b) Notwithstanding any provision to the contrary herein, so
long as a Global Series A Preferred Share remains outstanding and is held by or
on behalf of the Depositary, transfers of a Global Series A Preferred Share, in
whole or in part, or of any beneficial interest therein, shall only be made in
accordance with Section 4 and this Section 5; PROVIDED, HOWEVER, that beneficial
interests in a Global Series A Preferred Share may be transferred to persons who
take delivery thereof in the form of a beneficial interest in the same or a
different Global Series A Preferred Share in accordance with the transfer
restrictions set forth in the Global Restricted Shares Legend:
(i) Except for transfers or exchanges made in accordance with
any of clauses (b)(ii) through (vi) of this Section 5, transfers of a
Global Series A Preferred Share shall be limited to transfers of such
Global Series A Preferred Share in whole, but not in part, to nominees
of the Depositary or to a successor of the Depositary or such
successor's nominee.
(ii) If an owner of a beneficial interest in a Global Series A
Preferred Share deposited with the Depositary or with the Registrar as
custodian for the Depositary wishes at any time to transfer its
interest in such Global Series A Preferred Share to a
<PAGE> 4
4
person who is required to take delivery thereof in the form of
Definitive Series A Preferred Shares, such owner may, subject to the
rules and procedures of the Depositary, cause the exchange of such
interest for one or more certificates evidencing such Definitive Series
A Preferred Shares. Upon receipt by the Registrar, at its office in The
City of New York of (A) instructions from the Depositary directing the
Registrar to countersign and deliver one or more Definitive Series A
Preferred Shares equal in number of shares to the beneficial interest
in the Global Series A Preferred Share to be exchanged, such
instructions to contain the name or names of the designated transferee
or transferees, the number of Definitive Series A Preferred Shares to
be so issued and appropriate delivery instructions, (B) a certificate
in the form of Exhibit B attached hereto given by the transferor, to
the effect set forth therein, (C) if such transfer is made pursuant to
Section 4(a)(iv), a certificate in the form of Exhibit C attached
hereto given by the person acquiring the Definitive Series A Preferred
Shares for which such interest is being exchanged, to the effect set
forth therein, and (D) such other certifications, legal opinions or
other information as the Company, the Depositary or the Registrar may
reasonably require 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, then the Registrar
will instruct the Depositary to reduce or cause to be reduced such
Global Series A Preferred Share by the number of shares of the
beneficial interest therein to be exchanged and to debit or cause to be
debited from the account of the person making such transfer the
beneficial interest in the Global Series A Preferred Share that is
being transferred, and concurrently with such reduction and debit, the
Company shall execute, and the Registrar shall countersign and deliver,
one or more Definitive Series A Preferred Shares representing the same
number of shares in accordance with the instructions referred to above.
(iii) If a holder of Definitive Series A Preferred Shares
wishes at any time to transfer all or part of such Definitive Series A
Preferred Shares to a person who is required to take delivery thereof
in the form of Definitive Series A Preferred Shares, such holder may,
subject to the restrictions on transfer set forth herein and in the
certificate representing such Definitive Series A Preferred Shares,
cause the exchange of such Definitive Series A Preferred Shares for one
or more certificates evidencing such Definitive Series A Preferred
Shares. Upon receipt by the Registrar, at its office in The City of New
York of (A) such Definitive Series A Preferred Shares, duly endorsed as
provided herein, (B) instructions from such holder directing the
Registrar to authenticate and deliver one or more certificates
evidencing Definitive Series A Preferred Shares, such instructions to
contain the name of the transferee and the number of the Definitive
Series A Preferred Shares to be so issued and appropriate delivery
instructions, (C) a certificate from the holder of the Definitive
Series A Preferred Shares to be exchanged in the form of Exhibit B
attached hereto given by the transferor, to the effect set forth
therein, (D) if such transfer is made pursuant to clause 4(a)(iv), a
certificate in the form of Exhibit C attached hereto given by the
person acquiring the Definitive Series A Preferred Shares for which
such shares are being exchanged, to the effect set forth therein, and
(E) such other certifications, legal opinions or other information as
the Company or the Registrar may reasonably require to confirm that
such transfer is being made pursuant to an exemption from, or in a
<PAGE> 5
5
transaction not subject to, the registration requirements of the
Securities Act, then the Registrar shall cancel or cause to be canceled
such Definitive Series A Preferred Shares and concurrently therewith,
the Company shall execute, and the Registrar shall countersign and
deliver, one or more Definitive Series A Preferred Shares representing
the number of shares transferred in accordance with the instructions
referred to above.
(iv) If a holder of Definitive Series A Preferred Shares
wishes at any time to transfer all or part of such Definitive Series A
Preferred Shares to a person who is eligible to take delivery thereof
in the form of a beneficial interest in a Global Series A Preferred
Share, such holder may, subject to the restrictions on transfer set
forth herein and in the certificate representing such Definitive Series
A Preferred Shares, cause the exchange of such Definitive Series A
Preferred Shares for beneficial interests in a Global Series A
Preferred Share. Upon receipt by the Registrar, at its office in The
City of New York of (A) such Definitive Series A Preferred Shares, duly
endorsed as provided herein, (B) instructions from such holder
directing the Registrar to increase the applicable Global Series A
Preferred Share, such instructions to contain the name of the
transferee and appropriate account information, (C) a certificate from
the holder of the Definitive Series A Preferred Shares to be exchanged
in the form of Exhibit B attached hereto given by the transferor, to
the effect set forth therein, and (D) such other certifications, legal
opinions or other information as the Company, the Depositary or the
Registrar may reasonably require 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, then the Registrar
shall cancel or cause to be canceled such Definitive Series A Preferred
Shares and concurrently therewith, the Registrar will instruct the
Depositary to increase or cause to be increased the applicable Global
Series A Preferred Share by the aggregate number of shares of the
Definitive Series A Preferred Shares to be exchanged and to credit or
cause to be credited to the account of the transferee the beneficial
interest in the Global Series A Preferred Share that is being
transferred.
(v) If an owner of a beneficial interest in a Global Series A
Preferred Share deposited with the Depositary or with the Registrar as
custodian for the Depositary wishes at any time to transfer its
interest in such Global Series A Preferred Share to a person who is
eligible to take delivery thereof in the form of a beneficial interest
in a Global Series A Preferred Share, such owner may, subject to the
rules and procedures of the Depositary, cause the exchange of such
interest for a new beneficial interest in the applicable Global Series
A Preferred Share. Upon receipt by the Registrar at its office in The
City of New York of (A) instructions from the holder directing the
Registrar to transfer its interest in the applicable Global Series A
Preferred Share, such instructions to contain the name of the
transferee and appropriate account information, (B) a certificate in
the form of Exhibit B given by the transferor, to the effect set forth
therein, and (C) such other certifications, legal opinions and other
information as the Company or the Registrar may reasonably require 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, then the Registrar shall instruct the Depositary to
reduce or cause to be reduced such Global Series A Preferred Share by
the number of shares of the beneficial interest therein to be exchanged
and to
<PAGE> 6
6
debit or cause to be debited from the account of the person making such
transfer the beneficial interest in the Global Series A Preferred Share
that is being transferred, and concurrently with such reduction and
debit, the Registrar will instruct the Depositary to increase or cause
to be increased the applicable Global Series A Preferred Share by the
aggregate number of shares being exchanged and to credit or cause to be
credited to the account of the transferee the beneficial interest in
the Global Series A Preferred Share that is being transferred.
(vi) In the event that a Global Series A Preferred Share is
exchanged for Series A Preferred Stock in definitive registered form
pursuant to this Section, prior to the effectiveness of a Shelf
Registration Statement with respect to such Series A Preferred Stock,
such Series A Preferred Stock may be exchanged only in accordance with
such procedures as are substantially consistent with the provisions of
clauses (ii), (iii), (iv) and (v) above (including the certification
requirements intended to ensure that such transfers comply with Rule
144A or are otherwise exempt under the Securities Act, as the case may
be) and such other procedures as may from time to time be adopted by
the Company, the Depositary or the Registrar.
(c) Except in connection with a Shelf Registration Statement
contemplated by and in accordance with the terms of the Registration Rights
Agreement relating to the Series A Preferred Stock, Common Shares issuable on
conversion of the Series A Preferred Stock and any securities into which such
Series A Preferred Stock or Common Shares shall be converted or into which they
shall be changed by operation of law or otherwise (collectively, the
"REGISTRABLE SECURITIES"), if Series A Preferred Stock is issued upon the
transfer, exchange or replacement of Series A Preferred Stock bearing the Global
Restricted Shares Legend or the Definitive Restricted Shares Legend, as
applicable, or if a request is made to remove such Global Restricted Shares
Legend or Definitive Restricted Shares Legend, as applicable, on Series A
Preferred Stock, the Series A Preferred Stock so issued shall bear the Global
Restricted Shares Legend or Definitive Restricted Shares Legend, as applicable,
or the Global Restricted Shares Legend or the Definitive Restricted Shares
Legend, as applicable, shall not be removed, as the case may be, unless there is
delivered to the Company and the Registrar such satisfactory evidence, which may
include an opinion of counsel licensed to practice law in the State of New York,
as may be reasonably required by the Company or the Registrar, that neither the
legend nor the restrictions on transfer set forth therein are required to ensure
that transfers thereof comply with the provisions of Rule 144A or Rule 144 or
that such shares of Series A Preferred Stock are not "restricted securities"
within the meaning of Rule 144 under the Securities Act. Upon provision of such
satisfactory evidence, the Registrar, at the direction of the Company, shall
countersign and deliver shares of Series A Preferred Stock that do not bear the
Global Restricted Shares Legend or the Definitive Restricted Shares Legend, as
applicable.
(d) The Registrar shall have no responsibility for any
actions taken or not taken by the Depositary.
(e) Each holder of a share of Series A Preferred Stock agrees
to indemnify the Company and the Registrar against any liability that may result
from the transfer, exchange or assignment of such holder's Series A Preferred
Stock in violation of any provision of this Certificate of Designations and/or
applicable U.S. Federal or State securities law; PROVIDED, HOWEVER, that such
indemnity shall not apply
<PAGE> 7
7
to acts of wilful misconduct, gross negligence or bad faith on the part of the
Company or the Registrar, as the case may be.
(f) Payments due on the Series A Preferred Stock shall be
payable at the office or agency of the Company maintained for such purpose in
The City of New York and at any other office or agency maintained by the Company
for such purpose. Payments shall be payable by United States dollar check drawn
on, or wire transfer (provided that appropriate wire instructions have been
received by the Registrar at least 15 days prior to the applicable date of
payment) to a United States dollar account maintained by the holder with, a bank
located in New York City; PROVIDED that at the option of the Company payment of
dividends may be made by check mailed to the address of the person entitled
thereto as such address shall appear in the Series A Preferred Stock Register.
(g) The Company agrees that it will refuse to register any
transfer of Series A Preferred Stock or any Common Shares issuable upon
conversion thereof that is not made in accordance with the provisions of
Regulation S, pursuant to a registration statement that has been declared
effective under the Securities Act or pursuant to an available exemption from
the registration requirements of the Securities Act; PROVIDED that the
provisions of this paragraph (g) shall not be applicable to any Series A
Preferred Stock that does not bear any Global Restricted Shares Legend or
Definitive Restricted Shares Legend or to any Common Shares that do not bear the
Common Share Legend (as defined below).
(h) Common Shares issued upon conversion of the Series A
Preferred Stock prior to the effectiveness of a Shelf Registration Statement
shall be delivered in certificated form and shall bear the common share legend
(the "COMMON SHARE LEGEND") set forth in Exhibit D hereto. If (i) Common Shares
issued prior to the effectiveness of a Shelf Registration Statement are to be
registered in a name other than that of the holder of the Series A Preferred
Stock or (ii) Common Shares represented by a certificate bearing the Common
Share Legend are transferred subsequently by such holder, then, unless the Shelf
Registration Statement has become effective and such shares are being
transferred pursuant to the Shelf Registration Statement, the holder must
deliver to the Registrar a certificate in substantially the form of Exhibit E as
to compliance with the restrictions on transfer applicable to such Common Shares
and the Registrar shall not be required to register any transfer of such Common
Stock not so accompanied by a properly completed certificate. Such Common Share
Legend may be removed, and new certificates representing the Common Shares may
be issued, upon the presentation of satisfactory evidence that such Common Share
Legend is no longer required as described in Section 5(c) above with respect to
the Series A Preferred Stock.
Section 6. DIVIDEND RIGHTS. (a) The Company shall pay, and the
holders of the Series A Preferred Stock shall be entitled to receive, cumulative
dividends from the date of initial issuance of such Series A Preferred Stock at
a rate of 8.25% per annum on the amount of the liquidation preference of the
Series A Preferred Stock. Dividends will be computed on the basis of a 360-day
year of twelve 30-day months and will be payable quarterly in cash in arrears on
February 15, May 15, August 15 and November 15 of each year (each a "DIVIDEND
PAYMENT DATE"), commencing February 15, 2000, until the liquidation preference
thereof is paid or made available for payment; PROVIDED, HOWEVER, that if such
date is not a Business Day, then the Dividend Payment Date shall be the next
Business Day. The Company may elect not to declare dividend payments on any
Dividend Payment Date; PROVIDED, HOWEVER, that dividends
<PAGE> 8
8
on the Series A Preferred Stock will accrue whether or not the Company has
earnings or profits, whether or not there are funds legally available for the
payment of such dividends and whether or not dividends are declared. Dividends
will accumulate to the extent they are not paid on the Dividend Payment Date for
the period to which they relate. The Company will take all actions required or
permitted under applicable law to permit the payment of dividends on the Series
A Preferred Stock. Arrearages of unpaid dividends ("ACCUMULATED DIVIDENDS") will
not themselves bear interest or be added to the liquidation preference of the
Series A Preferred Stock.
(b) Pursuant to the terms of the Registration Rights
Agreement, if
(i) on or prior to February 1, 2000, a shelf registration
statement (the "SHELF REGISTRATION STATEMENT") with respect to resales
of the Registrable Securities has not been filed with the SEC;
(ii) on or prior to May 1, 2000, the Shelf Registration
Statement is not declared effective; or
(iii) the Shelf Registration Statement has been declared
effective by the SEC and such Shelf Registration Statement ceases to be
effective or to be usable as contemplated by Section 2 of the
Registration Rights Agreement at any time during the period in which
such Shelf Registration Statement is required to be effective (each of
the foregoing clauses (i) through (iii), a "REGISTRATION DEFAULT"),
additional dividends ("PREFERRED STOCK LIQUIDATED DAMAGES") will accrue
on the Series A Preferred Stock, from and including the date of such
Registration Default to but excluding the day on which such
Registration Default has been cured. In the event of each such
Registration Default, the Company shall pay Preferred Stock Liquidated
Damages to each holder of Series A Preferred Stock that are Transfer
Restricted Securities at a rate of 0.25% per annum of the liquidation
preference of such Series A Preferred Stock, which shall accrue from
the date of the Registration Default to and including the 90th day
following such Registration Default and increase by 0.25% per annum for
each subsequent 90 day period; PROVIDED, HOWEVER, that such Preferred
Stock Liquidated Damages may not accrue at any time at a rate greater
than 1.00% per annum of the liquidation preference of the Series A
Preferred Stock. Following the cure of all Registration Defaults, the
accrual of Preferred Stock Liquidated Damages with respect to such
Series A Preferred Stock shall cease (without in any way limiting the
effect of any subsequent Registration Default).
Section 7. PAYMENT OF DIVIDENDS; MECHANICS OF PAYMENT;
DIVIDEND RIGHTS PRESERVED. (a) Dividends on any share of Series A Preferred
Stock which are payable, and are punctually paid or duly provided for, on any
Dividend Payment Date shall be paid in arrears to the person in whose name such
Series A Preferred Stock (or one or more predecessor shares of Series A
Preferred Stock) is registered at the close of business on the next preceding
February 1, May 1, August 1 and November 1 (each, together with any record date
established for the payment of Accumulated Dividends, a "DIVIDEND RECORD DATE").
(b) No dividend whatsoever shall be declared or paid upon, or
any sum set apart for the payment of dividends upon, any outstanding share of
Series A Preferred Stock with respect to any dividend period unless all
dividends for all preceding dividend periods have been
<PAGE> 9
9
declared and paid, or declared and a sufficient sum set apart for the payment of
such dividends, upon all outstanding shares of Series A Preferred Stock. Unless
full cumulative dividends on all outstanding shares of Series A Preferred Stock
for all past dividend periods shall have been declared and paid, or declared and
a sufficient sum for the payment thereof set apart, then:
(i) no dividend (other than (A) with respect to Junior Shares
or Parity Shares, a dividend payable solely in any Junior Shares or
Parity Shares, respectively, or (B) with respect to Parity Shares, a
partial dividend paid pro rata on such Parity Shares and the Series A
Preferred Stock) shall be declared or paid upon, or any sum set apart
for the payment of dividends upon, any Junior Shares or Parity Shares,
respectively;
(ii) no other distribution shall be declared or made upon, or
any sum set apart for the payment of any distribution upon, any Junior
Shares or Parity Shares, other than a distribution consisting solely of
Junior Shares or Parity Shares, respectively;
(iii) no Junior Shares or Parity Shares or any warrants,
rights, calls or options exercisable for or convertible into any Parity
Share or Junior Share shall be purchased, redeemed or otherwise
acquired (other than in exchange for other Junior Shares or Parity
Shares, respectively) by the Company or any of its subsidiaries; and
(iv) no monies shall be paid into or set apart or made
available for a sinking or other like fund for the purchase, redemption
or other acquisition of any Junior Shares or Parity Shares or any
warrants, rights, calls or options exercisable for or convertible into
any Parity Share or Junior Share by the Company or any of its
subsidiaries.
Holders of the Series A Preferred Stock will not be entitled
to any dividends, whether payable in cash, property or stock, in excess of the
full cumulative dividends as herein described. In the event that the Company
fails to pay the dividends due for an aggregate of six quarterly payments
(whether or not consecutive), the holders will have the rights and remedies set
forth in Section 8.
(c) Dividends (including Accumulated Dividends) may be paid
only in cash. The Company will notify the Registrar and make a public
announcement no later than the close of business on the tenth Business Day prior
to the Record Date for each dividend as to whether it will pay such dividend.
(d) Any Accumulated Dividends on any Series A Preferred Stock
may be paid by the Company in any lawful manner (which shall include the
establishment of a record date not more than 45 days prior to the payment
thereof) not inconsistent with the requirements of any securities exchange on
which the Series A Preferred Stock may be listed, and upon such notice (which
shall precede the record date by at least ten Business Days) as may be required
by such exchange, if, after notice given by the Company to the Registrar of the
proposed payment pursuant to this clause (d), such manner of payment shall be
deemed practicable by the Registrar.
(e) Subject to the foregoing provisions of this Section 7,
each share of Series A Preferred Stock delivered under this Certificate of
Designations upon registration of transfer of or in exchange for or in lieu of
any other share of Series A Preferred Stock shall carry the
<PAGE> 10
10
rights to dividends accumulated and unpaid, and to accrue, which were carried by
such other share of Series A Preferred Stock.
(f) The holder of record of a share of Series A Preferred
Stock at the close of business on a Dividend Record Date with respect to the
payment of dividends on the Series A Preferred Stock will be entitled to receive
such dividends with respect to such Series A Preferred Stock on the
corresponding Dividend Payment Date, notwithstanding the conversion of such
share after such Dividend Record Date and prior to such Dividend Payment Date. A
share of Series A Preferred Stock surrendered for conversion during the period
from the close of business on any Dividend Record Date to the opening of
business of the corresponding Dividend Payment Date must be accompanied by a
payment in cash in an amount equal to such dividend payable on such Dividend
Payment Date, unless such Series A Preferred Stock has been called for
redemption on a redemption date occurring during the period from the close of
business on any Dividend Record Date to the close of business on the Business
Day immediately following the corresponding Dividend Payment Date. The dividend
payment with respect to a share of Series A Preferred Stock called for
redemption on a date during the period from the close of business on any
Dividend Record Date to the close of business on the Business Day immediately
following the corresponding Dividend Payment Date will be payable on such
Dividend Payment Date to the record holder of such share on such Dividend Record
Date if such share has been converted after such Dividend Record Date and prior
to such Dividend Payment Date. Notwithstanding the immediately preceding three
sentences of this Section 7(f), no payment shall be owed or payable to or by any
converting holder if the Board of Directors of the Company shall have elected to
defer the dividend payment to be made on such Dividend Payment Date pursuant to
Section 6(a). Fractional Common Shares will not be issued upon conversion, but
in lieu thereof the Company will round the applicable number of Common Shares
issuable upon conversion up or down to the nearest whole number of Common
Shares.
(g) No payment or adjustment will be made upon conversion of
Series A Preferred Stock for accumulated and unpaid dividends or for dividends
with respect to the Common Shares issued upon such conversion.
Section 8. VOTING RIGHTS. (a) Holders of Series A Preferred
Stock will not be entitled to any voting rights unless (i) required by law or
(ii) the Company has not paid scheduled dividend payments for an aggregate of
six quarterly payments, whether or not consecutive (a "VOTING RIGHTS TRIGGERING
EVENT"). If a Voting Rights Triggering Event occurs while any Series A Preferred
Stock is outstanding, the number of directors constituting the Board of
Directors of the Company will be adjusted to permit the holders of the then
Outstanding Series A Preferred Stock, voting separately and as a class, to elect
one or, if the Board of Directors of the Company then has more than five
members, two members to the Board of Directors of the Company (the "SERIES A
PREFERRED STOCK DIRECTORS"), and the number of members of the Company's Board of
Directors will be immediately and automatically increased by one or two, as the
case may be. The voting rights set forth in the preceding sentence will continue
until such time as all dividends in arrears on the Series A Preferred Stock are
paid in full, at which time the term of any Series A Preferred Stock Director
shall terminate. At any time after voting power to elect Directors shall have
become vested and be continuing in the holders of the Series A Preferred Stock
pursuant to the second preceding sentence, or if a vacancy shall exist in the
offices of Series A Preferred Stock Directors, the Board of Directors may, and
upon written request of the holders of record of at least 25% of the Outstanding
Series A Preferred Stock addressed to the
<PAGE> 11
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Chairman of the Board of the Company, shall, call a special meeting of the
holders of the Series A Preferred Stock for the purpose of electing the Series A
Preferred Stock Directors that such holders are entitled to elect. At any
meeting held for the purpose of electing Series A Preferred Stock Directors, the
presence in person or by proxy of the holders of at least a majority of the
Outstanding Series A Preferred Stock shall be required to constitute a quorum of
such Series A Preferred Stock. Any vacancy occurring in the office of a Series A
Preferred Stock Director may be filled by the remaining Series A Preferred Stock
Director unless and until such vacancy shall be filled by the holders of the
Series A Preferred Stock. The Series A Preferred Stock Directors shall agree,
prior to their election to office, to resign upon any termination of the right
of the holders of Series A Preferred Stock to vote as a class for Directors as
herein provided, and upon such termination the Series A Preferred Stock
Directors then in office shall forthwith resign.
(b) In addition to the voting rights set forth above, the
approval of the holders of at least two-thirds of the then Outstanding Series A
Preferred Stock voting or consenting, as the case may be, as one class, will be
required for the Company to amend the Restated Certificate of Incorporation of
the Company, this Certificate of Designations or the By-laws of the Company so
as to affect adversely the rights, preferences, privileges or voting rights of
holders of the Series A Preferred Stock or authorize the issuance of any
additional shares of Series A Preferred Stock (other than shares of Series A
Preferred Stock to be sold pursuant to the Purchase Agreement); PROVIDED,
HOWEVER, that no such modification or amendment may, without the consent of the
holders of each share of Outstanding Series A Preferred Stock affected thereby,
(i) change the due date of any dividend on any Series A Preferred Stock, or
reduce the liquidation preference or redemption price thereof or the rate of
dividends thereon, or change the place of payment where, or the coin or currency
in which, any shares of Series A Preferred Stock or any payment thereon is
payable, or impair the right to institute suit for the enforcement of any such
payment, or adversely affect the rights to convert any shares of Series A
Preferred Stock as provided in Section 12 or modify the provisions of this
Certificate of Designations with respect to the ranking of the Series A
Preferred Stock in a manner adverse to the holders, (ii) alter the voting rights
with respect to the Series A Preferred Stock or reduce the percentage of the
Outstanding Series A Preferred Stock the consent of whose holders is required
for any such modification, or the consent of whose holders is required for any
waiver of compliance with provisions of this Certificate of Designations or
(iii) modify any of the provisions of this Section 8 except to increase any such
percentage or to provide that certain other provisions of this Certificate of
Designations cannot be modified or waived without the consent of the holder of
each share of Outstanding Series A Preferred Stock affected thereby.
(c) The Company will not authorize or issue any new class of
Senior Shares or any obligation or security convertible or exchangeable into or
evidencing a right to purchase shares of any class or series of Senior Shares,
without the approval of the holders of at least two-thirds of the then
Outstanding Series A Preferred Stock, voting or consenting, as the case may be,
as one class.
(d) Except as set forth in Section 8(c) with respect to Senior
Shares, neither (i) the creation, authorization or issuance of any Junior
Shares, Parity Shares or Senior Shares or (ii) the increase or decrease in the
amount of authorized capital stock of any class, including any preferred stock,
shall require the consent of the holders
<PAGE> 12
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of the Series A Preferred Stock or shall be deemed to affect adversely the
rights, preferences, privileges, special rights or voting rights of holders of
Series A Preferred Stock. Furthermore, the consent of the holders of Series A
Preferred Stock will not be required for the Company to authorize, create (by
way of reclassification or otherwise) or issue any Parity Shares or any
obligation or security convertible or exchangeable into, or evidencing a right
to purchase, shares of any class or series of Parity Shares.
Section 9. RANKING. (a) The Series A Preferred Stock will,
with respect to dividend rights and rights on liquidation, winding-up and
dissolution, rank (i) senior to all Common Shares (whether issued in one or more
classes) and to each other class of capital stock or series of preferred stock
created after November 5, 1999 by the Company, the terms of which do not
expressly provide that it ranks on a parity with the Series A Preferred Stock as
to dividend rights and rights on liquidation, winding-up and dissolution of the
Company (collectively referred to, together with all Common Shares (whether
issued in one or more classes) of the Company, as "JUNIOR SHARES"); (ii) on a
parity with the Company's Series B Preferred Stock and any additional shares of
Series A Preferred Stock issued by the Company and each other class of capital
stock or series of preferred stock created after November 5, 1999 by the
Company, the terms of which expressly provide that such class or series will
rank on a parity with the Series A Preferred Stock as to dividend rights and
rights on liquidation, winding-up and dissolution of the Company (collectively
referred to as "PARITY SHARES"); and (iii) junior to each class of capital stock
or series of preferred stock created after November 5, 1999 in compliance with
Section 8(c) by the Company, the terms of which expressly provide that such
class or series will rank senior to the Series A Preferred Stock as to dividend
rights and rights upon liquidation, winding-up and dissolution of the Company
(collectively referred to as "SENIOR SHARES").
(b) No dividend whatsoever shall be declared or paid upon, or
any sum set apart for the payment of dividends upon, any outstanding shares of
Series A Preferred Stock with respect to any dividend period unless all
dividends for all preceding dividend periods have been declared and paid, or
declared and a sufficient sum set apart for the payment of such dividends, upon
all outstanding Senior Shares.
(c) In the event of any liquidation, dissolution or winding-up
of the Company, whether voluntary or involuntary, the holders of the Series A
Preferred Stock then Outstanding shall be entitled to receive, prior and in
preference to any distribution of any of the assets of the Company to the
holders of Common Shares or Junior Shares by reason of their ownership thereof,
an amount equal to $50 per share for each outstanding share of Series A
Preferred Stock, plus, without duplication, an amount in cash equal to all
accumulated and unpaid dividends (including Preferred Stock Liquidated Damages)
thereon to the date fixed for liquidation, dissolution or winding-up (including
an amount equal to a pro rata dividend for the period from the last Dividend
Payment Date to the date fixed for liquidation, dissolution or winding-up). If
upon the occurrence of such event the assets thus distributed among the holders
of Series A Preferred Stock shall be insufficient to permit the payment to such
holders of the full preferential amount, the entire assets of the Company
legally available for distribution shall be distributed ratably based upon their
respective liquidation preference, among the holders of the Series A Preferred
Stock PARI PASSU with the holders of all Parity Shares. After payment of the
full preferential amount (and, if applicable, an amount equal to a pro rata
dividend to the holders of Outstanding Series A
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Preferred Stock), such holders shall not be entitled to any further
participation in any distribution of assets of the Company.
Section 10. REDEMPTION. (a) The Series A Preferred Stock may
be redeemed, in whole or from time to time in part, at the election of the
Company (the "OPTIONAL REDEMPTION"), at any time commencing on or after November
18, 2004, at a redemption price equal to the percentage of the liquidation
preference set forth below plus accumulated and unpaid dividends (including an
amount equal to a prorated dividend for any partial dividend period) and
Preferred Stock Liquidated Damages, if any, to the date of redemption (the
"OPTIONAL REDEMPTION DATE"), if redeemed during the 12-month period commencing
on November 18 of the year set forth below:
Date Percentage
---- ----------
2004 104.13%
2005 103.30%
2006 102.48%
2007 101.65%
2008 100.83%
2009 and thereafter 100.00%
(b) The Series A Preferred Stock shall not be subject to
any mandatory redemption.
(c) The Company may only make payments in respect of the
liquidation preference due on the Series A Preferred Stock on the Optional
Redemption Date in cash.
(d) No Optional Redemption may be authorized or made unless,
prior to giving the applicable redemption notice, all accumulated and unpaid
dividends for periods ended prior to the date of such redemption notice shall
have been paid in cash.
(e) In the event of a redemption of fewer than all the shares
of Series A Preferred Stock, the Series A Preferred Stock will be chosen for
redemption by the Registrar from the Outstanding Series A Preferred Stock not
previously called for redemption, pro rata or by lot or by such other method as
the Registrar shall deem fair and appropriate, PROVIDED that the Company may
redeem (an "ODD-LOT REDEMPTION") all shares held by holders of fewer than 100
shares of Series A Preferred Stock (or by holders that would hold fewer than 100
shares of Series A Preferred Stock following such redemption) prior to its
redemption of other shares of Series A Preferred Stock. If fewer than all the
shares of Series A Preferred Stock represented by any share certificate are to
be so redeemed, (i) the Company shall issue a new certificate for the shares not
redeemed and (ii) if any shares represented thereby are converted before
termination of the conversion right with respect to such shares, such converted
shares shall be deemed (so far as may be) to be the shares represented by such
share certificate that was selected for redemption. Series A Preferred Stock
which has been converted during a selection of Series A Preferred Stock to be
redeemed shall be treated by the Registrar as outstanding for the purpose of
such selection but not for the purpose of the payment of the Redemption Price.
<PAGE> 14
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(f) In the event the Company elects to effect an Optional
Redemption, the Company shall (i) make a public announcement of the redemption
and (ii) give a redemption notice (the "REDEMPTION NOTICE") to the holders not
fewer than 30 days nor more than 60 days before the redemption date (the
"REDEMPTION DATE"). Whenever a Redemption Notice is required to be delivered to
the holders, such Redemption Notice shall provide the information set forth
below and be given by first class mail, postage prepaid to each holder of Series
A Preferred Stock to be redeemed, at such holder's address appearing in the
Series A Preferred Stock Register. All Redemption Notices shall identify the
Series A Preferred Stock to be redeemed (including CUSIP number) and shall
state:
(i) the Redemption Date;
(ii) the redemption price (the "REDEMPTION PRICE");
(iii) if fewer than all the outstanding shares of Series A
Preferred Stock are to be redeemed, the identification (and, in the
case of partial redemption, the certificate number, the total number of
shares represented thereby and the number of such shares being redeemed
on the Redemption Date) of the particular shares of Series A Preferred
Stock to be redeemed;
(iv) that on the Redemption Date the Redemption Price,
together with (subject to Section 10(j)) dividends accumulated and
unpaid to the Redemption Date (including an amount equal to a prorated
dividend for any partial dividend period), will become due and payable
upon each such shares of Series A Preferred Stock to be redeemed and
that dividends thereon will cease to accrue on and after said date;
(v) the conversion price, the date on which the right to
convert Series A Preferred Stock to be redeemed will terminate and the
place or places where such Series A Preferred Stock may be surrendered
for conversion; and
(vi) the place or places where such Series A Preferred Stock
is to be surrendered for payment of the Redemption Price.
The Redemption Notice shall be given by the Company or, at the
Company's request, by the Registrar in the name and at the expense of the
Company; PROVIDED that if the Company so requests, it shall provide the
Registrar adequate time, as reasonably determined by the Registrar, to deliver
such notices in a timely fashion.
(g) Prior to any Redemption Date, the Company shall deposit
with the Registrar or with a Paying Agent (or, if the Company is acting as its
own Paying Agent, segregate and hold in trust) an amount of consideration
sufficient to pay the Redemption Price of and (except to the extent payable to a
holder of Series A Preferred Stock on a Dividend Record Date prior to the
Redemption Date) accrued but unpaid dividends (including an amount equal to a
prorated dividend for any partial dividend period) on all shares of Series A
Preferred Stock which are to be redeemed on that date other than any Series A
Preferred Stock called for redemption on that date which have been converted
into Common Shares prior to the date of such deposit. If any shares of Series A
Preferred Stock called for redemption are converted, any consideration deposited
with the Registrar or with any Paying Agent or so segregated and held in trust
for the redemption of such shares of Series A Preferred Stock shall (subject to
any right of the holder of such Series A Preferred Stock or any predecessor
Series A Preferred Stock to receive accrued but unpaid dividends thereon as
provided in Section 7(f)) be paid or
<PAGE> 15
15
delivered to the Company upon Company Order or, if then held by the Company,
shall be discharged from such trust.
(h) Notice of redemption having been given as aforesaid, the
Series A Preferred Stock so to be redeemed shall, on the Redemption Date, become
due and payable at the Redemption Price therein specified, and from and after
such date (unless the Company shall default in the payment of the Redemption
Price and accrued but unpaid dividends) dividends on such Series A Preferred
Stock shall cease to accrue and such shares shall cease to be convertible into
Common Shares. Upon surrender of any such Series A Preferred Stock for
redemption in accordance with said notice, such Series A Preferred Stock shall
be redeemed, subject to Section 7(f), by the Company at the Redemption Price,
together with (except to the extent payable to a holder of Series A Preferred
Stock on a Dividend Record Date prior to the Redemption Date) accrued but unpaid
dividends and Preferred Stock Liquidated Damages, if any, to the Redemption
Date. If any shares of Series A Preferred Stock called for redemption shall not
be so paid upon surrender thereof for redemption, the Redemption Price thereof,
exclusive of accrued but unpaid dividends, shall, until paid, bear interest from
the Redemption Date at the dividend rate payable on the Series A Preferred
Stock.
(i) Any certificate that represents more than one share of
Series A Preferred Stock and is to be redeemed only in part shall be surrendered
at any office or agency of the Company designated for that purpose (with, if the
Company or the Registrar so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company and the Registrar
duly executed by, the holder thereof or his attorney duly authorized in
writing), and the Company shall execute, and the Registrar shall countersign and
deliver to the holder of such share of Series A Preferred Stock without service
charge, a new Series A Preferred Stock certificate or certificates, representing
any number of Series A Preferred Stock as requested by such holder, in aggregate
amount equal to and in exchange for the number of shares not redeemed and
represented by the Series A Preferred Stock certificate so surrendered.
(j) If a share of Series A Preferred Stock is redeemed
subsequent to a Dividend Record Date with respect to any Dividend Payment Date
specified above and on or prior to such Dividend Payment Date, then any
accumulated but unpaid dividends will be paid to the person in whose name such
Series A Preferred Stock is registered at the close of business on such Dividend
Record Date.
Section 11. METHOD OF PAYMENTS. The Company may only make
payments due on the Series A Preferred Stock, including dividend payments
(including Preferred Stock Liquidated Damages) and redemption payments, in cash.
Section 12. CONVERSION. (a) Subject to and upon compliance
with the provisions of this Certificate of Designations, at the option of the
holder thereof, any share of Series A Preferred Stock may be converted at any
time at the liquidation preference thereof into fully paid and nonassessable
Common Shares (calculated as to each conversion to the nearest 1/100 of a
share), at the Conversion Price, determined as hereinafter provided, in effect
at the time of conversion. In case shares of Series A Preferred Stock are called
for redemption, such conversion right in respect of the shares of Series A
Preferred Stock so called shall expire at the close of business on the Business
Day preceding the Redemption Date, unless the Company defaults in making the
payment due upon redemption.
<PAGE> 16
16
The price at which Common Shares shall be delivered upon
conversion (herein called the "CONVERSION PRICE") shall be initially $3.675 per
Common Share. The Conversion Price shall be adjusted in certain instances as
provided in Section 12(d) and Section 12(e).
(b) In order to exercise the conversion privilege, the holder
of any share of Series A Preferred Stock to be converted shall surrender the
certificate for such share, duly endorsed or assigned to the Company or in
blank, at any office or agency of the Company maintained for that purpose,
accompanied by written notice to the Company at such office or agency that the
holder elects to convert such share or, if fewer than all the shares of Series A
Preferred Stock represented by a single share certificate are to be converted,
the number of shares represented thereby to be converted. Except as provided in
Section 7(f), no payment or adjustment shall be made upon any conversion on
account of any dividends accrued on the Series A Preferred Stock surrendered for
conversion or on account of any dividends on the Common Shares issued upon
conversion. In no event shall the Company be obligated to pay any converting
holder any unpaid Accumulated Dividends upon conversion.
Series A Preferred Stock shall be deemed to have been
converted immediately prior to the close of business on the day of surrender of
such shares for conversion in accordance with the foregoing provisions, and at
such time the rights of the holders of such shares as holders shall cease, and
the person or persons entitled to receive the Common Shares issuable upon
conversion shall be treated for all purposes as the record holder or holders of
such Common Shares at such time. As promptly as practicable on or after the
conversion date, the Company shall issue and shall deliver at such office or
agency a certificate or certificates for the number of full Common Shares
issuable upon conversion as provided in Section 12(c).
In the case of any conversion of fewer than all the Series A
Preferred Stock evidenced by a certificate, upon such conversion the Company
shall execute and the Registrar shall countersign and deliver to the holder
thereof, at the expense of the Company, a new certificate or certificates
representing the number of unconverted shares of Series A Preferred Stock.
(c) No fractional Common Shares shall be issued upon the
conversion of shares of Series A Preferred Stock. If more than one share
certificate of Series A Preferred Stock shall be surrendered for conversion at
one time by the same holder, the number of full Common Shares which shall be
issuable upon conversion thereof shall be computed on the basis of the aggregate
number of shares of Series A Preferred Stock so surrendered. Instead of any
fractional Common Share which would otherwise be issuable upon conversion of any
Series A Preferred Stock, the Company shall round the applicable number of
Common Shares issuable upon conversion up or down to the nearest whole number of
Common Shares.
(d) The Conversion Price shall be adjusted from time to time
by the Company as follows:
(i) if the Company shall hereafter pay a dividend or make a
distribution to holders of the outstanding Common Shares in Common
Shares, the Conversion Price in effect at the opening of business on
the date following the date fixed for the determination of shareholders
entitled to receive such dividend or other distribution shall be
reduced by multiplying such Conversion Price by a fraction of which the
numerator shall be the number of Common
<PAGE> 17
17
Shares outstanding at the close of business on the Common Share Record
Date (as defined in Section 12(d)(vii)) fixed for such determination
and the denominator shall be the sum of such number of shares and the
total number of shares constituting such dividend or other
distribution, such reduction to become effective immediately after the
opening of business on the day following the Common Share Record Date.
If any dividend or distribution of the type described in this Section
12(d)(i) is declared but not so paid or made, the Conversion Price
shall again be adjusted to the Conversion Price which would then be in
effect if such dividend or distribution had not been declared;
(ii) if the Company shall offer or issue rights or warrants to
holders of its outstanding Common Shares entitling them to subscribe
for or purchase Common Shares at a price per share less than the
Current Market Price (as defined in Section 12(d)(vii)) on the Common
Share Record Date fixed for the determination of shareholders entitled
to receive such rights or warrants, the Conversion Price shall be
adjusted so that the same shall equal the price determined by
multiplying the Conversion Price in effect at the opening of business
on the date after such Common Share Record Date by a fraction of which
the numerator shall be the number of Common Shares outstanding at the
close of business on the Common Share Record Date plus the number of
Common Shares which the aggregate offering price of the total number of
Common Shares subject to such rights or warrants would purchase at such
Current Market Price and of which the denominator shall be the number
of Common Shares outstanding at the close of business on the Common
Share Record Date plus the total number of additional Common Shares
subject to such rights or warrants for subscription or purchase. Such
adjustment shall become effective immediately after the opening of
business on the day following the Common Share Record Date fixed for
determination of shareholders entitled to purchase or receive such
rights or warrants. To the extent that Common Shares are not delivered
pursuant to such rights or warrants, upon the expiration or termination
of such rights or warrants the Conversion Price shall again be adjusted
to be the Conversion Price which would then be in effect had the
adjustments made upon the issuance of such rights or warrants been made
on the basis of delivery of only the number of Common Shares actually
delivered. If such rights or warrants are not so issued, the Conversion
Price shall again be adjusted to be the Conversion Price which would
then be in effect if such date fixed for the determination of
shareholders entitled to receive such rights or warrants had not been
fixed. In determining whether any rights or warrants entitle the
holders to subscribe for or purchase Common Shares at less than such
Current Market Price, and in determining the aggregate offering price
of such Common Shares, there shall be taken into account any
consideration received for such rights or warrants, with the value of
such consideration, if other than cash, to be determined by the Board
of Directors;
(iii) if the outstanding Common Shares shall be subdivided
into a greater number of Common Shares, the Conversion Price in effect
at the opening of business on the day following the day upon which such
subdivision becomes effective shall be proportionately reduced, and,
conversely, if the outstanding Common Shares shall be combined into a
smaller number of Common Shares, the Conversion Price in effect at the
opening of business on the day following the day upon which such
combination becomes effective shall be proportionately increased, such
reduction or increase, as the case may be, to become effective
immediately
<PAGE> 18
18
after the opening of business on the day following the day upon
which such subdivision or combination becomes effective;
(iv) if the Company shall, by dividend or otherwise,
distribute to holders of its Common Shares any class of capital stock
of the Company (other than any dividends or distributions to which
Section 12(d)(i) applies) or evidences of its indebtedness, cash or
other assets (including securities, but excluding any rights or
warrants of a type referred to in Section 12(d)(ii) and dividends and
distributions paid exclusively in cash and excluding any capital stock,
evidences of indebtedness, cash or assets distributed upon a merger or
consolidation to which Section 12(e) applies) (the foregoing
hereinafter in this Section 12(d)(iv) called the "DISTRIBUTED
SECURITIES"), then, in each such case, the Conversion Price shall be
reduced so that the same shall be equal to the price determined by
multiplying the Conversion Price in effect immediately prior to the
close of business on the Common Share Record Date (as defined in
Section 12(d)(vii)) with respect to such distribution by a fraction of
which the numerator shall be the Current Market Price (determined as
provided in Section 12(d)(vii)) on such date less the fair market value
(as determined by the Board of Directors, whose determination shall be
conclusive and described in a resolution of the Board of Directors) on
such date of the portion of the Distributed Securities so distributed
applicable to one Common Share and the denominator shall be such
Current Market Price, such reduction to become effective immediately
prior to the opening of business on the day following the Common Share
Record Date; PROVIDED, HOWEVER, that, in the event the then fair market
value (as so determined) of the portion of the Distributed Securities
so distributed applicable to one Common Share is equal to or greater
than the Current Market Price on the Common Share Record Date, in lieu
of the foregoing adjustment, adequate provision shall be made so that
each holder of Series A Preferred Stock shall have the right to receive
upon conversion of a share of Series A Preferred Stock (or any portion
thereof) the amount of Distributed Securities such holder would have
received had such holder converted such share of Series A Preferred
Stock (or portion thereof) immediately prior to such Common Share
Record Date. If such dividend or distribution is not so paid or made,
the Conversion Price shall again be adjusted to be the Conversion Price
which would then be in effect if such dividend or distribution had not
been declared. If the Board of Directors determines the fair market
value of any distribution for purposes of this Section 12(d)(iv) by
reference to the actual or when issued trading market for any
securities constituting all or part of such distribution, it must in
doing so consider the prices in such market over the same period used
in computing the Current Market Price pursuant to Section 12(d)(vii) to
the extent possible.
Rights or warrants distributed by the Company to holders of
Common Shares entitling the holders thereof to subscribe for or
purchase shares of the Company's capital stock (either initially or
under certain circumstances), which rights or warrants, until the
occurrence of a specified event or events ("DILUTION TRIGGER EVENT"):
(A) are deemed to be transferred with such Common Shares; (B) are not
exercisable; and (C) are also issued in respect of future issuances of
Common Shares, shall be deemed not to have been distributed for
purposes of this Section 12(d)(iv) (and no adjustment to the Conversion
Price under this Section 12(d)(iv) shall be required) until the
occurrence of the earliest Dilution Trigger Event, whereupon such
rights and
<PAGE> 19
19
warrants shall be deemed to have been distributed and an appropriate
adjustment to the Conversion Price under this Section 12(d)(iv) shall
be made. If any such rights or warrants, including any such existing
rights or warrants distributed prior to the first issuance of Series A
Preferred Stock, are subject to subsequent events, upon the occurrence
of each of which such rights or warrants shall become exercisable to
purchase different securities, evidences of indebtedness or other
assets, then the occurrence of each such event shall be deemed to be
such date of issuance and record date with respect to new rights or
warrants (and a termination or expiration of the existing rights or
warrants, without exercise by the holder thereof). In addition, in the
event of any distribution (or deemed distribution) of rights or
warrants, or any Dilution Trigger Event with respect thereto, that was
counted for purposes of calculating a distribution amount for which an
adjustment to the Conversion Price under this Section 12(d) was made,
(1) in the case of any such rights or warrants which shall all have
been redeemed or repurchased without exercise by any holders thereof,
the Conversion Price shall be readjusted upon such final redemption or
repurchase to give effect to such distribution or Dilution Trigger
Event, as the case may be, as though it were a cash distribution, equal
to the per share redemption or repurchase price received by a holder or
holders of Common Shares with respect to such rights or warrants
(assuming such holder had retained such rights or warrants), made to
all holders of Common Shares as of the date of such redemption or
repurchase, and (2) in the case of such rights or warrants which shall
have expired or been terminated without exercise by any holders
thereof, the Conversion Price shall be readjusted as if such rights and
warrants had not been issued.
Notwithstanding any other provision of this Section 12(d)(iv)
to the contrary, rights, warrants, evidences of indebtedness, other
securities, cash or other assets (including, without limitation, any
rights distributed pursuant to any shareholder rights plan) shall be
deemed not to have been distributed for purposes of this Section
12(d)(iv) if the Company makes proper provision so that each holder of
Series A Preferred Stock who converts a share of Series A Preferred
Stock (or any portion thereof) after the date fixed for determination
of shareholders entitled to receive such distribution shall be entitled
to receive upon such conversion, in addition to the Common Shares
issuable upon such conversion, the amount and kind of such
distributions that such holder would have been entitled to receive if
such holder had, immediately prior to such determination date,
converted such share of Series A Preferred Stock into a Common Share.
For purposes of this Section 12(d)(iv) and Sections 12(d)(i)
and (ii), any dividend or distribution to which this Section 12(d)(iv)
is applicable that also includes Common Shares, or rights or warrants
to subscribe for or purchase Common Shares to which Section 12(d)(ii)
applies (or both), shall be deemed instead to be (A) a dividend or
distribution of the evidences of indebtedness, assets, shares of
capital stock, rights or warrants other than such Common Shares or
rights or warrants to which Section 12(d)(ii) applies (and any
Conversion Price reduction required by this Section 12(d)(iv) with
respect to such dividend or distribution shall then be made)
immediately followed by (B) a dividend or distribution of such Common
Shares or such rights or warrants (and any further Conversion Price
reduction required by Sections 12(d)(i) or 12(d)(ii) with respect to
such dividend or
<PAGE> 20
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distribution shall then be made), except that (1) the Common Share
Record Date of such dividend or distribution shall be substituted as
"the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution", "the Common Share Record
Date fixed for such determination" and "the Common Share Record Date"
within the meaning of Section 12(d)(i) and as "the date fixed for the
determination of shareholders entitled to receive such rights or
warrants", "the Common Share Record Date fixed for the determination of
the shareholders entitled to receive such rights or warrants" and "such
Common Share Record Date" for purposes of Section 12(d)(ii), and (2)
any Common Shares included in such dividend or distribution shall not
be deemed "outstanding at the close of business on the date fixed for
such determination" for the purposes of Section 12(d)(i).
