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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported) May 7, 1999
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METAL MANAGEMENT, INC.
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(Exact Name of Registrant as Specified in its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
0-14836 94-2835068
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(Commission File Number) (I.R.S. Employer Identification No.)
500 N. Dearborn Street, Suite 405, Chicago, IL 60610
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(Address of Principal Executive Offices) (Zip Code)
(312) 645-0700
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(Registrant's Telephone Number, Including Area Code)
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ITEM 5. OTHER EVENTS.
On May 7, 1999, Metal Management, Inc., a Delaware corporation (the
"Company"), sold, in a private offering pursuant to Rule 144A under the
Securities Act of 1933, as amended, $30 million in aggregate principal amount of
its senior secured notes (the "Notes"). The Notes were issued at a 10% discount
from their stated principal amount at maturity. The Notes mature on June 15,
2004 and bear interest at the rate of 12 3/4% per annum. The net proceeds from
the offering of approximately $25.8 million were used to reduce the Company's
outstanding borrowings under its Senior Credit Facility. Amounts repaid will be
available for reborrowing, subject to the terms of the Senior Credit Facility.
In addition, as of April 27, 1999, the Company and its bank group
amended the Senior Credit Facility in order to, among other things, permit (a)
the issuance of the Notes and the guarantees of the Notes by the Company's
subsidiaries and (b) the payment of up to $9.75 million (the "Redemption
Basket") by the Company for the redemption of shares of the Company's Series A
and Series B Convertible Preferred Stock (the "Preferred Stock"). With respect
to the consent to the redemption of the Preferred Stock, the terms of the
amendment provide that the consent in connection with the payment of $6.0
million of the Redemption Basket expires if such redemptions are not completed
by October 31, 1999.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
4.1 Indenture, dated as of May 7, 1999, among the
Company, the Guarantors (as defined therein) and
Harris Trust and Savings Bank, as Trustee, including
Forms of Notes issued pursuant to such Indenture and
Form of Security Agreement.
4.2 Exchange and Registration Rights Agreement, dated as
of May 7, 1999, among the Company, the Guarantors and
BT Alex. Brown Incorporated.
10.1 Amendment No. 6 to Credit Agreement, dated as of
April 29, 1999, by and among the Company, its
subsidiaries named therein, BT Commercial Corporation
and each of the financial institutions named therein.
10.2 Purchase Agreement, dated May 5, 1999, among the
Company, its subsidiaries named therein and BT Alex.
Brown Incorporated.
99.1 Press Release, dated May 7, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
METAL MANAGEMENT, INC.
Dated: May 18, 1999 By: /s/ David A. Carpenter
_____________________________________________
David A. Carpenter
Vice President, General Counsel and Secretary
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EXHIBIT 4.1
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METAL MANAGEMENT, INC.
AND
THE GUARANTORS NAMED HEREIN
12 3/4% SENIOR SECURED NOTES DUE 2004
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INDENTURE
DATED AS OF MAY 7, 1999
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HARRIS TRUST AND SAVINGS BANK
TRUSTEE
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CROSS-REFERENCE TABLE
Trust Indenture
Act Section Indenture Section
310(a)(1)................................................ 7.10
(a)(2)................................................ 7.10
(a)(3)................................................ N.A.
(a)(4)................................................ N.A.
(a)(5)................................................ 7.10
(b)................................................... 7.10
(c)................................................... N.A.
311(a)................................................... 7.11
(b)................................................... 7.11
(c)................................................... N.A.
312(a)................................................... 2.05
(b)................................................... 13.03
(c)................................................... 13.03
313(a)................................................... 7.06
(b)(1)................................................ N.A.
(b)(2)................................................ 7.07
(c)................................................... 7.06; 13.02
(d)................................................... 7.06
314(a)................................................... 4.03; 13.02
(b)................................................... 11.02
(c)(1)................................................ 13.04
(c)(2)................................................ 13.04
(c)(3)................................................ N.A.
(e)................................................... 13.05
(f)................................................... N.A.
315(a)................................................... 7.01
(b)................................................... 7.05,13.02
(c)................................................... 7.01
(d)................................................... 7.01
(e)................................................... 6.11
316(a)(last sentence).................................... 2.09
(a)(1)(A)............................................. 6.05
(a)(1)(B)............................................. 6.04
(a)(2)................................................ N.A.
(b)................................................... 6.07
(c)................................................... N.A.
317(a)(1)................................................ 6.08
(a)(2)................................................ 6.09
(b)................................................... 2.04
318(a)................................................... 13.01
(b)................................................... N.A.
(c)................................................... 13.01
N.A. means not applicable.
* This Cross-Reference Table is not part of the Indenture.
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TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.......................................................... 1
SECTION 1.02. OTHER DEFINITIONS.................................................... 15
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.................... 16
SECTION 1.04. RULES OF CONSTRUCTION................................................ 16
ARTICLE 2
THE NOTES
SECTION 2.01. FORM AND DATING...................................................... 17
SECTION 2.02. EXECUTION AND AUTHENTICATION......................................... 19
SECTION 2.03. REGISTRAR AND PAYING AGENT........................................... 19
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.................................. 19
SECTION 2.05. HOLDER LISTS......................................................... 20
SECTION 2.06. TRANSFER AND EXCHANGE................................................ 20
SECTION 2.07. REPLACEMENT NOTES.................................................... 28
SECTION 2.08. OUTSTANDING NOTES.................................................... 29
SECTION 2.09. TREASURY NOTES....................................................... 29
SECTION 2.10. TEMPORARY NOTES...................................................... 29
SECTION 2.11. CANCELLATION......................................................... 29
SECTION 2.12. DEFAULTED INTEREST................................................... 30
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE................................................... 30
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.................................... 30
SECTION 3.03. NOTICE OF REDEMPTION................................................. 31
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION....................................... 31
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.......................................... 32
SECTION 3.06. NOTES REDEEMED IN PART............................................... 32
SECTION 3.07. OPTIONAL REDEMPTION.................................................. 32
SECTION 3.08. MANDATORY REDEMPTION................................................. 32
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF AVAILABLE PROCEEDS AMOUNT........ 32
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ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.................................................... 34
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY..................................... 35
SECTION 4.03. REPORTS............................................................. 35
SECTION 4.04. COMPLIANCE CERTIFICATE.............................................. 35
SECTION 4.05. PAYMENT OF TAXES AND OTHER CLAIMS; MAINTENANCE OF
PROPERTIES; INSURANCE; BOOKS AND RECORDS......................... 36
SECTION 4.06. STAY, EXTENSION AND USURY LAWS...................................... 37
SECTION 4.07. RESTRICTED PAYMENTS................................................. 37
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES..................................................... 39
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK....... 40
SECTION 4.10. ASSET SALES......................................................... 42
SECTION 4.11. TRANSACTIONS WITH AFFILIATES........................................ 44
SECTION 4.12. LIENS............................................................... 45
SECTION 4.13. BUSINESS ACTIVITIES................................................. 45
SECTION 4.14. CORPORATE EXISTENCE................................................. 45
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.......................... 45
SECTION 4.16. LIMITATION ON INCURRENCE OF PARI PASSU INDEBTEDNESS................. 47
SECTION 4.17. SALE AND LEASEBACK TRANSACTIONS..................................... 48
SECTION 4.18. ADDITIONAL SUBSIDIARY GUARANTEES.................................... 48
SECTION 4.19. LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF WHOLLY
OWNED RESTRICTED SUBSIDIARIES.................................... 49
SECTION 4.20. [RESERVED].......................................................... 49
SECTION 4.21. IMPAIRMENT OF SECURITY INTEREST..................................... 49
ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS............................ 49
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED................................... 50
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT................................................... 50
SECTION 6.02. ACCELERATION........................................................ 52
SECTION 6.03. OTHER REMEDIES...................................................... 53
SECTION 6.04. WAIVER OF PAST DEFAULTS............................................. 53
SECTION 6.05. CONTROL BY MAJORITY................................................. 53
SECTION 6.06. LIMITATION ON SUITS................................................. 53
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT....................... 54
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.......................................... 54
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SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.................................... 54
SECTION 6.10. PRIORITIES.......................................................... 55
SECTION 6.11. UNDERTAKING FOR COSTS............................................... 55
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE................................................... 55
SECTION 7.02. RIGHTS OF TRUSTEE................................................... 56
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE........................................ 57
SECTION 7.04. TRUSTEE'S DISCLAIMER................................................ 57
SECTION 7.05. NOTICE OF DEFAULTS.................................................. 58
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.......................... 58
SECTION 7.07. COMPENSATION AND INDEMNITY.......................................... 58
SECTION 7.08. REPLACEMENT OF TRUSTEE.............................................. 59
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.................................... 60
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION....................................... 60
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY................... 60
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE............ 60
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE...................................... 61
SECTION 8.03. COVENANT DEFEASANCE................................................. 61
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.......................... 61
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN
TRUST; OTHER MISCELLANEOUS PROVISIONS............................ 63
SECTION 8.06. REPAYMENT TO COMPANY................................................ 63
SECTION 8.07. REINSTATEMENT....................................................... 63
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES................................. 64
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.................................... 64
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT................................. 66
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS................................... 66
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.................................... 67
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC..................................... 67
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ARTICLE 10
SUBSIDIARY GUARANTEES
SECTION 10.01. SUBSIDIARY GUARANTEES............................................... 67
SECTION 10.02. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEES..................... 68
SECTION 10.03. GUARANTORS MAY CONSOLIDATE, ETC. ON CERTAIN TERMS................... 68
SECTION 10.04. RELEASES FOLLOWING SALE OF ASSETS................................... 69
SECTION 10.05. LIMITATION ON GUARANTOR LIABILITY................................... 69
SECTION 10.06. "TRUSTEE" TO INCLUDE PAYING AGENT................................... 70
ARTICLE 11
SECURITY DOCUMENTS
SECTION 11.01. COLLATERAL AND SECURITY DOCUMENTS................................... 70
SECTION 11.02. RECORDING, ETC...................................................... 70
SECTION 11.03. CERTAIN DISPOSITIONS OF COLLATERAL WITHOUT RELEASE.................. 71
SECTION 11.04. RELEASE OF COLLATERAL............................................... 72
SECTION 11.05. ADDITIONAL COLLATERAL............................................... 72
SECTION 11.06. TRUST INDENTURE ACT REQUIREMENTS.................................... 74
SECTION 11.07. SUITS TO PROTECT THE COLLATERAL..................................... 74
SECTION 11.08. PURCHASER PROTECTED................................................. 74
SECTION 11.09. POWERS EXERCISABLE BY RECEIVER OR TRUSTEE........................... 75
SECTION 11.10. [RESERVED].......................................................... 75
SECTION 11.11. DETERMINATIONS RELATING TO COLLATERAL............................... 75
SECTION 11.12. RENEWAL AND REFUNDING............................................... 75
SECTION 11.13. RELEASE UPON TERMINATION OF THE COMPANY'S
OBLIGATIONS...................................................... 75
SECTION 11.14. CERTAIN ACTIONS BY TRUSTEE.......................................... 76
ARTICLE 12
APPLICATION OF TRUST MONEYS
SECTION 12.01. "TRUST MONEYS" DEFINED.............................................. 76
SECTION 12.02. RETIREMENT OF SECURITIES............................................ 77
SECTION 12.03. POWERS EXERCISABLE NOTWITHSTANDING EVENT OF DEFAULT................. 78
SECTION 12.04. POWERS EXERCISABLE BY COLLATERAL AGENT OR RECEIVER.................. 78
SECTION 12.05. DISPOSITION OF NOTES RETIRED....................................... 78
SECTION 12.06. INVESTMENT OF TRUST MONEYS.......................................... 78
ARTICLE 13
MISCELLANEOUS
SECTION 13.01. TRUST INDENTURE ACT CONTROLS........................................ 79
SECTION 13.02. NOTICES............................................................. 79
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SECTION 13.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES....... 80
SECTION 13.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.................. 80
SECTION 13.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION....................... 80
SECTION 13.06. RULES BY TRUSTEE AND AGENTS......................................... 81
SECTION 13.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS..................................................... 81
SECTION 13.08. GOVERNING LAW....................................................... 81
SECTION 13.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS....................... 81
SECTION 13.10. SUCCESSORS.......................................................... 81
SECTION 13.11. SEVERABILITY........................................................ 81
SECTION 13.12. COUNTERPART ORIGINALS............................................... 81
SECTION 13.13. TABLE OF CONTENTS; HEADINGS; ETC.................................... 82
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EXHIBITS
Exhibit A-1 Form of Note
Exhibit A-2 Form of Regulation S Temporary Global Note
Exhibit B-1 Form of Certificate for Exchange or Registration of Transfer
from U.S. Global Note or IAI Global Note to Regulation S
Global Note
Exhibit B-2 Form of Certificate for Exchange or Registration of Transfer
from Regulation S Global Note to U.S. Global Note or IAI
Global Note
Exhibit B-3 Form of Certificate for Exchange or Registration of Transfer
of Definitive Notes
Exhibit B-4 Form of Certificate for Exchange or Registration of Transfer
from U.S. Global Note or IAI Global Note or Regulation S
Permanent Global Note to Definitive Note
Exhibit B-5 Form of Certificate for Exchange or Registration of Transfer
from Definitive Note to U.S. Global Note or IAI Global Note or
Regulation S Permanent Global Note
Exhibit C Subsidiary Guarantee
Exhibit D Form of Certificate from Institutional Accredited Investors
Exhibit E Form of Security Agreement
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INDENTURE dated as of May 7, 1999 among Metal Management,
Inc., a Delaware corporation (the "Company"); Aerospace Metals, Inc., American
Scrap Processing, Inc., C Shredding Corp., California Metals Recycling, Inc.,
CIM Trucking, Inc., Cometco Corp., Cozzi Building Corporation, Cozzi Iron &
Metal, Inc., EMCO Trading, Inc., Ferrex Trading Corporation, Firma, Inc., Firma
Plastic Co., Inc., FPX, Inc., Houston Compressed Steel Corp., HouTex Metals
Company, Inc., The Isaac Corporation, P. Joseph Iron & Metal, Inc., Kankakee
Scrap Corporation, Kimerling Acquisition Corporation, Mac Leod Metals Co., Metal
Management Arizona, Inc., Metal Management Gulf Coast, Inc., Metal Management
Pittsburgh, Inc., Metal Management Realty, Inc., Michael Schiavone & Sons, Inc.,
Naporano Iron & Metal Co., Newell Recycling West, Inc., NIMCO Shredding Co., 138
Scrap Inc., PerlCo, L.L.C., Proler Southwest Inc., Proler Steelworks L.L.C.,
Reserve Iron & Metal Limited Partnership; R&P Holdings, Inc., Salt River
Recycling, L.L.C., Scrap Processing, Inc., Torrington Scrap Company, Trojan
Trading Co., and USA Southwestern Carrier, Inc. and Harris Trust and Savings
Bank, an Illinois banking corporation, as trustee (the "Trustee").
The Company, the Guarantors (as defined in Section 1.01
hereof) and the Trustee agree as follows for the benefit of each other and for
the equal and ratable benefit of the Holders of the Senior Secured Notes due
2004 (the "Secured Notes"), the Private Exchange Notes and the Senior Secured
Exchange Notes due 2004 (the "Exchange Notes" and, together with the Secured
Notes and the Private Exchange Notes (together treated as one class in this
Indenture), the "Notes" as used herein):
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"Acquired Debt" means, with respect to any specified Person,
(i) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Restricted Subsidiary of such specified Person,
including, without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Restricted Subsidiary of such specified Person, and (ii) Indebtedness secured at
the time of acquisition thereof by a Lien encumbering any asset acquired by such
specified Person.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise;
provided that beneficial ownership of 10% or more of the voting securities of a
Person shall be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Agent Members" means members of, or participants in, the
Depositary.
"Applicable Procedures" means applicable procedures of the
Depositary, Euroclear or Cedel Bank, as the case may be.
"Asset Sale" means:
(i) the sale, conveyance, transfer, assignment or other
disposition (whether in a single transaction or a series of related
transactions) of property or assets (including by way of a sale and
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leaseback) of the Company or any Restricted Subsidiary, whether owned
on the date of this Indenture or subsequently acquired, to any Person
other than the Company or any Restricted Subsidiary of the Company
(each referred to in this definition as a "disposition") or
(ii) the issuance or sale of Equity Interests of any
Restricted Subsidiary (other than directors' qualifying shares) to any
Person other than the Company or any Restricted Subsidiary of the
Company (whether in a single transaction or a series of related
transactions), in each case set forth in these clauses (i) and (ii),
other than:
(a) a disposition of Cash Equivalents or tangible
personal property (including obsolete or redundant equipment)
in the ordinary course of business of the Company or the
applicable Restricted Subsidiary;
(b) the disposition of all or substantially all of
the assets of the Company in a manner permitted pursuant to
the provisions of Section 5.01 hereof or any disposition that
constitutes a Change of Control pursuant to this Indenture;
(c) any disposition that is a Restricted Payment or
Permitted Investment that is not prohibited under the
provisions of Section 4.07 hereof; and
(d) any disposition, or related series of
dispositions, of assets with an aggregate Fair Market Value of
less than $1.5 million.
"Attributable Debt" means, in respect of a sale and leaseback
transaction, at the time of determination, the present value (discounted at the
rate of interest implicit in such transaction, determined in accordance with
GAAP) of the obligation of the lessee for net rental payments during the
remaining term of the lease included in such sale and leaseback transaction
(including any period for which such lease has been extended or may, at the
option of the lessor, be extended).
"Bankruptcy Law" means Title 11, U.S. Code or any similar
federal or state law for the relief of debtors.
"Board of Directors" means, as to any Person, the board of
directors of such Person or any duly authorized committee thereof.
"Board Resolution" means with respect to any Person, a copy of
a resolution certified by the Secretary or an Assistant Secretary of such
Person, to have been duly adopted by the Board of Directors of such Person and
to be in full force and effect on the date of such certification, and delivered
to the Trustee.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any
determination thereof is to be made, the amount of the liability in respect of a
capital lease that would at such time be required to be capitalized on a balance
sheet of the lessee thereof in accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation,
corporate stock, (ii) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership, partnership
interests (whether general or limited) and (iv) any other interest or
participation that confers on a Person the right to receive a share of the
profits and
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losses of, or distributions of assets of, the issuing Person (excluding
"earn-out" payments pursuant to the acquisition agreements of the Company or any
Subsidiary).
"Cash Equivalents" means (i) United States dollars, (ii)
securities issued or directly and fully guaranteed or insured by the United
States government or any agency or instrumentality thereof having maturities of
not more than one year from the date of acquisition, (iii) certificates of
deposit and time deposits with maturities of one year or less from the date of
acquisition, bankers' acceptances with maturities not exceeding one year and
overnight bank deposits, in each case with any commercial bank having combined
capital and surplus in excess of $200.0 million (or the foreign currency
equivalent thereof) and whose short-term commercial paper rating, or that of its
parent holding company, is at least "A-1" or the equivalent by S&P and at least
"Prime-1" or the equivalent by Moody's, (iv) repurchase obligations with a term
of not more than seven days for underlying securities of the types described in
clauses (ii) and (iii) above entered into with any financial institution meeting
the qualifications specified in clause (iii) above, (v) shares of money market
or similar funds which comply with Rule 2a-7 or any successor rule of the SEC
and (vi) commercial paper rated A-1 or higher by S&P or P-1 by Moody's and in
each case maturing within one year after the date of acquisition.
"Change of Control" means the occurrence of any of the
following: (i) the sale, lease or transfer, in one or a series of related
transactions (other than by merger or consolidation), of all or substantially
all of the assets of the Company and its Restricted Subsidiaries, taken as a
whole, to any "person" (as such term is used in Section 13(d)(3) of the Exchange
Act); (ii) the adoption of a plan relating to the liquidation or dissolution of
the Company; (iii) (A) the acquisition by any Person or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act), other than the
Principals, of a direct or indirect interest in more than 35% of the voting
power of the Voting Stock of the Company by way of acquisition, merger or
consolidation or otherwise and (B) the Principals beneficially owning, directly
or indirectly, a lesser percentage of the voting power of the Voting Stock of
the Company than such Person or group and the Principals not having the right or
ability by voting power, contract or otherwise to elect or designate for
election a majority of the Board of Directors of the Company; (iv) a majority of
the members of the Board of Directors of the Company ceasing to be Continuing
Directors; or (v) any Person or group effecting a "Rule 13e-3 transaction"
(within the meaning of Rule 13e-3 under the Exchange Act) with respect to the
Company.
"Collateral" means, collectively, all of the property and
assets (including, without limitation, Trust Moneys) that are from time to time
subject to the Lien of the Security Documents, including the Liens, if any,
required pursuant to the provisions of Section 4.16 and otherwise required
pursuant to the provisions of this Indenture.
"Company" has the meaning set forth in the preamble hereto.
"Company Preferred Stock" means the Series A Convertible
Preferred Stock and the Series B Convertible Preferred Stock of the Company
outstanding on the date hereof.
"Consolidated Cash Flow" means, with respect to any Person for
any period, the Consolidated Net Income of such Person for such period plus (i)
an amount equal to any extraordinary or nonrecurring loss plus any net loss
realized, in each case, in connection with all Asset Sales (to the extent such
losses were deducted in computing such Consolidated Net Income), plus (ii)
provision for taxes based on income or profits of such Person and its Restricted
Subsidiaries for such period, to the extent that such provision for taxes was
deducted in computing such Consolidated Net Income, plus (iii) consolidated
interest expense of such Person and its Restricted Subsidiaries for such period,
whether paid or accrued and whether or not capitalized (including, without
limitation, amortization of original issue discount, non-cash interest payments,
the interest component of any deferred payment obligations, the interest
component of all payments associated with Capital Lease Obligations, imputed
interest with respect to Attributable Debt, commissions, discounts and other
fees and charges in-
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curred in respect of letter of credit or bankers' acceptance financings, and net
payments (if any) pursuant to Hedging Obligations), to the extent that any such
expense was deducted in computing such Consolidated Net Income, plus (iv) any
Consolidated Non-Cash Charges that were deducted in computing such Consolidated
Net Income, less (v) any non-cash items increasing Consolidated Net Income for
such period and plus (vi) any cash dividends received by the Company or any of
its Restricted Subsidiaries which are paid by an Unrestricted Subsidiary.
"Consolidated Net Income" means, with respect to any Person
for any period, the aggregate of the Net Income of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; provided that (i) the Net Income (but not loss) of any
Person that is not a Restricted Subsidiary or that is accounted for by the
equity method of accounting shall be included only to the extent of the amount
of dividends or distributions paid in cash to the referent Person or a Wholly
Owned Restricted Subsidiary thereof, (ii) the Net Income of any Restricted
Subsidiary shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Restricted Subsidiary of that Net
Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Restricted Subsidiary or its stockholders, (iii) the cumulative effect of a
change in accounting principles shall be excluded and (iv) the Net Income of any
Unrestricted Subsidiary shall be excluded, whether or not distributed to the
Company or one of its Subsidiaries.
"Consolidated Net Worth" means, with respect to any Person as
of any date, the total of the following amounts of the Person and its Restricted
Subsidiaries, determined on a consolidated basis in accordance with GAAP as of
such date: (i) the par or stated value of all outstanding Capital Stock of the
Person plus (ii) paid-in capital or capital surplus relating to such Capital
Stock plus (iii) any retained earnings or earned surplus less (A) any
accumulated deficit and (B) any amounts attributable to Disqualified Stock.
"Consolidated Non-Cash Charges" means, with respect to any
Person, for any period, the aggregate depreciation and amortization (including
(a) amortization of goodwill, (b) any incremental increase in amortization of
account inventory resulting from write-ups of such inventory in connection with
the purchase accounting treatment of an acquisition and (c) amortization of
other intangibles and other noncash charges or amortization of a prepaid cash
expense that was paid in a prior period) of such Person and its Restricted
Subsidiaries for such period, in each case, determined on a consolidated basis
in accordance with GAAP.
"Continuing Directors" means, as of any date of determination,
any member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date of this Indenture or (ii) was nominated for
election or elected to such Board of Directors with, or whose election to such
Board of Directors was approved by, the affirmative vote of a majority of the
Continuing Directors who were members of such Board of Directors at the time of
such nomination or election.
"Corporate Trust Office of the Trustee" shall be at the
address of the Trustee specified in Section 13.02 hereof; provided, however, for
the purpose of presentation of Notes for payment, transfer or exchange and
maintenance of the registration books, such term shall mean the office at which
an affiliate of the Trustee conducts a corporate agency business in New York,
located at 88 Pine Street, New York, New York 10005, or such other address in
New York as to which the Trustee may give notice to the Company.
"Default" means any event that is or with the passage of time
or the giving of notice or both would be, an Event of Default.
"Definitive Notes" means Notes that are in the form of the
Notes attached hereto as Exhibit A-1, that do not include the information called
for by footnotes 1 and 2 thereof.
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"Depositary" means, with respect to the Notes issuable or
issued in whole or in part in global form, the Person specified in Section 2.03
hereof as the Depositary with respect to the Notes, until a successor shall have
been appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depositary" shall mean or include such successor.
"Disqualified Stock" means any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the Holder thereof, in whole or in part, on or
prior to the date that is 91 days after the date on which the Notes mature.
"Equity Interests" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any debt
security that is convertible into, or exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Notes" means the Company's Senior Secured Exchange
Notes due 2004 issuable in exchange for the Company's Senior Secured Notes due
2004, substantially in the form of the Note attached hereto as Exhibit A-1 (but
without including the text of paragraph 18 thereto).
"Exchange Offer" means the offer that may be made by the
Company pursuant to the Registration Rights Agreement to issue and exchange the
Exchange Notes for the Secured Notes.
"Existing Indebtedness" means Indebtedness of the Company and
its Restricted Subsidiaries (other than Indebtedness under the Senior Credit
Facility) in existence on the date of this Indenture, until such amounts are
repaid.
"Fair Market Value" means, with respect to any asset or
property, the price which could be negotiated in an arm's-length, free market
transaction, in cash, between an informed and willing seller and an informed and
willing and able buyer, neither of whom is under undue pressure or compulsion to
complete the transaction. Fair Market Value shall be determined by the Board of
Directors of the Company acting reasonably and in good faith and, in the case of
Fair Market Value that exceeds $5.0 million, shall be evidenced by a Board
Resolution delivered to the Trustee; provided, however, that in the case of any
determination of Fair Market Value for purposes of the covenant described under
Section 4.07 hereof, if the aggregate Fair Market Value could be reasonably
likely to exceed $10.0 million, the Fair Market Value shall be determined by an
accounting, appraisal or investment banking firm of nationally recognized
standing that is, in the reasonable and good faith judgment of the Board of
Directors of the Company, qualified to perform the task for which such firm has
been engaged.
"Fixed Charges" means, with respect to any Person for any
period, the sum of (i) the consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued (including,
without limitation, amortization of original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease Obligations,
imputed interest with respect to Attributable Debt, commissions, discounts and
other fees and charges incurred in respect of letter of credit or bankers'
acceptance financings, and net payments (if any) pursuant to Hedging
Obligations, but excluding amortization of deferred financing costs) and (ii)
the consolidated interest expense of such Person and its Restricted Subsidiaries
that was capitalized during such period and (iii) any interest expense on
Indebtedness of another Person that is Guaranteed by such Person or one of its
Restricted Subsidiaries or secured by a Lien on assets of such Person or one of
its Restricted Subsidiaries (whether or not such Guarantee or Lien is called
upon) and (iv) all cash dividend payments (and non-cash dividend pay-
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<PAGE> 13
ments in the case of a Person that is a Restricted Subsidiary) on any series of
Preferred Stock of such Person, in each case, on a consolidated basis and in
accordance with GAAP.
"Fixed Charge Coverage Ratio" means, with respect to any
Person for any period, the ratio of the Consolidated Cash Flow of such Person
for such period to the Fixed Charges of such Person for such period. In the
event that the Company or any of its Restricted Subsidiaries incurs, assumes,
Guarantees or redeems any Indebtedness (other than revolving credit borrowings)
or issues Preferred Stock subsequent to the commencement of the period for which
the Fixed Charge Coverage Ratio is being calculated but prior to the date on
which the event for which the calculation of the Fixed Charge Coverage Ratio is
made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be
calculated giving pro forma effect to such incurrence, assumption, Guarantee or
redemption of Indebtedness, or such issuance or redemption of Preferred Stock,
as if the same had occurred at the beginning of the applicable four-quarter
reference period. In addition, for purposes of making the computation referred
to above, (i) acquisitions that have been consummated by the Company or any of
its Restricted Subsidiaries, including through mergers or consolidations and
including any related financing transactions, during the four-quarter reference
period or subsequent to such reference period and on or prior to the Calculation
Date shall be deemed to have occurred on the first day of the four-quarter
reference period and Consolidated Cash Flow and Fixed Charges for such reference
period shall be calculated giving pro forma effect (excluding any pro forma
increase in revenues other than historical revenue of the acquired business, but
including any pro forma expense and cost reductions, in each case calculated on
a basis consistent with Regulation S-X under the Securities Act) to such
acquisition and related financing transactions, (ii) the Consolidated Cash Flow
attributable to discontinued operations, as determined in accordance with GAAP,
and operations or businesses disposed of prior to the Calculation Date,
calculated giving pro forma effect to such disposition, shall be excluded, and
(iii) the Fixed Charges attributable to discontinued operations, as determined
in accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, but only to the extent that the obligations
giving rise to such Fixed Charges will not be obligations of the referent Person
or any of its Restricted Subsidiaries following the Calculation Date.
"Foreign Subsidiaries" means any Subsidiary of the Company
incorporated or organized under the laws of a jurisdiction outside of the United
States of America and which, individually or together with all other such
Subsidiaries outside of the United States of America, represents less than 10%
of the assets or revenues of the Company and its Restricted Subsidiaries for any
period, on a consolidated basis and determined in accordance with GAAP.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect on the date of this Indenture.
"Global Notes" means, individually and collectively, the
Regulation S Temporary Global Note, the Regulation S Permanent Global Note, the
U.S. Global Note and the IAI Global Note.
"Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America for the payment of which
guarantee or obligations the full faith and credit of the United States is
pledged.
"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
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<PAGE> 14
"Guarantors" means (i) each of Aerospace Metals, Inc.,
American Scrap Processing, Inc., C Shredding Corp., California Metals Recycling,
Inc., CIM Trucking, Inc., Cometco Corp., Cozzi Building Corporation, Cozzi Iron
& Metal, Inc., EMCO Trading, Inc., Ferrex Trading Corporation, Firma, Inc.,
Firma Plastic Co., Inc., FPX, Inc., Houston Compressed Steel Corp., HouTex
Metals Company, Inc., The Isaac Corporation, P. Joseph Iron & Metal, Inc.,
Kankakee Scrap Corporation, Kimerling Acquisition Corporation, Mac Leod Metals
Co., Metal Management Arizona, Inc., Metal Management Gulf Coast, Inc., Metal
Management Pittsburgh, Inc., Metal Management Realty, Inc., Michael Schiavone &
Sons, Inc., Naporano Iron & Metal Co., Newell Recycling West, Inc., NIMCO
Shredding Co., 138 Scrap Inc., PerlCo, L.L.C., Proler Southwest Inc., Proler
Steelworks L.L.C., R&P Holdings, Inc., Salt River Recycling, L.L.C., Scrap
Processing, Inc., Torrington Scrap Company, Trojan Trading Co., USA Southwestern
Carrier, Inc. and Reserve Iron & Metal Limited Partnership; and (ii) each other
direct or indirect Restricted Subsidiary of the Company that executes a
Subsidiary Guarantee or supplemental indenture in accordance with the provisions
of this Indenture, and their respective successors and assigns.
"Hedging Obligations" means, with respect to any Person, the
net obligations of such Person under (i) currency exchange or interest rate swap
agreements, currency exchange or interest rate cap agreements and currency
exchange or interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in currency
exchange or interest rates or commodity prices.
"Holder" means a holder of any of the Notes.
"Indebtedness" means, with respect to any Person, any
indebtedness of such Person, whether or not contingent, in respect of borrowed
money or evidenced by bonds, notes, debentures or similar instruments or letters
of credit (or reimbursement agreements in respect thereof) or banker's
acceptances or representing Capital Lease Obligations or the maximum fixed
redemption or repurchase price of Redeemable Interests of such Person at the
time of determination or the balance deferred and unpaid of the purchase price
of any property (other than contingent or "earnout" payment obligations) or
representing any net Hedging Obligations, except any such balance that
constitutes an accrued expense or trade payable, if and to the extent any of the
foregoing indebtedness (other than letters of credit and Hedging Obligations)
would appear as a liability upon a balance sheet of such Person prepared in
accordance with GAAP as well as all indebtedness of others secured by a Lien on
any asset of such Person (whether or not such indebtedness is assumed by such
Person) and, to the extent not otherwise included, the Guarantee by such Person
of any indebtedness of any other Person.
"Indenture" means this Indenture, as amended or supplemented
from time to time.
"Institutional Accredited Investor" means an institution that
is an "accredited investor" as that term is defined in Rule 501(a)(1), (2), (3)
or (7) under the Securities Act.
"Intercreditor Agreement" means the intercreditor agreement
between BT Commercial Corporation, as agent for the lenders under the Senior
Credit Facility and the Trustee, in its capacity as such and on behalf of the
Holders of the Notes, and acknowledged by the Company and the Guarantors, dated
the date hereof, as such is amended, supplemented or otherwise modified from
time to time in accordance with the provisions hereof and thereof.
"Investments" means, with respect to any Person, all
investments by such Person in other Persons (including Affiliates) in the forms
of direct or indirect loans (including Guarantees of Indebtedness or other
obligations), advances or capital contributions (excluding commission, travel
and similar advances to officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities, together with all items that are or would
be classified as investments on a balance sheet prepared in accordance with
GAAP. If the Company or any Subsidiary of the
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<PAGE> 15
Company sells or otherwise disposes of any Equity Interests of any direct or
indirect Restricted Subsidiary of the Company such that, after giving effect to
any such sale or disposition, such Person is no longer a Subsidiary of the
Company, the Company shall be deemed to have made an Investment on the date of
any such sale or disposition equal to the Fair Market Value of the Equity
Interests of such Subsidiary not sold or disposed of. The amount of any
Investment shall be the original cost of such Investment plus the cost of all
additions thereto, without any adjustments for increases or decreases in value,
or write-ups, write-downs or write-offs with respect to such Investment.
"Leases" mean any and all agreements for the use, enjoyment or
occupancy of the Real Property and all buildings, improvements and fixtures of
every kind or nature situated thereon.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in the City of New York, New York or Chicago, Illinois are
authorized by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday.
"Lien" means, with respect to any asset or property, any
mortgage, deed of trust, lien (statutory or other), pledge, charge, security
interest, lease, easement, restriction, covenant or encumbrance of any kind or
nature in respect of such asset or property, whether or not filed, recorded or
otherwise perfected under applicable law (including any conditional sale or
other title retention agreement, any lease in the nature thereof, any option or
other agreement to sell or give a security interest under the Uniform Commercial
Code (or equivalent statutes) of any relevant jurisdiction).
"Liquidated Damages" means all liquidated damages then owing
pursuant to Section 5 of the Registration Rights Agreement.
"Loan Reductions" means permanent commitment reductions with
respect to revolving loans under the Senior Credit Facility (or any Permitted
Refinancing Indebtedness relating thereto) that have been made since the date
hereof.
"Maturity" means, with respect to any Note, the date on which
the principal of such Note becomes due and payable as provided in such Note or
this Indenture, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Moody's" means Moody's Investor Service, Inc. and its
successors.
"Mortgage" means each mortgage instrument (or deed of trust)
and assignment of leases and rents, substantially in the form of those delivered
pursuant to the provisions of the Senior Credit Facility, with such
modifications as shall be appropriate (i) to conform to applicable local laws or
customs regarding Real Property in the jurisdiction where such instrument is to
be recorded and (ii) to grant to the Trustee the Security Interest in the Real
Property encumbered by such instrument as contemplated by, and consistent with,
the provisions of this Indenture and the Security Documents, as the same may be
amended, supplemented or otherwise modified in accordance with the terms hereof
and thereof.
"Net Income" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of Preferred Stock dividends, excluding, however, (i) any
gain (but not loss), together with any related provision for taxes on such gain
(but not loss), realized in connection with (a) any Asset Sale (including,
without limitation, dispositions pursuant to sale and leaseback transactions) or
(b) the disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any
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<PAGE> 16
extraordinary or nonrecurring gain (but not loss), together with any related
provision for taxes on such extraordinary or nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by
the Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
(i) the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and brokerage and sales
commissions) and any relocation expenses incurred as a result thereof, (ii)
taxes paid or payable as a result thereof (after taking into account any
available tax credits or deductions and any tax sharing arrangements), and (iii)
any reserve for adjustment in respect of the sale price of such asset or assets
established in accordance with GAAP.
"Non-Recourse Debt" means Indebtedness (i) as to which neither
the Company nor any of its Restricted Subsidiaries (a) provides credit support
of any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor
or otherwise), or (c) constitutes the lender; and (ii) no default with respect
to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity; and (iii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of the
Company or any of its Restricted Subsidiaries.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officer" means, with respect to any Person, the Chairman of
the Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer,
the Controller, the Secretary or any Vice-President of such Person.
"Officer's Certificate" means a certificate signed on behalf
of the Company by the principal executive officer, the principal financial
officer, the treasurer or the principal accounting officer of the Company, that
meets the requirements set forth in Section 13.05 hereof.
"Opinion of Counsel" means a written opinion from legal
counsel who is reasonably acceptable to the Trustee, that meets the requirements
of Section 13.05 hereof. The counsel may be an employee of or counsel to the
Company, any Subsidiary of the Company or the Trustee.
"Pari Passu Indebtedness" means Indebtedness that ranks pari
passu in right of payment to the Notes.
"Permitted Investments" means (a) any Investment in the
Company or in a Restricted Subsidiary of the Company; (b) any Investment in cash
and Cash Equivalents; (c) any Investment by the Company or any Restricted
Subsidiary of the Company in a Person, if as a result of such Investment (A)
such Person becomes a Restricted Subsidiary of the Company or (B) such Person,
in one transaction or a series of related transactions, is merged, consolidated
or amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Restricted Subsidiary of the
Company; (d) any Restricted Investment made as a result of the receipt of
consideration not constituting cash or Cash Equivalents from an Asset Sale that
was made pursuant to and in compliance with the provisions set forth in Section
4.10 hereof; (e) any Investment existing on the date of this Indenture, and any
renewals or replacements thereof; (f) any Investment by Restricted Subsidiaries
in other Restricted Subsidiaries and Investments by Subsidiaries that are not
Re-
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<PAGE> 17
stricted Subsidiaries in other Subsidiaries that are not Restricted
Subsidiaries; (g) any Investment acquired or made by the Company or any of its
Restricted Subsidiaries (A) in exchange for any other Investment or receivable
held by the Company or any such Restricted Subsidiary in connection with or as a
result of a bankruptcy, workout, reorganization or recapitalization of the
issuer of such other Investment or receivable or (B) as a result of a
foreclosure by the Company or any of its Restricted Subsidiaries with respect to
any secured Investment or other transfer of title with respect to any secured
Investment in default; (h) Hedging Obligations; (i) any acquisition of assets,
Equity Interests or other securities by the Company for consideration consisting
of common Equity Interests of the Company; (j) loans and advances to officers,
directors and employees for business related travel expenses, moving expenses
and other similar expenses, in each case, incurred in the ordinary course of
business; (k) Investments the payment for which consists exclusively of Equity
Interests (exclusive of Disqualified Stock) of the Company; (l) repurchases of
Notes by the Company or any Restricted Subsidiary in open market purchase
transactions; (m) Investments not to exceed $15.0 million in the aggregate
outstanding at any time in Unrestricted Subsidiaries or Permitted Joint
Ventures; (n) any Investment by the Company or any Restricted Subsidiary in any
of its suppliers in the form of "take or pay" or "requirements" contracts
entered into by the Company or such Restricted Subsidiary in the ordinary course
of business; and (o) the making of other Investments not to exceed $15.0 million
in the aggregate at any time outstanding.
"Permitted Joint Venture" means, with respect to any Person,
any corporation, partnership, limited liability company or other business entity
of which at least 25% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more of the other
Subsidiaries of that Person (or a combination thereof).
"Permitted Liens" means (i) with respect to Collateral other
than Real Property, "Permitted Liens" as defined in the Security Agreement and
(ii) with respect to Real Property which may be pledged as Collateral in
accordance with the provisions of Section 4.16 of this Indenture, (a) "Permitted
Liens" as defined in, and solely to the extent and for so long as permitted with
respect to such Real Property by, the Senior Credit Facility and the security
documents securing the Senior Bank Debt (in each case, as in effect from time to
time in accordance with the provisions thereof) and, at such time as the Senior
Credit Facility shall no longer be in effect and the Obligations thereunder
shall have been paid in full (whether pursuant to its terms or otherwise), as
the same shall have been in effect on the date immediately preceding the date on
which the Senior Credit Facility shall have been so terminated, (b) the Security
Interests created pursuant to the Security Documents and (c) Prior Liens of the
type described in clause (ii) of the definition of "Prior Liens."
"Permitted Refinancing Indebtedness" means any Indebtedness of
the Company or any of its Restricted Subsidiaries issued in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries;
provided that: (i) the principal amount (or accreted value, if applicable) of
such Permitted Refinancing Indebtedness does not exceed the principal amount (or
accreted value, if applicable) of the Indebtedness so extended, refinanced,
renewed, replaced, defeased or refunded (plus the amount of any premium required
to be paid in connection therewith and plus reasonable expenses incurred in
connection therewith); (ii) such Permitted Refinancing Indebtedness has a final
maturity date no earlier than the final maturity date of, and has a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; (iii) if the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is subordinated in right of payment to
the Notes, such Permitted Refinancing Indebtedness has a final maturity date no
earlier than the final maturity date of, and is subordinated in right of payment
to, the Notes on terms at least as favorable to the Holders of Notes as those
contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness
is incurred either by the Company or by the Restricted Subsidiary who is the
obligor on the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded.
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<PAGE> 18
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
"Pledgor" means each of the Company and its Subsidiaries
existing on the date hereof and each other Guarantor that becomes a pledgor,
grantor, assignor, mortgagor, transferor or debtor under any Security Document.
"Preferred Stock", as to any Person, means any Equity Interest
with preferential right of payment of dividends or upon liquidation, dissolution
or winding up over Equity Interests of any other class of such Person.
"Principal Business" means any business in the metals industry
and businesses reasonably related thereto.
"Principals" mean, collectively, (i) Samstock, L.L.C. and its
affiliates and successors and (ii) T. Benjamin Jennings, Albert A. Cozzi, Frank
J. Cozzi and Gregory P. Cozzi, and the respective spouses, parents and lineal
descendants (by blood, adoption or marriage) of the foregoing, trusts the sole
beneficiaries of which (other than contingent beneficiaries) are any of the
foregoing, or corporations, partnerships or limited liability companies the sole
shareholders, sole partners or sole members of which are any of the foregoing.
"Prior Liens" means (i) with respect to Collateral other than
Real Property, "Prior Liens" as defined in the Security Agreement and (ii) with
respect to Real Property which may be pledged as Collateral in accordance with
the provisions of Section 4.16 of this Indenture, (a) "Permitted Liens" (as
defined in, and solely to the extent and for so long as permitted with respect
to such Real Property by, the Senior Credit Facility and the security documents
securing the Senior Bank Debt) to the extent and in the manner such Liens are in
effect on the date of execution and delivery of the applicable Security Document
excluding, however, the Liens, if any, granted to the holders of any Specified
Pari Passu Indebtedness and (b) Senior Permitted Liens (as defined in the
Security Agreement) incurred or created subsequent to the date of the execution
and delivery of the applicable Security Documents (with respect to the Mortgage
Lien) solely to the extent and for so long as permitted with respect to the Real
Property Collateral to be senior and superior to the Lien granted to the Senior
Bank Agent pursuant to the provisions of the Senior Credit Facility and the
security documents securing the Senior Bank Debt.
"Private Exchange Notes" has the meaning provided under the
Registration Rights Agreement.
"Pro Forma Basis" means, with respect to any additional
Indebtedness incurred or Disqualified Stock issued, as the case may be, the
Fixed Charge Coverage Ratio for the Company for the most recently ended four
full fiscal quarters for which internal financial statements are available
immediately preceding the date of such occurrence, as adjusted to reflect the
incurrence of such additional Indebtedness or the issuance of such Disqualified
Stock, as the case may be, and the application of the net proceeds therefrom, as
of the beginning of such four-quarter period.
"Purchase Money Indebtedness" means Indebtedness the net
proceeds of which are used for the purchase of property or assets acquired in
the ordinary course of business by the Person incurring such Indebtedness.
"Real Property" means any interest in any real property or any
portion thereof whether owned in fee or leased or otherwise owned.
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<PAGE> 19
"Redeemable Interest" of any Person means any equity security
of or other ownership interest in 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 upon the occurrence of an event) matures or is required to
be redeemed (pursuant to any sinking fund obligation or otherwise) or is
convertible into or exchangeable for Indebtedness or is redeemable at the option
of the holder thereof, in whole or in part, at any time prior to the final
stated maturity of the Notes.
"Registration Rights Agreement" means the Exchange and
Registration Rights Agreement, dated as of the date hereof, by and among the
Company, the Guarantors and the other party named on the signature pages
thereof, as such agreement may be amended, modified or supplemented from time to
time.
"Regulation D" means Regulation D promulgated under the
Securities Act.
"Regulation S" means Regulation S promulgated under the
Securities Act.
"Regulation S Global Note" means a Regulation S Temporary
Global Note or Regulation S Permanent Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent global
note that contains the paragraph referred to in footnote 1 and the additional
schedule referred to in footnote 2 to the form of the Note attached hereto as
Exhibit A-1, and that is deposited with and registered in the name of the
Depositary, representing a series of Notes sold in reliance on Regulation S.
"Regulation S Temporary Global Note" means a single temporary
global note in the form of the Note attached hereto as Exhibit A-2 that is
deposited with and registered in the name of the Depositary, representing a
series of Notes sold in reliance on Regulation S.
"Responsible Officer," when used with respect to the Trustee,
means any officer within the Corporate Trust Administration of the Trustee (or
any successor group of the Trustee) or any other officer of the Trustee assigned
to perform the duties of Trustee hereunder and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Restricted Investment" means an Investment other than a
Permitted Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of
any such Person that is not (i) an Unrestricted Subsidiary or (ii) a direct or
indirect Subsidiary of an Unrestricted Subsidiary; provided, however, that upon
the occurrence of any Unrestricted Subsidiary ceasing to be an Unrestricted
Subsidiary, such Subsidiary shall be included in the definition of Restricted
Subsidiary.
"Rule 144A" means Rule 144A promulgated under the Securities
Act.
"Rule 144A Global Note" means a permanent global note that
contains the paragraph referred to in footnote 1 and the additional schedule
referred to in footnote 2 to the form of the Note attached hereto as Exhibit
A-1, and that is deposited with the Depositary or the Trustee as custodian for
the Depositary and registered in the name of the Depositary, representing a
series of Notes sold in reliance on Rule 144A.
"S&P" means Standard & Poor's Rating Group, a division of
McGraw Hill, Inc., a New York corporation, and its successors.
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"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Agreement" means each security agreement
substantially in the form of Exhibit E hereto, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms hereof and thereof.
"Security Documents" means, collectively, the Intercreditor
Agreement, the Security Agreement, the Mortgages and all other security
agreements, mortgages, deeds of trust, pledges, collateral assignments or other
instruments evidencing or creating any Security Interest in favor of the Trustee
in all or any portion of the Collateral, in each case as amended, amended and
restated, supplemented or otherwise modified from time to time in accordance
with the terms hereof and thereof.
"Security Interests" means the Liens on the Collateral created
by the Security Documents in favor of the Trustee for its benefit and the
benefit of the Holders of the Notes.
"Senior Bank Agent" means BT Commercial Corporation, in its
capacity as agent for the lenders and lending institutions under the Senior
Credit Facility and its successors in such capacity appointed pursuant to the
provisions of the Senior Credit Facility.
"Senior Bank Debt" means all Obligations under or in respect
of the Senior Credit Facility, together with any refunding, refinancing or
replacement, in whole or part, of such Indebtedness.
"Senior Credit Facility" means that certain credit facility
dated as of March 31, 1998, by and among the Company, certain Subsidiaries of
the Company, the Senior Bank Agent, and certain commercial lending institutions
party thereto, including any related notes, guarantees, collateral or security
documents, instruments and agreements executed in connection therewith, and in
each case as amended (including any amendment and restatement thereof),
modified, renewed, refunded, replaced or refinanced from time to time, including
any agreement extending the maturity of, refinancing, replacing or otherwise
restructuring (including increasing the amount of available borrowings
thereunder (provided that such increase in borrowings is permitted by Section
4.09 hereof) or adding Subsidiaries of the Company as additional borrowers or
guarantors thereunder) all or any portion of the Indebtedness under such
agreement or any successor or replacement agreement and whether by the same or
any other agent, lender or group of lenders.
"Senior Subordinated Notes" means the $180.0 aggregate
principal amount of 10.0% Senior Subordinated Notes due 2008 of the Company
issued pursuant to an indenture dated May 13, 1998.
"Significant Subsidiary" means any Restricted Subsidiary that
would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of
Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation
is in effect on the date of this Indenture.
"Significant Subsidiary Guarantee" means the Subsidiary
Guarantee of a Significant Subsidiary.
"Significant Subsidiary Guarantor" means a Significant
Subsidiary that is a Subsidiary Guarantor.
"Specified Pari Passu Indebtedness" means Pari Passu
Indebtedness of the Company or any Restricted Subsidiary that (a) is incurred
after the date of this Indenture and (b) is of a type such that the Com-
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pany or any Restricted Subsidiary must have, on or prior to the date of such
incurrence, granted Security Interests in and valid mortgage Liens upon all Real
Property of the Company and the Restricted Subsidiaries that secures the Senior
Bank Debt in order for the incurrence thereof to be in compliance with Section
4.16 of this Indenture.
"Subordinated Indebtedness" means any Indebtedness of the
Company or any of its Restricted Subsidiaries which is expressly by its terms
subordinated in right of payment to any other Indebtedness.
"Stated Maturity," when used with respect to any Note or any
installment of interest thereof, means the date specified in such Note as the
fixed date on which the principal of such Note or such installment of interest
is due and payable.
"Subsidiary" means, with respect to any Person, (i) any
corporation, limited liability company, association or other business entity of
which more than 50% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more of the other
Subsidiaries of that Person (or a combination thereof) and (ii) any partnership
(a) the sole general partner or the managing general partner of which is such
Person or a Subsidiary of such Person or (b) the only general partners of which
are such Person or of one or more Subsidiaries of such Person (or any
combination thereof).
"Subsidiary Guarantees" means the Guarantees of the Notes by
each of the Guarantors pursuant to this Indenture.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date on which this Indenture is
qualified under the TIA.
"Transfer Restricted security" means a security that
bears or is required to bear the legend set forth in Section 2.06 hereof.
"Trustee" means the party named as such in the preamble hereto
until a successor replaces it in accordance with the applicable provisions of
this Indenture and thereafter means the successor serving hereunder.
"Unrestricted Subsidiary" means (i) any Subsidiary that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a
Board Resolution, which designation may only be made if such Subsidiary: (a) has
no Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement,
contract, arrangement or understanding with the Company or any Restricted
Subsidiary of the Company unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Company or such
Restricted Subsidiary than those that might be obtained at the time from Persons
who are not Affiliates of the Company; (c) is a Person with respect to which
neither the Company nor any of its Restricted Subsidiaries has any direct or
indirect obligation (x) to subscribe for additional Equity Interests or (y) to
maintain or preserve such Person's financial condition or to cause such Person
to achieve any specified levels of operating results; and (d) has not guaranteed
or otherwise directly or indirectly provided credit support for any Indebtedness
of the Company or any of its Restricted Subsidiaries. Any such designation by
the Board of Directors shall be evidenced to the Trustee by filing with the
Trustee a certified copy of the Board Resolution giving effect to such
designation and an Officer's Certificate certifying that such designation
complied with the foregoing conditions and was permitted pursuant to and in
accordance with the provisions set forth in Section 4.07 hereof. If, at any
time, any Unrestricted Subsidiary would fail to meet the foregoing requirements
as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date (and,
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if such Indebtedness is not permitted to be incurred as of such date pursuant to
and in accordance with the provisions set forth in Section 4.09 hereof, the
Company shall be in violation of such covenant). The Board of Directors of the
Company may at any time designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided that such designation shall be deemed to be an incurrence
of Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (i) such Indebtedness is permitted to be incurred pursuant to and
in accordance with the provisions set forth in Section 4.09 hereof, and (ii) no
Default or Event of Default would be in existence following such designation.
"Voting Stock" means, with respect to any Person, any class or
series of capital stock of such Person that is ordinarily entitled to vote in
the election of directors thereof at a meeting of stockholders called for such
purpose, without the occurrence of any additional event or contingency.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" is any Wholly Owned
Subsidiary that is a Restricted Subsidiary.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of
such Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person and one
or more Wholly Owned Subsidiaries of such Person.
SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
- ----- ----------
"Affiliate Transaction"....................................... 4.11
"Asset Sale Offer"............................................ 4.10
"Available Proceeds Amount"................................... 4.10
"Cedel Bank".................................................. 2.01
"Change of Control Offer"..................................... 4.15
"Change of Control Payment"................................... 4.15
"Change of Control Payment Date".............................. 4.15
"Collateral Account".......................................... 12.01
"Collateral Proceeds"......................................... 4.10
"Covenant Defeasance"......................................... 8.03
"Custodian"................................................... 6.01
"DTC"......................................................... 2.03
"Euroclear"................................................... 2.01
"Event of Default"............................................ 6.01
"IAI Global Notes"............................................ 2.01
"incur"....................................................... 4.09
"Legal Defeasance"............................................ 8.02
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Defined in
Term Section
- ---- ----------
"Non-Collateral Proceeds"..................................... 4.10
"Note Custodian".............................................. 2.03
"Offer"....................................................... 4.15
"Offer Amount"................................................ 3.09
"Offer Period"................................................ 3.09
"Paying Agent"................................................ 2.03
"Permitted Related Acquisition"............................... 4.10
"Prior Lien Collateral Proceeds".............................. 4.10
"Purchase Date"............................................... 3.09
"QIB"......................................................... 2.01
"Registrar"................................................... 2.03
"Restricted Payments"......................................... 4.07
"Shelf Registration Statement"................................ 7.03
"Trust Moneys"................................................ 12.01
"U.S. Global Notes"........................................... 2.01
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the
following meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee;
"obligor" on the Notes and the Subsidiary Guarantees means the
Company and the Guarantors, respectively, and any successor obligor upon the
Notes and the Subsidiary Guarantees, respectively.
All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule under
the TIA have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
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(4) words in the singular include the plural, and in the
plural include the singular;
(5) provisions apply to successive events and transactions;
(6) references to sections of or rules under the Securities
Act shall be deemed to include substitute, replacement of successor
sections or rules adopted by the SEC from time to time; and
(7) "herein," "hereof," "hereto" and other words of similar
import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
ARTICLE 2
THE NOTES
SECTION 2.01. FORM AND DATING.
The Notes and the Trustee's certificate of authentication
shall be substantially in the form of (i) in the case of the Notes other than a
Regulation S Temporary Global Note, Exhibit A-1 attached hereto, and (ii) in the
case of a Regulation S Temporary Global Note, Exhibit A-2 attached hereto. The
Notes may have notations, legends or endorsements required by law, stock
exchange rule or usage. The Company and the Trustee shall approve the form of
the Notes and any notation, legend or endorsement on them. Each Note shall be
dated the date of its issuance and shall show the date of its authentication.
The Notes shall be issued in minimum denominations of $1,000 and integral
multiples of $1,000 in excess thereof. The terms and provisions contained in the
Notes shall constitute, and are hereby expressly made, a part of this Indenture
and the Company, the Guarantors and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
(a) Global Notes. Notes offered and sold to qualified
institutional buyers as defined in Rule 144A ("QIBs") in reliance on Rule 144A
shall be issued initially in the form of Rule 144A Global Notes (the "U.S.
Global Notes"), which shall be deposited on behalf of the purchasers of the
Notes represented thereby with the Depositary at its New York office (or with
the Trustee as custodian for the Notes), 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 hereinafter provided. The aggregate principal
amount of the U.S. 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.
Notes offered and sold in reliance on Regulation D to
Institutional Accredited Investors under the Securities Act shall be issued in
the form of Institutional Accredited Investor Global Notes (the "IAI Global
Notes") and shall be in the form of Note attached hereto as Exhibit A-1, which
shall be deposited on behalf of the purchasers of the Notes represented thereby
with the Depositary at its New York office (or with the Trustee as custodian for
the Notes), 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
hereinafter provided. The aggregate principal amount of the IAI 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.
Notes offered and sold in reliance on Regulation S shall be
issued initially in the form of the Regulation S Temporary Global Note, which
shall be deposited on behalf of the purchasers of the Notes represented thereby
with the Trustee, at its New York office, as custodian for the Depositary, and
registered in the name of the Depositary or the nominee of the Depositary for
the accounts of designated agents holding on behalf of the Euroclear System
("Euroclear") or CEDEL, S.A. ("Cedel Bank"), duly executed by the Company and
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authenticated by the Trustee as hereinafter provided. The "40-day restricted
period" (as defined in Regulation S) shall be terminated upon the receipt by the
Trustee of (i) a written certificate from the Depositary, together with copies
of certificates from Euroclear and Cedel Bank certifying that they have received
certification of non-United States beneficial ownership of 100% of the aggregate
principal amount of the Regulation S Temporary Global Note (except to the extent
of any beneficial owners thereof who acquired an interest therein pursuant to
another exemption from registration under the Securities Act and who will take
delivery of a beneficial ownership interest in a U.S. Global Note, all as
contemplated by Section 2.06(a)(ii) hereof), and (ii) an Officer's Certificate
from the Company. Following the termination of the 40-day restricted period,
beneficial interests in the Regulation S Temporary Global Note shall be
exchanged for beneficial interests in Regulation S Permanent Global Notes
pursuant to the Applicable Procedures. Simultaneously with the authentication of
Regulation S Permanent Global Notes, the Trustee shall cancel the Regulation S
Temporary Global Note.
The aggregate principal amount of the Regulation S Temporary
Global Note and the Regulation S Permanent 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 the case may be, in connection with transfers of
interest as hereinafter provided.
Each Global Note shall represent such of the outstanding Notes
as shall be specified therein and each shall provide that it shall represent the
aggregate amount of outstanding Notes from time to time endorsed thereon and
that the aggregate amount of outstanding Notes represented thereby may from time
to time be reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a Global Note to reflect the amount of any
increase or decrease in the amount of outstanding Notes represented thereby
shall be made by the Trustee or the Note Custodian (as hereinafter defined), at
the direction of the Trustee, in accordance with instructions given by the
Holder thereof as required by Section 2.06 hereof.
The provisions of the "Operating Procedures of the Euroclear
System" and "Terms and Conditions Governing Use of Euroclear" and the
"Management Regulations" and "Instructions to Participants" of Cedel Bank shall
be applicable to interests in the Regulation S Temporary Global Note and the
Regulation S Permanent Global Notes that are held by the Agent Members through
Euroclear or Cedel Bank.
Except as set forth in Section 2.06 hereof, the Global Notes
may be transferred, in whole and not in part, only to another nominee of the
Depositary or to a successor of the Depositary or its nominee.
(b) Book-Entry Provisions. This Section 2.01(b) shall apply
only to U.S. Global Notes, IAI Global Notes and the Regulation S Permanent
Global Notes deposited with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance
with this Section 2.01(b), authenticate and deliver the Global Notes that (i)
shall be registered in the name of the Depositary or the nominee of the
Depositary and (ii) shall be delivered by the Trustee to the Depositary or
pursuant to the Depositary's instructions or held by the Trustee as custodian
for the Depositary.
Agent Members shall have no rights either under this Indenture
with respect to any Global Note held on their behalf by the Depositary or by the
Trustee as custodian for 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 an owner of a beneficial interest in any Global Note.
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(c) Definitive Notes. Notes issued in certificated form shall
be substantially in the form of Exhibit A-1 attached hereto (but without
including the text referred to in footnotes 1 and 2 thereto).
SECTION 2.02. EXECUTION AND AUTHENTICATION.
One Officer shall sign the Notes for the Company by manual or
facsimile signature.
If an Officer whose signature is on a Note no longer holds
that office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed
by one Officer, authenticate Notes for original issue up to $30,000,000 in
aggregate principal amount. The Trustee shall, upon a written order of the
Company, authenticate Exchange Notes (together with Private Exchange Notes, if
any) for original issue up to the aggregate principal amount of Notes exchanged
in the Exchange Offer or otherwise exchanged for Notes pursuant to the terms of
the Registration Rights Agreement. The aggregate principal amount of Notes
outstanding at any time may not exceed $30,000,000 except as provided in Section
2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Notes. An authenticating agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company or
an Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Notes may
be presented for registration of transfer or for exchange ("Registrar") and an
office or agency within the City and State of New York where Notes may be
presented for payment ("Paying Agent"). The Registrar shall keep a register of
the Notes and of their transfer and exchange. The Company may appoint one or
more co-registrars and one or more additional paying agents. The term
"Registrar" includes any co-registrar and the term "Paying Agent" includes any
additional paying agent. The Company may change any Paying Agent or Registrar
without notice to any Holder. The Company shall notify the Trustee in writing of
the name and address of any Agent not a party to this Indenture. If the Company
fails to appoint or maintain another entity as Registrar or Paying Agent, the
Trustee shall act as such. The Company or any of the Guarantors may act as
Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company
("DTC") to act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the
Registrar and Paying Agent and to act as custodian with respect to the Global
Notes (the "Note Custodian").
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Trustee all money held by the Paying Agent for the
payment of principal of and premium, interest and Liquidated Damages, if any, on
the Notes, and will notify the Trustee of any default by the Company or any
Guarantor in making any such payment. While any such default continues, the
Trustee may require a Paying Agent to pay all money held by it to the Trustee.
The
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Company at any time may require a Paying Agent to pay all money held by it to
the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than
the Company or a Guarantor) shall have no further liability for the money
delivered to the Trustee. If the Company or a Guarantor acts as Paying Agent, it
shall segregate and hold in a separate trust fund for the benefit of the Holders
all money held by it as Paying Agent. Upon any bankruptcy or reorganization
proceedings relating to the Company or any Guarantor, the Trustee shall serve as
Paying Agent for the Notes.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of all Holders and shall otherwise comply with TIA Section 312(a). If
the Trustee is not the Registrar, the Company and/or the Guarantors shall
furnish to the Trustee at least seven Business Days before each interest payment
date and at such other times as the Trustee may request in writing, a list in
such form and as of such date as the Trustee may reasonably require of the names
and addresses of the Holders of Notes and the Company and the Guarantors shall
otherwise comply with TIA Section 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Notes. The transfer and
exchange of Global Notes or beneficial interests therein shall be effected
through the Depositary, in accordance with this Indenture and the procedures of
the Depositary therefor, which shall include restrictions on transfer comparable
to those set forth herein to the extent required by the Securities Act.
Beneficial interests in a Global Note may be transferred to Persons who take
delivery thereof in the form of a beneficial interest in the same Global Note in
accordance with the transfer restrictions set forth in the legend in subsection
(g) of this Section 2.06. Transfers of beneficial interests in the Global Notes
to Persons required to take delivery thereof in the form of an interest in
another Global Note shall be permitted as follows:
(i) U. S. Global Note or IAI Global Note to Regulation S
Global Note. If, at any time, an owner of a beneficial interest in a
U.S. Global Note or IAI Global Note deposited with the Depositary (or
the Trustee as custodian for the Depositary) wishes to transfer its
interest in such U.S. Global Note or IAI Global Note to a Person who is
required or permitted to take delivery thereof in the form of an
interest in a Regulation S Global Note, such owner shall, subject to
the Applicable Procedures, exchange or cause the exchange of such
interest for an equivalent beneficial interest in a Regulation S Global
Note as provided in this Section 2.06(a)(i). Upon receipt by the
Trustee of (1) instructions given in accordance with the Applicable
Procedures from an Agent Member directing the Trustee to credit or
cause to be credited a beneficial interest in the Regulation S Global
Note in an amount equal to the beneficial interest in the U.S. Global
Note or IAI Global Note, as applicable, to be exchanged, (2) a written
order given in accordance with the Applicable Procedures containing
information regarding the participant account of the Depositary and the
Euroclear or Cedel Bank account to be credited with such increase, and
(3) a certificate in the form of Exhibit B-1 hereto given by the owner
of such beneficial interest stating that the transfer of such interest
has been made in compliance with the transfer restrictions applicable
to the Global Notes and pursuant to and in accordance with Rule 903 or
Rule 904 of Regulation S, then the Trustee, as Registrar, shall
instruct the Depositary to reduce or cause to be reduced the aggregate
principal amount of the applicable Global Note and to increase or cause
to be increased the aggregate principal amount of the applicable
Regulation S Global Note by the principal amount of the beneficial
interest in the U.S. Global Note or IAI Global Note to be exchanged, to
credit or cause to be credited to the account of the Person specified
in such instructions a beneficial interest in the Regulation S Global
Note equal to the reduction in the aggregate principal amount at
maturity of the applicable Global Note, and to debit, or cause to be
debited, from the account of the Person making
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such exchange or transfer the beneficial interest in the U.S. Global
Note or IAI Global Note that is being exchanged or transferred.
