<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 26, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ISSUER OF SENIOR NOTES REGISTERED HEREBY
------------------------
ARMCO INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
OHIO 3312 31-0200500
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
incorporation or organization) Number)
</TABLE>
ONE OXFORD CENTRE
301 GRANT STREET
PITTSBURGH, PA 15219-1415
(412) 255-9800
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
GARY R. HILDRETH
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
ARMCO INC.
ONE OXFORD CENTRE
301 GRANT STREET
PITTSBURGH, PA 15219-1415
(412) 255-9800
(Name and address, including zip code, and telephone number,
including area code, of agent for service)
------------------------
COPIES OF COMMUNICATIONS TO:
JONATHAN C. STAPLETON, ESQ.
ARNOLD & PORTER
399 PARK AVENUE
NEW YORK, NEW YORK 10022
(212) 715-1000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
------------------------
If any of the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT OFFERING PRICE(1) FEE(2)
<S> <C> <C> <C> <C>
8 7/8% Senior Notes due 2008......... $75,000,000 100% $75,000,000 $20,850
</TABLE>
(1) Estimated solely for the purposes of calculating the registration fee
pursuant to Rule 457(f)(2).
(2) Calculated pursuant to Rule 457(f)(2).
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED JANUARY 26, 1999
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
<PAGE>
PROSPECTUS
OFFER TO EXCHANGE
ALL OUTSTANDING
8 7/8% SENIOR NOTES DUE 2008
FOR
8 7/8% SENIOR NOTES DUE 2008
OF
ARMCO INC.
-------------
THE EXCHANGE OFFER
WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1999 UNLESS EXTENDED
---------------------
We are offering a total of $75,000,000 of our 8 7/8% Senior Notes due 2008,
which will be freely transferable, in exchange for our outstanding 8 7/8% Senior
Notes due 2008. We refer to this prospectus and the letter of transmittal that
accompanies it as the "exchange offer." We refer to the 8 7/8% Senior Notes due
2008 being offered in the exchange offer as the "new notes" and we refer to the
outstanding 8 7/8% Senior Notes due 2008 that can be exchanged for new notes as
the "old notes." We refer to new notes and old notes together as the "notes."
TERMS OF THE EXCHANGE OFFER
- The exchange offer expires at 5:00 p.m., New York City time, on
, 1999, unless it is extended.
- If you decide to participate in the exchange offer, the new notes issued
to you will have substantially the same terms as your old notes, except
that the new notes will be registered and will be able to be resold
without complying with the registration requirements of the Securities Act
of 1933. Any old notes not exchanged will continue to have restrictions on
their transfer.
- There is no existing public market for your old notes, and there will be
no public market for the new notes issued in the exchange offer.
- We will exchange all of the old notes that you validly tender and do not
validly withdraw.
- You may withdraw tenders of your old notes at any time before the
expiration of the exchange offer.
- The exchange offer is subject to certain customary conditions, including
that it not violate any applicable law or interpretation of the staff of
the Securities and Exchange Commission.
- We will not receive any proceeds from the exchange offer.
- The exchange of your old notes into new notes will not be a taxable
exchange for U.S. federal income tax purposes.
THIS INVESTMENT INVOLVES RISKS. WE URGE YOU TO READ THE "RISK FACTORS"
SECTION OF THIS PROSPECTUS BEGINNING ON PAGE THAT DESCRIBES SPECIFIC
RISKS ASSOCIATED
WITH THE EXCHANGE OFFER.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE NEW NOTES OR PASSED
UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
Each broker-dealer that receives new notes for its own account pursuant to
the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of such new notes. The letter of transmittal
accompanying this prospectus states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of new notes received in exchange for old notes where
the old notes were acquired by the broker-dealer as a result of market-making
activities or other trading activities. We have agreed that, starting on the
expiration date of the exchange offer and ending on the close of business one
year after the expiration date of the exchange offer, we will make this
prospectus available to any broker-dealer for use in connection with any such
resale. See "Plan of Distribution" in this prospectus for more information.
The date of this prospectus is , 1999
<PAGE>
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Where You Can Find More Information........................................................................ ii
Forward-Looking Statements................................................................................. iv
Prospectus Summary......................................................................................... 1
Risk Factors............................................................................................... 7
Our Business............................................................................................... 15
Recent Developments........................................................................................ 15
Use of Proceeds............................................................................................ 15
Capitalization............................................................................................. 16
Selected Historical Consolidated Financial and Other Data.................................................. 17
The Exchange Offer......................................................................................... 19
Description of the New Notes............................................................................... 28
Federal Income Tax Consequences............................................................................ 54
Plan of Distribution....................................................................................... 58
Legal Matters.............................................................................................. 59
Experts.................................................................................................... 59
</TABLE>
------------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT
MAKING AN OFFER OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT
PERMITTED.
THE INFORMATION IN THIS PROSPECTUS IS ACCURATE AS OF THE DATE ON THE FRONT
COVER. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS PROSPECTUS
IS ACCURATE AS OF ANY OTHER DATE.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. Our filings with the
Commission are available to the public over the Internet at the Commission's web
site at http://www.sec.gov. You may also read and copy any document that we file
at the Commission's public reference room at 450 Fifth Street, N.W., Washington,
D.C. 20549. These documents are also available at the public reference rooms at
the Commission's regional offices in New York, New York and Chicago, Illinois.
Please call the Commission at 1-800-SEC-0330 for further information on the
public reference rooms. The documents and other information that we file with
the Commission are also available at the offices of the New York Stock Exchange,
20 Broad Street, New York, New York 10005, on which our common stock is listed.
We are "incorporating by reference" in this prospectus the information that
we file with the Commission, which means that we can disclose important
information to you by referring you to those documents. Any documents or other
information that we file with the Commission after the date of this prospectus
will automatically update and supersede the information contained or
incorporated by reference in this prospectus. We are incorporating by reference
our documents listed below and any future filings that we make with the
Commission under Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act until
the day that is one year from the expiration date of the exchange offer.
- Annual report on Form 10-K for the fiscal year ended December 31, 1997;
- Quarterly reports on Form 10-Q for the quarters ended March 31, 1998, June
30, 1998 and September 30, 1998;
ii
<PAGE>
- Amendment to quarterly report on Form 10-Q/A for the quarter ended
September 30, 1998; and
- Current reports on Form 8-K, dated April 8, 1998, April 27, 1998 and
December 7, 1998.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Armco Inc.
One Oxford Centre
301 Grant Street
Pittsburgh, PA 15219-1415
Attn: Corporate Secretary
(412) 255-9800
IN ORDER TO ENSURE TIMELY DELIVERY OF ANY COPIES OF FILINGS REQUESTED FROM US,
PLEASE WRITE OR TELEPHONE US NO LATER THAN , 1999.
iii
<PAGE>
FORWARD-LOOKING STATEMENTS
Certain statements in this prospectus, including the information
incorporated by reference in this prospectus, may constitute "forward-looking
statements" for purposes of the Securities Act of 1933, as amended (the
"Securities Act") and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Such forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause our actual results,
performance or achievements to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. When used in this prospectus, the words "believe," "anticipate,"
"estimate," "project," "intend," "expect" and similar expressions, when used in
connection with Armco or its management, are intended to identify such
forward-looking statements. We caution readers that these forward-looking
statements were based on various results that were derived utilizing numerous
important assumptions and other important factors. Actual results could differ
materially from those in the forward-looking statements. We assume no obligation
to update or to publicly announce the results of any revisions to any of these
forward-looking statements to reflect actual results, future events or
developments, changes in assumptions or changes in other factors affecting such
forward-looking statements.
iv
<PAGE>
PROSPECTUS SUMMARY
The following summary highlights selected information about the exchange
offer and the new notes and may not contain all of the information that you
would find important in making your decision to participate in the exchange
offer. This prospectus includes the terms of the exchange offer and the new
notes being offered to you, as well as selected business information and
financial data. You are strongly encouraged to read this entire prospectus.
Except as otherwise required by the context, references in this prospectus
to "Armco," "we" or "us" are to Armco Inc., an Ohio corporation, and its
subsidiaries.
THE EXCHANGE OFFER
You are entitled to exchange your old notes for new notes that have been
registered under the Securities Act. The new notes will have substantially the
same terms as the old notes you currently hold, except that the new notes will
be registered under the Securities Act and will not have registration rights. As
a result of this registration, and only if you participate in the exchange offer
and exchange your old notes for new notes, we believe that you may resell the
new notes without complying with the registration and prospectus delivery
provisions of the Securities Act. Following the exchange offer, any old notes
held by you that are not exchanged will continue to have the existing
restrictions on their transfer and, except in certain circumstances, we will
have no further obligation to register your old notes under the Securities Act.
We entered into a registration agreement dated December 10, 1998 with
Salomon Smith Barney Inc., Chase Securities Inc. and PNC Capital Markets, Inc.,
the initial purchasers of the old notes. (Salomon Smith Barney Inc., Chase
Securities Inc. and PNC Capital Markets, Inc. are referred to in this prospectus
as the "initial purchasers.") Under the registration agreement, we must deliver
this prospectus to you and file a registration statement with the Commission to
register the new notes. You should read the discussion under the heading "The
Exchange Offer" for further information regarding the exchange offer and resales
of the new notes. You should also read the discussion under the headings
"Prospectus Summary--Summary of Terms of the New Notes" and "Description of the
New Notes" for further information regarding the new notes.
SUMMARY OF TERMS OF THE EXCHANGE OFFER
<TABLE>
<S> <C>
Securities Offered........................... Armco is offering $75,000,000 in principal
amount of 8 7/8% Senior Notes due 2008. These
new notes have substantially the same terms
as the old notes you hold, except that these
new notes will be registered under the
Securities Act and will be freely
transferable.
Registration Rights Agreement................ At the time the old notes were sold, we
entered into the registration agreement that
requires us to make this exchange offer.
After the exchange offer is complete, you
will no longer be entitled to exchange your
old notes for registered new notes. Under
certain circumstances, we may be required to
file a shelf registration statement under the
Securities Act with respect to your old
notes.
</TABLE>
<PAGE>
<TABLE>
<S> <C>
The Exchange Offer........................... We are offering to exchange $1,000 principal
amount of new notes for each $1,000 principal
amount of the old notes held by you. In order
to be exchanged, your old notes must be
properly tendered and accepted. All old notes
that are validly tendered and not validly
withdrawn will be exchanged.
Today, there is $75,000,000 principal amount
of old notes outstanding.
We will issue new notes on or promptly after
the expiration of the exchange offer.
Ability to Resell New Notes.................. We believe that new notes issued in the
exchange offer may be offered for resale,
resold and otherwise transferred by you
without compliance with the registration and
prospectus delivery provisions of the
Securities Act if:
- the new notes issued in the exchange
offer are being acquired in the ordinary
course of your business;
- you are not participating, do not
intend to participate and have no
arrangement or understanding with any
person to participate in the
distribution of new notes issued to you
in the exchange offer; and
- you are not our affiliate.
If this belief is inaccurate and you transfer
any new notes issued to you in the exchange
offer without delivering a prospectus meeting
the requirements of the Securities Act or
without an exemption from registration of
your new notes from such requirements, you
may incur liability under the Securities Act.
We do not assume responsibility for or
indemnify you against such liability.
A broker-dealer may use this prospectus for
an offer to resell, resale or other
retransfer of the new notes issued to it in
the exchange offer.
The exchange offer is not being made to:
- holders of notes in any jurisdiction in
which the exchange offer or its
acceptance would not comply with the
applicable securities or blue sky laws
of that jurisdiction; and
- holders of notes who are our
affiliates.
Consequences of Failure to Exchange
Your Notes................................. If you do not exchange your old notes for new
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
notes in the exchange offer, you will
continue to have the restrictions on transfer
provided in the old notes and in the
indenture governing the old notes. In
general, your old notes may not be offered or
sold unless registered under the Securities
Act, except for offers or sales made in
reliance on an exemption from, or in a
transaction not governed by, the Securities
Act and applicable state securities laws. We
have no current plans to register your old
notes under the Securities Act.
Expiration Date.............................. The exchange offer will expire at 5:00 p.m.,
New York City time, on , 1999, unless
it is extended. The expiration date is the
latest date and time to which we extend the
exchange offer.
Conditions to the Exchange Offer............. The exchange offer has certain customary
conditions. There is no minimum amount of old
notes that must be tendered to complete the
exchange offer.
Procedures for Tendering Your Old Notes...... If you wish to tender your old notes for
exchange in the exchange offer you must
transmit to Star Bank, N.A., the exchange
agent for the exchange offer, on or before
the expiration date of the exchange offer,
either:
- a properly completed and executed
letter of transmittal, which has been
provided to you with this prospectus,
or a facsimile of the letter of
transmittal, together with your old
notes and any other documentation
requested by the letter of transmittal,
to the exchange agent at the address
set forth in this prospectus under the
heading "The Exchange Offer--Exchange
Agent," and on the front cover of the
letter of transmittal; or
- a computer-generated message
transmitted by means of the Depository
Trust Company's Automated Tender Offer
Program system and received by the
exchange agent and forming a part of a
confirmation of book-entry transfer in
which you acknowledge and agree to be
bound by the terms of the letter of
transmittal.
By executing the letter of transmittal, each
holder of old notes will make those
representations described under the heading
"The Exchange Offer--Procedures for
Tendering."
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
Guaranteed Delivery Procedures............... If you wish to tender your old notes and time
will not permit the documents required by the
letter of transmittal to reach the exchange
agent prior to the expiration date of the
exchange offer, or the procedure for
book-entry transfer cannot be completed on a
timely basis, you must tender your old notes
according to the guaranteed delivery
procedures described in this prospectus under
the heading "The Exchange Offer--Guaranteed
Delivery Procedures."
Special Procedures for Beneficial Owners..... If you are a beneficial owner whose old notes
are registered in the name of a broker,
dealer, commercial bank, trust company or
other nominee and you wish to tender your old
notes in the exchange offer, you should
contact such registered holder promptly and
instruct such registered holder to tender on
your behalf. If you wish to tender on your
own behalf, you must either make appropriate
arrangements to register ownership of the old
notes in your name or obtain a properly
completed bond power from the registered
holder, prior to completing and executing the
letter of transmittal and delivering your old
notes.
We must advise you that the transfer of
registered ownership may take considerable
time and may not be able to be completed
prior to the expiration date of the exchange
offer.
Withdrawal Rights............................ Unless the date is extended, you may withdraw
the tender of your old notes at any time
prior to 5:00 p.m., New York City time, on
the expiration date.
Federal Tax Considerations................... The exchange of old notes is not a taxable
exchange for United States federal income tax
purposes. You will not recognize any taxable
gain or loss or any interest income as a
result of the exchange. For additional
information regarding federal income tax
considerations, you should read the
discussion under the heading "Federal Income
Tax Consequences."
Use of Proceeds.............................. We will not receive any proceeds from the
issuance of new notes in the exchange offer.
We will pay all expenses incident to the
exchange offer.
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
Exchange Agent............................... Star Bank, N.A. is serving as the exchange
agent for the exchange offer. The exchange
agent's address, telephone number and
facsimile number is:
Star Bank, N.A.
Corporate Trust
425 Walnut Street
Mail Location 5155
Cincinnati, Ohio 45202
Attention: Robert Jones
Phone: (513) 632-4427
Facsimile: (513) 632-5511
</TABLE>
Please review the information contained under the heading "The Exchange
Offer" for more detailed information concerning the exchange offer.
SUMMARY OF TERMS OF THE NEW NOTES
The new notes to be issued to you in the exchange offer will evidence the
same obligations of Armco as the old notes you currently hold. You should be
aware that the indenture that currently governs your old notes is the same
indenture that will govern the new notes, except that there will be no
restrictions on your ability to transfer the new notes. A more detailed
description of the indenture can be found under the heading "Description of the
New Notes."
<TABLE>
<S> <C>
Total Amount of New Notes Offered............ $75,000,000 in principal amount.
Maturity..................................... December 1, 2008.
Interest Payment Dates....................... June 1 and December 1 of each year,
commencing on June 1, 1999.
Optional Redemption.......................... On or after December 1, 2003, Armco may
redeem the notes, in whole or in part, at the
redemption prices described under the heading
"Description of the New Notes--Optional
Redemption," plus accrued and unpaid
interest, if any, to the date of redemption.
In addition, upon a change of control of
Armco prior to December 1, 2003, we may
redeem all (but not less than all) of the
outstanding notes at a redemption price equal
to 100% of their principal amount, plus a
premium, as described in "Description of the
New Notes--Optional Redemption."
Change of Control of Armco................... Upon a change of control of Armco, we will be
required to offer to purchase the notes from
you at a purchase price equal to 101% of
their principal amount, plus accrued and
unpaid interest, if any, to the date of
repurchase.
Guarantees................................... None.
Ranking...................................... The new notes:
- are unsecured obligations of Armco;
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
- rank senior in right of payment to all
subordinated debt of Armco;
- rank equally in right of payment with
all existing and future unsecured senior
debt of Armco; and
- are effectively subordinated to all
secured debt of Armco, to the extent of
assets securing that indebtedness and
to the debt of Armco's subsidiaries.
As of September 30, 1998, we had a $70.0
million revolving credit facility (as amended
as of November 10, 1998), secured by
inventory, with no borrowings under this
facility. We also had $15.8 million of other
debt, secured by assets of Armco, outstanding
on that date. In addition, a wholly owned
subsidiary of Armco has a revolving credit
facility (as amended as of November 10, 1998)
that provides up to $100.00 million for
revolving credit loans and letters of credit
secured by the subsidiary's receivables. As
of September 30, 1998, there were no
borrowings under this facility, but $61.1
million of letters of credit were
outstanding. A more detailed description of
our indebtedness can be found under the
heading "Risk Factors--Risks Relating to Our
Business and Operations--Highly Leveraged
Financial Position."
Certain Covenants............................ The indenture under which the new notes will
be issued contains covenants for your benefit
that restrict the ability of Armco and its
subsidiaries to, among other things:
- borrow additional money;
- pay dividends on or redeem capital
stock of Armco, or make certain other
restricted payments or investments;
- sell certain assets;
- enter into certain transactions with
our affiliates;
- merge or consolidate with any other
person;
- sell all or substantially all of our
assets; and
- create liens.
Absence of a Public Market................... The new notes generally will be transferable
without any restrictions but will be new
securities for which there is no established
market.
</TABLE>
6
<PAGE>
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS TOGETHER WITH THE OTHER
MATTERS SET FORTH IN THIS PROSPECTUS OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS BEFORE DECIDING WHETHER TO EXCHANGE YOUR OLD NOTES FOR NEW NOTES IN
THE EXCHANGE OFFER.
RISKS RELATING TO YOUR FAILURE TO PARTICIPATE IN THE EXCHANGE OFFER
If you do not elect to exchange your old notes for new notes you will hold
securities that are not registered and that contain restrictions on transfer.
As we explained earlier, the old notes not tendered or exchanged will remain
restricted securities. That means that if you desire to resell, pledge or
otherwise transfer any old note at some future time, it may be resold, pledged
or transferred only as follows:
- if the old note is eligible for resale pursuant to Rule 144A under the
Securities Act, to a qualified institutional buyer that purchases for its
own account or for the account of a qualified institutional buyer to whom
notice is given that the resale, pledge or transfer is being made in
reliance on Rule 144A;
- in an offshore transaction in accordance with Regulation S under the
Securities Act;
- under an available exemption from registration provided by Rule 144 or
Rule 145 under the Securities Act;
- in reliance on another exemption from the registration requirements of the
Securities Act, but only upon the receipt by the registrar of a
certification of the transferor and a satisfactory opinion of counsel to
the effect that such transfer is in compliance with the Securities Act; or
- under an effective registration statement under the Securities Act,
in each case in accordance with any applicable securities law of any state of
the United States.
Following the exchange offer, if you did not elect to participate you will
not be entitled to any further registration rights under the registration
agreement or under the purchase agreement governing your old notes, except for
certain shelf registration rights. See "The Exchange Offer--Purpose of the
Exchange Offer." We do not currently intend to file a registration statement to
register your old notes except in connection with this exchange offer.
RISKS RELATING TO ABSENCE OF PUBLIC MARKET FOR THE NOTES
The new notes will constitute a new issue of securities for which currently
there is no trading market. We do not intend to apply for listing of the new
notes on any securities exchange or for quotation through the National
Association of Securities Dealers Automated Quotation system. The initial
purchasers have informed us that they currently intend to make a market in the
new notes. However, they are not obligated to do so and may discontinue any such
market making at any time without notice. The liquidity of any market for the
new notes will depend upon the number of holders of the new notes, the interest
of securities dealers in making a market for the new notes and other factors
that are not under Armco's control. Accordingly, we cannot assure you that a
market or liquidity will develop for the new notes.
Historically, the market for non-investment grade debt has been subject to
disruptions that have caused substantial volatility in the prices of securities
similar to the new notes. We cannot assure you that the market for the new
notes, if any, will not be subject to similar disruptions. Any such disruptions
may adversely affect you as a holder of the new notes.
7
<PAGE>
RISKS RELATING TO OUR BUSINESS AND OPERATIONS
HIGHLY LEVERAGED FINANCIAL POSITION
We have substantial debt and debt service requirements. Adjusting for the
sale of the old notes and the redemption of the 9 3/8% Senior Notes due 2000, as
of September 30, 1998 we would have had total consolidated debt of approximately
$259.3 million. In addition, we have substantial employee postretirement benefit
obligations. See "--Substantial Employee Postretirement Benefit Obligations."
Our highly leveraged financial position has important consequences for us,
including:
- our ability to borrow additional amounts for working capital, capital
expenditures, debt service requirements or other purposes may be limited;
- a substantial portion of our cash flow from operations will be required to
make debt service payments and payments for postretirement benefit
obligations;
- our leverage could limit our ability to capitalize on significant business
opportunities and our flexibility to react to changes in general economic
conditions, competitive pressures and adverse changes in government
regulation;
- our high leverage could place us at a competitive disadvantage with
respect to companies with which we compete; and
- we may be more vulnerable in the event of a downturn or disruption in our
business or in the economy generally.
While we expect to be able to repay the balance of our indebtedness and meet
our other obligations through cash generated from operations, we may need to
obtain new credit arrangements and other sources of financing in order to meet
our future obligations and working capital requirements and to fund our future
capital expenditures. You should be aware that our ability to repay or refinance
our current debt and to fund our capital expenditures and other obligations
depends on our successful financial and operating performance and on our ability
to implement successfully our business strategy. Unfortunately, we cannot assure
you that we will be successful in implementing our strategy or in realizing our
anticipated financial results. You should also be aware that our financial and
operational performance depends upon a number of factors, many of which are
beyond our control. These factors include:
- the economic and competitive conditions in the steel industry;
- any operating difficulties, increased operating costs or pricing pressures
we may experience;
- the passage of legislation or other regulatory developments that may
adversely affect us;
- the economic conditions in the automotive industry; and
- volatility in financial markets, which may affect invested pension plan
assets and the calculation of benefit plan liabilities.
We have a $70.0 million revolving credit facility (as amended as of November
10, 1998), secured by certain of our inventories. As of September 30, 1998,
there were no borrowings under this facility. However, we had $15.8 million of
other debt outstanding as of that date that was secured by assets of Armco. In
addition, under a receivables facility, we sell substantially all of our trade
receivables to a wholly owned subsidiary. This subsidiary has a revolving credit
facility (as amended as of November 10, 1998) that provides up to $100.0 million
for revolving credit loans and letters of credit secured by the subsidiary's
receivables. As of September 30, 1998, there were no borrowings under this
credit facility, but $61.1 million of letters of credit were outstanding. This
subsidiary is a separate and distinct legal entity and has no obligation to pay
any amounts due under the notes or to make funds available for
8
<PAGE>
any such payment. If we default, your right to payment under the notes will be
junior to our secured debt and will be effectively subordinated to the claims of
creditors under our subsidiary's revolving credit facility to the extent of that
subsidiary's assets.
These and other factors could have an adverse effect on the marketability,
price and future value of the notes and our ability to pay the interest on and
the principal amount of the notes.
RELIANCE ON THE AUTOMOTIVE INDUSTRY
We sell a significant amount of our products to the automotive industry. The
following table shows the approximate percentage of our sales made directly to
the automotive industry in each of the past several years:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- -------------------------------------------------------------- ---------------
<S> <C>
1994.......................................................... 31
1995.......................................................... 33
1996.......................................................... 36
1997.......................................................... 32
</TABLE>
In addition, a substantial amount of our sales made to steel distribution
centers and converters consists of products that are resold (in original or
modified form) to the automotive industry.
The North American automotive industry historically has experienced
significant fluctuations in demand, based on such factors as general economic
conditions, interest rates and consumer confidence. In addition, the industry
historically has experienced significant fluctuations in production due to
strikes, lockouts, work stoppages or other production interruptions in the
automotive industry. Any material decrease in the production or sale of
automobiles could have a material adverse effect on the results of our
operations.
In recent years, United States demand for automotive exhaust stainless sheet
and strip steel has been high, with total United States demand for such material
increasing from approximately 223,000 tons in 1992 to approximately 438,000 tons
in 1997. However, we cannot assure you that demand will remain at these levels.
Although the production of light vehicles in North America increased from
approximately 12.5 million units in 1992 to 15.6 million units in 1997, we also
cannot assure you that such production levels will be maintained.
HIGHLY COMPETITIVE NATURE OF STEEL INDUSTRY; OTHER FACTORS AFFECTING STEEL
PRICES
The steel industry is extremely competitive, particularly with respect to
price. We face intense competition from domestic and foreign steel producers. In
addition, we face competition from foreign producers of components and other
products and manufacturers of competing products other than steel, including
aluminum, plastics, composites and ceramics. Competition is based primarily on
price, with factors such as reliability of supply, service and quality also
being important in certain segments of the industry.
Increases in the production capacity and efficiency of other domestic steel
producers, together with possible new entrants into the specialty steel market,
also could result in intensified competition that could exert downward pressure
on prices and market share. In 1995, Nucor Corporation, a mini-mill steel
company, entered the automotive chrome stainless steel business with the
addition of an argon-oxygen decarburization vessel at its Crawfordsville,
Indiana melt shop. AK Steel Corporation, an integrated steel company, is
building a stainless steel finishing facility in Rockport, Indiana that is
expected to be completed in mid-1999. When completed, this facility will provide
AK Steel Corporation with substantial stainless steel processing and finishing
capacity.
9
<PAGE>
Foreign producers also compete with us, although to a lesser extent than
domestic producers. Some foreign producers have lower labor costs and are
subsidized by their governments. Political and social considerations may
influence their decisions with regard to production and sales more than
prevailing market forces. Many foreign steel producers continue to ship to the
United States market despite decreasing profit margins or losses. Other factors
that influence the level of foreign competition include the relative strength of
the dollar, the level of imports, and the effectiveness of United States trade
laws. In June 1998, Armco and other domestic producers of flat-rolled stainless
sheet and strip products filed petitions with the U.S. Department of Commerce
and the International Trade Commission charging eight foreign countries with
violations of U.S. trade laws. The U.S. International Trade Commission issued a
preliminary finding in July 1998 that there has been injury to domestic
producers of flat-rolled stainless sheet and strip products. In November 1998,
the U.S. Department of Commerce announced preliminary results in its
investigations, establishing countervailing duty rates for companies in France,
Italy and South Korea. In December 1998, a preliminary determination on
antidumping margins was announced by the U.S. Department of Commerce for
companies in these three countries, as well as in Germany, Japan, Mexico, Taiwan
and the United Kingdom. Final antidumping duties are expected to be set by the
second quarter of 1999. However, we cannot assure you that meaningful tariffs
will be imposed on imports of these products. In addition, with respect to
electrical steel, the U.S. Department of Commerce and the U.S. International
Trade Commission are expected to review existing antidumping and countervailing
duty cases involving Italian and Japanese producers in mid-1999 to determine
whether these protections should be extended for another five years. The failure
to obtain or extend meaningful tariff protection for these products could
adversely affect the prices of our products and reduce our profitability.
Historically, the steel industry, including the specialty steel sector, has
been cyclical in nature. This is due to the cyclical nature of many of the
principal markets the steel industry serves, including the automotive, appliance
and construction industries, as well as to changes in total industry demand.
Since 1993, steel prices have fluctuated. In 1997, average specialty steel
prices were lower than in 1996. Although demand for steel has been strong since
1993, we cannot assure you that demand will continue at current levels. Further,
we cannot assure you that increased production capacity or efficiency of
competitors, or increased foreign and domestic competition will not adversely
affect pricing and profit margins. In addition, the steel industry is vulnerable
to price increases in raw materials and energy, which represent major components
in the per ton cost of production.
RISKS ASSOCIATED WITH LABOR
Unions represent most of our domestic production and maintenance employees,
although some of our operations are not unionized. Future collective bargaining
agreements, or the negotiation of such agreements, may have an adverse effect on
Armco's financial condition and results of operations. In August 1999, the labor
contract with the employees at our Mansfield, Ohio facility will expire. We
cannot assure you of the results of our negotiations of future collective
bargaining agreements with our employees. Further, we cannot assure you that the
Mansfield labor contract or other collective bargaining agreements will be
negotiated without production interruptions. Labor disputes and resulting work
stoppages or slowdowns occasionally occur in the steel industry. We cannot
assure you that work stoppages or slowdowns will not occur in the future in
connection with our labor negotiations or otherwise.
SUBSTANTIAL EMPLOYEE POSTRETIREMENT BENEFIT OBLIGATIONS
We have substantial financial obligations related to our employee
postretirement plans for medical and life insurance and pensions. Statement of
Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions" requires that we accrue retiree
medical and life insurance benefits during an employee's service rather than
defer the recognition of costs until
10
<PAGE>
claims are actually paid. In accordance with this accounting standard, we have
established a liability for the present value of the estimated future unfunded
medical and life insurance benefit obligations. As of December 31, 1997, we had
accumulated postretirement health care and life insurance benefit obligations
estimated at $755.2 million. In addition, as of that date we had accrued a
balance sheet liability of $1,037.7 million for these postretirement
obligations. The cash payments for actual postretirement health and life
insurance claims were $55.2 million in 1996, $60.0 million in 1997 and $44.4
million for the first nine months of 1998.
In accordance with the Statement of Financial Accounting Standards No. 87,
"Employers' Accounting for Pensions," we had an accrued pension liability of
$189.4 million at December 31, 1997 for our defined benefit pension plans. As of
December 31, 1997, the funded status of our defined benefit pension plans showed
plan assets of $2,106.4 million, exceeding projected benefit obligations by $7.4
million. However, adverse developments in health care costs or in the financial
markets could materially increase the amount of our postretirement benefit
obligations. In addition, plant shutdowns, layoffs or other similar events could
increase the amount of the obligations.
Effective January 1, 1998, we changed the accounting method that we use to
amortize unrecognized net gains and losses associated with our pension and
postretirement benefit plans. Under this accounting method, we
- recognize into income, as a fourth-quarter adjustment in each year, net
gains and losses that exceed 10% of the larger of our benefit obligations
or our plan assets, and
- amortize amounts inside this 10% corridor over the average remaining
service life of active participants (approximately 15 years).
Before this accounting change we chose to use the minimum amortization
method allowable under Statement of Financial Accounting Standards No. 87. Under
that method, we amortized unrecognized net gains and losses outside the 10%
corridor over the average remaining service life of active participants. This
older method resulted in the accumulation of substantial unrecognized net gains,
causing long-term employee benefit liabilities on our balance sheet to be higher
than the actuarially determined economic obligations. The new accounting method
that we have adopted therefore accelerates the recognition of certain net gains
and losses associated with our pension and postretirement benefit plans. In the
nine months ended September 30, 1998, we recognized income of $237.5 million for
the cumulative effect of this accounting change. The cumulative effect of this
accounting change increased our first quarter net income. The change also
resulted in our reporting positive total shareholder's equity for the first time
since 1992.
Because the new accounting method accelerates net gains and losses resulting
from, among other things, the investment returns on pension plan assets and
changes in interest rates, the accounting change could cause our future earnings
to be more volatile. For the nine months ended September 30, 1998, adoption of
the new accounting method increased income from continuing operations by
approximately $2.3 million. However, a decline in interest rates or a marked
deterioration in investment earnings on pension plan assets in future quarters
could require us to recognize a charge related to unrecognized losses outside
the 10% corridor.
FUTURE USE OF NET OPERATING LOSS CARRYFORWARDS
At December 31, 1997, we had net operating loss carryforwards for federal
income tax purposes of approximately $1,060.7 million. This represented a
portion of the net deferred tax asset recorded on our balance sheet of $328.5
million. A certain amount of these net operating loss carryforwards will expire
each year between 1998 and 2011. To use such net operating loss carryforwards,
we must generate taxable income equal in amount to the net operating loss
carryforwards prior to their expiration. Because we operate in a highly cyclical
industry, historically we have generated and then
11
<PAGE>
utilized net operating loss carryforwards. During the 1987, 1988 and 1989 fiscal
years, we utilized approximately $350.0 million of net operating loss
carryforwards. While we incurred tax losses for the seven fiscal years ending
December 31, 1996, our management believes that it is more likely than not that
we will generate sufficient taxable income to realize that portion of the tax
benefit associated with future deductible temporary differences and net
operating loss carryforwards represented by the net deferred tax asset recorded
on our balance sheet at December 31, 1997. We base this belief upon, among other
factors, changes in operations during the 1990s, as well as our consideration of
available tax planning strategies. Specifically, we are realizing cost savings
associated with new capital investments. In 1997, we recorded taxable income for
the first time since 1989 and utilized approximately $15.9 million of our net
operating loss carryforwards. While we expect these cost savings to continue to
improve operating results, we cannot assure you that the deferred tax asset
reflected on our consolidated balance sheets will actually be fully utilized.
POTENTIAL ENVIRONMENTAL EXPENDITURES
Under the federal Comprehensive Environmental Response, Compensation and
Liability Act, certain analogous state laws, and the federal Resource
Conservation and Recovery Act, federal and state regulatory authorities may
require investigation and cleanup of contaminated sites, even when a party acted
in accordance with applicable laws and requirements. In litigation under such
laws, courts generally will hold the responsible parties jointly and severally
liable absent proof that damages are divisible.
Certain parties have sued us, or identified us as a potentially responsible
party, in various proceedings in which the federal or state government seeks
reimbursement for, or to compel cleanup of, contaminated sites. Federal and
state agencies have required us to perform or fund such cleanups or participate
in cleanups with others at a number of sites, including some of our current or
former facilities and other sites at which our facilities disposed of wastes in
the past. In addition, such federal and state agencies may, from time to time,
require us to remediate or join with others in the remediation of additional
sites identified by federal or state authorities. We also have been named as a
defendant in several private lawsuits alleging property damage and personal
injury from waste disposal sites and from former facilities of Armco.
We may incur environmental exit costs if we decide to sell a current
property. (It is our policy not to accrue such environmental exit costs until we
decide to dispose of a property.) These costs include, among other things,
remediation and closure costs--for example, expenses relating to our clean-up of
soil contamination, our closing of waste treatment facilities and our monitoring
commitments. We also have retained certain environmental liabilities relating to
businesses and properties that we have sold. We believe that the ultimate
liability for the environmental remediation matters identified to date--
including the clean-up, closure and monitoring of waste sites and formerly owned
facilities and businesses--will not materially affect our consolidated financial
condition or liquidity. However, the identification of additional sites,
increases in remediation costs with respect to identified sites, the failure of
other potentially responsible parties to contribute their share of remediation
costs, decisions to dispose of additional properties and other changed
circumstances may result in increased costs to us. These increased costs may
have a material adverse effect on our financial condition, liquidity and results
of operations.
In common with other U.S. manufacturers, we are subject to various federal,
state and local requirements for environmental controls relating to our
operations. We have spent substantial amounts of money to control air and water
pollution pursuant to applicable environmental requirements. We have also spent,
and will continue to spend, substantial amounts for proper handling and disposal
and for the environmental investigation and cleanup of properties. Along with
capital investments and operating costs relating to environmental matters, from
time to time we have been and may be subject to penalties or other requirements
as a result of administrative action by regulatory agencies.
12
<PAGE>
Statutory and regulatory requirements in this area continue to evolve and,
accordingly, we cannot predict with certainty the type and magnitude of
expenditures that will be required in the future. However, we have estimated
that our total expenditures for capital projects for pollution control during
the five-year period from 1998 through 2002 will be approximately $32.3 million.
Of this amount, approximately $8.4 million is related to control of air
pollution as required by amendments to the federal Clean Air Act, corresponding
state laws and implementing regulations. A substantial portion of our capital
expenditures is also attributable to control of water pollution under the Clean
Water Act. Future Clean Air Act requirements may also increase the operating
costs of electrical utilities that rely on fossil fuels. This, in turn, could
increase the costs for utility services upon which our operations depend.
FINANCING CHANGE OF CONTROL OFFER
Upon the occurrence of certain specific kinds of change of control events,
we will be required to offer to repurchase all outstanding notes at a premium
and pay accrued interest. We also may be required to repurchase or prepay other
debt. However, it is possible that we will not have sufficient funds at the time
of the change of control to make these required repurchases or prepayments or
that restrictions in our credit facilities will not allow such repurchases or
prepayments. If we do not have sufficient funds to make the required repurchase
of notes, we would be required to seek additional funds from outside sources in
order to repurchase the notes. We cannot be certain that additional funds would
be available to us on satisfactory terms. If we fail to repurchase the notes
when required by a change of control event, the trustee under the indenture
relating to the notes and the holders of notes will be entitled to the rights
described under the caption "Description of the New Notes--Events of Default."
See "Description of the New Notes--Change of Control." In addition, certain
important corporate events, such as leveraged recapitalizations that would
increase the level of our indebtedness, would not constitute a change of control
under the indenture. See "Description of the New Notes-- Optional Redemption."
RISK FACTORS ASSOCIATED WITH THE "YEAR 2000" PROBLEM
Many computer systems and software products will not function properly in
the year 2000 and beyond due to a once-common programming standard that
represents years using two digits. This problem is often referred to as the
"Year 2000" problem. We have prioritized our efforts, with the goal of
completing work on noncompliant systems in the most critical areas first. We
spent approximately $5.6 million in 1998 and currently anticipate that we will
spend approximately $11.0 million in 1999 on Year 2000 compliance activities.
While we expect that virtually all Year 2000 compliance activities, including
system testing, will be completed by September 30, 1999, we cannot assure you
that all of our computer systems will be compliant by that date. We continue to
monitor Year 2000 compliance efforts of our suppliers and to seek to obtain, to
the extent possible, assurances that they will be able to deliver their products
and services without interruption. However, our failure to address these
problems or the failure of our critical suppliers and other companies with which
we do business to convert their systems on a timely basis could have a material
adverse effect on our financial condition, liquidity and results of operations.
OUR BUSINESS
THE FOLLOWING IS A SUMMARY OF OUR BUSINESS. IT DOES NOT CONTAIN ALL OF THE
INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ CAREFULLY THIS ENTIRE
PROSPECTUS, INCLUDING THE INFORMATION THAT WE INCORPORATE BY REFERENCE, BEFORE
YOU DECIDE TO PARTICIPATE IN THIS EXCHANGE OFFER.
Armco Inc. is the largest domestic producer of stainless sheet and strip and
electrical steel, based on tons shipped. We operate in two business segments:
Specialty Flat-Rolled Steels, which contributed
13
<PAGE>
83% of total sales, and Fabricated Products, which contributed 17% of total
sales, in each case for the twelve months ended September 30, 1998. Our
Specialty Flat-Rolled Steels segment produces and finishes flat-rolled
stainless, electrical and galvanized carbon steel at five manufacturing
locations in Pennsylvania and Ohio. For the twelve months ended September 30,
1998, the Specialty Flat-Rolled Steels segment had shipments of 1,218,000 tons.
Our major customers in this segment include automotive exhaust systems
producers, manufacturers of industrial and electrical equipment, other
manufacturers, service centers and converters. Our Fabricated Products segment
consists of three businesses:
- Douglas Dynamics, L.L.C., the largest North American manufacturer of
snowplows for four-wheel drive vehicles;
- Sawhill Tubular Division, a manufacturer of a wide range of steel pipe and
tubular products for use in construction, industrial and plumbing markets;
and
- Greens Port Industrial Park, located in Houston, Texas.
Our total sales were $1,749.6 million for the twelve months ended September 30,
1998.
Historically, consumption of stainless sheet and strip has grown at a faster
rate than the steel market as a whole. For example, between 1987 and 1997,
consumption of stainless sheet and strip in the United States had a compound
annual growth rate of 5.8% as compared to a rate of 3.1% for the total steel
market. Among the characteristics that make stainless steel a material of choice
are its resistance to corrosion, ability to withstand temperature extremes, high
strength-to-weight ratio, natural attractiveness and ease of maintenance.
Another factor contributing to increased stainless steel usage is the
requirement of the 1990 amendments to the Clean Air Act that long-life materials
such as corrosion-resistant stainless steel be used in a number of applications,
including automotive exhaust systems, where we have the leading United States
market position. From 1990 to 1997, stainless steel usage in automotive exhaust
systems grew from 25 pounds per vehicle to 56 pounds per vehicle. In addition to
increased usage per vehicle, automotive stainless steel demand has been driven
by strong North American production of light vehicles, with 14.9 million in
1995, 15.1 million in 1996 and 15.6 million in 1997, as compared to an annual
average of 13.3 million vehicles from 1991 to 1994.
Electrical steels are iron-silicon alloys that, through special production
techniques, possess unique magnetic properties that make them desirable for the
generation, transmission and distribution of electricity. We believe that we are
the largest domestic supplier and the only producer of a full product line of
electrical steels in the United States.
Our strategic objective is to enhance our position as a leading domestic
producer of specialty flat-rolled steels by focusing on our existing strong
market positions, especially in the automotive chrome and electrical steel
markets. We intend to strengthen our position in these markets by continuing to
focus on our core specialty steels business, by utilizing our recently upgraded
and improved facilities to produce higher quality products and by providing
improved customer service.
We have taken significant steps in recent years to become a focused
specialty steel company by streamlining our operations, investing in the
expansion and upgrade of our specialty flat-rolled steel facilities and
divesting or otherwise rationalizing certain unprofitable or non-strategic
operations. From 1993 through 1996, we sold or disposed of 13 operations and
investments, generating cash proceeds of over $400 million.
Since 1993, we have invested approximately $235 million in two major
programs to upgrade our facilities and thereby increase productivity, lower
operating costs, increase yields and improve customer service. The first of
these programs included the installation at our Mansfield, Ohio facility of a
state-of-the-art continuous thin-slab caster designed to produce different
grades of steel with rapid switchover from one grade to another. The new casting
process helps to ensure consistently high quality
14
<PAGE>
products because it eliminates intermediate production steps and reduces the
amount of rolling required to achieve the desired thickness. We made the
thin-slab caster, certain hot mill upgrades and other modifications at the
Mansfield plant over a 15-month period, at a total cost of approximately $140
million.
The second of these programs, which commenced in late 1994, consisted of $95
million of extensive capital improvements over a two-year period to upgrade and
expand our stainless and electrical steel finishing facilities. We initiated
this strategic facilities upgrade to reduce existing production constraints and
increase specialty flat-rolled steel finishing capacity by approximately 180,000
tons per year, particularly in chrome stainless steel, electrical steels and
specialty sheet and strip products. We completed these upgrades during 1996. We
have realized the benefits of these programs in the form of improved quality,
productivity and cost since 1997.
In addition, we intend to continue to pursue research and development
activities. Our new equipment and more advanced technology are helping customers
to lower their total costs, by providing them with the specific material
selection and part design needed to match their manufacturing processes.
Furthermore, we have reorganized our research and technology functions to
facilitate more direct interaction with customers in the development of new
products and processes.
Our principal executive offices are located at One Oxford Centre, 301 Grant
Street, Pittsburgh, Pennsylvania, 15219-1415 and our telephone number is (412)
255-9800.
RECENT DEVELOPMENTS
On January 21, 1999, we released preliminary, unaudited results for the
fourth quarter of 1998. For this quarter Armco reported net income of $27.5
million, compared with $19.2 million of net income in the same period in 1997.
Included in 1998 net income is a one-time gain of $4.3 million relating to a tax
settlement. For the year ended December 31, 1998, income before the cumulative
effect of an accounting change rose to $109.6 million, a 43% increase over 1997
net income of $76.8 million. Armco attributed the earnings improvement for both
the fourth quarter and full year to continuing strong demand for automotive
stainless and electrical steels, operating improvements and lower costs related
to retiree medical and pension benefits. Sales for the fourth quarter and full
year of 1998 declined 10 percent and 7 percent to $393.3 million and $1.7
billion, respectively, primarily as a result of lower specialty steel selling
prices, reduced shipments of specialty semi-finished and galvanized carbon
steels and lower snowplow and pipe and tube sales.
USE OF PROCEEDS
We will not receive any proceeds from the exchange offer. The net proceeds
to Armco from the sale of the $75.0 million of old notes was approximately $72.5
million after deducting discounts and offering expenses that we had to pay. We
used all of the net proceeds from the offering of the old notes, plus some of
our own funds, to redeem or repurchase all $125 million outstanding of our
9 3/8% Senior Notes due 2000, which were subject to redemption by Armco at a
redemption price of 101.75% of their principal amount plus accrued and unpaid
interest, to the date of redemption. Such redemption or repurchase resulted in
an extraordinary loss of approximately $3.3 million.
15
<PAGE>
CAPITALIZATION
The following table shows our historical capitalization as of September 30,
1998 and as adjusted to give effect to the offering of the old notes and the use
of the estimated net proceeds. You should read this table together with our
consolidated financial statements and related notes included in our quarterly
report on Form 10-Q for the quarter ended September 30, 1998 that we incorporate
by reference in this prospectus. Please refer to the section of this prospectus
entitled, "Where You Can Find More Information."
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
------------------------
<S> <C> <C>
HISTORICAL AS ADJUSTED
----------- -----------
<CAPTION>
(IN MILLIONS)
<S> <C> <C>
CASH AND SHORT-TERM LIQUID INVESTMENTS
Cash and cash equivalents.............................................................. $ 111.1 $ 56.4
Short-term liquid investments.......................................................... 12.6 12.6
----------- -----------
Total cash and short-term liquid investments....................................... $ 123.7 $ 69.0
----------- -----------
----------- -----------
CURRENT MATURITIES OF LONG-TERM DEBT..................................................... $ 5.9 $ 5.9
LONG-TERM DEBT (less current maturities)
Credit facilities (a).................................................................. -- --
5% Note Due 2000....................................................................... 7.7 7.7
9 3/8% Senior Notes Due 2000........................................................... 125.0 --
Variable rate pollution control revenue bonds due 2008................................. 12.1 12.1
9% Senior Notes Due 2007............................................................... 150.0 150.0
8 7/8% Senior Notes Due 2008........................................................... -- 75.0
Variable rate economic development revenue bonds due 2020.............................. 7.3 7.3
Other long-term debt................................................................... 1.9 1.3
----------- -----------
Total long-term debt............................................................... 304.0 253.4
SHAREHOLDERS' EQUITY
Class A Preferred Stock................................................................ 137.6 137.6
Class B Preferred Stock................................................................ 48.3 48.3
Common stock, par value $.01 per share (b)............................................. 1.1 1.1
Additional paid-in capital............................................................. 972.0 972.0
Accumulated deficit (c)................................................................ (998.8) (1,002.1)
Other.................................................................................. (3.0) (3.0)
----------- -----------
Total shareholders' equity......................................................... 157.2 153.9
----------- -----------
Total capitalization............................................................... $ 467.1 $ 413.2
----------- -----------
----------- -----------
</TABLE>
- ------------------------
(a) As of September 30, 1998, there were no borrowings under the credit
facilities, which have a total commitment of $170.0 million. However, $61.1
million of letters of credit were outstanding under one facility.
(b) Common stock outstanding does not include 25,462,568 shares issuable upon
the conversion of outstanding shares of cumulative preferred stock or the
exercise of outstanding vested stock options.
(c) The redemption or repurchase of certain of our indebtedness as described in
"Use of Proceeds" is expected to result in an extraordinary loss of
approximately $3.3 million.