(v) If the Company shall, by dividend or otherwise, distribute
to holders of its Common Shares cash (excluding any cash that is
distributed upon a merger or consolidation to which Section 12(e)
applies or as part of a distribution referred to in Section 12(d)(iv))
in an aggregate amount that, combined together with (A) the aggregate
amount of any other such distributions to holders of its Common Shares
made exclusively in cash within the 12 months preceding the date of
payment of such distribution, and in respect of which no adjustment
pursuant to this Section 12(d)(v) has been made, and (B) the aggregate
of any cash plus the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a
resolution of the Board of Directors) of consideration payable in
respect of any tender or exchange offer by the Company or any
subsidiary of the Company for all or any portion of the Common Shares
concluded within the 12 months preceding the date of payment of such
distribution, and in respect of which no adjustment pursuant to Section
12(d)(vi) has been made, exceeds 15% of the product of the Current
Market Price (determined as provided in Section 12(d)(vii)) on the
Common Share Record Date with respect to such distribution times the
number of Common Shares outstanding on such date, then, and in each
such case, immediately after the close of business on such date, the
Conversion Price shall be reduced so that the same shall equal the
price determined by multiplying the Conversion Price in effect
immediately prior to the close of business on such Common Share Record
Date by a fraction (1) the numerator of which shall be equal to the
Current Market Price on the Common Share Record Date less an amount
equal to the quotient of (x) the excess of such combined amount over
such 15% and (y) the number of Common Shares outstanding on the Common
Share Record Date and (2) the denominator of which shall be equal to
the Current Market Price on such Common Share Record Date; PROVIDED,
HOWEVER, that, if the portion of the cash so distributed applicable to
one Common Share is equal to or greater than the Current Market Price
of the Common Shares on the Common Share Record Date, in lieu of the
foregoing adjustment, adequate provision shall be made so that each
holder of Series A Preferred Stock shall have the right to receive upon
conversion of a share of Series A Preferred Stock (or any portion
thereof) the amount of cash such holder would have received had such
holder converted such share of Series A Preferred Stock (or portion
thereof) immediately prior to such Common Share Record Date. If such
dividend or distribution is not so paid or made, the Conversion Price
shall again be adjusted to be the Conversion Price which would then be
in effect if such dividend or distribution had not been declared.
<PAGE> 21
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(vi) if a tender or exchange offer made by the Company or any
of its subsidiaries for all or any portion of the Common Shares expires
and such tender or exchange offer (as amended upon the expiration
thereof) requires the payment to shareholders (based on the acceptance
(up to any maximum specified in the terms of the tender or exchange
offer) of Purchased Shares (as defined below)) of an aggregate
consideration having a fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a
resolution of the Board of Directors) that, combined together with (A)
the aggregate of the cash plus the fair market value (as determined by
the Board of Directors, whose determination shall be conclusive and
described in a resolution of the Board of Directors), as of the
expiration of such tender or exchange offer, of consideration payable
in respect of any other tender offers, by the Company or any of its
subsidiaries for all or any portion of the Common Shares expiring
within the 12 months preceding the expiration of such tender or
exchange offer and in respect of which no adjustment pursuant to this
Section 12(d)(vi) has been made and (B) the aggregate amount of any
distributions to all holders of the Common Shares made exclusively in
cash within 12 months preceding the expiration of such tender or
exchange offer and in respect of which no adjustment pursuant to
Section 12(d)(v) has been made, exceeds 15% of the product of the
Current Market Price (determined as provided in Section 12(d)(vii)) as
of the last time (the "EXPIRATION TIME") tenders could have been made
pursuant to such tender or exchange offer (as it may be amended) times
the number of Common Shares outstanding (including any tendered shares)
at the Expiration Time, then, and in each such case, immediately prior
to the opening of business on the day after the date of the Expiration
Time, the Conversion Price shall be adjusted so that the same shall
equal the price determined by multiplying the Conversion Price in
effect immediately prior to the close of business on the date of the
Expiration Time by a fraction of which the numerator shall be the
number of Common Shares outstanding (including any tendered shares) at
the Expiration Time multiplied by the Current Market Price of the
Common Shares on the trading day next succeeding the Expiration Time
and the denominator shall be the sum of (x) the fair market value
(determined as aforesaid) of the aggregate consideration payable to
shareholders based on the acceptance (up to any maximum specified in
the terms of the tender or exchange offer) of all shares validly
tendered and not withdrawn as of the Expiration Time (the shares deemed
so accepted, up to any such maximum, being referred to as the
"PURCHASED SHARES") and (y) the product of the number of Common Shares
outstanding (less any Purchased Shares) at the Expiration Time and the
Current Market Price of the Common Shares on the trading day next
succeeding the Expiration Time, such reduction (if any) to become
effective immediately prior to the opening of business on the day
following the Expiration Time. If the Company is obligated to purchase
shares pursuant to any such tender or exchange offer, but the Company
is permanently prevented by applicable law from effecting any such
purchases or all such purchases are rescinded, the Conversion Price
shall again be adjusted to be the Conversion Price which would then be
in effect if such tender or exchange offer had not been made. If the
application of this Section 12(d)(vi) to any tender or exchange offer
would result in an increase in the Conversion Price, no adjustment
shall be made for such tender offer under this Section 12(d)(vi).
<PAGE> 22
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(vii) For purposes of this Section 12(d), the following terms
shall have the meaning indicated:
"COMMON SHARE RECORD DATE" shall mean, with respect
to any dividend, distribution or other transaction or event in
which the holders of Common Shares have the right to receive
any cash, securities or other property or in which the Common
Shares (or other applicable security) are exchanged for or
converted into any combination of cash, securities or other
property, the date fixed for determination of shareholders
entitled to receive such cash, securities or other property
(whether such date is fixed by the Board of Directors or by
statute, contract or otherwise).
"CURRENT MARKET PRICE" means the Average Market
Value; PROVIDED, HOWEVER, that (A) if the "ex" date (as
hereinafter defined) for any event (other than the issuance or
distribution requiring such computation) that requires an
adjustment to the Conversion Price pursuant to Section
12(d)(i), (ii), (iii), (iv), (v) or (vi) occurs during the
applicable 10 trading day measurement period, the Current
Market Value for each trading day prior to the "ex" date for
such other event shall be adjusted by multiplying such Current
Market Value by the same fraction by which the Conversion
Price is so required to be adjusted as a result of such other
event, (B) if the "ex" date for any event (other than the
issuance or distribution requiring such computation) that
requires an adjustment to the Conversion Price pursuant to
Section 12(d)(i), (ii), (iii), (iv), (v) or (vi) occurs on or
after the "ex" date for the issuance or distribution requiring
such computation and prior to the day in question, the Current
Market Value for each trading day on and after the "ex" date
for such other event shall be adjusted by multiplying the
Current Market Value on such day by the reciprocal of the
fraction by which the Conversion Price is so required to be
adjusted as a result of such other event and (C) if the "ex"
date for the issuance or distribution requiring such
computation is prior to the day in question, after taking into
account any adjustment required pursuant to clause (A) or (B)
of this proviso, the Current Market Value for each trading day
on or after such "ex" date shall be adjusted by adding thereto
the amount of any cash and the fair market value (as
determined by the Board of Directors in a manner consistent
with any determination of such value for purposes of Section
12(d)(iv) or (v), whose determination shall be conclusive and
described in a resolution of the Board of Directors) of the
evidences of indebtedness, shares of capital stock or assets
being distributed applicable to one Common Share as of the
close of business on the day before such "ex" date. For
purposes of any computation under Section 12(d)(vi), the
Current Market Price on any date shall be deemed to be the
arithmetic average of the Current Market Value for such day
and the next two succeeding trading days; PROVIDED, HOWEVER,
that, if the "ex" date for any event (other than the tender or
exchange offer requiring such computation) that requires an
adjustment to the Conversion Price pursuant to Section
12(d)(i), (ii), (iii), (iv), (v) or (vi) occurs on or after
the Expiration Time for the tender or exchange offer requiring
such computation and prior to the day in question, the Current
Market Value for each trading day on and after the "ex" date
for such other
<PAGE> 23
23
event shall be adjusted by multiplying such Current Market
Value by the reciprocal of the fraction by which the
Conversion Price is so required to be adjusted as a result of
such other event. For purposes of this paragraph, the term
"ex" date (1) when used with respect to any issuance or
distribution, means the first date on which the Common Shares
trade regular way on the relevant exchange or in the relevant
market from which the Current Market Value was obtained
without the right to receive such issuance or distribution,
(2) when used with respect to any subdivision or combination
of Common Shares, means the first date on which the Common
Shares trade regular way on such exchange or in such market
after the time at which such subdivision or combination
becomes effective and (3) when used with respect to any tender
or exchange offer means the first date on which the Common
Shares trade regular way on such exchange or in such market
after the Expiration Time of such offer. Notwithstanding the
foregoing, whenever successive adjustments to the Conversion
Price are called for pursuant to this Section 12(d), such
adjustments shall be made to the Current Market Price as may
be necessary or appropriate to effectuate the intent of this
Section 12(d) and to avoid unjust or inequitable results, as
determined in good faith by the Board of Directors.
"FAIR MARKET VALUE" shall mean the amount which a
willing buyer would pay a willing seller in an arm's-length
transaction.
(viii) No adjustment in the Conversion Price shall be required
unless such adjustment would require an increase or decrease of at
least 1% in such price; PROVIDED, HOWEVER, that any adjustments which
by reason of this Section 12(d)(viii) are not required to be made shall
be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 12 shall be made by the Company and
shall be made to the nearest cent. No adjustment need be made for a
change in the par value or no par value of the Common Shares.
(ix) Whenever the Conversion Price is adjusted as herein
provided, the Company shall promptly file with the Registrar an
Officers' Certificate setting forth the Conversion Price after such
adjustment and setting forth a brief statement of the facts requiring
such adjustment. Promptly after delivery of such certificate, the
Company shall prepare a notice of such adjustment of the Conversion
Price setting forth the adjusted Conversion Price and the date on which
each adjustment becomes effective and shall mail such notice of such
adjustment of the Conversion Price to each holder of Series A Preferred
Stock at such holder's last address appearing on the register of
holders maintained for that purpose within 20 days of the effective
date of such adjustment. Failure to deliver such notice shall not
affect the legality or validity of any such adjustment.
(x) In any case in which this Section 12(d) provides that an
adjustment shall become effective immediately after a Common Share
Record Date for an event, the Company may defer until the occurrence of
such event issuing to the holder of any share of Series A Preferred
Stock converted after such Common Share Record Date and before the
occurrence of such event the additional Common Shares issuable upon
such conversion by reason of the adjustment
<PAGE> 24
24
required by such event over and above the Common Shares issuable upon
such conversion before giving effect to such adjustment.
(xi) For purposes of this Section 12(d), the number of Common
Shares at any time outstanding shall not include shares held in the
treasury of the Company. The Company shall not pay any dividend or make
any distribution on Common Shares held in the treasury of the Company.
(e) Subject to Sections 13 and 15, in case of any
consolidation of the Company with, or merger of the Company into, any other
corporation, or in case of any merger of another corporation into the Company
(other than a merger which does not result in any reclassification, conversion,
exchange or cancelation of outstanding shares of Common Shares of the Company),
or in case of any sale, conveyance or transfer of all or substantially all the
assets of the Company, the holder of each share of Series A Preferred Stock then
outstanding shall have the right thereafter to convert such Series A Preferred
Stock only into the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, conveyance or transfer by a holder
of the number of shares of Common Shares of the Company into which such Series A
Preferred Stock might have been converted immediately prior to such
consolidation, merger, conveyance or transfer, assuming such holder of Common
Shares of the Company failed to exercise his rights of election, if any, as to
the kind or amount of securities, cash and other property receivable upon such
consolidation, merger, conveyance or transfer (PROVIDED that, if the kind or
amount of securities, cash and other property receivable upon such
consolidation, merger, conveyance or transfer is not the same for each Common
Share of the Company in respect of which such rights of election shall not have
been exercised ("NONELECTING SHARE"), then for the purpose of this Section 12
the kind and amount of securities, cash and other property receivable upon such
consolidation, merger, conveyance or transfer by each nonelecting share shall be
deemed to be the kind and amount so receivable per share by a plurality of the
nonelecting shares). Such securities shall provide for adjustments which, for
events subsequent to the effective date of the triggering event, shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Section 12. The above provisions of this Section 12 shall similarly apply to
successive consolidations, mergers, conveyances or transfers.
(f) In case:
(i) the Company shall declare a dividend (or any other
distribution) on its Common Shares payable otherwise than in cash out
of its earned surplus; or
(ii) the Company shall authorize the granting to all holders
of its Common Shares of rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any other rights; or
(iii) of any reclassification of the Common Shares of the
Company (other than a subdivision or combination of its outstanding
Common Shares), or of any consolidation or merger to which the Company
is a party and for which approval of any shareholders of the Company is
required, or the sale, conveyance or transfer of all or substantially
all the assets of the Company; or
(iv) of the voluntary or involuntary dissolution, liquidation
or winding-up of the Company;
<PAGE> 25
25
then the Company shall cause to be filed with the Registrar and at each office
or agency maintained for the purpose of conversion of Series A Preferred Stock,
and shall cause to be mailed to all holders at their last addresses as they
shall appear in the Series A Preferred Stock Register, at least 20 Business Days
(or 10 Business Days in any case specified in clause (i) or (ii) above) prior to
the applicable date hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend, distribution,
rights or warrants, or, if a record is not to be taken, the date as of which the
holders of Common Shares of record to be entitled to such dividend,
distribution, rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding-up is expected to become effective, and the date as of
which it is expected that holders of Common Shares of record shall be entitled
to exchange their Common Shares for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up. Failure to give the notice required by
this Section 12(f) or any defect therein shall not affect the legality or
validity of any dividend, distribution, right, warrant, reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding-up,
or the vote upon any such action.
(g) The Company shall at all times reserve and keep available,
free from preemptive rights, out of its authorized but unissued Common Shares,
for the purpose of effecting the conversion of Series A Preferred Stock, the
full number of Common Shares then issuable upon the conversion of all
outstanding shares of Series A Preferred Stock.
(h) The Company will pay any and all taxes that may be payable
in respect of the issue or delivery of Common Shares on conversion of Series A
Preferred Stock pursuant hereto. The Company shall not, however, be required to
pay any tax which may be payable in respect of any transfer involved in the
issue and delivery of Common Shares in a name other than that of the holder of
the Series A Preferred Stock or Series A Preferred Stock to be converted, and no
such issue or delivery shall be made unless and until the Person requesting such
issue has paid to the Company the amount of any such tax, or has established to
the satisfaction of the Company that such tax has been paid or is not payable.
Section 13. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER.
Without the vote or consent of the holders of a majority of the then Outstanding
Series A Preferred Stock, the Company may not consolidate or merge with or into,
or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its assets to, any person unless (a) the entity formed by
such consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made (in any such case, the "RESULTING ENTITY") is a corporation organized and
existing under the laws of the United States or any State thereof or the
District of Columbia; (b) if the Company is not the resulting entity, the Series
A Preferred Stock is converted into or exchanged for and becomes shares of such
resulting entity, having in respect of such resulting entity the same (or more
favorable) powers, preferences and relative, participating, optional or other
special rights that the Series A Preferred Stock had immediately prior to such
transaction; (c) immediately after giving effect to such transaction, no Voting
Rights Triggering Event has occurred and is continuing; and (d) the Company
shall have delivered to the Registrar an Officers' Certificate and an opinion of
counsel, each stating that such consolidation, merger,
<PAGE> 26
26
conveyance or transfer complies with this Section 13 and that all conditions
precedent herein provided for relating to such transaction have been complied
with.
Section 14. SEC REPORTS; REPORTS BY COMPANY. Notwithstanding
that the Company may not be required to remain subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company shall file
with, or furnish to, the SEC 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 reports to be so filed at the times specified for the filing of
such information, documents and reports under such Sections (the "REQUIRED
FILING TIMES"); PROVIDED, HOWEVER, that the Company shall not be so obligated to
file such information, documents and reports with the SEC if the Commission does
not permit such filings. The Company shall also in any event (a) within 15 days
of each Required Filing Time, provide the Transfer Agent and the holders of the
Series A Preferred Stock with copies of such information, documents and reports
and (b) if the SEC does not permit the filing of such information, documents and
reports, promptly upon written request supply copies of such information,
documents and reports to any prospective holder of the Series A Preferred Stock.
Section 15. FUNDAMENTAL CHANGE CONVERSION PRICE ADJUSTMENT.
Notwithstanding anything herein to the contrary, but not in addition to the
adjustments to the Conversion Price set forth in Section 12, if the Company
makes an announcement of the occurrence of a Fundamental Change, the Conversion
Price shall be adjusted to equal the Fundamental Change Average Market Price;
PROVIDED, HOWEVER, that if the application of this Section 15 would result in an
increase to the Conversion Price, no adjustment shall be made to the Conversion
Price pursuant to this Section 15.
"FUNDAMENTAL CHANGE" means the occurrence of any transaction
or event in connection with which all or substantially all of the outstanding
Common Shares shall be exchanged for, converted into, acquired for or constitute
the right to receive stock, securities, other property or assets (including
cash) of another entity or person (whether by means of an exchange offer,
liquidation, tender offer, consolidation, merger, combination, reclassification,
recapitalization or otherwise).
"FUNDAMENTAL CHANGE AVERAGE MARKET PRICE" of the Common
Shares means the Average Market Value as of the closing of the
Fundamental Change.
Section 16. DEFINITIONS. For purposes of this Certificate
of Designations, the following terms shall have the meaning set forth
below:
"ACCUMULATED DIVIDENDS" has the meaning set forth in
Section 6(a).
"AGENT MEMBERS" has the meaning set forth in Section 4(c).
"AVERAGE MARKET VALUE" of the Common Shares means the
arithmetic average of the Current Market Value of the Common Shares for the ten
trading days ending on the fifth trading prior to, unless otherwise indicated,
the date of the event requiring such calculation.
"BUSINESS DAY" means each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in
<PAGE> 27
27
The City of New York are authorized or obligated by law or executive order to be
closed.
"CLOSING DATE" means any Closing Date under the Purchase
Agreement.
"COMMON SHARE RECORD DATE" has the meaning set forth in
Section 12(d)(vii).
"COMMON SHARE LEGEND" has the meaning set forth in
Section 5(h).
"COMMON SHARES" means shares of common stock of the Company,
par value $0.50 per share.
"COMPANY" has the meaning set forth in the Recitals.
"COMPANY ORDER" means a written request or order signed in the
name of the Company by its Chairman of the Board, its President or a Vice
President and by its Treasurer, an Assistant Treasurer, its Secretary or an
Assistant Secretary.
"CONVERSION AGENT" has the meaning set forth in Section
5(a).
"CONVERSION PRICE" has the meaning set forth in
Section 12(a).
"CURRENT MARKET VALUE" of the Common Shares means for any day
(i) the volume weighted average price, as quoted in Bloomberg Financial Markets
or any successor thereto, and if no such service shall exist, a similar
generally accepted service in the United States, or (ii) the average of the high
and low sale prices of the Common Shares (determined from the opening of trading
to the closing of trading on the applicable securities exchange), if reported on
any national securities exchange in the United States upon which the Common
Shares are then listed.
"CURRENT MARKET PRICE" has the meaning set forth in
Section 12(d)(vii).
"DEFINITIVE RESTRICTED SHARES LEGEND" has the meaning set
forth in Section 4(d).
"DEFINITIVE SERIES A PREFERRED STOCK" has the meaning set
forth in Section 4(d).
"DEPOSITARY" has the meaning set forth in Section 4(b).
"DILUTION TRIGGER EVENT" has the meaning set forth in
Section 12(d)(iv).
"DISTRIBUTED SECURITIES" has the meaning set forth in
Section 12(d)(iv).
"DIVIDEND PAYMENT DATE" means each February 15, May 15, August
15 and November 15; PROVIDED, HOWEVER, that if such date shall not be a Business
Day, then such date shall be the next Business Day.
"DIVIDEND RECORD DATE" has the meaning set forth in
Section 7(a).
<PAGE> 28
28
"DTC" has the meaning set forth in Section 4(b).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXPIRATION TIME" has the meaning set forth in
Section 12(d)(vi).
"FAIR MARKET VALUE" has the meaning set forth in
Section 12(d)(vii).
"FUNDAMENTAL CHANGE" has the meaning set forth in
Section 15.
"FUNDAMENTAL CHANGE AVERAGE MARKET PRICE" has the meaning
set forth in Section 15.
"GLOBAL RESTRICTED SHARES LEGEND" has the meaning set forth
in Section 4(b).
"GLOBAL SERIES A PREFERRED SHARE" has the meaning set forth
in Section 4(b).
"GLOBAL SHARES LEGEND" has the meaning set forth in
Section 4(b).
"INITIAL PURCHASERS" means Morgan Stanley & Co. Incorporated
and Credit Suisse First Boston Corporation.
"JUNIOR SHARES" has the meaning set forth in Section 9(a).
"NONELECTING SHARE" has the meaning set forth in
Section 12(e).
"NOTICE DATE" has the meaning set forth in Section 10(a).
"ODD-LOT REDEMPTION" has the meaning set forth in
Section 10(e).
"OFFICERS' CERTIFICATE" means a certificate of the Company
signed in the name of the Company by its Chairman of the Board, its President or
a Vice President and by its Treasurer, an Assistant Treasurer, its Secretary or
an Assistant Secretary.
"OPTIONAL REDEMPTION" has the meaning set forth in
Section 10(a).
"OPTIONAL REDEMPTION DATE" has the meaning set forth in
Section 10(a).
"OUTSTANDING" means when used with respect to Series A
Preferred Stock means, as of the date of determination, all shares of Series A
Preferred Stock theretofore authenticated and delivered under this Certificate
of Designations, except (a) Series A Preferred Stock theretofore converted into
Common Shares in accordance with Section 12 and Series A Preferred Stock
theretofore canceled by the Registrar or delivered to the Registrar for
cancelation; (b) Series A Preferred Stock for whose payment or redemption money
in the necessary amount has been theretofore deposited with the Registrar or any
Paying Agent (other than the Company) in trust or set aside and segregated in
trust by the Company (if the Company shall act as its own Paying Agent) for the
holders of such Series A Preferred Stock; PROVIDED that, if such
<PAGE> 29
29
Series A Preferred Stock is to be redeemed, notice of such redemption has been
duly given pursuant to this Certificate of Designations or provision therefor
satisfactory to the Registrar has been made; and (c) shares of Series A
Preferred Stock (x) that are mutilated, destroyed, lost or stolen which the
Company has decided to pay or (y) in exchange for or in lieu of which other
shares of Series A Preferred Stock have been authenticated and delivered
pursuant to this Certificate of Designations; PROVIDED, HOWEVER, that, in
determining whether the holders of Series A Preferred Stock have given any
request, demand, authorization, direction, notice, consent or waiver or taken
any other action hereunder, Series A Preferred Stock owned by the Company or any
other obligor upon the Series A Preferred Stock or any affiliate of the Company
or of such other obligor shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Registrar shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent, waiver
or other action, only Series A Preferred Stock which the Registrar has actual
knowledge of being so owned shall be so disregarded.
"PARITY SHARES" has the meaning set forth in Section 9(a).
"PAYING AGENT" has the meaning set forth in Section 5(a).
"PREFERRED STOCK LIQUIDATED DAMAGES" has the meaning set
forth in Section 6(b).
"PURCHASE AGREEMENT" means the Purchase Agreement dated
November 2, 1999, among the Company and the Initial Purchasers.
"PURCHASED SHARES" has the meaning set forth in
Section 12(d)(vi).
"QIBs" has the meaning set forth in Section 4(a).
"REDEMPTION DATE" has the meaning set forth in
Section 10(f).
"REDEMPTION NOTICE" has the meaning set forth in
Section 10(f).
"REDEMPTION PRICE" has the meaning set forth in Section
10(f).
"REGISTRAR" has the meaning set forth in Section 3.
"REGISTRABLE SECURITIES" has the meaning set forth in
Section 5(c).
"REGISTRATION DEFAULT" has the meaning set forth in
Section 6(b).
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement dated as of November 2, 1999, among the Company and the Initial
Purchasers.
"REQUIRED FILING TIMES" has the meaning set forth in
Section 14.
"REGULATION S" has the meaning set forth in Section 4(a).
"RESULTING ENTITY" has the meaning set forth in Section 13.
"RULE 144A" has the meaning set forth in Section 4(a).
<PAGE> 30
30
"SEC" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934, or,
if at any time after the adoption of this Schedule such commission is not
existing and performing the duties now assigned to it, then the body performing
such duties at such time.
"SECURITIES ACT" has the meaning set forth in Section 4(a).
"SENIOR SHARES" has the meaning set forth in Section 9(a).
"SERIES A PREFERRED STOCK" has the meaning set forth in
Section 1.
"SERIES A PREFERRED STOCK DIRECTORS" has the meaning set
forth in Section 8(a).
"SHELF REGISTRATION STATEMENT" means the shelf registration
statement in respect of the Registrable Securities required pursuant to the
Registration Rights Agreement to be filed with the SEC with respect to resales
of the Registrable Securities.
"TRANSFER RESTRICTED SECURITIES" means each Registrable
Security until the later of (A) the second anniversary of the last Closing Date
pursuant to the Purchase Agreement and (B) such time as (1) such Registrable
Security shall no longer constitute a restricted security for purposes of Rule
144(k) of the Securities Act or (2) such Registrable Security has been sold
pursuant to the Shelf Registration Statement.
"VOTING RIGHTS TRIGGERING EVENT" has the meaning set forth
in Section 8(a).
IN WITNESS WHEREOF, the Company has caused this Certificate of
Designations to be duly executed by Mr. Glenn J. Moran, Senior Vice President,
General Counsel and Secretary of the Company, and attested by Mr. Hal C.
Hedrick, Jr., Assistant Secretary of the Company, this 5th day of November,
1999.
THE LTV CORPORATION
by: ________________________
Name:
Title:
ATTEST:
by: ______________________
Name:
Title:
<PAGE> 31
EXHIBIT A
FACE OF SECURITY
[GLOBAL SHARES LEGEND (include if Security is issued as a global certificate):
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OF PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO., OR TO 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.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
PREFERRED STOCK SCHEDULE REFERRED TO BELOW.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH
REGISTRAR AND TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER
COMPLIES WITH THE FOREGOING RESTRICTIONS.]
[GLOBAL RESTRICTED SHARES LEGEND (include if Security is not registered under
the Securities Act of 1933): "THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED ("THE SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS
SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE
SECOND ANNIVERSARY OF THE ISSUANCE HEREOF (OR ANY PREDECESSOR SECURITY HERETO)
OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE
THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE, OTHER THAN (1)
TO THE COMPANY, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (3) IN AN OFFSHORE TRANSACTION
IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, (4) TO AN INSTITUTION
THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7)
UNDER THE SECURITIES ACT ("INSTITUTIONAL ACCREDITED INVESTOR") THAT IS ACQUIRING
THE SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, AND THAT, PRIOR
TO SUCH TRANSFER, DELIVERS TO THE COMPANY AND THE TRANSFER AGENT A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS
ON TRANSFER OF THE SECURITY EVIDENCED HEREBY (THE FORM OF WHICH LETTER MAY BE
OBTAINED FROM THE TRANSFER AGENT), (5) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144A (IF APPLICABLE)
UNDER THE SECURITIES ACT OR (6) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY
THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER OR (2) AN INSTITUTIONAL
ACCREDITED INVESTOR AND THAT IT IS HOLDING THIS SECURITY FOR INVESTMENT PURPOSES
AND NOT FOR DISTRIBUTION OR (3) NOT A U.S. PERSON AND IS OUTSIDE THE UNITED
STATES WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF
PARAGRAPH (k)(2) OF RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT. IN
ANY CASE THE HOLDER HEREOF WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY
HEDGING TRANSACTION WITH REGARD TO THIS SECURITY OR ANY COMMON STOCK ISSUABLE
<PAGE> 32
2
UPON CONVERSION OF THIS SECURITY EXCEPT AS PERMITTED BY THE SECURITIES
ACT."]
[DEFINITIVE RESTRICTED SHARES LEGEND (include if Security is not registered
under the Securities Act of 1933):
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED ("THE SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE
ISSUANCE HEREOF (OR ANY PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT
WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING
THE DATE OF SUCH TRANSFER, IN EITHER CASE, OTHER THAN (1) TO THE COMPANY, (2) SO
LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A") TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE
CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), (3) IN AN OFFSHORE
TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS
INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON
THE REVERSE OF THIS SECURITY), (4) TO AN INSTITUTION THAT IS AN "ACCREDITED
INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT
("INSTITUTIONAL ACCREDITED INVESTOR") (AS INDICATED BY THE BOX CHECKED BY THE
TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY) THAT
IS ACQUIRING THE SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, AND
THAT, PRIOR TO SUCH TRANSFER, DELIVERS TO THE COMPANY AND THE TRANSFER AGENT A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THE SECURITY EVIDENCED HEREBY (THE FORM OF WHICH
LETTER MAY BE OBTAINED FROM THE TRANSFER AGENT), (5) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE)
UNDER THE SECURITIES ACT OR (6) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. PRIOR TO A TRANSFER OF THIS
SECURITY (OTHER THAN A TRANSFER PURSUANT TO CLAUSE (6) ABOVE), THE HOLDER OF
THIS SECURITY MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY AND THE
TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS THEY MAY REASONABLY
REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE
FOREGOING RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED
INSTITUTIONAL BUYER OR (2) AN INSTITUTIONAL ACCREDITED INVESTOR AND THAT IT IS
HOLDING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION OR (3)
NOT A U.S. PERSON AND IS OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN
ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (k)(2) OF RULE 902 UNDER)
REGULATION S UNDER THE SECURITIES ACT. IN ANY CASE THE HOLDER HEREOF WILL NOT,
DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THIS
SECURITY OR ANY COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY EXCEPT AS
PERMITTED BY THE SECURITIES ACT."]
<PAGE> 33
Number: ____ ____ Shares
144A CUSIP NO.:
Reg S CUSIP NO.:
IAI CUSIP NO.:
8 1/4% SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK
OF
THE LTV CORPORATION
THE LTV CORPORATION, a Delaware corporation (the "Company"),
hereby certifies that [HOLDER] (the "Holder") is the registered owner of fully
paid and non-assessable preferred stock of the Company designated as the Series
A Preferred Stock, par value $1.00 and liquidation preference $50.00 per share
(the "Series A Preferred Stock"). The shares of Series A Preferred Stock are
transferable on the books and records of the Registrar, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Series A Preferred Stock
represented hereby are issued and shall in all respects be subject to the
provisions of the Certificate of Designations of the Company dated November 5,
1999, as the same may be amended from time to time in accordance with its terms
(the "Certificate of Designations"). Capitalized terms used herein but not
defined shall have the meaning given them in the Certificate of Designations.
The Company will provide a copy of the Certificate of Designations to a Holder
without charge upon written request to the Company at its principal place of
business.
Reference is hereby made to select provisions of the Series A
Preferred Stock set forth on the reverse hereof, and to the Certificate of
Designations, which select provisions and the Certificate of Designations shall
for all purposes have the same effect as if set forth at this place.
Upon receipt of this certificate, the Holder is bound by the
Certificate of Designations and is entitled to the benefits thereunder.
Unless the Transfer Agent's valid countersignature appears
hereon, the shares of Series A Preferred Stock evidenced hereby shall
<PAGE> 34
2
not be entitled to any benefit under the Certificate of Designations or
be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has executed this certificate
as of the date set forth below.
THE LTV CORPORATION
By:________________________
Name:
Title:
[Seal]
By:________________________
Name:
Title:
Dated:
COUNTERSIGNED AND REGISTERED
CHASEMELLON SHAREHOLDER
SERVICES L.L.C.,
as Transfer Agent,
By:______________________
Authorized Signatory
Dated:
<PAGE> 35
REVERSE OF SECURITY
THE LTV CORPORATION
8 1/4% Series A Cumulative Convertible Preferred Stock
Dividends on each share of Series A Preferred Stock shall be
payable in cash at a rate per annum set forth on the face hereof or as provided
in the Certificate of Designations (including Preferred Stock Liquidated
Damages).
The shares of Series A Preferred Stock shall be redeemable as
provided in the Certificate of Designations. The shares of Series A Preferred
Stock shall be convertible into the Company's Common Stock in the manner and
according to the terms set forth in the Certificate of Designations.
The Company shall furnish to any Holder upon request and
without charge, a full summary statement of the designations, voting rights,
preferences, limitations and special rights of the shares of each class or
series authorized to be issued by the Company so far as they have been fixed and
determined and the authority of the Board of Directors to fix and determine the
designations, voting rights, preferences, limitations and special rights of the
class and series of shares of the Company.
<PAGE> 36
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers the
shares of Series A Preferred Stock evidenced hereby to:
______________________________________________________________________
______________________________________________________________________
(Insert assignee's social security or tax identification number)
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
____________________________
(Insert address and zip code of assignee)
and irrevocably appoints:
_________________________________________________________
agent to transfer the shares of Series A Preferred Stock evidenced hereby on the
books of the Transfer Agent and Registrar. The agent may substitute another to
act for him or her.
Date:____________________________________
Signature: ______________________________
(Sign exactly as your name appears on the other side of this Series A Preferred
Stock Certificate)
Signature Guarantee:______________________________*
- --------
*Signature must be guaranteed by an "eligible guarantor institution"
(i.e., a bank, stockbroker, savings and loan association or credit union)
meeting the requirements of the Registrar, which requirements include membership
or participation in the Securities Transfer Agents Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934.
<PAGE> 37
NOTICE OF CONVERSION
(To be Executed by the Registered Holder
in order to Convert the Series A Preferred Stock)
The undersigned hereby irrevocably elects to convert (the "Conversion")
_________ shares of 8 1/4% Series A Cumulative Convertible Preferred Stock (the
"Series A Preferred Stock") into shares of common stock, par value $0.50 per
share ("Common Stock"), of The LTV Corporation (the "Company") according to the
conditions of the Certificate of Designations establishing the terms of the
Series A Preferred Stock (the "Certificate of Designations"), as of the date
written below. If shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto and is delivering herewith such certificates. No fee will be charged to
the holder for any conversion, except for transfer taxes, if any. A copy of each
stock certificate representing the shares to be converted is attached hereto (or
evidence of loss, theft or destruction thereof).*
The undersigned represents and warrants that all offers and sales by the
undersigned of the shares of Common Stock issuable to the undersigned upon
conversion of the Series A Preferred Stock shall be made pursuant to
registration of the Common Stock under the Securities Act of 1933 (the "Act"),
or pursuant to any exemption from registration under the Act.
Any holder, upon the exercise of its conversion rights in accordance with the
terms of the Certificate of Designations and the Series A Preferred Stock,
agrees to be bound by the terms of the Registration Rights Agreement.
Capitalized terms used but not defined herein shall have the meanings ascribed
thereto in or pursuant to the Certificate of Designations.
Date of Conversion:_________________________
Applicable Conversion Price:________________
Number of shares of Series A
Preferred Stock to be Converted:____________
Number of shares of
Common Stock to be Issued:__________________
Signature:__________________________________
Name:_______________________________________
Address:**__________________________________
Fax No.:____________________________________
*The Company is not required to issue shares of Common Stock to a person holding
Definitive Series A Preferred Shares until the original stock certificates
representing such Series A Preferred Stock (or evidence of loss, theft or
destruction thereof) to be converted are received by the Company or its Transfer
Agent. The Company shall issue and deliver shares of Common Stock to an
overnight courier not later than three business days following receipt of the
original stock certificates representing such Series A Preferred Stock to be
converted.
<PAGE> 38
2
**Address where shares of Common Stock and any other payments or certificates
shall be sent by the Company.
<PAGE> 39
[Global Share Schedule: (include if Security is issued as a global
certificate)]
SCHEDULE A
SCHEDULE OF EXCHANGES FOR GLOBAL SECURITY
The initial number of shares of Series A Preferred Stock
represented by this Global Series A Preferred Share shall be _______. The
following exchanges of a part of this Global Series A Preferred Share have been
made:
Number of
shares
Amount of Amount of represented
decrease in increase in by this
number of number of Global
shares shares Series A
represented represented Preferred
by this by this Share
Global Global following Signature of
Series A Series A such authorized
Date of Preferred Preferred decrease or officer of
Exchange Share Share increase Registrar
-------- ----- ----- -------- ---------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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<PAGE> 40
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
(Transfers pursuant to section 5(b)(ii),
section 5(b)(iii), section 5(b)(iv) or section 5(b)(v)
of the Certificate of Designations)
ChaseMellon Shareholder Services L.L.C., as Transfer Agent
85 Challenger Road
Overpeck Center
Ridgefield, NJ 07660
Att:
Re: The LTV Corporation
8 1/4% Series A Cumulative Convertible Preferred Stock (the
"Series A Preferred Stock")
Reference is hereby made to the Certificate of Designations
relating to the Series A Preferred Stock dated November 5, 1999 (the
"Certificate of Designations"). Capitalized terms used but not defined herein
shall have the meanings given them in the Certificate of Designations.
This letter relates to __________ shares of Series A Preferred
Stock (the "Securities") which are held in the form of a [Definitive] [Global]
Series A Preferred Share (CUSIP No. __) [with the Depositary]** in the name of
[name of transferor] (the "Transferor") to effect the transfer of the
Securities.
In connection with such request, and in respect of Securities,
the Transferor does hereby certify that the Securities are being transferred (i)
in accordance with applicable securities laws of any state of the United States
or any other jurisdiction and (ii) in accordance with their terms:
CHECK ONE BOX BELOW:
(1) [ ] to a transferee that the Transferor reasonably
believes is a qualified institutional buyer within
the meaning of Rule 144A under the Securities Act
purchasing for its own account or for the account of
a qualified institutional buyer in a transaction
meeting the requirements of Rule 144A;
(2) [ ] to a transferee that the Transferor reasonably
believes is an institutional "accredited investor" as
defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act that is acquiring such Securities for
investment purposes and not for distribution and is
acquiring the Series A Preferred Stock for its own
account or for one or more accounts as to which the
transferee exercises sole investment discretion;
(3) [ ] outside the United States in a transaction
complying with Rule 904 of Regulation S under the
Securities
Act;
- --------
** Insert, if appropriate.
<PAGE> 41
2
(4) [ ] pursuant to an exemption from registration under
the Securities Act provided by Rule 144 thereunder
(if available); or
(5) [ ] in accordance with another exemption from the
registration requirements of the Securities Act
(based upon an opinion of counsel if the Company so
requests).
[Name of Transferor]
by: ________________________
Name:
Title:
Dated:
cc: The LTV Corporation
200 Public Square
Cleveland, OH 44114
Att.: Secretary
<PAGE> 42
EXHIBIT C
FORM OF ACCREDITED INVESTOR TRANSFEREE CERTIFICATE
(Transfers pursuant to section 5(b)(ii) or
section 5(b)(iii) of the Certificate of Designations)
ChaseMellon Shareholder Services L.L.C., as Transfer Agent
85 Challenger Road
Overpeck Center
Ridgefield Park, NJ 07660
Att:
Re: The LTV Corporation
8 1/4% Series A Cumulative Convertible Preferred Stock (the
"Series A Preferred Stock")
Reference is hereby made to the Certificate of Designations
relating to the Series A Preferred Stock dated November 5, 1999 (the
"Certificate of Designations"). Capitalized terms used but not defined herein
shall have the meanings given them in the Certificate of Designations.
This letter relates to ________ shares of Series A Preferred
Stock (the "Securities") which are held in the form of a [Definitive] [Global]
Series A Preferred Share (CUSIP No. ___) [with the Depositary]* in the name of
[name of transferor] (the "Transferor") to effect the transfer of the Securities
to the undersigned.
In connection with such request, and in respect of the
Securities, which are convertible into shares of common stock ("Common Stock")
of the Company we confirm that:
1. We understand that the Securities and the Common Stock have
not been registered under the Securities Act of 1933, as amended (the
"Securities Act"), and may not be sold except as permitted in the
following sentence. We understand and agree, on our own behalf and on
behalf of any accounts for which we are acting as hereinafter stated,
(x) that such Securities are being transferred to us in a transaction
not involving any public offering within the meaning of the Securities
Act, (y) that if we should resell, pledge or otherwise transfer any
such Securities or any shares of Common Stock prior to the later of (I)
the expiration of the holding period under Rule 144(k) (or any
successor thereto) under the Securities Act which is applicable to such
Securities or shares of Common Stock, as the case may be, or (II)
within three months after we cease to be an affiliate (within the
meaning of Rule 144 under the Securities Act) of the Company, such
Securities or the Common Stock may be resold, pledged or transferred
only (i) to the Company, (ii) so long as such Securities are eligible
for resale pursuant to Rule 144A under the Securities Act ("Rule
144A"), to a person whom we reasonably believe is a "qualified
institutional buyer" (as defined in Rule 144A) ("QIB") that purchases
for its own account or for the account of a QIB to whom notice is given
that the resale, pledge or transfer is being made in reliance on Rule
144A (as indicated by the box checked by the transferor on the
Certificate of Transfer on the reverse of the certificate for the
Securities), it
- --------
* Insert if appropriate.
<PAGE> 43
2
being understood that the Common Stock is not eligible for resale
pursuant to Rule 144A, (iii) in an offshore transaction (as defined in
Regulation S under the Securities Act) in accordance with Regulation S
under the Securities Act (as indicated by the box checked by the
transferor on the Certificate of Transfer on the reverse of the
certificate for the Securities or on a comparable Certificate of
Transfer for the Common Stock issuable upon conversion thereof), (iv)
to an institution that is an "accredited investor" as defined in Rule
501 (a) (1), (2), (3) or (7) under the Securities Act (an
"Institutional Accredited Investor") (as indicated by the box checked
by the transferor on the Certificate of Transfer on the reverse of the
certificate for the Securities or on a comparable Certificate of
Transfer for the Common Stock) that is acquiring the securities for its
own account or for the account of one or more other Institutional
Accredited Investors over which it exercises sole investment discretion
and that prior to such transfer, delivers a signed letter to the
Company and the Transfer Agent certifying that it and each such account
is such an Institutional Accredited Investor and is acquiring the
Securities or the Common Stock for investment purposes and not for
distribution and agreeing to the restrictions on transfer of the
Securities or the Common Stock, (v) pursuant to an exemption from
registration under the Securities Act provided by Rule 144 (if
applicable) under the Securities Act (as indicated by the box checked
by the transferor on the Certificate of Transfer on the reverse of the
certificate for the Securities or a comparable Certificate of Transfer
for the Common Stock) or (vi) pursuant to an effective registration
statement under the Securities Act, in each case in accordance with any
applicable securities laws of any state of the United States, and we
will notify any purchaser of the Securities or the Common Stock from us
of the above resale restrictions, if then applicable. We further
understand that in connection with any transfer of the Securities or
the Common Stock (other than a transfer pursuant to clause (vi) above)
by us that the Company and Transfer Agent may request, and if so
requested we will furnish, such certificates and other information and,
in the case of a transfer pursuant to clause (v) above, a legal opinion
as they may reasonably require to confirm that any such transfer
complies with the foregoing restrictions. Finally, we understand that
in any case we will not directly or indirectly engage in any hedging
transactions with regard to the Securities or the Common Stock except
as permitted by the Securities Act.
2. We are able to fend for ourselves in connection with our
purchase of the Securities, we 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 its investment and can afford the complete loss of such
investment.
3. We understand that the Company and others will rely upon
the truth and accuracy of the foregoing acknowledgments,
representations, agreements and warranties and we agree that if any of
the acknowledgments, representations, agreements or warranties made or
deemed to have been made by us by our purchase of the Securities, for
our own account or for one or more accounts as to each of which we
exercise sole investment discretion, are no longer accurate, we shall
promptly notify the Company.
<PAGE> 44
3
4. With respect to the certificates representing Securities we
are purchasing, we understand that such certificates will be in
definitive registered form and that the notification requirement
referred to in (1) above requires that, until the expiration of the
holding period with respect to sales of the Securities under clause (k)
of Rule 144 under the Securities Act, that such Securities will bear a
legend substantially to the following effect:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE EXPIRATION OF THE
HOLDING PERIOD UNDER RULE 144(k) (OR ANY SUCCESSOR THERETO) UNDER THE SECURITIES
ACT WHICH IS APPLICABLE TO THIS SECURITY OR (Y) BY ANY HOLDER THAT WAS AN
"AFFILIATE" (WITHIN THE MEANING OF RULE 144 UNDER THE SECURITIES ACT) OF THE
COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER,
IN EITHER CASE OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS THIS SECURITY IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE
OF TRANSFER ON THE REVERSE OF THIS SECURITY), (3) IN AN OFFSHORE TRANSACTION (AS
DEFINED IN REGULATION S UNDER THE SECURITIES ACT) IN ACCORDANCE WITH REGULATION
S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON
THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), (4) TO AN
INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT ("INSTITUTIONAL ACCREDITED INVESTOR") (AS
INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON
THE REVERSE OF THIS SECURITY) THAT IS ACQUIRING THIS SECURITY FOR INVESTMENT
PURPOSES AND NOT FOR DISTRIBUTION AND THAT, PRIOR TO SUCH TRANSFER, DELIVERS TO
THE COMPANY AND THE TRANSFER AGENT A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE
SECURITY EVIDENCED HEREBY (THE FORM OF WHICH LETTER MAY BE OBTAINED FROM THE
TRANSFER AGENT), (5) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT (AS
INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON
THE REVERSE OF THIS SECURITY) OR (6) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. PRIOR TO A
TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER PURSUANT TO CLAUSE (6) ABOVE),
THE HOLDER OF THIS SECURITY MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY
AND THE TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AND, IN THE CASE
OF A TRANSFER PURSUANT TO CLAUSE (5) ABOVE, A LEGAL OPINION AS THEY MAY
REASONABLY REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES
WITH THE FOREGOING RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED
INSTITUTIONAL BUYER OR (2) AN INSTITUTIONAL ACCREDITED INVESTOR AND THAT IT IS
HOLDING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION OR (3)
NOT A U.S. PERSON AND IS OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN
ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (k)(2) OF RULE 902 UNDER)
REGULATION S UNDER THE SECURITIES ACT. IN ANY CASE THE HOLDER HEREOF WILL NOT,
DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTIONS WITH REGARD TO THIS
SECURITY OR ANY COMMON STOCK EXCEPT AS PERMITTED BY THE SECURITIES ACT."
<PAGE> 45
4
5. With respect to certificates representing shares of Common
Stock, we understand that the notification requirement referred to in
(1) above requires that, until the expiration of the holding period
with respect to sales of such Common Stock under clause (k) of Rule 144
under the Securities Act, such certificates will bear a legend
substantially to the effect set forth as Exhibit D to the Certificate
of Designations and that a copy of such legend may be obtained from the
Transfer Agent.
6. We are acquiring the Securities purchased by us for
investment purposes, and not for distribution, for our own account or
for one or more accounts as to each of which we exercise sole
investment discretion and we are and each such account is an
Institutional Accredited Investor.
7. You and the Company are entitled to rely on this letter and
you and the Company 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,
_________________________
(Name of Purchaser)
By:______________________
Dated:___________________
cc: The LTV Corporation
200 Public Square
Cleveland, Ohio 44114
<PAGE> 46
EXHIBIT D
Form of Common Share Legend
---------------------------
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED ("THE SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT
THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X)
PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE HEREOF (OR ANY
PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE
OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE
OF SUCH TRANSFER, IN EITHER CASE, OTHER THAN (1) TO THE COMPANY, (2) IN
AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE
SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON
THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), (3) TO AN
INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT ("INSTITUTIONAL
ACCREDITED INVESTOR") (AS INDICATED BY THE BOX CHECKED BY THE
TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
SECURITY) THAT IS ACQUIRING THE SECURITY FOR INVESTMENT PURPOSES AND
NOT FOR DISTRIBUTION, AND THAT, PRIOR TO SUCH TRANSFER, DELIVERS TO THE
COMPANY AND THE TRANSFER AGENT A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THE SECURITY EVIDENCED HEREBY (THE FORM OF WHICH LETTER MAY BE
OBTAINED FROM THE TRANSFER AGENT), (4) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF
APPLICABLE) UNDER THE SECURITIES ACT OR (5) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES. PRIOR TO A TRANSFER OF THIS SECURITY (OTHER THAN A
TRANSFER PURSUANT TO CLAUSE (5) ABOVE), THE HOLDER OF THIS SECURITY
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY AND THE TRANSFER
AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS THEY MAY REASONABLY
REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES
WITH THE FOREGOING RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT
IS (1) A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
OR (2) AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN
RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT AND THAT IT IS
HOLDING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION
OR (3) NOT A U.S. PERSON AND IS OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH
(k)(2) OF RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT. IN ANY
CASE THE HOLDER HEREOF WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY
HEDGING TRANSACTION WITH REGARD TO THIS SECURITY EXCEPT AS PERMITTED BY
THE SECURITIES ACT."
<PAGE> 47
EXHIBIT E
FORM OF CERTIFICATE OF TRANSFER
FOR COMMON SHARES
(Transfers pursuant to Section 5(h) of the
Certificate of Designations)
ChaseMellon Shareholder Services L.L.C., as Transfer Agent
85 Challenger Road
Overpeck Center
Ridgefield, NJ 07660
Att:
Re: The LTV Corporation
8 1/4% Series A Cumulative Convertible Preferred Stock (the
"Series A Preferred Stock")
Reference is hereby made to the Certificate of Designations
relating to the Series A Preferred Stock dated November 5, 1999 (the
"Certificate of Designations"). Capitalized terms used but not defined herein
shall have the meanings given them in the Certificate of Designations.
This letter relates to _________ shares of Common Stock represented by
the accompanying certificate(s) that were issued upon conversion of the Series A
Preferred Stock and which are held in the name of [name of transferor] (the
"Transferor") to effect the transfer of such Common Stock.
In connection with such request and in respect of the shares of Common
Stock, the Transferor does hereby certify that the shares of Common Stock are
being transferred (i) in accordance with applicable securities laws of any state
of the United States or any other jurisdiction and (ii) in accordance with their
terms:
CHECK ONE BOX BELOW
(1) [ ] to a transferee that the Transferor reasonably
believes is an institutional "accredited investor" as
defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act that is acquiring such Common Stock
for investment purposes and not for distribution and
is acquiring the Common Stock for its own account or
for one or more accounts as to which the transferee
exercises sole investment discretion;
(2) [ ] outside the United States in a transaction
complying with Rule 904 of Regulation S under the
Securities
Act;
(3) [ ] pursuant to an exemption from registration under
the Securities Act provided by Rule 144 thereunder
(if available); or
<PAGE> 48
2
(4) [ ] in accordance with another exemption from the
registration requirements of the Securities Act
(based upon an opinion of counsel if the Company so
requests).