(ii) Regulation S Global Note to U. S. Global Note or IAI
Global Note. If, at any time, an owner of a beneficial interest in a
Regulation S Global Note deposited with the Depositary or with the
Trustee as custodian for the Depositary wishes to transfer its interest
in such Regulation S Global Note to a Person who is required or
permitted to take delivery thereof in the form of an interest in a U.S.
Global Note or IAI Global Note, such owner shall, subject to the
Applicable Procedures, exchange or cause the exchange of such interest
for an equivalent beneficial interest in a U.S. Global Note or IAI
Global Note as provided in this Section 2.06(a)(ii). Upon receipt by
the Trustee of (1) instructions from Euroclear or Cedel Bank, if
applicable, and the Depositary, directing the Trustee, as Registrar, to
credit or cause to be credited a beneficial interest in the U.S. Global
Note or IAI Global Note, as applicable, equal to the beneficial
interest in the Regulation S Global Note to be exchanged, such
instructions to contain information regarding the participant account
with the Depositary to be credited with such increase, (2) a written
order given in accordance with the Applicable Procedures containing
information regarding the participant account of the Depositary and (3)
a certificate in the form of Exhibit B-2 attached hereto given by the
owner of such beneficial interest stating (A) if the transfer is
pursuant to Rule 144A, that the Person transferring such interest in a
Regulation S Global Note reasonably believes that the Person acquiring
such interest in a U.S. Global Note is a QIB and is obtaining such
beneficial interest in a transaction meeting the requirements of Rule
144A and any applicable blue sky or securities laws of any state of the
United States or (B) if the transfer is pursuant to Regulation D, that
the Person transferring such interest in a Regulation S Global Note
reasonably believes that the Person acquiring such interest in an IAI
Global Note is an Institutional Accredited Investor within the meaning
of Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act and that the transfer complies with any applicable blue sky or
securities laws of any state of the United States or (C) if the
transfer is pursuant to any other exemption from the registration
requirements of the Securities Act, that the transfer of such interest
has been made in compliance with the transfer restrictions applicable
to the Global Notes and pursuant to and in accordance with the
requirements of the exemption claimed, such statement to be supported
by an Opinion of Counsel from the transferee or the transferor in form
reasonably acceptable to the Company and to the Registrar, then the
Trustee, as Registrar, shall instruct the Depositary to reduce or cause
to be reduced the aggregate principal amount at maturity of such
Regulation S Global Note and to increase or cause to be increased the
aggregate principal amount of the applicable Global Note by the
principal amount of the beneficial interest in the Regulation S Global
Note to be exchanged, and the Trustee, as Registrar, shall instruct the
Depositary, concurrently with such reduction, to credit or cause to be
credited to the account of the Person specified in such instructions a
beneficial interest in the U.S. Global Note or IAI Global Note, as
applicable, equal to the reduction in the aggregate principal amount of
such Regulation S Global Note and to debit or cause to be debited from
the account of the Person making such transfer the beneficial interest
in the Regulation S Global Note that is being transferred.
(iii) IAI Global Note to U.S. Global Note or Regulation S
Global Note. If, at any time, an owner of a beneficial interest in an
IAI Global Note deposited with the Depositary (or the Trustee as
custodian for the Depositary) wishes to transfer its interest in such
IAI Global Note to a Person who is required or permitted to take
delivery thereof in the form of an interest in a Regulation S Global
Note or U.S. Global Note, such owner shall, subject to the Applicable
Procedures, exchange or cause the exchange of such interest for an
equivalent beneficial interest in a Regulation S Global Note or U.S.
Global Note as provided in this Section 2.06(a)(iii). Upon receipt by
the Trustee of (1) instructions given in accordance with the Applicable
Procedures from an Agent Member directing the Trustee to credit or
cause to be credited a beneficial interest in the Regulation S Global
Note or U.S. Global Note in an amount equal to the beneficial interest
in the IAI Global Note or U.S. Global Note, as applicable,
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<PAGE> 29
to be exchanged, (2) a written order given in accordance with the
Applicable Procedures containing information regarding the participant
account of the Depositary and the Euroclear or Cedel Bank account to be
credited with such increase, and (3)(A) if the transfer is pursuant to
Regulation S, a certificate in the form of Exhibit B-1 hereto given by
the owner of such beneficial interest stating that the transfer of such
interest has been made in compliance with the transfer restrictions
applicable to the Global Notes and pursuant to and in accordance with
Rule 903 or Rule 904 of Regulation S, and (B) if the transfer is
pursuant to Rule 144A, a certificate in the form of Exhibit B-2
attached hereto given by the owner of such beneficial interest stating
that the person transferring such interest in an IAI Global Note
reasonably believes that the person acquiring such interest in a U.S.
Global Note is a QIB and is obtaining such beneficial interest in a
transaction meeting the requirements of Rule 144A and any applicable
blue sky or securities laws of any state of the United States, then the
Trustee, as Registrar, shall instruct the Depositary to reduce or cause
to be reduced the aggregate principal amount of the applicable Global
Note and to increase or cause to be increased the aggregate principal
amount of the applicable Regulation S Global Note or U.S. Global Note
by the principal amount of the beneficial interest in the IAI Global
Note to be exchanged, to credit or cause to be credited to the account
of the Person specified in such instructions a beneficial interest in
the Regulation S Global Note or U.S. Global Note equal to the reduction
in the aggregate principal amount at maturity of the applicable Global
Note, and to debit, or cause to be debited, from the account of the
Person making such exchange or transfer the beneficial interest in the
IAI Global Note that is being exchanged or transferred.
(iv) U.S. Global Note to IAI Global Note. If, at any time, an
owner of a beneficial interest in a U.S. Global Note deposited with the
Depositary or with the Trustee or Custodian for the Depositary wishes
to transfer its interest in such U.S. Global Note to a person who is
required or permitted to take delivery thereof in the form of an
interest in an IAI Global Note, such owner shall, subject to the
applicable procedures, exchange or cause the exchange of such interest
for an equivalent beneficial interest in an IAI Global Note as provided
in this Section 2.06(a)(iv). Upon receipt by the Trustee of (1)
instructions from the Depositary, directing the Trustee, as Registrar,
to credit or cause to be credited a beneficial interest in the IAI
Global Note equal to the beneficial interest in the U.S. Global Note to
be exchanged, such instructions to contain information regarding the
Participant Account with the Depositary to be credited with such
increase, (2) a written order given in accordance with the applicable
procedures containing information regarding the participant account of
the depositary and (3) a certificate in the form of Exhibit B-2
attached hereto given by the owner of such Beneficial Interest stating
that the person transferring such interest in a U.S. Global Note
reasonably believes that the person acquiring such interest in an IAI
Global Note is an institutional accredited investor within the meaning
of Rule 501(a)(1),(2),(3) or (7) of Regulation D under the Securities
Act and that the transfer complies with any applicable blue sky or
securities laws of any state of the United States or (c) if the
transfer is pursuant to any other exemption from the Registration
Requirements of the Securities Act, that the transfer of such interest
has been made in compliance with the transfer restrictions applicable
to the Global Notes and pursuant to and in accordance with the
requirements of the exemption claimed, such statement to be supported
by an opinion of counsel from the transferee or the transferor in form
reasonably acceptable to the Company and to the Registrar, then the
Trustee, as Registrar, shall instruct the Depositary to reduce or cause
to be reduced the aggregate principal amount at maturity of such U.S.
Global Note and to increase or cause to be increased the aggregate
principal amount of the IAI Global Note by the principal amount of the
beneficial interest in the U.S. Global Note to be exchanged, and the
Trustee, as Registrar, shall instruct the Depositary, concurrently with
such reduction, to credit or cause to be credited to the account of the
person specified in such instructions a Beneficial Interest in the IAI
Global Note equal to the reduction in the aggregate principal amount of
such U.S. Global Note and to debit or cause to be debited from the
account of the person making such transfer the beneficial interest in
the U.S. Global Note that is being transferred.
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<PAGE> 30
(b) Transfer and Exchange of Definitive Notes. When Definitive
Notes are presented by a Holder to the Registrar with a request:
(x) to register the transfer of the Definitive Notes; or
(y) to exchange such Definitive Notes for an equal principal
amount of Definitive Notes of other authorized denominations, the
Registrar shall register the transfer or make the exchange as
requested; provided, however, that the Definitive Notes presented or
surrendered for register of transfer or exchange:
(i) shall be duly endorsed or accompanied by a
written instruction of transfer in form satisfactory to the
Registrar duly executed by such Holder or by his or her
attorney, duly authorized in writing; and
(ii) in the case of a Definitive Note that is a
Transfer Restricted Security, such request shall be
accompanied by the following additional information and
documents, as applicable:
(A) if such Transfer Restricted Security is
being delivered to the Registrar by a Holder for
registration in the name of such Holder, without
transfer, or such Transfer Restricted Security is
being transferred to the Company, a certification to
that effect from such Holder (in substantially the
form of Exhibit B-3 hereto);
(B) if such Transfer Restricted Security is
being transferred to a QIB in accordance with Rule
144A or pursuant to an exemption from registration in
accordance with Rule 144 under the Securities Act or
pursuant to an effective registration statement under
the Securities Act, a certification to that effect
from such Holder (in substantially the form of
Exhibit B-3 hereto);
(C) if such Transfer Restricted Security is
being transferred to an Institutional Accredited
Investor within the meaning of Rule 501(a)(1), (2),
(3) or (7) of Regulation D under the Securities Act,
a certification to that effect from such Holder (in
substantially the form of Exhibit B-3 hereto); or
(D) if such Transfer Restricted Security is
being transferred in reliance on any other exemption
from the registration requirements of the Securities
Act, a certification to that effect from such Holder
(in substantially the form of Exhibit B-3 hereto) and
an Opinion of Counsel from such Holder or the
transferee reasonably acceptable to the Company and
to the Registrar to the effect that such transfer is
in compliance with the Securities Act.
(c) Transfer of a Beneficial Interest in a Global Note for a
Definitive Note.
(i) Any Person having a beneficial interest in a
Global Note (other than a Regulation S Temporary Global Note)
may upon request, subject to the Applicable Procedures,
exchange such beneficial interest for a Definitive Note. Upon
receipt by the Trustee of written instructions or such other
form of instructions as is customary for the Depositary (or
Euroclear or Cedel Bank, if applicable) from the Depositary or
its nominee on behalf of any Person having a beneficial
interest in such Global Note, and, in the case of a Transfer
Restricted Security, the following additional information and
documents (all of which may be submitted by facsimile):
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<PAGE> 31
(A) if such beneficial interest is being
transferred to the Person designated by the
Depositary as being the beneficial owner, a
certification to that effect from such Person (in
substantially the form of Exhibit B-4 hereto);
(B) 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 Rule 144 under the Securities Act or
pursuant to an effective registration statement under
the Securities Act, a certification to that effect
from the transferor (in substantially the form of
Exhibit B-4 hereto);
(C) if such beneficial interest is being
transferred to an Institutional Accredited Investor
within the meaning of Rule 501(a)(1), (2), (3) or (7)
of Regulation D under the Securities Act, a
certification to that effect from the transferor (in
substantially the form of Exhibit B-4 hereto), or
(D) if such beneficial interest is being
transferred in reliance on any other exemption from
the registration requirements of the Securities Act,
a certification to that effect from the transferor
(in substantially the form of Exhibit B-4 hereto) and
an Opinion of Counsel from the transferee or the
transferor reasonably acceptable to the Company and
to the Registrar to the effect that such transfer is
in compliance with the Securities Act,
the Trustee or the Note Custodian, at the direction of the Trustee,
shall, in accordance with the standing instructions and procedures
existing between the Depositary and the Note Custodian, cause the
aggregate principal amount of the applicable Global Note (e.g., the
U.S. Global Note, IAI Global Note or the Regulation S Permanent Global
Note) to be reduced accordingly and, following such reduction, the
Company and the Guarantors shall execute and, the Trustee shall
authenticate and deliver to the transferee a Definitive Note in the
appropriate principal amount.
(ii) Definitive Notes issued in exchange for a beneficial
interest in a Global Note (other than a Regulation S Temporary Global
Note), as applicable, pursuant to this Section 2.06(c) shall be
registered in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee
shall deliver such Definitive Notes to the Persons in whose names such
Notes are so registered. Following any such issuance of Definitive
Notes, the Trustee, as Registrar, shall instruct the Depositary to
reduce or cause to be reduced the aggregate principal amount at
maturity of the applicable Global Note to reflect the transfer.
(d) Restrictions on Transfer and Exchange of Global Notes.
Notwithstanding any other provision of this Indenture (other than the provisions
set forth in subsection (f) of this Section 2.06), 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.
(e) Transfer and Exchange 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, subject to the Applicable
Procedures, upon satisfaction of the requirements set forth below. Upon receipt
by the Trustee of a Definitive Note, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Trustee, and, in the case
of a Transfer Restricted Security, the following additional information and
documents (all of which may be submitted by facsimile):
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<PAGE> 32
(i) if such beneficial interest is being transferred to the
Person designated by the Depositary as being the beneficial owner, a
certification to that effect from such Person (in substantially the
form of Exhibit B-5 hereto);
(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 Rule 144 under the Securities Act or
pursuant to an effective registration statement under the Securities
Act, a certification to that effect from the transferor (in
substantially the form of Exhibit B-5 hereto);
(iii) if such beneficial interest is being transferred to an
Institutional Accredited Investor within the meaning of Rule 501(a)(1),
(2), (3) or (7) of Regulation D under the Securities Act, a
certification to that effect from the transferor (in substantially the
form of Exhibit B-5 hereto); or
(iv) if such beneficial interest is being transferred in
reliance on any other exemption from the registration requirements of
the Securities Act, a certification to that effect from the transferor
(in substantially the form of Exhibit B-5 hereto) and an Opinion of
Counsel from the transferee or the transferor reasonably acceptable to
the Company and to the Registrar to the effect that such transfer is in
compliance with the Securities Act,
the Trustee shall cancel such Definitive Note in accordance with Section 2.11
hereof and cause, or direct the Note Custodian to cause, in accordance with the
standing instructions and procedures existing between the Depositary and the
Note Custodian, the aggregate principal amount of Notes represented by the
applicable Global Note (e.g., the U.S. Global Note, the IAI Global Note or the
Regulation S Permanent Global Note, as the case may be) to be increased
accordingly. If none of the applicable Global Notes are then outstanding, the
Company shall issue and, upon receipt of an authentication order in accordance
with Section 2.02 hereof, the Trustee shall authenticate a new applicable Global
Note in the appropriate principal amount.
(f) Authentication of Definitive Notes in Absence of
Depositary. If at any time:
(i) the Depositary for the Notes notifies the Company that the
Depositary is unwilling or unable to continue as Depositary for the
Global Notes and a successor Depositary for the Global Notes is not
appointed by the Company within 90 days after delivery of such notice;
or
(ii) the Company, at its sole discretion, notifies the Trustee
in writing that it elects to cause the issuance of Definitive Notes
under this Indenture; or
(iii) there shall have occurred and be continuing an Event of
Default or any event which after notice or lapse of time or both would
be an Event of Default with respect to the Notes,
then the Company and the Guarantors shall execute, and the Trustee shall, upon
receipt of an authentication order in accordance with Section 2.02 hereof,
authenticate and deliver, Definitive Notes in an aggregate principal amount
equal to the principal amount of the Global Notes in exchange for such Global
Notes.
(g) Legends.
(i) Except as permitted by the following paragraphs (ii) and
(iii), each Note certificate evidencing Global Notes and Definitive
Notes (and all Notes issued in exchange therefor or substitution
thereof) shall bear legends in substantially the following form:
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<PAGE> 33
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING
THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
RULE 904 UNDER THE SECURITIES ACT OR (C) IT IS AN ACCREDITED
INVESTOR (AS DEFINED IN RULE 501(a)(1), (2), (3), OR (7)
UNDER THE SECURITIES ACT (AN "ACCREDITED INVESTOR")), (2)
AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER the ORIGINAL
ISSUANCE OF THIS NOTE RESELL OR OTHERWISE TRANSFER THIS NOTE
EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B)
INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITh RULE 144A UNdER THE SECURITiES ACT, (C) INSIDE
THE UNITED STATES TO AN ACCREDITED INVESTOR IN COMPLIANCE WITH
RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT, (D)
OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT (IF
AVAILABLE), (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE),
(F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, OR (G) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
(3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS NOTE
IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN
TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS NOTE, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE
COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS EITHER OR THEM MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND
"U.S. PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION S
UNDER THE SECURITIES ACT.
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a
Global Note but not including any Private Exchange Notes) pursuant to
Rule 144 under the Securities Act or pursuant to an effective
registration statement under the Securities Act:
(A) in the case of any Transfer Restricted Security
that is a Definitive Note, the Registrar shall permit the
Holder thereof to exchange such Transfer Restricted Security
for a Definitive Note that does not bear the legend set forth
in (i) above and rescind any restriction on the transfer of
such Transfer Restricted Security upon receipt of a
certification from the transferring holder substantially in
the form of Exhibit B-3 hereto; and
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<PAGE> 34
(B) in the case of any Transfer Restricted Security
represented by a Global Note, such Transfer Restricted
Security shall not be required to bear the legend set forth in
(i) above, but shall continue to be subject to the provisions
of Section 2.06(a) and (b) hereof; provided, however, that
with respect to any request for an exchange of a Transfer
Restricted Security that is represented by a Global Note for a
Definitive Note that does not bear the legend set forth in (i)
above, which request is made in reliance upon Rule 144, the
Holder thereof shall certify in writing to the Registrar that
such request is being made pursuant to Rule 144 (such
certification to be substantially in the form of Exhibit B-4
hereto).
(iii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a
Global Note) in reliance on any exemption from the registration
requirements of the Securities Act (other than exemptions pursuant to
Rule 144A or Rule 144 under the Securities Act) in which the Holder or
the transferee provides an Opinion of Counsel to the Company and the
Registrar in form and substance reasonably acceptable to the Company
and the Registrar (which Opinion of Counsel shall also state that the
transfer restrictions contained in the legend are no longer
applicable):
(A) in the case of any Transfer Restricted Security
that is a Definitive Note, the Registrar shall permit the
Holder thereof to exchange such Transfer Restricted Security
for a Definitive Note that does not bear the legend set forth
in (i) above and rescind any restriction on the transfer of
such Transfer Restricted Security; and
(B) in the case of any Transfer Restricted Security
represented by a Global Note, such Transfer Restricted
Security shall not be required to bear the legend set forth in
(i) above, but shall continue to be subject to the provisions
of Section 2.06(a) and (b) hereof.
(iv) Notwithstanding the foregoing, upon consummation of the
Exchange Offer in accordance with the Registration Rights Agreement,
the Company shall issue and, upon receipt of an authentication order in
accordance with Section 2.02 hereof, the Trustee shall authenticate the
Exchange Notes (and Private Exchange Notes, if any) in exchange for the
Notes accepted for exchange in the Exchange Offer, which Exchange Notes
(but not the Private Exchange Notes) shall not bear the legend set
forth in (i) above, and the Registrar shall rescind any restriction on
the transfer of such Exchange Notes, in each case unless the Holder of
such Notes is either (A) a broker-dealer, (B) a Person participating in
the distribution of the Notes or (C) a Person who is an affiliate (as
defined in Rule 144) of the Company.
(h) Cancellation and/or Adjustment of Global Notes. At such
time as all beneficial interests in Global Notes have been exchanged for
Definitive Notes, redeemed, repurchased or canceled, all Global Notes shall be
returned to or retained and canceled by the Trustee in accordance with Section
2.11 hereof. At any time prior to such cancellation, if any beneficial interest
in a Global Note is exchanged for Definitive Notes, redeemed, repurchased or
canceled, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note, by the
Trustee or the Note Custodian, at the direction of the Trustee, to reflect such
reduction.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Company and the Guarantors shall execute and the Trustee shall
authenticate Definitive Notes and Global Notes at the Registrar's
request.
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<PAGE> 35
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any
such transfer taxes or similar governmental charge payable upon
exchange or transfer pursuant to Sections 3.07, 4.10, 4.15 and 9.05
hereof).
(iii) The Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed in part.
(iv) All Definitive Notes and Global Notes issued upon any
registration of transfer or exchange of Definitive Notes or Global
Notes shall be the valid obligations of the Company and the Guarantors,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Definitive Notes or Global Notes surrendered upon
such registration of transfer or exchange.
(v) The Company shall not be required:
(A) to issue, to register the transfer of or to
exchange Notes during a period beginning at the opening of
business 15 days before the day of any selection of Notes for
redemption under Section 3.02 hereof and ending at the close
of business on the day of selection; or
(B) to register the transfer of or to exchange any
Note so selected for redemption in whole or in part, except
the unredeemed portion of any Note being redeemed in part; or
(C) to register the transfer of or to exchange a Note
between a record date and the next succeeding interest payment
date.
(vi) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the Company may deem
and treat the Person in whose name any Note is registered as the
absolute owner of such Note for the purpose of receiving payment of
principal of and interest, premium and Liquidated Damages, if any, on
such Notes, and neither the Trustee, any Agent nor the Company shall be
affected by notice to the contrary.
(vii) The Trustee shall authenticate Definitive Notes and
Global Notes in accordance with the provisions of Section 2.02 hereof.
SECTION 2.07. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee or the
Company and the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Note, the Company shall issue and the Trustee,
upon the written order of the Company signed by one Officer of the Company,
shall authenticate a replacement Note if the Trustee's requirements and the
requirements of Section 8-405(a)(1) of the Uniform Commercial Code are met. If
required by the Trustee or the Company, an indemnity bond must be supplied by
the Holder that is sufficient in the reasonable judgment of the Trustee and the
Company to protect the Company, the Trustee, any Agent and any authenticating
agent from any loss that any of them may suffer if a Note is replaced.
The Company may charge such Holder for its expenses in replacing a Note.
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<PAGE> 36
Every replacement Note is an additional obligation of the
Company and the Guarantors and shall be entitled to all of the benefits of this
Indenture equally and proportionately with all other Notes duly issued
hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes
authenticated by the Trustee except for those canceled by it, those delivered to
it for cancellation, those reductions in the interest in a Global Note effected
by the Trustee in accordance with the provisions hereof, and those described in
this Section as not outstanding. Except as set forth in Section 2.09 hereof, a
Note does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof (other
than a mutilated Note surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Note is
held by a bona fide purchaser. A mutilated Note ceases to be outstanding upon
surrender of such Note and replacement thereof pursuant to Section 2.07 hereof.
If the principal amount of any Note is considered paid under
Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
If the Paying Agent (other than the Company or a Restricted
Subsidiary) holds, on a redemption date or maturity date, money sufficient to
pay Notes payable on that date, then on and after that date such Notes shall be
deemed to be no longer outstanding and shall cease to accrue interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver or consent, Notes owned
by the Company, by any Guarantor or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company or any Guarantor, shall be considered as though not outstanding, except
that for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Notes that a Trustee
knows are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES.
Until definitive Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Notes upon a written order
of the Company signed by one Officer of the Company. Temporary Notes shall be
substantially in the form of definitive Notes but may have variations that the
Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall prepare
and the Trustee shall authenticate definitive Notes in exchange for temporary
Notes.
Holders of temporary Notes shall be entitled to all of the
benefits of this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record reten-
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<PAGE> 37
tion requirement of the Exchange Act). Certification of the destruction of all
cancelled Notes shall be delivered to the Company. The Company may not issue new
Notes to replace Notes that it has paid or that have been delivered to the
Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company or any Guarantor defaults in a payment of
interest on the Notes, it shall pay the defaulted interest in any lawful manner
plus, to the extent lawful, interest payable on the defaulted interest, to the
Persons who are Holders on a subsequent special record date, in each case at the
rate provided in the Notes and in Section 4.01 hereof. The Company shall notify
the Trustee in writing of the amount of defaulted interest proposed to be paid
on each Note and the date of the proposed payment. The Company shall fix or
cause to be fixed each such special record date and payment date, provided that
no such special record date shall be less than 10 days prior to the related
payment date for such defaulted interest. At least 15 days before the special
record date, the Company (or, upon the written request of the Company, the
Trustee in the name and at the expense of the Company) shall mail or cause to be
mailed to Holders a notice that states the special record date, the related
payment date and the amount of such interest to be paid.
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 45 days (unless the Trustee consents to a shorter period) but not more
than 60 days before a redemption date, an Officer's Certificate setting forth
(i) the clause of this Indenture pursuant to which the redemption shall occur,
(ii) the redemption date, (iii) the principal amount of Notes to be redeemed and
(iv) the redemption price.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed at any time,
the Trustee shall select the Notes to be redeemed among the Holders of the Notes
in compliance with the requirements of the principal national securities
exchange, if any, on which the Notes are listed or, if the Notes are not so
listed, on a pro rata basis, by lot or such method as the Trustee shall deem
fair and appropriate. In the event of partial redemption by lot, the particular
Notes to be redeemed shall be selected, unless otherwise provided herein, not
less than 30 nor more than 60 days prior to the redemption date by the Trustee
from the outstanding Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of
the Notes selected for redemption and, in the case of any Note selected for
partial redemption, the principal amount thereof to be redeemed. Notes and
portions of Notes selected shall be in amounts of $1,000 or whole multiples of
$1,000; except that if all of the Notes of a Holder are to be redeemed, the
entire outstanding amount of Notes held by such Holder, even if not a multiple
of $1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
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SECTION 3.03. NOTICE OF REDEMPTION.
Subject to the provisions of Section 3.09 hereof, at least 30
days but not more than 60 days before a redemption date, the Company shall mail
or cause to be mailed, by first class mail, a notice of redemption to each
Holder whose Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall
state:
(a) the redemption date;
(b) the redemption price and the amount of accrued interest
and Liquidated Damages, if any;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the
redemption date upon surrender of such Note, a new Note or Notes in
principal amount equal to the unredeemed portion shall be issued upon
cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such
redemption payment, interest and Liquidated Damages, if any, on Notes
called for redemption ceases to accrue on and after the redemption
date;
(g) the paragraph of the Notes and/or Section of this
Indenture pursuant to which the Notes called for redemption are being
redeemed;
(h) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed
on the Notes; and
(i) if fewer than all the Notes are to be redeemed, the
identification of the particular Notes (or portions thereof) to be
redeemed as well as the aggregate principal amount of Notes to be
redeemed and the aggregate principal amount of Notes to be outstanding
after such partial redemption.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officer's Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section
3.03 hereof, Notes called for redemption become irrevocably due and payable on
the redemption date at the redemption price. A notice of redemption may not be
conditional.
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SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
On or before 10:00 a.m. Eastern Time on the redemption date,
the Company shall deposit with the Trustee or with the Paying Agent money
sufficient to pay the redemption price of and accrued interest and Liquidated
Damages, if any, on all Notes to be redeemed on that date. The Trustee or the
Paying Agent shall promptly return to the Company any money deposited with the
Trustee or the Paying Agent by the Company in excess of the amounts necessary to
pay the redemption price of, and accrued interest and Liquidated Damages, if
any, on all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest and Liquidated Damages, if
any, shall cease to accrue on the Notes or the portions of Notes called for
redemption whether or not such Notes are presented for payment. If a Note is
redeemed on or after an interest record date but on or prior to the related
interest payment date, then any accrued and unpaid interest and Liquidated
Damages, if any, shall be paid to the Person in whose name such Note was
registered at the close of business on such record date. If any Note called for
redemption shall not be so paid upon surrender for redemption because of the
failure of the Company to comply with the preceding paragraph, interest and
Liquidated Damages, if any, shall be paid on the unpaid principal from the
redemption date until such principal is paid, and, to the extent lawful, on any
interest and Liquidated Damages, if any, not paid on such unpaid principal, in
each case at the rate provided in the Notes and in Section 4.01 hereof.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company
shall issue and, upon the Company's written request, the Trustee shall
authenticate for the Holder at the expense of the Company a new Note equal in
principal amount to the unredeemed portion of the Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
The Notes are not redeemable, in whole or in part, at the
Company's option prior to June 15, 2000. From and after June 15, 2000, the
Company may redeem the Notes in whole or in part, in an aggregate minimum
principal amount of $10.0 million and integral multiples of $10.0 million, at a
redemption price equal to 100% of the aggregate principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the
redemption date.
For purposes of this Article 3, a repurchase by the Company or
a Restricted Subsidiary of the Notes in open market purchase transactions shall
not be deemed to be a redemption.
Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION.
Except as set forth under Sections 4.10 and 4.15 hereof, the
Company shall not be required to make mandatory redemption or sinking fund
payments with respect to the Notes.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF AVAILABLE PROCEEDS
AMOUNT.
In the event that, pursuant to Section 4.10 hereof, the
Company shall be required to commence an offer to all Holders to purchase Notes,
it shall follow the procedures specified below.
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The Asset Sale Offer shall remain open for a period of 20
Business Days following its commencement and no longer, except to the extent
that a longer period is required by applicable law (the "Offer Period"). No
later than five Business Days after the termination of the Offer Period (the
"Purchase Date"), the Company shall purchase the principal amount of Notes
required to be purchased pursuant to Section 4.10 hereof (the "Offer Amount")
or, if less than the Offer Amount has been tendered, all Notes tendered in
response to the Asset Sale Offer. Payment for any Notes so purchased shall be
made in the same manner as interest payments are made.
If the Purchase Date is on or after an interest record date
and on or before the related interest payment date, any accrued and unpaid
interest and Liquidated Damages, if any, shall be paid to the Person in whose
name a Note is registered at the close of business on such record date, and no
additional interest or Liquidated Damages, if any, shall be payable to Holders
who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company
shall send, by first class mail, a notice to the Trustee and each of the
Holders, with a copy to the Trustee. The notice shall contain all instructions
and materials necessary to enable such Holders to tender Notes pursuant to the
Asset Sale Offer. The Asset Sale Offer shall be made to all Holders. The notice,
which shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this
Section 3.09 and Section 4.10 hereof and the length of time the Asset
Sale Offer shall remain open;
(b) the Offer Amount, the purchase price, the amount of
accrued and unpaid interest and Liquidated Damages, if any, as of the
Purchase Date and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall
continue to accrete or accrue interest and Liquidated Damages, if any;
(d) that, unless the Company defaults in making such payment,
any Note accepted for payment pursuant to the Asset Sale Offer shall
cease to accrete or accrue interest and Liquidated Damages, if any,
after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to
an Asset Sale Offer may only elect to have all of such Note purchased
and may not elect to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to
any Asset Sale Offer shall be required to surrender the Note, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of
the Note completed, or transfer the Note by book-entry transfer, to the
Company, a Depositary, if appointed by the Company, or a Paying Agent
at the address specified in the notice at least three days before the
Purchase Date;
(g) that Holders shall be entitled to withdraw their election
if the Company, the Depositary or the Paying Agent, as the case may be,
receives, not later than the expiration of the Offer Period, a
telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Note the Holder
delivered for purchase and a statement that such Holder is withdrawing
his or her election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes
surrendered by Holders exceeds the Offer Amount, the Company shall
select the Notes to be purchased on a pro rata basis (with such
ad-
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justments as may be deemed appropriate by the Company so that only
Notes in denominations of $1,000, or integral multiples thereof, shall
be purchased); and
(i) that Holders whose Notes were purchased only in part shall
be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered (or transferred by book-entry
transfer).
On the Purchase Date for any Asset Sale Offer, the Company
shall (i) accept for payment the maximum principal amount of Notes tendered
pursuant to such Asset Sale Offer than can be purchased out of the Available
Proceeds Amount from such Asset Sales, (ii) deposit with the Paying Agent the
aggregate purchase price of all Notes accepted for payment and any accrued and
unpaid interest and Liquidated Damages, if any, on such Notes as of the Purchase
Date, and (iii) deliver or cause to be delivered to the Trustee all Notes
tendered pursuant to the Asset Sale Offer. If less than all Notes tendered
pursuant to any Asset Sale Offer are accepted for payment by the Company for any
reason, selection of the Notes to be purchased by the Trustee shall be in
compliance with the requirements of the principal national securities exchange,
if any, on which the Notes are listed or, if the Notes are not so listed, by lot
or by such method as the Trustee shall deem fair and appropriate; provided that
Notes accepted for payment in part shall only be purchased in integral multiples
of $1,000. The Paying Agent shall promptly mail to each Holder of Notes accepted
for payment an amount equal to the purchase price for such Notes plus any
accrued and unpaid interest and Liquidated Damages thereon, if any, and the
Trustee shall promptly authenticate and mail to such Holder of Notes accepted
for payment in part a new Note equal in principal amount to any unpurchased
portion of the Notes, and any Note not accepted for payment in whole or in part
shall be promptly returned to the Holder of such Note. On and after a Purchase
Date, interest and Liquidated Damages, if any, shall cease to accrue on the
Notes accepted for payment. The Company shall announce the results of the Offer
to Holders of the Notes on or as soon as practicable after the Purchase Date.
Other than as specifically provided in this Section 3.09, any
purchase pursuant to this Section 3.09 shall be made pursuant to the provisions
of Sections 3.01 through 3.06 hereof.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of,
premium, if any, and interest on the Notes on the dates and in the manner
provided in the Notes. Principal, premium, if any, and interest shall be
considered paid on the date due if the Paying Agent, if other than the Company
or any Guarantor, holds as of 10:00 a.m. Eastern Time on the due date money
deposited by the Company in immediately available funds and designated for and
sufficient to pay all principal, premium, if any, and interest then due. The
Company shall pay all Liquidated Damages, if any, in the same manner on the
dates and in the amounts set forth in the Registration Rights Agreement.
The Company shall pay interest on overdue principal at the
rate equal to the rate set forth in the Notes to the extent lawful; it shall pay
interest on overdue installments of interest and Liquidated Damages, if any,
(without regard to any applicable grace period) at the same rate to the extent
lawful.
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SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the
City of New York, an office or agency (which may be an office of the Trustee or
an affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Company may also from time to time designate one or more
other offices or agencies where the Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, the City of New York for such purposes. The Company shall
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of
the Trustee as one such office or agency of the Company in accordance with
Section 2.03.
SECTION 4.03. REPORTS.
(a) Whether or not required by the rules and regulations of
the SEC, so long as any Notes are outstanding, the Company shall furnish to the
Trustee (i) all quarterly and annual financial information that would be
required to be contained in a filing with the SEC on Forms 10-Q and 10-K if the
Company were required to file such Forms, including a "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and, with respect
to the annual information only, a report thereon by the Company's certified
independent accountants and (ii) all current reports that would be required to
be filed with the SEC on Form 8-K if the Company were required to file such
reports. In addition, whether or not required by the rules and regulations of
the SEC, commencing immediately after the consummation of the Exchange Offer
contemplated by the Registration Rights Agreement, the Company shall file a copy
of all such information and reports with the SEC (which may be contained in
Forms 10-K, 10-Q and 8-K) for public availability (unless the SEC will not
accept such a filing).
(b) For so long as any Notes remain outstanding, the Company
and the Guarantors shall furnish to the Holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4).
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Trustee, within 120 days
after the end of each fiscal year, an Officer's Certificate stating that a
review of the activities of the Company and its Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing Officer
with a view to determining whether each of the Company and the Guarantors has
kept, observed, performed and fulfilled its obligations under this Indenture,
and further stating, as to such Officer signing such certificate, that to the
best of his or her knowledge each of the Company and the Guarantors has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and is not in default in the performance or observance of any of the
terms, provisions and conditions of this Indenture (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which he or she may have knowledge and what action the Company is
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taking or proposes to take with respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest or Liquidated Damages, if
any, on the Notes is prohibited or if such event has occurred, a description of
the event and what action the Company is taking or proposes to take with respect
thereto.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 4.03(a) above shall
be accompanied by a written statement of the Company's independent public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial statements,
nothing has come to their attention that would lead them to believe that the
Company has violated any provisions of Article 4 or Article 5 hereof or, if any
such violation has occurred, specifying the nature and period of existence
thereof, it being understood that such accountants shall not be liable directly
or indirectly to any Person for any failure to obtain knowledge of any such
violation.
(c) The Company shall, so long as any of the Notes are
outstanding, deliver to the Trustee, forthwith upon any Officer of the Company
or any Guarantor becoming aware of any Default or Event of Default, an Officer's
Certificate specifying such Default or Event of Default and what action the
Company is taking or proposes to take with respect thereto.
SECTION 4.05. PAYMENT OF TAXES AND OTHER CLAIMS; MAINTENANCE OF
PROPERTIES; INSURANCE; BOOKS AND RECORDS.
(a) The Company shall pay or discharge and cause each of its
Subsidiaries to pay or discharge, before the same shall become delinquent, (i)
all taxes, assessments and governmental charges levied or imposed upon it or any
of its Subsidiaries or upon the income, profits, property or assets of it or any
of the Subsidiaries and (ii) all lawful claims for labor, materials and supplies
which, in each case, if unpaid, might by law become a Lien upon the property or
assets of it or any of the Restricted Subsidiaries; provided, however, that,
subject to the terms of the applicable Security Documents, the Company shall not
be required to pay or discharge or cause its Restricted Subsidiaries to pay or
discharge any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings and for
which disputed amounts adequate reserves have been made in accordance with GAAP.
(b) Subject to, and in compliance with, the provisions of
Section 11.03 and 11.04 and to the provisions of the applicable Security
Documents, the Company shall cause all properties used or useful in the conduct
of its business or the business of any of the Restricted Subsidiaries to be
maintained and kept in good condition, repair and working order (ordinary wear
and tear excepted) and supplied with all necessary equipment and shall cause to
be made all necessary repairs, renewals, replacements, betterments and
improvements thereto.
(c) The Company shall maintain, and shall cause the Restricted
Subsidiaries to maintain, subject to the provisions of the applicable Security
Documents, insurance with responsible carriers against such risks and in such
amounts, and with such deductibles, retentions, self-insured amounts and
co-insurance provisions, as are customarily carried by similar businesses of
similar size, including property and casualty loss, comprehensive general
liability, workers' compensation and interruption of business insurance.
(d) The Company shall, and shall cause each of its Restricted
Subsidiaries to, keep proper books of record and account, in which full and
correct entries shall be made of all financial transactions and the assets and
business of the Company and each of its Restricted Subsidiaries, in accordance
with GAAP.
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SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company and each of the Guarantors covenants (to the
extent that it may lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law wherever enacted, now or at any time hereafter
in force, that may affect the covenants or the performance of this Indenture;
and the Company and each of the Guarantors (to the extent that it may lawfully
do so) hereby expressly waives all benefit or advantage of any such law, and
covenants that it shall not, by resort to any such law, hinder, delay or impede
the execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law has been enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any
dividend or make any other payment or distribution on account of the Company's
Equity Interests (other than dividends or distributions payable in Equity
Interests (other than Disqualified Stock) of the Company); (ii) purchase,
redeem, defease or otherwise acquire or retire for value any Equity Interests of
the Company or any direct or indirect parent of the Company; (iii) make any
principal payment on, or purchase, redeem, defease or otherwise acquire or
retire for value any Subordinated Indebtedness, except at final maturity or
scheduled installment or sinking fund payments; or (iv) make any Restricted
Investment (all such payments and other actions set forth in clauses (i) through
(iv) above being collectively referred to as "Restricted Payments"), unless, at
the time of and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) the Company would, at the time of such Restricted Payment
and immediately after giving pro forma effect thereto as if such
Restricted Payment had been made at the beginning of the applicable
four-quarter period, have been permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in Section 4.09 hereof; and
(c) the amount of such Restricted Payment, together with the
aggregate amount of all other Restricted Payments made by the Company
and its Restricted Subsidiaries after the date hereof (including
Restricted Payments permitted by clauses (i), (iv), (vi) and (viii) of
the next succeeding paragraph, but excluding all other Restricted
Payments permitted by the next succeeding paragraph), is less than the
sum of (i) 50% of the Consolidated Net Income of the Company for the
period (taken as one accounting period) from July 1, 1998 to the end of
the Company's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted
Payment (or, if such Consolidated Net Income for such period is a
deficit, less 100% of such deficit), plus (ii) 100% of the aggregate
net cash proceeds received by the Company from the issue or sale since
May 13, 1998 of Equity Interests of the Company (including the net cash
proceeds of any exercise or conversion payments with respect to Equity
Interests) or of Disqualified Stock or debt securities of the Company
that have been converted into such Equity Interests (other than Equity
Interests, Disqualified Stock or convertible debt securities of the
Company sold to a Restricted Subsidiary of the Company and other than
Disqualified Stock or debt securities that have been converted into
Disqualified Stock), plus (iii) 100% of the aggregate amounts
contributed to the capital of the Company since May 13, 1998, plus (iv)
to the extent that any Restricted Investment that was made after May
13, 1998 was sold for cash or was repaid, the lesser of (A) the cash
return of capital with respect to such Restricted Investment (less the
cost of disposition, if any) and (B) the initial amount of such
Restricted Investment, plus (v) without duplication, to the extent that
any Unrestricted Subsidiary is or was designated by the Company as a
Restricted Subsidiary, an amount equal to the lesser of (A) the net
book value of the Company's Invest-
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ment in such Unrestricted Subsidiary at the time of such designation
and (B) the Fair Market Value of such Investment at the time of such
designation, plus (vi) 50% of any cash dividends received by the
Company or a Restricted Subsidiary of the Company (except to the extent
that such dividends were already included in Consolidated Net Income
and, in the case of a Restricted Subsidiary, only to the extent of the
Company's ownership interest in such Restricted Subsidiary) after May
13, 1998 from an Unrestricted Subsidiary of the Company.
The foregoing provisions shall not prohibit:
(i) the payment of any dividend or redemption payment within
60 days after the date of declaration thereof, if at the date of
declaration such payment would have complied with the provisions of
this Indenture;
(ii) the redemption, repurchase, retirement or other
acquisition of any Equity Interests of the Company or any Restricted
Subsidiary or any Subordinated Indebtedness of the Company in exchange
for, or out of the proceeds of, the substantially concurrent sale
(other than to a Restricted Subsidiary of the Company) of Equity
Interests of the Company (other than any Disqualified Stock); provided
that the amount of any such net cash proceeds that are utilized for any
such redemption, repurchase, retirement or other acquisition shall be
excluded from clause (c)(ii) of this Section;
(iii) the defeasance, redemption, repurchase, retirement or
other acquisition of Subordinated Indebtedness with the net cash
proceeds from an incurrence of Permitted Refinancing Indebtedness;
(iv) the repurchase of the Senior Subordinated Notes in the
event of an Asset Sale or Change of Control (as defined in the
indenture governing the Senior Subordinated Notes (as in effect on the
date of this Indenture)) as long as the Company complied with the
provisions of Section 4.10 or Section 4.15, as applicable;
(v) repurchases of Equity Interests deemed to occur upon
exercise of stock options if such Equity Interests represent a portion
of the exercise price of such options;
(vi) repurchases or redemptions of Equity Interests held by
officers or employees or former officers or employees of the Company or
any Restricted Subsidiary pursuant to any employment agreement or other
written agreement, in an aggregate amount not to exceed $2.0 million in
any fiscal year, and any such repurchases or redemptions funded by life
insurance proceeds received by the Company upon the death of an insured
officer or employee;
(vii) the acquisition by the Company of Equity Interests
previously issued and delivered to an escrow agent pursuant to an
escrow agreement or previously issued but never delivered pursuant to
contingent or "earn-out" payments, in each case in connection with
acquisition agreements of the Company or any Subsidiary;
(viii) the payment of any dividend on, or the redemption of,
the Company Preferred Stock, in each case in accordance with the terms
thereof as in effect on May 13, 1998; provided that (other than in the
case of a dividend payable solely in Equity Interests of the Company)
the Fixed Charge Coverage Ratio for the Company for the most recently
ended four full fiscal quarters for which internal financial statements
are available immediately preceding the date of such payment,
redemption, repurchase, retirement or other acquisition would have been
at least 2.0 to 1.0 determined on a pro forma basis, as if such
payment, redemption, repurchase, retirement or other acquisition,
together with any other
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payments, redemptions, repurchases, retirements and other acquisitions
permitted by this clause (viii) occurring during the preceding
twelve-month period, had occurred at the beginning of the applicable
four-quarter period;
(ix) guarantees of obligations of Unrestricted Subsidiaries or
Permitted Joint Ventures by the Company or a Restricted Subsidiary
(other than Obligations constituting Indebtedness of the Company or a
Restricted Subsidiary) to the extent that a cash Investment by the
Company or such Restricted Subsidiary would be permitted in such
Unrestricted Subsidiaries under this covenant; provided, however, that
the extension of any such guarantees shall be deemed to be an
Investment by the Company or such Restricted Subsidiary in an amount
equal to the Obligations subject to the guarantees and shall be deemed
to be made at the time of such extension; and
(x) the making of other Restricted Payments not to exceed
$10.0 million in the aggregate from and after May 13, 1998;
provided, further, that at the time of, and after giving effect to, any
Restricted Payment permitted under clauses (iv), (v), (viii) or (ix) above, no
Default or Event of Default shall have occurred and be continuing or would occur
as a consequence thereof; and, provided, further, that for purposes of
determining the aggregate amount expended for Restricted Payments in accordance
with clause (c) of this Section, only the amounts expended under clauses (i),
(iv), (vi) and (viii) shall be included.
As of the date hereof, all of the Company's Subsidiaries shall
be Restricted Subsidiaries. The Company shall not permit any Unrestricted
Subsidiary to become a Restricted Subsidiary except pursuant to the last
sentence of the definition of "Unrestricted Subsidiary." For purposes of
designating any Restricted Subsidiary as an Unrestricted Subsidiary, all
outstanding Investments by the Company and its Restricted Subsidiaries (except
to the extent repaid) in the Subsidiary so designated shall be deemed to be
Restricted Payments in an amount equal to the Fair Market Value of such
Investment at the time of such designation. Such designation shall only be
permitted if a Restricted Payment in such amount would be permitted to be made
at such time and if such Subsidiary otherwise meets the definition of an
Unrestricted Subsidiary. Unrestricted Subsidiaries shall not be subject to any
of the covenants set forth in this Article 4.
The amount of all Restricted Payments (other than cash) shall
be the Fair Market Value (evidenced by a resolution of the Board of Directors
set forth in an Officer's Certificate delivered to the Trustee) on the date of
the Restricted Payment of the asset(s) proposed to be transferred by the Company
or such Restricted Subsidiary, as the case may be, pursuant to the Restricted
Payment. Not later than the date of making any Restricted Payment with a Fair
Market Value in excess of $5.0 million, the Company shall deliver to the Trustee
an Officer's Certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required by this Section
4.07 were computed, which calculations may be based upon the Company's latest
available financial statements.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary to (i)(a) pay dividends or make any other
distributions to the Company or any of its Restricted Subsidiaries (1) on its
Capital Stock or (2) with respect to any other interest or participation in, or
measured by, its profits, or (b) pay any indebtedness owed to the Company or any
of its Restricted Subsidiaries, (ii) make loans or advances to the Company or
any of its Restricted Subsidiaries or (iii) sell, lease or transfer any of its
properties or assets to the Company or any of its Restricted Subsidiaries,
except for such en-
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cumbrances or restrictions existing under or by reason of (a) Existing
Indebtedness as in effect on the date hereof, (b) the Senior Credit Facility as
in effect as of the date hereof, and any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings thereof, in whole or in part, provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacement or refinancings are no more restrictive in any material respect with
respect to such dividend and other payment restrictions than those contained in
the Senior Credit Facility as in effect on the date hereof, (c) this Indenture,
the Notes and the Security Documents, (d) applicable law, (e) Indebtedness or
Capital Stock of a Person acquired by the Company or any of its Restricted
Subsidiaries as in effect at the time of such acquisition (except to the extent
such Indebtedness was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, provided; that, in the case of
Indebtedness, such Indebtedness was permitted by the terms of this Indenture to
be incurred, (f) by reason of nonassignment or net worth maintenance provisions
in leases entered into in the ordinary course of business, (g) purchase money
obligations for property acquired in the ordinary course of business that impose
restrictions of the nature described in clause (iii) above on the property so
acquired, or (h) Permitted Refinancing Indebtedness; provided that the
restrictions contained in the agreements governing such Permitted Refinancing
Indebtedness are no more restrictive in any material respect than those
contained in the agreements governing the Indebtedness being refinanced.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED
STOCK.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, "incur" and
correlatively, an "incurrence" of) any Indebtedness (including Acquired Debt)
and the Company shall not issue any Disqualified Stock and shall not permit any
of its Restricted Subsidiaries to issue any shares of Preferred Stock; provided,
however, that the Company may incur Indebtedness (including Acquired Debt) or
issue shares of Disqualified Stock if the Fixed Charge Coverage Ratio for the
Company for the most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date of such
incurrence would have been at least 2.0 to 1.0 determined on a Pro Forma Basis.
The foregoing provisions shall not apply to:
(a) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness under the Senior Credit Facility and
Guarantees thereof by the Guarantors so long as, immediately after any
such incurrence, the aggregate principal amount outstanding under the
Senior Credit Facility (together with any Permitted Refinancing
Indebtedness incurred to refund, replace or refinance any Indebtedness
incurred pursuant to the Senior Credit Facility) pursuant to this
paragraph (a) does not exceed an amount equal to the greater of (x)
$200.0 million, less the aggregate amount of all Loan Reductions, and
(y) the sum of (i) 85% of the consolidated book value of the accounts
receivable of the Company and its Restricted Subsidiaries, (ii) 70% of
the consolidated book value of the inventory of the Company and its
Restricted Subsidiaries and (iii) the orderly liquidation value of the
Company's property, plant and equipment (initially $40.0 million),
subject to automatic and permanent reduction by $1.4 million each
quarter, commencing July 1, 1998 and subject to increases (but not in
excess of $40.0 million) based on increases in the orderly liquidation
value of the Company's property, plant and equipment resulting from
acquisitions completed by the Company (as set forth in the appraisals
accepted by the agent under the Senior Credit Facility and provided
that the automatic and permanent reduction described above shall be
increased by the amount of any such increase divided by 28); provided,
however, that in no event may the aggregate principal amount
outstanding under the Senior
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Credit Facility pursuant to this paragraph (a) exceed $300.0 million;
and provided, further, that the amount of Indebtedness which may be
incurred under the Senior Credit Facility pursuant to this paragraph
(a) shall be reduced by the principal amount of any Acquired Debt
incurred solely pursuant to paragraph (j) below;
(b) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by the Notes and the
Subsidiary Guarantees in an amount not to exceed $30.0 million;
(c) Guarantees by the Company or a Guarantor of Indebtedness
incurred by the Company or a Restricted Subsidiary of the Company so
long as the incurrence of such Indebtedness by the primary obligor
thereon was permitted under the terms of this Indenture;
(d) the incurrence by the Company or a Restricted Subsidiary
of the Company of intercompany Indebtedness between or among the
Company and any of its Restricted Subsidiaries; provided, however, that
(i) all such intercompany Indebtedness is expressly subordinate to the
prior payment in full of all Obligations with respect to the Notes and
the Subsidiary Guarantees and (ii)(A) any subsequent issuance or
transfer of Equity Interests that results in any such intercompany
Indebtedness being held by a Person other than the Company or a
Restricted Subsidiary and (B) any sale or transfer of any such
intercompany Indebtedness to a Person that is not either the Company or
a Restricted Subsidiary of the Company shall be deemed, in each case,
to constitute an incurrence of such Indebtedness by the Company or such
Restricted Subsidiary, as the case may be, that is not permitted by
this clause (d);
(e) the incurrence by the Company or any Restricted Subsidiary
of Indebtedness (including reimbursement obligations relating thereto)
in respect of bid, payment or performance bonds, bankers' acceptances,
letters of credit and surety or appeal bonds, or guarantees of such
obligations of others, in the ordinary course of business;
(f) the issuance by a Restricted Subsidiary of the Company of
any shares of Preferred Stock to the Company or any of its Restricted
Subsidiaries; provided, however, that (i) all such Preferred Stock is
expressly subordinate to the prior payment in full of all Obligations
with respect to the Notes and the Subsidiary Guarantees and (ii)(A) any
subsequent issuance or transfer of Equity Interests that results in any
such Preferred Stock being held by a Person other than the Company or a
Restricted Subsidiary and (B) any sale or transfer of any such shares
of Preferred Stock to a Person that is not either the Company or a
Restricted Subsidiary of the Company shall be deemed, in each case, to
constitute an issuance of such Preferred Stock by such Restricted
Subsidiary that is not permitted by this clause (f);
(g) Hedging Obligations of the Company or a Restricted
Subsidiary that are incurred (1) for the purpose of fixing or hedging
interest rate risk with respect to any Indebtedness that is permitted
by the terms of this Indenture to be outstanding or (2) for the purpose
of fixing or hedging currency exchange rate risk with respect to any
currency exchanges or commodity price risk with respect to commodities
utilized by the Company in the ordinary course of business;
(h) subject to paragraph (a) above, the incurrence by the
Company or any of its Restricted Subsidiaries of Permitted Refinancing
Indebtedness in exchange for, or the net proceeds of which are used to
extend, refinance, renew, replace, defease or refund, Indebtedness that
was permitted by this Indenture to be incurred;
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(i) the incurrence of Indebtedness (but excluding any funded
Indebtedness) arising from agreements providing for indemnification,
adjustment of purchase price or similar Obligations, incurred or
assumed in connection with the acquisition or disposition of any
business by the Company or any Restricted Subsidiary;
(j) the incurrence of any Acquired Debt in an aggregate
principal amount permitted solely by this clause (j) not to exceed
$25.0 million at any one time outstanding;
(k) Capital Lease Obligations and Purchase Money Indebtedness
of the Company or any of its Restricted Subsidiaries (including any
Permitted Refinancing Indebtedness incurred to refund, replace or
refinance any Capital Lease Obligations or Purchase Money Indebtedness
incurred pursuant to this clause (k)) not to exceed $10.0 million at
any one time outstanding;
(l) the incurrence by the Company and any of its Restricted
Subsidiaries of Indebtedness represented by the Senior Subordinated
Notes and the Guarantees thereof in an amount not to exceed $180.0
million; and
(m) additional Indebtedness of the Company and the Restricted
Subsidiaries at any time outstanding equal to, if positive, (x) $30.0
million, less (y) the sum of (i) the principal amount of the Notes then
outstanding plus (ii) the principal amount of any Permitted
Refinancing Indebtedness incurred by the Company, the proceeds of which
are or were used to redeem or repurchase Notes, and which Permitted
Refinancing Indebtedness is incurred by the Company solely by reason of
paragraph (h) above.
For purposes of determining compliance with this Section 4.09, the accrual of
interest and the accretion of accreted value will not be deemed to be an
incurrence of Indebtedness.
Notwithstanding anything to the contrary in this Section 4.09,
the Company and the Restricted Subsidiaries shall comply with Section 4.16
hereof.
Neither the Company nor any Guarantor shall, directly or
indirectly, incur any Indebtedness which by its terms (or by the terms of any
agreement governing such Indebtedness) is subordinate in right of payment to any
other Indebtedness of the Company or such Guarantor, as the case may be, unless
such Indebtedness is also by its terms (or by the terms of any agreement
governing such Indebtedness) made expressly subordinate in right of payment to
the Notes and the Subsidiary Guarantees pursuant to subordination provisions
that are substantially identical to the subordination provisions of such other
Indebtedness (or any agreement governing such Indebtedness) that are most
favorable to the holders of any other Indebtedness of the Company.
SECTION 4.10. ASSET SALES.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, cause or make an Asset Sale unless (i) the Company
(or the Restricted Subsidiary, as the case may be) receives consideration at the
time of such Asset Sale at least equal to the Fair Market Value (evidenced by a
resolution of the Board of Directors, which in the case of an Asset Sale with a
Fair Market Value exceeding $5.0 million, shall be set forth in an Officer's
Certificate delivered to the Trustee) of the assets or Equity Interests issued
or sold or otherwise disposed of, (ii) at least 75% of the consideration
therefor received by the Company or such Restricted Subsidiary is in the form of
Cash Equivalents; provided that the amount of (x) any liabilities (as shown on
the Company's or such Restricted Subsidiary's most recent balance sheet) of the
Company or any Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Notes or any Guarantee
thereof) that are assumed by the transferee of any such assets pursuant to a
customary novation
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agreement that releases the Company or such Restricted Subsidiary from further
liability and (y) any notes or other obligations received by the Company or any
such Restricted Subsidiary from such transferee that are immediately converted
by the Company or such Restricted Subsidiary into cash (to the extent of the
cash received), shall be deemed to be cash for purposes of this provision (ii)
and (iii) the Company or such Restricted Subsidiary shall apply the Net Proceeds
of such Asset Sale within 270 days of receipt thereof as follows:
(a) to the extent such Net Proceeds are received from an Asset
Sale not involving the sale, transfer or disposition of Collateral
("Non-Collateral Proceeds") or such proceeds are received from an Asset
Sale involving the sale, transfer or disposition of Collateral that is
subject to a Prior Lien ("Prior Lien Collateral Proceeds"), to satisfy
all mandatory repayment obligations of any Indebtedness secured by the
assets involved in such Asset Sale together with a concomitant
permanent reduction in the amount of such Indebtedness (including a
permanent reduction in committed amounts therefor in the case of any
revolving credit facility so repaid); and
(b) with respect to any Non-Collateral Proceeds or Prior Lien
Collateral Proceeds remaining after application pursuant to the
preceding paragraph (a) above and any Net Proceeds received from an
Asset Sale involving the sale, transfer or disposition of Collateral
not subject to the provisions of paragraph (a) above ("Collateral
Proceeds," and, together with such remaining Non-Collateral Proceeds
and Prior Lien Collateral Proceeds, the "Available Proceeds Amount"),
the Company shall make an offer to purchase (the "Asset Sale Offer")
from all Holders up to a maximum principal amount (expressed as an
integral multiple of $1,000) of Notes equal to the Available Proceeds
Amount at a purchase price in cash equal to 100% of the principal
amount thereof plus accrued and unpaid interest thereon, if any, and
Liquidated Damages, if any, to the date fixed for such purchase in
accordance with the procedures set forth herein; provided, that the
Company will not be required to apply pursuant to this paragraph (b)
Net Proceeds received from any Asset Sale if, and only to the extent
that, such Net Proceeds are applied (or, in the case of clauses (i) or
(ii) below, the Company (or such Restricted Subsidiary) enters into a
binding, definitive agreement to apply) within 270 days of such Asset
Sale the Net Proceeds from such Asset Sale (i) to the acquisition of a
controlling interest in any one or more businesses, to the making of a
capital expenditure (including the construction or improvement of
properties and capital assets) or the acquisition of long-term assets,
in each case, that is engaged in or that is used or useful in a
Principal Business and/or (ii) to an investment in properties or assets
that replace the properties and assets that are the subject of such
Asset Sale (collectively, clause (i) and (ii) of this paragraph, a
"Permitted Related Acquisition") and/or (iii) to permanently reduce
Obligations under the Senior Credit Facility (and to correspondingly
reduce commitments with respect thereto) and, if the Net Proceeds so
invested in such Permitted Related Acquisition included Collateral
Proceeds or Prior Lien Collateral Proceeds, the property and assets
constituting such Permitted Related Acquisition and any non-cash
consideration received as a result of such Asset Sale are made subject
to the Lien securing the Notes in the manner contemplated in Section
11.05 hereof and the Security Documents.
If at any time any non-cash consideration received by the
Company or any Restricted Subsidiary of the Company, as the case may be, in
connection with any Asset Sale is converted into or sold or otherwise disposed
of for cash, then such conversion or disposition shall be deemed to constitute
an Asset Sale hereunder and the Net Proceeds thereof shall be applied in
accordance with this Section 4.10. The Company may defer the Asset Sale Offer
until there is an aggregate unutilized Available Proceeds Amount in excess of
$10.0 million resulting from one or more Asset Sales at which time the entire
unutilized Available Proceeds Amount, and not just the amount in excess of $10.0
million, shall be applied to the Asset Sale Offer. The Company shall commence an
Asset Sale Offer within ten Business Days after the date the unutilized
Available Proceeds Amount exceeds $10.0 million by mailing the notice required
pursuant to the terms of this Indenture, with a copy to the Trustee. To the
extent that the aggregate amount of Notes tendered pursuant to an Asset Sale
Offer exceeds the
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unutilized Available Proceeds Amount, the Trustee shall select the Notes to be
purchased on a pro rata basis. Upon completion of any such Asset Sale Offer, the
unutilized Available Proceeds Amount shall be reset to zero.
Notwithstanding any other provision of this covenant, in the
event of an Asset Sale by the Company or any Restricted Subsidiary of Southern
Recycling, L.L.C. that is consummated prior to such time when Southern
Recycling, L.L.C. becomes a Subsidiary of the Company or any Restricted
Subsidiary, such Asset Sale shall not be subject to, or otherwise required to
comply with, clauses (i) or (ii) of the first paragraph of this Section 4.10;
provided, however, such Asset Sale shall be subject to, and otherwise required
to comply with, all other provisions of this Section 4.10. From and after such
time when Southern Recycling, L.L.C. becomes a Subsidiary of the Company or a
Restricted Subsidiary, an Asset Sale relating to Southern Recycling, L.L.C.
shall be subject to and in compliance with all of the provisions described under
this Section 4.10.
To the extent the Senior Bank Debt is secured by or Lien of
the unutilized Available Proceeds Amount, the Notes shall be secured by a Lien
on such unutilized Available Proceeds Amount (which Lien shall be junior and
subordinated to the Lien securing the Senior Bank Debt) and such unutilized
Available Proceeds Amount shall constitute Collateral in accordance with the
Security Documents. To the extent such Lien shall be released under the terms of
the Senior Credit Facility, the Liens in favor of the Trustee and the Holders on
such Available Proceeds Amount shall be released, and the unutilized Available
Proceeds Amount may be applied for any purpose not prohibited by this Indenture,
including the repurchase of Senior Subordinated Notes in accordance with the
indenture governing such Senior Subordinated Notes.
The Company will comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of the Notes as a result of an Asset Sale. To the extent that the
provisions of any securities laws or regulations conflict with the Asset Sale
provisions of this Indenture, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under the Asset Sales provisions by virtue thereof.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate (each of the foregoing, an "Affiliate Transaction"), unless (i) such
Affiliate Transaction is on terms that are no less favorable to the Company or
the relevant Restricted Subsidiary than those that might reasonably have been
obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee
(a) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $2.0 million, a
certificate of the Chief Executive Officer of the Company certifying that such
Affiliate Transaction complies with clause (i) above, (b) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $5.0 million, a resolution of the Board of
Directors set forth in an Officer's Certificate certifying that such Affiliate
Transaction complies with clause (i) above and that such Affiliate Transaction
has been approved by a majority of the disinterested members of the Board of
Directors and (c) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $10.0
million, an opinion as to the fairness to the Holders of the Notes of such
Affiliate Transaction from a financial point of view issued by an accounting,
appraisal or investment banking firm of national standing.
The foregoing provisions shall not apply to the following: (i)
transactions between or among the Company and/or any of its Restricted
Subsidiaries in which no Affiliate of the Company owns Capital Stock
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(other than directors' qualifying shares); (ii) Restricted Payments or Permitted
Investments permitted under Section 4.07 hereof; and (iii) the payment of
reasonable and customary regular fees and compensation (including compensation
payable in Equity Interests) to, and indemnity provided on behalf of, officers,
directors, employees or consultants of the Company or any Subsidiary or
Permitted Joint Venture of the Company.
SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien (i) upon any item of Collateral other than the Liens
created by the Notes, the Subsidiary Guarantees, this Indenture and the Security
Documents and the Permitted Liens (including, without limitation, the Liens
securing the Senior Bank Debt) and (ii) upon any other asset or property (other
than Real Property) now owned or hereafter acquired by the Company or any of its
Restricted Subsidiaries, which asset or property does not at such time
constitute Collateral, or any income or profits therefrom or assignment or
conveyance of any right to receive income therefrom, if, in the case of (ii),
(a) such Lien secures obligations under any Subordinated Indebtedness, unless
the Notes are secured on a basis no less favorable than such Subordinated
Indebtedness is subordinated to the Notes with the obligations so secured until
such time as such obligations are no longer secured by a Lien or (b) such Lien
secures obligations under Pari Passu Indebtedness at a time when the Senior
Credit Facility is no longer in effect, unless the Notes are secured on a basis
that is pari passu with such Pari Passu Indebtedness so secured until such time
as such obligations are no longer secured by a Lien.