16
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA
The following table summarizes certain selected consolidated financial data,
which should be read in connection with our consolidated financial statements
and the related notes and with the annual, quarterly and special reports that we
incorporate by reference in this prospectus. See the section of this prospectus
entitled, "Where You Can Find More Information." The selected consolidated
financial data as of and for the years ended December 31, 1997, 1996, 1995,
1994, and 1993 have been derived from our audited financial statements. The
selected consolidated financial data presented below as of and for the nine
months ended September 30, 1998 and 1997 are derived from our unaudited
consolidated financial statements. The unaudited financial statements include
all adjustments (consisting of only normal recurring adjustments) that we
consider necessary for a fair presentation of our financial position and results
of operations for these periods. Operating results for the nine months ended
September 30, 1998 are not necessarily indicative of the results that may be
expected for future periods.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1998 1997 1997 1996 1995 1994 1993
--------- --------- --------- --------- --------- --------- ---------
<CAPTION>
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales................................... $ 1,313.2 $ 1,392.9 $ 1,829.3 $ 1,724.0 $ 1,559.9 $ 1,437.6 $ 1,664.0
--------- --------- --------- --------- --------- --------- ---------
Gross profit................................ 152.1 156.4 205.4 175.6 167.2 170.6 144.5
Selling and administrative expenses......... (68.7) (75.2) (100.0) (92.1) (98.2) (96.4) (125.0)
Special charges (a)......................... -- -- -- (8.8) -- (35.0) (165.5)
--------- --------- --------- --------- --------- --------- ---------
Operating profit............................ 83.4 81.2 105.4 74.7 69.0 39.2 (146.0)
Interest expense, net....................... (15.7) (19.3) (24.9) (26.2) (21.1) (23.3) (37.7)
Gain on sale of investments in joint
ventures and related stock................ -- -- -- -- 27.2 62.6 --
Equity in losses of Armco Steel Company,
L.P....................................... -- -- -- -- -- -- (27.9)
Sundry other, net........................... 19.8 (0.8) (1.1) (21.1) (49.6) (41.4) (43.2)
Credit (provision) for income taxes......... (5.4) (1.8) (2.3) (1.4) (2.0) 28.7 7.3
--------- --------- --------- --------- --------- --------- ---------
Income (loss) from continuing operations.... 82.1 59.3 77.1 26.0 23.5 65.8 (247.5)
Discontinued operations..................... -- 1.3 2.7 6.5 6.3 11.9 (79.5)
Extraordinary losses........................ -- (3.0) (3.0) -- -- -- (7.3)
Cumulative effect of changes in accounting
for postretirement and postemployment
benefits and income taxes (b)............. 237.5 -- -- -- -- -- (307.5)
--------- --------- --------- --------- --------- --------- ---------
Net income (loss)........................... $ 319.6 $ 57.6 $ 76.8 $ 32.5 $ 29.8 $ 77.7 $ (641.8)
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Earnings per share
Basic..................................... $ 2.84 $ 0.41 $ 0.55 $ 0.14 $ 0.11 $ 0.57 $ (6.35)
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Diluted................................... 2.49 0.41 0.55 0.14 0.11 0.57 (6.35)
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
OTHER DATA:
Depreciation and amortization............... $ 52.6 $ 49.5 $ 66.2 $ 58.7 $ 52.8 $ 48.8 $ 53.2
Capital expenditures........................ 19.0 25.5 41.9 59.8 159.5 96.4 53.9
Preferred stock dividends declared.......... 13.4 13.4 17.9 17.9 17.9 17.8 17.8
Ratio of earnings to fixed charges (c)...... 4.8x 3.2x 3.1x 1.7x 1.5x 1.6x --
Total Specialty Flat-Rolled Steels shipments
(in thousands of tons) (unaudited)........ 925 938 1,231 1,140 939 815 1,065
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................... $ 111.1 $ 279.9 $ 189.9 $ 168.9 $ 136.8 $ 202.8 $ 183.5
Working capital............................. 324.8 305.9 251.1 213.6 194.8 258.6 272.4
Total assets................................ 1,830.3 2,034.8 1,881.3 1,867.8 1,896.6 1,934.9 1,904.7
Total debt.................................. 309.9 488.1 345.1 371.5 387.4 374.3 388.0
Long-term employee benefit obligations
(b)....................................... 901.5 1,192.5 1,178.1 1,200.2 1,165.9 1,221.9 1,249.9
Preferred stock............................. 185.9 185.9 185.9 185.9 185.9 185.9 185.9
Total shareholders' equity (deficit)........ 157.2 (168.8) (152.5) (212.0) (230.4) (218.5) (313.1)
</TABLE>
- ------------------------
(a) In 1996, we recognized a special charge of $5.9 million to record a change
in the estimated loss on the sale of our nonresidential construction
business and a $2.9 million special charge primarily for the writedown of
inventory and severance costs related to our decision to discontinue a line
of light truck equipment manufactured by Armco's snowplow and ice control
equipment business. In 1994, we recorded a special charge of $20.0 million
for expenses associated with the temporary idling and restructuring of our
steelmaking facilities in Mansfield and Dover, Ohio and a charge of $15.0
million related to a decision by Eastern Stainless Corporation to sell
substantially all of its assets to Avesta Sheffield Holding Company, a
stainless steel plate manufacturer, for cash and the assumption of certain
liabilities. In 1993, as part of our strategy to focus on the production of
specialty flat-rolled steel, we sold our Brazilian operations and decided to
exit a number of domestic businesses, recording special charges totaling
$165.5 million.
(b) Effective January 1, 1998, we changed the accounting method that we use to
amortize unrecognized net gains and losses associated with our pension and
postretirement benefit plans. We recognized income of $237.5 million for the
cumulative effect of this accounting change. For a discussion of this
accounting change, see the section of this prospectus entitled "Risk
Factors--Risks Relating to Our Business and Operations--Substantial Employee
Postretirement Benefit Obligations." In 1993, Armco adopted SFAS No. 106,
Employers' Accounting for Postretirement Benefits Other Than Pensions, SFAS
No. 109, Accounting for Income Taxes and SFAS No. 112, Employers' Accounting
For Postemployment Benefits. The net cumulative effect of adopting these
statements was a charge of $307.5 million for the year ended December 31,
1993.
(c) For purposes of calculating the ratio of earnings to fixed charges, pretax
income (loss) from continuing operations plus fixed charges have been
divided by fixed charges. Fixed charges consist of interest and the portion
of rent deemed representative of the interest factor. In the year ended
December 31, 1993, earnings as defined were insufficient to cover fixed
charges by $264.4 million.
18
<PAGE>
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
We sold the old notes in a private offering on December 15, 1998, to Salomon
Smith Barney Inc., Chase Securities Inc. and PNC Capital Markets, Inc., the
initial purchasers, pursuant to a purchase agreement dated December 10, 1998
among Armco and the initial purchasers. The initial purchasers subsequently
resold the old notes to qualified institutional buyers in reliance, and subject
to the restrictions imposed under, Rule 144A under the Securities Act.
Under the registration agreement that we and the initial purchasers entered
into in connection with the private offering of the old notes, we are required
to file, no more than 60 days following the date the old notes were originally
issued, the issue date, the registration statement of which this prospectus is a
part. The registration statement provides for a registered exchange offer of new
notes identical in all material respects to the old notes, except that the new
notes will be freely transferable and will not have any covenants regarding
exchange and registration rights. Under the registration agreement, we are
required to use our best efforts to:
- file the registration statement no later than 60 days after the issue date
of the old notes;
- cause the registration statement to be declared effective no later than
150 days after the issue date of the old notes; and
- consummate the exchange offer as promptly as practicable, but no later
than 180 days after the issue date of the old notes.
We are also required to keep the exchange offer open for not less than 30
business days (or longer if required by applicable law) after the date that
notice of the exchange offer is mailed to holders of the old notes.
The registration agreement also provides that, under certain circumstances,
we will file with the Commission a shelf registration statement relating to the
offer and sale of old notes by holders of old notes who satisfy certain
conditions regarding the provision to us of information in connection with the
shelf registration statement.
For a more complete understanding of your exchange and registration rights,
you should refer to the registration agreement, which is included as an exhibit
to the registration statement of which this prospectus is a part, and a copy of
which is available as set forth under the heading "Where You Can Find More
Information."
EFFECT OF THE EXCHANGE OFFER
Based on interpretations by the staff of the Commission set forth in
no-action letters issued to third parties, we believe that you may offer for
resale, resell and otherwise transfer the new notes issued to you pursuant to
the exchange offer in exchange for your old notes without compliance with the
registration and prospectus delivery provisions of the Securities Act, so long
as you represent that:
- you are not our "affiliate" (as defined in Rule 405 of the Securities
Act);
- you are not engaged in, and do not intend to engage in, and have no
arrangement or understanding with any person to participate in, a
distribution of the new notes; and
- you are acquiring the new notes in the ordinary course of your business.
In addition, each broker-dealer that receives new notes for its own account
in exchange for old notes, where such old notes were acquired by the
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such new notes. See "Plan of Distribution." In the
registration agreement, Armco has agreed
19
<PAGE>
that it will allow exchanging dealers (and any other persons subject to similar
prospectus delivery requirements) to use this prospectus in connection with such
resale.
To the extent old notes are tendered and accepted in the exchange offer, the
principal amount of outstanding old notes will decrease with a resulting
decrease in the liquidity in the market for the old notes. Old notes that are
still outstanding following the consummation of the exchange offer will continue
to be subject to certain transfer restrictions.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, we will accept any and all old notes validly
tendered and not validly withdrawn prior to 5:00 p.m., New York City time, on
the expiration date of the exchange offer. As of the date of this prospectus, a
total of $75.0 million principal amount of the old notes is outstanding. We will
issue $1,000 principal amount of new notes in exchange for each $1,000 principal
amount of outstanding old notes accepted in the exchange offer. You may tender
some or all of your old notes pursuant to the exchange offer. However, old notes
may be tendered only in integral multiples of $1,000.
By tendering old notes in exchange for new notes and by executing the letter
of transmittal that accompanies this prospectus, you will be required to
represent, among other things, that:
- you are not an "affiliate" (as defined in Rule 405 of the Securities Act)
of Armco;
- you are not engaged in, and do not intend to engage in, and have no
arrangement or understanding with any person to participate in, a
distribution of the new notes; and
- you are acquiring the new notes in the ordinary course of your business.
The form and terms of the new notes will be identical in all material
respects to the form and terms of the old notes, except that:
- the offering of the new notes has been registered under the Securities
Act;
- the new notes will not be subject to transfer restrictions; and
- the new notes will be issued free of any covenants regarding exchange and
registration rights.
The new notes will evidence the same debt as the old notes and will be
entitled to the benefits of the indenture under which the old notes were, and
the new notes will be, issued.
This prospectus, together with the accompanying letter of transmittal, is
initially being sent to all registered holders of old notes on or about
, 1999. The exchange offer is not conditioned upon any minimum
aggregate principal amount of old notes being tendered. However, the exchange
offer is subject to certain customary conditions, which we may waive, and to the
terms and provisions of the registration agreement. See "--Certain Conditions to
the Exchange Offer."
You do not have any appraisal or dissenters' rights under law or the
indenture in connection with the exchange offer. We intend to conduct the
exchange offer in accordance with the applicable requirements of the Exchange
Act and the rules and regulations of the Commission established under the
Exchange Act.
If we do not accept for exchange any tendered old notes because of an
invalid tender, the occurrence of certain other events set forth in this
prospectus or for another reason, certificates for any such unaccepted old notes
will be returned, without expense to you, as promptly as practicable after the
expiration date of the exchange offer.
If you tender old notes in the exchange offer you will not be required to
pay brokerage commissions or fees or, subject to the instructions in the letter
of transmittal, transfer taxes with
20
<PAGE>
respect to the exchange of old notes pursuant to the exchange offer. We will pay
all charges and expenses, other than certain applicable taxes, in connection
with the exchange offer. See "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "expiration date" means 5:00 p.m., New York City time, on
, 1999, unless we, in our sole discretion, extend the exchange
offer, in which case the term "expiration date" will mean the latest date and
time to which the exchange offer is extended.
We have the right to delay accepting any old notes, to extend the exchange
offer or, if any of the conditions set forth below under "--Certain Conditions
to the Exchange Offer" have been satisfied, to terminate the exchange offer, by
giving oral or written notice of the delay, extension or termination to the
exchange agent. We also have the right to amend the terms of the exchange offer.
If we delay acceptance of any old notes, or terminate or amend the exchange
offer, we will make a public announcement to that effect as promptly as
practicable. If we believe that we have made a material amendment of the terms
of the exchange offer, we will promptly disclose the amendment in a manner
reasonably calculated to inform you of such amendment and we will extend the
exchange offer to the extent required by law. We will notify the exchange agent
of any extension of the exchange offer in writing or orally (which we will
promptly confirm in writing). Unless otherwise required by applicable law or
regulation, we will make a public announcement of any extension of the
expiration date before 9:00 a.m., New York City time, on the first business day
after the previously scheduled expiration date. We have no obligation to
publish, advise or otherwise communicate any public announcement, other than by
making a timely press release.
INTEREST ON THE NEW NOTES
Interest on the new notes will accrue from the last interest payment date on
which interest was paid on the old notes surrendered in exchange for them or, if
no interest has been paid on the old notes, from December 15, 1998. The new
notes will bear interest at a rate of 8 7/8% per year. Interest on the new notes
will be payable on June 1 and December 1 of each year, beginning ,
1999.
PROCEDURES FOR TENDERING
Each holder of old notes wishing to accept the exchange offer must (i)
complete, sign and date the letter of transmittal, or a facsimile of it, (ii)
have the signatures on it guaranteed if required by the letter of transmittal,
and (iii) mail or otherwise deliver the letter of transmittal or the facsimile,
together with the old notes and any other required documents, to the exchange
agent prior to 5:00 p.m., New York City time, on the expiration date of the
exchange offer (unless such tender is being effected pursuant to the procedure
for book-entry transfer described below).
Any financial institution that is a participant in the book-entry transfer
facility system of The Depository Trust Company (the "DTC") may make book-entry
delivery of the old notes by causing DTC to transfer such old notes into the
exchange agent's account and to deliver an agent's message (as described below)
on or prior to the expiration date of the exchange offer in accordance with
DTC's procedures for such transfer and delivery. If delivery of old notes is
made through book-entry transfer into the exchange agent's account at DTC and an
agent's message is not delivered, the letter of transmittal (or facsimile of
it), with any required signature guarantees and any other required documents
must be transmitted to and received or confirmed by the exchange agent at its
addresses set forth under "--Exchange Agent" prior to 5:00 p.m., New York City
time, on the expiration date of the exchange offer. DELIVERY OF DOCUMENTS TO DTC
IN ACCORDANCE WITH ITS PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE
AGENT.
21
<PAGE>
The term "agent's message" means a message that states that DTC has received
an express acknowledgment from the tendering DTC participant that such DTC
participant has received and agrees to be bound by, and makes the
representations and warranties contained in, the letter of transmittal and that
we may enforce the letter of transmittal against such DTC participant. The
agent's message is transmitted by DTC to, and received by, the exchange agent
and forms a part of the confirmation of the book-entry tender of old notes into
the exchange agent's account at DTC.
The tender (as set forth above) by a holder of old notes will constitute an
agreement between such holder and us in accordance with the terms and subject to
the conditions set forth in this prospectus and in the letter of transmittal.
Delivery of all documents must be made to the exchange agent at its address
set forth in this prospectus under "--Exchange Agent." Holders may also request
that their respective brokers, dealers, commercial banks, trust companies or
nominees effect such tender for the holders.
The method of delivery of old notes, the letter of transmittal and all other
required documents to the exchange agent is at the election and risk of the
holders. Instead of delivery by mail, we recommend that holders use an overnight
or hand delivery service. In all cases, you should allow enough time to assure
timely delivery. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO US.
Only a holder of old notes may tender such old notes in the exchange offer.
The term "holder" with respect to the exchange offer means any person in whose
name old notes are registered on the register maintained by the trustee or any
other person who has obtained a properly completed bond power from the
registered holder, or any person whose old notes are held of record by DTC who
desires to deliver such old notes by book-entry transfer at DTC.
Any beneficial holder whose old notes are registered in the name of his
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct such
registered holder to tender on his behalf. If the beneficial holder wishes to
tender on his own behalf, he must, prior to completing and executing the letter
of transmittal and delivering his old notes, obtain a properly completed bond
power from the registered holder. The transfer of record ownership may take
considerable time.
Signatures on a letter of transmittal or a notice of withdrawal must be
guaranteed by:
- a member firm of a registered national securities exchange or of the
National Association of Securities Dealers, Inc.;
- a commercial bank or trust company having an office or correspondent in
the United States; or
- an "eligible guarantor institution" within the meaning of Rule 17Ad-15
under the Exchange Act,
unless the old notes tendered pursuant to the letter of transmittal are
tendered:
- by a registered holder who has not completed the box entitled "Special
Issuance Instructions" or "Special Delivery Instructions" on the letter of
transmittal; or
- for the account of an eligible guarantor institution.
If the letter of transmittal is signed by a person other than the registered
holder of any old notes listed in it, such old notes must be endorsed or
accompanied by appropriate bond powers that authorize such person to tender the
old notes on behalf of the registered holder, and, in either case, signed as the
name of the registered holder or holders appears on the old notes.
If the letter of transmittal or any old notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting as fiduciaries or
22
<PAGE>
representatives, such persons should so indicate when signing, and, unless we
waive the requirement, must submit with the letter of transmittal evidence
satisfactory to us of their authority to so act.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of the tendered old notes will be determined
by us in our sole discretion. Our determination will be final and binding. We
reserve the absolute right to reject any and all old notes not properly tendered
or any old notes that, in the opinion of our counsel, it would be unlawful for
us to accept. We also reserve the absolute right to waive any irregularities or
conditions of tender as to particular old notes. Our interpretation of the terms
and conditions of the exchange offer (including the instructions in the letter
of transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of old notes must be cured
within such time as we shall determine. Neither we, the exchange agent nor any
other person is under any duty to give notification of defects or irregularities
with respect to tenders of old notes. Also, neither we, the exchange agent nor
any other person has any liability for failure to give such notification.
Tenders of old notes will not be deemed to have been made until any
irregularities have been cured or waived. Any old notes received by the exchange
agent that are not properly tendered, and as to which the defects or
irregularities have not been cured or waived, will be returned without cost by
the exchange agent to the tendering holder of such old notes unless otherwise
provided in the letter of transmittal as soon as practicable following the
expiration date of the exchange offer.
In addition, we reserve the right in our sole discretion to:
- purchase or make offers for any old notes that remain outstanding after
the expiration date of the exchange offer, or (as set forth under
"--Certain Conditions to the Exchange Offer") to terminate the exchange
offer; and
- to the extent permitted by applicable law, purchase old notes in the open
market, in privately negotiated transactions or other ways.
The terms of any of these purchases or offers may differ from the terms of the
exchange offer.
By tendering, you will represent to us that, among other things:
- the new notes acquired pursuant to the exchange offer in exchange for your
old notes are being obtained in the ordinary course of your business;
- you do not have an arrangement or understanding with any person to
participate in the distribution of the new notes; and
- you are not an "affiliate" of Armco within the meaning of Rule 405 under
the Securities Act.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all of the conditions to the exchange offer,
we will accept, promptly after the expiration date of the exchange offer, all
old notes properly tendered and will issue the new notes promptly after
acceptance of the old notes. See "--Certain Conditions to the Exchange Offer."
For each old note that we accept for exchange, the holder of such old note will
receive a new note having a principal amount equal to that of the surrendered
old note.
For purposes of the exchange offer, we will be deemed to have accepted
properly tendered old notes for exchange when, as and if we give oral or written
notice to that effect to the exchange agent, with written confirmation of any
oral notice to be given promptly afterwards.
In all cases, we will issue new notes for old notes that we accept for
exchange pursuant to the exchange offer only after timely receipt by the
exchange agent of:
- certificates for such old notes,
23
<PAGE>
- a properly completed and duly executed letter of transmittal, and
- all other required documents or a timely book-entry confirmation of such
old notes into the exchange agent's account at DTC.
If we do not accept any tendered old notes for any reason set forth in the terms
and conditions of the exchange offer or if old notes are submitted for a greater
principal amount than the holder desired to exchange, we will return these
unaccepted or non-exchanged old notes without expense to the tendering holder
(or, in the case of old notes tendered by book-entry transfer into the exchange
agent's account at DTC pursuant to the book-entry procedures described below,
such non-exchanged old notes will be credited to an account maintained with such
book-entry transfer facility) as promptly as practicable after the expiration
date of the exchange offer.
BOOK-ENTRY TRANSFER
The exchange agent will make a request to establish an account with respect
to the old notes at DTC for purposes of the exchange offer within two business
days after the date of this prospectus, and any financial institution that is a
participant in DTC's systems may make book-entry delivery of old notes by
causing DTC to transfer such old notes into the exchange agent's account at DTC
in accordance with DTC's procedures for transfer. Although delivery of old notes
may be effected through book-entry transfer at DTC, either:
- the letter of transmittal (or a facsimile of it or an agent's message in
lieu of it), with any required signature guarantees and any other required
documents, must always be transmitted to and received by the exchange
agent at one of the addresses set forth below under "--Exchange Agent" on
or prior to the expiration date of the exchange offer, or
- the guaranteed delivery procedures described below must be complied with.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their old notes and who cannot deliver their old
notes, the letter of transmittal, or any other required documents to the
exchange agent prior to the expiration date of the exchange offer, or holders
who cannot complete the procedure for book-entry transfer on a timely basis, may
effect a tender if:
- the tender is made through an eligible guarantor institution;
- prior to the expiration date of the exchange offer, the exchange agent
receives from the eligible guarantor institution a properly completed and
duly executed notice of guaranteed delivery (by facsimile transmission,
mail or hand delivery):
(i) setting forth the name and address of the holder of the old notes, the
certificate number or numbers of such old notes and the principal amount
of old notes tendered,
(ii) stating that the tender is being made, and
(iii) guaranteeing that, within three business days after the expiration
date of the exchange offer, the letter of transmittal (or facsimile of
it), together with the certificate(s) representing the old notes to be
tendered in proper form for transfer and any other documents required by
the letter of transmittal, will be deposited by the eligible guarantor
institution with the exchange agent; and
- the properly completed and executed letter of transmittal (or facsimile of
it), together with the certificate(s) representing all tendered old notes
in proper form for transfer (or confirmation of a book-entry transfer into
the exchange agent's account at DTC of old notes delivered
24
<PAGE>
electronically) and all other documents required by the letter of
transmittal are received by the exchange agent within three business days
after the expiration date of the exchange offer.
Upon request to the exchange agent, a notice of guaranteed delivery will be
sent to holders who wish to tender their old notes according to the guaranteed
delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, tenders of old notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the expiration
date of the exchange offer.
To withdraw a tender of old notes in the exchange offer, the exchange agent
must receive a facsimile transmission or letter notice of withdrawal at its
address set forth in this prospectus prior to 5:00 p.m., New York City time, on
the expiration date of the exchange offer. A notice of withdrawal must:
- specify the name of the person having deposited the old notes to be
withdrawn (the "depositor");
- include a statement that the depositor is withdrawing its election to have
old notes exchanged and identify the old notes to be withdrawn (including
the certificate number or numbers and principal amount of such old notes);
- be signed by the depositor in the same manner as the original signature on
the letter of transmittal by which such old notes were tendered (including
any required signature guarantees) or be accompanied by documents of
transfer that will permit the trustee with respect to the old notes to
register the transfer of such old notes into the name of the depositor
withdrawing the tender; and
- specify the name in which any such old notes are to be registered, if
different from that of the depositor.
If old notes have been tendered pursuant to the procedures for book-entry
transfer set forth in "--Procedures for Tendering" and "--Book-Entry Transfer,"
the notice of withdrawal must specify the name and number of the account at DTC
to be credited with the withdrawal of old notes, in which case a notice of
withdrawal will be effective if delivered to the exchange agent by written,
telegraphic, telex or facsimile transmission.
All questions as to the validity, form and eligibility (including time of
receipt) for such withdrawal notices will be determined by us, and our
determination will be final and binding on all parties. Any old notes withdrawn
will be deemed not to have been validly tendered for purposes of the exchange
offer and no new notes will be issued with respect to them unless the old notes
that have been withdrawn are validly re-tendered. Properly withdrawn old notes
may be re-tendered by following one of the procedures described above under
"--Procedures for Tendering" at any time prior to the expiration date of the
exchange offer.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
The exchange offer is not subject to any conditions, other than that:
- the exchange offer does not violate any applicable law or interpretation
of the staff of the Commission; and
- there is no injunction, order or decree issued by any court or any
governmental agency that would prohibit, prevent or otherwise materially
impair our ability to proceed with the exchange offer.
25
<PAGE>
We cannot assure you that any such condition will not occur. Holders of old
notes will have certain rights against us under the registration agreement if we
fail to consummate the exchange offer. If we determine that we may terminate the
exchange offer, as set forth above, we may:
- refuse to accept any old notes and return any old notes that have been
tendered to their holders;
- extend the exchange offer and retain all old notes tendered before the
expiration date of the exchange offer, subject to the rights of such
holders of tendered old notes to withdraw their tendered old notes; or
- waive such termination event with respect to the exchange offer and accept
all properly tendered old notes that have not been withdrawn.
If a waiver constitutes a material change in the exchange offer, we will
disclose the change by means of a supplement to this prospectus that will be
distributed to each registered holder of old notes, and we will extend the
exchange offer for a period of five to ten business days, depending upon the
significance of the waiver and the manner of disclosure to the registered
holders of the old notes, if the exchange offer would otherwise expire during
such period.
EXCHANGE AGENT
Star Bank, N.A., the trustee under the indenture, has been appointed as
exchange agent for the exchange offer. Questions and requests for assistance and
inquiries for additional copies of this prospectus or of the letter of
transmittal should be directed to the exchange agent addressed as follows:
<TABLE>
<CAPTION>
BY MAIL: BY HAND OR OVERNIGHT DELIVERY:
<S> <C>
Corporate Trust Corporate Trust
425 Walnut Street 425 Walnut Street
Mail Location 5155 6th Floor
Cincinnati, Ohio 45202 Cincinnati, Ohio 45202
Attention: Robert Jones Attention: Robert Jones
(IF BY MAIL, REGISTERED OR CERTIFIED MAIL RECOMMENDED)
FACSIMILE TRANSMISSION NUMBER:
(FOR ELIGIBLE INSTITUTIONS ONLY)
(513) 632-5511
CONFIRM BY TELEPHONE:
(513) 632-4427
</TABLE>
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF SUCH LETTER OF TRANSMITTAL.
FEES AND EXPENSES
We will not make any payments to brokers, dealers or others soliciting
acceptances of the exchange offer.
We will pay the cash expenses to be incurred in connection with soliciting
tenders pursuant to the exchange offer. These expenses include fees and expenses
of the exchange agent and the trustee, accounting and legal fees and printing
costs, among others.
26
<PAGE>
TRANSFER TAXES
Holders who tender their old notes for exchange will not be obligated to pay
any transfer taxes in connection with the tender, except that holders who
instruct us to register new notes in the name of, or request that old notes not
tendered or not accepted in the exchange offer be returned to, a person other
than the registered tendering holder, will be responsible for the payment of any
applicable transfer tax.
ACCOUNTING TREATMENT
The new notes will be recorded at the same carrying value as the old notes
on the date of the exchange. Accordingly, we will not recognize any gain or loss
for accounting purposes. The expenses of the exchange offer and the unamortized
expenses relating to the issuance of the old notes will be amortized over the
term of the new notes.
27
<PAGE>
DESCRIPTION OF THE NEW NOTES
We will issue the new notes under an indenture, dated as of November 1,
1993, between Armco and Star Bank, N.A., as supplemented by a supplemental
indenture dated as of December 15, 1998. The terms of the new notes include
those stated in the indenture and those made part of the indenture by reference
to the Trust Indenture Act of 1939.
The following description is a summary of the material provisions of the
indenture. It does not restate the indenture in its entirety. We urge you to
read the indenture because it, and not this description, defines your rights as
holders. We have filed a copy of the indenture as an exhibit to the registration
statement of which this prospectus is a part.
You can find the definitions of certain capitalized terms used in this
description under the subheading "Certain Definitions." Capitalized terms not
defined there have the meanings ascribed to them in the indenture. Words that
are not capitalized have their ordinary meaning. In this description, "notes"
means the outstanding old notes and the new notes we will issue to you in the
exchange offer. References to a "holder" or "holders" mean you, or all holders
of the notes.
PRINCIPAL, MATURITY AND INTEREST
The notes will mature on December 1, 2008 and bear interest at an annual
rate of 8 7/8%. Interest on the notes accrues from December 15, 1998 and is
payable in arrears on June 1 and December 1 of each year, commencing June 1,
1999, to the holders of registered notes at the close of business on May 15 or
November 15, as the case may be, immediately preceding the relevant interest
payment date. The notes are limited to an aggregate principal amount of
$125,000,000, of which $75,000,000 has been issued. Issuance of the remaining
notes is at Armco's discretion and will be subject to the limitations set forth
under "--Certain Covenants--Limitations on Indebtedness." Except for the
registration provisions of the old notes, all notes will have identical terms,
will be fungible and will constitute one series of debt securities.
Interest on the notes is computed on the basis of a 360-day year of twelve
months. Principal and interest on the notes is payable at the office of the
paying agent, but, at the option of Armco, interest may be paid by check mailed
to the registered holders at their registered address. The notes may be
presented for transfer or exchange at such office without any service charge,
but Armco may require a sum sufficient to cover any tax or other governmental
charges payable in connection with a transfer or exchange. Armco is not required
to exchange or register the transfer of any notes (i) for a period of fifteen
days next preceding any selection of notes to be redeemed or (ii) selected,
called or being called for redemption.
SUBORDINATION
The notes are unsecured obligations of Armco and rank equally in right of
payment with all other unsecured senior debt of Armco. The notes rank senior in
right of payment to any subordinated debt of Armco. The notes are not secured by
any assets and, therefore, are effectively junior to secured debt of Armco, to
the extent of the assets securing the debt, and to debt of subsidiaries of
Armco, to the extent of the assets of such subsidiaries. At September 30, 1998,
Armco had total consolidated debt obligations of $309.9 million, of which $15.8
million was secured by assets of Armco. In addition, the borrowings under
Armco's $170.0 million Credit Facilities are secured by certain of Armco's
inventory and receivables. The indenture does not limit the aggregate amount of
debt securities that may be issued under its terms. The indenture provides that
debt securities may be issued from time to time in one or more series.
28
<PAGE>
OPTIONAL REDEMPTION
On or after December 1, 2003, the notes will be redeemable in whole or in
part, at Armco's option, at the following redemption prices (expressed in
percentages of the principal amount), plus accrued and unpaid interest on the
notes, to the redemption date.
<TABLE>
<CAPTION>
REDEMPTION PERIOD PERCENTAGE
- ------------------------------------------------------------- -----------
<S> <C>
December 1, 2003 to November 30, 2004 104.438%
December 1, 2004 to November 30, 2005 102.958%
December 1, 2005 to November 30, 2006 101.479%
December 1, 2006 and thereafter 100.000%
</TABLE>
Notwithstanding the foregoing, at any time prior to December 1, 2001 Armco,
at its option, may redeem up to 33 1/3% of the aggregate principal amount of
notes originally issued with the net proceeds of one or more Equity Offerings at
a redemption price equal to 108 7/8% of their principal amount, plus accrued and
unpaid interest, if any, to the date of redemption so long as after any such
redemption at least 66 2/3% of the aggregate principal amount of the original
issue of the notes remains outstanding. Any such redemption must occur on or
prior to 120 days after the receipt of such net proceeds.
If less than all of the notes are to be redeemed, the selection of the notes
to be redeemed will be made as provided in the indenture. Notice of redemption
will be given at least 30 but not more than 60 days before the redemption date.
In addition, if there is a Change of Control prior to December 1, 2003,
Armco, at its option, may redeem all (but not less than all) of the outstanding
notes at a redemption price equal to 100% of the principal amount thereof plus
the applicable Make-Whole Premium. Armco will give not less than 30 nor more
than 60 days' prior notice to holders of such redemption within 30 days
following the Change of Control.
CHANGE OF CONTROL
If a Change of Control occurs, each holder will have the right to require
Armco to repurchase all or a part of that holder's notes, in whole or in part,
pursuant to the Change of Control offer described in the next paragraph. The
Repurchase Price will be an amount in cash equal to 101% of the aggregate
principal amount of the repurchased notes plus accrued and unpaid interest, if
any, to the Change of Control payment date.
Within 30 days following the date of the Change of Control, we will mail a
notice to each holder describing the terms of the Change of Control offer. This
notice will state the purchase date, which must be a business day no earlier
than 30 days nor later than 60 days from the date notice is mailed, unless
otherwise required by applicable law.
If a Change of Control offer is made, we cannot assure you that we will have
sufficient funds to pay the purchase price for all the notes that might be
delivered by holders seeking to accept the Change of Control offer. If we are
required to purchase outstanding notes pursuant to a Change of Control offer, we
expect that we would seek third party financing if we do not have available
funds to meet our purchase obligations. However we cannot assure you that we
would be able to obtain such financing. Neither Armco's Board of Directors nor
the trustee may waive the covenant relating to a holder's right to redemption
upon a Change of Control.
The definition of Change of Control includes a phrase relating to the sale,
lease, exchange or other transfer of "all or substantially all" of Armco's
assets. There is a limited body of case law interpreting the phrase "all or
substantially all," and therefore there is no precise established definition of
the phrase under applicable law. Accordingly, it may be unclear whether a Change
of Control has occurred and whether the notes are subject to a Change of Control
offer. We will comply with the
29
<PAGE>
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations under the Exchange Act to the extent such laws and regulations
are applicable in connection with the repurchase of the notes as a result of a
Change of Control.
TAKEOVERS AND LEVERAGED TRANSACTIONS
Restrictive covenants in the indenture may make it more difficult or
discourage a takeover of Armco. To complete such transactions, redemption or
repurchase of the Notes may be required. We cannot assure you that we or the
acquiring party will have sufficient financial resources to effect such
redemption or repurchase. Moreover, although restrictions in the indenture with
respect to transactions with Affiliates may make a leveraged buyout of Armco or
any of our subsidiaries by Armco's management more difficult, the indenture may
not afford holders protection from the adverse aspects of a highly leveraged
transaction, reorganization, restructuring, merger or similar transaction.
CROSS-DEFAULT PROVISIONS
Some of Armco's other debt agreements provide that certain Change of Control
events constitute a default under those agreements. If a Change of Control
occurs at a time when we are prohibited from purchasing notes, we could seek the
consent of our lenders to the purchase of notes or could attempt to repay the
borrowings that contain such prohibition. If we do not obtain such a consent or
repay such borrowings, we will remain prohibited from purchasing our notes. In
such case, our failure to purchase tendered notes would constitute an Event of
Default under the indenture that would, in turn, constitute a default under our
other debt agreements.
SINKING FUND
There will be no mandatory sinking fund payments for the notes.
CERTAIN COVENANTS
The indenture contains covenants that limit the ability of Armco and its
Restricted Subsidiaries to engage in a highly leveraged transaction, whether the
transaction is initiated or supported by Armco, its management or affiliates or
an unrelated third party.
TRANSACTIONS WITH AFFILIATES
Armco will not, and will not permit any of its Subsidiaries to conduct any
business or enter into any transaction or series of transactions (including, but
not limited to, the sale, transfer, disposition, purchase, exchange or lease of
assets or Property, the making of any Investment, the giving of any Guarantee,
or the rendering of any service) with or for the benefit of any Affiliate of
Armco, unless:
(i) such transaction or series of transactions is on terms no less
favorable, on the whole, to Armco or such Subsidiary than terms that could
be obtained in a comparable arm's-length transaction with an entity that is
not an Affiliate of Armco or such Subsidiary, and
(ii) with respect to a transaction or series of transactions outside the
ordinary course of business that has a Fair Market Value equal to or greater
than $5,000,000, the terms of such transaction(s) are set forth in writing
and the Board of Directors (including a majority of the disinterested
directors) approves such transaction or series of transactions and, in its
good faith judgment, believes that such transaction or series of
transactions complies with clause (i) of this paragraph, as evidenced by a
certified resolution of the Board of Directors.
The foregoing limitations do not apply to:
(i) any transaction with an officer or director of Armco or any
Subsidiary entered into in the ordinary course of business consistent with
past practice (including compensation or employee
30
<PAGE>
benefit arrangements with any officer or director of Armco or any
Subsidiary) and the cash-out of supplemental pension benefits, or
(ii) transactions between Armco and its Restricted Subsidiaries or among
such Restricted Subsidiaries.
LIMITATION ON RESTRICTED PAYMENTS
Armco will not, and will not permit any of its Restricted Subsidiaries to
make any Restricted Payment if, at the time of and after giving effect to the
proposed Restricted Payment:
(i) any Default or Event of Default has occurred and is continuing;
(ii) Armco could not Incur at least $1.00 of additional Indebtedness
pursuant to the first paragraph under "--Limitation on Indebtedness" below;
or
(iii) the aggregate amount of Restricted Payments from September 12, 1997
exceeds the sum of;
(A) 50% of the aggregate Consolidated Net Income of Armco and its
Restricted Subsidiaries (or, if Consolidated Net Income is a deficit,
minus 100% of such deficit) after June 30, 1997 and ending on the last
day of the fiscal quarter immediately preceding the date of the
Restricted Payment, plus
(B) 100% of the total net proceeds, including cash and the Fair
Market Value of Property other than cash, received by Armco after
September 12, 1997, from capital contributions from its stockholders or
from the issuance or sale (other than to a Subsidiary) of Qualified
Capital Stock of Armco or of any convertible securities or debt
obligations that have been converted into, exchanged for or satisfied by
the issuance of Qualified Capital Stock, plus
(C) the amount of the net reduction in Investments made as
Restricted Payments in accordance with this sentence in Unrestricted
Subsidiaries resulting from (1) the payment of cash dividends or the
repayment in cash of the principal of loans or the cash return on any
Investment, in each case to the extent received by Armco or any wholly
owned Restricted Subsidiary of Armco from Unrestricted Subsidiaries, (2)
to the extent that any Investment in an Unrestricted Subsidiary that was
made after September 12, 1997 is sold for cash or otherwise liquidated or
repaid for cash, the after-tax cash return of capital with respect to
such Investment (less the cost of disposition, if any) or (3) the
redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries.
The aggregate amount of the net reduction in such Investments will
not exceed, in the case of any Unrestricted Subsidiary, the amount of
such Investments made as Restricted Payments previously made by Armco or
any Restricted Subsidiary in such Unrestricted Subsidiary, which amount
was included in the calculation of the amount of Restricted Payments.
The foregoing limitations do not prevent Armco or its Restricted
Subsidiaries from:
(i) paying a dividend on its Capital Stock within 60 days after it is
declared if, on the declaration date, Armco could have paid such dividend in
compliance with the indenture;
(ii) repurchasing shares of its Capital Stock (A) solely in exchange for
other shares of its Capital Stock (other than Redeemable Stock), (B) to
eliminate fractional shares or odd lots for up to a total of $2,000,000 in
any fiscal year of Armco, (C) pursuant to an order of a court of competent
jurisdiction, or (D) in connection with repurchase provisions under employee
stock
31
<PAGE>
option and stock purchase agreements or other agreements to compensate
management employees of Armco;
(iii) making cash payments in respect of stock appreciation rights
granted to Armco employees;
(iv) the purchase for value of shares of Armco's Capital Stock (A) held
by directors, officers or employees upon death, disability, retirement, or
termination of employment or (B) to fund capital stock-based, long-term
incentive programs that do not exceed a total of $10,000,000;
(v) Restricted Payments for the redemption, repurchase or other
acquisition of shares of Armco's Capital Stock in satisfaction of
indemnification or other claims arising under any merger, consolidation,
asset purchase or investment or similar acquisition agreement permitted
under the indenture, pursuant to which such shares of Capital Stock were
issued;
(vi) making payments to purchase or redeem Indebtedness made by exchange
for, or out of the proceeds of, the substantially concurrent (A) sale or
issuance of Armco's Capital Stock (other than Redeemable Stock) or (B)
incurrence of Indebtedness of Armco that is contractually subordinated in
right of payment to the notes and has a Stated Maturity later than the
Stated Maturity of the notes and an Average Life greater than the remaining
Average Life of any of the notes;
(vii) declaring and paying dividends on the Armco Preferred Stock
outstanding on September 12, 1997;
(viii) making Investments in Affiliates up to an aggregate of $15,000,000;
(ix) making an Investment in an Affiliate as a result of which such
Affiliate becomes a Restricted Subsidiary in compliance with "--Restricted
and Unrestricted Subsidiaries";
(x) making an Investment by contributing or otherwise transferring to
any Person or Persons all or any part of the Non-Core Businesses enumerated
in clauses (i) through (v) of the definition of "Non-Core Businesses"; and
(xi) making other Restricted Payments not to exceed $25,000,000 in total
(after giving effect to the amount of the net reduction in any Investments
made as Restricted Payments in reliance on this clause (xi) resulting from
(A) the payment of cash dividends or the repayment in cash of the principal
of loans or the cash return on any such Investment, in each case to the
extent received by Armco or any wholly owned Restricted Subsidiary from
Unrestricted Subsidiaries, (B) to the extent that any such Investment in an
Unrestricted Subsidiary is sold for cash or otherwise liquidated or repaid
for cash, the after-tax cash return of capital with respect to such
Investment (less the cost of disposition, if any) or (C) the redesignation
of Unrestricted Subsidiaries as Restricted Subsidiaries).
The payments permitted to be made pursuant to clauses (ii)(A), (iii) (but
only to the extent any such payments are included in determining Consolidated
Net Income), (vi), (ix) and (x) of the preceding paragraph are excluded for
purposes of calculations pursuant to the first paragraph of this covenant of the
aggregate amount of Restricted Payments outstanding. The payments permitted to
be made pursuant to clauses (i), (ii)(B), (ii)(C), (ii)(D), (iii) (but only to
the extent that any such payments are not included in determining Consolidated
Net Income), (iv), (v), (vii), (viii) and (xi) of the preceding paragraph will
be included for purposes of calculations pursuant to the first paragraph of this
covenant of the aggregate amount of Restricted Payments outstanding.
LIMITATION ON INDEBTEDNESS
Armco will not Incur any Indebtedness unless, immediately after the date of
the transaction giving rise to such Indebtedness and after giving effect to the
Incurrence of such Indebtedness and the receipt and application of the proceeds
of such Indebtedness as if such Indebtedness had been Incurred and
32
<PAGE>
the proceeds applied on the first day of the Determination Period, the
Consolidated Interest Coverage Ratio of Armco at such date exceeds the ratio of
2.0 to 1.0.
Notwithstanding the foregoing, Armco may Incur the following Indebtedness:
(i) Indebtedness Incurred by Armco or by Armco Funding Corporation under
the Credit Facilities, so long as the aggregate principal amount of all
Indebtedness Incurred under this clause (i) at any one time outstanding does
not exceed the greater of (A) $225,000,000 and (B) the sum of (1) 80% of the
book value of the accounts receivable of Armco and its Restricted
Subsidiaries and (2) 50% of the book value of the inventory of Armco and its
Restricted Subsidiaries, in the case of clauses (B)(1) and (B)(2) as of the
end of the most recent fiscal quarter for which financial information in
respect thereof is available immediately prior to the date of such
Incurrence, determined in accordance with GAAP;
(ii) Indebtedness evidenced by the notes;
(iii) (A) Indebtedness of Armco in respect of Capital Lease Obligations
or (B) Capital Expenditure Indebtedness directly Incurred by Armco, so long
as the aggregate principal amount of all Indebtedness Incurred under clauses
(iii)(A) and (B) of this paragraph and the Indebtedness Incurred under
clause (iv) under "--Limitation on Restricted Subsidiary Indebtedness and
Preferred Stock" does not exceed $100,000,000 at any one time outstanding;
(iv) Indebtedness under Interest Rate Protection Agreements, so long as
the obligations under these agreements are related to payment obligations on
Indebtedness otherwise permitted by the terms of this covenant;
(v) Indebtedness of Armco to any wholly owned Restricted Subsidiary (but
only so long as such Indebtedness is held by such wholly owned Restricted
Subsidiary);
(vi) Indebtedness outstanding on September 12, 1997;
(vii) Permitted Refinancing Indebtedness;
(viii) surety obligations of Armco and its Restricted Subsidiaries entered
into in the ordinary course of business;
(ix) Indebtedness of Armco and its Restricted Subsidiaries Incurred to
finance the purchase of insurance in the ordinary course of business;
(x) Indebtedness of Armco and its Restricted Subsidiaries Incurred from
the honoring by a bank or other financial institution of a check or draft
inadvertently drawn against insufficient funds in the ordinary course of
business, so long as such Indebtedness is extinguished within two business
days of notice of any such Incurrence; and
(xi) Indebtedness not otherwise permitted to be Incurred under clauses
(i) through (x) of this paragraph, that, together with any other outstanding
Indebtedness Incurred under this clause (xi) of this paragraph, has an
aggregate principal amount that does not exceed $40,000,000 at any one time
outstanding.
Any Indebtedness Incurred pursuant to the previous paragraph will be
included, to the extent outstanding at the Transaction Date, in the
determination of the Consolidated Interest Coverage Ratio.
LIMITATION ON RESTRICTED SUBSIDIARY INDEBTEDNESS AND PREFERRED STOCK
Armco will not permit any of its Restricted Subsidiaries to Incur any
Indebtedness or Preferred Stock, except:
33
<PAGE>
(i) (A) Indebtedness or Preferred Stock outstanding on September 12,
1997 or (B) Indebtedness Incurred under the Credit Facilities to the extent
permitted by clause (i) of the second paragraph under "--Limitation on
Indebtedness";
(ii) Indebtedness or Preferred Stock issued to and held by Armco or a
wholly owned Restricted Subsidiary (but only so long as such Indebtedness or
Preferred Stock is held or owned by Armco or a wholly owned Restricted
Subsidiary);
(iii) (A) Indebtedness of a Restricted Subsidiary in respect of Capital
Lease Obligations or (B) Capital Expenditure Indebtedness directly Incurred
by a Restricted Subsidiary, so long as after giving effect to such
Indebtedness the Company could Incur at least $1.00 of additional
Indebtedness pursuant to the first paragraph under "--Limitation on
Indebtedness";
(iv) (A) Indebtedness of a Restricted Subsidiary in respect of Capital
Lease Obligations or (B) Capital Expenditure Indebtedness directly Incurred
by a Restricted Subsidiary, so long as the aggregate principal amount of all
Indebtedness Incurred under clauses (iv)(A) and (iv)(B) of this paragraph
and the Indebtedness Incurred under clause (iii) of the second paragraph
under "--Limitation on Indebtedness" does not exceed $100,000,000 at any one
time outstanding; and
(v) Indebtedness or Preferred Stock Incurred in exchange for, or the
proceeds of which are used to Refinance, Indebtedness or Preferred Stock of
equal or higher ranking referred to in clauses (i) through (iv) of this
paragraph, so long as (A) the principal amount of the Indebtedness or the
liquidation value of the Preferred Stock Incurred does not exceed the
principal amount or liquidation value of the Indebtedness or Preferred Stock
exchanged or Refinanced and (B) the Indebtedness or Preferred Stock Incurred
has a Stated Maturity or final redemption date later than the Stated
Maturity or final redemption date of, and an Average Life that is longer
than that of, the Indebtedness or Preferred Stock being exchanged or
Refinanced.
Any Indebtedness or Preferred Stock Incurred pursuant to clauses (i) through
(v) of the preceding paragraph will be included, to the extent outstanding at
the Transaction Date, in any subsequent determination of the Consolidated
Interest Coverage Ratio.
LIMITATION ON SALE AND LEASEBACK TRANSACTIONS
Armco will not, and will not permit any of its Restricted Subsidiaries to,
enter into, assume, Guarantee or otherwise become liable with respect to any
Sale and Leaseback Transaction, except for a Sale and Leaseback Transaction not
exceeding 360 days unless:
(i) Armco or the Restricted Subsidiary is permitted to Incur such
Indebtedness under the provisions of "--Limitation on Indebtedness" or
"--Limitation on Restricted Subsidiary Indebtedness and Preferred Stock"
above;
(ii) Armco or the Restricted Subsidiary would be permitted to Incur a
Lien to secure Indebtedness or enter into a Sale and Leaseback Transaction
pursuant to the second paragraph under "--Limitation on Liens" or Incur a
Lien on Property that is the subject of such Sale and Leaseback Transaction
pursuant to clause (ii) of the first paragraph of "--Limitation on Liens"
without equally and ratably securing the notes;
(iii) Armco or the Restricted Subsidiary receives consideration at least
equal to the Fair Market Value of the Property transferred; and
(iv) if the Sale and Leaseback Transaction is entered into, or assumed
or Guaranteed by, Armco or the Restricted Subsidiary, or Armco or the
Restricted Subsidiary becomes liable with respect to the transaction, more
than 360 days after the Property subject to the Sale and Leaseback
Transaction is acquired or constructed by Armco or the Restricted
Subsidiary, Armco applies the proceeds of such Sale and Leaseback
Transaction, net of all reasonable out-of-pocket
34
<PAGE>
expenses Incurred by Armco or such Restricted Subsidiary in connection with
the transaction, which are customarily Incurred in connection with the Sale
and Leaseback Transactions of such kind, in accordance with the provisions
under "--Limitation on Asset Sales" as if such Sale and Leaseback
Transaction were an Asset Sale.
LIMITATION ON LIENS
Armco will not, and will not permit any of its Restricted Subsidiaries to,
Incur any Lien on or with respect to any Property of Armco or such Restricted
Subsidiary, or any interest in such Property or any income or profits from it,
unless the notes are secured equally and ratably with (or prior to) any and all
other Indebtedness secured by the Lien, except for:
(i) any Lien securing Indebtedness that is permitted under clause (i) of
the second paragraph under "--Limitation on Indebtedness";
(ii) any Lien (A) in respect of Capital Lease Obligations or Capital
Expenditure Indebtedness permitted to be Incurred by the terms of the first
paragraph or clause (iii) of the second paragraph under "--Limitation on
Indebtedness" or clauses (iii) or (iv) of the first paragraph under
"--Limitation on Restricted Subsidiary Indebtedness and Preferred Stock,"
(B) existing on any Property of a Person at the time such Person is merged
or consolidated with or into Armco or any Restricted Subsidiary or becomes a
Restricted Subsidiary (and not Incurred in anticipation of such transaction)
or (C) existing on any Property at the time of its acquisition (and not
Incurred in anticipation of such transaction) whether or not assumed by
Armco or any Restricted Subsidiary; so long as in any such case the Lien may
extend only to the Property acquired or constructed and improvements on it.