[Name of Transferor]
by: ________________________
Name:
Title:
Dated:
cc: The LTV Corporation
200 Public Square
Cleveland, OH 44114
Att.: Secretary
<PAGE> 1
Exhibit 10.54
CONFORMED COPY
================================================================================
CREDIT AGREEMENT
dated as of November 10, 1999,
among
THE LTV CORPORATION,
THE LENDERS NAMED HEREIN,
MORGAN STANLEY SENIOR FUNDING, INC.,
as Lead Arranger and Book Manager,
CREDIT SUISSE FIRST BOSTON,
as Administrative Agent
and
MORGAN STANLEY SENIOR FUNDING, INC.,
as Syndication Agent
================================================================================
[CS&M Ref No. 3909-932]
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
Definitions
SECTION 1.01. Defined Terms ............................................ 1
SECTION 1.02. Terms Generally .......................................... 18
SECTION 1.03. Pro Forma Calculations ................................... 18
ARTICLE II
The Credits
SECTION 2.01. Commitments ............................................... 18
SECTION 2.02. Loans ..................................................... 18
SECTION 2.03. Borrowing Procedure ....................................... 19
SECTION 2.04. Evidence of Debt; Repayment of Loans ...................... 20
SECTION 2.05. Fees ..................................................... 20
SECTION 2.06. Interest on Loans ......................................... 20
SECTION 2.07. Default Interest .......................................... 20
SECTION 2.08. Alternate Rate of Interest ................................ 21
SECTION 2.09. Termination and Reduction of Commitments .................. 21
SECTION 2.10. Conversion and Continuation of Borrowings ................ 21
SECTION 2.11. Repayment of Borrowings ................................... 22
SECTION 2.12. Prepayment ................................................ 23
SECTION 2.13. Mandatory Prepayments ..................................... 23
SECTION 2.14. Reserve Requirements; Change in Circumstances ............. 24
SECTION 2.15. Change in Legality ........................................ 25
SECTION 2.16. Indemnity ................................................. 25
SECTION 2.17. Pro Rata Treatment ........................................ 26
SECTION 2.18. Sharing of Setoffs ........................................ 26
SECTION 2.19. Payments .................................................. 26
SECTION 2.20. Taxes ..................................................... 26
SECTION 2.21. Assignment of Commitments Under Certain Circumstances;
Duty to Mitigate ...................................... 27
ARTICLE III
Representations and Warranties
SECTION 3.01. Organization; Powers ...................................... 28
SECTION 3.02. Authorization ............................................ 29
SECTION 3.03. Enforceability ............................................ 29
SECTION 3.04. Governmental Approvals .................................... 29
SECTION 3.05. Financial Statements ...................................... 29
SECTION 3.06. No Material Adverse Change ................................ 30
SECTION 3.07. Title to Properties; Possession Under Leases .............. 30
SECTION 3.08. Subsidiaries .............................................. 30
SECTION 3.09. Litigation; Compliance with Laws .......................... 30
SECTION 3.10. Federal Reserve Regulations ............................... 31
SECTION 3.11. Investment Company Act; Public Utility Holding Company Act 31
SECTION 3.12. Use of Proceeds ........................................... 31
<PAGE> 3
2
Page
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SECTION 3.13. Tax Returns ............................................... 31
SECTION 3.14. No Material Misstatements ................................. 31
SECTION 3.15. Employee Benefit Plans .................................... 31
SECTION 3.16. Environmental Matters ..................................... 32
SECTION 3.17. Insurance ................................................. 32
SECTION 3.18. Security Documents ........................................ 32
SECTION 3.19. Location of Owned Real Property ........................... 33
SECTION 3.20. Labor Matters ............................................. 33
SECTION 3.21. Solvency .................................................. 33
SECTION 3.22. Year 2000 ................................................. 33
ARTICLE IV
Conditions of Lending
ARTICLE V
Affirmative Covenants
SECTION 5.01. Existence; Businesses and Properties ...................... 36
SECTION 5.02. Insurance ................................................. 37
SECTION 5.03. Obligations and Taxes ..................................... 38
SECTION 5.04. Financial Statements, Reports, etc ........................ 38
SECTION 5.05. Litigation and Other Notices .............................. 39
SECTION 5.06. Employee Benefits ......................................... 39
SECTION 5.07. Maintaining Records; Access to Properties and Inspections . 39
SECTION 5.08. Use of Proceeds ........................................... 39
SECTION 5.09. Compliance with Environmental Laws ........................ 40
SECTION 5.10. Preparation of Environmental Reports ...................... 40
SECTION 5.11. Further Assurances ........................................ 40
ARTICLE VI
Negative Covenants
SECTION 6.01. Indebtedness .............................................. 41
SECTION 6.02. Liens ..................................................... 42
SECTION 6.03. Sale and Lease-Back Transactions .......................... 44
SECTION 6.04. Investments, Loans and Advances ........................... 44
SECTION 6.05. Mergers, Consolidations, Sales of Assets and Acquisitions . 45
SECTION 6.06. Dividends and Distributions; Restrictions on Ability of
Subsidiaries to Pay Dividends ......................... 45
SECTION 6.07. Transactions with Affiliates .............................. 46
SECTION 6.08. Business of Borrower and Subsidiaries ..................... 47
SECTION 6.09. Note Documents and Other Agreements ...................... 47
SECTION 6.10. Capital Expenditures ..................................... 47
SECTION 6.11. Consolidated Leverage Ratio .............................. 48
SECTION 6.12. Consolidated Interest Coverage Ratio ...................... 48
SECTION 6.13. Consolidated Fixed Charge Coverage Ratio .................. 49
SECTION 6.14. Fiscal Year .............................................. 49
<PAGE> 4
3
ARTICLE VII
Events of Default
ARTICLE VIII
The Agents
ARTICLE IX
Miscellaneous
Page
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SECTION 9.01. Notices ................................................... 53
SECTION 9.02. Survival of Agreement ..................................... 53
SECTION 9.03. Binding Effect ............................................ 54
SECTION 9.04. Successors and Assigns .................................... 54
SECTION 9.05. Expenses; Indemnity ....................................... 56
SECTION 9.06. Right of Setoff ........................................... 57
SECTION 9.07. Applicable Law ............................................ 57
SECTION 9.08. Waivers; Amendment ........................................ 57
SECTION 9.09. Interest Rate Limitation .................................. 58
SECTION 9.10. Entire Agreement .......................................... 58
SECTION 9.11. WAIVER OF JURY TRIAL ..................................... 58
SECTION 9.12. Severability .............................................. 58
SECTION 9.13. Counterparts .............................................. 58
SECTION 9.14. Headings .................................................. 59
SECTION 9.15. Jurisdiction; Consent to Service of Process ............... 59
SECTION 9.16. Confidentiality ........................................... 59
Schedule 1.01(a) Guarantors
Schedule 1.01(b) Mortgaged Properties
Schedule 1.01(c) LTV Cash Investment Policy
Schedule 2.01 Lenders and Commitments
Schedule 3.07(c) Condemnation Proceedings
Schedule 3.08 Subsidiaries
Schedule 3.09 Litigation
Schedule 3.16 Environmental Matters
Schedule 3.17 Insurance
Schedule 3.18(c) Mortgage Filing Offices
Schedule 3.19 Real Property Owned In Fee
Schedule 4.02(a) Other Local Counsel
Schedule 6.01 Outstanding Indebtedness on Closing Date
Schedule 6.02 Liens Existing on Closing Date
Schedule 6.04 Investments Existing on Closing Date
Exhibit A Form of Administrative Questionnaire
Exhibit B Form of Assignment and Acceptance
Exhibit C Form of Borrowing Request
Exhibit D Form of Guarantee Agreement
Exhibit E Form of Indemnity, Subrogation and Contribution Agreement
Exhibit F-1 Form of Mortgage
Exhibit F-2 Form of Deed of Trust
Exhibit G Form of Security Agreement
<PAGE> 5
4
Page
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Exhibit H-1 Form of Opinion of Glenn Moran, General Counsel of the
Borrower
Exhibit H-2 Form of Opinion of Davis Polk & Wardwell
Exhibit H-3 Form of Opinion of Local Counsel
<PAGE> 6
CREDIT AGREEMENT dated as of
November 10, 1999, among THE LTV
CORPORATION, a Delaware corporation (the
"Borrower"), the Lenders (as defined in
Article I), MORGAN STANLEY SENIOR FUNDING,
INC., a Delaware corporation ("MSSF"), as
lead arranger and book manager (in such
capacities, the "Lead Arranger"), CREDIT
SUISSE FIRST BOSTON, a bank organized under
the laws of Switzerland, acting through its
New York branch, as administrative agent (in
such capacity, the "Administrative Agent")
and as collateral agent (in such capacity,
the "Collateral Agent") for the Lenders, and
MSSF, as syndication agent (in such
capacity, the "Syndication Agent").
Pursuant to the Stock Purchase Agreement (such term and each other
capitalized term used but not defined in this preamble having the meaning given
it in Article I), the Borrower intends to acquire (the "Acquisition") all the
issued and outstanding Equity Interests of Copperweld and Copperweld Canada for
aggregate cash consideration (including the refinancing of Indebtedness of
Copperweld and Copperweld Canada) of approximately $650,000,000 (the "Cash
Consideration"). The Borrower previously has acquired all the issued and
outstanding Equity Interests of WTHI for aggregate cash consideration of
approximately $120,000,000.
The Borrower has requested that the Lenders extend credit in the form
of Loans, in an aggregate principal amount not in excess of $225,000,000. The
proceeds of the Loans are to be used solely (a) to pay the Cash Consideration
and related fees and expenses and (b) to repay borrowings under the
Securitization Facilities that were used to finance the acquisition of WTHI and
to pay related fees and expenses.
The Lenders are willing to extend such credit to the Borrower on the
terms and subject to the conditions set forth herein. Accordingly, the parties
hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the following
terms shall have the meanings specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any Loan bearing interest at a rate determined by
reference to the Alternate Base Rate in accordance with the provisions of
Article II.
"Acquired Indebtedness" shall mean Indebtedness of a person or any of
its subsidiaries (the "Acquired Person") (a) existing at the time such person
becomes a Subsidiary of the Borrower or at the time it merges or consolidates
with a Subsidiary of the Borrower or (b) assumed in connection with the
acquisition of assets by such person; provided in each case that (i) such
Indebtedness was not created in contemplation of such acquisition, merger or
consolidation and (ii) such acquisition, merger or consolidation is otherwise
permitted under this Agreement.
"Acquired Person" shall have the meaning assigned to such term in the
definition of the term "Acquired Indebtedness".
"Acquired Subsidiaries" shall mean WTHI, Copperweld, Copperweld Canada
and their respective subsidiaries.
"Acquired Subsidiaries Working Capital" shall mean as at any date of
determination, the excess of (a) the sum of the book value of the inventory and
the accounts receivable of the Acquired
<PAGE> 7
2
Subsidiaries at such date over (b) the accounts payable of the Acquired
Subsidiaries at such date, all as determined in accordance with GAAP.
"Acquisition" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Adjusted LIBO Rate" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum equal to the
product of (a) the LIBO Rate in effect for such Interest Period and (b)
Statutory Reserves.
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit A, or such other form as may be supplied
from time to time by the Administrative Agent.
"Affiliate" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the person
specified, provided that for purposes of Section 6.07, the term "Affiliate"
shall also include any person that directly or indirectly owns more than 5% of
any class of Equity Interests of the person specified or that is an officer or
director of the person specified.
"Agents" shall have the meaning assigned to such term in Article VIII.
"Alternate Base Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of
(a) the Prime Rate in effect on such day and (b) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1%. If for any reason the Administrative
Agent shall have determined (which determination shall be conclusive absent
manifest error) that it is unable to ascertain the Federal Funds Effective Rate
for any reason, including the inability or failure of the Administrative Agent
to obtain sufficient quotations in accordance with the terms of the definition
thereof, the Alternate Base Rate shall be determined without regard to clause
(b) of the preceding sentence until the circumstances giving rise to such
inability no longer exist. Any change in the Alternate Base Rate due to a change
in the Prime Rate or the Federal Funds Effective Rate shall be effective on the
effective date of such change in the Prime Rate or the Federal Funds Effective
Rate, respectively. The term "Prime Rate" shall mean the rate of interest per
annum publicly announced from time to time by the Administrative Agent as its
prime rate in effect at its principal office in New York City; each change in
the Prime Rate shall be effective on the date such change is publicly announced
as being effective. The term "Federal Funds Effective Rate" shall mean, for any
day, the weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day that is a Business Day,
the average of the quotations for the day for such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by it.
<PAGE> 8
3
"Applicable Percentage" shall mean, for any day, with respect to any
Eurodollar Loan or ABR Loan, the applicable percentage set forth below under the
caption "Eurodollar Spread" or "ABR Spread", respectively, based upon the
ratings by S&P and Moody's, respectively, applicable on such day to the Loans:
<TABLE>
<CAPTION>
=======================================================================
RATINGS EURODOLLAR ABR SPREAD
SPREAD
-----------------------------------------------------------------------
<S> <C> <C>
Category 1
----------
BB+/Ba1 or higher 3.375% 2.375%
-----------------------------------------------------------------------
Category 2
----------
BB/Ba2 3.625% 2.625%
-----------------------------------------------------------------------
Category 3
----------
BB-/Ba3 3.875% 2.875%
-----------------------------------------------------------------------
Category 4
----------
B+/B1 or lower 4.125% 3.125%
=======================================================================
</TABLE>
For purposes of the foregoing, (i) if either Moody's or S&P shall not
have in effect a rating for the Loans (other than by reason of the circumstances
referred to in the last sentence of this definition), then such rating agency
shall be deemed to have established a rating in Category 3; (ii) if the ratings
established or deemed to have been established by Moody's and S&P for the Loans
shall fall within different Categories, the Applicable Percentage shall be based
on the lower of the two ratings; and (iii) if the ratings established or deemed
to have been established by Moody's and S&P for the Loans shall be changed
(other than as a result of a change in the rating system of Moody's or S&P),
such change shall be effective as of the date on which it is first announced by
the applicable rating agency. Each change in the Applicable Percentage shall
apply during the period commencing on the effective date of such change and
ending on the date immediately preceding the effective date of the next such
change. If the rating system of Moody's or S&P shall change, or if either such
rating agency shall cease to be in the business of rating corporate debt
obligations, the Borrower and the Lenders shall negotiate in good faith to amend
this definition to reflect such changed rating system or the non-availability of
ratings from such rating agency and, pending the effectiveness of any such
amendment, the Applicable Percentage shall be determined by reference to the
rating most recently in effect prior to such change or cessation. If this
Agreement shall be amended or modified in any way, or any provision hereof shall
be waived, in each case so as to permit the Borrower to incur any additional
term Indebtedness pursuant to which the holders thereof would be entitled to be
secured ratably with the Lenders by the Collateral (whether created as an
additional tranche of term loans hereunder or otherwise) and having a final
maturity and a weighted average life to maturity at least one year later than
that of the Loans, and any applicable interest rate margin in respect of such
additional term Indebtedness would exceed the applicable interest rate margin
provided for hereunder in respect of the Loans by more than 0.25%, then each
applicable interest rate margin provided for in the table above shall,
concurrently with the incurrence of such Indebtedness, be deemed to be amended
to the extent (but only to the extent) necessary to increase such interest rate
margin to a level that is 0.25% below the related applicable interest rate
margin for such Indebtedness.
<PAGE> 9
4
"Asset Sale" shall mean the sale, transfer or other disposition (by way
of merger, sale and leaseback, casualty, condemnation or otherwise) by the
Borrower or any Subsidiary of any of its assets (other than (i) inventory,
excess, damaged, obsolete or worn out assets, scrap and Permitted Investments,
in each case disposed of in the ordinary course of business, (ii) inventory
(other than inventory of the Acquired Subsidiaries) and receivables sold
pursuant to the Securitization Facilities, (iii) dispositions between or among
the Borrower and its Subsidiaries (other than a disposition of Collateral by an
Acquired Subsidiary), (iv) dispositions between or among Acquired Subsidiaries,
(v) dispositions between or among Foreign Subsidiaries, (vi) dispositions
consisting of dividends, distributions or other payments with respect to Equity
Interests permitted by Section 6.06(a) and (b) and (vii) the sale of the
Campbell seamless mill to International Steel and Tubes Industries Limited or an
affiliate thereof), provided that any asset sale or series of related asset
sales described above having a value not in excess of $2,500,000 shall be deemed
not to be an "Asset Sale" for purposes of this Agreement.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an assignee, and accepted by the Administrative
Agent, in the form of Exhibit B or such other form as shall be approved by the
Administrative Agent.
"Board" shall mean the Board of Governors of the Federal Reserve System
of the United States of America.
"Borrower's Portion of Excess Cash Flow and Equity Issuances" shall
mean, at any date of determination, (a) the cumulative amount of Excess Cash
Flow and (b) the cumulative amount of Net Cash Proceeds from all Equity
Issuances, for each full fiscal year of the Borrower commencing on or after
January 1, 2000, and ending prior to the date of determination that (i) was not
or is not required to be applied to the prepayment of Loans as described in
Section 2.13(b) or 2.13(c), as applicable, and (ii) has not been utilized on or
prior to the date of determination (A) to make Capital Expenditures pursuant to
Section 6.10(b) or (B) to make any investment pursuant to Section 6.04(m).
"Borrowing" shall mean a group of Loans of a single Type made,
converted or continued by the Lenders on a single date and as to which a single
Interest Period is in effect.
"Borrowing Request" shall mean a request by the Borrower in accordance
with the terms of Section 2.03 and substantially in the form of Exhibit C, or
such other form as shall be approved by the Administrative Agent.
"Business Day" shall mean any day other than a Saturday, Sunday or day
on which banks in New York City are authorized or required by law to close;
provided, however, that when used in connection with a Eurodollar Loan, the term
"Business Day" shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.
"Capital Expenditures" of any person shall mean, for any period, the
aggregate of all expenditures (whether paid in cash or other consideration or
accrued as a liability) by such person or any of its subsidiaries during such
period that, in accordance with GAAP, are or should be included in "additions to
property, plant and equipment" or similar items reflected in the consolidated
statement of cash flows of such person and its consolidated subsidiaries for
such period (including the amount of assets leased by incurring any Capital
Lease Obligation); provided that expenditures made with Casualty Proceeds or
Condemnation Proceeds shall not constitute Capital Expenditures.
"Capital Lease Obligations" of any person shall mean the obligations of
such person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Carryover Amount" shall mean, with respect to any fiscal year,
commencing with the fiscal year ending December 31, 2000, the excess (if any) of
$375,000,000 over the amount of Capital
<PAGE> 10
5
Expenditures of the Borrower and its Subsidiaries made during such fiscal year.
The Carryover Amount from any fiscal year shall be available to increase Capital
Expenditures.
"Casualty" shall have the meaning set forth in the Mortgages.
"Casualty Proceeds" shall have the meaning set forth in the Mortgages.
A "Change in Control" shall be deemed to have occurred if (a) any
person or group (within the meaning of Rule 13d-5 of the Securities Exchange Act
of 1934 as in effect on the date hereof) shall own directly or indirectly,
beneficially or of record, shares representing more than 35% of the aggregate
ordinary voting power represented by the issued and outstanding Equity Interests
of the Borrower; (b) a majority of the seats (other than vacant seats) on the
board of directors of the Borrower shall at any time be occupied by persons who
were neither (i) nominated by 66-2/3% of the board of directors of the Borrower,
nor (ii) appointed by directors so nominated; (c) the Borrower shall fail to
own, directly or indirectly, beneficially and of record, 100% of the Equity
Interests of Copperweld, Copperweld Canada and WTHI; or (d) any change in
control (or similar event, however denominated) with respect to the Borrower
shall occur under and as defined in any indenture or agreement in respect of
Indebtedness in an aggregate principal amount in excess of $10,000,000 to which
the Borrower is a party.
"Change in Law" shall mean (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (c) compliance by any Lender (or,
for purposes of Section 2.14, by any lending office of such Lender or by such
Lender's holding company, if any) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the date of this Agreement.
"Closing Date" shall mean November 10, 1999.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall mean all the "Collateral" as defined in any Security
Document and shall also include the Mortgaged Properties.
"Commitment" shall mean, with respect to each Lender, the commitment of
such Lender to make Loans hereunder as set forth on Schedule 2.01, or in the
Assignment and Acceptance pursuant to which such Lender assumed its Commitment,
as applicable, as the same may be (a) reduced from time to time pursuant to
Section 2.09 and (b) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 9.04.
"Condemnation" shall have the meaning set forth in the Mortgages.
"Condemnation Proceeds" shall have the meaning set forth in the
Mortgages.
"Confidential Information Memorandum" shall mean the Confidential
Information Memorandum of the Borrower dated October 1999.
"Consolidated Fixed Charge Coverage Ratio" for any period shall mean
the ratio of (a)(i) EBITDA of the Borrower and its consolidated Subsidiaries for
such period, plus (ii) OPEB Expense for such period, plus (iii) Pension Expenses
for such period, minus (iv) OPEB and VEBA Funding for such period, minus (v)
Pension Contributions for such period to (b) Consolidated Fixed Charges for such
period.
"Consolidated Fixed Charges" for any period shall mean, without
duplication, the sum of (a) Interest Expense of the Borrower and its
Subsidiaries for such period, plus (b) the aggregate amount of all cash
dividends paid by the Borrower with respect to its Equity Interests during such
period, plus (c) scheduled payments of principal (whether or not made) on long
term Indebtedness (including Capital Lease Obligations) of the Borrower and its
consolidated Subsidiaries for such
<PAGE> 11
6
period (other than the final four payments listed in Section 2.11(a)), plus (d)
income tax expense, to the extent paid in cash, of the Borrower and its
consolidated Subsidiaries for such period, all as determined on a consolidated
basis in accordance with GAAP.
"Consolidated Interest Coverage Ratio" for any period shall mean the
ratio of (a) EBITDA of the Borrower and its consolidated Subsidiaries for such
period to (b) Interest Expense of the Borrower and its consolidated Subsidiaries
for such period.
"Consolidated Leverage Ratio" shall mean, as of any date of
determination, the ratio of (a) Total Debt of the Borrower and its consolidated
Subsidiaries on such date to (b) EBITDA of the Borrower and its consolidated
Subsidiaries for the most recent period of four consecutive fiscal quarters
ended on or prior to such date. For the purposes of this definition only, the
aggregate principal amount of the Indebtedness of the Borrower arising as a
result of the Guarantee described in Section 6.01(e) shall be limited to 50% of
the aggregate principal amount of the Indebtedness described in clause (i) or
(ii), as applicable, of Section 6.01(e) so long as such Indebtedness is also
fully and unconditionally guaranteed by Bethlehem Steel Corporation and the
Borrower would have the right to recover from Bethlehem Steel Corporation 50% of
any payments made by the Borrower (but not by Bethlehem Steel Corporation) under
such Guarantee.
"Control" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
person, whether through the ownership of voting securities, by contract or
otherwise, and the terms "Controlling" and "Controlled" shall have meanings
correlative thereto.
"Copperweld" shall mean Copperweld Corporation, a Delaware corporation,
and its permitted successors and assigns hereunder.
"Copperweld Canada" shall mean Copperweld Canada Inc., a company
organized under the laws of the Province of Ontario, and its permitted
successors and assigns hereunder.
"Copperweld Canada Note" shall mean the secured intercompany note in
the aggregate principal amount of approximately $75,000,000 issued by Copperweld
Canada to WTHI on the Closing Date and pledged to the Collateral Agent for the
ratable benefit of the Secured Parties pursuant to the Security Agreement.
"Default" shall mean any event or condition which upon notice, lapse of
time or both would constitute an Event of Default.
"dollars" or "$" shall mean lawful money of the United States of
America.
"Domestic Subsidiaries" shall mean all Subsidiaries incorporated or
organized under the laws of the United States of America, any State thereof or
the District of Columbia.
"EBITDA" of any person for any period shall mean Net Income of such
person for such period, to which shall be added back (to the extent deducted in
calculating such Net Income for such period) (a) the total interest expense of
such person and its consolidated subsidiaries for such period, (b) all charges
for Federal, state, local and foreign income taxes of such person and its
consolidated subsidiaries for such period, (c) the aggregate depreciation
expense of such person and its consolidated subsidiaries for such period, (d)
the aggregate amortization expense of such person and its consolidated
subsidiaries for such period and (e) any other noncash items (other than any
such noncash item to the extent that it represents an accrual of or a reserve
for cash expenditures in any future period) of such person and its consolidated
subsidiaries for such period, minus any noncash item of such person and its
consolidated subsidiaries for such period increasing Net Income of such person
and its consolidated subsidiaries for such period (other than any such noncash
item to the extent it will result in the receipt of cash payments in any future
period), all as determined on a consolidated basis in accordance with GAAP.
<PAGE> 12
7
"environment" shall mean ambient air, surface water and groundwater
(including potable water, navigable water and wetlands), the land surface or
subsurface strata, the workplace or as otherwise defined in any Environmental
Law.
"Environmental Claim" shall mean any written accusation, allegation,
notice of violation, claim, demand, order, directive, cost recovery action or
other cause of action by, or on behalf of, any Governmental Authority or any
person for damages, injunctive or equitable relief, personal injury (including
sickness, disease or death), Remedial Action costs, tangible or intangible
property damage, natural resource damages, nuisance, pollution, any adverse
effect on the environment caused by any Hazardous Material, or for fines,
penalties or restrictions, resulting from or based upon (a) the existence, or
the continuation of the existence, of a Release (including sudden or non-sudden,
accidental or non-accidental Releases), (b) exposure to any Hazardous Material,
(c) the presence, use, handling, transportation, storage, treatment or disposal
of any Hazardous Material or (d) the violation or alleged violation of any
Environmental Law or Environmental Permit.
"Environmental Law" shall mean any and all applicable present and
future treaties, laws, rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions, notices or binding agreements issued, promulgated or
entered into by any Governmental Authority, relating in any way to the
environment, preservation or reclamation of natural resources, the management,
Release or threatened Release of any Hazardous Material or to health and safety
matters, including the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. Section Section 9601 et seq.
(collectively "CERCLA"), the Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act of 1976 and Hazardous and Solid Waste
Amendments of 1984, 42 U.S.C. Section Section 6901 et seq., the Federal Water
Pollution Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C.
Section Section 1251 et seq., the Clean Air Act of 1970, as amended 42 U.S.C.
Section Section 7401 et seq., the Toxic Substances Control Act of 1976, 15
U.S.C. Section Section 2601 et seq., the Occupational Safety and Health Act of
1970, as amended, 29 U.S.C. Section Section 651 et seq., the Emergency Planning
and Community Right-to-Know Act of 1986, 42 U.S.C. Section Section 11001 et
seq., the Safe Drinking Water Act of 1974, as amended, 42 U.S.C. Section Section
300(f) et seq., the Hazardous Materials Transportation Act, 49 U.S.C. Section
Section 5101 et seq., and any similar or implementing state, local or foreign
law, and all amendments or regulations promulgated under any of the foregoing.
"Environmental Permit" shall mean any permit, approval, authorization,
certificate, license, variance, filing or permission required by or from any
Governmental Authority pursuant to any Environmental Law.
"Equity Interests" shall mean shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a person.
"Equity Issuance" shall mean any issuance or sale by the Borrower or
any Subsidiary of any Equity Interests of the Borrower or any Subsidiary, as
applicable, or any obligations convertible into or exchangeable for, or giving
any person a right, option or warrant to acquire such Equity Interests or such
convertible or exchangeable obligations, except in each case for (a) any
issuance or sale to the Borrower or any Subsidiary, (b) any issuance of
directors' qualifying shares, (c) sales or issuances of common stock of the
Borrower to management or employees of the Borrower or any Subsidiary under any
employee stock option or stock purchase plan or employee benefit plan in
existence from time to time and (d) issuances of common stock of the Borrower to
directors of the Borrower upon the exercise of stock options received by
directors as directors' compensation.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code, or solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
<PAGE> 13
8
"ERISA Event" shall mean (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder, with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any of its ERISA
Affiliates from the PBGC or a plan administrator of any notice relating to the
intention to terminate any Plan or Plans or to appoint a trustee to administer
any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of
any liability with respect to the withdrawal from any Plan or Multiemployer
Plan; (g) the receipt by the Borrower or any of its ERISA Affiliates of any
notice, or the receipt by any Multiemployer Plan from the Borrower or any of its
ERISA Affiliates of any notice, concerning the imposition of Withdrawal
Liability or a determination that a Multiemployer Plan is, or is expected to be,
insolvent or in reorganization, within the meaning of Title IV of ERISA; or (h)
any Foreign Benefit Event.
"Escrow Agreements" shall mean (i) the agreement dated as of November
5, 1999, among the Borrower, U.S. Bank Trust National Association, as trustee,
and The Chase Manhattan Bank, as escrow agent, relating to the New Senior Notes
and (ii) the agreement dated as of November 5, 1999, among the Borrower,
ChaseMellon Shareholder Services LLC, as transfer agent, and The Chase Manhattan
Bank, as escrow agent, relating to the New Preferred Stock.
"Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar
Loans.
"Eurodollar Loan" shall mean any Loan bearing interest at a rate
determined by reference to the Adjusted LIBO Rate in accordance with the
provisions of Article II.
"Event of Default" shall have the meaning assigned to such term in
Article VII.
"Excess Cash Flow" shall mean, for any fiscal year of the Borrower, the
excess of (a) the sum, without duplication, of (i) EBITDA of the Borrower and
its consolidated Subsidiaries for such fiscal year and (ii) the decrease, if
any, in the Acquired Subsidiaries Working Capital from the beginning to the end
of such fiscal year, over (b) the sum, without duplication, of (i) the amount of
any cash income taxes payable by the Borrower and its consolidated Subsidiaries
with respect to such fiscal year, (ii) cash interest paid (net of cash interest
received) by the Borrower and its consolidated Subsidiaries during such fiscal
year, (iii) Capital Expenditures made in cash by the Borrower and its
consolidated Subsidiaries in accordance with, and pursuant to, Section 6.10(a)
during such fiscal year, except to the extent financed with the proceeds of
Equity Issuances, Indebtedness or casualty or condemnation proceeds, (iv)
permanent repayments of Indebtedness made by the Borrower and its consolidated
Subsidiaries during such fiscal year, but only to the extent that such
repayments by their terms cannot be reborrowed or redrawn and do not occur in
connection with a refinancing of all or any portion of such Indebtedness, (v)
cash dividends paid during such fiscal year to the extent permitted pursuant to
Section 6.06(a) or (b), (vi) cash expenditures paid out in any period from
accruals or reserves taken in prior periods for such expenditures, (vii)
investments made in cash by the Borrower and its consolidated Subsidiaries in
accordance with, and pursuant to, Sections 6.04(d) and 6.04(k) during such
fiscal year, in each case except to the extent financed with the proceeds of
Equity Issuances or Indebtedness, and (viii) the increase, if any, in the
Acquired Subsidiaries Working Capital from the beginning to the end of such
fiscal year; provided that to the extent otherwise included therein, the Net
Cash Proceeds of Asset Sales and dispositions resulting in Casualty Proceeds or
Condemnation Proceeds shall be excluded from the calculation of Excess Cash
Flow.
"Excluded Subsidiaries" shall mean (i) each of LTV Sales Finance
Company and LTV Steel Products, LLC, and each of their respective subsidiaries
and (ii) any other bankruptcy-remote, special purpose subsidiary of the
Borrower.
"Excluded Taxes" shall mean, with respect to the Administrative Agent,
any Lender or any other recipient of any payment to be made by or on account of
any obligation of the Borrower
<PAGE> 14
9
hereunder, (a) income or franchise taxes imposed on (or measured by) its net
income by the United States of America, or by the jurisdiction under the laws of
which such recipient is organized or in which its principal office is located
or, in the case of any Lender, in which its applicable lending office is
located, (b) any branch profits taxes imposed by the United States of America or
any similar tax imposed by any other jurisdiction in which the Borrower is
located, (c) taxes imposed by reason of any present or former connection between
such recipient and the jurisdiction imposing such taxes, other than solely as a
result of this Agreement or any other Loan Document and (d) in the case of a
Foreign Lender (other than an assignee pursuant to a request by the Borrower
under Section 2.21(a)), any withholding tax that is imposed on amounts payable
to such Foreign Lender at the time such Foreign Lender becomes a party to this
Agreement (or designates a new lending office or, in the case of a participating
bank or other entity pursuant to Section 9.04(f), purchases such participation)
or is attributable to such Foreign Lender's failure to comply with Section
2.20(e), except to the extent that such Foreign Lender (or its assignor, if any)
was entitled, at the time of designation of a new lending office (or
assignment), to receive additional amounts from the Borrower with respect to
such withholding tax pursuant to Section 2.20(a).
"Existing Inventory Facility" shall mean the credit facilities provided
under the Note Purchase and Letter of Credit Agreement dated as of February 26,
1998, among LTV Steel Company, Inc., various financial institutions party
thereto, Chase Securities Inc., as placement agent, and The Chase Manhattan
Bank, as administrative agent and collateral agent, as in effect on the Closing
Date and as thereafter amended, supplemented or otherwise modified from time to
time.
"Existing Note Documents" shall mean the Existing Notes and the
Existing Note Indenture.
"Existing Note Indenture" shall mean the indenture dated as of
September 22, 1997, between the Borrower, the Guarantors and The Chase Manhattan
Bank, as trustee, as in effect on the Closing Date and as thereafter amended
from time to time.
"Existing Notes" shall mean the 8.20% Senior Notes due 2007 of the
Borrower, in an aggregate principal amount outstanding on the Closing Date of
$300,000,000.
"Existing Receivables Facility" shall mean the credit facilities
provided under the Revolving Credit Agreement dated as of October 12, 1994,
among LTV Sales Finance Company, the financial institutions party thereto as
banks, the issuing banks identified therein and the facility agent and
collateral agent identified therein, as in effect on the Closing Date and as
thereafter amended, supplemented or otherwise modified from time to time.
"Fee Letter" shall mean the Fee Letter dated August 19, 1999, between
the Borrower and the Lead Arranger.
"Financial Officer" of any person shall mean the chief financial
officer, principal accounting officer, treasurer or controller of such person.
"Foreign Benefit Event" shall mean, with respect to any Foreign Pension
Plan, (a) the existence of unfunded liabilities in excess of the amount
permitted under any applicable law, or in excess of the amount that would be
permitted absent a waiver from a Governmental Authority, (b) the failure to make
the required contributions or payments, under any applicable law, on or before
the due date for such contributions or payments, (c) the receipt of a notice by
a Governmental Authority relating to the intention to terminate any such Foreign
Pension Plan or to appoint a trustee or similar official to administer any such
Foreign Pension Plan, or alleging the insolvency of any such Foreign Pension
Plan, (d) the incurrence of any liability in excess of $5,000,000 (or the
equivalent thereof in another currency) by the Borrower or any of its
Subsidiaries under applicable law on account of the complete or partial
termination of such Foreign Pension Plan or the complete or partial withdrawal
of any participating employer therein, or (e) the occurrence of any transaction
that is prohibited under any applicable law and could reasonably be expected to
result in the incurrence of any liability by the Borrower or any of its
Subsidiaries, or the imposition on the Borrower or any of its Subsidiaries of
any fine, excise tax or penalty resulting from any noncompliance with any
applicable law, in each case in excess of $5,000,000 (or the equivalent thereof
in another currency).
<PAGE> 15
10
"Foreign Lender" shall mean any Lender or any participating bank or
other entity pursuant to Section 9.04(f) that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"Foreign Pension Plan" shall mean any plan, fund (including any
superannuation fund) or other similar program established or maintained outside
the United States by the Borrower or any one or more of its Subsidiaries
primarily for the benefit of employees of the Borrower or such Subsidiaries
residing outside the United States, which plan, fund or other similar program
provides, or results in, retirement income, a deferral of income in
contemplation of retirement or payments to be made upon termination of
employment, and which plan is not subject to ERISA or the Code.
"Foreign Subsidiary" shall mean any Subsidiary that is not a Domestic
Subsidiary.
"GAAP" shall mean generally accepted accounting principles applied on a
consistent basis.
"Governmental Authority" shall mean any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body.
"Granting Lender" shall have the meaning specified in Section 9.04(i).
"Guarantee" of or by any person shall mean any obligation, contingent
or otherwise, of such person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other person (the "primary obligor") in any
manner, whether directly or indirectly, and including any obligation of such
person, direct or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or to purchase (or to advance
or supply funds for the purchase of) any security for the payment of such
Indebtedness, (b) to purchase or lease property, securities or services for the
purpose of assuring the owner of such Indebtedness of the payment of such
Indebtedness or (c) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness; provided, however, that the
term "Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business.
"Guarantee Agreement" shall mean the Guarantee Agreement, substantially
in the form of Exhibit D, made by the Guarantors in favor of the Collateral
Agent for the benefit of the Secured Parties.
"Guarantors" shall mean each person listed on Schedule 1.01(a) and each
other person that becomes party to a Guarantee Agreement as a Guarantor, and the
permitted successors and assigns of each such person.
"Hazardous Materials" shall mean all substances or wastes of any nature
that are regulated pursuant to any Environmental Law, including all explosive or
radioactive substances or wastes, hazardous or toxic substances or wastes,
pollutants, solid, liquid or gaseous wastes, petroleum or petroleum distillates,
asbestos or asbestos containing materials, polychlorinated biphenyls ("PCBs") or
PCB-containing materials or equipment, radon gas and infectious or medical
wastes.
"Hedging Agreement" shall mean any Interest Rate Protection Agreement
or any foreign currency exchange agreement, commodity price protection agreement
or other interest or currency exchange rate or commodity price hedging
arrangement not entered into for speculation.
"Inactive Subsidiary" at any time shall mean any Subsidiary of the
Borrower that (a) has assets with a total book value not in excess of
$1,000,000, (b) has not conducted any business or other operations during the
prior 12-month period and (c) is not an obligor with respect to any
Indebtedness.
"Indebtedness" of any person shall mean, without duplication, (a) all
obligations of such person for borrowed money, (b) all obligations of such
person evidenced by bonds, debentures, notes
<PAGE> 16
11
or similar instruments, (c) all obligations of such person under conditional
sale or other title retention agreements relating to property or assets
purchased by such person, (d) all obligations of such person issued or assumed
as the deferred purchase price of property or services (excluding trade accounts
payable and accrued obligations incurred in the ordinary course of business),
(e) all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on property owned or acquired by such person, whether or not the
obligations secured thereby have been assumed, (f) all Guarantees by such person
of Indebtedness of others, (g) all Capital Lease Obligations of such person, (h)
all obligations of such person in respect of interest rate protection
agreements, foreign currency exchange agreements, commodity price protection
agreements or other interest, exchange rate or commodity price hedging
arrangements (such obligations to be equal at any time to the net amount that
would be payable by such person at such time were all such agreements and
arrangements to terminate at such time) and (i) all obligations of such person
as an account party in respect of letters of credit and bankers' acceptances.
The Indebtedness of any person shall include the Indebtedness of any partnership
in which such person is a general partner.
"Indemnified Taxes" shall mean Taxes other than Excluded Taxes.
"Indemnity, Subrogation and Contribution Agreement" shall mean the
Indemnity, Subrogation and Contribution Agreement, substantially in the form of
Exhibit E, among the Borrower, the Guarantors and the Collateral Agent.
"Interest Expense" of any person for any period shall mean the total
interest expense, to the extent paid in cash, of such person and its
consolidated subsidiaries for such period determined on a consolidated basis in
accordance with GAAP.
"Interest Payment Date" shall mean (a) with respect to any ABR Loan,
the last Business Day of each March, June, September and December, and (b) with
respect to any Eurodollar Loan, the last day of the Interest Period applicable
to the Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an Interest Period of more than three months' duration, each day
that would have been an Interest Payment Date had successive Interest Periods of
three months' duration been applicable to such Borrowing, and, in addition, the
date of any prepayment of a Eurodollar Borrowing or conversion of a Eurodollar
Borrowing to an ABR Borrowing.
"Interest Period" shall mean, with respect to any Eurodollar Borrowing,
the period commencing on the date of such Borrowing (or the last day of the most
recently ended Interest Period with respect to such Borrowing) and ending on the
numerically corresponding day (or, if there is no numerically corresponding day,
on the last day) in the calendar month that is 1, 2, 3 or 6 months thereafter,
as the Borrower may elect; provided, however, that if any Interest Period would
end on a day other than a Business Day, such Interest Period shall be extended
to the next succeeding Business Day unless such next succeeding Business Day
would fall in the next calendar month, in which case such Interest Period shall
end on the next preceding Business Day. Interest shall accrue from and including
the first day of an Interest Period to but excluding the last day of such
Interest Period.
"Interest Rate Protection Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or
similar agreement or arrangement designed to protect the Borrower or any
Subsidiary against fluctuations in interest rates, and not entered into for
speculation.
"Lenders" shall mean (a) the financial institutions listed on Schedule
2.01 (other than any such financial institution that has ceased to be a party
hereto pursuant to an Assignment and Acceptance) and (b) any financial
institution that has become a party hereto pursuant to an Assignment and
Acceptance.
"LIBO Rate" shall mean, with respect to any Eurodollar Borrowing for
any Interest Period, the rate per annum determined by the Administrative Agent
at approximately 11:00 a.m. (London time) on the date that is two Business Days
prior to the beginning of the relevant Interest Period by reference to the
British Bankers' Association Interest Settlement Rates for deposits in dollars
(as set
<PAGE> 17
12
forth by the Bloomberg Information Service or any successor thereto or any other
service selected by the Administrative Agent that has been nominated by the
British Bankers' Association as an authorized information vendor for the purpose
of displaying such rates) for a period equal to such Interest Period; provided
that, to the extent that an interest rate is not ascertainable pursuant to the
foregoing provisions of this definition, the "LIBO Rate" shall be the interest
rate per annum determined by the Administrative Agent to be the average of the
rates per annum at which deposits in dollars are offered for such relevant
Interest Period to major banks in the London interbank market in London, England
by the Administrative Agent at approximately 11:00 a.m. (London time) on the
date that is two Business Days prior to the beginning of such Interest Period.
"Lien" shall mean, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, encumbrance, charge or security interest in or on such
asset and (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement relating to such asset.
"Loan Documents" shall mean this Agreement, the Guarantee Agreement,
the Security Documents and the Indemnity, Subrogation and Contribution
Agreement.
"Loan Parties" shall mean the Borrower and the Guarantors.
"Loans" shall mean the term loans made by the Lenders to the Borrower
pursuant to Section 2.01. Each Loan shall be a Eurodollar Loan or an ABR Loan.
"Margin Stock" shall have the meaning assigned to such term in
Regulation U.
"Material Adverse Effect" shall mean (a) a materially adverse effect on
the business, assets, operations, prospects or condition, financial or
otherwise, of the Borrower and the Subsidiaries, taken as a whole, (b) material
impairment of the ability of the Borrower or any other Loan Party to perform any
of its obligations under any Loan Document to which it is or will be a party or
(c) material impairment of the rights of or benefits available to the Lenders
under any Loan Document.
"Maturity Date" shall mean October 31, 2004.
"Moody's" shall mean Moody's Investors Service, Inc. and its
successors.
"Mortgaged Properties" shall mean the owned real properties of the Loan
Parties specified on Schedule 1.01(b).
"Mortgages" shall mean the mortgages, deeds of trust, leasehold
mortgages, assignments of leases and rents, modifications and other security
documents delivered pursuant to paragraph (l) of Article IV or pursuant to
Section 5.11, each substantially in the form of Exhibit F.
"Multiemployer Plan" shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" shall mean (a) with respect to any Asset Sale, the
cash proceeds (including cash proceeds subsequently received (as and when
received) in respect of noncash consideration initially received), net of (i)
selling expenses (including reasonable broker's fees or commissions, legal fees,
transfer and similar taxes and the Borrower's good faith estimate of income
taxes paid or payable in connection with such sale), (ii) amounts provided as a
reserve, in accordance with GAAP, against any liabilities that are directly
attributable to such Asset Sale (provided that, to the extent and at the time
any such amounts are released from such reserve, such amounts shall constitute
Net Cash Proceeds) and (iii) the principal amount, premium or penalty, if any,
interest and other amounts on any Indebtedness for borrowed money which is
secured by the asset sold in such Asset Sale or is otherwise required to be
repaid as a result of such Asset Sale and which is repaid with such proceeds
(other than any such Indebtedness assumed by the purchaser of such asset);
provided, however, that, with respect to the proceeds of any Asset Sale or
series of related Asset Sales permitted by Section 6.05, if (x) the Borrower
shall deliver a certificate of a Financial Officer to the Agents at the time of
receipt thereof setting forth the Borrower's intent to reinvest (or to be
contractually
<PAGE> 18
13
committed to reinvest) such proceeds in Replacement Assets (which, if the assets
subject to such Asset Sale were Collateral (other than WTC's Portland tubing
facility in the event it is sold pursuant to a sale and leaseback transaction
within one year from the Closing Date) shall constitute Replacement Collateral)
within 180 days of receipt of such proceeds and (y) no Default or Event of
Default shall have occurred and shall be continuing at the time of such
certificate or at the proposed time of the application of such proceeds, such
proceeds shall not constitute Net Cash Proceeds except to the extent not so used
or contractually committed to be used at the end of such 180-day period, at
which time such proceeds shall be deemed to be Net Cash Proceeds; and (b) with
respect to any issuance of Indebtedness or any Equity Issuance, the cash
proceeds thereof, net of all taxes and customary fees, commissions, costs and
other expenses incurred in connection therewith.
"Net Income" of any person for any period shall mean the net income or
loss of such person and its consolidated subsidiaries for such period determined
on a consolidated basis in accordance with GAAP; provided that there shall be
excluded (a) the income of any person in which any other person (other than such
person or any of its subsidiaries or any director holding qualifying shares in
accordance with applicable law) has a joint interest, except to the extent of
the amount of dividends or other distributions actually paid to such person or
any of its wholly owned subsidiaries by such other person during such period,
(b) the income of any subsidiary of such person to the extent that the
declaration or payment of dividends or similar distributions by such subsidiary
of that income is prohibited by operation of the terms of its charter or any
agreement, instrument, judgment, decree, statute, rule or governmental
regulation applicable to such subsidiary, (c) the income (or loss) of any person
accrued prior to the date it becomes a subsidiary of such person or is merged
into or consolidated with such person or any of such person's subsidiaries or
the date that person's assets are acquired by such person or any of its
subsidiaries, and (d) any after-tax gains or losses attributable to sales of
assets out of the ordinary course of business, (e) any extraordinary gain or
loss and (f) any unusual or nonrecurring noncash charge or credit separately
identified on the Borrower's consolidated income statement for such period;
provided that to the extent any such charge represents an accrual of or reserves
for cash expenditures in any future period, such cash expenditure shall be
included in Net Income for such future period.
"New Preferred Stock" shall mean the Series A 8-1/4% Cumulative
Convertible Preferred Stock of the Borrower, liquidation preference $50 per
share, in an aggregate liquidation preference on the Closing Date of
$80,000,000.
"New Preferred Stock Documents" shall mean the New Preferred Stock and
the related Certificate of Designations.
"New Senior Note Documents" shall mean the New Senior Notes and the New
Senior Note Indenture.
"New Senior Note Indenture" shall mean the indenture dated as of
November 5, 1999, between the Borrower, the Guarantors and U.S. Bank Trust
National Association, as trustee, as in effect on the Closing Date and as
thereafter amended from time to time in accordance with the requirements hereof
and thereof.
"New Senior Notes" shall mean the Borrower's 11-3/4% Senior Notes Due
2009 in the initial aggregate principal amount of $275,000,000, issued pursuant
to the New Senior Note Indenture, and any notes issued by the Borrower in
exchange for, and as contemplated by, the New Senior Notes with substantially
identical terms as the New Senior Notes.
"Nonrecourse Subsidiary" shall mean any Subsidiary that is an
"Unrestricted Subsidiary" as defined in the Existing Note Indenture.
"Note Documents" shall mean the Existing Note Documents and the New
Senior Note Documents.
"Obligations" shall mean all obligations defined as "Obligations" in
the Guarantee Agreement and the Security Documents.
<PAGE> 19
14
"OPEB Expense" for any period shall mean, without duplication, the
aggregate amount of the expense relating to other postemployment benefits under
employee benefit plans recorded in the consolidated statement of operations of
the Borrower for such period.
"OPEB and VEBA Funding" for any period shall mean, without duplication,
the aggregate amount of all payments made in cash by the Borrower and its
consolidated Subsidiaries to pay other postemployment benefits or to fund the
Voluntary Employee Beneficiary Association Trust for such period.
"Other Taxes" shall mean any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made under any Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, any Loan
Document.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
and defined in ERISA.
"Pension Contributions" for any period shall mean, without duplication,
the aggregate amount of all payments made in cash by the Borrower and its
consolidated Subsidiaries to fund pension plans for such period.
"Pension Expense" for any period shall mean, without duplication, the
aggregate amount of the expense relating to pension plans recorded in the
consolidated statement of operations of the Borrower for such period.
"Perfection Certificate" shall mean the Perfection Certificate
substantially in the form of Annex 2 to the Security Agreement.