SECTION 4.13. BUSINESS ACTIVITIES.
The Company shall not, and shall not permit any Restricted
Subsidiary to, engage in any business other than a Principal Business, except to
such extent as would not be material to the Company and its Restricted
Subsidiaries, taken as a whole.
SECTION 4.14. CORPORATE EXISTENCE.
Subject to Article 5 hereof, each of the Company and the
Guarantors shall do or cause to be done all things necessary to preserve and
keep in full force and effect (i) its corporate existence, and the corporate,
partnership or other existence of each of its Restricted Subsidiaries, in
accordance with the respective organizational documents (as the same may be
amended from time to time) of the Company, such Guarantor or any such Restricted
Subsidiary and (ii) the rights (charter and statutory), licenses and material
franchises of the Company, the Guarantors and any of their Restricted
Subsidiaries; provided, however, that the Company and the Guarantors shall not
be required to preserve any such right, license or franchise, or the corporate,
partnership or other existence of any of their Restricted Subsidiaries, if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company or such Guarantors as
applicable and their Restricted Subsidiaries, taken as a whole, and that the
loss thereof is not adverse in any material respect to the Holders of the Notes.
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, and regardless
of the applicability of any other provision hereof, each Holder of Notes shall
have the right to require the Company to repurchase all or any part (of at least
$1,000 principal amount or an integral multiple thereof) of such Holder's Notes
pursuant to the offer described below (the "Change of Control Offer") at an
offer price in cash (the "Change of Control Payment") equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the date of purchase. Within 30 days
following a Change of Control, the Company shall mail to each Holder of Notes at
such Holder's registered address a notice stating: (i) that an offer
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(an "Offer") is being made pursuant to this Section 4.15 as a result of a Change
of Control, the length of time the Offer shall remain open, and the maximum
aggregate principal amount of Notes that will be accepted for payment pursuant
to such Offer; (ii) the purchase price, the amount of accrued and unpaid
interest and Liquidated Damages, if any, as of the purchase date, and the
purchase date (which will be no earlier than 30 days or later than 60 days from
the date such notice is mailed) (the "Change of Control Payment Date"); (iii)
the circumstances and material facts regarding such Change of Control to the
extent known to the Company (including, but not limited to, information with
respect to pro forma and historical financial information after giving effect to
such Change of Control and information regarding the Person or Persons acquiring
control); (iv) that any Note not tendered will continue to accrue interest and
Liquidated Damages, if any; (v) that, unless the Company defaults in the payment
of the Change of Control Payment, all Notes accepted for payment pursuant to the
Offer shall cease to accrue interest and Liquidated Damages, if any, after the
Change of Control Payment Date; (vii) that Holders electing to have any Notes
purchased pursuant to an Offer will be required to surrender the Notes, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the Notes
completed, to the Paying Agent at the address specified in the notice prior to
the close of business on the third Business Day preceding the Change of Control
Payment Date; (viii) that Holders shall be entitled to withdraw their election
if the Paying Agent receives, not later than the close of business on the second
Business Day preceding the Change of Control Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of Notes delivered for purchase, and a statement that such
Holder is withdrawing his election to have the Notes purchased; and (ix) that
Holders whose Notes are being purchased only in part shall be issued new Notes
equal in principal amount to the unpurchased portion of the Notes surrendered,
which unpurchased portion must be equal to $1,000 in principal amount or an
integral multiple thereof.
The Company shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of Notes in connection with a Change of Control. To the extent that
the provision of any securities laws or regulations conflict with the Change of
Control Offer provisions herein, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligation under this Section 4.15 by virtue thereof.
(b) On the Change of Control Payment Date, the Company shall,
to the extent lawful, (1) accept for payment all Notes or portions thereof
properly tendered pursuant to the Change of Control Offer, (2) deposit with the
Paying Agent an amount equal to the Change of Control Payment in respect of all
Notes or portions thereof so tendered and (3) deliver or cause to be delivered
to the Trustee for cancellation the Notes so accepted together with an Officer's
Certificate stating the aggregate principal amount of Notes or portions thereof
being purchased by the Company. The Paying Agent shall promptly mail at the
expense of the Company to each Holder of Notes so tendered the Change of Control
Payment for such Notes, and the Trustee shall promptly authenticate and mail at
the expense of the Company (or cause to be transferred by book entry) to each
Holder a new Note equal in principal amount to any unpurchased portion of the
Notes surrendered, if any; provided that each such new Note shall be in a
principal amount of $1,000 or an integral multiple thereof. 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. Any amounts remaining
after the purchase of Notes pursuant to the Change of Control Offer shall be
promptly returned by the Paying Agent to the Company.
(c) The Company shall not be required to make a Change of
Control Offer upon a Change of Control if a third party makes the Change of
Control Offer in the manner, at the times and otherwise in compliance with the
requirements set forth herein applicable to a Change of Control Offer made by
the Company and purchases all Notes validly tendered and not withdrawn under
such Change of Control Offer.
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SECTION 4.16. LIMITATION ON INCURRENCE OF PARI PASSU INDEBTEDNESS.
So long as the Senior Credit Facility is outstanding and is
secured by any interest in Real Property (other than fixtures) of the Company or
any Restricted Subsidiary, the Company will not, and will not permit any of its
Restricted Subsidiaries to, incur any Pari Passu Indebtedness, unless prior to
such incurrence of Pari Passu Indebtedness, (i) the Company executes and
delivers and causes the Restricted Subsidiaries to execute and deliver Mortgages
granting a Security Interest in, and valid mortgage Lien upon, all of the Real
Property of the Company and the Restricted Subsidiaries that from time to time
secures the Senior Bank Debt, which Security Interest shall be superior and
prior to the rights of all other Persons (including, without limitation, the
holders of any Pari Passu Indebtedness incurred pursuant to the provisions of
this Section 4.16) in such Real Property other than Prior Liens, (ii) the
Company files, records and registers and causes the Restricted Subsidiaries to
file, record and register all filings, recordings and registrations necessary or
reasonably requested by the Trustee at the direction of the Holders of the Notes
to create, preserve, protect and perfect the Security Interest intended to be
granted pursuant to clause (i) of this Section 4.16 and (iii) the Company
delivers and causes the Restricted Subsidiaries to deliver to the Trustee the
following documents:
(1) a policy of title insurance (or a commitment to issue
title insurance) insuring that the Lien of the Security Documents
constitutes a direct and valid and perfected mortgage Lien on such Real
Property (subject to no Liens other than Prior Liens) in an aggregate
amount equal to the Fair Market Value of such Real Property and
containing the same endorsements in title to the insurance policies
provided to the Senior Bank Agent and contain only such exceptions to
title as shall be Prior Liens and such other exceptions as are in title
policies provided to the Senior Bank Agent in respect of the Senior
Bank Debt;
(2) an Officers' Certificate of the Company stating that any
specific exceptions to such title insurance or title opinion are Liens
permitted to be on Collateral pursuant to the provisions of this
Section 4.16;
(3) a survey with respect to such Real Property substantially
in the form thereof, if any, delivered to the Senior Bank Agent in
connection with the Lien granted to the Senior Bank Agent with respect
to such Real Property;
(4) a policy or certificate of insurance relating to such Real
Property insuring against such risks, with policy limits and
deductibles in such amounts, and otherwise satisfying the requirements
described in the Security Agreement, which policy or certificate shall
bear mortgagee endorsements of the type and character described in the
Security Agreement;
(5) evidence of payment or a closing statement indicating
payments to be made by the applicable Pledgor of all title premiums,
recording charges, transfer taxes and other costs and expenses
including reasonable legal fees and disbursements of counsel for the
Trustee (and any local counsel) that may be incurred to validly and
effectively subject such Real Property to the Lien of any applicable
Security Document to perfect such Lien;
(6) copies of all Leases, all of which Leases shall be in
conformance with any applicable provisions of the Security Documents;
(7) an Officers' Certificate of the Company stating that there
has been issued and is in effect a valid and proper certificate of
occupancy or local or foreign equivalent, if required by the local or
foreign codes or ordinances for the use then being made of such Real
Property;
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(8) such consents, approvals, amendments, supplements,
estoppels, tenant subordination agreements or other instruments as
shall be necessary in order for the owner or holder of the fee interest
to grant the Lien contemplated by the Mortgage with respect to such
Real Property; and
(9) Opinion(s) of Counsel in each jurisdiction in which such
Real Property is located substantially in the form of the local counsel
opinions delivered pursuant to the Senior Credit Facility and otherwise
in form and substance satisfactory to the Trustee with respect to the
documents executed and delivered by the applicable Pledgor and the Real
Property encumbered thereby.
Notwithstanding the provisions of this Section 4.16, the
Company and the Restricted Subsidiaries shall not be required to comply with
this Section 4.16 to the extent Pari Passu Indebtedness is incurred and such
Indebtedness is: (i) Indebtedness permitted by clauses (a) or (b) of the second
paragraph of Section 4.09 hereof or (ii) Indebtedness permitted by clauses (e),
(g), (i), (j) or (k) of the second paragraph of Section 4.09 hereof, so long as,
in the case of clause (ii) of this paragraph, the Pari Passu Indebtedness
incurred pursuant to clauses (e), (g), (i) and (j) of the second paragraph of
Section 4.09 hereof does not exceed $5.0 million, in the aggregate, at any time
outstanding and so long as, in the case of clause (ii) of this paragraph, all
Pari Passu Indebtedness incurred pursuant to clauses (e), (g), (i), (j) and (k)
of the second paragraph of Section 4.09 hereof does not exceed $10.0 million, in
the aggregate, at any time outstanding.
In the event the Company and the Restricted Subsidiaries grant
the Security Interests in (and valid mortgage Liens upon) all of the Real
Property securing the Senior Bank Debt as provided in this Section 4.16, the
Company shall deliver an Officers' Certificate stating the satisfaction of all
conditions with respect thereto and thereafter, so long as the Company and the
Restricted Subsidiaries maintain such Security Interests in compliance with the
provisions hereof and in the Security Documents with respect to such Collateral,
this Section 4.16 shall cease to be in effect.
SECTION 4.17. SALE AND LEASEBACK TRANSACTIONS.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, enter into any sale and leaseback transaction;
provided that the Company may enter into a sale and leaseback transaction
involving only the sale or transfer of assets not constituting Collateral if (i)
the Company could have (a) incurred Indebtedness in an amount equal to the
Attributable Debt relating to such sale and leaseback transaction pursuant to
the Fixed Charge Coverage Ratio test set forth in the first paragraph of Section
4.09 hereof and (b) incurred a Lien to secure such Indebtedness pursuant to
Section 4.12 hereof, (ii) the gross cash proceeds of such sale and leaseback
transaction are at least equal to the Fair Market Value (as determined in good
faith by the Board of Directors and, in the case of a sale and leaseback
transaction having a Fair Market Value in excess of $5 million, set forth in an
Officer's Certificate delivered to the Trustee) of the property that is the
subject of such sale and leaseback transaction and (iii) the transfer of assets
in such sale and leaseback transaction is permitted by, and the Company applies
the proceeds of such transaction in compliance with, Section 4.10 hereof.
SECTION 4.18. ADDITIONAL SUBSIDIARY GUARANTEES.
If (i) the Company acquires or creates any additional
Subsidiary that is a Restricted Subsidiary and (A) any such Restricted
Subsidiary has assets or revenues in any fiscal year in excess of $200,000 or
(B) any such Restricted Subsidiary previously in existence has assets or
revenues in any fiscal year in excess of $200,000, or (C) any such Restricted
Subsidiary, together with all other Restricted Subsidiaries which are not
Guarantors, has assets or revenues in any fiscal year in excess of $1.0 million
in the aggregate, or (ii) any Restricted Subsidiary of the Company that is not a
Guarantor guarantees or otherwise, directly or indirectly, provides credit
support for any Indebtedness of the Company or any Restricted Subsidiary or is a
borrower under the Senior Credit Facility (in each case described in clauses (i)
and (ii), except for Foreign Subsidiaries), the
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Company shall cause such Restricted Subsidiary to execute and deliver to the
Trustee a supplemental indenture and, if required by the provisions hereof, the
applicable Security Documents each in form and substance substantially similar
to those executed on the date hereof and reasonably satisfactory to the Trustee
at the direction of the Holders of the Notes pursuant to which such Restricted
Subsidiary shall unconditionally guarantee all of the Company's Obligations
under the Notes on the terms set forth in such supplemental indenture and shall
grant a Security Interest in the Collateral on the terms set forth herein and in
such Security Documents.
SECTION 4.19. LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF WHOLLY
OWNED RESTRICTED SUBSIDIARIES
The Company (i) shall not, and shall not permit any Wholly
Owned Restricted Subsidiary of the Company to, transfer, convey, sell, lease or
otherwise dispose of any Capital Stock of any Wholly Owned Restricted Subsidiary
of the Company to any Person (other than the Company or a Wholly Owned
Restricted Subsidiary of the Company), unless (a) such transfer, conveyance,
sale, lease or other disposition is of all the Capital Stock of such Wholly
Owned Restricted Subsidiary and (b) the cash Net Proceeds from such transfer,
conveyance, sale, lease or other disposition are applied in accordance with
Section 4.10 hereof and (ii) shall not permit any Wholly Owned Restricted
Subsidiary of the Company to issue any of its Equity Interests (other than, if
necessary, shares of its Capital Stock constituting directors' qualifying
shares) to any Person other than to the Company or a Wholly Owned Restricted
Subsidiary of the Company.
SECTION 4.20. [RESERVED]
SECTION 4.21. IMPAIRMENT OF SECURITY INTEREST.
(a) Neither the Company nor any of its Subsidiaries shall take
or knowingly or negligently omit to take any action which action or omission
would have the result of adversely affecting or impairing the Security Interests
in any material respect, with respect to the Collateral other than as expressly
contemplated by this Indenture and the Security Documents, and neither the
Company nor any of its Subsidiaries shall grant to any Person (other than the
Trustee, on behalf of the Trustee and the Holders) any Lien on the Collateral
other than Permitted Liens.
(b) Neither the Company nor any of its Subsidiaries shall take
or knowingly or negligently omit to take any action which action or omission
would have the effect of causing a Lien to be created in favor of the Senior
Bank Agent or the lenders under the Senior Credit Facility on any property or
assets of the type that would constitute Collateral unless a Lien is created in
favor of the Trustee and the Holders of the Notes with respect to such property
or assets. Such Lien in favor of the Trustee and the Holders of the Notes shall
at all times be in accordance with the provisions of the Indenture and Security
Documents with respect to priority and otherwise.
ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company shall not consolidate or merge with or into
(whether or not the Company is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions to, another
corporation, Person or entity unless (i) the Company is the surviving
corporation or the entity or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other
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disposition shall have been made is a corporation organized or existing under
the laws of the United States, any state thereof or the District of Columbia;
(ii) the entity or Person formed by or surviving any such consolidation or
merger (if other than the Company) or the entity or Person to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made assumes all the Obligations of the Company under the Notes, this Indenture
and the Security Documents pursuant to a supplemental indenture in a form
reasonably satisfactory to the Trustee and such entity or Person shall have
taken all steps necessary or reasonably requested by the Trustee to protect and
perfect the Security Interests granted or purported to be granted under the
Security Documents; (iii) immediately after such transaction no Default or Event
of Default exists; (iv) except in the case of a merger of the Company with or
into a Wholly Owned Restricted Subsidiary of the Company, the Company or the
entity or Person formed by or surviving any such consolidation or merger (if
other than the Company), or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made (A) shall have Consolidated
Net Worth immediately after the transaction equal to or greater than the
Consolidated Net Worth of the Company immediately prior to the transaction and
(B) shall, at the time of such transaction and after giving pro forma effect
thereto as if such transaction had occurred at the beginning of the applicable
four-quarter period, be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in
Section 4.09 hereof; (v) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel each stating that (A) such
transaction and supplemental indenture comply with this Article, and (B) all
conditions precedent herein provided for relating to such transaction have been
complied with; and (vi) the Company shall have delivered to the Trustee all
instruments of further assurance and all actions, as are necessary to maintain,
preserve and protect the rights of the Holders of the Notes and the Trustee
hereunder and under each of the applicable Security Documents with respect to
the Security Interests have been taken. The sale, assignment, transfer, lease,
conveyance or other disposition by the Company or its Restricted Subsidiaries of
all or substantially all of their respective property or assets to one or more
of their Subsidiaries shall not relieve either the Company or the Restricted
Subsidiaries from their respective obligations hereunder, under the Notes or
under the Security Documents. Subject to the foregoing, any Restricted
Subsidiary may consolidate with, merge into or transfer all or part of its
properties and assets to the Company or any other Restricted Subsidiary or other
entity that becomes, by reason of such consolidation, merger or transfer, a
Restricted Subsidiary.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially all of
the assets of the Company in accordance with Section 5.01 hereof, the successor
corporation formed by such consolidation or into which or with which the Company
is merged or to which such sale, assignment, transfer, lease, conveyance or
other disposition is made shall succeed to, and be substituted for (so that from
and after the date of such consolidation, merger, sale, lease, conveyance or
other disposition, the provisions of this Indenture referring to the "Company"
shall refer instead to the successor corporation and not to the Company), and
may exercise every right and power of the Company under this Indenture with the
same effect as if such successor Person had been named as the Company herein;
provided, however, that the predecessor Company shall not be relieved from the
obligation to pay the principal of and interest and Liquidated Damages, if any,
on the Notes except in the case of a sale of all of the Company's assets that
meets the requirements of Section 5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
Each of the following constitutes an "Event of Default":
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(i) default for 30 days in the payment when due of interest or
Liquidated Damages, if any, on the Notes;
(ii) default in payment when due of the principal of or
premium, if any, on the Notes;
(iii) failure by the Company to comply with the provisions
described under Sections 4.10, 4.15 or 5.01 hereof;
(iv) failure by the Company for 60 days after notice from the
Trustee or the Holders of at least 25% in aggregate principal amount of
the then outstanding Notes to comply with any of its other covenants,
agreements or warranties in this Indenture, the Notes or the Security
Documents;
(v) default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Company or any of its
Restricted Subsidiaries (or the payment of which is guaranteed by the
Company or any of its Restricted Subsidiaries) whether such
Indebtedness or guarantee now exists, or is created after the date
hereof, which default results in the acceleration of such Indebtedness
prior to its express maturity and, in each case, the principal amount
of any such Indebtedness, together with the principal amount of any
other such Indebtedness the maturity of which has been so accelerated,
aggregates $10.0 million or more;
(vi) failure by the Company or any of its Restricted
Subsidiaries to pay final judgments for the payment of money damages
aggregating in excess of $10.0 million, which judgments are not paid,
discharged or stayed for a period of 60 days;
(vii) except as permitted by this Indenture, any Significant
Subsidiary Guarantee shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full
force and effect (except by its terms) or any Guarantor, or any Person
acting on behalf of any Guarantor, shall deny or disaffirm its
obligations under its Significant Subsidiary Guarantee, in each case if
such default continues for a period of ten days after notice to the
Company from the Trustee or the Holders of at least 25% in aggregate
principal amount of the then outstanding Notes;
(viii) other than as permitted under the Security Documents or
the terms of this Indenture, any of the Security Documents cease to be
in full force and effect, or any of the Security Documents cease to
give the Trustee the Security Interests, rights, powers and privileges
purported to be created thereby, or any Security Document is declared
null and void, or the Company or any Significant Subsidiary Guarantor
shall deny or disaffirm any of its obligations under any Security
Document or any Collateral becomes subject to any Lien other than
Permitted Liens;
(ix) the Company or any of its Significant Subsidiaries or any
group of Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary pursuant to or within the meaning of Bankruptcy
Law:
(a) commences a voluntary case,
(b) consents to the entry of an order for relief against it in
an involuntary case,
(c) consents to the appointment of a Custodian of it or for
all or substantially all of its property,
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(d) makes a general assignment for the benefit of its
creditors, or
(e) generally is not paying its debts as they become due; or
(x) a court of competent jurisdiction enters an order or
decree in an involuntary case or proceeding under any Bankruptcy Law
that:
(a) is for relief against the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary;
(b) appoints a Custodian of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as whole,
would constitute a Significant Subsidiary or for all or substantially all of the
Company or any of its Significant Subsidiaries or any group of Subsidiaries
that, taken as a whole, would constitute a Significant Subsidiary; or
(c) orders the liquidation of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60
consecutive days.
The term "Custodian" means any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law.
SECTION 6.02. ACCELERATION.
If any Event of Default (other than an Event of Default under
clauses (ix) or (x) of Section 6.01 hereof with respect to the Company) occurs
and is continuing, the Trustee or the Holders of at least 25% in principal
amount of the then outstanding Notes, by notice to the Trustee and the Company,
may declare all the Notes to be due and payable immediately. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency described in clauses (ix) or (x) of Section 6.01
hereof, with respect to the Company, any Significant Subsidiary or any group of
Subsidiaries that, taken together, would constitute a Significant Subsidiary,
all outstanding Notes shall ipso facto become due and payable without further
action or notice.
At any time after a declaration of acceleration with respect
to the Notes, the Holders of a majority in principal amount of the Notes may
rescind and cancel such declaration and its consequences (i) if the rescission
would not conflict with any judgment or decree, (ii) if all existing Events of
Default have been cured or waived except nonpayment of principal, interest or
Liquidated Damages that has become due solely because of the acceleration, (iii)
if, to the extent the payment of such interest is lawful, interest on overdue
installments of interest and overdue principal at a rate equal to the rate borne
by the Notes, which has become due otherwise than by such declaration of
acceleration, has been paid, (iv) if the Company has paid the Trustee its
reasonable compensation and reimbursed the Trustee for its expenses,
disbursements and advances and (v) if, in the event of the cure or waiver of an
Event of Default of the type described in clause (ix) or (x) of Section 6.01
hereof, the Trustee shall have received an Officer's Certificate and an Opinion
of Counsel that such Event of Default has been cured or waived. No such
rescission shall affect any subsequent Default or impair any right consequent
thereto. If any Event of Default exists solely by reason of any acceleration of
Indebtedness under clause (v) of Section 6.01, and such acceleration is
rescinded by the holders of Indebtedness affected thereby prior to the time the
Obligations under the Notes have been accelerated, such Event of Default shall
cease to exist.
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SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal, premium and
Liquidated Damages, if any, and interest on the Notes or to enforce the
performance of any provision of the Notes, this Indenture or the Security
Documents.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder of a Note in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
Each Holder, by accepting a Note, acknowledges that the
exercise of remedies by the Trustee with respect to the Collateral is subject to
the terms and conditions of the Security Documents and the proceeds received
upon realization of the Collateral shall be applied by the Trustee in accordance
with the Intercreditor Agreement and Section 6.10 of this Indenture.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
The Holders of a majority in principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under this Indenture, except, subject to the second paragraph of Section 6.02
hereof, a continuing Default or Event of Default in the payment of interest or
Liquidated Damages, if any, on, or the principal of, the Notes (including in
connection with an offer to purchase) or a Default or Event of Default with
respect to any covenant or provision which cannot be modified or amended without
the consent of the Holder of each outstanding Note affected. Upon any such
waiver, such Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then
outstanding Notes may direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee or exercising any
trust or power conferred on it hereunder or under the Security Documents.
However, the Trustee may refuse to follow any direction that conflicts with law,
this Indenture or the Security Documents that the Trustee determines may be
unduly prejudicial to the rights of other Holders of Notes or that may involve
the Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this
Indenture, the Notes, the Subsidiary Guarantees or the Security Documents only
if:
(a) the Holder of a Note gives to the Trustee written notice
of a continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the
then outstanding Notes make a written request to the Trustee to pursue
the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee
against any loss, liability or expense;
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(d) the Trustee does not comply with the request within 60
days after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(e) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Notes do not give the Trustee
a direction inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the
rights of another Holder of a Note or to obtain a preference or priority over
another Holder of a Note.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Note to receive payment of principal, premium and
Liquidated Damages, if any, and interest on the Note, on or after the respective
due dates expressed in the Note (including in connection with an offer to
purchase), or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
such Holder except to the extent that the institution or prosecution of such
suit or the entry of judgment therein would, under applicable law, result in the
surrender, impairment or waiver of the Lien of this Indenture and the Security
Documents upon the Collateral.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(i) or (ii)
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company for the whole
amount of principal of and premium, interest and Liquidated Damages, if any,
remaining unpaid on the Notes and interest on overdue principal and, to the
extent lawful, interest and Liquidated Damages, if any, in each case at the rate
per annum borne by the Notes, and such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel) and
the Holders of the Notes allowed in any judicial proceedings relative to the
Company or any of the Guarantors (or any other obligor upon the Notes), its
creditors or its property and shall be entitled and empowered to collect,
receive and distribute any money or other property payable or deliverable on any
such claims and any Custodian in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee, and in the event
that the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof. To
the extent that the payment of any such compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 7.07 hereof out of the estate in any such proceeding,
shall be denied for any reason, payment of the same shall be secured by a Lien
on, and shall be paid out of, any and all distributions, dividends, money,
securities and other properties that the Holders may be entitled to receive in
such proceeding whether in liquidation or under any plan of reorganization or
arrangement or otherwise. Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder, or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
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SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article 6,
it shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for any
amounts due under Section 7.07 hereof, including payment of all
compensation, expense and liabilities incurred, and all advances made,
by the Trustee and the costs and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the
Notes for principal, premium, interest and Liquidated Damages, if any,
ratably, without preference or priority of any kind, according to the
amounts due and payable on the Notes for principal, premium, interest
and Liquidated Damages, if any, respectively; and
Third: to the Company, the Guarantors or to such party as a
court of competent jurisdiction shall direct.
The Trustee, upon prior notice to the Company, may fix a
record date and payment date for any payment to Holders of Notes pursuant to
this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a
Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more
than 10% in principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the duties, rights and powers vested in it by
this Indenture and the Security Documents, and use the same degree of care and
skill in its exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default
actually known to the Trustee:
(i) the Trustee shall not be liable hereunder except for such
duties of the Trustee which shall be determined solely by the express
provisions of this Indenture and of the Security Documents and the
Trustee need perform only those duties that are specifically set forth
in this Indenture and in the Security Documents and no others, and no
implied covenants or obligations shall be read into this Indenture or
the Security Documents against the Trustee; and
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(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, statements, certificates
or opinions furnished to the Trustee and conforming to the requirements
of this Indenture and the Security Documents. However, the Trustee
shall examine the statements, certificates and opinions to determine
whether or not they conform to the requirements of this Indenture or
the Security Documents.
(c) The Trustee shall not be relieved from liabilities for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section 7.01;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every
provision of this Indenture or the Security Documents that in any way relates to
the Trustee is subject to paragraphs (a), (b), and (c) of this Section 7.01 and
Sections 315 and 316 of the TIA.
(e) No provision of this Indenture or the Security Documents
shall require the Trustee to expend or risk its own funds or incur any liability
whatsoever in the performance of any of its duties hereunder or under the
Security Documents or in the exercise of any of its rights or powers hereunder
or under any Security Documents. The Trustee shall be under no obligation to
exercise any of its duties under this Indenture or under the Security Documents
at the request of any Holders, unless such Holder shall have offered to the
Trustee security or indemnity satisfactory to it in its reasonable judgment
against any loss, liability or expense that might be incurred by it in
compliance with such request or direction.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document
believed by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officer's Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on such Officer's Certificate or Opinion of Counsel. The Trustee may
consult with counsel and other experts and the written advice of such counsel or
expert or any Opinion of Counsel as to matters of law shall be full and complete
authorization and protection from liability in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent (other
than an agent who is an employee of the Trustee) chosen in good faith.
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(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith that it reasonably believes to be authorized or
within the rights or powers conferred upon it by this Indenture or the Security
Documents.
(e) Unless otherwise specifically provided in this Indenture,
any demand, request, direction or notice from the Company or any Guarantor shall
be sufficient if signed by an Officer of the Company or Guarantor, as
applicable.
(f) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture or the Security Documents
at the request or direction of any of the Holders unless such Holders shall have
offered to the Trustee security or indemnity satisfactory to it in its
reasonable judgment against any loss, liability or expense that might be
incurred by it in compliance with such request or direction.
(g) The permissive rights of the Trustee to do things
enumerated in this Indenture and in the Security Documents shall not be
construed as duties of the Trustee and the Trustee shall not be answerable for
other than its negligence or willful default.
(h) The Trustee shall not be required to give any bond or
surety in respect of its obligations hereunder.
(i) The Trustee shall not be charged with knowledge of any
Default or Event of Default unless it shall have received written notice thereof
from the Company or a Holder of a Note or unless an officer of the Trustee shall
have actual knowledge thereof.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Company, the
Guarantors or any Affiliate of the Company with the same rights it would have if
it were not Trustee. However, in accordance with the requirements of the TIA, in
the event that the Trustee acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the SEC for permission to continue as
trustee (in the event such conflict arises after consummation of the Exchange
Offer, or if a Shelf Registration Statement (as defined in the Registration
Rights Agreement) has been filed, after such Shelf Registration Statement has
been declared effective by the SEC) or resign. Any Agent may do the same with
like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11
hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture, the Notes or
the Security Documents. It shall not be accountable for the Company's use of the
proceeds from the Notes or any money paid to the Company or upon the Company's
direction under any provision of this Indenture or the Security Documents, it
shall not be responsible for the use or application of any money received by any
Paying Agent other than the Trustee, and it shall not be responsible for any
statement or recital herein or any statement in the Notes or the Security
Documents or any other document in connection with the sale of the Notes or
pursuant to this Indenture other than its certificate of authentication.
The Trustee, in its capacity as Registrar hereunder, shall not
be charged with knowledge of the Applicable Procedures and may conclusively rely
that instructions and certificates presented to it are in accordance with such
Applicable Procedures in effecting transfers pursuant to Section 2.06 hereof.
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SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and
if it is known to the Trustee, the Trustee shall mail to Holders of Notes a
notice of the Default or Event of Default within 90 days after it occurs. Except
in the case of a Default or Event of Default in payment of principal, premium,
if any, or interest or Liquidated Damages, if any, on any Note, the Trustee may
withhold the notice if and so long as a committee of its Responsible Officers in
good faith determines that withholding the notice is in the interests of the
Holders of the Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each November 1 beginning with the
November 1 following the date hereof, and for so long as Notes remain
outstanding, the Trustee shall mail to the Holders of the Notes a brief report
dated as of such reporting date that complies with TIA Section 313(a) (but if no
event described in TIA Section 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA Section 313(b)(2). The Trustee shall also transmit by mail
all reports as required by TIA Section 313(c).
A copy of each report at the time of its mailing to the
Holders of Notes shall be mailed to the Company and, if such report is prepared
after the Exchange Offer Registration Statement or the Shelf Registration
Statement has been declared effective by the SEC, filed with the SEC and each
stock exchange, if any, on which the Notes are listed in accordance with TIA
Section 313(d). The Company shall promptly notify the Trustee when the Notes are
listed on any stock exchange and of any delisting thereof.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company and the Guarantors shall pay to the Trustee upon
demand from time to time, and the Trustee shall be entitled to, compensation for
its acceptance of this Indenture and services hereunder and under the Security
Documents which shall be agreed to by the Company and the Trustee in a separate
fee agreement. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company and the Guarantors
shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services, except any disbursements, expenses and advances
as may be attributable to the Trustee's negligence or willful misconduct. Such
expenses shall include the reasonable compensation, disbursements and expenses
of the Trustee's agents and counsel.
The Company and the Guarantors shall, jointly and severally,
indemnify the Trustee against any and all losses, liabilities or expenses
incurred by it arising out of or in connection with the acceptance or
administration of its duties under this Indenture and the Security Documents,
including the reasonable costs and expenses of enforcing this Indenture against
the Company and the Guarantors (including this Section 7.07) and defending
itself against any claim (whether asserted by the Company, the Guarantors or any
Holder or any other Person) or liability or investigating in connection with the
exercise or performance of any of its powers or duties hereunder, except to the
extent any such loss, liability or expense may be attributable to its negligence
or willful misconduct. The Trustee shall notify the Company and the Guarantors
promptly of any claim for which it may seek indemnity. Failure by the Trustee to
so notify the Company and the Guarantors shall not relieve the Company or the
Guarantors of their obligations hereunder. The Company and the Guarantors shall
defend the claim and the Trustee shall cooperate in the defense. The Trustee may
have separate counsel and the Company and the Guarantors shall pay the
reasonable fees and expenses of such counsel. The Company and the Guarantors
need not pay for any settlement made without their consent, which consent shall
not be unreasonably withheld.
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The obligations of the Company and the Guarantors under this
Section 7.07 shall survive the satisfaction and discharge of this Indenture and
the resignation or removal of the Trustee.
To secure the Company's and the Guarantors' payment
obligations in this Section 7.07, the Trustee shall have a Lien prior to the
Notes on all money or property held or collected by the Trustee, except that
held in trust to pay principal of and interest and Liquidated Damages, if any,
on particular Notes. Such Lien shall survive the satisfaction and discharge of
this Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01 (viii) or (ix) hereof occurs, the
expenses and the compensation for the services (including the reasonable fees
and expenses of its agents and counsel) are intended to constitute expenses of
administration under any Bankruptcy Law.
As to notice of liens or charges, the Trustee shall comply
with the provisions of TIA Section 313(b)(2) to the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.08.
The Trustee may resign in writing at any time and be
discharged from the trust hereby created by so notifying the Company (with a
copy to the agent under the Senior Credit Facility). The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing (with a copy to
the agent under the Senior Credit Facility). The Company may remove the Trustee
if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee
or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office, the
Holders of a majority in principal amount of the then outstanding Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.
If a successor Trustee does not take office within 30 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company, or the Holders of Notes of at least 10% in principal amount of the then
outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Note
who has been a Holder of a Note for at least six months, fails to comply with
Section 7.10, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
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A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company (with a copy to the agent
under the Senior Credit Facility). Thereupon, the resignation or removal of the
retiring Trustee shall become effective, and the successor Trustee shall have
all the rights, powers and duties of the Trustee under this Indenture and the
Security Documents. The successor Trustee shall mail a notice of its succession
to Holders of the Notes (with a copy to the agent under the Senior Credit
Facility). The retiring Trustee shall promptly transfer all property held by it
as Trustee to the successor Trustee, provided all sums owing to the Trustee
hereunder have been paid and subject to the Lien provided for in Section 7.07
hereof. Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee.
Any resignation or removal of the Trustee pursuant to this
Indenture shall be deemed to be a resignation or removal of the Trustee in its
capacity as such under each of the Security Documents and any appointment of a
successor Trustee pursuant to this Indenture shall be deemed to be an
appointment of such successor in all capacities of the former Trustee under each
of the Security Documents and such successor shall assume all of the obligations
of the Trustee pursuant to the Security Documents.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall, if such
resulting surviving or transferee corporation is otherwise eligible hereunder,
be the successor Trustee (and the successor to the Trustee under the Security
Documents).
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United States of
America or of any state thereof that is authorized under such laws to exercise
corporate trustee power, that is subject to supervision or examination by
federal or state authorities and that has or has a corporate parent that has a
combined capital and surplus of at least $100.0 million as set forth in its most
recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors
evidenced by a resolution set forth in an Officer's Certificate, at any time,
elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding
Notes upon compliance with the conditions set forth below in this Article 8.
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SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.02, the Company and the Guarantors shall,
subject to the satisfaction of the conditions set forth in Section 8.04 hereof,
be deemed to have been discharged from their obligations with respect to all
outstanding Notes on the date the conditions set forth below are satisfied
(hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means that
the Company shall be deemed to have paid and discharged the entire Indebtedness
represented by the outstanding Notes, which shall thereafter be deemed to be
"outstanding" only for the purposes of Section 8.05 hereof and the other
Sections of this Indenture referred to in (a) and (b) below, and to have
satisfied all its other obligations under such Notes and this Indenture (and the
Trustee, on demand of and at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following provisions which
shall survive until otherwise terminated or discharged hereunder: (a) the rights
of Holders of outstanding Notes to receive solely from the trust fund described
in Section 8.04 hereof, and as more fully set forth in such Section, payments in
respect of the principal of, premium, if any, interest and Liquidated Damages,
if any, on such Notes when such payments are due, (b) the Company's obligations
with respect to such Notes under Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07,
2.10 and 2.12 and Section 4.02 hereof, (c) the rights, powers, trusts, duties
and immunities of the Trustee hereunder and the Company's obligations in
connection therewith and (d) this Article 8. Subject to compliance with this
Article 8, the Company may exercise its option under this Section 8.02
notwithstanding the prior exercise of its option under Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.03, the Company and the Guarantors shall,
subject to the satisfaction of the conditions set forth in Section 8.04 hereof,
be released from their obligations under the covenants contained in Sections
4.03(a), 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18, 4.19,
4.21 and 5.01 and Article 11 hereof and the Security Documents with respect to
the outstanding Notes on and after the date the conditions set forth below are
satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter
be deemed not "outstanding" for the purposes of any direction, waiver, consent
or declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes shall not
be deemed outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with respect to the outstanding Notes, the Company, its
Subsidiaries and any Guarantor may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section 6.01
hereof, but, except as specified above, the remainder of this Indenture and such
Notes shall be unaffected thereby. In addition, upon the Company's exercise
under Section 8.01 hereof of the option applicable to this Section 8.03 hereof
and subject to the satisfaction of the conditions set forth in Section 8.04
hereof, Sections 6.01 (iii) through 6.01 (viii) hereof and Sections 6.01(ix) and
(x) (but, in the case of Sections 6.01(ix) and (x), only with respect to a
Significant Subsidiary) hereof shall not constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of
either Section 8.02 or 8.03 hereof to the outstanding Notes:
(a) the Company must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders of Notes, cash in U.S. dollars,
non-callable Government Securities, or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally
recognized firm of independent public
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accountants, to pay the principal of, premium and Liquidated Damages,
if any, and interest on the outstanding Notes on the stated maturity or
on the applicable redemption date, as the case may be, and the Company
must specify whether the Notes are being defeased to maturity or to a
particular redemption date;
(b) in the case of an election under Section 8.02 hereof
(other than when the Notes are being defeased within one year prior to
the stated maturity or the applicable redemption date), the Company
shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that (A) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling or (B) since the date hereof, there has been a
change in the applicable federal income tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall confirm
that, the Holders of the outstanding Notes will not recognize income,
gain or loss for federal income tax purposes as a result of such Legal
Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in
the United States reasonably acceptable to the Trustee confirming that
the Holders of the outstanding Notes will not recognize income, gain or
loss for federal income tax purposes as a result of such Covenant
Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event
of Default resulting from the borrowing of funds to be applied to such
deposit) or insofar as Sections 6.01 (ix) or 6.01 (x) hereof are
concerned, at any time in the period ending on the 91st day after the
date of such deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under the
Senior Credit Facility or any other material agreement or instrument
(other than this Indenture) to which the Company or any of its
Restricted Subsidiaries is a party or by which the Company or any of
its Restricted Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an Opinion
of Counsel to the effect that (assuming no intervening bankruptcy or
insolvency of the Company between the date of such deposit and the 91st
day after such deposit and that no Holder is an insider of the Company)
after the 91st day following the deposit, the trust funds will not be
subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally;
(g) the Company shall have delivered to the Trustee an
Officer's Certificate stating that the deposit was not made by the
Company with the intent of preferring the Holders of Notes over the
other creditors of the Company with the intent of defeating, hindering,
delaying or defrauding creditors of the Company or others; and
(h) the Company shall have delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for or relating to the Legal Defeasance
or the Covenant Defeasance have been complied with.
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SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN
TRUST; OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable
Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as
Paying Agent) as the Trustee may determine, to the Holders of such Notes of all
sums due and to become due thereon in respect of principal, premium, and
Liquidated Damages, if any, and interest, but such money need not be segregated
from other funds except to the extent required by law.
The Company and the Guarantors shall pay and indemnify the
Trustee against any tax, fee or other charge imposed on or assessed against the
cash or non-callable Government Securities deposited pursuant to Section 8.04
hereof or the principal and interest received in respect thereof other than any
such tax, fee or other charge which by law is for the account of the Holders of
the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon the
request of the Company any money or non-callable Government Securities held by
it as provided in Section 8.04 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.04(a) hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.
SECTION 8.06. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of and
premium or Liquidated Damages, if any, or interest on any Note and remaining
unclaimed for one year after such principal and premium or Liquidated Damages,
if any, or interest has become due and payable shall be paid to the Company on
its request or (if then held by the Company) shall be discharged from such
trust; and the Holder of such Note shall thereafter, as a creditor, look only to
the Company or Guarantors for payment thereof, and all liability of the Trustee
or such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the written request and expense of the Company cause to be published
once, in The New York Times or The Wall Street Journal (national edition),
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such notification
or publication, any unclaimed balance of such money then remaining will be
repaid to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United
States dollars or non-callable Government Securities in accordance with Section
8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the obligations of the Company or the
Guarantors under this Indenture and the Notes shall be revived and reinstated as
though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until
such time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 8.02 or 8.03 hereof, as the case may be; provided,
however, that, if either the Company or any Guarantor makes any payment of
principal of and premium or Liquidated Damages, if any, or interest on any Note
following the reinstatement
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of its obligations, the Company or any Guarantor shall be subrogated to the
rights of the Holders of such Notes to receive such payment from the money held
by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture and subject to
the next succeeding paragraph, the Company, the Guarantors and the Trustee may
amend or supplement this Indenture, the Notes or the Security Documents without
the consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in
place of certificated Notes;
(c) to provide for the assumption of the Company's or any
Guarantor's obligations to Holders of Notes in the case of a merger or
consolidation pursuant to Article 5 or Article 10 hereof, as
applicable;
(d) to make any change that would provide any additional
rights or benefits to the Holders of Notes or that does not adversely
affect the legal rights hereunder and under the Security Documents of
any Holder of the Notes;
(e) to comply with requirements of the SEC in order to effect
or maintain the qualification of this Indenture under the TIA;
(f) to mortgage, pledge or grant a Security Interest in favor
of the Trustee as additional security for the payment and performance
of Obligations under this Indenture, the Notes and the Subsidiary
Guarantees, in any property or assets, including any which are required
to be mortgaged, pledged or hypothecated, or in which a Security
Interest is required to be granted pursuant to the provisions of the
Security Documents or otherwise; or
(g) to add or release any Guarantor or Pledgor strictly in
accordance with another provision of this Indenture or a provision of
the Security Documents expressly providing for such addition or
release.
Upon the request of the Company accompanied by a resolution of
its Board of Directors of the Company and each of the Guarantors authorizing the
execution of any such amended or supplemental Indenture, and upon receipt by the
Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company and each of the Guarantors in the execution of any amended
or supplemental Indenture authorized or permitted by the terms of this Indenture
and to make any further appropriate agreements and stipulations that may be
therein contained, but the Trustee shall not be obligated to enter into such
amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, this Indenture,
the Notes or the Security Documents may be amended or supplemented with the
consent of the Holders of at least a majority in principal
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amount of the Notes then outstanding (including, without limitation, consents
obtained in connection with a purchase of, or tender offer or exchange offer
for, Notes), and, subject to Sections 6.02, 6.04 and 6.07 hereof, any existing
Default or Event of Default (other than a Default or Event of Default in the
payment of principal of, premium or Liquidated Damages, if any, or interest on
the Notes) or compliance with any provision of this Indenture, the Notes or the
Security Documents may be waived with the consent of the Holders of a majority
in principal amount of the then outstanding Notes (including consents obtained
in connection with a tender offer or exchange offer for Notes).
Upon the request of the Company accompanied by a resolution of
the Board of Directors of the Company and each of the Guarantors authorizing the
execution of any such amended or supplemental Indenture, and upon the filing
with the Trustee of evidence satisfactory to the Trustee of the consent of the
Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents
described in Section 7.02 hereof, the Trustee shall join with the Company and
each of the Guarantors in the execution of such amended or supplemental
Indenture unless such amended or supplemental Indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of
Notes under this Section 9.02 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section
9.02 becomes effective, the Company shall mail to the Holders of Notes affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental Indenture or waiver. Subject to Sections 6.02, 6.04 and 6.07
hereof, the Holders of a majority in aggregate principal amount of the Notes
then outstanding may waive compliance in a particular instance by the Company
with any provision of this Indenture or the Notes. However, without the consent
of each Holder affected, an amendment or waiver may not (with respect to any
Notes held by a non-consenting Holder):
(i) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver of this Indenture, the
Notes or the Security Documents;
(ii) reduce the principal of or change the fixed maturity of
any Note or alter the provisions with respect to the redemption of the
Notes (other than with respect to the provisions contained in Sections
4.10 and 4.15);
(iii) reduce the rate of or change the time for payment of
interest or Liquidated Damages, if any, on any Note;
(iv) waive a Default or Event of Default in the payment of
principal of or premium or Liquidated Damages, if any, or interest on
the Notes (except a rescission of acceleration of the Notes by the
Holders of at least a majority in aggregate principal amount of the
Notes and a waiver of the payment default that resulted from such
acceleration);
(v) make any Note payable in money other than that stated in
the Notes;
(vi) make any change in the provisions of this Indenture
relating to waivers of past Defaults (other than to add a section of
the Indenture or the Notes which are subject thereto) or the rights
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of Holders of Notes to receive payments of principal of or premium, if
any, interest or Liquidated Damages, if any, on the Notes;
(vii) waive a redemption payment with respect to any Note
(other than a payment required by the provisions contained in Sections
4.10 and 4.15);
(viii) make any change in Section 6.04 or 6.07 hereof or in
the foregoing amendment and waiver provisions;
(ix) adversely affect the ranking of the Notes or the
Subsidiary Guarantees;
(x) adversely affect Liens created by this Indenture and the
Security Documents on the Collateral (other than in accordance with the
provisions herein or therein); or
(xi) release any Guarantor from its Obligations under its
Subsidiary Guarantee (other than in accordance with this Indenture).
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture, the Notes or
the Security Documents shall be set forth in a amended or supplemental Indenture
that complies with the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Note is a continuing consent by the Holder of a
Note and every subsequent Holder of a Note or portion of a Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
is not made on any Note. However, any such Holder of a Note or subsequent Holder
of a Note may revoke the consent as to his/her Note if the Trustee receives
written notice of revocation before the date the waiver, supplement or amendment
becomes effective. An amendment, supplement or waiver becomes effective in
accordance with its terms and thereafter binds every Holder.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders of Notes entitled to consent to
any amendment, supplement or waiver. If a record date is fixed, then
notwithstanding the provisions of the second sentence of the preceding
paragraph, those Holders of Notes who were Holders on such record date (or their
duly designated proxies), and only those Holders, shall be entitled to revoke
any consent previously given, whether or not such Holder of Notes continues to
be a Holder of Notes after such record date. No such consent shall be valid or
effective for more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it
shall bind every Holder of Notes, unless it makes a change described in clauses
(i) though (xi) of Section 9.02 hereof, in which case, the amendment, supplement
or waiver shall bind only each Holder of Notes who has consented to it; provided
that any such waiver shall not impair or affect the right of any Holder to
receive payment of principal of and interest and Liquidated Damages, if any, on
the Notes, on or after the respective due dates expressed in such Notes, or to
bring suit for the enforcement of any such payment on or after such respective
dates without the consent of such Holder of Notes.
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SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an
amendment, supplement or waiver on any Note thereafter authenticated. If an
amendment, supplement or waiver changes the terms of the Notes, the Company may
require the Holders of the Notes to deliver the Notes to the Trustee. The
Company may place an appropriate notation on the Notes and return them to the
Holders. Alternatively, the Company in exchange for all Notes may issue and the
Trustee shall authenticate new Notes (accompanied by a notation of the
Subsidiary Guarantees duly endorsed by the Guarantors) that reflect the
amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such amendment, supplement or
waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article 9 if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may, but need not, sign it. The Company and the
Guarantors may not sign an amendment or supplemental Indenture until their
respective Board of Directors approves it. In executing any amended or
supplemental indenture, the Trustee shall be entitled to receive and (subject to
Section 7.01 hereof) shall be fully protected in relying upon, an Officer's
Certificate and an Opinion of Counsel stating that the execution of such amended
or supplemental indenture is authorized or permitted by this Indenture.
ARTICLE 10
SUBSIDIARY GUARANTEES
SECTION 10.01. SUBSIDIARY GUARANTEES.
Each of the Guarantors hereby, jointly and severally,
unconditionally guarantees to each Holder of a Note authenticated and delivered
by the Trustee and to the Trustee and its successors and assigns, irrespective
of the validity and enforceability of this Indenture, the Notes, the Security
Documents or the Obligations of the Company hereunder or thereunder, that: (a)
the principal of and interest and premium and Liquidated Damages, if any, on the
Notes shall be promptly paid in full when due, whether at maturity, by
acceleration, redemption, repurchase or otherwise, and interest on the overdue
principal of and interest and Liquidated Damages, if any, on the Notes, if
lawful, and all other Obligations of the Company to the Holders or the Trustee
hereunder or thereunder shall be promptly paid in full or performed, all in
accordance with the terms hereof and thereof; and (b) in case of any extension
of time of payment or renewal of any Notes or any of such other Obligations, the
same shall be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at stated maturity, by acceleration,
redemption, repurchase or otherwise, subject, however, to the limitations set
forth in Section 10.05 hereof. Failing payment when due of any amount so
guaranteed or any performance so guaranteed for whatever reason, the Guarantors
shall be jointly and severally obligated to pay the same immediately. The
Guarantors hereby agree that their Obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of the Notes, the
Security Documents or this Indenture, the absence of any action to enforce the
same, any waiver or consent by any Holder of the Notes with respect to any
provisions hereof or thereof, the recovery of any judgment against the Company,
and action to enforce the same or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a Guarantor. Each
Guarantor hereby waives diligence, presentment, demand of payment, filing of
claims with a court in the event of insolvency or bankruptcy of the Company, any
right to require a proceeding first against the Company, protest, notice and all
demands whatsoever and covenants that this Subsidiary Guarantee shall not be
discharged except by complete performance of the Obligations contained in the
Notes and this
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Indenture. If any Holder of Notes or the Trustee is required by any court or
otherwise to return to the Company or Guarantors, or any Custodian, Trustee,
liquidator or other similar official acting in relation to either the Company or
Guarantors, any amount paid by the Company or any Guarantor either to the
Trustee or such Holder, this Subsidiary Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and effect. Each Guarantor agrees
that it shall not be entitled to any right of subrogation in relation to the
Holders of Notes in respect of any Obligations guaranteed hereby until payment
in full of all Obligations guaranteed hereby. Each Guarantor further agrees
that, as between the Guarantors, on the one hand, and the Holders and the
Trustee, on the other hand, (x) the maturity of the Obligations guaranteed
hereby may be accelerated as provided in Article 6 hereof for the purposes of
this Subsidiary Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the Obligations
guaranteed hereby and (y) in the event of any declaration of acceleration of
such Obligations as provided in Article 6 hereof, such Obligations (whether or
not due and payable) shall forthwith become due and payable by the Guarantors
for the purpose of this Subsidiary Guarantee. The Guarantors shall have the
right to seek contribution from any non-paying Guarantor so long as the exercise
of such right does not impair the rights of the Holders under the Subsidiary
Guarantees.
SECTION 10.02. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEES.
To evidence its Subsidiary Guarantee set forth in Section
10.01 hereof, each Guarantor hereby agrees that a notation of such Subsidiary
Guarantee substantially in the form of Exhibit C (executed by the manual or
facsimile signature of one of its Officers) shall be endorsed by an Officer of
such Guarantor on each Note authenticated and delivered by the Trustee and that
this Indenture and, to the extent required by the provisions hereof, the
Security Documents, shall be executed on behalf of such Guarantor by an Officer
of such Guarantor.
Each Guarantor hereby agrees that its Subsidiary Guarantee
set forth in Section 10.01 hereof shall remain in full force and effect
notwithstanding any failure to endorse on each Note a notation of such
Subsidiary Guarantee.
If an Officer whose signature is on this Indenture or on the
Subsidiary Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which a Subsidiary Guarantee is endorsed, the
Subsidiary Guarantee shall be valid nevertheless.
The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the
Subsidiary Guarantee set forth in this Indenture on behalf of the Guarantors.
SECTION 10.03. GUARANTORS MAY CONSOLIDATE, ETC. ON CERTAIN TERMS.
(a) Except as set forth in Articles 4 and 5 hereof, nothing
contained in this Indenture or in any of the Notes shall prevent any
consolidation or merger of a Guarantor with or into the Company or another
Guarantor or shall prevent any sale or conveyance of the property of a
Guarantor, as an entirety or substantially as an entirety, to the Company.
(b) Except as provided in Section 10.03(a) hereof or in a
transaction referred to in Section 10.04 hereof, no Guarantor may consolidate
with or merge with or into (whether or not such Guarantor is the surviving
Person) another corporation, Person or entity whether or not affiliated with
such Guarantor unless: (i) subject to the provisions of Section 10.04 hereof,
the Person formed by or surviving any such consolidation or merger (if other
than such Guarantor) shall assume all the Obligations of such Guarantor,
pursuant to a supplemental indenture in form and substance reasonably
satisfactory to the Trustee, under the Notes, this Indenture and the Security
Documents; (ii) immediately after giving effect to such transaction, no Default
or Event of Default exists; and (iii) the Company would be permitted to incur,
immediately after giving effect to such transaction, at least $1.00 of
additional Indebtedness (other than Permitted Refinancing Indebtedness) pursuant
to the
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Fixed Charge Coverage Ratio Test set forth in Section 4.09 hereof. Subject to
Section 10.04 hereof, in case of any such consolidation, merger, sale or
conveyance and upon the assumption by the successor corporation, by supplemental
indenture, executed and delivered to the Trustee and satisfactory in form to the
Trustee, of the Subsidiary Guarantee endorsed upon the Notes and the due and
punctual performance of all of the covenants and conditions of this Indenture to
be performed by the Guarantor, such successor corporation shall succeed to and
be substituted for the Guarantor with the same effect as if it had been named
herein as a Guarantor. Such successor corporation thereupon may cause to be
signed any or all of the Subsidiary Guarantees to be endorsed upon all of the
Notes issuable hereunder which theretofore shall not have been signed by the
Company and delivered to the Trustee. All the Subsidiary Guarantees so issued
shall in all respects have the same legal rank and benefit under this Indenture
as the Subsidiary Guarantees theretofore and thereafter issued in accordance
with the terms of this Indenture as though all of such Subsidiary Guarantees had
been issued at the date of the execution hereof.
SECTION 10.04. RELEASES FOLLOWING SALE OF ASSETS.
Concurrently with any sale of assets of any Guarantor
(including, if applicable, all of the Capital Stock of any Guarantor), any
Security Interest in the assets sold thereby shall be released; provided that in
the event of an Asset Sale, the Net Proceeds from such sale or other disposition
are treated in accordance with the provisions of Section 4.10 hereof. In the
event of a sale or other disposition of all of the assets of any Guarantor, by
way of merger, consolidation or otherwise, or a sale or other disposition of all
of the Capital Stock of any Guarantor, then such Guarantor (in the event of a
sale or other disposition, by way of such a merger, consolidation or otherwise,
of all of the Capital Stock of such Guarantor in accordance with the provisions
of this Indenture) or the corporation acquiring the property (in the event of a
sale or other disposition of all of the assets of such Guarantor), shall be
released and relieved of its Obligations under its Subsidiary Guarantee and
Section 10.03 hereof; provided that in the event of an Asset Sale, the Net
Proceeds from such sale or other disposition are treated in accordance with the
provisions of Section 4.10 hereof. Upon delivery by the Company to the Trustee
of an Officer's Certificate and an Opinion of Counsel to the effect that such
sale or other disposition was made by the Company in accordance with the
provisions of this Indenture, including without limitation Section 4.10 hereof,
the Trustee shall execute any documents reasonably required in order to evidence
the release of any Guarantor from its Obligations under its Subsidiary
Guarantee. Any Guarantor not released from its Obligations under its Subsidiary
Guarantee shall remain liable for the full amount of principal of and interest
and Liquidated Damages, if any, on the Notes and for the other Obligations of
any Guarantor under this Indenture as provided in this Article 10. The release
of any Guarantor pursuant to this Section 10.04 shall be effective whether or
not such release shall be noted on any Note then outstanding or thereafter
authenticated and delivered.
SECTION 10.05. LIMITATION ON GUARANTOR LIABILITY.
For purposes hereof, each Guarantor's liability shall be that
amount from time to time equal to the aggregate liability of such Guarantor
thereunder, but shall be limited to the lesser of (i) the aggregate amount of
the Obligations of the Company under the Notes and this Indenture and (ii) the
amount, if any, which would not have (A) rendered such Guarantor "insolvent" (as
such term is defined in the federal Bankruptcy Law and in the Debtor and
Creditor Law of the State of New York) or (B) left it with unreasonably small
capital at the time its Subsidiary Guarantee was entered into, after giving
effect to the incurrence of existing Indebtedness immediately prior to such
time; provided that, it shall be a presumption in any lawsuit or other
proceeding in which such Guarantor is a party that the amount guaranteed
pursuant to its Subsidiary Guarantee is the amount set forth in clause (i) above
unless any creditor, or representative of creditors of such Guarantor, or debtor
in possession or trustee in bankruptcy of such Guarantor, otherwise proves in
such a lawsuit that the aggregate liability of such Guarantor is limited to the
amount set forth in clause (ii). In making any determination as to the solvency
or sufficiency of capital of a Guarantor in accordance with the previous
sentence, the right of such Guarantor to
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contribution from other Guarantors and any other rights such Guarantor may have,
contractual or otherwise, shall be taken into account.
SECTION 10.06. "TRUSTEE" TO INCLUDE PAYING AGENT.
In case at any time any Paying Agent other than the Trustee
shall have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article 10 shall in such case (unless the context
shall otherwise require) be construed as extending to and including such Paying
Agent within its meaning as fully and for all intents and purposes as if such
Paying Agent were named in this Article 10 in place of the Trustee.
ARTICLE 11
SECURITY DOCUMENTS
SECTION 11.01. COLLATERAL AND SECURITY DOCUMENTS.
(a) In order to secure the due and punctual payment of the
Notes, the Pledgors have entered into the respective Security Documents to which
they are party to create the Security Interests and for related matters. Subject
to the provisions in the Intercreditor Agreement and this Indenture, the Notes
and the Subsidiary Guarantees shall be secured by the Collateral securing the
Senior Bank Debt from time to time.
(b) Each holder of a Note, by accepting a Note, agrees to all
of the terms and provisions of the Security Documents, as the same may be
amended from time to time pursuant to the provisions of the Security Documents
and this Indenture.
SECTION 11.02. RECORDING, ETC.
(a) The Company will, and will cause each other Pledgor to,
take or cause to be taken all action required or necessary to maintain, preserve
and protect the Security Interests in the Collateral granted by the Security
Documents, including, but not limited to, causing all financing statements,
Mortgages, other instruments of further assurance, including, without
limitation, continuation statements covering security interests in personal
property, and all mortgages securing purchase money obligations delivered to the
Trustee or to the trustee, mortgagee or other holder of a Permitted Lien under
Section 11.05 to be promptly recorded, registered and filed, and at all times
to be kept recorded, registered and filed, and will execute and file such
financing statements and cause to be issued and filed such continuation
statements, all in such manner and in such places as may be required by law
fully to preserve and protect the rights of the Holders of the Notes and the
Trustee under this Indenture and the Security Documents to all property
comprising the Collateral. Without limiting the generality of the foregoing
covenant, the Company will cause each Guarantor that is not in existence on the
date hereof to execute and deliver to the Trustee at such time as such Guarantor
owns, possesses or acquires any property or assets of the type or nature that
would constitute Collateral (i) a joinder agreement to the Security Agreement
substantially in the form of Exhibit 3 thereto and (ii) any other Security
Documents as shall be necessary or reasonably requested by the Trustee in order
to grant, perfect, preserve and protect the Security Interest in such property
and assets.
The Company will from time to time promptly pay and discharge
all mortgage and financing and continuation statement recording and/or filing
fees, charges and taxes relating to this Indenture and the Security Documents,
any amendments thereto and any other instruments of further assurance. Without
limiting the generality of the foregoing covenant, in the event at any time the
Trustee shall determine that additional mortgage recording, transfer or similar
taxes are required to be paid to perfect or continue any Lien on any Real
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Property, the Company shall pay such taxes promptly upon demand by the Trustee.
Notwithstanding the foregoing, the Trustee shall not have any duty or obligation
to ascertain whether any such taxes are required to be paid at any time, and the
determination referred to in the preceding sentence shall only be made by the
Trustee upon receipt of written notice that such taxes are due and owing.
(b) The Company shall furnish or cause to be furnished to the
Trustee:
(i) at the time of execution and delivery of this Indenture,
Opinion(s) of Counsel substantially in the form of those delivered
pursuant to the provisions of the Senior Credit Facility, relating to
the creation, enforceability and perfection of the Security Interests
and Liens created by the Security Documents delivered in accordance
therewith, with such modifications as shall be necessary or reasonably
requested by the Trustee;
(ii) within 60 days after the date of this Indenture, Opinion(s)
of Counsel either (a) substantially to the effect that, in the opinion
of such counsel, this Indenture, each Security Document and all other
instruments of further assurance or assignment, if any, have been
properly recorded, registered and filed to the extent necessary to
perfect or otherwise make effective the Security Interests created by
each such Security Document; and
(iii) within 30 days after May 1 in each year beginning with May
1, 2000, an Opinion of Counsel, dated as of such date, either (a) to
the effect that, in the opinion of such counsel, such action has been
taken with respect to the recordings, registerings, filings,
re-recordings, re-registerings and refilings of all financing
statements, continuation statements or other instruments of further
assurance as is necessary to maintain the Security Interests of each of
the Security Documents and reciting with respect to such Security
Interests the details of such action or referencing prior Opinions of
Counsel in which such details are given, and stating that all financing
statements and continuation statements have been executed and filed
that are necessary fully to preserve and protect the rights of the
holders and the Trustee hereunder and under each of the Security
Documents with respect to the Security Interests, or (b) to the effect
that, in the opinion of such Counsel, no such action is necessary to
maintain such Security Interests.
SECTION 11.03. CERTAIN DISPOSITIONS OF COLLATERAL WITHOUT RELEASE.
(a) Notwithstanding the provisions of Section 11.04, so long
as no Event of Default shall have occurred and be continuing the Pledgors may,
without any release or consent by the Trustee, do any number of ordinary course
activities in respect of the Collateral so long as the Pledgors may do such
activities under the Senior Credit Facility, without any release by the Senior
Bank Agent.
(b) In the event that a Pledgor has sold, exchanged, or
otherwise disposed of or proposes to sell, exchange or otherwise dispose of any
portion of the Collateral which under the provisions of this Section 11.03 may
be sold, exchanged or otherwise disposed of by such Pledgor without any release
or consent of the Trustee, and such Pledgor requests the Trustee to furnish a
written disclaimer, release or quitclaim of any interest in such property under
any of the Security Documents, the Trustee shall promptly execute such an
instrument (in recordable form, where appropriate) upon delivery to the Trustee
of (i) an Officers' Certificate by such Pledgor reciting the sale, exchange or
other disposition made or proposed to be made and describing in reasonable
detail the property affected thereby, and stating that such property is property
which by the provisions of this Section 11.03 may be sold, exchanged or
otherwise disposed of or dealt with by such Pledgor without any release or
consent of the Trustee and (ii) an Opinion of Counsel stating that the sale,
exchange or other disposition made or proposed to be made was duly taken by such
Pledgor in conformity with Section 11.03(a) and that the execution of such
written disclaimer, release or quitclaim is appropriate under this Section
11.03.
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Any disposition of Collateral made in strict compliance with
the provisions of this Section 11.03 shall be deemed not to impair the Security
Interests in contravention of the provisions of this Indenture. To the extent
this Section 11.03 relates to property or assets that do not constitute
Collateral such provisions shall not apply with respect to any such property or
assets not constituting Collateral.
SECTION 11.04. RELEASE OF COLLATERAL.
(a) In addition to their rights under Section 11.03, the
Pledgors shall have the right, at any time and from time to time, to obtain a
release of any items of the Collateral so long as the Pledgors obtain a release
of the Lien granted to the Senior Bank Agent on such Collateral securing the
Senior Bank Debt in accordance with the provisions of the Senior Credit Facility
and the Intercreditor Agreement.