(and, in the case of any such Lien in respect of Capital Lease Obligations
and Capital Expenditure Indebtedness, the real property on which such
Property is located);
(iii) any Lien Incurred to secure the performance of statutory
obligations, bids, trade contracts, leases, surety or appeal bonds,
performance or return-of-money bonds or other obligations of a like nature
that is Incurred in the ordinary course of business;
(iv) any Lien to secure industrial revenue or development or pollution
control bonds;
(v) any Lien to secure any Refinancing (or successive Refinancings), in
whole or in part, of any Indebtedness secured by Liens referred to in
clauses (i) through (iv) of this paragraph so long as such Lien does not
extend to any other Property and the Indebtedness secured is not increased;
(vi) any Lien securing only the notes;
(vii) any Lien in favor of Armco or a wholly owned Restricted Subsidiary;
(viii) any Lien for taxes or assessments by other governmental charges or
levies;
(ix) any Lien to secure obligations under worker's compensation,
unemployment insurance or other social security legislation, including Liens
with respect to judgments that are not currently dischargeable;
(x) materialmen's, mechanics', worker's, warehousemen's, landlord's and
carriers' Liens or other like Liens created by law (or in a lease agreement
in the case of landlord's Liens) and arising in the ordinary course of
business;
(xi) any Lien existing on September 12, 1997;
(xii) easements, rights of way, zoning and other similar restrictions or
encumbrances Incurred in the ordinary course of business; and
(xiii) attachment, judgment and other similar Liens arising in connection
with court proceedings, provided that the execution or other enforcement of
such Liens is effectively stayed
35
<PAGE>
and the claims secured thereby are currently being contested in good faith
by appropriate proceedings.
In addition to Liens permitted by the preceeding paragraph, Armco and its
Restricted Subsidiaries may Incur a Lien to secure Indebtedness or enter into a
Sale and Leaseback Transaction, without equally and ratably securing the notes,
if the sum of (i) the amount of Indebtedness secured by all Liens entered into
after September 12, 1997 and (ii) the Attributable Value of all Sale and
Leaseback Transactions or Capital Lease Obligations in respect of such
transactions entered into after September 12, 1997 and otherwise prohibited by
the indenture does not exceed 10% of Armco's Consolidated Net Tangible Assets.
LIMITATION CONCERNING DISTRIBUTIONS OR TRANSFERS BY RESTRICTED SUBSIDIARIES
Armco will not, and will not permit any Restricted Subsidiary to create or
otherwise cause or permit to exist any encumbrance or restriction (other than
pursuant to law or regulation) on the ability of any Restricted Subsidiary to:
(i) pay dividends or make any other distributions in respect of its
Capital Stock or pay any Indebtedness or other obligation owed to Armco or
any other Restricted Subsidiary;
(ii) make loans or advances to Armco or any Restricted Subsidiary; or
(iii) transfer any of its Property to Armco or any other Restricted
Subsidiary,
except for any encumbrance or restrictions pursuant to any agreement in
effect on September 12, 1997 or any Refinancing thereof containing encumbrances
or restrictions no greater than in the agreement so Refinanced.
LIMITATION ON ASSET SALES
Armco will not, and will not permit any Restricted Subsidiary to consummate
any Asset Sale unless:
(i) Armco or the Restricted Subsidiary, as the case may be, receives
consideration at least equal to the Fair Market Value of the Property
disposed of and
(ii) at least 75% of the consideration received by Armco or such
Restricted Subsidiary for such Property (other than Non-Core Businesses
enumerated in clauses (i) through (v) of the definition of "Non-Core
Businesses") is in the form of (A) cash, (B) cash equivalents, (C) readily
marketable securities, (D) non-cash consideration that is immediately
converted to cash, or (E) the assumption by the purchaser of such Property
of Senior Indebtedness (so long as such Senior Indebtedness was not Incurred
in connection with or in anticipation of such Asset Sale) so long as Armco,
at its option, either;
(A) (1) commits, or causes such Restricted Subsidiary to commit (such
commitments to include amounts anticipated to be expended pursuant to
Armco's capital investment plan (x) as adopted by the Board of Directors and
(y) evidenced by the filing of an officer's certificate with the trustee
stating that the total amount of the Net Cash Proceeds of such Asset Sale is
less than the aggregate amount contemplated to be expended pursuant to such
capital investment plan within 24 months of the consummation of such Asset
Sale) within 270 days of the consummation of such Asset Sale, to apply the
Net Cash Proceeds of such Asset Sale to reinvest in Additional Core Assets
or, if the applicable Asset Sale was a sale of a Non-Core Business, in
Additional Assets and (2) applies, or causes such Restricted Subsidiary to
apply, pursuant to such commitment (which includes amounts actually expended
under the capital investment plan authorized by the Board of Directors), the
Net Cash Proceeds of the Asset Sale within 24 months of the consummation of
the Asset Sale; however, if any commitment under this clause (A) is
terminated
36
<PAGE>
or rescinded after the 225th day after the consummation of such Asset Sale,
Armco or such Restricted Subsidiary, as the case may be, will have 45 days
after the termination or rescission to (a) apply the Net Cash Proceeds
pursuant to clause (B) or (C) below, or (b) commit, or cause such Restricted
Subsidiary to commit, to apply the Net Cash Proceeds of such Asset Sale to
reinvest in Additional Core Assets or in Additional Assets, as the case may
be; and/or
(B) offers to apply an amount equal to the Net Cash Proceeds (or
remaining Net Cash Proceeds) to the repayment of any Senior Indebtedness, or
(to the extent of Net Cash Proceeds received from an Asset Sale by the
Restricted Subsidiary) debt of a Restricted Subsidiary, and repay the
Indebtedness of any lender or debt holder who accepts the offer or, in the
case of any Indebtedness under a revolving credit facility, repay an amount
outstanding under the facility equal to the Net Cash Proceeds and
concurrently therewith, makes a permanent reduction in the committed
availability under the facility; and/or
(C) offers to apply an amount equal to the Net Cash Proceeds (or
remaining Net Cash Proceeds) to the repayment of the notes and repurchases
any notes properly tendered in acceptance of this prepayment offer (the
"Prepayment Offer") on a pro rata basis at a purchase price at least equal
to 100% of their principal amount plus interest accrued to the date of
repurchase.
If the Net Cash Proceeds resulting from any Asset Sale, after giving effect
to the purchase of Additional Core Assets or Additional Assets, as the case may
be, and/or the repayment of Senior Indebtedness, are less than $10,000,000, then
the application of an amount equal to such Net Cash Proceeds to a pro rata offer
to repurchase the notes may be deferred until the Net Cash Proceeds, together
with Net Cash Proceeds from any other Asset Sales not applied in accordance with
this paragraph, are at least equal to $10,000,000. To the extent that any
portion of the amount of Net Cash Proceeds remains after Armco has complied with
the preceding sentence and so long as all holders have been given the
opportunity to tender their notes for repurchase as provided in clause (C)
above, Armco or the Restricted Subsidiary may use these remaining amount for
general corporate purposes.
Within 280 days from the date of an Asset Sale, Armco will, if it chooses
(or is obligated) to apply an amount equal to any remaining Net Cash Proceeds
(or any portion) to fund an offer to repurchase the notes, send a written
Prepayment Offer Notice to the holders of the notes, along with such information
about Armco and its Subsidiaries as Armco in good faith believes will enable
such holders to make an informed decision with respect to the Prepayment Offer.
Notwithstanding the foregoing, if any note (or any portion) accepted for
payment is not paid pursuant to the provisions described in the preceding
paragraph, then, from the Purchase Date until the principal of (and premium, if
any) and interest on such note is paid, interest will be paid on the unpaid
principal (and premium, if any) and, to the extent permitted by law, on any
accrued but unpaid interest, in each case, at the rate prescribed by such note.
RESTRICTED AND UNRESTRICTED SUBSIDIARIES
Armco may designate a Subsidiary (including a newly formed or newly acquired
Subsidiary) of Armco or any of its Restricted Subsidiaries as an Unrestricted
Subsidiary if;
(i) the Subsidiary has total assets of $1,000 or less, or
(ii) the designation is effective immediately upon such Person becoming
a Subsidiary of either Armco or any of its Restricted Subsidiaries.
Unless it is designated as an Unrestricted Subsidiary, any Person that becomes a
Subsidiary of Armco or any of its Restricted Subsidiaries will be classified as
a Restricted Subsidiary. Except as provided in clause (i) of this paragraph, no
Restricted Subsidiary may be redesignated as an Unrestricted Subsidiary. Subject
to the next paragraph, an Unrestricted Subsidiary may be redesignated as a
Restricted Subsidiary.
37
<PAGE>
Armco will not, and will not permit any of its Restricted Subsidiaries to,
take any action that would result in a Person becoming a Restricted Subsidiary
unless, after giving effect to such action:
(i) on a pro forma basis, Armco could Incur at least $1.00 of additional
Indebtedness pursuant to the first paragraph under "--Limitation on
Indebtedness,"
(ii) such Subsidiary could then Incur, pursuant to clauses (ii), (iii)
or (iv) of the first paragraph under "--Limitation on Restricted Subsidiary
Indebtedness and Preferred Stock," all Indebtedness as to which it is
obligated at such time,
(iii) no Default or Event of Default would occur or be continuing, and
(iv) there exist no Liens with respect to the Property of the Subsidiary
other than Liens permitted to be Incurred under "--Limitation on Liens."
Armco will not, and will not permit any of its Restricted Subsidiaries to,
take any action that would result in any such Restricted Subsidiary ceasing to
be a Subsidiary (other than a merger or consolidation with Armco or another
Restricted Subsidiary) unless, after giving effect to such action, either:
(i) (A) neither Armco nor any of its Affiliates (other than a Person
that is an Affiliate by virtue of its ownership of Capital Stock or control
of Armco) owns any Capital Stock of such former Restricted Subsidiary or any
successor in interest to the business thereof, and (B) there is no
Indebtedness of the former Restricted Subsidiary or any successor in
interest to its business in favor of Armco or any of its Restricted
Subsidiaries; or
(ii) Armco and its Restricted Subsidiaries would be permitted to make a
Restricted Payment in the amount of the total Investment (excluding (A) any
Investment to the extent of cash or the Fair Market Value of Property other
than cash received by Armco or its Restricted Subsidiary, as the case may
be, in respect of or as a repayment of such Investment and (B) the amount of
Indebtedness of the former Restricted Subsidiary received by Armco or its
Restricted Subsidiaries as part of the consideration for the acquisition of
the Capital Stock or assets of such former Restricted Subsidiary), if any,
made in the former Restricted Subsidiary after September 12, 1997.
Merger, Consolidation
Armco may not merge or consolidate with any other corporation (other than a
merger of a Restricted Subsidiary into Armco in which Armco is the continuing
corporation) or sell, transfer or convey its Property or assets as an entirety
or substantially as an entirety to any Person other than a wholly owned
Restricted Subsidiary, unless:
(i) the entity formed by or surviving any such consolidation or merger
(if other than Armco) or to which such sale, transfer or conveyance is made
is a corporation organized and existing under the laws of the United States
of America or a State or the District of Columbia and that corporation
expressly assumes, by supplemental indenture satisfactory to the trustee,
executed and delivered to the trustee by such corporation, the due and
punctual payment of the principal of premium (if any) and interest on all
the notes and the due and punctual performance and observance of all of the
covenants and conditions of the indenture to be performed by Armco;
(ii) immediately before and after giving effect to the transaction or
series of transactions, no Default or Event of Default has occurred and is
continuing;
(iii) immediately after giving effect to the transaction or series of
transactions on a pro forma basis (including any Indebtedness Incurred or
anticipated to be Incurred in connection with the transaction or series of
transactions), Armco (or the surviving entity if Armco is not continuing)
would be able to Incur at least $1.00 of additional Indebtedness under the
first paragraph under
38
<PAGE>
"--Limitation on Indebtedness," or, in the case of a merger or consolidation
of Armco into or with a wholly owned Restricted Subsidiary, the Consolidated
Interest Coverage Ratio of the surviving entity would be no less than the
Consolidated Interest Coverage Ratio of Armco immediately prior to the
merger or consolidation;
(iv) immediately after giving effect to the transaction or series of
transactions on a pro forma basis (including any Indebtedness Incurred or
anticipated to be Incurred in connection with the transaction or series of
transactions) as if the transaction had occurred on the first day of the
Determination Period, Armco (or the surviving entity if Armco is not
continuing) has a Consolidated Net Worth equal to or greater than the
Consolidated Net Worth of Armco immediately before the transaction or series
of transactions; and
(v) the trustee has received an opinion of counsel as conclusive
evidence that any such consolidation, merger, sale, conveyance or
acquisition, and any such assumption, complies with the provisions of this
covenant.
EVENTS OF DEFAULT
The indenture provides that, if an Event of Default with respect to any
series of debt securities occurs and is continuing, either the trustee or the
holders of 25% in principal amount of the outstanding debt securities of that
series may declare the principal of all the debt securities of that series to be
due and payable. In the case of certain Events of Default involving a bankruptcy
event with respect to Armco, such principal shall become immediately due and
payable, without any requirement of notice or declaration.
Events of Default for a series of debt securities include:
- default for 30 days in payment of an interest installment or any sinking
or analogous fund payment;
- default in payment of principal on the debt securities of any series when
due;
- default for 30 days after notice to Armco by the trustee or by holders of
25% in aggregate principal amount of the outstanding debt securities in
the performance of any other covenant in the indenture with respect to the
debt securities of such series; and
- certain events of bankruptcy and insolvency.
In addition to the Events of Default that are provided in the indenture with
respect to all debt securities, the supplemental indenture provides that the
following are also Events of Default with respect to the notes:
- a default by Armco or any of its Significant Restricted Subsidiaries under
certain other obligations for borrowed money and the indebtedness has been
accelerated (or has matured) and remains unpaid, if the principal amount
of such indebtedness is $5,000,000 or more; or
- the entry by a court of competent jurisdiction of one or more judgments or
orders against Armco or any of its Significant Restricted Subsidiaries in
an uninsured total amount in excess of $5,000,000 is not discharged,
waived, stayed or satisfied for a period of 60 consecutive days.
The trustee will, within 90 days after the occurrence of a default with
respect to the debt securities of any series, give the holders of the debt
securities of such series notice of all uncured and unwaived defaults known to
it. However, in the case of default in the payment of principal of, or premium,
if any, or interest on any of the debt securities of such series, the trustee
will be protected in withholding this notice if it determines in good faith that
withholding this notice is in the interest of the holders of the debt securities
of such series. The term "default" for the purpose of this provision means the
39
<PAGE>
happening of any of the Events of Default specified above, except that any grace
period or notice requirement is eliminated.
Subject to the duty of the trustee during an Event of Default to act with
the required standard of care, the holders of the notes may be required to
indemnify the trustee before the trustee proceeds to exercise any right or power
under the indenture at the request of holders of the notes.
The holders of a majority in principal amount of the outstanding notes may
direct the time, method and place of conducting proceedings for remedies
available to the trustee or exercising any trust or power conferred on the
trustee with respect to such series. In certain cases, the holders of a majority
in principal amount of the outstanding notes may, on behalf of the holders of
notes, waive any past default or Event of Default with respect to notes or
compliance with certain provisions of the indenture, except, among other things,
a default not theretofore cured in payment of the principal of, or premium, if
any, or interest on, any of the notes.
Armco will file annually with the trustee a certificate stating whether or
not any default exists.
WAIVERS
The provisions of the various covenants discussed above cannot be waived,
except that, in certain cases, the holders of a majority in principal amount of
the outstanding notes may, on behalf of the holders of all notes, waive any past
Default or Event of Default with respect to the notes, including a breach of
covenant, other than a Default not theretofore cured in payment of the principal
of, or premium, if any, or interest on, any of the notes. No such waiver,
however, shall extend to any subsequent or other Default or impair any
consequent right.
DEFEASANCE
Armco, at its option:
(i) will be Discharged from any and all obligations in respect of the
notes (except for certain obligations to register the transfer or exchange
of notes, replace stolen, lost or mutilated notes, maintain paying agencies
and hold moneys for payment in trust) on the 91st day after satisfaction of
the conditions set forth below, or
(ii) will not be subject to certain provisions of the indenture (including
the Events of Default described above other than defaults on payments due on
the notes),
in each case if Armco irrevocably deposits or causes to be deposited with the
trustee, in trust, money or government obligations that through the payment of
interest and principal in accordance with their terms will provide money, in an
amount sufficient to pay all the principal of, and interest on, the notes not
later than one day before the payments are due. To exercise this option, there
must not exist any Event of Default or event that would become an Event of
Default with notice or lapse of time or both, that shall have occurred and be
continuing at the time of such deposit, and Armco must deliver to the trustee an
opinion of counsel to the effect that:
- the deposit and related defeasance would not cause the holders of notes to
recognize income, gain or loss for federal income tax purposes and, in the
case of a Discharge pursuant to clause (i), accompanied by a ruling to
such effect received from or published by the United States Internal
Revenue Service, and
- if notes are then listed on the New York Stock Exchange, the notes would
not be delisted as a result of the exercise of such option.
The indenture also provides that if at any time:
40
<PAGE>
- all authenticated notes (other than any notes that have been destroyed,
lost or stolen and that have been replaced or paid as provided in the
indenture) have been delivered to the trustee for cancellation, or
- all notes not canceled or delivered to the trustee for cancellation have
become due and payable, or will become due and payable in accordance with
their terms, within one year,
and
- Armco shall deposit or cause to be deposited with the trustee, in trust,
sufficient funds to pay at maturity the entire amount of all notes not
previously delivered to the trustee for cancellation, including principal
and interest due or to become due to such date of maturity and
- if Armco shall also pay all other sums payable under the indenture by
Armco,
- then the indenture shall cease to be of further effect, and on our demand
of and at our cost and expense, the trustee will execute proper
instruments acknowledging satisfaction of and Discharging the indenture.
MODIFICATION TO THE INDENTURE
The indenture contains provisions permitting Armco and the trustee, with the
consent of the holders of not less than a majority in aggregate principal amount
of the outstanding debt securities of each series to be affected, to execute
supplemental indentures adding any provisions to or changing or eliminating any
of the provisions of the indenture or modifying the rights of the holders of the
debt securities of such series to be affected, except that no such supplemental
indenture may, without the consent of the holders of affected debt securities,
among other things, change the fixed maturity of any debt securities, or reduce
their principal amount, or reduce their rate or extend the time of payment of
interest, or reduce any premium payable upon their redemption, or reduce the
relative ranking of any debt securities, or reduce the percentage of debt
securities of any series the consent of the holders of which is required for any
such supplemental indenture.
THE TRUSTEE
Star Bank, N.A. is the trustee under the indenture. The trustee maintains
normal banking relationships with Armco and its subsidiaries, including as a
participant in Armco's Credit Facilities. The trustee may perform certain
services for and transact other business with Armco from time to time in the
ordinary course of business.
CERTAIN DEFINITIONS
The following is a summary of certain defined terms used in the indenture.
Please refer to the indenture for the full definition of all such terms, as well
as any other capitalized terms used in this prospectus for which no definition
is provided.
"Additional Assets" means (i) any Property or assets (other than
Indebtedness and Capital Stock) that the Board of Directors determines to be
useful in the conduct of the business of Armco and its Subsidiaries, whether or
not such business is conducted on the date of the original issuance of the notes
("Approved Business"), (ii) the Capital Stock of a Person that becomes a
Restricted Subsidiary as a result of the acquisition of such Capital Stock by
Armco or another Restricted Subsidiary, or (iii) Capital Stock constituting a
minority interest in any Person that at such time is a Restricted Subsidiary;
provided, however, that any such Restricted Subsidiary described in clause (ii)
or (iii) above is primarily engaged in an Approved Business.
"Additional Core Assets" means (i) any Property or assets (other than
Indebtedness or Capital Stock) used or intended for use in the Core Business,
(ii) the Capital Stock of a Person engaged in the
41
<PAGE>
Core Business that becomes a Restricted Subsidiary as a result of the
acquisition of such Capital Stock by Armco or another Restricted Subsidiary
engaged in the Core Business, or (iii) Capital Stock constituting a minority
interest in any Person that at such time is a Restricted Subsidiary engaged in
the Core Business.
"Affiliate" means, as to any Person, any other Person that directly or
indirectly controls, or is under common control with, or is controlled by, such
Person. As used in this definition, "control" (including, with its correlative
meanings, "controlled by" and "under common control with") shall mean
possession, directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of securities or partnership,
membership or other ownership interests, by contract or otherwise), provided
that, in any event, each Unrestricted Subsidiary shall be deemed to be an
Affiliate of Armco and of each other Subsidiary. Notwithstanding the foregoing,
no individual shall be deemed to be an Affiliate of a Person solely by reason of
his or her being an officer or director (or equivalent) of such Person and
neither Armco nor any of its Restricted Subsidiaries shall be deemed to be
Affiliates of each other.
"AFSC" means Armco Financial Services Corporation.
"Asset Sale" means, with respect to any Person, any transfer, conveyance,
sale, lease or other disposition (including, without limitation, dispositions
pursuant to any consolidation or merger, but excluding any Restricted Payment or
Sale and Leaseback Transaction) by such Person or any of its Restricted
Subsidiaries (including any consolidation, merger or other sale of any such
Restricted Subsidiaries with, into or to another Person in a transaction in
which such Restricted Subsidiary ceases to be a Restricted Subsidiary, but
excluding a disposition by a Restricted Subsidiary of such Person to such Person
or a wholly owned Restricted Subsidiary of such Person or by such Person to a
wholly owned Restricted Subsidiary of such Person) in any single transaction or
series of transactions of (i) shares of Capital Stock (other than directors'
qualifying shares) or other ownership interests of a Restricted Subsidiary of
such Person, (ii) all or substantially all the Property of any division,
business segment or comparable line of business of such Person or any of its
Restricted Subsidiaries or (iii) any other Property of such Person or any of its
Restricted Subsidiaries having a Fair Market Value in excess of $5,000,000 and
transferred, conveyed, sold, leased or otherwise disposed of outside of the
ordinary course of business of such Person or Restricted Subsidiary; provided
that the term "Asset Sale," when used with respect to Armco, shall not include
(x) any asset disposition permitted pursuant to "--Merger, Consolidation" which
constitutes a disposition of all or substantially all of Armco's assets, (y) a
disposition of obsolete assets in the ordinary course of business, or (z) a sale
or transfer of accounts receivable under the Credit Facilities.
"Attributable Value" means, as to any particular lease under which any
Person is at the time liable other than a Capital Lease Obligation, and at any
date as of which the amount thereof is to be determined, the total net amount of
rent required to be paid by such Person under such lease during the initial term
thereof as determined in accordance with GAAP, discounted from the last date of
such initial term to the date of determination at a rate per annum equal to the
discount rate which would be applicable to a Capital Lease Obligation with like
term in accordance with GAAP. The net amount of rent required to be paid under
any such lease for any such period shall be the aggregate amount of rent payable
by the lessee with respect to such period after excluding amounts required to be
paid on account of insurance, taxes, assessments, utility, operating and labor
costs and similar charges. In the case of any lease which is terminable by the
lessee upon the payment of a penalty, such net amount shall also include the
amount of such penalty, but no rent shall be considered as required to be paid
under such lease subsequent to the first date upon which it may be so
terminated. "Attributable Value" means, as to a Capital Lease Obligation under
which any Person is at the time liable and at any date as of which the amount
thereof is to be determined, the capitalized amount thereof that would appear on
the face of the balance sheet of such Person in accordance with GAAP.
42
<PAGE>
"Average Life" means, as of any date, with respect to any debt security or
redeemable Preferred Stock, the quotient obtained by dividing (i) the sum of the
products of (x) the number of years from such date to the date of each scheduled
principal or redemption (including any sinking fund or mandatory redemption
payment requirements) of such debt or equity security multiplied in each case by
(y) the amount of such principal or redemption payment by (ii) the sum of all
such principal or redemption payments.
"Capital Expenditure Indebtedness" means Indebtedness Incurred by any Person
to finance the purchase or construction of any Property acquired (other than
from an Affiliate) or constructed by such Person so long as (i) the purchase or
construction price for such Property is or should be included in "addition to
property, plant or equipment" in accordance with GAAP, (ii) the acquisition or
construction of such Property is not part of any acquisition of a Person or
business unit, and (iii) such Indebtedness is Incurred within 360 days of the
acquisition or completion of construction of such Property.
"Capital Lease Obligation" of any Person means the obligation to pay rent or
other payment amounts under a lease of (or other Indebtedness arrangement
conveying the right to use) real or personal property of such Person which is
required to be classified and accounted for as a capital lease or a liability on
the face of a balance sheet of such Person in accordance with GAAP.
"Capital Stock" in any Person means any and all shares, interests,
participations or other equivalents in the equity interest (however designated)
in such Person and any rights (other than debt securities convertible into an
equity interest), warrants or options to subscribe for or to acquire an equity
interest in such Person.
"Change of Control" means an event or series of events by which (i)(A) Armco
consolidates with or merges into any other Person or conveys, transfers or
leases all or substantially all of its assets to any Person or group of Persons
or (B) any Person consolidates with or merges into Armco, in the case of either
(A) or (B) pursuant to a transaction or series of transactions (other than a
transaction or series of transactions between Armco and a wholly owned
Restricted Subsidiary of Armco) as a result of which the existing shareholders
of Armco immediately prior thereto hold less than 50% of the combined voting
power of the Voting Stock of the surviving Person, or (ii) any "person" or
"group" (each as defined in Section 13(d)(3) of the Exchange Act) becomes the
"beneficial owner" (as defined under Rule 13d-3 of the Exchange Act), directly
or indirectly, of 50% or more of the total voting power of all classes of Voting
Stock of Armco, or (iii) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors (together
with any new or replacement directors whose election by the Board of Directors
or whose nomination for election by Armco's stockholders was approved by a vote
of at least 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 directors then in office.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker that would be utilized, at the time
of selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining term
of the notes. "Independent Investment Banker" means one of the Reference
Treasury Dealers appointed by the trustee after consultation with Armco.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the daily
43
<PAGE>
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Securities" or (ii) if such release (or any successor release) is not published
or does not contain such prices on such business day, (A) the average of the
Reference Treasury Dealer Quotations for such redemption date, (B) if the
trustee is able to obtain only one Reference Treasury Dealer Quotation from the
Reference Treasury Dealers, such Quotation, or (C) if the trustee is not able to
obtain any Reference Treasury Dealer Quotations from the Reference Treasury
Dealers, the average of the Reference Treasury Dealer Quotations obtained from
two other Primary Treasury Dealers designated by Armco as Reference Treasury
Dealers for the purpose of determining such Comparable Treasury Price.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by the
trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the trustee by such Reference Treasury Dealer as of 3:30 p.m., New
York time, on the third business day preceding such redemption date.
"Consolidated EBITDA" of any Person means, for any period, the Consolidated
Net Income of such Person, (i) increased (to the extent deducted in determining
Consolidated Net Income) by the sum of (A) all income taxes of such Person and
its Restricted Subsidiaries paid or accrued in accordance with GAAP (other than
income taxes attributable to extraordinary gains), (B) the Consolidated Interest
Expense of such Person and its Restricted Subsidiaries for such period, other
than interest capitalized by such Person or its Restricted Subsidiaries during
such period, (C) depreciation and amortization expenses of such Person and its
Restricted Subsidiaries for such period, including without limitation,
amortization of capitalized debt issuance costs; and (D) other non-cash items of
such Person and its Restricted Subsidiaries for such period to the extent such
non-cash items reduce Consolidated Net Income (excluding any non-cash charge
that will require cash payments and for which an accrual or reserve is, or is
required by GAAP to be, made) minus non-cash items to the extent such non-cash
items increase the Consolidated Net Income (excluding any items which represent
the reversal of any accrual or reserve for cash charges established in any prior
period) of such Person and its Restricted Subsidiaries and (ii) decreased (to
the extent included in determining Consolidated Net Income) by any revenues
accrued but not received by such Person or any of its Restricted Subsidiaries
from any other Person (other than such Person or its Restricted Subsidiaries) in
respect of any Investment for such period, all as determined on a consolidated
basis in accordance with GAAP.
"Consolidated Interest Coverage Ratio" means, with respect to any Person,
the ratio of (i) the aggregate amount of Consolidated EBITDA of such Person for
the four consecutive fiscal quarters for which consolidated financial statements
in respect thereof are available immediately prior to the relevant Transaction
Date (the "Determination Period") to (ii) the aggregate amount of Consolidated
Interest Expense of such Person for the Determination Period; provided, however,
that for purposes of calculating the Consolidated Interest Coverage Ratio of any
specified Person, the Consolidated EBITDA and Consolidated Interest Expense of
such specified Person shall be calculated on a pro forma basis as if the
transaction giving rise to the need to calculate the Consolidated Interest
Coverage Ratio had taken place on the first day of the Determination Period, and
shall (A) include the Consolidated Interest Expense in respect of any
Indebtedness Incurred by such Person subsequent to the first day of the
Determination Period and prior to the Transaction Date as if such Indebtedness
had been Incurred on the first day of the Determination Period, (B) exclude,
from the first day of the Determination Period, the Consolidated Interest
Expense in respect of (1) any Indebtedness of such Person that has been redeemed
or retired subsequent to the first day of the Determination Period and prior to
the Transaction Date and (2) if the transaction giving rise to the need to
calculate the Consolidated Interest Coverage Ratio is an Incurrence of
Indebtedness, any Indebtedness (x) that Armco anticipates as of the time of
determination will be redeemed or retired with the proceeds of, and within 90
days following the Incurrence of, such Indebtedness giving rise to such need or
(y) with
44
<PAGE>
respect to which Armco has deposited or caused to be deposited irrevocably with
the trustee or fiscal agent for such Indebtedness funds sufficient to redeem or
retire such Indebtedness or has irrevocably committed to redeem such
Indebtedness, (C) include the Consolidated EBITDA and Consolidated Interest
Expense of any other Person acquired subsequent to the first day of the
Determination Period and prior to the Transaction Date by such specified Person
as a Restricted Subsidiary of such specified Person as if such Person had been
acquired on the first day of the Determination Period, (D) exclude, from the
first day of the Determination Period, the Consolidated EBITDA of such specified
Person directly attributable to any Property of such specified Person
(including, without limitation, Capital Stock) which was the subject of an Asset
Sale at any time subsequent to the first day of the Determination Period and
prior to the Transaction Date and (E) for purposes of "--Limitation on
Indebtedness" and "--Merger, Consolidation," where the Consolidated Interest
Coverage Ratio is calculated to give effect to the transaction giving rise to
the need to calculate the Consolidated Interest Coverage Ratio, such calculation
shall also include the Consolidated EBITDA and Consolidated Interest Expense of
any other Person to be acquired by such specified Person as a Restricted
Subsidiary of such specified Person in connection with the transaction giving
rise to the need to calculate the Consolidated Interest Coverage Ratio. When the
Consolidated Interest Coverage Ratio is determined with respect to Armco, the
term "Restricted Subsidiary" shall be deemed to include any Unrestricted
Subsidiary that became a Restricted Subsidiary at any time between the first day
of the Determination Period and the Transaction Date, provided that such
Subsidiary is a Restricted Subsidiary on the Transaction Date.
"Consolidated Interest Expense" means, with respect to any Person for any
period, without duplication (i) the sum of (A) the aggregate amount of cash and
non-cash interest expense (net of interest income) of such Person and its
Restricted Subsidiaries for such period as determined on a consolidated basis in
accordance with GAAP in respect of Indebtedness (including, without limitation,
(u) capitalized interest, (v) any amortization of debt discount, (w) net costs
associated with Interest Rate Protection Agreements (including any amortization
of discounts), (x) the interest portion of any deferred payment obligation, (y)
all accrued interest, and (z) all commissions, discounts and other fees and
charges owed with respect to letters of credit, bankers' acceptances or similar
facilities) paid, accrued or scheduled to be paid or accrued, during such
period; (B) Preferred Stock dividends of such Person (and of its Restricted
Subsidiaries if paid to a Person other than such Person or its Restricted
Subsidiaries) declared and payable in cash; (C) the portion of any rental
obligation of such Person or its Restricted Subsidiaries in respect of any
Capital Lease Obligation allocable to interest expense in accordance with GAAP;
(D) the portion of any rental obligation of such Person or its Restricted
Subsidiaries in respect of any Sale and Leaseback Transaction allocable to
interest expense (determined as if such were treated as a Capital Lease
Obligation); and (E) to the extent any Indebtedness of any other Person is
Guaranteed by such Person or any of its Restricted Subsidiaries (other than
Guarantees relating to obligations of customers, either of such Person or any of
its Restricted Subsidiaries, that are made in the ordinary course of business
consistent with the past practices of such Person or such Restricted
Subsidiaries), the aggregate amount of interest paid, accrued or scheduled to be
paid or accrued, by such other Person during such period attributable to any
such Indebtedness, less (ii) to the extent included in (i) above, amortization
or write-off of deferred financing costs of such Person and its Restricted
Subsidiaries during such period and any charge related to any premium or penalty
paid in connection with redeeming or retiring any Indebtedness of such Person
and its Restricted Subsidiaries prior to its Stated Maturity; in the case of
both (i) and (ii) above, after elimination of intercompany accounts among such
Person and its Restricted Subsidiaries and as determined in accordance with
GAAP.
"Consolidated Net Income" of any Person means, for any period, the aggregate
net income (or net loss) of such Person and its Restricted Subsidiaries for such
period on a consolidated basis determined in accordance with GAAP; provided that
there shall be excluded therefrom, without duplication, (i) all items classified
as extraordinary, (ii) any net loss or net income of any Person other than such
Person
45
<PAGE>
and its Restricted Subsidiaries, except to the extent of the amount of dividends
or other distributions actually paid to such Person or its Restricted
Subsidiaries by such other Person during such period, (iii) the net income of
any Person acquired by such Person or any of its Restricted Subsidiaries in a
pooling-of-interests transaction for any period prior to the date of such
acquisition, (iv) any gain or loss, net of taxes, realized on the termination of
any employee pension benefit plan, (v) gains or losses in respect of Asset Sales
by such Person or its Restricted Subsidiaries, (vi) the net income of any
Restricted Subsidiary of such Person to the extent that the payment of dividends
or other distributions to such Person is restricted by contract or otherwise,
except for any dividends or distributions actually paid by such Restricted
Subsidiary to such Person, (vii) any extraordinary, unusual or nonrecurring
gains or losses (and related tax effects) in accordance with GAAP, and (viii)
the effect of the adoption of Statement of Financial Accounting Standards No.
106 ("SFAS 106") to the extent expenses recognized pursuant to such adoption
exceed the amounts with respect to such expenses which would have been
recognized during such period using the "pay as you go" accounting method;
provided further that there shall be included in determining the net income or
net loss of such person expenses that would have been recognized using the "pay
as you go" accounting method to the extent that such expenses exceed the
expenses recognized during such period pursuant to SFAS 106.
"Consolidated Net Tangible Assets" of any Person means the sum of Tangible
Assets of such Person and its Restricted Subsidiaries after eliminating
inter-company items, all determined in accordance with GAAP, including
appropriate deductions for any minority interest in Tangible Assets of such
Restricted Subsidiaries.
"Consolidated Net Worth" of any Person means the stockholders' equity of
such Person and its Restricted Subsidiaries, as determined on a consolidated
basis in accordance with GAAP, less amounts attributable to Redeemable Stock of
such Person.
"Core Business" means the specialty flat-rolled steel business.
"Corporation" includes corporations, associations, companies and business
trusts.
"Credit Facilities" means the two bank credit facilities dated as of
December 22, 1995 between Armco and Armco Funding Corporation, respectively, on
the one hand, and the banks signatory thereto on the other, and all related
notes, collateral documents, guarantees, instruments and other agreements
executed in connection therewith, as the same may be amended, modified,
supplemented, restated or Refinanced from time to time.
"Default" means any event, act or condition, the occurrence of which is, or
after notice or the passage of time or both would be, an Event of Default.
"Discharge" or "Discharged" means that Armco shall be deemed to have paid
and discharged the entire indebtedness represented by, and obligations under,
the notes and to have satisfied all the obligations under the indenture relating
to the notes (and the trustee, at the expense of Armco, shall execute proper
instruments acknowledging the same and satisfaction of and discharging the
indenture).
"Eligible Receivables" means, as of any date, trade receivables (less
allowance for doubtful accounts) of Armco and its Restricted Subsidiaries that
would be shown on a consolidated balance sheet of Armco and its Restricted
Subsidiaries as of that date prepared in accordance with GAAP.
"Equity Offering" means a registered public offering of common stock of
Armco resulting in net proceeds to Armco in excess of $25,000,000.
"Fair Market Value" means, with respect to the total consideration received
pursuant to any Asset Sale or any non-cash consideration received by any Person,
the fair market value of such consideration as determined in good faith by the
Board of Directors as evidenced by a Certified Resolution.
"fiscal year" means, with respect to Armco, the twelve consecutive months
ending December 31.
46
<PAGE>
"GAAP" or "generally accepted accounting principles," with respect to any
computation required or permitted hereunder shall, except as otherwise
specifically provided, mean such accounting principles as are generally accepted
in the United States of America at the date of such computation.
"Guarantee" by an Person means 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, without limitation, any obligation of
such Person, (i) 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, (ii) to
purchase Property, securities or services for the purpose of assuring the holder
of such Indebtedness of the payment of such Indebtedness, or (iii) to maintain
working capital, equity capital or other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness (and "Guaranteed," "Guaranteeing" and "Guarantor" shall have
meanings correlative to the foregoing); provided, however, that a Guarantee by
any Person shall not include endorsements by such Person for collection or
deposit, in either case, in the ordinary course of business.
"Incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise), extend,
assume, Guarantee or otherwise become liable in respect of such Indebtedness or
other obligation or the recording, as required pursuant to GAAP or otherwise, of
any such Indebtedness or obligation on the balance sheet of such Person (and
"Incurrence," "Incurred," "Incurrable" and "Incurring" 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 becoming
Indebtedness shall not be deemed an Incurrence of such Indebtedness.
"Indebtedness" means at any time (without duplication), with respect to any
Person, whether recourse is to all or a portion of the assets of such Person,
and whether or not contingent, (i) any obligation of such Person for borrowed
money, (ii) any obligation of such Person evidenced by bonds, debentures, notes,
Guarantees or other similar instruments, including, without limitation, any such
obligations Incurred in connection with acquisition of Property or businesses,
(iii) any reimbursement obligation of such Person with respect to letters of
credit, bankers' acceptances or similar facilities issued for the account of
such Person, (iv) any obligation of such Person issued or assumed as the
deferred purchase price of Property or services (but excluding trade accounts
payable or accrued liabilities arising in the ordinary course of business), (v)
any Capital Lease Obligation of such Person, (vi) the maximum fixed redemption
or repurchase price of Redeemable Stock of such Person at the time of
determination, (vii) any payment obligation of such Person under Interest Rate
Protection Agreements at the time of determination, (viii) any obligation to pay
rent or other payment amounts of such Person with respect to any Sale and
Leaseback Transaction to which such Person is a party and (ix) any obligation of
the type referred to in clauses (i) through (viii) of another Person and all
dividends of another Person the payment of which, in either case, such Person
has Guaranteed or is responsible or liable, directly or indirectly, as obligor,
Guarantor or otherwise. For purposes of the preceding sentence, the maximum
fixed repurchase price of any Redeemable Stock that does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Redeemable Stock as if such Redeemable Stock were repurchased on any date on
which Indebtedness shall be required to be determined pursuant to this
indenture; provided, however, that if such Redeemable Stock is not then
permitted to be repurchased, the repurchase price shall be the book value of
such Redeemable Stock. The amount of Indebtedness 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 of any contingent obligations in
respect thereof at such date.
"Interest Rate Protection Agreement" means, with respect to any Person, any
interest rate swap agreement, interest rate cap agreement, currency swap
agreement or other financial agreement or
47
<PAGE>
arrangement designed to protect such Person or its Restricted Subsidiaries
against fluctuations in interest rates or currency exchange rates, as in effect
from time to time.
"Investment" means, with respect to any Person, any direct, indirect or
contingent (i) payment or transfer (including, without limitation, by means of
any payment for Property or services for the account or use of another Person)
of cash, Capital Stock or other Property, or assumption of Indebtedness, made by
such Person in exchange for Capital Stock, notes or bonds of, or as a capital
contribution to, any other Person or (ii) loan, advance or other extension of
credit (including, without limitation, by means of a Guarantee, letter of credit
or similar arrangement other than advances or loans to customers in the ordinary
course of business that are recorded as accounts receivable of such Person or
its Restricted Subsidiaries in accordance with GAAP) made by such Person to or
on behalf of any other Person.
"Lien" means, with respect to any Property, any mortgage or deed of trust,
pledge, hypothecation, assignment, deposit arrangement, security interest, lien
(statutory or other), charge, easement, encumbrance, preference, priority or
other security or similar agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such Property (including, without
limitation, any conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing).
"Make-Whole Premium" means, with respect to a note, an amount equal to the
greater of (i) 1.0% of the outstanding principal amount of such note and (ii)
the excess of (a) the present value of the remaining interest, premium and
principal payments due on such note as if such note were redeemed on December 1,
2003, computed using a discount rate equal to the Treasury Rate plus 75 basis
points, over (b) the outstanding principal amount of such note.
"Net Cash Proceeds" from any Asset Sale by any Person or its Restricted
Subsidiaries means cash, cash equivalents or readily marketable securities
received (including by way of sale or discounting of a note, installment
receivable or other receivable, but excluding any other consideration received
in the form of assumption of Indebtedness or other obligations relating to the
Properties sold or otherwise conveyed or received in any other non-cash form
unless such non-cash consideration is immediately converted into cash therefrom
by such Person or its Restricted Subsidiaries), net of (i) all reasonable
out-of-pocket expenses of such Person or such Restricted Subsidiary Incurred in
connection with an Asset Sale of such type, including, without limitation, all
legal, title and recording tax expenses, commissions and other fees and expenses
Incurred (but excluding any finder's fee or broker's fee payable to any
Affiliate of such Person) and all federal, state, provincial, foreign and local
taxes arising in connection with such Asset Sale that are paid or required to be
accrued as a liability under GAAP by such Person or its Restricted Subsidiaries,
(ii) all payments made by such Person or its Restricted Subsidiaries on any
Indebtedness which is secured by such Properties in accordance with the terms of
any Lien upon or with respect to such Properties or which must, by the terms of
such Lien, 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, and (iii)
all distributions and other payments made to minority interest holders in
Restricted Subsidiaries of such Person as a result of such Asset Sale; provided
that, in the event that any consideration for an Asset Sale (which would
otherwise constitute Net Cash Proceeds) is required to be held in escrow pending
determination of whether a purchase price adjustment will be made, such
consideration (or any portion thereof) shall become Net Cash Proceeds only at
such time as it is released to such Person or its Restricted Subsidiaries from
escrow, and provided that any non-cash consideration received in connection with
an Asset Sale, which is subsequently converted to cash, shall be deemed to be
Net Cash Proceeds at such time and shall thereafter be applied in accordance
with "--Limitation on Asset Sales."
"Non-Core Businesses" means the following businesses of Armco, including any
tangible and intangible Property and assets held by such businesses (excluding
cash, Indebtedness and Capital Stock
48
<PAGE>
of any other Person (other than Capital Stock of Subsidiaries of AFSC that do
not, directly or indirectly, hold Property or assets of the Core Business) held
by such businesses), substantially as conducted and reported on September 30,
1998, (i) the Company's Sawhill Tubular Division, (ii) Douglas Dynamics, L.L.C.,
(iii) Greens Port Industrial Park, (iv) Armco's steelmaking facilities in Dover,
Ohio, (v) AFSC and Subsidiaries of AFSC that do not, directly or indirectly,
hold Property or assets of the Core Business and (vi) any other business other
than the Core Business.
"Permitted Refinancing Indebtedness" means Indebtedness of Armco, the
proceeds of which are used to Refinance outstanding Indebtedness of Armco or any
Restricted Subsidiary, provided that (i) if the Indebtedness being Refinanced is
pari passu with or subordinated in right of payment to the notes, then such
Indebtedness is pari passu with or subordinated in right of payment to, as the
case may be, the notes at least to the same extent as the Indebtedness being
Refinanced, (ii) such Indebtedness is scheduled to mature no earlier than the
Indebtedness being Refinanced and (iii) such Indebtedness has an Average Life at
the time such Indebtedness is Incurred that is equal to or greater than the
Average Life of the Indebtedness being Refinanced; provided further that such
Indebtedness is in an aggregate principal amount (or, if such Indebtedness is
issued at a price less than the principal amount thereof, has an aggregate
original issue price) not in excess of the aggregate principal amount then
outstanding of the Indebtedness being Refinanced (or if the Indebtedness being
Refinanced was issued at a price less than the principal amount thereof, then
not in excess of the amount of liability in respect thereof determined in
accordance with GAAP) plus (A) prepayment premium and accrued interest on and
defeasance costs associated with such Indebtedness being Refinanced and (B) plus
fees and expenses associated with the Incurrence of such refinancing
Indebtedness.
"Preferred Stock," as applied to the Capital Stock of any Person, means
Capital Stock of such Person of any class or classes (however designated) that
ranks prior, as to the payment of dividends or as to the distribution of assets
upon any voluntary or involuntary liquidation, dissolution or winding up of such
Person, to shares of Capital Stock of any other class of such Person.
"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, without limitation, Capital Stock in any other Person.
"Qualified Capital Stock" means Capital Stock of Armco or any of its
Restricted Subsidiaries that does not by its terms require any dividends,
distributions, mandatory prepayment or redemption prior to the first anniversary
following the Stated Maturity of the notes.
"Redeemable Stock" of any Person means any equity security of such Person
that by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable), or otherwise (including, on the happening of
an event), is required to be redeemed or is redeemable at the option of the
holder thereof, in whole or part, prior to the Stated Maturity of the notes, or
is exchangeable for debt at any time, in whole or part, prior to the Stated
Maturity of the notes.
"Redemption Date" means, when used with respect to any note to be redeemed,
the date fixed for redemption of such note pursuant to Article IV of
Supplemental Indenture No. 2 and the notes.
"Redemption Price" means, when used with respect to any note to be redeemed,
the price fixed for redemption of such note pursuant to Article IV of
Supplemental Indenture No. 2 and the notes, plus accrued and unpaid interest
thereon to the Redemption Date.
"Reference Treasury Dealer" means each of Salomon Smith Barney Inc. and
Chase Securities Inc. and their respective successors; provided, however, that
if any of the foregoing shall cease to be a primary U.S. Government securities
dealer in New York City (a "Primary Treasury Dealer"), Armco shall substitute
therefor another nationally recognized investment banking firm that is a Primary
Treasury Dealer.
49
<PAGE>
"Refinance" means, with respect to any Indebtedness, to renew, extend,
refinance, refund, replace or repurchase, or be substituted for, such
Indebtedness and "Refinancing" means the renewal, extension, refinancing,
refunding, replacement or repurchasing of, or substitution for, such
Indebtedness.
"Restricted Payment" means (i) a dividend or other distribution declared and
paid on the Capital Stock of Armco or to Armco's stockholders (in their capacity
as such), or declared and paid to any Person other than Armco or a Restricted
Subsidiary of Armco on the Capital Stock of any Restricted Subsidiary of Armco,
in each case, other than dividends, distributions or payments payable or made
solely in Qualified Capital Stock, (ii) a payment made by Armco or any of its
Restricted Subsidiaries (other than to Armco or any Restricted Subsidiary of
Armco) to purchase, redeem, acquire or retire any Capital Stock of Armco or of a
Restricted Subsidiary, (iii) a payment made by Armco or any of its Restricted
Subsidiaries to redeem, repurchase, defease (including, but not limited to,
in-substance or legal defeasance) or otherwise acquire or retire for value,
prior to any scheduled maturity, scheduled repayment or scheduled sinking fund
or mandatory redemption payment, Indebtedness of Armco which is subordinate
(whether pursuant to its terms or by operation of law) in right of payment to
the notes and which was scheduled to mature (after giving effect to any and all
options to extend the maturity thereof) on or after the Stated Maturity of the
notes or (iv) a payment made by Armco or any of its Restricted Subsidiaries to
purchase, acquire, retire or redeem any Indebtedness of or equity interest in or
otherwise to make any Investment in any Affiliate thereof or in any Person that
would become an Affiliate thereof in connection with or as a result of such
investment; provided, that Restricted Payments shall not include any payment or
transfer of any Capital Stock of any Person in exchange for, or to purchase or
otherwise acquire, Capital Stock of, or an equity interest in, another Person
that is, or other Persons that are, or will, as part of such transaction,
become, the successor or successors to substantially all of the assets and
business of such first Person.
"Restricted Subsidiary" means, (i) with respect to Armco, (A) any Subsidiary
of Armco that exists on September 12, 1997 other than AFSC and its Subsidiaries,
(B) any other Subsidiary of Armco that Armco has not designated as an
Unrestricted Subsidiary pursuant to the first paragraph under "--Restricted and
Unrestricted Subsidiaries," and (ii) with respect to a Person other than Armco
and its Subsidiaries, a Subsidiary of such other Person.
"Sale and Leaseback Transaction" means, with respect to any Person, any
direct or indirect arrangement pursuant to which Property is sold or transferred
by such Person or a Restricted Subsidiary of such Person and is thereafter
leased back from the purchaser or transferee thereof by such Person or one of
its Restricted Subsidiaries.
"Senior Indebtedness" means, at any date, any outstanding Indebtedness of
Armco that is pari passu in right of payment with the notes.
"Significant Restricted Subsidiary" means each Restricted Subsidiary of
Armco that (i) during the most recent four consecutive fiscal quarters of Armco
for which financial information in respect thereof is available accounted for
more than 10% of the Consolidated EBITDA of Armco or (ii) is the owner, directly
or indirectly, of more than 10% of the Consolidated Net Tangible Assets of
Armco, provided that clause (i) shall be determined on a pro forma basis in the
case of a Restricted Subsidiary that became a Restricted Subsidiary during or
subsequent to the end of such four-consecutive-fiscal-quarter period as if the
transaction in which it became a Restricted Subsidiary occurred on the first day
of such period.