"Permitted Acquisition" shall mean the acquisition (in a single
transaction or a series of related transactions) of not less than 100% (other
than directors' qualifying shares) of the outstanding Equity Interests of any
person or any business unit (or of all or substantially all the assets and
business of any of the foregoing) engaged in a Related Business so long as (a)
at the time of and immediately after giving effect to such acquisition, on a pro
forma basis, no Default or Event of Default shall have occurred and be
continuing and (b) the Borrower shall comply with the applicable provisions of
Section 5.11 and the Security Documents with respect to the assets so acquired.
"Permitted Investments" shall mean:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States
of America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America),
in each case maturing within one year from the date of acquisition
thereof;
(b) investments in commercial paper maturing within 270 days
from the date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from S&P or from
Moody's;
(c) investments in certificates of deposit, banker's
acceptances and time deposits maturing within one year from the date of
acquisition thereof issued or guaranteed by or placed with, and money
market deposit accounts issued or offered by, (i) any domestic office
of any commercial bank organized under the laws of the United States of
America or any State thereof and (ii) in the case of certificates of
deposit in U.S. dollars, any commercial bank (or branch thereof)
organized under the laws of any country that is part of the "Group of
7" industrialized nations, in each case having a combined capital and
surplus and undivided profits of not less than $500,000,000 (or the
equivalent thereof in another currency);
<PAGE> 20
15
(d) fully collateralized repurchase agreements with a term of
not more than 30 days for securities described in clause (a) above and
entered into with a financial institution satisfying the criteria of
clause (c) above;
(e) other short-term investments utilized by Foreign
Subsidiaries in accordance with normal investment practices for cash
management in investments of a type analogous to the foregoing;
(f) investments in money market funds (i) registered under the
Investment Company Act of 1940, as amended, (ii) in compliance with
Investment Company Act Rule 2a-7, (iii) having net assets of at least
$200,000,000 and (iv) that are valued at daily maturity in calculating
total portfolio average maturity; and
(g) at any time that the aggregate fair market value of all
Permitted Investments of the Borrower and its Subsidiaries exceeds
$25,000,000, any other investments permitted by the LTV Cash Investment
Policy set forth in Schedule 1.01(c).
"person" shall mean any natural person, corporation, business trust,
joint venture, association, company, limited liability company, partnership or
government, or any agency or political subdivision thereof.
"Plan" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 307 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Preferred Stock" shall mean the New Preferred Stock and the Series B
Preferred Stock.
"Purchase Money Indebtedness" shall mean any Indebtedness of a person
to any seller or other person incurred to finance the acquisition (including in
the case of a Capital Lease Obligation, the lease) of any after acquired
property or assets related to the business of the Borrower or the Subsidiaries
and which is incurred substantially within 180 days of such acquisition and is
secured only by the assets so acquired.
"Refinancing Indebtedness" shall have the meaning given such term in
Section 6.01(k).
"Register" shall have the meaning given such term in Section 9.04(d).
"Regulation T" shall mean Regulation T of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation U" shall mean Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation X" shall mean Regulation X of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Related Business" shall mean the business conducted on the Closing
Date by the Borrower and its Subsidiaries and any business reasonably related,
ancillary or complementary thereto.
"Related Fund" shall mean, with respect to any Lender that is a fund
that invests in commercial bank loans, any other fund that invests in commercial
bank loans and is advised or managed by the same investment advisor as such
Lender or by an Affiliate of such investment advisor.
<PAGE> 21
16
"Release" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing,
depositing, dispersing, emanating or migrating of any Hazardous Material in,
into, onto or through the environment.
"Remedial Action" shall mean (a) "remedial action" as such term is
defined in CERCLA, 42 U.S.C. Section 9601(24), and (b) all other actions to: (i)
cleanup, remove, treat, abate or in any other way address any Hazardous Material
in the environment; (ii) prevent the Release or threat of Release, or minimize
the further Release of any Hazardous Material so it does not migrate or endanger
or threaten to endanger human health or the environment; or (iii) perform
studies and investigations in connection with, or as a precondition to, (i) or
(ii) above.
"Repayment Date" shall have the meaning given such term in Section
2.11.
"Required Lenders" shall mean, at any time, Lenders having Loans and
unused Commitments representing at least a majority of the sum of all Loans
outstanding and unused Commitments at such time.
"Replacement Assets" shall mean, at any time, assets of a kind then
used or usable in the business of the Borrower and its Subsidiaries at that
time.
"Replacement Collateral" shall mean Replacement Assets that, at the
time of the acquisition thereof, are subject to a perfected first-priority
security interest (subject only to Liens permitted pursuant to Section 6.02) in
favor of the Collateral Agent for the benefit of the Secured Parties to secure
the Obligations pursuant to the Security Documents.
"Responsible Officer" of any person shall mean any executive officer or
Financial Officer of such person and any other officer or similar official
thereof responsible for the administration of the obligations of such person in
respect of this Agreement.
"S&P" shall mean Standard & Poor's Ratings Service, a division of
McGraw-Hill, Inc. and its successors.
"Secured Parties" shall have the meaning assigned to such term in the
Security Agreement.
"Securitization Facilities" shall mean securitization or credit
facilities providing for revolving credit loans, term loans, receivables or
inventory financing (including the Existing Inventory Facility and the Existing
Receivables Facility) or trade letters of credit and any extensions, revisions,
refinancings or replacements thereof.
"Securitization Subsidiary" shall mean any bankruptcy-remote
special-purpose Subsidiary of the Borrower or its Subsidiaries established for
the purpose of arranging financing of accounts receivable and inventory,
including by selling or selling interests in such accounts receivable and
inventory and related property or through borrowing money or obtaining credit
secured by such property.
"Security Agreement" shall mean the Security Agreement, substantially
in the form of Exhibit G, among the Subsidiaries party thereto and the
Collateral Agent for the benefit of the Secured Parties.
"Security Documents" shall mean the Mortgages, the Security Agreement
and each of the security agreements, mortgages and other instruments and
documents executed and delivered pursuant to any of the foregoing.
"Series B Preferred Stock" shall mean the Series B 4.5% Convertible
Preferred Stock of the Borrower, liquidation preference $100 per share.
"SPC" shall have the meaning specified in Section 9.04(i).
<PAGE> 22
17
"Statutory Reserves" shall mean a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board and any other banking authority, domestic or foreign,
to which the Administrative Agent or any Lender (including any branch,
Affiliate, or other fronting office making or holding a Loan) is subject for
Eurocurrency Liabilities (as defined in Regulation D of the Board). Eurodollar
Loans shall be deemed to constitute Eurocurrency Liabilities and to be subject
to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D. Statutory Reserves shall be adjusted automatically on
and as of the effective date of any change in any reserve percentage.
"Stock Purchase Agreement" shall mean the Stock Purchase Agreement
dated as of September 8, 1999, between the Borrower and Imetal SA, as the same
may be amended, supplemented or otherwise modified from time to time.
"subsidiary" shall mean, with respect to any person (herein referred to
as the "parent"), any corporation, partnership, association or other business
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or more
than 50% of the general partnership interests are, at the time any determination
is being made, owned, controlled or held, or (b) that is, at the time any
determination is made, otherwise Controlled, by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent.
"Subsidiary" shall mean any subsidiary of the Borrower.
"Sumitomo Securities Purchase Agreement" shall mean the Securities
Purchase Agreement dated as of May 26, 1993, as amended through September 22,
1997, by and among the Borrower, LTV Steel Company, Inc. and SMI America, Inc.
"Taxes" shall mean any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Total Debt" of any person shall mean, as of any date of determination,
without duplication, the aggregate principal amount of Indebtedness of such
person and its subsidiaries outstanding as of such date, determined on a
consolidated basis (other than Indebtedness of the type referred to in clause
(h) or, except to the extent of any unreimbursed drawings thereunder, clause (i)
of the definition of the term "Indebtedness"); provided, however, that any
Venture Holding Company Guarantee shall not be included in the calculation of
Total Debt.
"Transactions" shall have the meaning assigned to such term in Section
3.02.
"Type", when used in respect of any Loan or Borrowing, shall refer to
the Rate by reference to which interest on such Loan or on the Loans comprising
such Borrowing is determined. For purposes hereof, the term "Rate" shall include
the Adjusted LIBO Rate and the Alternate Base Rate.
"USWA Secured Obligations" shall mean the retiree health benefit plan
contribution and other obligations of the Borrower and its Subsidiaries secured
by a Lien granted to the United Steel Workers of America pursuant to the
Collateral Trust Agreement dated as of May 15, 1993, as amended through the
Closing Date, among the Borrower, LTV Steel Company, Inc., the United Steel
Workers of America and Bank One Ohio Trust Company, N.A., as collateral agent.
"Venture Holding Company" means LTV-Trico, Inc., Trico Steel Company,
Inc., LTV Columbus Processing, Inc., LTV EGL Holding Company, Dearborn Leasing,
Inc. and any other Subsidiary of the Borrower formed or acquired after the
Closing Date whose activities are limited to making and owning equity interests
and other Investments in one or more joint ventures and activities incidental
thereto, including without limitation participation in financing arrangements of
such joint
<PAGE> 23
18
ventures (but in each case only for so long as its activities are so limited),
and which does not own any capital stock of the Borrower or any of its
Subsidiaries.
"Venture Holding Company Guarantee" means any Guarantee, including
through a pledge of capital stock or assets, by a Venture Holding Company of
Indebtedness of its joint venture, which Indebtedness and Guarantee are not
otherwise obligations of the Borrower or any of its other consolidated
Subsidiaries.
"wholly owned Subsidiary" of any person shall mean a subsidiary of such
person of which securities (except for directors' qualifying shares) or other
ownership interests representing 100% of the equity or 100% of the ordinary
voting power or 100% of the general partnership interests are, at the time any
determination is being made, owned, controlled or held by such person or one or
more wholly owned subsidiaries of such person or by such person and one or more
wholly owned subsidiaries of such person.
"Withdrawal Liability" shall mean liability to a Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
"WTC" shall mean Welded Tube Co. of America, a Delaware corporation,
and its permitted successors and assigns hereunder.
"WTHI" shall mean Welded Tube Holdings, Inc., a Delaware corporation,
and its permitted successors and assigns hereunder.
SECTION 1.02. Terms Generally . The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. Except as otherwise
expressly provided herein, (a) any reference in this Agreement to any Loan
Document shall mean such document as amended, restated, supplemented or
otherwise modified from time to time and (b) all terms of an accounting or
financial nature shall be construed in accordance with GAAP, as in effect from
time to time; provided, however, that if the Borrower notifies the
Administrative Agent that the Borrower wishes to amend any covenant in Article
VI or any related definition or the definitions related to the calculation of
Excess Cash Flow to eliminate the effect of any change in GAAP occurring after
the date of this Agreement on the operation of such covenant (or if the
Administrative Agent notifies the Borrower that the Required Lenders wish to
amend Article VI or any related definition or the definitions related to the
calculation of Excess Cash Flow for such purpose), then the Borrower's
compliance with such covenant shall be determined on the basis of GAAP in effect
immediately before the relevant change in GAAP became effective, until either
such notice is withdrawn or such covenant is amended in a manner satisfactory to
the Borrower and the Required Lenders.
SECTION 1.03. Pro Forma Calculations. With respect to any period during
which any Permitted Acquisition occurs as permitted pursuant to the terms
hereof, for purposes of determining compliance with the financial covenants set
forth in Sections 6.11, 6.12 and 6.13, EBITDA, Interest Expense and Consolidated
Fixed Charges shall be calculated with respect to such periods and such
Permitted Acquisition on a pro forma basis after giving effect to such Permitted
Acquisition as if such Permitted Acquisition had occurred on the first day of
the relevant period being tested (including pro forma adjustments arising out of
events which are directly attributable to such Permitted Acquisition, are
factually supportable and are expected to have a continuing impact, in each case
determined on a basis consistent with Article 11 of Regulation S-X of the
Securities Act and as interpreted by the Staff of the Securities and Exchange
Commission).
<PAGE> 24
19
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each Lender
agrees, severally and not jointly, to make a Loan to the Borrower on the Closing
Date in a principal amount not to exceed its Commitment. Amounts paid or prepaid
in respect of Loans may not be reborrowed.
SECTION 2.02. Loans. (a) On the Closing Date, each Loan shall be made
as part of a single Borrowing consisting of Loans made by the Lenders ratably in
accordance with their Commitments; provided, however, that the failure of any
Lender to make any Loan shall not in itself relieve any other Lender of its
obligation to lend hereunder (it being understood, however, that no Lender shall
be responsible for the failure of any other Lender to make any Loan required to
be made by such other Lender). The Loans comprising the Borrowing to be made on
the Closing Date shall be in an aggregate principal amount that is (i) an
integral multiple of $1,000,000 and not less than $5,000,000 or (ii) equal to
the remaining available balance of the Commitments.
(b) Subject to Sections 2.08 and 2.15, each Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request
pursuant to Section 2.03. Each Lender may at its option make any Eurodollar Loan
by causing any domestic or foreign branch or Affiliate of such Lender to make
such Loan; provided that any exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
this Agreement. Borrowings of more than one Type may be outstanding at the same
time; provided, however, that the Borrower shall not be entitled to request any
Borrowing that, if made, would result in more than five Eurodollar Borrowings
outstanding hereunder at any time. For purposes of the foregoing, Borrowings
having different Interest Periods, regardless of whether they commence on the
same date, shall be considered separate Borrowings.
(c) Each Lender shall make the Loan to be made by it hereunder on the
proposed date thereof by wire transfer of immediately available funds to such
account in New York City as the Administrative Agent may designate not later
than 11:00 a.m., New York City time, and the Administrative Agent shall by 12:00
(noon), New York City time, credit the amounts so received to an account in the
name of the Borrower, maintained with the Administrative Agent and designated by
the Borrower in the applicable Borrowing Request or, if a Borrowing shall not
occur on such date because any condition precedent herein specified shall not
have been met, return the amounts so received to the respective Lenders.
(d) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of the initial Borrowing that such Lender will not make
available to the Administrative Agent such Lender's portion of such Borrowing,
the Administrative Agent may assume that such Lender has made such portion
available to the Administrative Agent on the date of such Borrowing in
accordance with paragraph (c) above and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If the Administrative Agent shall have so made funds
available then, to the extent that such Lender shall not have made such portion
available to the Administrative Agent, such Lender and the Borrower severally
agree to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Administrative Agent at (i) in the case of the Borrower, the
interest rate applicable at the time to the Loans comprising such Borrowing and
(ii) in the case of such Lender, a rate determined by the Administrative Agent
to represent its cost of overnight or short-term funds (which determination
shall be conclusive absent manifest error). If such Lender shall repay to the
Administrative Agent such corresponding amount, such amount shall constitute
such Lender's Loan as part of such Borrowing for purposes of this Agreement.
SECTION 2.03. Borrowing Procedure. In order to request the initial
Borrowing, the Borrower shall hand deliver or fax to the Administrative Agent a
duly completed Borrowing Request (a) in the case of a Eurodollar Borrowing, not
later than 11:00 a.m., New York City time, three Business Days
<PAGE> 25
20
before a proposed Borrowing, and (b) in the case of an ABR Borrowing, not later
than 12:00 noon, New York City time, one Business Day before a proposed
Borrowing. Each Borrowing Request shall be irrevocable, shall be signed by or on
behalf of the Borrower and shall specify the following information: (i) whether
the Borrowing then being requested is to be a Eurodollar Borrowing or an ABR
Borrowing; (ii) the date of such Borrowing (which shall be a Business Day),
(iii) the number and location of the account to which funds are to be disbursed
(which shall be an account that complies with the requirements of Section
2.02(c)); (iv) the amount of such Borrowing; and (v) if such Borrowing is to be
a Eurodollar Borrowing, the Interest Period with respect thereto; provided,
however, that, (x) unless the Lead Arranger shall have notified the Borrower
that the syndication of the Loans has been completed (which notice shall be
given as promptly as practicable), the initial Borrowing shall be either an ABR
Borrowing or a Eurodollar Borrowing with an Interest Period of one month's
duration and (y) notwithstanding any contrary specification in any Borrowing
Request, each requested Borrowing shall comply with the requirements set forth
in Section 2.02. If no election as to the Type of Borrowing is specified in any
such notice, then the requested Borrowing shall be an ABR Borrowing. If no
Interest Period with respect to any Eurodollar Borrowing is specified in any
such notice, then the Borrower shall be deemed to have selected an Interest
Period of one month's duration. The Administrative Agent shall promptly advise
the applicable Lenders of any notice given pursuant to this Section 2.03 (and
the contents thereof), and of each Lender's portion of the requested Borrowing.
SECTION 2.04. Evidence of Debt; Repayment of Loans. (a) The Borrower
hereby unconditionally promises to pay to the Administrative Agent for the
account of each Lender the principal amount of each Loan of such Lender as
provided in Section 2.11.
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender from time to time, including the
amounts of principal and interest payable and paid such Lender from time to time
under this Agreement.
(c) The Administrative Agent shall maintain accounts in which it will
record (i) the amount of each Loan made hereunder, the Type thereof and the
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder from the Borrower or any Guarantor and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraphs
(b) and (c) above shall be prima facie evidence of the existence and amounts of
the obligations therein recorded; provided, however, that the failure of any
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligations of the Borrower to repay
the Loans in accordance with their terms.
(e) Any Lender may request that Loans made by it hereunder be evidenced
by a promissory note. In such event, the Borrower shall execute and deliver to
such Lender a promissory note payable to such Lender and its registered assigns
and in a form and substance reasonably acceptable to the Administrative Agent
and the Borrower. Notwithstanding any other provision of this Agreement, in the
event any Lender shall request and receive such a promissory note, the interests
represented by such note shall at all times (including after any assignment of
all or part of such interests pursuant to Section 9.04) be represented by one or
more promissory notes payable to the payee named therein or its registered
assigns.
SECTION 2.05. Fees. The Borrower agrees to pay to the Administrative
Agent, for its own account, the administrative fees set forth in the Fee Letter
at the times and in the amounts specified therein.
SECTION 2.06. Interest on Loans. (a) Subject to the provisions of
Section 2.07, the Loans comprising each ABR Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 365
or 366 days, as the case may be, when the Alternate Base Rate is
<PAGE> 26
21
determined by reference to the Prime Rate and over a year of 360 days at all
other times) at a rate per annum equal to the Alternate Base Rate plus the
Applicable Percentage in effect from time to time.
(b) Subject to the provisions of Section 2.07, the Loans comprising
each Eurodollar Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 360 days) at a rate per annum equal
to the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing
plus the Applicable Percentage in effect from time to time.
(c) Interest on each Loan shall be payable on the Interest Payment
Dates applicable to such Loan except as otherwise provided in this Agreement.
The applicable Alternate Base Rate or Adjusted LIBO Rate for each Interest
Period or day within an Interest Period, as the case may be, shall be determined
by the Administrative Agent, and such determination shall be conclusive absent
manifest error.
SECTION 2.07. Default Interest. If the Borrower shall default in the
payment of the principal of or interest on any Loan or any other amount becoming
due hereunder, by acceleration or otherwise, or under any other Loan Document,
the Borrower shall on demand from time to time pay interest, to the extent
permitted by law, on such defaulted amount to but excluding the date of actual
payment (after as well as before judgment) (a) in the case of overdue principal,
at the rate otherwise applicable to such Loan pursuant to Section 2.06 plus
2.00% per annum and (b) in all other cases, at a rate per annum (computed on the
basis of the actual number of days elapsed over a year of 365 or 366 days, as
the case may be, when determined by reference to the Prime Rate and over a year
of 360 days at all other times) equal to the rate that would be applicable to an
ABR Loan plus 2.00%.
SECTION 2.08. Alternate Rate of Interest. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the Administrative Agent shall have
determined that dollar deposits in the principal amounts of the Loans comprising
such Borrowing are not generally available in the London interbank market, or
that the rates at which such dollar deposits are being offered will not
adequately and fairly reflect the cost to any Lender of making or maintaining
its Eurodollar Loan during such Interest Period, or that reasonable means do not
exist for ascertaining the Adjusted LIBO Rate, the Administrative Agent shall,
as soon as practicable thereafter, give written or fax notice of such
determination to the Borrower and the Lenders. In the event of any such
determination, until the Administrative Agent shall have advised the Borrower
and the Lenders that the circumstances giving rise to such notice no longer
exist, any request by the Borrower for a Eurodollar Borrowing pursuant to
Section 2.03 or 2.10 shall be deemed to be a request for an ABR Borrowing. Each
determination by the Administrative Agent hereunder shall be conclusive absent
manifest error.
SECTION 2.09. Termination and Reduction of Commitments. (a) The
Commitments shall automatically terminate after the initial Borrowing on the
Closing Date. Notwithstanding the foregoing, all the Commitments shall
automatically terminate at 5:00 p.m., New York City time, on December 15, 1999,
if the initial Borrowing hereunder shall not have occurred by such time.
(b) Upon at least three Business Days' prior irrevocable written or fax
notice to the Administrative Agent, the Borrower may at any time in whole
permanently terminate, or from time to time in part permanently reduce, the
Commitments; provided, however, that each partial reduction of the Commitments
shall be in an integral multiple of $1,000,000 and in a minimum amount of
$5,000,000.
(c) Each reduction in the Commitments hereunder shall be made ratably
among the Lenders in accordance with their respective Commitments.
SECTION 2.10. Conversion and Continuation of Borrowings. The Borrower
shall have the right at any time upon prior irrevocable notice to the
Administrative Agent (a) not later than 12:00 (noon), New York City time, one
Business Day prior to conversion, to convert any Eurodollar Borrowing into an
ABR Borrowing, (b) not later than 11:00 a.m., New York City time, three Business
Days prior to conversion or continuation, to convert any ABR Borrowing into a
Eurodollar Borrowing or to continue any Eurodollar Borrowing as a Eurodollar
Borrowing for an additional Interest Period,
<PAGE> 27
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and (c) not later than 11:00 a.m., New York City time, three Business Days prior
to conversion, to convert the Interest Period with respect to any Eurodollar
Borrowing to another permissible Interest Period, subject in each case to the
following:
(i) each conversion or continuation shall be made pro rata
among the Lenders in accordance with the respective principal amounts
of the Loans comprising the converted or continued Borrowing;
(ii) if less than all the outstanding principal amount of any
Borrowing shall be converted or continued, then each resulting
Borrowing shall satisfy the limitations specified in Sections 2.02(a)
and 2.02(b) regarding the principal amount and maximum number of
Borrowings of the relevant Type;
(iii) each conversion shall be effected by each Lender and the
Administrative Agent by recording for the account of such Lender the
new Loan of such Lender resulting from such conversion and reducing the
Loan (or portion thereof) of such Lender being converted by an
equivalent principal amount; accrued interest on any Eurodollar Loan
(or portion thereof) being converted shall be paid by the Borrower at
the time of conversion;
(iv) if any Eurodollar Borrowing is converted at a time other
than the end of the Interest Period applicable thereto, the Borrower
shall pay, upon demand, any amounts due to the Lenders pursuant to
Section 2.16; and
(v) upon notice to the Borrower from the Administrative Agent
given at the request of the Required Lenders, after the occurrence and
during the continuance of a Default or Event of Default, no outstanding
Loan may be converted into, or continued as, a Eurodollar Loan.
Each notice pursuant to this Section 2.10 shall be irrevocable and
shall refer to this Agreement and specify (i) the identity and amount of the
Borrowing that the Borrower requests be converted or continued, (ii) whether
such Borrowing is to be converted to or continued as a Eurodollar Borrowing or
an ABR Borrowing, (iii) if such notice requests a conversion, the date of such
conversion (which shall be a Business Day) and (iv) if such Borrowing is to be
converted to or continued as a Eurodollar Borrowing, the Interest Period with
respect thereto. If no Interest Period is specified in any such notice with
respect to any conversion to or continuation as a Eurodollar Borrowing, the
Borrower shall be deemed to have selected an Interest Period of one month's
duration. The Administrative Agent shall advise the Lenders of any notice given
pursuant to this Section 2.10 and of each Lender's portion of any converted or
continued Borrowing. If the Borrower shall not have given notice in accordance
with this Section 2.10 to continue any Borrowing into a subsequent Interest
Period (and shall not otherwise have given notice in accordance with this
Section 2.10 to convert such Borrowing), such Borrowing shall, at the end of the
Interest Period applicable thereto (unless repaid pursuant to the terms hereof),
automatically be continued into a new Interest Period as an ABR Borrowing.
SECTION 2.11. Repayment of Borrowings. (a) The Borrower shall pay to
the Administrative Agent, for the account of the Lenders, on the dates set forth
below or, if any such date is not a Business Day, on the next preceding Business
Day (each such date being a "Repayment Date"), a principal amount of the Loans
(as adjusted from time to time pursuant to Sections 2.11(b), 2.12 and 2.13(f))
equal to the amount set forth below for such date, together in each case with
accrued and unpaid interest on the principal amount to be paid to but excluding
the date of such payment:
Repayment Date Amount
-------------- ------
February 29, 2000 $ 562,500
May 31, 2000 562,500
August 31, 2000 562,500
November 30, 2000 562,500
February 28, 2001 562,500
May 31, 2001 562,500
August 31, 2001 562,500
November 30, 2001 562,500
February 28, 2002 562,500
<PAGE> 28
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May 31, 2002 562,500
August 31, 2002 562,500
November 30, 2002 562,500
February 28, 2003 562,500
May 31, 2003 562,500
August 31, 2003 562,500
November 30, 2003 562,500
February 29, 2004 54,000,000
May 31, 2004 54,000,000
August 31, 2004 54,000,000
Maturity Date 54,000,000
(b) In the event and on each occasion that the Commitments shall be
reduced or shall expire or terminate other than as a result of the making of a
Loan, the installments payable on each Repayment Date shall be reduced pro rata
by an aggregate amount equal to the amount of such reduction, expiration or
termination.
(c) To the extent not previously paid, all Loans shall be due and
payable on the Maturity Date, together with accrued and unpaid interest on the
principal amount to be paid to but excluding the date of payment.
(d) All repayments pursuant to this Section 2.11 shall be subject to
Section 2.16, but shall otherwise be without premium or penalty.
SECTION 2.12. Prepayment. (a) The Borrower shall have the right at any
time and from time to time to prepay any Borrowing, in whole or in part, upon at
least three Business Days' prior written or fax notice (or telephone notice
promptly confirmed by written or fax notice) in the case of Eurodollar Loans, or
written or fax notice (or telephone notice promptly confirmed by written or fax
notice) at least one Business Day prior to the date of prepayment in the case of
ABR Loans, to the Administrative Agent before 11:00 a.m., New York City time;
provided, however, that each partial prepayment shall be in an amount that is an
integral multiple of $1,000,000 and not less than $5,000,000.
(b) Optional prepayments of Loans shall be applied pro rata against the
remaining scheduled installments of principal due in respect of the Loans.
(c) Each notice of prepayment shall specify the prepayment date, the
Type of each Loan being prepaid and the principal amount of each Borrowing (or
portion thereof) to be prepaid, shall be irrevocable and shall commit the
Borrower to prepay such Borrowing by the amount stated therein on the date
stated therein. All prepayments under this Section 2.12 shall be subject to
Section 2.16 but otherwise without premium or penalty. All prepayments under
this Section 2.12 shall be accompanied by accrued interest on the principal
amount being prepaid to the date of payment.
SECTION 2.13. Mandatory Prepayments. (a) Not later than 10 days
following the completion of any Asset Sale, the Borrower shall apply 100% of the
Net Cash Proceeds received with respect thereto to prepay outstanding Loans in
accordance with Section 2.13(f).
(b) In the event and on each occasion that an Equity Issuance occurs,
the Borrower shall, substantially simultaneously with (and in any event not
later than the third Business Day next following) the occurrence of such Equity
Issuance, apply 50% of the Net Cash Proceeds therefrom to prepay outstanding
Loans in accordance with Section 2.13(f); provided, however, that no such
prepayment shall be required if, after giving effect to such Equity Issuance and
the use of proceeds thereof, the Consolidated Leverage Ratio as of the end of
the most recently completed fiscal quarter of the Borrower would be less than
2.5 to 1.0.
<PAGE> 29
24
(c) No later than the earlier of (i) 90 days after the end of each
fiscal year of the Borrower, commencing with the fiscal year ending on December
31, 2000, and (ii) the date on which the financial statements with respect to
such period are delivered pursuant to Section 5.04(a), the Borrower shall prepay
outstanding Loans in accordance with Section 2.13(f) in an aggregate principal
amount equal to 75% of Excess Cash Flow for the fiscal year then ended;
provided, however, that such amount shall be reduced to 50% for any fiscal year
if the Consolidated Leverage Ratio as of the end of such fiscal year was less
than 2.5 to 1.0.
(d) In the event that any Loan Party or any subsidiary of a Loan Party
shall receive Net Cash Proceeds from the issuance of Indebtedness for money
borrowed of any Loan Party or any subsidiary of a Loan Party (other than any
cash proceeds from the issuance of Indebtedness for money borrowed permitted
pursuant to Section 6.01), the Borrower shall, substantially simultaneously with
(and in any event not later than the third Business Day next following) the
receipt of such Net Cash Proceeds by such Loan Party or such subsidiary, apply
an amount equal to 100% of such Net Cash Proceeds to prepay outstanding Loans in
accordance with Section 2.13(f).
(e) In the event that there shall occur any Casualty or Condemnation
and, pursuant to the applicable Mortgage, the Casualty Proceeds or Condemnation
Proceeds, as the case may be, are required to be used to prepay the Loans, then
the Borrower shall apply an amount equal to 100% of such Casualty Proceeds or
Condemnation Proceeds, as the case may be, to prepay outstanding Loans in
accordance with Section 2.13(f).
(f) Mandatory prepayments of outstanding Loans under this Agreement
shall be applied first to scheduled installments of outstanding Loans that are
due under Section 2.11 within 12 months of the date of such prepayment, and then
pro rata against the remaining scheduled installments of principal due in
respect of the Loans under Section 2.11.
(g) The Borrower shall deliver to the Administrative Agent, at the time
of each prepayment required under this Section 2.13, (i) a certificate signed by
a Financial Officer of the Borrower setting forth in reasonable detail the
calculation of the amount of such prepayment and (ii) to the extent practicable,
at least 10 days prior written notice of such prepayment. Each notice of
prepayment shall specify the prepayment date, the Type of each Loan being
prepaid and the principal amount of each Loan (or portion thereof) to be
prepaid. All prepayments of Borrowings under this Section 2.13 shall be subject
to Section 2.16, but shall otherwise be without premium or penalty.
SECTION 2.14. Reserve Requirements; Change in Circumstances. (a)
Notwithstanding any other provision of this Agreement, if any Change in Law
shall impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of or credit
extended by any Lender (except any such reserve requirement which is reflected
in the Adjusted LIBO Rate) or shall impose on such Lender or the London
interbank market any other condition affecting this Agreement or Eurodollar
Loans made by such Lender, and the result of any of the foregoing shall be to
increase the cost to such Lender of making or maintaining any Eurodollar Loan or
to reduce the amount of any sum received or receivable by such Lender hereunder
(whether of principal, interest or otherwise) by an amount deemed by such Lender
to be material, then the Borrower will pay to such Lender upon demand such
additional amount or amounts as will compensate such Lender for such additional
costs incurred or reduction suffered.
(b) If any Lender shall have determined that any Change in Law
regarding capital adequacy has or would have the effect of reducing the rate of
return on such Lender's capital or on the capital of such Lender's holding
company, if any, as a consequence of this Agreement or the Loans made by such
Lender pursuant hereto to a level below that which such Lender or such Lender's
holding company could have achieved but for such Change in Law (taking into
consideration such Lender's policies and the policies of such Lender's holding
company with respect to capital adequacy) by an amount deemed by such Lender to
be material, then from time to time the Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender or such Lender's
holding company for any such reduction suffered.
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(c) A certificate of a Lender setting forth the amount or amounts
necessary to compensate such Lender or its holding company as specified in
paragraph (a) or (b) above shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay such Lender the amount
shown as due on any such certificate delivered by it within 10 days after its
receipt of the same.
(d) Failure or delay on the part of any Lender to demand compensation
for any increased costs or reduction in amounts received or receivable or
reduction in return on capital shall not constitute a waiver of such Lender's
right to demand such compensation; provided that the Borrower shall not be under
any obligation to compensate any Lender under paragraph (a) or (b) above with
respect to increased costs or reductions with respect to any period prior to the
date that is 120 days prior to such request if such Lender knew or could
reasonably have been expected to know of the circumstances giving rise to such
increased costs or reductions and of the fact that such circumstances would
result in a claim for increased compensation by reason of such increased costs
or reductions; provided further that the foregoing limitation shall not apply to
any increased costs or reductions arising out of the retroactive application of
any Change in Law within such 120-day period. The protection of this Section
shall be available to each Lender regardless of any possible contention of the
invalidity or inapplicability of the law, rule, regulation, agreement, guideline
or other change or condition that shall have occurred or been imposed.
SECTION 2.15. Change in Legality. (a) Notwithstanding any other
provision of this Agreement, if any Change in Law shall make it unlawful for any
Lender to make or maintain any Eurodollar Loan or to give effect to its
obligations as contemplated hereby with respect to any Eurodollar Loan, then, by
written notice to the Borrower and to the Administrative Agent:
(i) such Lender may declare that Eurodollar Loans will not
thereafter (for the duration of such unlawfulness) be made by such
Lender hereunder (or be continued for additional Interest Periods and
ABR Loans will not thereafter (for such duration) be converted into
Eurodollar Loans), whereupon any request for a Eurodollar Borrowing (or
to convert an ABR Borrowing to a Eurodollar Borrowing or to continue a
Eurodollar Borrowing for an additional Interest Period) shall, as to
such Lender only, be deemed a request for an ABR Loan (or a request to
continue an ABR Loan as such for an additional Interest Period or to
convert a Eurodollar Loan into an ABR Loan, as the case may be), unless
such declaration shall be subsequently withdrawn; and
(ii) such Lender may require that all outstanding Eurodollar
Loans made by it be converted to ABR Loans, in which event all such
Eurodollar Loans shall be automatically converted to ABR Loans as of
the effective date of such notice as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal that would otherwise have been applied to
repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Loans made by such Lender in lieu of, or resulting from the conversion of,
such Eurodollar Loans.
(b) For purposes of this Section 2.15, a notice to the Borrower by any
Lender shall be effective as to each Eurodollar Loan made by such Lender, if
lawful, on the last day of the Interest Period currently applicable to such
Eurodollar Loan; in all other cases such notice shall be effective on the date
of receipt by the Borrower.
SECTION 2.16. Indemnity. The Borrower shall indemnify each Lender
against any loss or expense that such Lender may sustain or incur as a
consequence of (a) any event, other than a default by such Lender in the
performance of its obligations hereunder, which results in (i) such Lender
receiving or being deemed to receive any amount on account of the principal of
any Eurodollar Loan prior to the end of the Interest Period in effect therefor,
(ii) the conversion of any Eurodollar Loan to an ABR Loan, or the conversion of
the Interest Period with respect to any Eurodollar Loan, in each case other than
on the last day of the Interest Period in effect therefor, or (iii) any
Eurodollar Loan to
<PAGE> 31
26
be made by such Lender (including any Eurodollar Loan to be made pursuant to a
conversion or continuation under Section 2.10) not being made after notice of
such Loan shall have been given by the Borrower hereunder (any of the events
referred to in this clause (a) being called a "Breakage Event") or (b) any
default in the making of any payment or prepayment required to be made
hereunder. In the case of any Breakage Event, such loss shall include an amount
equal to the excess, as reasonably determined by such Lender, of (i) its cost of
obtaining funds for the Eurodollar Loan that is the subject of such Breakage
Event for the period from the date of such Breakage Event to the last day of the
Interest Period in effect (or that would have been in effect) for such Loan over
(ii) the amount of interest likely to be realized by such Lender in redeploying
the funds released or not utilized by reason of such Breakage Event for such
period. A certificate of any Lender setting forth any amount or amounts which
such Lender is entitled to receive pursuant to this Section 2.16 shall be
delivered to the Borrower and shall be conclusive absent manifest error.
SECTION 2.17. Pro Rata Treatment. Except as required under Section
2.15, each Borrowing, each payment or prepayment of principal of any Borrowing,
each payment of interest on the Loans, each reduction of the Commitments and
each conversion of any Borrowing to or continuation of any Borrowing as a
Borrowing of any Type shall be allocated pro rata among the Lenders in
accordance with their respective Commitments (or, if such Commitments shall have
expired or been terminated, in accordance with the respective principal amounts
of their outstanding Loans). Each Lender agrees that in computing such Lender's
portion of any Borrowing to be made hereunder, the Administrative Agent may, in
its discretion, round each Lender's percentage of such Borrowing to the next
higher or lower whole dollar amount.
SECTION 2.18. Sharing of Setoffs. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
the Borrower or any other Loan Party, or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other security or interest
arising from, or in lieu of, such secured claim, received by such Lender under
any applicable bankruptcy, insolvency or other similar law or otherwise, or by
any other means, obtain payment (voluntary or involuntary) in respect of any
Loan or Loans as a result of which the unpaid principal portion of its Loans
shall be proportionately less than the unpaid principal portion of the Loans of
any other Lender, it shall be deemed simultaneously to have purchased from such
other Lender at face value, and shall promptly pay to such other Lender the
purchase price for, a participation in the Loans of such other Lender, so that
the aggregate unpaid principal amount of the Loans and participations in Loans
held by each Lender shall be in the same proportion to the aggregate unpaid
principal amount of all Loans then outstanding as the principal amount of its
Loans prior to such exercise of banker's lien, setoff or counterclaim or other
event was to the principal amount of all Loans outstanding prior to such
exercise of banker's lien, setoff or counterclaim or other event; provided,
however, that if any such purchase or purchases or adjustments shall be made
pursuant to this Section 2.18 and the payment giving rise thereto shall
thereafter be recovered, such purchase or purchases or adjustments shall be
rescinded to the extent of such recovery and the purchase price or prices or
adjustment restored without interest. The Borrower expressly consents to the
foregoing arrangements and agrees that any Lender holding a participation in a
Loan deemed to have been so purchased may exercise, to the fullest extent
permitted by law, any and all rights of banker's lien, setoff or counterclaim
with respect to any and all moneys owing by the Borrower to such Lender by
reason thereof as fully as if such Lender had made a Loan directly to the
Borrower in the amount of such participation.
SECTION 2.19. Payments. (a) The Borrower shall make each payment
(including principal of or interest on any Borrowing or any other amounts)
hereunder and under any other Loan Document not later than 12:00 (noon), New
York City time, on the date when due in immediately available dollars, without
setoff, defense or counterclaim. Each such payment shall be made to the
Administrative Agent at its offices at Eleven Madison Avenue, New York, New York
10010.
(b) Except as otherwise expressly provided herein, whenever any payment
(including principal of or interest on any Borrowing or any other amounts)
hereunder or under any other Loan Document shall become due, or otherwise would
occur, on a day that is not a Business Day, such payment may be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of interest.
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SECTION 2.20. Taxes. (a) Any and all payments by or on account of any
obligation of the Borrower or any Loan Party hereunder or under any other Loan
Document shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided that if the Borrower or any Loan
Party shall be required to deduct any Indemnified Taxes or Other Taxes from such
payments, then (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section) the Administrative Agent or such Lender (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Borrower or such Loan Party shall make such
deductions and (iii) the Borrower or such Loan Party shall pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable
law.
(b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent and each
Lender, within 10 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Administrative Agent or such
Lender, as the case may be, on or with respect to any payment by or on account
of any obligation of the Borrower or any Loan Party hereunder or under any other
Loan Document (including Indemnified Taxes or Other Taxes imposed or asserted on
or attributable to amounts payable under this Section) and any penalties,
interest and reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority; provided, however,
that the Borrower shall not be obligated to make payment to the Administrative
Agent or such Lender pursuant to this Section in respect of penalties, interest
and other liabilities attributable to such Indemnified Taxes or Other Taxes, if
such penalties, interest and other liabilities are attributable to the gross
negligence or wilful misconduct of the Administrative Agent or such Lender.
After the Administrative Agent or such Lender learns of the imposition of
Indemnified Taxes or Other Taxes, the Administrative Agent or such Lender will
act in good faith to promptly notify the Borrower of its obligations hereunder.
A certificate as to the amount of such payment or liability delivered to the
Borrower by a Lender, or by the Administrative Agent on its behalf or on behalf
of a Lender, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower or any other Loan Party to a Governmental Authority,
the Borrower shall deliver to the Administrative Agent the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of the return reporting such payment or other evidence of
such payment reasonably satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by applicable
law, such properly completed and executed documentation prescribed by applicable
law, if any, as will permit such payments to be made without withholding or at a
reduced rate.
(f) If a Lender or the Administrative Agent determines in its sole
discretion that it has received a refund in respect of any Indemnified Taxes or
Other Taxes as to which it has been indemnified by the Borrower or another Loan
Party pursuant to this Section, or with respect to which the Borrower or another
Loan Party has paid additional amounts pursuant to this Section, it shall
promptly notify the Borrower of such refund and shall within 30 days from the
date of receipt of such notice pay over the amount of such refund to the
Borrower (but only to the extent of indemnity payments made, or additional
amounts paid, by the Borrower or a Loan Party under this Section with respect to
the Indemnified Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of the Administrative Agent or such Lender (but including
any interest paid by the relevant Governmental Authority with respect to such
refund); provided, however, that the Borrower, upon the request of the
Administrative Agent or such Lender (or transferee), agrees to repay the amount
paid over to the Borrower (plus all penalties, interest or other charges imposed
by the relevant Governmental Authority) to the Administrative Agent or such
Lender (or transferee) in the event the
<PAGE> 33
26
Administrative Agent or such Lender (or transferee) is required to repay such
refund to such Governmental Authority. Nothing contained in this Section 2.20(f)
shall require the Administrative Agent or any Lender (or transferee) to make
available its tax returns (or any other information relating to taxes which it
deems confidential) to the Borrower or any other person.
SECTION 2.21. Assignment of Commitments Under Certain Circumstances;
Duty to Mitigate. (a) In the event (i) any Lender delivers a certificate
requesting compensation pursuant to Section 2.14, (ii) any Lender delivers a
notice described in Section 2.15, (iii) the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority on account of any
Lender pursuant to Section 2.20 or (iv) any Lender refuses to consent to a
proposed amendment, waiver or modification with respect to any Loan Document
which has been approved by the Required Lenders but which requires the consent
of each Lender pursuant to Section 9.08(b), the Borrower may, at its sole
expense and effort (including with respect to the processing and recordation fee
referred to in Section 9.04(b)), upon notice to such Lender and the
Administrative Agent, require such Lender to transfer and assign, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.04), all of its interests, rights and obligations under this Agreement
to an assignee that shall assume such assigned obligations (which assignee may
be another Lender, if a Lender accepts such assignment); provided that (x) such
assignment shall not conflict with any law, rule or regulation or order of any
court or other Governmental Authority having jurisdiction, (y) the Borrower
shall have received the prior written consent of the Administrative Agent, which
consent shall not unreasonably be withheld, and (z) the Borrower or such
assignee shall have paid to the affected Lender in immediately available funds
an amount equal to the sum of the principal of and interest accrued to the date
of such payment on the outstanding Loans of such Lender plus all other amounts
accrued for the account of such Lender hereunder (including any amounts under
Section 2.14 and Section 2.16); provided further that, if prior to any such
transfer and assignment the circumstances or event that resulted in such
Lender's claim for compensation under Section 2.14 or notice under Section 2.15
or the amounts paid pursuant to Section 2.20, as the case may be, cease to cause
such Lender to suffer increased costs or reductions in amounts received or
receivable or reduction in return on capital, or cease to have the consequences
specified in Section 2.15, or cease to result in amounts being payable under
Section 2.20, as the case may be (including as a result of any action taken by
such Lender pursuant to paragraph (b) below), or if such Lender shall waive its
right to claim further compensation under Section 2.14 in respect of such
circumstances or event or shall withdraw its notice under Section 2.15 or shall
waive its right to further payments under Section 2.20 in respect of such
circumstances or event, as the case may be, then such Lender shall not
thereafter be required to make any such transfer and assignment hereunder.
(b) If (i) any Lender shall request compensation under Section 2.14,
(ii) any Lender delivers a notice described in Section 2.15 or (iii) the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority on account of any Lender, pursuant to Section 2.20, then
such Lender shall use reasonable efforts (which shall not require such Lender to
incur an unreimbursed loss or unreimbursed cost or expense or otherwise take any
action inconsistent with its internal policies or legal or regulatory
restrictions or suffer any disadvantage or burden deemed by it to be
significant) (x) to file any certificate or document reasonably requested in
writing by the Borrower or (y) to assign its rights and delegate and transfer
its obligations hereunder to another of its offices, branches or affiliates, if
such filing or assignment would reduce its claims for compensation under Section
2.14 or enable it to withdraw its notice pursuant to Section 2.15 or would
reduce amounts payable pursuant to Section 2.20, as the case may be, in the
future. The Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such filing or assignment,
delegation and transfer.
<PAGE> 34
ARTICLE III
Representations and Warranties
The Borrower represents and warrants to the Administrative Agent, the
Collateral Agent and each of the Lenders that:
SECTION 3.01. Organization; Powers. The Borrower and each of the
Subsidiaries (other than Inactive Subsidiaries) (a) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, (b) has all requisite power and authority to own its property and
assets and to carry on its business as now conducted and as proposed to be
conducted, (c) is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required, except where the failure so
to qualify could not reasonably be expected to result in a Material Adverse
Effect, and (d) has the power and authority to execute, deliver and perform its
obligations under each of the Loan Documents and each other agreement or
instrument contemplated hereby to which it is or will be a party and, in the
case of the Borrower, to borrow hereunder.
SECTION 3.02. Authorization. The execution, delivery and performance by
the Borrower of the Stock Purchase Agreement and by each Loan Party of each of
the Loan Documents, the New Note Documents and the Perpetual Convertible
Preferred Stock Documents, and the borrowings hereunder (collectively, the
"Transactions") (a) have been duly authorized by all requisite corporate and, if
required, stockholder action and (b) will not (i) violate (A) any provision of
law, statute, rule or regulation, except for violations that could not
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect, (B) any provision of the certificate or articles of
incorporation or other constitutive documents or by-laws of the Borrower or any
Subsidiary, (C) any order of any Governmental Authority or (D) any provision of
any indenture or other material agreement or other material instrument to which
the Borrower or any Subsidiary is a party or by which any of them or any of
their property is or may be bound, (ii) constitute (alone or with notice or
lapse of time or both) a default under, or give rise to any right to accelerate
or to require the prepayment, repurchase or redemption of any obligation under
any such indenture, agreement or other instrument (except, in each case, with
respect to Indebtedness to be repaid on the Closing Date) or (iii) result in the
creation or imposition of any Lien upon or with respect to any property or
assets now owned or hereafter acquired by the Borrower or any Subsidiary (other
than any Lien created hereunder or under the Security Documents).
SECTION 3.03. Enforceability. This Agreement has been duly executed and
delivered by the Borrower and constitutes, and each other Loan Document when
executed and delivered by the each Loan Party thereto will constitute, a legal,
valid and binding obligation of such Loan Party enforceable against such Loan
Party in accordance with its terms except as such enforceability may be limited
by bankruptcy, insolvency, fraudulent conveyance, reorganization and other
similar laws relating to or affecting creditors' rights generally and by general
equitable principles.
SECTION 3.04. Governmental Approvals. No action, consent or approval
of, registration or filing with or any other action by any Governmental
Authority is or will be required in connection with the Transactions, except for
(a) the filing of Uniform Commercial Code financing statements and filings with
the United States Patent and Trademark Office and the United States Copyright
Office, (b) recordation of the Mortgages, (c) such as have been made or obtained
and are in full force and effect and (d) those the failure of which to obtain or
make could not reasonably be expected to have a Material Adverse Effect.
SECTION 3.05. Financial Statements. (a) The Borrower has heretofore
furnished to the Lenders (i) its (x) consolidated balance sheet and statements
of operations, stockholders' equity and cash flows as of and for the fiscal year
ended December 31, 1998, audited by and accompanied by the opinion of Ernst &
Young LLP, independent public accountants, and (y) consolidated balance sheet
and statements of operations and cash flows as of and for the six months ended
June 30, 1999, certified by its chief financial officer and (ii) the combined
balance sheet and statements of operations, stockholder's equity and cash flows
of Copperweld and Copperweld Canada as of and for the fiscal year ended December
31, 1998, audited by and accompanied by the opinions of Ernst & Young LLP,
<PAGE> 35
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independent public accountants, and the combined balance sheet and statements of
operations and cash flows of Copperweld and Copperweld Canada as of and for the
six months ended June 30, 1999, certified by its chief financial officer. Such
financial statements present fairly, in all material respects, the financial
condition and results of operations and cash flows of the Borrower and its
consolidated Subsidiaries, Copperweld and Copperweld Canada, as the case may be,
as of such dates and for such periods. Such balance sheets and the notes thereto
disclose all material liabilities, direct or contingent, of the Borrower and its
consolidated Subsidiaries, Copperweld and Copperweld Canada, as the case may be,
as of the dates thereof. Such financial statements were prepared in accordance
with GAAP applied on a consistent basis.