(b) If the Senior Credit Facility is no longer in effect, or
the Senior Bank Debt is no longer secured by any of the Collateral, the Notes
and the Subsidiary Guarantees will not (subject to the provisions under Section
4.12 hereof) be secured by any of the Collateral; provided, however, that if the
Senior Bank Debt is thereafter secured by any assets or property of the type
that would constitute Collateral, the Company and its Subsidiaries, in
accordance with the provisions of Section 11.05, shall cause the Notes and the
Subsidiary Guarantees to be secured by a Lien on such Collateral. To the extent
that the Senior Credit Facility is in effect and the Senior Bank Agent releases
its Lien on all or any portion of the Collateral of the Company or any
Subsidiary securing the Senior Bank Debt, the Lien on such Collateral securing
the Notes and the Subsidiary Guarantees shall likewise be released (subject to
the provisions under Section 4.12 hereof); provided, however, that if the Senior
Bank Debt is thereafter secured by any assets or property of the type that would
constitute Collateral, the Company and its Subsidiaries, in accordance with the
provisions of Section 11.05, shall cause the Notes and the Subsidiary Guarantees
to be secured by a Lien on such Collateral.
(c) In connection with any release by the Senior Bank Agent
of the Collateral securing the Senior Bank Debt, in accordance with the
Intercreditor Agreement, the Trustee shall execute and deliver any and all
instruments evidencing the release of the Lien of the Security Documents on the
Collateral described to be released in the Release notice (as defined in the
Intercreditor Agreement) delivered by the Senior Bank Agent in accordance with
the provisions of the Intercreditor Agreement.
Any releases of Collateral made in strict compliance with the
provisions of this Section 11.04 shall be deemed not to impair the Security
Interests created by the Security Documents in favor of the Trustee for its
benefit and the benefit of the holders of the Notes, in contravention of the
provisions of this Indenture.
(d) Notwithstanding the foregoing, if during the continuance
of an Event of Default the Senior Bank Debt is repaid in full and the Senior
Credit Facility ceases to be in effect, any Collateral owned by the Company or
any Subsidiary Guarantor and remaining after any disposal of collateral, the
proceeds of which were used to repay the Senior Bank Debt, shall continue to
secure the Notes and the Subsidiary Guarantees and shall not be released from
the Lien granted to the Trustee under the Security Documents as a result of the
Senior Credit Facility's Liens being released (but shall be released
automatically when such Event of Default ceases to exist).
SECTION 11.05. ADDITIONAL COLLATERAL.
At any time and from time to time, the Company or any other
Pledgor shall be required to or elects to grant to the Trustee a Security
Interest in additional Collateral pursuant to the provisions of this Indenture
(including without limitation Section 4.16 hereof) or the Security Documents,
the Company and any such Pledgor shall comply with the provisions of this
Section 11.05. The Company and any such Pledgor shall deliver to the Trustee the
following documents:
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(a) an instrument or instruments in recordable form
sufficient for the Lien of the Security Documents to cover the additional
Collateral;
(b) in the case of additional Collateral which constitutes
personal property having a value in excess of $2,000,000:
(1) an Opinion of Counsel stating that the Lien of
the Security Documents constitutes a direct and valid and
perfected Lien on such additional Collateral;
(2) an Officers' Certificate of the Company stating
that any specific exceptions to such Lien are Liens of the
character which were permitted to be Prior Liens under the
Security Documents with respect to the Collateral; and
(3) evidence of payment or a closing statement
indicating payments to be made by the applicable Pledgor of
all filing fees, recording charges, transfer taxes and other
costs and expenses, including reasonable legal fees and
disbursements of counsel for the Trustee (and any local
counsel) that may be incurred to validly and effectively
subject such personal property to the Lien of any applicable
Security Document to perfect such Liens;
(c) in the case of additional Collateral which constitutes
Real Property:
(1) a policy of title insurance (or a commitment to
issue title insurance) insuring that the Lien of the Security
Documents constitutes a direct and valid and perfected
mortgage Lien on such additional Collateral (subject to no
Prior Liens other than Prior Liens which were permitted under
the Security Documents with respect to the Collateral being
replaced by such additional Collateral) in an aggregate
amount equal to the Fair Market Value of such additional
Collateral and containing the same endorsements in the title
insurance policies provided to the Senior Bank Agent and
contain only such exceptions to title as shall be Prior Liens
and such exceptions as are in title policies provided to the
Senior Bank Agent in respect of the Senior Bank Debt;
(2) an Officers' Certificate of the Company stating
that any specific exceptions to such title insurance or title
opinion are Liens permitted to be on Collateral pursuant to
the provisions of Section 4.21;
(3) a survey with respect to such Real Property
substantially in the form thereof, if any, delivered to the
Senior Bank Agent in connection with the Lien granted to the
Senior Bank Agent with respect to such Real Property;
(4) a policy or certificate of insurance as required
by any Mortgage relating to such Real Property, which policy
or certificate shall bear mortgagee endorsements of the
character required by such Mortgage;
(5) evidence of payment or a closing statement
indicating payments to be made by the applicable Pledgor of
all title premiums, recording charges, transfer taxes and
other costs and expenses including reasonable legal fees and
disbursements of counsel for the Trustee (and any local
counsel) that may be incurred to validly and effectively
subject such Real Property to the Lien of any applicable
Security Document to perfect such Lien;
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(6) copies of all Leases, all of which Leases shall
be in conformance with any applicable provisions of the
Security Documents;
(7) an Officers' Certificate of the Company stating
that there has been issued and is in effect a valid and proper
certificate of occupancy or local or foreign equivalent, if
required by the local or foreign codes or ordinances for the
use then being made of such Real Property and that there is
not outstanding any citation, violation or similar notice
indicating that such Real Property contains conditions which
are not in compliance with local or foreign codes or
ordinances relating to building or fire safety or structural
soundness; and
(8) such consents, approvals, amendments,
supplements, estoppels, tenant subordination agreements or
other instruments as shall be necessary in order for the owner
or holder of the fee interest to grant the Lien contemplated
by the Mortgage with respect to such Real Property; and
(d) Opinion(s) of Counsel in each jurisdiction in which such
Collateral is located substantially in the form of the local counsel
opinions delivered on the date hereof and otherwise in form and
substance satisfactory to the Trustee with respect to the documents
executed and delivered by the applicable Pledgor and the Collateral
encumbered thereby.
SECTION 11.06. TRUST INDENTURE ACT REQUIREMENTS.
The release of any Collateral pursuant to Article 11 or 12,
from the Lien of any of the Security Documents or the release of, in whole or in
part, the Liens created by any of the Security Documents, will not be deemed to
impair the Security Interests in contravention of the provisions hereof if and
to the extent the Collateral or Liens are released pursuant to the applicable
Security Documents and pursuant to the terms hereof. The Trustee and each of the
holders of the Notes acknowledge that a release of Collateral or Liens strictly
in accordance with the terms of the Security Documents and the terms hereof will
not be deemed for any purpose to be an impairment of the Security Interests in
contravention of the terms of this Indenture. So long as the Senior Credit
Facility is in effect to the extent applicable, without limitation, the Pledgors
and each obligor on the Notes shall cause TIA Section 314(d) relating to the
release of property or securities from the Liens hereof and of the Security
Documents to be disregarded to the maximum extent permitted by law.
SECTION 11.07. SUITS TO PROTECT THE COLLATERAL.
Subject to the provisions of the Security Documents, the
Trustee shall have power to institute and to maintain such suits and proceedings
as they may deem expedient to prevent any impairment of the Collateral by any
acts which may be unlawful or in violation of any of the Security Documents or
this Indenture, and such suits and proceedings as the Trustee may deem expedient
to preserve or protect its interests and the interests of the Holders of the
Notes in the Collateral (including power to institute and maintain suits or
proceedings to restrain the enforcement of or compliance with any legislative or
other governmental enactment, rule or order that may be unconstitutional or
otherwise invalid if the enforcement of, or compliance with, such enactment,
rule or order would impair the Security Interests or be prejudicial to the
interests of the Holders of the Notes or the Trustee).
SECTION 11.08. PURCHASER PROTECTED.
In no event shall any purchaser in good faith of any property
purported to be released hereunder be bound to ascertain the authority of the
Trustee to execute the release or to inquire as to the satisfaction of any
conditions required by the provisions hereof for the exercise of such authority
or to see to the application of
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any consideration given by such purchaser or other transferee; nor shall any
purchaser or other transferee of any property or rights permitted by this
Article 11 to be sold be under obligation to ascertain or inquire into the
authority of the Company or any other Pledgor, as applicable, to make any such
sale or other transfer.
SECTION 11.09. POWERS EXERCISABLE BY RECEIVER OR TRUSTEE.
In case the Collateral shall be in the possession of a
receiver or trustee, lawfully appointed, the powers conferred in this Article 11
upon the Company or any other Pledgor, as applicable, with respect to the
release, sale or other disposition of such property may be exercised by such
receiver or trustee, and an instrument signed by such receiver or trustee shall
be deemed the equivalent of any similar instrument of the Company or any other
Pledgor, as applicable, or of any officer or officers thereof required by the
provisions of this Article 11.
SECTION 11.10. [RESERVED]
SECTION 11.11. DETERMINATIONS RELATING TO COLLATERAL.
In the event (i) the Trustee shall receive any written request
from the Company or any other Pledgor under any Security Document for consent or
approval with respect to any matter or thing relating to any Collateral or the
Company's or any other Pledgor's obligations with respect thereto or (ii) there
shall be due to or from the Trustee under the provisions of any Security
Document any performance or the delivery of any instrument or (iii) the Trustee
shall become aware of any nonperformance by the Company or any other Pledgor of
any covenant or any breach of any representation or warranty of the Company or
any other Pledgor set forth in any Security Document, then, in each such event,
the Trustee shall be entitled to hire experts, consultants, agents and attorneys
to advise the Trustee on the manner in which the Trustee should respond to such
request or render any requested performance or response to such nonperformance
or breach (the expenses of which shall be reimbursed to the Trustee pursuant to
Section 7.07). The Trustee shall be fully protected in the taking of any action
recommended or approved by any such expert, consultant, agent or attorney or
agreed to by a majority of holders of the Notes pursuant to Section 6.05.
SECTION 11.12. RENEWAL AND REFUNDING.
Nothing in this Article 11 shall prevent (a) the renewal or
extension, without impairment of the Security Interests, at the same or at a
lower or higher rate of interest, of any of the obligations or Indebtedness of
any Person included in the Collateral or (b) the issue in substitution for any
such obligations or Indebtedness of other obligations or Indebtedness of such
Person for equivalent amounts and of substantially equal or superior rank as to
security, if any; provided, however, that every such obligation or Indebtedness
as so renewed or extended shall continue to be subject to the Lien of the
Security Documents and every substituted obligation of Indebtedness and the
evidence thereof shall be deposited and pledged with the Senior Bank Agent.
SECTION 11.13. RELEASE UPON TERMINATION OF THE COMPANY'S
OBLIGATIONS.
In the event that the Company delivers an Officers'
Certificate certifying that its obligations under this Indenture have been
satisfied and discharged by complying with the provisions of Article 8, the
Trustee shall (i) execute and deliver such releases, termination statements and
other instruments (in recordable form, where appropriate) as the Company or any
other Pledgor, as applicable, may reasonably request evidencing the termination
of the Security Interests created by the Security Documents and (ii) not be
deemed to hold the Security Interests for its benefit and the benefit of the
holders of the Notes.
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SECTION 11.14. CERTAIN ACTIONS BY TRUSTEE.
Any action taken by the Trustee pursuant to this Article 11
and Article 12 in respect of the release, addition or use of Collateral shall be
taken by the Trustee as its interest in such Collateral may appear, and no
provision of this Article 11 and Article 12 is intended to, or shall, excuse
compliance with any provision of the Intercreditor Agreement or the other
Security Documents that create rights in favor of other holders of Prior Liens.
ARTICLE 12
APPLICATION OF TRUST MONEYS
SECTION 12.01. "TRUST MONEYS" DEFINED.
The provisions of this Article 12 shall apply only during the
continuance of an Event of Default when the Senior Credit Facility is repaid in
full and the Senior Credit Facility ceases to be in effect and the Trustee (for
the benefit of itself and the Holders) maintains a Lien on any of the Collateral
pursuant to Section 11.04(b) hereof.
All Cash Equivalents received by the Trustee, as the case may
be, in accordance with the terms of this Indenture and the Security Documents:
(a) upon the release of property from the Lien of any of the
Security Documents, including, without limitation, all moneys received
in respect of the principal of all purchase money, governmental and
other obligations; or
(b) as compensation for, or proceeds of the sale of, all or
any part of the Collateral Taken by eminent domain or purchased by, or
sold pursuant to an order of, a governmental authority or otherwise
disposed of; or
(c) as proceeds of insurance upon any, all or part of the
Collateral (other than any liability insurance proceeds payable to the
Trustee for any loss, liability or expense incurred by them); or
(d) pursuant to certain provisions of the Mortgages; or
(e) as proceeds of any other sale or other disposition of all
or any part of the Collateral by or on behalf of the Trustee or any
collection, recovery, receipt, appropriation or other realization of or
from all or any part of the Collateral pursuant to the Security
Documents or otherwise; or
(f) for application under this Article 12 as elsewhere
provided in this Indenture or any Security Document, or whose
disposition is not elsewhere otherwise specifically provided for herein
or in any Security Document;
(all such moneys being herein sometimes called "Trust Moneys"; provided,
however, that Trust Moneys shall not include any property deposited with the
Trustee pursuant to Article 3 or 8 or delivered to or received by the Trustee
pursuant to Section 6.10 hereof) shall be held by or delivered to the Trustee,
for its benefit and the benefit of the Holders of Notes as a part of the
Collateral in accordance with the provisions of this Indenture and the
applicable Security Documents and, upon any entry upon or sale or other
disposition of the Collateral or any part thereof pursuant to any of the
Security Documents, said Trust Moneys shall be applied in accordance with
Section 6.10; but, prior to any such entry, sale or other disposition, all or
any part of the Trust Moneys may be with-
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drawn, and shall be released, paid or applied by the Trustee, from time to time
as provided in Sections 12.02 through 12.06, inclusive, and the Intercreditor
Agreement.
On the date the Senior Credit Facility is terminated there
shall be established and, at all times thereafter until this Indenture shall
have terminated, there shall be maintained with the Trustee an account which
shall be entitled the "Collateral Account" (the "Collateral Account"). The
Collateral Account shall be established and maintained by the Trustee at its
corporate trust offices located in New York or Illinois. All Trust Moneys that
are received by the Trustee shall be held, applied and/or disbursed by the
Trustee in accordance with the provisions of this Article 12.
SECTION 12.02. RETIREMENT OF SECURITIES.
The Trustee shall apply Trust Moneys from time to time to the
payment of the principal of and interest on any Notes, when due or to the
redemption thereof or the purchase thereof upon tender or in the open market or
at private sale or upon any exchange or in any one or more of such ways,
including, without limitation, pursuant to an Asset Sale Offer under Section
4.10 or a Change of Control Offer under Section 4.15, as the Company shall
request in writing, upon receipt by the Trustee of the following:
(a) Board Resolutions of the Company directing the application
pursuant to this Section 12.02 of a specified amount of Trust Moneys
and, in case any such moneys are to be applied to payment, designating
the Notes so to be paid and, in case any such moneys are to be applied
to the purchase of Notes, prescribing the method of purchase, the price
or prices to be paid and the maximum principal amount of Notes to be
purchased and any other provisions of this Indenture governing such
purchase;
(b) cash in the maximum amount of the accrued interest, if
any, required to be paid in connection with any such purchase, which
cash shall be held by the Trustee in trust for such purpose;
(c) an Officers' Certificate of the Company, dated not more
than five Business Days prior to the date of the relevant application
stating
(i) that no Default or Event of Default exists unless
such Default or Event of Default would be cured thereby; and
(ii) that all conditions precedent and covenants herein
provided for relating to such application of Trust Moneys have
been complied with; and
(d) an Opinion of Counsel stating that the documents and the
Cash Equivalents, if any, which have been or are therewith delivered to
and deposited with the Trustee conform to the requirements of this
Indenture and that all conditions precedent herein provided for
relating to such application of Trust Moneys have been complied with.
Upon compliance with the foregoing provisions of this Section,
the Trustee shall apply Trust Moneys as directed and specified by such Board
Resolution, up to, but not exceeding, the principal amount of the Notes so paid
or purchased, using the cash deposited pursuant to paragraph (b) of this Section
12.02, to the extent necessary, to pay any accrued interest required in
connection with such purchase.
A Board Resolution expressed to be irrevocable directing the
application of Trust Moneys under this Section 12.02 to the payment of the
principal of particular Notes shall for all purposes of this Indenture be deemed
the equivalent of the deposit of money with the Trustee in trust for such
purpose. Such Trust Mon-
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eys and any cash deposited with the Trustee pursuant to paragraph (b) of this
Section 12.02 for the payment of accrued interest shall not, after compliance
with the foregoing provisions of this Section, be deemed to be part of the
Collateral or Trust Moneys.
SECTION 12.03. POWERS EXERCISABLE NOTWITHSTANDING EVENT OF DEFAULT.
In case an Event of Default shall have occurred and shall be
continuing, the Company or any Guarantor, as applicable, while in possession of
Collateral (other than Cash Equivalents, securities and other personal property
held by, or required to be deposited or pledged with, the Trustee hereunder or
under the Security Documents or with the trustee, mortgagee or other holder of a
Prior Lien), may do any of the things not expressly provided for in this
Indenture if the holders of a majority in aggregate principal amount of the
Notes outstanding, by appropriate action of such holders, shall consent to such
action. This Section 12.03 shall not apply, however, during the continuance of
an Event of Default of the type specified in Section 6.01(i) or (ii).
SECTION 12.04. POWERS EXERCISABLE BY COLLATERAL AGENT OR RECEIVER.
In case the Collateral (other than any Cash Equivalents,
securities and other personal property held by, or required to be deposited or
pledged with, the Trustee hereunder or under the Security Documents or with the
trustee, mortgagee or other holder of a Prior Lien) shall be in the possession
of a receiver or trustee lawfully appointed, the powers hereinbefore in this
Article 12 conferred upon the Company and any Guarantor, as applicable, with
respect to the withdrawal or application of Trust Moneys may be exercised by
such receiver or trustee, in which case a certificate signed by such receiver or
trustee shall be deemed the equivalent of any Officers' Certificate required by
this Article 12. If the Trustee shall be in possession of any of the Collateral
hereunder or under any of the Security Documents, such powers may be exercised
by the Trustee, in its discretion.
SECTION 12.05. DISPOSITION OF NOTES RETIRED.
All Notes received by the Trustee and for whose purchase Trust
Moneys are applied under this Article 12, if not otherwise cancelled, shall be
promptly delivered to the Trustee for cancellation and destruction unless the
Trustee shall be otherwise directed in writing by the Company. Upon destruction
of any Notes, the Trustee shall issue a certificate of destruction to the
Company.
SECTION 12.06. INVESTMENT OF TRUST MONEYS.
All or any part of any Trust Moneys held by the Trustee
hereunder (except such as may be held for the account of any particular Notes)
shall from time to time be invested or reinvested by the Trustee in any Cash
Equivalents pursuant to the written direction of the Company which shall specify
the Cash Equivalents in which such Trust Moneys shall be invested. Such Cash
Equivalents shall be held by the Trustee, as the case may be, as a part of the
Collateral, subject to the same provisions hereof as the cash used by it to
purchase such Cash Equivalents.
The Trustee shall not be liable or responsible for any loss
resulting from such investments or sales except only for its own grossly
negligent action, its own grossly negligent failure to act or its own willful
misconduct in complying with this Section 12.06.
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ARTICLE 13
MISCELLANEOUS
SECTION 13.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture or the Security Documents
limits, qualifies or conflicts with the duties imposed by TIA Section 318(c),
the imposed duties shall control except as otherwise provided pursuant to
Section 11.06 to the extent they cannot be disregarded, pursuant to TIA Section
314(d).
SECTION 13.02. NOTICES.
Any notice or communication by the Company or the Trustee to
the others is duly given if in writing and delivered in Person or mailed by
first class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
others' address:
If to the Company or any Guarantor:
Metal Management, Inc.
500 North Dearborn Street
Chicago, Illinois 60610
Telecopier No.: (312) 645-0714
Attention: Chief Financial Officer and
General Counsel
With a copy to:
Mayer, Brown & Platt
190 South LaSalle Street
Suite 3100
Chicago, Illinois 60603
Telecopier No.: (312) 701-7711
Attention: Paul W. Theiss
If to the Trustee:
Harris Trust and Savings Bank
311 West Monroe, 12th Floor
Chicago, Illinois 60606
Telecopier No.: (312) 461-3525
Attention: Indenture Trust Administration
The Company, any Guarantor or the Trustee by written notice to
the others may designate additional or different addresses for subsequent
notices or communications.
All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time delivered by hand,
if personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if sent by registered or certified mail; when answered back, if
telexed; when receipt
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acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by
first class mail, certified or registered, return receipt requested, or by
overnight air courier guaranteeing next day delivery to its address shown on the
register kept by the Registrar. Any notice or communication shall also be so
mailed to any Person described in TIA Section 313(c), to the extent required by
the TIA. Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it
shall mail a copy to the Trustee and each Agent at the same time.
SECTION 13.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF
NOTES.
Holders may communicate pursuant to TIA Section 312(b) with
other Holders with respect to their rights under this Indenture or the Notes.
The Company, the Guarantors, the Trustee, the Registrar and any other Person
shall have the protection of TIA Section 312(c).
SECTION 13.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company or any
Guarantor to the Trustee to take any action under this Indenture, the Company or
such Guarantor shall furnish to the Trustee, at the request of the Trustee:
(a) an Officer's Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 13.05 hereof) stating that, in the opinion of the
signers, all conditions precedent and covenants, if any, provided for
in this Indenture relating to the proposed action have been satisfied;
and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 13.05 hereof) stating that, in the opinion of such
counsel, all such conditions precedent and covenants have been
satisfied.
SECTION 13.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture and the Security Documents
(other than a certificate provided pursuant to TIA Section 314(a)(4) and the
Officer's Certificate required by Section 4.08 hereof) shall comply with the
provisions of TIA Section 314(e) and shall include:
(a) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
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(c) a statement that, in the opinion of such Person, he or she
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been satisfied; and
(d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been satisfied; provided,
however, that with respect to matters of fact, an Opinion of Counsel
may rely on an Officer's Certificate or certificates of public
officials.
SECTION 13.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or Paying Agent may make reasonable rules and
set reasonable requirements for its functions.
SECTION 13.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No director, officer, employee, incorporator or stockholder of
the Company or any Guarantor, as such, shall have any liability for any
obligations of the Company or the Guarantors under the Notes, the Subsidiary
Guarantees, this Indenture or the Security Documents or for any claim based on,
in respect of, or by reason of, such obligations or their creation. Each Holder
of Notes by accepting a Note waives and releases all such liability. The waiver
and release are part of the consideration for issuance of the Notes.
SECTION 13.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE
USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES.
SECTION 13.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other
indenture, loan or debt agreement of the Company or its Subsidiaries or of any
other Person. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
SECTION 13.10. SUCCESSORS.
All agreements of the Company and the Guarantors in this
Indenture and the Notes shall bind their respective successors. All agreements
of the Trustee in this Indenture shall bind its successors.
SECTION 13.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
SECTION 13.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
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<PAGE> 89
SECTION 13.13. TABLE OF CONTENTS; HEADINGS; ETC.
The Table of Contents, Cross-Reference Table and Headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part of this Indenture and shall
in no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page.]
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<PAGE> 90
SIGNATURES
Dated as of May 7, 1999 METAL MANAGEMENT, INC.
By: /s/ Robert C. Larry
-----------------------
Name: Robert C. Larry
Title: Executive Vice President
AEROSPACE METALS, INC.
AMERICAN SCRAP PROCESSING, INC.
C SHREDDING CORP.
CALIFORNIA METALS RECYCLING, INC.
CIM TRUCKING, INC.
COMETCO CORP.
COZZI BUILDING CORPORATION
COZZI IRON & METAL, INC.
EMCO TRADING, INC.
FERREX TRADING CORPORATION
FIRMA, INC.
FIRMA PLASTIC CO., INC.
FPX, INC.
HOUSTON COMPRESSED STEEL CORP.
HOUTEX METALS COMPANY, INC.
THE ISAAC CORPORATION
KIMERLING ACQUISITION CORP.
P. JOSEPH IRON & METAL, INC.
KANKAKEE SCRAP CORPORATION
MAC LEOD METALS CO.
METAL MANAGEMENT ARIZONA, INC.
METAL MANAGEMENT GULF COAST, INC.
METAL MANAGEMENT PITTSBURGH INC.
METAL MANAGEMENT REALTY, INC.
MICHAEL SCHIAVONE & SONS, INC.
NAPORANO IRON & METAL CO.
NEWELL RECYCLING WEST, INC.
NIMCO SHREDDING CO.
138 SCRAP, INC.
PERLCO, L.L.C.
PROLER SOUTHWEST INC.
PROLER STEELWORKS L.L.C.
R&P HOLDINGS, INC.
SALT RIVER RECYCLING, L.L.C.
SCRAP PROCESSING, INC.
TORRINGTON SCRAP COMPANY
TROJAN TRADING CO.
USA SOUTHWESTERN CARRIER, INC.
S-1
<PAGE> 91
By: /s/ Robert C. Larry
-----------------------
Name: Robert C. Larry
Title: Vice President
RESERVE IRON & METAL LIMITED PARTNERSHIP
By: P. JOSEPH IRON & METAL, INC.,
its general partner
By: /s/ Robert C. Larry
-----------------------
Name: Robert C. Larry
Title: Vice President
HARRIS TRUST AND SAVINGS BANK,
as Trustee
By: /s/ Daniel G. Donovan
--------------------------------------
Name: Daniel G. Donovan
Title: Assistant Vice President
S-2
<PAGE> 92
EXHIBIT A-1
(Face of Note)
12 3/4% Senior Secured Notes due 2004
No. $___________
METAL MANAGEMENT, INC.
promises to pay to _________________________________________________________ or
registered assigns, the principal sum of _______________ Dollars on June 15,
2004.
Interest Payment Dates: June 15 and December 15
Record Dates: June 1 and December 1
CUSIP Number:
Dated: _______________, 1999
METAL MANAGEMENT, INC.
By: ______________________
Name:
Title:
This is one of the Notes referred to in the within-mentioned indenture:
Dated: May 7, 1999
HARRIS TRUST AND SAVINGS BANK
as Trustee
By: ______________________
<PAGE> 93
[Unless and until it is exchanged in whole or in part for
Notes in definitive form, this Note may not be transferred except as a whole 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. Unless this certificate is presented by an authorized representative
of The Depository Trust Company (55 Water Street, New York, New York) ("DTC") to
the issuer 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 may be requested by an authorized representative of DTC (and any payment
is made to Cede & Co. or such other entity as may be requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.](1)
[Insert legend in Section 2.06(g), if applicable]
Capitalized terms used herein shall have the meanings assigned
to them in the Indenture referred to below unless otherwise indicated.
- ----------
(1) This paragraph should be included only if the Note is issued in global form.
A-1-2
<PAGE> 94
(Back of Note)
METAL MANAGEMENT, INC.
12 3/4% Senior Secured Notes due 2004
1. INTEREST. Metal Management, Inc., a Delaware corporation
(the "Company"), promises to pay interest on the principal amount of this Note
at 12 3/4% per annum from May [ ], 1999 until June 15, 2004. The Company shall
pay interest and Liquidated Damages, if any, in cash semi-annually in arrears on
June 15 and December 15 of each year, or if any such day is not a Business Day,
on the next succeeding Business Day (each an "Interest Payment Date"). Interest
on the Notes will accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from the date of issuance; provided that
if there is no existing Default in the payment of interest, and if this Note is
authenticated between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided, further, that the first Interest
Payment Date shall be December 15, 1999. The Company shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue principal and premium, if any, from time to time on demand at a rate
equal to the per annum rate on the Notes then in effect; it shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest and Liquidated Damages, if any, (without regard
to any applicable grace periods) from time to time on demand at the same rate to
the extent lawful. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
2. METHOD OF PAYMENT. The Company shall make payments in
respect of the Notes represented by the Global Notes (including principal,
premium, interest and Liquidated Damages, if any) by wire transfer of
immediately available funds to the accounts specified by the Global Note
custodian. With respect to Notes issued in definitive form, the Company shall
make all payments of principal, premium, interest and Liquidated Damages, if
any, by mailing a check to each such Holder's registered address, provided that
all payments with respect to Notes having an aggregate principal amount of
$100,000 or more, the Holders of which have given written wire transfer
instructions to the Company at least ten business days prior to the applicable
payment date, will be required to be made by wire transfer of immediately
available funds to the accounts specified by the Holders thereof. Except for
trades involving only Euroclear or CEDEL participants, the Notes represented by
the Global Notes are expected to be eligible to trade in DTC's Same-Day Funds
Settlement System, and any permitted secondary market trading activity in such
Notes will, therefore, be required by DTC to be settled in immediately available
funds. The Company expects that secondary trading in the Definitive Notes also
will be settled in immediately available funds.
3. PAYING AGENT AND REGISTRAR. Initially, Harris Trust and
Savings Bank, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Notes may be presented for registration of transfer and exchange
at the offices (or an affiliate's office) of the Registrar. The Company may
change any Paying Agent or Registrar without notice to any Holder. The Company
or any of the Guarantors may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture
dated as of May 7, 1999 ("Indenture") among the Company, the Guarantors and the
Trustee. The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code Sections 77aaa-77bbbb). The Notes are subject to all such
terms, and Holders are referred to the Indenture and such Act for a statement of
such terms. The Notes are obligations of the Company limited to $30,000,000 in
aggregate principal amount.
A-1-3
<PAGE> 95
5. OPTIONAL REDEMPTION.
The Notes are not redeemable, in whole or in part, at the
Company's option prior to June 15, 2000. From and after June 15, 2000, the
Company may redeem all or any portion of the Notes, in aggregate minimum
principal amounts of $10.0 million and integral multiples of $10.0 million, at a
redemption price equal to 100% of the aggregate principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages, if any, to the redemption
date.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall
not be required to make mandatory redemption payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, the Company shall be
required to make an offer (a "Change of Control Offer") to repurchase all or any
part (equal to $1,000 or an integral multiple thereof) of each Holder's Notes at
a purchase price equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
of purchase, which date shall be no fewer than 30 and no more than 60 days from
the date such notice is mailed (the "Change of Control Payment"). Within 30 days
following any Change of Control, the Company shall mail a notice to each Holder
setting forth the procedures governing the Change of Control Offer as required
by the Indenture.
(b) Unless the Company otherwise complies with the provisions
of Section 4.10(b) of the Indenture and, subject to the provisions of Section
4.10 of the Indenture, as soon as practical, but in no event later than 10
Business Days after any date that the aggregate amount of Available Proceeds
Amount exceeds $10.0 million, the Company shall commence an Asset Sale Offer to
purchase the maximum principal amount of Notes that may be purchased out of the
Available Proceeds Amount, at an Asset Sale offer price in cash in an amount
equal to 100% of the principal amount thereof, plus accrued and unpaid interest
and Liquidated Damages thereon, if any, to the date fixed for the closing of
such offer.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed
at least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes may be
redeemed in part but only in whole multiples of $1,000. On and after the
redemption date interest ceases to accrue on Notes or portions thereof called
for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in
registered form without coupons in minimum denominations of $1,000 and integral
multiples of $1,000 in excess thereof. The transfer of Notes may be registered
and Notes may be exchanged as provided in the Indenture. The Registrar and the
Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and the Company may require a Holder to pay
any taxes and fees required by law or permitted by the Indenture. The Company
need not exchange or register the transfer of any Note or portion of a Note
selected for redemption, except for the unredeemed portion of any Note being
redeemed in part. Also, it need not exchange or register the transfer of any
Notes for a period of 15 days before a selection of Notes to be redeemed or
during the period between a record date and the corresponding Interest Payment
Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may
be treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain
exceptions, the Indenture or the Notes may be amended or supplemented with the
consent of the Holders of at least a majority in
A-1-4
<PAGE> 96
aggregate principal amount of the then outstanding Notes, and any existing
default or compliance with any provision of the Indenture, the Notes or the
Security Documents may be waived with the consent of the Holders of a majority
in principal amount of the then outstanding Notes. Without the consent of any
Holder of a Note, the Indenture or the Notes may be amended or supplemented to
cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes
in addition to or in place of Definitive Notes, to provide for the assumption of
the Company's and Guarantors' obligations to Holders of the Notes in case of a
merger or consolidation, to make any change that would provide any additional
rights or benefits to the Holders of the Notes or that does not adversely affect
the legal rights under the Indenture or the Security Documents of any such
Holder, or to comply with the requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act to
mortgage, pledge or grant a Security Interest in favor of the Trustee as
additional security for the payment and performance of Obligations under this
Indenture, the Notes and the Subsidiary Guarantees, in any property or assets,
including any which are required to be mortgaged, pledged or hypothecated, or in
which a Security Interest is required to be granted pursuant to the provisions
of the Security Documents or otherwise, or to add or release any Guarantor or
Pledgor strictly in accordance with another provision of this Indenture or a
provision of the Security Documents expressly providing for such addition or
release.
12. DEFAULTS AND REMEDIES. Each of the following constitutes
an Event of Default: (i) default for 30 days in the payment when due of interest
or Liquidated Damages, if any, on the Notes; (ii) default in payment when due of
the principal of or premium, if any, on the Notes; (iii) failure by the Company
to comply with the provisions described under Sections 4.10, 4.15 or 5.01 of the
Indenture; (iv) failure by the Company for 60 days after notice from the Trustee
or the Holders of at least 25% in aggregate principal amount of the then
outstanding Notes to comply with any of its other covenants, agreements or
warranties in the Indenture, the Notes or the Security Documents; (v) default
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness for money borrowed
by the Company or any of its Restricted Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Restricted Subsidiaries) whether such
Indebtedness or guarantee now exists, or is created after the date of the
Indenture, which default results in the acceleration of such Indebtedness prior
to its express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
the maturity of which has been so accelerated, aggregates $10.0 million or more;
(vi) failure by the Company or any of its Restricted Subsidiaries to pay final
judgments for the payment of money damages aggregating in excess of $10.0
million, which judgments are not paid, discharged or stayed for a period of 60
days; (vii) except as permitted by the Indenture, any Significant Subsidiary
Guarantee shall be held in any judicial proceeding to be unenforceable or
invalid or shall cease for any reason to be in full force and effect (except by
its terms) or any Guarantor, or any Person acting on behalf of any Guarantor,
shall deny or disaffirm its obligations under its Significant Subsidiary
Guarantee, in each case if such default continues for a period of ten days after
notice to the Company from the Trustee or the Holders of at least 25% in
aggregate principal amount of the then outstanding Notes; (viii) other than as
permitted under the Security Documents or the terms of the Indenture, any of the
Security Documents ceases to be in full force and effect, or any of the other
Security Documents cease to give the Trustee the Security Interests, rights,
powers and privileges purported to be created thereby, or any Security Document
is declared null and void, or the Company or any Significant Subsidiary
Guarantor shall deny or disaffirm any of its obligations under any Security
Document or any Collateral becomes subject to any Lien other than Permitted
Liens; and (ix) certain events of bankruptcy or insolvency with respect to the
Company or any of its Significant Subsidiaries.
If any Event of Default (other than an Event of Default under
clause (ix) of the preceding paragraph with respect to the Company) occurs and
is continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare all the Notes to be due and payable
immediately. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency described in clause (ix)
of the preceding paragraph, with respect to the Company, any Significant
Subsidiary or any group of Subsidiaries that, taken together, would constitute a
Significant Subsidiary, all outstanding Notes shall ipso facto become due and
payable without further action or notice on the part of the Trus-
A-1-5
<PAGE> 97
tee or any Holder. Holders of the Notes may not enforce the Indenture or the
Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal, interest or Liquidated Damages, if any) if it determines that
withholding notice is in their interest.
At any time after a declaration of acceleration with respect
to the Notes, the Holders of a majority in aggregate principal amount of the
Notes may rescind and cancel such declaration and its consequences (i) if the
rescission would not conflict with any judgment or decree, (ii) if all existing
Events of Default have been cured or waived except nonpayment of principal,
interest or Liquidated Damages, if any, that has become due solely because of
the acceleration, (iii) if, to the extent the payment of such interest is
lawful, interest on overdue installments of interest and Liquidated Damages, if
any, and overdue principal at a rate equal to the rate borne by the Notes, which
has become due otherwise than by such declaration of acceleration, has been
paid, (iv) if the Company has paid the Trustee its reasonable compensation and
reimbursed the Trustee for its expenses, disbursements and advances and (v) if,
in the event of the cure or waiver of an Event of Default of the type described
in clauses (ix) and (x) of Section 6.01 of the Indenture, the Trustee shall have
received an Officer's Certificate and an Opinion of Counsel that such Event of
Default has been cured or waived. No such rescission shall affect any subsequent
Default or impair any right consequent thereto. If any Event of Default exists
solely by reason of any acceleration of Indebtedness under clause (v) of Section
6.01 of the Indenture, and such acceleration is rescinded by the holders of
Indebtedness affected thereby prior to the time the Obligations under the Notes
have been accelerated, such Event of Default shall cease to exist.
Subject to the second paragraph of Section 6.02 of the
Indenture, Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture, except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes or a default with respect to any
covenant or provision which cannot be modified or amended without the consent of
the Holder of each outstanding Note affected.
The Company is required to deliver to the Trustee annually a
statement regarding compliance with the Indenture, and the Company is required,
upon becoming aware of any Default or Event of Default, to deliver to the
Trustee a statement specifying such Default or Event of Default.
13. SECURITY DOCUMENTS. In order to secure the due and
punctual payment of the principal of and interest on the Notes and all other
amounts payable by the Company and the Guarantors under the Indenture, the Notes
and the Subsidiary Guarantees when and as the same shall be due and payable,
whether at maturity, by acceleration or otherwise, according to the terms of the
Notes and the Indenture, the Company and the Guarantors have granted Liens on
the Collateral to the Trustee for the benefit of the Holders of the Notes
pursuant to the Indenture and the Security Documents. The Notes will be secured
by Liens on the Collateral that are subject only to certain permitted
encumbrances.
14. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not the Trustee.
15. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company or the Guarantors, as such, shall
not have any liability for any obligations of the Company or the Guarantors
under the Notes, the Subsidiary Guarantees, the Indenture or the Security
Documents or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder
A-1-6
<PAGE> 98
by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Notes.
16. AUTHENTICATION. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
17. ABBREVIATIONS. Customary abbreviations may be used in the
name of a Holder or an assignee, such as: TEN COM (= tenants in common), TENENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
18.(2) ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED
SECURITIES. In addition to the rights provided to Holders of Notes under the
Indenture, Holders of Transfer Restricted Securities shall have all the rights
set forth in the Exchange and Registration Rights Agreement, dated as of May 7,
1999 (the "Registration Rights Agreement"), among the Company, the Guarantors
and the parties named on the signature pages thereof.
19. CUSIP NUMBERS. Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to Holders. No representation
is made as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
- ----------
(2) Shall be removed with respect to Exchange Notes.
A-1-7
<PAGE> 99
The Company shall furnish to any Holder upon written request
and without charge a copy of the Indenture and/or the Registration Rights
Agreement. Requests may be made to:
Metal Management, Inc.
500 N. Dearborn Street
Chicago, Illinois 60610
Attention: Chief Financial Officer
A-1-8
<PAGE> 100
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
(Insert assignee's soc. sec. or tax I.D. no.)
(Print or type assignee's name, address and zip code)
and irrevocably appoint agent to transfer this Note on the books of the Company.
The agent may substitute another to act for him.
Date: Your Signature:
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee:
A-1-9
<PAGE> 101
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the
Company pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Note purchased
by the Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state
the amount you elect to have purchased:
$
Date: Your Signature:
(Sign exactly as your name appears on the face of this Note)
Tax Identification No.:
Signature Guarantee:
A-1-10
<PAGE> 102
SCHEDULE OF EXCHANGES OF NOTES(3)
The following exchanges of a part of this Global Note for
other Notes have been made:
<TABLE>
<CAPTION>
Amount of decrease in Amount of increase Principal Amount of Signature of
Principal Amount of in Principal Amount this Global Note authorized officer
Date of Exchange this Global Note of this Global Note following such of Trustee or Note
decrease (or increase) Custodian
<S> <C> <C> <C> <C>
</TABLE>
- ----------
(3) This should be included only if the Note is issued in global form.
A-1-11
<PAGE> 103
EXHIBIT A-2
(Face of Regulation S Temporary Global Note)
12 3/4% Senior Secured Notes due 2004
No. $___________
METAL MANAGEMENT, INC.
promises to pay to _________________________________________________________ or
registered assigns, the principal sum of _______________ Dollars on June 15,
2004.
Interest Payment Dates: June 15 and December 15
Record Dates: June 1 and December 1
CUSIP Number:
Dated: _______________, 1999
METAL MANAGEMENT, INC.
By: _________________________
Name:
Title:
This is one of the Notes referred to in the within-mentioned indenture:
Dated: _____________, 1999
HARRIS TRUST AND SAVINGS BANK
as Trustee
By: _________________________
A-2-1
<PAGE> 104
Unless and until it is exchanged in whole or in part for Notes
in definitive form, this Note may not be transferred except as a whole 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. Unless this certificate is presented by an authorized representative
of The Depository Trust Company (55 Water Street, New York, New York) ("DTC") to
the issuer 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 may be requested by an authorized representative of DTC (and any payment
is made to Cede & Co. or such other entity as may be 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.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT), (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES
ACT OR (C) IT IS AN ACCREDITED INVESTOR (AS DEFINED IN RULE 501(a)(1),
(2), (3), OR (7)) UNDER THE SECURITIES ACT (AN "ACCREDITED INVESTOR"),
(2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL
ISSUANCE OF THIS NOTE RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A)
TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES
TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER
THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN ACCREDITED
INVESTOR, (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT (IF AVAILABLE), (E)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE SECURITIES ACT (IF AVAILABLE), (F) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, OR
(G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM
THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN TWO YEARS
AFTER THE ORIGINAL ISSUANCE OF THIS NOTE, THE HOLDER MUST, PRIOR TO
SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM
MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE
TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND
THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR DEFINITIVE
NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN).
A-2-2
<PAGE> 105
NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S
TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST
HEREON.
A-2-3
<PAGE> 106
(Back of Regulation S Temporary Global Note)
METAL MANAGEMENT, INC.
12 3/4% Senior Secured Note due 2004
Subject to the provisions hereof, Metal Management, Inc., a
Delaware corporation, (the "Company"), promises to pay to
________________________ the principal sum of ________________________ UNITED
STATES DOLLARS (U.S. $________________) on June 15, 2004, and to pay interest on
the principal amount of this Note beginning December 15, 1999 at the rate of 12
3/4% per annum. Upon exchange of this Regulation S Temporary Global Note for a
Regulation S Permanent Global Note as set forth below, interest shall be payable
in cash semi-annually in arrears on June 15 and December 15, or if any such day
is not a Business Day, on the next succeeding Business Day (each an "Interest
Payment Date"); provided that the first Interest Payment Date shall be December
15, 1999. Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
original issuance. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
This Regulation S Temporary Global Note is issued in respect
of an issue of 12 3/4% Senior Secured Notes due 2004 (the "Notes") of the
Company, limited to the aggregate principal amount of U.S. $30,000,000 issued
pursuant to an Indenture (the "Indenture") dated as of May 7, 1999, among the
Company, the Guarantors and Harris Trust and Savings Bank, as trustee (the
"Trustee"), and is governed by the terms and conditions of the Indenture
governing the Notes, which terms and conditions are incorporated herein by
reference and, except as otherwise provided herein, shall be binding on the
Company, the Guarantors and the Holder hereof as if fully set forth herein.
Unless the context otherwise requires, the terms used herein shall have the
meanings specified in the Indenture.
Until this Regulation S Temporary Global Note is exchanged for
a Regulation S Permanent Global Note, the Holder hereof shall not be entitled to
receive payments of interest hereon; until so exchanged in full, this Regulation
S Temporary Global Note shall in all other respects be entitled to the same
benefits as other Notes under the Indenture.
This Regulation S Temporary Global Note is exchangeable in
whole or in part for one or more Regulation S Permanent Global Notes, U.S.
Global Notes or IAI Global Notes only (i) on or after the termination of the
40-day restricted period (as defined in Regulation S) and (ii) upon presentation
of certificates (accompanied by an Opinion of Counsel, if applicable) required
by Article 2 of the Indenture. Upon exchange of this Regulation S Temporary
Global Note for one or more Regulation S Permanent Global Notes, U.S. Global
Notes or IAI Global Notes, the Trustee shall cancel this Regulation S Temporary
Global Note.
This Regulation S Temporary Global Note shall not become valid
or obligatory until the certificate of authentication hereon shall have been
duly manually signed by the Trustee in accordance with the Indenture. This
Regulation S Temporary Global Note shall be governed by and construed in
accordance with the laws of the State of the New York. All references to "$,"
"Dollars," "dollars" or "U.S. $" are to such coin or currency of the United
States of America as at the time shall be legal tender for the payment of public
and private debts therein.
A-2-4
<PAGE> 107
SCHEDULE OF EXCHANGES OF NOTES
The following exchanges of a part of this Regulation S
Temporary Global Note for other Global Notes have been made:
<TABLE>
<CAPTION>
Amount of decrease in Amount of increase in Principal Amount of Signature of
Principal Amount of Principal Amount of this Global Note authorized officer
Date of Exchange this Global Note this Global Note following such of Trustee or Note
decrease (or increase) Custodian
<S> <C> <C> <C> <C>
</TABLE>
A-2-5
<PAGE> 108
EXHIBIT B-1
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM U.S. GLOBAL NOTE OR IAI GLOBAL NOTE TO REGULATION S GLOBAL NOTE
(Pursuant to Section 2.06(a)(i) of the Indenture)
Harris Trust and Savings Bank
311 West Monroe, 12th Floor
Chicago, Illinois 60606
Attention: Corporate Trust Administration
Re: 12 3/4% Senior Secured Notes due 2004 of Metal Management, Inc.
Reference is hereby made to the Indenture, dated as of May 7,
1999 (the "Indenture"), among Metal Management, Inc., as issuer (the "Company"),
the Guarantors and Harris Trust and Savings Bank, as trustee. Capitalized terms
used but not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to $ principal amount of Notes which
are evidenced by one or more [U.S. Global Notes (CUSIP No.[ ])] [IAI Global
Notes (CUSIP No. [ ])] and held with the Depositary in the name of
(the "Transferor"). The Transferor has requested a transfer of such beneficial
interest in the Notes to a Person (the "Transferee") who will take delivery
thereof in the form of an equal principal amount of Notes evidenced by one or
more Regulation S Global Notes (CUSIP No. [ ]), which amount, immediately
after such transfer, is to be held with the Depositary through Euroclear or
Cedel Bank or both.
In connection with such request and in respect of such Notes,
the Transferor hereby certifies that such transfer has been effected in
compliance with the transfer restrictions applicable to the Global Notes and
pursuant to and in accordance with Rule 903 or Rule 904 under the United States
Securities Act of 1933, as amended (the "Securities Act"), and accordingly the
Transferor hereby further certifies that:
(1) The offer of the Notes was not made to a person in the
United States;
(2) either:
(a) at the time the buy order was originated, the
transferee was outside the United States or the Transferor and
any person acting on its behalf reasonably believed and
believes that the transferee was outside the United States; or
(b) the transaction was executed in, on or through
the facilities of a designated offshore securities market and
neither the Transferor nor any person acting on its behalf
knows that the transaction was prearranged with a buyer in the
United States;
(3) no directed selling efforts have been made in
contravention of the requirements of Rule 904(b) of Regulation S;
(4) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act; and
(5) upon completion of the transaction, the beneficial
interest being transferred as described above is to be held with the
Depositary through Euroclear or Cedel Bank or both.
B-1-1
<PAGE> 109
Upon giving effect to this request to exchange a beneficial
interest in such [U.S. Global Note] [IAI Global Note] for a beneficial interest
in a Regulation S Global Note, the resulting beneficial interest shall be
subject to the restrictions on transfer applicable to Regulation S Global Notes
pursuant to the Indenture and the Securities Act and, if such transfer occurs
prior to the end of the 40-day restricted period associated with the initial
offering of Notes, the additional restrictions applicable to transfers of
interest in the Regulation S Temporary Global Note.
This certificate and the statements contained herein are made
for your benefit and the benefit of the Company and the Guarantors. Each of the
foregoing is entitled to rely upon this letter and are irrevocably authorized to
produce this letter or a copy hereof to any interested party in any
administrative or legal proceedings with respect to the materials covered
hereby. Terms used in this certificate and not otherwise defined in the
Indenture have the meanings set forth in Regulation S under the Securities Act.
[Insert Name of Transferor]
By: _______________________
Name:
Title:
Dated: ______________, ____
B-1-2
<PAGE> 110
EXHIBIT B-2
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM REGULATION S GLOBAL NOTE TO U.S. GLOBAL NOTE OR IAI GLOBAL NOTE
(Pursuant to Section 2.06(a)(ii) of the Indenture)
Harris Trust and Savings Bank
311 West Monroe, 12th Floor
Chicago, Illinois 60606
Attention: Corporate Trust Administration
Re: 12 3/4% Senior Secured Notes due 2004 of Metal Management, Inc.
Reference is hereby made to the Indenture, dated as of May 7,
1999 (the "Indenture), among Metal Management, Inc., as issuer (the "Company"),
the Guarantors and Harris Trust and Savings Bank, as trustee. Capitalized terms
used but not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to $__________ principal amount of Notes
which are evidenced by one or more Regulation S Global Notes (CUSIP No.
[ ]) and held with the Depositary through Euroclear or Cedel Bank or both
in the name of _________________ (the "Transferor"). The Transferor has
requested a transfer of such beneficial interest in the Notes to a Person (the
"Transferee") who will take delivery thereof in the form of an equal principal
amount of Notes evidenced by one or more U.S. Global Notes (CUSIP No. [ ])
or IAI Global Notes to be held with the Depositary.
In connection with such request and in respect of such Notes,
the Transferor hereby certifies that:
[CHECK ONE]
[ ] such transfer is being effected pursuant to and in accordance with
Rule 144A under the United States Securities Act of 1933, as amended
(the "Securities Act"), and, accordingly, the Transferor hereby further
certifies that the Notes are being transferred to a Person that the
Transferor reasonably believes is purchasing the Notes for its own
account, or for one or more accounts with respect to which such Person
exercises sole investment discretion, and such Person and each such
account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A;
or
[ ] such transfer is being effected pursuant to and in accordance with
Rule 144 under the Securities Act;
or
[ ] such transfer is being effected pursuant to an effective
registration statement under the Securities Act;
or
B-2-1
<PAGE> 111
[ ] such transfer is being effected pursuant to and in accordance with
the requirements of the Securities Act, and the Transferor hereby
certifies that the Notes are being transferred to a Person that the
Transferor reasonably believes is purchasing the Notes for its account,
or for one or more accounts with respect to which such Person exercises
sole investment discretion, and such Person and each such account is an
institutional "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act;
and the Transferee agrees to provide a signed letter containing certain
representations and agreements regarding the transfer in a form
available from the Trustee;
or
[ ] such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A or
Rule 144, and the Transferor hereby further certifies that the Notes
are being transferred in compliance with the transfer restrictions
applicable to the Global Notes and in accordance with the requirements
of the exemption claimed, which certification is supported by an
Opinion of Counsel, provided by the Transferor or the Transferee (a
copy of which the Transferor has attached to this certification) in
form reasonably acceptable to the Company and to the Registrar, to the
effect that such transfer is in compliance with the Securities Act;
and such Notes are being transferred in compliance with any applicable blue sky
securities laws of any state of the United States.
Upon giving effect to this request to exchange a beneficial
interest in Regulation S Global Notes for a beneficial interest in U.S. Global
Notes or IAI Global Notes the resulting beneficial interest shall be subject to
the restrictions on transfer applicable to U.S. Global Notes or IAI Global
Notes, as applicable pursuant to the Indenture and the Securities Act.
This certificate and the statements contained herein are made
for your benefit and the benefit of the Company and the Guarantors. Each of the
foregoing is entitled to rely upon this letter and are irrevocably authorized to
produce this letter or a copy hereof to any interested party in any
administrative or legal proceedings with respect to the materials covered
hereby. Terms used in this certificate and not otherwise defined in the
Indenture have the meanings set forth in Regulation S under the Securities Act.
[Insert Name of Transferor]
By: _______________________
Name:
Title:
Dated: ______________, ____
B-2-2
<PAGE> 112
EXHIBIT B-3
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
OF DEFINITIVE NOTES
(Pursuant to Section 2.06(b) of the Indenture)
Harris Trust and Savings Bank
311 West Monroe, 12th Floor
Chicago, Illinois 60606
Attention: Corporate Trust Administration
Re: 12 3/4% Senior Secured Notes due 2004 of Metal Management, Inc.
Reference is hereby made to the Indenture, dated as of May 7,
1999 (the "Indenture"), among Metal Management, Inc., as issuer (the "Company"),
the Guarantors and Harris Trust and Savings Bank, as trustee. Capitalized terms
used but not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to $ principal amount of Notes which are
evidenced by one or more Definitive Notes (CUSIP No. __________) and registered
with the Registrar in the name of (the "Transferor"). The Transferor has
requested an exchange or transfer of such Definitive Note(s) in the form of an
equal principal amount of Notes evidenced by one or more Definitive Notes (CUSIP
No. ________), to be delivered to the Transferor or, in the case of a transfer
of such Notes, to such Person as the Transferor instructs the Trustee.
In connection with such request and in respect of the Notes
surrendered to the Trustee herewith for exchange (the "Surrendered Notes"), the
Holder of such Surrendered Notes hereby certifies that:
[CHECK ONE]
[ ] the Surrendered Notes are being acquired for the Transferor's own
account, without transfer;
or
[ ] the Surrendered Notes are being transferred to the Company;
or
[ ] the Surrendered Notes are being transferred pursuant to and in
accordance with Rule 144A under the United States Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, the
Transferor hereby further certifies that the Surrendered Notes are
being transferred to a Person that the Transferor reasonably believes
is purchasing the Surrendered Notes for its own account, or for one or
more accounts with respect to which such Person exercises sole
investment discretion, and such Person and each such account is a
"qualified institutional buyer," within the meaning of Rule 144A, in
each case in a transaction meeting the requirements of Rule 144A;
or
B-3-1
<PAGE> 113
[ ] the Surrendered Notes are being transferred in a transaction
permitted by Rule 144 under the Securities Act;
or
[ ] the Surrendered Notes are being transferred pursuant to an
effective registration statement under the Securities Act;
or
[ ] the Surrendered Notes are being transferred pursuant to and in
accordance with the requirements of the Securities Act, and the
Transferor hereby certifies that the Surrendered Notes are being
transferred to a Person that the Transferor reasonably believes is
purchasing the Surrendered Notes for its account, or for one or more
accounts with respect to which such Person exercises sole investment
discretion, and such Person and each such account is an institutional
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or
(7) of Regulation D under the Securities Act; and the transferee agrees
to provide a signed letter containing certain representations and
agreements regarding the transfer in a form available from the Trustee;
or
[ ] such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A or
Rule 144, and the Transferor hereby further certifies that the Notes
are being transferred in compliance with the transfer restrictions
applicable to the Global Notes and in accordance with the requirements
of the exemption claimed, which certification is supported by an
Opinion of Counsel, provided by the Transferor or the transferee (a
copy of which the Transferor has attached to this certification) in
form reasonably acceptable to the Company and to the Registrar, to the
effect that such transfer is in compliance with the Securities Act;
and the Surrendered Notes are being transferred in compliance with any
applicable blue sky securities laws of any state of the United States.
B-3-2
<PAGE> 114
This certificate and the statements contained herein are made
for your benefit and the benefit of the Company and the Guarantors. Each of the
foregoing is entitled to rely upon this letter and are irrevocably authorized to
produce this letter or a copy hereof to any interested party in any
administrative or legal proceedings with respect to the materials covered
hereby.
[Insert Name of Transferor]
By: _______________________
Name:
Title:
Dated: ______________, ____
B-3-3
<PAGE> 115
EXHIBIT B-4
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM U.S. GLOBAL NOTE, IAI GLOBAL NOTE OR REGULATION S
PERMANENT GLOBAL NOTE TO DEFINITIVE NOTE
(Pursuant to Section 2.06(c) of the Indenture)
Harris Trust and Savings Bank
311 West Monroe, 12th Floor
Chicago, Illinois 60606
Attention: Corporate Trust Administration
Re: 12 3/4% Senior Secured Notes due 2004 of Metal Management, Inc.
Reference is hereby made to the Indenture, dated as of May 7,
1999 (the "Indenture"), among Metal Management, Inc., as issuer (the "Company"),
the Guarantors and Harris Trust and Savings Bank, as trustee. Capitalized terms
used but not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to $ principal amount of Notes which
are evidenced by one or more (check one) [ ] U.S. Global Notes (CUSIP No.
[ ]), [ ] IAI Global Notes (CUSIP No. [ ]) or [ ] Regulation S
Permanent Global Notes (CUSIP No. [ ]) and held with the Depositary through
Euroclear or Cedel Bank or both in the name of __________ (the "Transferor").
The Transferor has requested a transfer of such beneficial interest in the Notes
to a Person (the "Transferee") who will take delivery thereof in the form of an
equal principal amount of Notes evidenced by one or more Definitive Notes (CUSIP
No. ________) to be registered with the Registrar in the name of _____________.
In connection with such request and in respect of the Notes
surrendered to the Trustee herewith for exchange (the "Surrendered Notes"), the
Holder of such Surrendered Notes hereby certifies that:
[CHECK ONE]
[ ] the Surrendered Notes are being transferred to the beneficial owner
of such Notes;
or
[ ] the Surrendered Notes are being transferred pursuant to and in
accordance with Rule 144A under the United States Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, the
Transferor hereby further certifies that the Surrendered Notes are
being transferred to a Person that the Transferor reasonably believes
is purchasing the Surrendered Notes for its own account, or for one or
more accounts with respect to which such Person exercises sole
investment discretion, and such Person and each such account is a
"qualified institutional buyer" within the meaning of Rule 144A, in
each case in a transaction meeting the requirements of Rule 144A;
or
[ ] the Surrendered Notes are being transferred in a transaction
permitted by Rule 144 under the Securities Act;
B-4-1
<PAGE> 116
or
[ ] the Surrendered Notes are being transferred pursuant to an
effective registration statement under the Securities Act;
or
[ ] the Surrendered Notes are being transferred pursuant to and in
accordance with the requirements of the Securities Act, and the
Transferor hereby certifies that the Surrendered Notes are being
transferred to a Person that the Transferor reasonably believes is
purchasing the Surrendered Notes for its account, or for one or more
accounts with respect to which such Person exercises sole investment
discretion, and such Person and each such account is an institutional
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or
(7) of Regulation D under the Securities Act; and the Transferee agrees
to provide a signed letter containing certain representations and
agreements regarding the transfer in a form available from the Trustee;
or
[ ] such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A or
Rule 144, and the Transferor hereby further certifies that the Notes
are being transferred in compliance with the transfer restrictions
applicable to the Global Notes and in accordance with the requirements
of the exemption claimed, which certification is supported by an
Opinion of Counsel, provided by the Transferor or the Transferee (a
copy of which the Transferor has attached to this certification) in
form reasonably acceptable to the Company and to the Registrar, to the
effect that such transfer is in compliance with the Securities Act;
and the Surrendered Notes are being transferred in compliance with any
applicable blue sky securities laws of any state of the United States.
B-4-2
<PAGE> 117
This certificate and the statements contained herein are made
for your benefit and the benefit of the Company and the Guarantors. Each of the
foregoing is entitled to rely upon this letter and are irrevocably authorized to
produce this letter or a copy hereof to any interested party in any
administrative or legal proceedings with respect to the materials covered
hereby. Terms used in this certificate and not otherwise defined in the
Indenture have the meanings set forth in Regulation S under the Securities Act.
[Insert Name of Transferor]
By: _______________________
Name:
Title:
Dated: ______________, ____
B-4-3
<PAGE> 118
EXHIBIT B-5
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM DEFINITIVE NOTE TO U.S. GLOBAL NOTE, IAI GLOBAL NOTE
OR REGULATION S PERMANENT GLOBAL NOTE
(Pursuant to Section 2.06(e) of the Indenture)
Harris Trust and Savings Bank
311 West Monroe, 12th Floor
Chicago, Illinois 60606
Attention: Corporate Trust Administration
Re: 12 3/4% Senior Secured Notes due 2004 of Metal Management, Inc.
Reference is hereby made to the Indenture, dated as of May 7,
1999 (the "Indenture"), among Metal Management, Inc., as issuer (the "Company"),
the Guarantors and Harris Trust and Savings Bank, as trustee. Capitalized terms
used but not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to $ principal amount of Notes which
are evidenced by one or more Definitive Notes (CUSIP No. and registered
with the Registrar in the name of (the "Transferor"). The Transferor has
requested a transfer of such Definitive Notes to a Person who will take delivery
thereof in the form of an equal beneficial interest in Global Notes evidenced by
one or more (check one) [ ] U.S. Global Notes (CUSIP No. [ ]) or [ ] IAI
Global Notes (CUSIP No. [ ]) or [ ] Regulation S Permanent Global Notes
(CUSIP No. [ ]), which amount, immediately after such transfer, is to be
held with the Depositary through Euroclear or Cedel Bank or both.
In connection with such request and in respect of the Notes
surrendered to the Trustee herewith for exchange (the "Surrendered Notes"), the
Holder of such Surrendered Notes hereby certifies that:
[CHECK ONE]
[ ] the Surrendered Notes are being transferred to the beneficial owner
of such Notes;
or
[ ] the Surrendered Notes are being transferred pursuant to and in
accordance with Rule 144A under the United States Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, the
Transferor hereby further certifies that the Surrendered Notes are
being transferred to a Person that the Transferor reasonably believes
is purchasing the Surrendered Notes for its own account, or for one or
more accounts with respect to which such Person exercises sole
investment discretion, and such Person and each such account is a
"qualified institutional buyer" within the meaning of Rule 144A, in
each case in a transaction meeting the requirements of Rule 144A;
or
[ ] the Surrendered Notes are being transferred in a transaction
permitted by Rule 144 under the Securities Act;
B-5-1
<PAGE> 119
or
[ ] the Surrendered Notes are being transferred pursuant to an
effective registration statement under the Securities Act;
or
[ ] the Surrendered Notes are being transferred pursuant to and in
accordance with the requirements of the Securities Act, and the
Transferor hereby certifies that the Surrendered Notes are being
transferred to a Person that the Transferor reasonably believes is
purchasing the Surrendered Notes for its account, or for one or more
accounts with respect to which such Person exercises sole investment
discretion, and such Person and each such account is an institutional
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or
(7) of Regulation D under the Securities Act; and the transferee agrees
to provide a signed letter containing certain representations and
agreements regarding the transfer in a form available from the Trustee;
or
[ ] such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A or
Rule 144, and the Transferor hereby further certifies that the Notes
are being transferred in compliance with the transfer restrictions
applicable to the Global Notes and in accordance with the requirements
of the exemption claimed, which certification is supported by an
Opinion of Counsel, provided by the Transferor or the transferee (a
copy of which the Transferor has attached to this certification) in
form reasonably acceptable to the Company and to the Registrar, to the
effect that such transfer is in compliance with the Securities Act;
or
[ ] such transfer is being effected pursuant to and in accordance with
Rule 903 or Rule 904 under the Securities Act, and accordingly the
Transferor hereby further certifies that:
(1) The offer of the Notes was not made to a person in the
United States;
(2) either:
(a) at the time the buy order was originated, the
transferee was outside the United States or the Transferor and
any person acting on its behalf reasonably believed and
believes that the transferee was outside the United States; or
(b) the transaction was executed in, on or through
the facilities of a designated offshore securities market and
neither the Transferor nor any person acting on its behalf
knows that the transaction was prearranged with a buyer in
the United States;
(3) no directed selling efforts have been made in
contravention of the requirements of Rule 904(b) of Regulation S;
(4) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act; and
B-5-2
<PAGE> 120
(5) upon completion of the transaction, the beneficial
interest being transferred as described above is to be held with the
Depositary through Euroclear or Cedel Bank or both.
and the Surrendered Notes are being transferred in compliance with any
applicable blue sky securities laws of any state of the United States.
Upon giving effect to this request to exchange a Definitive
Note for a beneficial interest in such Rule 144A Global Note or Regulation S
Global Note, the resulting beneficial interest shall be subject to the
restrictions on transfer applicable to Global Notes pursuant to the Indenture
and the Securities Act and, if such transfer occurs prior to the end of the
40-day restricted period associated with the initial offering of Notes, the
additional restrictions applicable to transfers of interest in the Regulation S
Temporary Global Note.