"Stated Maturity" means, when used with respect to any security, the date
specified in such security as the fixed date on which the principal or
redemption price of such security is due and payable and, when used with respect
to any installment of interest on a security, the fixed date on which such
installment of interest is due and payable. The Stated Maturity of a Capital
Lease Obligation shall be the date of the last payment of rent or any other
amount due under such lease
50
<PAGE>
prior to the first date upon which such lease may be terminated by the lessee
without payment of a penalty.
"Subsidiary," with respect to any Person, means (i) a corporation a majority
of whose Capital Stock with voting power, under ordinary circumstances, to elect
directors is at the time, directly or indirectly, owned by such Person, by such
Person and one or more Subsidiaries of such Person or by one or more
Subsidiaries of such Person, or (ii) any other Person (other than a corporation)
in which such Person, one or more Subsidiaries of such Person, or such Person
and one or more Subsidiaries of such Person, directly or indirectly, at the date
of determination thereof has at least a majority ownership interest.
"Tangible Assets" of any Person means, at any date, the gross book value as
shown by the accounting books and records of such Person of all its Property,
less the net book value of all items that would be classified as intangibles
under GAAP, including, without limitation, (i) licenses, patents, patent
applications, copyrights, trademarks, trade names, goodwill, noncompete
agreements and organizational expenses, (ii) unamortized debt discount and
expense, (iii) all reserves for depreciation, obsolescence, depletion and
amortization of its Properties and (iv) all other proper reserves which in
accordance with GAAP should be provided in connection with the business
conducted by such Person.
"Transaction Date" means the date of any transaction giving rise to the need
to calculate the Consolidated Interest Coverage Ratio.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity (computed as of the
second business day immediately preceding such redemption date) of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date.
"Unrestricted Subsidiary" means (i) AFSC and its Subsidiaries and (ii) any
Subsidiary of the Company that the Company has classified, pursuant to the first
paragraph of "--Restricted and Unrestricted Subsidiaries," as an Unrestricted
Subsidiary and that has not been reclassified as a Restricted Subsidiary
pursuant to such paragraph.
"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons performing
similar functions) of such Person, whether at all times or only as long as no
senior class of securities has such voting power by reason of any contingency.
BOOK-ENTRY, DELIVERY AND FORM
Except as described in the next paragraph, the new notes will be issued in
the form of one or more global notes. The global notes will be deposited with,
or on behalf of, DTC and registered in the name of DTC or its nominee.
THE GLOBAL NOTES
We expect that under the procedures established by DTC (1) upon the issuance
of the global notes, DTC or its custodian will credit on its internal system the
principal amount of new notes of the individual beneficial interests represented
by such global notes to the respective accounts of persons who have accounts
with such depositary and (2) ownership of beneficial interest in the global
notes will be shown on, and the transfer of such ownership will be effective
only through, records maintained by DTC or its nominee (with respect to interest
of participants) and the records of participants (with respect to interest of
persons other than participants). Ownership of beneficial interests in the
global notes will be limited to persons who have accounts with DTC
("participants") or persons who hold interests through participants.
51
<PAGE>
So long as DTC, or its nominee, is the registered owner or holder of the new
notes, DTC or such nominee will be considered the sole owner or holder of the
new notes represented by such global notes for all purposes under the
indentures. No beneficial owner of an interest in the global notes will be able
to transfer that interest except in accordance with DTC's procedures.
Payments of the principal of, premium (if any) and interest on, the global
notes will be made to DTC or its nominee as the registered owner of the note.
Armco, the trustee or any paying agent will not have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in the global notes or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interest.
We expect that DTC or its nominee, upon receipt of any payment of principal,
premium, if any, and interest on the global notes, will credit participants'
accounts with payments in amounts proportionate to their beneficial interests in
the principal amount of the global notes as shown on the records of DTC or its
nominee. We also expect that payments by participants to owners of beneficial
interests in the global notes held through such participants will be governed by
standing instructions and customary practice, as is now the case with securities
held for the accounts of customers registered in the names of nominees for such
customers. Such payments will be the responsibility of such participants.
Ownership of beneficial interests in the global notes will be shown on, and
the transfer of those ownership interests will be effected only through, records
maintained by DTC (with respect to participants' interest) and such participants
(with respect to the owners of beneficial interests in the global notes other
than participants). The laws of some jurisdictions may require that certain
purchasers of securities take physical delivery of those securities in
definitive form. These limits and laws may impair the ability to transfer or
pledge beneficial interests in a global note.
DTC has advised us that it will take any action permitted to be taken by a
holder of new notes (including the presentation of new notes for exchange as
described below) only at the direction of one or more participants to whose
account the DTC interests in the global notes are credited and only in respect
of such portion of the aggregate principal amount of new notes as to which such
participant or participants has or have given such direction.
DTC has advised us as follows: DTC is a limited purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the Uniform
Commercial Code and a "Clearing Agency" registered pursuant to the provisions of
Section 17A of the Exchange Act. DTC was created to hold securities for its
participants and facilitate the clearance and settlement of securities
transactions between participants through electronic book-entry changes in
accounts of its participants, thereby eliminating the need for physical movement
of certificates. Participants include securities brokers and dealers, banks,
trust companies, clearing corporations and certain other organizations. Indirect
access to the DTC system is available to others such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a participant, either directly or indirectly.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the global notes among participants of DTC, it is
under no obligation to perform such procedures, and such procedures may be
discontinued at any time. Neither we nor the trustee will have any
responsibility for the performance by DTC or its participants or indirect
participants of their obligations under the rules and procedures governing their
operations.
52
<PAGE>
CERTIFICATED NOTES
The notes represented by a global note are exchangeable for certificated
notes in definitive form of like terms in denominations of $1,000 and integral
multiples of $1,000 if:
- DTC notifies Armco that it is unwilling or unable to continue as
depositary for such global note or if at any time DTC ceases to be a
clearing agency registered under the Exchange Act;
- Armco in its discretion at any time determines not to have all of the
notes represented by such global note; or
- a default entitling the holders of the notes to accelerate the maturity of
the notes has occurred and is continuing.
53
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of the principal United States federal
income tax consequences to holders of old notes who exchange their old notes for
new notes pursuant to the exchange offer. This discussion is based on currently
existing provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), existing, temporary and proposed Treasury regulations promulgated under
the Code, and administrative and judicial interpretations of the Code, all as in
effect or proposed on the date hereof and all of which are subject to change,
possibly with retroactive effect, or different interpretations. This discussion
is limited to holders of notes who hold the notes as capital assets within the
meaning of section 1221 of the Code. Moreover, this discussion is for general
information only and does not address all of the tax consequences that may be
relevant to holders of old notes and new notes in light of their personal
circumstances or to certain types of holders of old notes and new notes (such as
certain financial institutions, insurance companies, tax-exempt entities,
dealers in securities, investors in pass-through entities, persons that have a
functional currency other than U.S. dollar, or persons who have hedged the risk
of owning notes). In addition, this discussion does not address any tax
consequences arising under the laws of any state, locality or foreign
jurisdiction.
EXCHANGE OF OLD NOTES FOR NEW NOTES
The exchange of the old notes for new notes pursuant to the exchange offer
should not be a taxable exchange for federal income tax purposes. As a result,
no gain or loss should be recognized for federal income tax purposes by holders
who exchange old notes for new notes pursuant to the exchange offer. A holder
who exchanges an old note for a new note should have the same basis and holding
period in the new note immediately after the exchange as the holder had in the
old note immediately before the exchange.
U.S. HOLDERS OF NEW NOTES
The following discussion is limited to the U.S. federal income tax
consequences relevant to a holder of a note that is
- a citizen or resident (as defined in 7701(b)(1) of the Code) of the United
States,
- a corporation organized under the laws of the United States or any
political subdivision of or within the United States,
- an estate or trust, the income of which is subject to U.S. federal income
tax regardless of the source, or
- a trust if a U.S. court is able to exercise primary supervision over the
trust's administration and one or more U.S. persons have authority to
control all of the trust's substantial decisions,
each, a "U.S. holder." Certain U.S. federal income tax consequences relevant to
a holder other than a U.S. holder are discussed separately below.
STATED INTEREST
Interest on a new note will be taxable to a U.S. holder as ordinary interest
income at the time it accrues or is received in accordance with the holder's
method of accounting for tax purposes.
SALE, EXCHANGE OR REDEMPTION OF THE NEW NOTES
Upon the disposition of a new note by sale, exchange or redemption, the U.S.
holder will generally recognize gain or loss equal to the difference between
54
<PAGE>
- the amount realized on the disposition (other than amounts attributable to
accrued interest) and
- the U.S. holder's tax basis in the new note.
A U.S. holder's tax basis in a new note received in exchange for an old note
generally will equal the cost of the note (net of accrued interest) to the U.S.
holder reduced by any payments other than payments of qualified stated interest
made on either the old note or the new note.
Assuming the new note is held as a capital asset, that gain or loss will
generally constitute capital gain or loss and will be long-term capital gain or
loss if the U.S. holder has held the new note and the old note exchanged for the
new note for an aggregate period longer than one year. Long-term capital gain of
a non-corporate U.S. holder is generally subject to a maximum tax rate of 20%.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Under the Code, a U.S. holder of a new note may be subject, under certain
circumstances, to information reporting and/or backup withholding at a 31% rate
with respect to cash payments in respect of interest or the gross proceeds from
dispositions thereof. This withholding applies only if the holder
- fails to furnish its social security or other taxpayer identification
number ("TIN") within a reasonable time after a request therefor,
- furnishes an incorrect TIN,
- fails to report interest properly, or
- fails, under certain circumstances, to provide a certified statement,
signed under penalty of perjury, that the TIN provided is its correct
number and that it is not subject to backup withholding.
Any amount withheld from a payment to a U.S. holder under the backup withholding
rules is allowable as a credit against that holder's U.S. federal income tax
liability (and may entitle the holder to a refund), provided that the required
information is furnished to the Internal Revenue Service. Certain persons are
exempt from backup withholding, including corporations and financial
institutions. Holders of new notes should consult their tax advisors as to their
qualifications for exemption from withholding and the procedure for obtaining
that exemption.
NON-U.S. HOLDERS OF NEW NOTES
The following discussion is limited to the U.S. federal income tax
consequences relevant to a holder of a note that is not
- a citizen or resident of the United States,
- a corporation organized under the laws of the United States or any
political subdivision of or within the United States,
- an estate or trust, the income of which is subject to U.S. federal income
tax regardless of the source, or
- a trust if a U.S. court is able to exercise primary supervision over the
trust's administration and one or more U.S. persons have the authority to
control all of the trust's substantial decisions,
each, a "non-U.S. holder." This discussion does not deal with all aspects of
U.S. federal income and estate taxation that may be relevant to the acquisition,
ownership or disposition of the new notes by any particular non-U.S. holder in
light of that holder's personal circumstances, including holding the new notes
through a partnership. For example, persons who are partners in foreign
partnerships and
55
<PAGE>
beneficiaries of foreign trusts or estates who are subject to U.S. federal
income tax because of their own status, such as United States residents or
foreign persons engaged in a trade or business in the United States, may be
subject to U.S. federal income tax even though the entity is not subject to
income tax on the disposition of its new note.
For purposes of the following discussion, interest and gain on the sale,
exchange or other disposition of a new note will be considered "U.S. trade or
business income" if such income or gain is
- effectively connected with the conduct of a U.S. trade or business, or
- in the case of a treaty resident, attributable to a U.S. permanent
establishment (or to a fixed base) in the United States.
STATED INTEREST
Generally, any interest paid to a non-U.S. holder of a new note that is not
"U.S. trade or business income" will not be subject to United States tax if the
interest qualifies as "portfolio interest." Generally, interest on the new notes
will qualify as portfolio interest if
- the non-U.S. holder does not actually or constructively own 10% or more of
the total voting power of all voting stock of Armco and is not a
controlled foreign corporation with respect to which Armco is a "related
person" within the meaning of the Code, and
- the beneficial owner, under penalty of perjury, certifies that the
beneficial owner is not a United States person and such certificate
provides the beneficial owner's name and address.
The gross amount of payments to a non-U.S. holder of interest that do not
qualify for the portfolio interest exception and that are not U.S. trade or
business income will be subject to U.S. federal income tax at the rate of 30%
unless a U.S. income tax treaty applies to reduce or eliminate withholding. U.S.
trade or business income will be taxed at regular U.S. rates rather than the 30%
gross rate. To claim the benefit of a tax treaty or to claim exemption from
withholding because the income is U.S trade or business income, the non-U.S.
holder must provide a properly executed Form 1001 or 4224, as applicable, prior
to the payment of interest. The Forms 1001 and 4224 must be periodically
updated.
SALE, EXCHANGE OR REDEMPTION OF NEW NOTES
Except as described below and subject to the discussion concerning backup
withholding, any gain realized by a non-U.S. holder on the sale, exchange or
redemption of a new note generally will not be subject to U.S. federal income
tax, unless
- such gain is U.S. trade or business income,
- subject to certain exceptions, the non-U.S. holder is an individual who
holds the new notes as a capital asset and is present in the United States
for 183 days or more in the taxable year of the disposition, or
- the non-U.S. holder is subject to tax pursuant to the provisions of U.S.
tax law applicable to certain U.S. expatriates.
FEDERAL ESTATE TAX
New notes held (or treated as held) by an individual who is a non-U.S.
holder at the time of his death will not be subject to U.S. federal estate tax
provided that the individual does not actually or
56
<PAGE>
constructively own 10% or more of the total voting power of all voting stock of
Armco and income on the new notes is not U.S. trade or business income.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Armco must report annually to the Service and to each non-U.S. holder any
interest that is subject to withholding or that is exempt from U.S. withholding
tax pursuant to a tax treaty or the portfolio interest exception. Copies of
these information returns may also be made available under the provisions of a
specific treaty or agreement to the tax authorities of the country in which the
non-U.S. holder resides.
In the case of payments of principal on the new notes by Armco to a non-U.S.
holder, the regulations provide that backup withholding and information
reporting will not apply to payments if the holder certifies to its non-U.S.
status under penalty of perjury or otherwise establishes an exemption (provided
that neither Armco nor its paying agent has actual knowledge that the holder is
a United States person or that the conditions of any other exemption are not, in
fact, satisfied).
The payment of the proceeds from the disposition of new notes to or through
the United States office of any broker, U.S. or foreign, will be subject to
information reporting and possible backup withholding unless the owner certifies
its non-U.S. status under penalty of perjury or otherwise establishes an
exemption, provided that the broker does not have actual knowledge that the
holder is a U.S. person or that the conditions of any other exemption are not,
if fact, satisfied. The payment of the proceeds from the disposition of a new
note to or through a non-U.S. office of a non-U.S. broker that is not a U.S.
related person will not be subject to information reporting or backup
withholding. For this purpose, a "U.S. related person" is
- a "controlled foreign corporation" for U.S. federal income tax purposes,
- a foreign person 50% or more of whose gross income from all sources for
the three-year period ending with the close of its taxable year preceding
the payment (or for such part of the period that the broker has been in
existence) is derived from activities that are effectively connected with
the conduct of a United States trade or business, or
- with respect to payments made after December 31, 1999, a foreign
partnership that, at any time during its taxable year, is 50% or more (by
income or capital interest) owned by U.S. persons or is engaged in the
conduct of a U.S. trade or business.
In the case of the payment of proceeds from the disposition of new notes to
or through a non-U.S. office of a broker that is either a U.S. person or a "U.S.
related person," regulations require information reporting on the payment,
unless the broker has documentary evidence in its files that the owner is a
non-U.S. holder and the broker has no knowledge to the contrary. Backup
withholding will not apply to payments made through foreign offices of a broker
that is a U.S. person or a U.S. related person (absent actual knowledge that the
payee is a U.S. person).
Any amounts withheld under the backup withholding rules from a payment to a
non-U.S. holder will be allowed as a refund or a credit against such non-U.S.
holder's U.S. federal income tax liability, provided that the requisite
procedures are followed.
57
<PAGE>
PLAN OF DISTRIBUTION
Based on an interpretation by the staff of the Commission set forth in
no-action letters issued to third parties in similar transactions, we believe
that the new notes issued in the exchange offer in exchange for the old notes
may be offered for resale, resold and otherwise transferred by holders (other
than any such holder which is our "affiliate" within the meaning of Rule 405
under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act. However, this applies only
if the new notes are acquired in the ordinary course of such holders' business
and such holders have no arrangement with any person to participate in the
distribution of such new notes. We refer you to the "Morgan Stanley & Co. Inc."
SEC No-Action Letter (available June 5, 1991), "Exxon Capital Holdings
Corporation" SEC No-Action Letter (available May 13, 1988) and "Shearman &
Sterling" SEC No-Action Letter (available July 2, 1993) for support of this
belief.
Each broker-dealer that receives new notes for its own account in the
exchange offer must acknowledge that it will deliver a prospectus with any
resale of such new notes. This prospectus, as it may be amended or supplemented
from time to time, may be used by a broker-dealer in connection with resales of
new notes received in exchange for old notes where such old notes were acquired
as a result of market-making activities or other trading activities. We have
agreed that starting on the expiration date of the exchange offer and ending on
the close of business one year after the expiration date of the exchange offer,
we will make this prospectus, as amended or supplemented, available to any
broker-dealer for use in connection with any such resale. In addition, until
, 1999, all dealers effecting transactions in the new notes may be
required to deliver this prospectus.
We will not receive any proceeds from any sale of new notes by
broker-dealers or any other persons. New notes received by broker-dealers for
their own account in the exchange offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the new notes or a combination of such methods
of resale, at market prices prevailing at the time of resale, at prices related
to such prevailing market prices or negotiated prices. Any such resale may be
made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such new notes. Any broker-dealer
that resells new notes that were received by it for its own account pursuant to
the exchange offer and any broker or dealer that participates in a distribution
of such new notes may be deemed to be an underwriter within the meaning of the
Securities Act, and any profit on any such resale of new notes and any
commissions or concessions received by any such persons may be underwriting
compensation under the Securities Act. The letter of transmittal states that by
acknowledging that it will deliver and by delivering a prospectus meeting the
requirements of the Securities Act, a broker-dealer will not be admitting that
it is an underwriter within the meaning of the Securities Act.
For a period of one year after the expiration date of the exchange offer,
Armco will promptly send additional copies of this prospectus and any amendment
or supplement to this prospectus to any broker-dealer that requests such
documents in the letter of transmittal. We have agreed to pay all expenses
incident to the exchange offer (including the expenses of one counsel for the
holders of the old notes), other than commissions or concessions of any brokers
or dealers. We have agreed to indemnify holders of the notes (including any
broker-dealers) against certain liabilities, including certain liabilities under
the Securities Act.
58
<PAGE>
LEGAL MATTERS
Arnold & Porter, New York, New York, will pass upon the validity of the new
notes for Armco.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference from Armo Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1997 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated herein by reference,
and have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
59
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$75,000,000
ARMCO INC.
8 7/8% SENIOR NOTES DUE 2008
[LOGO]
------
P R O S P E C T U S
, 1999
---------
UNTIL , 1999, ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE
SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 1701.13(E) of the Ohio Revised Code, under which law Armco is
incorporated, grants corporations the power to indemnify a director, officer,
employee or agent against expenses, including attorney's fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with any proceeding, other than a derivative action, to which he is a
party by reason of the fact that he is or was a director, officer, employee or
agent of the corporation or was serving in a similar capacity with another
entity at the request of the corporation if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation and, with respect to any criminal action or proceeding, he had
no reason to believe his conduct was unlawful. In the case of a derivative
action, indemnification is limited to expenses and no indemnification shall be
made in respect of (i) any claim, issue or matter as to which such person is
adjudged to be liable for negligence or misconduct in the performance of his
duty to the corporation unless, and only to the extent that, a court determines,
despite the adjudication of liability, but in view of all the circumstances of
the case, that such person is fairly and reasonably entitled to indemnity for
expenses or (ii) any action or suit in which the only liability asserted against
a director is pursuant to Section 1701.95 of the Revised Code dealing with
unlawful loans, dividends and distribution of assets. Indemnification for
expenses is mandatory under the statutory provisions if the person has been
successful on the merits or otherwise in any such proceeding. The
indemnification authorized by statute is not exclusive.
Article IV of Armco's regulations provides that Armco shall indemnify
directors, officers, employees or agents to the full extent permitted by
applicable law and may, subject to certain exceptions, do so in cases where
applicable law does not provide for indemnification if authorized by the
directors upon the determination that such indemnification is in the best
interest of Armco.
Armco maintains insurance policies insuring Armco and its directors and
officers against claims resulting from defined acts or omissions to act, subject
to various exclusions, including pollution and antitrust claims and claims
resulting from dishonesty. After certain deductibles, policies cover up to
$50,000,000 for all losses in the year.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<S> <C>
3.1 --Articles of Incorporation of Armco Inc., as amended as of April 4, 1996 (incorporated herein by
reference to Exhibit 3(a) to Armco's Annual Report on Form 10-K for the year ended December 31,
1997).
3.2 --Regulations of Armco Inc. (incorporated herein by reference to Exhibit 3(b) to Armco's Annual
Report on Form 10-K for the year ended December 31, 1997).
4.1 --Armco hereby agrees to furnish to the Securities and Exchange Commission, upon its request, a copy
of each instrument defining the rights of holders of long-term debt of Armco and its subsidiaries,
omitted pursuant to Item 601(b)(4)(iii) of Regulation S-K.
4.2 --Indenture, dated as of November 1, 1993, between Armco and Star Bank, N.A. (the "Indenture")
(incorporated herein by reference to Exhibit 4 to Armco's Registration Statement on Form S-3, No.
33-50205 ("Registration No. 33-50205")).
4.3 --Supplemental Indenture No. 2, dated as of December 15, 1998, to the Indenture (including form of
Senior Notes).*
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
4.4 --Registration Agreement, dated as of December 10, 1998 among Armco, Salomon Smith Barney Inc., Chase
Securities Inc. and PNC Capital Markets, Inc.*
<S> <C>
5 --Opinion of Arnold and Porter (with opinion of Gary R. Hildreth, Esq. attached).**
12 --Ratio of Earnings to Fixed Charges.*
23.1 --Consent of Deloitte & Touche LLP.*
23.2 --Consent of Arnold and Porter.**
24 --Powers of Attorney.*
25 --Statement of Eligibility on Form T-1 of Star Bank, N.A. (incorporated herein by reference to
Exhibit 25 to Registration No. 33-50205).
99.1 --Form of Letter of Transmittal.*
99.2 --Form of Notice of Guaranteed Delivery.*
99.3 --Form of Exchange Agent Agreement.**
</TABLE>
- ------------------------
* Filed herewith
** To be filed by amendment
(B) SCHEDULES
All schedules are omitted as the required information is presented in the
registrant's consolidated financial statements or related notes or such
schedules are not applicable.
ITEM 22. UNDERTAKINGS.
(a) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(b) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
(c) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant,
Armco Inc., certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-4 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the city of Pittsburgh, Commonwealth of Pennsylvania.
<TABLE>
<S> <C> <C>
Date: January 22, 1999 ARMCO INC.
By: *
-----------------------------------------
James F. Will
CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF
EXECUTIVE OFFICER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on January 22, 1999.
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
* Chairman of the Board, January 22, 1999
- ------------------------------ President, Chief Executive
James F. Will Officer and Director
* Vice President and Chief January 22, 1999
- ------------------------------ Financial Officer
Jerry W. Albright
* Vice President and January 22, 1999
- ------------------------------ Controller
John N. Davis
* Director January 22, 1999
- ------------------------------
Dan R. Carmichael
Director
- ------------------------------
Paula H.J. Cholmondeley
* Director January 22, 1999
- ------------------------------
Dorothea C. Gilliam
* Director January 22, 1999
- ------------------------------
John C. Haley
* Director January 22, 1999
- ------------------------------
Charles J. Hora, Jr.
<PAGE>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
* Director January 22, 1999
- ------------------------------
Bruce E. Robbins
* Director January 22, 1999
- ------------------------------
Jan H. Suwinski
* Director January 22, 1999
- ------------------------------
John D. Turner
* By his signature set forth below, Gary R. Hildreth has signed this
registration statement as attorney for the persons noted above, in the
capacities above stated, pursuant to powers of attorney filed with the
Securities and Exchange Commission as exhibits to this registration
statement.
By: /s/ GARY R. HILDRETH
-------------------------
Gary R. Hildreth
ATTORNEY-IN-FACT
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------
<S> <C> <C>
3.1 --Articles of Incorporation of Armco Inc., as amended as of April 4, 1996 (incorporated
herein by reference to Exhibit 3(a) to Armco's Annual Report on Form 10-K for the year
ended December 31, 1997).
3.2 --Regulations of Armco Inc. (incorporated herein by reference to Exhibit 3(b) to Armco's
Annual Report on Form 10-K for the year ended December 31, 1997).
4.1 --Armco hereby agrees to furnish to the Securities and Exchange Commission, upon its request,
a copy of each instrument defining the rights of holders of long-term debt of Armco and its
subsidiaries, omitted pursuant to Item 601(b)(4)(iii) of Regulation S-K.
4.2 --Indenture, dated as of November 1, 1993, between Armco and Star Bank, N.A. (the
"Indenture") (incorporated herein by reference to Exhibit 4 to Armco's Registration
Statement on Form S-3, No. 33-50205 ("Registration No. 33-50205")).
4.3 --Supplemental Indenture No. 2, dated as of December 15, 1998, to the Indenture (including
form of Senior Notes).*
4.4 --Registration Agreement, dated as of December 10, 1998 among Armco, Salomon Smith Barney
Inc., Chase Securities Inc. and PNC Capital Markets, Inc.*
5 --Opinion of Arnold and Porter.**
12 --Ratio of Earnings to Fixed Charges.*
23.1 --Consent of Deloitte & Touche LLP.*
23.2 --Consent of Arnold and Porter.**
24 --Powers of Attorney.*
25 --Statement of Eligibility on Form T-1 of Star Bank, N.A. (incorporated herein by reference
to Exhibit 25 to Registration No. 33-50205).
99.1 --Form of Letter of Transmittal.*
99.2 --Form of Notice of Guaranteed Delivery.*
99.3 --Form of Exchange Agent Agreement.**
</TABLE>
- ------------------------
* Filed herewith
** To be filed by amendment
<PAGE>
Exhibit 4.3
ARMCO INC.
To
STAR BANK, N.A.,
Trustee
- --------------------------------------------------------------------------------
SUPPLEMENTAL INDENTURE NO. 2
Dated as of December 15, 1998
to
INDENTURE
Dated as of November 1, 1993
- --------------------------------------------------------------------------------
U.S. $125,000,000
8 7/8% Notes Due 2008
<PAGE>
ARMCO INC.
SUPPLEMENTAL INDENTURE NO. 2
Dated as of December 15, 1998
8 7/8% Initial Notes Due 2008
8 7/8% Exchange Notes Due 2008
SUPPLEMENTAL INDENTURE NO. 2, dated as of December 15, 1998,
between ARMCO INC., a corporation duly organized and existing under the laws of
the State of Ohio with executive offices located at One Oxford Centre, 301 Grant
Street, Pittsburgh, PA 15219-1415 (hereinafter sometimes called the "Company")
and Star Bank, N.A., with offices located at 425 Walnut Street, Cincinnati,
Ohio, 45202 (hereinafter sometimes called the "Trustee"), as Trustee under an
indenture of the Company dated as of November 1, 1993 (the "Base Indenture") as
supplemented by Supplemental Indenture No. 1 dated as of November 1, 1993
(together, the "Indenture").
RECITALS OF THE COMPANY
Section 2.01 of the Indenture provides for the issuance from
time to time of debentures, notes, bonds or other evidences of indebtedness (the
"Debt Securities") of the Company, issuable for the purposes and subject to the
limitations contained in the Indenture. The Company has duly authorized the
creation of an issue of its Debt Securities named its 8 7/8% Notes
Due 2008 (hereinafter the "Initial Notes") of the tenor and in the amount
hereinafter set forth and, if and when issued pursuant to a registered exchange
for the Initial Notes as contemplated by the Registration Agreement, the
Company's 8 7/8% Exchange Notes Due 2008, (hereinafter the "Exchange
Notes" and, together with the Initial Notes, the "Notes").
Section 10.01 of the Indenture provides that the Company, when
authorized by a resolution of its Board of Directors, and the Trustee may from
time to time and at any time enter into one or more indentures supplemental to
the Indenture to establish, among other things, the form and terms of Debt
Securities of any series as permitted by Section 2.02 of the Indenture and to
add to the covenants of the Company for the benefit of the Holders of all or any
series of Debt Securities or to surrender any right or power therein conferred
upon the Company.
The Company has duly authorized the execution and delivery of
this Supplemental Indenture No. 2, and all things necessary have been done to
make Notes having an aggregate principal amount of $75,000,000, when executed by
the Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Supplemental
Indenture No. 2 a valid agreement of the Company, in accordance with its terms.
<PAGE>
NOW, THEREFORE, THIS SUPPLEMENTAL
INDENTURE NO. 2 WITNESSETH:
For and in consideration of the premises and the purchase of
the Debt Securities of the series provided for herein, it is mutually covenanted
and agreed, for the equal and proportionate benefit of all Holders of the Debt
Securities of such series, as follows:
ARTICLE I.
THE SERIES OF NOTES
SECTION 101. The aggregate principal amount (except as
provided in Section 2.08 of the Indenture) of Notes which may be authenticated
and delivered according to the terms of this Supplemental Indenture No. 2 is
specified in Section 2.2 of Appendix A hereto. The Initial Notes and the
Exchange Notes shall for purposes of the Indenture, constitute a single Series
of Debt Securities.
SECTION 102. Provisions relating to the Initial Notes and the
Exchange Notes are set forth in Appendix A, which is hereby incorporated in and
expressly made part of this Supplemental Indenture No. 2. The Initial Notes 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 Supplemental Indenture No. 2. The Exchange Notes and the Trustee's
certificate of authentication shall be substantially in the form of Exhibit 2 to
Appendix A, which is hereby incorporated in and expressly made a part of this
Supplemental Indenture No. 2. The Notes may have notations, legends or
endorsements required by law, stock exchange rule, agreements to which the
Company is subject, if any, or usage (provided that any such notation, legend or
endorsement is in a form acceptable to the Company). Each Note shall be dated
the date of its authentication. The terms of the Notes set forth in Exhibits 1
and 2 to Appendix A are part of the terms of this Supplemental Indenture No. 2.
If any provision of this Supplemental Indenture No. 2 limits, qualifies, or
conflicts with any term or provision of the Notes, such provision in the Notes
shall control.
ARTICLE II.
RELATION TO INDENTURE; DEFINITIONS
SECTION 201. RELATION TO THE INDENTURE. This Supplemental
Indenture No. 2 constitutes an integral part of the Indenture and shall be
construed in connection with and as part of the Indenture.
SECTION 202. DEFINITIONS IN THE INDENTURE. For all purposes of
this Supplemental Indenture No. 2, capitalized terms used herein without
definition shall have the meanings specified in the Indenture. If any term is
defined in this Supplemental Indenture No. 2
2
<PAGE>
and in the Indenture, such term shall have the meaning assigned to it in this
Supplemental Indenture No. 2.
SECTION 203. DEFINITIONS. For all purposes of this
Supplemental Indenture No. 2, except as expressly provided or the context
otherwise requires:
"Additional Assets" means (i) any Property or assets (other
than Indebtedness and Capital Stock) that the Board of Directors determines to
be useful in the conduct of the business of the Company and its Subsidiaries,
whether or not such business is conducted on the date of the original issuance
of the Notes ("Approved Business"), (ii) the 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, or (iii) Capital Stock
constituting a minority interest in any Person that at such time is a Restricted
Subsidiary; PROVIDED, HOWEVER, that any such Restricted Subsidiary described in
clause (ii) or (iii) above is primarily engaged in an Approved Business.
"Additional Core Assets" means (i) any Property or assets
(other than Indebtedness or Capital Stock) used or intended for use in the Core
Business, (ii) the Capital Stock of a Person engaged in the Core Business that
becomes a Restricted Subsidiary as a result of the acquisition of such Capital
Stock by the Company or another Restricted Subsidiary engaged in the Core
Business, or (iii) Capital Stock constituting a minority interest in any Person
that at such time is a Restricted Subsidiary engaged in the Core Business.
"Affiliate" means, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (including,
with its correlative meanings, "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership, membership or other ownership interests, by contract or otherwise),
provided that, in any event, each Unrestricted Subsidiary shall be deemed to be
an Affiliate of the Company and of each other Subsidiary. Notwithstanding the
foregoing, no individual shall be deemed to be an Affiliate of a Person solely
by reason of his or her being an officer or director (or equivalent) of such
Person and neither the Company nor any of its Restricted Subsidiaries shall be
deemed to be Affiliates of each other.
"AFSC" means Armco Financial Services Corporation.
"Asset Sale" means, with respect to any Person, any transfer,
conveyance, sale, lease or other disposition (including, without limitation,
dispositions pursuant to any consolidation or merger, but excluding any
Restricted Payment or Sale and Leaseback Transaction) by such Person or any of
its Restricted Subsidiaries (including any consolidation, merger or other sale
of any such Restricted Subsidiaries with, into or to another Person in a
transaction in which such Restricted Subsidiary ceases to be a Restricted
Subsidiary, but excluding a disposition by a Restricted Subsidiary of such
Person to such Person or a wholly owned Restricted Subsidiary of such Person or
by such Person to a wholly owned Restricted Subsidiary of such Person) in any
single transaction or series of transactions of (i) shares of
3
<PAGE>
Capital Stock (other than directors' qualifying shares) or other ownership
interests of a Restricted Subsidiary of such Person, (ii) all or substantially
all the Property of any division, business segment or comparable line of
business of such Person or any of its Restricted Subsidiaries or (iii) any other
Property of such Person or any of its Restricted Subsidiaries having a Fair
Market Value in excess of $5,000,000 and transferred, conveyed, sold, leased or
otherwise disposed of outside of the ordinary course of business of such Person
or Restricted Subsidiary; PROVIDED that the term "Asset Sale," when used with
respect to the Company, shall not include (x) any asset disposition permitted
pursuant to Section 310 which constitutes a disposition of all or substantially
all of the Company's assets, (y) a disposition of obsolete assets in the
ordinary course of business or (z) a sale or transfer of accounts receivable
under the Credit Facilities.
"Attributable Value" means, as to any particular lease under
which any Person is at the time liable other than a Capital Lease Obligation,
and at any date as of which the amount thereof is to be determined, the total
net amount of rent required to be paid by such Person under such lease during
the initial term thereof as determined in accordance with GAAP, discounted from
the last date of such initial term to the date of determination at a rate per
annum equal to the discount rate which would be applicable to a Capital Lease
Obligation with like term in accordance with GAAP. The net amount of rent
required to be paid under any such lease for any such period shall be the
aggregate amount of rent payable by the lessee with respect to such period after
excluding amounts required to be paid on account of insurance, taxes,
assessments, utility, operating and labor costs and similar charges. In the case
of any lease which is terminable by the lessee upon the payment of a penalty,
such net amount shall also include the amount of such penalty, but no rent shall
be considered as required to be paid under such lease subsequent to the first
date upon which it may be so terminated. "Attributable Value" means, as to a
Capital Lease Obligation under which any Person is at the time liable and at any
date as of which the amount thereof is to be determined, the capitalized amount
thereof that would appear on the face of the balance sheet of such Person in
accordance with GAAP.
"Average Life" means, as of any date, with respect to any debt
security or redeemable Preferred Stock, the quotient obtained by dividing (i)
the sum of the products of (x) the number of years from such date to the date of
each scheduled principal or redemption (including any sinking fund or mandatory
redemption payment requirements) of such debt or equity security multiplied in
each case by (y) the amount of such principal or redemption payment by (ii) the
sum of all such principal or redemption payments.
"Bankruptcy Code" means the Federal Bankruptcy Act or Title 11
of the United States Code.
"Capital Expenditure Indebtedness" means Indebtedness Incurred
by any Person to finance the purchase or construction of any Property acquired
(other than from an Affiliate) or constructed by such Person so long as (i) the
purchase or construction price for such Property is or should be included in
"addition to property, plant or equipment" in accordance with GAAP, (ii) the
acquisition or construction of such Property is not part of any acquisition of a
Person or business unit, and (iii) such Indebtedness is Incurred within 360 days
of the acquisition or completion of construction of such Property.
4
<PAGE>
"Capital Lease Obligation" of any Person means the obligation
to pay rent or other payment amounts under a lease of (or other Indebtedness
arrangement conveying the right to use) real or personal property of such Person
which is required to be classified and accounted for as a capital lease or a
liability on the face of a balance sheet of such Person in accordance with GAAP.
"Capital Stock" in any Person means any and all shares,
interests, participations or other equivalents in the equity interest (however
designated) in such Person and any rights (other than debt securities
convertible into an equity interest), warrants or options to subscribe for or to
acquire an equity interest in such Person.
"Change of Control" means an event or series of events by
which (i)(A) the Company consolidates with or merges into any other Person or
conveys, transfers or leases all or substantially all of its assets to any
Person or group of Persons or (B) any Person consolidates with or merges into
the Company, in the case of either (A) or (B) pursuant to a transaction or
series of transactions (other than a transaction or series of transactions
between the Company and a wholly owned Restricted Subsidiary of the Company) as
a result of which the existing shareholders of the Company immediately prior
thereto hold less than 50% of the combined voting power of the Voting Stock of
the surviving Person, or (ii) any "person" or "group" (each as defined in
Section 13(d)(3) of the Exchange Act) becomes the "beneficial owner" (as defined
under Rule 13d-3 of the Exchange Act), directly or indirectly, of 50% or more of
the total voting power of all classes of Voting Stock of the Company, or (iii)
during any period of two consecutive years, individuals who at the beginning of
such period constituted the Board of Directors (together with any new or
replacement directors whose election by the Board of Directors or whose
nomination for election by the Company's stockholders was approved by a vote of
at least 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
directors then in office.
"Change of Control Offer" has the meaning given such term in
Section 305(a).
"Change of Control Payment Date" has the meaning given such
term in Section 305(b).
"Comparable Treasury Issue" means the United States Treasury
security selected by an Independent Investment Banker that would be utilized, at
the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the Notes.
"Comparable Treasury Price" means, with respect to any
redemption date, (i) the average of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
on the third business day preceding such redemption date, as set forth in the
daily statistical release (or any successor release) published by the Federal
Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Securities" or (ii) if such release (or any successor release) is not published
or does not contain such prices on such business day, (A) the average of the
Reference Treasury Dealer Quotations
5
<PAGE>
for such redemption date, (B) if the Trustee is able to obtain only one
Reference Treasury Dealer Quotation from the Reference Treasury Dealers, such
Quotation, or (C) if the Trustee is not able to obtain any Reference Treasury
Dealer Quotations from the Reference Treasury Dealers, the average of the
Reference Treasury Dealer Quotations obtained from two other Primary Treasury
Dealers designated by the Company as Reference Treasury Dealers for the purpose
of determining such Comparable Treasury Price.
"Consolidated EBITDA" of any Person means, for any period, the
Consolidated Net Income of such Person, (i) increased (to the extent deducted in
determining Consolidated Net Income) by the sum of (A) all income taxes of such
Person and its Restricted Subsidiaries paid or accrued in accordance with GAAP
(other than income taxes attributable to extraordinary gains), (B) the
Consolidated Interest Expense of such Person and its Restricted Subsidiaries for
such period, other than interest capitalized by such Person or its Restricted
Subsidiaries during such period, (C) depreciation and amortization expenses of
such Person and its Restricted Subsidiaries for such period, including without
limitation, amortization of capitalized debt issuance costs, and (D) other
non-cash items of such Person and its Restricted Subsidiaries for such period to
the extent such non-cash items reduce Consolidated Net Income (excluding any
non-cash charge that will require cash payments and for which an accrual or
reserve is, or is required by GAAP to be, made) MINUS non-cash items to the
extent such non-cash items increase the Consolidated Net Income (excluding any
items which represent the reversal of any accrual or reserve for cash charges
established in any prior period) of such Person and its Restricted Subsidiaries
and (ii) decreased (to the extent included in determining Consolidated Net
Income) by any revenues accrued but not received by such Person or any of its
Restricted Subsidiaries from any other Person (other than such Person or its
Restricted Subsidiaries) in respect of any Investment for such period, all as
determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Coverage Ratio" means, with respect to
any Person, the ratio of (i) the aggregate amount of Consolidated EBITDA of such
Person for the four consecutive fiscal quarters for which consolidated financial
statements in respect thereof are available immediately prior to the relevant
Transaction Date (the "Determination Period") to (ii) the aggregate amount of
Consolidated Interest Expense of such Person for the Determination Period;
PROVIDED, HOWEVER, that for purposes of calculating the Consolidated Interest
Coverage Ratio of any specified Person, the Consolidated EBITDA and Consolidated
Interest Expense of such specified Person shall be calculated on a PRO FORMA
basis as if the transaction giving rise to the need to calculate the
Consolidated Interest Coverage Ratio had taken place on the first day of the
Determination Period, and shall (A) include the Consolidated Interest Expense in
respect of any Indebtedness Incurred by such Person subsequent to the first day
of the Determination Period and prior to the Transaction Date as if such
Indebtedness had been Incurred on the first day of the Determination Period, (B)
exclude, from the first day of the Determination Period, the Consolidated
Interest Expense in respect of (1) any Indebtedness of such Person that has been
redeemed or retired subsequent to the first day of the Determination Period and
prior to the Transaction Date and (2) if the transaction giving rise to the need
to calculate the Consolidated Interest Coverage Ratio is an Incurrence of
Indebtedness, any Indebtedness (x) that the Company anticipates as of the time
of determination will be redeemed or retired with the proceeds of, and within 90
days following the Incurrence of, such Indebtedness giving rise to such need or
(y)
6
<PAGE>
with respect to which the Company has deposited or caused to be deposited
irrevocably with the Trustee or Fiscal Agent for such Indebtedness funds
sufficient to redeem or retire such Indebtedness or has irrevocably committed to
redeem such Indebtedness, (C) include the Consolidated EBITDA and Consolidated
Interest Expense of any other Person acquired subsequent to the first day of the
Determination Period and prior to the Transaction Date by such specified Person
as a Restricted Subsidiary of such specified Person as if such Person had been
acquired on the first day of the Determination Period, (D) exclude, from the
first day of the Determination Period, the Consolidated EBITDA of such specified
Person directly attributable to any Property of such specified Person
(including, without limitation, Capital Stock) which was the subject of an Asset
Sale at any time subsequent to the first day of the Determination Period and
prior to the Transaction Date and (E) for purposes of Section 303 and Section
310 where the Consolidated Interest Coverage Ratio is calculated to give effect
to the transaction giving rise to the need to calculate the Consolidated
Interest Coverage Ratio, such calculation shall also include the Consolidated
EBITDA and Consolidated Interest Expense of any other Person to be acquired by
such specified Person as a Restricted Subsidiary of such specified Person in
connection with the transaction giving rise to the need to calculate the
Consolidated Interest Coverage Ratio. When the Consolidated Interest Coverage
Ratio is determined with respect to the Company, the term "Restricted
Subsidiary" shall be deemed to include any Unrestricted Subsidiary that became a
Restricted Subsidiary at any time between the first day of the Determination
Period and the Transaction Date, PROVIDED that such Subsidiary is a Restricted
Subsidiary on the Transaction Date.
"Consolidated Interest Expense" means, with respect to any
Person for any period, without duplication (i) the sum of (A) the aggregate
amount of cash and non-cash interest expense (net of interest income) of such
Person and its Restricted Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP in respect of Indebtedness
(including, without limitation, (u) capitalized interest, (v) any amortization
of debt discount, (w) net costs associated with Interest Rate Protection
Agreements (including any amortization of discounts), (x) the interest portion
of any deferred payment obligation, (y) all accrued interest, and (z) all
commissions, discounts and other fees and charges owed with respect to letters
of credit, bankers' acceptances or similar facilities) paid, accrued or
scheduled to be paid or accrued, during such period; (B) Preferred Stock
dividends of such Person (and of its Restricted Subsidiaries if paid to a Person
other than such Person or its Restricted Subsidiaries) declared and payable in
cash; (C) the portion of any rental obligation of such Person or its Restricted
Subsidiaries in respect of any Capital Lease Obligation allocable to interest
expense in accordance with GAAP; (D) the portion of any rental obligation of
such Person or its Restricted Subsidiaries in respect of any Sale and Leaseback
Transaction allocable to interest expense (determined as if such were treated as
a Capital Lease Obligation); and (E) to the extent any Indebtedness of any other
Person is Guaranteed by such Person or any of its Restricted Subsidiaries (other
than Guarantees relating to obligations of customers, either of such Person or
any of its Restricted Subsidiaries, that are made in the ordinary course of
business consistent with the past practices of such Person or such Restricted
Subsidiaries), the aggregate amount of interest paid, accrued or scheduled to be
paid or accrued, by such other Person during such period attributable to any
such Indebtedness, less (ii) to the extent included in (i) above, amortization
or write-off of deferred financing costs of such Person and its Restricted
7
<PAGE>
Subsidiaries during such period and any charge related to any premium or penalty
paid in connection with redeeming or retiring any Indebtedness of such Person
and its Restricted Subsidiaries prior to its Stated Maturity; in the case of
both (i) and (ii) above, after elimination of intercompany accounts among such
Person and its Restricted Subsidiaries and as determined in accordance with
GAAP.
"Consolidated Net Income" of any Person means, for any period,
the aggregate net income (or net loss) of such Person and its Restricted
Subsidiaries for such period on a consolidated basis determined in accordance
with GAAP; PROVIDED that there shall be excluded therefrom, without duplication,
(i) all items classified as extraordinary, (ii) any net loss or net income of
any Person other than such Person and its Restricted Subsidiaries, except to the
extent of the amount of dividends or other distributions actually paid to such
Person or its Restricted Subsidiaries by such other Person during such period,
(iii) the net income of any Person acquired by such Person or any of its
Restricted Subsidiaries in a pooling-of-interests transaction for any period
prior to the date of such acquisition, (iv) any gain or loss, net of taxes,
realized on the termination of any employee pension benefit plan, (v) gains or
losses in respect of Asset Sales by such Person or its Restricted Subsidiaries,
(vi) the net income of any Restricted Subsidiary of such Person to the extent
that the payment of dividends or other distributions to such Person is
restricted by contract or otherwise, except for any dividends or distributions
actually paid by such Restricted Subsidiary to such Person, (vii) any
extraordinary, unusual or nonrecurring gains or losses (and related tax effects)
in accordance with GAAP, and (viii) the effect of the adoption of Statement of
Financial Accounting Standards No. 106 ("SFAS 106") to the extent expenses
recognized pursuant to such adoption exceed the amounts with respect to such
expenses which would have been recognized during such period using the "pay as
you go" accounting method; PROVIDED FURTHER that there shall be included in
determining the net income or net loss of such person expenses that would have
been recognized using the "pay as you go" accounting method to the extent that
such expenses exceed the expenses recognized during such period pursuant to SFAS
106.
"Consolidated Net Tangible Assets" of any Person means the sum
of Tangible Assets of such Person and its Restricted Subsidiaries after
eliminating inter-company items, all determined in accordance with GAAP,
including appropriate deductions for any minority interest in Tangible Assets of
such Restricted Subsidiaries.
"Consolidated Net Worth" of any Person means the stockholders'
equity of such Person and its Restricted Subsidiaries, as determined on a
consolidated basis in accordance with GAAP, less amounts attributable to
Redeemable Stock of such Person.
"Core Business" means the specialty flat-rolled steel
business.
"Corporation" includes corporations, associations, companies
and business trusts.
"Credit Facilities" means the two bank credit facilities dated
as of December 22, 1995 between the Company or Armco Funding Corporation, on the
one hand, and the banks signatory thereto on the other, and all related notes,
collateral documents, guarantees, instruments
8
<PAGE>
and other agreements executed in connection therewith, as the same may be
amended, modified, supplemented, restated or Refinanced from time to time.
"Default" means any event, act or condition the occurrence of
which is, or after notice or the passage of time or both would be, an Event of
Default.
"Determination Period" has the meaning specified in Section
203 under the definition of "Consolidated Interest Coverage Ratio."
"Discharge" or "Discharged" means that the Company shall be
deemed to have paid and discharged the entire indebtedness represented by, and
obligations under the Notes and to have satisfied all the obligations under the
Indenture relating to the Notes (and the Trustee, at the expense of the Company,
shall execute proper instruments acknowledging the same and satisfaction of and
discharging this Supplemental Indenture No. 2).
"Eligible Receivables" means, as of any date, trade
receivables (less allowance for doubtful accounts) of the Company and its
Restricted Subsidiaries that would be shown on a consolidated balance sheet of
the Company and its Restricted Subsidiaries as of that date prepared in
accordance with GAAP.
"Equity Offering" means a registered public offering of common
stock of the Company resulting in net proceeds to the Company in excess of $25.0
million.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations promulgated thereunder.
"Expiration Date" has the meaning specified in Section 309.
"Fair Market Value" means, with respect to the total
consideration received pursuant to any Asset Sale or any non-cash consideration
received by any Person, the fair market value of such consideration as
determined in good faith by the Board of Directors as evidenced by a Certified
Resolution.
"fiscal year" means, with respect to the Company, the twelve
consecutive months ending December 31.
"GAAP" or "generally accepted accounting principles," with
respect to any computation required or permitted hereunder shall, except as
otherwise specifically provided, mean such accounting principles as are
generally accepted in the United States of America at the date of such
computation.