(b) The Borrower has heretofore delivered to the Lenders its unaudited
pro forma consolidated balance sheet as of June 30, 1999, and statements of
operations for the six-month period ended June 30, 1999, and for the 12-month
period ended December 31, 1998, prepared giving effect to the Acquisition and
the acquisition of WTHI as if they had occurred, with respect to such balance
sheet, on such date and, with respect to such other financial statements, on the
first day of the reporting period. Such pro forma financial statements have been
prepared in good faith by the Borrower, based on the assumptions used to prepare
the pro forma financial information contained in the preliminary offering
memorandum dated October 15, 1999, relating to the New Senior Notes (which
assumptions are believed by the Borrower on the date hereof and on the Closing
Date to be reasonable), are based on the best information available to the
Borrower as of the date of delivery thereof, accurately reflect all adjustments
required to be made to give effect to the Transactions and presents fairly, in
all material respects, on a pro forma basis the estimated consolidated financial
position of the Borrower and its consolidated Subsidiaries as of such date and
for such period, assuming that the Transactions had actually occurred at such
date or at the beginning of such period, as the case may be.
SECTION 3.06. No Material Adverse Change. There has been no material
adverse change in the business, assets, operations, properties, prospects or
condition (financial or otherwise) of the Borrower and the Subsidiaries, taken
as a whole, since June 30, 1999.
SECTION 3.07. Title to Properties; Possession Under Leases. (a) Each of
the Borrower and the Subsidiaries has valid title to, or valid leasehold
interests in, all its material properties and assets (including all Mortgaged
Property), except for defects in title and other matters that do not interfere
with its ability to conduct its business as currently conducted or to utilize
such properties and assets for their intended purposes and, with respect to each
Mortgaged Property, encumbrances permitted under Section 6.02 (including those
matters shown on Schedule B of the title commitment described in paragraph (l)
of Article IV). All such material properties and assets are free and clear of
Liens, other than Liens expressly permitted by Section 6.02.
(b) Each of the Borrower and the Subsidiaries has complied with all
obligations under all material leases to which it is a party and all such leases
are in full force and effect, and each of the Borrower and the Subsidiaries
enjoys peaceful and undisturbed possession under all such material leases,
except for noncompliance that could not reasonably be expected, individually or
in the aggregate, to result in a Material Adverse Effect.
(c) Except as set forth on Schedule 3.07(c), the Borrower has not
received, as of the date hereof, any notice of, nor has any knowledge of, any
pending or contemplated condemnation proceeding affecting the Mortgaged
Properties or any sale or disposition thereof in lieu of condemnation.
(d) Neither the Borrower nor any of the Subsidiaries is obligated under
any right of first refusal, option or other contractual right to sell, assign or
otherwise dispose of any Mortgaged Property or any interest therein.
SECTION 3.08. Subsidiaries. Schedule 3.08 sets forth as of the Closing
Date a list of all Subsidiaries and the percentage ownership interest of the
Borrower therein. The shares of capital stock or other ownership interests so
indicated on Schedule 3.08 are fully paid and non-assessable and
<PAGE> 36
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are owned by the Borrower, directly or indirectly, free and clear of all Liens
other than Liens permitted pursuant to Section 6.02.
SECTION 3.09. Litigation; Compliance with Laws. (a) Except as set forth
on Schedule 3.09, there are not any actions, suits or proceedings at law or in
equity or by or before any Governmental Authority now pending or, to the
knowledge of the Borrower, threatened against or affecting the Borrower or any
Subsidiary or any business, property or rights of any such person (i) that
involve any Loan Document or the Transactions or (ii) that could reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect.
(b) None of the Borrower or any of the Subsidiaries or any of their
respective material properties or assets is in violation of, nor will the
continued operation of their material properties and assets as currently
conducted violate, any law, rule or regulation (including any zoning or building
law, rule or regulation, Environmental Law, ordinance, code or approval or any
building permits) or any restrictions of record or agreements affecting the
Mortgaged Property, or is in default with respect to any judgment, writ,
injunction, decree or order of any Governmental Authority, where such violation
or default could reasonably be expected to result in a Material Adverse Effect.
SECTION 3.10. Federal Reserve Regulations. (a) Neither the Borrower nor any
of the Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of buying or
carrying Margin Stock.
(b) No part of the proceeds of any Loan will be used, whether directly
or indirectly, and whether immediately, incidentally or ultimately, for any
purpose that entails a violation of, or that is inconsistent with, the
provisions of the Regulations of the Board, including Regulation T, U or X.
SECTION 3.11. Investment Company Act; Public Utility Holding Company Act.
Neither the Borrower nor any other Loan Party is an "investment company" as
defined in, or subject to regulation under, the Investment Company Act of 1940.
Each of the Borrower and each Loan Party either (a) is not a "holding company"
as defined in, or subject to regulation under, the Public Utility Holding
Company Act of 1935 or (b) is subject to an exemption under such Act.
SECTION 3.12. Use of Proceeds. The Borrower will use the proceeds of
the Loans only for the purposes specified in the preamble to this Agreement.
SECTION 3.13. Tax Returns. Each of the Borrower and the Subsidiaries
has filed or caused to be filed all Federal income tax and all other material
Federal, state, local and foreign tax returns or materials required to have been
filed by it and has paid or caused to be paid all taxes shown on such returns to
be due and payable by it and all assessments received by it, except taxes that
are being contested in good faith by appropriate proceedings and for which the
Borrower or such Subsidiary, as applicable, shall have set aside on its books
adequate reserves.
SECTION 3.14. No Material Misstatements. None of (a) the Confidential
Information Memorandum or (b) any other information, report, financial
statement, exhibit or schedule furnished in writing by or on behalf of the
Borrower to the Administrative Agent or any Lender in connection with the
negotiation of any Loan Document or included therein or delivered pursuant
thereto contained, contains or will contain, when taken as a whole, any material
misstatement of fact or omitted, omits or will omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were, are or will be made, not misleading; provided that to the
extent any such information, report, financial statement, exhibit or schedule
was based upon or constitutes a forecast or projection, the Borrower represents
only that it acted in good faith and utilized reasonable assumptions and due
care in the preparation of such information, report, financial statement,
exhibit or schedule.
SECTION 3.15. Employee Benefit Plans. (a) Each of the Borrower and its
ERISA Affiliates is in compliance in all material respects with the applicable
provisions of ERISA and the Code and the regulations and published
interpretations thereunder, except to the extent that any such noncompliance
could not reasonably be expected to result in a Material Adverse Effect. No
ERISA
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Event has occurred or is reasonably expected to occur that, when taken
together with all other such ERISA Events, could reasonably be expected to
result in a Material Adverse Effect. The present value of all benefit
liabilities under each Plan (based on those assumptions used to fund such Plan)
did not, as of the last annual valuation date applicable thereto, exceed by more
than $58,000,000 the fair market value of the assets of such Plan, and the
present value of all benefit liabilities of all underfunded Plans (based on
those assumptions used to fund each such Plan) did not, as of the last annual
valuation dates applicable thereto, exceed by more than $78,000,000 the fair
market value of the assets of all such underfunded Plans.
(b) Each Foreign Pension Plan is in compliance in all material respects
with all requirements of law applicable thereto and the respective requirements
of the governing documents for such plan except to the extent such noncompliance
could not reasonably be expected to result in a Material Adverse Effect. With
respect to each Foreign Pension Plan, none of the Borrower, its Affiliates or
any of its directors, officers, employees or agents has engaged in a transaction
that subject the Borrower or any of its Subsidiaries, directly or indirectly, to
a material tax or civil penalty. With respect to each Foreign Pension Plan,
reserves have been established in the financial statements furnished to Lenders
in respect of any unfunded liabilities in accordance with applicable law and
prudent business practice or, where required, in accordance with ordinary
accounting practices in the jurisdiction in which such Foreign Pension Plan is
maintained. The aggregate unfunded liabilities, with respect to such Foreign
Pension Plans could not reasonably be expected to result in a Material Adverse
Effect. There are no actions, suits or claims (other than routine claims for
benefits) pending or threatened against the Borrower or any of its Affiliates
with respect to any Foreign Pension Plan which could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect.
SECTION 3.16. Environmental Matters. Except as set forth in Schedule
3.16:
(a) The Borrower and the Subsidiaries have not generated, treated,
stored or disposed of Hazardous Materials at, on or under any of the properties
owned or operated by the Borrower and the Subsidiaries (the "Properties"), and
to the Borrower's knowledge, the Properties do not contain any Hazardous
Materials in amounts or concentrations which (i) constitute, or constituted a
violation of, (ii) require Remedial Action under, or (iii) could give rise to
liability under, Environmental Laws or Environmental Permits, which violations,
Remedial Actions and liabilities could reasonably be expected to result in a
Material Adverse Effect;
(b) The Properties and all operations of the Borrower and the
Subsidiaries are in compliance, and in the last six years have been in
compliance, with all Environmental Laws and all necessary Environmental Permits
have been obtained and are in effect, except to the extent that any such
noncompliance or failure to obtain any necessary permits could not reasonably be
expected to result in a Material Adverse Effect;
(c) There have been no Releases, and there are no threatened Releases,
at, from, under or proximate to the Properties or otherwise in connection with
the operations of the Borrower or the Subsidiaries, which Releases or threatened
Releases could reasonably be expected to result in a Material Adverse Effect;
(d) Neither the Borrower nor any of the Subsidiaries has received any
notice of an Environmental Claim in connection with the Properties or the
operations of the Borrower or the Subsidiaries or with regard to any person
whose liabilities for environmental matters the Borrower or the Subsidiaries has
retained or assumed, in whole or in part, contractually or by operation of law,
which could reasonably be expected to result in a Material Adverse Effect, nor
do the Borrower or the Subsidiaries have reason to believe that any such notice
will be received or is being threatened; and
(e) Hazardous Materials have not been transported from the Properties
in a manner that could give rise to liability under any Environmental Law, nor
have the Borrower or the Subsidiaries retained or assumed any liability,
contractually or by operation of law, with respect to the generation, treatment,
storage or disposal of Hazardous Materials, which transportation or retained or
assumed liabilities could reasonably be expected to result in a Material Adverse
Effect.
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SECTION 3.17. Insurance. Schedule 3.17 sets forth a true, complete and
correct description of all insurance maintained by the Borrower or by the
Borrower for its Subsidiaries as of the date hereof and the Closing Date. As of
each such date, such insurance is in full force and effect and all premiums have
been duly paid. The Borrower and its Subsidiaries have insurance in such amounts
and covering such risks and liabilities as are in accordance with normal
industry practice.
SECTION 3.18. Security Documents. (a) The Security Agreement is
effective to create in favor of the Collateral Agent, for the ratable benefit of
the Secured Parties, a legal, valid and enforceable security interest in the
Collateral (as defined in the Security Agreement) to the extent that a security
interest can be created in such property under the Uniform Commercial Code, and,
when financing statements in appropriate form are filed in the offices specified
on Schedule 6 to the Perfection Certificate, the Security Agreement shall
constitute a fully perfected Lien on, and security interest in, all right, title
and interest of the grantors thereunder in such Collateral (other than as
expressly permitted in the Security Agreement) to the extent that a security
interest may be perfected by filing under the Uniform Commercial Code, in each
case prior and superior in right to any other person, other than with respect to
Liens expressly permitted by Section 6.02.
(b) When the Security Agreement is filed in the United States Patent
and Trademark Office and the United States Copyright Office, the Security
Agreement shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the grantors thereunder in the Intellectual
Property (as defined in the Security Agreement), in each case prior and superior
in right (subject to Liens permitted under Section 6.02) to any other person (it
being understood that subsequent recordings in the United States Patent and
Trademark Office and the United States Copyright Office may be necessary to
perfect a lien on registered trademarks, trademark applications and copyrights
acquired by the grantors after the date hereof).
(c) Each Mortgage is effective to create in favor of the Collateral
Agent, for the ratable benefit of the Secured Parties, a legal, valid and
enforceable Lien on all of the relevant Loan Party's right, title and interest
in and to the Mortgaged Property thereunder and the proceeds thereof, and when
such Mortgage is filed in the relevant office specified on Schedule 3.18(c),
such Mortgage shall constitute a fully perfected Lien on, and security interest
in, all right, title and interest of such Loan Party in such Mortgaged Property
and the proceeds thereof, in each case prior and superior in right to any other
person, other than with respect to the rights of persons pursuant to Liens
expressly permitted by Section 6.02.
SECTION 3.19. Location of Owned Real Property. Schedule 3.19 lists
completely and correctly as of the Closing Date all real property owned by the
Acquired Subsidiaries and the addresses thereof. The Acquired Subsidiaries own
in fee all the real property set forth on Schedule 3.19.
SECTION 3.20. Labor Matters. As of the date hereof and the Closing
Date, there are no strikes, lockouts or slowdowns against the Borrower or any
Subsidiary pending or, to the knowledge of the Borrower, threatened, which could
reasonably be expected to have a Material Adverse Effect. The hours worked by
and payments made to employees of the Borrower and the Subsidiaries have not
been in violation of the Fair Labor Standards Act or any other applicable
Federal, state, local or foreign law dealing with such matters. All material
payments due from the Borrower or any Subsidiary, or for which any claim may be
made against the Borrower or any Subsidiary, on account of wages and employee
health and welfare insurance and other benefits, have been paid or accrued as a
liability on the books of the Borrower or such Subsidiary. The consummation of
the Transactions will not give rise to any right of termination or right of
renegotiation on the part of any union under any collective bargaining agreement
to which the Borrower or any Subsidiary is bound.
SECTION 3.21. Solvency. Immediately after the consummation of the
Transactions to occur on the Closing Date and immediately following the making
of each Loan and after giving effect to the application of the proceeds of each
Loan, on a consolidated basis (a) the fair value of the assets of the Loan
Parties, at a fair valuation, will exceed their debts and liabilities,
subordinated, contingent or otherwise; (b) the present fair saleable value of
the property of the Loan Parties will be greater than the amount that will be
required to pay the probable liability of their debts and other liabilities,
<PAGE> 39
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subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured; (c) the Loan Parties will be able to pay their
debts and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (d) the Loan Parties will not have
unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is proposed to be conducted
following the Closing Date.
SECTION 3.22. Year 2000. Any reprogramming required to permit the
proper functioning, in and following the year 2000, of (a) the Borrower's and
its Subsidiaries' computer systems and (b) equipment containing embedded
microchips (including systems and equipment supplied by others or with which the
Borrower's or its Subsidiaries' systems interface) and the testing of all such
systems and equipment, as so reprogrammed, has been completed in all material
respects, other than systems relating to payroll and certain employee benefits
which reprogramming and testing is expected to be completed in all material
respects by December 1, 1999. The cost to the Borrower and its Subsidiaries of
such reprogramming and testing and of the reasonably foreseeable consequences of
the year 2000 to the Borrower and its Subsidiaries (including reprogramming
errors and the failure of others' systems or equipment) will not result in a
Material Adverse Effect. The computer and management information systems of the
Borrower and its Subsidiaries are and, with ordinary course upgrading and
maintenance, will continue for the term of this Agreement to be, sufficient to
permit the Borrower and its Subsidiaries to conduct their business without
Material Adverse Effect.
ARTICLE IV
Conditions of Lending
The obligation of each Lender to make its Loans hereunder is subject to
the satisfaction of the following conditions on the Closing Date:
(a) The Administrative Agent shall have received a notice of Borrowing
as required by Section 2.03.
(b) The representations and warranties set forth in Article III hereof
and in each other Loan Document shall be true and correct in all material
respects on and as of the date of the Borrowing with the same effect as though
made on and as of such date.
(c) At the time of and immediately after the Borrowing, no Event of
Default or Default shall have occurred and be continuing.
(d) The Agents shall have received, on behalf of themselves and the
Lenders, a favorable written opinion of (i) Glenn Moran, General Counsel of the
Borrower, substantially to the effect set forth in Exhibit H-1, (ii) Davis Polk
& Wardwell, counsel for the Borrower, substantially to the effect set forth in
Exhibit H-2, and (iii) each local counsel listed on Schedule 4.02(a),
substantially to the effect set forth in Exhibit H-3, in each case (A) dated the
Closing Date, (B) addressed to the Agents and the Lenders, and (C) covering such
other matters relating to the Loan Documents and the Transactions as the Agents
shall reasonably request, and the Borrower hereby requests such counsel to
deliver such opinions.
(e) The Administrative Agent shall have received (i) a copy of the
certificate or articles of incorporation, including all amendments thereto, of
each Loan Party, certified as of a recent date by the Secretary of State of the
state of its organization, and a certificate as to the good standing of each
Loan Party as of a recent date, from such Secretary of State; (ii) a certificate
of the Secretary or Assistant Secretary of each Loan Party dated the Closing
Date and certifying (A) that attached thereto is a true and complete copy of the
by-laws of such Loan Party as in effect on the Closing Date and at all times
since a date prior to the date of the resolutions described in clause (B) below,
(B) that attached thereto is a true and complete copy of resolutions duly
adopted by the Board of Directors or stockholders of such Loan Party authorizing
the execution, delivery and performance of the Loan Documents to which such
person is a party and, in the case of the Borrower, the borrowings hereunder,
and that such resolutions have not been modified, rescinded or amended and are
in full
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35
force and effect, (C) that the certificate or articles of incorporation of such
Loan Party have not been amended since the date of the last amendment thereto
shown on the certificate of good standing furnished pursuant to clause (i)
above, and (D) as to the incumbency and specimen signature of each officer
executing any Loan Document or any other document delivered in connection
herewith on behalf of such Loan Party; (iii) a certificate of another officer
as to the incumbency and specimen signature of the Secretary or Assistant
Secretary executing the certificate pursuant to (ii) above; and (iv) such other
documents as the Lenders or the Agents may reasonably request.
(f) The Administrative Agent shall have received a certificate, dated
the Closing Date and signed by a Financial Officer of the Borrower, confirming
compliance with the conditions precedent set forth in paragraphs (b) and (c) of
this Article IV.
(g) The Agents shall have received all amounts due and payable on or
prior to the Closing Date, including, to the extent invoiced, reimbursement or
payment of all out-of-pocket expenses required to be reimbursed or paid by the
Borrower hereunder or under any other Loan Document.
(h) The Copperweld Canada Note, accompanied by a note transfer and
endorsed in blank, shall be in the actual possession of the Collateral Agent.
(i) The Security Agreement shall have been duly executed by the Loan
Parties party thereto and shall have been delivered to the Collateral Agent and
shall be in full force and effect on such date and each document (including each
Uniform Commercial Code financing statement) required by law or reasonably
requested by the Agents to be filed, registered or recorded in order to create
in favor of the Collateral Agent for the benefit of the Secured Parties a valid,
legal and perfected first-priority security interest in and lien on the
Collateral (subject to any Lien expressly permitted by Section 6.02) described
in such agreement shall have been delivered to the Collateral Agent.
(j) The Collateral Agent shall have received the results of a search of
the Uniform Commercial Code filings (or equivalent filings) made with respect to
the Loan Parties in the states (or other jurisdictions) in which the chief
executive office of each such person is located, any offices of such persons in
which records have been kept relating to accounts receivable and the other
jurisdictions in which Uniform Commercial Code filings (or equivalent filings)
are to be made pursuant to the preceding paragraph, together with copies of the
financing statements (or similar documents) disclosed by such search, and
accompanied by evidence satisfactory to the Collateral Agent that the Liens
indicated in any such financing statement (or similar document) would be
permitted under Section 6.02 or have been released.
(k) The Collateral Agent shall have received a Perfection Certificate
with respect to the Acquired Subsidiaries dated the Closing Date and duly
executed by a Responsible Officer of the Borrower.
(l)(i) Each of the Security Documents, in form and substance
satisfactory to the Lenders, relating to each of the Mortgaged Properties shall
have been duly executed by the parties thereto and delivered to the Collateral
Agent and shall be in full force and effect, (ii) each of such Mortgaged
Properties shall not be subject to any Lien other than those permitted under
Section 6.02, (iii) each of such Security Documents shall have been filed and
recorded in the recording office as specified on Schedule 3.18(c) (or a lender's
title insurance policy or "marked" title commitment, in form and substance
acceptable to the Collateral Agent, insuring such Security Document as a first
lien on such Mortgaged Property (subject to any Lien permitted by Section 6.02)
shall have been received by the Collateral Agent) and, in connection therewith,
the Collateral Agent shall have received evidence satisfactory to it of each
such filing and recordation or arrangements therefor and (iv) the Collateral
Agent shall have received such other documents, including a policy or policies
of title insurance issued by a nationally recognized title insurance company,
together with such endorsements, coinsurance and reinsurance as may be available
and as reasonably requested by the Collateral Agent and the Lenders, insuring
the Mortgages as valid first liens on the Mortgaged Properties, free of Liens
other than those permitted under Section 6.02, together with such surveys as are
sufficient for the title insurance company to remove the general survey
exception; provided that with respect to surveys, the
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Borrower may deliver such surveys to the Collateral Agent following the Closing
Date in accordance with Section 5.11.
(m) The Guarantee Agreement shall have been duly executed by the
parties thereto, shall have been delivered to the Collateral Agent and shall be
in full force and effect.
(n) The Indemnity, Subrogation and Contribution Agreement shall have
been duly executed by the parties thereto, shall have been delivered to the
Collateral Agent and shall be in full force and effect.
(o) The Administrative Agent shall have received a copy of, or a
certificate as to coverage under, the insurance policies required by Section
5.02(b) and the applicable provisions of the Security Documents, each of which
shall be endorsed or otherwise amended to include a "standard" or "New York"
lender's loss payable endorsement and to name the Collateral Agent as additional
insured, in form and substance satisfactory to the Administrative Agent.
(p) The Required Lenders shall be satisfied as to the amount and nature
of any environmental and employee health and safety exposures to which the
Borrower and the Subsidiaries may be subject and the plans of the Borrower with
respect thereto.
(q) The Transactions shall have been consummated or shall be
consummated simultaneously with, or immediately after, the initial Borrowing in
accordance with applicable law and with the terms and conditions of the Stock
Purchase Agreement and all related documentation (without giving effect to any
material waiver or modification thereof not approved by the Required Lenders).
(r) The Borrower shall have received at least $272,000,000 in gross
cash proceeds from the issuance of the New Senior Notes in a public offering or
an offering made pursuant to the terms and conditions of Rule 144A of the
Securities act of 1933. The terms and conditions of the New Senior Note
Documents (including, without limitation, the interest rate, fees, amortization,
maturity, covenants, events of default and remedies) shall be satisfactory in
all respects to the Required Lenders.
(s) After giving effect to the Transactions and the other transactions
contemplated hereby, the Borrower and the Subsidiaries shall have outstanding no
Indebtedness or preferred stock other than (i) Indebtedness incurred under the
Loan Documents, (ii) the New Senior Notes, (iii) Indebtedness under the
Securitization Facilities, (iv) the Existing Senior Notes, (v) the Preferred
Stock and (vi) other Indebtedness permitted under Sections 6.01(a), (e), (f),
(g), (j) and (l).
(t) The Lenders shall have received appraisals, satisfactory in form
and substance to the Agents, with respect to such of the properties and assets
of the Acquired Subsidiaries as the Agents shall reasonably request.
(u) The Lenders shall have received a certificate of the chief
financial officer of the Borrower, in form and substance satisfactory to the
Agents, as to the solvency of the Borrower and its subsidiaries on a
consolidated basis after giving effect to the Transactions and the consummation
of the transaction and the other transactions contemplated hereby.
(v) All requisite Governmental Authorities and third parties shall have
approved or consented to the Transactions to the extent required except where
the failure to receive such approval could not reasonably be expected to have a
Material Adverse Effect, all applicable appeal periods shall have expired and
there shall be no governmental or judicial action, actual or threatened, that
has a reasonable likelihood of restraining, preventing or imposing materially
burdensome conditions on the Transactions.
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ARTICLE V
Affirmative Covenants
The Borrower covenants and agrees with each Lender that so long as this
Agreement shall remain in effect and until the Commitments have been terminated
and the principal of and interest on each Loan and all other expenses or
amounts payable under any Loan Document shall have been paid in full, unless
the Required Lenders shall otherwise consent in writing, the Borrower will, and
will cause each of the Subsidiaries (other than Inactive Subsidiaries) to:
SECTION 5.01. Existence; Businesses and Properties. (a) Do or cause to be
done all things necessary to preserve, renew and keep in full force and effect
its legal existence, except as otherwise expressly permitted under Section
6.05.
(b) Do or cause to be done all things necessary to obtain, preserve,
renew, extend and keep in full force and effect the rights, licenses, permits,
franchises, authorizations, patents, copyrights, trademarks and trade names
material to the conduct of its business; maintain and operate such business in
substantially the manner in which it is presently conducted and operated;
comply with all applicable laws, rules, regulations (including any zoning,
building, Environmental Law, ordinance, code or approval or any building
permits or any restrictions of record or agreements affecting the Mortgaged
Properties) and decrees and orders of any Governmental Authority, whether now
in effect or hereafter enacted, except for noncompliance that could not
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect; and at all times maintain and preserve all property
material to the conduct of such business and keep such property in good repair,
working order and condition and from time to time make, or cause to be made,
all needful and proper repairs, renewals, additions, improvements and
replacements thereto necessary in order that the business carried on in
connection therewith may be properly conducted at all times.
SECTION 5.02. Insurance. (a) Keep its insurable properties adequately
insured at all times by financially sound and reputable insurers; maintain such
other insurance, to such extent and against such risks, including fire and
other risks insured against by extended coverage, as is customary with
companies in the same or similar businesses operating in the same or similar
locations, including public liability insurance against claims for personal
injury or death or property damage occurring upon, in, about or in connection
with the use of any properties owned, occupied or controlled by it; and
maintain such other insurance as may be required by law.
(b) Cause all such policies covering any Collateral to be endorsed or
otherwise amended to include a "standard" or "New York" lender's loss payable
endorsement, in form and substance satisfactory to the Administrative Agent and
the Collateral Agent, which endorsement shall provide that, from and after the
Closing Date, if the insurance carrier shall have received written notice from
the Administrative Agent or the Collateral Agent of the occurrence of an Event
of Default, the insurance carrier shall pay all proceeds otherwise payable to
the Borrower or the Loan Parties under such policies directly to the Collateral
Agent; cause all such policies to provide that neither the Borrower, the
Administrative Agent, the Collateral Agent nor any other party shall be a
coinsurer thereunder and to contain a "Replacement Cost Endorsement", without
any deduction for depreciation, and such other provisions as the Administrative
Agent or the Collateral Agent may reasonably require from time to time to
protect their interests; deliver certificates of insurance evidencing all such
policies to the Collateral Agent; cause each such policy to provide that it
shall not be canceled or not renewed (i) by reason of nonpayment of premium
upon not less than 10 days' prior written notice thereof by the insurer to the
Administrative Agent and the Collateral Agent (giving the Administrative Agent
and the Collateral Agent the right to cure defaults in the payment of premiums)
or (ii) for any other reason upon not less than 30 days' prior written notice
thereof by the insurer to the Administrative Agent and the Collateral Agent;
deliver to the Administrative Agent and the Collateral Agent, prior to the
cancelation or nonrenewal of any such policy of insurance, a copy of a renewal
or replacement policy (or other evidence of renewal of a policy previously
delivered to the Administrative Agent and the Collateral Agent) together with
evidence satisfactory to the Administrative Agent and the Collateral Agent of
payment of the premium therefor.
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(c) If at any time the area in which the Premises (as defined in the
Mortgages) are located is designated (i) a "flood hazard area" in any Flood
Insurance Rate Map published by the Federal Emergency Management Agency (or any
successor agency), obtain flood insurance in such total amount as the
Administrative Agent, the Collateral Agent or the Required Lenders may from
time to time reasonably require, and otherwise comply with the National Flood
Insurance Program as set forth in the Flood Disaster Protection Act of 1973, as
it may be amended from time to time, or (ii) a "Zone 1" area, to the extent
available, obtain earthquake insurance in such total amount as the
Administrative Agent, the Collateral Agent or the Required Lenders may from
time to time reasonably require.
(d) With respect to any Mortgaged Property, carry and maintain
comprehensive general liability insurance including the "broad form CGL
endorsement" and coverage on an occurrence basis against claims made for
personal injury (including bodily injury, death and property damage) and
umbrella liability insurance (umbrella or excess policies or claims made)
against any and all claims, in no event for a combined single limit of less
than $50,000,000, naming the Collateral Agent as an additional insured, on
forms satisfactory to the Collateral Agent.
SECTION 5.03. Obligations and Taxes. Pay its material Indebtedness and
other material obligations promptly and in accordance with their terms and pay
and discharge promptly when due all taxes, assessments and governmental charges
or levies imposed upon it or upon its income or profits or in respect of its
property, before the same shall become delinquent or in default, as well as all
lawful claims for labor, materials and supplies or otherwise that, if unpaid,
might give rise to a Lien upon such properties or any part thereof; provided,
however, that such payment and discharge shall not be required with respect to
any such tax, assessment, charge, levy or claim so long as the validity or
amount thereof shall be contested in good faith by appropriate proceedings and
the Borrower shall have set aside on its books adequate reserves with respect
thereto in accordance with GAAP and such contest operates to suspend collection
of the contested obligation, tax, assessment or charge and enforcement of a
Lien and, in the case of a Mortgaged Property, there is no risk of forfeiture
of such property.
SECTION 5.04. Financial Statements, Reports, etc. In the case of the
Borrower, furnish to the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year, (i) its
consolidated balance sheet and related statements of income, stockholders'
equity and cash flows showing the financial condition of the Borrower and
its consolidated Subsidiaries as of the close of such fiscal year and the
results of its consolidated operations during such year, all audited by
Ernst & Young LLP or other independent public accountants of recognized
national standing and accompanied by an opinion of such accountants (which
shall not be qualified in any material respect) to the effect that such
consolidated financial statements fairly present, in all material
respects, the financial condition and results of operations of the
Borrower and its consolidated Subsidiaries in accordance with GAAP and
(ii) its unaudited combined balance sheet and related statements of
operations and cash flows of the Acquired Subsidiaries showing their
financial condition as of the close of such fiscal year, certified by one
of its Financial Officers as fairly presenting, in all material respects,
the financial condition and results of operations of the Acquired
Subsidiaries on a combined basis in accordance with GAAP;
(b) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year, (i) its consolidated balance sheet and
related statements of operations and cash flows and (ii) the combined
balance sheet and related statements of operations and cash flows of the
Acquired Subsidiaries, in each case showing the financial condition of the
Borrower and its consolidated Subsidiaries or the Acquired Subsidiaries,
respectively, as of the close of such fiscal quarter and the results of
its consolidated operations during such fiscal quarter and the then
elapsed portion of the fiscal year, all certified by one of its Financial
Officers as fairly presenting, in all material respects, the financial
condition and results of operations of the Borrower and its consolidated
Subsidiaries and the Acquired Subsidiaries, respectively,
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39
on a consolidated or combined basis, as applicable, in accordance with
GAAP, subject to normal year-end audit adjustments;
(c) concurrently with any delivery of financial statements under
paragraph (a) or (b) above, a certificate of the accounting firm (in the
case of paragraph (a)) or Financial Officer (in the case of paragraph (b))
opining on or certifying such statements (which certificate, when
furnished by an accounting firm, may be limited to accounting matters and
disclaim responsibility for legal interpretations) (i) stating, in the
case of the accounting firm, that nothing came to their attention that
caused them to believe that the Borrower was in default in the performance
of the terms, covenants, provisions, or conditions of Section 6.10, 6.11,
6.12 or 6.13, and certifying, in the case of the Financial Officer, that
no Event of Default or Default has occurred or if such an Event of Default
or Default has occurred, specifying the nature and extent thereof and any
corrective action taken or proposed to be taken with respect thereto, (ii)
setting forth computations in detail reasonably satisfactory to the Agents
demonstrating compliance with the covenants contained in Sections 6.10 (in
the case of a certificate delivered with the financial statements required
by paragraph (a) above), 6.11, 6.12 and 6.13, and (iii) in the case of a
certificate delivered with the financial statements required by paragraph
(a) above, setting forth the Borrower's calculation of (x) Excess Cash
Flow and (y) the Borrower's Portion of Excess of Cash Flow and Equity
Issuances;
(d) promptly after the same become publicly available, copies of all
filings (and amendments to filings) on Form 10-K, 10-Q and 8-K and proxy
statements filed by the Borrower or any Subsidiary with the Securities and
Exchange Commission, or any Governmental Authority succeeding to any or
all of the functions of said Commission, or with any national securities
exchange, or distributed to its shareholders, as the case may be;
(e) each year, at the time of delivery of the annual financial
statements with respect to the preceding fiscal year pursuant to paragraph
(a) above, the Borrower shall deliver (i) to the Administrative Agent a
certificate of a Financial Officer of the Borrower setting forth the
information required pursuant to Section 2 of the Perfection Certificate
or confirming that there has been no change in such information since the
date of the Perfection Certificate delivered on the Closing Date or the
date of the most recent certificate delivered pursuant to this Section and
(ii) to the Administrative Agent and the Collateral Agent a certificate of
insurance with respect to any change to, or addition of, any insurance
policy or policies covering Collateral; and
(f) promptly, from time to time, such other information regarding the
operations, business affairs and financial condition of the Borrower or
any Subsidiary, or compliance with the terms of any Loan Document, as
either Agent or any Lender may reasonably request.
SECTION 5.05. Litigation and Other Notices. Furnish to the Administrative
Agent and each Lender prompt written notice of the following:
(a) any Event of Default or Default, specifying the nature and extent
thereof and the corrective action (if any) taken or proposed to be taken
with respect thereto;
(b) the filing or commencement of, or any threat or notice of
intention of any person to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any Governmental
Authority, against the Borrower or any Affiliate thereof that could
reasonably be expected to result in a Material Adverse Effect; and
(c) any change in the ratings by S&P or Moody's of the Loans.
SECTION 5.06. Employee Benefits. (a) Comply in all material respects with
the applicable provisions of ERISA and the Code and (b) furnish to the
Administrative Agent (i) as soon as possible after, and in any event within 10
days after any Responsible Officer of the Borrower or any ERISA Affiliate knows
or has reason to know that, any ERISA Event has occurred that, alone or
together with any other ERISA Event could reasonably be expected to result in
liability of the Borrower in an
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40
aggregate amount exceeding $5,000,000, a statement of a Financial Officer of
the Borrower setting forth details as to such ERISA Event and the action, if
any, that the Borrower proposes to take with respect thereto.
SECTION 5.07. Maintaining Records; Access to Properties and Inspections.
Keep proper books of record and account in which full, true and correct entries
in all material respects in conformity with GAAP and all requirements of law
are made of all dealings and transactions in relation to its business and
activities. Each Loan Party will, and will cause each of its Subsidiaries to,
permit any representatives designated by the Administrative Agent or any Lender
to visit and inspect the financial records and the properties of the Borrower
or any Subsidiary at reasonable times and as often as reasonably requested and
to make extracts from and copies of such financial records, and permit any
representatives designated by the Administrative Agent or any Lender to discuss
the affairs, finances and condition of the Borrower or any Subsidiary with the
officers thereof and (with the participation of or prior notice to such
officers) independent accountants therefor.
SECTION 5.08. Use of Proceeds. Use the proceeds of the Loans only for
the purposes set forth in the preamble to this Agreement.
SECTION 5.09. Compliance with Environmental Laws. Comply, and cause
all lessees and other persons occupying its Properties to comply, in all
material respects with all Environmental Laws and Environmental Permits
applicable to its operations and Properties; obtain and renew all material
Environmental Permits necessary for its operations and Properties; and conduct
any Remedial Action required under Environmental Laws; provided, however, that
neither the Borrower nor any of the Subsidiaries shall be required to undertake
any Remedial Action to the extent that its obligation to do so is being
contested in good faith and by proper proceedings and appropriate reserves are
being maintained with respect to such circumstances.
SECTION 5.10. Preparation of Environmental Reports. If a Default
caused by reason of a breach of Section 3.16 or 5.09 shall have occurred and be
continuing, at the request of the Required Lenders through the Administrative
Agent, provide to the Lenders within 45 days after such request, or later with
prior consent of the Required Lenders, at the expense of the Borrower, an
environmental site assessment report for the portions of the Properties which
are the subject of such default prepared by a nationally recognized
environmental consulting firm acceptable to the Administrative Agent and
indicating the presence or absence of Hazardous Materials and the estimated
cost of any compliance or Remedial Action in connection with such Properties.
SECTION 5.11. Further Assurances. Execute any and all further
documents, financing statements, agreements and instruments, and take all
further action (including filing Uniform Commercial Code and other financing
statements, mortgages and deeds of trust) that may be required under applicable
law, or that the Required Lenders, the Administrative Agent or the Collateral
Agent may reasonably request, in order to effectuate the transactions
contemplated by the Loan Documents and in order to grant, preserve, protect and
perfect the validity and first priority of the security interests created or
intended to be created by the Security Documents. The Borrower will cause any
subsequently acquired or organized wholly owned Domestic Subsidiary (other than
an Inactive Subsidiary or a Securitization Subsidiary) or any such Subsidiary
that ceases to be an Inactive Subsidiary to execute a Guarantee Agreement,
Indemnity Subrogation and Contribution Agreement and (if such Subsidiary is a
subsidiary of any Acquired Subsidiary) each applicable Security Document in
favor of the Collateral Agent (it being understood that it is the intent of the
parties that the Obligations shall be secured by, among other things,
substantially all the assets of the Acquired Subsidiaries (including real and
personal property acquired after the Closing Date but excluding receivables)).
The Borrower agrees to provide such evidence as the Collateral Agent shall
reasonably request as to the perfection and priority status of each such
security interest and Lien. No later than December 31, 1999, for each Mortgaged
Property other than WTC's Portland tubing facility referred to below, the
Borrower shall deliver or cause to be delivered an A.L.T.A. survey in form and
substance reasonably satisfactory to the Collateral Agent and endorsements to
the title insurance policies required by Article IV(l) providing for
survey-related coverage reasonably satisfactory to the Collateral Agent. If, on
the first anniversary of the Closing Date, WTC has failed to consummate the
sale and leaseback of its Portland tubing facility, or the Borrower or any
Subsidiary shall otherwise
<PAGE> 46
41
own all or any substantial part of such facility, then the Borrower shall, or
shall cause the appropriate Subsidiary to, deliver a title insurance policy and
an A.L.T.A. survey with respect to such facility in form and substance
reasonably satisfactory to the Collateral Agent and endorsements to the title
insurance policy required by Article IV(l) providing for survey-related
coverage reasonably satisfactory to the Collateral Agent.
ARTICLE VI
Negative Covenants
The Borrower covenants and agrees with each Lender that, so long as
this Agreement shall remain in effect and until the Commitments have been
terminated and the principal of and interest on each Loan and all other
expenses or amounts payable under any Loan Document have been paid in full,
unless the Required Lenders shall otherwise consent in writing, the Borrower
will not, and will not cause or permit any of the Subsidiaries to:
SECTION 6.01. Indebtedness. Incur, create, assume or permit to exist any
Indebtedness, except:
(a) Indebtedness existing on the date hereof and set forth in
Schedule 6.01;
(b) Indebtedness created hereunder and under the other Loan
Documents;
(c) Indebtedness under the Securitization Facilities in an aggregate
principal amount outstanding not to exceed at any time the greater of (i)
$570,000,000 and (ii) the sum of (A) 60% of the book value of the
inventory of the Borrower and its consolidated Subsidiaries (other than
the Acquired Subsidiaries) and (B) 85% of the book value of the accounts
receivable of the Borrower and its consolidated Subsidiaries, in each case
as of the most recently ended fiscal quarter of the Borrower;
(d) Capital Lease Obligations of WTC resulting from the sale and
leaseback of WTC's Portland tubing facility in an aggregate principal
amount not to exceed $50,000,000;
(e) the Guarantee by the Borrower or any of its Subsidiaries (other
than the Acquired Subsidiaries) of the obligations of the Borrower's
Columbus Coating joint venture with respect to (i) a construction facility
in an aggregate principal amount not to exceed $145,000,000 or (ii)
Capital Lease Obligations under a sale and leaseback of such facility in
an aggregate principal amount not to exceed $250,000,000;
(f) Indebtedness of (i) the Borrower or any wholly owned Subsidiary
to any other Subsidiary, (ii) any wholly owned Subsidiary to the Borrower
or (iii) any non-wholly owned Subsidiary to the Borrower or any wholly
owned Subsidiary to the extent permitted by Section 6.04(k); provided,
however, that any Indebtedness to an Acquired Subsidiary pursuant to this
paragraph (f) (other than Indebtedness of an Acquired Subsidiary) shall be
evidenced by an intercompany note and pledged to the Collateral Agent to
secure the Obligations to the extent permitted by Section 4.07 of each of
the New Senior Note Indenture and the Existing Note Indenture without
providing an equal and ratable lien;
(g) Indebtedness incurred in the ordinary course of business or
pursuant to self-insurance obligations with respect to surety and appeal
bonds, standby letters of credit, performance, insurance and
return-of-money bonds and other similar obligations and not in connection
with the borrowing of money or the obtaining of advances or credit;
(h) Indebtedness consisting of (i) Acquired Indebtedness or (ii)
Purchase Money Indebtedness or Capital Lease Obligations incurred after
the Closing Date; provided that the
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42
aggregate principal amount of any such Indebtedness incurred pursuant to
this paragraph (h) shall not exceed $100,000,000;
(i) in addition to Acquired Indebtedness incurred pursuant to
paragraph (h) above, additional Acquired Indebtedness so long as (i) such
Indebtedness is nonrecourse to the Borrower or any of its Subsidiaries
other than the person acquired in the related Permitted Acquisition and
(ii) as of the date of the related Permitted Acquisition and after giving
pro forma effect thereto, no Default or Event of Default shall have
occurred and be continuing;
(j) Indebtedness consisting of deferred compensation to employees or
directors in an aggregate principal amount not exceeding $20,000,000 at
any time outstanding;
(k) Indebtedness incurred to extend, renew or refinance Indebtedness
described in paragraph (a), (c), (d), (e), (h) or (i) above ("Refinancing
Indebtedness") so long as (i) such Refinancing Indebtedness is in an
aggregate principal amount (or if incurred with original issue discount,
the aggregate issue price is) not greater than the aggregate principal or
committed amount (or if incurred with original issue discount, the
aggregate accreted value) of the Indebtedness being extended, renewed or
refinanced, plus the amount of any interest or premiums required to be
paid thereon plus fees and expenses associated therewith, (ii) if an
Acquired Subsidiary was not an obligor in respect of the Indebtedness
being extended, renewed or refinanced, then an Acquired Subsidiary shall
not be an obligor with respect to such Refinancing Indebtedness, (iii)
such Refinancing Indebtedness has a later or equal final maturity and a
longer or equal weighted average life than the Indebtedness being
extended, renewed or refinanced, (iv) if the Indebtedness being extended,
renewed or refinanced is subordinated to the Obligations, the Refinancing
Indebtedness is subordinated to the Obligations to the extent of the
Indebtedness being extended, renewed or refinanced, (v) if the
Indebtedness being extended, renewed or refinanced is nonrecourse to the
Borrower or any Subsidiary, such Refinancing Indebtedness shall be
similarly nonrecourse and (vi) in the case of Refinancing Indebtedness
extending, renewing or refinancing the Existing Notes or the New Senior
Notes, the covenants, events of default and other non-pricing provisions
of the Refinancing Indebtedness shall be no less favorable to the Lenders
than those contained in the Existing Notes or the New Senior Notes,
respectively;
(l) Hedging Agreements entered into in the ordinary course of
business or in the ordinary course of the financial management of the
Borrower and its Subsidiaries;
(m) Indebtedness consisting of Venture Holding Company Guarantees;
(n) Indebtedness of Acquired Subsidiaries not to exceed $1,000,000 at
any time outstanding; and
(o) other Indebtedness of the Borrower and the Subsidiaries (other
than the Acquired Subsidiaries) in an aggregate principal amount not
exceeding $100,000,000 at any time outstanding.
SECTION 6.02. Liens. Create, incur, assume or permit to exist any Lien
on any property or assets (including stock or other securities of any person,
including any Subsidiary) now owned or hereafter acquired by it or on any
income or revenues or rights in respect of any thereof, except:
(a) Liens on property or assets of the Borrower and its Subsidiaries
existing on the date hereof and set forth in Schedule 6.02; provided that
such Liens shall secure only those obligations which they secure on the
date hereof;
(b) any Lien created under the Loan Documents and any Liens securing
the Copperweld Canada Note;
(c) any Lien existing on any property or asset prior to the
acquisition thereof by the Borrower or any Subsidiary; provided that (i)
such Lien is not created in contemplation of or
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in connection with such acquisition, (ii) such Lien does not apply to any
other property or assets of the Borrower or any Subsidiary and (iii) such
Lien does not (A) materially interfere with the use, occupancy and
operation of any Mortgaged Property or (B) result in any material increase
in the cost of operating, occupying or owning or leasing such Mortgaged
Property;
(d) Liens for taxes, assessments or governmental charges or levies
not yet due or which are being contested in compliance with Section 5.03;
(e) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business and
securing obligations that are not more than 60 days past due and payable
or which are being contested in compliance with Section 5.03;
(f) pledges and deposits made in the ordinary course of business in
compliance with workmen's compensation, unemployment insurance and other
social security laws or regulations;
(g) deposits to secure the performance of bids, tenders, contracts
(other than for Indebtedness), leases, the payment of rent, statutory or
regulatory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature incurred in the ordinary course of
business;
(h) zoning restrictions, easements, rights-of-way, restrictions on
use of real property and other similar encumbrances incurred in the
ordinary course of business which, in the aggregate, are not substantial
in amount and do not materially detract from the value of the property
subject thereto or interfere with the ordinary conduct of the business of
the Borrower or any of its Subsidiaries;
(i) purchase money security interests in property or assets or
improvements thereto hereafter acquired (or, in the case of improvements,
constructed) by the Borrower or any Subsidiary; provided that (i) such
security interests secure Indebtedness permitted by Section 6.01, (ii)
such security interests are incurred, and the Indebtedness secured thereby
is created, within 180 days after such acquisition (or construction),
(iii) the Indebtedness secured thereby does not exceed the lesser of the
cost or the fair market value of such property or assets or improvements
at the time of such acquisition (or construction) and (iv) such security
interests do not apply to any other property or assets of the Borrower or
any Subsidiary;
(j) Liens securing Acquired Indebtedness incurred pursuant to Section
6.01(h) or (i); provided that (i) such Acquired Indebtedness was secured
by such Liens at the time of the relevant Permitted Acquisition and such
Liens were not incurred in contemplation thereof and (ii) such Liens do
not extend to (x) any property of the Borrower or the Subsidiaries (other
than the Acquired Person) or (y) any property of the Acquired Person other
than the property securing such Liens on the date of the relevant
Permitted Acquisition;
(k) Liens securing Refinancing Indebtedness, to the extent that the
Indebtedness being refinanced was originally secured in accordance with
this Section 6.02; provided that such Lien does not apply to any
additional property or assets of the Borrower or any Subsidiary;
(l) Liens to secure Indebtedness permitted to be incurred under
Section 6.01(c); provided that any such Lien is limited to accounts
receivable and inventory (and insurance proceeds and other property
similarly incident thereto) of the Borrower and its Subsidiaries and
securities issued by Excluded Subsidiaries (other than inventory
constituting Collateral) and Liens on the property of the Excluded
Subsidiaries incurred pursuant to the Securitization Facilities;
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(m) Liens existing on the Closing Date securing the USWA Secured
Obligations, provided that such Liens may be extended from time to time to
property or assets (other than Collateral) of the Borrower or any of its
Subsidiaries not subject thereto on the Closing Date to the extent any
such extension is required by the terms of the Collateral Trust Agreement
as in effect on the Closing Date;
(n) any Lien created under the Escrow Agreements pending the release
of funds from such escrow arrangements;
(o) Liens securing Capital Lease Obligations permitted to be incurred
under Section 6.01(d), (e) or (h); provided that such Liens do not extend
to any property of the Borrower or its Subsidiaries other than the
property subject to the relevant capital lease;
(p) Liens to secure industrial revenue or pollution control bonds
issued by the Borrower; provided that (i) the aggregate principal amount
outstanding of the Indebtedness secured by Liens permitted by this clause
(p) shall not at any time exceed the higher of the cost or the fair market
value of the property financed by such Indebtedness (together with
improvements and accessions to such property) and (ii) such Liens shall
not extend to any other property of the Borrower or any Subsidiaries;
(q) Liens arising out of judgments or decrees which involve uninsured
amounts not exceeding $10,000,000 and which are being contested in good
faith by appropriate proceedings promptly instituted and diligently
concluded; provided that any reserve or other appropriate provision that
shall be required in conformity with GAAP shall have been made therefor;
(r) Liens securing or constituting Indebtedness permitted under
Section 6.01(m); provided that such Liens do not extend to any assets of
the Borrower and its Subsidiaries other than Nonrecourse Subsidiaries or
Venture Holding Companies;
(s) Liens not otherwise permitted by the foregoing paragraphs (a)
through (r) to the extent attaching to properties and assets of the
Acquired Subsidiaries with an aggregate fair value at the time of such
attachment not in excess of, and securing liabilities not in excess of,
$1,000,000 in the aggregate at any time outstanding; and
(t) Liens not otherwise permitted by the foregoing paragraphs (a)
through (r) to the extent attaching to properties and assets of the
Borrower and its Subsidiaries (other than the Acquired Subsidiaries) with
an aggregate fair value at the time of such attachment not in excess of,
and securing liabilities not in excess of, $50,000,000 in the aggregate at
any time outstanding.
SECTION 6.03. Sale and Lease-Back Transactions. Enter into any
arrangement, directly or indirectly, with any person whereby it shall sell or
transfer any property, real or personal, used or useful in its business,
whether now owned or hereafter acquired, and thereafter rent or lease such
property, other than any such arrangement with respect to property acquired or
placed into service by the Borrower or any Subsidiary after the Closing Date to
the extent entered into within 365 days after the date of such acquisition or
placement into service and not constituting a Capital Lease Obligation;
provided that the Borrower or any Subsidiary may enter into any such
transaction to the extent that any Capital Lease Obligations and Liens
associated therewith would be permitted under this Agreement.