This certificate and the statements contained herein are made
for your benefit and the benefit of the Company and the Guarantors. Each of the
foregoing is entitled to rely upon this letter and are irrevocably authorized to
produce this letter or a copy hereof to any interested party in any
administrative or legal proceedings with respect to the materials covered
hereby. Terms used in this certificate and not otherwise defined in the
Indenture have the meanings set forth in Regulation S under the Securities Act.
[Insert Name of Transferor]
By: _______________________
Name:
Title:
Dated: ,
B-5-3
<PAGE> 121
EXHIBIT C
SUBSIDIARY GUARANTEE
Each Guarantor hereby, jointly and severally, unconditionally
guarantees to each Holder of Notes authenticated and delivered by the Trustee
and to the Trustee and its successors and assigns, irrespective of the validity
and enforceability of the Indenture, the Notes or the Obligations of the Company
to the Holders or the Trustee under the Notes or under the Indenture, that: (a)
the principal of, and premium and Liquidated Damages, if any, and interest on
the Notes shall be promptly paid when due, whether at maturity, by acceleration,
redemption or otherwise, and interest on overdue principal of and interest and
Liquidated Damages, if any, on any Note, if lawful, and all other Obligations of
the Company to the Holders or the Trustee under the Indenture or under the Notes
shall be promptly paid in full or performed, all in accordance with the terms
thereof; and (b) in case of any extension of time of payment or renewal of any
Notes or any of such other Obligations, the same will be promptly paid in full
when due in accordance with the terms of the extension or renewal, whether at
stated maturity, by acceleration or otherwise (subject to the last paragraph of
this Subsidiary Guarantee). Failing payment when due of any amount so
guaranteed, for whatever reason, the Guarantors will be jointly and severally
obligated to pay the same immediately.
The Obligations of the Guarantors to the Holders of Notes and
to the Trustee pursuant to this Subsidiary Guarantee and the Indenture are
expressly set forth in Article 10 of the Indenture, and reference is hereby made
to the Indenture for the precise terms of this Subsidiary Guarantee. The terms
of Article 10 of the Indenture are incorporated herein by reference.
No director, officer, employee, incorporator or stockholder,
as such, past, present or future, of each of the Guarantors shall have any
personal liability under this Subsidiary Guarantee by reason of its status as
such director, officer, employee, incorporator or stockholder.
This is a continuing Subsidiary Guarantee and shall remain in
full force and effect and shall be binding upon each Guarantor and its
respective successors and assigns to the extent set forth in the Indenture until
full and final payment of all of the Company's Obligations under the Notes and
the Indenture and shall inure to the benefit of the successors and assigns of
the Trustee and the Holders of Notes and, in the event of any transfer or
assignment of rights by any Holder of Notes or the Trustee, the rights and
privileges herein conferred upon that party shall automatically extend to and be
vested in such transferee or assignee, all subject to the terms and conditions
hereof.
In certain circumstances more fully described in the
Indenture, any Guarantor may be released from its liability under this
Subsidiary Guarantee, and any such release will be effective whether or not
noted hereon.
This Subsidiary Guarantee shall not be valid or obligatory for
any purpose until the certificate of authentication on the Note upon which this
Subsidiary Guarantee is noted shall have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized officers.
For purposes hereof, each Guarantor's liability will be that
amount from time to time equal to the aggregate liability of such Guarantor
thereunder, but shall be limited to the lesser of (i) the aggregate amount of
the Obligations of the Company under the Notes and the Indenture and (ii) the
amount, if any, which would not have (A) rendered such Guarantor "insolvent" (as
such term is defined in the federal Bankruptcy Law and in the Debtor and
Creditor Law of the State of New York) or (B) left it with unreasonably small
capital at the time its Subsidiary Guarantee was entered into, after giving
effect to the incurrence of existing Indebtedness immediately prior to such
time; provided that, it shall be a presumption in any lawsuit or other
proceeding in which such Guarantor is a party that the amount guaranteed
pursuant to its Subsidiary Guarantee is the amount set forth in
C-1
<PAGE> 122
clause (i) above unless any creditor, or representative of creditors of such
Guarantor, or debtor in possession or trustee in bankruptcy of such Guarantor,
otherwise proves in such a lawsuit that the aggregate liability of such
Guarantor is limited to the amount set forth in clause (ii). The Indenture
provides that, in making any determination as to the solvency or sufficiency of
capital of a Guarantor in accordance with the previous sentence, the right of
such Guarantor to contribution from other Guarantors and any other rights such
Guarantor may have, contractual or otherwise, shall be taken into account.
C-2
<PAGE> 123
Capitalized terms used herein have the same meanings given in
the Indenture unless otherwise indicated.
AEROSPACE METALS, INC.
AMERICAN SCRAP PROCESSING, INC.
C SHREDDING CORP.
CALIFORNIA METALS RECYCLING, INC
CIM TRUCKING, INC.
COMETCO CORP.
COZZI BUILDING CORPORATION
COZZI IRON & METAL, INC.
EMCO TRADING, INC.
FERREX TRADING CORPORATION
FIRMA, INC.
FIRMA PLASTIC CO., INC.
FPX, INC.
HOUSTON COMPRESSED STEEL CORP.
HOUTEX METALS COMPANY, INC.
THE ISAAC CORPORATION
KIMBERLING ACQUISITION CORPORATION
P. JOSEPH IRON & METAL, INC.
KANKAKEE SCRAP CORPORATION
MAC LEOD METALS CO.
METAL MANAGEMENT ARIZONA, INC.
METAL MANAGEMENT GULF COAST, INC.
METAL MANAGEMENT PITTSBURGH INC.
METAL MANAGEMENT REALTY, INC.
MICHAEL SCHIAVONE & SONS, INC.
NAPORANO IRON & METAL CO.
NEWELL RECYCLING WEST, INC.
NIMCO SHREDDING CO.
138 SCRAP INC.
PERLCO, L.L.C.
PROLER SOUTHWEST INC.
PROLER STEELWORKS L.L.C.
SALT RIVER RECYCLING L.L.C.
SCRAP PROCESSING, INC.
TORRINGTON SCRAP COMPANY
TROJAN TRADING CO.
USA SOUTHWESTERN CARRIER, INC.
By:
Name:
Title:
C-3
<PAGE> 124
RESERVE IRON & METAL LIMITED PARTNERSHIP
By: P. JOSEPH IRON & METAL, INC.,
its general partner
By:
Name:
Title:
C-4
<PAGE> 125
EXHIBIT D
FORM OF LETTER TO BE DELIVERED BY INSTITUTIONAL ACCREDITED INVESTORS
Harris Trust and Savings Bank
311 West Monroe, 12th Floor
Chicago, Illinois 60606
Attention: Corporate Trust Administration
Re: 12 3/4% Senior Secured Notes due 2004 of Metal Management, Inc.
Reference is hereby made to the Indenture, dated as of May 7,
1999 (the "Indenture"), among Metal Management, Inc., as issuer (the "Company"),
the Guarantors and Harris Trust and Savings Bank, as trustee. Capitalized terms
used but not defined herein shall have the meanings given to them in the
Indenture.
We understand that the 12 3/4% Senior Secured Notes due 2004
(the "Notes") of the Company have not been registered under the Securities Act
of 1933, as amended (the "Securities Act"), and we agree, on our own behalf and
on behalf of each account for which we acquire any Notes, that if we decide to
offer, resell or otherwise transfer such Notes, such Notes may be offered,
resold or otherwise transferred only (a) to a person whom we reasonably believe
is a qualified institutional buyer within the meaning of Rule 144A under the
Securities Act purchasing for its own account or for the account of a qualified
institutional buyer in a transaction meeting the requirements of Rule 144A, (b)
in an offshore transaction complying with Rule 903 or Rule 904 of Regulation S
under the Securities Act, (c) pursuant to an exemption from registration under
the Securities Act provided by Rule 144 thereunder (if available), (d) to the
Company, (e) pursuant to an effective registration statement under the
Securities Act or (f) to an institutional "accredited investor" in a transaction
exempt from the registration requirements of the Securities Act, and, in each
case, in accordance with all applicable securities laws of the states of the
United States. We further agree to provide any person purchasing any of the
Notes from us a notice advising such purchaser that resales of such securities
are restricted as stated herein.
We confirm that:
(i) we are an "accredited investor" within the meaning of Rule
501(a)(1), (2) or (3) under the Securities Act or an entity in which
all of the equity owners are accredited investors within the meaning of
Rule 501(a)(1), (2) and (3) under the Securities Act (an "Institutional
Accredited Investor");
(ii) (A) any purchase of Notes by us will be for our own account
or for the account of one or more other Institutional Accredited
Investors or as fiduciary for the account of one or more trusts, each
of which is an "accredited investor" within the meaning of Rule
501(a)(7) under the Securities Act and for each of which we exercise
sole investment discretion or (B) we are a "bank," within the meaning
of Section 3(a)(2) of the Securities Act, or a "savings and loan
association" or other institution described in Section 3(a)(5)(A) of
the Securities Act that is acquiring Notes as fiduciary for the account
of one or more institutions for which we exercise sole investment
discretion;
(iii) we have such knowledge and experience in financial and
business matters that we are capable of evaluating the merits and risks
of an investment in the Notes;
(iv) we are not acquiring Notes with a view to resale or
distribution thereof or with any present intention of offering or
selling Notes, except as permitted above; provided that the disposition
D-1
<PAGE> 126
of our property and property of any accounts for which we are acting as
fiduciary shall remain at all times within our control; and
(v) we have received a copy of the Offering Memorandum dated
May 5, 1999, relating to the offering of the Notes and acknowledge that
we have had access to such financial and other information and have
been afforded the opportunity to ask such questions of representatives
of the Company and receive answers thereto, as we deem necessary in
connection with our decision to purchase Notes.
This certificate and the statements contained herein are made
for your benefit and the benefit of the Company, the Guarantors and BT Alex.
Brown Incorporated (the "Initial Purchaser"), the Initial Purchaser of such
Notes being transferred. Each of the foregoing is entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a copy hereof to
any interested party in any administrative or legal proceedings with respect to
the materials covered hereby.
_______________________________
[Insert Name of Transferee]
By: _______________________________
Name:
Title:
Dated: _______________, _____
cc: Metal Management, Inc.
BT Alex. Brown Incorporated
D-2
<PAGE> 127
Exhibit E to
Indenture
METAL MANAGEMENT, INC.,
as Issuer
and
THE PLEDGORS PARTY HERETO
SECURITY AGREEMENT
Dated as of May 7, 1999
HARRIS TRUST AND SAVINGS BANK,
as Trustee
<PAGE> 128
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
RECITALS .................................................................................................. 1
AGREEMENT ................................................................................................. 1
Section 1. Definitions; Interpretation; Resolution of Drafting Ambiguities ................................ 1
Section 2. Grant of Security Interests .................................................................... 9
Section 3. Secured Obligations ............................................................................ 10
Section 4. No Release ..................................................................................... 10
Section 5. Perfection; Supplements; Further Assurances; Use of Pledged Collateral ......................... 10
Section 6. Representations, Warranties and Covenants ...................................................... 12
Section 7. Special Provisions Concerning General Collateral ............................................... 17
Section 8. Special Provisions Concerning Securities Collateral ............................................ 19
Section 9. Special Provisions Concerning Intellectual Property Collateral ................................. 21
Section 10. Transfers and Other Liens ..................................................................... 23
Section 11. Reasonable Care ............................................................................... 23
Section 12. Remedies upon Default ......................................................................... 23
Section 13. Application of Proceeds ....................................................................... 26
Section 14. Expenses ...................................................................................... 26
Section 15. No Waiver; Cumulative Remedies ................................................................ 26
Section 16. Actions by Trustee ............................................................................ 26
Section 17. Trustee May Perform; Trustee Appointed Attorney-in-Fact ....................................... 27
Section 18. Indemnity ..................................................................................... 27
Section 19. Modification in Writing ....................................................................... 28
Section 20. Termination; Release .......................................................................... 28
Section 21. Notices ...................................................................................... 28
Section 22. Continuing Security Interest; Assignment ...................................................... 28
Section 23. Joinder of Affiliates ......................................................................... 29
Section 24. GOVERNING LAW; TERMS .......................................................................... 29
Section 25. CONSENT TO JURISDICTION AND SERVICE OF PROCESS; WAIVER OF JURY TRIAL........................... 29
Section 26. Severability of Provisions .................................................................... 29
Section 27. Execution in Counterparts ..................................................................... 30
Section 28. Obligations Absolute .......................................................................... 30
Section 29. Trustee's Right to Sever Indebtedness ......................................................... 30
Section 30. Future Advances................................................................................ 31
</TABLE>
<PAGE> 129
SECURITY AGREEMENT
SECURITY AGREEMENT (the "Agreement"), dated as of May 7, 1999, made by
METAL MANAGEMENT, INC., a Delaware corporation (the "Issuer"), and EACH OF THE
GUARANTORS LISTED ON THE SIGNATURE PAGES HERETO OR FROM TIME TO TIME PARTY
HERETO BY EXECUTION OF A JOINDER AGREEMENT (collectively, the "Guarantors"), as
pledgors, assignors and debtors (the Issuer, together with the Guarantors, in
such capacities and together with any successors in such capacities, the
"Pledgors"), in favor of HARRIS TRUST AND SAVINGS BANK, an Illinois banking
corporation, in its capacity as trustee and collateral agent, as pledgee,
assignee and secured party (in such capacity and together with any successors in
such capacity, the "Trustee") pursuant to the Indenture (as hereinafter
defined).
RECITALS:
A. The Issuer, the Guarantors and the Trustee have, in
connection with the execution and delivery of this Agreement, entered into a
certain indenture, dated as of May 7, 1999 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "Indenture"), pursuant
to which the Issuer has issued its 12 3/4% senior secured notes due 2004 (the
"Senior Secured Notes") in the aggregate principal amount of $30,000,000. It is
contemplated that Pledgor may, after the date hereof, issue exchange notes
pursuant to the Indenture (the "Exchange Notes"; together with the Senior
Secured Notes, the "Notes").
B. Each Pledgor is or will be the legal and/or beneficial
owner of the Pledged Collateral (as hereinafter defined) to be pledged by it
hereunder.
C. This Agreement is given by each Pledgor in favor of the
Trustee for its benefit and the benefit of the holders of the Notes
(collectively, the "Secured Parties") to secure the payment and performance of
all of the Secured Obligations (as hereinafter defined).
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing premises and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Pledgors and the Trustee hereby agree as follows:
Section 1. Definitions, Interpretation, Resolution of Drafting
Ambiguities.
(a) Definitions. Unless otherwise defined herein, terms
defined in the Indenture are used herein as therein defined, and the following
terms shall have the following meanings;
"Account" means, with respect to each Pledgor, any "account",
as such term is defined in Section 9-106 of the UCC, now owned or
hereafter acquired by such Pledgor and shall include, without
limitation, all present and future rights of such Pledgor to payment
for goods sold or leased or for services rendered which are not
evidenced by Instruments or Chattel Paper, and whether or not they have
been earned by performance.
"Account Debtor " means the Person who is obligated on or
under an Account of any Pledgor.
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"Charges" means all property and other taxes, assessments and
governmental charges or levies imposed upon, and all claims (including
claims for labor, materials, supplies and warehousing and other claims
in respect of the Patent Licenses, Patents, Trademark Licenses and
Trademarks arising by operation of law) against, the Pledged
Collateral.
"Chattel Paper" means, with respect to each Pledgor, any
"chattel paper", as such term is defined in Section 9-105(l)(b) of the
UCC, now owned or hereafter acquired by such Pledgor.
"Contracts" means, with respect to each Pledgor, all
contracts, undertakings or other agreements (other than rights
evidenced by Chattel Paper, Documents or Instruments) in or under which
such Pledgor may now or hereafter have any right, title or interest.
"Destruction" shall have the meaning assigned to such term in
Section 6(m).
"Distributions" means, collectively, all dividends, cash,
options, warrants, rights, instruments, distributions, returns of
capital, income, profits and other property, interests or proceeds from
time to time received, receivable or otherwise distributed to each
Pledgor in respect of or in exchange for any or all of the Securities
Collateral.
"Documents" means, with respect to each Pledgor, any
"documents", as such term is defined in Section 9-105(l)(f) of the UCC,
now owned or hereafter acquired by such Pledgor.
"Equipment" means, with respect to each Pledgor, any
"equipment", as such term is defined in Section 9-109(2) of the UCC,
now owned or hereafter acquired by such Pledgor and, in any event,
shall include, without limitation, all machinery, equipment,
furnishings, fixtures, vehicles, computers, other electronic
data-processing equipment and office equipment now owned or hereafter
acquired by such Pledgor and any and all additions to, substitutions
for and replacements of any of the foregoing, wherever located,
together with all attachments, components, parts, equipment and
accessories installed thereon or affixed thereto.
"General Collateral" means, collectively, all Pledged
Collateral other than Securities Collateral and Intellectual Property
Collateral.
"General Intangibles" means, with respect to each Pledgor, any
"general intangibles", as such term is defined in Section 9-106 of the
UCC, now owned or hereafter acquired by such Pledgor and, in any event,
shall include, without limitation, all right, title and interest which
such Pledgor may now or hereafter have in, under or to any Contracts,
leasehold interests in real and personal property, interests in
partnerships and joint ventures, tax refunds, deposit accounts (general
or special) with and credits and other claims against any financial
institution, all customer lists, trademarks, patents, rights in
intellectual property, licenses, permits, copyrights, trade secrets,
proprietary or confidential information, inventions (whether patented
or patentable or not) and technical information, procedures, designs,
knowledge, know-how, software, data bases, data, skill, expertise,
experience, processes, models, drawings, materials and records now
owned or hereafter acquired by such Pledgor, goodwill and rights of
indemnification.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
<PAGE> 131
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"Guarantors" shall have the meaning assigned to such term in
the introductory paragraph.
"Indenture" shall have the meaning assigned to such term in
Recital A.
"Initial Pledged Interests" means, collectively, the
Membership Interests and the Partnership Interests set forth on
Schedule I-B.
"Initial Pledged Stock" means the Pledged Stock set forth on
Schedule I-A.
"Instrument" means, with respect to each Pledgor, any
"instrument", as such term is defined in Section 9-105(l)(i) of the
UCC, now owned or hereafter acquired by such Pledgor.
"Intellectual Property Collateral" means, collectively, all
Patents, Patent Licenses, Trademarks and Trademark Licenses.
"Inventory" means, with respect to each Pledgor, any
"inventory", as such term is defined in Section 9-109(4) of the UCC,
now owned or hereafter acquired by such Pledgor and, in any event,
shall include, without limitation, all inventory, merchandise, goods
and other personal property now owned or hereafter acquired by such
Pledgor which are held for sale or lease or are furnished or are to be
furnished under a contract of service or which constitute raw
materials, work in process or materials used or consumed or to be used
or consumed in such Pledgor's business, or the processing, packaging,
delivery or shipping of the same, and all finished goods.
"Investment Property" means, with respect to each Pledgor, all
investment property and any other securities (whether certificated or
uncertificated), security entitlements, securities accounts, commodity
contracts and commodity accounts now owned or hereafter acquired by
such Pledgor, including all substitutions and additions thereto, all
dividends, distributions and sums distributable or payable from, upon,
or in respect thereof, and all rights and privileges incident thereto.
"Issuer" shall have the meaning assigned to such term in the
introductory paragraph.
"Issuing Entities" means each entity with respect to which any
Pledgor is a record or legal and beneficial owner of such entity's
capital stock, units, membership interests, or general or limited
partnership interests, as the case may be.
"License" means any license as to which the Trustee has been
granted a security interest hereunder.
"LLC Rights" means all warrants, options and other rights to
acquire, and rights in and to, membership interests in each Issuing
Entity now or at any time or times hereafter owned by such Pledgor.
"Material Adverse Effect" shall have the meaning assigned to
such term in Section 6(i).
"Membership Collateral" means, with respect to each Pledgor:
(a) Membership Interests;
<PAGE> 132
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(b) all of such Pledgor's interests in the profits and losses
of the respective Issuing Entity and all of such Pledgor's rights as a
member therein to receive distributions of such Issuing Entity's
assets;
(c) all of such Pledgor's rights, if any, to participate in
the management of the respective Issuing Entity;
(d) all rights, privileges, authority and powers of Pledgor as
owner or holder of such Pledgor's membership interests in the
respective Issuing Entity, including, without limitation, all general
intangibles related thereto;
(e) LLC Rights;
(f) all instruments and certificates representing or
evidencing such Pledgor's membership interests in the respective
Issuing Entity;
(g) all other property now or at any time or times hereafter
received, receivable or otherwise distributed in respect of or in
exchange or substitution for any or all of the Membership Interests
and/or the LLC Rights, and all of such Pledgor's rights thereto,
including, without limitation, all cash and other payments and
distributions of any kind whatsoever; and
(h) all proceeds of all of the foregoing and all books and
records of such Pledgor pertaining to any of the foregoing.
"Membership Interests" means any and all units or membership
interests, as the case may be, in each Issuing Entity which is a
limited liability company now or at any time or times hereafter owned
by such Pledgor, including, without limitation, all of such membership
interests described on Schedule I-B hereto.
"Net Awards" shall mean any proceeds, award or payment in
respect of any Taking, net of (i) the amount of any expenses incurred
in collecting, litigating, arbitrating, compromising or settling any
claim arising out of such Taking and (ii) amounts required to be and
actually applied to the repayment of Indebtedness outstanding under the
Senior Bank Debt (and any other Indebtedness secured by a Prior Lien
permitted by this Agreement) in connection with such Net Award.
"Net Insurance Proceeds" shall mean any proceeds of insurance
payable in respect of any Destruction, net of (i) the amount of any
expenses incurred in collecting, litigating, arbitrating, compromising
or settling any claim arising out of such Destruction and (ii) amounts
required to be and actually applied to the repayment of Indebtedness
outstanding under the Senior Bank Debt (and any other Indebtedness
secured by a Prior Lien permitted by this Agreement) in connection with
such Destruction.
"Notes" shall have the meaning assigned to such term in
Recital A.
"Obligations" shall have the meaning assigned to such term in
the Indenture.
"Operative Agreement" means any membership or partnership
agreement of any limited liability company or partnership.
<PAGE> 133
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"Partnership Collateral" means, with respect to each Pledgor:
(a) Partnership Interests;
(b) all of such Pledgor's interests in the profits and losses
of the respective Issuing Entity and all of such Pledgor's rights as a
partner therein to receive distributions of such Issuing Entity's
assets;
(c) all of such Pledgor's rights, if any, to participate in
the management of the respective Issuing Entity;
(d) all rights, privileges, authority and powers of such
Pledgor as owner or holder of such Pledgor's partnership interests in
the respective Issuing Entity, including, without limitation, all
general intangibles related thereto;
(e) Partnership Rights;
(f) all instruments and certificates representing or
evidencing such Pledgor's partnership interests in the respective
Issuing Entity;
(g) all other property now or at any time or times hereafter
received, receivable or otherwise distributed in respect of or in
exchange or substitution for any or all of the Partnership Interests
and/or the Partnership Rights, and all of such Pledgor's rights
thereto, including, without limitation, all cash and other payments and
distributions of any kind whatsoever; and
(h) all proceeds of all of the foregoing and all books and
records of such Pledgor pertaining to any of the foregoing.
"Partnership Interests" means any and all units of general or
limited partnership interests, as the case may be, in each Issuing
Entity which is a partnership now or at any time or times hereafter
owned by such Pledgor, including, without limitation, all of such
partnership interests described on Schedule I-B hereto.
"Partnership Rights" means all warrants, options and other
rights to acquire, and rights in and to, partnership interests in each
Issuing Entity now or at any time or times hereafter owned by such
Pledgor.
"Patent Licenses" means, with respect to each Pledgor, all
rights under or interests in any patent license agreements with any
other party, whether such Pledgor is a licensee or licensor under any
such license agreement, including, without limitation, those patent
license agreements listed on Schedule IV hereto, and the right to
prepare for sale and sell any and all Inventory now or hereafter owned
by such Pledgor and now or hereafter covered by such licenses.
"Patents" means, with respect to each Pledgor, all patents,
registered patents, patent applications, including, without limitation,
the patents, registered patents and patent applications listed on
Schedule II hereto, and (i) all renewals thereof, (ii) all income,
royalties, damages and payments now and hereafter due and/or payable
under and with respect thereto, including, without limitation, payments
under all licenses entered into in connection therewith and damages and
payments for past or
<PAGE> 134
-6-
future infringements or dilutions thereof, (iii) the right to sue for
past, present and future infringements and dilutions thereof, and (iv)
all of such Pledgor's rights corresponding thereto throughout the
world.
"Permitted Liens" shall have the meaning assigned to such term
in Section 6(b).
"Person" shall have the meaning assigned to such term in the
Indenture.
"Pledged Collateral" has the meaning set forth in Section 2.
"Pledged Securities" means, collectively, the Membership
Interests, the Partnership Interests and the Pledged Stock.
"Pledged Stock" means, with respect to each Pledgor, all
shares of capital stock of each Issuing Entity which is an issuer of
capital stock now or at any time or times hereafter owned by such
Pledgor, including, without limitation, all of such shares of capital
stock described on Schedule I-A hereto.
"Pledgors" shall have the meaning assigned to such term in
the introductory paragraph.
"Prior Liens" means, (i) Senior Permitted Liens to the extent
and in the manner such Liens are in effect on the date hereof, (ii)
Senior Permitted Liens incurred or created subsequent to the date
hereof solely to the extent and for so long as permitted with respect
to the item or type of Pledged Collateral to be senior and superior to
the Lien granted to the Senior Bank Agent pursuant to the provisions of
the Senior Credit Facility and the security documents securing the
Senior Bank Debt and (iii) any Lien granted to the Senior Bank Agent on
the Pledged Collateral.
"Proceeds" means "proceeds", as such term is defined in
Section 9-306(l) of the UCC, and, in any event, shall include with
respect to each Pledgor, without limitation, (i) any and all proceeds
of any insurance, indemnity, warranty or guaranty payable to such
Pledgor from time to time with respect to any of the Pledged
Collateral, (ii) any and all payments (in any form whatsoever) made or
due and payable to such Pledgor from time to time in connection with
any requisition, confiscation, condemnation, seizure or forfeiture of
all or any part of the Pledged Collateral by any Governmental
Authority, and (iii) any and all other amounts from time to time paid
or payable to such Pledgor under or in connection with any of the
Pledged Collateral.
"Secured Obligations" means, collectively, (i) all obligations
of the Issuer now existing or hereafter arising under or in respect of
the Indenture and the Notes (including, without limitation, the
obligations of the Issuer to pay principal of, premium, if any, and
interest on the Notes when due and payable) and all other charges,
fees, expenses, commissions, reimbursements, premiums, indemnities and
all other amounts due or to become due under or in connection with the
Indenture and the Notes, (ii) all obligations of the Guarantors now
existing or hereafter arising under or in respect of the Indenture and
the Notes (including, without limitation, the obligations of each
Guarantor to pay principal of, premium, if any, and interest on the
Notes when due and payable) and all other charges, fees, expenses,
commissions, reimbursements, premiums, indemnities and all other
amounts due or to become due under or in connection with the Indenture
and the Notes and (iii) without duplication of the amounts described in
clauses (i) and (ii), all obligations of the Pledgors now existing or
hereafter arising under or in respect of this Agreement or any other
Security Document, including, without limitation, all charges, fees,
expenses, commissions, reimbursements, premiums, indemnities and other
payments related to or
<PAGE> 135
-7-
in respect of the obligations contained in this Agreement or in any
other Security Document, in each case whether in the regular course of
business or otherwise.
"Secured Parties" shall have the meaning assigned to such term
in Recital C.
"Securities Collateral" means, collectively, the Stock
Collateral, the Membership Collateral and the Partnership Collateral.
"Senior Bank Agent" means BT Commercial Corporation, in its
capacity as agent for the lenders and lending institutions under the
Senior Credit Facility and its successors in such capacity appointed
pursuant to the provisions of the Senior Credit Facility.
"Senior Bank Debt" shall have the meaning assigned to such
term in the Indenture.
"Senior Credit Facility" shall have the meaning assigned to
such term in the Indenture.
"Senior Permitted Liens" means Permitted Liens (as defined in,
and solely to the extent and for so long as permitted with respect to
the applicable item or type of Pledged Collateral by, the Senior Credit
Facility and the security documents (in each case, as in effect from
time to time in accordance with the provisions thereof and, at such
time as the Senior Credit Facility shall no longer be in effect and the
Obligations thereunder shall have been paid in full (whether pursuant
to its terms or otherwise), as the same shall have been in effect on
the date immediately preceding the date on which the Senior Credit
Facility shall have been so terminated) securing the Senior Bank Debt).
"Stock Collateral" means, with respect to each Pledgor:
(a) Pledged Stock;
(b) Stock Rights;
(c) all other property now or at any time or times hereafter
received, receivable or otherwise distributed in respect of or in
exchange or substitution for any or all of the Pledged Stock and/or the
Stock Rights, and all of such Pledgor's rights thereto, including,
without limitation, all dividends, cash and other payments and
distributions of any kind whatsoever; and
(d) all proceeds of all of the foregoing.
"Stock Rights" means all warrants, options and other rights to
acquire, and rights in and to, the capital stock of each Issuing Entity
which issues capital stock now or at any time or times hereafter owned
by any Pledgor.
"Taking" shall have the meaning assigned to such term in
Section 6(n).
"Trademark Licenses" means, with respect to each Pledgor, all
rights under or interests in any trademark license agreements or
service mark license agreements with any other party, whether such
Pledgor is a licensee or licensor under any such license agreement,
including, without limitation, those trademark license agreements and
service mark license agreements listed on Schedule IV hereto, together
with any goodwill connected with and symbolized by any such trademark
license agreements
<PAGE> 136
-8-
or service mark license agreements, and the right to prepare for sale
and sell any and all Inventory now or hereafter owned by such Pledgor
and now or hereafter covered by such licenses.
"Trademarks" means, with respect to each Pledgor, trademarks,
registered trademarks, trademark applications, service marks,
registered service marks and service mark applications, including,
without limitation, the trademarks, registered trademarks, trademark
applications, service marks, registered service marks and service mark
applications listed on Schedule III hereto, and (i) all renewals
thereof, (ii) all income, royalties, damages and payments now and
hereafter due and/or payable under and with respect thereto, including,
without limitation, payments under all licenses entered into in
connection therewith and damages and payments for past or future
infringements or dilutions thereof, (iii) the right to sue for past,
present and future infringements and dilutions thereof, (iv) the
goodwill of such Pledgor's business symbolized by the foregoing and
connected therewith, and (v) all of such Pledgor's rights corresponding
thereto throughout the world.
"Trustee" shall have the meaning assigned to such term in the
introductory paragraph.
"UCC" means the Uniform Commercial Code as the same may, from
time to time, be in effect in the State of New York, provided, that if,
by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of the Trustee's lien on or the Trustee's
security interest in any Pledged Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than the State of
New York, the term "UCC" shall mean the Uniform Commercial Code as in
effect in such other jurisdiction for purposes of the provisions hereof
relating to such attachment, perfection or priority and for purposes of
definitions related to such provisions.
(b) Interpretation. In this Agreement, unless otherwise
specified, (i) singular words include the plural and plural words include the
singular, (ii) words importing any gender include the other gender, (iii)
references to any Person include such Person's successors and assigns and in the
case of an individual, the word "successors" includes such Person's heirs,
devisees, legatees, executors, administrators and personal representatives, (iv)
references to any statute or other law include all applicable rules, regulations
and orders adopted or made thereunder and all statutes or other laws amending,
consolidating or replacing the statute or law referred to, (v) the words
"consent", "approve" and "agree", and derivations thereof or words of similar
import, mean the prior written consent, approval or agreement of the Person in
question, (vi) the words "include" and "including", and words of similar import,
shall be deemed to be followed by the words "without limitation", (vii) the
words "hereto", "herein", "hereof" and "hereunder", and words of similar import,
refer to this Agreement in its entirety, (viii) references to Articles,
Sections, Schedules, Exhibits, subsections, paragraphs and clauses are to the
Articles, Sections, Schedules, Exhibits, subsections, paragraphs and clauses of
this Agreement, (ix) the Schedules and Exhibits to the Security Agreement are
incorporated herein by reference, (x) the titles and headings of Articles,
Sections, Schedules, Exhibits, subsections, paragraphs and clauses are inserted
as a matter of convenience only and shall not affect the constructions of this
Agreement, (xi) all obligations of each Pledgor hereunder shall be satisfied by
such Pledgor at such Pledgor's sole cost and expense and (xii) references to
each of this Agreement and the Indenture include all amendments, modifications,
extensions, renewals and replacements of either thereof.
(c) Resolution of Drafting Ambiguities. Each Pledgor
acknowledges that it was represented by counsel in connection with this
Agreement, that it and its counsel reviewed and participated in the preparation
and negotiation of this Agreement and that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party (i.e., the
Trustee) shall not be employed in the interpretation of this Agreement.
<PAGE> 137
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Section 2. Grant of Security Interests. To secure the prompt
and complete payment, performance and observance when due, whether at stated
maturity, by acceleration or otherwise (including, without limitation, the
payment of interest and other amounts which would accrue and become due but for
the filing of a petition in bankruptcy or the operation of the automatic stay
under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a)) of all
the Secured Obligations, each of the Pledgors hereby pledges, assigns, transfers
and grants to the Trustee for its benefit and the benefit of the other Secured
Parties, a continuing security interest in and to and pledge of (and, if
available, a right of setoff against) all of the following property and
interests in property of such Pledgor, whether now owned or existing or
hereafter acquired or arising and wheresoever located (all of such property and
interests in property of the Pledgors being hereinafter, collectively, referred
to as the "Pledged Collateral"):
(a) Accounts;
(b) Chattel Paper;
(c) Contracts;
(d) Documents;
(e) Equipment;
(f) General Intangibles;
(g) Instruments;
(h) Inventory;
(i) Investment Property;
(j) Membership Collateral;
(k) Partnership Collateral;
(1) Stock Collateral;
(m) Patents;
(n) Patent Licenses;
(o) Trademarks;
(p) Trademark Licenses;
(q) all monies and any and all other property and interests in
property of such Pledgor now or hereafter coming into the actual
possession, custody or control of the Trustee or any agent or affiliate
of the Trustee (including, without limitation, the Senior Bank Agent to
the extent appointed as its agent pursuant to the provisions of the
Intercreditor Agreement) in any way or for any purpose (whether for
safekeeping, deposit, custody, pledge, transmission, collection or
otherwise), and all rights and interests
<PAGE> 138
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of such Pledgor in respect of any and all (i) drafts, letters of
credit, stocks, bonds, and debt and equity securities, whether or not
certificated, and warrants, options, puts and calls and other rights to
acquire or otherwise relating to the same, (ii) interest rate and
currency exchange agreements, including, without limitation, cap,
collar, floor, forward and similar agreements and interest rate
protection agreements, (iii) cash and cash equivalents, and (iv) all
other personal property and interests in personal property of such
Pledgor not specifically included in clauses (a) through (p) above; and
(r) to the extent not otherwise included, all Proceeds of
each of the foregoing and all accessions and additions to,
substitutions and replacements for, and rents, profits and products of,
each of the foregoing.
Notwithstanding the foregoing, the Collateral shall not
include (i) any Contract or General Intangible if (and solely to the extent and
for so long as) such Contract or General Intangible expressly prohibits the
Pledgor thereof from granting any Lien thereon, (ii) any fixtures on leased real
property of any Pledgor if (and solely to the extent and for so long as) the
applicable lease expressly prohibits such Pledgor from granting any assignment
of rights or any Lien thereon, (iii) any Equipment subject to Permitted Liens
(as defined in and otherwise permitted in the Senior Credit Facility and the
other credit documents executed in connection therewith) if (and solely to the
extent and for so long as) the terms of the secured obligations secured by such
Liens expressly prohibit such Pledgor from granting any Lien thereon or (iv) any
Equipment subject to a capitalized lease if (and solely to the extent and for so
long as) such lease expressly prohibits such Pledgor from granting any Lien
thereon.
Section 3. Secured Obligations. This Agreement secures, and
the Pledged Collateral is collateral security for, the payment and performance
in full when due, whether at stated maturity, by acceleration or otherwise
(including, without limitation, the payment of interest and other amounts which
would accrue and become due but for the filing of a petition in bankruptcy or
the operation of the automatic stay under Section 362(a) of the Bankruptcy Code,
11 U.S.C. Section 362(a)), of all the Secured Obligations.
Section 4. No Release. Nothing set forth in this Agreement
shall relieve any Pledgor from the performance of any term, covenant, condition
or agreement on such Pledgor's part to be performed or observed under any of the
Pledged Collateral or from any liability to any Person under any of the Pledged
Collateral or shall impose any obligation on the Trustee or any other Secured
Party to perform or observe any such term, covenant, condition or agreement on
such Pledgor's part to be so performed or observed or shall impose any liability
on the Trustee or any other Secured Party for any act or omission on the part of
such Pledgor relating thereto or for any breach of any representation or
warranty on the part of such Pledgor contained in this Agreement, or under or in
respect of the Pledged Collateral or made in connection herewith or therewith.
The obligations of each Pledgor referred to in this Section 4 shall survive the
termination of this Agreement and the discharge of such Pledgor's other
obligations under this Agreement.
Section 5. Perfection; Supplements; Further Assurances; Use of
Pledged Collateral.
(a) Delivery of Certificated Securities Collateral. All
certificates, agreements or instruments representing or evidencing the
Securities Collateral, to the extent not previously delivered to the Trustee or
the Senior Bank Agent in accordance with the provisions of the Intercreditor
Agreement, shall immediately upon receipt thereof by any Pledgor be delivered to
and held by or on behalf of the Trustee pursuant hereto or the Senior Bank Agent
in accordance with the provisions of the Intercreditor Agreement. All
certificated Securities Collateral shall be in suitable form for transfer by
delivery or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to the Trustee.
Subject to the
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Intercreditor Agreement, the Trustee shall have the right, at any time upon the
occurrence and during the continuance of any Event of Default and without notice
to any Pledgor, to endorse, assign or otherwise transfer to or to register in
the name of the Trustee or any of its nominees or endorse for negotiation any or
all of the Securities Collateral, without any indication that such Securities
Collateral is subject to the Lien and security interest granted hereunder. In
addition, the Trustee shall have the right at any time to exchange certificates
representing or evidencing Pledged Securities for certificates of smaller or
larger denominations.
(b) Perfection of Uncertificated Securities Collateral. If any
issuer of Pledged Securities is organized in a jurisdiction which does not
permit the use of certificates to evidence equity ownership, or if any of the
Pledged Securities are at any time not evidenced by certificates of ownership,
then each applicable Pledgor shall, to the extent permitted by applicable law,
record such pledge on the equityholder register or the books of the issuer,
cause the issuer to execute and deliver to the Trustee an acknowledgment of the
pledge of such Pledged Securities substantially in the form of Exhibit 1 annexed
hereto, execute any customary pledge forms or other documents necessary or
appropriate to complete the pledge and give the Trustee the right to transfer
such Pledged Securities under the terms hereof and provide to the Trustee an
opinion of counsel, in form and substance satisfactory to the Trustee,
confirming such pledge.
(c) Financing Statements and Other Filings. As of the date
hereof, the only filings, registrations and recordings necessary to create and
perfect the security interest granted by each Pledgor to the Trustee pursuant to
this Agreement have been filed, registered and recorded contemporaneously with
the execution of the Indenture and the Security Documents to the same extent
that such filings, registrations and recordings have been filed, registered and
recorded with respect to the Prior Lien granted to the Senior Bank Agent on the
Pledged Collateral other than (i) such filings to be made in the State of
Alabama; provided, however, that such filings shall be made within fifteen (15)
days after the date hereof and (ii) such filings with respect to any and all
consigned Inventory of each Pledgor; provided, however, that with respect to
such consigned inventory, each Pledgor shall, within ninety (90) days after the
date hereof cause to be filed such financing statements as shall be necessary to
create and perfect the security interest granted by such Pledgor to the Trustee
pursuant to this Agreement in such consigned Inventory to the extent the Senior
Bank Agent has been granted a perfected Prior Lien thereon. Each Pledgor agrees
that at any time and from time to time, it will execute and, at the sole cost
and expense of the Pledgors, file and refile, or permit the Trustee to file and
refile, such financing statements, continuation statements and other documents
(including, without limitation, this Agreement) in such offices (including,
without limitation, the United States Patent and Trademark Office and the United
States Copyright Office) as required or permitted by law in order to perfect,
continue and maintain a valid, enforceable Lien on and security interest in the
Pledged Collateral as provided herein and to protect and preserve the other
rights and interests granted to the Trustee hereunder, as against third parties,
with respect to any Pledged Collateral. Without limiting each Pledgor's
obligation to make such filings and without creating any duty or obligation on
the Trustee, each Pledgor authorizes the Trustee to file, at the sole cost and
expense of such Pledgor, any such financing or continuation statements or other
documents without the signature of such Pledgor to the fullest extent permitted
by applicable law.
(d) Motor Vehicles. Each Pledgor shall (i) at such time as any
Pledgor shall be required so to do by the Senior Bank Agent and (ii) subject to
the provisions of the Intercreditor Agreement, at any time after the occurrence
and during the continuance of an Event of Default, upon the request of the
Trustee, deliver to the Senior Bank Agent or, in the event that the Obligations
under the Senior Credit Facility shall no longer be outstanding and all
commitments to extend financing under the Senior Credit Facility shall have
terminated, the Trustee originals of the certificates of title or ownership for
the motor vehicles (and any other Equipment covered by certificates of title or
ownership owned by it) with the Senior Bank Agent or the Trustee, as the case
may be, listed therein as lienholder.
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(e) Supplements; Further Assurances. Each Pledgor agrees to do
such further acts and things, and to execute and deliver to the Trustee such
additional assignments, agreements, supplements, powers and instruments, as
shall be required or permitted by law, in order to perfect, preserve and protect
the Lien on and security interest in the Pledged Collateral as provided herein
and the rights and interests granted to the Trustee hereunder, to carry into
effect the purposes of this Agreement or better to assure and confirm unto the
Trustee or permit the Trustee to exercise and enforce its respective rights,
powers and remedies hereunder with respect to any Pledged Collateral. Without
limiting the foregoing, each Pledgor shall make, execute, endorse, acknowledge,
file or refile and/or deliver to the Trustee from time to time such lists,
descriptions and designations of the Pledged Collateral, copies of warehouse
receipts, receipts in the nature of warehouse receipts, bills of lading,
documents of title, vouchers, invoices, schedules, confirmatory assignments,
supplements, additional security agreements, conveyances, financing statements,
transfer endorsements, powers of attorney, certificates, reports and other
assurances or instruments. The Trustee may institute and maintain, in its own
name or in the name of any Pledgor, such suits and proceedings as the Trustee
may be advised by counsel shall be necessary or reasonably appropriate to
prevent any impairment of the Lien on and security interest in or perfection of
the Pledged Collateral. All of the foregoing shall be at the sole cost and
expense of the Pledgors.
(f) Use and Pledge of Pledged Collateral. Unless an Event of
Default shall have occurred and be continuing, the Trustee shall from time to
time execute and deliver, upon written request of any Pledgor and at the sole
cost and expense of the Pledgors, any and all instruments, certificates or other
documents, in a form reasonably requested by such Pledgor, necessary or
appropriate in the reasonable judgment of such Pledgor to enable such Pledgor to
continue to exploit, license, use, enjoy and protect the Pledged Collateral,
except as may be prohibited by the terms of this Agreement or the Indenture. The
Pledgors and the Trustee acknowledge that this Agreement is intended to grant to
the Trustee for the benefit of the Secured Parties a Lien on and security
interest in the Pledged Collateral and shall not constitute or create a present
assignment of any of the Pledged Collateral.
Section 6. Representations, Warranties and Covenants.
Each Pledgor represents, warrants and covenants as follows:
(a) Perfection Actions; Prior Liens. Upon the completion of
the deliveries, filings and other actions contemplated in Sections 5(a)
through 5(c) hereof, the Lien and security interest granted to the
Trustee for its benefit and the benefit of other Secured Parties
pursuant to this Agreement in and to the Pledged Collateral will
constitute a perfected Lien and security interest therein, superior and
prior to the rights of all other Persons therein other than with
respect to Prior Liens.
(b) No Liens. Such Pledgor is as of the date hereof, and, as
to Pledged Collateral acquired by it from time to time after the date
hereof, such Pledgor will be, the sole direct and beneficial owner of
all Pledged Collateral pledged by it hereunder free from any Lien or
other right, title or interest of any Person other than (i) Prior
Liens, (ii) other Senior Permitted Liens and (iii) the Lien and
security interest created by this Agreement (the Liens described in
clauses (i), (ii) and (iii) of this Section 6(b), collectively,
"Permitted Liens"). Each Pledgor shall defend the Pledged Collateral
pledged by it hereunder against all claims and demands of all Persons
at any time claiming any interest therein adverse to the Trustee or any
other Secured Party.
(c) Other Financing Statements. There is no (nor will be any)
valid or effective financing statement (or similar statement or
instrument of registration under the law of any jurisdiction) covering
or purporting to cover any interest of any kind in the Pledged
Collateral other than those relating to
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Permitted Liens, and so long as any of the Secured Obligations remain
unpaid, no Pledgor shall execute, authorize or permit to be filed in
any public office any financing statement (or similar statement or
instrument of registration under the law of any jurisdiction) or
statements relating to any Pledged Collateral, except, in each case,
financing statements filed or to be filed in respect of and covering
the Liens granted by such Pledgor with respect to Permitted Liens.
(d) Chief Executive Office; Change of Name. The chief
executive office of such Pledgor is located at the address indicated
next to its name on Annex A hereto. Such Pledgor shall not move its
chief executive office, except to such new location as such Pledgor may
establish in accordance with the last sentence of this Section 6(d).
Such Pledgor shall not establish a new location for its chief executive
office nor shall it change its name until (i) it shall have given the
Trustee not less than fifteen (15) days' prior written notice of its
intention so to do, clearly describing such new location or name and
providing such other information in connection therewith as the Trustee
may request and (ii) with respect to such new location or name, such
Pledgor shall have taken all action required or permitted by law to
maintain the perfection and priority of the Lien and security interest
of the Trustee for its benefit and for the benefit of the other Secured
Parties on and in the Pledged Collateral intended to be granted hereby,
including, without limitation, obtaining waivers of landlord's or
warehouseman's liens with respect to such new location to the extent
required pursuant to the Senior Credit Facility.
(e) Location of Equipment. All Equipment held on the date
hereof by such Pledgor is located at the addresses indicated next to
its name on Annex A hereto. All Equipment now held or subsequently
acquired shall be kept at one or more of the locations listed in Annex
A hereto, or such new location as such Pledgor may establish if (i) it
shall have given to the Trustee at least fifteen (15) days' prior
written notice of its intention so to do, clearly describing such new
location and providing such other information in connection therewith
as the Trustee may request, and (ii) with respect to such new location,
such Pledgor shall have taken all action required or permitted by law
to maintain the perfection and priority of the Lien and security
interest of the Trustee for its benefit and for the benefit of the
other Secured Parties on and in the Pledged Collateral intended to be
granted hereby, including, without limitation, obtaining waivers of
landlord's or warehouseman's liens with respect to such new location to
the extent required by the Senior Credit Facility.
(f) Due Authorization and Issuance. All of the Pledged Stock
has been, and to the extent hereafter issued will be upon such
issuance, duly authorized, validly issued and fully paid and
nonassessable. All of the Initial Pledged Interests have been fully
paid for, and there is no amount or other obligation owing by any
Pledgor to any Issuing Entity of the Initial Pledged Interests in
exchange for or in connection with the issuance of the Initial Pledged
Interests or any Pledgor's status as a partner or a member of any
Issuing Entity of the Initial Pledged Interests.
(g) No Violations, etc. The pledge of the Pledged Securities
pursuant to this Agreement does not violate Regulation T, U or X of the
Federal Reserve Board.
(h) No Options, Warrants, etc. There are no options, warrants,
calls, rights, commitments or agreements of any character to which such
Pledgor is a party or by which it is bound obligating such Pledgor to
issue, deliver or sell or cause to be issued, delivered or sold,
additional Pledged Securities or obligating such Pledgor to grant,
extend or enter into any such option, warrant, call, right, commitment
or agreement. Other than the Senior Credit Facility and the documents
securing the Senior Bank Debt, there are no voting trusts or other
agreements or understandings to which such Pledgor is a party with
respect to the transfer, voting or exercise of any other right of the
equity interests of any Issuing Entity.
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(i) No Claims. Such Pledgor owns or has rights to use all the
Pledged Collateral pledged by it hereunder and all rights with respect
to any of the foregoing used in, necessary for or material to such
Pledgor's business as currently conducted and as contemplated to be
conducted pursuant to the Indenture and the Security Documents. The use
by such Pledgor of such Pledged Collateral and all such rights with
respect to the foregoing do not infringe on the rights of any Person,
except to the extent that such infringement would not, individually or
in the aggregate, have a material adverse effect (each, a "Material
Adverse Effect") on the business, condition (financial or otherwise),
properties, assets, results of operation or prospects of the Pledgors
taken as a whole. To the knowledge of the Pledgors, no claim has been
made and remains outstanding that such Pledgor's use of any Pledged
Collateral does or may violate the rights of any third Person, which
violation would, individually or in the aggregate, have a Material
Adverse Effect.
(j) Authorization, Enforceability. Such Pledgor has the
requisite organizational power, authority and legal right to pledge and
grant a Lien on and security interest in all the Pledged Collateral
pledged by it pursuant to this Agreement, and this Agreement
constitutes the legal, valid and binding obligation of such Pledgor,
enforceable against such Pledgor in accordance with its terms, except
as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting
creditors' rights generally or by equitable principles relating to
enforceability.
(k) No Conflicts, Consents, etc. Neither the execution and
delivery of this Agreement by each Pledgor nor the consummation of the
transactions herein contemplated nor the fulfillment of the terms
hereof (i) violates any charter or by-laws or other organizational
document of such Pledgor or any Issuing Entity, (ii) violates the terms
of any agreement, indenture, mortgage, deed of trust, equipment lease,
instrument or other document to which such Pledgor is a party, or by
which it may be bound or to which any of its properties or assets may
be subject, which violation or conflict would have a material adverse
effect on the value of the Pledged Collateral or an adverse effect on
the Lien on and security interests granted hereunder, (iii) conflicts
with any law, order, rule or regulation applicable to any such Pledgor
of any Governmental Authority having jurisdiction over such Pledgor or
its property, or (iv) results in or requires the creation or imposition
of any Lien (other than the Lien contemplated hereby) upon or with
respect to any of the property now owned or hereafter acquired by such
Pledgor. Except for such consents as have been obtained, no consent of
any party (including, without limitation, equityholders or creditors of
such Pledgor or any Account Debtor) and no consent, authorization, ap-
proval, license or other action by, and no notice to or filing with,
any Governmental Authority or regulatory body or other Person is
required for (x) the pledge by such Pledgor of the Pledged Collateral
pledged by it pursuant to this Agreement or for the execution, delivery
or performance of this Agreement by such Pledgor (except for the
filing of financing statements necessary to perfect Liens), (y) except
as may be provided in the Intercreditor Agreement, the exercise by the
Trustee of the rights provided for in this Agreement or (z) except as
may be provided in the Intercreditor Agreement, the exercise by the
Trustee of the remedies in respect of the Pledged Collateral pursuant
to this Agreement (provided that any exercise of remedies is subject to
applicable bankruptcy and insolvency laws and general principles of
equity). In the event that the Trustee desires to exercise any
remedies, voting or consensual rights or attorney-in-fact powers set
forth in this Agreement and determines it necessary to obtain any
approvals or consents of any Governmental Authority or any other Person
therefor, then, upon the request of the Trustee, such Pledgor agrees to
use its best efforts to assist and aid the Trustee to obtain as soon as
practicable any necessary approvals or consents for the exercise of any
such remedies, rights and powers.
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(l) Pledged Collateral. All information set forth herein,
including the schedules and annexes attached hereto, and all
information contained in any documents, schedules and lists heretofore
delivered to any Secured Party in connection with this Agreement, in
each case, relating to the Pledged Collateral, is accurate and complete
in all material respects. The Pledged Collateral described on the
schedules I, II, III and IV attached hereto constitutes all of the
property of such type of Pledged Collateral owned or held by the
Pledgors.
(m) Insurance. Except to the extent required by the Senior
Credit Facility, no Pledgor shall take any action that materially
impairs the rights of the Trustee or any Secured Party in the Pledged
Collateral. Each Pledgor shall at all times keep the Equipment insured,
at such Pledgor's own expense, against fire, theft and all other risks
to which the Pledged Collateral may be subject, with policy limits and
deductibles in such amounts and to the extent as, from time to time,
would be maintained by a prudent operator of businesses similar to the
business of such Pledgor, including, without limitation, with respect
to such Pledgor's Equipment and the property at which such Equipment is
located, as applicable, the following insurance coverages:
(i) Physical hazard insurance on an "all risk" basis covering,
without limitation, hazards commonly covered by fire and extended
coverage, lightning, windstorm, civil commotion, hail, riot, strike,
water damage, sprinkler leakage, collapse and malicious mischief (but
not water damage resulting from sewer backup);
(ii) Commercial general liability insurance against claims for
bodily injury, death or property damage occurring on, in or about the
property or Pledged Collateral of such Pledgor and any adjoining
streets, sidewalks and passageways, and covering any and all claims,
including, without limitation, all legal liability, to the extent
insurable, imposed upon the Trustee and all court costs and attorneys'
fees, arising out of or connected with the possession, use, leasing,
operation or condition of the property or Pledged Collateral of such
Pledgor;
(iii) Worker's compensation insurance as required by the laws
of the State where the property or Pledged Collateral of such Pledgor
is located to protect such Pledgor and the Trustee against claims for
injuries sustained in the course of employment at any property of such
Pledgor;
(iv) Explosion insurance in respect of any boilers and similar
apparatus located on the property or comprising any Equipment of such
Pledgor;
(v) Business interruption insurance;
(vi) If any property of such Pledgor is located in an area
identified by the Federal Emergency Management Agency as an area having
special flood hazards pursuant to the National Flood Insurance Act of
1968 or the Flood Disaster Protection Act of 1973, each as amended, or
any successor laws, flood insurance; and
(vii) Such other insurance, against such risks and with policy
limits and deductibles in such amounts as the Trustee may from time to
time require.
Each policy or certificate with respect to such insurance
shall be endorsed to the Trustee's satisfaction for the benefit of the
Trustee (including, without limitation, by naming the Trustee as an
additional named insured and loss payee as its interest may appear) and
such policy or certificate shall be
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delivered to the Trustee. Each such policy shall state that it cannot
be cancelled without 30 days' prior written notice to the Trustee.
Prior to the expiration of any such policy of insurance, each Pledgor
shall deliver to the Trustee an extension or renewal policy or an
insurance certificate evidencing renewal or extension of such policy.
If any Pledgor shall fail to insure such Pledged Collateral to the
Trustee's satisfaction or if such Pledgor shall fail to so endorse and
deposit, or to extend or renew, all such insurance policies or
certificates with respect thereto, the Trustee shall have the right
(but shall be under no obligation) to advance funds to procure or renew
or extend such insurance, and such Pledgor agrees to reimburse the
Trustee for all costs and expenses thereof, with interest on all such
funds from the date advanced until paid in full at the highest rate
then in effect under the Indenture. Settlement of any claim under any
of the insurance policies referred to in this Section 6(m) (other than
the insurance contemplated in clause (iii) of Section 6(m)) which in
such Pledgor's reasonable judgment involves loss of $ 10,000,000 or
more, shall require the prior approval of Trustee (acting at the
direction of the holders of the Notes) and such Pledgor shall use its
best efforts to cause each such insurance policy to contain a provision
to such effect. Subject to the provisions of the Intercreditor
Agreement and provided that during the occurrence and continuance of an
Event of Default the Senior Bank Debt shall be repaid in full and the
Senior Credit Facility shall cease to be in effect, in case of any
loss, damage or destruction (each, a "Destruction") to any of the
Pledged Collateral, all Net Insurance Proceeds maintained by the
applicable Pledgor shall be paid to the Trustee as Trust Moneys
pursuant to Article 12 of the Indenture and shall be subject to
retention and disbursement by the Trustee in accordance with the terms
of Article 12 of the Indenture.
(n) Condemnation; Assignment of Award. If there shall occur
any taking of the Pledged Collateral of any Pledgor or any part
thereof, in or by condemnation or other eminent domain proceedings
pursuant to any law, general or special, or by reason of the temporary
requisition of the use or occupancy of such Pledged Collateral or any
part thereof, by any Governmental Authority, civil or military (each, a
"Taking"), such Pledgor shall immediately notify the Trustee upon
receiving notice of such Taking or commencement of proceedings
therefor. The Trustee may (acting at the direction of the holders of
the Notes) participate in any proceedings or negotiations which might
result in any Taking, and such Pledgor shall deliver or cause to be
delivered to Trustee all instruments requested by it to permit such
participation. Trustee may be represented by counsel satisfactory to it
at the reasonable expense of such Pledgor in connection with any such
participation. Such Pledgor shall deliver or cause to be delivered to
the Trustee all instruments reasonably requested by it to permit such
participation. Such Pledgor shall in good faith and with due diligence
file and prosecute what would otherwise be such Pledgor's claim for any
such award or payment and cause the same to be collected and paid over
to the Trustee, and hereby irrevocably authorizes and empowers the
Trustee, in the name of such Pledgor as its true and lawful
attorney-in-fact or otherwise, to collect and to receipt for any such
award or payment, and in the event such Pledgor fails so to act or is
otherwise in default hereunder beyond any applicable notice and grace
period set forth herein or in the Indenture, to file and prosecute such
claim. Such Pledgor shall pay all fees, costs and expenses incurred by
the Trustee in connection with any Taking and in seeking and obtaining
any award or payment on account thereof Subject to the provisions of
the Intercreditor Agreement and provided that during the occurrence and
continuance of an Event of Default the Senior Bank Debt shall be repaid
in full and the Senior Credit Facility shall cease to be in effect, Net
Awards shall be paid to the Trustee as Trust Moneys pursuant to Article
12 of the Indenture and shall be subject to retention and disbursement
by the Trustee in accordance with the terms of Article 12 of the
Indenture. Such Pledgor shall take all steps necessary to notify the
condemning authority of such assignment.
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(o) Payment of Taxes; Claims. Each Pledgor shall pay promptly
when due all Charges. Notwithstanding the foregoing, each Pledgor may
at its own expense contest the amount or applicability of any such
Charge by appropriate legal proceedings; provided, however, that (i)
any such contest shall be conducted in good faith by appropriate
proceedings promptly instituted and diligently conducted and (ii) in
connection with such contest, such Pledgor shall have (A) made
provision for the payment of such contested amount on such Pledgor's
books if and to the extent required by generally accepted accounting
principles then used by such Pledgor in the preparation of its
financial statements or (B) subject to the provisions of the
Intercreditor Agreement, deposited with the Trustee a sum sufficient to
pay and discharge such Charge and an estimate of all interest and
penalties related thereto. Notwithstanding the foregoing provisions of
this Section 6(o), (i) no contest of any such Charge may be pursued by
such Pledgor if such contest would expose the Trustee or any other
Secured Party to (A) any possible criminal liability or (B) unless such
Pledgor shall have furnished a bond or other security therefor
satisfactory to the Trustee or any other Secured Party, any additional
civil liability for failure to comply with its obligations with respect
to such Charge and (ii) if at any time payment of any Charge shall
become necessary to prevent the imposition of remedies because of
non-payment, such Pledgor shall pay the same in sufficient time to
prevent the imposition of remedies in respect of such default or
prospective default.
(p) Access to Books and Records. Upon reasonable request to
such Pledgor, the Trustee shall have full and free access during normal
business hours to all of the books, correspondence and records of such
Pledgor relating to the Pledged Collateral, and the Trustee and its
representatives may examine the same, take extracts therefrom and make
photocopies thereof, and such Pledgor agrees to render to the Trustee,
at such Pledgor's cost and expense, such clerical and other assistance
as may be reasonably requested by the Trustee with regard thereto.
Section 7. Special Provisions Concerning General Collateral.
(a) Intentionally Omitted.
(b) Maintenance of Records. Each Pledgor shall keep and
maintain at its own cost and expense complete records of each Account, in a
manner consistent with prudent business practice, including, without limitation,
records of all payments received, all credits granted thereon, all merchandise
returned and all other documentation relating thereto. Each Pledgor shall, at
such Pledgor's sole cost and expense, upon the Senior Bank Agent's or, in the
event the obligations under the Senior Credit Facility have been paid and
satisfied, the Trustee's demand made at any time after the occurrence and during
the continuance of any Event of Default, deliver all tangible evidence of
Accounts, including, without limitation, all documents evidencing Accounts and
any books and records relating thereto to the Senior Bank Agent or the Trustee,
as the case may be, or to its representatives (copies of which evidence and
books and records may be retained by such Pledgor). Upon the occurrence and
during the continuance of any Event of Default, the Trustee may transfer a full
and complete copy of any Pledgor's books, records, credit information, reports,
memoranda and all other writings relating to the Accounts to and for the use by
any Person that has acquired or is contemplating acquisition of an interest in
the Accounts or the Trustee's Lien and security interest therein without the
consent of any Pledgor.
(c) Legend. Each Pledgor shall legend, at the request of the
Trustee made at any time after the occurrence of any Event of Default and in
form and manner satisfactory to the Trustee, the Accounts and the other books,
records and documents of such Pledgor evidencing or pertaining to the Accounts
with an appropriate reference to the fact that the Accounts have been assigned
to the Trustee for its benefit and the benefit of the other Secured Parties and
that the Trustee has a Lien and security interest therein.
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(d) Modification of Terms, etc. Except in the ordinary course
of and pursuant to the reasonable requirements of any Pledgor and in accordance
with the usual and customary business practice of such Pledgor as of the date
hereof, no Pledgor shall (i) rescind or cancel any indebtedness evidenced by any
Account or modify any term thereof or make any adjustment with respect thereto
except in the ordinary course of business consistent with prudent business
practice, (ii) extend or renew any such indebtedness or compromise or settle any
dispute, claim, suit or legal proceeding relating thereto or (iii) sell any
Account or interest therein except in the ordinary course of business consistent
with prudent business practice. Each Pledgor shall timely fulfill in all
material respects all obligations on its part to be fulfilled under or in
connection with the Accounts.
(e) Collection. Each Pledgor shall cause each of the Accounts
to be collected, applied and deposited in the manner contemplated by the Senior
Credit Facility.
(f) Instruments. Upon the occurrence and during the
continuance of any Event of Default, each Pledgor shall, subject to the
provisions of the Intercreditor Agreement, deliver to the Trustee, within five
days after receipt thereof by such Pledgor, any Instrument evidencing Accounts
which is in the principal amount of $500,000 or more. Any Instrument delivered
to the Trustee pursuant to this Section 7(f) shall be appropriately endorsed (if
applicable) to the order of the Trustee, as agent for the Secured Parties, and
shall be held by the Trustee as further security hereunder; provided, however,
that so long as no Default shall have occurred and be continuing, the Trustee
shall, promptly upon request of such Pledgor, make appropriate arrangements for
making any Instrument pledged by such Pledgor available to such Pledgor for
purposes of presentation, collection or renewal (any such arrangement to be
effected, to the extent deemed appropriate by the Trustee, against trust receipt
or like document).
(g) Maintenance of Equipment. Each Pledgor shall cause the
Equipment to be maintained and preserved in good condition, repair and working
order, ordinary wear and tear excepted, and to the extent consistent with
current business practice in accordance with any manufacturer's manual, and
shall forthwith, or in the case of any loss or damage which (individually or in
the aggregate) exceeds $ 100,000 to any of the Equipment (of which prompt notice
shall be given to the Trustee) as quickly as commercially practicable after the
occurrence thereof, make or cause to be made all repairs, replacements and other
improvements in connection therewith which are necessary or desirable in the
conduct of such Pledgor's business.
(h) Warehouse Receipts Non-Negotiable. If any warehouse
receipt or receipt in the nature of a warehouse receipt is issued with respect
to any of the Inventory, the applicable Pledgor shall not permit such warehouse
receipt or receipt in the nature thereof to be "negotiable" (as such term is
used in Section 7-104 of the UCC or under other relevant law).
(i) Consents to Assignment of Contracts. To the extent that
any contract or other agreement of any Pledgor would constitute Pledged
Collateral hereunder but for the exclusions contained in Section 2 of this
Agreement, such Pledgor shall, to the extent required under the Senior Credit
Facility, cause the counterparty thereto to deliver or cause to be delivered the
requisite consent.