"Guarantee" by an Person means 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, without limitation, any
obligation of such Person, (i) to purchase or pay (or advance or supply
9
<PAGE>
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, (ii) to purchase Property, securities or services for the
purpose of assuring the holder of such Indebtedness of the payment of such
Indebtedness, or (iii) to maintain working capital, equity capital or other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness (and "Guaranteed,"
"Guaranteeing" and "Guarantor" shall have meanings correlative to the
foregoing); PROVIDED, HOWEVER, that a Guarantee by any Person shall not include
endorsements by such Person for collection or deposit, in either case, in the
ordinary course of business.
"Incur" means, with respect to any Indebtedness or other
obligation of any Person, to create, issue, incur (by conversion, exchange or
otherwise), extend, assume, Guarantee or otherwise become liable in respect of
such Indebtedness or other obligation or the recording, as required pursuant to
GAAP or otherwise, of any such Indebtedness or obligation on the balance sheet
of such Person (and "Incurrence," "Incurred," "Incurrable" and "Incurring" 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
becoming Indebtedness shall not be deemed an Incurrence of such Indebtedness.
"Indebtedness" means at any time (without duplication), with
respect to any Person, whether recourse is to all or a portion of the assets of
such Person, and whether or not contingent, (i) any obligation of such Person
for borrowed money, (ii) any obligation of such Person evidenced by bonds,
debentures, notes, Guarantees or other similar instruments, including, without
limitation, any such obligations Incurred in connection with acquisition of
Property or businesses, (iii) any reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person, (iv) any obligation of such Person issued or
assumed as the deferred purchase price of Property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business), (v) any Capital Lease Obligation of such Person, (vi) the maximum
fixed redemption or repurchase price of Redeemable Stock of such Person at the
time of determination, (vii) any payment obligation of such Person under
Interest Rate Protection Agreements at the time of determination, (viii) any
obligation to pay rent or other payment amounts of such Person with respect to
any Sale and Leaseback Transaction to which such Person is a party and (ix) any
obligation of the type referred to in clauses (i) through (viii) of another
Person and all dividends of another Person the payment of which, in either case,
such Person has Guaranteed or is responsible or liable, directly or indirectly,
as obligor, Guarantor or otherwise. For purposes of the preceding sentence, the
maximum fixed repurchase price of any Redeemable Stock that does not have a
fixed repurchase price shall be calculated in accordance with the terms of such
Redeemable Stock as if such Redeemable Stock were repurchased on any date on
which Indebtedness shall be required to be determined pursuant to this
Supplemental Indenture No. 2; PROVIDED, HOWEVER, that if such Redeemable Stock
is not then permitted to be repurchased, the repurchase price shall be the book
value of such Redeemable Stock. The amount of Indebtedness 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 of any contingent
obligations in respect thereof at such date.
10
<PAGE>
"Independent Investment Banker" means one of the Reference
Treasury Dealers appointed by the Trustee after consultation with the Company.
"Initial Issue Date" means December 15, 1998.
"Interest Rate Protection Agreement" means, with respect to
any Person, any interest rate swap agreement, interest rate cap agreement,
currency swap agreement or other financial agreement or arrangement designed to
protect such Person or its Restricted Subsidiaries against fluctuations in
interest rates or currency exchange rates, as in effect from time to time.
"Investment" means, with respect to any Person, any direct,
indirect or contingent (i) payment or transfer (including, without limitation,
by means of any payment for Property or services for the account or use of
another Person) of cash, Capital Stock or other Property, or assumption of
Indebtedness, made by such Person in exchange for Capital Stock, notes or bonds
of, or as a capital contribution to, any other Person or (ii) loan, advance or
other extension of credit (including, without limitation, by means of a
Guarantee, letter of credit or similar arrangement other than advances or loans
to customers in the ordinary course of business that are recorded as accounts
receivable of such Person or its Restricted Subsidiaries in accordance with
GAAP) made by such Person to or on behalf of any other Person.
"Lien" means, with respect to any Property, any mortgage or
deed of trust, pledge, hypothecation, assignment, deposit arrangement, security
interest, lien (statutory or other), charge, easement, encumbrance, preference,
priority or other security or similar agreement or preferential arrangement of
any kind or nature whatsoever on or with respect to such Property (including,
without limitation, any conditional sale or other title retention agreement
having substantially the same economic effect as any of the foregoing).
"Make-Whole Premium" means, with respect to a Note, an amount
equal to the greater of (i) 1.0% of the outstanding principal amount of such
Note and (ii) the excess of (a) the present value of the remaining interest,
premium and principal payments due on such Note as if such Note were redeemed on
December 1, 2003, computed using a discount rate equal to the Treasury Rate plus
75 basis points, over (b) the outstanding principal amount of such Note.
"Net Cash Proceeds" from any Asset Sale by any Person or its
Restricted Subsidiaries means cash, cash equivalents or readily marketable
securities received (including by way of sale or discounting of a note,
installment receivable or other receivable, but excluding any other
consideration received in the form of assumption of Indebtedness or other
obligations relating to the Properties sold or otherwise conveyed or received in
any other non-cash form unless such non-cash consideration is immediately
converted into cash therefrom by such Person or its Restricted Subsidiaries),
net of (i) all reasonable out-of-pocket expenses of such Person or such
Restricted Subsidiary Incurred in connection with an Asset Sale of such type,
including, without limitation, all legal, title and recording tax expenses,
commissions and other fees and expenses Incurred (but excluding any finder's fee
or broker's fee payable to any Affiliate of such Person) and all federal, state,
provincial, foreign and local taxes arising in connection with such Asset Sale
that are paid or required to be accrued as a liability under GAAP by such Person
or its Restricted Subsidiaries, (ii) all payments made by such Person or its
Restricted Subsidiaries on
11
<PAGE>
any Indebtedness which is secured by such Properties in accordance with the
terms of any Lien upon or with respect to such Properties or which must, by the
terms of such Lien, 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, and
(iii) all distributions and other payments made to minority interest holders in
Restricted Subsidiaries of such Person as a result of such Asset Sale; PROVIDED
that, in the event that any consideration for an Asset Sale (which would
otherwise constitute Net Cash Proceeds) is required to be held in escrow pending
determination of whether a purchase price adjustment will be made, such
consideration (or any portion thereof) shall become Net Cash Proceeds only at
such time as it is released to such Person or its Restricted Subsidiaries from
escrow, and PROVIDED that any non-cash consideration received in connection with
an Asset Sale, which is subsequently converted to cash, shall be deemed to be
Net Cash Proceeds at such time and shall thereafter be applied in accordance
with Section 309.
"Non-Core Businesses" means the following businesses of the
Company, including any tangible and intangible Property assets (excluding cash,
Indebtedness and Capital Stock of any other Person (other than Capital Stock of
Subsidiaries of AFSC that do not, directly or indirectly, hold Property or
assets of the Core Business) held by such businesses), substantially as
conducted and reported on September 30, 1998, (i) the Company's Sawhill Tubular
division, (ii) Douglas Dynamics, L.L.C., (iii) Greens Port Industrial Park, (iv)
the Company's steelmaking facilities in Dover, Ohio, (v) AFSC and Subsidiaries
of AFSC that do not, directly or indirectly, hold Property or assets of the Core
Business and (vi) any other business other than the Core Business.
"Paying Agent" means any Person authorized by the Company to
pay the principal of or interest on any Notes on behalf of the Company.
"Permitted Refinancing Indebtedness" means Indebtedness of the
Company, the proceeds of which are used to Refinance outstanding Indebtedness of
the Company or any Restricted Subsidiary, PROVIDED that (i) if the Indebtedness
being Refinanced is PARI PASSU with or subordinated in right of payment to the
Notes, then such Indebtedness is PARI PASSU with or subordinated in right of
payment to, as the case may be, the Notes at least to the same extent as the
Indebtedness being Refinanced, (ii) such Indebtedness is scheduled to mature no
earlier than the Indebtedness being Refinanced and (iii) such Indebtedness has
an Average Life at the time such Indebtedness is Incurred that is equal to or
greater than the Average Life of the Indebtedness being Refinanced; PROVIDED
FURTHER that such Indebtedness is in an aggregate principal amount (or, if such
Indebtedness is issued at a price less than the principal amount thereof, has an
aggregate original issue price) not in excess of the aggregate principal amount
then outstanding of the Indebtedness being Refinanced (or if the Indebtedness
being Refinanced was issued at a price less than the principal amount thereof,
then not in excess of the amount of liability in respect thereof determined in
accordance with GAAP) plus (A) prepayment premium and accrued interest on and
defeasance costs associated with such Indebtedness being Refinanced and (B) plus
fees and expenses associated with the Incurrence of such refinancing
Indebtedness.
"Preferred Stock," as applied to the Capital Stock of any
Person, means Capital Stock of such Person of any class or classes (however
designated) that ranks prior, as to the
12
<PAGE>
payment of dividends or as to the distribution of assets upon any voluntary or
involuntary liquidation, dissolution or winding up of such Person, to shares of
Capital Stock of any other class of such Person.
"Prepayment Offer" has the meaning given such term in Section
309(a).
"Prepayment Offer Notice" has the meaning given such term in
Section 309(b).
"Primary Treasury Dealer" has the meaning given such term in
this Section 203 as set forth in the definition of Reference Treasury Dealer.
"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, without limitation, Capital Stock in any
other Person.
"Purchase Date" has the meaning specified in Section 309(b).
"Qualified Capital Stock" means Capital Stock of the Company
or any of its Restricted Subsidiaries that does not by its terms require any
dividends, distributions, mandatory prepayment or redemption prior to the first
anniversary following the Stated Maturity of the Notes.
"Redeemable Stock" of any Person means any equity security of
such Person that by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or otherwise (including, on the
happening of an event), is required to be redeemed or is redeemable at the
option of the holder thereof, in whole or part, prior to the Stated Maturity of
the Notes, or is exchangeable for debt at any time, in whole or part, prior to
the Stated Maturity of the Notes.
"Redemption Date" means, when used with respect to any Note to
be redeemed, the date fixed for redemption of such Note pursuant to Article IV
of this Supplemental Indenture No. 2 and the Notes.
"Redemption Price" means, when used with respect to any Note
to be redeemed, the price fixed for redemption of such Note pursuant to Article
IV of this Supplemental Indenture No. 2 and the Notes, plus accrued and unpaid
interest thereon to the Redemption Date.
"Reference Treasury Dealer" means each of Salomon Smith Barney
Inc. and Chase Securities Inc. and their respective successors; PROVIDED,
HOWEVER, that if any of the foregoing shall cease to be a primary U.S.
Government securities dealer in New York City (a "Primary Treasury Dealer"), the
Company shall substitute therefor another nationally recognized investment
banking firm that is a Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to
each Reference Treasury Dealer and any redemption date, the average, as
determined by the Trustee, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its
13
<PAGE>
principal amount) quoted in writing to the Trustee by such Reference Treasury
Dealer as of 3:30 p.m., New York time, on the third business day preceding such
redemption date.
"Refinance" means, with respect to any Indebtedness, to renew,
extend, refinance, refund, replace or repurchase, or be substituted for, such
Indebtedness and "Refinancing" means the renewal, extension, refinancing,
refunding, replacement or repurchasing of, or substitution for, such
Indebtedness.
"Registration Agreement" means, the registration agreement
dated December 10, 1998 between the Company and the Initial Purchasers, for
themselves and as representatives of each subsequent Holder of the Notes.
"Repurchase Price" has the meaning given such term in Section
305.
"Restricted Payment" means (i) a dividend or other
distribution declared and paid on the Capital Stock of the Company or to the
Company's stockholders (in their capacity as such), or declared and paid to any
Person other than the Company or a Restricted Subsidiary of the Company on the
Capital Stock of any Restricted Subsidiary of the Company, in each case, other
than dividends, distributions or payments payable or made solely in Qualified
Capital Stock, (ii) a payment made by the Company or any of its Restricted
Subsidiaries (other than to the Company or any Restricted Subsidiary of the
Company) to purchase, redeem, acquire or retire any Capital Stock of the Company
or of a Restricted Subsidiary, (iii) a payment made by the Company or any of its
Restricted Subsidiaries to redeem, repurchase, defease (including, but not
limited to, in-substance or legal defeasance) or otherwise acquire or retire for
value, prior to any scheduled maturity, scheduled repayment or scheduled sinking
fund or mandatory redemption payment, Indebtedness of the Company which is
subordinate (whether pursuant to its terms or by operation of law) in right of
payment to the Notes and which was scheduled to mature (after giving effect to
any and all options to extend the maturity thereof) on or after the Stated
Maturity of the Notes or (iv) a payment made by the Company or any of its
Restricted Subsidiaries to purchase, acquire, retire or redeem any Indebtedness
of or equity interest in or otherwise to make any Investment in any Affiliate
thereof or in any Person that would become an Affiliate thereof in connection
with or as a result of such investment; PROVIDED, that Restricted Payments shall
not include any payment or transfer of any Capital Stock of any Person in
exchange for, or to purchase or otherwise acquire, Capital Stock of, or an
equity interest in, another Person that is, or other Persons that are, or will,
as part of such transaction, become, the successor or successors to
substantially all of the assets and business of such first Person.
"Restricted Subsidiary" means, (i) with respect to the
Company, (A) any Subsidiary of the Company that exists on September 12, 1997
other than AFSC and its Subsidiaries, (B) any other Subsidiary of the Company
that the Company has not designated as an Unrestricted Subsidiary pursuant to
Section 311(a) and, (ii) with respect to a Person other than the Company and its
Subsidiaries, a Subsidiary of such other Person.
"Sale and Leaseback Transaction" means, with respect to any
Person, any direct or indirect arrangement pursuant to which Property is sold or
transferred by such Person or a
14
<PAGE>
Restricted Subsidiary of such Person and is thereafter leased back from the
purchaser or transferee thereof by such Person or one of its Restricted
Subsidiaries.
"Senior Indebtedness" means, at any date, any outstanding
Indebtedness of the Company that is PARI PASSU in right of payment with the
Notes.
"Significant Restricted Subsidiary" means each Restricted
Subsidiary of the Company that (i) during the most recent four consecutive
fiscal quarters of the Company for which financial information in respect
thereof is available accounted for more than 10% of the Consolidated EBITDA of
the Company or (ii) is the owner, directly or indirectly, of more than 10% of
the Consolidated Net Tangible Assets of the Company, PROVIDED that clause (i)
shall be determined on a pro forma basis in the case of a Restricted Subsidiary
that became a Restricted Subsidiary during or subsequent to the end of such
four-consecutive-fiscal-quarter period as if the transaction in which it became
a Restricted Subsidiary occurred on the first day of such period.
"Stated Maturity" means, when used with respect to any
security, the date specified in such security as the fixed date on which the
principal or redemption price of such security is due and payable and, when used
with respect to any installment of interest on a security, the fixed date on
which such installment of interest is due and payable. The Stated Maturity of a
Capital Lease Obligation 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.
"Subsidiary," with respect to any Person, means (i) a
corporation a majority of whose Capital Stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such Person, by such Person and one or more Subsidiaries of such Person or by
one or more Subsidiaries of such Person, or (ii) any other Person (other than a
corporation) in which such Person, one or more Subsidiaries of such Person, or
such Person and one or more Subsidiaries of such Person, directly or indirectly,
at the date of determination thereof has at least a majority ownership interest.
"Tangible Assets" of any Person means, at any date, the gross
book value as shown by the accounting books and records of such Person of all
its Property, less the net book value of all items that would be classified as
intangibles under GAAP, including, without limitation, (i) licenses, patents,
patent applications, copyrights, trademarks, trade names, goodwill, noncompete
agreements and organizational expenses, (ii) unamortized debt discount and
expense, (iii) all reserves for depreciation, obsolescence, depletion and
amortization of its Properties and (iv) all other proper reserves which in
accordance with GAAP should be provided in connection with the business
conducted by such Person.
"Transaction Date" means the date of any transaction giving
rise to the need to calculate the Consolidated Interest Coverage Ratio.
"Treasury Rate" means, with respect to any redemption date,
the rate per annum equal to the semiannual equivalent yield to maturity
(computed as of the second business day
15
<PAGE>
immediately preceding such redemption date) of the Comparable Treasury Issue,
assuming a price for the Comparable Treasury Issue (expressed as a percentage of
its principal amount) equal to the Comparable Treasury Price for such redemption
date.
"Unrestricted Subsidiary" means (i) AFSC and its Subsidiaries
and, (ii) any Subsidiary of the Company that the Company has classified,
pursuant to Section 311(a) as an Unrestricted Subsidiary and that has not been
reclassified as a Restricted Subsidiary pursuant to Section 311(a).
"Voting Stock" of any Person means Capital Stock of such
Person which ordinarily has voting power for the election of directors (or
persons performing similar functions) of such Person, whether at all times or
only as long as no senior class of securities has such voting power by reason of
any contingency.
ARTICLE III.
COVENANTS
SECTION 301. TRANSACTIONS WITH AFFILIATES.
(a) The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, conduct any business or enter into any
transaction or series of transactions (including, but not limited to, the sale,
transfer, disposition, purchase, exchange or lease of assets or Property, the
making of any Investment, the giving of any Guarantee, or the rendering of any
service) with or for the benefit of any Affiliate of the Company (other than the
Company), unless (i) such transaction or series of transactions is on terms no
less favorable in the aggregate (including such factors as quality, delivery,
service and acceptance by customers of the Company or such Subsidiary) to the
Company or such Subsidiary than those that could be obtained in a comparable
arm's-length transaction with an entity that is not an Affiliate of the Company
or such Subsidiary, and (ii) with respect to a transaction or series of
transactions outside the ordinary course of business that has a Fair Market
Value equal to or greater than $5,000,000, the terms thereof are set forth in
writing and the Board of Directors (including a majority of the disinterested
directors thereof) approves such transaction or series of transactions and, in
its good faith judgment, believes that such transaction or series of
transactions complies with clause (i) of this Section 301(a), as evidenced by a
Certified Resolution.
(b) The limitations contained in Section 301(a) shall not
apply to (i) any transaction with an officer or director of the Company or any
Subsidiary of the Company entered into in the ordinary course of business
consistent with past practice (including compensation or employee benefit
arrangements with any officer or director of the Company or any Subsidiary of
the Company) and the cash-out of supplemental pension benefits, or (ii)
transactions between the Company and its Restricted Subsidiaries or among such
Restricted Subsidiaries.
16
<PAGE>
SECTION 302. LIMITATION ON RESTRICTED PAYMENTS.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, make any Restricted Payment
if, at the time of and after giving effect to the proposed Restricted Payment:
(i) any Default or Event of Default has occurred and is
continuing;
(ii) the Company could not Incur at least $1.00 of additional
Indebtedness pursuant to Section 303(a); or
(iii) the aggregate amount expended or committed for all
Restricted Payments from September 12, 1997 (the amount so expended or
committed, if other than in cash, to be determined in good faith by the
Board of Directors and evidenced by a Certified Resolution) exceeds the
sum of (A) 50% of the aggregate Consolidated Net Income of the Company
and its Restricted Subsidiaries (or, if Consolidated Net Income shall
be a deficit, minus 100% of such deficit) subsequent to June 30, 1997
and ending on the last day of the fiscal quarter immediately preceding
the date of such Restricted Payment, (B) 100% of the aggregate net
proceeds, including cash and the Fair Market Value of Property other
than cash, received by the Company subsequent to September 12, 1997,
from capital contributions from its stockholders or from the issuance
or sale (other than to a Subsidiary) of Qualified Capital Stock of the
Company or of any convertible securities or debt obligations which have
been converted into, exchanged for or satisfied by the issuance of
Qualified Capital Stock, and (C) the amount of the net reduction in
Investments made as Restricted Payments in accordance with this
sentence in Unrestricted Subsidiaries resulting from (1) the payment of
cash dividends or the repayment in cash of the principal of loans or
the cash return on any Investment, in each case to the extent received
by the Company or any wholly owned Restricted Subsidiary of the Company
from Unrestricted Subsidiaries, (2) to the extent that any Investment
in an Unrestricted Subsidiary that was made after September 12, 1997 is
sold for cash or otherwise liquidated or repaid for cash, the after-tax
cash return of capital with respect to such Investment (less the cost
of disposition, if any) or (3) the redesignation of Unrestricted
Subsidiaries as Restricted Subsidiaries, such aggregate amount of the
net reduction in such Investments not to exceed, in the case of any
Unrestricted Subsidiary, the amount of such Investments made as
Restricted Payments previously made by the Company or any Restricted
Subsidiary in such Unrestricted Subsidiary, which amount was included
in the calculation of the amount of Restricted Payments.
(b) The limitations contained in Section 302(a) shall not
prevent the Company or its Restricted Subsidiaries from:
(i) paying a dividend on its Capital Stock within 60 days
after declaration thereof if, on the declaration date, the Company
could have paid such dividend in compliance with the Indenture;
17
<PAGE>
(ii) repurchasing shares of its Capital Stock (A) solely in
exchange for other shares of its Capital Stock (other than Redeemable
Stock), (B) to eliminate fractional shares or odd lots for up to an
aggregate consideration in any fiscal year of the Company not to exceed
$2,000,000, (C) pursuant to an order of a court of competent
jurisdiction, or (D) in connection with repurchase provisions under
employee stock option and stock purchase agreements or other agreements
to compensate management employees of the Company;
(iii) making cash payments in respect of stock appreciation
rights granted to employees of the Company;
(iv) the purchase for value of shares of Capital Stock of the
Company (A) held by directors, officers or employees upon death,
disability, retirement, or termination of employment or (B) to fund
capital stock-based, long-term incentive programs, not to exceed
$10,000,000 in the aggregate;
(v) Restricted Payments for the redemption, repurchase or
other acquisition of shares of Capital Stock of the Company in
satisfaction of indemnification or other claims arising under any
merger, consolidation, asset purchase or investment or similar
acquisition agreement permitted under the Indenture, pursuant to which
such shares of Capital Stock were issued;
(vi) making payments to purchase or redeem Indebtedness made
by exchange for, or out of the proceeds of, the substantially
concurrent (A) sale or issuance of Capital Stock (other than Redeemable
Stock) of the Company, or (B) Incurrence of Indebtedness of the Company
that is contractually subordinated in right of payment to the Notes and
has a Stated Maturity later than the Stated Maturity of the Notes and
an Average Life greater than the remaining Average Life of any of the
Notes;
(vii) declaring and paying dividends on the Preferred Stock of
the Company outstanding on September 12, 1997;
(viii) making Investments in Affiliates up to an aggregate of
$15,000,000;
(ix) making an Investment in an Affiliate as a result of which
such Affiliate becomes a Restricted Subsidiary in compliance with the
provisions of Section 311;
(x) making an Investment by contributing or otherwise
transferring to any Person or Persons all or any part of the Non-Core
Businesses enumerated in clauses (i) through (v) of the definition of
"Non-Core Businesses"; and
(xi) making other Restricted Payments in an aggregate amount
not to exceed $25,000,000 (after giving effect to the amount of the net
reduction in any Investments made as Restricted Payments in reliance on
this clause (xi) resulting from (A) the payment of cash dividends or
the repayment in cash of the principal of loans or the cash return on
any such Investment, in each case to the extent received by the Company
or any
18
<PAGE>
wholly owned Restricted Subsidiary of the Company from Unrestricted
Subsidiaries, (B) to the extent that any such Investment in an
Unrestricted Subsidiary is sold for cash or otherwise liquidated or
repaid for cash, the after-tax cash return of capital with respect to
such Investment (less the cost of disposition, if any) or (C) the
redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries).
(c) The payments permitted to be made pursuant to clauses
(ii)(A), (iii) (but only to the extent any such payments are included in
determining Consolidated Net Income), (vi), (ix) and (x) of Section 302(b) shall
be excluded for purposes of any future calculations pursuant to Section 302(a)
of the aggregate amount of Restricted Payments outstanding. The payments
permitted to be made pursuant to clauses (i), (ii)(B), (ii)(C), (ii)(D), (iii)
(but only to the extent that any such payments are not included in determining
Consolidated Net Income), (iv), (v), (vii), (viii) and (xi) of Section 302(b)
shall be included for purposes of any future calculations pursuant to Section
302(a) of the aggregate amount of Restricted Payments outstanding.
SECTION 303. LIMITATION ON INDEBTEDNESS.
(a) The Company shall not, directly or indirectly, Incur any
Indebtedness unless, immediately after the date of the transaction giving rise
to such Indebtedness and after giving effect to the Incurrence of such
Indebtedness and the receipt and application of the proceeds thereof as if such
Indebtedness had been Incurred and the proceeds thereof applied on the first day
of the Determination Period, the Consolidated Interest Coverage Ratio of the
Company at such date exceeds the ratio of 2.0 to 1.0.
(b) The limitations contained in Section 303(a) shall not
prevent the Company from Incurring the following Indebtedness (although any
Indebtedness so Incurred shall be included, to the extent outstanding at the
Transaction Date, in any subsequent determination of the Consolidated Interest
Coverage Ratio):
(i) Indebtedness Incurred by the Company or by Armco Funding
Corporation under the Credit Facilities, PROVIDED that the aggregate
principal amount of all Indebtedness Incurred under this clause (i) at
any one time outstanding does not exceed the greater of (A)
$225,000,000 and (B) the sum of (1) 80% of the book value of the
accounts receivable of the Company and its Restricted Subsidiaries and
(2) 50% of the book value of the inventory of the Company and its
Restricted Subsidiaries, in the case of clauses (B)(1) and (B)(2) of
this proviso, as of the end of the most recent fiscal quarter for which
financial information in respect thereof is available immediately prior
to the date of such Incurrence, determined in accordance with GAAP;
(ii) Indebtedness evidenced by the Initial Notes issued on or
prior to December 15, 1998 and a like aggregate principal amount of
Exchange Notes;
(iii) (A) Indebtedness of the Company in respect of Capital
Lease Obligations or (B) Capital Expenditure Indebtedness directly
Incurred by the Company, PROVIDED that the aggregate principal amount
of all Indebtedness Incurred under subclauses (A) and (B)
19
<PAGE>
of this clause (iii) and the Indebtedness Incurred under Section
304(a)(iv) does not exceed $100,000,000 at any one time outstanding;
(iv) Indebtedness under Interest Rate Protection Agreements,
PROVIDED that the obligations under such agreements are related to
payment obligations on Indebtedness otherwise permitted by the terms of
this covenant;
(v) Indebtedness of the Company to any wholly owned Restricted
Subsidiary of the Company (but only so long as such Indebtedness is
held by such wholly owned Restricted Subsidiary);
(vi) Indebtedness outstanding on September 12, 1997;
(vii) Permitted Refinancing Indebtedness;
(viii) surety obligations of the Company and its Restricted
Subsidiaries entered into in the ordinary course of business;
(ix) Indebtedness of the Company and its Restricted
Subsidiaries Incurred to finance the purchase of insurance in the
ordinary course of business;
(x) Indebtedness of the Company and its Restricted
Subsidiaries Incurred from the honoring by a bank or other financial
institution of a check or draft inadvertently drawn against
insufficient funds in the ordinary course of business, PROVIDED that
such Indebtedness is extinguished within two business days of notice of
any such Incurrence; and
(xi) Indebtedness not otherwise permitted to be Incurred under
clauses (i) through (x) of this Section 303(b), which, together with
any other outstanding Indebtedness Incurred under clause (xi) of this
Section 303(b), has an aggregate principal amount not in excess of
$40,000,000 at any one time outstanding.
SECTION 304. LIMITATION ON RESTRICTED SUBSIDIARY
INDEBTEDNESS AND PREFERRED STOCK.
(a) The Company shall not permit any of its Restricted
Subsidiaries to Incur, directly or indirectly, any Indebtedness or Preferred
Stock, except:
(i) (A) Indebtedness or Preferred Stock outstanding on
September 12, 1997 or (B) Indebtedness Incurred under the Credit
Facilities to the extent permitted by clause (i) of Section 303(b);
(ii) Indebtedness or Preferred Stock issued to and held by the
Company or a wholly owned Restricted Subsidiary of the Company (but
only so long as such Indebtedness or Preferred Stock is held or owned
by the Company or a wholly owned Restricted Subsidiary of the Company);
20
<PAGE>
(iii) (A) Indebtedness of a Restricted Subsidiary in respect
of Capital Lease Obligations or (B) Capital Expenditure Indebtedness
directly Incurred by a Restricted Subsidiary, PROVIDED that after
giving effect to such Indebtedness the Company could Incur at least
$1.00 of additional Indebtedness pursuant to Section 303(a);
(iv) (A) Indebtedness of a Restricted Subsidiary in respect of
Capital Lease Obligations or (B) Capital Expenditure Indebtedness
directly Incurred by a Restricted Subsidiary, PROVIDED that the
aggregate principal amount of all Indebtedness Incurred under clauses
(iv)(A) and (iv)(B) of this Section 304(a) and the Indebtedness
Incurred under Section 303(b)(iii) does not exceed $100,000,000 at any
one time outstanding; and
(v) Indebtedness or Preferred Stock Incurred in exchange for,
or the proceeds of which are used to Refinance, Indebtedness or
Preferred Stock of equal or higher ranking referred to in clauses (i)
through (iv) of this Section 304(a), so long as (A) the principal
amount of such Indebtedness or the liquidation value of such Preferred
Stock so Incurred does not exceed the principal amount or liquidation
value of the Indebtedness or Preferred Stock so exchanged or Refinanced
and (B) the Indebtedness or Preferred Stock so Incurred has a Stated
Maturity or final redemption date later than the Stated Maturity or
final redemption date (if any) of, and an Average Life that is longer
than that of, the Indebtedness or Preferred Stock being exchanged or
Refinanced.
(b) Any Indebtedness or Preferred Stock Incurred pursuant to
clauses (i) through (v) of Section 304(a) will be included, to the extent
outstanding at the Transaction Date, in any subsequent determination of the
Consolidated Interest Coverage Ratio.
SECTION 305. CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each Holder
shall have the right to require the Company to repurchase such Holder's Notes,
in whole or in part, in integral multiples of $1,000, pursuant to the offer
described in Section 305(b) (the "Change of Control Offer") at a price (the
"Repurchase Price") in cash equal to 101% of the aggregate principal amount
thereof, plus accrued and unpaid interest thereon, if any, to the Change of
Control Payment Date.
(b) Within 30 calendar days subsequent to the date of any
Change of Control, the Company shall mail a notice to each Holder and to the
Trustee stating:
(i) that a Change of Control has occurred and a Change of
Control Offer is being made pursuant to this Section 305, and that all
Notes that are timely tendered will be accepted for payment;
(ii) the Repurchase Price and the repurchase date, which shall
be a date occurring no earlier than 30 days and no later than 60 days
subsequent to the date on which such notice is mailed (the "Change of
Control Payment Date");
21
<PAGE>
(iii) that any Note (or any portion thereof) not tendered will
continue to accrue interest;
(iv) that any Note (or any portion thereof) accepted for
payment pursuant to the Change of Control Offer (and duly paid on the
Change of Control Payment Date) will cease to accrue interest after the
Change of Control Payment Date;
(v) that any Holder electing to have a Note (or any portion
thereof) repurchased pursuant to a Change of Control Offer will be
required to surrender the Note, with the form entitled "Election of
Holder to Require Repurchase" on the reverse of the Note completed, to
the Paying Agent at the address specified in the notice on or prior to
the close of business on the Change of Control Payment Date;
(vi) that any Holder will be entitled to withdraw such
election if the Paying Agent receives, not later than the close of
business on the third Business Day preceding the Change of Control
Payment Date, a telegram, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of Notes the Holder
delivered for repurchase and a statement that such Holder is
withdrawing the Holder's election to have such Notes repurchased;
(vii) that any Holder that elects to have a portion of its
Notes repurchased must specify the principal amount that is being
tendered for repurchase, which principal amount must be in an integral
multiple of $1000; and
(viii) any other 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 the decision to
tender their Notes (including, but not limited to, a description of the
circumstances and relevant facts regarding the events requiring the
Company to make the Change of Control Offer), or is necessary to enable
Holders to tender their Notes (or any portion thereof) and to have such
Notes repurchased pursuant to this Section 305.
At the Company's request, the Trustee shall give the notice required in this
clause (b) 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 clauses
(i) - (viii) above.
(c) On the Change of Control Payment Date, the Company shall
(i) accept for payment any Note (or portion thereof) tendered pursuant to the
Change of Control Offer, (ii) deposit with the Paying Agent money sufficient to
pay the Repurchase Price of any Note so tendered and (iii) deliver to the
Trustee each Note so accepted together with an Officers' Certificate that states
the aggregate principal amount of Notes tendered to the Company. The Paying
Agent shall promptly mail to each Holder of Notes so accepted payment in an
amount equal to the Repurchase Price therefor. The Company shall publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date. For purposes of this Section 305, the
Trustee shall act as the Paying Agent.
22
<PAGE>
(d) Notwithstanding the foregoing, if any Note (or any portion
thereof) accepted for payment shall not be so paid pursuant to the provisions of
this Section 305, then, from the Change of Control Payment Date until the
principal of (and premium) and interest on such Note is paid, interest shall be
paid on the unpaid principal (and premium) and, to the extent permitted by law,
on any accrued but unpaid interest thereon, in each case at the rate prescribed
therefor by such Note.
(e) Upon surrender pursuant to this Section 305 of any Note
tendered in part, the Company shall execute, and the Trustee shall authenticate
and deliver, a new Note of the same series, of any authorized denomination, in
an aggregate principal amount equal to the untendered portion of the surrendered
Note.
(f) Neither the Board of Directors nor the Trustee under the
Indenture may waive the Company's obligation to make a Change of Control Offer.
(g) The Company shall comply, to the extent applicable, with
the requirements of Rule 14e-1 under the Exchange Act and other securities laws
or regulations in connection with the repurchase of the Notes pursuant to this
Section 305. To the extent that the provisions of any securities laws or
regulations conflict with the Change of Control provisions of the Indenture, the
Company shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under the Indenture by
virtue thereof.
SECTION 306. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, enter into, assume,
Guarantee or otherwise become liable with respect to any Sale and Leaseback
Transaction, except for a Sale and Leaseback Transaction not exceeding 360 days
unless:
(i) the Company or such Restricted Subsidiary is permitted to
Incur such Indebtedness under Section 303 or Section 304, respectively;
(ii) the Company or such Restricted Subsidiary would be
permitted to Incur a Lien to secure Indebtedness or enter into a Sale
and Leaseback Transaction pursuant to Section 307(b) or Incur a Lien on
such Property that is the subject of such Sale and Leaseback
Transaction pursuant to Section 307(a)(ii) without equally and ratably
securing the Notes;
(iii) the Company or such Restricted Subsidiary receives
consideration at least equal to the Fair Market Value of the Property
transferred; and
(iv) if the Sale and Leaseback Transaction is, directly or
indirectly, entered into, or assumed or Guaranteed by, the Company or
such Restricted Subsidiary, or the Company or such Restricted
Subsidiary otherwise becomes liable with respect thereto, more than 360
days after the Property subject to such Sale and Leaseback Transaction
is
23
<PAGE>
acquired or constructed by the Company or such Restricted Subsidiary,
the Company applies the proceeds of such Sale and Leaseback
Transaction, net of all reasonable out-of-pocket expenses Incurred by
the Company or such Restricted Subsidiary in connection therewith,
which are customarily Incurred in connection with the Sale and
Leaseback Transactions of such kind, in accordance with the provisions
of Section 309 as if such Sale and Leaseback Transaction were an Asset
Sale.
SECTION 307. LIMITATION ON LIENS.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, Incur any Lien on or with
respect to any Property of the Company or such Restricted Subsidiary, or any
interest therein or any income or profits therefrom, unless the Notes are
secured equally and ratably with (or prior to) any and all other Indebtedness
secured by such Lien, except for:
(i) any Lien securing Indebtedness permitted under Section
303(b)(i);
(ii) any Lien (A) in respect of Capital Lease Obligations or
Capital Expenditure Indebtedness permitted to be Incurred by the terms
of Section 303(a), Section 303(b)(iii), Section 304(a)(iii) or Section
304(a)(iv), (B) existing on any Property of a Person at the time such
Person is merged or consolidated with or into the Company or any
Restricted Subsidiary or becomes a Restricted Subsidiary (and not
Incurred in anticipation of such transaction) or (C) existing on any
Property at the time of the acquisition thereof (and not Incurred in
anticipation of such transaction) whether or not assumed by the Company
or any Restricted Subsidiary; PROVIDED that in any such case such Lien
may extend only to the Property so acquired or constructed and
improvements thereon, and, in the case of any such Lien in respect of
Capital Lease Obligations and Capital Expenditure Indebtedness, the
real property on which such Property is located;
(iii) any Lien Incurred to secure the performance of statutory
obligations, bids, trade contracts, leases, surety or appeal bonds,
performance or return-of-money bonds or other obligations of a like
nature Incurred in the ordinary course of business;
(iv) any Lien to secure industrial revenue or development or
pollution control bonds;
(v) any Lien to secure any Refinancing (or successive
Refinancings), in whole or in part, of any Indebtedness secured by
Liens referred to in clauses (i) through (iv) of this Section 307(a) so
long as such Lien does not extend to any other Property and the
Indebtedness so secured is not increased;
(vi) any Lien securing only the Notes;
(vii) any Lien in favor of the Company or a wholly owned
Restricted Subsidiary;
(viii) any Lien for taxes or assessments by other governmental
charges or levies;
24
<PAGE>
(ix) any Lien to secure obligations under worker's
compensation, unemployment insurance or other social security
legislation, including Liens with respect to judgments which are not
currently dischargeable;
(x) materialmen's, mechanics', worker's, warehousemen's,
landlord's and carriers' Liens or other like Liens created by law (or
in a lease agreement in the case of landlord's Liens) and arising in
the ordinary course of business;
(xi) any Lien existing on September 12, 1997;
(xii) easements, rights of way, zoning and other similar
restrictions or encumbrances Incurred in the ordinary course of
business; and
(xiii) attachment, judgment and other similar Liens arising in
connection with court proceedings, PROVIDED that the execution or other
enforcement of such Liens is effectively stayed and the claims secured
thereby are currently being contested in good faith by appropriate
proceedings.
(b) In addition to the foregoing, the Company and its
Restricted Subsidiaries may Incur a Lien to secure Indebtedness or enter into a
Sale and Leaseback Transaction, without equally and ratably securing the Notes,
if the sum of (i) the amount of Indebtedness secured by all Liens entered into
after September 12, 1997 and (ii) the Attributable Value of all Sale and
Leaseback Transactions or Capital Lease Obligations in respect thereof entered
into after September 12, 1997 and otherwise prohibited by the Base Indenture or
this Supplemental Indenture No. 2 does not exceed 10% of the Company's
Consolidated Net Tangible Assets.
SECTION 308. LIMITATION CONCERNING DISTRIBUTIONS OR
TRANSFERS BY RESTRICTED SUBSIDIARIES.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, cause to exist or become
effective or enter into any encumbrance or restriction (other than pursuant to
law or regulation) on the ability of any Restricted Subsidiary: (i) to pay
dividends or make any other distributions in respect of its Capital Stock or pay
any Indebtedness or other obligation owed to the Company or any other Restricted
Subsidiary of the Company; (ii) to make loans or advances to the Company or any
Restricted Subsidiary of the Company; or (iii) to transfer any of its Property
to the Company or any other Restricted Subsidiary, except for any encumbrance or
restrictions pursuant to any agreement in effect on September 12, 1997 or any
Refinancing thereof containing encumbrances or restrictions no greater than in
the agreement so Refinanced.
SECTION 309. LIMITATION ON ASSET SALES.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, consummate any Asset Sale unless:
25
<PAGE>
(i) the Company or such Restricted Subsidiary, as the case may
be, receives consideration at least equal to the Fair Market Value of
the Property disposed of; and
(ii) at least 75% of the consideration received by the Company
or such Restricted Subsidiary for such Property (other than Non-Core
Businesses enumerated in clauses (i) through (v) of the definition of
"Non-Core Businesses" set forth in Section 203) is in the form of cash,
cash equivalents, readily marketable securities or non-cash
consideration that is immediately converted to cash, or the assumption
by the purchaser of such Property of Senior Indebtedness (PROVIDED such
Senior Indebtedness was not Incurred in connection with or in
anticipation of such Asset Sale), PROVIDED that the Company must, at
the Company's option:
(A) (1) commit, or cause such Restricted Subsidiary to commit
(such commitments to include amounts anticipated to be expended
pursuant to the Company's capital investment plan (x) as adopted by the
Board of Directors and (y) evidenced by the filing of an officer's
certificate with the Trustee stating that the total amount of the Net
Cash Proceeds of such Asset Sale is less than the aggregate amount
contemplated to be expended pursuant to such capital investment plan
within 24 months of the consummation of such Asset Sale) within 270
days of the consummation of such Asset Sale, to apply the Net Cash
Proceeds of such Asset Sale to reinvest in Additional Core Assets or,
if the applicable Asset Sale was a sale of a Non-Core Business, in
Additional Assets and (2) apply, or cause such Restricted Subsidiary to
apply, pursuant to such commitment (which includes amounts actually
expended under the capital investment plan authorized by the Board of
Directors), such Net Cash Proceeds of such Asset Sale within 24 months
of the consummation of such Asset Sale; PROVIDED THAT if any commitment
under this clause (A) is terminated or rescinded after the 225th day
after the consummation of such Asset Sale, the Company or such
Restricted Subsidiary, as the case may be, shall have 45 days after
such termination or rescission to (x) apply such Net Cash Proceeds
pursuant to clause (B) or (C) below, or (y) to commit, or cause such
Restricted Subsidiary to commit, to apply the Net Cash Proceeds of such
Asset Sale to reinvest in Additional Core Assets or in Additional
Assets, as the case may be, and/or
(B) offer to apply an amount equal to such Net Cash Proceeds
(or remaining Net Cash Proceeds) to the repayment of any Senior
Indebtedness, or (to the extent of Net Cash Proceeds received from an
Asset Sale by such Restricted Subsidiary) debt of a Restricted
Subsidiary, and repay such Indebtedness of any lender or debt holder
who accepts such offer or, in the case of any Indebtedness under a
revolving credit facility, repay an amount outstanding thereunder equal
to such Net Cash Proceeds and concurrently therewith, effect a
permanent reduction in the committed availability thereunder, and/or
(C) offer to apply an amount equal to such Net Cash Proceeds
(or remaining Net Cash Proceeds) to the repayment of the Notes and
repurchase any Notes properly tendered in acceptance of such prepayment
offer (the "Prepayment Offer") on a pro rata basis at a purchase price
at least equal to 100% of their principal amount plus interest
26
<PAGE>
accrued to the date of such repurchase; PROVIDED, that in the event the
Net Cash Proceeds resulting from any Asset Sale, after giving effect to
the purchase of Additional Core Assets or Additional Assets, as the
case may be, and/or the repayment of Senior Indebtedness, are less than
$10,000,000, the application of an amount equal to such Net Cash
Proceeds to a pro rata offer to repurchase the Notes may be deferred
until such time as such Net Cash Proceeds, together with Net Cash
Proceeds from any prior or subsequent Asset Sales not otherwise applied
in accordance with this Section 309(a), are at least equal to
$10,000,000. To the extent that any portion of the amount of Net Cash
Proceeds remains after compliance with the preceding sentence and
PROVIDED that all Holders have been given the opportunity to tender
their Notes for repurchase as provided in clause (C) of the immediately
preceding sentence, the Company or such Restricted Subsidiary may use
such remaining amount for general corporate purposes.
(b) Within 280 days from the date of an Asset Sale, the
Company shall, if it chooses (or is obligated) to apply an amount equal to any
remaining Net Cash Proceeds (or any portion thereof) to fund an offer to
repurchase the Notes, send a written Notice (a "Prepayment Offer Notice"), by
first-class mail, to the Holders of the Notes, 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 the
Prepayment Offer (including, but not limited to, a description of the
circumstances and relevant facts regarding the events requiring the Company to
make the Prepayment Offer). The Prepayment Offer Notice will contain all
instructions and materials necessary to enable such Holder to tender pursuant to
the Prepayment Offer. The Prepayment Offer Notice will also state:
(i) that the Company is offering to purchase Notes pursuant to
the provisions of this Section 309;
(ii) that any Note (or any portion thereof) accepted for
payment (and duly paid on the Purchase Date) pursuant to the Prepayment
Offer will cease to accrue interest after the Purchase Date and that
any Note (or any portion thereof) not tendered or accepted for payment
shall continue to accrue interest at the rate prescribed therefor by
such Note;
(iii) the expiration date (the "Expiration Date") of the
Prepayment Offer, which will be, subject to any contrary requirements
of applicable law, not less than 30 days nor more than 60 days after
the date of such Prepayment Offer;
(iv) a settlement date (the "Purchase Date") for the purchase
of Notes which shall be within five Business Days after the Expiration
Date;
(v) the aggregate principal amount of Notes to be purchased
and the purchase price thereof; and
(vi) a description of the procedure that a Holder must follow
and any other information necessary to tender all or any portion of
such Holder's Notes.
27
<PAGE>
At the Company's request, the Trustee shall give the
Prepayment Offer Notice required in this paragraph (b) 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 paragraph (b).
To tender any Note, a Holder must surrender such Note at the
place or places specified in the Prepayment Offer Notice prior to the close of
business on the Expiration Date (such securities being, if the Company or the
Trustee so requires, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Trustee duly executed by,
the Holder thereof or such Holder's attorney duly authorized in writing).
Holders will be entitled to withdraw all or any portion of Notes tendered if the
Company (or its Paying Agent) receives, not later than the close of business on
the Expiration Date, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of Notes the Holder tendered,
the certificate numbers of the Notes tendered and a statement that such Holder
is withdrawing all or a portion of such tender. Any portion of Notes so tendered
must be tendered or withdrawn in an integral multiple of $1,000 principal
amount.
(c) Notwithstanding the foregoing, if any Note (or any portion
thereof) accepted for payment shall not be so paid pursuant to the provisions of
Section 309(b), then, from the Purchase Date until the principal of (and
premium, if any) and interest on such Note is paid, interest shall be paid on
the unpaid principal (and premium, if any) and, to the extent permitted by law,
on any accrued but unpaid interest thereon, in each case, at the rate prescribed
therefor by such Note.
(d) Upon surrender pursuant to this Section 309 of any Note
tendered or accepted in part, the Company shall execute, and the Trustee shall
authenticate and deliver, a new Note of the same series, of any authorized
denomination, in an aggregate principal amount equal to the unpaid portion of
the surrendered Note.
SECTION 310. COMPANY MAY CONSOLIDATE, ETC.
(a) The Company shall not merge or consolidate with any other
corporation (other than a merger of a Restricted Subsidiary into the Company in
which the Company is the continuing corporation) or sell, transfer or convey its
Property or assets as an entirety or substantially as an entirety to any Person
other than a wholly owned Restricted Subsidiary, unless:
(i) the entity formed by or surviving any such consolidation
or merger (if other than the Company) or to which such sale, transfer
or conveyance is made shall be a corporation organized and existing
under the laws of the United States of America or a State or the
District of Columbia and such corporation expressly assumes, by
supplemental indenture satisfactory to the Trustee, executed and
delivered to the Trustee by such corporation, the due and punctual
payment of the principal of, premium, if any, and interest on all the
Notes, according to their tenor, and the due and punctual performance
and observance of all of the covenants and conditions of the Indenture
to be performed by the Company;
28
<PAGE>
(ii) immediately before and after giving effect to such
transaction or series of transactions, no Default or Event of Default
shall have occurred and be continuing;
(iii) immediately after giving effect to such transaction or
series of transactions on a pro forma basis (including, without
limitation, any Indebtedness Incurred or anticipated to be Incurred in
connection with such transaction or series of transactions), the
Company (or the surviving entity if the Company is not continuing)
would be able to Incur at least $1.00 of additional Indebtedness
pursuant to Section 303(a), or, in the case of a merger or
consolidation of the Company into or with a wholly owned Restricted
Subsidiary, the Consolidated Interest Coverage Ratio of the surviving
entity would be no less than the Consolidated Interest Coverage Ratio
of the Company immediately prior to such merger or consolidation;
(iv) immediately after giving effect to such transaction or
series of transactions on a pro forma basis (including, without
limitation, any Indebtedness Incurred or anticipated to be Incurred in
connection with such transaction or series of transactions) as if such
transaction had occurred on the first day of the Determination Period,
the Company (or the surviving entity if the Company is not continuing)
shall have a Consolidated Net Worth equal to or greater than the
Consolidated Net Worth of the Company immediately prior to the
transaction or series of transactions;
(v) the Company has delivered to the Trustee an Officer's
Certificate stating that such consideration, merger, sale, conveyance
or transfer and such supplemental indenture comply with this Section
310 and that all conditions precedent herein provided for relating to
such transaction have been complied with; and
(vi) the Trustee shall have received an Opinion of Counsel as
conclusive evidence that any such consolidation, merger, sale,
conveyance or acquisition, and any such assumption, complies with the
provisions of this Section 310.
(b) In case of any such consolidation or merger or such sale,
transfer or conveyance to a Person other than a Restricted Subsidiary
in accordance with Section 310(a) and upon any such assumption by the
successor corporation, such successor corporation shall succeed to and
be substituted for the Company, with the same effect as if it had been
named herein as the Company and the predecessor corporation shall
thereupon be released from all liability with respect to the Notes, the
Indenture and this Supplemental Indenture No. 2. Such successor
corporation thereupon may cause to be signed, and may issue either in
its own name or in the name of Armco Inc., any or all of the Notes
which theretofore shall not have been signed by the Company and
delivered to the Trustee; and, upon the order of such successor
corporation, instead of the Company, and subject to all the terms,
conditions and limitations in this Indenture prescribed, the Trustee
shall authenticate and shall deliver any which previously shall have
been signed and delivered by the officers of the Company to the Trustee
for authentication, and any Notes which such successor corporation
thereafter shall cause to be signed and delivered to the Trustee for
that purpose. All the Notes so issued shall in all respects have the
same
29
<PAGE>
legal rank and benefit under the Indenture as the Notes theretofore or
thereafter issued in accordance with the terms of this Indenture as
though all of such Notes had been issued at the date of the execution
hereof.