SECTION 6.04. Investments, Loans and Advances. Purchase, hold or
acquire any Equity Interests, evidences of Indebtedness or other securities of,
make or permit to exist any loans or advances to, or make or permit to exist
any investment or any other interest in, any other person, except:
(a)(i) investments by the Borrower and its Subsidiaries existing on
the date hereof in the Equity Interests of the Subsidiaries and other
investments by the Borrower and its
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Subsidiaries existing on the date hereof or contractually committed on the
date hereof to be made within one year of the date hereof and set forth in
Schedule 6.04;
(b) Permitted Investments;
(c) the Borrower may make the Acquisition;
(d) the Borrower and the Subsidiaries may make Permitted
Acquisitions;
(e) the Borrower and the Subsidiaries may make loans and advances to
employees for moving, entertainment, travel and other similar expenses in
the ordinary course of business not to exceed $5,000,000 in the aggregate
at any time outstanding;
(f) Capital Expenditures permitted pursuant to Section 6.10;
(g) promissory notes issued by any purchaser in connection with any
Asset Sale permitted pursuant to Section 6.05(b);
(h) provided that no Default or Event of Default shall have occurred
and be continuing at the time of such payment or after giving effect
thereto, the Borrower and its Subsidiaries may acquire their own Equity
Interests to the extent permitted pursuant to Sections 6.06(a) and (b);
(i) accounts receivable arising in the ordinary course of business;
(j) investments in and loans and advances to wholly owned
Subsidiaries;
(k) investments in and loans and advances to non-wholly owned
Subsidiaries and joint ventures in Related Businesses not otherwise
permitted by clause (a) above in an aggregate amount not exceeding
$125,000,000 at any time outstanding;
(l) intercompany loans and advances constituting Indebtedness
permitted by Section 6.01(f);
(m) investments in an aggregate amount not to exceed the Borrower's
Portion of Excess Cash Flow and Equity Issuances; and
(n) other investments in an aggregate amount not exceeding
$25,000,000 at any time outstanding.
SECTION 6.05. Mergers, Consolidations, Sales of Assets and Acquisitions.
(a) Merge into or consolidate with any other person, or permit any other person
to merge into or consolidate with it, or sell, transfer, lease or otherwise
dispose of (in one transaction or in a series of transactions) all or
substantially all of the assets of the Borrower (whether now owned or hereafter
acquired) or any Equity Interests of an Acquired Subsidiary (other than any
sale, transfer, lease or other disposal to the Borrower or any Subsidiary), or
purchase, lease or otherwise acquire (in one transaction or a series of
transactions) all or substantially all of the assets of any other person,
except that (i) if at the time thereof and immediately after giving effect
thereto no Event of Default or Default with respect to the Borrower shall have
occurred and be continuing (A) any Subsidiary may merge into the Borrower in a
transaction in which the Borrower is the surviving corporation and (B) any
Subsidiary may merge into or consolidate with any Subsidiary in a transaction
in which the surviving entity is a Subsidiary; provided that any such merger or
consolidation involving a Subsidiary that is not a wholly owned Subsidiary
shall not be permitted unless also permitted by Section 6.04; and (ii) the
Borrower or any Subsidiary may make Permitted Acquisitions.
(b) Engage in any Asset Sale not otherwise prohibited by Section 6.05(a)
unless all of the following conditions are met: (i) the consideration received
is at least equal to the fair market value of the assets sold; (ii) at least
75% of the consideration received is cash or cash equivalents; (iii) to
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the extent applicable, the Net Cash Proceeds of such Asset Sale are applied as
required by Section 2.13(a) and (iv) the fair market value of all Collateral
sold pursuant to Asset Sales during any fiscal year of the Borrower shall not
exceed $10,000,000.
SECTION 6.06. Dividends and Distributions; Restrictions on Ability of
Subsidiaries to Pay Dividends. (a) Declare or pay, directly or indirectly, any
dividend or make any other distribution (by reduction of capital or otherwise),
whether in cash, property, securities or a combination thereof, with respect to
any Equity Interests of the Borrower or any of its Subsidiaries or directly or
indirectly redeem, purchase, retire or otherwise acquire for value (or permit
any Subsidiary to purchase or acquire) any Equity Interests of the Borrower or
set aside any amount for any such purpose; provided, however, that (i) any
Subsidiary may declare and pay dividends or make other distributions to the
Borrower or any Subsidiary or ratably to its shareholders and (ii) the Borrower
may pay dividends on, and redeem and repurchase its Equity Interests so long as
all of the following conditions are satisfied: (A) at the time of such
dividend, redemption or purchase and after giving effect thereto, no Default or
Event of Default has occurred and is continuing or would arise as a result
thereof; (B) the Borrower would be permitted to make such dividend,
distribution, redemption or purchase pursuant to the New Senior Note Indenture
as in effect on the Closing Date, and (C) on a pro forma basis and after giving
effect to such payment and all other payments pursuant to this clause (a) made
after the last day of the most recent fiscal quarter for which financial
statements have been delivered pursuant to Section 5.04(a) or (b), as
applicable, as if such payments were made in the four-fiscal-quarter period
ending on such last day of such fiscal quarter (and excluding any such payments
included pro forma with respect to prior periods), the Borrower would be in
compliance with the financial covenant set forth in Section 6.13 as of the last
day of such fiscal quarter.
(b) Notwithstanding the foregoing limitation, the Borrower may (i) at
any time pay dividends with respect to its Equity Interests solely in
additional Equity Interests, (ii) purchase, repurchase, redeem, legally
defease, acquire or retire for value Equity Interests of the Borrower in
exchange for, or out of the proceeds of the substantially concurrent sale of,
Equity Interests of the Borrower (other than Equity Interests issued or sold to
a Subsidiary of the Borrower or an employee stock ownership plan or trust
established by the Borrower or any of its Subsidiaries for the benefit of their
employees), (iii) pay cash dividends on its Equity Interests within 60 days of
the declaration thereof if, on said declaration date, such dividends could have
been paid in compliance with this Agreement; provided, however, that at the
time of such payment of such dividend, no other Event of Default shall have
occurred and be continuing (or would result therefrom), or (iv) expend up to
$5,000,000 in any fiscal year of the Borrower to repurchase common stock of the
Borrower (A) to distribute to current or former employees, officers and
directors of the Borrower and its Subsidiaries, (B) from such current or former
employees, officers or directors or (C) otherwise in order to distribute as
employee compensation.
(c) Permit its subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction on the ability of any such subsidiary to (i) pay any
dividends or make any other distributions on its Equity Interests or (ii) make
or repay any loans or advances to the Borrower or the parent of such
subsidiary. The foregoing limitations will not apply to restrictions (i) in
effect on the Closing Date, (ii) relating to Indebtedness of a Subsidiary and
existing at the time it became a Subsidiary if such restriction was not created
in connection with or in anticipation of the transaction or series of
transactions pursuant to which such Subsidiary became a Subsidiary or was
acquired by the Borrower or any Subsidiary, (iii) which result from the
refinancing of Indebtedness incurred pursuant to an agreement referred to in
the immediately preceding clause (i) or (ii) above, provided that such
restriction is no less favorable to the Lenders than those under the agreement
evidencing the Indebtedness so refinanced, or (iv) on any Excluded Subsidiary.
SECTION 6.07. Transactions with Affiliates. (a) Except for
transactions by or among the Borrower and its wholly owned Domestic
Subsidiaries or Acquired Subsidiaries, sell or transfer any property or assets
to, or purchase or acquire any property or assets from, or otherwise engage in
any other transactions with, any of its Affiliates, except that the Borrower or
any Subsidiary may engage in any of the foregoing transactions at prices and on
terms and conditions not less favorable to the
<PAGE> 52
47
Borrower or such Subsidiary than could be obtained on an arm's-length basis
from unrelated third parties.
(b) Notwithstanding the foregoing limitation, the Borrower or any
Subsidiary may enter into or suffer to exist the following:
(i) any dividend, distribution or other payment permitted to be
made pursuant to Section 6.06(a) or (b);
(ii) any issuance of securities, or other payments, awards or
grants in securities or otherwise pursuant to, or the funding of,
employment arrangements, pension plans, stock options and stock
ownership plans approved by the Board of Directors of the Borrower or
such Subsidiary;
(iii) the payment of reasonable fees to directors of the
Borrower or such Subsidiary who are not employees of the Borrower or
any Subsidiary;
(iv) loans and advances to employees made in the ordinary course
of business and consistent with the past practices of the Borrower or
such Subsidiary, as the case may be, provided that such loans and
advances do not exceed $5,000,000 in the aggregate at any one time
outstanding;
(v) any transaction or series of transactions between the
Borrower or any Subsidiary and any of their joint ventures or
non-wholly owned Subsidiaries, provided that (x) such transaction or
series of transactions is in the ordinary course of business between
the Borrower or such Subsidiary and such joint venture or non-wholly
owned Subsidiary and is consistent with the past practices of the
Borrower and its wholly owned Subsidiaries with respect to their
joint ventures and non-wholly owned Subsidiaries, (y) if such
transaction or series of transactions constitutes an investment by
the Borrower, such Subsidiary or such joint venture, the other equity
investors in such joint venture (A) participate in such investment on
the same basis as the Borrower or such Subsidiary, (B) have their
interests in such joint venture diluted to the extent such investors
elect not to so participate in such Investment or (C) individually
beneficially own 10% or less of the equity interests in such joint
venture and (z) such joint venture or non-wholly owned subsidiary is
engaged in a Related Business; and
(vi) any transaction or series of transactions between the
Borrower or any Subsidiary and SMI America, Inc. or any of its
affiliates pursuant to the terms of the Sumitomo Securities Purchase
Agreement and any documents relating thereto, as such Agreement and
document are in effect on September 22, 1997.
SECTION 6.08. Business of Borrower and Subsidiaries. (a) Engage at any
time in any business or business activity other than a Related Business.
(b) In the case of the Excluded Subsidiaries, engage at any time in
any business or business activity other than acting as special purpose finance
subsidiaries in respect of the Securitization Facilities and activities
reasonably incidental thereto.
SECTION 6.09. Note Documents and Other Agreements. (a) Permit any waiver,
supplement, modification, amendment, termination or release of any Note
Document or certificate of designations pursuant to which the Preferred Stock
of the Borrower is outstanding if the effect of such waiver, supplement,
modification, amendment, termination or release is to (i) increase the interest
rate or dividend rate on any Existing Notes, New Senior Notes or Preferred
Stock; (ii) accelerate the dates upon which payments of principal, interest,
capital or dividends are due on any Existing Notes, New Senior Notes or
Preferred Stock; (iii) change the prepayment provisions of any Existing Notes,
New Senior Notes or Preferred Stock in any manner adverse to the Lenders; (iv)
change the subordination (or the subordination terms of any Guarantee thereof)
in any manner adverse to the Lenders; or
<PAGE> 53
48
(vii) other than Subsidiaries becoming guarantors of the Existing Notes solely
in conjunction with such Subsidiaries becoming new guarantors of the New Senior
Notes, change or amend any other term if such change or amendment would
materially increase the obligations of the obligor or confer additional
material rights on the holder of any Existing Notes, New Senior Notes or
Preferred Stock in a manner adverse to the Borrower, any Subsidiary, the
Administrative Agent or the Lenders.
(b) Make any distribution, whether in cash, property, securities or a
combination thereof, other than regular scheduled payments of principal and
interest (to the extent not prohibited by applicable subordination provisions),
in respect of, or pay, or offer or commit to pay, or directly or indirectly
redeem, repurchase, retire or otherwise acquire for consideration, or set apart
any sum for the aforesaid purposes, any Existing Notes or New Senior Notes;
provided, however, that (i) the Existing Notes and the New Senior Notes may be
repaid in accordance with the Note Documents upon a change in control or event
of default as defined therein and (ii) the Existing Notes and the New Senior
Notes may be repaid with the proceeds of Refinancing Indebtedness or, after
giving effect to Section 2.13(b), with the proceeds of an Equity Issuance, each
as otherwise permitted to be incurred hereunder.
SECTION 6.10. Capital Expenditures. (a) Permit the aggregate amount of
Capital Expenditures made by the Borrower and its Subsidiaries, taken as a
whole, in any fiscal year of the Borrower to exceed the sum of (i) $375,000,000
and (ii) the Carryover Amount from the preceding fiscal year; provided,
however, that to the extent the full Carryover Amount is not utilized in any
fiscal year such amount (the "Additional Carryover Amount") may be used to
increase Capital Expenditures made during the first six months of the following
fiscal year. In calculating the amount of Capital Expenditures made in any
fiscal year, the Borrower shall be deemed to have utilized the Additional
Carryover Amount, if any, first, and the Carryover Amount, if any, second,
before utilizing the amount permitted by Section 6.10(a)(i).
(b) In addition to the Capital Expenditures permitted to be made
pursuant to paragraph (a) above, the Borrower and the Subsidiaries may make
Capital Expenditures with the Borrower's Portion of Excess Cash Flow and Equity
Issuances.
SECTION 6.11. Consolidated Leverage Ratio. Permit the Consolidated
Leverage Ratio at any time during any period set forth below to be in excess of
the ratio set forth below for such period:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
March 31, 2000 through and including
June 29, 2000 5.75:1.00
June 30, 2000 through and including
September 29, 2000 5.25:1.00
September 30, 2000 through and including
December 30, 2000 4.75:1.00
December 31, 2000 through and including December 30,
2001 4.25:1.00
December 31, 2001 through and including December 30,
2002 4.00:1.00
December 31, 2002 through and including December 30,
2003 3.75:1.00
December 31, 2003 and thereafter 3.50:1.00
</TABLE>
provided, however, that for purposes of determining the Consolidated Leverage
Ratio for the four-fiscal quarter periods ending on March 31, 2000, and June
30, 2000, EBITDA of the Borrower and its consolidated Subsidiaries shall be
deemed to be (a) in the case of the four-fiscal-quarter period ending March 31,
2000, EBITDA of the Borrower and its consolidated Subsidiaries for the two
consecutive fiscal quarters of the Borrower ending on such date, multiplied by
2 and (b) in the case of the four-fiscal-quarter period ending on June 30,
2000, EBITDA of the Borrower and its
<PAGE> 54
49
consolidated Subsidiaries for the three consecutive fiscal quarters of the
Borrower ending on such date, multiplied by 1-1/3.
SECTION 6.12. Consolidated Interest Coverage Ratio. Permit the
Consolidated Interest Coverage Ratio for any period of four consecutive fiscal
quarters of the Borrower, in each case taken as one accounting period, ending
during any period set forth below to be less than the ratio set forth below for
such period:
<TABLE>
<CAPTION>
Fiscal Quarters Ending Ratio
---------------------- -----
<S> <C>
December 31, 1999 through and including
March 31, 2000 1.50:1.00
June 30, 2000 2.25:1.00
September 30, 2000 2.50:1.00
December 31, 2000 2.90:1.00
March 31, 2001 through and including
September 30, 2001 3.25:1.00
December 31, 2001 and thereafter 3.75:1.00
</TABLE>
provided, however, that (a) for the period ended December 31, 1999, the
Consolidated Interest Coverage Ratio will be tested based on the
one-fiscal-quarter period ended December 31, 1999, (b) for the period ended
March 31, 2000, the Consolidated Interest Coverage Ratio will be tested based
on the two-fiscal-quarter period ended March 31, 2000 and (c) for the period
ended June 30, 2000, the Consolidated Interest Coverage Ratio will be tested
based on the three-fiscal-quarter period ended June 30, 2000.
SECTION 6.13. Consolidated Fixed Charge Coverage Ratio. Permit the
Consolidated Fixed Charge Coverage Ratio for any period of four consecutive
fiscal quarters of the Borrower, in each case taken as one accounting period,
ending during any period set forth below to be less than the ratio set forth
below for such period:
<TABLE>
<CAPTION>
Fiscal Quarters Ending Ratio
---------------------- -----
<S> <C>
December 31, 1999 through and including
March 31, 2000 1.00:1.00
June 30, 2000 1.50:1.00
September 30, 2000 2.00:1.00
December 31, 2000 2.40:1.00
March 31, 2001 through and including
December 31, 2002 2.50:1.00
March 31, 2003 and thereafter 2.00:1.00
</TABLE>
provided, however, that (a) for the period ended December 31, 1999, the
Consolidated Fixed Charge Coverage Ratio will be tested based on the
one-fiscal-quarter period ended December 31, 1999, (b) for the period ended
March 31, 2000, the Consolidated Fixed Charge Coverage Ratio will be tested
based on the two-fiscal-quarter period ended March 31, 2000 and (c) for the
period ended June 30, 2000, the Consolidated Fixed Charge Ratio will be tested
based on the three-fiscal-quarter period ended June 30, 2000.
SECTION 6.14. Fiscal Year. Permit the fiscal year of the Borrower to end
on a day other than December 31.
<PAGE> 55
50
ARTICLE VII
Events of Default
In case of the happening of any of the following events ("Events of
Default"):
(a) any representation or warranty made in or in connection with any
Loan Document or the borrowings hereunder, or any representation, warranty,
statement or information contained in any report, certificate, financial
statement or other instrument furnished in connection with or pursuant to any
Loan Document, shall prove to have been false or misleading in any material
respect when so made or furnished;
(b) default shall be made in the payment of any principal of any Loan
when and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or by acceleration thereof or
otherwise;
(c) default shall be made in the payment of any interest on any Loan
or any other amount (other than an amount referred to in (b) above) due under
any Loan Document, when and as the same shall become due and payable, and such
default shall continue unremedied for a period of three Business Days;
(d) default shall be made in the due observance or performance by the
Borrower or any Subsidiary of any covenant, condition or agreement contained in
Section 5.01(a) (with respect to the Borrower), 5.05 or 5.08 or in Article VI;
(e) default shall be made in the due observance or performance by the
Borrower or any Subsidiary of any covenant, condition or agreement contained in
any Loan Document (other than those specified in (b), (c) or (d) above) and
such default shall continue unremedied for a period of 20 days after notice
thereof from the Administrative Agent or any Lender to the Borrower;
(f) the Borrower or any Subsidiary (other than a Nonrecourse
Subsidiary) shall (i) fail to pay any principal or interest, regardless of
amount, due in respect of any Indebtedness in a principal amount in excess of
$10,000,000, when and as the same shall become due and payable, or (ii) fail to
observe or perform any other term, covenant, condition or agreement contained
in any agreement or instrument evidencing or governing any such Indebtedness if
the effect of any failure referred to in this clause (ii) is to cause, or to
permit the holder or holders of such Indebtedness or a trustee on its or their
behalf (with or without the giving of notice, the lapse of time or both) to
cause, such Indebtedness to become due prior to its stated maturity;
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i) relief
in respect of the Borrower or any Subsidiary (other than an Inactive
Subsidiary), or of a substantial part of the property or assets of the Borrower
or a Subsidiary (other than an Inactive Subsidiary), under Title 11 of the
United States Code, as now constituted or hereafter amended, or any other
Federal, state or foreign bankruptcy, insolvency, receivership or similar law,
(ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any Subsidiary (other than
an Inactive Subsidiary) or for a substantial part of the property or assets of
the Borrower or a Subsidiary (other than an Inactive Subsidiary) or (iii) the
winding-up or liquidation of the Borrower or any Subsidiary (other than an
Inactive Subsidiary); and such proceeding or petition shall continue
undismissed for 60 days or an order or decree approving or ordering any of the
foregoing shall be entered;
(h) the Borrower or any Subsidiary (other than an Inactive Subsidiary)
shall (i) voluntarily commence any proceeding or file any petition seeking
relief under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other Federal, state or foreign bankruptcy,
insolvency, receivership or similar law, (ii) consent to the institution of, or
fail to contest in a timely and appropriate manner, any proceeding or the
filing of any petition described in (g) above, (iii) apply for or consent to
the appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar
<PAGE> 56
51
official for the Borrower or any Subsidiary (other than an Inactive Subsidiary)
or for a substantial part of the property or assets of the Borrower or any
Subsidiary (other than an Inactive Subsidiary), (iv) file an answer admitting
the material allegations of a petition filed against it in any such proceeding,
(v) make a general assignment for the benefit of creditors, (vi) become unable,
admit in writing its inability or fail generally to pay its debts as they
become due or (vii) take any action for the purpose of effecting any of the
foregoing;
(i) one or more judgments for the payment of money in an aggregate
amount in excess of $10,000,000 shall be rendered against the Borrower, any
Subsidiary or any combination thereof and the same shall remain undischarged
for a period of 60 consecutive days during which execution shall not be
effectively stayed, or any action shall be legally taken by a judgment creditor
to levy upon assets or properties of the Borrower or any Subsidiary to enforce
any such judgment;
(j) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other such ERISA Events, could
reasonably be expected to result in liability of the Borrower and its ERISA
Affiliates in an aggregate amount exceeding $10,000,000;
(k) any Guarantee under the Guarantee Agreement for any reason shall
cease to be in full force and effect (other than in accordance with its terms)
or is declared to be null and void, or any Guarantor shall deny in writing that
it has any further liability under the Guarantee Agreement (other than as a
result of the discharge of such Guarantor in accordance with the terms of the
Loan Documents);
(l) any security interest purported to be created by any Security
Document shall cease to be, or shall be asserted by the Borrower or any other
Loan Party not to be, a valid, perfected, first priority (except as otherwise
expressly provided in this Agreement or such Security Document) security
interest in the securities, assets or properties covered thereby, except to the
extent that such loss (i) is covered by a lender's title insurance policy and
the related insurer promptly after such loss shall have acknowledged in writing
that such loss is covered by such title insurance policy or (ii) would not,
together with all such losses, result in Collateral having a fair market value
in excess of $5,000,000 ceasing to be so subject; or
(m) there shall have occurred a Change in Control;
then, and in every such event (other than an event with respect to the Borrower
described in paragraph (g) or (h) above), and at any time thereafter during the
continuance of such event, the Administrative Agent may, and at the request of
the Required Lenders shall, by notice to the Borrower, take either or both of
the following actions, at the same or different times: (i) terminate forthwith
the Commitments and (ii) declare the Loans then outstanding to be forthwith due
and payable in whole or in part, whereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
other liabilities of the Borrower accrued hereunder and under any other Loan
Document, shall become forthwith due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived by the Borrower, anything contained herein or in any other Loan Document
to the contrary notwithstanding; and in any event with respect to the Borrower
described in paragraph (g) or (h) above, the Commitments shall automatically
terminate and the principal of the Loans then outstanding, together with
accrued interest thereon and all other liabilities of the Borrower accrued
hereunder and under any other Loan Document, shall automatically become due and
payable, without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived by the Borrower, anything contained
herein or in any other Loan Document to the contrary notwithstanding.
<PAGE> 57
52
ARTICLE VIII
The Agents
In order to expedite the transactions contemplated by this Agreement,
Credit Suisse First Boston is hereby appointed to act as Administrative Agent
and Collateral Agent, and Morgan Stanley Senior Funding, Inc. is hereby
appointed to act as Lead Arranger and Syndication Agent on behalf of the
Lenders (the Administrative Agent, the Collateral Agent, the Lead Arranger and
the Syndication Agent being referred to collectively as the "Agents"). Each of
the Lenders and each assignee of any such Lender, hereby irrevocably authorizes
the Agents to take such actions on behalf of such Lender or assignee and to
exercise such powers as are specifically delegated to the Agents by the terms
and provisions hereof and of the other Loan Documents, together with such
actions and powers as are reasonably incidental thereto. The Administrative
Agent is hereby expressly authorized by the Lenders, without hereby limiting
any implied authority, (a) to receive on behalf of the Lenders all payments of
principal of and interest on the Loans and all other amounts due to the Lenders
hereunder, and promptly to distribute to each Lender its proper share of each
payment so received; (b) to give notice on behalf of each of the Lenders to the
Borrower of any Event of Default specified in this Agreement of which the
Administrative Agent has actual knowledge acquired in connection with its
agency hereunder; and (c) to distribute to each Lender copies of all notices,
financial statements and other materials delivered by the Borrower or any other
Loan Party pursuant to this Agreement or the other Loan Documents as received
by the Administrative Agent. Without limiting the generality of the foregoing,
the Agents are hereby expressly authorized to execute any and all documents
(including releases) with respect to the Collateral and the rights of the
Secured Parties with respect thereto, as contemplated by and in accordance with
the provisions of this Agreement and the Security Documents.
Neither the Agents nor any of their respective directors, officers,
employees or agents shall be liable as such for any action taken or omitted by
any of them except for its or his own gross negligence or wilful misconduct, or
be responsible for any statement, warranty or representation herein or the
contents of any document delivered in connection herewith, or be required to
ascertain or to make any inquiry concerning the performance or observance by
the Borrower or any other Loan Party of any of the terms, conditions, covenants
or agreements contained in any Loan Document. The Agents shall not be
responsible to the Lenders for the due execution, genuineness, validity,
enforceability or effectiveness of this Agreement or any other Loan Documents,
instruments or agreements. The Agents shall in all cases be fully protected in
acting, or refraining from acting, in accordance with written instructions
signed by the Required Lenders and, except as otherwise specifically provided
herein, such instructions and any action or inaction pursuant thereto shall be
binding on all the Lenders. Each Agent shall, in the absence of knowledge to
the contrary, be entitled to rely on any instrument or document believed by it
in good faith to be genuine and correct and to have been signed or sent by the
proper person or persons. Neither the Agents nor any of their respective
directors, officers, employees or agents shall have any responsibility to the
Borrower or any other Loan Party on account of the failure of or delay in
performance or breach by any Lender of any of its obligations hereunder or to
any Lender on account of the failure of or delay in performance or breach by
any other Lender or the Borrower or any other Loan Party of any of their
respective obligations hereunder or under any other Loan Document or in
connection herewith or therewith. Each of the Agents may execute any and all
duties hereunder by or through agents or employees and shall be entitled to
rely upon the advice of legal counsel selected by it with respect to all
matters arising hereunder and shall not be liable for any action taken or
suffered in good faith by it in accordance with the advice of such counsel.
The Lenders hereby acknowledge that neither Agent shall be under any
duty to take any discretionary action permitted to be taken by it pursuant to
the provisions of this Agreement unless it shall be requested in writing to do
so by the Required Lenders.
Subject to the appointment and acceptance of a successor Agent as
provided below, either Agent may resign at any time by notifying the Lenders
and the Borrower. Upon any such resignation, the Required Lenders with the
consent of the Borrower (not to be unreasonably withheld), unless an Event of
Default shall have occurred and be continuing, shall have the right to appoint
a successor.
<PAGE> 58
53
If no successor shall have been so appointed by the Required Lenders and shall
have accepted such appointment within 30 days after the retiring Agent gives
notice of its resignation, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent which shall be a bank with an office in New
York, New York, having a combined capital and surplus of at least $500,000,000
or an Affiliate of any such bank. Upon the acceptance of any appointment as
Agent hereunder by a successor bank, such successor shall succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent
and the retiring Agent shall be discharged from its duties and obligations
hereunder. After the Agent's resignation hereunder, the provisions of this
Article and Section 9.05 shall continue in effect for its benefit in respect of
any actions taken or omitted to be taken by it while it was acting as Agent.
With respect to the Loans made by it hereunder, each Agent in its
individual capacity and not as Agent shall have the same rights and powers as
any other Lender and may exercise the same as though it were not an Agent, and
the Agents and their Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower or any Subsidiary or
other Affiliate thereof as if it were not an Agent.
Each Lender agrees (a) to reimburse the Agents, on demand, in the
amount of its pro rata share (based on the aggregate amount of its outstanding
Loans (or, prior to the termination of the Commitments, its unused Commitment)
hereunder) of any expenses incurred for the benefit of the Lenders by the
Agents, including counsel fees and compensation of agents and employees paid
for services rendered on behalf of the Lenders, that shall not have been
reimbursed by the Borrower and (b) to indemnify and hold harmless each Agent
and any of its directors, officers, employees or agents, on demand, in the
amount of such pro rata share, from and against any and all liabilities, taxes,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by or asserted against it in its capacity as Agent or any of them
in any way relating to or arising out of this Agreement or any other Loan
Document or any action taken or omitted by it or any of them under this
Agreement or any other Loan Document, to the extent the same shall not have
been reimbursed by the Borrower or any other Loan Party, provided that no
Lender shall be liable to an Agent or any such other indemnified person for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted
from the gross negligence or wilful misconduct of such Agent or any of its
directors, officers, employees or agents.
Each Lender acknowledges that it has, independently and without
reliance upon the Agents or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agents or any other Lender
and based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement or any other Loan Document, any related
agreement or any document furnished hereunder or thereunder.
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. Notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by fax, as follows:
(a) if to the Borrower, to it at 200 Public Square,
Cleveland, Ohio 44114-2308, Attention of Corporate Secretary (Fax No.
(216) 622-5631);
(b) if to the Administrative Agent or the Collateral Agent,
to Credit Suisse First Boston, Eleven Madison Avenue, New York, New
York 10010, Attention of Shazia Sarker
<PAGE> 59
54
(Fax No. (212) 325-8304, with a copy to Credit Suisse First Boston, at
Eleven Madison Avenue, New York, New York 10010, Attention of David
Dodd (Fax No. (212) 325-8304);
(c) if to the Lead Arranger or the Syndication Agent, to
Morgan Stanley Senior Funding, Inc., at 1221 Avenue of the Americas,
New York, New York 10036, Attention of Morgan Edwards (Fax No. (212)
762-9181), with a copy to Morgan Stanley Senior Funding, Inc., at 1585
Broadway, New York, New York 10036, Attention of James Morgan (Fax No.
(212) 761-0592); and
(d) if to a Lender, to it at its address (or fax number) set
forth on Schedule 2.01 or in the Assignment and Acceptance pursuant to
which such Lender shall have become a party hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
fax or on the date five Business Days after dispatch by certified or registered
mail if mailed, in each case delivered, sent or mailed (properly addressed) to
such party as provided in this Section 9.01 or in accordance with the latest
unrevoked direction from such party given in accordance with this Section 9.01.
SECTION 9.02. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Borrower herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Lenders and shall survive the making by the
Lenders of the Loans, regardless of any investigation made by the Lenders or on
their behalf, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any other amount payable
under this Agreement or any other Loan Document is outstanding and unpaid and
so long as the Commitments have not been terminated. The provisions of Sections
2.14, 2.16, 2.20 and 9.05 shall remain operative and in full force and effect
regardless of the expiration of the term of this Agreement, the consummation of
the transactions contemplated hereby, the repayment of any of the Loans, the
expiration of the Commitments, the invalidity or unenforceability of any term
or provision of this Agreement or any other Loan Document, or any investigation
made by or on behalf of the Administrative Agent, the Collateral Agent or any
Lender.
SECTION 9.03. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Borrower and the Administrative Agent
and when the Administrative Agent shall have received counterparts hereof
which, when taken together, bear the signatures of each of the other parties
hereto, and thereafter shall be binding upon and inure to the benefit of the
parties hereto and their respective permitted successors and assigns. Delivery
of an executed counterpart hereof by facsimile transmission shall be as
effective as delivery of a manually executed counterpart hereof.
SECTION 9.04. Successors and Assigns. (a) Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the permitted successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Borrower, the Administrative
Agent or the Lenders that are contained in this Agreement shall bind and inure
to the benefit of their respective successors and assigns.
(b) Each Lender may assign to one or more assignees all or a portion
of its interests, rights and obligations under this Agreement (including all or
a portion of its Commitment and the Loans at the time owing to it); provided,
however, that (i) except in the case of an assignment to a Lender or an
Affiliate or Related Fund of such Lender, (x) the Borrower, the Administrative
Agent and the Lead Arranger must give their prior written consent to such
assignment (which consent shall not be unreasonably withheld); provided,
however, that the consent of the Borrower shall not be required to any such
assignment during the continuance of any Event of Default described in
subsection (g) or (h) of Article VII, and (y) the amount of the Commitment of
the assigning Lender subject to each such assignment (determined as of the date
the Assignment and Acceptance with respect to such assignment is delivered to
the Administrative Agent) shall not be less than $1,000,000 (or, if less, the
entire remaining amount of such Lender's Commitment) and increments of
$1,000,000 in excess
<PAGE> 60
55
thereof, (ii) the parties to each such assignment shall execute and deliver to
the Administrative Agent an Assignment and Acceptance, together with a
processing and recordation fee of $3,500 and (iii) the assignee, if it shall
not be a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire. Upon acceptance and recording pursuant to paragraph (e) of this
Section 9.04, from and after the effective date specified in each Assignment
and Acceptance, (A) the assignee thereunder shall be a party hereto and, to the
extent of the interest assigned by such Assignment and Acceptance, have the
rights and obligations of a Lender under this Agreement and (B) the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto but shall continue to
be entitled to the benefits of Sections 2.14, 2.16, 2.20 and 9.05).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim and
that its Commitment, if any, and the outstanding balance of its Loans, in each
case without giving effect to assignments thereof which have not become
effective, are as set forth in such Assignment and Acceptance, (ii) except as
set forth in (i) above, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement, or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement, any other Loan Document or any other instrument or
document furnished pursuant hereto, or the financial condition of the Borrower
or any Subsidiary or the performance or observance by the Borrower or any
Subsidiary of any of its obligations under this Agreement, any other Loan
Document or any other instrument or document furnished pursuant hereto; (iii)
such assignee represents and warrants that it is legally authorized to enter
into such Assignment and Acceptance; (iv) such assignee confirms that it has
received a copy of this Agreement, together with copies of the most recent
financial statements referred to in Section 3.05(a) or delivered pursuant to
Section 5.04 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (v) such assignee will independently and without
reliance upon the Administrative Agent, the Collateral Agent, such assigning
Lender or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement; (vi) such assignee
appoints and authorizes the Administrative Agent, the Collateral Agent and the
Lead Arranger to take such action as agent on its behalf and to exercise such
powers under this Agreement as are delegated to the Administrative Agent, the
Collateral Agent and the Lead Arranger, respectively, by the terms hereof,
together with such powers as are reasonably incidental thereto; and (vii) such
assignee agrees that it will perform in accordance with their terms all the
obligations which by the terms of this Agreement are required to be performed
by it as a Lender.
(d) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices in The City of New York a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the "Register"). The entries in the Register shall be
conclusive and the Borrower, the Administrative Agent, the Collateral Agent and
the Lenders may treat each person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower, the Collateral Agent and any Lender,
at any reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, an Administrative
Questionnaire completed in respect of the assignee (unless the assignee shall
already be a Lender hereunder), the processing and recordation fee referred to
in paragraph (b) above and, if required, the written consent of the Borrower
and the Administrative Agent to such assignment, the Administrative Agent shall
(i) accept such Assignment
<PAGE> 61
56
and Acceptance, (ii) record the information contained therein in the Register
and (iii) give prompt notice thereof to the Lenders. No assignment shall be
effective unless it has been recorded in the Register as provided in this
paragraph (e).
(f) Each Lender may without the consent of the Borrower or the
Administrative Agent sell participations to one or more banks or other entities
in all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it);
provided, however, that (i) such Lender's obligations under this Agreement
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) the
participating banks or other entities shall be entitled to the benefit of the
cost protection provisions contained in Sections 2.14, 2.16 and 2.20 to the
same extent as if they were Lenders and (iv) the Borrower, the Administrative
Agent and the Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement, and such Lender shall retain the sole right to enforce the
obligations of the Borrower relating to the Loans and to approve any amendment,
modification or waiver of any provision of this Agreement (other than
amendments, modifications or waivers decreasing any fees payable hereunder or
the amount scheduled pursuant to Section 2.11 of principal of or the rate at
which interest is payable on the Loans, extending any principal payment date
scheduled pursuant to Section 2.11 or date fixed for the payment of interest on
the Loans, increasing or extending the Commitments or releasing any Guarantor
or all or any substantial part of the Collateral).
(g) Any Lender or participant may, in connection with any assignment
or participation or proposed assignment or participation pursuant to this
Section 9.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrower furnished to such Lender
by or on behalf of the Borrower; provided that, prior to any such disclosure,
each such assignee or participant or proposed assignee or participant shall
execute an agreement whereby such assignee or participant shall agree (subject
to customary exceptions) to preserve the confidentiality of such confidential
information on terms no less restrictive than those applicable to the Lenders
pursuant to Section 9.16.
(h) Notwithstanding the limitations set forth in paragraph (b) above,
any Lender may at any time, without the consent of the Borrower or the
Administrative Agent, assign all or any portion of its rights under this
Agreement to secure extensions of credit to such Lender; provided that no such
assignment shall release a Lender from any of its obligations hereunder or
substitute any such assignee for such Lender as a party hereto.
(i) Notwithstanding anything to the contrary contained herein, any
Lender (a "Granting Lender") may grant to a special purpose funding vehicle
engaged in making, purchasing or otherwise investing in commercial loans in the
ordinary course of its business (an "SPC"), identified as such in writing from
time to time by the Granting Lender to the Administrative Agent and the
Borrower, the option to provide to the Borrower all or any part of any Loan
that such Granting Lender would otherwise be obligated to make to the Borrower
pursuant to this Agreement; provided that (i) such grant shall not be effective
unless the Borrower consents thereto (such consent not to be unreasonably
withheld), (ii) nothing herein shall constitute a commitment by any SPC to make
any Loan and (iii) if an SPC elects not to exercise such option or otherwise
fails to provide all or any part of such Loan, the Granting Lender shall be
obligated to make such Loan pursuant to the terms hereof. The making of a Loan
by an SPC hereunder shall utilize the Commitment of the Granting Lender to the
same extent, and as if, such Loan were made by such Granting Lender. Each party
hereto hereby agrees that no SPC shall be liable for any indemnity or similar
payment obligation under this Agreement (all liability for which shall remain
with the Granting Lender). In furtherance of the foregoing, each party hereto
hereby agrees (which agreement shall survive the termination of this Agreement)
that, prior to the date that is one year and one day after the payment in full
of all outstanding commercial paper or other senior indebtedness of any SPC, it
will not institute against, or join any other person in instituting against,
such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings under the laws of the United States or any State thereof. In
addition, notwithstanding anything to the contrary contained in this Section
9.04, any SPC may (i) with notice to, but without the prior written consent of,
the Borrower and the Administrative Agent and without paying any processing fee
therefor, assign all or a portion of its interests in any Loans to the Granting
Lender or
<PAGE> 62
57
to any financial institutions (consented to by the Borrower and Administrative
Agent) providing liquidity and/or credit support to or for the account of such
SPC to support the funding or maintenance of Loans and (ii) disclose on a
confidential basis any non-public information relating to its Loans to any
rating agency, commercial paper dealer or provider of any surety, guarantee or
credit or liquidity enhancement to such SPC.
(j) The Borrower shall not assign or delegate any of its rights or
duties hereunder without the prior written consent of the Administrative Agent
and each Lender, and any attempted assignment without such consent shall be
null and void.
SECTION 9.05. Expenses; Indemnity. (a) The Borrower agrees to pay all
reasonable out-of-pocket expenses incurred by the Administrative Agent and the
Collateral Agent in connection with the syndication of the credit facilities
provided for herein and the preparation and administration of this Agreement
and the other Loan Documents or in connection with any amendments,
modifications or waivers of the provisions hereof or thereof (whether or not
the transactions hereby or thereby contemplated shall be consummated) or
incurred by the Administrative Agent, the Collateral Agent or any Lender in
connection with the enforcement or protection of its rights in connection with
this Agreement and the other Loan Documents or in connection with the Loans
made issued hereunder, including the reasonable fees, charges and disbursements
of Cravath, Swaine & Moore, counsel for the Administrative Agent and the
Collateral Agent, and, in connection with any such enforcement or protection,
the fees, charges and disbursements of any other counsel for the Administrative
Agent, the Collateral Agent or any Lender.
(b) The Borrower agrees to indemnify the Administrative Agent, the
Collateral Agent and each Lender, each Affiliate of any of the foregoing
persons and each of their respective directors, officers, employees and agents
(each such person being called an "Indemnitee") against, and to hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses, including reasonable counsel fees, charges and disbursements,
incurred by or asserted against any Indemnitee arising out of, in any way
connected with, or as a result of any claim, litigation, investigation or
proceeding (whether or not any Indemnitee is a party thereto) relating to (i)
the execution or delivery of this Agreement or any other Loan Document or any
agreement or instrument contemplated thereby, the performance by the parties
thereto of their respective obligations thereunder or the consummation of the
Transactions and the other transactions contemplated thereby, (ii) the use of
the proceeds of the Loans, or (iii) any actual or alleged presence or Release
of Hazardous Materials on any property owned or operated by the Borrower or any
of the Subsidiaries, or any Environmental Claim related in any way to the
Borrower or the Subsidiaries; provided that such indemnity shall not, as to any
Indemnitee, 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 wilful misconduct of such Indemnitee.
(c) The provisions of this Section 9.05 shall remain operative and in
full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the expiration of the Commitments, the
invalidity or unenforceability of any term or provision of this Agreement or
any other Loan Document, or any investigation made by or on behalf of the
Administrative Agent, the Collateral Agent or any Lender. All amounts due under
this Section 9.05 shall be payable on written demand therefor.
SECTION 9.06. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender is hereby authorized at any time and
from time to time, except to the extent prohibited by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Lender to or
for the credit or the account of the Borrower against any of and all the
obligations of the Borrower now or hereafter existing under this Agreement and
other Loan Documents held by such Lender, irrespective of whether or not such
Lender shall have made any demand under this Agreement or such other Loan
Document and although such obligations may be unmatured. The rights of each
Lender under this Section 9.06 are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have.
<PAGE> 63
58
SECTION 9.07. Applicable Law. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (OTHER THAN AS EXPRESSLY SET FORTH IN OTHER LOAN DOCUMENTS) SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.08. Waivers; Amendment. (a) No failure or delay of the
Administrative Agent, the Collateral Agent or any Lender in exercising any
power or right hereunder or under any other Loan Document 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 Administrative Agent, the
Collateral Agent and the Lenders hereunder and under the other Loan Documents
are cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of this Agreement or any other Loan
Document or consent to any departure by the Borrower or any other Loan Party
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 Borrower in any case shall entitle the Borrower 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 except pursuant to an agreement or agreements in writing
entered into by the Borrower and the Required Lenders; provided, however, that
no such agreement shall (i) decrease the principal amount scheduled pursuant to
Section 2.11 of, or extend the maturity of or any principal payment date
scheduled pursuant to Section 2.11 or date for the payment of any interest on
any Loan, or waive or excuse any such payment or any part thereof, or decrease
the rate of interest on any Loan, without the prior written consent of each
Lender affected thereby, (ii) increase or extend the Commitment of any Lender,
without the prior written consent of such Lender, (iii) amend or modify the pro
rata requirements of Section 2.17, the provisions of Section 9.04(j), the
provisions of this Section, the definition of the term "Required Lenders" or
release any Guarantor (except to the extent in connection with the sale of any
Guarantor or the sale of all or substantially all the assets of any Guarantor
allowed by this Agreement) or all or any substantial part of the Collateral,
without the prior written consent of each Lender or (iv) amend or modify the
protections afforded to an SPC pursuant to the provisions of Section 9.04(i)
without the written consent of such SPC; provided further that no such
agreement shall amend, modify or otherwise affect the rights or duties of the
Administrative Agent, the Collateral Agent or the Lead Arranger hereunder or
under any other Loan Document without the prior written consent of the
Administrative Agent, the Collateral Agent or the Lead Arranger, respectively.
SECTION 9.09. Interest Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any
Loan, together with all fees, charges and other amounts which are treated as
interest on such Loan under applicable law (collectively the "Charges"), shall
exceed the maximum lawful rate (the "Maximum Rate") which may be contracted
for, charged, taken, received or reserved by the Lender holding such Loan in
accordance with applicable law, the rate of interest payable in respect of such
Loan hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section 9.09 shall be cumulated and the
interest and Charges payable to such Lender in respect of other Loans or
periods shall be increased (but not above the Maximum Rate therefor) until such
cumulated amount, together with interest thereon at the Federal Funds Effective
Rate to the date of repayment, shall have been received by such Lender.
SECTION 9.10. Entire Agreement. This Agreement, the Fee Letter and the
other Loan Documents constitute the entire contract between the parties
relative to the subject matter hereof. Any other previous agreement among the
parties with respect to the subject matter hereof is superseded by this
Agreement and the other Loan Documents. Nothing in this Agreement or in the
other Loan Documents, expressed or implied, is intended to confer upon any
party other than the parties hereto and thereto any rights, remedies,
obligations or liabilities under or by reason of this Agreement or the other
Loan Documents.
<PAGE> 64
59
SECTION 9.11. 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 OR ANY OF THE OTHER LOAN
DOCUMENTS. 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 AND THE OTHER LOAN DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 9.11.
SECTION 9.12. Severability. In the event any one or more of the
provisions contained in this Agreement or in any other Loan Document should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
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.
SECTION 9.13. Counterparts. This Agreement may be executed in
counterparts (and by different parties hereto on different 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 9.03. Delivery of an executed signature page to this Agreement by
facsimile transmission shall be as effective as delivery of a manually signed
counterpart of this Agreement.
SECTION 9.14. Headings. Article and Section headings and the Table of
Contents 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 9.15. Jurisdiction; Consent to Service of Process. (a) The
Borrower 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 the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that 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, to the extent permitted by law, 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 Administrative Agent, the Collateral
Agent or any Lender may otherwise have to bring any action or proceeding
relating to this Agreement or the other Loan Documents against the Borrower or
its properties in the courts of any jurisdiction.
(b) The Borrower hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which 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 or the other Loan Documents 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 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 9.16. Confidentiality. The Administrative Agent, the
Collateral Agent, the Lead Arranger and each of the Lenders agrees to keep
confidential (and to use its best efforts to cause its
<PAGE> 65
60
respective agents and representatives to keep confidential) the Information (as
defined below) and all copies thereof, extracts therefrom and analyses or other
materials based thereon, except that the Administrative Agent, the Collateral
Agent, the Lead Arranger or any Lender shall be permitted to disclose
Information (a) to such of its respective officers, directors, employees,
agents, affiliates and representatives as need to know such Information, (b) to
a potential assignee or participant of such Lender or any direct or indirect
contractual counterparty in any swap agreement relating to the Loans or such
potential assignee's or participant's or counterparty's advisors who need to
know such Information (provided that any such potential assignee or participant
or counterparty shall, and shall use commercially reasonable efforts to cause
its advisors to, keep confidential all such Information on the terms set forth
in this Section 9.16), (c) to the extent requested by any regulatory authority,
(d) to the National Association of Insurance Commissioners or any similar
organization or any nationally recognized rating agency that requires
Information about a Lender's investment portfolio in connection with ratings
issued with respect to such Lender, (e) to the extent otherwise required by
applicable laws and regulations or by any subpoena or similar legal process,
(f) in connection with any suit, action or proceeding relating to the
enforcement of its rights hereunder or under the other Loan Documents or (g) to
the extent such Information (i) becomes publicly available other than as a
result of a breach of this Section 9.16 or (ii) becomes available to the
Administrative Agent, the Lead Arranger, any Lender or the Collateral Agent on
a nonconfidential basis from a source other than the Borrower. For the purposes
of this Section, "Information" shall mean all financial statements,
certificates, reports, agreements and information (including all analyses,
compilations and studies prepared by the Administrative Agent, the Collateral
Agent, the Lead Arranger or any Lender based on any of the foregoing) that are
received from the Borrower and related to the Borrower, any shareholder of the
Borrower or any employee, customer or supplier of the Borrower, other than any
of the foregoing that were available to the Administrative Agent, the
Collateral Agent, the Lead Arranger or any Lender on a nonconfidential basis
prior to its disclosure thereto by the Borrower. The provisions of this Section
9.16 shall remain operative and in full force and effect regardless of the
expiration and term of this Agreement.
<PAGE> 66
61
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
THE LTV CORPORATION,
by /s/ Glenn Moran
-----------------------------------------
Name: Glenn Moran
Title: Senior Vice President
MORGAN STANLEY SENIOR FUNDING, INC.,
individually and as Lead Arranger and
Syndication Agent,
by /s/ Michael T. McLaughlin
-----------------------------------------
Name: Michael T. McLaughlin
Title: Principal
CREDIT SUISSE FIRST BOSTON, individually
and as Administrative Agent and Collateral
Agent,
by /s/ Gregory R. Perry
-----------------------------------------
Name: Gregory R. Perry
Title: Vice President
by /s/ Kristin Lepri
-----------------------------------------
Name: Kristin Lepri
Title: Associate
GENERAL ELECTRIC CAPITAL
CORPORATION,
by /s/ Edward S. Christie
-----------------------------------------
Name: Edward S. Christie
Title: Manager - Operations
MERRILL LYNCH SENIOR FLOATING
RATE FUND, INC.,
by /s/ Andrew C. Liggio
-----------------------------------------
Name: Andrew C. Liggio
Title: Authorized Signatory
MERRILL LYNCH SENIOR FLOATING
RATE FUND II, INC.,
by /s/ Andrew C. Liggio
-----------------------------------------
Name: Andrew C. Liggio
Title: Authorized Signatory
<PAGE> 67
62
NATIONAL CITY BANK,
by /s/ Renold D. Thompson, Jr.
-----------------------------------------
Name: Renold D. Thompson, Jr.