(j) Fair Labor Standards Act. Any goods now or hereafter
produced by each Pledgor included in the Pledged Collateral have been and will
be produced in substantial compliance with the requirements of the Fair Labor
Standards Act of 1938, as amended.
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Section 8. Special Provisions Concerning Securities Collateral.
(a) Pledge of Additional Securities. Each Pledgor shall, upon
obtaining any Pledged Securities of any Issuing Entity, accept the same in trust
for the benefit of the Trustee and promptly (and in any event within five
Business Days) deliver (i) to the Trustee a pledge amendment, duly executed by
such Pledgor, in substantially the form of Exhibit 2 annexed hereto (each, a
"Pledge Amendment"), and (ii) to the Trustee or the Senior Bank Agent in
accordance with the provisions of the Intercreditor Agreement, the certificates
and other documents required under Sections 5(a) and 5(b) in respect of the
additional Pledged Securities which are to be pledged pursuant to this
Agreement, and confirming the attachment of the Lien and security interest
hereby created on and in respect of such additional Pledged Securities. Each
Pledgor hereby authorizes the Trustee to attach each Pledge Amendment to this
Agreement and agrees that all Pledged Securities listed on any Pledge Amendment
delivered to the Trustee shall for all purposes hereunder be considered Pledged
Collateral.
(b) Voting Rights; Distributions, etc.
(i) So long as no Event of Default shall have occurred and
be continuing:
(A) Each Pledgor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Securities
Collateral or any part thereof for any purpose not inconsistent with
the terms or purposes of this Agreement, the Indenture or any other
Security Document; provided, however, that no Pledgor shall in any
event exercise such rights in any manner which would reasonably be
expected to have a material adverse effect on the aggregate value of
the Pledged Collateral or on the Lien granted pursuant to this
Agreement.
(B) Each Pledgor shall be entitled to receive and retain, and
to utilize free and clear of the Lien of this Agreement, any and all
Distributions, but only if and to the extent made in accordance with
the provisions of the Indenture; provide , however, that any and all
such Distributions consisting of rights or interests in the form of
certificates representing securities shall be forthwith delivered to
the Trustee or the Senior Bank Agent in accordance with the provisions
of the Intercreditor Agreement to hold as Pledged Collateral and shall,
if received by any Pledgor, be received in trust for the benefit of the
Collateral Senior Bank Agent, be segregated from the other property or
funds of such Pledgor and be forthwith delivered to the Trustee or the
Agent in accordance with the provisions of the Intercreditor Agreement
as Pledged Collateral in the same form as so received (with any
necessary endorsement).
(C) The Trustee shall be deemed without further action or
formality to have granted to each Pledgor all necessary consents
relating to voting rights and shall, if necessary, upon written request
of any Pledgor and at the sole cost and expense of the Pledgors, from
time to time execute and deliver (or cause to be executed and
delivered) to such Pledgor all such instruments as such Pledgor may
reasonably request in order to permit such Pledgor to exercise the
voting and other rights which it is entitled to exercise pursuant to
Section 8(b)(i)(A) hereof and to receive the Distributions which it is
authorized to receive and retain pursuant to Section 8(b)(i)(B) hereof.
(ii) Upon the occurrence and during the continuance of any
Event of Default:
(A) All rights of each Pledgor to exercise the voting and
other consensual rights it would otherwise be entitled to exercise
pursuant to Section 8(b)(i)(A) hereof without any action or the giving
of any notice shall cease, and all such rights shall, subject to the
provisions of the Intercreditor Agree-
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ment, thereupon become vested in the Trustee, which shall thereupon
have the sole right to exercise such voting and other consensual
rights.
(B) All rights of each Pledgor to receive Distributions which
it would otherwise be authorized to receive and retain pursuant to
Section 8(b)(i)(B) hereof shall cease and all such rights shall,
subject to the provisions of the Intercreditor Agreement, thereupon
become vested in the Trustee, which shall thereupon have the sole right
to receive and hold as Pledged Collateral such Distributions.
(iii) Each Pledgor shall, at its sole cost and expense, from
time to time execute and deliver to the Trustee appropriate instruments
as the Trustee may reasonably request in order to permit the Trustee to
exercise the voting and other rights which it may be entitled to
exercise pursuant to Section 8(b)(ii)(A) hereof and to receive all
Distributions which it may be entitled to receive under Section
8(b)(ii)(B) hereof
(iv) All Distributions which are received by any Pledgor
contrary to the provisions of Section 8(b)(ii)(B) hereof shall be
received in trust for the benefit of the Trustee, shall be segregated
from other funds of such Pledgor and shall immediately be paid over to
the Trustee or the Senior Bank Agent in accordance with the provisions
of the Intercreditor Agreement as Pledged Collateral in the same form
as so received (with any necessary endorsement).
(c) No New Securities. Except to the extent delivered to the
Senior Bank Agent, as agent, for the Trustee pursuant to the provisions of the
Intercreditor Agreement, each Pledgor shall cause each issuer of the Pledged
Securities not to issue any stock or other securities or equity interests in
addition to or in substitution for the Pledged Securities issued by such issuer,
except to such Pledgor.
(d) Operative Agreements. Each Pledgor has delivered to the
Trustee true, correct and complete copies of the Operative Agreements. The
Operative Agreements are in full force and effect, have not as of the date
hereof been amended or modified, and there is no existing default by any party
thereunder or any event which, with the giving of notice of passage of time or
both, would constitute a default by any party thereunder. Each Pledgor shall
deliver to the Trustee a copy of any notice of default given or received by it
under any Operative Agreement within ten (10) days after such Pledgor gives or
receives such notice. Except in connection with a transaction permitted by the
Indenture, no Pledgor will terminate or agree to terminate any Operative
Agreement or make any amendment or modification to any Operative Agreement which
would reasonably be expected to have a material adverse effect on the value of
the Membership Interests, the Partnership Interests or the security intended to
be provided by this Agreement.
(e) Defaults, etc. Such Pledgor is not in default in the
payment of any portion of any mandatory capital contribution, if any, required
to be made under any agreement to which such Pledgor is a party relating to the
Pledged Securities pledged by it, and such Pledgor is not in violation of any
other material provisions of any such agreement to which such Pledgor is a
party, or otherwise in default or violation thereunder. No Pledged Securities
pledged by such Pledgor are subject to any defense, offset or counterclaim, nor
have any of the foregoing been asserted or alleged against such Pledgor by any
Person with respect thereto, and as of the date hereof, there are no
certificates, instruments, documents or other writings (other than the Operative
Agreements and certificates, if any, delivered to the Trustee or the Senior Bank
Agent) which evidence any Pledged Securities of such Pledgor.
Section 9. Special Provisions Concerning Intellectual Property
Collateral.
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(a) Registrations. Except pursuant to licenses and other user
agreements entered into by any Pledgor in the ordinary course of business, that
are listed in Schedules II and III hereto, on and as of the date hereof (i) each
Pledgor owns and possesses the right to use, and has done nothing to authorize
or enable any other Person to use, any Patent or Trademark listed in Schedules
II and III and (ii) all registrations listed in Schedules II and III are valid
and in full force and effect.
(b) No Violations or Proceedings. To each Pledgor's knowledge,
on and as of the date hereof, (i) except as set forth in Schedules II and III
hereto, there is no violation by others of any right of such Pledgor with
respect to any Patent or Trademark listed in Schedules II and III hereto,
respectively, pledged by it under the name of such Pledgor, (ii) such Pledgor is
not infringing upon any Patent or Trademark of any other Person and (iii) no
proceedings have been instituted or are pending against such Pledgor or, to such
Pledgor's knowledge, threatened, and no claim against such Pledgor has been
received by such Pledgor, alleging any such violation, except as may be set
forth in Schedules II and III.
(c) Duties of Pledgor. Each Pledgor shall have the duty, to
the extent desirable in the normal conduct of such Pledgor's business, to: (i)
prosecute diligently any Intellectual Property Collateral application that is
part of the Intellectual Property Collateral pending as of the date hereof or
hereafter until the termination of this Agreement, and (ii) make applications
for Intellectual Property Collateral that are necessary in the operation of such
Pledgor's business. Each Pledgor further agrees (i) not to abandon any
Intellectual Property Collateral unless (x) such Pledgor shall have obtained the
prior written consent of Senior Bank Agent to the extent required pursuant to
the Senior Credit Facility or (y) subsequent applications relating to such
abandoned Intellectual Property have been filed with respect to similar subject
matter or (z) where such Pledgor, in its reasonable business judgment, concludes
that such Intellectual Property is no longer useful in the conduct of such
Pledgor's business, and (ii) to use its commercially reasonable efforts to
maintain in full force and effect the Intellectual Property Collateral that are
or shall be necessary or economically desirable in the operation of such
Pledgor's business. Any expenses incurred in connection with the foregoing shall
be borne by such Pledgor. Neither Trustee nor any other Secured Party shall have
any duty with respect to the Intellectual Property Collateral. Without limiting
the generality of the foregoing, Trustee shall not be under any obligation to
take any steps necessary to preserve rights in the Intellectual Property
Collateral against any other Persons, but may, subject to the provisions of the
Intecreditor Agreement, do so at its option from and after the occurrence and
during the continuance of an Event of Default, and all reasonable expenses
incurred in connection therewith shall be for the sole account of such Pledgor
and shall be added to the Secured Obligations secured hereby.
(d) Trustee's Right to Sue. From and after the occurrence and
during the continuance of an Event of Default, the Trustee shall have the right,
subject to the provisions of the Intercreditor Agreement, but shall not be
obligated, to bring suit in its own name to enforce the Intellectual Property
Collateral and, if the Trustee shall commence any such suit, each Pledgor shall,
at the request of the Trustee, do any and all lawful acts and execute any and
all proper documents reasonably required by the Trustee in aid of such
enforcement. Such Pledgor shall, upon demand, promptly reimburse the Trustee for
all reasonable costs and expenses incurred by Trustee in the exercise of its
rights under this Section 9(d) (including, without limitation, reasonable fees
and expenses of attorneys and paralegals for the Trustee).
(e) After-Acquired Property. If any Pledgor shall, at any time
before the Secured Obligations have been paid in full (i) obtain any rights to
any additional Intellectual Property Collateral or (ii) become entitled to the
benefit of any additional Intellectual Property Collateral or any renewal or
extension thereof, including any reissue, division, continuation, or
continuation-in-part of any Patent, or any improvement on any Patent, the
provisions of this Agreement shall automatically apply thereto and any such item
enumerated
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in clauses (i) or (ii) of this Section 9(e) with respect to such Pledgor shall
automatically constitute Intellectual Property Collateral if such would have
constituted Intellectual Property Collateral at the time of execution of this
Agreement and be subject to the Lien and security interest created by this
Agreement without further action by any party other than actions required to
perfect such Lien and security interest (provided, that no such actions will be
taken with respect to any foreign intellectual property registrations except to
the extent required under the Senior Credit Facility). Each Pledgor shall
promptly provide to the Trustee written notice of any of the foregoing. Each
Pledgor agrees, promptly following a request by the Trustee, to confirm the
attachment of the Lien and security interest created by this Agreement to any
rights described in clauses (i) and (ii) of this Section 9(e) if such would have
constituted Intellectual Property Collateral at the time of execution of this
Agreement by execution of an instrument in form reasonably acceptable to the
Trustee.
(f) Modifications. Each Pledgor authorizes the Trustee to
modify this Agreement by amending Schedules II, III and IV hereto to include any
future Intellectual Property Collateral of such Pledgor, including, without
limitation, any of the items listed in Section 9(e).
(g) Litigation.
(i) Unless there shall occur and be continuing any Event of
Default, each Pledgor shall have the right to commence and prosecute in
its own name, as the party in interest, for its own benefit and at the
sole cost and expense of the Pledgors, such applications for protection
of the Intellectual Property Collateral and suits, proceedings or other
actions for infringement, counterfeiting, unfair competition, dilution
or other damage as are in its reasonable business judgment necessary to
protect the Intellectual Property Collateral. Each Pledgor shall
promptly notify the Trustee in writing as to the commencement and
prosecution of any such actions, or threat thereof relating to the
Intellectual Property Collateral, and shall provide to the Trustee such
information with respect thereto as may be reasonably requested by the
Trustee. Each Pledgor shall indemnify and hold harmless each Secured
Party for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, expenses or disbursements
(including attorneys' fees and expenses) of any kind whatsoever which
may be imposed on, incurred by or asserted against such Secured Party
in connection with or in any way arising out of such suits, proceedings
or other actions, except to the extent arising out of the gross
negligence or willful misconduct of such Secured Party.
(ii) Upon the occurrence and during the continuance of any
Event of Default, the Trustee shall have the right but shall in no way
be obligated to file applications for protection of the Intellectual
Property Collateral and/or bring suit in the name of any Pledgor, the
Trustee or the other Secured Parties to enforce the Intellectual
Property Collateral and any license thereunder. In the event of such
suit, each Pledgor shall, at the request of the Trustee, do any and all
lawful acts and execute any and all documents requested by the Trustee
in aid of such enforcement and the Pledgors shall promptly, upon
demand, reimburse and indemnify the Trustee, as the case may be, for
all costs and expenses (including fees and expenses of counsel)
incurred by the Trustee in the exercise of its rights under this
Section gig). In the event that the Trustee shall elect not to bring
suit to enforce the Intellectual Property Collateral, each Pledgor
agrees, at the request of the Trustee, to use all reasonable measures,
whether by action, suit, proceeding or otherwise, to prevent the
infringement, counterfeiting or other diminution in value of any of the
Intellectual Property Collateral by others and for that purpose agrees
to diligently maintain any action, suit or proceeding against any
person so infringing necessary to prevent such infringement unless such
Pledgor has determined that such Intellectual Property Collateral that
is the subject of any pending or contemplated infringement or
enforcement action or proceeding does not
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contain or represent any value or utility (other than of an immaterial
nature), consistent with prudent business practice.
Section 10. Transfers and Other Liens. No Pledgor shall (a)
sell, convey, assign or otherwise dispose of, or grant any option with respect
to, any of the Pledged Collateral pledged by it hereunder except as permitted by
the Indenture, (b) create or permit to exist any Lien upon or with respect to
any of the Pledged Collateral pledged by it hereunder other than Permitted Liens
or (c) permit any issuer of the Pledged Securities to merge, consolidate or
change its legal form except as permitted by the Indenture.
Section 11. Reasonable Care. The Trustee shall be deemed to
have exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if such Pledged Collateral is accorded treatment
substantially equivalent to that which the Trustee, in its individual capacity,
accords its own property consisting of similar instruments or interests, it
being understood that neither the Trustee nor any of the Secured Parties shall
have responsibility for (i) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relating to any
Securities Collateral, whether or not the Trustee or any other Secured Party has
or is deemed to have knowledge of such matters or (ii) taking any necessary
steps to preserve rights against any Person with respect to any Pledged
Collateral.
Section 12. Remedies upon Default.
(a) Obtaining the Pledged Collateral upon Event of Default. If
any Event of Default shall have occurred and be continuing, then and in every
such case, the Trustee may, subject to the provisions of the Intercreditor
Agreement:
(i) Personally, or by agents or attorneys, immediately take
possession of the Pledged Collateral or any part thereof, from any
Pledgor or any other Person who then has possession of any part thereof
with or without notice or process of law, and for that purpose may
enter upon any Pledgor's premises where any of the Pledged Collateral
is located, remove such Pledged Collateral, remain present at such
premises to receive copies of all communications and remittances
relating to the Pledged Collateral and use in connection with such
removal and possession any and all services, supplies, aids and other
facilities of any Pledgor;
(ii) Demand, sue for, collect or receive any money or property
at any time payable or receivable in respect of the Pledged Collateral,
including, without limitation, instructing the obligor or obligors on
any agreement, instrument or other obligation (including, without
limitation, the Accounts and Contracts) constituting part of the
Pledged Collateral to make any payment required by the terms of such
instrument or agreement directly to the Trustee, and in connection with
any of the foregoing, compromising, settling, extending the time for
payment and making other modifications with respect thereto; provided,
however. that in the event that any such payments are made directly to
any Pledgor, prior to receipt by any such obligor of such instruction,
such Pledgor shall segregate all amounts received pursuant thereto in a
separate account and pay the same promptly to the Trustee (or, so long
as the obligations under the Senior Credit Facility shall be
outstanding, the Senior Bank Agent in accordance with the provisions of
the Intercreditor Agreement);
(iii) Sell, assign, grant a license to use or otherwise
liquidate, or direct any Pledgor to sell, assign, grant a license to
use or otherwise liquidate, any or all investments made in whole or in
part with the Pledged Collateral or any part thereof, and take
possession of the proceeds of any such sale, assignment, license or
liquidation;
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(iv) Take possession of the Pledged Collateral or any part
thereof, by directing any Pledgor in writing to deliver the same to the
Trustee at any place or places so designated by the Trustee, in which
event such Pledgor shall at its own expense: (A) forthwith cause the
same to be moved to the place or places designated by the Trustee (or,
so long as the obligations under the Senior Credit Facility shall be
outstanding, the Senior Bank Agent in accordance with the provisions of
the Intercreditor Agreement) and there delivered to the Trustee (or, so
long as the obligations under the Senior Credit Facility shall be
outstanding, the Senior Bank Agent in accordance with the provisions of
the Intercreditor Agreement), (B) store and keep any Pledged Collateral
so delivered to the Trustee (or, so long as the obligations under the
Senior Credit Facility shall be outstanding, the Senior Bank Agent in
accordance with the provisions of the Intercreditor Agreement) at such
place or places pending further action by the Trustee; and (C) while
the Pledged Collateral shall be so stored and kept, provide such
security and maintenance services as shall be necessary to protect the
same and to preserve and maintain them in good condition. Each
Pledgor's obligation to deliver the Pledged Collateral is of the
essence of this Agreement. Upon application to a court of equity having
jurisdiction, the Trustee shall be entitled to a decree requiring
specific performance by any Pledgor of such obligation;
(v) Retain and apply the Distributions to the Secured
Obligations as provided in Section 13 hereof, and
(vi) Exercise any and all rights as beneficial and legal owner
of the Pledged Collateral, including, without limitation, perfecting
assignment of and exercising any and all voting, consensual and other
rights and powers with respect to any Pledged Collateral.
(b) Disposition of the Pledged Collateral.
(i) Upon the occurrence and during the continuance of any
Event of Default, the Trustee may from time to time, in accordance with the
terms of and at the times, if any, specified in the Indenture and/or the
Intercreditor Agreement, exercise in respect of the Pledged Collateral, in
addition to the other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured parry on default under
the UCC, and the Trustee may also in its sole discretion, without notice except
as specified below, sell, assign or grant a license to use the Pledged
Collateral or any part thereof in one or more parcels at public or private sale,
at any exchange, broker's board or at any of the Trustees offices or elsewhere,
for cash, on credit or for future delivery, and at such price or prices and upon
such other terms as the Trustee may deem commercially reasonable. The Trustee or
any other Secured Party or any of their respective Affiliates may be the
purchaser, licensee, assignee or recipient of any or all of the Pledged
Collateral at any such sale and shall be entitled, for the purpose of bidding
and making settlement or payment of the purchase price for all or any portion of
the Pledged Collateral sold, assigned or licensed at such sale, to use and apply
any of the Secured Obligations owed to such Person as a credit on account of the
purchase price of any Pledged Collateral payable by such Person at such sale.
Each purchaser, assignee, licensee or recipient at any such sale shall acquire
the property sold, assigned or licensed absolutely free from any claim or right
on the part of any Pledgor, and each Pledgor hereby waives, to the fullest
extent permitted by law, all rights of redemption, stay and/or appraisal which
it now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted. The Trustee shall not be obligated to
make any sale of Pledged Collateral regardless of notice of sale having been
given. The Trustee may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned. Each
Pledgor hereby waives, to the fullest extent permitted by law, any claims
against the Trustee arising by reason of the fact that the price at which any
Pledged Collateral may have been sold, assigned or licensed at such a private
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sale was less than the price which might have been obtained at a public sale,
even if the Trustee accepts the first offer received and does not offer such
Pledged Collateral to more than one offeree.
(ii) Each Pledgor acknowledges and agrees that, to the extent
notice of sale shall be required by law, ten days' notice to such Pledgor of the
time and place of any public sale or of the time after which any private sale or
other intended disposition is to take place shall be commercially reasonable
notification of such matters. No notification need be given to any Pledgor if it
has signed, after the occurrence of an Event of Default, a statement renouncing
or modifying any right to notification of sale or other intended disposition.
(c) Waiver of Notice and Claims. Each Pledgor hereby waives,
to the fullest extent permitted by applicable law, notice or judicial hearing in
connection with the Trustee's taking possession or the Trustee's disposition of
any of the Pledged Collateral, including, without limitation, any and all prior
notice and hearing for any prejudgment remedy or remedies and any such right
which such Pledgor would otherwise have under law, and each Pledgor hereby
further waives, to the fullest extent permitted by applicable law: (i) all
damages occasioned by such taking of possession, (ii) all other requirements as
to the time, place and terms of sale or other requirements with respect to the
enforcement of the Trustee's rights hereunder, and (iii) all rights of
redemption, appraisal, valuation, stay, extension or moratorium now or hereafter
in force under any applicable law. The Trustee shall not be liable for any
incorrect or improper payment made pursuant to this Section 12 in the absence of
gross negligence or willful misconduct. Any sale of, or the grant of options to
purchase, or any other realization upon, any Pledged Collateral shall operate to
divest all right, title, interest, claim and demand, either at law or in equity,
of the applicable Pledgor therein and thereto, and shall be a perpetual bar both
at law and in equity against such Pledgor and against any and all Persons
claiming or attempting to claim the Pledged Collateral so sold, optioned or
realized upon, or any part thereof, from, through or under such Pledgor.
(d) Certain Sales of Pledged Collateral. Each Pledgor
recognizes that, by reason of certain prohibitions contained in law, rules,
regulations or orders of any foreign Governmental Authority, the Trustee may be
compelled, with respect to any sale of all or any part of the Pledged
Collateral, to limit purchasers to those who meet the requirements of such
foreign Governmental Authority. Each Pledgor acknowledges that any such sales
may be at prices and on terms less favorable to the Trustee than those
obtainable through a public sale without such restrictions, and, notwithstanding
such circumstances, agrees that any such restricted sale shall be deemed to have
been made in a commercially reasonable manner and that, except as may be
required by applicable law, the Trustee shall have no obligation to engage in
public sales.
(e) Certain Sales of Securities Collateral.
(i) Each Pledgor recognizes that, by reason of certain
prohibitions contained in the Securities Act of 1933, as amended (the
"Securities Act"), and applicable state securities laws, the Trustee may be
compelled, with respect to any sale of all or any part of the Securities
Collateral, to limit purchasers to Persons who will agree, among other things,
to acquire such Securities Collateral for their own account, for investment and
not with a view to the distribution or resale thereof. Each Pledgor acknowledges
that any such private sales may be at prices and on terms less favorable to the
Trustee than those obtainable through a public sale without such restrictions
(including, without limitation, a public offering made pursuant to a
registration statement under the Securities Act), and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner and that the Trustee shall have no
obligation to engage in public sales and no obligation to delay the sale of any
Securities Collateral for the period of time necessary to permit the Issuing
Entity thereof to register it for a form of public sale requiring registration
under the Securities Act or under applicable state securities laws, even if such
Issuing Entity would agree to do so.
<PAGE> 154
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(ii) If the Trustee determines to exercise its right to sell
any or all of the Securities Collateral, upon written request, the applicable
Pledgor shall from time to time furnish to the Trustee all such information as
the Trustee may request in order to determine the number of securities included
in the Securities Collateral which may be sold by the Trustee as exempt
transactions under the Securities Act and the rules of the Securities and
Exchange Commission thereunder, as the same are from time to time in effect.
Section 13. Application of Proceeds.
The proceeds received by the Trustee in respect of any sale
of, collection from or other realization upon all or any part of the Pledged
Collateral pursuant to the exercise by the Trustee of its remedies as a secured
creditor as provided in Section 12 hereof shall be applied, together with any
other sums then held by the Trustee pursuant to this Agreement, promptly by the
Trustee in the manner set forth in the Indenture and/or the Intercreditor
Agreement.
Section 14. Expenses. Each Pledgor will upon demand pay to the
Trustee the amount of any and all reasonable expenses, including the reasonable
fees and expenses of its counsel and the reasonable fees and expenses of any
experts and agents which the Trustee may incur in connection with (a) the
collection of the Secured Obligations, (b) the enforcement and administration of
this Agreement, (c) the custody or preservation of, or the sale of, collection
from, or other realization upon, any of the Pledged Collateral, (d) the exercise
or enforcement of any of the rights of the Trustee or any Secured Party
hereunder or (e) the failure by any Pledgor to perform or observe any of the
provisions hereof. All amounts payable by any Pledgor under this Section 14
shall be due upon demand and shall be part of the Secured Obligations. Each
Pledgor's obligations under this Section 14 shall survive the termination of
this Agreement and the discharge of such Pledgor's other obligations hereunder.
Section 15. No Waiver; Cumulative Remedies. (a) No failure on
the part of the Trustee to exercise, no course of dealing with respect to, and
no delay on the part of the Trustee in exercising, any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, power or remedy hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or remedy;
nor shall the Trustee be required to look first to, enforce or exhaust any other
security, collateral or guaranties. The remedies herein provided are cumulative
and are not exclusive of any remedies provided by law.
(b) In the event that the Trustee shall have instituted any
proceeding to enforce any right, power or remedy under this Agreement by
foreclosure, sale, entry or otherwise, and such proceeding shall have been
discontinued or abandoned for any reason or shall have been determined adversely
to the Trustee, then and in every such case, the Pledgors, the Trustee and each
other Secured Party shall be restored to their respective former positions and
rights hereunder with respect to the Pledged Collateral, and all rights,
remedies and powers of the Trustee and the other Secured Parties shall continue
as if no such proceeding had been instituted.
Section 16. Actions by Trustee.
The Trustee has been appointed as collateral agent and trustee
pursuant to the Indenture. The actions of the Trustee hereunder are subject to
the provisions of the Indenture. The Trustee shall have the right hereunder to
make demands, to give notices, to exercise or refrain from exercising any
rights, and to take or refrain from taking action (including, without
limitation, the release or substitution of Pledged Collateral), in accordance
with this Agreement, the Indenture and/or the Intercreditor Agreement. The
Trustee may employ agents and attorneys-in-fact in connection herewith and shall
not be liable for the negligence or misconduct of
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any such agents or attorneys-in-fact selected by it in good faith. The Trustee
may resign and a successor Trustee may be appointed in the manner provided in
the Indenture. Upon the acceptance of any appointment as the Trustee by a
successor Trustee, that successor Trustee shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Trustee under this Agreement, and the retiring Trustee shall thereupon be
discharged from its duties and obligations under this Agreement. After any
retiring Trustee's resignation, the provisions of this Agreement shall inure to
its benefit as to any actions taken or omitted to be taken by it under this
Agreement while it was the Trustee.
Section 17. Trustee May Perform; Trustee Appointed
Attorney-in-Fact. If any Pledgor shall fail to do any act or thing that it has
covenanted to do hereunder or if any warranty on the part of any Pledgor
contained herein shall be breached, the Trustee may (but shall not be obligated
to) do the same or cause it to be done or remedy any such breach, and may expend
funds for such purpose. Any and all reasonable amounts so expended by the
Trustee shall be paid by the Pledgors promptly upon demand therefor, with
interest at the highest rate then in effect under the Indenture during the
period from and including the date on which such funds were so expended to the
date of repayment. Each Pledgor's obligations under this Section 17 shall
survive the termination of this Agreement and the discharge of such Pledgor's
other obligations under this Agreement, the Indenture and the other Security
Documents. Each Pledgor hereby appoints the Trustee its attorney-in-fact, with
full authority in the place and stead of such Pledgor and in the name of such
Pledgor, or otherwise, from time to time at the direction of the holders of the
Notes to take any action and, while an Event of Default exists, to execute any
and all instruments consistent with the terms of this Agreement, the Indenture
and the other Security Documents which the Trustee may deem necessary or
advisable to accomplish the purposes of this Agreement. The foregoing grant of
authority is a power of attorney coupled with an interest and such appointment
shall be irrevocable for the term of this Agreement. Each Pledgor hereby
ratifies all that such attorney shall lawfully do or cause to be done by virtue
hereof.
Section 18. Indemnity
(a) Indemnity. Each Pledgor agrees to, jointly and severally,
indemnify, pay and hold harmless the Trustee and each of the other Secured
Parties and the officers, directors, employees, agents and Affiliates of the
Trustee and each of the other Secured Parties (collectively, the "Indemnitees")
from and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs (including, without
limitation, settlement costs), expenses or disbursements of any kind or nature
whatsoever (including, without limitation, the fees and disbursements of counsel
for such Indemnitees in connection with any investigative, administrative or
judicial proceeding commenced or threatened, whether or not such Indemnitee
shall be designated a party thereto) which may be imposed on, incurred by, or
asserted against that Indemnitee, in any manner relating to or arising out of
this Agreement, the Indenture, the Intercreditor Agreement or any other Security
Document (including, without limitation, any misrepresentation by any Pledgor in
this Agreement, the Indenture or any other Security Document) (the "indemnified
liabilities"); provided, however, that no Pledgor shall have any obligation to
an Indemnitee hereunder with respect to indemnified liabilities if it has been
determined by a final decision (after all appeals and the expiration of time to
appeal) of a court of competent jurisdiction that such indemnified liability
arose from the gross negligence or willful misconduct of that Indemnitee. To the
extent that the undertaking to indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it is violative of any law or
public policy, each Pledgor shall contribute the maximum portion which it is
permitted to pay and satisfy under applicable law to the payment and
satisfaction of all indemnified liabilities incurred by the Indemnitees or any
of them such that it has contributed to the Trustee an amount equal to that
portion of the loss determined by virtue of its relative fault.
<PAGE> 156
-28-
(b) Survival. The obligations of the Pledgors contained in
this Section 18 shall survive the termination of this Agreement and the
discharge of the Pledgors' other obligations under this Agreement, the Indenture
and under the other Security Documents and the removal or resignation of the
Trustee.
(c) Reimbursement. Any amounts paid by any Indemnitee as to
which such Indemnitee has the right to reimbursement shall constitute Secured
Obligations secured by the Pledged Collateral.
Section 19. Modification in Writing. No amendment,
modification, supplement, termination or waiver of or to any provision of this
Agreement, nor consent to any departure by any Pledgor therefrom, shall be
effective unless the same shall be made in accordance with the terms of the
Indenture and unless in writing and signed by the Trustee. Any amendment
modification or supplement of or to any provision of this Agreement, any waiver
of any provision of this Agreement and any consent to any departure by any
Pledgor from the terms of any provision of this Agreement shall be effective
only in the specific instance and for the specific purpose for which made or
given. Except where notice is specifically required by this Agreement, the
Indenture or any other Security Document, no notice to or demand on any Pledgor
in any case shall entitle any Pledgor to any other or further notice or demand
in similar or other circumstances.
Section 20. Termination; Release. When all the Secured
Obligations have been paid in full this Agreement shall terminate. Upon
termination of this Agreement or any release of Pledged Collateral in accordance
with the provisions of the Indenture, the Trustee shall, upon the request and at
the sole cost and expense of the Pledgors, forthwith assign, transfer and
deliver to Pledgor, against receipt and without recourse to or warranty by the
Trustee, such of the Pledged Collateral to be released (in the case of a
release) as may be in possession of the Trustee and as shall not have been sold
or otherwise applied pursuant to the terms hereof, and, with respect to any
other Pledged Collateral, proper documents and instruments (including UCC-3
termination statements or releases) acknowledging the termination of this
Agreement or the release of such Pledged Collateral, as the case may be.
Section 21. Notices.
Unless otherwise provided herein or in the Indenture, any
notice or other communication herein required or permitted to be given shall be
given in the manner set forth in the Indenture, as to any Pledgor, addressed to
it at the address of such Pledgor set forth in the Indenture and as to the
Trustee, addressed to it at the address set forth in the Indenture, or in each
case at such other address as shall be designated by such party in a written
notice to the other party complying as to delivery with the terms of this
Section 21; provided, however, that notices to the Trustee shall not be
effective until received by the Trustee.
Section 22. Continuing Security Interest; Assignment. This
Agreement shall create a continuing security interest in the Pledged Collateral
and shall (i) be binding upon the Pledgors, their respective successors and
assigns and (ii) inure, together with the rights and remedies of the Trustee
hereunder, to the benefit of the Trustee and the other Secured Parties and each
of their respective successors, transferees and assigns. No other Persons
(including, without limitation, any other creditor of any Pledgor) shall have
any interest herein or any right or benefit with respect hereto. Without
limiting the generality of the foregoing clause (ii), any Secured Party may
assign or otherwise transfer any indebtedness held by it secured by this
Agreement to any other Person, and such other Person shall thereupon become
vested with all the benefits in respect thereof granted to such Secured Party,
herein or otherwise, subject however, to the provisions of the Indenture.
Section 23. Joinder of Affiliates. Each Affiliate of the
Issuer which from time to time after the initial date of this Agreement is
required under the Indenture to pledge any assets to the Trustee for its bene-
<PAGE> 157
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fit and the benefit of the other Secured Parties may become a party hereto upon
execution and delivery to the Trustee of a joinder agreement substantially in
the form attached hereto as Exhibit 3, and upon such execution and delivery
shall be deemed to be a "Guarantor" and a "Pledgor" for all purposes hereunder.
Section 24. GOVERNING LAW, TERMS. THIS AGREEMENT SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, EXCLUDING (TO THE GREATEST EXTENT PERMITTED BY LAW) ANY
RULE OF LAW THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION
OTHER THAN THE STATE OF NEW YORK, AND EXCEPT TO THE EXTENT THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT
OF ANY PARTICULAR PLEDGED COLLATERAL, ARE GOVERNED BY THE LAWS OF A JURISDICTION
OTHER THAN THE STATE OF NEW YORK.
Section 25. CONSENT TO JURISDICTION AND SERVICE OF PROCESS,
WAIVER OF JURY TRIAL. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PLEDGOR WITH
RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE SUPREME COURT OF THE STATE OF
NEW YORK SITTING IN NEW YORK COUNTY, THE COURTS OF THE UNITED STATES OF AMERICA
FOR THE SOUTHERN DISTRICT OF NEW YORK AND APPELLATE COURTS OF ANY THEREOF, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PLEDGOR ACCEPTS FOR ITSELF AND
IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND IRREVOCABLY AGREES TO BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT,
SUBJECT TO THE RIGHT OF SUCH PLEDGOR TO SEEK APPELLATE RELIEF. EACH PLEDGOR
AGREES THAT SERVICE OF PROCESS IN ANY PROCEEDING MAY BE EFFECTED BY MAILING A
COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM
OF MAIL), POSTAGE PREPAID, TO SUCH PLEDGOR AT ITS ADDRESS SET FORTH IN THE
INDENTURE OR AT SUCH OTHER ADDRESS OF WHICH THE COLLATERAL AGENT SHALL HAVE BEEN
NOTIFIED PURSUANT THERETO. IF ANY AGENT APPOINTED BY ANY PLEDGOR REFUSES TO
ACCEPT SERVICE, SUCH PLEDGOR HEREBY AGREES THAT SERVICE UPON IT BY MAIL SHALL
CONSTITUTE SUFFICIENT NOTICE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE
COLLATERAL AGENT TO BRING PROCEEDINGS AGAINST ANY PLEDGOR IN THE COURTS OF ANY
OTHER JURISDICTION. EACH PLEDGOR HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 26. Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 27. Execution in Counterparts. This Agreement and any
amendments, waivers, consents or supplements hereto may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original,
but all such counterparts together shall constitute one and the same agreement.
Section 28. Obligations Absolute. All obligations of each
Pledgor hereunder shall be absolute and unconditional irrespective of:
<PAGE> 158
-30-
(i) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of any Pledgor;
(ii) any lack of validity or enforceability of the Indenture,
or any Security Document, or any other agreement or instrument relating
thereto;
(iii) any change in the time, manner or place of payment of,
or in any other term of, all or any of the Secured Obligations, or any
other amendment or waiver of or any consent to any departure from the
Indenture, or any other Security Document, or any other agreement or
instrument relating thereto;
(iv) any pledge, exchange, release or non-perfection of any
other collateral, or any release or amendment or waiver of or consent
to any departure from any guarantee, for all or any of the Secured
Obligations;
(v) any exercise, non-exercise or waiver of any right, remedy,
power or privilege under or in respect of this Agreement, the Indenture
or any Security Document except as specifically set forth in a waiver
granted pursuant to the provisions of Section 19 hereof; or
(vi) any other circumstances which might otherwise constitute
a defense (other than the defense of payment and performance of the
Secured Obligations) available to, or a discharge of, any Pledgor.
Section 29. Trustee's Right to Sever Indebtedness. (a) Each
Pledgor acknowledges that (i) the Pledged Collateral does not constitute the
sole source of security for the payment and performance of the Secured
Obligations and that the Secured Obligations may also secured by other types of
property of the Pledgors in other jurisdictions (all such property,
collectively, the "Collateral"), (ii) the number of such jurisdictions and the
nature of the transaction of which this instrument is a part are such that it
would have been impracticable for the parties to allocate to each item of
Collateral a specific loan amount and to execute in respect of such item a
separate agreement and (iii) each Pledgor intends that the Trustee have the same
rights with respect to the Pledged Collateral, in any judicial proceeding
relating to the exercise of any right or remedy hereunder or otherwise, that the
Trustee would have had if each item of Collateral had been pledged or encumbered
pursuant to a separate indenture and security instrument. In furtherance of such
intent, each Pledgor agrees to the greatest extent permitted by law that the
Trustee may at any time by notice (an "Allocation Notice") to such Pledgor
allocate a portion of the Secured Obligations (the "Allocated Indebtedness") to
all or a specified portion of the Pledged Collateral and sever from the
remaining Secured Obligations the Allocated Indebtedness. From and after the
giving of an Allocation Notice with respect to any of the Pledged Collateral,
the Secured Obligations hereunder shall be limited to the extent set forth in
the Allocation Notice and (as so limited) shall, for all purposes, be construed
as a separate obligation of such Pledgor unrelated to the other transactions
contemplated by the Indenture, any Security Document or any document related to
any thereof. To the extent that the proceeds of any judicial proceeding relating
to the exercise of any right or remedy hereunder of the Pledged Collateral shall
exceed the Allocated Indebtedness, such proceeds shall belong to such Pledgor
and shall not be available hereunder to satisfy any Secured Obligations of such
Pledgor other than the Allocated Indebtedness. In any action or proceeding to
exercise any right or remedy under this Agreement which is commenced after the
giving by the Trustee of an Allocation Notice, the Allocation Notice shall be
conclusive proof of the limits of the Secured Obligations hereby secured, and
such Pledgor may introduce, by way of defense or counterclaim, evidence thereof
in any such action or proceeding. Notwithstanding any provision of this Section
29, the proceeds received by
<PAGE> 159
-31-
the Trustee pursuant to this Agreement shall be applied by the Trustee in
accordance with the provisions of Section 13 hereof.
(b) Each Pledgor hereby waives to the greatest extent
permitted under law the right to a discharge of any of the Secured Obligations
under any statute or rule of law now or hereafter in effect which provides that
the exercise of any particular right or remedy as provided for herein (by
judicial proceedings or otherwise) constitutes the exclusive means for
satisfaction of the Secured Obligations or which makes unavailable any further
judgment or any other right or remedy provided for herein because the Trustee
elected to proceed with the exercise of such initial right or remedy or because
of any failure by the Trustee to comply with laws that prescribe conditions to
the entitlement to such subsequent judgment or the availability of such
subsequent right or remedy. In the event that, notwithstanding the foregoing
waiver, any court shall for any reason hold that such subsequent judgment or
action is not available to the Trustee, no Pledgor shall (i) introduce in any
other jurisdiction any judgment so holding as a defense to enforcement against
such Pledgor of any remedy in the Indenture or any Security Document or (ii)
seek to have such judgment recognized or entered in any other jurisdiction, and
any such judgment shall in all events be limited in application only to the
state or jurisdiction where rendered and only with respect to the collateral
referred to in such judgment.
(c) In the event any instrument in addition to the Allocation
Notice is necessary to effectuate the provisions of this Section 29, including,
without limitation, any amendment to this Agreement, any substitute promissory
note or affidavit or certificate of any kind, the Trustee may execute and
deliver such instrument as the attorney-in-fact of any Pledgor. Such power of
attorney is coupled with an interest and is irrevocable.
(d) Notwithstanding anything set forth herein to the contrary,
the provisions of this Section 29 shall be effective only to the maximum extent
permitted by law.
Section 30. Future Advances. This Agreement shall secure the
payment of any amounts advanced from time to time pursuant to the Indenture.
<PAGE> 160
IN WITNESS WHEREOF, the Pledgors and the Trustee have caused this Agreement
to be duly executed and delivered by their duly authorized officers as of the
date first above written.
METAL MANAGEMENT, INC.
By:
--------------------------------------
Name:
Title:
AEROSPACE METALS, INC.
AMERICAN SCRAP PROCESSING, INC.
C SHREDDING CORP.
CALIFORNIA METALS RECYCLING, INC.
CIM TRUCKING, INC.
COMETCO CORP.
COZZI BUILDING CORPORATION
COZZI IRON & METAL, INC.
EMCO TRADING, INC.
FERREX TRADING CORPORATION
FIRMA, INC.
FIRMA PLASTIC CO., INC.
FPX, INC.
HOUSTON COMPRESSED STEEL CORP.
HOUTEX METALS COMPANY, INC.
THE ISAAC CORPORATION
P. JOSEPH IRON & METAL, INC.
KANKAKEE SCRAP CORPORATION
KIMERLING ACQUISITION CORP.
MACLEOD METALS CO.
METAL MANAGEMENT ARIZONA, INC.
METAL MANAGEMENT GULF COAST, INC.
METAL MANAGEMENT PITTSBURGH, INC.
METAL MANAGEMENT REALTY, INC.
MICHAEL SCHIAVONE & SONS, INC.
NAPORANO IRON & METAL CO.
NEWELL RECYCLING WEST, INC.
NIMCO SHREDDING CO.
138 SCRAP, INC.
PERLCO, L.L.C.
PROLER SOUTHWEST INC.
PROLER STEELWORKS L.L.C.
R&P HOLDINGS, INC.
SALT RIVER RECYCLING, L.L.C.
SCRAP PROCESSING, INC.
TORRINGTON SCRAP COMPANY
TROJAN TRADING, INC.
<PAGE> 161
-33-
USA SOUTHWESTERN CARRIER, INC.
By:
--------------------------------------
Name:
Title:
RESERVE IRON & METAL LIMITED PARTNERSHIP
By: P. JOSEPH IRON & METAL, INC.,
its general partner
By:
--------------------------------------
Name:
Title:
HARRIS TRUST AND SAVINGS BANK, as Trustee
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
<PAGE> 162
SCHEDULE I-A
Initial Pledged Shares
Pledgor:
------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE OF
ALL ISSUED
CAPITAL OR
NUMBER OTHER EQUITY
CLASS CERTIFICATE OF INTERESTS OF
ISSUER OF STOCK NO(S). SHARES ISSUER
- ------ -------- ----------- ------ -------------
<S> <C> <C> <C> <C>
</TABLE>
Note: A separate sheet should be used for each Pledgor pledging shares.
<PAGE> 163
SCHEDULE I-B
Initial Pledged Interests
Pledgor:
-----------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE OF
ALL ISSUED
CAPITAL OR
TYPE NUMBER OTHER EQUITY
OF CERTIFICATE OF INTERESTS OF
ISSUER INTEREST NO(S). SHARES ISSUER
- ------ -------- ----------- ------ -------------
<S> <C> <C> <C> <C>
</TABLE>
Note: A separate sheet should be used for each Pledgor pledging notes.
<PAGE> 164
SCHEDULE II
Initial Patents
Pledgor:
------------------------------------
Registrations:
<TABLE>
<CAPTION>
REGISTRATION REGISTRATION
NUMBER DATE COUNTRY DESCRIPTION
<S> <C> <C> <C>
</TABLE>
Applications:
<TABLE>
<CAPTION>
APPLICATION APPLICATION
NUMBER DATE COUNTRY DESCRIPTION
<S> <C> <C> <C>
</TABLE>
Note: A separate sheet should be used for each Pledgor pledging Patents.
<PAGE> 165
SCHEDULE III
Initial Trademarks
Pledgor:
------------------------------------
Registrations:
<TABLE>
<CAPTION>
REGISTRATION REGISTRATION
NUMBER DATE COUNTRY DESCRIPTION
<S> <C> <C> <C>
</TABLE>
Applications:
<TABLE>
<CAPTION>
APPLICATION APPLICATION
NUMBER DATE COUNTRY DESCRIPTION
<S> <C> <C> <C>
</TABLE>
<PAGE> 166
SCHEDULE IV
Initial Licenses
Pledgor:
----------------------------------
<PAGE> 167
ANNEX A
Locations of Pledgors
Chief Executive Tax ID
Pledgor Office Number Other Locations
- ------- --------------- ------ ---------------
Note: A separate sheet should be used for each Pledgor pledging
Financial Accounts.
<PAGE> 168
EXHIBIT 1
Form of Issuer Acknowledgment
The undersigned hereby (i) acknowledges receipt of a copy of that certain
security agreement (as amended, amended and restated, supplemented or otherwise
modified from time to time, the "Agreement"; capitalized terms used herein but
not defined herein have the meanings given such terms in the Agreement), dated
as of , among (the "Issuer"), the Guarantors from time to time
party thereto and , as collateral agent (in such capacity and together
with any successors in such capacity, the "Trustee"), (ii) agrees promptly to
note on its books the security interests granted and confirmed under the
Agreement, (iii) agrees that, subject to the rights, if any, of the Senior Bank
Agent under the Senior Credit Facility, it will comply with instructions of the
Trustee with respect to the applicable Securities Collateral without further
consent by the applicable Pledgor, (iv) agrees to notify the Trustee upon
obtaining knowledge of any interest in favor of any Person in the applicable
Securities Collateral that is adverse to the interest of the Trustee therein
(other than interests in favor of the Senior Bank Agent) and (v) subject to the
rights, if any, of the Senior Bank Agent under the Senior Credit Facility,
waives any right or requirement at any time hereafter to receive a copy of the
Agreement in connection with the registration of any Securities Collateral
thereunder in the name of the Trustee or its nominee or the exercise of voting
rights by the Trustee or its nominee.
[_______________]
By:
-------------------------
Name:
Title:
<PAGE> 169
EXHIBIT 2
Form of Securities Pledge Amendment
PLEDGE AMENDMENT
This Pledge Amendment, dated , is delivered pursuant
to Section 8 of the Agreement referred to below. The undersigned hereby agrees
that this Pledge Amendment may be attached to the Security Agreement, dated as
of , among the undersigned, certain other Pledgors and ,
as the Trustee (the "Agreement"; capitalized terms used herein and not defined
shall have the meanings assigned to them in the Agreement) and that the Pledged
Securities listed on this Pledge Amendment shall be deemed to be and shall
become part of the Pledged Collateral and shall secure all Secured Obligations.
-------------------------------
as Pledgor
By:
---------------------------
Name:
Title:
Pledged Securities
<TABLE>
<CAPTION>
PERCENTAGE OF ALL
NUMBER ISSUED CAPITAL OR
CLASS PAR CERTIFICATE OF OTHER EQUITY
ISSUER OF STOCK VALUE NO(S). SHARES INTERESTS OF ISSUER
<S> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 170
EXHIBIT 3
Form of Joinder Agreement
[Name of New Pledgor]
[Address of New Pledgor]
[Date]
_____________________________________ ,
as Trustee
_____________________________________
_____________________________________
Attention:___________________________
Ladies and Gentlemen:
Reference is made to the Security Agreement (the "Agreement"), dated as
of ________________, made by _____________________ (the "Issuer"), each of the
Guarantors listed on the signature pages thereto or from time to time party
thereto by execution of a joinder agreement and __________________, as
collateral agent for the Secured Parties. Capitalized terms used herein but not
otherwise defined herein have the meanings given such terms in the Agreement.
This letter supplements the Agreement and is delivered by the
undersigned, ___________________ (the "New Pledgor"), pursuant to Section 23 of
the Agreement. The New Pledgor hereby agrees to be bound as a Guarantor and as
a Pledgor by all of the terms, covenants and conditions set forth in the
Agreement to the same extent that it would have been bound if it had been a
signatory to the Agreement on the execution date of the Agreement. The New
Pledgor hereby makes each of the representations and warranties and agrees to
each of the covenants applicable to the Pledgors contained in the Agreement.
Attached hereto are supplements to each of the schedules and annexes to
the Agreement with respect to the New Pledgor. Such supplements shall be deemed
to be part of the Agreement.
This agreement and any amendments, waivers, consents or supplements
hereto may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed to be an original, but all such counterparts together shall
constitute one and the same agreement.
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, EXCLUDING (TO THE
GREATEST EXTENT PERMITTED BY LAW) ANY RULE OF LAW THAT WOULD CAUSE THE
APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
<PAGE> 171
-2-
IN WITNESS WHEREOF, the New Pledgor has caused this Agreement to be
executed and delivered by its duly authorized officer as of the date first above
written.
[NEW PLEDGOR]
By:_______________________________________
Name:
Title:
AGREED TO AND ACCEPTED:
__________________________________ ,
as Trustee
By: ______________________________
Name:
Title:
[Schedules and Annexes to be attached]
<PAGE> 1
EXHIBIT 4.2
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
Dated as of May 7, 1999
by and among
Metal Management, Inc.,
as Issuer,
Aerospace Metals, Inc., American Scrap Processing, Inc., C
Shredding Corp., California Metals Recycling, Inc., CIM Trucking, Inc., Cometco
Corp., Cozzi Building Corporation, Cozzi Iron & Metal, Inc., EMCO Trading, Inc.,
Ferrex Trading Corporation, FPX, Inc., Firma, Inc., Firma Plastic Co., Inc.,
Houston Compressed Steel Corp., HouTex Metals Company, Inc., The Isaac
Corporation, P. Joseph Iron & Metal, Inc., Kankakee Scrap Corporation, Kimerling
Acquisition Corp., MacLeod Metals Co., Metal Management Arizona, Inc., Metal
Management Gulf Coast, Inc., Metal Management Pittsburgh, Inc., Metal Management
Realty, Inc., Michael Schiavone & Sons, Inc., Naporano Iron & Metal Co., Newell
Recycling West, Inc., NIMCO Shredding Co., 138 Scrap Acquisition Corp., PerlCo,
L.L.C., Proler Southwest Inc., Proler Steelworks L.L.C., R&P Holdings, Inc.,
Reserve Iron & Metal Limited Partnership, Salt River Recycling, L.L.C., Scrap
Processing, Inc., Torrington Scrap Company, Trojan Trading Co., USA Southwestern
Carriers, Inc.,
as Guarantors,
and
BT Alex. Brown Incorporated,
as Initial Purchaser
<PAGE> 2
-2-
This Exchange and Registration Rights Agreement (this
"Agreement") is made and entered into as of May 7, 1999, by and among Metal
Management, Inc., (the "Company"); Aerospace Metals, Inc., American Scrap
Processing, Inc., C Shredding Corp., California Metals Recycling, Inc., CIM
Trucking, Inc., Cometco Corp., Cozzi Building Corporation, Cozzi Iron & Metal,
Inc., EMCO Trading, Inc., Ferrex Trading Corporation, FPX, Inc., Firma, Inc.,
Firma Plastic Co., Inc., Houston Compressed Steel Corp., HouTex Metals Company,
Inc., The Isaac Corporation, P. Joseph Iron & Metal, Inc., Kankakee Scrap
Corporation, Kimerling Acquisition Corp., MacLeod Metals Co., Metal Management
Arizona, Inc., Metal Management Gulf Coast, Inc., Metal Management Pittsburgh,
Inc., Metal Management Realty, Inc., Michael Schiavone & Sons, Inc., Naporano
Iron & Metal Co., Newell Recycling West, Inc., NIMCO Shredding Co., 138 Scrap
Acquisition Corp., PerlCo, LLC., Proler Southwest Inc., Proler Steelworks
L.L.C., R & P Holdings, Inc., Reserve Iron & Metal Limited Partnership, Salt
River Recycling L.L.C., Scrap Processing, Inc., Torrington Scrap Company, Trojan
Trading Co. and USA Southwestern Carriers, Inc. (each a "Subsidiary Guarantor"
and collectively, the "Guarantors"); and BT Alex. Brown Incorporated (the
"Initial Purchaser"), who has agreed to purchase the Company's 12 3/4% Senior
Secured Notes due 2004 (the "Secured Notes") pursuant to the Purchase Agreement
dated May 5, 1999 (the "Purchase Agreement"), by and among the Company, the
Subsidiary Guarantors and the Initial Purchaser. In order to induce the Initial
Purchaser to purchase the Secured Notes, the Company and the Subsidiary
Guarantors have agreed to provide the exchange and registration rights set forth
in this Agreement. The execution and delivery of this Agreement is a condition
to the obligations of the Initial Purchaser set forth in Section 7 of the
Purchase Agreement. The parties hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following capitalized terms
shall have the following meanings:
Act: The Securities Act of 1933, as amended.
Business Day: Any day, except a Saturday, Sunday or other day
in The City of New York, or in the city of the Corporate Trust Office (as
defined in the Indenture) of the Trustee, on which banks are authorized to
close.
Broker-Dealer: Any broker or dealer registered under the
Exchange Act.
Broker-Dealer Transfer Restricted Securities: Exchange Notes
that are acquired by a Broker-Dealer in the Exchange Offer in exchange for
Secured Notes that such Broker-Dealer acquired for its own account as a result
of market-making activities or other trading
<PAGE> 3
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activities (other than Secured Notes acquired directly from the Company or any
of its affiliates).
Closing Date: The date hereof.
Commission: The Securities and Exchange Commission.
Consummate: An Exchange Offer shall be deemed "Consummated"
for purposes of this Agreement upon the occurrence of (a) the filing and
declaration of effectiveness under the Act of the Exchange Offer Registration
Statement relating to the Exchange Notes to be issued in the Exchange Offer and
the related Guarantees, (b) the maintenance of such Registration Statement
continuously effective and the keeping of the Exchange Offer open for a period
not less than the minimum period required pursuant to Section 3(b) hereof and
(c) the delivery by the Company to the registrar under the Indenture of Exchange
Notes in the same aggregate principal amount as the aggregate principal amount
of Secured Notes tendered by Holders thereof pursuant to the Exchange Offer and
the issuance of the related Guarantees by the Subsidiary Guarantors.
Damages Payment Date: With respect to the Secured Notes, each
Interest Payment Date.
Definitive Notes: As defined in the Indenture.
Effectiveness Target Date: As defined in Section 5.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Notes: The Company's 12 3/4% Senior Secured Notes due
2004 to be issued pursuant to the Indenture in the Exchange Offer that are
identical in all material respects to the Notes initially issued on the Closing
Date (other than that there shall be no restrictive legends thereon and such
Exchange Notes shall be registered under the Act) and entitled to the benefits
of the Indenture.
Exchange Offer: The registration by the Company and the
Guarantors under the Act of the Exchange Notes and the related Guarantees
pursuant to the Exchange Offer Registration Statement pursuant to which the
Company shall offer the Holders of all outstanding Transfer Restricted
Securities the opportunity to exchange all such outstanding Transfer Restricted
Securities for Exchange Notes in an aggregate principal amount equal to the
aggregate principal amount of the Transfer Restricted Securities tendered in
such exchange offer by such Holders.
<PAGE> 4
-4-
Exchange Offer Registration Statement: The Registration
Statement relating to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial
Purchaser proposes to sell the Secured Notes (i) to certain "qualified
institutional buyers," as such term is defined in Rule 144A under the Act,
and/or (ii) in one or more offshore transactions complying with Rule 903 or 904
of Regulation S under the Act.
Global Note Holder: As defined in the Indenture.
Guarantees: The guarantees of the Notes to be issued by the
Guarantors pursuant to the Indenture.
Holders: As defined in Section 2(b) hereof.
Indenture: The Indenture, dated as of the Closing Date, among
the Company, the Subsidiary Guarantors and Harris Trust and Savings Bank, as
trustee (the "Trustee"), pursuant to which the Notes and the Guarantees are to
be issued, as such Indenture is amended or supplemented from time to time in
accordance with the terms thereof.
Interest Payment Date: As defined in the Indenture and the
Notes.
NASD: National Association of Securities Dealers, Inc.
Notes: The Secured Notes, the Exchange Notes and the Private
Exchange Notes.
Person: An individual, partnership, limited liability company,
corporation, trust, unincorporated organization or a government or agency or
political subdivision thereof.
Private Exchange: As defined in Section 3(d) hereof.
Private Exchange Notes: As defined in Section 3(d) hereof.
Prospectus: The prospectus included in a Registration
Statement at the time such Registration Statement is declared effective, as
amended or supplemented by any prospectus supplement and by all other amendments
thereto, including post-effective amendments, and all material incorporated by
reference into such Prospectus.
Record Holder: With respect to any Damages Payment Date, each
Person who is a Holder of Notes on the record date with respect to the Interest
Payment Date on which such Damages Payment Date shall occur.
<PAGE> 5
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Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the
Company and the Guarantors relating to (a) an offering of Exchange Notes
pursuant to an Exchange Offer or (b) the registration for resale of Transfer
Restricted Securities and the related Guarantees pursuant to the Shelf
Registration Statement, in each case, (i) which is filed pursuant to the
provisions of this Agreement and (ii) including the Prospectus included therein,
all amendments and supplements thereto (including post-effective amendments) and
all exhibits and material incorporated by reference therein.
Restricted Broker-Dealer: Any Broker-Dealer that holds
Broker-Dealer Transfer Restricted Securities.
Security Documents: As defined in the Indenture.
Shelf Registration Statement: As defined in Section 4 hereof.
TIA: The Trust Indenture Act of 1939, as in effect on the date
of the Indenture.
Transfer Restricted Securities: Each Note until (i) the date
on which such Note has been exchanged by a Person other than a Broker-Dealer for
an Exchange Note in the Exchange Offer so long as such Exchange Note may be
resold by such Person without restriction under federal and state securities
laws, (ii) following the exchange by a Broker-Dealer in the Exchange Offer of a
Note for an Exchange Note, the date on which such Exchange Note is sold to a
purchaser who receives from such Broker-Dealer on or prior to the date of such
sale a copy of the Prospectus contained in the Exchange Offer Registration
Statement, (iii) the date on which such Note has been effectively registered
under the Act and disposed of in accordance with the Shelf Registration
Statement or (iv) the date on which such Note is distributed to the public
pursuant to Rule 144 under the Act under circumstances in which any legend borne
by such Note relating to restriction of transferability thereof, under the Act
or otherwise, is removed by the Company or pursuant to the Indenture.
Underwritten Registration or Underwritten Offering: A
registration in which securities of the Company are sold to an underwriter for
reoffering to the public.
2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities. The securities
entitled to the benefits of this Agreement are the Transfer Restricted
Securities.
<PAGE> 6
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(b) Holders of Transfer Restricted Securities. A Person
is deemed to be a holder of Transfer Restricted Securities (each, a "Holder")
whenever such Person owns Transfer Restricted Securities.
3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by
applicable federal law (after the procedures set forth in Section 6(a) below
have been complied with), the Company and the Guarantors shall (i) cause to be
filed with the Commission on or prior to 90 days after the Closing Date, the
Exchange Offer Registration Statement, (ii) use their respective commercially
reasonable efforts to cause such Exchange Offer Registration Statement to be
declared effective on or prior to 180 days after the Closing Date (which 180-day
period shall be extended for a number of days equal to the number of Business
Days, if any, that the Commission is officially closed during such period),
(iii) in connection with the foregoing, (A) file all pre-effective amendments to
such Exchange Offer Registration Statement as may be necessary in order to cause
such Exchange Offer Registration Statement to become effective, (B) file, if
applicable, a post-effective amendment to such Exchange Offer Registration
Statement pursuant to Rule 430A under the Act and (C) cause all necessary
filings, if any, in connection with the registration and qualification of the
Exchange Notes and the related Guarantees to be made under the Blue Sky laws of
such jurisdictions as are necessary to permit Consummation of the Exchange Offer
and (iv) upon the effectiveness of such Exchange Offer Registration Statement,
commence and Consummate the Exchange Offer. The Exchange Offer Registration
Statement shall be on the appropriate form promulgated by the Commission under
the Act permitting registration of the Exchange Notes and the related Guarantees
to be offered in exchange for the Secured Notes that are Transfer Restricted
Securities and the related Guarantees and to permit sales of Broker-Dealer
Transfer Restricted Securities by Restricted Broker-Dealers as contemplated by
Section 3(c) below.
(b) The Company and the Guarantors shall use their
respective commercially reasonable efforts to cause the Exchange Offer
Registration Statement to be effective continuously, and shall keep the Exchange
Offer open for a period of not less than the minimum period required under
applicable federal and state securities laws to Consummate the Exchange Offer;
provided, however, that in no event shall such period be less than 25 Business
Days. Additionally, the Company and the Guarantors shall keep the Exchange Offer
Registration effective for the period required under Section 3(c) hereof, if
required to do so pursuant to the provisions herein. The Company and the
Guarantors shall cause the Exchange Offer to comply with all applicable federal
and state securities laws. No securities other than the Exchange Notes and the
related Guarantees shall be included in the Exchange Offer Registration
Statement. The Company and the Guarantors shall use their respective
commercially reasonable efforts to cause the Exchange Offer to be Consummated on
or prior to 25 Business Days after date the Exchange Offer Registration
Statement has become effective.
<PAGE> 7
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(c) The Company shall include a "Plan of Distribution"
section in the Prospectus contained in the Exchange Offer Registration Statement
which is reasonably acceptable to the Initial Purchaser (the costs, if any,
associated with such Initial Purchaser's review to be borne by the Initial
Purchaser) and indicate therein that any Restricted Broker-Dealer who holds
Secured Notes that are Transfer Restricted Securities and that were acquired for
the account of such Broker-Dealer as a result of market-making activities or
other trading activities may exchange such Secured Notes (other than Transfer
Restricted Securities acquired directly from the Company or any affiliate of the
Company) pursuant to the Exchange Offer; however, such Broker-Dealer may be
deemed to be an "underwriter" within the meaning of the Act and must, therefore,
deliver a prospectus meeting the requirements of the Act in connection with its
initial sale of each Exchange Note received by such Broker-Dealer in the
Exchange Offer, which prospectus delivery requirement may be satisfied by the
delivery by such Broker-Dealer of the Prospectus contained in the Exchange Offer
Registration Statement. Such "Plan of Distribution" section shall also contain
all other information with respect to such sales of Broker-Dealer Transfer
Restricted Securities by Restricted Broker-Dealers that the Commission may
require in order to permit such sales pursuant thereto, but such "Plan of
Distribution" shall not name any such Broker-Dealer or disclose the amount of
Notes held by any such Broker-Dealer, except to the extent required by the
Commission.
The Company and the Guarantors shall use their respective
commercially reasonable efforts to keep the Exchange Offer Registration
Statement continuously effective, supplemented and amended as required by the
provisions of Section 6(c) below to the extent necessary to ensure that it is
available for sales of Broker-Dealer Transfer Restricted Securities by
Restricted Broker-Dealers, and to ensure that such Registration Statement
conforms with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time for a
period of one year from the date on which the Exchange Offer is declared
effective.
The Company and the Guarantors shall provide sufficient copies
of the latest version of the Prospectus included in the Exchange Offer
Registration Statement to such Restricted Broker-Dealers promptly upon request
at any time during such one-year period in order to facilitate such sales.
(d) If, prior to Consummation of the Exchange Offer, the
Initial Purchaser holds any Secured Notes acquired by them that have the status
of an unsold allotment in the initial distribution, the Company upon the request
of the Initial Purchaser shall simultaneously with the delivery of the Exchange
Notes issue and deliver to the Initial Purchaser, in exchange (the "Private
Exchange") for such Notes held by the Initial Purchaser, a like principal amount
of notes (the "Private Exchange Notes") of the Company, guaranteed by the
Guarantors, that are identical in all material respects to the Exchange Notes
except for the placement of a restrictive legend on such Private Exchange Notes.
The Private Exchange Notes shall be issued
<PAGE> 8
-8-
pursuant to the same indenture as the Exchange Notes and bear the same CUSIP
number as the Exchange Notes. The Exchange Notes, the Private Exchange Notes and
the Secured Notes shall all be treated as one class (for voting, consenting and
otherwise) under the Indenture.