In case of any such consolidation, merger, sale, transfer or
conveyance such changes in phraseology and form (but not in substance)
may be made in the Notes thereafter to be issued as may be appropriate.
(c) If, upon any such consolidation, merger, sale, transfer or
conveyance or upon any acquisition by the Company by purchase or
otherwise of all or any part of the Property of any other corporation,
any Property of the Company owned immediately prior thereto would
thereupon become subject to any mortgage, lien, pledge, charge or
encumbrance, the Company, prior to such consolidation, merger, sale,
conveyance or acquisition, the Company, (or the surviving entity if the
Company is not continuing) shall secure the Notes (equally and ratably
with any other Indebtedness of the Company then entitled thereto) by a
lien on all such Property of the Company prior to all liens charges and
encumbrances other than any theretofore existing thereon;
(d) The provisions of Article 11 of the Base Indenture are
superseded and of no force or effect with respect to the Notes.
SECTION 311. RESTRICTED AND UNRESTRICTED SUBSIDIARIES.
(a) The Company may designate a Subsidiary (including a newly
formed or newly acquired Subsidiary) of the Company or any of its Restricted
Subsidiaries as an Unrestricted Subsidiary if (i) such Subsidiary has total
assets of $1,000 or less, or (ii) such designation is effective immediately upon
such Person becoming a Subsidiary of either the Company or any of its Restricted
Subsidiaries. Unless so designated as an Unrestricted Subsidiary, any Person
that becomes a Subsidiary of the Company or any of its Restricted Subsidiaries
shall be classified as a Restricted Subsidiary thereof. Except as provided in
clause (i) of the first sentence of this Section 311, no Restricted Subsidiary
may be redesignated as an Unrestricted Subsidiary. Subject to Section 311(b), an
Unrestricted Subsidiary may be redesignated as a Restricted Subsidiary. The
designation of an Unrestricted Subsidiary or the removal of such designation in
compliance with Section 311(b) shall be made by the Board of Directors pursuant
to a Certified Resolution delivered to the Trustee and shall be effective as of
the date specified in the applicable Certified Resolution, which shall not be
prior to the date such Certified Resolution is delivered to the Trustee.
(b) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, take any action or enter into any transaction or
series of transactions that would result in a Person becoming a Restricted
Subsidiary (whether through an acquisition, the redesignation of an Unrestricted
Subsidiary or otherwise) unless, after giving effect to such action, transaction
or series of transactions:
(i) on a pro forma basis, the Company could Incur at least
$1.00 of additional Indebtedness pursuant to Section 303(a);
30
<PAGE>
(ii) such Subsidiary could then Incur, pursuant to clauses
(ii), (iii) or (iv) of Section 304(a), all Indebtedness as to which it
is obligated at such time;
(iii) no Default or Event of Default would occur or be
continuing; and
(iv) there exist no Liens with respect to the Property of such
Subsidiary other than Liens permitted to be Incurred under Section 307.
(c) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, take any action or enter into any transaction or
series of transactions that would result in any such Restricted Subsidiary
ceasing to be a Subsidiary (other than a merger or consolidation with the
Company or another Restricted Subsidiary) unless, after giving effect to such
action, transaction or series of transactions, either:
(i) (A) neither the Company nor any of its Affiliates (other
than a Person that is an Affiliate by virtue of its ownership of
Capital Stock or control of the Company) shall own any Capital Stock of
such former Restricted Subsidiary or any successor in interest to the
business thereof, and (B) there shall not exist any Indebtedness of the
former Restricted Subsidiary or any successor in interest to the
business thereof in favor of the Company or any of its Restricted
Subsidiaries; or
(ii) the Company and its Restricted Subsidiaries would be
permitted to make a Restricted Payment in the amount of the aggregate
Investment (excluding (A) any Investment to the extent of cash or the
Fair Market Value of Property other than cash received by the Company
or its Restricted Subsidiary, as the case may be, in respect of or as a
repayment of such Investment, and (B) the amount of Indebtedness of the
former Restricted Subsidiary received by the Company or its Restricted
Subsidiaries as part of the consideration for the acquisition of the
Capital Stock or assets of such former Restricted Subsidiary), if any,
made in the former Restricted Subsidiary after September 12, 1997.
ARTICLE IV.
REDEMPTION
SECTION 401. REDEMPTION OF THE NOTES. Except as provided in
this Article IV and in the Notes, the Notes are not subject to redemption by the
Company.
On or after December 1, 2003, the Notes may, from time to
time, be redeemed, in whole or in part, at the option of the Company upon not
less than 30 nor more than 60 days' prior notice to Holders, at the redemption
prices set forth below (expressed in percentages of the principal amount
thereof), plus accrued and unpaid interest thereon, to the Redemption Date.
31
<PAGE>
<TABLE>
<CAPTION>
REDEMPTION PERIOD PERCENTAGE
----------------- ----------
<S> <C>
December 1, 2003 to November 30, 2004 104.438%
December 1, 2004 to November 30, 2005 102.958%
December 1, 2005 to November 30, 2006 101.479%
December 1, 2006 and thereafter 100.000%
</TABLE>
At any time prior to December 1, 2001 the Company, at its
option, may redeem up to 33 1/3% of the aggregate principal amount of Initial
Notes originally issued and may redeem up to 33 1/3% of the aggregate principal
amount of Exchange Notes originally issued with the net proceeds of one or more
Equity Offerings of the Company at a redemption price equal to 108.875% of the
principal amount thereof, plus accrued and unpaid interest, if any, thereon to
the date of redemption PROVIDED, HOWEVER, that after any such redemption at
least 66 2/3% of the aggregate principal amount of the Initial or Exchange Notes
originally issued by the Company, whether or not on the date hereof or hereafter
(excluding, for purposes hereof, any Notes issued pursuant to Section 305, 309
or 407 of this Supplemental Indenture No. 2 or Section 2.08 or 3.03 of the
Indenture), respectively, remains outstanding. Any such redemption must occur on
or prior to 120 days after the receipt of such net proceeds.
In addition, upon the occurrence of a Change of Control prior
to December 1, 2003, the Company, at its option, may redeem all, but not less
than all, of the outstanding Notes at a redemption price equal to 100% of the
principal amount thereof plus the applicable Make-Whole Premium. The Company
shall give not less than 30 nor more than 60 days' prior notice to Holders of
such redemption within 30 days following the applicable Change of Control.
If less than all of the Notes are to be redeemed, the
selection of the Notes to be redeemed shall be made by the Trustee in accordance
with Section 403. Notice of redemption will be mailed to the Holders, by
first-class mail, at the addresses of such Holders as they appear on the Note
Register.
SECTION 402. NOTICE TO TRUSTEE.
In order to effect any redemption, the Company shall notify
the Trustee of the Redemption Date and the principal amount of Notes to be
redeemed and shall deliver to the Trustee an Officers' Certificate certifying
resolutions of the Board of Directors authorizing the redemption and an Opinion
of Counsel with respect to the due authorization of such redemption and that
such redemption is being made in accordance with the Indenture and the Notes.
The Company shall give the notice provided for in this Section
402 at least 60 days but not more than 90 days before each Redemption Date
(unless a shorter notice period shall be satisfactory to the Trustee).
SECTION 403. SELECTION OF NOTES TO BE REDEEMED.
If less than all the Notes are to be redeemed, the Trustee
shall allocate the total principal amount of Notes to be redeemed on a pro rata
basis, by lot or by such other method as the Trustee deems fair and appropriate
to the Holders.
32
<PAGE>
The Trustee shall make the selection not more than 60 days but
not less than 30 days before each Redemption Date from outstanding Notes not
previously called for redemption or submitted for repurchase pursuant to Section
305, 306, or 309.
The Trustee may select for redemption portions (equal to
$1,000 or any integral multiple thereof) of the principal of Notes that have
denominations larger than $1,000. Provisions of this Supplemental Indenture No.
2 that apply to Notes called for redemption shall also apply to portions of
Notes called for redemption. The Trustee shall notify the Company promptly of
the Notes or portions of Notes to be called for redemption.
SECTION 404. NOTICE OF REDEMPTION.
At least 30 but not more than 60 days before a Redemption
Date, the Company shall give a notice of redemption by first-class mail to each
Holder whose Notes are to be redeemed.
The notice shall identify the Notes to be redeemed and shall
state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the name and address of the Paying Agent;
(4) that the Notes called for redemption must be
surrendered to the Paying Agent to collect the Redemption Price;
(5) that, unless the Company defaults in making the redemption
payment, interest on the Notes called for redemption ceases to accrue
on and after the specified Redemption Date and the only remaining right
of the Holders is to receive payment of the Redemption Price upon
surrender to the Trustee or the Paying Agent of the Notes; and
(6) if any Note is being redeemed in part, the portion of the
principal amount (equal to $1,000 or any integral multiple thereof) of
such Note to be redeemed and that, on or after the Redemption Date,
upon surrender of such Note, a new Note or Notes in principal amount
equal to the unredeemed portion thereof will be issued.
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 clauses
(1), (2) and (3) above.
SECTION 405. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed (after the Trustee has
received the notice provided for in Section 402), the Notes called for
redemption become due and payable on the Redemption Date and at the Redemption
Price and shall cease to bear interest from and after the Redemption Date
(unless the Company shall fail to make payment of the Redemption Price on
33
<PAGE>
the Redemption Date). Upon surrender to the Paying Agent such Notes shall be
paid at the Redemption Price; PROVIDED, HOWEVER, that installments of interest
whose Stated Maturity is on or prior to the Redemption Date shall be payable to
the Holders registered as such at the close of business on the relevant Record
Dates therefor in accordance with the terms of the Notes and the provisions of
Section 2.04 of the Indenture.
SECTION 406. DEPOSIT OF REDEMPTION PRICE.
On or prior to 10:00 a.m., New York City time, on each
Redemption Date, the Company shall deposit with the Trustee or Paying Agent (or
if the Company acts as its own Paying Agent, shall segregate and hold in a
separate trust fund for the sole benefit of the Holders) money, in federal or
other immediately available funds, sufficient to pay the Redemption Price of all
Notes to be redeemed on the Redemption Date other than Notes or portions thereof
called for redemption on that date which have been delivered by the Company to
the Trustee for cancellation.
So long as the Company complies with the preceding paragraph
and the other provisions of this Article, interest on the Notes to be redeemed
on the applicable Redemption Date shall cease to accrue from and after such date
and such Notes or portions thereof shall be deemed not to be entitled to any
benefit under the Indenture except to receive payment of the Redemption Price on
the Redemption Date. If any Note called for redemption shall not be so paid upon
surrender for redemption, then, from the Redemption Date until such principal is
paid, interest shall be paid on the unpaid principal and, to the extent
permitted by law, on any accrued but unpaid interest thereon, in each case at
the rate prescribed therefor by such Notes.
The provisions of Section 12.06 of the Indenture shall apply
to any money held by the Trustee or any Paying Agent under this Article that
remains unclaimed for two years after the Redemption Date for any Notes called
for redemption pursuant to the provisions of this Article.
SECTION 407. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company
shall execute, and the Trustee shall authenticate and deliver, at the expense of
the Company, a new Note equal in principal amount to the unredeemed portion of
the Note surrendered.
SECTION 408. DEFEASANCE.
The defeasance provisions of Article XII of the Indenture
shall be applicable to the Notes.
ARTICLE V.
ADDITIONAL EVENTS OF DEFAULT
SECTION 501. (a) In addition to the Events of Default
specified in clauses (a) - (f) of Section 6.01 of the Indenture, the following
events are Events of Default with respect to the
34
<PAGE>
Notes and shall be subject to the procedures and other provisions applicable to
the Events of Default contained in clauses (a) - (f) of such Section 6.01:
(a) a default by the Company or any of its Significant
Restricted Subsidiaries under, any bonds, debentures, mortgages,
indentures, agreements or instruments, under which there may be issued,
or by which there may be secured or evidenced, any indebtedness for
borrowed money of the Company or any Significant Restricted Subsidiary,
whether such indebtedness now exists or shall hereafter be created, and
such indebtedness shall have been accelerated (or shall have matured)
and such indebtedness remains unpaid, PROVIDED that the principal
amount of such indebtedness with respect to which any such default and
acceleration (or maturity) has occurred and is continuing, together
with the principal amount of all other such indebtedness with respect
to which such a default and acceleration (or maturity) has occurred and
is continuing, aggregates $5,000,000 or more; or
(b) the entry by a court of competent jurisdiction of one or
more judgments or orders against the Company or any of its Significant
Restricted Subsidiaries in an uninsured aggregate amount in excess of
$5,000,000 is not discharged, waived, stayed or satisfied for a period
of 60 consecutive days.
ARTICLE VI.
MISCELLANEOUS
SECTION 601. The recitals of fact herein and in the Notes
shall be taken as statements of the Company and shall not be construed as made
by the Trustee.
SECTION 602. THIS SUPPLEMENTAL INDENTURE NO. 2 AND THE NOTES
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.
SECTION 603. In case any one or more of the provisions
contained in this Supplemental Indenture No. 2 or in the Notes should be
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, impaired, prejudiced or disturbed thereby.
SECTION 604. Wherever in this Supplemental Indenture No. 2 any
of the parties hereto is named or referred to, such reference shall be deemed to
include the successors or assigns of such party, and all the covenants and
agreements in this Supplemental Indenture No. 2 contained by or on behalf of the
Company or the Trustee shall bind and inure to the benefit of the respective
successors and assigns of such parties, whether so expressed or not.
SECTION 604a. For purposes of the Notes and this Supplemental
Indenture No. 2, Section 2.02(a) of the Indenture is amended to read as follows:
"(a) a Certified Resolution, or a Certified Resolution and
Officers' Certificate, setting forth"
35
<PAGE>
SECTION 605. (a) This Supplemental Indenture No. 2 may be
simultaneously executed in several counterparts, and all such counterparts
executed and delivered, each as an original, shall constitute but one and the
same instrument.
(b) The descriptive headings of the several Articles of this
Supplemental Indenture No. 2 were formulated, used and inserted in this
Supplemental Indenture No. 2 for convenience only and shall not be deemed to
affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture No. 2 to be duly executed, all as of the day and year
first above written.
STAR BANK, N.A.,
as Trustee
By
----------------------------------------
Name:
Title:
ARMCO INC.
By
-----------------------------------------
Name:
Title:
36
<PAGE>
STATE OF )
-------------
: ss:
COUNTY OF )
-----------
On the ____ day of __________, 1998, before me personally came
_____________, to me known, who, being by me duly sworn, did depose and say that
he resides at ___________ ____________________; that he is a __________ of
___________, one of the parties described in and which executed the above
instrument; that he knows the corporate seal of said corporation; that the seal
affixed to the said instrument is such corporate seal; that it was so affixed by
authority of the board of directors of said corporation; and that he signed his
name thereto by like authority.
[NOTARIAL SEAL]
--------------------------------------
NOTARY PUBLIC
37
<PAGE>
STATE OF )
-------------
: ss:
COUNTY OF )
-----------
On the ____ day of __________, 1998, before me personally came
Jerry W. Albright, to me known, who, being by me duly sworn, did depose and say
that he resides at 105 Warlington Circle, McMurray, PA 15317; that he is a Vice
President of Armco Inc., one of the parties described in and which executed the
above instrument; that he knows the corporate seal of said corporation; that the
seal affixed to the said instrument is such corporate seal; that it was so
affixed by authority of the board of directors of said corporation; and that he
signed his name thereto by like authority.
[NOTARIAL SEAL]
---------------------------------
NOTARY PUBLIC
38
<PAGE>
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 NOTES AND EXCHANGE NOTES
1. DEFINITIONS
1.1 DEFINITIONS
Capitalized terms used but not defined herein that are defined
in the Supplemental Indenture to which this Appendix is attached shall have the
meaning ascribed therein to such terms. For the purposes of this Appendix A the
following terms shall have the meanings indicated below:
"Definitive Note" means a certificated Note.
"Depositary" means The Depository Trust Company, its nominees
and their respective successors.
"Initial Purchasers" means Salomon Smith Barney Inc., Chase
Securities Inc. and PNC Capital Markets, Inc.
"Purchase Agreement" means the Purchase Agreement dated
December 10, 1998 among the Company and the Initial Purchasers.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"Registered Exchange Offer" means the offer by the Company,
pursuant to the Registration Agreement, to certain Holders of Initial Notes, to
issue and deliver to such Holders, in exchange for the Initial Notes, a like
aggregate principal amount of Exchange Notes registered under the Securities
Act.
"Registration Agreement" means the Registration Agreement
dated December 10, 1998 among the Company and the Initial Purchasers.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the custodian with respect to a
Global Note (as appointed by the Depositary), or any successor person thereto
and shall initially be the Trustee.
"Shelf Registration Statement" means the registration
statement issued by the Company in connection with the offer and sale of Initial
Notes pursuant to the Registration Agreement.
A-1
<PAGE>
"Transfer Restricted Notes" means Definitive Notes and Notes
that bear or are required to bear the legend set forth in Section 2.3(e) hereto.
1.2 OTHER DEFINITIONS
<TABLE>
<CAPTION>
TERM DEFINED IN
---- SECTION:
--------
<S> <C>
"Agent Members"............................................................................... 2.1(b)
"Cedel Bank".................................................................................. 2.1(a)
"Euroclear"................................................................................... 2.1(a)
"Global Note" ................................................................................ 2.1(a)
"Regulation S"................................................................................ 2.1(a)
"Rule 144A"................................................................................... 2.1(a)
</TABLE>
2. THE NOTES
2.1 FORM AND DATING
Initial Notes having an aggregate prinicpal amount of
$75,000,000 (the "Basic Initial Notes") are being offered and sold by the
Company pursuant to the Purchase Agreement. Additional Initial Notes having an
aggregate principal amount of up to $50,000,000 (the "Add-On Additional Notes")
may be offered and sold by the Company pursuant to one or more purchase
agreements ("Add-On Purchase Agreements") having terms substantially similar to
the Purchase Agreement.
(a) GLOBAL NOTES. Initial Notes offered and sold to a QIB in
reliance on Rule 144A under the Securities Act ("Rule 144A") or in reliance on
Regulation S under the Securities Act ("Regulation S"), in each case as provided
in the Purchase Agreement or Add-On Purchase Agreement, shall be issued
initially in the form of one or more permanent global notes in definitive, fully
registered form without interest coupons with the global securities legend and
restricted notes legend set forth in Exhibit 1 hereto (each, a "Global Note"),
which shall be deposited on behalf of the purchasers of the Initial Notes
represented thereby with the Trustee, as custodian for the Depositary (or with
such other custodian as the Depositary may direct) (and, in the case of
Regulation S, for the accounts of designated agents holding on behalf of the
Euroclear System ("Euroclear") or Cedel Bank, societe anonyme ("Cedel Bank")),
and registered in the name of the Depositary or a nominee of the Depositary,
duly executed by the Company and authenticated by the Trustee as provided in the
Indenture. The aggregate principal amount of the Global Notes may from time to
time be increased or decreased by adjustments made on the records of the Trustee
and the Depositary or its nominee as hereinafter provided.
A-2
<PAGE>
(b) BOOK-ENTRY PROVISIONS. This Section 2.1(b) shall apply
only to a Global Note deposited with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance
with this Section 2.1(b) and pursuant to an order of the Company, authenticate
and deliver initially one or more Global Notes that (i) shall be registered in
the name of the Depositary for such Global Note or Global Notes or the nominee
of such Depositary and (ii) shall be delivered by the Trustee to such Depositary
or pursuant to such Depositary's instructions or held by the Trustee as
custodian for the Depositary pursuant to a FAST Balance Certificate Agreement
between the Depositary and the Trustee.
Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Supplemental Indenture No. 2 with
respect to any Global Note held on their behalf by the Depositary or by the
Trustee as the custodian of the Depositary or under such Global Note, and the
Depositary may be treated by the Company, the Trustee and any agent of the
Company or the Trustee as the absolute owner of such Global Note 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 Depositary or impair, as between the Depositary and its Agent Members, the
operation of customary practices of such Depositary governing the exercise of
the rights of a holder of a beneficial interest in any Global Note.
(c) DEFINITIVE NOTES. Except as provided in this Section 2.1
or Sections 2.3 or 2.4, owners of beneficial interests in Global Notes will not
be entitled to receive physical delivery of certificated Notes. Upon transfer of
a Definitive Note to a QIB, such Definitive Note will, unless the Global Note
has previously been exchanged, be exchanged for an interest in a Global Note
pursuant to the provisions of Section 2.3.
2.2 AUTHENTICATION. The Trustee shall authenticate and deliver
from time to time: (a) Initial Notes for original issue in an aggregate
principal amount of up to $125,000,000 and (b) Exchange Notes for issue only in
a Registered Exchange Offer pursuant to the Registration Agreement, for a like
principal amount of Initial Notes, in either case, upon a written order of the
Company. Such order shall specify the amount of the Notes to be authenticated
and the date on which the original issue of such amount of Notes is to be
authenticated and whether the Notes are to be Initial Notes or Exchange Notes.
Notes authenticated for original issue on any date and pursuant to any written
order of the Company shall nonetheless have identical terms as, and shall be
fungible with, all other Notes. The aggregate principal amount of Notes
outstanding at any time may not exceed $125,000,000, except as provided in
Section 2.08 of the Indenture. It is understood that as of the date hereof the
Board of Directors has not authorized the issuance of Add-On Initial Notes and
that evidence of appropriate action by the Board of Directors shall be provided
to the Trustee prior to any issuance thereof.
2.3 TRANSFER AND EXCHANGE. (a) TRANSFER AND EXCHANGE OF
DEFINITIVE NOTES. When Definitive Notes are presented to the Debt Security
Registrar with a request to register the transfer of such Definitive Notes or to
exchange such Definitive Notes for an equal principal
A-3
<PAGE>
amount of Definitive Notes of other authorized denominations, the Debt Security
Registrar shall register the transfer or make the exchange as requested if the
requirements set forth in the Indenture for such transaction are met; PROVIDED,
HOWEVER, that the Definitive Notes presented or surrendered for registration of
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 duly executed by the Holder thereof or his attorney
duly authorized in writing; and
(ii) in the case of Transfer Restricted Notes that are
Definitive Notes, such Notes shall be (A) transferred or exchanged
pursuant to an effective registration statement under the Securities
Act or (B) shall be accompanied by the following additional information
and documents, as applicable:
(1) if such Transfer Restricted Notes are being
delivered to the Debt Security Registrar by a Holder for
registration in the name of such Holder, without transfer, a
certification from such Holder to that effect (in the form set
forth on the reverse of the Notes), (2) if such Transfer
Restricted Notes are being transferred to the Company, a
certification to that effect (in the form set forth on the
reverse of the Notes) or (3) if such Transfer Restricted Notes
are being delivered to the Debt Security Registrar by a Holder
for transfer pursuant to an exemption from registration in
accordance with Rule 144 under the Securities Act, (x) a
certification to that effect (in the form set forth on the
reverse of the Notes) and (y) if the Company so requests,
evidence reasonably satisfactory to it as to the compliance
therewith.
(b) RESTRICTIONS ON TRANSFER OF A DEFINITIVE NOTE FOR A
BENEFICIAL INTEREST IN A GLOBAL NOTE. A Definitive Note may not be exchanged for
a beneficial interest in a Global Note except upon satisfaction of the
requirements set forth below. Upon receipt by the Trustee of a Definitive Note,
duly endorsed or accompanied by appropriate instruments or transfer, in form
satisfactory to the Trustee, together with:
(i) in the case of Transfer Restricted Notes that are
Definitive Notes, certification, (in the form set forth on the reverse
of the Note), that such Definitive Note is being transferred (A) to a
QIB in accordance with Rule 144A, or (B) 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) whether or not such Definitive Security is a Transfer
Restricted Security, 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 Note to reflect an
increase in the aggregate principal amount of the Notes represented by
the Global Note, such instructions to contain information regarding the
Depositary account to be credited with such increase,
A-4
<PAGE>
then the Trustee shall cancel such Definitive Note and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Securities Custodian, the
aggregate principal amount of Notes represented by the Global Note to be
increased by the aggregate principal amount of the Definitive Note to be
exchanged and shall credit or cause to be credited to the account of the Person
specified in such instructions a beneficial interest in the Global Note equal to
the principal amount of the Definitive Note so canceled. If no Global Notes are
then outstanding and the Global Note 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 Note in the appropriate principal amount.
(c) TRANSFER AND EXCHANGE OF GLOBAL NOTES. (i) The transfer
and exchange of Global Notes or beneficial interests therein shall be effected
through the Depositary, in accordance with Supplemental Indenture No. 2
(including applicable restrictions on transfer set forth herein, if any) and the
procedures of the Depositary (and Euroclear or Cedel Bank, if applicable)
therefor. A transferor of a beneficial interest in a Global Note shall deliver
to the Debt Security Registrar a written order given in accordance with the
Depositary's procedures (and the procedures of Euroclear or Cedel Bank, if
applicable) containing information regarding the participant account of the
Depositary to be credited with a beneficial interest in the Global Note. The
Debt Security Registrar or Euroclear or Cedel Bank, if applicable, shall, in
accordance with such instructions instruct the Depositary to credit to the
account of the Person specified in such instructions a beneficial interest in
the Global Note and to debit the account of the Person making the transfer the
beneficial interest in the Global Note being transferred.
(ii) Notwithstanding any other provisions of this Appendix A
(other than the provisions set forth in Section 2.4), a Global Note may
not be transferred as a whole except by the Depositary to a nominee of
the Depositary or by a nominee of the Depositary to the Depositary or
another nominee of the Depositary or by the Depositary or any such
nominee to a successor Depositary or a nominee of such successor
Depositary.
(iii) In the event that a Global Note is exchanged for Notes
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 Notes, such Notes 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 Notes intended to ensure that such transfers comply with
Rule 144A or Regulation S, as the case may be) and such other
procedures as may from time to time be adopted by the Company.
(d) TRANSFER OF A BENEFICIAL INTEREST IN A GLOBAL SECURITY
FOR A DEFINITIVE SECURITY. Subject to Section 2.4 of this Supplemental
Indenture No. 2, any person having a beneficial interest in a Global Security
may upon request exchange such beneficial interest for a Definitive Security.
Upon receipt by the Trustee of written instructions from the Depositary or
its nominee, pursuant to instructions from its direct or indirect
participants or otherwise, and upon receipt by the
A-5
<PAGE>
Trustee of a written order of the person designated by the Depositary as
having such a beneficial interest containing registration instructions and,
in the case of a beneficial interest in a Transfer Restricted Security only,
the following additional information and documents:
(i) if such beneficial interest is being transferred to the
person designated by the Depositary as being the beneficial owner, a
certification from such person to that effect (in the form set forth on
the reverse of the Note); or
(ii) if such beneficial interest is being transferred to a QIB
in accordance with Rule 144A or pursuant to an exemption from
registration in accordance with Regulation S or pursuant to an
effective registration statement under the Securities Act, a
certification to that effect from the holder of such beneficial
interest (in the form set forth on the reverse of the Note); or
(iii) if such beneficial interest is being transferred
pursuant to an exemption from registration in accordance with Rule 144
under the Securities Act, a certification to that effect (in the form
set forth on the reverse of the Note) and if the Company so requests,
evidence reasonably satisfactory to it as to compliance with such Rule,
then the Trustee will cause the aggregate principal amount of the Global
Security to be reduced, the Trustee shall promptly notify the Depositary of such
action and, following such reduction, the Company will execute and, upon receipt
of an authentication order in the form of an Officers' Certificate, the Trustee
will authenticate and deliver to the transferee, a Definitive Note.
(e) LEGEND.
(i) Except as permitted by the following paragraphs (ii),
(iii) and (iv), each Note certificate evidencing the Global Notes and
the Notes in certificated form (and all Notes 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 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,
A-6
<PAGE>
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
("REGULATION S") (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON
THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), (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. 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) 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. THE HOLDER HEREOF BY ITS ACCEPTANCE
HEREOF AGREES TO BE BOUND BY THE PROVISIONS OF THE REGISTRATION
AGREEMENT DATED DECEMBER 10, 1998 RELATING TO THE NOTES."
Each Definitive Note 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 Note
(including any Transfer Restricted Note represented by a Global Note)
pursuant to clause (3), (4) or (5) of the foregoing legend:
(A) in the case of any Transfer Restricted Note that
is a Definitive Note, the Registrar shall permit the Holder
thereof to exchange such Transfer Restricted Note for a
Definitive Note that does not bear the legend set forth above
and rescind any restriction on the transfer of such Transfer
Restricted Note; and
(B) in the case of any Transfer Restricted Note that
is represented by a Global Note, the Registrar shall permit
the Holder thereof to exchange such Transfer Restricted Note
for a Definitive Note that does not bear the legend set forth
above and rescind any restriction on the transfer of such
Transfer Restricted Note,
A-7
<PAGE>
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 or
Regulation S, if applicable (such certification to be in the form set
forth on the reverse of the Initial Note).
(iii) After a transfer of any Initial Notes during the period
of the effectiveness of a Shelf Registration Statement with respect to
such Initial Notes, all requirements pertaining to legends on such
Initial Note will cease to apply, the requirements requiring any such
Initial Note issued to certain Holders be issued in global form will
cease to apply, and an Initial Note in certificated or global form
without legends will be available to the transferee of the Holder of
such Initial Notes upon exchange of such transferring Holder's
certificated Initial Note. 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
Notes without legends.
(iv) Upon the consummation of a Registered Exchange Offer with
respect to the Initial Notes pursuant to which certain Holders of such
Initial Notes are offered Exchange Notes in exchange for their Initial
Notes, all requirements pertaining to such Initial Notes that Initial
Notes issued to certain Holders be issued in global form will cease to
apply and certificated Initial Notes with the restricted notes legend
set forth in Exhibit 1 hereto will be available to Holders of such
Initial Notes that do not exchange their Initial Notes, and Exchange
Notes in certificated or global form will be available to Holders that
exchange such Initial Notes 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 Notes without legends.
(e) CANCELLATION OR ADJUSTMENT OF GLOBAL NOTE. At such time as
all beneficial interests in a Global Note have either been exchanged for
certificated or Definitive Notes, redeemed, repurchased or canceled, such Global
Note shall be returned to the Trustee for cancellation or retained and canceled
by the Trustee. At any time prior to such cancellation, if any beneficial
interest in a Global Note is exchanged for certificated or Definitive Notes,
repurchased or canceled, the principal amount of Notes represented by such
Global Note 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
Note) with respect to such Global Note, by the Trustee or the Securities
Custodian, to reflect such reduction.
(f) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF
NOTES.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Notes in
certificated form and Global Notes at the Debt Security 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 3.08).
A-8
<PAGE>
(iii) The Debt Security Registrar shall not be required to
register the transfer of or exchange of any Note for a period beginning
15 days before the mailing of a notice of an offer to repurchase Notes
or 15 days before an interest payment date.
(iv) Prior to the due presentation for registration of
transfer of any Note, the Company, the Trustee, the Paying Agent, the
Debt Security Registrar may deem and treat the person in whose name a
Note is registered as the absolute owner of such Note for the purpose
of receiving payment of principal of and interest on such Note and for
all other purposes whatsoever, whether or not such Note 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 Notes issued upon any transfer or exchange pursuant to
the terms of this Supplemental Indenture No. 2 shall evidence the same
debt and shall be entitled to the same benefits under this Supplemental
Indenture No. 2 as the Notes 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 Note, a member of, or a participant in
the Depositary or other Person with respect to the accuracy of the
records of the Depositary or its nominee or of any participant or
member thereof, with respect to any ownership interest in the Notes or
with respect to the delivery to any participant, member, beneficial
owner or other Person (other than the Depositary) of any notice
(including any notice of redemption) or the payment of any amount,
under or with respect to such Notes. All notices and communications to
be given to the Holders and all payments to be made to Holders under
the Notes shall be given or made only to the registered Holders (which
shall be the Depositary or its nominee in the case of a Global Note).
The rights of beneficial owners in any Global Note shall be exercised
only through the Depositary subject to the applicable rules and
procedures of the Depositary. The Trustee may rely and shall be fully
protected in relying upon information furnished by the Depositary 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 Supplemental Indenture No. 2 or under applicable law
with respect to any transfer of any interest in any Note (including any
transfers between or among Depositary participants, members or
beneficial owners in any Global Note) 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 Supplemental Indenture No. 2, and to examine the same to
determine substantial compliance as to form with the express
requirements hereof.
2.4 CERTIFICATED NOTES
A-9
<PAGE>
(a) A Global Note deposited with the Depositary or with the
Trustee as custodian for the Depositary pursuant to Section 2.1 shall be
transferred to the beneficial owners thereof in the form of Notes in
certificated form in an aggregate principal amount equal to the principal amount
of such Global Note, in exchange for such Global Note, only if such transfer
complies with Section 2.3 and (i) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for such Global Note or if at any
time such Depositary 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 (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 Notes in certificated form under
this Supplemental Indenture No. 2.
(b) Any Global Note that is transferable to the beneficial
owners thereof pursuant to this Section 2.4 shall be surrendered by the
Depositary 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 Note, an equal aggregate principal
amount of certificated Initial Notes of authorized denominations. Any portion of
a Global Note transferred pursuant to this Section 2.4 shall be executed,
authenticated and delivered only in denominations of $1,000 and any integral
multiple thereof and registered in such names as the Depositary shall direct.
Any certificated Initial Note delivered in exchange for an interest in the
Global Note shall, except as otherwise provided by Section 2.3(d), bear the
restricted notes legend set forth in Exhibit 1 hereto.
(c) Subject to the provisions of Section 2.4(b), the
registered Holder of a Global Note 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
Supplemental Indenture No. 2 or the Notes.
(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 Notes in
definitive, fully registered form without interest coupons.
A-10
<PAGE>
EXHIBIT 1 TO APPENDIX A
FORM OF FACE OF INITIAL NOTE
[Global Notes 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 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 Notes 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 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
A-1-1
<PAGE>
REVERSE OF THIS SECURITY), (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH
REGULATION S UNDER THE SECURITIES ACT ("REGULATION S") (AS INDICATED BY THE BOX
CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
SECURITY), (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. 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) 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. THE HOLDER HEREOF BY ITS
ACCEPTANCE HEREOF AGREES TO BE BOUND BY THE PROVISIONS OF THE REGISTRATION
AGREEMENT DATED DECEMBER 10, 1998 RELATING TO THE NOTES.
A-1-2
<PAGE>
REGISTERED REGISTERED
ARMCO INC.
No CUSIP
------ ------------
8 7/8% Senior Note Due 2008
ARMCO INC., a corporation duly organized and existing under
the laws of the State of Ohio (herein referred to as the "Company", which
term includes any successor corporation under the Indenture referred to on
the reverse hereof), for value received, hereby promises to pay to
or registered assigns, the principal sum of
[indicated on Schedule A hereof]* [________________________ Dollars]** on
December 1, 2008, and to pay interest thereon in arrears from the date of
original issuance hereof or from the most recent date to which interest has
been paid or duly provided for, semiannually on June 1 and December 1 (each
hereinafter called an "Interest Payment Date") in each year commencing June
1, 1999 at the rate of 8 7/8% per annum until the principal hereof is paid or
made available for payment.
The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in the Indenture referred to
on the reverse hereof, be paid to the person in whose name this Note is
registered at the close of business on the May 15 or November 15, as the case
may be, next preceding such Interest Payment Date, unless the Company shall
default in the payment of interest due on such Interest Payment Date, in which
case such defaulted interest shall be paid to the person in whose name this Note
is registered at the close of business on a special record date for the payment
of such defaulted interest established by notice to the registered holders of
the Notes not less than ten days preceding such special record date.
Payment of the principal of, premium, if any, and interest on
this Note will be made at the office or agency of the Company maintained for
that purpose in the Borough of Manhattan, City and State of New York, in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts; PROVIDED, HOWEVER, that at
the option of the Company payment of interest may be made by check mailed to the
address of the person entitled thereto as such address shall appear in the Debt
Security Register related to the Notes and PROVIDED, FURTHER, that at the option
of any Holder of Notes, payment of interest to such Holder will be made by wire
transfer to an account designated by such Holder. So long as payments of
interest are made by check or wire transfer, the
- ------------------------------
* Applicable to Global Notes only.
** Applicable to certificated notes only.
A-1-3
<PAGE>
Company need not maintain an office or agency for the payment of interest in the
Borough of Manhattan, City and State of New York.
Reference is made to the further provisions of this Note set
forth on the reverse hereof. Such further provisions shall for all purposes have
the same effect as though fully set forth at this place.
This Note shall not be valid or become obligatory for any
purpose until the certificate of authentication hereon shall have been signed by
the Trustee under the Indenture referred to on the reverse hereof.
IN WITNESS WHEREOF, Armco Inc. has caused this Note to be
signed manually or by facsimile by its Chairman of the Board or its President or
one of its Corporate Vice Presidents and by its Treasurer or one of its
Assistant Treasurers or its Secretary or one of its Assistant Secretaries, and
has caused its corporate seal to be affixed hereunto or imprinted hereon.
Dated:
------------------------------
ARMCO INC.
[SEAL]
Attest: By:
----------------------------- ----------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This Note is one of the Debt Securities described in the
within-mentioned Indenture.
Star Bank, N.A.,
as Trustee
By:
----------------------------------
Authorized Officer
A-1-4
<PAGE>
FORM OF REVERSE OF INITIAL NOTE
ARMCO INC.
8 7/8% Senior Note Due 2008
This Note is one of a duly authorized issue of debentures,
notes, bonds or other evidences of indebtedness of the Company (hereinafter
called the "Debt Securities"), of the series hereinafter specified, all issued
or to be issued under an indenture dated as of November 1, 1993, as supplemented
by Supplemental Indenture No. 1 dated as of November 1, 1993 and by Supplemental
Indenture No. 2 dated as of December 15, 1998 ("Supplemental Indenture No. 2")
(together, as so supplemented, the "Indenture"), duly executed and delivered by
the Company to Star Bank, N.A., as trustee (hereinafter called the "Trustee"),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a description of the respective rights and duties thereunder of the
Trustee, the Company and the Holders of the Debt Securities. The Debt Securities
may be issued in one or more series, which different series may be issued in
various aggregate principal amounts, may mature at different times, may bear
interest at different rates (if any) which interest may be payable at different
times, may be subject to different redemption, repurchase or purchase provisions
(if any), may be subject to different sinking or analogous funds, may be subject
to different covenants and Events of Default, may be subject to different
defeasance provisions, and may otherwise vary as in the Indenture provided. This
Note is one of an issue of Debt Securities designated as the "8 7/8%
Notes Due 2008" of the Company (herein called the "Notes") issued under the
Indenture, limited in aggregate principal amount to $125,000,000. Pursuant to a
Registration Agreement dated December 10, 1998, the Company has agreed to use
its best efforts to exchange its 8 7/8% Exchange Notes Due 2008 (the
"Exchange Notes") for a like principal amount of the Notes. The Notes and the
Exchange Notes will be treated for all purposes of the Indenture as one series
of Debt Securities.
On or after December 1, 2003, the Notes may, from time to
time, be redeemed, in whole or in part, at the option of the Company upon not
less than 30 nor more than 60 days' prior notice to Holders, at the redemption
prices set forth below (expressed in percentages of the principal amount
thereof), plus accrued and unpaid interest thereon, to the Redemption Date.
<TABLE>
<CAPTION>
REDEMPTION PERIOD PERCENTAGE
----------------- ----------
<S> <C>
December 1, 2003 to November 30, 2004 104.438%
December 1, 2004 to November 30, 2005 102.958%
December 1, 2005 to November 30, 2006 101.479%
December 1, 2006 and thereafter 100.000%
</TABLE>
At any time prior to December 1, 2001 the Company, at its
option, may redeem up to 33 1/3% of the aggregate principal amount of Notes
originally issued with the net proceeds from one or more Equity Offerings of the
Company at a redemption price equal to 108.875% of the principal amount thereof,
plus accrued and unpaid interest, if any, thereon to the date of redemption
PROVIDED, HOWEVER, that after any such redemption at least 66 2/3 % of the
aggregate
A-1-5
<PAGE>
principal amount of the original issue of the Notes remains outstanding. Any
such redemption must occur on or prior to 120 days after the receipt of such net
proceeds.
In addition, upon the occurrence of a Change of Control prior
to December 1, 2003, the Company, at its option, may redeem all, but not less
than all, of the outstanding Notes at a redemption price equal to 100% of the
principal amount thereof plus the applicable Make-Whole Premium. The Company
shall give not less than 30 nor more than 60 days' prior notice to Holders of
such redemption within 30 days following the applicable Change of Control.
Upon the occurrence of a Change of Control, each Holder shall
have the right to require the Company to repurchase such Holder's Notes, in
whole or in part, in integral multiples of $1,000, pursuant to the Change of
Control Offer described in Section 305 of Supplemental Indenture No. 2 at the
Repurchase Price in cash equal to 101% of the aggregate principal amount
thereof, plus accrued and unpaid interest thereon, if any, to the Change of
Control Payment Date. The Holder's right of repurchase referred to in this
paragraph is as provided in and subject to the terms of the Indenture.
The Indenture contains certain covenants which restrict (among
other things) the ability of the Company and certain of its Subsidiaries to
enter into or permit certain transactions with Affiliates, make certain
Investments, pay dividends, or make other Restricted Payments, Incur
Indebtedness, issue preferred stock of Restricted Subsidiaries, enter into Sale
and Leaseback Transactions, enter into certain Asset Sales, Incur Liens, impose
restrictions on distributions from Restricted Subsidiaries and consummate
mergers or sell, transfer or convey all or substantially all of the Company's
assets.
In case an Event of Default, as defined in the Indenture,
shall have occurred and be continuing, the principal hereof may be declared, and
upon such declaration shall become, due and payable, in the manner, with the
effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and
the Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of Debt Securities at the time outstanding of each
series to be affected, evidenced as in the Indenture provided, from time to time
and at any time to enter into supplemental indentures adding any provisions to
or changing in any manner or eliminating any of the provisions of the Indenture
or of any supplemental indenture or modifying in any manner the rights of the
Holders of the Debt Securities of such series to be affected; PROVIDED, HOWEVER,
that no such supplemental indenture shall (i) extend the fixed maturity of any
Debt Security, or reduce the rate or extend the time of payment of any interest
thereon, or reduce the principal amount thereof or any premium payable upon
redemption thereof, or make the principal thereof or any premium or interest
thereon payable in any coin or currency other than that initially provided for
in such Debt Security, without the consent of the Holder of each Debt Security
so affected, or (ii) reduce the aforesaid percentage of Debt Securities of a
series, the Holders of which are required to consent to any such supplemental
indenture, without the consent of the Holders of all Debt Securities of such
series then outstanding.
A-1-6
<PAGE>
No reference herein to the Indenture and no provision of this
Note or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of, premium, if any,
and interest on this Note at the place, at the respective times, at the rate and
in the coin or currency herein prescribed.
The Notes are issuable in registered form without coupons in
denominations of $1,000 and any multiple of $1,000. Notes may be exchanged for a
like aggregate principal amount of Notes of other authorized denominations at
the office or agency of the Company in the Borough of Manhattan, City and State
of New York, and in the manner and subject to the limitations provided in the
Indenture, but without the payment of any service charge.
Upon due presentment for registration of transfer of this Note
at the office or agency of the Company in the Borough of Manhattan, City and
State of New York, the Company shall execute and the Trustee shall authenticate
and deliver a new Note or Notes of like tenor and authorized denominations for
an equal aggregate principal amount in exchange herefor, subject to the
limitations provided in the Indenture, without charge except for any tax or
other governmental charge imposed in connection therewith.
The Company has initially appointed the Trustee as Debt
Security Registrar, paying agent and agent for notice of service and demand in
respect of the Notes. So long as the Trustee continues to serve as the Debt
Security Registrar or a paying agent, payment of principal, premium, if any, and
interest, exchanges and registrations of transfer and tender of Notes for
redemption may be made at the principal corporate trust office of the Trustee in
addition to any other office or agency that the Company is required to maintain
pursuant to the terms of the Indenture or this Note.
The Company, the Trustee, any paying agent and any Debt
Security Registrar in respect of the Notes may deem and treat the registered
holder hereof as the absolute owner of this Note (whether or not this Note shall
be overdue and notwithstanding any notation of ownership or other writing hereon
made by anyone other than the Company or any Debt Security Registrar in respect
of the Notes), for the purpose of receiving payment as provided herein, and for
all other purposes, neither the Company nor the Trustee nor any paying agent nor
any Debt Security Registrar in respect of the Notes shall be affected by any
notice to the contrary. All payments made to or upon the order of such
registered holder shall, to the extent of the sum or sums paid, effectually
satisfy and discharge the liability for moneys payable on this Note.
No recourse for the payment of the principal of or interest on
this Note, or for any claim based hereon or otherwise in respect hereof, and no
recourse under or upon any obligation, covenant or agreement of the Company in
the Indenture or any indenture supplemental thereto or in any Note, or because
of the creation of any indebtedness represented thereby, shall be had against
any incorporator, stockholder, officer or director, as such, past, present or
future, of the Company or of any successor corporation, either directly or
through the Company or any successor corporation, whether by virtue of any
constitution, statute or rule of law or by the enforcement of any assessment or
penalty or otherwise, all such liability being, by the acceptance hereof and as
part of the consideration for the issue hereof, expressly waived and released.
A-1-7
<PAGE>
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS
OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF SAID STATE, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF
LAW.
All terms used in this Note (and not otherwise defined in this
Note) that are defined in the Indenture shall have the meanings assigned to them
in the Indenture.
- --------------------------------------------------------------------------------
Certificate of Transfer
(To be executed by the registered holder
if such holder desires to transfer this Note)
__________________
__________________
New York, New York______
FOR VALUE RECEIVED _________________________ hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER TAX
IDENTIFYING NUMBER OF TRANSFEREE
- ----------------------------------------------
| |
- ---------------------------------------------- ---------------------------------
- --------------------------------------------------------------------------------
(Please print name and address of transferee)
- --------------------------------------------------------------------------------
this Note, together with all right, title and interest herein, and does hereby
irrevocably constitute and appoint ___________________________________________
Attorney to transfer this Note on the Debt Security Register relating to this
Note, with full power of substitution.
Dated:
---------------------------- -----------------------------------
Signature
-----------------------------------
Signature Guaranteed:
NOTICE: The signature to the foregoing Assignment must correspond to the Name as
written upon the face of this Note in every particular, without alteration or
any change whatsoever.
A-1-8
<PAGE>
ELECTION OF HOLDER TO REQUIRE REPURCHASE
1. Pursuant to Section 305 of Supplemental Indenture
No. 2,
/ / the undersigned hereby elects to have the entire principal amount of
this Note repurchased by the Company.
/ / the undersigned hereby elects to have $_________ of this Note
repurchased by the Company (such specified amount must be in an
integral multiple of $1000).
2. The undersigned hereby directs the Trustee or Paying Agent
to pay it or ___________________________ an amount in cash equal to 101% of the
principal amount specified in paragraph 1 above plus accrued and unpaid interest
hereon, if any, to the Change of Control Payment Date and to deliver to it a new
Note of this series in an aggregate principal amount equal to the untendered
portion, if any, this Note.
Dated:
------------------------- ---------------------------------
Signature
---------------------------------
Signature Guaranteed:
NOTICE: The signature to the foregoing Election must correspond to the Name as
written upon the face of this Note in every particular, without alteration or
any change whatsoever.
In connection with any transfer of any of the Notes 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 Notes and the last date, if any, on which such Notes were owned by the
Company or any Affiliate of the Company, the undersigned confirms that such
Notes 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 (the "Securities Act"); or
(3) /_/ inside the United States to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act
("Rule 144A")) ("QIB") 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; or
A-1-9
<PAGE>
(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; or
(5) /_/ pursuant to another available exemption from registration
provided by Rule 144 under the Securities Act ("Rule 144").
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any person other than the
registered holder thereof; PROVIDED, HOWEVER, that if box (5) is checked, the
Trustee may require, prior to registering any such transfer of the Notes, such
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.
------------------------------------
Signature
Signature Guarantee:
- -------------------------------------- ------------------------------------
Signature must be guaranteed Signature
- ------------------------------------------------------------ -------------------
A-1-10
<PAGE>
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Note 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 ("Rule 144A"), 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
A-1-11
<PAGE>
[TO BE ATTACHED TO GLOBAL NOTES]
SCHEDULE A
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE
The initial principal amount at maturity of this Global Note
shall be $ . The following increases or decreases in this Global
Note have been made:
<TABLE>
<CAPTION>
Date of Amount of decrease in Amount of increase in Principal amount of this Signature of authorized
Exchange Principal Amount of this Principal Amount of this Global Note following signatory of Trustee or
Global Note Global Note such decrease or increase Securities Custodian
- -------- ------------------------ ------------------------ ------------------------- -----------------------------
<S> <C> <C> <C> <C>
</TABLE>
A-1-12
<PAGE>
EXHIBIT 2 TO APPENDIX A
FORM OF FACE OF EXCHANGE NOTE
[Global Notes 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 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.
REGISTERED REGISTERED
ARMCO INC.
No $
------ ------
8 7/8% Senior Exchange Note Due 2008
ARMCO INC., a corporation duly organized and existing under
the laws of the State of Ohio (herein referred to as the "Company", which
term includes any successor corporation under the Indenture referred to on
the reverse hereof), for value received, hereby promises to pay to________ or
registered assigns, the principal sum of [indicated on Schedule A hereof]*
[_____________________________Dollars]** on December 1, 2008, and to pay
interest thereon in arrears from the date of original issuance hereof or from
the most recent
- -----------------------------
* Applicable to Global Notes only.