Title: Executive Vice President, Portfolio
Manager
KZH STERLING LLC,
by /s/ Peter Chin
-----------------------------------------
Name: Peter Chin
Title: Authorized Agent
THE BANK OF NOVA SCOTIA,
by /s/ F.C.H. Ashby
-----------------------------------------
Name: F.C.H. Ashby
Title: Senior Manager Loan Operations
<PAGE> 68
CONFORMED COPY
SECURITY AGREEMENT dated as of November 10, 1999,
among COPPERWELD CORPORATION ("Copperweld"), WELDED
TUBE HOLDINGS, INC. ("Welded Tube"), each subsidiary
of Copperweld and Welded Tube listed on Schedule I
hereto (each of Copperweld and Welded Tube and each
such subsidiary individually a "Grantor" and
collectively, the "Grantors") and CREDIT SUISSE FIRST
BOSTON, a bank organized under the laws of
Switzerland, acting through its New York branch
("CSFB"), as collateral agent (in such capacity, the
"Collateral Agent") for the Secured Parties (as
defined herein).
Reference is made to (a) the Credit Agreement dated as of November 10,
1999 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among The LTV Corporation, a Delaware corporation (the
"Borrower"), the lenders from time to time party thereto (the "Lenders"), Morgan
Stanley Senior Funding, Inc., a Delaware corporation ("MSSF"), as lead arranger
and book manager (in such capacities, the "Lead Arranger"), CSFB, as
administrative agent (in such capacity, the "Administrative Agent") and as
Collateral Agent for the Lenders, and MSSF, as syndication agent (in such
capacity, the "Syndication Agent"), and (b) the Guarantee Agreement dated as of
November 10, 1999 (as amended, supplemented or otherwise modified from time to
time, the "Guarantee Agreement"), among the Grantors, the other guarantors
listed on the signature pages thereto and the Collateral Agent.
The Lenders have agreed to make Loans to the Borrower, pursuant to, and
upon the terms and subject to the conditions specified in, the Credit Agreement.
Each of the Grantors has agreed to guarantee, among other things, all the
obligations of the Borrower under the Credit Agreement. The obligations of the
Lenders to make Loans are conditioned upon, among other things, the execution
and delivery by the Grantors of an agreement in the form hereof to secure (a)
the due and punctual payment by the Borrower of (i) the principal of and
premium, if any, and interest (including interest accruing during the pendency
of any bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such proceeding) on the Loans,
when and as due, whether at maturity, by acceleration, upon one or more dates
set for prepayment or otherwise and (ii) all other monetary obligations,
including fees, costs, expenses and indemnities, whether primary, secondary,
direct, contingent, fixed or otherwise (including monetary obligations incurred
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), of
the Borrower to the Secured Parties under the Credit Agreement and the other
Loan Documents, (b) the due and punctual performance of all covenants,
agreements, obligations and liabilities of the Borrower under or pursuant to the
Credit Agreement and the other Loan Documents and (c) the due and punctual
payment and performance of all obligations of the Borrower under each Interest
Rate Protection Agreement that is specified in writing by the Borrower as a
"Covered Interest Rate Protection Agreement" to the Collateral Agent, entered
into with any counterparty that was a Lender (or an Affiliate of a Lender) at
the time such Interest Rate Protection Agreement was entered into (all the
monetary and other obligations described in the preceding clauses (a) through
(c) being collectively called the "Obligations").
Accordingly, the Grantors and the Collateral Agent, on behalf of itself
and each Secured Party (and each of their respective successors or assigns),
hereby agree as follows:
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 Credit Agreement.
SECTION 1.02. Definition of Certain Terms Used Herein. As used herein,
the following terms shall have the following meanings:
"Accounts Receivable" shall mean all indebtedness of an obligor
(whether constituting an account, chattel paper or a general intangible) arising
from the sale of goods, merchandise or the furnishing of services by a Grantor,
including all interest or finance charges and other obligations of such obligor
with respect thereto, and all right, title and interest in any returned,
repossessed or foreclosed goods or merchandise, together with all rights,
titles, securities and guarantees with respect thereto, including any rights to
stoppage in transit, replevin, reclamation and resales, and all related security
interests, liens
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and pledges, whether voluntary or involuntary, in each case whether now existing
or owned or hereafter arising or acquired.
"Chattel Paper" shall mean (a) a writing or writings which evidence
both a monetary obligation and a security interest in or a lease of specific
Equipment and (b) all other property now or hereafter constituting "chattel
paper" under the Uniform Commercial Code as in effect in the State of New York
or its equivalent in other jurisdictions, in each case that are now or hereafter
owned by any Grantor. The term Chattel Paper shall not include Accounts
evidenced by chattel paper.
"Collateral" shall mean, with respect to each Grantor, all (a)
Documents, (b) Chattel Paper, (c) Equipment, (d) General Intangibles, (e)
Inventory, (f) cash and cash accounts, (g) Investment Property and (h) Proceeds
(other than Proceeds of Inventory), except where (i) any Equipment is subject to
a purchase money lien permitted under the Credit Agreement in favor of any
person (other than the Collateral Agent) if the documents relating to such lien
do not permit other liens, or (ii) any General Intangible is the subject of a
written agreement which specifically prohibits assignment thereof but only to
the extent of such prohibition.
"Commodity Account" shall mean an account maintained by a Commodity
Intermediary in which a Commodity Contract is carried out for a Commodity
Customer.
"Commodity Contract" shall mean a commodity futures contract, an option
on a commodity futures contract, a commodity option or any other contract that,
in each case, is (a) traded on or subject to the rules of a board of trade that
has been designated as a contract market for such a contract pursuant to the
federal commodities laws or (b) traded on a foreign commodity board of trade,
exchange or market, and is carried on the books of a Commodity Intermediary for
a Commodity Customer.
"Commodity Customer" shall mean a person for whom a Commodity
Intermediary carries a Commodity Contract on its books.
"Commodity Intermediary" shall mean (a) a person who is registered as a
futures commission merchant under the federal commodities laws or (b) a person
who in the ordinary course of its business provides clearance or settlement
services for a board of trade that has been designated as a contract market
pursuant to federal commodities laws.
"Copperweld" shall mean Copperweld Corporation, a Delaware corporation,
and its permitted successors and assigns hereunder.
"Copperweld Canada" shall mean Copperweld Canada Inc., a company
organized under the laws of the Province of Ontario, and its permitted
successors and assigns hereunder.
"Copperweld Canada Note" shall mean the secured intercompany note in
the aggregate principal amount of $76,000,000 issued by Copperweld Canada to
Copperweld on even date herewith and pledged to the Collateral Agent for the
ratable benefit of the Secured Parties hereunder.
"Copyright License" shall mean any written agreement, now or hereafter
in effect, granting any right to any Grantor under any Copyright now or
hereafter owned by any third party, and all rights of such Grantor under any
such agreement.
"Copyrights" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all copyright rights in any work subject to the
copyright laws of the United States or any other country, whether as author,
assignee, transferee or otherwise, and (b) all registrations and applications
for registration of any such copyright in the United States or any other
country, including registrations, recordings, supplemental registrations and
pending applications for registration in the United States Copyright Office,
including those listed on Schedule II.
"Credit Agreement" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
"Documents" shall mean all instruments, files, records, ledger sheets
and documents covering or relating to any of the Collateral.
"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
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Entitlement by virtue of Section 8-501(b)(2) or (3) of the Uniform Commercial
Code, such person is the Entitlement Holder.
"Equipment" shall mean all equipment, furniture and furnishings, and
all tangible personal property similar to any of the foregoing, including tools,
parts and supplies of every kind and description, and all improvements,
accessions or appurtenances thereto, that are now or hereafter owned by any
Grantor. The term Equipment shall include Fixtures.
"Equity Interest" shall mean shares of capital stock, partnership
interests, membership interests in a limited liability company or beneficial
interests in a trust or other equity ownership interests in a person.
"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.
"Fixtures" shall mean all items of Equipment, whether now owned or
hereafter acquired, of any Grantor that become so related to particular real
estate that an interest in them arises under any real estate law applicable
thereto.
"General Intangibles" shall mean all choses in action and causes of
action and all other assignable intangible personal property of any Grantor of
every kind and nature (other than Accounts Receivable) now owned or hereafter
acquired by any Grantor, including corporate or other business records,
indemnification claims, contract rights (including rights under leases, whether
entered into as lessor or lessee, Interest Rate Protection Agreements and other
agreements), Intellectual Property, goodwill, registrations, franchises or tax
refund claims.
"Intellectual Property" shall mean all intellectual and similar
property of any Grantor of every kind and nature now owned or hereafter acquired
by any Grantor, including inventions, designs, Patents, Copyrights, Licenses,
Trademarks, trade secrets, confidential or proprietary technical and business
information, know-how, show-how or other data or information, software and
databases and all embodiments or fixations thereof and related documentation,
registrations and franchises, and all additions, improvements and accessions to,
and books and records describing or used in connection with, any of the
foregoing.
"Intercompany Notes" shall mean all promissory notes and other debt
securities (other than the Copperweld Canada Note), each having an aggregate
principal amount greater than $50,000, issued by any Subsidiary (other than a
Grantor) to a Grantor, including those listed on Schedule VI and those issued in
the future, and pledged to the Collateral Agent for the ratable benefit of the
Secured Parties hereunder.
"Inventory" shall mean all goods of any Grantor, whether now owned or
hereafter acquired, held for sale or lease, or furnished or to be furnished by
any Grantor under contracts of service, or consumed in any Grantor's business,
including raw materials, intermediates, work in process, packaging materials,
finished goods, semi-finished inventory, scrap inventory, manufacturing supplies
and spare parts, and all such goods that have been returned to or repossessed by
or on behalf of any Grantor.
"Investment Property" shall mean all Securities (whether certificated
or uncertificated), including the Copperweld Canada Note, Intercompany Notes,
Security Entitlements, Securities Accounts, Commodity Contracts, Commodity
Accounts and Equity Interests (other than the Equity Interests of any Grantor or
any other Subsidiary of the Borrower), whether now owned or hereafter acquired
by any Grantor.
"License" shall mean any Patent License, Trademark License, Copyright
License or other license or sublicense to which any Grantor is a party,
including those listed on Schedule III (other than those license agreements in
existence on the date hereof and listed on Schedule III and those license
agreements entered into after the date hereof, which by their terms prohibit
assignment or a grant of a security interest by such Grantor as licensee
thereunder).
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"Obligations" shall have the meaning assigned to such term in the
preliminary statement of this Agreement.
"Patent License" shall mean any written agreement, now or hereafter in
effect, granting to any Grantor any right to make, use or sell any invention on
which a Patent, now or hereafter owned by any third party, is in existence, and
all rights of any Grantor under any such agreement.
"Patents" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all letters patent of the United States or any
other country, all registrations and recordings thereof, and all applications
for letters patent of the United States or any other country, including
registrations, recordings and pending applications in the United States Patent
and Trademark Office or any similar offices in any other country, including
those listed on Schedule IV, and (b) all reissues, continuations, divisions,
continuations- in-part, renewals or extensions thereof, and the inventions
disclosed or claimed therein, including the right to make, use and/or sell the
inventions disclosed or claimed therein.
"Perfection Certificate" shall mean a certificate substantially in the
form of Annex 2 hereto, completed and supplemented with the schedules and
attachments contemplated thereby, and duly executed by a Responsible Officer of
each of Copperweld and Welded Tube.
"Proceeds" shall mean any consideration received from the sale,
exchange, license, lease or other disposition of any asset or property that
constitutes 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) any claim of any Grantor against any third
party for (and the right to sue and recover for and the rights to damages or
profits due or accrued arising out of or in connection with) (i) past, present
or future infringement of any Patent now or hereafter owned by any Grantor, or
licensed under a Patent License, (ii) past, present or future infringement or
dilution of any Trademark now or hereafter owned by any Grantor or licensed
under a Trademark License or injury to the goodwill associated with or
symbolized by any Trademark now or hereafter owned by any Grantor, (iii) past,
present or future breach of any License and (iv) past, present or future
infringement of any Copyright now or hereafter owned by any Grantor or licensed
under a Copyright License 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 mean (a) the Lenders, (b) the Administrative
Agent, (c) the Collateral Agent, (d) each counterparty to a Covered Interest
Rate Protection Agreement entered into with the Borrower if such counterparty
was a Lender or an Affiliate of a Lender at the time the Interest Rate
Protection Agreement was entered into, (e) the beneficiaries of each
indemnification obligation undertaken by any Grantor under any Loan Document and
(f) the successors and assigns of each of the foregoing.
"Securities" shall mean any obligations of an issuer or any shares,
participations 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 traded 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.
"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.
"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.
"Trademark License" shall mean any written agreement, now or hereafter
in effect, granting to any Grantor any right to use any Trademark now or
hereafter owned by any third party, and all rights of any Grantor under any such
agreement.
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"Trademarks" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all trademarks, service marks, trade names,
corporate names, company names, business names, fictitious business names, trade
styles, trade dress, logos, other source or business identifiers, designs and
general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all registration and
recording applications filed in connection therewith, including registrations
and registration applications in the United States Patent and Trademark Office,
any State of the United States or any similar offices in any other country or
any political subdivision thereof, and all extensions or renewals thereof,
including those listed on Schedule V, (b) all goodwill associated therewith or
symbolized thereby and (c) all other assets, rights and interests that uniquely
reflect or embody such goodwill.
"WTC" shall mean Welded Tube Company of America, a Delaware
corporation, and its permitted successors and assigns hereunder.
SECTION 1.03. Rules of Interpretation. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement.
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
foregoing, the Collateral Agent is hereby authorized to file one or more
financing statements (including fixture filings), continuation statements,
filings with the United States Patent and Trademark Office or United States
Copyright Office (or any successor office or any similar office in any other
country) 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.
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
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 and title to 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 (i) any consent or approval which has been obtained or (ii) any consent or
approval which, if not obtained, would not reasonably be expected to result,
individually or in the aggregate, in a Material Adverse Effect on each Grantor;
provided that in the case of clause (ii), each Grantor covenants to use its
reasonable best efforts to obtain such consent or approval.
SECTION 3.02. Filings. (a) The Perfection Certificate has been duly
prepared, completed and executed and the information set forth therein is
correct and complete. Fully executed Uniform Commercial Code financing
statements (including fixture filings, as applicable) or other appropriate
filings, recordings or registrations containing a description of the Collateral
have been delivered to the Collateral Agent for filing in each governmental,
municipal or other office specified in Schedule 6 to the Perfection Certificate,
which are all the filings, recordings and registrations (other than filings
required to be made in the United States Patent and Trademark Office and the
United States Copyright Office in order to perfect the Security Interest in
Collateral consisting of United States Patents, Trademarks and Copyrights) 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
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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 under the Uniform Commercial Code, and no further or
subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary in any such jurisdiction, except as provided under
applicable law with respect to the filing of continuation statements or with
respect to the filing of amendments or new filings to reflect the change of any
Grantor's name, location, identity or corporate structure, except that no
filings, recordings or registrations shall be required to be made with respect
to (i) motor vehicles subject to any requirement that a filing, registration or
recording be made with the department of motor vehicles or any other similar
department or agency in any relevant jurisdiction ("Excluded Motor Vehicles")
and (ii) Inventory having a fair market value not in excess of $1,000,000 in the
aggregate at any time which is not in the possession of a Grantor ("Excluded
Inventory" and, together with Excluded Motor Vehicles, "Excluded Collateral").
(b) Each Grantor shall ensure that fully executed security agreements
in the form hereof and containing a description of all Collateral consisting of
United States registered Intellectual Property shall have been received and
recorded within three months after the execution of this Agreement with respect
to United States registered Patents and United States registered Trademarks (and
Trademarks for which United States registration applications are pending) and
within one month after the execution of this Agreement with respect to United
States registered Copyrights by the United States Patent and Trademark Office
and the United States Copyright Office pursuant to 35 U.S.C. Section 261, 15
U.S.C. Section 1060 or 17 U.S.C. Section 205 and the regulations thereunder, as
applicable, and otherwise as may be required pursuant to the laws of any other
necessary jurisdiction, to 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 consisting
of United States registered Patents, Trademarks and Copyrights in which a
security interest may be perfected by filing, recording or registration in the
United States (or any political subdivision thereof) and its territories and
possessions, or in any other necessary jurisdiction, and no further or
subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary (other than such actions as are necessary to perfect
the Security Interest with respect to any Collateral consisting of United States
registered Patents, Trademarks and Copyrights (or registration or application
for registration thereof) acquired or developed after the date hereof).
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 to the extent a security
interest can be created under the Uniform Commercial Code, (b) subject to the
filings described in Section 3.02 above, a perfected security interest in all
Collateral (other than the Excluded 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 in
such jurisdictions and (c) a security interest that shall be perfected in all
Collateral in which a security interest may be perfected upon the receipt and
recording of this Agreement with the United States Patent and Trademark Office
and the United States Copyright Office, as applicable, within the three month
period (commencing as of the date hereof) pursuant to 35 U.S.C. Section 261 or
15 U.S.C. Section 1060 or the one month period (commencing as of the date
hereof) pursuant to 17 U.S.C. Section 205 and otherwise as may be required
pursuant to the laws of any other necessary jurisdiction. The Security Interest
is and shall be prior to any other Lien on any of the Collateral, other than
Liens expressly permitted pursuant to Section 6.02 of the Credit Agreement that
may be prior to the Security Interest.
SECTION 3.04. Absence of Other Liens. The Collateral is owned by the
Grantors free and clear of any Lien, except for Liens expressly permitted
pursuant to Section 6.02 of the Credit Agreement. 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 the
United States Patent and Trademark Office or the United States Copyright Office
or (c) 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, except, in each case, for Liens expressly permitted pursuant to
Section 6.02 of the Credit Agreement.
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ARTICLE IV
Covenants
SECTION 4.01. Change of Name; Location of Collateral; Records; Place of
Business. (a) Each Grantor agrees to notify the Collateral Agent promptly in
writing of any change (i) 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, (ii) 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)
other than changes in the location of any Excluded Inventory, (iii) in its
identity or corporate structure or (iv) 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, subject to any
Liens expressly permitted pursuant to Section 6.02 of the Credit Agreement that
may be prior to such security interest. Each Grantor agrees promptly to notify
the Collateral Agent if any material portion of the Collateral owned or held by
such Grantor is damaged or destroyed.
(b) Each Grantor agrees to maintain, at its own cost and expense, such
complete and accurate records with respect to the Collateral owned by it as is
consistent with its current practices and in accordance with such prudent and
standard practices used in industries that are the same as or similar to those
in which such Grantor is engaged, but in any event to include complete
accounting records indicating all payments and proceeds received with respect to
any part of the Collateral, and, at such time or times as the Collateral Agent
may reasonably request, promptly to prepare and deliver to the Collateral Agent
a duly certified schedule or schedules in form and detail satisfactory to the
Collateral Agent showing the identity, amount and location of any and all
Collateral.
SECTION 4.02. Periodic Certification. Each year, at the time of
delivery of annual financial statements with respect to the preceding fiscal
year pursuant to Section 5.04 of the Credit Agreement, the Borrower shall
deliver to the Collateral Agent a certificate executed by a Financial Officer
and the chief legal officer of the Borrower or each of Copperweld and Welded
Tube setting forth the information required pursuant to Section 2 of the
Perfection Certificate or confirming that there has been no change in such
information since the date of such certificate or the date of the most recent
certificate delivered pursuant to this Section 4.02. Each certificate delivered
pursuant to this Section 4.02 shall identify in the format of Schedule II, III,
IV or V, as applicable, all United States registered Intellectual Property of
any Grantor in existence on the date thereof and not then listed on such
Schedules or previously so identified to the Collateral Agent.
SECTION 4.03. Protection of Security. Each Grantor shall, at its own
cost and expense, take any and all actions necessary to defend title to the
Collateral (other than Excluded Inventory) against all persons and to defend the
Security Interest of the Collateral Agent in the Collateral and the priority
thereof against any Lien not expressly permitted pursuant to Section 6.02 of the
Credit Agreement.
SECTION 4.04. 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 reasonably 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 (including fixture filings)
or other documents in connection herewith or therewith. If any amount payable
under or in connection with any of the Collateral shall be or become evidenced
by any promissory note or other instrument having a principal amount in excess
of $50,000, such note or instrument shall be immediately pledged and delivered
to the Collateral Agent, duly endorsed in a manner satisfactory to the
Collateral Agent.
Without limiting the generality of the foregoing, each Grantor hereby
authorizes the Collateral Agent, with prompt notice thereof to the Grantors, to
supplement this Agreement by supplementing Schedule II, III, IV or V hereto or
adding additional schedules hereto to specifically identify any asset or item
that may constitute United States registered Copyrights, Licenses, Patents or
Trademarks; provided, however, that any Grantor shall have the right,
exercisable within 10 days after it has been notified by the Collateral Agent of
the specific identification of such Collateral, to advise the Collateral Agent
in writing of any inaccuracy of the representations and warranties made by such
Grantor hereunder with respect to such Collateral. Each Grantor agrees that it
will use its reasonable best efforts to take such action as shall be necessary
in order that
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all representations and warranties hereunder shall be true and correct with
respect to such Collateral within 30 days after the date it has been notified by
the Collateral Agent of the specific identification of such Collateral.
SECTION 4.05. Inspection and Verification. The Collateral Agent and
such persons as the Collateral Agent may reasonably designate shall have the
right, upon reasonable notice, at the Grantors' own cost and expense, to inspect
the Collateral, all records related thereto (and to make extracts and copies
from such records) and the premises upon which any of the Collateral is located,
to discuss the Grantors' affairs with the officers of the Grantors and their
independent accountants and to verify under reasonable procedures the validity,
amount, quality, quantity, value, condition and status of, or any other matter
relating to, the Collateral, including, in the case of Collateral in the
possession of any third person, by contacting the third person possessing such
Collateral for the purpose of making such a verification. The Collateral Agent
shall have the absolute right to share any information it gains from such
inspection or verification with any Secured Party (it being understood that any
such information shall be deemed to be "Information" subject to the provisions
of Section 9.16 of the Credit Agreement).
SECTION 4.06. Taxes; Encumbrances. At its option, the Collateral Agent
may discharge past due taxes, assessments, charges, fees, Liens, security
interests or other encumbrances at any time levied or placed on the Collateral
and not permitted pursuant to Section 6.02 of the Credit Agreement only to the
extent the Grantor fails to discharge or dispute in good faith such taxes,
assessments, charges, fees, Liens, security interests or other encumbrances, and
may pay for the maintenance and preservation of the Collateral to the extent any
Grantor fails to do so as required by the Credit Agreement or this Agreement,
and each Grantor jointly and severally agrees to reimburse the Collateral Agent
on demand for any payment made or any expense incurred by the Collateral Agent
pursuant to the foregoing authorization; provided, however, that nothing in this
Section 4.06 shall be interpreted as excusing any Grantor from the performance
of, or imposing any obligation on the Collateral Agent or any Secured Party to
cure or perform, any covenants or other promises of any Grantor with respect to
taxes, assessments, charges, fees, Liens, security interests or other
encumbrances and maintenance as set forth herein or in the other Loan Documents.
SECTION 4.07. Continuing Obligations of the Grantors. Each Grantor
shall remain liable to observe and perform all the conditions and obligations to
be observed and performed by it under each contract, agreement or instrument
relating to the Collateral, all in accordance with the terms and conditions
thereof, and each Grantor jointly and severally agrees to indemnify and hold
harmless the Collateral Agent and the Secured Parties from and against any and
all liability for such performance.
SECTION 4.08. Use and Disposition of Collateral. None of the Grantors
shall make or permit to be made an assignment, pledge or hypothecation of the
Collateral or shall grant any other Lien in respect of the Collateral, except as
expressly permitted by Section 6.02 or 6.05 of the Credit Agreement. None of the
Grantors shall make or permit to be made any transfer of the Collateral and each
Grantor shall remain at all times in possession of the Collateral (other than
Excluded Inventory) owned by it, except that (a) Inventory may be sold in the
ordinary course of business and (b) unless and until the Collateral Agent shall
notify the Grantors that an Event of Default shall have occurred and be
continuing and that during the continuance thereof the Grantors shall not sell,
convey, lease, assign, transfer or otherwise dispose of any Collateral (which
notice may be given by telephone if promptly confirmed in writing), the Grantors
may use and dispose of the Collateral in any lawful manner not inconsistent with
the provisions of this Agreement, the Credit Agreement or any other Loan
Document. Without limiting the generality of the foregoing, each Grantor agrees
that it shall not permit any Inventory (other than Excluded Inventory) to be in
the possession or control of any warehouseman, bailee, agent or processor at any
time unless such warehouseman, bailee, agent or processor shall have been
notified of the Security Interest by a Grantor and shall have been instructed by
a Grantor to hold the Inventory subject to the Security Interest and the
instructions of the Collateral Agent (which shall permit such Inventory to be
removed by such Grantor in the ordinary course of business until the Collateral
Agent notifies such warehouseman, bailee, agent or processor that an Event of
Default has occurred and is continuing).
SECTION 4.09. Insurance. The Grantors, at their own expense, shall
maintain or cause to be maintained insurance covering physical loss or damage to
the Inventory and Equipment in accordance with Section 5.02 of the Credit
Agreement. Each Grantor irrevocably makes, constitutes and appoints the
Collateral Agent (and all officers, employees or agents designated by the
Collateral Agent) as such Grantor's true and lawful agent (and attorney-in-fact)
for the purpose, during the continuance of an Event of Default, of making,
settling and adjusting claims in respect of Collateral under policies of
insurance, endorsing the name of such Grantor on any check, draft, instrument or
other item of payment for the proceeds of such policies of insurance and for
making all determinations and decisions with respect thereto. In the event that
any Grantor at any time or times shall fail to obtain or maintain any of the
policies of insurance required
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hereby or to pay any premium in whole or part relating thereto, the Collateral
Agent may, without waiving or releasing any obligation or liability of the
Grantors hereunder or any Event of Default, in its sole discretion, obtain and
maintain such policies of insurance and pay such premium and take any other
actions with respect thereto as the Collateral Agent deems advisable. All sums
disbursed by the Collateral Agent in connection with this Section 4.09,
including reasonable attorneys' fees, court costs, expenses and other charges
relating thereto, shall be payable, upon demand, by the Grantors to the
Collateral Agent and shall be additional Obligations secured hereby.
SECTION 4.10. Covenants Regarding Patent, Trademark and Copyright
Collateral. (a) Each Grantor agrees that it will not, nor will it permit any of
its licensees to, do any act, or omit to do any act, whereby any Patent which is
material to the conduct of such Grantor's business may become invalidated or
dedicated to the public, and agrees that it shall mark any products covered by a
Patent with the relevant patent number as necessary and sufficient to establish
and preserve its maximum rights under applicable patent laws.
(b) Each Grantor (either itself or through its licensees or its
sublicensees) will, for each Trademark material to the conduct of such Grantor's
business, (i) maintain such Trademark in full force free from any claim of
abandonment or invalidity for non-use, (ii) maintain the quality of products and
services offered under such Trademark, (iii) display such Trademark with notice
of Federal or foreign registration to the extent necessary and sufficient to
establish and preserve its maximum rights under applicable law and (iv) not
knowingly use or knowingly permit the use of such Trademark in violation of any
third party rights.
(c) Each Grantor (either itself or through licensees) will, for each
work covered by a material Copyright, continue to publish, reproduce, display,
adopt and distribute the work with appropriate copyright notice as necessary and
sufficient to establish and preserve its maximum rights under applicable
copyright laws.
(d) Each Grantor shall notify the Collateral Agent immediately if it
knows or has reason to know that any Patent, Trademark or Copyright material to
the conduct of its business may become abandoned, lost or dedicated to the
public, or of any adverse determination or development (including the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office, United States Copyright Office or
any court or similar office of any country) regarding such Grantor's ownership
of any Patent, Trademark or Copyright, its right to register the same, or to
keep and maintain the same.
(e) In no event shall any Grantor, either itself or through any agent,
employee, licensee or designee, file an application for any Patent, Trademark or
Copyright (or for the registration of any Trademark or Copyright) with the
United States Patent and Trademark Office, United States Copyright Office or any
office or agency in any political subdivision of the United States, unless it
promptly informs the Collateral Agent, and, upon request of the Collateral
Agent, executes and delivers any and all agreements, instruments, documents and
papers as the Collateral Agent may request to evidence the Collateral Agent's
security interest in such Patent, Trademark or Copyright, and each Grantor
hereby appoints the Collateral Agent as its attorney-in-fact to execute and file
such writings for the foregoing purposes, all acts of such attorney being hereby
ratified and confirmed; such power, being coupled with an interest, is
irrevocable, subject to the provisions of Section 7.14 hereunder.
(f) Each Grantor will take all necessary steps that are consistent with
the practice in any proceeding before the United States Patent and Trademark
Office, United States Copyright Office or any office or agency in any political
subdivision of the United States or in any other country or any political
subdivision thereof, to maintain and pursue each application relating to the
Patents, Trademarks and/or Copyrights material to the conduct of such Grantor's
business (and to obtain the relevant grant or registration) and to maintain each
issued Patent and each registration of the Trademarks and Copyrights that is
material to the conduct of any Grantor's business, including timely filings of
applications for renewal, affidavits of use, affidavits of incontestability and
payment of maintenance fees, and, if consistent with good business judgment, to
initiate opposition, interference and cancellation proceedings against third
parties.
(g) In the event that any Grantor has reason to believe that any
Collateral consisting of a Patent, Trademark or Copyright material to the
conduct of any Grantor's business has been or is about to be infringed,
misappropriated or diluted by a third party, such Grantor promptly shall notify
the Collateral Agent and shall, if consistent with good business judgment,
promptly sue for infringement, misappropriation or dilution and to recover any
and all damages for such infringement, misappropriation or dilution, and take
such other actions as are appropriate under the circumstances to protect such
Collateral.
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(h) Upon and during the continuance of an Event of Default, upon the
request of the Collateral Agent, each Grantor shall use its reasonable best
efforts to obtain all requisite consents or approvals by the licensor of each
Copyright License, Patent License or Trademark License to effect the assignment
of all of such Grantor's right, title and interest thereunder to the Collateral
Agent or its designee.
ARTICLE V
Power of Attorney
Each Grantor irrevocably makes, constitutes and appoints the Collateral
Agent (and all officers, employees or agents designated by the Collateral Agent)
as such Grantor's true and lawful agent and attorney-in-fact, and in such
capacity the Collateral Agent shall have the right, with power of substitution
for each Grantor and in each Grantor's name or otherwise, for the use and
benefit of the Collateral Agent and the Secured Parties, upon the occurrence and
during the continuance of an Event of Default (a) to receive, endorse, assign
and/or deliver any and all notes, acceptances, checks, drafts, money orders or
other evidences of payment relating to the Collateral or any part thereof; (b)
to demand, collect, receive payment of, give receipt for and give discharges and
releases of all or any of the Collateral; (c) to sign the name of any Grantor on
any invoice or bill of lading relating to any of the Collateral; (d) to commence
and prosecute any and all suits, actions or proceedings at law or in equity in
any court of competent jurisdiction to collect or otherwise realize on all or
any of the Collateral or to enforce any rights in respect of any Collateral; (e)
to settle, com promise, compound, adjust or defend any actions, suits or
proceedings relating to all or any of the Collateral; and (f) to use, sell,
assign, transfer, pledge, make any agreement with respect to or otherwise deal
with all or any of the Collateral, and to do all other acts and things necessary
to carry out the purposes of this Agreement, as fully and completely as though
the Collateral Agent were the absolute owner of the Collateral for all purposes;
provided, however, that nothing herein contained shall be construed as requiring
or obligating the Collateral Agent or any Secured Party to make any commitment
or to make any inquiry as to the nature or sufficiency of any payment received
by the Collateral Agent or any Secured Party, or to present or file any claim or
notice, or to take any action with respect to the Collateral or any part thereof
or the moneys due or to become due in respect thereof or any property covered
thereby, and no action taken or omitted to be taken by the Collateral Agent or
any Secured Party with respect to the Collateral or any part thereof shall give
rise to any defense, counterclaim or offset in favor of any Grantor or to any
claim or action against the Collateral Agent or any Secured Party. It is
understood and agreed that the appointment of the Collateral Agent as the agent
and attorney-in-fact of the Grantors for the purposes set forth above is coupled
with an interest and is irrevocable, subject to the provisions of Section 7.14
hereunder. The provisions of this Section shall in no event relieve any Grantor
of any of its obligations hereunder or under any other Loan Document with
respect to the Collateral or any part thereof or impose any obligation on the
Collateral Agent or any Secured Party to proceed in any particular manner with
respect to the Collateral or any part thereof, or in any way limit the exercise
by the Collateral Agent or any Secured Party of any other or further right which
it may have on the date of this Agreement or hereafter, whether hereunder, under
any other Loan Document, by law or otherwise.
ARTICLE VI
Remedies
SECTION 6.01. Remedies upon Default. Upon the occurrence and during the
continuance of an Event of Default, each Grantor agrees to deliver or make
available each item of Collateral to the Collateral Agent on demand, and it is
agreed that the Collateral Agent shall have the right to take any of or all the
following actions at the same or different times: (a) with respect to any
Collateral consisting of Intellectual Property, on demand, to cause the Security
Interest to become an assignment, transfer and conveyance of any of or all such
Collateral by the applicable Grantors to the Collateral Agent, or to license or
sublicense, whether general, special or otherwise, and whether on an exclusive
or non-exclusive basis, any such Collateral throughout the world on such terms
and conditions and in such manner as the Collateral Agent shall determine (other
than in violation of any then-existing licensing arrangements to the extent that
waivers cannot be obtained), and (b) with or without legal process and with or
without prior notice or demand for performance, to take possession of the
Collateral and without liability for trespass to enter any premises where the
Collateral may be located for the purpose of taking possession of or removing
the Collateral and, generally, to exercise any and all rights afforded to a
secured party under the Uniform Commercial Code or other applicable law. Without
limiting the generality of the foregoing, each Grantor agrees that the
Collateral Agent shall have the right, subject to the mandatory requirements of
applicable law, to sell or otherwise
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dispose of all or any part of the Collateral, at public or private sale or at
any broker's board or on any securities exchange, for cash, upon credit or for
future 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 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
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 Grantor, and
each Grantor hereby waives (to the extent permitted by law) all rights of
redemption, stay and appraisal which such Grantor 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 the Grantors 10 days' written notice
(which each Grantor 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 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 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 (if any)
of such sale. At any such sale, the 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 Collateral if it shall determine
not to do so, regardless of the fact that notice of sale of such 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 Collateral is made on
credit or for future delivery, the Collateral so sold may be retained by the
Collateral Agent until the sale price is paid 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 Collateral so sold
and, in case of any such failure, such Collateral may be sold again upon like
notice. At any public (or, to the extent permitted by law, private) sale made
pursuant to this Section, any Secured Party may bid for or purchase, free (to
the extent permitted by law) from any right of redemption, stay, valuation or
appraisal on the part of any Grantor (all said rights being also hereby waived
and released to the extent permitted by law), the Collateral or any part thereof
offered for sale and may make payment on account thereof by using any claim then
due and payable to such Secured Party from any Grantor as a credit against the
purchase price, and such Secured Party may, upon compliance with the terms of
sale, hold, retain and dispose of such property without further accountability
to any Grantor therefor. For purposes hereof, a written agreement to purchase
the Collateral or any portion thereof shall be treated as a sale thereof; the
Collateral Agent shall be free to carry out such sale pursuant to such agreement
and no Grantor shall be entitled to the return of the 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 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 this Agreement and to sell the
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.
SECTION 6.02. Application of Proceeds. The Collateral Agent shall apply
the proceeds of any collection or sale of the Collateral, as well as any
Collateral consisting of cash, as follows:
FIRST, to the payment of all costs and expenses
incurred by the Administrative Agent or the Collateral Agent (in its
capacity as such hereunder or under any other Loan Document) in
connection with such collection or sale or otherwise in connection with
this Agreement or any of the Obligations, including all court costs and
the reasonable fees and expenses of its agents and legal counsel, the
repayment of all advances made by the Collateral Agent hereunder or
under any other Loan Document on behalf of any Grantor and any other
reasonable costs or expenses incurred in connection with the exercise
of any right or remedy hereunder or under any other Loan Document;
SECOND, to the payment in full of the Obligations
(the amounts so applied to be distributed among the Secured Parties pro
rata in accordance with the amounts of the Obligations owed to them on
the date of any such distribution); and
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THIRD, to the Grantors, their successors or assigns,
or as a court of competent jurisdiction may otherwise direct.
Subject to the foregoing, the Collateral Agent shall have absolute discretion as
to the time of application of any such proceeds, moneys or balances in
accordance with this Agreement. Upon any sale of the Collateral by the
Collateral Agent (including pursuant to a power of sale granted by statute or
under a judicial proceeding), the receipt of the Collateral Agent or of the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.
SECTION 6.03. Grant of License to Use Intellectual Property. For the
purpose of enabling the Collateral Agent to exercise rights and remedies under
this Article at such time as the Collateral Agent shall be lawfully entitled to
exercise such rights and remedies, each Grantor hereby grants to the Collateral
Agent an irrevocable, non-exclusive license (exercisable without payment of
royalty or other compensation to the Grantors) to use, license or sub-license
any of the Collateral consisting of Intellectual Property now owned or hereafter
acquired by such Grantor, and wherever the same may be located, and including in
such license reasonable access to all media in which any of the licensed items
may be recorded or stored and to all computer software and programs used for the
compilation or printout thereof. The use of such license by the Collateral Agent
may be exercised, at the option of the Collateral Agent, upon the occurrence and
during the continuation of an Event of Default; provided that any license,
sub-license or other transaction entered into by the Collateral Agent in
accordance herewith shall be binding upon the Grantors notwithstanding any
subsequent cure of an Event of Default.
ARTICLE VII
Miscellaneous
SECTION 7.01. Notices. All communications and notices hereunder shall
(except as otherwise expressly permitted herein) be in writing and given as
provided in Section 9.01 of the Credit Agreement. All communications and notices
hereunder to any Grantor shall be given to it at its address or fax number set
forth on Schedule I, with a copy to the Borrower.
SECTION 7.02. Security Interest Absolute. All rights of the Collateral
Agent hereunder, the Security Interest and all obligations of the Grantors
hereunder shall, to the extent permitted by law, be absolute and unconditional
irrespective of (a) any lack of validity or enforceability of the Credit
Agreement, any other Loan Document, any agreement with respect to any of the
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 Obligations, or any other amendment or waiver
of or any consent to any departure from the Credit Agreement, any other Loan
Document or any other agreement or instrument, (c) any exchange, release or
non-perfection of any Lien on other collateral, or any release or amendment or
waiver of or consent under or departure from any guarantee, securing or
guaranteeing all or any of the Obligations, or (d) any other circumstance that
might otherwise constitute a defense available to, or a discharge of, any
Grantor in respect of the Obligations or this Agreement.
SECTION 7.03. Survival of Agreement. 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
Secured Parties and shall survive the making by the Lenders of the Loans, and
the execution and delivery to the Lenders of any notes evidencing such Loans,
regardless of any investigation made by the Lenders or on their behalf, and
shall continue in full force and effect until this Agreement shall terminate.
SECTION 7.04. Binding Effect; Several Agreement. 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 other Secured Parties and their respective
successors and assigns, except that no Grantor shall have the right to assign or
transfer its rights or obligations hereunder or any interest herein or in the
Collateral (and any such assignment or transfer shall be void) except as
expressly contemplated by this Agreement or the Credit Agreement. This Agreement
shall be construed as a separate agreement with respect to each Grantor and may
be amended,
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modified, supplemented, waived or released with respect to any Grantor without
the approval of any other Grantor and without affecting the obligations of any
other Grantor hereunder.
SECTION 7.05. Successors and Assigns. 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 any Grantor or the Collateral Agent that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns.
SECTION 7.06. Collateral Agent's Fees and Expenses; Indemnification.
(a) Each Grantor jointly and severally agrees to pay upon demand to the
Collateral Agent the amount of any and all reasonable expenses, including the
reasonable fees, disbursements and other charges of its counsel and of any
experts or agents, which 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 Collateral,
(iii) the exercise, enforcement or protection of any of the rights of the
Collateral Agent hereunder or (iv) the failure of any Grantor to perform or
observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations under the
other Loan Documents, each Grantor jointly and severally agrees to indemnify the
Collateral Agent and the other Indemnitees against, and hold each of them
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including reasonable fees, disbursements and other charges of counsel,
incurred by or asserted against any of them arising out of, in any way connected
with, or as a result of, any claim, litigation, investigation or proceeding
relating to the execution, delivery or performance of this Agreement or to the
Collateral, whether or not any Indemnitee is a party thereto; provided that such
indemnity shall not, as to any Indemnitee, 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 Indemnitee.
(c) Any such amounts payable as provided hereunder shall be additional
Obligations secured hereby and by the other Security Documents. The provisions
of this Section 7.06 shall remain operative and in full force and effect
regardless of the termination of this Agreement or any other Loan Document, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans, the invalidity or unenforceability of any term or provision of this
Agreement or any other Loan Document, or any investigation made by or on behalf
of the Collateral Agent or any Lender. All amounts due under this Section 7.06
shall be payable on written demand therefor.
SECTION 7.07. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, EXCEPT THAT
THE LAW OF THEIR LOCATION SHALL GOVERN WITH RESPECT TO THE CREATION, PERFECTION
AND ENFORCEMENT OF SECURITY INTERESTS IN FIXTURES AND THE EXERCISE OF REMEDIES
WITH RESPECT THERETO (IF APPLICABLE).
SECTION 7.08. 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
and of the Collateral Agent, the Administrative Agent and the Lenders under the
other Loan Documents 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 any other Loan Document or consent to any departure by any Grantor
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 to or
demand on any Grantor in any case shall entitle such Grantor or any other
Grantor 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 except pursuant to an agreement or agreements in writing
entered into by the Collateral Agent and the Grantor or Grantors with respect to
which such waiver, amendment or modification is to apply, subject to any consent
required in accordance with Section 9.08 of the Credit Agreement.
SECTION 7.09. 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 OR ANY OF THE OTHER LOAN
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DOCUMENTS. 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 AND THE OTHER LOAN DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 7.09.
SECTION 7.10. Severability. 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.
SECTION 7.11 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 but one contract (subject to Section 7.04),
and shall become effective as provided in Section 7.04. Delivery of an executed
signature page to this Agreement by facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof.
SECTION 7.12. Headings. Article and Section headings used herein are
for the purpose 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 7.13. 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 the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that 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,
to the extent permitted by law, 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 Administrative
Agent or any Lender may otherwise have to bring any action or proceeding
relating to this Agreement or the other Loan Documents against any Grantor or
its properties in the courts of any jurisdiction.
(b) Each Grantor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which 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 or the other Loan Documents 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 7.01. 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 7.14. Termination. (a) This Agreement and the Security Interest
shall terminate when all the Obligations (other than wholly contingent
indemnification obligations) then due and owing have been paid in full in cash
and the Lenders have no further commitment to lend under the Credit Agreement,
at which time the Collateral Agent shall execute and deliver to the Grantors, at
the Grantors' expense, all Uniform Commercial Code termination statements and
similar documents which the Grantors shall reasonably request to evidence such
termination. Any execution and delivery of termination statements or documents
pursuant to this Section 7.14 shall be without recourse to or warranty by the
Collateral Agent. A Grantor shall automatically be released from its obligations
hereunder and the Security Interest in the Collateral of such Grantor shall be
automatically released in the event that all the capital stock of such Grantor
or all or substantially all of the assets of such Grantor shall be sold,
transferred or otherwise disposed of to a person that is not an Affiliate of the
Borrower in accordance with the terms of the Credit Agreement;
<PAGE> 82
15
provided that the Required Lenders shall have consented to such sale, transfer
or other disposition (to the extent required by the Credit Agreement) and the
terms of such consent did not provide otherwise.
(b) The Security Interest in (i) any Collateral sold by or for
the account of a Grantor in accordance with the terms of the Credit Agreement
and (ii) in the case of any Collateral consisting of Inventory, any Proceeds of
such Inventory (including for avoidance of doubt, Accounts Receivable) sold or
encumbered under a Securitization Facility, shall automatically be released
without the need for any action on the part of the Collateral Agent upon the
sale of such Collateral by or for the account of such Grantor.
SECTION 7.15. Additional Grantors. Upon execution and delivery by the
Collateral Agent and a Subsidiary of an instrument in the form of Annex 3
hereto, such Subsidiary shall become a Grantor hereunder with the same force and
effect as if originally named as a Grantor herein. The execution and delivery of
any such instrument shall not require the consent of any Grantor hereunder. The
rights and obligations of each Grantor hereunder shall remain in full force and
effect notwithstanding the addition of any new Grantor as a party to this
Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
EACH OF THE GRANTORS LISTED ON
SCHEDULE I HERETO,
by: /s/ Glenn J. Moran
------------------------------------
Name: Glenn J. Moran
Title: Vice President
CREDIT SUISSE FIRST BOSTON, as Collateral
Agent,
by: /s/ Chris T. Horgan
------------------------------------
Name: Chris T. Horgan
Title: Vice President
by: /s/ Gregory R. Perry
------------------------------------
Name: Gregory R. Perry
Title: Vice President
<PAGE> 83
SCHEDULE I
GRANTORS
Name Address/Fax Number
- ---- ------------------
<PAGE> 84
SCHEDULE II
COPYRIGHTS OWNED BY [NAME OF GRANTOR]
-------------------------------------
[Make a separate Schedule II for each Grantor, and if no copyrights are owned,
so state. List in numerical order by copyright registration/application no.]
U.S. Copyright Registrations
----------------------------
Title Class Reg. Date Reg No.
----- ----- --------- -------
Pending U.S. Copyright Applications for Registration
----------------------------------------------------
Title Class Date Application Filed
----- ----- ----------------------
<PAGE> 85
SCHEDULE III
LICENSES
--------
[Make a separate Schedule III for each Grantor, and if not a
licensor/licensee in a license/sublicense, so state.]
PART I
------
LICENSES/SUBLICENSES OF [NAME OF GRANTOR] ON DATE HEREOF
--------------------------------------------------------
A. Copyrights
-------------
[List U.S. copyrights in numerical order by Reg. No.]
<TABLE>
<CAPTION>
Licensee Name Date of License/ Title of
and Address Sublicense U.S. Copyrights Class Reg. Date Reg. No.
----------- ---------------- --------------- ----- --------- --------
<S> <C> <C> <C> <C> <C>
</TABLE>
B. Patents
----------
[List first in numerical order by U.S. patent nos. followed by
U.S. patent application nos.]
<TABLE>
<CAPTION>
Licensee Name Date of License/ Application Date Application/
and Address Sublicense Title of U.S. Patent Class Filed/Issue Date Patent No.
----------- ---------- -------------------- ----- ---------------- ----------
<S> <C> <C> <C> <C> <C>
</TABLE>
C. Trademarks
-------------
[List first in numerical order by U.S. trademark nos., followed by
U.S. trademark application nos.]
<TABLE>
<CAPTION>
Licensee Name Date of License/ Application Date Application/
and Address Sublicense U.S. Mark Class Filed/Reg. Date Reg. No.
----------- ---------- --------- ----- --------------- --------
<S> <C> <C> <C> <C> <C>
</TABLE>
D. Others
---------
<TABLE>
<CAPTION>
Date of License/
Licensee Name and Address Sublicense Subject Matter
------------------------- ---------- --------------
<S> <C> <C>
</TABLE>
<PAGE> 86
2
PART 2
------
LICENSES/SUBLICENSES OF [NAME OF GRANTOR] AS LICENSEE ON DATE HEREOF
--------------------------------------------------------------------
A. Copyrights
-------------
[List U.S. copyrights in numerical order by Reg. No.]
<TABLE>
<CAPTION>
Licensor Name Date of License/ Title of
and Address Sublicense U.S. Copyright Class Reg. Date Reg. No.
----------- ---------- -------------- ----- --------- --------
<S> <C> <C> <C> <C> <C>
</TABLE>
B. Patents
----------
[List first in numerical order by U.S. Patent nos. followed by
U.S. patent application nos.]
<TABLE>
<CAPTION>
Licensor Name Date of License/ Title of Application Date/Filed/ Application/
and Address Sublicense U.S. Patent Class Issue Date Patent No.
----------- ---------- ----------- ----- ---------- ----------
<S> <C> <C> <C> <C> <C>
</TABLE>
C. Trademarks
-------------
[List first in numerical order by U.S. trademark nos., followed by
U.S. trademark application nos.]
<TABLE>
<CAPTION>
Licensor Name and Date of License/ Application Date Application
Address Sublicense U.S. Mark Class Filed/Reg. Date Reg. No.
- ------- ---------- --------- ----- --------------- --------
<S> <C> <C> <C> <C> <C>
</TABLE>
D. Others
---------
<TABLE>
<CAPTION>
Date of License/
Licensor Name and Address Sublicense Subject Matter
------------------------- ---------- --------------
<S> <C> <C>
</TABLE>
<PAGE> 87
SCHEDULE IV
PATENTS OWNED BY [NAME OF GRANTOR]
----------------------------------
[Make a separate Schedule IV for each Grantor, and if no patents
are owned, so state. List in numerical order by patent no./patent
application no.]
U.S. Patent Registrations
-------------------------
<TABLE>
<CAPTION>
Patent Name Class Issue Date Patent No.
- ----------- ----- ---------- ----------
<S> <C> <C> <C>
</TABLE>
U.S. Patent Applications
------------------------
<TABLE>
<CAPTION>
Patent Name Class Filing Date Patent Application No.
----------- ----- ----------- ----------------------
<S> <C> <C> <C>
</TABLE>
<PAGE> 88
SCHEDULE V
TRADEMARK/TRADE NAMES OWNED BY [NAME OF GRANTOR]
------------------------------------------------
[Make a separate Schedule V for each Grantor, and if no
trademarks/trade names are owned, so state.
List in numerical order by trademark registration/application no.]
U.S. Trademark Registrations
----------------------------
Mark Class Reg. Date Reg. No.
---- ----- --------- --------
U.S. Trademark Applications
---------------------------
Mark Class Filing Date Application No.