(e) Interest on the Exchange Notes and the Private
Exchange Notes will accrue (A) from the last Interest Payment Date on which
interest was paid on the Secured Notes surrendered in exchange therefor or (B)
if no interest has been paid on the Secured Notes, from the Closing Date.
(f) Upon consummation of the Exchange Offer in accordance
with this Section 3, the provisions of this Agreement shall continue to apply,
mutatis mutandis, solely with respect to Transfer Restricted Securities that are
Private Exchange Notes, Exchange Notes held by Broker-Dealers and Transfer
Restricted Securities as to which Section 4(a)(iii) or (iv) apply and the
Company and the Guarantors shall have no further obligation to register Transfer
Restricted Securities pursuant to Section 4 hereof.
4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Company is not
permitted to Consummate the Exchange Offer because the Exchange Offer is not
permitted by applicable law or Commission policy (after the procedures set forth
in Section 6(a) below have been complied with), (ii) the Exchange Offer is not
Consummated on or prior to the 25th Business Day after the day which is 180 days
after the Closing Date (the "Target Date"), (iii) any Holder of Transfer
Restricted Securities shall notify the Company within 10 Business Days following
the Consummation of the Exchange Offer that (A) such Holder was prohibited by
law or Commission policy from participating in the Exchange Offer or (B) such
Holder may not resell the Exchange Notes acquired by it in the Exchange Offer to
the public without delivering a prospectus and the Prospectus contained in the
Exchange Offer Registration Statement is not appropriate or available for such
resales by such Holder or (C) such Holder is a Broker-Dealer and holds Secured
Notes acquired directly from the Company or one of its affiliates or (iv) the
Holders of not less than a majority in aggregate principal amount of the
Transfer Restricted Securities shall notify the Company that they reasonably
determine that the interests of the Holders would be adversely affected by
Consummation of the Exchange Offer, then the Company and the Guarantors shall
(x) use their respective best efforts to cause to be filed on or prior to (I) 90
days after the date on which the Company determines that it is not permitted to
file the Exchange Offer Registration Statement pursuant to clause (i) above,
(II) 90 days after the Target Date, if the Exchange Offer has not been
Consummated on or prior to the Target Date pursuant to clause (ii) above or
(III) 90 days after the date on which the Company receives the notice specified
in clauses (iii) or (iv) above, a shelf registration statement pursuant to Rule
415 under the Act (which may be an amendment to the Exchange Offer Registration
Statement) (in any case, the "Shelf Registration Statement") relating to all
Transfer Restricted
<PAGE> 9
-9-
Securities the Holders of which shall have provided the information required
pursuant to Section 4(b) hereof and shall (y) use their respective commercially
reasonable efforts to cause such Shelf Registration Statement to become
effective as promptly as possible, but in no event later than 180 days after the
date on which the Company becomes obligated to file such Shelf Registration
Statement. The Company and the Guarantors shall use their respective
commercially reasonable efforts to keep such Shelf Registration Statement
continuously effective, supplemented and amended as required by and subject to
the provisions of Sections 6(b) and (c) hereof to the extent necessary to ensure
that it is available for sales of Transfer Restricted Securities by the Holders
thereof entitled to the benefit of this Section 4(a) and to ensure that it
conforms with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time for a
period of at least two years following the Closing Date or such shorter period
that will terminate when all Transfer Restricted Securities covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement; provided, however, the Shelf Registration Statement shall be extended
to permit Broker-Dealers to comply with prospectus delivery requirements as
provided herein.
(b) Provision by Holders of Certain Information in
Connection with the Shelf Registration Statement. No Holder of Transfer
Restricted Securities may include any of its Transfer Restricted Securities in
any Shelf Registration Statement pursuant to this Agreement unless and until
such Holder furnishes to the Company in writing, within 10 Business Days after
receipt of a request therefor, such information specified in item 507 of
Regulation S-K under the Act for use in connection with any Shelf Registration
statement or Prospectus or preliminary Prospectus included therein. Each Holder
as to which any Shelf Registration Statement is being effected agrees to furnish
promptly to the Company all information so required to be disclosed in order to
make the information previously furnished to the Company by such Holder not
materially misleading. No Holder as to which any Shelf Registration Statement is
being effected shall be entitled to the benefits of Section 5 below unless it
has complied with its obligations under this Section 4(b).
5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement
is not filed with the Commission on or prior to the date specified for such
filing in this Agreement, (ii) any such Registration Statement has not been
declared effective by the Commission on or prior to the date specified for such
effectiveness in this Agreement (the "Effectiveness Target Date"), (iii) the
Exchange Offer has not been Consummated within 25 Business Days after the
Effectiveness Target Date with respect to the Exchange Offer Registration
Statement or (iv) subject to the provisions of Section 6(d) below, any
Registration Statement required by this Agreement is filed and declared
effective but shall thereafter cease to be effective during the period required
pursuant to the applicable provisions of this Agreement or fail to be usable for
its in-
<PAGE> 10
-10-
tended purpose without being succeeded immediately by a post-effective amendment
to such Registration Statement that cures such failure and that is itself
declared effective immediately (each such event referred to in clauses (i)
through (iv), a "Registration Default"), then the Company and the Guarantors
hereby jointly and severally agree to pay liquidated damages to each Holder of
Transfer Restricted Securities affected by such Registration Default with
respect to the first 90-day period immediately following the occurrence of such
Registration Default, in an amount equal to $.05 per week per $1,000 principal
amount of Transfer Restricted Securities affected by such Registration Default
held by such Holder for each week or portion thereof that the Registration
Default continues. The amount of the liquidated damages shall increase by an
additional $.05 per week per $1,000 in principal amount of Transfer Restricted
Securities affected by such Registration Default with respect to each subsequent
90-day period until all Registration Defaults have been cured, up to a maximum
amount of liquidated damages of $.50 per week per $1,000 principal amount of
Transfer Restricted Securities. All accrued Liquidated Damages will be paid by
the Company in cash on each Damages Payment Date to the Global Note Holder (and
any Holder of Definitive Notes who has given wire transfer instructions to the
Company prior to the Damages Payment Date) by wire transfer of immediately
available funds and to all other Holders of Definitive Notes by mailing checks
to their registered addresses. Following the cure of all Registration Defaults
relating to any particular Transfer Restricted Securities, the accrual of
liquidated damages with respect to such Transfer Restricted Securities will
cease.
All obligations of the Company and the Guarantors set forth in
the preceding paragraph that are outstanding with respect to any Transfer
Restricted Security at the time such security ceases to be a Transfer Restricted
Security shall survive until such time as all such obligations with respect to
such security shall have been satisfied in full.
6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection
with the Exchange Offer, the Company and the Guarantors shall comply with all
applicable provisions of Section 6(c) below, shall use their respective
commercially reasonable efforts to effect such exchange and to permit the sale
of Broker-Dealer Transfer Restricted Securities being sold in accordance with
the intended method or methods of distribution thereof, and shall comply with
all of the following provisions:
(i) If, following the date hereof there has been
promulgated a change in Commission policy with respect to
exchange offers such as the Exchange Offer, such that in the
reasonable opinion of counsel to the Company the Exchange
Offer is not permitted by applicable federal law, the Company
and the Guarantors hereby agree to seek a no-action letter or
other favorable decision from the Commission allowing the
Company and the Guarantors to Consummate an Exchange Offer for
such Secured
<PAGE> 11
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Notes. The Company and the Guarantors hereby agree to pursue
the issuance of such a decision to the Commission staff level,
but shall not be required to take commercially unreasonable
action to obtain such no-action letter or favorable decision.
In connection with the foregoing, the Company and the
Guarantors hereby agree to take all such other actions as are
reasonably requested by the Commission or otherwise reasonably
required in connection with the issuance of such decision,
including, without limitation, (A) participating in telephonic
conferences with the Commission, (B) delivering to the
Commission staff an analysis prepared by counsel to the
Company setting forth the legal bases, if any, upon which such
counsel believes that such an Exchange Offer should be
permitted and (C) diligently pursuing a resolution by the
Commission staff of such submission.
(ii) As a condition to its participation in the
Exchange Offer pursuant to the terms of this Agreement, each
Holder of Transfer Restricted Securities shall furnish, upon
the request of the Company, prior to the Consummation of the
Exchange Offer, a written representation to the Company and
the Guarantors (which may be contained in the letter of
transmittal contemplated by the Exchange Offer Registration
Statement) to the effect that (A) it is not an affiliate of
the Company or, if it is an affiliate of the Company, it will
comply with the registration and prospectus delivery
requirements of the Act to the extent applicable, (B) it is
not engaged in, and does not intend to engage in, and has no
arrangement or understanding with any Person to participate
in, a distribution of the Exchange Notes to be issued in the
Exchange Offer, (C) it is acquiring the Exchange Notes in its
ordinary course of business and (D) if it is a Broker-Dealer
holding Secured Notes acquired for its own account as a result
of market-making activities or other trading activities, then
it will deliver a prospectus meeting the requirements of the
Act in connection with any resale of Exchange Notes received
in respect of such Secured Notes pursuant to the Exchange
Offer; provided, however, that by so representing and by
delivering a prospectus, such Broker-Dealer will not be deemed
to admit that it is an "underwriter" of the Notes within the
meaning of the Act. Each Holder hereby acknowledges and agrees
that any Broker-Dealer and any such Holder using the Exchange
Offer to participate in a distribution of the securities to be
acquired in the Exchange Offer (1) could not under Commission
policy as in effect on the date of this Agreement rely on the
position of the Commission enunciated in Morgan Stanley & Co.
Incorporated (available June 5, 1991) and Exxon Capital
Holdings Corporation (available May 13, 1988), as interpreted
in the Commission's letter to Shearman & Sterling dated July
2, 1993, and similar no-action letters (including, if
applicable, any no-action letter obtained pursuant to clause
(i) above), and (2) must comply with the registration and
prospectus delivery requirements of the Act in connection with
a secondary resale transaction and that such a secondary
resale transaction must be covered by an effective
registration statement containing required
<PAGE> 12
-12-
information with respect to the selling securityholder if the
resales are of Exchange Notes obtained by such Holder in
exchange for Secured Notes acquired by such Holder directly
from the Company or an affiliate thereof or as a result of
market-making activities or other trading activities.
(iii) In connection with the Exchange Offer, the
Company and the Guarantors shall: (1) mail, or cause to be
mailed, to each Holder entitled to participate in the Exchange
Offer a copy of the Prospectus forming part of the Exchange
Registration Statement, together with an appropriate letter of
transmittal and related documents; (2) utilize the services of
a depositary for the Exchange Offer with an address in the
Borough of Manhattan, The City of New York; (3) permit Holders
to withdraw tendered Secured Notes at any time prior to the
close of business, New York time, on the last Business Day on
which the Exchange Offer shall remain open; and (4) otherwise
comply in all material respects with all applicable laws,
rules and regulations.
As soon as practicable after the close of the Exchange Offer
or the Private Exchange, as the case may be, the Company shall: (1) accept for
exchange all Secured Notes properly tendered and not validly withdrawn pursuant
to the Exchange Offer or the Private Exchange; (2) deliver to the Trustee for
cancellation all Secured Notes so accepted for exchange; and (3) cause the
Trustee to authenticate and deliver promptly to each Holder of Secured Notes,
Exchange Notes or Private Exchange Notes, as the case may be, equal in principal
amount to the Secured Notes of such Holder so accepted for exchange.
(b) Shelf Registration Statement. In connection with any Shelf
Registration Statement required to be filed by the Company and the Guarantors,
the Company and the Guarantors shall comply with all the provisions of Section
6(c) below and shall use their respective commercially reasonable efforts to
effect such registration to permit the sale of the Transfer Restricted
Securities being sold in accordance with the intended method or methods of
distribution thereof (as indicated in the information furnished to the Company
pursuant to Section 4(b) hereof), and pursuant thereto the Company and the
Guarantors will prepare and file with the Commission a Registration Statement
relating to the registration on any appropriate form under the Act, which form
shall be available for the sale of the Transfer Restricted Securities in
accordance with the intended method or methods of distribution thereof within
the time periods and otherwise in accordance with the provisions hereof. The
Company shall not permit any securities other than the Transfer Restricted
Securities to be included in the Shelf Registration Statement.
(c) General Provisions. In connection with any Registration
Statement and any related Prospectus required by this Agreement to permit the
sale or resale of Transfer Restricted Securities (including, without limitation,
any Exchange Offer Registration Statement
<PAGE> 13
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and the related Prospectus, to the extent that the same are required to be
available to permit sales of Broker-Dealer Transfer Restricted Securities by
Restricted Broker-Dealers), the Company and the Guarantors shall:
(i) use their respective commercially reasonable
efforts to keep such Registration Statement continuously
effective and provide all requisite financial statements
(including, if required by the Act or any regulation
thereunder, financial statements of any Guarantor) for the
period specified in Section 3 or 4 of this Agreement, as
applicable. Upon the occurrence of any event that would cause
any such Registration Statement or the Prospectus contained
therein (A) to contain a material misstatement or omission or
(B) not to be effective and usable for resale of Transfer
Restricted Securities during the period required by this
Agreement, the Company and the Guarantors shall file promptly
an appropriate amendment to such Registration Statement, (1)
in the case of clause (A), correcting any such misstatement or
omission and (2) in the case of clauses (A) and (B), use their
respective commercially reasonable efforts to cause such
amendment or Registration Statement to be declared effective
and such Registration Statement and the related Prospectus to
become usable for their intended purpose(s) as soon as
practicable thereafter.
(ii) prepare and file with the Commission such
amendments to the Registration Statement as may be necessary
to keep the Registration Statement effective for the
applicable period set forth in Section 3 or 4 of this
Agreement, as applicable or such shorter period as will
terminate when all Transfer Restricted Securities covered by
such Registration Statement have been sold; cause the
Prospectus to be supplemented by any required Prospectus
supplement and, as so supplemented, filed pursuant to Rule 424
under the Act, and to comply fully with Rules 424, 430A and
462, as applicable, under the Act in a timely manner; and
comply with the provisions of the Act with respect to the
disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the
intended method or methods of distribution by the sellers
thereof set forth in such Registration Statement or supplement
to the Prospectus;
(iii) advise the Trustee and, if requested,
confirming such advice in writing, when the Prospectus or any
Prospectus supplement or post-effective amendment has been
filed and, with respect to any Registration Statement or any
post-effective amendment thereto, when the same has become
effective; and advise the underwriter(s), if any, and selling
Holders promptly and, if requested by such Persons, confirming
such advice in writing, (A) of any request by the Commission
for any post-effective amendment to the Registration Statement
or any amendment or supplement to the Prospectus, (B) of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement under the Act or
of the suspension by
<PAGE> 14
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any state securities commission of the qualification of the
Transfer Restricted Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for any of
the preceding purposes or (C) of the happening of any event or
the existence of any state of facts that makes any statement
of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto or any
document incorporated by reference therein untrue (which has
not been corrected by the filing of a document incorporated by
reference therein), or that requires the making of any
additions to or changes in the Registration Statement in order
to make the statements therein not misleading, or that
requires the making of any additions to or changes in the
Prospectus in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. If at anytime the Commission shall issue any stop
order suspending the effectiveness of the Registration
Statement under the Act, or any state securities commission or
other regulatory authority shall issue an order suspending the
qualification or exemption from qualification of the Transfer
Restricted Securities under state securities or Blue Sky laws,
the Company and the Guarantors shall use their respective
commercially reasonable efforts to obtain the withdrawal or
lifting of such order at the earliest possible time;
(iv) furnish to each selling Holder specifically
named in any Registration Statement or Prospectus and each of
the underwriter(s) in connection with such sale, if any, on or
before filing with the Commission, copies of any Registration
Statement or any Prospectus included therein or any amendments
or supplements to any such Registration Statement or
Prospectus (including all documents incorporated by reference
after the initial filing of such Registration Statement),
which documents will be subject to the review and comment of
such Holders and underwriter(s) in connection with such sale,
if any, for a period of at least five Business Days, and the
Company will not file any such Registration Statement or
Prospectus or any amendment or supplement to any such
Registration Statement or Prospectus (including all such
documents incorporated by reference) to which such selling
Holders of the Transfer Restricted Securities covered by such
Registration Statement or the underwriter(s) in connection
with such sale, if any, shall reasonably object within five
Business Days after the receipt thereof;
(v) promptly prior to the filing of any document that
is to be incorporated by reference into a Shelf Registration
Statement or related Prospectus, provide copies of such
document to each selling Holder specifically named therein and
to the underwriter(s) in connection with such sale, if any,
make the Company's and the Guarantors' representatives
available for discussion of such document and other customary
due diligence matters, and include such information in such
document prior to the filing thereof as such selling Holders
or underwriter(s), if any, reasonably may request;
<PAGE> 15
-15-
(vi) make available at reasonable times for
inspection by any Restricted Broker-Dealers, any selling
Holders named in any Shelf Registration Statement, any
underwriter participating in any disposition pursuant to such
Registration Statement and any attorney or accountant retained
by such selling Holders, Restricted Broker-Dealers or any of
such underwriter(s) all relevant financial and other records,
pertinent corporate documents and properties of the Company
and the Guarantors and cause the Company's and the Guarantors'
officers, directors and employees to supply all relevant
information reasonably requested by any such Holder,
Restricted Broker-Dealer, underwriter, attorney or accountant
in connection with such Registration Statement or any
post-effective amendment thereto subsequent to the filing
thereof and prior to its effectiveness;
(vii) if requested by any selling Holders named in
any Shelf Registration Statement or the underwriter(s) in
connection with such sale, if any, promptly include in any
such Registration Statement or Prospectus, pursuant to a
supplement or post-effective amendment if necessary, such
information as such selling Holders and underwriter(s), if
any, may reasonably request to have included therein relating
to such Holders and underwriter(s), if any, and the
disposition of the related Transfer Restricted Securities,
including, without limitation, information relating to the
"Plan of Distribution" of the Transfer Restricted Securities,
information with respect to the principal amount of Transfer
Restricted Securities being sold to such underwriter(s), the
purchase price being paid therefor and any other terms of the
offering of the Transfer Restricted Securities to be sold in
such offering; and make all required filings of such
Prospectus supplement or post-effective amendment as soon as
practicable after the Company is notified of the matters to be
included in such Prospectus supplement or post-effective
amendment;
(viii) deliver to each selling Holder and each of the
underwriter(s) in connection with such sale, if any, without
charge, as many copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement
thereto as such Persons reasonably may request in writing; the
Company and the Guarantors hereby consent to the use of any
preliminary prospectus, the Prospectus and any amendment or
supplement thereto by each of the selling Holders and each of
the underwriter(s), if any, in connection with the offering
and the sale of the Transfer Restricted Securities covered by
the Prospectus or any amendment or supplement thereto but only
in a manner consistent with the matters set forth under "Plan
of Distribution" therein;
(ix) enter into such agreements (including, in the
case of an Underwritten Registration, an underwriting
agreement) and make such representations and warranties and
take all such other actions in connection therewith in order
to expedite or fa-
<PAGE> 16
-16-
cilitate the disposition of the Transfer Restricted Securities pursuant
to any Registration Statement contemplated by this Agreement as may be
reasonably requested by any Holder of Transfer Restricted Securities or
underwriter in connection with any sale or resale pursuant to any
Registration Statement contemplated by this Agreement, and in such
connection, whether or not an underwriting agreement is entered into
and whether or not the registration is an Underwritten Registration,
the Company and the Guarantors shall upon request:
(A) furnish to each selling Holder specifically named in any
Shelf Registration Statement and each underwriter, if any, in such
substance and scope as they may reasonably request and (in the case of
any Underwritten Registration) as are customarily made by issuers to
underwriters in primary underwritten offerings, upon the effectiveness
of any Shelf Registration Statement and to any Restricted Broker-Dealer
who so requests upon Consummation of the Exchange Offer:
(1) a certificate, dated the date of Consummation of
the Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, signed on behalf
of the Company and each Guarantor by (x) the Chief Executive
Officer, the President or any Vice President and (y) a
principal financial or accounting officer of the Company and
such Guarantor, confirming, as of the date thereof, the
matters set forth in subsection (h) of Section 7 of the
Purchase Agreement, as the same apply to any Registration
Statement or Prospectus and the other matters addressed in
such subsection, and such other similar matters as such
Holders, underwriter(s) and/or Restricted Broker-Dealers may
reasonably request;
(2) opinions, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, of counsel for the
Company and the Guarantors covering matters similar to those
set forth in subsections (a) and (b) of Section 7 of the
Purchase Agreement, as the same apply to any Registration
Statement or Prospectus and the other matters addressed in
such subsections, and such other matters as such Holders,
underwriter(s) and/or Restricted Broker-Dealers may reasonably
request, and
(3) a customary comfort letter, dated as of the date
of effectiveness of the Shelf Registration Statement or the
date of Consummation of the Exchange Offer, as the case may
be, from the Company's
<PAGE> 17
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and the Guarantors' independent accountants, in the customary
form and covering matters of the type customarily covered in
comfort letters to underwriters in connection with primary
underwritten offerings, and affirming the matters set forth in
the comfort letters delivered pursuant to subsection (e) of
Section 7 of the Purchase Agreement, without exception, as the
same apply to any Registration Statement or Prospectus and the
other matters addressed in such subsection;
(B) set forth in full or incorporate by reference in the
underwriting agreement, if any, in connection with any sale or resale
pursuant to any Shelf Registration Statement relating to an
Underwritten Offering the indemnification provisions and procedures of
Section 8 hereof with respect to all parties to be indemnified pursuant
to said Section; and
(C) deliver such other documents and certificates as may
be reasonably requested by the selling Holders specifically named in
any Shelf Registration Statement, the underwriter(s), if any, and
Restricted Broker-Dealers, if any, to evidence compliance with clause
(A) above and with any customary conditions contained in any
underwriting agreement or other agreement entered into by the Company
and the Guarantors pursuant to this clause (ix). The above shall be
done at each closing under such underwriting or similar agreement, as
and to the extent required thereunder, and if at any time the
representations and warranties of the Company and the Guarantors
contemplated in (A)(1) above cease to be true and correct, the Company
and the Guarantors shall so advise the underwriter(s), if any, the
selling Holders and any Restricted Broker-Dealer promptly and, if
requested by such Persons, shall confirm such advice in writing;
(x) prior to any public offering of Transfer Restricted Securities,
cooperate with the selling Holders, the underwriter(s), if any, and their
respective counsel in connection with the registration and qualification of the
Transfer Restricted Securities under the securities or Blue Sky laws of such
jurisdictions as the selling Holders or underwriter(s), if any, may request and
do any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Transfer Restricted Securities covered
by the applicable Registration Statement; provided, however, that neither the
Company nor any Guarantor shall be required to register or qualify as a foreign
corporation where it is not now so qualified or to take any action that would
subject it to the service of process in suits or to taxation, other than as to
matters and transactions relating to the Registration Statement, in any
jurisdiction where it is not now so subject;
<PAGE> 18
-18-
(xi) issue, upon the request of any Holder of Secured Notes
covered by any Shelf Registration Statement contemplated by this
Agreement and the surrender for cancellation of the Secured Notes held
by such Holder, Exchange Notes having an aggregate principal amount
equal to the aggregate principal amount of Secured Notes surrendered to
the Company by such Holder in exchange therefor or being sold by such
Holder; such Exchange Notes to be registered in the name of such Holder
or in the name of the purchaser(s) of such Notes, as the case may be;
(xii) in connection with any sale of Transfer Restricted
Securities that will result in such securities no longer being Transfer
Restricted Securities (other than with respect to the consummation of
the Exchange Offer), cooperate with the selling Holders and the
underwriter(s), if any, to facilitate the timely preparation and
delivery of certificates representing Transfer Restricted Securities to
be sold and not bearing any restrictive legends; and to register such
Transfer Restricted Securities in such denominations and such names as
the Holders or the underwriter(s), if any, may request at least two
Business Days prior to such sale of Transfer Restricted Securities;
(xiii) use their respective commercially reasonable efforts to
cause the disposition of the Transfer Restricted Securities covered by
the Registration Statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to
enable the seller or sellers thereof or the underwriter(s), if any, to
consummate the disposition of such Transfer Restricted Securities;
(xiv) if any fact or event contemplated by Section
6(c)(iii)(C) above shall exist or have occurred, prepare a supplement
or post-effective amendment to the Registration Statement or related
Prospectus or any document incorporated therein by reference or file
any other required document so that, as thereafter delivered to the
purchasers of Transfer Restricted Securities, the Prospectus will not
contain 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 we remade, not misleading;
(xv) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of a Registration
Statement covering such Transfer Restricted Securities and provide the
Trustee under the Indenture with printed certificates for the Transfer
Restricted Securities which are in a form eligible for deposit with The
Depository Trust Company;
(xvi) cooperate and assist in any filings required to be made
with the NASD and in the performance of any due diligence investigation
by any underwriter (including any "qualified independent underwriter")
that is required to be retained in
<PAGE> 19
-19-
accordance with the rules and regulations of the NASD, and use their
respective commercially reasonable efforts to cause such Registration
Statement to become effective and approved by such governmental
agencies or authorities as may be necessary to enable the Holders
selling Transfer Restricted Securities to consummate the disposition of
such Transfer Restricted Securities;
(xvii) otherwise use their respective commercially reasonable
efforts to comply with all applicable rules and regulations of the
Commission and make generally available to its security holders with
regard to any applicable Registration Statement, a consolidated
earnings statement meeting the requirements of Rule 158 covering a
twelve-month period beginning after the effective date of the
Registration Statement (as such term is defined in paragraph (c) of
Rule 158 under the Act);
(xviii) cause the Indenture to be qualified under the TIA not
later than the effective date of the first Registration Statement
required by this Agreement and, in connection therewith, cooperate with
the Trustee and the Holders of Notes to effect such changes to the
Indenture as may be required for such Indenture to be so qualified in
accordance with the terms of the TIA; and execute, and use its
commercially reasonable efforts to cause the Trustee to execute, all
documents that may be required to effect such changes and all other
forms and documents required to be filed with the Commission to enable
such Indenture to be so qualified in a timely manner; and
(xix) provide promptly to each Holder upon request each
document filed with the Commission pursuant to the requirements of
Section 13 or Section 15(d) of the Exchange Act.
(d) Restrictions on Holders. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of any notice from the Company
of the happening of any event or the existence of any state of facts of the kind
described in Section 6(c)(iii)(C) hereof, such Holder will forthwith discontinue
disposition of Transfer Restricted Securities pursuant to the applicable
Registration Statement until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 6(c)(xiv) hereof, or
until it is advised in writing by the Company (the "Advice") that the use of the
Prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the Prospectus. If so
directed by the Company, each Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of any such notice. In the
event the Company shall give any such notice, the time period regarding the
effectiveness of such Registration Statement set forth in Section 3 or 4 hereof,
as applicable, shall be extended by the number of days during the period from
and including the date of the giving of such notice pursuant to Section
<PAGE> 20
-20-
6(c)(iii)(C) hereof to and including the date when each selling Holder covered
by such Registration Statement shall have received the copies of the
supplemented or amended Prospectus contemplated by Section 6(c)(xiv) hereof or
shall have received the Advice.
7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's and the Guarantors'
performance of or compliance with this Agreement will be borne by the Company
and the Guarantors, regardless of whether a Registration Statement becomes
effective, including, without limitation: (i) all registration and filing fees
and expenses (other than filings made by the Initial Purchaser or any Holder
with the NASD and, if applicable, the fees and expenses of any "qualified
independent underwriter" and its counsel that may be required by the rules and
regulations of the NASD); (ii) all fees and expenses of compliance with federal
securities and state Blue Sky or securities laws; (iii) all expenses of printing
(including printing certificates for the Exchange Notes to be issued in the
Exchange Offer and printing of Prospectuses), messenger and delivery services
and telephone; (iv) all fees and disbursements of counsel for the Company, the
Guarantors and, subject to Section 7(b) below, the Holders of Transfer
Restricted Securities; (v) all application and filing fees in connection with
causing the Notes to be eligible for the PORTAL trading system of the National
Association of Securities Dealers, Inc.; and (vi) all fees and disbursements of
independent certified public accountants of the Company and the Guarantors
(including the expenses of any special audit and comfort letters required by or
incident to such performance).
The Company will, in any event, bear its and the Guarantors' internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expenses of
any annual audit and the fees and expenses of any Person, including special
experts, retained by the Company or the Guarantors.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company and the Guarantors
will reimburse the Initial Purchaser and the Holders of Transfer Restricted
Securities being tendered in the Exchange Offer and/or resold pursuant to the
"Plan of Distribution" contained in the Exchange Offer Registration Statement or
registered pursuant to the Shelf Registration Statement, as applicable, for the
reasonable fees and disbursements of not more than one counsel chosen by the
Holders of a majority in principal amount of the Transfer Restricted Securities
for whose benefit such Registration Statement is being prepared.
<PAGE> 21
-21-
8. INDEMNIFICATION
(a) The Company and the Guarantors will, jointly and
severally, indemnify and hold harmless each Holder against any losses,
claims, damages, liabilities or expenses, joint or several, to which it
may become subject, under the Act or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect
thereof) (i) arise out of or are based upon an untrue statement or
alleged untrue statement of material fact contained in any Registration
Statement or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a
material fact necessary to make the statements therein not misleading
or (ii) arise out of or are based upon an untrue statement or alleged
untrue statement of material fact contained in any preliminary
Prospectus or Prospectus or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to
state therein a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, and will reimburse each Holder for any legal or other
expenses reasonably incurred by it in connection with investigating or
defending any such action or claim as such expenses are incurred;
provided, however, that neither the Company nor any of the Guarantors
shall be liable in any such case to the extent that any such loss,
claim, damage, liability or expenses arise out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in any Registration Statement, preliminary Prospectus or
Prospectus, or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company or any of
the Guarantors by or on behalf of any of the Holders expressly for
inclusion therein.
(b) Each Holder and each underwriter named in any underwriting
agreement entered into in connection with an Underwritten Offering
will, severally and not jointly, indemnify and hold harmless the
Company and the Guarantors against any losses, claims, damages,
liabilities or expenses to which the Company or any of the Guarantors
may become subject, under the Act or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect
thereof) (i) arise out of or are based upon an untrue statement or
alleged untrue statement of material fact contained in any Registration
Statement or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a
material fact necessary to make the statements therein not misleading
or (ii) arise out of or are based upon an untrue statement or alleged
untrue statement of material fact contained in any preliminary
Prospectus or Prospectus or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to
state therein a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or
alleged omission was made in any Registration Statement, preliminary
Prospectus or Prospectus, or any
<PAGE> 22
-22-
such amendment or supplement, in reliance upon and in conformity with
written information furnished to the Company or any of the Guarantors
by such Holder or such underwriter expressly for use therein; and will
reimburse the Company and the Guarantors for any legal or other
expenses reasonably incurred by the Company or the Guarantors in
connection with investigating or defending any such action or claim as
such expenses are incurred. The liability of any Person under this
paragraph shall in no event exceed the proceeds received by such Person
from sales of Transfer Restricted Securities or Exchange Notes giving
rise to such obligations.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action
or proceeding (including any governmental or regulatory investigation)
such indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party shall not relieve it from
any liability which it may have to any indemnified party otherwise than
under such subsection. In case any such action shall be brought against
any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall
not, except with the consent of the indemnified party, be counsel to
the indemnifying party), and, after notice from the indemnifying party
to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified
party under such subsection for any legal expenses of other counsel or
any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without
the written consent of the indemnified party, effect the settlement or
compromise of, or consent to the entry of any judgment with respect to,
any pending or threatened action or claim in respect of which
indemnification or contribution may be sought thereunder unless such
settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such
action or claim and (ii) does not include a statement as to, or an
admission of, fault, culpability or a failure to act, by or on behalf
of any indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party
under subsection (a) or (b) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative fault of the
Company and the Guarantors, on the one hand, and of such Holder, on the
other, in connection with the
<PAGE> 23
-23-
statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative fault shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by
the Company and the Guarantors, on the one hand, or the Holders, on the
other, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Company, the Guarantors and each Holder agree that it
would not be just and equitable if contribution pursuant to this
subsection (d) were determined by pro rata allocation (even if the
Holders were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable
considerations referred to above in this subsection (d). The amount
paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred
to above in this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8(d), no Holder shall be
required to contribute any amount in excess of the amount by which the
dollar amount of the proceeds received by such Holder from the sale of
any Transfer Restricted Securities (after deducting any fees, discounts
and commissions applicable thereto) exceeds the amount of any damages
which such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission, and
no underwriter shall be required to contribute any amount in excess of
the amount by which the total price at which the Transfer Restricted
Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such
underwriter has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. The
Holders' and any underwriters' obligations in this Section 8(d) to
contribute shall be several in proportion to the respective principal
amounts of Transfer Restricted Securities held or underwritten, as the
case may be, by them and not joint. 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.
(e) The obligations of the Company and the Guarantors under
this Section 8 shall be in addition to any liability that the Company
and the Guarantors may otherwise have and shall extend, upon the same
terms and conditions, to each officer, director and partner of each
Holder, agent and underwriter, if any, and each Person, if any, who
controls any Holder, agent or underwriter within the meaning of the
Act; and the obligations of the Holders and any underwriters
contemplated by this Section 8 shall be in addition to any liability
which the respective Holder or underwriter may otherwise have and shall
extend, upon the same terms and conditions, to each officer and
director of the Company or any Guarantor and to
<PAGE> 24
-24-
each Person, if any, who controls the Company or any Guarantor within the
meaning of the Act.
9. RULE 144A
The Company and the Guarantors hereby agree and
covenant that it will file reports required to be filed by it under the Act and
the Exchange Act and the rules and regulations thereunder in a timely manner in
accordance with the requirements of the Act and the Exchange Act. The Company
and the Guarantors hereby agree with each Holder, for so long as any Transfer
Restricted Securities remain outstanding and during any period during which the
Company or any Guarantor is not subject to Section 13 or 15(d) of the Exchange
Act, to make available, upon request of any Holder of Transfer Restricted
Securities, to any Holder or beneficial owner of Transfer Restricted Securities
in connection with any sale thereof and any prospective purchaser of such
Transfer Restricted Securities designated by such Holder or beneficial owner,
the information required by Rule 144A(d)(4) under the Act in order to permit
resales of such Transfer Restricted Securities pursuant to Rule 144A.
10. UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten
Registration hereunder unless such Holder (a) agrees to sell such Holder's
Transfer Restricted Securities on the basis provided in customary underwriting
arrangements entered into in connection therewith and (b) completes and executes
all reasonable questionnaires, powers of attorney and other documents required
under the term of such underwriting arrangements.
11. SELECTION OF UNDERWRITERS
For any Underwritten Offering, the investment banker
or investment bankers and manager or managers for any Underwritten Offering that
will administer such offering will be selected by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities included in
such offering; provided, that such investment bankers and managers must be
reasonably satisfactory to the Company. Such investment bankers and managers are
referred to herein as the "underwriters." Neither the Company nor any Guarantor
shall be liable for the payment of any underwriting fee or commission in
connection with any Underwritten Offering.
12. MISCELLANEOUS
(a) Remedies. Each Holder, in addition to being
entitled to exercise all rights provided herein, in the Indenture, the Purchase
Agreement, Security Documents or granted by law, including recovery of
liquidated or other damages, will be entitled to specific
<PAGE> 25
-25-
performance of its rights under this Agreement. The Company and the Guarantors
agree that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by them of the provisions of this Agreement and
hereby agree to waive the defense in any action for specific performance that a
remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither the Company
nor any Guarantor will, on or after the date of this Agreement, enter into any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with the rights granted to the holders of
the Company's and the Guarantors' securities under any agreement in effect on
the date hereof.
(c) Adjustments Affecting the Notes. Neither the
Company nor any Guarantor will take any action intended to materially and
adversely affect the ability of the Holders to Consummate any Exchange Offer.
(d) Amendments and Waivers. The provisions of this
Agreement may not be amended, modified or supplemented, and waivers or consents
to or departures from the provisions hereof may not be given, unless (i) in the
case of Section 5 hereof and this Section 12(d)(i), the Company has obtained the
written consent of Holders of all outstanding Transfer Restricted Securities and
(ii) in the case of all other provisions hereof, the Company has obtained the
written consent of Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities. Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof that relates exclusively to the
rights of Holders whose securities are being tendered pursuant to the Exchange
Offer and that does not affect, directly or indirectly, the rights of other
Holders whose securities are not being tendered pursuant to such Exchange Offer
may be given by the Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities subject to such Exchange Offer.
(e) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by hand-delivery,
first-class mail (registered or certified, return receipt requested), telex,
telecopier or air courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth
on the records of the Registrar under the Indenture,
with a copy to the Registrar under the Indenture; and
(ii) if to the Company or the Guarantors:
c/o Metal Management, Inc.
500 N. Dearborn Street Suite 405
<PAGE> 26
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Chicago, IL 60610
Telecopier No.: (312) 645-0714
Attention: T. Benjamin Jennings, Chief Executive Officer
David A. Carpenter, General Counsel
With a copy to:
Mayer, Brown & Platt
190 S. LaSalle Street, Suite 3100
Chicago, IL 60603
Telecopier No.: (312) 701-7711
Attention: Paul W. Theiss, Esq.
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if mailed;
when receipt acknowledged orally by recipient, if telecopied; and on the next
business day, if timely delivered to an air courier guaranteeing overnight
delivery.
Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the Trustee at
the address specified in the Indenture.
(f) 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 limitation, and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities.
(g) 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.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to the conflict of laws rules thereof. Each of the parties hereto agrees to
submit to the non-exclusive jurisdiction of the courts of the State of New York
in any action or proceeding arising out of or relating to this Agreement.
<PAGE> 27
-27-
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby and the
parties hereto shall use their best efforts to find and employ alternative means
to achieve the same or substantially the same result as that contemplated by
such provision.
(k) Entire Agreement. Except as to those matters governed,
expressly as set forth herein, by the Indenture, the Security Documents or the
Purchase Agreement, this Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings other than those set forth or referred to herein with
respect to the exchange and registration rights granted with respect to the
Transfer Restricted Securities. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
(l) Securities Held by Any of the Company or Any Guarantor or
Any of Their Respective Affiliates. Whenever the consent or approval of Holders
of a specified percentage of Transfer Restricted Securities is required
hereunder, Transfer Restricted Securities held by the Company or any Guarantor
or any of their respective affiliates (as such term is defined in Rule 405 under
the Securities Act) shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage.
(m) Subsidiary Guarantor a Party. Immediately upon the
designation of any subsidiary of the Company as a Guarantor under the Indenture,
the Company shall cause such subsidiary to become a party hereto as a Guarantor
by executing and delivering to the Initial Purchaser a counterpart hereof.
(n) Third Party Beneficiary. Each Holder shall be a third
party beneficiary of the agreements made hereunder between the Company and the
Guarantors, on the one hand, and the Initial Purchaser, on the other hand, and
shall have the right to enforce such agreements directly to the extent it deems
such enforcement necessary or advisable to protect its rights or the rights of
Holders hereunder.
<PAGE> 28
-28-
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
METAL MANAGEMENT, INC.
By:/s/ David A. Carpenter
------------------------------------------
Name: David A. Carpenter
Title: Vice President, General Counsel
and Secretary
AEROSPACE METALS, INC.
AMERICAN SCRAP PROCESSING, INC.
C SHREDDING CORP.
CALIFORNIA METALS RECYCLING, INC.
CIM TRUCKING, INC.
COMETCO CORP.
COZZI BUILDING CORPORATION
COZZI IRON & METAL, INC.
EMCO TRADING, INC.
FERREX TRADING CORPORATION
FPX, INC.
FIRMA, INC.
FIRMA PLASTIC CO., INC.
HOUSTON COMPRESSED STEEL CORP.
HOUTEX METALS COMPANY, INC.
THE ISAAC CORPORATION
P. JOSEPH IRON & METAL, INC.
KANKAKEE SCRAP CORPORATION
KIMERLING ACQUISITION CORP.
MAC LEOD METALS CO.
METAL MANAGEMENT ARIZONA, INC.
METAL MANAGEMENT GULF COAST, INC.
METAL MANAGEMENT PITTSBURGH, INC.
METAL MANAGEMENT REALTY, INC.
MICHAEL SCHIAVONE & SONS, INC.
NAPORANO IRON & METAL CO.
NEWELL RECYCLING WEST, INC.
NIMCO SHREDDING CO.
138 SCRAP, INC.
PERLCO, L.L.C.
<PAGE> 29
-29-
PROLER SOUTHWEST INC.
PROLER STEELWORKS L. L. C.
R&P HOLDINGS, INC.
SALT RIVER RECYCLING, L.L.C.
SCRAP PROCESSING, INC.
TORRINGTON SCRAP COMPANY
TROJAN TRADING CO.
USA SOUTHWESTERN CARRIER, INC.
By:/s/ David A. Carpenter
------------------------------------------
Name: David A. Carpenter
Title: Vice President
RESERVE IRON & METAL LIMITED PARTNERSHIP
By: P. JOSEPH IRON & METAL, INC.,
its general partner
By:/s/ David A. Carpenter
------------------------------------------
Name: David A. Carpenter
Title: Vice President
<PAGE> 30
-30-
BT ALEX. BROWN INCORPORATED
By: /s/ Paul Higbee
------------------------------
Name: Paul Higbee
Title: Managing Director
<PAGE> 1
EXHIBIT 10.1
AMENDMENT NO. 6
TO
CREDIT AGREEMENT
THIS AMENDMENT NO. 6 TO CREDIT AGREEMENT ("AMENDMENT") is dated as of
April 29, 1999, by and among METAL MANAGEMENT, INC., a Delaware corporation
("MTLM"), each of the corporations and other entities set forth on ANNEX 1
hereto (MTLM and each of such corporations and other entities sometimes
hereinafter are referred to individually as a "BORROWER" and collectively as
"BORROWERS"); MTLM, acting in its capacity as funds administrator for itself and
the other Borrowers (in such capacity, the "FUNDS ADMINISTRATOR"); BT COMMERCIAL
CORPORATION, a Delaware corporation (in its individual capacity, hereinafter
referred to as "BTCC") and the other financial institutions signatories hereto
as lenders (BTCC and each of such other financial institutions hereinafter are
referred to individually as a "LENDER" and collectively as "LENDERS"); and BTCC,
acting in its capacity as agent (in such capacity, hereinafter referred to as
the "AGENT") for itself and the other Lenders. Capitalized terms used herein but
not otherwise defined herein shall have the respective meanings assigned to such
terms in the Credit Agreement.
WITNESSETH:
WHEREAS, the Borrowers, the Funds Administrator, the Agent and the
Lenders have entered into that certain Credit Agreement dated as of March 31,
1998, as amended (the "CREDIT AGREEMENT"), pursuant to which the Lenders have
agreed to make certain loans and other financial accommodations to or for the
account of the Borrowers;
WHEREAS, the respective Borrowers have requested that the Agent and the
Lenders further amend the Credit Agreement in order, among other things, to
permit (A) the issuance by MTLM of second lien senior notes in an aggregate
principal amount not exceeding $30,000,000 (the "SENIOR NOTES") and (B) the
guaranty by the other Borrowers of the indebtedness evidenced by the Senior
Notes; and
WHEREAS, the Agent and the Lenders have agreed to further amend the
Credit Agreement on the terms and subject to the conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises set forth above, the
terms and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
respective parties hereto hereby agree as follows:
1. AMENDMENT TO CREDIT AGREEMENT. Effective as of the date hereof, upon
satisfaction of the conditions precedent set forth in SECTION 2 below, and in
reliance upon the representations and warranties of the respective Borrowers and
the Funds Administrator set forth herein, the Credit Agreement is hereby amended
as follows:
<PAGE> 2
1.1 The Credit Agreement is hereby amended by inserting the following
defined terms in SECTION 1.1 thereof in the appropriate alphabetical order:
OFFERING MEMORANDUM shall mean the Offering Memorandum dated
April __, 1999, previously delivered to the Agent.
PREFERRED REDEMPTION PERIOD shall mean the period commencing on
the Senior Note Issuance Date and ending on the earlier to occur of (A)
October 31, 1999 and (B) the date, if any, on which the Funds
Administrator shall request in writing that the Agent terminate the
Preferred Redemption Reserve.
PREFERRED REDEMPTION RESERVE shall mean a special reserve
established upon the written request of the Funds Administrator in an
amount specified by the Funds Administrator in such request and
maintained by Agent against the Borrowing Base at all times during the
Preferred Redemption Period, PROVIDED, that such reserve shall in no
event exceed $6,000,000 and (B) such request shall be received by the
Agent no later than the Senior Note Issuance Date.
SENIOR NOTE DOCUMENTS means, collectively, the Senior Notes,
the Senior Note Indenture and all other agreements, instruments and
documents executed and/or delivered by any Credit Party pursuant
thereto or in connection therewith.
SENIOR NOTE INDENTURE means the Indenture pursuant to which the
Senior Notes are issued, among MTLM, as issuer, the other Borrowers, as
guarantors, and Harris Trust and Savings Bank, as trustee.
SENIOR NOTES means the 12-3/4% Senior Secured Notes due 2004 of
MTLM in an aggregate original principal amount not exceeding
$30,000,000, described in the Offering Memorandum.
1.2 The Credit Agreement is hereby amended by deleting therefrom CLAUSE
(III) of the definition of the term "Change of Control" set forth in SECTION 1.1
thereof and substituting therefor the following language:
(III) any "change of control" or similar event occurs under the
Subordinated Note Indenture or Senior Note Indenture, respectively.
1.3 The Credit Agreement is hereby amended by deleting SECTION 8.3(G)
thereof in its entirety and substituting therefor the following language:
(G) (I) Indebtedness evidenced by the Subordinated Notes (and
guaranties thereof by Subsidiaries of MTLM) in an aggregate outstanding
principal amount not exceeding $300,000,000 at any time and (II)
Indebtedness evidenced by the Senior Notes (and guaranties thereof by
Subsidiaries of MTLM) in an aggregate outstanding principal amount not
exceeding $30,000,000 at any time, PROVIDED, that, except as otherwise
expressly permitted pursuant to SECTION 8.7(VI), in each case the net
proceeds thereof shall be
-2-
<PAGE> 3
deposited immediately upon receipt thereof by or for the account of
MTLM or any other Borrower into the Collection Account for application
to the outstanding principal balance of the Revolving Loans and Letter
of Credit Obligations pursuant to the terms hereof;
1.4 The Credit Agreement is hereby amended by deleting SECTION 8.3(N)
thereof in its entirety and substituting therefor the following language:
(N) initial or successive refinancings of the Indebtedness
permitted by CLAUSE (G) above, so long as (I) the aggregate outstanding
principal amount of such Indebtedness shall not exceed at any time, (X)
in the case of any such refinancing of Indebtedness evidenced by the
Subordinated Notes, $300,000,000 and (Y) in the case of any such
refinancing of Indebtedness evidenced by the Senior Notes, $30,000,000;
(II) in the case of any such refinancing of Indebtedness evidenced by
the Subordinated Notes, such Indebtedness is expressly subordinated to
the Obligations on terms substantially equivalent (or more favorable to
the Agent and the Lenders) to those set forth in the Subordinated Note
Documents; (III) each such refinancing otherwise shall be on terms and
conditions and governed by documents that are not more restrictive in
any material respect to the Consolidated Entity than the Subordinated
Note Documents and Senior Note Documents, respectively; and (IV) such
Indebtedness has a final maturity and a weighted average life to
maturity no earlier than the refinanced Indebtedness; and
1.5 The Credit Agreement is hereby amended by deleting SECTION 8.4(A)
thereof in its entirety and substituting therefor the following language:
(A) Liens granted to the Agent and Liens granted pursuant to
the Senior Note Documents in favor of the trustee under the Senior Note
Indenture, to the extent such Liens secure Indebtedness permitted
pursuant to SECTION 8.3(G)(II);
1.6 SECTION 8.7 of the Credit Agreement is hereby amended by (A)
inserting therein the following language immediately following CLAUSE (V)
thereof and (B) renumbering clause "(VI)" thereof as clause "(VII)":
(VI) so long as before and after giving effect to each such
repurchase or redemption, no Default or Event of Default shall have
occurred and be continuing:
(1) on or at any time after the date on which the proceeds
of the Senior Notes are received by or for the account of MTLM
(the "SENIOR NOTE ISSUANCE DATE"), MTLM may repurchase or redeem
shares of its convertible preferred stock having an aggregate face
amount no greater than $3,000,000 with aggregate proceeds of the
issuance of the Senior Notes not exceeding $3,750,000; and
(2) if on or prior to the Senior Note Issuance Date, the
Funds Administrator has requested the establishment by Agent of
the Preferred Redemption Reserve, at any time during the Preferred
Redemption Period, MTLM may repurchase or redeem shares of its
convertible preferred stock in addition to those repurchases and
redemptions permitted pursuant to CLAUSE (1) above, PROVIDED, that
the
-3-
<PAGE> 4
aggregate consideration for such additional repurchases and
redemptions shall not exceed the Preferred Redemption Reserve; and
1.7 The Credit Agreement is hereby amended by deleting CLAUSE (II) of
SECTION 8.11(A) thereof in its entirety and substituting therefor the following
language:
(II) the Subordinated Note Indenture and the other Subordinated Note
Documents and the Senior Note Indenture and the other Senior Note
Documents, respectively,
1.8 The Credit Agreement is hereby amended by deleting SECTION 8.12
thereof in its entirety and substituting therefor the following language:
8.12 SUBORDINATED NOTES AND SENIOR NOTES.
(A) NO CHANGE. MTLM shall not amend or otherwise
change the respective terms of any of the Subordinated Note
Documents or Senior Note Documents if such amendment change could
reasonably be expected to affect the Agent or the Lenders in any
material and adverse respect.
(B) NOTICES. MTLM shall deliver to the Agent (I) a
copy of each notice or other communication delivered by or on
behalf of such Borrower to the trustee under the Subordinated Note
Documents or Senior Note Documents, respectively, such delivery to
be made at the same time and by the same means as such notice or
other communication is delivered to such trustee, and (II) a copy
of each notice or other communication received by MTLM from such
trustee, such delivery to be made promptly after such notice or
other communication is received by such Borrower.
2. CONDITIONS PRECEDENT. This Amendment shall become effective as of
the date hereof, upon satisfaction of each of the following conditions:
(A) the Agent shall have received six (6) copies of this
Amendment, duly executed by the Majority Lenders, each of the Borrowers
and the Funds Administrator;
(B) (I) issuance of the Senior Notes shall occur no later than
May 31, 1999, (II) the respective terms and provisions of Senior Note
Documents shall be in all respects satisfactory to the Agent and (III)
the Agent shall have entered into an Intercreditor Agreement with the
trustee under the Senior Note Indenture in all respects in form and
substance satisfactory to the Agent.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS.
3.1 Each of the Borrowers and the Funds Administrator hereby
represents and warrants to the Agent and each of the Lenders that,
after giving effect to this Amendment:
-4-
<PAGE> 5
(A) All representations and warranties contained in
the Credit Agreement and the other Credit Documents are true and
correct in all material respects on and as of the date of this
Amendment, in each case as if then made, other than
representations and warranties that expressly relate solely to an
earlier date (in which case such representations and warranties
remain true and accurate on and as of such earlier date);
(B) No Default or Event of Default has occurred which
is continuing;
(C) This Amendment, and the Credit Agreement, as
amended hereby, constitute legal, valid and binding obligations of
the Borrowers and the Funds Administrator, respectively, and are
enforceable against each of the Borrowers and the Funds
Administrator in accordance with their respective terms; and
(D) The execution and delivery by the Borrowers and
the Funds Administrator of this Amendment does not require the
consent or approval of any Person, except such consents and
approvals as have been obtained.
4. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER
CREDIT DOCUMENTS.
4.1 Upon the effectiveness of this Amendment, each reference
in the Credit Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import, and each reference in each of the
other Credit Documents to the "Credit Agreement" shall in each case
mean and be a reference to the Credit Agreement as amended hereby.
4.2 Except as expressly set forth herein, (I) the execution
and delivery of this Amendment shall in no way affect any of the
respective rights, powers or remedies of the Agent or any of the
Lenders with respect to any Event of Default nor constitute a waiver of
any provision of the Credit Agreement or any of the other Credit
Documents and (II) all of the respective terms and provisions of the
Credit Agreement, the other Credit Documents and all other documents,
instruments, amendments and agreements executed and/or delivered by any
of the Borrowers and/or the Funds Administrator pursuant thereto or in
connection therewith shall remain in full force and effect and are
hereby ratified and confirmed in all respects. The execution and
delivery of this Amendment by the Agent and each of the Lenders shall
in no way obligate the Agent or any of the Lenders, at any time
hereafter, to consent to any other amendment or modification of any
term or provision of the Credit Agreement or any of the other Credit
Documents, whether of a similar or different nature.
5. GOVERNING LAW. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF
THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS AND DECISIONS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICT
OF LAWS PRINCIPLES.
-5-
<PAGE> 6
6. HEADINGS. Section headings in this Amendment are included herein
for convenience of reference only and shall not constitute a part of this
Amendment for any other pur pose.
7. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. Any such counterpart
which may be delivered by facsimile transmission shall be deemed the equivalent
of an originally signed counterpart and shall be fully admissible in any
enforcement proceedings regarding this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGES
FOLLOW]
-6-
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their proper and duly authorized officers as of
the date first set forth above.
BT COMMERCIAL CORPORATION, in its
individual capacity as a Lender and in its capacity
as Agent
By: /s/ Frank Fazio
-------------------------------
Name: Frank Fazio
-----------------------------
Title: Principal
----------------------------
HELLER FINANCIAL, INC.
By: /s/ Albert J. Forzano
-------------------------------
Name: Albert J. Forzano
-----------------------------
Title: Vice President
----------------------------
FLEET CAPITAL CORPORATION (FORMERLY
KNOWN AS SANWA BUSINESS CREDIT
CORPORATION)
By: /s/ Robert J. Lund
-------------------------------
Name: Robert J. Lund
-----------------------------
Title: Vice President
----------------------------
FLEET CAPITAL CORPORATION
By: /s/ Robert J. Lund
-------------------------------
Name: Robert J. Lund
-----------------------------
Title: Vice President
----------------------------
LASALLE NATIONAL BANK
By: /s/ Karen J. Orlich
-------------------------------
Name: Karen J. Orlich
-------------------------------
Title: Assistant Vice President
----------------------------
CONGRESS FINANCIAL CORP. (CENTRAL)
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Amendment No. 6
to Credit Agreement
<PAGE> 8
FINOVA CAPITAL CORPORATION
By: /s/ Brian Rujawitz
-----------------------------------------------
Name: Brian Rujawitz
---------------------------------------------
Title: Vice President
--------------------------------------------
NATIONAL CITY COMMERCIAL FINANCE, INC.
By: /s/ Stanley J. Gregorin, Jr.
-----------------------------------------------
Name: Stanley J. Gregorin, Jr.
---------------------------------------------
Title: Vice President
--------------------------------------------
PNC BUSINESS CREDIT
By:
-----------------------------------------------
Name:
---------------------------------------------
Title:
--------------------------------------------
IBJ WHITEHALL BUSINESS CREDIT
CORPORATION
By: /s/ John Butera
-----------------------------------------------
Name: John Butera
---------------------------------------------
Title: Vice President
--------------------------------------------
NATIONAL BANK OF CANADA
By: /s/ Jonathan Millard / Leroy A. Irvin
-----------------------------------------------
Name: Jonathan Millard / Leroy A. Irvin
---------------------------------------------
Title: Vice President / Vice President & Manager
--------------------------------------------
BANKBOSTON, N.A.
By: /s/ Marwan Isbaih
-----------------------------------------------
Name: Marwan Isbaih
---------------------------------------------
Title: Vice President
--------------------------------------------
Amendment No. 6
to Credit Agreement
<PAGE> 9
METAL MANAGEMENT, INC., a Delaware
corporation, in its individual capacity as a
Borrower and in its capacity as Funds
Administrator
By: /s/ Robert C. Larry
-----------------------------
Name: Robert C. Larry
-----------------------------
Title: Executive Vice President
-----------------------------
Amendment No. 6
to Credit Agreement
<PAGE> 10
AEROSPACE METALS, INC.
AMERICAN SCRAP PROCESSING, INC.
C SHREDDING CORP.
CALIFORNIA METALS RECYCLING, INC.
CIM TRUCKING, INC.
COMETCO CORP.
COZZI BUILDING CORPORATION
COZZI IRON & METAL, INC.
EMCO TRADING, INC.
FERREX TRADING CORPORATION
FIRMA, INC.
FIRMA PLASTIC CO., INC.
HOUSTON COMPRESSED STEEL CORP.
HOUTEX METALS COMPANY, INC.
THE ISAAC CORPORATION
P. JOSEPH IRON & METAL, INC.
KANKAKEE SCRAP CORPORATION
MAC LEOD METALS CO.
METAL MANAGEMENT ARIZONA, INC.
METAL MANAGEMENT REALTY, INC.
PROLER SOUTHWEST INC.
PROLER STEELWORKS L.L.C.
SALT RIVER RECYCLING, L.L.C.
SCRAP PROCESSING, INC.
TROJAN TRADING CO.
USA SOUTHWESTERN CARRIER, INC.
138 SCRAP ACQUISITION CORP.
R & P HOLDINGS, INC.
METAL MANAGEMENT GULF
COAST, INC.
NEWELL RECYCLING WEST, INC.
NAPORANO IRON & METAL CO.
NIMCO SHREDDING CO.
MICHAEL SCHIAVONE & SONS, INC.
TORRINGTON SCRAP COMPANY
KIMERLING ACQUISITION CORP.
METAL MANAGEMENT
PITTSBURGH, INC.
FPX, INC.
PERLCO, L.L.C.
By: /s/ Robert C. Larry
-------------------------------
Name: Robert C. Larry
-----------------------------
Title: Vice President
----------------------------
Amendment No. 6
to Credit Agreement
<PAGE> 11
RESERVE IRON & METAL LIMITED
PARTNERSHIP
By: P. JOSEPH IRON & METAL, INC., its
general partner
By: /s/ Robert C. Larry
--------------------------------------
Name: Robert C. Larry
------------------------------------
Title: Vice President
-----------------------------------
Amendment No. 6
to Credit Agreement
<PAGE> 12
ANNEX 1
TO
AMENDMENT NO. 6
DATED AS OF APRIL ___, 1999
OTHER BORROWERS
1. AEROSPACE METALS, INC.
2. AMERICAN SCRAP PROCESSING, INC.
3. C SHREDDING CORP.
4. CALIFORNIA METALS RECYCLING, INC.
5. CIM TRUCKING, INC.
6. COMETCO CORP.
7. COZZI BUILDING CORPORATION
8. COZZI IRON & METAL, INC.
9 EMCO TRADING, INC.
10. FERREX TRADING CORPORATION
11. FIRMA, INC.
12. FIRMA PLASTIC CO., INC.
13. HOUSTON COMPRESSED STEEL CORP.
14. HOUTEX METALS COMPANY, INC.
15. THE ISAAC CORPORATION
16. P. JOSEPH IRON & METAL, INC.
17. KANKAKEE SCRAP CORPORATION
18. MAC LEOD METALS CO.
19. METAL MANAGEMENT ARIZONA, INC.
20. METAL MANAGEMENT REALTY, INC.
21. PROLER SOUTHWEST INC.
22. PROLER STEELWORKS L.L.C.
23. SALT RIVER RECYCLING, L.L.C.
24. SCRAP PROCESSING, INC.
25. TROJAN TRADING CO.
26. USA SOUTHWESTERN CARRIER, INC.
27. RESERVE IRON & METAL LIMITED PARTNERSHIP
28. 138 SCRAP ACQUISITION CORP.
29. R & P HOLDINGS, INC.
30. METAL MANAGEMENT GULF COAST, INC.
31. NEWELL RECYCLING WEST, INC.
32. NAPORANO IRON & METAL CO.
33. NIMCO SHREDDING CO.
34. MICHAEL SCHIAVONE & SONS, INC.
35. TORRINGTON SCRAP COMPANY
36. KIMERLING ACQUISITION CORP.
37. METAL MANAGEMENT PITTSBURGH, INC.
38. FPX, INC.
39. PERLCO, L.L.C.
<PAGE> 1
EXHIBIT 10.2
METAL MANAGEMENT, INC.
$30,000,000
12-3/4% SENIOR SECURED NOTES DUE 2004
PURCHASE AGREEMENT
May 5, 1999
BT ALEX. BROWN INCORPORATED
One Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
Ladies and Gentlemen:
Metal Management, Inc., a Delaware corporation (the
"Company"), and the Company's subsidiaries listed on the signature pages hereof
(collectively, the "Subsidiary Guarantors") hereby confirm their agreement with
you (the "Initial Purchaser"), as set forth below.
1. The Securities. Subject to the terms and conditions herein
contained, the Company proposes to issue and sell to the Initial Purchaser
$30,000,000 aggregate principal amount of its 12-3/4% Senior Secured Notes due
2004 (the "Notes"). The Notes will be unconditionally guaranteed (collectively,
the "Guarantees") on a senior secured basis by each of the Subsidiary
Guarantors. The Notes and the Guarantees are collectively referred to herein as
the "Securities." The Securities are to be issued under an indenture (the
"Indenture") to be dated as of May 7, 1999 by and among the Company, the
Subsidiary Guarantors and Harris Trust & Savings Bank, as Trustee (the
"Trustee").
The Securities will be offered and sold to the Initial
Purchaser without being registered under the Securities Act of 1933, as amended
(the "Act"), in reliance on exemptions therefrom.
In connection with the sale of the Securities, the Company has
prepared an offering memorandum dated May 5, 1999 (the "Final Memorandum")
setting forth or including a description of the terms of the Securities, the
terms of the offering of the Securities, a description of the Company and its
sub-
<PAGE> 2
- 2 -
sidiaries and any material developments relating to the Company and the
Subsidiary Guarantors occurring after December 31, 1998. Capitalized terms used
herein and not defined shall have the meanings ascribed to such terms in the
Final Memorandum.
The Company understands that the Initial Purchaser proposes to
make an offering of the Securities only on the terms and in the manner set forth
in the Final Memorandum and Section 8 hereof as soon as the Initial Purchaser
deems advisable after this Agreement has been executed and delivered, to persons
in the United States whom the Initial Purchaser reasonably believes to be
qualified institutional buyers ("Qualified Institutional Buyers" or "QIBs") as
defined in Rule 144A under the Act, as such rule may be amended from time to
time ("Rule 144A"), and outside the United States to certain persons in reliance
on Regulation S under the Act.
The Initial Purchaser and its direct and indirect transferees
of the Securities will be entitled to the benefits of the Exchange and
Registration Rights Agreement (the "Registration Rights Agreement"), to be dated
the Closing Date (as defined in Section 3 below) pursuant to which the Company
and the Subsidiary Guarantors have agreed, among other things, to file a
registration statement (the "Registration Statement") with the Securities and
Exchange Commission (the "Commission") registering the Notes or the Exchange
Notes (as defined in the Registration Rights Agreement) under the Act.
The Initial Purchaser and its direct and indirect transferees
of the Securities will also be entitled to the benefits, and otherwise subject
to the terms, of the Security Documents (as defined in the Indenture) pursuant
to which the Company and the Subsidiary Guarantors have agreed, among other
things, to grant a second priority security interest in the Collateral (as
defined in the Indenture), subject to certain exceptions in accordance with the
terms of the Indenture and as described in the Final Memorandum.
2. Representations and Warranties. The Company and each of the
Subsidiary Guarantors, jointly and severally, represent and warrant to and agree
with the Initial Purchaser that:
(a) Neither the Final Memorandum nor any amendment or
supplement thereto as of the date thereof and at all times subsequent thereto to
the Closing Date (as defined in Section 3 below) contained or contains any
untrue statement of a material fact or omitted or omits to state a material fact
necessary to
<PAGE> 3
- 3 -
make the statements therein, in the light of the circumstances under which they
were made, not misleading, except that the representations and warranties set
forth in this Section 2(a) do not apply to statements or omissions made in
reliance upon and in conformity with information relating to the Initial
Purchaser furnished to the Company in writing by the Initial Purchaser expressly
for use in the Final Memorandum or any amendment or supplement thereto.