** Applicable to certificated notes only.
A-2-1
<PAGE>
date to which interest has been paid or duly provided for, semiannually on June
1 and December 1 (each hereinafter called an "Interest Payment Date") in each
year commencing June 1, 1999 at the rate of 8 7/8% per annum until the principal
hereof is paid or made available for payment.
The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in the Indenture referred to
on the reverse hereof, be paid to the person in whose name this Note is
registered at the close of business on the May 15 or November 15, as the case
maybe, next preceding such Interest Payment Date, unless the Company shall
default in the payment of interest due on such Interest Payment Date, in which
case such defaulted interest shall be paid to the person in whose name this Note
is registered at the close of business on a special record date for the payment
of such defaulted interest established by notice to the registered holders of
the Notes not less than ten days preceding such special record date.
Payment of the principal of, premium, if any, and interest on
this Note will be made at the office or agency of the Company maintained for
that purpose in the Borough of Manhattan, City and State of New York, in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts; PROVIDED, HOWEVER, that at
the option of the Company payment of interest may be made by check mailed to the
address of the person entitled thereto as such address shall appear in the Debt
Security Register related to the Notes and PROVIDED, FURTHER, that at the option
of any Holder of Notes, payment of interest to such Holder will be made by wire
transfer to an account designated by such Holder. So long as payments of
interest are made by check or wire transfer, the Company need not maintain an
office or agency for the payment of interest in the Borough of Manhattan, City
and State of New York.
Reference is made to the further provisions of this Note set
forth on the reverse hereof. Such further provisions shall for all purposes have
the same effect as though fully set forth at this place.
This Note shall not be valid or become obligatory for any
purpose until the certificate of authentication hereon shall have been signed by
the Trustee under the Indenture referred to on the reverse hereof.
A-2-2
<PAGE>
IN WITNESS WHEREOF, Armco Inc. has caused this Note to be
signed manually or by facsimile by its Chairman of the Board or its President or
one of its Corporate Vice Presidents and by its Treasurer or one of its
Assistant Treasurers or its Secretary or one of its Assistant Secretaries, and
has caused its corporate seal to be affixed hereunto or imprinted hereon.
Dated
ARMCO INC.
[SEAL]
Attest: By
--------------------------------
Name:
Title: [Chairman of the Board]
By
Name:
Title: [Treasurer]
FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This Note is one of the Debt Securities described in the
within-mentioned Indenture.
Star Bank, N.A.,
as Trustee
By
--------------------------------
Authorized Officer
A-2-3
<PAGE>
FORM OF REVERSE OF EXCHANGE NOTE
ARMCO INC.
8 7/8% Senior Exchange Note Due 2008
This Note is one of a duly authorized issue of debentures,
notes, bonds or other evidences of indebtedness of the Company (hereinafter
called the "Debt Securities"), of the series hereinafter specified, all issued
or to be issued under an indenture dated as of November 1, 1993, as supplemented
by Supplemental Indenture No. 1 dated as of November 1, 1993 and by Supplemental
Indenture No. 2 dated as of December 15, 1998 ("Supplemental Indenture No. 2")
(together, as so supplemented, the "Indenture"), duly executed and delivered by
the Company to Star Bank, N.A., as trustee (hereinafter called the "Trustee"),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a description of the respective rights and duties thereunder of the
Trustee, the Company and the Holders of the Debt Securities. The Debt Securities
may be issued in one or more series, which different series may be issued in
various aggregate principal amounts, may mature at different times, may bear
interest at different rates (if any) which interest may be payable at different
times, may be subject to different redemption, repurchase or purchase provisions
(if any), may be subject to different sinking or analogous funds, may be subject
to different covenants and Events of Default, may be subject to different
defeasance provisions, and may otherwise vary as in the Indenture provided. This
Note is one of an issue of Debt Securities designated as the "8 7/8%
Exchange Notes Due 2008" of the Company (herein called the "Notes") issued under
the Indenture, limited in aggregate principal amount to $125,000,000. The Notes
were originally issued pursuant to an exchange offer for the Company's 8 7/8%,
Notes Due 2008 (the "Initial Notes"). The Notes and the Initial Notes will be
treated for all purposes of the Indenture as one series of Debt Securities.
On or after December 1, 2003, the Notes may, from time to
time, be redeemed, in whole or in part, at the option of the Company upon not
less than 30 nor more than 60 days' prior notice to Holders, at the redemption
prices set forth below (expressed in percentages of the principal amount
thereof), plus accrued and unpaid interest thereon, to the Redemption Date.
<TABLE>
<CAPTION>
REDEMPTION PERIOD PERCENTAGE
----------------- ----------
<S> <C>
December 1, 2003 to November 30, 2004 104.438%
December 1, 2004 to November 30, 2005 102.958%
December 1, 2005 to November 30, 2006 101.479%
December 1, 2006 and thereafter 100.000%
</TABLE>
At any time prior to December 1, 2001, the Company, at its
option, may redeem up to 33 1/3% of the aggregate principal amount of Notes
originally issued with the net proceeds from one or more Equity Offerings of the
Company at a redemption price equal to 108.875% of the principal amount thereof,
plus accrued and unpaid interest, if any, thereon to the date of redemption
PROVIDED, HOWEVER, that after any such redemption at least 66 2/3% of the
aggregate
A-2-4
<PAGE>
principal amount of the original issue of the Notes remains outstanding. Any
such redemption must occur on or prior to 120 days after the receipt of such net
proceeds.
In addition, upon the occurrence of a Change of Control prior
to December 1, 2003, the Company, at its option, may redeem all, but not less
than all, of the outstanding Notes at a redemption price equal to 100% of the
principal amount thereof plus the applicable Make-Whole Premium. The Company
shall give not less than 30 nor more than 60 days' prior notice to Holders of
such redemption within 30 days following the applicable Change of Control.
Upon the occurrence of a Change of Control, each Holder shall
have the right to require the Company to repurchase such Holder's Notes, in
whole or in part, in integral multiples of $1,000, pursuant to the Change of
Control Offer described in Section 305 of Supplemental Indenture No. 2 at the
Repurchase Price in cash equal to 101% of the aggregate principal amount
thereof, plus accrued and unpaid interest thereon, if any, to the Change of
Control Payment Date. The Holder's right of repurchase referred to in this
paragraph is as provided in and subject to the terms of the Indenture.
The Indenture contains certain covenants which restrict (among
other things) the ability of the Company and certain of its Subsidiaries to
enter into or permit certain transactions with Affiliates, make certain
Investments, pay dividends, or make other Restricted Payments, Incur
Indebtedness, issue preferred stock of Restricted Subsidiaries, enter into Sale
and Leaseback Transactions, enter into certain Asset Sales, Incur Liens, impose
restrictions on distributions from Restricted Subsidiaries and consummate
mergers or sell, transfer or convey all or substantially all of the Company's
assets.
In case an Event of Default, as defined in the Indenture,
shall have occurred and be continuing, the principal hereof may be declared, and
upon such declaration shall become, due and payable, in the manner, with the
effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and
the Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of Debt Securities at the time Outstanding of each
series to be affected, evidenced as in the Indenture provided, from time to time
and at any time to enter into supplemental indentures adding any provisions to
or changing in any manner or eliminating any of the provisions of the Indenture
or of any supplemental indenture or modifying in any manner the rights of the
Holders of the Debt Securities of such series to be affected; PROVIDED, HOWEVER,
that no such supplemental indenture shall (i) extend the fixed maturity of any
Debt Security, or reduce the rate or extend the time of payment of any interest
thereon, or reduce the principal amount thereof or any premium payable upon
redemption thereof, or make the principal thereof or any premium or interest
thereon payable in any coin or currency other than that initially provided for
in such Debt Security, without the consent of the Holder of each Debt Security
so affected, or (ii) reduce the aforesaid percentage of Debt Securities of a
series, the Holders of which are required to consent to any such supplemental
indenture, without the consent of the Holders of all Debt Securities of such
series then outstanding.
A-2-5
<PAGE>
No reference herein to the Indenture and no provision of this
Note or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of, premium, if any,
and interest on this Note at the place, at the respective times, at the rate and
in the coin or currency herein prescribed.
The Notes are issuable in registered form without coupons in
denominations of $1,000 and any multiple of $1,000. Notes may be exchanged for a
like aggregate principal amount of Notes of other authorized denominations at
the office or agency of the Company in the Borough of Manhattan, City and State
of New York, and in the manner and subject to the limitations provided in the
Indenture, but without the payment of any service charge.
Upon due presentment for registration of transfer of this Note
at the office or agency of the Company in the Borough of Manhattan, City and
State of New York, the Company shall execute and the Trustee shall authenticate
and deliver a new Note or Notes of like tenor and authorized denominations for
an equal aggregate principal amount in exchange herefor, subject to the
limitations provided in the Indenture, without charge except for any tax or
other governmental charge imposed in connection therewith.
The Company has initially appointed the Trustee as Debt
Security Registrar, paying agent and agent for notice of service and demand in
respect of the Notes. So long as the Trustee continues to serve as the Debt
Security Registrar or a paying agent, payment of principal, premium, if any, and
interest, exchanges and registrations of transfer and tender of Notes for
redemption may be made at the principal corporate trust office of the Trustee in
addition to any other office or agency that the Company is required to maintain
pursuant to the terms of the Indenture or this Note.
The Company, the Trustee, any paying agent and any Debt
Security Registrar in respect of the Notes may deem and treat the registered
holder hereof as the absolute owner of this Note (whether or not this Note shall
be overdue and notwithstanding any notation of ownership or other writing hereon
made by anyone other than the Company or any Debt Security Registrar in respect
of the Notes), for the purpose of receiving payment as provided herein, and for
all other purposes neither the Company nor the Trustee nor any paying agent nor
any Debt Security Registrar in respect of the Notes shall be affected by any
notice to the contrary. All payments made to or upon the order of such
registered holder shall, to the extent of the sum or sums paid, effectually
satisfy and discharge the liability for moneys payable on this Note.
No recourse for the payment of the principal of or interest on
this Note, or for any claim based hereon or otherwise in respect hereof, and no
recourse under or upon any obligation, covenant or agreement of the Company in
the Indenture or any indenture supplemental thereto or in any Note, or because
of the creation of any indebtedness represented thereby, shall be had against
any incorporator, stockholder, officer or director, as such, past, present or
future, of the Company or of any successor corporation, either directly or
through the Company or any successor corporation, whether by virtue of any
constitution, statute or rule of law or by the enforcement of any assessment or
penalty or otherwise, all such liability being, by the acceptance hereof and as
part of the consideration for the issue hereof, expressly waived and released.
A-2-6
<PAGE>
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS
OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF SAID STATE, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF
LAW.
All terms used in this Note (and not otherwise defined in this
Note) that are defined in the Indenture shall have the meanings assigned to them
in the Indenture.
- --------------------------------------------------------------------------------
Certificate of Transfer
(To be executed by the registered holder
if such holder desires to transfer this Note)
__________________
__________________
New York, New York_____
FOR VALUE RECEIVED _________________________ hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER TAX
IDENTIFYING NUMBER OF TRANSFEREE
- ----------------------------------------------
| |
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please print name and address of transferee)
- --------------------------------------------------------------------------------
this Note, together with all right, title and interest herein, and does hereby
irrevocably constitute and appoint ___________________________________________
Attorney to transfer this Note on the Debt Security Register relating to this
Note, with full power of substitution.
Dated:
-------------------------------- ----------------------------------
Signature
----------------------------------
Signature Guaranteed:
NOTICE: The signature to the foregoing Assignment must correspond to the Name as
written upon the face of this Note in every particular, without alteration or
any change whatsoever.
A-2-7
<PAGE>
ELECTION OF HOLDER TO REQUIRE REPURCHASE
1. Pursuant to Section 305 of Supplemental Indenture No. 2,
/ / the undersigned hereby elects to have the entire principal amount of
this Note repurchased by the Company.
/ / the undersigned hereby elects to have $_________ of this Note
repurchased by the Company (such specified amount must be in an
integral multiple of $1000).
2. The undersigned hereby directs the Trustee or Paying Agent
to pay it or ___________________________ an amount in cash equal to 101% of the
principal amount specified in paragraph 1 above plus accrued and unpaid interest
hereon, if any, to the Change of Control Payment Date and to deliver to it a new
Note of this series in an aggregate principal amount equal to the untendered
portion, if any, this Note.
Dated:
------------------------------ -----------------------------------
Signature
-----------------------------------
Signature Guaranteed:
NOTICE: The signature to the foregoing Election must correspond to the Name as
written upon the face of this Note in every particular, without alteration or
any change whatsoever.
A-2-8
<PAGE>
[TO BE ATTACHED TO GLOBAL NOTES]
SCHEDULE A
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE
The initial principal amount at maturity of this Global Note
shall be $ . The following increases or decreases in this Global
Note have been made:
<TABLE>
<CAPTION>
Date of Amount of decrease in Amount of increase in Principal amount of this Signature of authorized
Exchange Principal Amount of this Principal Amount of this Global Note following signatory of Trustee or
Global Note Global Note such decrease or increase Securities Custodian
- -------- ------------------------ ------------------------ ------------------------- -----------------------
<S> <C> <C> <C> <C>
</TABLE>
A-2-9
<PAGE>
Exhibit 4.4
Armco Inc.
$75,000,000
8 7/8% Senior Notes Due 2008
REGISTRATION AGREEMENT
New York, New York
December 10, 1998
Salomon Smith Barney Inc.
Chase Securities Inc.
PNC Capital Markets, Inc.
c/o Salomon Smith Barney Inc.
Seven World Trade Center
New York, New York 10048
Ladies and Gentlemen:
Armco Inc., an Ohio corporation (the "Company"), proposes to
issue and sell to certain purchasers (the "Initial Purchasers"), upon the terms
set forth in a purchase agreement of even date herewith (the "Purchase
Agreement"), its 8 7/8% Senior Notes Due 2008 (the "Senior Notes") (the "Initial
Placement"). As an inducement to the Initial Purchasers to enter into the
Purchase Agreement and purchase the Notes and in satisfaction of a condition to
your obligations under the Purchase Agreement, the Company agrees with you, (i)
for your benefit and the benefit of the other Initial Purchasers and (ii) for
the benefit of the holders from time to time of the Senior Notes (including the
Initial Purchasers) (each of the foregoing a "Holder" and together the
"Holders"), as follows:
1. DEFINITIONS. Capitalized terms used herein without
definition shall have their respective meanings set forth in the Purchase
Agreement. As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"AFFILIATE" of any specified person means any other person
that, directly or indirectly, is in control of, is controlled by, or is under
common control with, such specified person. For purposes of this definition,
control of a person means the power, direct or indirect, to direct or cause the
direction of the management and policies of such person whether by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative thereto.
<PAGE>
"CLOSING DATE" has the meaning set forth in the Purchase
Agreement.
"COMMISSION" means the Securities and Exchange Commission.
"COMPANY" has the meaning set forth in the preamble hereto.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"EXCHANGE NOTES" means debt securities of the Company issued
pursuant to a Registered Exchange Offer containing terms identical in all
material respects to the terms of the Senior Notes (except that the interest
rate step-up provisions and the transfer restrictions pertaining to the Senior
Notes will be modified or eliminated, as appropriate), to be issued under the
Indenture or the Exchange Notes Indenture.
"EXCHANGE NOTES INDENTURE" means an indenture, if any, between
the Company and the Exchange Notes Trustee, identical in all material respects
with the Indenture (except that the interest rate step-up provisions and the
transfer restrictions will be modified or eliminated, as appropriate).
"EXCHANGE NOTES TRUSTEE" means a bank or trust company
reasonably satisfactory to the Initial Purchasers, as trustee with respect to
the Exchange Notes under the Exchange Notes Indenture.
"EXCHANGE OFFER REGISTRATION PERIOD" means the one year period
following the consummation of the Registered Exchange Offer, exclusive of any
period during which any stop order shall be in effect suspending the
effectiveness of the Exchange Offer Registration Statement.
"EXCHANGE OFFER REGISTRATION STATEMENT" means a registration
statement of the Company on an appropriate form under the Act with respect to
the Registered Exchange Offer, all amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"EXCHANGING DEALER" means any Holder (which may include the
Initial Purchasers) which is a broker-dealer, electing to exchange Senior Notes
acquired for its own account as a result of market-making activities or other
trading activities, for Exchange Notes.
"FINAL MEMORANDUM" has the meaning set forth in the Purchase
Agreement.
"HOLDER" has the meaning set forth in the preamble hereto.
"INDENTURE" means the Indenture relating to the Senior Notes
dated as of November 1, 1993, between the Company and Star Bank, N.A. as
trustee, as the same may be amended to the date hereof and as further amended by
Supplemental Indenture No. 1 and Supplemental Indenture No. 2.
2
<PAGE>
"INITIAL PLACEMENT" has the meaning set forth in the preamble
hereto.
"INITIAL PURCHASERS" has the meaning set forth in the preamble
hereto.
"MAJORITY HOLDERS" means the Holders of a majority of the
aggregate principal amount of Senior Notes registered under a Registration
Statement.
"MANAGING UNDERWRITERS" means the investment banker or
investment bankers and manager or managers that shall administer an underwritten
offering under a Shelf Registration Statement.
"PROSPECTUS" means the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Senior Notes or the Exchange Notes, covered by
such Registration Statement, and all amendments and supplements to the
Prospectus, including post-effective amendments.
"PURCHASE AGREEMENT" has the meaning set forth in the preamble
hereto.
"REGISTERED EXCHANGE OFFER" means an offer to the Holders to
issue and deliver to such Holders, in exchange for the Senior Notes, a like
principal amount of the Exchange Notes.
"REGISTRATION STATEMENT" means any Exchange Offer Registration
Statement or Shelf Registration Statement that covers any of the Senior Notes or
the Exchange Notes pursuant to the provisions of this Agreement, amendments and
supplements to such registration statement, including post-effective amendments,
in each case including the Prospectus contained therein, all exhibits thereto
and all material incorporated by reference therein.
"SENIOR NOTES" has the meaning set forth in the preamble
hereto.
"SHELF REGISTRATION" means a registration effected pursuant to
Section 3 hereof.
"SHELF REGISTRATION PERIOD" has the meaning set forth in
Section 3(b) hereof.
"SHELF REGISTRATION STATEMENT" means a "shelf" registration
statement of the Company pursuant to the provisions of Section 3 hereof which
covers some or all of the Senior Notes or Exchange Notes, as applicable, on an
appropriate form under Rule 415 under the Act, or any similar rule that may be
adopted by the Commission, amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.
"SUPPLEMENTAL INDENTURE NO. 1" means the first supplement to
the Indenture dated as of November 1, 1993.
3
<PAGE>
"SUPPLEMENTAL INDENTURE NO. 2" means the second supplement to
the Indenture dated as of December 15, 1998.
"TRUSTEE" means the trustee with respect to the Senior Notes
or the Exchange Notes, as applicable under the Indenture.
"UNDERWRITER" means any underwriter of Senior Notes in
connection with an offering thereof under a Shelf Registration Statement.
2. REGISTERED EXCHANGE OFFER; RESALES OF EXCHANGE NOTES BY
EXCHANGING DEALERS; PRIVATE Exchange. (a) The Company shall prepare and shall
use its best efforts to file with the Commission, not later than 60 days
following the Closing Date, the Exchange Offer Registration Statement with
respect to the Registered Exchange Offer. The Company shall use its best efforts
to (i) cause the Exchange Offer Registration Statement to be declared effective
under the Act within 150 days after the Closing Date and (ii) consummate the
Registered Exchange Offer within 180 days after the Closing Date.
(b) Upon the effectiveness of the Exchange Offer Registration
Statement, the Company shall promptly commence the Registered Exchange Offer, it
being the objective of such Registered Exchange Offer to enable each Holder
electing to exchange Senior Notes for Exchange Notes (assuming that such Holder
(i) is not an affiliate of the Company within the meaning of the Act, (ii) is
not a broker-dealer that acquired the Senior Notes in a transaction other than
as a part of its market-making or other trading activities and (iii) if such
Holder is not a broker-dealer, it acquires the Exchange Notes in the ordinary
course of such Holder's business, is not participating in the distribution of
the Exchange Notes and has no arrangements or understandings with any person to
participate in the distribution of the Exchange Notes) to resell such Exchange
Notes from and after their receipt without any limitations or restrictions under
the Act and without material restrictions under the securities laws of a
substantial proportion of the several states of the United States.
(c) In connection with the Registered Exchange Offer, the
Company shall:
(i) mail to each Holder a copy of the Prospectus forming part
of the Exchange Offer Registration Statement, together with an appropriate
letter of transmittal and related documents;
(ii) keep the Registered Exchange Offer open for acceptance
for not less than 30 days after the date notice thereof is mailed to the Holders
(or longer if required by applicable law);
(iii) utilize the services of a depositary for the Registered
Exchange Offer with an address in the Borough of Manhattan, The City of New
York; and
(iv) comply in all respects with all applicable laws.
4
<PAGE>
(d) As soon as practicable after the close of the Registered
Exchange Offer, the Company shall:
(i) accept for exchange all Senior Notes validly tendered and
not validly withdrawn pursuant to the Registered Exchange Offer;
(ii) deliver to the Trustee for cancellation all Senior Notes
so accepted for exchange; and
(iii) cause the Trustee or the Exchange Notes Trustee, as the
case may be, promptly to authenticate and deliver to each Holder of Senior Notes
Exchange Notes equal in principal amount to the Senior Notes of such Holder so
accepted for exchange and canceled pursuant to the Registered Exchange Offer.
(e) The Initial Purchasers and the Company acknowledge that,
pursuant to interpretations by the staff of the Commission of Section 5 of the
Act, and in the absence of an applicable exemption therefrom, each Exchanging
Dealer is required to deliver a Prospectus in connection with a sale of any
Exchange Notes received by such Exchanging Dealer pursuant to the Registered
Exchange Offer in exchange for Senior Notes acquired for its own account as a
result of market-making activities or other trading activities. Accordingly, the
Company shall:
(i) include the information set forth in Annex A hereto on the
cover of the Exchange Offer Registration Statement, in Annex B hereto in the
forepart of the Exchange Offer Registration Statement in a section setting forth
details of the Exchange Offer, and in Annex C hereto in the underwriting or plan
of distribution section of the Prospectus forming a part of the Exchange Offer
Registration Statement, and in Annex D hereto in the letter of transmittal
delivered pursuant to the Registered Exchange Offer; and
(ii) use its best efforts to keep the Exchange Offer
Registration Statement continuously effective and generally usable for resales
under the Act during the Exchange Offer Registration Period for delivery by
Exchanging Dealers in connection with sales of Exchange Notes received pursuant
to the Registered Exchange Offer, as contemplated by Section 4(h) below.
(f) In the event that any Initial Purchaser determines that it
is not eligible to participate in the Registered Exchange Offer with respect to
the exchange of Senior Notes constituting any portion of an unsold allotment, at
the request of such Initial Purchaser, the Company shall issue and deliver to
such Initial Purchaser or to the party purchasing Exchange Notes registered
under a Shelf Registration Statement as contemplated by Section 3, hereof from
such Initial Purchaser, in exchange for such Senior Notes, a like principal
amount of Exchange Notes. The Company shall seek to cause the CUSIP Service
Bureau to issue the same CUSIP number for such Exchange Notes as for Exchange
Notes issued pursuant to the Registered Exchange Offer; PROVIDED, that if such
CUSIP number is obtained at a time when resales of such Exchange Securities by
such Initial Purchaser are not covered by a Shelf Registration such CUSIP number
may vary from the CUSIP number for the Exchange Securities issued pursuant to
the Registered Exchange Offer by the inclusion of a designation indicating such
securities are
5
<PAGE>
"restricted securities"; PROVIDED, further that on the first business day
following the effective date of any Shelf Registration Statement hereunder or as
soon as possible thereafter, the Company shall use its best efforts to cause The
Depository Trust Company ("DTC"), as depositary, to remove (1) from any existing
CUSIP number assigned to the Senior Notes any such designation, which efforts
shall include delivery to DTC of a letter executed by the Company substantially
in the form of Exhibit A hereto and (2) any other stop or restriction on DTC's
system with respect to the Senior Notes.
3. SHELF REGISTRATION. If, (i) because of any change in law or
applicable interpretations thereof by the Commission's staff, the Company
determines upon advice of its outside counsel that it is not permitted to effect
the Registered Exchange Offer as contemplated by Section 2 hereof, or (ii) if
for any reason the Exchange Offer Registration Statement is not declared
effective within 150 days following the date of original issuance of the Senior
Notes, or (iii) if for any other reason the Registered Exchange Offer is not
consummated within 180 days following the date of original issuance of the
Senior Notes, or (iv) if any Initial Purchaser so requests with respect to
Senior Notes held by it following consummation of the Registered Exchange Offer,
or (v) if any Holder (other than an Initial Purchaser) is not eligible to
participate in the Registered Exchange Offer or (vi) in the case of any Initial
Purchaser that participates in the Registered Exchange Offer or acquires
Exchange Notes pursuant to Section 2(f) hereof, such Initial Purchaser does not
receive freely tradeable Exchange Notes in exchange for Senior Notes
constituting any portion of an unsold allotment (it being understood that, for
purposes of this Section 3, (x) the requirement that an Initial Purchaser
deliver a Prospectus containing the information required by Items 507 and/or 508
of Regulation S-K under the Act in connection with sales of Exchange Notes
acquired in exchange for such Senior Notes shall result in such Exchange Notes
being not "freely tradeable" but (y) the requirement that an Exchanging Dealer
deliver a Prospectus in connection with sales of Exchange Notes acquired in the
Registered Exchange Offer in exchange for Senior Notes acquired as a result of
market-making activities or other trading activities shall not result in such
Exchange Notes being not "freely tradeable"), the following provisions shall
apply:
(a) The Company shall use its best efforts to (i) as promptly
as practicable (but in no event more than 30 days after so required or requested
pursuant to this Section 3) file with the Commission a shelf registration
relating to the offer and sale of the Senior Notes or the Exchange Notes (the
"Shelf Registration Statement"), as applicable, by the Holders from time to time
in accordance with the methods of distribution elected by such Holders as set
forth in such Shelf Registration Statement and in accordance with Rule 415 under
the Act; PROVIDED, that with respect to Exchange Notes received by an Initial
Purchaser in exchange for Senior Notes constituting any portion of an unsold
allotment, the Company may, if permitted by current interpretations by the
Commission's staff, file a post-effective amendment to the Exchange Offer
Registration Statement containing the information required by Regulation S-K
Items 507 and/or 508, as applicable, in satisfaction of its obligations under
this paragraph (a) with respect thereto, and any such Exchange Offer
Registration Statement, as so amended, shall be referred to herein as, and
governed by the provisions herein applicable to, a Shelf Registration Statement
and (ii) cause the Shelf Registration Statement to be declared effective under
the Act by the 180th day
6
<PAGE>
after the original issuance of the Senior Notes (or promptly in the event of a
request by an Initial Purchaser); and
(b) The Company shall use its best efforts to keep the Shelf
Registration Statement continuously effective and generally usable for resales
in order to permit the Prospectus contained therein to be usable by Holders for
a period of two years from the date the Shelf Registration Statement is declared
effective by the Commission (or until one year after its effective date if such
Shelf Registration Statement is filed at the request of the Initial Purchaser)
or such shorter period that will terminate when all the Senior Notes or Exchange
Notes, as applicable, covered by the Shelf Registration Statement have been sold
pursuant to the Shelf Registration Statement (in any such case, such period
being called the "Shelf Registration Period"). The Company shall be deemed not
to have used its best efforts to keep the Shelf Registration Statement effective
during the requisite period if it voluntarily takes any action that would result
in Holders of securities covered thereby not being able to offer and sell such
securities during that period, unless (i) such action is required by applicable
law, or (ii) such action is taken by the Company in good faith and for valid
business reasons (not including avoidance of the Company's obligations
hereunder), including the acquisition or divestiture of assets, so long as the
Company promptly thereafter complies with the requirements of Section 4(k)
hereof, if applicable.
4. REGISTRATION PROCEDURES. In connection with any Shelf
Registration Statement and, to the extent applicable, any Exchange Offer
Registration Statement, the following provisions shall apply:
(a) The Company shall furnish to you, prior to the filing
thereof with the Commission, a copy of any Registration Statement, and each
amendment thereof and each amendment or supplement, if any, to the Prospectus
included therein and shall use its best efforts to reflect in each such
document, when so filed with the Commission, such comments as you reasonably may
propose.
(b) The Company shall ensure that (i) any Registration
Statement and any amendment thereto and any Prospectus contained therein and any
amendment or supplement thereto (and any documents incorporated therein by
reference) complies in all material respects with the Act and the Exchange Act
and the respective rules and regulations thereunder, (ii) any Registration
Statement and any amendment thereto does not, when it becomes effective, contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
and (iii) any Prospectus forming part of any Registration Statement, including
any amendment or supplement to such Prospectus, does not include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
(c) (1) The Company shall advise you and, in the case of a
Shelf Registration Statement, the Holders of securities covered thereby, and, if
requested by you or any such Holder, confirm such advice in writing:
7
<PAGE>
(i) when a Registration Statement and any amendment
thereto has been filed with the Commission and when the Registration Statement
or any post-effective amendment thereto has become effective; and
(ii) of any request by the Commission for amendments or
supplements to the Registration Statement or the Prospectus included therein or
for additional information.
(2) The Company shall advise you and, in the case of a Shelf
Registration Statement, the Holders of securities covered thereby, and, in the
case of an Exchange Offer Registration Statement, any Exchanging Dealer that has
provided in writing to the Company a telephone or facsimile number and address
for notices, and, if requested by you or any such Holder or Exchanging Dealer,
confirm such advice in writing:
(i) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose;
(ii) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the securities included
therein for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; and
(iii) of the happening of any event that requires the
making of any changes in the Registration Statement or the Prospectus so that,
as of such date, the Registration Statement or the Prospectus does not include
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein (in the case of
the Prospectus, in light of the circumstances under which they were made) not
misleading (which advice shall be accompanied by an instruction to suspend the
use of the Prospectus until the requisite changes have been made).
(d) The Company shall use its best efforts to prevent the
issuance, and if issued to obtain the withdrawal, of any order suspending the
effectiveness of any Registration Statement at the earliest possible time.
(e) The Company shall furnish to each Holder of securities
covered by any Shelf Registration Statement, without charge, at least one copy
of such Shelf Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, and, if the Holder so requests in
writing, all exhibits thereto (including those incorporated by reference).
(f) The Company shall, during the Shelf Registration Period,
deliver to each Holder of securities covered by any Shelf Registration
Statement, without charge, as many copies of the Prospectus (including each
preliminary Prospectus) included in such Shelf Registration Statement and any
amendment or supplement thereto as such Holder may reasonably request; and the
Company consents to the use of the Prospectus or any amendment or supplement
thereto by each of such Holder of securities in connection with the offering and
sale of the securities covered by the Prospectus or any amendment or supplement
thereto.
8
<PAGE>
(g) The Company shall furnish to each Exchanging Dealer that
so requests, without charge, at least one copy of the Exchange Offer
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, any documents incorporated by reference
therein, and, if the Exchanging Dealer so requests in writing, all exhibits
thereto (including those incorporated by reference).
(h) The Company shall, during the Exchange Offer Registration
Period, promptly deliver to each Exchanging Dealer, without charge, as many
copies of the Prospectus included in such Exchange Offer Registration Statement
and any amendment or supplement thereto as such Exchanging Dealer may reasonably
request for delivery by such Exchanging Dealer in connection with a sale of
Exchange Notes received by it pursuant to the Registered Exchange Offer; and the
Company consents to the use of the Prospectus or any amendment or supplement
thereto by any such Exchanging Dealer, as aforesaid.
(i) Prior to the Registered Exchange Offer or any other
offering of securities pursuant to any Registration Statement, the Company shall
register or qualify or cooperate with the Holders of securities included therein
and their respective counsel in connection with the registration or
qualification of such securities for offer and sale under the securities or blue
sky laws of such jurisdictions as any such Holders reasonably request in writing
and do any and all other acts or things necessary or advisable to enable the
offer and sale in such jurisdictions of the securities covered by such
Registration Statement; PROVIDED, HOWEVER, that the Company will not be required
to qualify generally to do business in any jurisdiction where it is not then so
qualified or to take any action which would subject it to general service of
process or to taxation in any such jurisdiction where it is not then so subject.
(j) The Company shall cooperate with the Holders of Senior
Notes to facilitate the timely preparation and delivery of certificates
representing Senior Notes to be sold pursuant to any Registration Statement free
of any restrictive legends and in such denominations and registered in such
names as Holders may request prior to sales of securities pursuant to such
Registration Statement.
(k) Upon the occurrence of any event contemplated by paragraph
(c) (2) (iii) of this Section 4, the Company shall promptly prepare and file a
post-effective amendment to any Registration Statement or an amendment or
supplement to the related Prospectus or file any other required document so
that, as thereafter delivered to purchasers of the securities included therein,
the Prospectus will not include an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(l) (A) Not later than the effective date of an Exchange Offer
Registration Statement filed hereunder, the Company shall provide a CUSIP number
for the Exchange Notes registered under such Exchange Offer Registration
Statement, and provide the Trustee with printed certificates for such Exchange
Notes, in a form eligible for deposit with DTC and (B) on the first business day
following the effective date of any Shelf Registration Statement hereunder or as
soon as possible thereafter, the Company shall use its best efforts to cause DTC
to remove
9
<PAGE>
(1) from any existing CUSIP number assigned to the Senior Notes any designation
indicating that the Senior Notes are "restricted securities", which efforts
shall include delivery to DTC of a letter executed by the Company substantially
in the form of Exhibit A hereto and (2) any other stop or restriction on DTC's
system with respect to the Senior Notes. In the event the Company is unable to
cause DTC to take the actions described in the immediately preceding sentence,
the Company shall take such actions as the Initial Purchasers may reasonably
request to provide, as soon as practicable, a CUSIP number for the Senior Notes
registered under the Shelf Registration Statement and to cause the CUSIP number
to be assigned to the Senior Notes (or to the maximum aggregate principal amount
of the Senior Notes to which such number may be assigned). Upon compliance with
the foregoing requirements of this Section 4(l), the Company shall provide the
Trustee with printed certificates for such Senior Notes in a form eligible for
deposit with DTC.
(m) The Company shall use its best efforts to comply with all
applicable rules and regulations of the Commission and shall make generally
available to its security holders as soon as practicable after the effective
date of the applicable Registration Statement an earnings statement satisfying
the provisions of Section 11(a) of the Act.
(n) The Company shall cause the Indenture or the Exchange
Notes Indenture to be qualified under the Trust Indenture Act of 1939, as
amended, in a timely manner.
(o) The Company may require each Holder of securities to be
sold pursuant to any Shelf Registration Statement to furnish to the Company such
information regarding the holder and the distribution of such securities as the
Company may from time to time reasonably require for inclusion in such
Registration Statement.
(p) The Company shall, if requested, promptly incorporate in a
Prospectus supplement or post-effective amendment to a Shelf Registration
Statement (i) such information as the Managing Underwriters and Majority
Holders, as the case may be, reasonably agree should be included therein and
(ii) such information as a Holder may reasonably provide from time to time to
the Company in writing for inclusion in a Prospectus or any Shelf Registration
Statement concerning such Holder and the distribution of such Holder's
securities and, in either case, shall make all required filings of such
Prospectus supplement or post-effective amendment as soon as notified of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment.
(q) In the case of any Shelf Registration Statement, the
Company shall enter into such agreements (including underwriting agreements) and
take all other appropriate actions in order to expedite or facilitate the
registration or the disposition of any securities included therein, and in
connection therewith, if an underwriting agreement is entered into, cause the
same to contain indemnification provisions and procedures no less favorable than
those set forth in Section 6 (or such other provisions and procedures acceptable
to the Majority Holders and the Managing Underwriters, if any) with respect to
all parties to be indemnified pursuant to Section 6.
10
<PAGE>
(r) In the case of any Shelf Registration Statement, the
Company shall (i) make reasonably available for inspection by the Holders of
securities to be registered thereunder, any underwriter participating in any
disposition pursuant to such Shelf Registration Statement, and any attorney,
accountant or other agent retained by the Holders or any such underwriter all
relevant financial and other records, pertinent corporate documents and
properties of the Company and its subsidiaries as may be reasonably requested;
(ii) cause the Company's officers, directors and employees to supply all
relevant information reasonably requested by the Holders or any such
underwriter, attorney, accountant or agent in connection with any such Shelf
Registration Statement as is customary for similar due diligence examinations
and make such representatives of the Company as shall be reasonably requested by
the Initial Purchasers available for discussion of any such Registration
Statement; PROVIDED, HOWEVER, that any information that is designated in writing
by the Company, in good faith, as confidential at the time of delivery of such
information shall be kept confidential by the Holders or any such underwriter,
attorney, accountant or agent, unless such disclosure is made in connection with
a court proceeding or required by law, or such information becomes available to
the public generally or through a third party without an accompanying obligation
of confidentiality other than as a result of a disclosure of such information by
any such Holder, underwriter, attorney, accountant or agent; (iii) make such
representations and warranties to the Holders of securities registered
thereunder and the underwriters, if any, in form, substance and scope as are
customarily made by issuers to underwriters in primary underwritten offerings
and covering matters including, but not limited to, those set forth in the
Purchase Agreement; (iv) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the Managing Underwriters, if any) addressed to each
selling Holder and the underwriters, if any, covering such matters as are
customarily covered in opinions requested in primary underwritten offerings and
such other matters as may be reasonably requested by such Holders and
underwriters; (v) obtain "cold comfort" letters and updates thereof from the
independent certified public accountants of the Company (and, if necessary, any
other independent certified public accountants of any subsidiary of the Company
or of any business acquired by the Company for which financial statements and
financial data are, or are required to be, included in the Shelf Registration
Statement), addressed to each selling Holder of securities registered thereunder
and the underwriters, if any, in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with primary
underwritten offerings; and (vi) deliver such documents and certificates as may
be reasonably requested by the Majority Holders and the Managing Underwriters,
if any, including those to evidence compliance with Section 4(k) and with any
customary conditions to underwriting agreements for primary underwritten
offerings. The foregoing actions set forth in clauses (iii), (iv), (v) and (vi)
of this Section 4(r) shall be performed at (A) the effectiveness of such Shelf
Registration Statement and each post-effective amendment thereto and (B) each
closing under any underwriting or similar agreement as and to the extent
required thereunder.
(s) In the case of any Exchange Offer Registration Statement,
the Company shall (i) make reasonably available for inspection by each Initial
Purchaser, and any attorney, accountant or other agent retained by such Initial
Purchaser, all relevant financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries as may be
reasonably requested; (ii) cause the Company's officers, directors and employees
to
11
<PAGE>
supply all relevant information reasonably requested by such Initial Purchaser
or any such attorney, accountant or agent in connection with any such Exchange
Offer Registration Statement as is customary for similar due diligence
examinations and make such representatives of the Company as shall be reasonably
requested by the Initial Purchasers available for discussion of any such
Registration Statement; PROVIDED, HOWEVER, that any information that is
designated in writing by the Company, in good faith, as confidential at the time
of delivery of such information shall be kept confidential by such Initial
Purchaser or any such attorney, accountant or agent, unless such disclosure is
made in connection with a court proceeding or required by law, or such
information becomes available to the public generally or through a third party
without an accompanying obligation of confidentiality other than as a result of
a disclosure of such information by any such Initial Purchaser, attorney,
accountant or agent; (iii) make such representations and warranties to such
Initial Purchaser, in form, substance and scope as are customarily made by
issuers to underwriters in primary underwritten offerings and covering matters
including, but not limited to, those set forth in the Purchase Agreement; (iv)
obtain opinions of counsel to the Company and updates thereof (which counsel and
opinions (in form, scope and substance) shall be reasonably satisfactory to such
Initial Purchaser and its counsel, addressed to such Initial Purchaser, covering
such matters as are customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by such Initial
Purchaser or its counsel; (v) obtain "cold comfort" letters and updates thereof
from the independent certified public accountants of the Company (and, if
necessary, any other independent certified public accountants of any subsidiary
of the Company or of any business acquired by the Company for which financial
statements and financial data are, or are required to be, included in the
Registration Statement), addressed to such Initial Purchaser, in customary form
and covering matters of the type customarily covered in "cold comfort" letters
in connection with primary underwritten offerings, or if requested by such
Initial Purchaser or its counsel in lieu of a "cold comfort" letter, an
agreed-upon procedures letter under Statement on Auditing Standards No. 35,
covering matters requested by such Initial Purchaser or its counsel; and (vi)
deliver such documents and certificates as may be reasonably requested by such
Initial Purchaser or its counsel, including those to evidence compliance with
Section 4(k) and with conditions customarily contained in underwriting
agreements for primary underwritten offerings. The foregoing actions set forth
in clauses (iii), (iv), (v), and (vi) of this Section 4(s) shall be performed at
the close of the Registered Exchange Offer and the effective date of any
post-effective amendment to the Exchange Offer Registration Statement.
5. REGISTRATION EXPENSES. The Company shall bear all expenses
incurred in connection with the performance of its obligations under Sections 2,
3 and 4 hereof and, in the event of any Shelf Registration Statement, will
reimburse the Holders for the reasonable fees and disbursements of one firm or
counsel designated by the Majority Holders to act as counsel for the Holders in
connection therewith, and, in the case of any Exchange Offer Registration
Statement, will reimburse the Initial Purchasers for the reasonable fees and
disbursements of counsel acting in connection therewith.
6. INDEMNIFICATION AND CONTRIBUTION. (a) In connection with
any Registration Statement, the Company agrees to indemnify and hold harmless
each Holder of securities covered thereby (including the Initial Purchasers and,
with respect to any Prospectus delivery as
12
<PAGE>
contemplated in Section 4(h) hereof, each Exchanging Dealer), the directors,
officers, employees and agents of each such Holder and each person who controls
any such Holder within the meaning of either the Act or the Exchange Act against
any and all losses, claims, damages or liabilities, joint or several, to which
they or any of them may become subject under the Act, the Exchange Act or other
Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in such Registration Statement as
originally filed or in any amendment thereof, or in any preliminary Prospectus
or Prospectus, or in any amendment thereof or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein (in the case of the Prospectus, in light of the circumstances under
which they were made) not misleading, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage or liability (or action in respect thereof); PROVIDED, HOWEVER,
that the Company will not be liable in any case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company by or on behalf of any such Holder specifically for inclusion
therein. This indemnity agreement will be in addition to any liability that the
Company may otherwise have.
The Company also agrees to indemnify or contribute to Losses
of, as provided in Section 6(d) hereof, any selling Holders and any underwriters
of Senior Notes registered under a Shelf Registration Statement, their
employees, officers, directors and agents and each person who controls such
selling Holders or underwriters on the same basis as that of the indemnification
of the Initial Purchasers provided in this Section 6(a) and shall, if requested
by any Holder, enter into an underwriting agreement reflecting such agreement,
as provided in Section 4(q) hereof.
(b) Each Holder of securities covered by a Registration
Statement (including each Initial Purchaser and, with respect to any Prospectus
delivery as contemplated by Sections 2(e) and 4(h) hereof, each Exchanging
Dealer) severally agrees to indemnify and hold harmless (i) the Company, (ii)
each of its directors, (iii) each of its officers who signs such Registration
Statement and (iv) each person who controls the Company within the meaning of
either the Act or the Exchange Act to the same extent as the foregoing indemnity
from the Company to each such Holder, but only with respect to written
information relating to such Holder furnished to the Company by or on behalf of
such Holder specifically for inclusion in the documents referred to in the
foregoing indemnity. This indemnity agreement will be in addition to any
liability that any such Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 6, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve the indemnifying party from liability under paragraph (a) or
(b) above unless and to
13
<PAGE>
the extent it did not otherwise learn of such action and such failure results in
the forfeiture by the indemnifying party of substantial rights and defenses and
(ii) will not, in any event, relieve the indemnifying party from any obligations
to any indemnified party other than the indemnification obligation provided in
paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint
counsel of the indemnifying party's choice at the indemnifying party's expense
to represent the indemnified party in any action for which indemnification is
sought (in which case the indemnifying party shall not thereafter be responsible
for the fees and expenses of any separate counsel retained by the indemnified
party or parties except as set forth below); PROVIDED, HOWEVER, that such
counsel shall be satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent the indemnified
party in an action, the indemnified party shall have the right to employ
separate counsel (including local counsel), and the indemnifying party shall
bear the reasonable fees, costs and expenses of such separate counsel (and local
counsel) if (i) the use of counsel chosen by the indemnifying party to represent
the indemnified party would present such counsel with a conflict of interest,
(ii) the actual or potential defendants in, or targets of, any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties that are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 6 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall have a joint and several
obligation to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in connection
with investigating or defending same) (collectively, "Losses") to which such
indemnified party may be subject in such proportion as is appropriate to reflect
the relative benefits received by such indemnifying party, on the one hand, and
such indemnified party, on the other hand, from the Initial Placement and the
Registration Statement that resulted in such Losses; PROVIDED, HOWEVER, that in
no case shall any Initial Purchaser or any subsequent Holder of any Senior Note
or Exchange Note be responsible, in the aggregate, for any amount in excess of
the purchase discount or commission applicable to such Senior Note, or in the
case of an Exchange Note, applicable to the Senior Note which was exchangeable
into such Exchange Note, as set forth on the cover page of the Final Memorandum,
nor shall any underwriter be responsible for any amount in excess of the
underwriting discount or commission applicable to the securities purchased by
such underwriter under the Registration Statement that resulted in such Losses.
If the allocation provided by the
14
<PAGE>
immediately preceding sentence is unavailable for any reason, the indemnifying
party and the indemnified party shall contribute in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of such indemnifying party, on the one hand, and such indemnified party,
on the other hand, in connection with the statements or omissions that resulted
in such Losses as well as any other relevant equitable considerations. Benefits
received by the Company shall be deemed to be equal to the sum of (x) the total
net proceeds from the Initial Placement (before deducting expenses) as set forth
on the cover page of the Final Memorandum and (y) the total amount of additional
interest that the Company was not required to pay as a result of registering the
securities covered by the Registration Statement that resulted in such Losses.
Benefits received by the Initial Purchasers shall be deemed to be equal to the
total purchase discounts and commissions as set forth on the cover page of the
Final Memorandum, and benefits received by any other Holders shall be deemed to
be equal to the value of receiving Senior Notes or Exchange Notes, as
applicable, registered under the Act. Benefits received by any underwriter shall
be deemed to be equal to the total underwriting discounts and commissions, as
set forth on the cover page of the Prospectus forming a part of the Registration
Statement that resulted in such Losses. Relative fault shall be determined by
reference to whether any alleged untrue statement or omission relates to
information provided by the indemnifying party, on the one hand, or by the
indemnified party, on the other hand. The parties agree that it would not be
just and equitable if contribution were determined by pro rata allocation or any
other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 6, each person who controls a Holder within the meaning of either
the Act or the Exchange Act and each director, officer, employee and agent of
such Holder shall have the same rights to contribution as such Holder, and each
person who controls the Company within the meaning of either the Act or the
Exchange Act, each officer of the Company who shall have signed the Registration
Statement and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to the applicable terms and
conditions of this paragraph (d).
(e) The provisions of this Section 6 will remain in full force
and effect, regardless of any investigation made by or on behalf of any Holder
or the Company or any of the officers, directors or controlling persons referred
to in Section 6 hereof, and will survive the sale by a Holder of securities
covered by a Registration Statement.
7. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. The Company has not, as of the
date hereof, entered into, nor shall it, on or after the date hereof, enter
into, any agreement that conflicts with the rights granted to the Holders herein
or otherwise conflicts with the provisions hereof.
(b) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, qualified,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the
15
<PAGE>
Company has obtained the written consent of the Holders of at least a majority
of the then outstanding aggregate principal amount of Senior Notes (or, after
the consummation of any Exchange Offer in accordance with Section 2 hereof, of
Exchange Notes); PROVIDED that, with respect to any matter that directly or
indirectly affects the rights of any Initial Purchaser hereunder, the Company
shall obtain the written consent of each such Initial Purchaser against which
such amendment, qualification, supplement, waiver or consent is to be effective.
Notwithstanding the foregoing (except the foregoing proviso), a waiver or
consent to departure from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders whose securities are being sold
pursuant to a Registration Statement and that does not directly or indirectly
affect the rights of other Holders may be given by the Majority Holders,
determined on the basis of securities being sold rather than registered under
such Registration Statement.
(c) NOTICES. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail, telex, telecopier, or air courier guaranteeing overnight delivery:
(1) if to a Holder, at the most current address given
by such Holder to the Company in accordance with the provisions of this Section
7(c), which address initially is, with respect to each Holder, the address of
such Holder maintained by the Registrar under the Indenture, with a copy in like
manner to Salomon Smith Barney Inc.;
(2) if to you, initially at the respective addresses
set forth in the Purchase Agreement; and
(3) if to the Company, initially at its address set
forth in the Purchase Agreement.
All such notices and communications shall be deemed to have
been duly given when received.
You or the Company by notice to the other may designate
additional or different addresses for subsequent notices or communications.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including, without the need for an express assignment or any consent by
the Company thereto, subsequent Holders of Senior Notes and/or Exchange Notes.
The Company hereby agrees to extend the benefits of this Agreement to any Holder
of Senior Notes and/or Exchange Notes and any such Holder may specifically
enforce the provisions of this Agreement as if an original party hereto.
(e) COUNTERPARTS. This agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
16
<PAGE>
(f) HEADINGS. The headings in this agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE.
(h) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired
or affected thereby, it being intended that all of the rights and privileges of
the parties shall be enforceable to the fullest extent permitted by law.