---- ----- ----------- ---------------
State Trademark Registrations
-----------------------------
[List in alphabetical order by State/numerical order by trademark no.]
State Mark Class Reg. Date Reg. No.
- ----- ---- ----- --------- --------
State Trademark Applications
----------------------------
[List in alphabetical order by trademark application no.]
State Mark Class Filing Date Application No.
- ----- ---- ----- ----------- ---------------
Trade Names
-----------
Country(s) Where Used Trade Names
--------------------- -----------
<PAGE> 89
SCHEDULE VI
INTERCOMPANY NOTES
------------------
Obligor Obligee Amount Issue Date Maturity Date
- ------- ------- ------ ---------- -------------
<PAGE> 90
Annex 2 to the
Security Agreement
[Form Of]
PERFECTION CERTIFICATE
Reference is made to (a) the Credit Agreement dated as of November 10,
1999 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, the lenders from time to time party
thereto (the "Lenders"), Morgan Stanley Senior Funding, Inc., a Delaware
corporation ("MSSF"), as lead arranger and book manager (in such capacities, the
"Lead Arranger"), Credit Suisse First Boston, a bank organized under the laws of
Switzerland, acting through its New York branch, as administrative agent (in
such capacity, the "Administrative Agent") and as collateral agent (in such
capacity, the "Collateral Agent") for the Lenders, and MSSF, as syndication
agent (in such capacity, the "Syndication Agent"), and (b) the Guarantee
Agreement dated as of November 10, 1999 (as amended, supplemented or otherwise
modified from time to time, the "Guarantee Agreement"), among the Guarantors and
the Collateral Agent. Capitalized terms used but not defined herein have the
meanings assigned in the Credit Agreement or the Security Agreement referred to
therein, as applicable.
The undersigned, a Responsible Officer of each of the Grantors, hereby
certify to the Collateral Agent and each other Secured Party as follows:
1. Names.
(a) The exact corporate name of each Grantor, as such name appears in
its respective certificate of incorporation, and the Federal Tax Identification
Number of each Grantor is as follows:
(b) Set forth below is each other corporate name each Grantor has had
in the past five years, together with the date of the relevant change:
(c) Except as set forth in Schedule 1 hereto, no Grantor has changed
its identity or corporate structure in any way within the past five years.
Changes in identity or corporate structure would include mergers, consolidations
and acquisitions, as well as any change in the form, nature or jurisdiction of
corporate organization. If any such change has occurred, include in Schedule 1
the information required by Sections 1 and 2 of this certificate as to each
acquiree or constituent party to a merger or consolidation.
(d) The following is a list of all other names (including trade names
or similar appellations) used by each Grantor or any of its divisions or other
business units in connection with the conduct of its business or the ownership
of its properties at any time during the past five years:
2. Current Locations.
(a) The chief executive office of each Grantor is located at the
address set forth opposite its name below:
Grantor Mailing Address County State
- ------- --------------- ------ -----
(b) Set forth below opposite the name of each Grantor are all the
places of business of such Grantor not identified in paragraph (a) above:
Grantor Mailing Address County State
- ------- --------------- ------ -----
(c) Set forth below opposite the name of each Grantor are all the
locations where such Grantor maintains any Collateral not identified in
paragraph (a) or (b) above (other than Collateral consisting of Inventory
located on the premises of outside processors and having a value not in excess
of $1, 000, 000 in the aggregate ("De Minimis Inventory")):
Grantor Mailing Address County State
- ------- --------------- ------ -----
<PAGE> 91
2
(d) Set forth below opposite the name of each Grantor are the names and
addresses of all persons other than such Grantor that have possession of any of
the Collateral other than De Minimis Inventory of such Grantor:
Grantor Mailing Address County State
- ------- --------------- ------ -----
3. Unusual Transactions. All Inventory has been acquired by the
Grantors in the ordinary course of business.
4. File Search Reports. Attached hereto as Schedule 4(A) are true
copies of file search reports from the Uniform Commercial Code filing offices
where filings described in Section 3.18 of the Credit Agreement are to be made.
Attached hereto as Schedule 4(B) is a true copy of each financing statement or
other filing identified in such file search reports.
5. UCC Filings. Duly signed financing statements on Form UCC-1 in
substantially the form of Schedule 5 hereto have been prepared for filing in the
Uniform Commercial Code filing office in each jurisdiction where a Grantor has
Collateral other than De Minimis Inventory as identified in Section 2 hereof.
6. Schedule of Filings. Attached hereto as Schedule 6 is a schedule
setting forth, with respect to the filings described in Section 5 above, each
filing and the filing office in which such filing is to be made.
7. Filing Fees. To the best of my knowledge, all filing fees and taxes
payable in connection with the filings described in Section 5 above have been
paid.
8. Debt Instruments. Attached hereto as Schedule 8 is a true and
correct list of all promissory notes and all other indebtedness evidenced by a
note held by each Acquired Subsidiary and all intercompany notes between the
Borrower and each Acquired Subsidiary and between each Acquired Subsidiary and
each other Subsidiary.
9. Advances. Attached hereto as Schedule 9 is (a) a true and correct
list of all advances made by the Borrower to any Acquired Subsidiary or made by
any Acquired Subsidiary to the Borrower or any other Subsidiary of the Borrower,
which advances will be on and after the date hereof evidenced by one or more
intercompany notes, and (b) a true and correct list of all unpaid intercompany
transfers of goods sold and delivered by or to any Acquired Subsidiary.
10. Mortgage Filings. Attached hereto as Schedule 10 is a schedule
setting forth, with respect to each Mortgaged Property, (i) the exact corporate
name of the corporation that owns such property as such name appears in its
certificate of incorporation, (ii) if different from the name identified
pursuant to clause (i), the exact name of the current record owner of such
property reflected in the records of the filing office for such property
identified pursuant to the following clause and (iii) each filing office in
which a Mortgage with respect to such property was filed or recorded in order
for the Collateral Agent to obtain a perfected security interest therein.
11. Intellectual Property. Attached hereto as Schedule 11(A) in proper
form for filing with the United States Patent and Trademark Office is a schedule
setting forth all of each Acquired Subsidiary's Patents, Patent Licenses,
Trademarks and Trademark Licenses, including the name of the registered owner,
the registration number and the expiration date of each Patent License,
Trademark and Trademark License owned by any Acquired Subsidiary. Attached
hereto as Schedule 11(B) in proper form for filing with the United States
<PAGE> 92
3
Copyright Office is a schedule setting forth all of each Acquired Subsidiary's
Copyrights and Copyright Licenses, including the name of the registered owner,
the registration number and the expiration date of each Copyright or Copyright
License owned by any Acquired Subsidiary.
IN WITNESS WHEREOF, the undersigned have duly executed this certificate
on this 10th day of November 1999.
COPPERWELD CORPORATION,
by: ________________________________
Name:
Title:[Responsible Officer]
WELDED TUBE HOLDINGS, INC.,
by: ________________________________
Name:
Title:[Responsible Officer]
<PAGE> 93
Annex 3 to the
Security Agreement
SUPPLEMENT NO. __ dated as of __, to the
Security Agreement dated as of November 10, 1999, among
COPPERWELD CORPORATION ("Copperweld"), WELDED TUBE HOLDINGS,
INC. ("Welded Tube"), each subsidiary of Copperweld and Welded
Tube listed on Schedule I thereto (each of Copperweld and
Welded Tube and each such subsidiary individually a "Grantor"
and collectively, the "Grantors") and CREDIT SUISSE FIRST
BOSTON, a bank organized under the laws of Switzerland, acting
through its New York branch ("CSFB"), as collateral agent (in
such capacity, the "Collateral Agent") for the Secured Parties
(as defined herein).
A. Reference is made to (a) the Credit Agreement dated as of November
10, 1999 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among The LTV Corporation, a Delaware corporation (the
"Borrower"), the lenders from time to time party thereto (the "Lenders"), Morgan
Stanley Senior Funding, Inc., a Delaware corporation ("MSSF"), as lead arranger
and book manager (in such capacities, the "Lead Arranger"), CSFB, as
administrative agent (in such capacity, the "Administrative Agent") and as
Collateral Agent for the Lenders, and MSSF, as syndication agent (in such
capacity, the "Syndication Agent"), and (b) the Guarantee Agreement dated as of
November 10, 1999 (as amended, supplemented or otherwise modified from time to
time, the "Guarantee Agreement"), among the Grantors, the other guarantors
listed on the signature pages thereto and the Collateral Agent.
B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Security Agreement and the
Credit Agreement.
C. The Grantors have entered into the Security Agreement in order to
induce the Lenders to make Loans. Section 7.15 of Security Agreement provides
that additional wholly owned Subsidiaries of Copperweld or Welded Tube may
become Grantors under the Security Agreement by execution and delivery of an
instrument in the form of this Supplement. The undersigned Subsidiary (the "New
Grantor") is executing this Supplement in accordance with the requirements of
the Credit Agreement to become a Grantor under the Security Agreement in order
to induce the Lenders to make additional Loans and as consideration for Loans
previously made.
Accordingly, the Collateral Agent and the New Grantor agree as follows:
SECTION 1. In accordance with Section 7.15 of the Security Agreement,
the New Grantor by its signature below becomes a Grantor under the Security
Agreement with the same force and effect as if originally named therein as a
Grantor and the New Grantor hereby (a) agrees to all the terms and provisions of
the Security Agreement applicable to it as a Grantor thereunder and (b)
represents and warrants that the representations and warranties made by it as a
Grantor thereunder are true and correct on and as of the date hereof. In
furtherance of the foregoing, the New Grantor, as security for the payment and
performance in full of the Obligations (as defined in the Security Agreement),
does hereby create and grant to the Collateral Agent, its successors and
assigns, for the benefit of the Secured Parties, their successors and assigns, a
security interest in and lien on all of the New Grantor's right, title and
interest in and to the Collateral (as defined in the Security Agreement) of the
New Grantor. Each reference to a "Grantor" in the Security Agreement shall be
deemed to include the New Grantor. The Security Agreement is hereby incorporated
herein by reference.
SECTION 2. The New Grantor represents and warrants to the Collateral
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Supplement shall become effective when the Collateral
Agent shall have received counterparts of this Supplement that, when taken
together, bear the signatures of the New Grantor and the Collateral Agent.
Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.
SECTION 4. The New Grantor hereby represents and warrants that (a) set
forth on Schedule I attached hereto is a true and correct schedule of the
location of any and all Collateral of the New Grantor and (b) set forth under
its signature hereto, is the true and correct location of the chief executive
office of the New Grantor.
SECTION 5. Except as expressly supplemented hereby, the Security
Agreement shall remain in full force and effect.
<PAGE> 94
2
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, EXCEPT THAT THE LAW OF THEIR
LOCATION SHALL GOVERN WITH RESPECT TO THE CREATION, PERFECTION AND ENFORCEMENT
OF SECURITY INTERESTS IN FIXTURES AND THE EXERCISE OF REMEDIES WITH RESPECT
THERETO (IF APPLICABLE).
SECTION 7. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Security Agreement 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 hereto 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.
SECTION 8. All communications and notices hereunder shall be in writing
and given as provided in Section 7.01 of the Security Agreement. All
communications and notices hereunder to the New Grantor shall be given to it at
the address set forth under its signature below.
SECTION 9. The New Grantor agrees to reimburse the Collateral Agent for
its reasonable out-of-pocket expenses in connection with this Supplement,
including the reasonable fees, other charges and disbursements of counsel for
the Collateral Agent.
IN WITNESS WHEREOF, the New Grantor and the Collateral Agent have duly
executed this Supplement to the Security Agreement as of the day and year first
above written.
[Name Of New Grantor],
by: __________________________________
Name:
Title:
Address:
CREDIT SUISSE FIRST BOSTON, as Collateral
Agent,
by: __________________________________
Name:
Title:
by: __________________________________
Name:
Title:
<PAGE> 95
SCHEDULE I
to Supplement No.___ to the
Security Agreement
LOCATION OF COLLATERAL
----------------------
Description Location
- ----------- --------
<PAGE> 96
CONFORMED COPY
INDEMNITY, SUBROGATION and CONTRIBUTION
AGREEMENT dated as of November 10, 1999, among THE
LTV CORPORATION, a Delaware corporation (the
"Borrower"), each Subsidiary of the Borrower listed
on Schedule I hereto (the "Guarantors") and CREDIT
SUISSE FIRST BOSTON, a bank organized under the laws
of Switzerland, acting through its New York branch
("CSFB"), as collateral agent (in such
capacity, the "Collateral Agent") for the Secured
Parties (as defined in the Credit Agreement referred
to below).
Reference is made to (a) the Credit Agreement dated as of November 10,
1999 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, the lenders from time to time party
thereto (the "Lenders"), Morgan Stanley Senior Funding, Inc., a Delaware
corporation ("MSSF"), as lead arranger and book manager (in such capacities, the
"Lead Arranger"), CSFB, as administrative agent (in such capacity, the
"Administrative Agent") and as Collateral Agent for the Lenders, and MSSF, as
syndication agent (in such capacity, the "Syndication Agent"), and (b) the
Guarantee Agreement dated as of November 10, 1999, among the Guarantors and the
Collateral Agent (the "Guarantee Agreement"). Capitalized terms used herein and
not defined herein shall have the meanings assigned to such terms in the Credit
Agreement.
The Lenders have agreed to make Loans to the Borrower pursuant to, and
upon the terms and subject to the conditions specified in, the Credit Agreement.
The Guarantors have guaranteed such Loans and the other Obligations (as defined
in the Guarantee Agreement) of the Borrower under the Credit Agreement pursuant
to the Guarantee Agreement, and the Guarantors have granted Liens on and
security interests in certain of their assets to secure such guarantees. The
obligations of the Lenders to make Loans are conditioned on, among other things,
the execution and delivery by the Borrower and the Guarantors of an agreement in
the form hereof.
Accordingly, the Borrower, each Guarantor and the Collateral Agent
agree as follows:
SECTION 1. Indemnity and Subrogation. In addition to all such rights of
indemnity and subrogation as the Guarantors may have under applicable law, the
Borrower agrees that (a) in the event a payment shall be made by any Guarantor
under the Guarantee Agreement, the Borrower shall indemnify such Guarantor for
the full amount of such payment and such Guarantor shall be subrogated to the
rights of the person to whom such payment shall have been made to the extent of
such payment and (b) in the event any assets of any Guarantor shall be sold
pursuant to any Security Document to satisfy a claim of any Secured Party, the
Borrower shall indemnify such Guarantor in an amount equal to the greater of the
book value or the fair market value of the assets so sold.
SECTION 2. Contribution and Subrogation. Each Guarantor (a
"Contributing Guarantor") agrees that, in the event a payment shall be made by
any other Guarantor under the Guarantee Agreement or assets of any other
Guarantor shall be sold pursuant to any Security Document to satisfy a claim of
any Secured Party and such other Guarantor (the "Claiming Guarantor") shall not
have been fully indemnified by the Borrower as provided in Section 1, the
Contributing Guarantor shall indemnify the Claiming Guarantor in an amount equal
to the amount of such payment or the greater of the book value or the fair
market value of such assets, as the case may be, in each case multiplied by a
fraction of which the numerator shall be the net worth of the Contributing
Guarantor on the date hereof (or, in the case of any Guarantor becoming a party
hereto pursuant to Section 12, the date of the Supplement hereto executed and
delivered by such Guarantor) and the denominator shall be the aggregate net
worth of all the Guarantors on the date hereof (or, in the case of any Guarantor
becoming a party hereto pursuant to Section 12, the date of the Supplement
hereto executed and delivered by such Guarantor). Any Contributing Guarantor
making any payment to a Claiming Guarantor pursuant to this Section 2 shall be
subrogated to the rights of such Claiming Guarantor under Section 1 to the
extent of such payment.
SECTION 3. Termination. This Agreement shall survive and be in full
force and effect so long as any Obligation is outstanding and has not been paid
in full in cash or any of the Commitments under the Credit Agreement have not
been terminated, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment, or any part thereof, of any Obligation is
rescinded or must otherwise be restored by any Secured Party or any Guarantor
upon the bankruptcy or reorganization of the Borrower, any Guarantor or other
wise.
SECTION 4. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE> 97
2
SECTION 5. No Waiver; Amendment. (a) No failure on the part of the
Collateral Agent or any Guarantor to exercise, and no delay in exercising, any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, power or remedy by the
Collateral Agent or any Guarantor preclude any other or further exercise thereof
or the exercise of any other right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law. None of
the Collateral Agent and the Guarantors shall be deemed to have waived any
rights hereunder unless such waiver shall be in writing and signed by such
parties.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to a written agreement entered into between
the Borrower, the Guarantors and the Collateral Agent, with the prior written
consent of the Required Lenders (except as otherwise provided in the Credit
Agreement).
SECTION 6. Notices. All communications and notices hereunder shall be
in writing and given as provided in the Guarantee Agreement and addressed as
specified therein.
SECTION 7. Binding 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 parties that are contained in this
Agreement shall bind and inure to the benefit of their respective successors and
assigns. Neither the Borrower nor any Guarantor may assign or transfer any of
its rights or obligations hereunder (and any such attempted assignment or
transfer shall be void) without the prior written consent of the Required
Lenders. Notwithstanding the foregoing, at the time any Guarantor is released
from its obligations under the Guarantee Agreement in accordance with such
Guarantee Agreement and the Credit Agreement, such Guarantor will cease to have
any rights or obligations under this Agreement.
SECTION 8. Survival of Agreement; Severability. (a) All covenants and
agreements made by the Borrower and each Guarantor herein and in the
certificates or other instruments prepared or delivered in connection with this
Agreement or the other Loan Documents shall be considered to have been relied
upon by the Collateral Agent, the other Secured Parties and each Guarantor and
shall survive the making by the Lenders of the Loans and shall continue in full
force and effect as long as the principal of or any accrued interest on any
Loans or any other fee or amount payable under the Credit Agreement or this
Agreement or under any of the other Loan Documents is outstanding and unpaid and
as long as the Commitments have not been terminated.
(b) In case any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, no
party hereto shall be required to comply with such provision for so long as such
provision is held to be invalid, illegal or unenforceable, but the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby. 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.
SECTION 9. Counterparts. This Agreement may be executed in counterparts
(and by different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Agreement shall be effective with respect to any Guarantor
when a counterpart bearing the signature of such Guarantor shall have been
delivered to the Collateral Agent. Delivery of an executed signature page to
this Agreement by facsimile transmission shall be as effective as delivery of a
manually signed counterpart of this Agreement.
SECTION 10. Rules of Interpretation. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement.
SECTION 11. Additional Guarantors. Pursuant to Section 5.11 of the
Credit Agreement, each wholly owned Domestic Subsidiary of the Borrower that was
not in existence or not such a Subsidiary on the date of the Credit Agreement
(other than an Inactive Subsidiary or a Securitization Subsidiary) or any such
Subsidiary that ceases to be an Inactive Subsidiary is required to enter into
the Guarantee Agreement as a Guarantor upon becoming such a Subsidiary or
ceasing to be an Inactive Subsidiary, as the case may be. Upon execution and
delivery, after the date hereof, by the Collateral Agent and such a Subsidiary
of an instrument in the form of Annex 1 hereto, such Subsidiary shall become a
Guarantor hereunder with the same force and effect as if originally named as a
Guarantor hereunder. The execution and delivery of any instrument adding an
additional Guarantor as a party to this Agreement shall not require the consent
of any Guarantor hereunder. The rights and
<PAGE> 98
3
obligations of each Guarantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Guarantor as a party to this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first appearing above.
THE LTV CORPORATION,
by: /s/ Glenn J. Moran
----------------------------------------
Name: Glenn J. Moran
Title: Senior Vice President
EACH OF THE SUBSIDIARIES LISTED ON
SCHEDULE I HERETO, as a Guarantor,
by: /s/ Glenn J. Moran
----------------------------------------
Name: Glenn J. Moran
Title: Vice President
CREDIT SUISSE FIRST BOSTON, as Collateral
Agent,
by: /s/ Gregory R. Perry
----------------------------------------
Name: Gregory R. Perry
Title: Vice President
by: /s/ Chris T. Horgan
----------------------------------------
Name: Chris T. Horgan
Title: Vice President
<PAGE> 99
SCHEDULE I
to the Indemnity, Subrogation
and Contribution Agreement
Guarantors
----------
Name Address
- ---- --------
<PAGE> 100
Annex 1 to
the Indemnity, Subrogation and
Contribution Agreement
SUPPLEMENT NO. dated as of , to the
Indemnity, Subrogation and Contribution Agreement
dated as of November 10, 1999 (as the same may be
amended, supplemented or otherwise modified from time
to time, the "Indemnity, Subrogation and Contribution
Agreement"), among THE LTV CORPORATION, a Delaware
corporation (the "Borrower"), each Subsidiary of the
Borrower listed on Schedule I thereto (the
"Guarantors"), and CREDIT SUISSE FIRST BOSTON, a bank
organized under the laws of Switzerland, acting
through its New York branch ("CSFB"), as collateral
agent (the "Collateral Agent") for the Secured
Parties (as defined in the Credit Agreement referred
to below).
A. Reference is made to (a) the Credit Agreement dated as of November
10, 1999 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, the lenders from time to time party
thereto (the "Lenders"), Morgan Stanley Senior Funding, Inc., a Delaware
corporation ("MSSF"), as lead arranger and book manager (in such capacities, the
"Lead Arranger"), CSFB, as administrative agent (in such capacity, the
"Administrative Agent") and as Collateral Agent for the Lenders, and MSSF, as
syndication agent (in such capacity, the "Syndication Agent"), and (b) the
Guarantee Agreement dated as of November 10, 1999, among the Guarantors and the
Collateral Agent (the "Guarantee Agreement").
B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Indemnity, Subrogation and
Contribution Agreement and the Credit Agreement.
C. The Borrower and the Guarantors have entered into the Indemnity,
Subrogation and Contribution Agreement in order to induce the Lenders to make
Loans. Pursuant to Section 5.11 of the Credit Agreement, each wholly owned
Domestic Subsidiary of the Borrower that was not in existence or not such a
Subsidiary on the date of the Credit Agreement (other than an Inactive
Subsidiary or Securitization Subsidiary) or any such Subsidiary that ceases to
be an Inactive Subsidiary is required to enter into the Guarantee Agreement as a
Guarantor upon becoming a Subsidiary or ceasing to be an Inactive Subsidiary, as
the case may be. Section 12 of the Indemnity, Subrogation and Contribution
Agreement provides that additional Subsidiaries of the Borrower may become
Guarantors under the Indemnity, Subrogation and Contribution Agreement by
execution and delivery of an instrument in the form of this Supplement. The
undersigned Subsidiary of the Borrower (the "New Guarantor") is executing this
Supplement in accordance with the requirements of the Credit Agreement to become
a Guarantor under the Indemnity, Subrogation and Contribution Agreement in order
to induce the Lenders to make additional Loans and as consideration for Loans
previously made.
Accordingly, the Collateral Agent and the New Guarantor agree as
follows:
SECTION 1. In accordance with Section 12 of the Indemnity, Subrogation
and Contribution Agreement, the New Guarantor by its signature below becomes a
Guarantor under the Indemnity, Subrogation and Contribution Agreement with the
same force and effect as if originally named therein as a Guarantor and the New
Guarantor hereby agrees to all the terms and provisions of the Indemnity,
Subrogation and Contribution Agreement applicable to it as a Guarantor
thereunder. Each reference to a "Guarantor" in the Indemnity, Subrogation and
Contribution Agreement shall be deemed to include the New Guarantor. The
Indemnity, Subrogation and Contribution Agreement is hereby incorporated herein
by reference.
SECTION 2. The New Guarantor represents and warrants to the Collateral
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Supplement shall become effective when the Collateral
Agent shall have received counterparts of this Supplement that, when taken
together, bear the signatures of the New Guarantor and the Collateral Agent.
Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.
SECTION 4. Except as expressly supplemented hereby, the Indemnity,
Subrogation and Contribution Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE> 101
2
SECTION 6. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect,
neither party hereto shall be required to comply with such provision for so long
as such provision is held to be invalid, illegal or unenforceable, but the
validity, legality and enforceability of the remaining provisions contained
herein and in the Indemnity, Subrogation and Contribution Agreement shall not in
any way be affected or impaired. The parties hereto 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.
SECTION 7. All communications and notices hereunder shall be in writing
and given as provided in Section 7 of the Indemnity, Subrogation and
Contribution Agreement. All communications and notices hereunder to the New
Guarantor shall be given to it at the address set forth under its signature.
SECTION 8. The New Guarantor agrees to reimburse the Collateral Agent
for its reasonable out-of-pocket expenses in connection with this Supplement,
including the reasonable fees, other charges and disbursements of counsel for
the Collateral Agent.
IN WITNESS WHEREOF, the New Guarantor and the Collateral Agent have
duly executed this Supplement to the Indemnity, Subrogation and Contribution
Agreement as of the day and year first above written.
[Name Of New Guarantor],
by: _______________________
Name:
Title:
Address:
CREDIT SUISSE FIRST BOSTON, as Collateral Agent,
by: _______________________
Name:
Title:
by: _______________________
Name:
Title:
<PAGE> 102
SCHEDULE I
to Supplement No.___ to the Indemnity,
Subrogation and Contribution Agreement
Guarantors
-----------
Name Address
- ---- -------
<PAGE> 103
CONFORMED COPY
GUARANTEE AGREEMENT dated as of November 10,
1999, among each of the subsidiaries listed on
Schedule I hereto (each such subsidiary individually,
a "Guarantor" and collectively, the "Guarantors") of
THE LTV CORPORATION, a Delaware corporation (the
"Borrower"), and CREDIT SUISSE FIRST BOSTON, a bank
organized under the laws of Switzerland, acting
through its New York branch ("CSFB"), as collateral
agent (the "Collateral Agent") for the Secured
Parties (as defined in the Credit Agreement referred
to below).
Reference is made to the Credit Agreement dated as of November 10, 1999
(as amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Borrower, the lenders from time to time party thereto
(the "Lenders"), Morgan Stanley Senior Funding, Inc., a Delaware corporation
("MSSF"), as lead arranger and book manager (in such capacities, the "Lead
Arranger"), CSFB, as administrative agent (in such capacity, the "Administrative
Agent") and as Collateral Agent for the Lenders, and MSSF, as syndication agent
(in such capacity, the "Syndication Agent"). Capitalized terms used herein and
not defined herein shall have the meanings assigned to such terms in the Credit
Agreement.
The Lenders have agreed to make Loans to the Borrower pursuant to, and
upon the terms and subject to the conditions specified in, the Credit Agreement.
Each of the Guarantors is a wholly owned Domestic Subsidiary of the Borrower and
acknowledges that it will derive substantial benefit from the making of the
Loans by the Lenders. The obligations of the Lenders to make Loans are
conditioned on, among other things, the execution and delivery by the Guarantors
of a Guarantee Agreement in the form hereof. As consideration therefor and in
order to induce the Lenders to make Loans, the Guarantors are willing to execute
this Agreement.
Accordingly, the parties hereto agree as follows:
SECTION 1. Guarantee. Each Guarantor unconditionally guarantees,
jointly with the other Guarantors and severally, as a primary obligor and not
merely as a surety, (a) the due and punctual payment by the Borrower of (i) the
principal of and premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, and (ii) all other monetary
obligations, including fees, costs, expenses and indemnities, whether primary,
secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of the Borrower to the Secured Parties under the
Credit Agreement and the other Loan Documents, (b) the due and punctual
performance of all covenants, agreements, obligations and liabilities of the
Borrower under or pursuant to the Credit Agreement and the other Loan Documents
and (c) the due and punctual payment and performance of all obligations of the
Borrower under each Interest Rate Protection Agreement that is specified in
writing by the Borrower as a "Covered Interest Rate Protection Agreement" to the
Collateral Agent, entered into with a counterparty that was a Lender (or an
Affiliate of a Lender) at the time such Interest Rate Protection Agreement was
entered into (all the monetary and other obligations referred to in the
preceding clauses (a) through (c) being collectively called the "Obligations").
Each Guarantor further agrees that the Obligations may be extended or renewed,
in whole or in part, without notice to or further assent from it, and that it
will remain bound upon its guarantee notwithstanding any extension or renewal of
any Obligation.
Anything contained in this Agreement to the contrary notwithstanding,
the obligations of each Guarantor hereunder shall be limited to a maximum
aggregate amount equal to the greatest amount that would not render such
Guarantor's obligations hereunder subject to avoidance as a fraudulent transfer
or conveyance under Section 548 of Title 11 of the United States Code or any
provisions of applicable state law (collectively, the "Fraudulent Transfer
Laws"), in each case after giving effect to all other liabilities of such
Guarantor, contingent or otherwise, that are relevant under the Fraudulent
Transfer Laws (specifically excluding, however, any liabilities of such
Guarantor (a) in respect of intercompany indebtedness to the Borrower or
Affiliates of the Borrower to the extent that such indebtedness would be
discharged in an amount equal to the amount paid by such Guarantor hereunder and
(b) under any Guarantee of Indebtedness subordinated in right of payment to the
Obligations which Guarantee contains a limitation as to maximum amount similar
to that set forth in this paragraph, pursuant to which the liability of such
Guarantor hereunder is included in the liabilities taken into account in
determining such maximum amount) and after giving effect as assets to the value
(as determined under the applicable provisions of the Fraudulent Transfer Laws)
of any rights to subrogation, contribution, reimbursement, indemnity or similar
rights of such Guarantor pursuant to
<PAGE> 104
2
(i) applicable law or (ii) any agreement providing for an equitable allocation
among such Guarantor and other Affiliates of the Borrower of obligations arising
under Guarantees by such parties (including the Indemnity, Subrogation and
Contribution Agreement).
SECTION 2. Obligations Not Waived. To the fullest extent permitted by
applicable law, each Guarantor waives presentment to, demand of payment from and
protest to the Borrower of any of the Obligations, and also waives notice of
acceptance of its guarantee and notice of protest for nonpayment. To the fullest
extent permitted by applicable law, the obligations of each Guarantor hereunder
shall not be affected by (a) the failure of the Collateral Agent or any other
Secured Party to assert any claim or demand or to enforce or exercise any right
or remedy against the Borrower or any other Guarantor under the provisions of
the Credit Agreement, any other Loan Document or otherwise, (b) any extension,
renewal or increase of or in any of the Obligations, (c) any rescission, waiver,
amendment or modification of, or any release from any of the terms or provisions
of any Loan Document (other than this Agreement), any Guarantee or any other
agreement or instrument, including with respect to any other Guarantor under
this Agreement, (d) the failure to perfect any security interest in, or the
release of, any of the security held by or on behalf of the Collateral Agent or
any other Secured Party or (e) the failure or delay of any Secured Party to
exercise any right or remedy against any other guarantor of the Obligations.
SECTION 3. Security. Each of the Guarantors authorizes the Collateral
Agent and each of the other Secured Parties to (a) take and hold security for
the payment of this Guarantee and the Obligations and exchange, enforce, waive
and release any such security, (b) apply such security and direct the order or
manner of sale thereof as they in their sole discretion may determine and (c)
release or substitute any one or more endorsees, other guarantors or other
Obligors.
SECTION 4. Guarantee Of Payment. Each Guarantor further agrees that its
guarantee constitutes a guarantee of payment when due and not of collection, and
waives any right to require that any resort be had by the Collateral Agent or
any other Secured Party to any of the security held for payment of the
Obligations or to any balance of any deposit account or credit on the books of
the Collateral Agent or any other Secured Party in favor of the Borrower or any
other person.
SECTION 5. No Discharge or Diminishment of Guarantee. To the fullest
extent permitted by law, the obligations of each Guarantor hereunder shall not
be subject to any reduction, limitation, impairment or termination for any
reason (other than the payment in full in cash of the Obligations), including
any claim of waiver, release, surrender, alteration or compromise of any of the
Obligations, and shall not be subject to any defense or setoff, counterclaim,
recoupment or termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of each Guarantor hereunder shall
not, to the fullest extent permitted by law, be discharged or impaired or
otherwise affected by the failure of the Collateral Agent or any other Secured
Party to assert any claim or demand or to enforce any remedy under the Credit
Agreement, any other Loan Document, any Guarantee or any other agreement or
instrument, by any waiver or modification of any provision of any thereof, by
any default, failure or delay, wilful or otherwise, in the performance of the
Obligations, or by any other act, omission or delay to do any other act that may
or might in any manner or to any extent vary the risk of any Guarantor or that
would otherwise operate as a discharge of each Guarantor as a matter of law or
equity (other than the payment in full in cash of all the Obligations) or which
would impair or eliminate any right of such Guarantor to subrogation.
SECTION 6. Defenses of Borrower Waived. To the fullest extent permitted
by applicable law, each of the Guarantors waives any defense based on or arising
out of any defense of the Borrower or the unenforceability of the Obligations or
any part thereof from any cause, or the cessation from any cause of the
liability of the Borrower, other than the final payment in full in cash of the
Obligations. To the fullest extent permitted by law, the Collateral Agent and
the other Secured Parties may, at their election, foreclose on any security held
by one or more of them by one or more judicial or nonjudicial sales, accept an
assignment of any such security in lieu of foreclosure, compromise or adjust any
part of the Obligations, make any other accommodation with the Borrower or any
other guarantor or exercise any other right or remedy available to them against
the Borrower or any other guarantor, without affecting or impairing in any way
the liability of any Guarantor hereunder except to the extent the Obligations
have been fully and finally paid in cash. Pursuant to applicable law, each of
the Guarantors waives, to the fullest extent permitted by law, any defense
arising out of any such election even though such election operates, pursuant to
applicable law, to impair or to extinguish any right of reimbursement or
subrogation or other right or remedy of such Guarantor against the Borrower or
any other Guarantor or guarantor, as the case may be, or any security.
SECTION 7. Agreement to Pay; Subordination. In furtherance of the
foregoing and not in limitation of any other right that the Collateral Agent or
any other Secured Party has at law or in equity
<PAGE> 105
3
against any Guarantor by virtue hereof, upon the failure of the Borrower or any
other Loan Party to pay any Obligation when and as the same shall become due,
whether at maturity, by acceleration, after notice of prepayment or otherwise,
each Guarantor hereby promises to and will forthwith pay, or cause to be paid,
to the Collateral Agent or such other Secured Party as designated thereby in
cash the amount of such unpaid Obligations. Upon payment by any Guarantor of any
sums to the Collateral Agent or any Secured Party as provided above, all rights
of such Guarantor against the Borrower arising as a result thereof by way of
right of subrogation, contribution, reimbursement, indemnity or otherwise shall
in all respects be subordinate and junior in right of payment to the prior
payment in full in cash of all the Obligations. In addition, any indebtedness of
the Borrower now or hereafter held by any Guarantor is hereby subordinated in
right of payment to the prior payment in full of the Obligations. If any amount
shall erroneously be paid to any Guarantor on account of (i) such subrogation,
contribution, reimbursement, indemnity or similar right or (ii) any such
indebtedness of the Borrower, such amount shall be held in trust for the benefit
of the Secured Parties and shall forthwith be paid to the Collateral Agent to be
credited against the payment of the Obligations, whether matured or unmatured,
in accordance with the terms of the Loan Documents.
SECTION 8. Information. Each of the Guarantors assumes all
responsibility for being and keeping itself informed of the Borrower's financial
condition and assets, and of all other circumstances bearing upon the risk of
nonpayment of the Obligations and the nature, scope and extent of the risks that
such Guarantor assumes and incurs hereunder, and agrees that none of the
Collateral Agent or the other Secured Parties will have any duty to advise any
of the Guarantors of information known to it or any of them regarding such
circumstances or risks.
SECTION 9. Representations and Warranties. Each of the Guarantors
represents and warrants as to itself that all representations and warranties
relating to it contained in the Credit Agreement are true and correct.
SECTION 10. Termination. The Guarantees made hereunder (a) shall
terminate when all the Obligations have been paid in full in cash and the
Lenders have no further commitment to lend under the Credit Agreement and (b)
shall continue to be effective or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any Obligation is rescinded or must
otherwise be restored by any Secured Party or any Guarantor upon the bankruptcy
or reorganization of the Borrower, any Guarantor or otherwise.
SECTION 11. 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 Guarantors that are contained in
this Agreement shall bind and inure to the benefit of each party hereto and
their respective successors and assigns. This Agreement shall become effective
as to any Guarantor when a counterpart hereof executed on behalf of such
Guarantor 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 Guarantor and the Collateral Agent and
their respective successors and assigns, and shall inure to the benefit of such
Guarantor, the Collateral Agent and the other Secured Parties, and their
respective successors and assigns, except that no Guarantor shall have the right
to assign its rights or obligations hereunder or any interest herein (and any
such attempted assignment shall be void). If all of the capital stock of, or all
or substantially all the assets of, a Guarantor is sold, transferred or
otherwise disposed of pursuant to a transaction permitted by Section 6.05 of the
Credit Agreement, such Guarantor shall be released from its obligations under
this Agreement without further action. This Agreement shall be construed as a
separate agreement with respect to each Guarantor and may be amended, modified,
supplemented, waived or released with respect to any Guarantor without the
approval of any other Guarantor and without affecting the obligations of any
other Guarantor hereunder.
SECTION 12. 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
and of the other Secured Parties under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provision of this Agreement or consent to any departure by any
Guarantor 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 any Guarantor in any case shall entitle such Guarantor to
any other or further notice or demand in similar or other circumstances.
<PAGE> 106
4
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to a written agreement entered into between
the Guarantors with respect to which such waiver, amendment or modification
relates and the Collateral Agent, with the prior written consent of the Required
Lenders (except as otherwise provided in the Credit Agreement).
SECTION 13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 14. Notices. All communications and notices hereunder shall be
in writing and given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to each Guarantor shall be given to it in
care of the Borrower.
SECTION 15. Survival of Agreement; Severability. (a) All covenants,
agreements, representations and warranties made by the Guarantors herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Collateral Agent and the other Secured Parties and
shall survive the making by the Lenders of the Loans 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
any Loan or any other fee or amount payable under this Agreement or any other
Loan Document is outstanding and unpaid and as long as the Commitments have not
been terminated.
(b) In the event any one or more of the provisions contained in this
Agreement or in any other Loan Document should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein 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.
SECTION 16. Counterparts. This Agreement may be executed in
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 11. Delivery of an executed signature page to this Agreement
by facsimile transmission shall be as effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 17. Rules of Interpretation. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement.
SECTION 18. Jurisdiction; Consent to Service of Process. (a) Each
Guarantor 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 the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State court or, to the
extent permitted by law, in such Federal court. Each of the parties hereto
agrees that, to the fullest extent permitted by law, 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 other Secured Party may otherwise have to bring any action or proceeding
relating to this Agreement or the other Loan Documents against any Guarantor or
its properties in the courts of any jurisdiction.
(b) Each Guarantor 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 or the other Loan
Documents 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 14. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
<PAGE> 107
5
SECTION 19. 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 OR THE OTHER LOAN DOCUMENTS. 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 AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 19.
SECTION 20. Additional Guarantors. Pursuant to Section 5.11 of the
Credit Agreement, each wholly owned Domestic Subsidiary of the Borrower that was
not in existence or not such a Subsidiary on the date of the Credit Agreement
(other than an Inactive Subsidiary or a Securitization Subsidiary) or any such
Subsidiary that ceases to be an Inactive Subsidiary is required to enter into
this Agreement as a Guarantor upon becoming a Subsidiary or ceasing to be an
Inactive Subsidiary, as the case may be. Upon execution and delivery after the
date hereof by the Collateral Agent and such a Subsidiary of an instrument in
the form of Annex 1, such Subsidiary shall become a Guarantor hereunder with the
same force and effect as if originally named as a Guarantor herein. The
execution and delivery of any instrument adding an additional Guarantor as a
party to this Agreement shall not require the consent of any other Guarantor
hereunder. The rights and obligations of each Guarantor hereunder shall remain
in full force and effect notwithstanding the addition of any new Guarantor as a
party to this Agreement.
SECTION 21. Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Secured Party is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other Indebtedness at any time owing by such Secured Party to
or for the credit or the account of any Guarantor against any or all the
obligations of such Guarantor now or hereafter existing under this Agreement and
the other Loan Documents held by such Secured Party, irrespective of whether or
not such Secured Party shall have made any demand under this Agreement or any
other Loan Document and although such obligations may be unmatured. The rights
of each Secured Party under this Section 21 are in addition to other rights and
remedies (including other rights of setoff) which such Secured Party may have.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
EACH OF THE SUBSIDIARIES
LISTED ON SCHEDULE I HERETO,
by: /s/ Glenn J. Moran
------------------------------------
Name: Glenn J. Moran
Title: Vice President
CREDIT SUISSE FIRST BOSTON, as Collateral
Agent,
by: /s/ Gregory R. Perry
------------------------------------
Name: Gregory R. Perry
Title: Vice President
by: /s/ Chris T. Horgan
------------------------------------
Name: Chris T. Horgan
Title: Vice President
<PAGE> 108
Schedule I to the
Guarantee Agreement
Guarantor [Address]
--------- -----------
<PAGE> 109
Annex 1 to the
Guarantee Agreement
SUPPLEMENT NO. dated as of , to the
Guarantee Agreement dated as of November 10, 1999,
among each of the subsidiaries listed on Schedule I
thereto (each such subsidiary individually, a
"Guarantor" and collectively, the "Guarantors") of
THE LTV CORPORATION, a Delaware corporation (the
"Borrower"), and CREDIT SUISSE FIRST BOSTON, a bank
organized under the laws of Switzerland, acting
through its New York branch, as collateral agent (the
"Collateral Agent") for the Secured Parties (as
defined in the Credit Agreement referred to below).
A. Reference is made to the Credit Agreement dated as of November 10,
1999 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, the lenders from time to time party
thereto (the "Lenders"), Morgan Stanley Senior Funding, Inc., a Delaware
corporation ("MSSF"), as lead arranger and book manager (in such capacities, the
"Lead Arranger"), CSFB, as administrative agent (in such capacity, the
"Administrative Agent") and as Collateral Agent for the Lenders, and MSSF, as
syndication agent (in such capacity, the "Syndication Agent").
B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Guarantee Agreement and the
Credit Agreement.
C. The Guarantors have entered into the Guarantee Agreement in order to
induce the Lenders to make Loans. Pursuant to Section 5.11 of the Credit
Agreement, each wholly owned Domestic Subsidiary of the Borrower that was not in
existence or not such a Subsidiary on the date of the Credit Agreement (other
than an Inactive Subsidiary or a Securitization Subsidiary) or any such
Subsidiary that ceases to be an Inactive Subsidiary is required to enter into
the Guarantee Agreement as a Guarantor upon becoming a Subsidiary or ceasing to
be an Inactive Subsidiary, as the case may be. Section 20 of the Guarantee
Agreement provides that additional Subsidiaries of the Borrower may become
Guarantors under the Guarantee Agreement by execution and delivery of an
instrument in the form of this Supplement. The undersigned Subsidiary of the
Borrower (the "New Guarantor") is executing this Supplement in accordance with
the requirements of the Credit Agreement to become a Guarantor under the
Guarantee Agreement in order to induce the Lenders to make additional Loans and
as consideration for Loans previously made.
Accordingly, the Collateral Agent and the New Guarantor agree as
follows:
SECTION 1. In accordance with Section 20 of the Guarantee Agreement,
the New Guarantor by its signature below becomes a Guarantor under the Guarantee
Agreement with the same force and effect as if originally named therein as a
Guarantor and the New Guarantor hereby (a) agrees to all the terms and
provisions of the Guarantee Agreement applicable to it as a Guarantor thereunder
and (b) represents and warrants that the representations and warranties made by
it as a Guarantor thereunder are true and correct on and as of the date hereof.
Each reference to a "Guarantor" in the Guarantee Agreement shall be deemed to
include the New Guarantor. The Guarantee Agreement is hereby incorporated herein
by reference.
SECTION 2. The New Guarantor represents and warrants to the Collateral
Agent and the other Secured Parties that this Supplement has been duly
authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts, each of
which shall constitute an original, but all of which when taken together shall
constitute a single contract. This Supplement shall become effective when the
Collateral Agent shall have received counterparts of this Supplement that, when
taken together, bear the signatures of the New Guarantor and the Collateral
Agent. Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually executed
counterpart of this Supplement.
SECTION 4. Except as expressly supplemented hereby, the Guarantee
Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Guarantee Agreement shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision hereof in a particular jurisdiction shall not in and
<PAGE> 110
2
of itself affect the validity of such provision in any other jurisdiction). The
parties hereto 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.
SECTION 7. All communications and notices hereunder shall be in writing
and given as provided in Section 14 of the Guarantee Agreement. All
communications and notices hereunder to the New Guarantor shall be given to it
at the address set forth under its signature below, with a copy to the Borrower.
SECTION 8. The New Guarantor agrees to reimburse the Collateral Agent
for its reasonable out-of-pocket expenses in connection with this Supplement,
including the reasonable fees, disbursements and other charges of counsel for
the Collateral Agent.
IN WITNESS WHEREOF, the New Guarantor and the Collateral Agent have
duly executed this Supplement to the Guarantee Agreement as of the day and year
first above written.
[Name Of New Guarantor],
by: ____________________________________
Name:
Title:
Address:
CREDIT SUISSE FIRST BOSTON, as Collateral
Agent,
by: ____________________________________
Name:
Title:
by: ____________________________________
Name:
Title:
<PAGE> 1
<TABLE>
<CAPTION>
Page 1 of 2
Exhibit (11)
THE LTV CORPORATION
Calculation of Basic Earnings Per Share (EPS)
(Dollar amounts in millions except for EPS)
(Share data in thousands)
Three Months Ended September 30,
------------------------------------------------------------------
1999 1998
-------------------------------- -------------------------------
Shares Amount EPS Shares Amount EPS
----------- --------- --------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net income (loss) $ (58) $ 11
Preferred stock dividend
requirements -- --
----- -----
$ (58) $ 11
====== =====
Weighted average share base:
Shares issued 105,546 105,377
Shares repurchased pursuant to share
repurchase program (5,512) (5,512)
----------- ----------
100,034 99,865
=========== ==========
BASIC EARNINGS PER SHARE $ (0.58) $0.11
========= =========
<CAPTION>
Nine Months Ended September 30,
-----------------------------------------------------------------
1999 1998
------------------------------- ------------------------------
Shares Amount EPS Shares Amount EPS
----------- --------- -------- ---------- -------- --------
<C> <C> <C> <C> <C> <C>
Net income (loss) $ (145) $ 34
Preferred stock dividend
requirements (1) (1)
------ ----
$ (146) $ 33
======= ====
Weighted average share base:
Shares issued 105,528 105,352
Shares repurchased pursuant to share
repurchase program (5,512) (5,512)
----------- ----------
100,016 99,840
=========== ==========
BASIC EARNINGS PER SHARE $ (1.46) $0.33
======== ========
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
Page 2 of 2
Exhibit (11)
THE LTV CORPORATION
Calculation of Diluted Earnings Per Share (EPS)
(Dollar amounts in millions except for EPS)
(Share data in thousands)
Three Months Ended September 30,
------------------------------------------------------------------
1999 1998
------------------------------- --------------------------------
Shares Amount EPS Shares Amount EPS
---------- --------- --------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net income $ (58) $ 11
Preferred stock dividend
requirements -- --
----- ----
(58) 11
Weighted average share base:
Shares issued 105,546 105,377
Shares repurchased pursuant to share
repurchase program (5,512) (5,512)
---------- -----------
100,034 99,865
========== ===========
Common Stock equivalent shares
resulting from outstanding
Series A Warrants, Stock
Options and Restricted Stock (A) -- 226 --
Common Stock issuable upon
conversion of Series B
Preferred Stock (A) -- (A) --
-------- ------ ---------- -----
100,034 $ (58) 100,091 $ 11
======== ====== ========== =====
DILUTED EARNINGS PER SHARE $ (0.58) $ 0.11
========= =========
<CAPTION>
Nine Months Ended September 30,
-------------------------------------------------------------------
1999 1998
-------------------------------- --------------------------------
Shares Amount EPS Shares Amount EPS
----------- --------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net income $ (145) $ 34
Preferred stock dividend
requirements (1) (1)
------- -----
(146) 33
Weighted average share base:
Shares issued 105,528 105,352
Shares repurchased pursuant to share
repurchase program (5,512) (5,512)
----------- ---------
100,016 99,840
=========== =========
Common Stock equivalent shares
resulting from outstanding
Series A Warrants, Stock
Options and Restricted Stock (A) -- 175 --
Common Stock issuable upon
conversion of Series B
Preferred Stock (A) -- (A) --
---------- ------- --------- --
100,016 $ (146) 100,015 $ 33
======== ======= ========= =====
DILUTED EARNINGS PER SHARE $ (0.88) $ 0.33
========= ==========
</TABLE>
(A) Addition of these shares would result in antidilution.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 167
<SECURITIES> 0
<RECEIVABLES> 502
<ALLOWANCES> 17
<INVENTORY> 851
<CURRENT-ASSETS> 1,521
<PP&E> 4,285
<DEPRECIATION> 1,186
<TOTAL-ASSETS> 5,235
<CURRENT-LIABILITIES> 871
<BONDS> 402
0
1
<COMMON> 53
<OTHER-SE> 1,417
<TOTAL-LIABILITY-AND-EQUITY> 5,235
<SALES> 2,985
<TOTAL-REVENUES> 2,985
<CGS> 2,722
<TOTAL-COSTS> 3,056
<OTHER-EXPENSES> 58
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10
<INCOME-PRETAX> (139)
<INCOME-TAX> 6
<INCOME-CONTINUING> (145)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (145)
<EPS-BASIC> (1.46)
<EPS-DILUTED> (1.46)
</TABLE>