(b) As of December 31, 1998, the Company had the authorized,
issued and outstanding capitalization set forth in the Final Memorandum under
the caption "Capitalization" and in the financial statements and the related
notes included in the Final Memorandum; all of the subsidiaries of the Company,
direct or indirect, are listed in Schedule 1 attached hereto (each, a
"Subsidiary" and collectively, the "Subsidiaries"); all of the outstanding
shares of capital stock of the Company and the Subsidiaries have been, and as of
the Closing Date will be, duly authorized and validly issued, are fully paid and
nonassessable and were not issued in violation of any preemptive or similar
rights; except as set forth in the Final Memorandum, all of the outstanding
shares of capital stock of each of the Subsidiaries will be free and clear of
all liens, encumbrances, equities and claims or restrictions on transferability
(other than those imposed by the securities or "Blue Sky" laws of certain
jurisdictions) or voting; except for options to purchase common stock of the
Company under the Company's employee benefit plans existing on the date hereof
and except as set forth in the Final Memorandum, there are no (i) options,
warrants or other rights to purchase from the Company or the Subsidiaries, (ii)
agreements or other obligations of the Company or the Subsidiaries to issue or
(iii) other rights to convert any obligation into, or exchange any securities
for, shares of capital stock of or ownership interests in the Company or any of
the Subsidiaries outstanding. Except as disclosed in the Final Memorandum,
neither the Company nor any of the Subsidiaries owns, directly or indirectly,
any shares of capital stock or any other equity or long-term debt securities or
have any equity interest in any firm, partnership, joint venture or other
entity.
(c) Each of the Company and the Subsidiaries is duly
incorporated or organized, as the case may be, and is validly existing and in
good standing as a corporation, limited liability company or limited
partnership, as the case may be, under the laws of its respective jurisdiction
of incorporation or organization and has all requisite corporate power and/or
other requisite power and authority to own or lease its properties
<PAGE> 4
- 4 -
and conduct its business as now conducted and as described in the Final
Memorandum; each of the Company and the Subsidiaries is duly qualified to do
business as a foreign corporation in good standing in all other jurisdictions
where the ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to be so qualified would
not, individually or in the aggregate, have a material adverse effect on the
general affairs, management, business, condition (financial or otherwise),
prospects or results of operations of the Company and the Subsidiaries, taken as
a whole (any such event, a "Material Adverse Effect").
(d) The Company has all requisite corporate power and
authority to execute, deliver and perform each of its obligations under the
Notes, the Exchange Notes and the Private Exchange Notes (as defined in the
Registration Rights Agreement). The Notes, Exchange Notes and Private Exchange
Notes, if any, when issued, will be in the form contemplated by the Indenture.
The Notes, the Exchange Notes and the Private Exchange Notes have each been duly
and validly authorized by the Company and, when executed by the Company and
authenticated by the Trustee in accordance with the provisions of the Indenture
and, in the case of the Notes, when delivered to and paid for by the Initial
Purchaser in accordance with the terms of this Agreement, and, in the case of
the Exchange Notes and the Private Exchange Notes, when delivered in accordance
with the terms of the Registration Rights Agreement and the Indenture, will each
constitute valid and legally binding obligations of the Company, entitled to the
benefits of the Indenture, and enforceable against the Company in accordance
with their terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally, and (ii) general principles of equity and the discretion of the court
before which any proceeding therefor may be brought.
(e) Each of the Subsidiary Guarantors has all requisite
corporate and/or other requisite power and authority to execute, deliver and
perform each of its obligations under the Guarantees and the guarantees of the
Exchange Notes and the Private Exchange Notes. The Guarantees, when issued, will
be in the form contemplated by the Indenture. The Guarantees and the guarantees
of the Exchange Notes and the Private Exchange Notes have been duly and validly
authorized by each of the Subsidiary Guarantors and, when executed by each of
the Subsidiary Guarantors and delivered in accordance with the provisions of the
Indenture, will constitute valid and legally binding obli-
<PAGE> 5
- 5 -
gations of the Subsidiary Guarantors, entitled to the benefits of the Indenture
and enforceable against the Subsidiary Guarantors in accordance with their
terms, except that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally, and
(ii) general principles of equity and the discretion of the court before which
any proceeding therefor may be brought.
(f) Each of the Company and the Subsidiary Guarantors has all
requisite corporate and/or other requisite power and authority to execute,
deliver and perform its obligations under the Indenture. The Indenture has been
duly and validly authorized by the Company and each of the Subsidiary Guarantors
and, when executed and delivered by the Company and each of the Subsidiary
Guarantors (assuming the due authorization, execution and delivery by the
Trustee), will constitute a valid and legally binding agreement of the Company
and each of the Subsidiary Guarantors, enforceable against the Company and each
of the Subsidiary Guarantors in accordance with its terms, except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii) general
principles of equity and the discretion of the court before which any proceeding
therefor may be brought.
(g) Each of the Company and the Subsidiary Guarantors has all
requisite corporate and/or other requisite power and authority to execute,
deliver and perform its obligations under the Registration Rights Agreement. The
Registration Rights Agreement has been duly and validly authorized by the
Company and each of the Subsidiary Guarantors and, when executed and delivered
by the Company and each of the Subsidiary Guarantors will constitute a valid and
legally binding agreement of the Company and each of the Subsidiary Guarantors,
enforceable against each of them in accordance with its terms, except that (A)
the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii) general
principles of equity and the discretion of the court before which any proceeding
therefor may be brought and (B) any rights to indemnity or contribution
thereunder may be limited by federal and state securities laws and public policy
considerations.
<PAGE> 6
- 6 -
(h) Each of the Company and the Subsidiary Guarantors has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby. This Agreement and the consummation by the Company and each of the
Subsidiary Guarantors of the transactions contemplated hereby have been duly and
validly authorized by the Company and each of the Subsidiary Guarantors. This
Agreement has been duly executed and delivered by the Company and each of the
Subsidiary Guarantors.
(i) Each of the Company and the Subsidiary Guarantors has all
requisite corporate power and authority to execute, deliver and perform its
respective obligations under the Security Documents and to consummate the
transactions contemplated thereby. The Security Documents and the consummation
by the Company and each of the Subsidiary Guarantors of the transactions
contemplated thereby have been duly and validly authorized by the Company and
each of the Subsidiary Guarantors and, when the Security Documents are executed
and delivered, each of the Security Documents will constitute a valid and
legally binding obligations of the Company and each of the Subsidiary
Guarantors, enforceable against the Company and each of the Subsidiary
Guarantors in accordance with its terms, except that the enforcement thereof may
be subject to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating to
creditor's rights generally and (ii) general principals of equity and the
discretion of the court before which any proceeding therefore may be brought. On
the Closing Date, the Collateral and the Security Documents will conform to the
description thereof contained in the Final Memorandum.
(j) No consent, approval, authorization or order of any court,
governmental agency or body, or third party is required for the issuance and
sale by the Company of the Securities to the Initial Purchasers and the initial
resales of the Securities by the Initial Purchaser in the manner described in
the Final Memorandum, the execution, delivery and performance by the Company and
the Subsidiary Guarantors of this Agreement, the Indenture, the Notes, the
Guarantees, the Exchange Notes, the Private Exchange Notes, the Registration
Rights Agreement and the Security Documents or the consummation by the Company
and the Subsidiary Guarantors of the other transactions contemplated hereby or
thereby, except (i) such as have been obtained, (ii) such as may be required
under state securities or "Blue Sky" laws in connection with the purchase and
resale of the Securities by the Initial Purchaser, (iii) such as are re-
<PAGE> 7
- 7 -
quired pursuant to the terms of the Registration Rights Agreement and (iv) such
as are required under the Senior Credit Facility which will be obtained by the
Closing Date. None of the Company or the Subsidiaries is (i) in violation of its
certificate of incorporation or bylaws (or other similar organizational
documents), (ii) in breach or violation of any statute, judgment, decree, order,
rule or regulation applicable to the Company or any Subsidiary or any of their
respective properties or assets, except for any such breach or violation which
would not, individually or in the aggregate, have a Material Adverse Effect, or
(iii) in breach of or default under (nor has any event occurred which, with
notice or passage of time or both, would constitute a default under) or in
violation of any of the terms or provisions of any indenture, mortgage, deed of
trust, loan agreement, note, lease, license, franchise agreement, permit,
certificate, contract or other agreement or instrument to which any of them is a
party or to which any of them or their respective properties or assets is
subject (collectively, "Contracts"), except for any such breach, default,
violation or event which would not, individually or in the aggregate, have a
Material Adverse Effect.
(k) The execution, delivery and performance by the Company and
the Subsidiary Guarantors of this Agreement, the Indenture, the Registration
Rights Agreement and the Security Documents and the consummation by the Company
and the Subsidiary Guarantors of the transactions contemplated hereby and
thereby (including, without limitation, the issuance and sale of the Securities
to the Initial Purchaser) will not conflict with or constitute or result in a
breach of or a default under (or an event which with notice or passage of time
or both would constitute a default under) or violation of any of (i) the terms
or provisions of any Contract, (ii) the certificate of incorporation or bylaws
(or other similar organizational documents) of the Company or any of the
Subsidiaries, or (iii) (assuming compliance with all applicable state securities
or "Blue Sky" laws and assuming the accuracy of the representations and
warranties of the Initial Purchaser in Section 8 hereof) any statute, judgment,
decree, order, rule or regulation applicable to the Company or any of the
Subsidiaries or any of their respective properties or assets, except in the case
of (i) for such conflicts, breaches, defaults or violations that would not,
individually or in the aggregate, have a Material Adverse Effect or adversely
affect the holders of the Notes.
(l) The audited consolidated financial statements of the
Company and the Subsidiaries included or incorporated by
<PAGE> 8
- 8 -
reference in the Final Memorandum present fairly in all material respects the
financial position, results of operations and cash flows of the Company and the
Subsidiaries at the dates and for the periods to which they relate and have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis, except as otherwise stated therein. The summary and selected
financial and statistical data in the Final Memorandum present fairly in all
material respects the information shown therein and have been prepared and
compiled on a basis consistent with the audited financial statements included
therein, except as otherwise stated therein. PricewaterhouseCoopers, LLP (the
"Independent Accountants") is an independent public accounting firm with respect
to the Company and the Subsidiaries within the meaning of the Act and the rules
and regulations promulgated thereunder.
(m) The pro forma financial statements (including the notes
thereto) and the other pro forma financial information included in the Final
Memorandum (i) comply as to form in all material respects with the applicable
requirements of Regulation S-X promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), (ii) have been prepared in accordance
with the Commission's rules and guidelines with respect to pro forma financial
statements, and (iii) have been properly computed on the bases described
therein; the assumptions used in the preparation of the pro forma financial data
and other pro forma financial information included in the Final Memorandum are
reasonable and the adjustments used therein are appropriate to give effect to
the transactions or circumstances referred to therein.
(n) There is not pending or, to the knowledge of the Company
or any of the Subsidiaries, threatened any action, suit, proceeding, inquiry or
investigation to which the Company or any of the Subsidiaries is a party, or to
which the property or assets of the Company or any of the Subsidiaries are
subject, before or brought by any court, arbitrator or governmental agency or
body which, if determined adversely to the Company or any of the Subsidiaries,
would, individually or in the aggregate, have a Material Adverse Effect, except
as disclosed in the Final Memorandum, or which seeks to restrain, enjoin,
prevent the consummation of or otherwise challenge the issuance or sale of the
Securities to be sold hereunder or the consummation of the other transactions
described in the Final Memorandum.
(o) Each of the Company and the Subsidiaries owns or possesses
adequate licenses or other rights to use all material
<PAGE> 9
- 9 -
patents, trademarks, service marks, trade names, copyrights and know-how
necessary to conduct the businesses now or proposed to be operated by it as
described in the Final Memorandum, and none of the Company or the Subsidiaries
has received any notice of infringement of or conflict with (or knows of any
such infringement of or conflict with) asserted rights of others with respect to
any patents, trademarks, service marks, trade names, copyrights or know-how
that, if such assertion of infringement or conflict were sustained, would,
individually or in the aggregate, have a Material Adverse Effect.
(p) Each of the Company and the Subsidiaries possesses all
licenses, permits, certificates, consents, orders, approvals and other
authorizations from, and has made all declarations and filings with, all
federal, state, local and other governmental authorities, all self-regulatory
organizations and all courts and other tribunals, presently required or
necessary to own or lease, as the case may be, and to operate its respective
properties and to carry on its respective businesses as now or proposed to be
conducted as set forth in the Final Memorandum ("Permits"), except as described
in the Final Memorandum and except where the failure to obtain such Permits
would not, individually or in the aggregate, have a Material Adverse Effect;
each of the Company and the Subsidiaries has fulfilled and performed all of its
obligations with respect to such Permits and no event has occurred which allows,
or after notice or lapse of time would allow, revocation or termination thereof
or results in any other impairment of the rights of the holder of any such
Permit, except for such revocations, terminations or impairments as would not,
individually or in the aggregate, have a Material Adverse Effect; and none of
the Company or the Subsidiaries has received any notice of any proceeding
relating to revocation or modification of any such Permit, except as described
in the Final Memorandum and except where such revocation or modification would
not, individually or in the aggregate, have a Material Adverse Effect.
(q) Except as described in the Final Memorandum, since
December 31, 1998, except as described therein, (i) none of the Company or the
Subsidiaries has incurred any liabilities or obligations, direct or contingent,
or entered into or agreed to enter into any transactions or contracts (written
or oral) not in the ordinary course of business which liabilities, obligations,
transactions or contracts would, individually or in the aggregate, have a
Material Adverse Effect, (ii) none of the Company or the Subsidiaries has
purchased any of its outstanding capital stock, nor declared, paid or otherwise
made any dividend or distribution of any kind on its capital stock
<PAGE> 10
- 10 -
(other than with respect to any of such Subsidiaries, the purchase of, or
dividend or distribution on, capital stock owned by the Company) and (iii) there
shall not have been any change in the capital stock or long-term indebtedness of
the Company or the Subsidiaries.
(r) Each of the Company and the Subsidiaries has filed all
necessary federal, state and foreign income and franchise tax returns, except
where the failure to so file such returns would not, individually or in the
aggregate, have a Material Adverse Effect, and has paid all taxes shown as due
thereon; and other than tax deficiencies which the Company or any Subsidiary is
contesting in good faith and for which the Company or such Subsidiary has
provided adequate reserves, there is no tax deficiency that has been asserted
against the Company or any of the Subsidiaries that would have, individually or
in the aggregate, a Material Adverse Effect.
(s) The statistical and market-related data included in the
Final Memorandum are based on or derived from sources which the Company and the
Subsidiaries believe to be reliable and accurate.
(t) None of the Company, the Subsidiaries or any agent acting
on their behalf has taken or will take any action that might cause this
Agreement or the sale of the Securities to violate Regulations T, U or X of the
Board of Governors of the Federal Reserve System, in each case as in effect, or
as the same may hereafter be in effect, on the Closing Date.
(u) Each of the Company and the Subsidiaries has good and
marketable title to all real property and good and (except in the case of
inventory) marketable title to all personal property, including, without
limitation, all Collateral, owned by it and good title to a leasehold interest
in the real and personal property including, without limitation, all Collateral,
leased by it, in each case free and clear of all Liens (as defined in the
Indenture), charges, encumbrances or restrictions, except as described in the
Final Memorandum or to the extent the failure to have such title or the
existence of such Liens would not, individually or in the aggregate, have a
Material Adverse Effect or conflict with the provisions of the Security
Documents. All leases, contracts and agreements to which the Company or any of
the Subsidiaries is a party or by which any of them is bound are valid and
enforceable against the Company or such Subsidiary, to the Company's and the
Subsidiaries' knowledge are valid and enforceable against the other party or
parties thereto, and are in full force and ef-
<PAGE> 11
- 11 -
fect with only such exceptions as would not, individually or in the aggregate,
have a Material Adverse Effect.
(v) In the ordinary course of business, each of the Company
and the Subsidiaries conducts periodic reviews of the effect of Environmental
Laws (as defined below) and the handling, storage, transport, treating and
disposal of hazardous materials, on the business, operations and properties of
the Company and the Subsidiaries. On the basis of such reviews, the Company and
the Subsidiaries have concluded that such associated costs and liabilities would
not, individually or in the aggregate have a Material Adverse Effect except as
described in the Final Memorandum. Except as described in the Final Memorandum
or as would not, individually or in the aggregate, have a Material Adverse
Effect, (A) each of the Company and the Subsidiaries is in compliance with and
not subject to liability under applicable Environmental Laws, (B) each of the
Company and the Subsidiaries has made all filings and provided all notices
required under any applicable Environmental Law, and has and is in compliance
with all Permits required under any applicable Environmental Laws and each of
them is in full force and effect, (C) there is no civil, criminal or
administrative action, suit, demand, claim, hearing, notice of violation,
investigation, proceeding, notice or demand letter pending or, to the knowledge
of the Company or any of the Subsidiaries, threatened against the Company or any
of the Subsidiaries under any Environmental Law, (D) no lien, charge,
encumbrance or restriction has been recorded under any Environmental Law with
respect to any assets, facility or property owned, operated, leased or
controlled by the Company or any of the Subsidiaries, (E) none of the Company or
the Subsidiaries has received notice that it has been identified as a
potentially responsible party under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), or any comparable
state law, (F) no property or facility of the Company or any of the Subsidiaries
is (i) listed or proposed for listing on the National Priorities List under
CERCLA or is (ii) listed in the Comprehensive Environmental Response,
Compensation, Liability Information System List promulgated pursuant to CERCLA
or on any comparable list maintained by any state or local governmental
authority.
For purposes of this Agreement, "Environmental Laws" means the
common law and all applicable federal, state and local laws or regulations,
codes, orders, decrees, judgments or injunctions issued, promulgated, approved
or entered thereunder, relating to pollution or protection of public or employee
health and safety or the environment, including, without limi-
<PAGE> 12
- 12 -
tation, laws relating to (i) emissions, discharges, releases or threatened
releases of hazardous materials into the environment (including, without
limitation, ambient air, surface water, ground water, land surface or subsurface
strata), (ii) the manufacture, processing, distribution, use, generation,
treatment, storage, disposal, transport or handling of hazardous materials and
(iii) underground and above ground storage tanks and related piping, and
emissions, discharges, releases or threatened releases therefrom.
(w) Except as disclosed in the Final Memorandum, there is (i)
no material unfair labor practice complaint pending against the Company or any
Subsidiary, or to the knowledge of the Company and the Subsidiaries, threatened
against any of them, before the National Labor Relations Board or any state or
local labor relations board, and no material grievance or material arbitration
proceeding arising out of or under any collective bargaining agreement is
pending against the Company or any Subsidiary, or to the knowledge of the
Company or any Subsidiary threatened against them, (ii) no strike, labor
dispute, slowdown or work stoppage with the employees of the Company or any of
the Subsidiaries which is pending or, to the knowledge of the Company or any of
the Subsidiaries, threatened and (iii) to the knowledge of the Company and the
Subsidiaries, no union organizing activities taking place.
(x) Each of the Company and the Subsidiaries carries
insurance, by insurers of recognized financial responsibility in such amounts
and covering such risks as the Company and the Subsidiaries believe to be
adequate for the conduct of their business and the value of their properties and
as the Company and the Subsidiaries believe to be customary for companies
engaged in similar business and, in the case of its properties, as would be
maintained by a prudent operator of properties, similar in use and configuration
to such properties and located in the locality where such properties are
located; and neither the Company nor any of the Subsidiaries (i) has received
notice from any insurer or agent of such insurer that substantial capital
improvements or other material expenditures will have to be made in order to
continue such insurance or (ii) has any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers at a cost that would not
have a Material Adverse Effect.
(y) Except as disclosed in the Final Memorandum, no
relationship, direct or indirect, exists between or among the Company or any of
the Subsidiaries on the one hand, and the di-
<PAGE> 13
- 13 -
rectors, officers, stockholders, customers or suppliers of the Company or any of
the Subsidiaries on the other hand, which would be required by the Act to be
described in the Final Memorandum by Item 404 of Regulation S-K if the Final
Memorandum were a prospectus included in a registration statement on Form S-1
filed with the SEC and each business relationship or related party transaction
described therein is a fair and accurate description of the relationship and
transactions so described.
(z) The Security Documents, once executed and delivered, will
create, in favor of the Trustee for the benefit of the Trustee and the holders
of the Securities, a valid and enforceable, and upon filing or recording with
the appropriate governmental authorities and delivery of the applicable
documents to the Trustee, perfected security interest in and Lien upon all of
the Collateral, and to the Company's and the Subsidiaries' knowledge, such Lien
shall be superior to and prior to the rights of all third persons other than the
lenders under the Senior Credit Facility (as defined in the Indenture) and
subject to no other Liens except for Liens expressly permitted to exist on such
Collateral by the terms of the applicable Security Document.
(aa) To the Company's knowledge, none of the Company or the
Subsidiaries has any liability for any prohibited transaction or funding
deficiency or any complete or partial withdrawal liability with respect to any
pension, profit sharing or other plan which is subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), to which the
Company or any of the Subsidiaries makes or ever has made a contribution and in
which any employee of the Company or of any Subsidiary is or has ever been a
participant. With respect to such plans, the Company and each Subsidiary is in
compliance in all material respects with all applicable provisions of ERISA.
(bb) Neither the Company or any of the Subsidiaries does
business with the government of Cuba or with any person located in Cuba within
the meaning of Section 517.075, Florida Statutes.
(cc) Each of the Company and the Subsidiaries (i) makes and
keeps accurate books and records and (ii) maintains internal accounting controls
which provide reasonable assurance that (A) transactions are executed in
accordance with management's authorization, (B) transactions are recorded as
necessary to permit preparation of its financial statements and to maintain
accountability for its assets, (C) access to its as-
<PAGE> 14
- 14 -
sets is permitted only in accordance with management's authorization and (D) the
reported accountability for its assets is compared with existing assets at
reasonable intervals.
(dd) None of the Company or the Subsidiaries are, and after
giving effect to the offering of the Securities and the application of the net
proceeds thereof as described in the Final Memorandum, none of the Company or
the Subsidiaries will be an "investment company" or an entity "controlled" by an
investment company or "promoter" or "principal underwriter" for an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder.
(ee) The Notes, the Guarantees, the Exchange Notes, the
Indenture, the Registration Rights Agreement and the Security Documents will
conform in all material respects to the descriptions thereof in the Final
Memorandum.
(ff) No holder of securities of the Company or any Subsidiary
will be entitled to have such securities registered under the registration
statements required to be filed by the Company pursuant to the Registration
Rights Agreement other than as expressly permitted thereby.
(gg) Immediately after the consummation of the transactions
contemplated by this Agreement, the fair value and present fair saleable value
of the assets of each of the Company and the Subsidiaries (each on a
consolidated basis) will exceed the sum of its stated liabilities and identified
contingent liabilities; none of the Company or the Subsidiaries (each on a
consolidated basis) is, nor will any of the Company or the Subsidiaries (each on
a consolidated basis) be, after giving effect to the execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, (a) left with unreasonably small capital with which to
carry on its business as it is proposed to be conducted, (b) unable to pay its
debts (contingent or otherwise) as they mature or (c) otherwise insolvent.
(hh) None of the Company, the Subsidiaries or any of their
respective Affiliates (as defined in Rule 501(b) of Regulation D under the Act)
has directly, or through any agent, (i) sold, offered for sale, solicited offers
to buy or otherwise negotiated in respect of, any "security" (as defined in the
Act) which is or could be integrated with the sale of the Securities in a manner
that would require the registration under the Act of the Securities or (ii)
engaged in any form of
<PAGE> 15
- 15 -
general solicitation or general advertising (as those terms are used in
Regulation D under the Act) in connection with the offering of the Securities or
in any manner involving a public offering within the meaning of Section 4(2) of
the Act. Assuming the accuracy of the representations and warranties of the
Initial Purchaser in Section 8 hereof, it is not necessary in connection with
(i) the offer, sale and delivery of the Securities to the Initial Purchaser in
the manner contemplated by this Agreement or (ii) the initial resales of the
Securities by the Initial Purchaser as described in the Final Memorandum to
register any of the Securities under the Act or to qualify the Indenture under
the TIA.
(ii) No securities of the Company or any Subsidiary are of the
same class (within the meaning of Rule 144A under the Act) as the Securities and
listed on a national securities exchange registered under Section 6 of the
Exchange Act, or quoted in a U.S. automated inter-dealer quotation system.
(jj) None of the Company or the Subsidiaries has taken, nor
will any of them take, directly or indirectly, any action designed to, or that
might be reasonably expected to, cause or result in stabilization or
manipulation of the price of the Notes.
(kk) None of the Company, the Subsidiaries, any of their
respective Affiliates or any person acting on its or their behalf (other than
the Initial Purchaser) has engaged or will engage in any directed selling
efforts (as that term is defined in Regulation S under the Act ("Regulation S"))
with respect to the Notes; the Company, the Subsidiaries and their respective
Affiliates and any person acting on its or their behalf (other than the Initial
Purchaser) have complied with the offering restrictions requirement of
Regulation S.
Any certificate signed by any officer of the Company or any
Subsidiary and delivered to any Initial Purchaser or to counsel for the Initial
Purchaser shall be deemed a joint and several representation and warranty by the
Company and each of the Subsidiaries to the Initial Purchaser as to the matters
covered thereby.
3. Purchase, Sale and Delivery of the Securities. On the basis
of the representations, warranties, agreements and covenants herein contained
and subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to the Initial Purchaser, and the Initial Purchaser, agrees to
purchase the Securities from the Company at 86.5% of the prin-
<PAGE> 16
- 16 -
cipal amount of the Notes. One or more certificates in definitive form for the
Notes that the Initial Purchaser has agreed to purchase hereunder, and in such
denomination or denominations and registered in such name or names as the
Initial Purchaser requests upon notice to the Company at least 36 hours prior to
the Closing Date, shall be delivered by or on behalf of the Company to the
Initial Purchaser, against payment by or on behalf of the Initial Purchaser of
the purchase price therefor by wire transfer (same day funds), to such account
or accounts as the Company shall specify prior to the Closing Date, or by such
means as the parties hereto shall agree prior to the Closing Date. Such delivery
of and payment for the Securities shall be made at the offices of Cahill Gordon
& Reindel, 80 Pine Street, New York, New York at 9:00 A.M., New York time, on
May 7, 1999, or at such other place, time or date as the Initial Purchaser, on
the one hand, and the Company, on the other hand, may agree upon, such time and
date of delivery against payment being herein referred to as the "Closing Date."
The Company will make such certificate or certificates for the Securities
available for checking and packaging by the Initial Purchaser at the offices of
Cahill Gordon & Reindel, or at such other place as the Initial Purchaser may
designate, at least 24 hours prior to the Closing Date.
4. Offering by the Initial Purchaser. The Initial Purchaser
proposes to make an offering of the Securities at the price and upon the terms
set forth in the Final Memorandum, as soon as practicable after this Agreement
is entered into and as in the judgment of the Initial Purchaser is advisable.
5. Covenants of the Company and the Subsidiary Guarantors. The
Company and each of the Subsidiary Guarantors, jointly and severally covenant
and agree with the Initial Purchaser that:
(a) The Company will not amend or supplement the Final
Memorandum or any amendment or supplement thereto of which the Initial Purchaser
shall not previously have been advised and furnished a copy for a reasonable
period of time prior to distributing the proposed amendment or supplement and as
to which the Initial Purchaser shall not have given their consent. The Company
will promptly, upon the reasonable request of the Initial Purchaser or counsel
for the Initial Purchaser, make any amendments or supplements to the Final
Memorandum that may be necessary or advisable in connection with the resale of
the Securities by the Initial Purchaser.
<PAGE> 17
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(b) The Company and the Subsidiary Guarantors will cooperate
with the Initial Purchaser in arranging for the qualification of the Securities
for offering and sale under the securities or "Blue Sky" laws of such
jurisdictions as the Initial Purchaser may designate and will continue such
qualification in effect for as long as may be necessary to complete the resale
of the Securities; provided, however, that in connection therewith, none of the
Company or the Subsidiary Guarantors shall be required to qualify as a foreign
corporation or to execute a general consent to service of process in any
jurisdiction or subject themselves to taxation in excess of a nominal dollar
amount in any such jurisdiction where it is not then so subject.
(c) If, at any time prior to the earlier of the completion of
the distribution by the Initial Purchaser of the Securities or the Private
Exchange Notes or the effectiveness of a registration statement pursuant to the
terms of the Registration Rights Agreement, any event occurs or information
becomes known as a result of which the Final Memorandum as then amended or
supplemented would include any untrue statement of a material fact, or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or if for any
other reason it is necessary during such time to amend or supplement the Final
Memorandum to comply with applicable law, the Company will promptly notify the
Initial Purchaser thereof and will prepare, at the expense of the Company, an
amendment or supplement to the Final Memorandum that corrects such statement or
omission or effects such compliance.
(d) The Company will, without charge, provide to the Initial
Purchaser and to counsel for the Initial Purchaser as many copies of the Final
Memorandum or any amendment or supplement thereto as the Initial Purchaser may
reasonably request.
(e) The Company will apply the net proceeds from the sale of
the Securities as set forth under "Use of Proceeds" in the Final Memorandum.
(f) For so long as any of the Securities remain outstanding,
the Company will furnish to the Initial Purchaser copies of all reports and
other communications (financial or otherwise) furnished by the Company to the
Trustee or to the holders of the Securities and, as soon as available, copies of
any reports or financial statements furnished to or filed by the Company with
the Commission or any national securities ex-
<PAGE> 18
- 18 -
change on which any class of securities of the Company may be listed.
(g) Prior to the Closing Date, the Company will furnish to the
Initial Purchaser, as soon as it has been prepared, a copy of any unaudited
interim financial statements of the Company for any period subsequent to the
period covered by the most recent financial statements appearing in the Final
Memorandum.
(h) None of the Company, the Subsidiaries or any of their
Affiliates will sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any "security" (as defined in the Act) which could be
integrated with the sale of the Securities in a manner which would require the
registration under the Act of the Securities.
(i) The Company will not, and will not permit any of the
Subsidiaries to, engage in any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Act) in
connection with the offering of the Securities or in any manner involving a
public offering of the Securities within the meaning of Section 4(2) of the Act.
(j) For so long as any of the Securities remain outstanding,
the Company will make available at its expense, upon request, to any holder of
such Securities and any prospective purchasers thereof the information specified
in Rule 144A(d)(4) under the Act, unless the Company is then subject to Section
13 or 15(d) of the Exchange Act.
(k) The Company will use its best efforts to (i) permit the
Securities to be designated PORTAL securities in accordance with the rules and
regulations adopted by the NASD relating to trading in the Private Offerings,
Resales and Trading through Automated Linkages market (the "Portal Market") and
(ii) permit the Securities to be eligible for clearance and settlement through
The Depository Trust Company.
(l) In connection with Securities offered and sold in an
offshore transaction (as defined in Regulation S) the Company will not register
any transfer of such Securities not made in accordance with the provisions of
Regulation S and will not, except in accordance with the provisions of
Regulation S, if applicable, issue any such Securities in the form of definitive
securities.
<PAGE> 19
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6. Expenses. The Company and each of the Subsidiary
Guarantors, jointly and severally, agrees to pay all costs and expenses incident
to the performance of their respective obligations under this Agreement, whether
or not the transactions contemplated herein are consummated or this Agreement is
terminated pursuant to any provision hereof, including all costs and expenses
incident to (i) the printing, word processing or other production of documents
with respect to the transactions contemplated hereby, including any costs of
printing the Final Memorandum and any amendment or supplement thereto, and any
"Blue Sky" memoranda, (ii) all arrangements relating to the delivery to the
Initial Purchaser of copies of the foregoing documents, (iii) the fees and
disbursements of the counsel, the accountants and any other experts or advisors
retained by the Company, (iv) preparation (including printing), issuance and
delivery to the Initial Purchaser of the Securities, (v) the qualification of
the Securities under state securities and "Blue Sky" laws, including filing fees
and fees and disbursements of counsel for the Initial Purchaser relating
thereto, (vi) expenses in connection with any meetings with prospective
investors in the Securities, (vii) fees and expenses of the Trustee including
fees and expenses of counsel for the Trustee, (viii) all expenses and listing
fees incurred in connection with the application for quotation of the Securities
on the PORTAL Market, (ix) any fees charged by investment rating agencies for
the rating of the Securities and (x) all filing fees and other disbursements
associated with the Security Documents and the perfection of the security
interests created thereby. Additionally, in the event the sale of the Securities
provided for herein is consummated, the Company and the Subsidiary Guarantors,
jointly and severally, agree to promptly reimburse the Initial Purchaser upon
demand for 50% of all out-of-pocket expenses (including the reasonable fees,
disbursements and charges of Cahill Gordon & Reindel, counsel for the Initial
Purchaser) that shall have been incurred by the Initial Purchaser in connection
with the proposed purchase and sale of the Securities and the related
transactions contemplated herein. In the event the sale of the Securities
provided for herein is not consummated or this Agreement is terminated (other
than solely by reason of a default by the Initial Purchaser of its obligations
hereunder after all conditions hereunder have been satisfied in accordance
herewith), the Company and the Subsidiary Guarantors, jointly and severally,
agree to promptly reimburse the Initial Purchaser upon demand for all
out-of-pocket expenses (including the reasonable fees, disbursements and charges
of Cahill Gordon & Reindel, counsel for the Initial Purchaser) that shall have
been incurred by the Initial Pur-
<PAGE> 20
- 20 -
chaser in connection with the proposed purchase and sale of the Securities and
the related transactions contemplated herein.
7. Conditions of the Initial Purchaser's Obligations. The
obligation of the Initial Purchaser to purchase and pay for the Securities
shall, in its sole discretion, be subject to the satisfaction or waiver of the
following conditions on or prior to the Closing Date:
(a) On the Closing Date, the Initial Purchaser shall have
received the opinion, dated as of the Closing Date and addressed to the Initial
Purchaser, of Mayer, Brown & Platt counsel for the Company, in form and
substance reasonably satisfactory to counsel for the Initial Purchaser.
(b) On the Closing Date, the Initial Purchaser shall have
received opinions dated the Closing Date and addressed to the Initial Purchaser
and the Trustee, of local counsel for each of the Subsidiary Guarantors listed
on Schedule 3 hereto, in form and substance reasonably satisfactory to counsel
for the Initial Purchaser.
(c) On the Closing Date, the Initial Purchaser shall have
received opinions, dated the Closing Date and addressed to the Initial
Purchaser, of local counsel for the Company and the Subsidiaries, in each of the
jurisdictions listed on Schedule 4 hereto substantially in the form of the local
counsel opinions delivered pursuant to the provisions of the Senior Credit
Facility, relating to the creation, enforceability and perfection of the
security interests and Liens created by the Security Documents delivered in
accordance therewith, with such changes thereto as shall be reasonably requested
by counsel to the Initial Purchaser and, in form and substance satisfactory to
counsel for the Initial Purchaser.
(d) On the Closing Date, the Initial Purchaser shall have
received the opinion, in form and substance satisfactory to the Initial
Purchaser, dated as of the Closing Date and addressed to the Initial Purchaser,
of Cahill Gordon & Reindel, counsel for the Initial Purchaser, with respect to
certain legal matters relating to this Agreement and such other related matters
as the Initial Purchaser may reasonably require. In rendering such opinion,
Cahill Gordon & Reindel shall have received and may rely upon such certificates
and other documents and information as it may reasonably request to pass upon
such matters.
<PAGE> 21
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(e) The Initial Purchaser shall have received from the
Independent Accountants a comfort letter or letters dated the date hereof and
the Closing Date, in form and substance satisfactory to counsel for the Initial
Purchaser.
(f) The representations and warranties of the Company and the
Subsidiary Guarantors contained in this Agreement shall be true and correct on
and as of the date hereof and on and as of the Closing Date as if made on and as
of the Closing Date; the statements of the Company's and the Subsidiary
Guarantors' officers made pursuant to any certificate delivered in accordance
with the provisions hereof shall be true and correct on and as of the date made
and on and as of the Closing Date; the Company and the Subsidiary Guarantors
shall have performed all covenants and agreements and satisfied all conditions
on their part to be performed or satisfied hereunder at or prior to the Closing
Date; and, except as described in the Final Memorandum (exclusive of any
amendment or supplement thereto after the date hereof), subsequent to the date
of the most recent financial statements in such Final Memorandum, there shall
have been no event or development, and no information shall have become known,
that, individually or in the aggregate, has or would be reasonably likely to
have a Material Adverse Effect.
(g) The sale of the Securities hereunder shall not be enjoined
(temporarily or permanently) on the Closing Date.
(h) The Initial Purchaser shall have received a certificate of
the Company and each of the Subsidiary Guarantors, dated the Closing Date,
signed on behalf of the Company by its Chief Executive Officer, Chief Financial
Officer or Chief Operating Officer and any Vice President and signed on behalf
of each of the Subsidiary Guarantors by two officers of each of the Subsidiary
Guarantors, to the effect that:
(i) The representations and warranties of the Company and
the Subsidiary Guarantors contained in this Agreement are true and
correct on and as of the date hereof and on and as of the Closing Date,
and the Company and the Subsidiary Guarantors have performed all
covenants and agreements and satisfied all conditions on their part to
be performed or satisfied hereunder at or prior to the Closing Date;
(ii) Upon the execution of the Security Documents and filings
of financing statements in all required jurisdictions, the Trustee on
behalf of the Trustee and holders of
<PAGE> 22
- 22 -
Securities will have a valid and perfected lien on the Collateral and
subject to no Liens, other than Liens permitted by the Indenture and
the Security Documents;
(iii) At the Closing Date, since the date hereof or since the
date of the most recent financial statements in the Final Memorandum
(exclusive of any amendment or supplement thereto after the date
hereof), no event or development has occurred, and no information has
become known, that, individually or in the aggregate, has or would be
reasonably likely to have a Material Adverse Effect; and
(iv) The sale of the Securities hereunder has not been
enjoined (temporarily or permanently).
(i) On the Closing Date, the Initial Purchaser shall have
received the Registration Rights Agreement, the Indenture and the Security
Documents executed by the Company and the Subsidiary Guarantors and each such
agreement shall be in full force and effect at all times from and after the
Closing Date.
(j) On the Closing Date, Amendment No. 6 to the Senior Credit
Facility, in the form previously delivered to the Initial Purchaser, shall be in
full force and effect or the Initial Purchaser shall have received, in form and
substance satisfactory to the Initial Purchaser and counsel to the Initial
Purchaser, such consents, amendments or approvals required in connection with
the Company's Senior Credit Facility in order to issue and sell the Securities
and consummate the other transactions contemplated hereby.
On or before the Closing Date, the Initial Purchaser and
counsel for the Initial Purchaser shall have received such further documents,
opinions, certificates, letters and schedules or instruments relating to the
business, corporate, legal and financial affairs of the Company and the
Subsidiaries as they shall have heretofore reasonably requested from the
Company.
All such documents, opinions, certificates, letters, schedules
or instruments delivered pursuant to this Agreement will comply with the
provisions hereof only if they are reasonably satisfactory in all material
respects to the Initial Purchaser and counsel for the Initial Purchaser. The
Company shall furnish to the Initial Purchaser such conformed copies of such
documents, opinions, certificates, letters, schedules and instruments in such
quantities as the Initial Purchaser shall reasonably request.
<PAGE> 23
- 23 -
8. Offering of Securities; Restrictions on Transfer. (a) The
Initial Purchaser represents and warrants that it is a QIB. The Initial
Purchaser agrees with the Company (as to itself only) that (i) it has not and
will not solicit offers for, or offer or sell, the Securities by any form of
general solicitation or general advertising (as those terms are used in
Regulation D under the Act) or in any manner involving a public offering within
the meaning of Section 4(2) of the Act; and (ii) it has and will solicit offers
for the Securities only from, and will offer the Securities only to (A) in the
case of offers inside the United States, persons whom the Initial Purchaser
reasonably believes to be QIBs or, if any such person is buying for one or more
institutional accounts for which such person is acting as fiduciary or agent,
only when such person has represented to the Initial Purchaser that each such
account is a QIB, to whom notice has been given that such sale or delivery is
being made in reliance on Rule 144A, and, in each case, in transactions under
Rule 144A and (B) in the case of offers outside the United States, to persons
other than U.S. persons ("foreign purchasers," which term shall include dealers
or other professional fiduciaries in the United States acting on a discretionary
basis for foreign beneficial owners (other than an estate or trust)); provided,
however, that, in the case of this clause (B), in purchasing such Securities
such persons are deemed to have represented and agreed as provided under the
caption "Notice to Investors" contained in the Final Memorandum.
(b) The Initial Purchaser represents and warrants with respect
to offers and sales outside the United States that (i) it has and will comply
with all applicable laws and regulations in each jurisdiction in which it
acquires, offers, sells or delivers Securities or has in its possession or
distributes any Final Memorandum or any such other material, in all cases at its
own expense; (ii) the Securities have not been and will not be offered or sold
within the United States or to, or for the account or benefit of, U.S. persons
except in accordance with Regulation S under the Act or pursuant to an exemption
from the registration requirements of the Act; (iii) it has offered the
Securities and will offer and sell the Securities (A) as part of its
distribution at any time and (B) otherwise until 40 days after the later of the
commencement of the offering and the Closing Date, only in accordance with Rule
903 of Regulation S and, accordingly, neither it nor any persons acting on its
behalf have engaged or will engage in any directed selling efforts (within the
meaning of Regulation S) with respect to the Securities, and any such persons
have complied and will comply with the offering restrictions requirement of
Regu-
<PAGE> 24
- 24 -
lation S; and (iv) it agrees that, at or prior to confirmation of sales of the
Securities, it will have sent to each distributor, dealer or person receiving a
selling concession, fee or other remuneration that purchases Securities from it
during the restricted period a confirmation or notice to substantially the
following effect:
"The Securities covered hereby have not been registered under
the United States Securities Act of 1933 (the "Securities
Act") and may not be offered and sold within the United States
or to, or for the account or benefit of, U.S. persons (i) as
part of the distribution of the Securities at any time or (ii)
otherwise until 40 days after the later of the commencement of
the offering and the closing date of the offering, except in
either case in accordance with Regulation S (or Rule 144A if
available) under the Securities Act. Terms used above have the
meaning given to them in Regulation S."
Terms used in this Section 8 and not defined in this Agreement
have the meanings given to them in Regulation S.
9. Indemnification and Contribution. (a) The Company and each
of the Subsidiary Guarantors agree, jointly and severally, to indemnify and hold
harmless the Initial Purchaser, and each person, if any, who controls the
Initial Purchaser or its affiliates within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act, against any losses, claims, damages or
liabilities to which the Initial Purchaser or such controlling person may become
subject under the Act, the Exchange Act or otherwise, insofar as any such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon:
(i) any untrue statement or alleged untrue statement of any
material fact contained in the Final Memorandum or any amendment or
supplement thereto or any application or other document, or any
amendment or supplement thereto, executed by the Company or the
Subsidiary Guarantors or based upon written information furnished by or
on behalf of the Company or the Subsidiary Guarantors filed in any
jurisdiction in order to qualify the Notes under the securities or
"Blue Sky" laws thereof or filed with any secu-
<PAGE> 25
- 25 -
rities association or securities exchange (each an "Application"); or
(ii) the omission or alleged omission to state, in the Final
Memorandum or any amendment or supplement thereto or any Application, a
material fact required to be stated therein or necessary to make the
statements therein not misleading,
and will reimburse, as incurred, the Initial Purchaser and each such controlling
person for any legal or other expenses incurred by the Initial Purchaser or such
controlling person in connection with investigating, defending against or
appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action; provided, however, the Company and the Subsidiary
Guarantors will not be liable in any such case to the extent that any such loss,
claim, damage, or liability arises out of or is based upon any untrue statement
or alleged untrue statement or omission or alleged omission made in the Final
Memorandum or any amendment or supplement thereto or any Application in reliance
upon and in conformity with written information concerning the Initial Purchaser
furnished to the Company by the Initial Purchaser specifically for use therein.
This indemnity agreement will be in addition to any liability that the Company
and the Subsidiary Guarantors may otherwise have to the indemnified parties. The
Company and the Subsidiary Guarantors shall not be liable under this Section 9
for any settlement of any claim or action effected without prior written
consent, which shall not be unreasonably withheld. The Initial Purchaser shall
not, without the prior written consent of the Company, effect any settlement or
compromise of any pending or threatened proceeding in respect of which the
Company or the Subsidiary Guarantors is or could have been a party, or indemnity
could have been sought hereunder by the Company or the Subsidiary Guarantors,
unless such settlement (A) includes an unconditional written release of the
Company and the Subsidiary Guarantors, in form and substance reasonably
satisfactory to the Company, from all liability on claims that are the subject
matter of such proceeding and (B) does not include any statement as to an
admission of fault, culpability or failure to act by or on behalf of the Company
or the Subsidiary Guarantors.
(b) The Initial Purchaser agrees to indemnify and hold
harmless the Company and the Subsidiary Guarantors, their respective directors
and officers and each person, if any, who controls the Company and the
Subsidiary Guarantors within the meaning of Section 15 of the Act or Section 20
of the Exchange
<PAGE> 26
- 26 -
Act against any losses, claims, damages or liabilities to which the Company or
the Subsidiary Guarantors or any such director, officer or controlling person
may become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Final Memorandum or any amendment or supplement
thereto or any Application, or (ii) the omission or the alleged omission to
state therein a material fact required to be stated in the Final Memorandum or
any amendment or supplement thereto or any Application, or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information concerning the Initial Purchaser, furnished to the Company by the
Initial Purchaser specifically for use therein; and subject to the limitation
set forth immediately preceding this clause, will reimburse, as incurred, any
legal or other expenses incurred by the Company or any of the Subsidiary
Guarantors or any such director, officer or controlling person in connection
with investigating or defending against or appearing as a third party witness in
connection with any such loss, claim, damage, liability or action in respect
thereof. This indemnity agreement will be in addition to any liability that the
Initial Purchaser may otherwise have to the indemnified parties. The Initial
Purchaser shall not be liable under this Section 9 for any settlement of any
claim or action effected without its consent, which shall not be unreasonably
withheld. The Company and the Subsidiary Guarantors shall not, without the prior
written consent of the Initial Purchaser, effect any settlement or compromise of
any pending or threatened proceeding in respect of which the Initial Purchaser
is or could have been a party, or indemnity could have been sought hereunder by
the Initial Purchaser, unless such settlement (A) includes an unconditional
written release of the Initial Purchaser, in form and substance reasonably
satisfactory to the Initial Purchaser, from all liability on claims that are the
subject matter of such proceeding and (B) does not include any statement as to
an admission of fault, culpability or failure to act by or on behalf of the
Initial Purchaser.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action for which such indemnified
party is entitled to indemnification under this Section 9, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
<PAGE> 27
- 27 -
party under this Section 9, notify the indemnifying party of the commencement
thereof in writing; but the omission to so notify the indemnifying party (i)
will not relieve it from any liability under paragraph (a) or (b) above unless
and to the extent 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 paragraphs (a) and (b)
above. In case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party; provided, however, that 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 defendants in any such action include both
the indemnified party and the indemnifying party and the indemnified party shall
have been advised by counsel that there may be one or more legal defenses
available to it and/or other indemnified parties that are different from or
additional to those available to the indemnifying party, or (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after receipt by the indemnifying party of notice of the institution of
such action, then, in each such case, the indemnifying party shall not have the
right to direct the defense of such action on behalf of such indemnified party
or parties and such indemnified party or parties shall have the right to select
separate counsel to defend such action on behalf of such indemnified party or
parties. After notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof and approval by such indemnified
party of counsel appointed to defend such action, the indemnifying party will
not be liable to such indemnified party under this Section 9 for any legal or
other expenses, other than reasonable costs of investigation, subsequently
incurred by such indemnified party in connection with the defense thereof,
unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the immediately preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, desig-
<PAGE> 28
- 28 -
nated by the Initial Purchaser in the case of paragraph (a) of this Section 9 or
the Company and the Subsidiary Guarantors in the case of paragraph (b) of this
Section 9, representing the indemnified parties under such paragraph (a) or
paragraph (b), as the case may be, who are parties to such action or actions) or
(ii) the indemnifying party has authorized in writing the employment of counsel
for the indemnified party at the expense of the indemnifying party. After such
notice from the indemnifying party to such indemnified party, the indemnifying
party will not be liable for the costs and expenses of any settlement of such
action effected by such indemnified party without the prior written consent of
the indemnifying party (which consent shall not be unreasonably withheld),
unless such indemnifying party waived in writing its rights under this Section
9, in which case the indemnified party may effect such a settlement without such
consent.
(d) In circumstances in which the indemnity agreement provided
for in the preceding paragraphs of this Section 9 is unavailable to, or
insufficient to hold harmless, an indemnified party in respect of any losses,
claims, damages or liabilities (or actions in respect thereof), each
indemnifying party, in order to provide for just and equitable contribution,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect (i) the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the offering of the Securities or (ii) if
the allocation provided by the foregoing clause (i) is not permitted by
applicable law, not only such relative benefits but also the relative fault of
the indemnifying party or parties on the one hand and any indemnified party on
the other in connection with the statements or omissions or alleged statements
or omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof). The relative benefits received by the Company and
the Subsidiary Guarantors on the one hand and the Initial Purchaser on the other
shall be deemed to be in the same proportion as the total proceeds from the
offering (before deducting expenses) received by the Company and the Subsidiary
Guarantors bear to the total discounts and commissions received by the Initial
Purchaser. The relative fault of the parties shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company and the Subsidiary Guarantors on
the one hand, or the Initial Purchaser on the other, the parties' rela-
<PAGE> 29
- 29 -
tive intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission or alleged statement or omission, and any
other equitable considerations appropriate in the circumstances. The Company and
the Subsidiary Guarantors and the Initial Purchaser agree that it would not be
equitable if the amount of such contribution were determined by pro rata or per
capita allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the first sentence of this
paragraph (d). Notwithstanding any other provision of this paragraph (d), the
Initial Purchaser shall not be obligated to make contributions hereunder that in
the aggregate exceed the total discounts, commissions and other compensation
received by the Initial Purchaser under this Agreement, less the aggregate
amount of any damages that the Initial Purchaser has otherwise been required to
pay by reason of the untrue or alleged untrue statements or the omissions or
alleged omissions to state a material fact, and 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 paragraph (d), each person, if any, who
controls the Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act shall have the same rights to contribution as the
Initial Purchaser, and each director of the Company or any Subsidiary Guarantor,
each officer of the Company or any Subsidiary Guarantor and each person, if any,
who controls the Company or any Subsidiary Guarantor within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, shall have the same
rights to contribution as the Company and the Subsidiary Guarantors.
10. Survival Clause. The respective representations,
warranties, agreements, covenants, indemnities and other statements of the
Company, the Subsidiary Guarantors, their respective officers and the Initial
Purchaser set forth in this Agreement or made by or on behalf of them pursuant
to this Agreement shall remain in full force and effect, regardless of (i) any
investigation made by or on behalf of the Company, the Subsidiary Guarantors,
any of their respective officers or directors, the Initial Purchaser or any
controlling person referred to in Section 9 hereof and (ii) delivery of and
payment for the Securities. The respective agreements, covenants, indemnities
and other statements set forth in Sections 6, 9 and 15 hereof shall remain in
full force and effect, regardless of any termination or cancellation of this
Agreement.
<PAGE> 30
- 30 -
11. Termination. (a) This Agreement may be terminated in the
sole discretion of the Initial Purchaser by notice to the Company given prior to
the Closing Date in the event that the Company or any of the Subsidiary
Guarantors shall have failed, refused or been unable to perform all obligations
and satisfy all conditions on their part to be performed or satisfied hereunder
at or prior thereto or, if at or prior to the Closing Date:
(i) any of the Company or the Subsidiaries shall have
sustained any loss or interference with respect to its businesses or
properties from fire, flood, hurricane, accident or other calamity,
whether or not covered by insurance, or from any strike, labor dispute,
slow down or work stoppage or any legal or governmental proceeding,
which loss or interference, in the sole judgment of the Initial
Purchaser, has had or has a Material Adverse Effect, or there shall
have been, in the sole judgment of the Initial Purchaser, any event or
development that, individually or in the aggregate, has or could be
reasonably likely to have a Material Adverse Effect (including without
limitation a change in control of the Company or the Subsidiaries),
except in each case as described in the Final Memorandum (exclusive of
any amendment or supplement thereto);
(ii) trading in securities of the Company (other than in
connection with a delisting of the Common Stock of the Company from the
NASDAQ National Market) or in securities generally on the New York
Stock Exchange, American Stock Exchange or the NASDAQ National Market
shall have been suspended or minimum or maximum prices shall have been
established on any such exchange or market;
(iii) a banking moratorium shall have been declared by New
York or United States authorities;
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, or (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or any other national or international
calamity or emergency, or (C) any material change in the financial
markets of the United States which, in the case of (A), (B) or (C)
above and in the sole judgment of the Initial Purchaser, makes it
impracticable or inadvisable to proceed with the offering or the
delivery of the Securities as contemplated by the Final Memorandum; or
<PAGE> 31
- 31 -
(v) any securities of the Company shall have been downgraded
or placed (from and after the date hereof) on any "watch list" for
possible downgrading by any nationally recognized statistical rating
organization.
(b) Termination of this Agreement pursuant to this Section 11
shall be without liability of any party to any other party except as provided in
Section 10 hereof.
12. Information Supplied by the Initial Purchaser. The
statements set forth in the third paragraph, second sentence of the fifth
paragraph and the sixth paragraph under the heading "Private Placement" in the
Final Memorandum (to the extent such statements relate to the Initial Purchaser)
constitute the only information furnished by the Initial Purchaser to the
Company for the purposes of Sections 2(a) and 9 hereof.
13. Notices. All communications hereunder shall be in writing
and, if sent to the Initial Purchaser, shall be mailed or delivered to (i) BT
Alex. Brown Incorporated, 130 Liberty Street, New York, New York 10006,
Attention: Corporate Finance Department; and (ii) if sent to the Company or any
Subsidiary Guarantor, shall be mailed or delivered to the Company at 500 N.
Dearborn Street, Suite 405, Chicago, Illinois 60610, Attention: Chief Financial
Officer with a copy to Mayer, Brown & Platt, 190 S. LaSalle, Chicago, Illinois
60603, Attention: Paul Theiss.
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; and one
business day after being timely delivered to a next-day air courier.
14. Successors. This Agreement shall inure to the benefit of
and be binding upon the Initial Purchaser, the Company and the Subsidiary
Guarantors and their respective successors and legal representatives, and
nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any other person any legal or equitable right, remedy or claim
under or in respect of this Agreement, or any provisions herein contained; this
Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of such persons and for the benefit of
no other person except that (i) the indemnities of the Company and the
Subsidiary Guarantors contained in Section 9 of this Agreement shall also be for
the benefit of any person or persons who control the Initial Purchaser within
the meaning of Section 15
<PAGE> 32
- 32 -
of the Act or Section 20 of the Exchange Act and (ii) the indemnities of the
Initial Purchaser contained in Section 9 of this Agreement shall also be for the
benefit of the directors of the Company and the Subsidiary Guarantors, their
respective officers and any person or persons who control the Company or any of
the Subsidiary Guarantors within the meaning of Section 15 of the Act or Section
20 of the Exchange Act. No purchaser of Securities from the Initial Purchaser
will be deemed a successor because of such purchase.
15. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT GIVING EFFECT TO ANY
PROVISIONS THEREOF RELATING TO CONFLICTS OF LAW.
16. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
<PAGE> 33
S-1
If the foregoing correctly sets forth our understanding,
please indicate your acceptance thereof in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement between the
Company, the Subsidiary Guarantors and the Initial Purchaser.
Very truly yours,
METAL MANAGEMENT, INC.
By: /s/ T. BENJAMIN JENNINGS
Name: T. Benjamin Jennings
Title: Chairman and
Chief Executive Officer
AEROSPACE METALS, INC.
AMERICAN SCRAP PROCESSING, INC.
C SHREDDING CORP.
CALIFORNIA METALS RECYCLING, INC.
CIM TRUCKING, INC.
COMETCO CORP.
COZZI BUILDING CORPORATION
COZZI IRON & METAL, INC.
EMCO TRADING, INC.
FERREX TRADING CORPORATION
FIRMA, INC.
FIRMA PLASTIC CO., INC.
FPX, INC.
HOUSTON COMPRESSED STEEL CORP.
HOUTEX METALS COMPANY, INC.
THE ISAAC CORPORATION
P. JOSEPH IRON & METAL, INC.
KANKAKEE SCRAP CORPORATION
KIMERLING ACQUISITION CORP.
MACLEOD METALS CO.
METAL MANAGEMENT ARIZONA, INC.
METAL MANAGEMENT GULF COAST, INC.
METAL MANAGEMENT PITTSBURGH, INC.
METAL MANAGEMENT REALTY, INC.
MICHAEL SCHIAVONE & SONS, INC.
NAPORANO IRON & METAL CO.
NEWELL RECYCLING WEST, INC.
NIMCO SHREDDING CO.
138 SCRAP, INC.
PERLCO, L.L.C.
PROLER SOUTHWEST INC.
PROLER STEELWORKS L.L.C.
R&P HOLDINGS, INC.
SALT RIVER RECYCLING, L.L.C.
SCRAP PROCESSING, INC.
<PAGE> 34
S-2
TORRINGTON SCRAP COMPANY
TROJAN TRADING, INC.
USA SOUTHWESTERN CARRIER, INC.
By: /s/ DAVID A. CARPENTER
_________________________
Name: David A. Carpenter
Title: Vice President
RESERVE IRON & METAL LIMITED PARTNERSHIP
By: P. JOSEPH IRON & METAL, INC.,
its general partner
By: /s/ DAVID A. CARPENTER
________________________
Name: David A. Carpenter
Title: Vice President
<PAGE> 35
S-3
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above
written.
BT ALEX. BROWN INCORPORATED
By: /s/ PAUL HIGBEE
____________________
Name: Paul Higbee
Title: Managing Director
<PAGE> 36
SCHEDULE 1
SUBSIDIARIES OF THE COMPANY
Name
AEROSPACE METALS, INC.
AMERICAN SCRAP PROCESSING, INC.
C SHREDDING CORP.
CALIFORNIA METALS RECYCLING, INC.
CIM TRUCKING, INC.
COMETCO CORP.
COZZI BUILDING CORPORATION
COZZI IRON & METAL, INC.
EMCO TRADING, INC.
FERREX TRADING CORPORATION
FIRMA, INC.
FIRMA PLASTIC CO., INC.
FPX, INC.
HOUSTON COMPRESSED STEEL CORP.
HOUTEX METALS COMPANY, INC.
THE ISAAC CORPORATION
P. JOSEPH IRON & METAL, INC.
KANKAKEE SCRAP CORPORATION
KIMERLING ACQUISITION CORP.
MACLEOD METALS CO.
METAL MANAGEMENT ARIZONA, INC.
METAL MANAGEMENT GULF COAST, INC.
METAL MANAGEMENT PITTSBURGH, INC.
METAL MANAGEMENT REALTY, INC.
MICHAEL SCHIAVONE & SONS, INC.
NAPORANO IRON & METAL CO.
NEWELL RECYCLING WEST, INC.
NIMCO SHREDDING CO.
138 SCRAP, INC.
PERLCO, L.L.C.
PROLER SOUTHWEST INC.
PROLER STEELWORKS L.L.C.
R&P HOLDINGS, INC.
RESERVE IRON & METAL LIMITED PARTNERSHIP
SALT RIVER RECYCLING, L.L.C.
SCRAP PROCESSING, INC.
TORRINGTON SCRAP COMPANY
TROJAN TRADING, INC.
USA SOUTHWESTERN CARRIER, INC.
<PAGE> 37
SCHEDULE 2
DESIGNATED SUBSIDIARIES*
(For purposes of Section 7(a) of the Agreement)
AEROSPACE METALS, INC.
AMERICAN SCRAP PROCESSING, INC.
CIM TRUCKING, INC.
COMETCO CORP.
COZZI BUILDING CORPORATION
COZZI IRON & METAL, INC.
C SHREDDING CORP.
FERREX TRADING CORPORATION
KANKAKEE SCRAP CORPORATION
KIMERLING ACQUISITION CORP.
METAL MANAGEMENT GULF COAST, INC.
MICHAEL SCHIAVONE & SONS, INC.
138 SCRAP, INC.
PROLER STEELWORKS L.L.C.
R&P HOLDINGS, INC.
RESERVE IRON & METAL LIMITED PARTNERSHIP
SCRAP PROCESSING, INC.
TORRINGTON SCRAP COMPANY
* List should reflect all Subsidiaries incorporated or organized under the laws
of Illinois or Delaware
<PAGE> 38
SCHEDULE 3
SUBSIDIARY GUARANTORS
(For purposes of Section 7(b) of the Agreement)
CALIFORNIA METALS RECYCLING, INC.
FIRMA, INC.
FIRMA PLASTIC CO., INC.
FPX, INC.
HOUSTON COMPRESSED STEEL CORP.
HOUTEX METALS COMPANY, INC.
THE ISAAC CORPORATION
P. JOSEPH IRON & METAL, INC.
MACLEOD METALS CO.
METAL MANAGEMENT ARIZONA, INC.
METAL MANAGEMENT REALTY, INC.
NAPORANO IRON & METAL CO.
NEWELL RECYCLING WEST, INC.
NIMCO SHREDDING CO.
PERLCO, L.L.C.
PROLER SOUTHWEST INC.
SALT RIVER RECYCLING, L.L.C.
TROJAN TRADING, INC.
USA SOUTHWESTERN CARRIER, INC.
<PAGE> 39
SCHEDULE 4
REQUIRED LOCAL COUNSEL OPINIONS
(For purposes of Section 7(c) of the Agreement)
Alabama
Arizona
California
Colorado
Connecticut
Illinois
Indiana
Louisiana
Mississippi
New Jersey
Ohio
Pennsylvania
Tennessee
Texas
Utah
<PAGE> 1
EXHIBIT 99.1
[METAL MANAGEMENT, INC. LOGO]
FOR IMMEDIATE RELEASE
FOR MORE INFORMATION CONTACT:
Xavier Hermosillo, Vice President of Investor Relations
& Corporate Communications:
Midwest/East-Call (312)645-0445 - West Coast - Call (310)832-2999
METAL MANAGEMENT ISSUES
SENIOR SECURED NOTES
Chicago, IL - - May 7, 1999 - Metal Management, Inc. (NASDAQ symbol-MTLM)("Metal
Management" or "MTLM" or the "Company") today announced that it has issued
$30-million principal amount of its 12-3/4% Senior Secured Notes due 2004 in a
Rule 144A private offering. The Notes were issued at 90% of their principal
amount and are prepayable by the Company, in whole or in part, at 100% of their
principal amount at any time after June 15, 2000 and are secured by a second
priority lien on certain of the Company's property, plant and equipment. The net
proceeds of this offering to Metal Management, approximately $25.6 million after
the 10% original issue discount and transaction fees and expenses, were used to
pay down a portion of the Company's outstanding bank indebtedness under its
senior credit facility. Giving effect to this repayment, the Company's borrowing
availability under its senior bank credit facility increased to approximately
$47-million.
The securities referenced above have not been registered under the Securities
Act of 1933 and may not be offered or sold in the United States absent
registration or an applicable exemption from registration requirements.
MORE* MORE* MORE* MORE* MORE* MORE
<PAGE> 2
METAL MANAGEMENT ISSUES PAGE 2
SENIOR SECURED NOTES
T. Benjamin Jennings, the Company's Chairman and Chief Executive Officer, said,
"This financing represents an important layer of long-term capital that
significantly improves Metal Management's liquidity. It will provide us with the
financial flexibility and working capital that should inspire confidence in our
investors and trading partners. We are confident that the improving market
conditions for steel and scrap metals will continue to improve our liquidity and
financial performance."
Metal Management is one of the largest and fastest-growing full service metal
recyclers in the United States, with approximately 55 recycling facilities in 15
states and estimated annualized gross revenues of approximately $800-million.
The Company also owns a 28.5 percent interest in Southern Recycling, which
operates 22 facilities in five states along the Gulf Coast.
* * * *
All of the statements in this release, other than historical facts, are
forward-looking statements made in reliance upon the Safe Harbor Provisions of
the Private Securities Litigation Reform Act of 1995. As such, they involve
risks and uncertainties and are subject to change at any time. These statements
reflect MTLM's current expectations regarding the future profitability of MTLM
and its subsidiaries and the benefits to be derived from MTLM's execution of its
industry consolidation strategy. As discussed in MTLM's annual report on Form
10-K for the fiscal year ended March 31, 1998, as amended, and in any periodic
filing filed by the Company after the date thereof, some of the factors which
could affect MTLM's performance include, among other things: the effects of
leverage on Metal Management, immediate and future capital requirements, risk
of dilution to existing shareholders, potential inability to control growth or
to successfully integrate acquired businesses, limited operating history,
cyclicality of the metals recycling industry, potential inability to complete
pending acquisitions, commodity price fluctuations, compliance with
environmental, health and safety and other regulatory requirements applicable to
MTLM, potential environmental liability, risk of deterioration in relations with
labor unions, control by principal stockholders and dependence on key
management, dependence on suppliers of scrap metals, concentration of customer
risk, competition in the scrap metals industry, availability of scrap
alternatives, stock market volatility and year 2000 compliance.
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