(i) SENIOR NOTES HELD BY THE COMPANY, ETC. Whenever the
consent or approval of Holders of a specified percentage of principal amount of
Senior Notes or Exchange Notes is required hereunder, Senior Notes or Exchange
Notes, as applicable, held by the Company or its Affiliates (other than
subsequent Holders of Senior Notes or Exchange Notes if such subsequent Holders
are deemed to be Affiliates solely by reason of their holdings of such Senior
Notes or Exchange Notes) shall not be counted in determining whether such
consent or approval was given by the Holders of such required percentage.
17
<PAGE>
Please confirm that the foregoing correctly sets forth the
agreement between the Company and you.
Very truly yours,
ARMCO INC.
By:
-----------------------------
Name:
Title:
Accepted in New York, New York
December 10, 1998
SALOMON SMITH BARNEY INC.
CHASE SECURITIES INC.
PNC CAPITAL MARKETS, INC.
By: SALOMON SMITH BARNEY INC.
By:
---------------------------------
Name:
Title:
18
<PAGE>
ANNEX A
Each broker-dealer that receives Exchange Notes for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Notes. The
Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of Exchange Notes received in exchange for Senior
Notes where such Senior Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Company has agreed
that, starting on the Expiration Date (as defined herein) and ending on the
close of business one year after the Expiration Date, it will make this
Prospectus available to any broker-dealer for use in connection with any such
resale. See "Plan of Distribution."
A-1
<PAGE>
ANNEX B
Each broker-dealer that receives Exchange Notes for its own
account in exchange for Senior Notes, where such Senior Notes were acquired by
such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. See "Plan of Distribution."
B-1
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Senior Notes where such Senior Notes were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that, starting on the Expiration Date and ending on the close of business one
year after the Expiration Date, it will make this Prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale.
The Company will not receive any proceeds from any sale of
Exchange Notes by broker-dealers. Exchange Notes received by broker-dealers for
their own account pursuant to the Exchange Offer may be sold from time to time
in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such
Exchange Notes. Any broker-dealer that resells Exchange Notes that were received
by it for its own account pursuant to the Exchange Offer and any broker or
dealer that participates in a distribution of such Exchange Notes may be deemed
to be an "underwriter" within the meaning of the Securities Act and any profit
of any such resale of Exchange Notes and any commissions or concessions received
by any such persons may be deemed to be underwriting compensation under the
Securities Act. The Letter of Transmittal states that by acknowledging that it
will deliver and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
For a period of one year after the Expiration Date, the
Company will promptly send additional copies of this Prospectus and any
amendment or supplement to this Prospectus to any broker-dealer that requests
such documents in the Letter of Transmittal. The Company has agreed to pay all
expenses incident to the Registered Exchange Offer (including the expenses of
one counsel for the Holders of the Notes) other than commissions or concessions
of any brokers or dealers and will indemnify the Holders of the Senior Notes
(including any broker-dealers) against certain liabilities, including
liabilities under the Securities Act.
[If applicable, add information required by Regulation S-K
Items 507 and/or 508.]
C-1
<PAGE>
ANNEX D
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO
RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10
COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
Address:
The undersigned represents that it is not an affiliate of the
Company, that any Exchange Notes to be received by it will be acquired in the
ordinary course of business and that at the time of the commencement of the
Registered Exchange Offer it had no arrangement with any person to participate
in a distribution of the Exchange Notes.
If the undersigned is not a broker-dealer, the undersigned
represents that it acquired the Exchange Notes in the ordinary course of its
business, it is not engaged in, and does not intend to engage in, a distribution
of Exchange Notes and it has no arrangements or understandings with any person
to participate in a distribution of the Exchange Notes. If the undersigned is a
broker-dealer that will receive Exchange Notes for its own account in exchange
for Senior Notes, it represents that the Senior Notes to be exchanged for
Exchange Notes were acquired by it as a result of market-making activities or
other trading activities and acknowledges that it will deliver a prospectus in
connection with any resale of such Exchange Notes; however, by so acknowledging
and by delivering a prospectus, the undersigned will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
D-1
<PAGE>
EXHIBIT A
FORM OF LETTER TO BE PROVIDED BY ISSUER TO
THE DEPOSITORY TRUST COMPANY
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, NY 10004
Re: 8 7/8% Senior Notes Due 2008 (the "Securities")
of Armco Inc. (the "Issuer")
Ladies and Gentlemen:
Please be advised that the Securities and Exchange Commission
has declared effective a Registration Statement on Form S-3 under the Securities
Act of 1933, as amended, with regard to all of the Securities referenced above.
Accordingly, there is no longer any restriction as to whom such Securities may
be sold and any restrictions on the CUSIP designation are no longer appropriate
and may be removed. I understand that upon receipt of this letter, DTC will
remove any stop or restriction on its system with respect to this issue.
As always, please do not hesitate to call if we can be of
further assistance.
Very truly yours,
Authorized Officer
<PAGE>
Exhibit 12
ARMCO INC.
HISTORICAL RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in Millions)
<TABLE>
<CAPTION>
Nine Months
Ended Sept. 30, For the Year Ended December 31,
----------------- ------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
------ ------ ------ ------ ----- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Income (loss) from continuing operations $ 82.1 $ 59.3 $ 77.1 $ 26.0 $ 23.5 $ 65.8 $ (247.5)
Income tax provision (benefit) 5.4 1.8 2.3 1.4 2.0 (28.7) (7.3)
Adjustment to pretax income (loss)
for unconsolidated businesses and
minority interest 0.6 0.7 1.0 0.6 0.8 0.5 (7.8)
------ ------ ------ ------ ------ ------ --------
Pretax income (loss) from continuing
operations 88.1 61.8 80.4 28.0 26.3 37.6 (262.6)
Add fixed charges:
Interest expense - consolidated group 21.7 26.7 35.5 36.4 33.0 44.1 79.6
Interest expenses - 50% or more
owned unconsolidated subsidiaries
Interest portion of rental expense 1.1 1.1 1.5 1.5 2.5 2.5 4.3
------ ------ ------ ------ ------ ------ --------
Total fixed charges 22.8 27.8 37.0 37.9 35.5 46.6 83.9
------ ------ ------ ------ ------ ------ --------
Total income (loss) and fixed
charges $110.9 $ 89.6 $117.4 $ 65.9 $61.8 $ 84.2 $ (178.7)
------ ------ ------ ------ ------ ------ --------
------ ------ ------ ------ ------ ------ --------
Fixed charges
From above $ 22.8 $ 27.8 $ 37.0 $ 37.9 $ 35.5 $ 46.6 $ 83.9
Capitalized interest 0.1 0.3 0.4 0.8 5.1 4.9 1.8
------ ------ ------ ------ ------ ------ --------
Total fixed charges $ 22.9 $ 28.1 $ 37.4 $ 38.7 $ 40.6 $ 51.5 $ 85.7
------ ------ ------ ------ ------ ------ --------
------ ------ ------ ------ ------ ------ --------
Ratio 4.8x 3.2x 3.1x 1.7x 1.5x 1.6x *
------ ------ ------ ------ ------ ------ --------
------ ------ ------ ------ ------ ------ --------
</TABLE>
- ------------------
* For the year ended December 31, 1993, earnings as defined were
insufficient to cover fixed charges by $264.4 million.
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Armco Inc. on Form S-4 of our report dated February 9, 1998, appearing in
and incorporated by reference in the Annual Report on Form 10-K of Armco Inc.
for the year ended December 31, 1997 and to the reference to us under the
heading "Experts" in the Prospectus, which is part of this Registration
Statement.
/s/ Deloitte & Touche LLP
Pittsburgh, Pennsylvania
January 26, 1999
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
ARMCO INC.
The undersigned, in each of my capacities with Armco Inc., an Ohio
corporation, which anticipates filing with the Securities and Exchange
Commission, Washington, D.C., under the provisions of the Securities Act of
1933, as amended, one or more Registration Statements on Form S-4 relating to
the exchange of its 8 7/8% Senior Notes due 2008 for registered notes of
like tenor, hereby constitutes and appoints Gary R. Hildreth and James L.
Bertsch, and each of them individually, with full power of substitution and
resubstitution, as attorneys or attorney to sign for the undersigned in my
name said Registration Statements and any and all amendments thereto
(including post-effective amendments), and to file with the Securities and
Exchange Commission the same, with all exhibits thereto, and any and all
applications or other documents to be filed with the Securities and Exchange
Commission pertaining thereto, with full power and authority to do and
perform any and all acts and things whatsoever required and necessary to be
done in the premises, as fully to all intents and purposes as the undersigned
could do if personally present, hereby ratifying and approving the acts of
said attorneys and any of them and of any such substitute.
Executed this 22nd day of January, 1999.
/s/ James F. Will
------------------------
James F. Will
Chairman, President and
Chief Executive Officer
<PAGE>
POWER OF ATTORNEY
ARMCO INC.
The undersigned, in each of my capacities with Armco Inc., an Ohio
corporation, which anticipates filing with the Securities and Exchange
Commission, Washington, D.C., under the provisions of the Securities Act of
1933, as amended, one or more Registration Statements on Form S-4 relating to
the exchange of its 8 7/8% Senior Notes due 2008 for registered notes of
like tenor, hereby constitutes and appoints Gary R. Hildreth and James L.
Bertsch, and each of them individually, with full power of substitution and
resubstitution, as attorneys or attorney to sign for the undersigned in my
name said Registration Statements and any and all amendments thereto
(including post-effective amendments), and to file with the Securities and
Exchange Commission the same, with all exhibits thereto, and any and all
applications or other documents to be filed with the Securities and Exchange
Commission pertaining thereto, with full power and authority to do and
perform any and all acts and things whatsoever required and necessary to be
done in the premises, as fully to all intents and purposes as the undersigned
could do if personally present, hereby ratifying and approving the acts of
said attorneys and any of them and of any such substitute.
Executed this 22nd day of January, 1999.
/s/ Jerry W. Albright
-----------------------------
Jerry W. Albright
Vice President and
Chief Financial Officer
<PAGE>
POWER OF ATTORNEY
ARMCO INC.
The undersigned, in each of my capacities with Armco Inc., an Ohio
corporation, which anticipates filing with the Securities and Exchange
Commission, Washington, D.C., under the provisions of the Securities Act of
1933, as amended, one or more Registration Statements on Form S-4 relating to
the exchange of its 8 7/8% Senior Notes due 2008 for registered notes of
like tenor, hereby constitutes and appoints Gary R. Hildreth and James L.
Bertsch, and each of them individually, with full power of substitution and
resubstitution, as attorneys or attorney to sign for the undersigned in my
name said Registration Statements and any and all amendments thereto
(including post-effective amendments), and to file with the Securities and
Exchange Commission the same, with all exhibits thereto, and any and all
applications or other documents to be filed with the Securities and Exchange
Commission pertaining thereto, with full power and authority to do and
perform any and all acts and things whatsoever required and necessary to be
done in the premises, as fully to all intents and purposes as the undersigned
could do if personally present, hereby ratifying and approving the acts of
said attorneys and any of them and of any such substitute.
Executed this 22nd day of January, 1999.
/s/ John N. Davis
---------------------------
John N. Davis
Vice President and Controller
<PAGE>
POWER OF ATTORNEY
ARMCO INC.
The undersigned, in each of my capacities with Armco Inc., an Ohio
corporation, which anticipates filing with the Securities and Exchange
Commission, Washington, D.C., under the provisions of the Securities Act of
1933, as amended, one or more Registration Statements on Form S-4 relating to
the exchange of its 8 7/8% Senior Notes due 2008 for registered notes of
like tenor, hereby constitutes and appoints Gary R. Hildreth and James L.
Bertsch, and each of them individually, with full power of substitution and
resubstitution, as attorneys or attorney to sign for the undersigned in my
name said Registration Statements and any and all amendments thereto
(including post-effective amendments), and to file with the Securities and
Exchange Commission the same, with all exhibits thereto, and any and all
applications or other documents to be filed with the Securities and Exchange
Commission pertaining thereto, with full power and authority to do and
perform any and all acts and things whatsoever required and necessary to be
done in the premises, as fully to all intents and purposes as the undersigned
could do if personally present, hereby ratifying and approving the acts of
said attorneys and any of them and of any such substitute.
Executed this 22nd day of January, 1999.
/s/ Dan R. Carmichael
------------------------
Dan R. Carmichael
Director
<PAGE>
POWER OF ATTORNEY
ARMCO INC.
The undersigned, in each of my capacities with Armco Inc., an Ohio
corporation, which anticipates filing with the Securities and Exchange
Commission, Washington, D.C., under the provisions of the Securities Act of
1933, as amended, one or more Registration Statements on Form S-4 relating to
the exchange of its 8 7/8% Senior Notes due 2008 for registered notes of
like tenor, hereby constitutes and appoints Gary R. Hildreth and James L.
Bertsch, and each of them individually, with full power of substitution and
resubstitution, as attorneys or attorney to sign for the undersigned in my
name said Registration Statements and any and all amendments thereto
(including post-effective amendments), and to file with the Securities and
Exchange Commission the same, with all exhibits thereto, and any and all
applications or other documents to be filed with the Securities and Exchange
Commission pertaining thereto, with full power and authority to do and
perform any and all acts and things whatsoever required and necessary to be
done in the premises, as fully to all intents and purposes as the undersigned
could do if personally present, hereby ratifying and approving the acts of
said attorneys and any of them and of any such substitute.
Executed this 22nd day of January, 1999.
/s/ Dorothea C. Gilliam
-----------------------------
Dorothea C. Gilliam
Director
<PAGE>
POWER OF ATTORNEY
ARMCO INC.
The undersigned, in each of my capacities with Armco Inc., an Ohio
corporation, which anticipates filing with the Securities and Exchange
Commission, Washington, D.C., under the provisions of the Securities Act of
1933, as amended, one or more Registration Statements on Form S-4 relating to
the exchange of its 8 7/8% Senior Notes due 2008 for registered notes of
like tenor, hereby constitutes and appoints Gary R. Hildreth and James L.
Bertsch, and each of them individually, with full power of substitution and
resubstitution, as attorneys or attorney to sign for the undersigned in my
name said Registration Statements and any and all amendments thereto
(including post-effective amendments), and to file with the Securities and
Exchange Commission the same, with all exhibits thereto, and any and all
applications or other documents to be filed with the Securities and Exchange
Commission pertaining thereto, with full power and authority to do and
perform any and all acts and things whatsoever required and necessary to be
done in the premises, as fully to all intents and purposes as the undersigned
could do if personally present, hereby ratifying and approving the acts of
said attorneys and any of them and of any such substitute.
Executed this 22nd day of January, 1999.
/s/ John C. Haley
--------------------------
John C. Haley
Director
<PAGE>
POWER OF ATTORNEY
ARMCO INC.
The undersigned, in each of my capacities with Armco Inc., an Ohio
corporation, which anticipates filing with the Securities and Exchange
Commission, Washington, D.C., under the provisions of the Securities Act of
1933, as amended, one or more Registration Statements on Form S-4 relating to
the exchange of its 8 7/8% Senior Notes due 2008 for registered notes of
like tenor, hereby constitutes and appoints Gary R. Hildreth and James L.
Bertsch, and each of them individually, with full power of substitution and
resubstitution, as attorneys or attorney to sign for the undersigned in my
name said Registration Statements and any and all amendments thereto
(including post-effective amendments), and to file with the Securities and
Exchange Commission the same, with all exhibits thereto, and any and all
applications or other documents to be filed with the Securities and Exchange
Commission pertaining thereto, with full power and authority to do and
perform any and all acts and things whatsoever required and necessary to be
done in the premises, as fully to all intents and purposes as the undersigned
could do if personally present, hereby ratifying and approving the acts of
said attorneys and any of them and of any such substitute.
Executed this 22nd day of January, 1999.
/s/ Charles J. Hova, Jr.
------------------------------
Charles J. Hova, Jr.
Director
<PAGE>
POWER OF ATTORNEY
ARMCO INC.
The undersigned, in each of my capacities with Armco Inc., an Ohio
corporation, which anticipates filing with the Securities and Exchange
Commission, Washington, D.C., under the provisions of the Securities Act of
1933, as amended, one or more Registration Statements on Form S-4 relating to
the exchange of its 8 7/8% Senior Notes due 2008 for registered notes of
like tenor, hereby constitutes and appoints Gary R. Hildreth and James L.
Bertsch, and each of them individually, with full power of substitution and
resubstitution, as attorneys or attorney to sign for the undersigned in my
name said Registration Statements and any and all amendments thereto
(including post-effective amendments), and to file with the Securities and
Exchange Commission the same, with all exhibits thereto, and any and all
applications or other documents to be filed with the Securities and Exchange
Commission pertaining thereto, with full power and authority to do and
perform any and all acts and things whatsoever required and necessary to be
done in the premises, as fully to all intents and purposes as the undersigned
could do if personally present, hereby ratifying and approving the acts of
said attorneys and any of them and of any such substitute.
Executed this 22nd day of January, 1999.
/s/ Bruce E. Robbins
------------------------------
Bruce E. Robbins
Director
<PAGE>
POWER OF ATTORNEY
ARMCO INC.
The undersigned, in each of my capacities with Armco Inc., an Ohio
corporation, which anticipates filing with the Securities and Exchange
Commission, Washington, D.C., under the provisions of the Securities Act of
1933, as amended, one or more Registration Statements on Form S-4 relating to
the exchange of its 8 7/8% Senior Notes due 2008 for registered notes of
like tenor, hereby constitutes and appoints Gary R. Hildreth and James L.
Bertsch, and each of them individually, with full power of substitution and
resubstitution, as attorneys or attorney to sign for the undersigned in my
name said Registration Statements and any and all amendments thereto
(including post-effective amendments), and to file with the Securities and
Exchange Commission the same, with all exhibits thereto, and any and all
applications or other documents to be filed with the Securities and Exchange
Commission pertaining thereto, with full power and authority to do and
perform any and all acts and things whatsoever required and necessary to be
done in the premises, as fully to all intents and purposes as the undersigned
could do if personally present, hereby ratifying and approving the acts of
said attorneys and any of them and of any such substitute.
Executed this 22nd day of January, 1999.
/s/ Jan S. Suwinski
------------------------------
Jan S. Suwinski
Director
<PAGE>
POWER OF ATTORNEY
ARMCO INC.
The undersigned, in each of my capacities with Armco Inc., an Ohio
corporation, which anticipates filing with the Securities and Exchange
Commission, Washington, D.C., under the provisions of the Securities Act of
1933, as amended, one or more Registration Statements on Form S-4 relating to
the exchange of its 8 7/8% Senior Notes due 2008 for registered notes of
like tenor, hereby constitutes and appoints Gary R. Hildreth and James L.
Bertsch, and each of them individually, with full power of substitution and
resubstitution, as attorneys or attorney to sign for the undersigned in my
name said Registration Statements and any and all amendments thereto
(including post-effective amendments), and to file with the Securities and
Exchange Commission the same, with all exhibits thereto, and any and all
applications or other documents to be filed with the Securities and Exchange
Commission pertaining thereto, with full power and authority to do and
perform any and all acts and things whatsoever required and necessary to be
done in the premises, as fully to all intents and purposes as the undersigned
could do if personally present, hereby ratifying and approving the acts of
said attorneys and any of them and of any such substitute.
Executed this 22nd day of January, 1999.
/s/ John D. Turner
----------------------------
John D. Turner
Director
<PAGE>
LETTER OF TRANSMITTAL
ARMCO INC.
OFFER TO EXCHANGE
ALL OUTSTANDING
8 7/8% SENIOR NOTES DUE 2008
FOR
8 7/8% SENIOR NOTES DUE 2008,
THAT HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED,
PURSUANT TO THE PROSPECTUS,
DATED , 1999
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER
WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1999 UNLESS EXTENDED (THE "EXPIRATION DATE")
- --------------------------------------------------------------------------------
STAR BANK, N.A., Exchange Agent
<TABLE>
<S> <C> <C>
BY HAND OR OVERNIGHT BY MAIL: BY FACSIMILE:
DELIVERY: Corporate Trust (513) 632-5511
Corporate Trust 425 Walnut Street CONFIRM BY TELEPHONE:
425 Walnut Street Mail Location 5155 (513) 632-4427
6th Floor Cincinnati, Ohio 45202
Cincinnati, Ohio 45202 Attention: Robert Jones
Attention: Robert Jones
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
The undersigned acknowledges that he or she has received and reviewed the
Prospectus, dated , 1999 (the "Prospectus") of Armco Inc., an Ohio
corporation (the "Company") and this Letter of Transmittal (the "Letter"), which
together constitute the Company's offer (the "Exchange Offer") to exchange an
aggregate principal amount of up to $75,000,000 of the Company's 8 7/8% Senior
Notes due 2008 (the "New Notes"), which have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
Registration Statement of which the Prospectus is part, for a like principal
amount of the issued and outstanding 8 7/8% Senior Notes due 2008 (the "Old
Notes") of the Company from the registered holders (the "Holders") thereof.
For each Old Note accepted for exchange, the Holder of such Old Note will
receive a New Note having a principal amount equal to that of the surrendered
Old Note. Accordingly, registered holders of New Notes on the relevant record
date for the first interest payment date following the consummation of the
Exchange Offer will receive interest accruing from the most recent date to which
interest has been paid or, if no interest has been paid, from December 15, 1998.
Old Notes accepted for exchange will cease to accrue interest from and after the
date of consummation of the Exchange Offer. Holders whose Old Notes are accepted
for exchange will not receive any payment in respect of accrued interest on such
Old Notes otherwise payable on any interest payment date the record date for
which occurs on or after consummation of the Exchange Offer.
<PAGE>
This Letter is to be completed by a Holder of Old Notes either if
certificates are to be forwarded herewith or if a tender of certificates for Old
Notes, if available, is to be made by book-entry transfer to the account
maintained by the Exchange Agent at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in "The
Exchange Offer--Book-Entry Transfer" section of the Prospectus. Holders of Old
Notes whose certificates are not immediately available, or who are unable to
deliver their certificates or confirmation of the book-entry tender of their Old
Notes into the Exchange Agent's account at the Book-Entry Transfer Facility (a
"Book-Entry Confirmation") and all other documents required by this Letter to
the Exchange Agent on or prior to the Expiration Date, must tender their Old
Notes according to the guaranteed delivery procedures set forth in "The Exchange
Offer--Guaranteed Delivery Procedures" section of the Prospectus. See
Instruction 1. Delivery of documents to the Book-Entry Transfer Facility does
not constitute delivery to the Exchange Agent.
The undersigned has completed the appropriate boxes below and signed this
Letter to indicate the action the undersigned desires to take with respect to
the Exchange Offer.
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD NOTES"
BELOW AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE OLD NOTES AS
SET FORTH IN SUCH BOX BELOW.
LIST BELOW THE OLD NOTES TO WHICH THIS LETTER RELATES. If the space
provided below is inadequate, the certificate numbers and principal amount of
Old Notes should be listed on a separate signed schedule affixed hereto.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL CAREFULLY BEFORE
COMPLETING THE BOX
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
DESCRIPTION OF 8 7/8% SENIOR NOTES DUE 2008
----------------------------------------------------------------------------------------------------
PRINCIPAL
AGGREGATE AMOUNT
PRINCIPAL TENDERED
AMOUNT (MUST BE IN
NAMES AND ADDRESS(ES) OF REPRESENTED INTEGRAL
REGISTERED HOLDERS CERTIFICATE BY MULTIPLES
(PLEASE FILL IN, IF BLANK) NUMBER(S) CERTIFICATE(S) OF $1,000)*
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
TOTAL
- ------------------------------------------------------------------------------------------------------
</TABLE>
* Unless indicated in the column labeled "Principal Amount Tendered," any
tendering Holder of 8 7/8% Senior Notes due 2008 will be deemed to have
rendered the entire aggregate principal amount represented by the column
labeled "Aggregate Principal Amount Represented by Certificates(s)."
If the space provided above is inadequate, list the certificate numbers and
principal amounts on a separate signed schedule and affix the list to this
Letter of Transmittal.
The minimum permitted tender is $1,000 in principal amount of 8 7/8% Senior
Notes due 2008. All other tenders must be in integral multiples of $1,000.
/ / CHECK HERE IF TENDERED OLD NOTES ARE ENCLOSED HEREWITH.
<PAGE>
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND COMPLETE
THE FOLLOWING (FOR USE BY ELIGIBLE INSTITUTIONS (AS HEREINAFTER DEFINED)
ONLY):
Name of Tendering Institution ______________________________________________
Account Number _____________________________________________________________
Transaction Code Number ____________________________________________________
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY ENCLOSED HEREWITH AND COMPLETE THE FOLLOWING (FOR USE
BY ELIGIBLE INSTITUTIONS ONLY):
Name(s) of Registered Old Noteholder(s) ____________________________________
Date of Execution of Notice of Guaranteed Delivery _________________________
Window Ticket Number (if available) ________________________________________
Name of Institution which Guaranteed Delivery ______________________________
Account Number (if delivered by book entry transfer) _______________________
- --------------------------------------------------------------------------------
- ------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 4, 5 AND 6)
To be completed ONLY (i) if certificates for Old Notes not tendered, or
New Notes issued in exchange for Old Notes accepted for exchange, are to
issued in the name of someone other than the undersigned, or (ii) if Old
Notes tendered by book-entry transfer which are not exchange are to be
returned by credit to an account maintained at Depository Trust Company
("DTC").
Issue certificate(s) to:
Name _______________________________________________________________________
(PLEASE PRINT)
Address ____________________________________________________________________
(INCLUDE ZIP CODE)
__________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
Credit Old Notes not exchanged and delivered by book-entry transfer to
the DTC account set forth below:
__________________________________________________________________________
DTC ACCOUNT NUMBER
- ------------------------------------------------------------
- ------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 4, 5 AND 6)
To be completed ONLY if certificates for Old Notes not tendered, or New
Notes issued in exchange, are to be sent to someone other than the
undersigned, or to the undersigned at an address other than that shown
above.
Mail to:
Name _______________________________________________________________________
(PLEASE PRINT)
Address ____________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
__________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
- -----------------------------------------------------
PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount of Old
Notes indicated above. Subject to, and effective upon, the acceptance for
exchange of the Old Notes tendered hereby, the undersigned hereby sells, assigns
and transfers to, or upon the order of, the Company all right, title and
interest in and to such Old Notes as are being tendered hereby. The undersigned
hereby irrevocably constitutes and appoints the Exchange Agent its agent and
attorney-in-fact (with full knowledge that the Exchange Agent also acts as the
agent of the Company) with respect to the tendered Old Notes with full power of
substitution to (i) deliver certificates for such Old Notes, or transfer
ownership of such Old Notes on the account books maintained by DTC, to the
Company and deliver all accompanying evidences of transfer and authenticity to,
or upon the order of, the Company and (ii) present such Old Notes for transfer
on the books of the Company and receive all benefits and otherwise exercise all
rights of beneficial ownership of such Old Notes, all in accordance with the
terms of the Exchange Offer. The power of attorney granted in this paragraph
shall be deemed irrevocable and coupled with an interest.
<PAGE>
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Old Notes tendered
hereby and that the Company will acquire good and unencumbered title thereto,
free and clear of all liens, restrictions, charges and encumbrances and not
subject to any adverse claim when the same are accepted by the Company. The
undersigned hereby further represents that any New Notes acquired in exchange
for Old Notes tendered hereby will have been acquired in the ordinary course of
business of the person receiving such New Notes, whether or not such person is
the undersigned, that neither the Holder of such Old Notes nor any such other
person has an arrangement or understanding with any person to participate in the
distribution of such New Notes and that neither the Holder of such Old Notes nor
any such other person is an "affiliate," as defined in Rule 405 under the
Securities Act of 1933, as amended (the "Securities Act"), of the Company.
The undersigned also acknowledges that this Exchange Offer is being made in
reliance on interpretations by the staff of the Securities and Exchange
Commission (the "SEC"), as set forth in no-action letters issued to third
parties, that the New Notes issued pursuant to the Exchange Offer in exchange
for the Old Notes may be offered for resale, resold and otherwise transferred by
Holders thereof (other than any such Holder which is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act), without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such New Notes are acquired in the ordinary course
of such Holders' business and such Holders have no arrangement with any person
to participate in a distribution of such New Notes. However, the SEC has not
considered the Exchange Offer in the context of a no-action letter and there can
be no assurance that the staff of the SEC would make a similar determination
with respect to the Exchange Offer as in other circumstances. If the undersigned
is not a broker-dealer, the undersigned represents that it is not engaged in,
and does not intend to engage in, a distribution of New Notes and has no
arrangement or understanding to participate in a distribution of New Notes. If
any Holder is an affiliate of the Company, is engaged in or intends to engage
in, or has any arrangement or understanding with any person to participate in, a
distribution of the New Notes to be acquired pursuant to the Exchange Offer,
such Holder (i) may not rely on the applicable interpretations of the staff of
the SEC and (ii) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction. If
the undersigned is a broker-dealer that will receive New Notes for its own
account pursuant to the Exchange Offer, it represents that the Old Notes to be
exchanged for the New Notes were acquired by it as a result of market-making
activities or other trading activities and acknowledges that it will deliver a
prospectus in connection with any resale of such New Notes; however, by so
acknowledging and by delivering a prospectus, the undersigned will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Old Notes tendered hereby. All authority
conferred or agreed to be conferred in this Letter and every obligation of the
undersigned hereunder shall be binding upon the successors, assigns, heirs,
executors, administrators, trustees in bankruptcy and legal representatives of
the undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. This tender may be withdrawn only in accordance
with the procedures set forth in "The Exchange Offer--Withdrawal Rights" section
of the Prospectus.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" above, please issue the New Notes (and, if applicable, substitute
certificates representing Old Notes for any Old Notes not exchanged) in the name
of the undersigned or, in the case of a book-entry delivery of Old Notes, please
credit the account indicated above maintained at the Book-Entry Transfer
Facility. Similarly, unless otherwise indicated under the box entitled "Special
Delivery Instructions" above, please send the New Notes (and, if applicable,
substitute certificates representing Old Notes for any Old Notes not exchanged)
to the undersigned at the address shown above in the box entitled "Description
of Old Notes."
<PAGE>
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(COMPLETE ACCOMPANYING SUBSTITUTE W-9 ON REVERSE SIDE)
Dated: ________________, 1999
<TABLE>
<C> <S>
X
- ------------------------------------------------------------------ -------------------------------
Date
- ------------------------------------------------------------------ -------------------------------
Signature(s) of Owner Date
Area Code and Telephone Number: ( )
</TABLE>
If a holder is tendering any Old Notes, this letter must be signed by the
registered holder(s) as the name(s) appear(s) on the certificate(s) for the Old
Notes or by any person(s) authorized to become registered holder(s) by
endorsements and documents transmitted herewith. If signature is by a trustee,
executor, administrator, guardian, officer or other person acting in a fiduciary
or representative capacity, please set forth full title. See Instruction 3.
Name(s): _______________________________________________________________________
(PLEASE PRINT)
Capacity (full title) __________________________________________________________
Address(es): ___________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
SIGNATURE GUARANTEE (IF REQUIRED BY INSTRUCTION 3)
Signature(s) Guaranteed by an Eligible Institution: ____________________________
(Authorized Signature)
________________________________________________________________________________
(Title)
________________________________________________________________________________
(Name and Firm)
Dated: _________________, 1999
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER AND NOTES; GUARANTEED DELIVERY PROCEDURES. This
Letter is to be completed by holders of Old Notes either if certificates are to
be forwarded herewith or if tenders are to be made pursuant to the procedures
for delivery by book-entry transfer set forth in "The Exchange Offer--Book-Entry
Transfer" section of the Prospectus. Certificates for all physically tendered
Old Notes, or Book-Entry Confirmation, as the case may be, as well as a properly
completed and duly executed Letter (or manually signed facsimile hereof) and any
other documents required by this Letter, must be received by the Exchange Agent
at the address set forth herein on or prior to the Expiration Date, or the
tendering holder must comply with the guaranteed delivery procedures set forth
below. Old Notes tendered hereby must be in denominations of principal amount of
$1,000 and any integral multiple thereof.
Holders whose certificates for Old Notes are not immediately available or
who cannot deliver their certificates and all other required documents to the
Exchange Agent on or prior to the Expiration Date, or who cannot complete the
procedure for book-entry transfer on a timely basis, may tender their Old Notes
pursuant to the guaranteed delivery procedures set forth in "The Exchange
Offer--Guaranteed Delivery Procedures" section of the Prospectus. Pursuant to
such procedures, (i) such tender must be made through an Eligible Institution;
(ii) on or prior to 5:00 p.m., New York City time, on the Expiration Date, the
Exchange Agent must receive from such Eligible Institution a properly completed
and duly executed Letter (or a facsimile thereof) and Notice of Guaranteed
Delivery, substantially in the form provided by the Company (by telegram, telex,
facsimile transmission, mail or hand delivery), setting forth the name and
address of the holder of Old Notes and the amount of Old Notes tendered stating
that the tender is being made thereby and guaranteeing that within three New
York Stock Exchange ("NYSE") trading days after the date of execution of the
Notice of Guaranteed Delivery, the certificates for all physically tendered Old
Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case
may be, and any other documents required by this Letter will be deposited by the
Eligible Institution with the Exchange Agent; and (iii) the certificates for all
physically tendered Old Notes, in proper form for transfer, or Book-Entry
Confirmation, as the case may be, and all other documents required by this
Letter, are deposited by the Eligible Institution within three NYSE trading days
after the date of execution of the Notice of Guaranteed Delivery.
The method of delivery of this Letter, the Old Notes and all other required
documents is at the election and risk of the tendering Holders, but the delivery
will be deemed made only when actually received or confirmed by the Exchange
Agent. If Old Notes are sent by mail, it is suggested that the mailing be
registered mail, properly insured, with return receipt requested, and made
sufficiently in advance of the Expiration Date to permit delivery to the
Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration Date.
Only a holder of Old Notes may tender such Old Notes in the Exchange Offer.
Any beneficial holder of Old Notes who is not the registered holder and who
wishes to tender should arrange with the registered holder to execute and
deliver this Letter of Transmittal on his behalf or must, prior to completing
and executing this Letter of Transmittal and delivering his Old Notes, either
make appropriate arrangements to register ownership of the Old Notes in such
holder's name or obtain a properly completed bond power from the registered
holder.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Old Notes and withdrawal of tendered Old Notes
will be determined by the Issuer in its sole discretion, which determination
will be final and binding. The Issuer reserves the absolute right to reject any
and all Old Notes not properly tendered or any Old Notes the Issuer's acceptance
of which would, in the opinion of counsel for the Issuer, be unlawful. The
Issuer also reserves the right to waive any irregularities or conditions of
tender as to particular Old Notes. The Issuer's interpretation of the terms and
conditions of the Exchange Offer (including the instructions in this Letter of
Transmittal) shall be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Old Notes must be cured
within such time as the Issuer shall determine. Neither the Issuer, the Exchange
Agent nor any other person shall be under any duty to give notification of
defects or irregularities with respect to tenders of Old Notes, nor shall any of
them incur any liability for failure to give such notification. Tenders of Old
Notes will not be deemed to have been made until such defects or irregularities
have been cured or waived. Any Old Notes received by the Exchange Agent that are
not properly tendered and as to which the defects or irregularities have not
been cured or waived will be returned by the Exchange Agent to the tendering
Holders of Old Notes, unless otherwise provided in this Letter of Transmittal,
as soon as practicable following the Expiration Date.
See "The Exchange Offer" section of the Prospectus.
<PAGE>
2. PARTIAL TENDERS (NOT APPLICABLE TO NOTEHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If less than all of the Old Notes evidenced by a submitted
certificate are to be tendered, the tendering Holder(s) should fill in the
aggregate principal amount of Old Notes to be tendered in the box above entitled
"Description of Old Notes--Principal Amount Tendered." A reissued certificate
representing the balance of nontendered Old Notes will be sent to such tendering
holder, unless otherwise provided in the appropriate box of this Letter,
promptly after the Expiration Date. All of the Old Notes delivered to the
Exchange Agent will be deemed to have been tendered unless otherwise indicated.
3. SIGNATURES ON THIS LETTER, BOND POWERS AND ENDORSEMENTS, GUARANTEE OF
SIGNATURES. If this Letter is signed by the registered holder of the Old Notes
tendered hereby, the signature must correspond exactly with the name as written
on the face of the certificates without any change whatsoever.
If any tendered Old Notes are owned of record by two or more joint owners,
all of such owners must sign this Letter.
If any tendered Old Notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
copies of this letter as there are different registrations of certificates.
When this Letter is signed by the registered holder or holders of the Old
Notes specified herein and tendered hereby, no endorsements of certificates or
separate bond powers are required. If, however, the New Notes are to be issued,
or any untendered Old Notes are to be reissued, to a person other than the
registered holder, then endorsements of any certificates transmitted hereby or
separate bond powers are required. Signatures on such certificate(s) must be
guaranteed by an Eligible Institution.
If this Letter is signed by a person other than the registered holder or
holders of any certificate(s) specified herein, such certificate(s) must be
endorsed accompanied by appropriate bond powers, in either case signed exactly
as the name or names of the registered holder or holders appear(s) on the
certificate(s) and signatures on such certificate(s) must be guaranteed by an
Eligible Institution.
If this Letter or any certificates or bond powers are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must be
submitted.
Endorsements on certificates for Old Notes or signatures on bond powers
required by this Instruction 3 must be guaranteed by a financial institution
(including most banks, savings and loan associations and brokerage houses) that
is a participant in the Securities Transfer Agents Medallion Program, the New
York Stock Exchange Medallion Signature Program or the Stock Exchanges Medallion
Program (each, an "Eligible Institution").
Signatures on this Letter need not be guaranteed by an Eligible Institution,
provided the Old Notes are tendered: (i) by a registered holder of Old Notes who
has not completed the box entitled "Special Issuance Instructions" or "Special
Delivery Instructions" on this Letter, or (ii) for the account of an Eligible
Institution.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. Tendering holders of Old
Notes should indicate in the applicable box the name and address to which New
Notes issued pursuant to the Exchange Offer and/or substitute certificates
evidencing Old Notes not exchanged are to be issued or sent, if different from
the name or address of the person signing this Letter. In the case of issuance
in a different name, the employer identification or social security number of
the person named must also be indicated. Noteholders tendering Old Notes by
book-entry transfer may request that Old Notes not exchanged be credited to such
account maintained at the Book-Entry Transfer Facility as such noteholder may
designate hereon. If no such instructions are given, such Old Notes not
exchanged will be returned to the name and address of the person signing this
Letter.
<PAGE>
5. TRANSFER TAXES. The Company will pay all transfer taxes, if any,
applicable to the transfer of Old Notes to it or its order pursuant to the
Exchange Offer. If, however, New Notes and/or substitute Old Notes not exchanged
are to be delivered to, or are to be registered or issued in the name of, any
person other than the registered holder of the Old Notes tendered hereby, or if
tendered Old Notes are registered in the name of any person other than the
person signing this Letter, or if a transfer tax is imposed for any reason other
than the transfer of Old Notes to the Company or its order pursuant to the
Exchange Offer, the amount of any such transfer taxes (whether imposed on the
registered holder or any other persons) will be payable by the tendering holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted herewith, the amount of such transfer taxes will be billed to such
tendering holder and the Exchange Agent will retain possession of an amount of
New Notes with a face amount equal to the amount of such transfer taxes due by
such tendering holder pending receipt by the Exchange Agent of the amount of
such taxes.
Except as provided in this Instruction 5, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes specified in this Letter.
6. WAIVER OF CONDITIONS. The Company reserves the absolute right to waive
satisfaction of any or all conditions enumerated in the Prospectus.
7. NO CONDITIONAL TENDERS. No alternative, conditional, irregular or
contingent tenders will be accepted. All tendering holders of Old Notes, by
execution of this Letter, shall waive any right to receive notice of the
acceptance of their Old Notes for exchange.
Although the Company intends to notify holders of defects or irregularities
with respect to tenders of Old Notes, neither the Company, the Exchange Agent
nor any other person shall incur any liability for failure to give any such
notice.
8. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES. Any holder whose Old
Notes have been mutilated, lost, stolen or destroyed should contact the Exchange
Agent at the address indicated above for further instructions.
9. WITHDRAWAL OF TENDERS. Tenders of Old Notes may be withdrawn at any time
prior to 5:00 p.m., New York City time, on the Expiration Date.
For a withdrawal of a tender of Old Notes to be effective, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth above prior to 5:00 p.m., New York City time, on
the Expiration Date. Any such notice of withdrawal must (i) specify the name of
the person having deposited the Old Notes to be withdrawn (the "Depositor"),
(ii) identify the Old Notes to be withdrawn (including the certificate number or
numbers and principal amount of such Old Notes), (iii) be signed by the holder
in the same manner as the original signature on this Letter (including any
required signature guarantees) or be accompanied by documents of transfer
sufficient to have the trustee under the Indenture register the transfer of such
Old Notes into the name of the person withdrawing the tender and (iv) specify
the name in which any such Old Notes are to be registered, if different from
that of the Depositor. All questions as to the validity, form and eligibility
(including time of receipt) of such notices will be determined by the Company,
whose determination shall be final and binding on all parties. Any Old Notes so
withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the Exchange Offer. Any Old Notes that have been tendered for
exchange but which are not exchanged for any reason will be returned to the
holder thereof without cost to such holder as soon as practicable after
withdrawal, rejection of tender or termination of the Exchange Offer. Properly
withdrawn Old Notes may be retendered by following the procedures described
above at any time on or prior to 5:00 p.m., New York City time, on the
Expiration Date.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the
procedure for tendering, as well as requests for additional copies of the
Prospectus, this Letter and other related documents may be directed to the
Exchange Agent, at the address and telephone number indicated above.
<PAGE>
11. IMPORTANT TAX INFORMATION. Under current federal income tax law, a
holder of New Notes is required to provide the Company (as payor) with such
holder's correct taxpayer identification number ("TIN") on Substitute Form W-9
or otherwise establish a basis for exemption from backup withholding to prevent
backup withholding on any New Notes delivered pursuant to the Exchange Offer and
any payments received in respect of the New Notes. If a holder of New Notes is
an individual, the TIN is such holder's social security number. If the Company
is not provided with the correct taxpayer identification number, a holder of New
Notes may be subject to a $50 penalty imposed by the Internal Revenue Service.
Accordingly, each prospective holder of New Notes to be issued pursuant to
Special Issuance Instructions should complete the attached Substitute Form W-9.
The Substitute Form W-9 need not be completed if the box entitled Special
Issuance Instructions has not been completed.
Certain holders of New Notes (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. Exempt prospective holders of New Notes should indicate
their exempt status on Substitute Form W-9. A foreign individual may qualify as
an exempt recipient by submitting to the Company, through the Exchange Agent, a
properly completed Internal Revenue Service Form W-8 (which the Exchange Agent
will provide upon request) signed under penalty of perjury, attesting to the
holder's exempt status. See the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional
instructions.
If backup withholding applies, the Company is required to withhold 31% of
any payment made to the holder of New Notes or other payee. Backup withholding
is not an additional federal income tax. Rather, the federal income tax
liability of persons subject to backup withholding will be reduced by the amount
of tax withheld. If withholding results in an overpayment of taxes, a refund may
be obtained from the Internal Revenue Service.
To prevent backup withholding on any New Notes delivered pursuant to the
Exchange Offer and any payments received in respect of the New Notes, each
prospective holder of New Notes to be issued pursuant to Special Issuance
Instructions should provide the Company, through the Exchange Agent, with
either: (i) such prospective holder's correct TIN by completing the form below,
certifying that the TIN provided on Substitute Form W-9 is correct (or that such
prospective holder is awaiting a TIN) and that (A) such prospective holder has
not been notified by the Internal Revenue Service that he or she is subject to
backup withholding as a result of a failure to report all interest or dividends
or (B) the Internal Revenue Service has notified such prospective holder that he
or she is no longer subject to backup withholding; or (ii) an adequate basis for
exemption.
The prospective holder of New Notes to be issued pursuant to Special
Issuance Instructions is required to give the Exchange Agent the TIN (e.g.,
social security number or employer identification number) of the prospective
record owner of the New Notes. If the New Notes will be held in more than one
name or are not held in the name of the actual owner, consult the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 for additional guidance regarding which number to report.
To prevent backup withholding, each tendering holder of Old Notes must
provide its correct TIN by completing the Substitute Form W-9 set forth below,
certifying that the TIN provided is correct (or that such holder is awaiting a
TIN) and that (i) the holder is exempt from backup withholding, or (ii) the
holder has not been notified by the Internal Revenue Service that such holder is
subject to backup withholding as a result of a failure to report all interest or
dividends or (iii) the Internal Revenue Service has notified the holder that
such holder is no longer subject to backup withholding. If the tendering holder
of Old Notes is a nonresident alien or foreign entity not subject to backup
withholding, such holder must give the Company a completed Form W-8, Certificate
of Foreign Status. These forms may be obtained from the Exchange Agent. If the
Old Notes are in more than one name or are not in the name of the actual owner,
such holder should consult the W-9 Guidelines for information on which TIN to
report. If such holder does not have a TIN, such holder should consult the W-9
Guidelines for instructions on applying for a TIN, check the box in Part 2 of
the Substitute Form W-9 and write "applied for" in lieu of its TIN. Note:
Checking this box and writing "applied for" on the form means that such holder
has already applied for a TIN or that such holder intends to apply for one in
the near future. If such holder does not provide its TIN to the Company within
60 days, backup withholding will begin and continue until such holder furnishes
its TIN to the Company.
<PAGE>
NOTICE OF GUARANTEED DELIVERY FOR ARMCO INC.
This form or one substantially equivalent hereto must be used to accept the
Exchange Offer of Armco Inc. (the "Company") made pursuant to the Prospectus,
dated , 1999 (the "Prospectus"), if certificates for the
outstanding 8 7/8% Senior Notes due 2008 of the Company (the "Old Notes") are
not immediately available or if the procedure for book-entry transfer cannot be
completed on a timely basis or time will not permit all required documents to
reach the Exchange Agent prior to 5:00 p.m., New York City time, on the
Expiration Date of the Exchange Offer. Such form may be delivered or transmitted
by telegram, telex, facsimile transmission, mail or hand delivery to Star Bank,
N.A. ("Exchange Agent") as set forth below. In addition, in order to utilize the
guaranteed delivery procedure to tender Old Notes pursuant to the Exchange
Offer, a completed, signed and dated Letter of Transmittal (or facsimile
thereof) must also be received by the Exchange Agent prior to 5:00 p.m., New
York City time, on the Expiration Date. Capitalized terms not defined herein are
defined in the Prospectus.
STAR BANK, N.A., Exchange Agent
By Hand or Overnight Delivery:
Corporate Trust
425 Walnut Street--6th Floor
Cincinnati, Ohio 45202
Attention: Robert Jones
By Mail:
Corporate Trust
425 Walnut Street
Mail Location 5155
Cincinnati, Ohio 45202
Attention: Robert Jones
By Facsimile: (513) 632-5511
Confirm by Telephone: (513) 632-4427
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL
NOT CONSTITUTE A VALID DELIVERY.
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to the
Company the principal amount of Old Notes set forth below, pursuant to the
guaranteed delivery procedure described in "The Exchange Offer--Guaranteed
Delivery Procedures" section of the Prospectus.
<TABLE>
<S> <C>
Principal Amount of Old Notes Tendered: If Old Notes will be delivered to Depository
Trust Company, provide account number.
$ -------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Certificate Nos. (if available):
- -------------------
Total Principal Amount Represented by Certificate(s):
$ ------------------- Account Number: -------------------
</TABLE>
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned.
PLEASE SIGN HERE
<TABLE>
<S> <C>
X -----------------------------
- ----------------------------------------------------------- Date
X -----------------------------
- ----------------------------------------------------------- Date
Signature(s) of Owner(s) or Authorized Signatory
Area Code and Telephone Number: ------------------------
</TABLE>
Must be signed by the holder(s) of Old Notes as their name(s) appear(s) on
certificates for Old Notes or on a security position listing, or by person(s)
authorized to become registered holder(s) by endorsement and documents
transmitted with this Notice of Guaranteed Delivery. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must set
forth his or her full title below. If Old Notes will be delivered by book-entry
transfer to The Depository Trust Company, provide account number.
Please print name(s) and address(es)
<TABLE>
<S> <C>
Name(s): ------------------------------------------------------------------------------
(Please Type or Print)
Capacity: ------------------------------------------------------------------------------
Address(es): ------------------------------------------------------------------------------
------------------------------------------------------------------------------
(Including Zip Code)
Account Number: ------------------------
</TABLE>
<PAGE>
GUARANTEE
The undersigned, a financial institution (including most banks, savings and
loan associations and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Program or the Stock Exchanges Medallion Program, hereby guarantees
that the undersigned will deliver to the Exchange Agent the certificates
representing the Old Notes being tendered hereby or confirmation of book-entry
transfer of such Old Notes into the Exchange Agent's account at The Depository
Trust Company, in proper form for transfer, together with any other documents
required by the Letter of Transmittal within three New York Stock Exchange
trading days after the Expiration Date.
Name of
Firm: --------------------------------------------------------------------------
Address: -----------------------------------------------------------------------
Area Code & Telephone
No.: ---------------------------------------------------------------------------
<TABLE>
<S> <C>
- --------------------------------------------
Authorized Signature
- --------------------------------------------
Name (Please Type or Print)
- --------------------------------------------
Title
- --------------------------------------------
Dated
</TABLE>
NOTE: DO NOT SEND CERTIFICATES OF OLD NOTES WITH THIS FORM. CERTIFICATES OF
OLD NOTES SHOULD BE SENT ONLY WITH A COPY OF THE PREVIOUSLY EXECUTED LETTER OF
TRANSMITTAL.
